### 202-234-4433 **Neal R. Gross and Co., Inc. Page 1**  **UNITED STATES OF AMERICA DEPARTMENT OF ENERGY**  **+ + + + + ENERGY CONSERVATION STANDARDS**  **FOR RESIDENTIAL FURNACE FANS + + + + +**  **MEETING + + + + +**  **TUESDAY, DECEMBER 3, 2013** 

**+ + + + + The panel met in the Room 8E-089,**  **1000 Independence Avenue, S.W., Washington, DC, at 9:00 a.m., Doug Brookman, Moderator,**  **presiding. PRESENT**  **DOUG BROOKMAN, Moderator JOSHUA COCCIARDI, U.S. Department of Energy**  **JOHN CYMBALSKY, U.S. Department of Energy KAVITA VAIDYANATHAN, U.S. Department of**  **Energy TIMOTHY BALLO, Earthjustice**  **TOM J. BROOKS, JR., Southern Company DONALD M. BRUNDAGE, Southern Company**  **LANE BURT, NRDC GARY CLARK, Daikin Manufacturing**  **ROSALYN COCHRANE, Natural Resources Canada OWEN COMSTOCK, U.S. Energy Information**  **Administration ANDREW DELASKI, Appliance Standards Awareness**  **Project SCOTT DURFEE, Nidec Motor Corporation** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 2**  **KEVIN FOLEY, Navigant Consulting VICTOR FRANCO, Lawrence Berkeley National**  **Laboratory MARSHALL HUNT, Pacific Gas & Electric Company**  **DIANE JAKOBS, Rheem Manufacturing SAMUEL JASINSKI, Navigant Consulting**  **CHRISTOPHER LAU, Navigant Consulting ALEX LEKOV, Lawrence Berkeley National**  **Laboratory PAUL C. LIN, Regal-Beloit Corporation**  **RONALD MAJETTE, Department of Energy CHARLES MCCRUDDEN, Air Conditioning**  **Contractors of America MARK MENZER, Intertek**  **DAVID D. RANSOM, McDermott Will & Emery GREG ROSENQUIST, Lawrence Berkeley National**  **Laboratory STEVE ROSENSTOCK, Edison Electric Institute**  **ANIRUDDH ROY, Air Conditioning, Heating & Refrigeration Institute**  **HARVEY SACHS, American Council for an Energy Efficient Economy**  **PAUL SELKING, Regal-Beloit Corporation TERRY SMALL, Mortex Products, Inc.**  **ANDREW K. SOTO, American Gas Association CHARLIE STEPHENS, Northwest Energy Efficiency**  **Alliance JAMES T. VERSHAW, Ingersoll-Rand**  **GREGORY WAGNER, Morrison Products, Inc. DAVE WINNINGHAM, Allied Air Enterprises**  **TED WILLIAMS, American Gas Association XING XU, Navigant Consulting** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 3**  **C-O-N-T-E-N-T-S Call to Order 5**  **Doug Brookman**

**Welcome Remarks 5 Ronald Majette**  **Introductions 6 Agenda Review 12**  **Doug Brookman Purpose and Scope of the Public Meeting**  **15 Doug Brookman**  **Opening Statements 16**

**Diane Jakobs 16**

**Don Brundage 21**

**Jim VerShaw 23**

**Andrew deLaski 24**  **Presentation with Content Slides 30** 

**Overview 30 Ron Majette**  **Criteria for Selecting Standards Levels 45**  **Ron Majette Market Assessment 55**  **Kevin Foley Engineering Analysis**  **90 Kevin Foley** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 4**  **Markups; Energy Use Characterization 174**  **Victor Franco Life-Cycle Cost and Payback Period**  **Analysis 248 Victor Franco**  **National Impact Analysis, Shipments, and Regulatory Impact Analysis**  **282 Alex Lekov** 

**Manufacturer Impact Analysis 314**  **Chris Lau**

**Environmental Impacts 328**  **Alex Lekov**

**Results and Proposed Standards 336**  **Alex Lekov**

**Closing Remarks from Interested Parties 362**  **Ronald Majette**

**Adjourn 373 Doug Brookman** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 5**  **1** 

### P-R-O-C-E-E-D-I-N-G-S

**2** 

### 9:10 a.m.

**3** 

### MODERATOR BROOKMAN: This is the

**4** 

### Energy Conservation Standards meeting, the

**5** 

### Notice of Proposed Rulemaking for Residential

**6** 

### Furnace Fans. Today is December 3rd, 2013,

**7** 

### here in the Forrestal Building in Washington,

**8** 

### D.C.

**9** 

### Welcome. So glad you're here.

**10** 

### Glad you made it this morning.

**11** 

### We are going to start with

**12** 

### welcoming remarks from Ron Majette.

**13** 

### MR. MAJETTE: Good morning all.

**14** 

### My name is Ron Majette from the

**15** 

### U.S. Department of Energy.

**16** 

### I wanted to welcome you all to

**17** 

### Washington, D.C.

**18** 

### I hope we have a good meeting for

**19** 

### today, no punching, no eye-pulling, no

**20** 

### eye-scratching. Okay?

**21** 

### (Laughter.)

**22** 

### We just need information, so that

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 6**  **1 we can complete our regulatory requirements 2 for accomplishing this rulemaking.**  **3 Any of your comments proposed 4 today will be part of the public record. So,**  **5 please, as much as possible, have dialog with 6 people around with you and with us, so we can**  **7 gather more information. 8 Thank you.**  **9 MODERATOR BROOKMAN: Thank you. 10 We always start with**  **11 introductions. 12 You can get used to turning these**  **13 microphones on and off. Unless you're using 14 them, please leave them turned off. When they**  **15 are on, the little green button will be 16 glowing green.**  **17 Let's start to my immediate left, 18 your name and organizational affiliation.**  **19 MR. WINNINGHAM: Dave Winningham, 20 Allied Air, Lennox International.**  **21 MR. SMALL: Terry Small, Mortex 22 Products, Inc.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 7**  **1 MR. ROY: Aniruddh Roy, 2 Air-Conditioning, Heating, and Refrigeration**  **3 Institute. 4 MR. SACHS: Harvey Sachs, American**  **5 Council for Energy Efficient Economy. 6 MS. COCHRANE: Rosalyn Cochrane,**  **7 Natural Resources Canada. 8 MR. ROSENSTOCK: Steve Rosenstock,**  **9 Edison Electric Institute. 10 MR. VERSHAW: Jim VerShaw,**  **11 Ingersoll-Rand. 12 DR. JAKOBS: Diane Jakobs, Rheem**  **13 Manufacturing. 14 MR. DURFEE: Scott Durfee, Nidec**  **15 Motor Corporation. 16 MR. McCRUDDEN: Charlie McCrudden,**  **17 Air Conditioning Contractors of America. 18 MR. DELASKI: Andrew deLaski,**  **19 Appliance Standards Awareness Project. 20 MR. HUNT: Marshall Hunt, Pacific**  **21 Gas and Electric Company. 22 MR. CLARK: Gary Clark, Goodman** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 8**  **1 Manufacturing. 2 MR. RANSOM: Dave Ransom. I'm an**  **3 attorney at McDermott Will & Emery. 4 MR. BRUNDAGE: Don Brundage,**  **5 Southern Company, electric utility. 6 MS. VAIDYANATHAN: Kavita**  **7 Vaidyanathan. I'm here at the U.S. Department 8 of Energy in the General Counsel's Office.**  **9 MODERATOR BROOKMAN: John, 10 introduce yourself, please.**  **11 MR. CYMBALSKY: John Cymbalsky, 12 DOE.**  **13 MODERATOR BROOKMAN: And please 14 just stand.**  **15 MR. FOLEY: Kevin Foley, Navigant 16 Consulting.**  **17 MR. JASINSKI: Sam Jasinski, 18 Navigant Consulting.**  **19 MR. LAU: Christopher Lau, 20 Navigant Consulting.**  **21 DR. LEKOV: Alex Lekov, Lawrence 22 Berkeley National Laboratory.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 9**  **1 MR. FRANCO: Victor Franco, 2 Lawrence Berkeley National Laboratory.**  **3 MR. LIN: Paul Lin with the 4 Regal-Beloit Corporation.**  **5 MR. SELKING: Paul Selking with 6 the Regal-Beloit Corporation.**  **7 MODERATOR BROOKMAN: It will be 8 sufficient just to stand.**  **9 Yes? 10 MR. WAGNER: Greg Wagner, Morrison**  **11 Products. 12 MR. BROOKS: Tom Brooks, Southern**  **13 Company. 14 MR. XU: Xing Xu, Navigant**  **15 Consulting. 16 MR. MENZER: Mark Menzer,**  **17 Intertek. 18 MR. WILLIAMS: Ted Williams,**  **19 American Gas Association. 20 MR. SOTO: Andrew Soto with the**  **21 American Gas Association. 22 MR. BURT: Lane Burt, representing** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 10**  **1 the Natural Resources Defense Council. 2 MR. ROSENQUIST: Greg Rosenquist,**  **3 Lawrence Berkeley National Laboratory. 4 MR. STEPHENS: Charlie Stephens,**  **5 Northwest Energy Efficiency Alliance. 6 MR. BALLO: Tim Ballo,**  **7 Earthjustice. 8 MODERATOR BROOKMAN: Did everyone**  **9 introduce him or herself? Good. 10 Well, once again, thanks to all of**  **11 you for being here and allowing us to get an 12 early start on the day. Welcome.**  **13 All of you received a packet of 14 information when you came in the door. I am**  **15 going to do a very brief agenda review, if you 16 will turn to page 2 of your packet.**  **17 Immediately following this agenda 18 review, there is an overview of the purpose of**  **19 this public meeting and an opportunity for 20 anybody that wants to, anybody that wishes to,**  **21 to make an opening statement, brief opening 22 remarks, issues that are important to you,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 11**  **1 things that you wish to raise here at the 2 outset.**  **3 During the conduct of the meeting 4 today, as we go through these detailed content**  **5 slides, lots and lots of opportunity for you 6 to cover whatever you wish to cover in**  **7 whatever form you wish to cover it. 8 Doing it contiguous, working with**  **9 the content slides themselves, it makes it 10 easier to create a complete and a good record.**  **11 There will be a complete transcript of this 12 meeting.**  **13 So, immediately following the 14 opening statements, there is going to an**  **15 overview on regulatory authority and 16 rulemaking overview.**  **17 Following that, market and 18 technology assessment and screening analysis.**  **19 We will take a break mid-morning, 20 right about 10:15 or so.**  **21 Following that, an engineering 22 analysis and mockups, energy use** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 12**  **1 characterization. 2 We will take lunch round about**  **3 noon today. Everybody is going to be on their 4 own. We will talk about that when we get**  **5 there. 6 Following that, when we return,**  **7 life cycle costs and payback period analysis, 8 national impact analysis, shipments,**  **9 regulatory impact analysis. 10 We'll take a break mid-afternoon,**  **11 round about 1:45, maybe 2:00-ish. 12 When we return, manufacturing**  **13 impact analysis, environmental impact results 14 and proposed standards.**  **15 And at the end of the day, yet 16 another opportunity for closing remarks, any**  **17 additional comments, anything that you think 18 that hasn't been said or covered sufficiently,**  **19 another opportunity to do that. 20 And we intend to close today**  **21 around about four o'clock. We'll see how that 22 turns out as we pace through the day.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 13**  **1 Questions and comments about the 2 agenda?**  **3 (No response.) 4 Many of you have been here before.**  **5 I recognize about 80 percent of you, which is 6 a good thing.**  **7 I would ask for your 8 consideration. Please speak one at a time.**  **9 Please say your name for the record each time 10 you speak. As Ron said, there will be a**  **11 complete transcript of this meeting made 12 available. It will be on the DOE website.**  **13 If you could keep the focus here, 14 turn your cell phones on silent mode. Limit**  **15 sidebar conversations. Remember to turn the 16 microphones on and off. If you can be concise**  **17 and share the airtime, and we are going to be 18 queuing individuals by name as best I can do**  **19 it. 20 We wish to encourage to follow-on.**  **21 Sometimes the back-and-forth between 22 individuals is very, very helpful to the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 14**  **1 Department, as they consider the pros and cons 2 of these issues.**  **3 Okay. Anything additional at this 4 time before we proceed?**  **5 (No response.) 6 Those of you participating via the**  **7 webcast, welcome. We especially are wanting 8 to welcome web participants. The Department**  **9 of Energy is trying hard to make certain that 10 these meetings are accessible via the web.**  **11 How many folks do we have joining 12 us? Do we know? We don't know. Can they**  **13 hear us? 14 So, we are having a little bit of**  **15 technical difficulty getting everybody online 16 patched in, but, apparently, you can hear us.**  **17 We are going to make it possible 18 for you to participate, ask questions here**  **19 live in the room. However, until we get that 20 capability, if you would keep your telephones**  **21 on mute and raise your hand, if you wish to 22 speak, or you can send an email message to the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 15**  **1 web mistress here. And she will insert your 2 question. We'll get your content inserted**  **3 into the meeting. 4 And I think that is it.**  **5 Do you want to do the purpose of 6 the public meeting before weá okay. You can**  **7 see on slide 6 on page 3 of your packet the 8 purpose of the public meeting:**  **9 Present procedure and analytical 10 approaches.**  **11 Invite comment on the Energy 12 Conservation Standards Notice of Proposed**  **13 Rulemaking and Technical Support Document, 14 including DOE's proposed standard level.**  **15 And invite participants to provide 16 summary comments or statements and raise**  **17 additional issues for discussion. 18 So, that is the general purpose**  **19 and scope of this meeting. 20 And you can see on the following**  **21 slide, on slide 7, this issue box, which is 22 there to illustrate how the Department will** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 16**  **1 seek specific comment on specific issues as we 2 go through the PowerPoint slides today.**  **3 So, that is the overview. 4 Questions and comments before we proceed?**  **5 (No response.) 6 Yes, Diane? The microphone.**  **7 DR. JAKOBS: Thank you. 8 So, I have been through all these**  **9 documents many times, and there's a lot of 10 good work here. There are things there are**  **11 a lot of assumptions. This is like a big 12 thought experiment. The thing is, it is**  **13 lacking in data, and they have tried to supply 14 some data, but I don't think there is a lot of**  **15 data. 16 But I can get hung up on like any**  **17 one thing, but I tried to come up with three 18 things that I was most concerned about.**  **19 MODERATOR BROOKMAN: Okay. 20 DR. JAKOBS: So, the first one**  **21 isá 22 MODERATOR BROOKMAN: So, pardon me** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 17**  **1 for interrupting. 2 So, procedurally, we are**  **3 proceeding to the next step, which is opening 4 remarks, and you are right on track. Keep**  **5 going. 6 DR. JAKOBS: Okay. Thank you.** 

**7 MODERATOR BROOKMAN: Yes. 8 DR. JAKOBS: Sorry.**  **9 So, No. 1, there is no test 10 procedure yet. So, when I went through all**  **11 this, I had in my mind what the test procedure 12 is, and I have data. I have data that we**  **13 calculated. I have data that we measured, 14 different flavors. But the truth is I don't**  **15 know what the test procedure is. So, that's 16 my first concern.**  **17 My second concern is that the 18 Technical Support Documents are really based**  **19 on data from Eae, which is the Energy what 20 is it? It's capital "E", subscript "ae", and**  **21 it comes from ASHRAE 103. And we have a lot 22 of data for that. That was used in the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 18**  **1 Technical Support Document, and that's how the 2 energy savings was calculated.**  **3 And it is all related to different 4 design options, like PSC motor and improved**  **5 PSC motor, BPM motor. There is not much 6 really in here about FER. But if you go to**  **7 the NOPR, it is all based on FER and it is 8 tied to those same design options.**  **9 But when I looked at the data I 10 had, based on what I assumed the FER is, the**  **11 design options didn't match up with the FER 12 values. So, I am really concerned about that.**  **13 And Rheem, we submitted 18 14 furnaces, and that's the data I'm looking at.**  **15 And I'm concerned about that. 16 And then, the third one is, based**  **17 on the analysis, I believe that if your 18 furnace fan motor fails, that will offset all**  **19 the savings over the 26 years of life that 20 DOES is assuming for a furnace fan.**  **21 MODERATOR BROOKMAN: Thank you. 22 DR. JAKOBS: And I have been** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 19**  **1 collecting warranty data. One of the things, 2 Rheem used to offer a one-year warranty**  **3 period, and I think it's 10 years now. So, we 4 only get data on furnaces that we warranty.**  **5 I mean, some people they'll call and they'll 6 yell, "It's out of warranty," but that's not**  **7 really good data. 8 So, we only know I only had six**  **9 years of data. I have been looking at it. 10 And then, I have been segregating. It is all**  **11 in a database. You can like search on 12 different things. And I have been using the**  **13 design options that DOE uses in the Technical 14 Support Document. So, PSC motors, condensing,**  **15 non-condensing, ECM, constant torque, all 16 these sections.**  **17 And what I found was, where the 18 Technical Support Document used a Weibull**  **19 analysis to predict the life of a furnace fan, 20 I found that, based on our data, PSC motors**  **21 did much better than that, and the BPM motors 22 did much worse. So, you could say it was an** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 20**  **1 average, which is how it is described, but in 2 a way it doesn't describe anything because it**  **3 is either way better or way worse, which is 4 going sound terrible in the transcript.**  **5 But, anyway, so that concerns me 6 because, if you assume a furnace fan life is**  **7 long enough, you are going to save enough 8 money over a long enough time, and it is going**  **9 to offset the cost, where, in practical terms, 10 based on the data I have looked at, that**  **11 doesn't seem to be the case. 12 So, it is more you have a certain**  **13 amount of savings. But if you have to replace 14 your fan motor, it is all lost to the**  **15 consumer. 16 MODERATOR BROOKMAN: Okay. Thank**  **17 you. 18 DR. JAKOBS: Okay. Thank you.**  **19 MODERATOR BROOKMAN: That was 20 helpful.**  **21 Other comments here at the outset? 22 Yes, Don Brundage?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 21**  **1 MR. BRUNDAGE: Don Brundage, 2 Southern Company.**  **3 I also have several major 4 concerns. One is and I would like the**  **5 Department to explain at some point along the 6 way it appears that furnace fans are a**  **7 second efficiency measure on products where 8 this energy is already covered other**  **9 standards. If these fans are installed in 10 conjunction with a heat pump or air**  **11 conditioner, it is included within the SEER 12 value. I would like a little bit of**  **13 explanation at some point on how this is 14 really a separate product that should be**  **15 covered under an efficiency rulemaking. 16 I also have some significant power**  **17 quality issues related to the BPM motors, 18 looking at the harmonics and power factor**  **19 issues on them. There have been some studies 20 within the electric utility industry that show**  **21 significant problems if the market were 22 saturated with these types of technology** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 22**  **1 motors. 2 And I am working to try to get**  **3 that report done by EPRI released to the 4 National Labs. It's copyrighted, and there's**  **5 some issues with that. 6 The other thing, to echo what**  **7 Rheem has said, is it just seems like the 8 furnace fan life is totally unrealistic. I**  **9 looked between the furnace NOPR and the 10 furnace fan, the furnace TSD and the furnace**  **11 fan TSD, and it looks like there's nearly 12 twice as many shipments of furnace fans as**  **13 there are furnaces. Now maybe some of those 14 are used in air conditioning in some way.**  **15 There may be a good explanation for that. 16 But it appears that the assumption**  **17 that the furnace fan lasts as long as the 18 furnace is not realistic. And I would think**  **19 there would be some repair data available from 20 the service and maintenance and distributor**  **21 trade groups on that. But it seems like the 22 life of the furnace fan is just totally** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 23**  **1 unrealistic to expect it to last as long as 2 the furnace.**  **3 MODERATOR BROOKMAN: Okay. 4 MR. BRUNDAGE: Thank you.**  **5 MODERATOR BROOKMAN: Thank you. 6 Other comments here at the outset?** 

**7 Yes? 8 MR. VERSHAW: Jim VerShaw of**  **9 Ingersoll-Rand. 10 There are some four areas that I**  **11 would hope they would be able to get into 12 today.**  **13 One is the derivation of the FER 14 equation. I think there are some flaws in**  **15 that, in particular, normalizing on Qmax and, 16 also, not using the total number of heating**  **17 hours in both the numerator and denominator 18 when you multi-stage products.**  **19 How packaged units or weatherized 20 furnaces were characterized seems to be**  **21 totally flawed because the numbers that I see 22 don't match up with anything that they are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 24**  **1 talking about in the standard. 2 And also, the assumption on the**  **3 energy savings from constant torque motors 4 isn't constant across the range of products as**  **5 it is assumed to be. So, there is no way that 6 we can get the same energy savings in small**  **7 units as a large unit. 8 And also, again, the reliability**  **9 and life is flawed in its assumptions there. 10 I think those technical issues are**  **11 significant to the outcome of the analysis and 12 need to be hopefully, we get into that. We**  **13 can show that there are some errors in there 14 that we can fix.**  **15 Thanks. 16 MODERATOR BROOKMAN: Good. Thank**  **17 you. Thank you. 18 Andrew, do you have something here**  **19 at the outset? 20 MR. DELASKI: Yes. I'm Andrew**  **21 deLaski, Appliance Standards Awareness 22 Project.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 25**  **1 Doug knows me too well to let me 2 do an opening statement. So, I've got a**  **3 couple of remarks. 4 One is I look forward to the**  **5 dialog today and the discussion, and learning 6 more about the technical concerns that Rheem**  **7 and Ingersoll-Rand are raising and Don. 8 I think there is always room for**  **9 improvement in your analysis. So, I look 10 forward to hearing more about the concerns**  **11 that you have identified for your 12 identification, through your working through**  **13 the documents. 14 And I also want to echo your**  **15 praise for the Department in coming forward 16 with a lot of information, a lot of analysis.**  **17 A lot of work has gone into this over many 18 years. So, we appreciate the work of the**  **19 Department coming forward with a proposed 20 rule.**  **21 I want to take us up to a little 22 bit of a higher level, too, and just emphasize** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 26**  **1 the importance of this particular standard. 2 There are many folks in this room, in this**  **3 room and outside of this room, who have worked 4 to improve furnace fan efficiency for a long**  **5 time through a variety of initiatives and 6 standards, and one of those initiatives that**  **7 has been underway now for some time. 8 When we look at the data in the**  **9 rule, in the proposed rule, and it is 10 supported through other sources as well, that**  **11 residential air handlers use about 1,000 12 kilowatt hours per year in an average**  **13 household. That's a lot. It's about, in 14 round numbers, it is about 10 percent of**  **15 residential electricity consumption. 16 So, this particular end-use**  **17 deserves our attention, and it deserves the 18 attention it has gotten over the past decade**  **19 and more, and it deserves the attention of the 20 folks in this room and of the Department. So,**  **21 we applaud the Department for moving forward 22 with this rulemaking, as required by the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 27**  **1 statute. 2 It also deserves our attention**  **3 because it is somewhat of an invisible energy 4 use. Not many consumers know that the furnace**  **5 fan in their basement is responsible for such 6 a big chunk of your electricity bill. You**  **7 have replaced all your lightbulbs. You have 8 done all your Energy Star appliances. And**  **9 here's this use in your basement that is 10 somewhat invisible to most consumers.**  **11 Most consumers have very little 12 control over the furnace fan they get. It**  **13 came with the house. Or if it failed, it was 14 replaced in an emergency situation. And the**  **15 contractor, Charlie's guy, got very little 16 chance to upsell to a better fan because**  **17 you've got to replace it in the moment. It is 18 a heat wave in the summertime or it's a cold**  **19 snap, and you've got to get that equipment 20 working again.**  **21 So, for the consumer, it is 22 invisible. It is hard to affect. So, the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 28**  **1 importance of standards I think is one that is 2 really quite clear.**  **3 According to the Department's 4 analysis, the savings are enormous from the**  **5 proposed levels. We're talking 50-percent 6 reduction in watts, 50-percent reduction in**  **7 kWh per year. There aren't many opportunities 8 to look at an average household and say,**  **9 "Here's a standard that can save in the 10 neighborhood of 5 percent in round numbers of**  **11 your residential electricity use." It is a 12 huge savings opportunity.**  **13 We support the proposed levels, 14 the proposed standards. We think they make a**  **15 lot of sense. We believe that a standard that 16 is based on a constant torque BPM motor and**  **17 multi-staging controls will yield significant 18 savings.**  **19 We also want to note that it is a 20 performance standard. It is based, the**  **21 standard is based on these technologies, but 22 it is a performance standard. In other words,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 29**  **1 you can get there any way that you I 2 suspect, as this goes forward, that we will**  **3 find that manufacturers get there through a 4 variety of strategies. And there are some**  **5 strategies that we had hoped would be included 6 in the analysis that ultimately weren't,**  **7 including improved airflow, including improved 8 housing design, that are still a pathway for**  **9 improvement, even though they weren't included 10 in the analysis itself.**  **11 So, I think that these 12 opportunities provide a way for**  **13 differentiation and a way for manufacturers to 14 reach improvements that ultimately weren't**  **15 included in the modeling itself. 16 The national benefits are very**  **17 large, 4.5 quads over 30 years of sales. It 18 is a big standard. In the world of appliance**  **19 standards, efficiency standards, this is a big 20 one. Twenty-six billion dollars in NPV**  **21 benefits for consumers at 3 percent, $8.5 22 billion at 7 percent. Those are big numbers** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 30**  

### 1 and big savings for consumers nationally. **2 Typical consumer paybacks are three to five 3 years under the DOE's current analysis.**  **4 And, of course, with those 5 electricity savings come very large emissions**  **6 reductions. 7 So, again, we look forward to the**  **8 opportunity to hear some more of the 9 information coming forward today, the dialog**  **10 in the workshop today, and thank the 11 Department for holding it.**  **12 MODERATOR BROOKMAN: Thank you. 13 Additional comments here?**  **14 (No response.) 15 Nothing additional?**  **16 Okay. Let's proceed with the 17 contents slides.**  **18 MR. MAJETTE: All right. Just a 19 very, very quick overview.**  **20 And even though this is ingrained 21 in everybody's head, you need to know that we**  **22 were told to do this. Congress has mandated**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 31**  **1 that we have to look at this particular 2 rulemaking; we have to make improvements here.**  **3 And this is why we come back and we need help, 4 as we are developing this.**  **5 So, I am not going to go into all 6 the different background pieces here because**  **7 you know quite well. But the main purpose 8 here is just to make sure it is**  **9 well-understood that this is our project. We 10 have to do it. So, we need to collectively**  **11 put our heads together to come up with the 12 best that we can, based upon the mandate that**  **13 was given to us. 14 We are in the last stage here as**  **15 far as the rulemaking process is concerned. 16 So, we have completed the framework document.**  **17 We have done the preliminary analysis. And 18 now, we are in the NOPR stage. So, we are at**  **19 the last push to receive comments by the 24th 20 of this month to formulate and postulate a**  **21 final rule to be published. 22 This slide right here shows** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 32**  **1 basically just a history of where we are at 2 this particular moment. Withstanding a**  **3 government shutdown and a couple of 4 conferences, but we have made it to this**  **5 point. So, we're here. 6 MR. VERSHAW: Ron, I'm Jim**  **7 VerShaw, Ingersoll-Rand. 8 MR. MAJETTE: Yes.**  **9 MR. VERSHAW: It says you're going 10 to publish the final test procedure by the end**  **11 of 2013. This is December. How are you 12 doing?**  **13 MR. MAJETTE: Okay. We're pushed 14 back. I should have updated this slide. One**  **15 of the things that really set us back was we 16 did have a backlog at OMB of a lot of test**  **17 procedures, a lot of rulemakings. And then, 18 we just coupled that with the government**  **19 shutdown. So, it looked like things were 20 backing up prior to the shutdown. We actually**  **21 had 15 days and then after that. 22 So, as a matter of fact, the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 33**  **1 publish date for this is going to be moved 2 back to near the end of February. However,**  **3 the comments 4 MR. VERSHAW: So, it is difficult**  **5 I'm sorry. Let me start again. 6 MR. MAJETTE: Okay, yes. Just**  **7 stay here. 8 MR. VERSHAW: It is difficult, as**  **9 Diane said earlier, to really get into what a 10 product is going to do with you don't know for**  **11 sure how it is going to be tested. But we 12 won't really know the uncertainty of the test**  **13 procedure and all of that until that is 14 finalized. So, it almost says that we ought**  **15 to push back the comments on the final rule 16 until after we know what the test procedure**  **17 is. 18 MS. VAIDYANATHAN: I think Ron**  **19 misunderstood the question. I think what he 20 means is that the test procedure is still**  **21 slated to be final and published by the end of 22 2013. So, the test procedure should be done** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 34**  **1 by the end of 2013, from what we are looking 2 at with our schedule, yes.**  **3 MR. VERSHAW: Is it already at 4 OMB?**  **5 MR. MAJETTE: Yes. I'm sorry. 6 No, the test procedures don't have to don't**  **7 go. 8 MS. VAIDYANATHAN: The test**  **9 procedures don't have to go to OMB. 10 MR. MAJETTE: Yes.**  **11 MS. VAIDYANATHAN: It is only the 12 standards that go to OMB.**  **13 MR. VERSHAW: Okay. So, when can 14 we expect to see that again?**  **15 MS. VAIDYANATHAN: So, the test 16 procedure, we are slated to have it by the end**  **17 of 2013. I don't have an exact date. 18 MR. VERSHAW: Well, the comments**  **19 for this rule are due on the 24th. 20 MS. VAIDYANATHAN: Right.**  **21 MR. VERSHAW: Will we see it 22 before then?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 35**  **1** 

### MR. MAJETTE: I might be able to

**2** 

### give that answer within this meeting.

**3** 

### MR. VERSHAW: Well, you can see

**4** 

### that the Catch 22 we are in here

**5** 

### MR. MAJETTE: Yes. **6** 

### MR. VERSHAW: in terms of we are

**7** 

### working on what the rule is going to be before

**8** 

### we really know what the final test procedure

**9** 

### is going to be.

**10** 

### MS. VAIDYANATHAN: Right, and we

**11** 

### understand that. And that is why we were

**12** 

### trying to get it out before the end of the

**13** 

### comment period for these standards.

**14** 

### MODERATOR BROOKMAN: Let's see how

**15** 

### that evolves during the day.

**16** 

### Steve Rosenstock?

**17** 

### MS. VAIDYANATHAN: So, we'll look **18** 

### at it.

**19** 

### MR. ROSENSTOCK: Steve Rosenstock,

**20** 

### Edison Electric Institute.

**21** 

### Again, looking at the timeline,

**22** 

### there was something on the NOPR about a test

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 36**  **1 procedure, so I am assuming there were some 2 changes made between the NOPR and the**  **3 Supplemental NOPR to the test procedure, based 4 on feedback that you received from**  **5 manufacturers and other parties. 6 I guess the other possibility is,**  **7 are there any other changes that would affect 8 all of the FERs and all the other analysis?**  **9 MR. MAJETTE: Yes, I did confuse 10 the initial question. So, I apologize for**  **11 that. 12 I will, as we are doing the slide**  **13 presentation, I will go ahead and try to dig 14 that information out. I might be able to have**  **15 that today before the meeting is over. So, I 16 have to make that announcement.**  **17 MODERATOR BROOKMAN: Okay. 18 Don Brundage?**  **19 MR. BRUNDAGE: It just seems to me 20 you haven't defined the rule or the**  **21 performance metric yet. So, it makes it very 22 difficult.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 37**  **1 I would strongly suggest, if there 2 is any changes to what has been proposed in**  **3 the test procedure NOPR, you do a Supplemental 4 NOPR for this one because you just can't**  **5 comment on something if you don't even know 6 how you're measuring energy savings.**  **7 Thank you. 8 MR. MAJETTE: Okay.**  **9 MODERATOR BROOKMAN: Thank you. 10 Aniruddh?**  **11 MR. ROY: I just want to add to 12 Jim VerShaw's comment. On page 64076 of The**  **13 Federal Register notice, as you can see from 14 the FER equation, this is based on the April**  **15 2nd SNOPR, and we had submitted comments to 16 the AHRI suggesting a revision to the**  **17 equation. 18 There is an 830 in the**  **19 denominator. We suggested a change to that 20 denominator. And so, the current NOPR**  **21 accounts for the 830 in this denominator. 22 So, depending on how DOE views our** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 38**  **1 comments, the test procedure could reflect a 2 change back to that original equation to**  **3 account for the multi-staging units. So, just 4 what Jim pointed out, I wanted to give an**  **5 example that, if that change does take effect, 6 then it changes the whole analysis for this**  **7 particular rulemaking as well. So, they are 8 interrelated to an extent.**  **9 MODERATOR BROOKMAN: Sam? Are you 10 on?**  **11 MR. JASINSKI: How about now? 12 MODERATOR BROOKMAN: Yes.**  **13 MR. JASINSKI: Okay. Sam 14 Jasinski, Navigant Consulting.**  **15 Just as point of clarification, 16 the analyses reflected in the Notice of**  **17 Proposed Rulemaking are based on the test 18 procedure proposed in the test procedure**  **19 Supplemental Notice of Proposed Rulemaking, 20 which does not include the 830 in the**  **21 denominator. 22 So, the FER values used to come up** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 39**  **1 with the proposed standard levels in this NOPR 2 are reflective of the most recent test**  **3 procedure. So, of course, we are still in the 4 process of finalizing the final rule, so we**  **5 are processing the comments that were 6 submitted on that test procedure SNOPR, but**  **7 the FER values okay. 8 DR. JAKOBS: Is the denominator a**  **9 constant? 10 MR. ROY: The denominator is a**  **11 constant, which is consistent with what was 12 proposed in the test procedure Supplemental**  **13 Notice of Proposed Rulemaking. 14 MR. SACHS: This is Harvey Sachs.**  **15 Sam, that flew by a little bit 16 higher altitude than I could shoot at.**  **17 MR. JASINSKI: Okay. 18 MR. SACHS: Could you repeat,**  **19 please, slowly for us old folks 20 MR. JASINSKI: Sure.**  **21 MR. SACHS: the difference 22 between what is published and how you actually** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 40**  **1** 

### tested it, and maybe help me understand a

**2** 

### little how come?

**3** 

### MR. JASINSKI: Sure. I'll go back

**4** 

### a little bit further because I think I was

**5** 

### sort of responding directly to Aniruddh, who

**6** 

### I know is

**7** 

### MR. SACHS: He's smarter than I **8** 

### am. **9** 

### MR. JASINSKI: up-to-date on all

**10** 

### of these things. So, I'll give a little bit

**11** 

### of history.

**12** 

### So, in the test procedure

**13** 

### rulemaking, we published a NOPR, I guess it

**14** 

### was summer of last year. In that, the

**15** 

### proposed metric fan energy rating included a

**16** 

### factor in the denominator that essentially

**17** 

### increased that normalization factor based on

**18** 

### the number of heating hours.

**19** 

### So, in multi-stage units that have

**20** 

### multiple heating stages, DOE expects that the

**21** 

### heating hours will be greater compared to a

**22** 

### very similar service stage unit because it

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 41**  **1 will operate for some period of time at a 2 lower heating output.**  **3 To reflect that, in the test 4 procedure NOPR, there was a factor called the**  **5 heating capacity ratio that was used to adjust 6 the annual average, estimated annual average**  **7 heating operating hours, which are 830 hours 8 for single-stage units. But, in order to**  **9 adjust that to reflect that a multi-stage unit 10 would operate longer, we divided that number**  **11 by that heating capacity ratio. DOE divided 12 that 830 both in the numerator of the fan**  **13 energy rating and in the denominator. 14 In between the test procedure NOPR**  **15 and the test procedure Supplemental Notice of 16 Proposed Rulemaking, DOE analyzed its data and**  **17 found that this overestimated the energy 18 savings of some of its technology options, of**  **19 multi-staging, in particular. In order to 20 have a metric that more accurately reflects**  **21 the savings that multi-staging can achieve, in 22 the SNOPR, the test procedure SNOPR, DOE** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 42**  **1 eliminated that heating capacity ratio from 2 the denominator. So, now the denominator is**  **3 constant, which makes the fan energy rating 4 proportional to the estimated annual energy**  **5 consumption. 6 Now the question that, the**  **7 statement that Aniruddh made was that the 8 results that you are seeing today in the**  **9 Notice of Proposed Rulemaking for the standard 10 are based on that old NOPR, test procedure**  **11 NOPR metric where the heating capacity ratio 12 was both in the numerator and denominator of**  **13 the fan energy rating, which would be 14 inconsistent with the most recent test**  **15 procedure notice, which eliminated the heating 16 capacity ratio from the denominator.**  **17 I am just here to clarify that 18 that is not the case. The results in the**  **19 standard Notice of Proposed Rulemaking are 20 based on the updated fan energy rating, which**  **21 has eliminated HCR from the denominator in 22 order to make it proportional to estimated** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 43**  **1** 

### annual energy consumption and to make the

**2** 

### estimated reduction in FER more accurate for

**3** 

### multi-staging as a technology option.

**4** 

### MODERATOR BROOKMAN: Diane?

**5** 

### DR. JAKOBS: I submitted data for

**6** 

### 18 furnaces.

**7** 

### MODERATOR BROOKMAN: Microphone.

**8** 

### DR. JAKOBS: I submitted data for

**9** 

### 18 furnaces, and the original equation, which

**10** 

### was a weighted average, that aligned with my

**11** 

### actual data. The new one does not.

**12** 

### And actually, for all the people

**13** 

### interested in the details, I am going to have

**14** 

### to have a trial standard level of five in

**15** 

### order to build anything. So, an ECM motor

**16** 

### with multi-stages.

**17** 

### So, what you were describing and

**18** 

### it is only like one sentence in this 700 pages

**19** 

### where it was like it didn't match up we

**20** 

### changed it. It was like one sentence.

**21** 

### But that was not my experience

**22** 

### with the data that I have.

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 44**  

### 1 MODERATOR BROOKMAN: Aniruddh? **2 MR. ROY: Aniruddh Roy with AHRI. 3 So, Sam, if I understood you**  **4 correctly, the equation, the FER equation, 5 still in the denominator includes CH plus 830**  **6 plus CCH times Qmax, right?**

**7 MR. JASINSKI: Yes. 8 MR. ROY: Okay. So, in the**  **9 comments we submitted on May 2nd we 10 recommended changes to that denominator. And**  **11 so, we would like to see the final test 12 procedure reflect those changes, for the**  **13 reasons stated in that letter. 14 Obviously, the analysis that has**  **15 been done for this NOPR includes the FER 16 equation which the industry does not agree**  **17 with. 18 MODERATOR BROOKMAN: Jim?**  **19 MR. VERSHAW: Jim VerShaw. 20 Are we going to get into the**  **21 details of this FER equation later? 22 Otherwise, I want to ask a question.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 45**  **1 MR. JASINSKI: Yes. There will be 2 a few slides on the FER equation.**  **3 MODERATOR BROOKMAN: Several 4 slides on FER.**  **5 MR. VERSHAW: Because I would like 6 to see a real technical reason, other than**  **7 didn't like the results, when you changed it. 8 MODERATOR BROOKMAN: Yes. Let's**  **9 just wait until we get there, and then, we 10 will dive deep at that point. Okay?**  **11 Thanks, Sam. 12 I'm going to turn to Ron and this**  **13 description of the regulatory history. 14 MR. MAJETTE: At this point, as**  **15 far as the schedule is concerned, were there 16 any more questions?**  **17 (No response.) 18 Okay. We're good on that for**  **19 right now. Okay. 20 All right. The next slide here is**  **21 criteria for selecting standards levels. The 22 Energy Policy Act directs DOE to consider** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 46**  **1 seven factors when setting energy conservation 2 standards. Without going into a lot of**  **3 detail, but it lets us know how we formulate 4 analysis based upon the factor presented due** 

**5 to EPCA. 6 As stated before, we are in the**  **7 last phase of the rulemaking process. So, we 8 are planning to go final. We will make sure**  **9 that we will have the timing estimates down 10 for as far as the test procedure, to make sure**  **11 that you have the test procedure in hand, so 12 you can make your final comments.**  **13 At this stage, we are not planning 14 to extend the comment period at this point in**  **15 time. However, we will look at the results of 16 how this meeting goes and see if there is**  **17 something necessary for us to possibly extend 18 it, if possible. Right now, we are standing**  **19 firm on the 24th as the closing date for 20 comments.**  **21 Diane? 22 DR. JAKOBS: So, there were a** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 47**  **1 number of things about the test standard that 2 we commented on, and we haven't I don't**  **3 know. You know, I hope that you accepted our 4 arguments.**  **5 So, it is very reasonable to 6 assume that we have no specific test data to**  **7 whatever this final test procedure is going to 8 be. So, if the manufacturers were going to**  **9 supply test data, we would have to do it 10 between when we have the test procedure and**  **11 when we would have submit comments. So, that 12 is looking like when I am going to be at my**  **13 mom and dad's house in Chicago, you know. So, 14 yes, we need to keep this in mind.**  **15 Thank you. 16 MR. SMALL: They are interested,**  **17 aren't they? 18 DR. JAKOBS: Actually, my dad is,**  **19 but that's another story. 20 (Laughter.)**  **21 MODERATOR BROOKMAN: Yes, we take 22 your point, Diane.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 48**  **1 Dave? 2 MR. WINNINGHAM: This is Dave**  **3 Winningham with Allied Air, Lennox. 4 I would support Diane's position.**  **5 Getting this test procedure first of all, 6 I guess let's step back. From what we know of**  **7 the test procedure, there has been 8 considerable improvement from the initial**  **9 proposal. I think we can all agree with that, 10 and we very, very much appreciate it. I think**  **11 the outcome of that will be much less 12 burdensome to the manufacturers.**  **13 But getting the final test 14 procedure in enough time, so the manufacturers**  **15 can do the proper analysis to provide the 16 data, so that this rulemaking really makes**  **17 sense is critical. 18 But, with the compressed timeframe**  **19 that we are looking at, and also the time of 20 year, as Diane alluded to, I think looking at**  **21 an extension is appropriate. 22 MODERATOR BROOKMAN: Okay. Thank** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 49**  **1 you. 2 Aniruddh?**  **3 MR. ROY: I would just like 4 Aniruddh Roy, AHRI I would like to just**  **5 point you to page 64079 of The Federal 6 Register Notice under "Methodology and**  **7 Discussion," it is section 4. 8 There DOE in its October notice**  **9 stated that the LCC payback periods, shipment 10 forecasts, national energy savings, NPV,**  **11 spreadsheets, as well as the GRIM model 12 spreadsheet, would be available online on the**  **13 link provided on that page. I think those 14 documents were uploaded recently. And even**  **15 the GRIM, as of yesterday, was not available. 16 So, for the industry at least, you**  **17 know, it was very difficult for us to know 18 exactly what inputs were used because even the**  **19 engineering analysis TSD, Chapter 5, doesn't 20 really get into the details, the specific**  **21 details on the inputs. It talks very 22 generally, but there are not many tables or,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 50**  **1 you know, figures inside Chapter 5 compared to 2 what we could actually see in the spreadsheet.**  **3 So, I think that is another reason 4 why we would like to see an extension in the**  **5 comment period deadline, because, you know, it 6 was stated in the October notice, but the**  **7 industry didn't have until, let's say, last 8 week or even earlier this week to even access**  **9 those spreadsheets. 10 MR. MAJETTE: Okay. Aniruddh,**  **11 right? That's the correct pronunciation? 12 Okay.**  **13 One of the things I have to admit, 14 you folks end up being the eyes and ears for**  **15 the Department because we are uploading lots 16 of documents, especially into regulations that**  **17 go. And a lot of times we may not see the 18 issue as far as if something is readable or**  **19 the link is working properly. 20 So, again, we appreciate any of**  **21 the emails that come in that tell us that 22 there is something not operating properly.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 51**  **1 And as soon as we get that information, we try 2 to correct it as fast as possible.**  **3 So, the GRIM document probably 4 came up at like 5:32 p.m. yesterday. So, if**  **5 you haven't seen it, that's your fault now, 6 because it is on the site.**  **7 (Laughter.) 8 Okay. Well, just to make light of**  **9 it, we didn't realize that that link didn't 10 operate correctly.**  **11 Again, the Department has its 12 deadlines. And again, if there's pushback**  **13 that needs to be done, then the reason for 14 this public meeting is to understand the**  **15 rationale for that, and then, we can go back 16 to DOE brass to ask for a time extension, if**  **17 it is necessary. 18 Again, let's continue to listen to**  **19 the arguments for today, and realizing that 20 the test procedure is a large piece of it.**  **21 Also, realizing that there are some of the 22 links that didn't function properly, when you** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 52**  **1 couldn't get information; that those things 2 were repaired as fast as we found out about**  **3 it. 4 So, we know that those are**  **5 factors, and I would like to keep moving on, 6 knowing that that is an issue that we need to**  **7 look at. 8 MODERATOR BROOKMAN: Andrew?**  **9 MR. DELASKI: Yes, I would just 10 say that I am sympathetic to the plights**  **11 described, that you know it is hard to 12 evaluate until you see the final test method,**  **13 and that you don't really know how much more 14 time you need until you see the final test**  **15 method because you don't know how different it 16 is, right? It may be that it is the proposed**  **17 rule, in which case you may be able to 18 evaluate it pretty quickly. It may be that**  **19 they kept all the AHRI's recommendations in 20 total, and that's also pretty easy to**  **21 evaluate. It is the in-between places that 22 may be harder to evaluate.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 53**  **1 So, it may be that not much more 2 time is needed. It may be that a lot more**  **3 time is needed. And that you don't know until 4 the rule is published.**  **5 So, I guess I would encourage the 6 Department to publish the test method final**  **7 rule as soon as humanly possible to enable 8 people to evaluate how much time they need.**  **9 The second point I would make is 10 that one thing that I don't I have thumbed**  **11 through here. There is another timing 12 question or staging issue that is not**  **13 addressed here, which is the effective date or 14 the compliance date of the rule.**  **15 The Department in the NOPR 16 proposes a compliance date which is five years**  **17 from the publication of the final rule, I 18 believe. And, you know, it just suggestsáthat**  **19 that is sort of the norm for this product 20 category.**  **21 And I suppose what has been done 22 there is to look at furnaces, and since** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 54**  **1 furnaces had a five-year lead time at one 2 point, I would suggest to the Department that**  **3 there is a lot of latitude, and the Department 4 seems to acknowledge that it has a lot of**  **5 latitude on effective date for this rule. It 6 is really a question that is within the**  **7 Department's discretion, that three years is 8 a pretty typical lead time that we see in the**  **9 appliance standards world, and that the 10 Department should consider three years as a**  **11 potential lead time for this standard. 12 MODERATOR BROOKMAN: Diane?**  **13 DR. JAKOBS: Actually, for 14 furnaces we have had eight. So, five is**  **15 MR. DELASKI: I think your number 16 took effect.**  **17 (Laughter.) 18 For furnaces, it was five for the**  **19 first, I think, and eight for the second. So, 20 I mean, there are some standards that have**  **21 been as short as nine months, but not for 22 furnaces, I mind you, but I think it was a** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 55**  **1 different category altogether. 2 My point is that there is a lot of**  **3 latitude and it is one of the points that DOE 4 has to consider in meeting its statutory**  **5 obligations, to maximize energy savings and 6 meet the criteria that you all described. It**  **7 is not a set term in this rulemaking. It is 8 one that is part of the Department's decision**  **9 making process. 10 MR. MAJETTE: Okay. Thanks a lot**  **11 for that. 12 At this point in time, I want to**  **13 go ahead and move on. And I guess we want to 14 go into the first large section, which would**  **15 be market assessment. 16 MODERATOR BROOKMAN: And we are**  **17 going to hear from Kevin Foley. 18 MR. MAJETTE: Yes.**  **19 MR. FOLEY: Is there any way you 20 can see it up here? Is there a way I can see**  **21 my presentation up here? 22 (Pause.)** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 56**  **1 Okay. So, I'll be going over the 2 market assessment first. And the purpose of**  **3 the market assessment is to characterize the 4 market for the considered products.**  **5 So, DOE proposes to define a 6 furnace fan as any electrically-powered device**  **7 using residential ventilation and air 8 conditioning products for the purpose of**  **9 circulating air through ductwork. DOE uses 10 the furnace fan as shorthand for any of these**  **11 products. 12 It is important to note that DOE**  **13 recognizes that a significant number of 14 products may be encompassed by its**  **15 interpretation of the statutory language and 16 its corresponding definition.**  **17 So, this figure shows typical HVAC 18 system combinations, and each box represents**  **19 an HVAC component, and each chain represents 20 an HVAC system configuration.**  **21 And note the boxes outlined in red 22 represent space-conditioning products that** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 57**  **1 include a furnace fan. 2 DR. JAKOBS: Could I ask a**  **3 question to clarify? 4 MODERATOR BROOKMAN: Diane,**  **5 please. 6 DR. JAKOBS: Thank you.**  **7 So, we built something called an 8 air handler, and it is matched with a heat**  **9 pump. And it has stripping heat in it for 10 backup. And when Sam came to visit, we asked**  **11 to him clarify, and that it was not covered by 12 this. And that's my understanding. Could you**  **13 just say I'm right or I'm wrong or what you 14 think?**  **15 MR. FOLEY: Right, yes. Yes, 16 you're right. I think that actually might be**  **17 the next slide. 18 So, this next slide shows the**  **19 proposed scope of coverage in this current 20 NOPR, and it includes 63 percent of the**  **21 estimated sales of the space conditioning 22 products. That includes furnace fans.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 58**  **1 So, yes, the boxes outlined in 2 white show the products that are considered in**  **3 this rulemaking, and the boxes outlined in 4 black are the products not concerned in this**  **5 rulemaking. 6 MODERATOR BROOKMAN: Diane?**  **7 DR. JAKOBS: So, when you say "not 8 in this rulemaking," does that mean in a**  **9 future rulemaking it could be or it's 10 MR. FOLEY: So, yes, yes. That's**  **11 correct. 12 DR. JAKOBS: Okay. So, this is**  **13 related to the test procedure. And is it 14 possible that the test procedure might be**  **15 applied to an air handler at some time 16 someday? Because we're not really sure that**  **17 it applies that well. 18 MODERATOR BROOKMAN: I'm looking**  **19 over to Sam, since he is our test procedure 20 guy.**  **21 DR. JAKOBS: Okay. He knows what 22 I'm talking about.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 59**  **1 MODERATOR BROOKMAN: So, go ahead. 2 MR. JASINSKI: Sam Jasinski,**  **3 Navigant Consulting. 4 So, in terms of the scope of**  **5 applicability of the test procedure, 6 obviously, the test procedure is being**  **7 developed simultaneously and with this 8 particular energy conservation standard in**  **9 mind. 10 So, at this time the scope of**  **11 applicability of the test procedure is only 12 intended for and, you know, your question**  **13 about whether or not it will ever be applied 14 to air handlers, I can't say yes or no. But,**  **15 without an energy conservation standard for 16 the products there, DOE will not require that**  **17 that test procedure be applied. So, there 18 would have to be a future energy conservation**  **19 standard developed for those products not 20 considered in this rulemaking, and then, it**  **21 would be the test procedure being developed 22 now could be considered for that, but it would** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 60**  **1 not be required until there is a corresponding 2 energy conservation standard for those**  **3 products. And even then, it is not guaranteed 4 that that test procedure would be used.**  **5 MODERATOR BROOKMAN: We have an 6 additional question.**  **7 Please say your name. 8 MR. WAGNER: Greg Wagner.**  **9 So, I get clarity on this, the air 10 handler, if it has electric in it, it would be**  **11 covered under this standard? Does it have to 12 have the electric in it or provisions for it?**  **13 How is that divided? 14 MR. JASINSKI: So, the proposed**  **15 definition tries to draw a very distinctive 16 line between a heat pump that has electric**  **17 resistance heating in it and maybe an electric 18 furnace. And that distinction is based on**  **19 whichever of those two heat sources is the 20 primary source of heat for the residence.**  **21 So, DOE expects that in a heat 22 pump that might have the electric resistance** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 61**  **1 heating, the electrical resistance heating is 2 intended for extremely cold days when the**  **3 capacity of the heat pump in which they are 4 installed isn't sufficient. So, in that case,**  **5 the primary source of heat would be that heat 6 pump. And therefore, it would not be**  **7 considered an electric furnace or a modular 8 blower that could be converted to an electric**  **9 furnace, and would not be considered. 10 So, the products considered here**  **11 are electric furnaces are those where the 12 electric resistance heating are the primary**  **13 source of heating for the residence. 14 MR. WAGNER: So, it is already**  **15 installed, you're saying? Because these air 16 handlers aren't they're not heat pumps.**  **17 The heat pump is the outdoor part of the 18 equation.**  **19 MR. JASINSKI: Okay. Well, in 20 that case, they would be defined as electric**  **21 furnaces, and they would be considered. 22 MR. WAGNER: So, it would be an** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 62**  **1 electric furnace if it has electric installed? 2 MR. JASINSKI: Yes.**  **3 MR. WAGNER: Not necessarily just 4 as an option to add that later?**  **5 MR. JASINSKI: If the electric is 6 not installed, it would be classified as a**  **7 modular blower, and those are also considered 8 in this rulemaking.**  **9 MR. WAGNER: I'm talking about a 10 condensing coil as welláas a blower.**  **11 MR. JASINSKI: Okay. 12 MR. WAGNER: Which could have**  **13 provisions oftentimes to have electric heat in 14 it.**  **15 According to this slide, I was 16 thinking that it was excluded in that big**  **17 purple section. 18 MR. JASINSKI: Okay. It would**  **19 have to be installed in that case. And when 20 you are pairing that air handler with an**  **21 outdoor unit, that outdoor unit typically 22 provides heat, correct? It would be** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 63**  **1 MR. WAGNER: Not necessarily. 2 MR. JASINSKI: Not necessarily?**  **3 MR. WAGNER: Some are 4 air-conditioning-only; some are for heat pump** 

**5 use. 6 MR. JASINSKI: Okay.**  **7 MR. WAGNER: So, a question is, 8 which bucket is that in, the purple one or the**  **9 other bucket? 10 MR. JASINSKI: If it is an air**  **11 handler that has electric resistance heating 12 installed and is the primary source of heating**  **13 for the residence, it is considered. It would 14 be defined as an electric furnace and would be**  **15 considered in this rulemaking. 16 MR. WAGNER: Okay. But anything**  **17 without that installed wouldn't? 18 MR. JASINSKI: Right.**  **19 MODERATOR BROOKMAN: Terry? And 20 then, to Don.**  **21 MR. SMALL: Terry Small, Mortex. 22 Sam, when you say "installed," do** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 64**  **1 you mean factory installed or field installed? 2 Because most manufacturers offer the strip**  **3 heat, even if it is supplementary in a kit 4 form.**  **5 MR. JASINSKI: Factory installed. 6 MR. SMALL: I think that is just**  **7 misguided definitely, because I don't think 8 very many people you know, when you think**  **9 about it, I would want, if I am in Alaska and 10 I have a heat pump, my supplemental heat, I**  **11 may want a bigger strip heat capacity in that 12 situation than if I'm in Key West, Florida.**  **13 MODERATOR BROOKMAN: Charlie 14 Stephens?**  **15 MR. STEPHENS: I think I would 16 like to point out, from lots and lots of years**  **17 out in the field watching all this be done, 18 that whether or not a heat pump outdoor unit**  **19 is the kind of resource of heat or the 20 electric furnace on the indoor with strip heat**  **21 is the primary source of heat for the 22 residence is actually determined by the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 65**  **1 contractor who installs it with or without an 2 outdoor unit.**  **3 So, this is not a factory thing. 4 These units show up set up for strip heat.**  **5 The strip heat is often actually changed or 6 installed by the contractor. You know, it is**  **7 sized for the heat pump installation, you 8 know, 15 or 20 kW, whatever it needs. And it**  **9 is either staged or it is not staged. But the 10 fact is it is the contractor who figures out**  **11 whether this is an electric forced-air furnace 12 or a heat pump system. So, I don't know how**  **13 you are going to fix that, but it doesn't 14 happen at the factory.**  **15 MODERATOR BROOKMAN: Harvey Sachs? 16 MR. SACHS: Sam, following up on**  **17 Charlie's comments, which immediately came to 18 mind as this discussion came up, it seems to**  **19 me that we have converted an engineering 20 discussion to theological argument. And this**  **21 is nuts. 22 The basic air, to me, the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 66**  **1 legislation was not designed or intended, as 2 I recall the conversations, to exclude the**  **3 heat pump. And if the heat pump were included 4 in this, then these discussions about whether**  **5 the wiring for the strip was put in at the 6 factory was left to the contractor to mangle,**  **7 and I'm not referring to the ACCA members, but 8 those of the unwatched who are not part of**  **9 Charlie's organization or the equivalent. 10 But this discussion has shown that**  **11 the underlying decision was, in my opinion, 12 ill-considered and flat-out wrong.**  **13 MODERATOR BROOKMAN: Steven 14 Rosenstock?**  **15 Don, go ahead. Don? 16 MR. BRUNDAGE: I'm more confused**  **17 now than before. 18 So, what you are saying, based on**  **19 your current definition, is that if it is a 20 standard split system, gas furnace with**  **21 central air, it would be covered under this 22 rulemaking. If it is a heat pump, defining** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 67**  **1 the heat pump in some way based on the amount 2 of strip versus capacity of the heat pump**  **3 unit, if it is a true heat pump unit, it would 4 not be included in this rulemaking? Is that** 

**5 correct? 6 MR. JASINSKI: Correct.**  **7 MR. SACHS: But, as a follow-on to 8 thatá**  **9 MODERATOR BROOKMAN: Go head, 10 Harvey. Go ahead, Harvey.**  **11 MR. SACHS: This is Harvey Sachs. 12 If, instead of that evaporator**  **13 condenser indoor coil, I had an air-over water 14 coil, a hydronic coil, then the system would**  **15 be considered a modular boiler and included?**

**16 No? 17 MR. JASINSKI: Hydronic air**  **18 handlers are not considered in this 19 rulemaking.**  **20 MODERATOR BROOKMAN: Okay. Thank 21 you, Sam.**  **22 MR. SACHS: So, we are purists.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 68**  **1 And unless there is fossil fuel combusted, it 2 is not a furnace fan, even though it is**  **3 designed to move heated air through ductwork? 4 MR. JASINSKI: Correct. But,**  **5 again 6 MR. SACHS: Thanks for explaining**  **7 that. 8 MR. JASINSKI: Sure.**  **9 MODERATOR BROOKMAN: Sam 10 MR. SACHS: All of the electric**  **11 furnace, too. I'm sorry, I as confused as 12 Don.**  **13 MR. JASINSKI: Electric furnaces 14 and modular blowers also.**  **15 MODERATOR BROOKMAN: Sam, do you 16 want to clarify or did you just clarify?**  **17 MR. JASINSKI: Yes. 18 MODERATOR BROOKMAN: Okay.**  **19 Yes, Steve Rosenstock? 20 MR. ROSENSTOCK: Steve Rosenstock,**  **21 EEI. 22 To follow-on, I agree with the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 69**  **1 assessment because, especially when you're 2 talking about a split system, central air**  **3 conditioner and heat pumps, since everyone 4 knows what they are, that fan energy has been**  **5 covered under the CO or EER or HSPF ratings. 6 Manufacturers have made decisions in terms of**  **7 how they are going to meet the 8.2 HSPF, how 8 they are going to meet the 14 SEER versus the**  **9 10 SEER just a few years ago. 10 The fan energy is part of that**  **11 equation. The manufacturer have already 12 decided, made decisions in terms of improving**  **13 the energy efficiency of those systems, 14 including the fan energy efficiency already**  **15 back in the early nineties, in 2006, and 16 upcoming in 2015. So, yes, I do agree with**  **17 this assessment, and there should be 18 exclusions because the manufacturer has**  **19 already had to do improvements in the 20 efficiency.**  **21 Thank you. 22 MODERATOR BROOKMAN: Don Brundage?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 70**  **1 MR. BRUNDAGE: And while the 2 definition is kind of convoluted, while I**  **3 might not agree with all, I agree with the 4 concept of it because the energy is already**  **5 covered on a heat pump under the SEER and HSPF 6 rating.**  **7 And the statute you are quoting 8 says the Secretary will consider prescribed**  **9 energy standards for electricity used for 10 purposes of circulating air through ductwork.**  **11 But if it is already covered under another 12 efficiency standard, I don't take that as a**  **13 mandate that they have to regulate that if it 14 is already regulated.**  **15 MR. SACHS: This is Harvey Sachs. 16 And I'm sorry, but I was a little**  **17 bit involved in that process. And I think 18 that's and I'm speaking to my good friends**  **19 and colleagues, both Steve and Don, on this 20 I think this is a moot point.**  **21 The legislation says that we will 22 regulate furnace fans; that they are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 71**  **1 implicitly covered was not something that 2 motivated Congress. DOE has a job to do, and**  **3 I don't think that doing this aspect of the 4 theology is going to help us. End of rant.**  **5 MODERATOR BROOKMAN: Final 6 comments on scheduled coverage? This is**  **7 important. Let's get it out here right now. 8 Any additional and final comments before we**  **9 move on? 10 (No response.)**  **11 Nothing more? Oh, Diane? 12 DR. JAKOBS: I just brought it**  **13 upá 14 MODERATOR BROOKMAN: I know.**  **15 (Laughter.) 16 DR. JAKOBS: But, I mean, it was**  **17 clear from Sam's explanation to me; it was 18 like two summers ago, but we rate a heat pump**  **19 system and we match them, and we publish 20 ratings. But we have no control if a**  **21 distributor buys them and matches up pieces we 22 didn't intend to go together, you know.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 72**  **1 So, we are very concerned about 2 what we needed to test, how we needed to test.**  **3 We actually have the strip heat is a module. 4 so, are we going to have to match up every air**  **5 handler fan with every set of strip, resistant 6 heat strips?**  **7 So, it is important to us, so we 8 know what to test and how to test it, how to**  **9 label it. You know, we need to nail this 10 down. And I'm quite happy to go with what Sam**  **11 said. 12 MODERATOR BROOKMAN: Okay.**  **13 John Cymbalsky? 14 MR. CYMBALSKY: This is John**  **15 Cymbalsky, DOE. 16 So, we have AHRI and we have HR**  **17 members here, and I know you certify these 18 products, combinations, to AHRI. So, maybe**  **19 you can explain to the room how you go about 20 doing that now.**  **21 MR. VERSHAW: So, we rate them 22 very well, of course.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 73**  **1 (Laughter.) 2 And we follow the Department's**  **3 rules. 4 (Laughter.)**  **5 MR. CYMBALSKY: Right. So, the 6 specific example Diane provided was these**  **7 strip heat things. And I guess I'm curious 8 MR. VERSHAW: The electric heat**  **9 pump comes into the HSPF calculation when you 10 test at 17 and when you do defrost testing.**  **11 Because you test it at 47. You test at 35. 12 You test at 17. And the unit will defrost in**  **13 35. And they know how much strip heat is in 14 there and how much you can't make up, based on**  **15 the DOE procedures, and the watts for the 16 blower is measured throughout all the**  **17 different tests. 18 And on the cooling side, again,**  **19 you test it at 95 and 82 and 67, and you 20 measure the blower watts, each one of those**  **21 conditions. 22 I think the issue here, just to be** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 74**  **1 blunt, is that there are some people who don't 2 think the static pressures we run those at is**  **3 appropriate. And as a result, now we are 4 looking at higher static pressures with the**  **5 fan efficiency rule to make up for that fact 6 that we haven't been able to change the other**  **7 rules to get to a higher static pressure. 8 So, now we are kind of saying,**  **9 okay, you've got to design for HSPF and SEER 10 based on these rules, but this indoor product**  **11 has to also operate way up here, which most of 12 your furnaces aren't rated that high. And we**  **13 have got to measure the fan efficiency up at 14 that level as well. And that is where we get**  **15 all the confluence of all these different 16 rules getting on top of everything.**  **17 And you couple that with there is 18 going to be a change in the furnace efficiency**  **19 rule sometime in the future, and it is going 20 to fall right on top of the fan efficiency**  **21 thing. How do we run all the tests and get it 22 all figured out in the right timeframe, so** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 75**  

### 1 that we still have products to sell to **2 customers? 3 MODERATOR BROOKMAN: Hang on one**  **4 second. 5 I would like to hear any other**  **6 manufacturer who would like to add onto Jim's 7 comments or elucidate. Any additional**  **8 comments in that stream and content? 9 Yes, please? Your name?**  **10 MR. CLARK: Gary Clark from 11 Goodman.**  **12 Just the one thing that I find 13 confusing about this, where this started on**  **14 the air handlers versus electric furnace, you 15 know, as a manufacturer, what it sounds like**  **16 is that people think that this air handler is 17 different if it is matched with an air**  **18 conditioner versus being matched with a heat 19 pump. We manufacture one product.**  **20 And as Charlie mentioned, in the 21 field the contractor decides whether the**  **22 outdoor unit is an air conditioner or whether**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 76**  **1 the outdoor unit is a heat pump, but it is the 2 same air handler.**  **3 And so, as Jim has talked about 4 and Diane, we already do a lot of electric fan**  **5 testing in our heat pump testing to make sure 6 that it is you know, of course, all the DOE**  **7 regulations, and it is safe. 8 So, hopefully, just trying to**  **9 clarify. This is exact same product, and 10 depending on what it gets matched with defines**  **11 whether it is an electric furnace or a heat 12 pump air handler.**  **13 So, when you start trying to carve 14 that up and say it's included or not included,**  **15 we feel, of course, because the preponderance 16 of cases, it is used as a heat pump air**  **17 handler, that it is already covered by 18 legislation.**  **19 MODERATOR BROOKMAN: Harvey Sachs. 20 Oh, pardon me. Yes, go ahead, Terry.**  **21 MR. SMALL: Well, I would like to 22 add to what Gary just said, that because it is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 77**  **1 sort of a contractor decision, most of these 2 units will go out with zero kW. I know as an**  **3 independent coil manufacturer and blower coil 4 manufacturer, you know, we leave that**  **5 decision, basically, to the contractor as to 6 how much strip heat he is putting into it.**  **7 What I gather from Sam, that 8 basically if it goes out with zero kW strip**  **9 heat, and it may have a coil in it, is it 10 still going to be considered a modular blower?**  **11 MODERATOR BROOKMAN: Sam? 12 MR. JASINSKI: Sam Jasinski,**  **13 Navigant Consulting. 14 No. If there is a cooling coil in**  **15 it, I believe that the proposed definition of 16 modular blower excludes anything that has**  **17 cooling or heating included. 18 So, essentially, a modular blower**  **19 is a box with a fan in it. That's essentially 20 the definition of modular blower. If you add**  **21 electric resistance heating to it, and that is 22 the primary source of heat, that becomes an** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 78**  **1 electric furnace. If you add a coil that 2 provides heating or cooling to that, it will**  **3 not be considered. That would be considered 4 a blower coil unit and would be in that big**  **5 slice of the darked-out pie. 6 MR. SMALL: Sam, I think where you**  **7 are getting confused, or somebody is getting 8 confused, is I have never heard of modular**  **9 strip heat. I have heard of a modular blower 10 going with a modular coil, a blower going with**  **11 a coil. It is for convenience. It is in two 12 pieces. Maybe it is easier to get into the**  **13 attic, or whatever. 14 I really believe that modular**  **15 blowers should be excluded from this. The 16 chances they are going to end up in a**  **17 standalone electric furnace are very slim. 18 If anybody has some comments about**  **19 that? Modular blower, modular coil; I have 20 never heard of a modular heat. So, modular**  **21 blower, modular heat, it is modular coil, 22 modular blower in a cooling or a heat pump** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 79**  **1 situation. 2 I think you should exclude modular**  **3 blowers from this rulemaking. 4 MODERATOR BROOKMAN: I thought if**  **5 we discussed this for a while, we might 6 detangle this. But it looks as though we**  **7 might need to just rely on the written 8 comments, the detailed written comments that**  **9 come in from everyone. 10 I will entertain a few comments**  **11 before we move on. 12 Harvey Sachs?**  **13 MR. SACHS: Harvey Sachs, ACEEE. 14 I just want to try to amplify a**  **15 little bit of the history of the issue that 16 Jim VerShaw has raised of having to rate at**  **17 low static for the air conditioner and high 18 static for the furnace fan.**  **19 This unpleasant result came out 20 of, among other things, the discussions that**  **21 led to the consensus agreement on regional 22 standards for air conditioners, furnaces, and** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 80**  **1 heat pumps, when the environmental advocates 2 came in with a wishlist that included changing**  **3 external static for the air conditioners. 4 And the manufacturers responded**  **5 that that would simply be a linear translation 6 and degradation of SEER across all products,**  **7 and therefore, it was not worth doing. And 8 that is the reason we wound up with this**  **9 effort to get the furnace fans rated under 10 conditions that represent field use.**  **11 And Charlie Stephens and lots of 12 other people, John Proctor and lots of others**  **13 have contributed to the understanding that 14 field installations of ductwork are typically**  **15 at least a half-inch of external static. They 16 are far beyond double what the naive**  **17 assumptions were when the test procedure was 18 originally set up.**  **19 So, I think we would certainly be 20 open eventually to revisiting why we have**  **21 wound up in this odd situation, but I am not 22 sure what we can do about it now.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 81**  **1 MODERATOR BROOKMAN: Thank you. 2 We're about to move on here.**  **3 Final comments perhaps briefly. 4 Andrew?**  **5 MR. DELASKI: A question for the 6 manufacturers, which is, to what extent, as**  **7 you are preparing for the it may not be 8 answerable now, but as you are preparing for**  **9 the 2015 standards for air conditioners and 10 heat pumps, to what extent are products that**  **11 meet those levels using BPMs today? Is that 12 a pretty common configuration, uncommon, orá**  **13 MODERATOR BROOKMAN: Gary, would 14 you use the microphone?**  **15 MR. CLARK: I'm sorry. Gary Clark 16 from Goodman.**  **17 I think, for competitive reasons, 18 it is probably not something that should be**  **19 discussed. 20 MODERATOR BROOKMAN: Okay.**  **21 Jim? 22 MR. VERSHAW: Well, Jim VerShaw.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 82**  **1 You could probably look at today's 2 ratings because 13 is going to go away.**  **3 MR. DELASKI: Right, right. 4 MR. VERSHAW: And you could**  **5 determine from that what it is. My guess is 6 it is not going to be significantly different.** 

**7 MODERATOR BROOKMAN: Dave? 8 MR. WINNINGHAM: You know, just to**  **9 Gary's point, I think it is somewhat 10 application-specific. But, for the base 13**  **11 and 14 SEER single-stage equipment, you're 12 defined that it has to be coil-only rating.**  **13 So, that rating will be derived off of that 14 base default watt, as it is today.**  **15 How a person would design products 16 beyond that or package equipment, that isn't**  **17 relevant to that. It is subject to whatever 18 a manufacturer's strategy might be.**  **19 MODERATOR BROOKMAN: I want to 20 return to Kevin. Kevin, let's keep pressing**  **21 on with the content. 22 MR. FOLEY: All right. So, moving** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 83**  **1 on here, the eight proposed product classes 2 that represent most of the energy use**  **3 associated with furnace fans, it is important 4 to note that DOE differentiated between**  **5 product classes based on internal structure 6 and application-specific differences that**  **7 impact furnace fan energy consumption. 8 So, for example, the presence of**  **9 an additional heat exchanger and condensing 10 versus non-condensing falls into that internal**  **11 structure category, and then, weatherized 12 versus non-weatherized falls into that**  **13 application-specific design differences. 14 This table shows the product**  **15 classes that DOE could directly analyze and 16 the three product classes that DOE had to**  **17 extrapolate. Basically, DOE didn't have any 18 baseline data for those three extrapolated**  **19 product classes. So, we needed to use the 20 baseline extrapolated data from those**  **21 directly-analyzed product classes. 22 And DOE did find two additional** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 84**  **1 product classes with active models in the AHRI 2 appliance directory, and those are**  **3 manufactured home, weatherized, non-condensing 4 gas furnace fans, and manufactured home,**  **5 non-weatherized, non-condensing oil furnace 6 fans.**  **7 But due to a limited number of 8 basic models for these two product classes,**  **9 DOE did not have data to directly analyze and 10 consider establishing standards for these**  **11 product classes. So, at this point, DOE 12 proposes to reserve standards for those two**  **13 product classes until sufficient data becomes 14 available.**  **15 Yes? 16 MODERATOR BROOKMAN: Aniruddh?**  **17 MR. ROY: My name Roy, AHRI. 18 Kevin, how were you able to**  **19 establish market share based on your review of 20 the AHRI directory? Could you get into the**  **21 details of how you were able to do that? 22 MR. FOLEY: From this one?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 85**  **1 MR. ROY: Yes. Well, this one. 2 You know, on page 3 3 of the Market and**  **3 Technology Assessment chapter it does list 4 AHRI as a reference of how you derived the**  **5 market share. I'm just curious to learn or to 6 know how these numbers were attained.**  **7 Because if you go to the AHRI 8 directory, it doesn't give any market share.**  **9 It just lists units 10 MR. FOLEY: Right.**  **11 MR. ROY: and their 12 corresponding certificates. And if you go on**  **13 ahrinet.org, the historical data broken down 14 for furnaces is just broken down by gas and**  **15 oil furnaces, and it doesn't break it down 16 into any further categories.**  **17 MR. FOLEY: Right. I think we 18 used a variety of different sources for that,**  **19 and a lot of it actually came from the 20 shipment analysis that will be presented**  **21 later. So, it is not just from the AHRI 22 directory.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 86**  **1 MR. ROY: Okay. 2 MODERATOR BROOKMAN: Charlie?**  **3 MR. McCRUDDEN: Charlie McCrudden, 4 Air Conditioning Contractors of America.**  **5 So, this is, I guess, to slide 17. 6 So, these proposed product classes, they are**  **7 unique to this standard? 8 MR. FOLEY: Uh hum.**  **9 MR. McCRUDDEN: And they don't 10 overlap with the furnace standards?**  **11 MR. FOLEY: I think they overlap 12 with the furnace standards.**  **13 MR. McCRUDDEN: I'm sorry? 14 MR. FOLEY: I think they do**  **15 overlap with the furnace standards. 16 MR. McCRUDDEN: But what I am**  **17 saying, the product categories. So, in the 18 furnace standard, we have got non-weatherized,**  **19 weatherized, mobile home 20 MR. FOLEY: Right.**  **21 MR. McCRUDDEN: Is manufactured 22 home mobile home?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 87**  **1 MR. FOLEY: Yes. 2 MR. McCRUDDEN: Okay. Okay. All**  **3 right. 4 MR. CYMBALSKY: They map into**  **5 those furnace products. 6 MR. McCRUDDEN: They do? Okay.**  **7 MODERATOR BROOKMAN: John, do you 8 want to say that? I think say it on the**  **9 record. 10 MR. CYMBALSKY: "Overlap" is not**  **11 the word I would use. They map into the 12 product classes from furnaces.**  **13 MR. McCRUDDEN: Thank you. That 14 was it.**  **15 MODERATOR BROOKMAN: Okay. 16 Additional and final comments on the market**  **17 assessment slide? 18 Just to be clear, when you say**  **19 "reserved standards," what does that mean? 20 MR. FOLEY: We are reserving space**  **21 for them now, but we are not prescribing any 22 standards for them at this point.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 88**  **1 MODERATOR BROOKMAN: Okay. 2 Yes, Steve Rosenstock?**  **3 MR. ROSENSTOCK: Steve Rosenstock. 4 Yes, so there is no proposed**  **5 standard for these products under this 6 proposed rule?** 

**7 MR. FOLEY: Correct. 8 MR. ROSENSTOCK: Thank you.**  **9 MR. FOLEY: That is correct. 10 MODERATOR BROOKMAN: Okay. Thanks**  **11 for that clarification. 12 MR. CYMBALSKY: But they remain**  **13 covered. 14 MODERATOR BROOKMAN: Thank you,**  **15 John Cymbalsky. 16 It is now 10:30. Let's take a**  **17 break, which means we will resume at 10:45 18 here in this room. You must wear a badge**  **19 visible on your person above the waist in the 20 Department of Energy when you walk in the**  **21 halls. 22 So, the restrooms are at both ends** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 89**  **1 of the hall. There is a coffee shop on the 2 ground floor. Take the elevator down to the**  **3 ground floor. 4 Go quickly if you're going for**  **5 coffee. Sometimes they move slowly. 6 And some of this complicated**  **7 stuff, we have made a good start on it this 8 morning, and we are going to keep going.**  **9 We'll see you back here at 10:45. 10 (Whereupon, the foregoing matter**  **11 went off the record at 10:29 a.m. and went 12 back on the record at 10:46 a.m.)**  **13 MODERATOR BROOKMAN: Okay. Please 14 take your seats. Let's resume.**  **15 One procedural matter. The 16 check-in this morning didn't go as it**  **17 typically it does. Typically, when you check 18 in, the Department would like to receive a**  **19 business card from you. They compile a list 20 of the business cards, all the attendees. So,**  **21 if you haven't yet given a business card to 22 Brenda, please pull one out of your pocket and** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 90**  **1 give it to her, and then, the Department will 2 compile a list of all the attendees. Okay?**  **3 So, please do that. 4 Who hasn't handed in a business**  **5 card? Please pull one out. Okay. 6 Okay. So, then, we are going to**  **7 proceed where we left off with Kevin and 8 engineering analysis.**  **9 MR. FOLEY: All right. So, moving 10 on to the engineering analysis, all right, so**  **11 DOE considered six technology options in the 12 engineering analysis. They are listed here.**  **13 I am sure you guys have all seen this. 14 They range from more efficient**  **15 motors to multi-staging. 16 (Interruption by noise unrelated**  **17 to the meeting.) 18 MODERATOR BROOKMAN: We are**  **19 working on it. 20 (Laughter.)**  **21 I think you can still proceed, 22 Kevin. Keep going.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 91**  **1 MR. FOLEY: In the engineering 2 analysis, DOE evaluated technologies that**  **3 reduce fan energy consumption and characterize 4 the relationship between manufactured cost and**  **5 energy consumption reduction. 6 So, this just shows that the**  **7 output of the engineering analysis is this 8 cost-efficiency relationship. And that feeds**  **9 into downstream analyses. 10 Going back to FER, the proposed**  **11 rating metric, as you talked about, is the fan 12 energy rating, which is the estimated annual**  **13 electrical energy consumption normalized by 14 the airflow and the maximum airflow control**  **15 setting and the estimated annual operating 16 hours.**  **17 And it is written down below. 18 Again, it is the sum, in all the modes, the**  **19 operating hours times the power consumption, 20 divided by the sum of all the operating hours**  **21 in all the modes or sorry the operating 22 hours in all the modes times the maximum** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 92**  **1 airflow. 2 MODERATOR BROOKMAN: Jim, do you**  **3 want to comment here? 4 MR. VERSHAW: Yes. Jim VerShaw.**  **5 A couple of comments. Well, it's the next 6 slide.**  **7 But why did you choose to 8 normalize on Qmax when this is really a**  **9 heating product efficiency? Because what I 10 can do now is I can design all my furnaces**  **11 with 5 tons of cooling airflow and drive the 12 FERs down by using lower speeds on heating.**  **13 I have got product, I have got 14 six, right now, I have got six PSC furnaces in**  **15 three different cabinet widths with four 16 different cooling widths. And the 6-ton**  **17 furnaces, which use the most energy in 18 heating, have the lowest FERs.**  **19 MR. FOLEY: So, I will defer that**

**20 to Sam. 21 MR. JASINSKI: Sam Jasinski,**  **22 Navigant Consulting.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 93**  **1 So, to address the first part of 2 your question about why Qmax, and you stated**  **3 that why Qmax or cooling when this is a 4 heating product. The answer to that is that**  **5 this is a fan regulation, and it is not 6 specific to the heating function of the fans.**  **7 It is intended to cover all functions of the 8 fan, which include ventilation, cooling, and**  **9 heating. 10 And Qmax was picked specifically**  **11 because it is tied to the heating, most 12 closely tied to the heating and cooling**  **13 capacity or the cooling capacity of the 14 furnace which DOE finds is the driver in**  **15 designing most of these products. 16 I'm sorry, can you repeat the**  **17 second part of your question again? 18 MR. VERSHAW: Everybody keeps**  **19 asking me to repeat, and I can't remember what 20 I said.**  **21 (Laughter.) 22 What I never saw discussed, and** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 94**  **1 I'm going to change what I said a little bit, 2 what I never saw discussed was the effect of**  **3 heat-to-cool ratios in various cabinet widths. 4 And the wider cabinets with the same heating**  **5 as input with more cooling capacity end up 6 with lower FERs.**  **7 MR. JASINSKI: Oh, okay, I do 8 recall now. You said and correct me if I'm**  **9 wrong that you could just design your 10 furnace fans all at 5 tons to drive up Qmax**  **11 and drive down FER. 12 MR. VERSHAW: Uh hum.**  **13 MR. JASINSKI: I don't have 14 specific data in front of me. But knowing**  **15 what I know about the cubic relationship of 16 the power consumption of the fan and airflow,**  **17 even if you did that, as Qmax would increase 18 with the speed, the power consumption that is**  **19 included in the numerator would increase more 20 rapidly. So, I am not certain that that's**  **21 always accurate. 22 MR. VERSHAW: And you can look at** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 95**  **1 data separately, yes. 2 MR. JASINSKI: Sure. Like I said,**  **3 I don't have the data in front of me. So, I'm 4 not sure that that is always accurate, but it**  **5 is not as cut and dry as you can simply 6 increase Qmax to reduce FER overall.**  **7 And then, to address your final 8 comment about, what about the impacts of the**  **9 different cabinet sizes and different fan 10 sizes, as you will see later on, one of the**  **11 major changes between the preliminary analysis 12 and the NOPR is that DOE, instead of proposing**  **13 singular FER values as the standards, is now 14 proposing standard levels of FER as a function**  **15 of capacity, which includes and accounts for 16 those impacts of airflow path design in terms**  **17 of putting higher-capacity units in smaller or 18 larger envelopes.**  **19 MR. VERSHAW: Well, actually, but 20 you assumed the straight line instead of the**  **21 cubic equation, also. And the reason you 22 could do a straight line is the scatter on the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 96**  **1 data is so great because of the effect of 2 cabinet size and heat/cool ratios, that you**  **3 can draw a straight line through it. But, if 4 you really got into the details, technically,**  **5 it wouldn't be. 6 MODERATOR BROOKMAN: Don Brundage?**  **7 MR. BRUNDAGE: I don't pretend to 8 be an expert on all this, but, in reality,**  **9 this is a manufacturer standard on what is 10 shipped out the door on fans. And that fan**  **11 could be used in any number of different sizes 12 or capacity of units in real life.**  **13 And sticking the Qmax in there 14 just seems to me to be opportunities for**  **15 gaming. Because if you have something that 16 was rated as a fan for a 5-ton unit and you**  **17 use it on a 3-ton unit, I mean, it seems like 18 that fundamentally fan inefficiency ought to**  **19 be in terms of energy used to move "X" volume 20 of air, and not with the heating part thrown**  **21 in there. 22 Thank you.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 97**  **1 MODERATOR BROOKMAN: Charlie 2 Stephens?**  **3 MR. STEPHENS: Yes, I just wanted 4 to clarify. I know the test procedure isn't**  **5 final, and I don't mean to take us back there. 6 (Laughter.)**  **7 But tell me if I remember 8 correctly. The external static, in order to**  **9 simplify the test procedure, is set at Qmax. 10 So, you set those external static conditions**  **11 at Qmax, and then, external static floats for 12 the tests in the other fan flows, right?**  **13 MR. JASINSKI: Correct. 14 MR. STEPHENS: Okay. Just**  **15 checking on that. 16 MODERATOR BROOKMAN: Diane?**  **17 DR. JAKOBS: So, this is Diane 18 Jakobs.**  **19 MODERATOR BROOKMAN: Get close to 20 the microphone.**  **21 DR. JAKOBS: Sorry. 22 One of the things confusing about** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 98**  **1 it is the furnace fan isn't really a 2 component. It is not like my scarf and I can**  **3 wear it with six outfits, you know. We have 4 to combine them. They are in a specific unit.**  **5 We have safety standards we have to meet, and 6 we have the AFUE for furnace that we have to** 

**7 meet. 8 So, it is not really completely**  **9 independent of the application. There are a 10 number of other tests and requirements that we**  **11 have to meet in order to be categorized as a 12 furnace fan.**  **13 MODERATOR BROOKMAN: Okay. 14 Aniruddh?**  **15 MR. ROY: Aniruddh Roy, AHRI. 16 Sam, this is a question for you.**  **17 So, the slide, as a point of clarification, 18 that HH in the denominator is actually 830,**  **19 right? 20 MR. JASINSKI: Yes.**  **21 MR. ROY: Okay. So, it just needs 22 to be changed to** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 99**  **1 MR. JASINSKI: Yes. 2 Kevin, why don't you go to the**  **3 next slide? It shows a couple of different 4 variations of the FER equation.**  **5 MR. FOLEY: Yes, the webinar 6 closed, and we are trying it back running.**  **7 MR. JASINSKI: Okay. 8 MR. VERSHAW: All right. While**  **9 they are looking at that, the next slide does 10 show, if you have a multi-stage product, you**  **11 can use the ratio of low-to-high capacity on 12 heating multiplied times 830 and use the low**  **13 power for your furnace. But we normalize on 14 830.**  **15 And what I heard you say earlier 16 was that you didn't like the way it came out**  **17 when you did that, so you changed it. Now, if 18 you were an engineer in my organization, I**  **19 would send you back to your desk, "Come back 20 with a technical reason why you can normalize**  **21 it that way." And I was hoping you could give 22 us a better definition or explanation of that.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 100**  **1 MR. JASINSKI: Sure. Sam 2 Jasinski, Navigant Consulting.**  **3 So, it wasn't as simple as we 4 didn't like the way it looked. We have a**  **5 number of different sources of information 6 that we generated as many FER values as we**  **7 possibly could. 8 Those sources of information**  **9 include very limited amounts of public product 10 literature that actually include electrical**  **11 energy consumption, which would enable us to 12 calculate FER. So, some FER data from there.**  **13 The other are in confidential 14 comments submitted to DOE. So, we can't share**  **15 that specific data. 16 And then, another avenue for that**  **17 are the manufacturer interviews, which are 18 also under NDA. So, we can't divulge that raw**  **19 information, either. 20 So, when we say we didn't like the**  **21 way it looked, what we actually are doing is 22 comparing what we have heard from** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 101**  **1 manufacturers, what we have seen in 2 manufacturer data, public data and**  **3 confidential data, and comparing that to the 4 results of our analysis of all these FER**  **5 values. 6 And what we found is that, when**  **7 HCR is included in the denominator, it roughly 8 estimates the improvement, reduction in FER,**  **9 for multi-staging at 30 percent. What we 10 heard during manufacturer interviews is that**  **11 that should actually be closer to 10 or even 12 maybe 15 percent.**  **13 So, obviously, FER was 14 overestimating that, based on our comparison**  **15 of what we have heard, what we have seen in 16 manufacturer data, but more importantly is**  **17 that the metric is intended to be proportional 18 to our estimation of annual energy**  **19 consumption. 20 If you compare a multi-stage unit**  **21 to a single-stage unit using a different 22 denominator, which would happen if the HCR was** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 102**  **1 included in the denominator, that wouldn't 2 happen. And that is the mathematical reason**  **3 that FER, with HCR in the denominator, 4 overestimates that reduction.**  **5 Once DOE eliminated HCR from the 6 denominator and used a consistent denominator**  **7 to normalize when comparing single-stage FER 8 values to multi-stage FER values, that**  **9 reduction in FER and estimated annual energy 10 consumption went down to the levels that were**  **11 consistent with our comparisons and what we 12 heard from manufacturers.**  **13 MR. VERSHAW: Well, the problem we 14 are having is that we have got modulating**  **15 furnaces with ECM motors and 40 to 100 16 percent, and they don't make the new standard**  **17 across every model. They would if you had 18 done the other. If we had done it the way we**  **19 thought it was going in, until the NOPR came 20 out on the test procedure, and that falls in**  **21 line for condensing furnaces, non-condensing 22 furnaces, and package units, you are not even** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 103**  **1 close. 2 I mean, we have got**  **3 top-of-the-line way up there, and they are not 4 going to make it. And I am really concerned**  **5 that there has been a miss technically here, 6 when we can't use the top-of-the-line units**  **7 we have today aren't making the proposed 8 model. So, I think there are errors in the**  **9 analysis beyond the denominator/numerator 10 thing.**  **11 MR. JASINSKI: Thank you. 12 Obviously, the Department of**  **13 Energy will take that comment very seriously. 14 But, in order to help the Department of Energy**  **15 fix any of those potential errors, if you can 16 provide FER data for these products that are**  **17 not making the standard, we can include those 18 in our analyses and adjust them.**  **19 And beyond that, once we go 20 through the engineering analysis and we talk**  **21 about the methodology that we used to come up 22 with our equations for the standard levels, if** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 104**  **1 there are improvements to that methodology or 2 the numbers that are used in that methodology,**  **3 comments to that effect and what they should 4 be, and how it should be done, that would be**  **5 very helpful. 6 MODERATOR BROOKMAN: Let me just**  **7 make a note. Those of you that are joining us 8 via the web, our apologies. We have had**  **9 several technical problems with the web 10 broadcast access this morning.**  **11 I know a few of you have been 12 trying to get into this conversation.**  **13 Perhaps, Karen Meyers, I guess you have had 14 your hand raised for a while. Can you see if**  **15 this works? Karen, speak clearly. You're on. 16 Unmute your phone.**  **17 (No audible response.) 18 No success. Okay. Well, we will**  **19 return to Karen and anyone else that wants to 20 get in shortly.**  **21 Diane? 22 DR. JAKOBS: Well, I calculated it** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 105**  **1 the old way and the new way. And for our 2 modulating furnace, it increased the FER 20**  **3 percent and the two-stage 10 percent. 4 And so, the only ones that would**  **5 pass your proposed regulated values had an ECM 6 and multi-staging. So, that is where we ended**  **7 up. 8 MODERATOR BROOKMAN: Dave?**  **9 MR. WINNINGHAM: This is Dave with 10 Allied, Lennox.**  **11 We found similar results. 12 MODERATOR BROOKMAN: Thank you.**  **13 Yes? 14 MR. CLARK: And this is Gary Clark**  **15 from Goodman Manufacturing, just reiterating 16 kind of the same situation for our products**  **17 also. 18 MODERATOR BROOKMAN: Okay. Thank**  **19 you. That's good. That's very helpful. 20 Thank you.**  **21 And the data, as Sam suggested, 22 and your written comments, even more helpful.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 106**  **1 So, the Department will look forward to 2 receiving those data.**  **3 I'm ready to move on. 4 MR. FOLEY: Okay. So, I'm on**  **5 slideá 6 MODERATOR BROOKMAN: Oh, wait a**  **7 second. 8 Jim, did you exhaust your comments**  **9 on the FER equation?**

**10 MR. VERSHAW: For now. 11 MODERATOR BROOKMAN: For now.**  **12 Move on. 13 MR. FOLEY: Okay. So, I'll move**  **14 on past this slide. I think Sam actually went 15 over most of this.**  **16 So, moving to slide 25, DOE 17 incorporated the following list of sources in**  **18 the engineering analysis. So, product 19 literature, Appliance Magazine, AHRI, GAMA,**  **20 manufacturer interviews, product teardowns, 21 manufacturing cost modeling, and finally,**  **22 product energy testing.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 107**  **1 And DOE acquired data from 2 specification sheets, testing, and teardowns**  **3 to assist in developing the FER values and the 4 cost models.**  **5 DOE had about 200 units, six 6 manufacturers represented, ranging from 800 to**  **7 2200 CFM nominal airflow capacity, various 8 motor types, various heat exchanger types,**  **9 non-condensing, condensing, various fan 10 housing designs, multi-stage and single-stage**  **11 heating and weatherized and non-weatherized 12 units.**  **13 MODERATOR BROOKMAN: Terry? 14 MR. SMALL: Any modular blowers?**  **15 MR. FOLEY: Yes. Yes, we did. 16 Moving on, the cost/efficiency**  **17 curve was developed in four steps. First, DOE 18 developed the baseline, then developed the**  **19 efficiency pathway. Calculated the cost. And 20 then, generated the cost/efficiency curves.**  **21 So, DOE selected baseline models 22 typical of the least-efficient furnace fans** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 108**  **1 using commercially-available residential HVAC 2 models. And across all product classes, the**  **3 baseline furnace fan includes a PSC motor with 4 three or fewer airflow control settings, a**  **5 forward-curve impeller, a standard sheet metal 6 fan housing.**  **7 So, DOE reviewed all available FER 8 values based on data from the preliminary**  **9 analysis and new data, and as Sam said, 10 concluded that FER can best be represented as**  **11 a linear function of airflow capacity, which 12 is actually that equation in the graph there.**  **13 FER equals slope times capacity plus the Y 14 intercept.**  **15 So, DOE first determined the slope 16 of the linear function by looking at multiple**  **17 series of models of non-weatherized gas, 18 non-condensing and non-weatherized gas,**  **19 condensing furnaces. And DOE found that the 20 slopes for these various series were similar**  **21 and that the average of these slopes was 5.7 22 in FER.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 109**  **1 MR. ROSENSTOCK: Question? 2 MR. FOLEY: Yes.**  **3 MR. ROSENSTOCK: Steve Rosenstock, 4 Edison Electric Institute.**  **5 I know you are probably grouping 6 some things together. How many datapoints**  **7 went into each of these series? 8 MR. FOLEY: Yes. So, this is just**  **9 a stylized graph. It is obviously not it. I 10 see we had four or five series for each**  **11 product class. So, then, maybe 20 datapoints 12 for each product class.**  **13 MR. ROSENSTOCK: Twenty 14 datapoints? Okay. Thank you.**  **15 MR. FOLEY: Twenty to 30 or so. 16 MR. VERSHAW: Jim VerShaw.**  **17 You know, it is difficult to get, 18 especially on PSC motors, data on watts**  **19 because nobody publishes it, and it is 20 difficult for the manufacturers to figure out**  **21 where FERs are because these are not normally 22 test points that we test at.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 110**  **1 However, when we have dug into the 2 our product was put out starting in '91.**  **3 So, it goes back a ways, and we had to dig 4 into the airflow data that we had taken.**  **5 And condensing or non-condensing 6 furnaces, yes, I guess you could draw a line**  **7 through there to kind of match the slope, 8 albeit, it was below your baseline.**  **9 And the fact is we have four taps 10 on all of our motors, not three. I don't know**  **11 if that makes a difference or not. But all of 12 ours were lower than that, which says, then,**  **13 when you put a 40- or 50-percent reduction 14 from baseline, we can't get there because**  **15 there is another problem with the CTM motor 16 power, which we will get to in another slide**  **17 here. 18 And then, on the condensing**  **19 furnaces, for some reason, I guess the 20 pressure drops so much higher in that, that as**  **21 you get to the higher Qmaxes, that it tends to 22 fall off quicker. So, our slope actually goes** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 111**  **1 the other way. And so, some are above and 2 some are below, but it doesn't match.**  **3 Of course, we didn't have a test 4 procedure to test to. I'm sorry. But we did**  **5 assume that we would dig into the data and 6 draw curves and match whatever.**  **7 So, I will be able to supply this 8 information in the comments and maybe even**  **9 give you some curves before I leave. But 10 there's something that just doesn't seem quite**  **11 right. 12 MODERATOR BROOKMAN: Do you want**  **13 to add on, Dave? Nothing at this time? Okay. 14 Yes, Gary?**  **15 MR. CLARK: Gary Clark from 16 Goodman.**  **17 Why was three speed taps picked 18 instead of four, which four is much more**  **19 prevalent in the industry? 20 MR. FOLEY: So, that was based on**  **21 that was the least-efficient that was on the 22 market. So, that is why the three-speed tap** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 112**  **1 is the baseline. Four is the improved PSC. 2 MR. VERSHAW: I don't know; I have**  **3 been doing furnaces and other things for Trane 4 since, oh, '88, and we've had four taps the**  **5 whole time. 6 DR. JAKOBS: I have three.**  **7 (Laughter.) 8 I have three and four.**  **9 MODERATOR BROOKMAN: True 10 confessions. True confessions. Okay.**  **11 DR. JAKOBS: They're out there. 12 MODERATOR BROOKMAN: Let's keep**  **13 going. 14 MR. FOLEY: So, now that we have**  **15 the slope, next we performed a market and 16 capacity-weighted least squares regression,**  **17 keeping the slope constant to determine the Y 18 intercept of the linear equation.**  **19 And this equation on here is 20 showing the least squares regression analysis.**  **21 So, basically, we just moved this line up and 22 down, keeping the same slope, and trying to** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 113**  **1** 

### minimize all of these different FER points in

**2** 

### there, minimize that error squared. And

**3** 

### again, market capacity, weighted that.

**4** 

### MODERATOR BROOKMAN: Harvey Sachs?

**5** 

### MR. SACHS: Going back to Harvey

**6** 

### Sachs, ACEEEá ágoing back to slide 29, you

**7** 

### asserted in the text that you concluded that

**8** 

### FER can best be represented as a linear

**9** 

### function of airflow capacity. But we are not

**10** 

### seeing the scatter diagrams at all. But was

**11** 

### the term "best" analytically derived by a

**12** 

### procedure analogous to the least squares

**13** 

### regression in slide 30 or was this designed to

**14** 

### make it feasible to do the regulation? I'm

**15** 

### just not sure how you mean the term "best".

**16** 

### MR. FOLEY: Yes, I think it was

**17** 

### áI mean, you could just see from the FER

**18** 

### points that it is definitely increasing with

**19** 

### capacity.

**20** 

### MR. SACHS: Okay. So, this was

**21** 

### analyst's judgment, which I have been guilty

**22** 

### of a number of times in my career. It is not

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 114**  **1 a cardinal sin. 2 MR. FOLEY: Right.**  **3 MR. SACHS: Thank you. 4 MODERATOR BROOKMAN: Diane?**  **5 DR. JAKOBS: Diane again. 6 So, I know this is stylized and**  **7 you have some of the points are above the 8 line; some of the points are below the line.**  **9 But, if you kind of step back and say the 10 support documents are based on certain**  **11 technologies, I would think that, as an 12 example, all the red dots would be constant**  **13 torque BPM motors, and that I would want to 14 put the line so I get all of them.**  **15 Because this analysis is based on 16 the technology and the cost data and the**  **17 manufacturers' analysis is all based on 18 specific technologies. And then, I would want**  **19 to set the lines so that the regulation would 20 mirror that stratification of technologies.**  **21 MR. FOLEY: Right. Well, what you 22 see up here, this is just for the baseline.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 115**  **1 This is not 2 DR. JAKOBS: Just to determine the**  **3 baseline? 4 MR. FOLEY: Right. But we looked**  **5 at multiple series of baseline models. 6 MR. VERSHAW: You know, this is**  **7 Jim VerShaw again. 8 The slide you had up before which**  **9 talked about market weight 10 MR. FOLEY: Uh hum.**  **11 MR. VERSHAW: can you tell me 12 about how you used market weight and what that**  **13 has to do with technically how a furnace 14 operates or a blower operates?**  **15 MR. JASINSKI: This is Sam 16 Jasinski.**  **17 So, the market weight, here what 18 we are trying to do is model something that is**  **19 going to be representative of the market. And 20 so, you know, some of these points might**  **21 represent a major market player, which 22 translates to a larger number of shipments,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 116**  **1 meaning that those are more representative of 2 what you find across the entire market;**  **3 whereas, another point from a manufacturer 4 that might not have as large of a market**  **5 share, that might only represent a very small 6 part of the market. And therefore, if you**  **7 weight them all equally, that line will change 8 and it will no longer be representative of**  **9 what is in the market, the baseline of the 10 market.**  **11 MR. VERSHAW: Oh, higher-selling 12 products, you try to get those closer to the**  **13 line versus niche products? 14 MR. JASINSKI: Mathematically,**  **15 yes, by weighting them that way, that that**

**16 error 17 MR. VERSHAW: So, for those niche**  **18 products which might be geographically 19 significant but on the national space is not,**  **20 those products may not be represented by the 21 baseline. So, therefore, when you go to the**  **22 new standard, they may not be able to make it.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 117**  **1 And as a result, those customers may not be 2 able to get a product that will fit in their**  **3 current application. They do a resell. So, 4 what they will end up having to do is just**  **5 repair rather than buy a new product, because 6 they can't either that or they have to**  **7 change their ductwork or change something 8 significant. So, it is a lot more than just**  **9 adding a motor. I mean, that's something we 10 have got to be careful of here.**  **11 MR. JASINSKI: Okay. 12 MR. VERSHAW: You know, there are**  **13 some very niche markets in the HVAC business. 14 You know, the upper Northwest has a lot of**  **15 downflows that it opted to build in the 16 garages. There's attics and closets in the**  **17 South. Basements, and if you have never lived 18 anywhere but the Northeast or the Midwest,**  **19 everybody's got a basement. But that is not 20 the case for most products. The biggest**  **21 furnace markets are California and Texas. 22 Those are attics and closets. And it is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 118**  **1 difficult to get a bigger furnace up in that 2 attic without tearing out the scuttle hole or**  **3 taking out the outside wall. 4 So, we have got to be careful that**  **5 we don't create a standard that says you can't 6 build furnaces like we have been building them**  **7 in terms of size and fit. 8 MR. JASINSKI: Sam Jasinski,**  **9 Navigant Consulting, again. 10 So, part of our suite of analyses**  **11 includes a screening analysis. So, as Kevin 12 discussed, during the market and technology**  **13 assessment, DOE goes out and tries to find any 14 technology that might reduce the energy**  **15 consumption of fans, ignoring at that point in 16 the process other factors.**  **17 Once DOE has that list, it 18 performs a screening analysis, and EPCA**  **19 mandates that DOE consider technologies that 20 are technologically feasible, practical to**  **21 manufacture, install, don't reduce utility, 22 and are safe.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 119**  **1 So, DOE takes that list of 2 technology options, uses those screening**  **3 criteria, and eliminates some of them. 4 As someone mentioned earlier I**  **5 think it was Andrew deLaskiá things like 6 airflow path design and housing improvements,**  **7 DOE screened out from that list and did not 8 include. And the primary reason for that is**  **9 that DOE could not find any quantitative 10 improvement in efficiency that was linked**  **11 directly to a specific improvement in those 12 things that did not require increasing the**  **13 size of the unit, which, according to those 14 screening criteria, might impact utility,**  **15 might impact the practicability to install, 16 and might also eventually result in cost to**  **17 the consumer or limited number of products 18 that are applicable to each consumer because**  **19 of that increase in size. 20 MR. VERSHAW: Right. But if you**  **21 look at today's furnaces across the board, the 22 narrower cabinets with the higher heating** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 120**  **1 inputs at higher FERs, based on the way we are 2 doing this, and if those fall above the**  **3 minimum, those will have to switch to a bigger 4 cabinet. And now, if you had a 21-inch**  **5 furnace and duct in your system and you can't 6 put that in anymore, you put a 24, and think**  **7 about the cost to install that. 8 And that is going to alter the**  **9 economics. And I hate to see some part of the 10 country become burdened by that additional**  **11 input because we are off by a little bit. I 12 think we need to adjust where we are here to**  **13 make sure we have got it right. 14 MR. JASINSKI: Thank you.**  **15 MODERATOR BROOKMAN: Greg? 16 MR. WAGNER: Greg Wagner.**  **17 I had a basic question about the 18 FER input. Where did you get that data?**  **19 MR. FOLEY: From a variety of 20 sources. Product literature, testing,**  **21 manufacturer interviews. 22 MR. WAGNER: Okay. Well, the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 121**  **1 reason I'm asking that is that, first, the 2 test procedure, as we have discussed**  **3 previously, is not complete. So, therefore, 4 I don't know what that would represent.**  **5 But, secondly, product literature 6 would not have FER data because it is not**  **7 complete and nobody has tested that standard. 8 And then, I guess I am looking at**  **9 all these datapoints. Did you test that many 10 points for each of these series to come up**  **11 with these FER numbers? 12 MR. FOLEY: Well, again, that is**  **13 from a combination of all those, testing, spec 14 sheets, and interviews.**  **15 MR. WAGNER: Well, those spec 16 sheets aren't FER data, but**  **17 MR. FOLEY: Right, but we could 18 derive FER data from those spec sheets.**  **19 MR. WAGNER: It is not the same 20 test procedure, the same way to calculate**  **21 those numbers. So, I don't know how you are 22 making that adjustment, but is that something** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 122**  **1** 

### that is available?

**2** 

### MR. JASINSKI: This is Sam

**3** 

### Jasinski, Navigant Consulting.

**4** 

### Obviously, there may be

**5** 

### differences, but the Department of Energy, it

**6** 

### would be negligent for the Department of

**7** 

### Energy to not use information that is

**8** 

### available, and DOE uses the best information

**9** 

### that is available. Some data is better than

**10** 

### no data. So, as Kevin said, we tried any

**11** 

### number of ways to get as much information as

**12** 

### possible.

**13** 

### Now, to calculate FER áKevin, can

**14** 

### you go back to the slide with the FER

**15** 

### equation? the inputs to this equation are

**16** 

### electrical consumption in a range of airflow

**17** 

### control settings at specific operating points,

**18** 

### external static pressure.

**19** 

### So, while there may be some

**20** 

### differences in the measurements that you get

**21** 

### at certain operating points, DOE feels that

**22** 

### those differences are not significant enough

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 123**  **1 that, if DOE finds that a certain model in the 2 maximum airflow control setting, according to**  **3 a spec sheet, consumes a certain amount of 4 electricity at a certain static pressure, that**  **5 that number will be dramatically different 6 from the proposed test procedure in the SNOPR.**  **7 And one of the reasons that DOE is 8 confident in that is that in written comments**  **9 received on the test procedure NOPR and SNOPR, 10 manufacturers suggested the method that is**  **11 being proposed, a lot of the elements of the 12 method that is being proposed, and justified**  **13 that by saying that that would be the 14 least-burdensome, but accurate reflection of**  **15 that data from their spec sheets. 16 MR. WAGNER: Right. That's two**  **17 different things. That's apples and oranges. 18 Yes, we can say or manufacturers**  **19 can say that the test procedure is not going 20 to be much of a burden, but it is a whole new**  **21 test procedure with different numbers and 22 different outcomes than what is currently** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 124**  **1 being done today that is being published in 2 those tables.**  **3 And that might be the reason why 4 the differences that the manufacturers have**  **5 stated today, why that curve doesn't fit right 6 for all the cases, and why they are having a**  **7 lot of product that will not meet the 8 standard.**  **9 So, again, I would just suggest 10 that you revisit that**  **11 MR. JASINSKI: Sure. 12 MR. WAGNER: because that test**  **13 data that you are using from public literature 14 is not the same as the FER values.**  **15 MR. JASINSKI: Sure. I'll just 16 reiterate that one way that well, the best**  **17 way that the Department of Energy can do that 18 is to get accurate FER data from**  **19 manufacturers. And included in your written 20 comments, if you could explain technically why**  **21 what's in your spec sheets might be different 22 than what would be generated by using the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 125**  **1 proposed test procedure, and even quantify 2 what that difference might be, that would also**  **3 help the Department of Energy to determine 4 whether that data is useful or even use it and**  **5 adjust it accordingly. 6 MODERATOR BROOKMAN: Charlie, yes?**  **7 MR. McCRUDDEN: Okay. Charlie 8 McCrudden, Air Conditioning Contractors of**  **9 America. 10 I want to actually pick up on the**  **11 discussion that Jim VerShaw had on cabinet 12 size and the screening analysis that you**  **13 mentioned. 14 We have seen in the past**  **15 unintended consequences of changes in 16 performance standards on the size of the**  **17 equipment and what happens. Now I heard a lot 18 back in 2006-2007 on the change from 10 SEER**  **19 to 13 SEER, some things as sort of not silly, 20 but as minimal as the flowerbed had to be**  **21 shrunk to hold the new condensing on the 22 outside.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 126**  **1 But we have also talked about this 2 with furnaces in requiring condensing**  **3 furnaces. There are installation costs that 4 are added on.**  **5 You mentioned that there is a 6 screening analysis that you performed. Does**  **7 the TSD go into some discussion on what you 8 considered in some of these impacts?**  **9 MR. JASINSKI: Yes, Chapter 4 10 MR. McCRUDDEN: Chapter 4?**  **11 MR. JASINSKI: will include the 12 write-up of the screening analysis.**  **13 MR. McCRUDDEN: Okay. 14 MR. JASINSKI: But if you want to**  **15 get into details about the impacts on 16 installation costs and those things**  **17 MR. McCRUDDEN: Right. 18 MR. JASINSKI: that will**  **19 actually be part of some of the downstream 20 analyses that we will talk about laterá**  **21 MR. McCRUDDEN: Okay. 22 MR. JASINSKI: but are also** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 127**  **1 included in the TSD. 2 MR. McCRUDDEN: Thank you.**  **3 MODERATOR BROOKMAN: Harvey Sachs? 4 MR. SACHS: This is Harvey Sachs** 

**5 at ACEEE. 6 I'm concerned about your statement**  **7 that you looked at all sorts of information 8 that might have been relevant. And there is**  **9 an historical component here that a decade ago 10 and more some utilities were concerned about**  **11 furnace fan power, the context of their 12 incentive programs.**  **13 Some of them were moving toward an 14 explicit prescriptive requirement of ECMs for**  **15 their rebates or as an adder for their 16 rebates. And some of us took a look at that**  **17 and said, "This is not a good idea," that we 18 should, with all due respect to my friends**  **19 from Regal-Beloit, we should be thinking in 20 terms of performance rather than prescriptive**  **21 requirements. 22 And we worked on a number of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 128**  **1 things and handed it off to AHRI. And the 2 directory now includes a list of condensing**  **3 units with a small "e" for low electricity 4 use.**  **5 At one point, the response to 6 consumers in California, I looked to see if we**  **7 could extend that to non-condensing furnaces. 8 And it turns out that the heating/cooling**  **9 ratio variability, which shows up in separate 10 SKUs, I believe, went with this was just nuts.**  **11 And similarly, as I think about 12 the comments today, we are trying to wrap the**  **13 furnace fans into a simple requirement, but 14 the equations don't seem to include the**  **15 downstream technologies. There is an inherent 16 difference in the internal static between a**  **17 condensing furnace and a non-condensing. 18 These cannot be put on the same graph. We are**  **19 going to have to have product classes for FER, 20 and they have to have separate values as well**  **21 as capacity limit. 22 And this seems to have been** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 129**  **1 completely ignored. And I think this is the 2 source of some of the concerns that you are**  **3 hearing at this table. The fan power required 4 in a condensing furnace is different.**  **5 Thank you. 6 MODERATOR BROOKMAN: Terry?**  **7 MR. SMALL: Terry Small, Mortex. 8 Following up along with what Jim**  **9 said, we are a manufacturer of niche products, 10 in particular, manufactured housing furnaces,**  **11 both gas and electric. And what's a bit 12 unique about that application is the footprint**  **13 is the same regardless of the capacity, the 14 heating capacity or the cooling capacity, of**  **15 these units. They are typically 20-inches 16 wide, maybe 25-inches deep.**  **17 So, what that means is that, on 18 our version that would handle a 3-ton coil, it**  **19 is going to have maybe a third horsepower 20 motor. And this is both gas and electric. In**  **21 both of those cases, the PSC version is 22 marginal or barely passes or barely fails.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 130**  **1 The same cabinet, we put a 2 three-quarter horsepower motor in, both**  **3 electric and natural gas, and put a 4- or 4 5-ton coil in that. And so, you know, you've**  **5 got the same box, basically. You're putting 6 a bigger motor in it, a bigger coil, and those**  **7 fail miserably. 8 So, a lot of our business is**  **9 replacement, meaning there are millions of 10 manufactured homes, mobile homes out there,**  **11 that cannot structurally be modified to take 12 a bigger furnace.**  **13 So, basically, what we have seen 14 in the proposed rulemaking here is, the way**  **15 you have got it set up, you will wipe out the 16 bigger application. Maybe the smaller**  **17 application will work. And really, 18 technologically, even if you put an ECM motor**  **19 in the unit, it may not solve the problem. 20 So, I get back to what Jim was**  **21 saying. I believe that you all should go back 22 and relook at the actual cabinet size, and** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 131**  **1 maybe there needs to be sort of best 2 practices, a best FER value by cabinet size or**  **3 maybe by the cooling capacity, too. It might 4 be a different approach. Otherwise, you are**  **5 going to basically destroy certain 6 applications.**  **7 MODERATOR BROOKMAN: Okay. Moving 8 on. Oh, Steve Rosenstock?**  **9 MR. ROSENSTOCK: Steve Rosenstock. 10 This is something completely**  **11 different. There is a terrible whine coming 12 from these speakers. Is there some way you**  **13 can just I don't know if it is feedback, or 14 whatever. Is there anyá**  **15 MODERATOR BROOKMAN: Let's try 16 turning that one off. Let's just see if that**  **17 helps. 18 It's not the microphone? It is**  **19 the air handler? 20 (Laughter.)**  **21 I'm sorry. We have had that at 22 many meetings. So, I don't think there is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 132**  **1 anything we can do about it. 2 Okay. We're going to press on.**  **3 MR. FOLEY: So, moving on, now 4 that we have the slope and the Y intercept, we**  **5 could develop these FER equations. 6 So, these are based on FER**  **7 equations with typical capacity, what they 8 would be for typical capacities, 1200 CFM and**  **9 2,000 CFM. 10 MR. ROSENSTOCK: Question? I'm**  **11 sorry. Steve Rosenstock, EEI. 12 In that previous slide, you show**  **13 1200. Is that the two most common CFM ratings 14 for -**  **15 MR. FOLEY: Right, right, right. 16 MR. ROSENSTOCK: And is it 1200,**  **17 and is 1200 more the median value, or I'm just 18 kind of curious about what all**  **19 MR. FOLEY: Yes, that is a 3-ton. 20 That's more the median value.**  **21 MR. ROSENSTOCK: Okay. That 22 helps. Thank you. Okay.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 133**  **1 MR. FOLEY: Okay. So, moving on, 2 each efficiency level above the baseline is**  **3 defined by the specific design option used to 4 achieve it. And DOE does not expect the**  **5 percentage reduction FER associated with each 6 design option, whether commercially available**  **7 or a prototype, to differ across product 8 classes.**  **9 And DOE found that manufacturers 10 use similar components and design paths to**  **11 improve the efficiency across all product 12 classes. So, DOE determined the average**  **13 percent reductions in FER for each efficiency 14 level and applied these reductions to all**  **15 product classes. 16 DOE based the reductions in FER**  **17 associated with commercial technologies on 18 measurements or publicly-available performance**  **19 data, again, just like the baseline data. And 20 DOE based the FER reductions associated with**  **21 prototype technologies on research reports 22 that included performance data.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 134**  **1 So, here are the percent 2 reductions in FER for each efficiency level.**  **3 And these are percent reductions in FER from 4 the baseline.**  **5 MR. VERSHAW: Jim VerShaw here. 6 We have constant torque motors in**  **7 production for both condensing and 8 non-condensing furnaces. And I don't get a**  **9 constant reduction in energy usage across 10 furnace size. At the real small furnaces, it**  **11 is in that ball park, but at the 5-ton, it is 12 only about a 20-percent reduction, and the**  **13 slope is tremendously different. 14 And the thing I am concerned about**  **15 here is that all of the costs, that all of the 16 energy savings was based on a constant**  **17 reduction across all sizes. And I am not sure 18 we can get that.**  **19 MR. FOLEY: Yes. Well, again, any 20 data would be great appreciated**  **21 MR. VERSHAW: Okay. 22 MR. FOLEY: for that.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 135**  **1 So, using those percent 2 reductions, we multiplied those to the slope**  **3 and Y intercept of the baseline FER equations 4 to generate the intermediate FER equations.**  **5 So, this is a table showing the 6 intermediate or sorry the constant**  **7 torque BPM motor and multi-stage level in all 8 the product classes, the FER equation for all**  **9 those product classes with that efficiency 10 level. And again, showing the 1200 CFM and**  **11 the 2,000 CFM. 12 MR. SACHS: Kevin, this is Harvey.**  **13 And I do owe you an apology. I 14 had forgotten that you differentiated between**  **15 the non-condensing and condensing on this 16 slide.**  **17 MR. FOLEY: Uh hum. 18 And then, this shows the**  **19 efficiency levels for the product class, 20 non-weatherized, non-condensing gas furnace**  **21 fan. Again, showing the 1200, what it would 22 be for 1200 CFM and 2,000 CFM. And this shows** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 136**  **1 all the efficiency levels. 2 MODERATOR BROOKMAN: Aniruddh?**  **3 MR. ROY: Aniruddh Roy, AHRI. 4 Kevin, if you could go back to**  **5 slide 33? I believe the efficiency levels or 6 the design options considered here, design**  **7 options 2 and 6, they were prototypes, right? 8 MR. FOLEY: Right, yes.**  **9 MR. ROY: So, I guess I would like 10 to ask DOE this question. You say that you**  **11 consider something either economically- or 12 technologically-justified. So, in the case of**  **13 being technologically-justified, do prototypes 14 also get considered under that or do you look**  **15 at something that is commercially-available as 16 being something that becomes**  **17 technologically-justified? Because if it is 18 just a prototype and it is not manufactured by**  **19 OEMs, then would that meet the criteria of 20 being technologically-justified?**  **21 MR. JASINSKI: Sam Jasinski, 22 Navigant Consulting.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 137**  **1 So, obviously, something that has 2 been commercialized meets the technological**  **3 not obviously but something that has been 4 commercialized meets the criteria of**  **5 technologically-feasible. When you get into 6 prototypes that have not been commercialized,**  **7 that is a little bit different. 8 So, the reason that this prototype**  **9 was considered technologically-feasible by the 10 Department of Energy was because it had been**  **11 tested as installed in a 12 commercially-available furnace, and they were**  **13 able to test it and generate performance 14 values. So, you know, it was a proven concept**  **15 in terms of performing within a commercialized 16 product.**  **17 And this is specifically talking 18 about Efficiency Level 6 with a**  **19 backward-inclined impeller. For Efficiency 20 Level 2, the inverter-driven PSC. DOE is**  **21 aware that there was a furnace model that was 22 commercially-available at one point that** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 138**  **1 included this technology. I don't believe 2 that is available anymore, but, anyhow, it was**  **3 commercially-available at one time. 4 MODERATOR BROOKMAN: Steve?**  **5 MR. ROSENSTOCK: Steve Rosenstock, 6 EEI.**  **7 So, you are talking about 8 Efficiency Level 2? You are basing this on**  **9 one furnace available at one time, that it 10 would be applicable to all furnaces as a final**  **11 rule? 12 MR. JASINSKI: It was a technology**  **13 that was used in multiple series of models for 14 a particular manufacturer. So, it is not a**  **15 singular model in terms of one product 16 available. It spanned capacities and that**  **17 sort of thing. And we did have the 18 performance data for those models.**  **19 MR. ROSENSTOCK: Steve Rosenstock, 20 EEI.**  **21 Yes, I appreciate that, but this 22 was only being offered by one manufacturer?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 139**  **1 MR. JASINSKI: Yes, but the 2 inverter technology being paired with a PSC**  **3 motor is something that is also available in 4 a lot of similar appliances and applications.**  **5 So, in terms of technologically-feasible, you 6 know, that is why DOE was confident to include**  **7 it. 8 The performance data that was**  **9 available, DOE used that to generate values, 10 but those values have been included in the**  **11 preliminary analysis, have been brought before 12 manufacturers for comment, and have been open**  **13 to receiving more information since then. 14 MR. ROSENSTOCK: Steve Rosenstock,**  **15 EEI, again. 16 Thank you.**  **17 So, it wasn't covered by a special 18 patent where only that one manufacturer would**  **19 be able to basically - 20 MR. JASINSKI: No.**  **21 MR. ROSENSTOCK: Okay. Thank you. 22 MODERATOR BROOKMAN: Other** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 140**  **1 comments here? 2 (No response.)**  **3 Let's go back to where you were. 4 MR. FOLEY: Okay. So, moving on**  **5 to the cost part of the engineering analysis, 6 manufacturing costs were developed as part of**  **7 the efficiency-level approach. 8 The first here, we selected units,**  **9 did physical teardowns, developed the bill of 10 materials. That took into account the raw**  **11 materials, fabrication processes, purchased 12 parts. And that all fed into assembly**  **13 processes and manufacturing cost. 14 This shows the structure of the**  **15 manufacturing costs. Basically, in the full 16 MSP, MPC and non-production costs are taken**  **17 into account. 18 MODERATOR BROOKMAN: Diane?**  **19 DR. JAKOBS: When I was reading 20 through the Technical Support Document, you**  **21 know, I know that you didn't know it in the 22 beginning, but all of the design options are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 141**  **1 really related to different motor types. So, 2 where I am a manufacturer of a motor, but I am**  **3 actually a manufacturer of a furnace; I am 4 actually a consumer of a motor. And that was**  **5 reflected in your analysis, where there is no 6 capital cost.**  **7 MR. FOLEY: Uh hum. 8 DR. JAKOBS: So, I was curious. I**  **9 had imagined, when Sam came to visit, that you 10 would also visit manufacturers of motors. So,**  **11 did you? I mean, did you talk to motor 12 manufacturers or**  **13 MR. FOLEY: Those are factored 14 into the purchased parts. Because, like you**  **15 said, the manufacturers are purchasing those 16 motors from motor manufacturers. So, those**  **17 are considered 18 DR. JAKOBS: But I'm saying I**  **19 don't manufacture any of these things related 20 to different motor technology. I buy them.**  **21 MR. FOLEY: Right. And those are 22 included in the cost, if that is what you are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 142**  **1 asking. 2 DR. JAKOBS: Well, if you are**  **3 doing a manufacturer analysis, you know, it 4 kind of reminds me of thermodynamics, and you**  **5 draw a square around something and you look at 6 the ins and the outs. It seems to me you**  **7 should have had the motor manufacturers inside 8 your square and talked to them about what**  **9 their costs would be. 10 MODERATOR BROOKMAN: Chris?**  **11 MR. LAU: This is Chris Lau with 12 Navigant.**  **13 So, in this case in the 14 manufacturer impact analysis, since the burden**  **15 falls on the HVAC manufacturers, we considered 16 manufacturers to be those that assembled the**  **17 furnace fan as part of a cover HVAC product. 18 MODERATOR BROOKMAN: Diane?**  **19 DR. JAKOBS: This is Diane. 20 Well, as soon as I can, I am going**  **21 to try to shift the burden to my friend here. 22 (Laughter.)** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 143**  **1 So, I think that they are 2 certainly part of the whole picture here, and**  **3 we are talking about making a premium product 4 the only product available with respect to**  **5 motors. So, we are talking about eliminating 6 a whole class of motors and going to what we**  **7 consider a premium class, you know, and having 8 a large increase in the volume.**  **9 And I would think there is some 10 impact. For me, it is an impact in my**  **11 procurement group. And we are going to be 12 buying a whole lot more of them. So, we are**  **13 going to be talking about what they cost. 14 So, I just think that there is a**  **15 missing piece in the puzzle here. 16 MODERATOR BROOKMAN: Okay. We**  **17 have a question from Peter Edwards via the 18 web. And, Peter, I was not certain this was**  **19 the place for it, but Emily suggests this is 20 the spot.**  **21 The question is: what was the 22 range of HCR analyzed for multi-stage** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 144**  **1 furnaces? 2 MR. FOLEY: I think Sam can answer**  **3 that one. 4 MR. JASINSKI: This is Sam**  **5 Jasinski, Navigant Consulting. 6 DOE collected a lot of**  **7 information, and the range that DOE found was 8 anywhere from 35 or 40 percent up to 80 or 90**  **9 percent. 10 MODERATOR BROOKMAN: Okay. Thank**  **11 you. 12 Let me see. Aniruddh, do you have**  **13 a question here? 14 MR. ROY: I just wanted to**  **15 supplement what Diane and Chris said. Chapter 16 12, page 12 1 of that chapter, does state that**  **17 DOE considers the furnace fan industry to 18 consist of manufacturers who assemble furnace**  **19 fans as a component of their HVAC products. 20 And we feel that the design**  **21 options that have been narrowed down in this 22 NOPR or being proposed in this NOPR would also** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 145**  **1 affect the component manufacturers because it 2 would require some changes in the way they do**  **3 their assembly-line manufacturing for those 4 furnace fans.**  **5 MODERATOR BROOKMAN: Okay. 6 Gary?**  **7 MR. CLARK: So, just so I'm clear, 8 you did not talk to any motor manufacturers?**  **9 MR. JASINSKI: Sam Jasinski, 10 Navigant Consulting, again.**  **11 The reason we are not directly 12 answering that question is because those**  **13 manufacturer interviews are confidential, and 14 DOE doesn't typically divulge who they talked** 

**15 to. 16 MR. CLARK: I am not asking who**  **17 you talked to. I'm just asking if you talked 18 to them. That's the question.**  **19 MR. JASINSKI: I'm not sure I'm 20 comfortable answering that unless the**  **21 Department is willing to divulge that. 22 MODERATOR BROOKMAN: Kavita?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 146**  

### 1 MS. VAIDYANATHAN: Kavita **2 Vaidyanathan, DOE GC. 3 I think we have to come back to**  **4 the fact that this is not a motor standard we 5 are looking at. We are looking at a furnace**  **6 fan standard. 7 And I understand your comments,**  **8 and we will consider those comments, but we 9 have to get back to the fact that we are**  **10 looking at a furnace fan standard at this 11 point. And we have standards for motors. I**  **12 am not involved in those standards, but I 13 understand we do have those. And those would**  **14 apply to motors specifically. 15 MODERATOR BROOKMAN: Scott?**  **16 MR. DURFEE: This is Scott Durfee 17 with Nidec Motor Corporation.**  **18 MODERATOR BROOKMAN: Use the 19 microphone, Scott. Thank you.**  **20 MR. DURFEE: Scott Durfee with 21 Nidec Motor Corporation.**  **22 On slide No. 35, you talk about**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 147**  **1 improved PSC. Can you define what you looked 2 at when you looked at the improved PSCs?**  **3 MR. FOLEY: Yes, that is a PSC 4 with more than three airflow control settings.**  **5 MR. DURFEE: Okay. So, it was not 6 what is considered a higher-efficiency PSC or**  **7 premium-efficiency-style PSC? It was just a 8 four-tap PSC?**  **9 MR. FOLEY: Right, right. 10 MR. DURFEE: There are such things**  **11 as higher-efficiency PSCs, and these numbers 12 do not reflect that.**  **13 MR. FOLEY: Okay. 14 MR. DURFEE: And that is something**  **15 that some of the manufacturers here are using, 16 and I think that needs to be considered.**  **17 MR. FOLEY: Okay. 18 MODERATOR BROOKMAN: If you would**  **19 include that in your written comments, Scott, 20 that would be helpful.**  **21 Terry? 22 MR. SMALL: I would just like to** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 148**  **1 point out that there are some of the motor 2 manufacturers that are trying to provide a**  **3 solution for this or getting into the blower 4 wheel housing/impeller combination. So, at**  **5 that point, they would be providing what I 6 would consider would be the furnace fan. All**  **7 the furnace manufacturer is doing is providing 8 the sheet metal to go around it.**  **9 So, maybe it wasn't the practice 10 so much years ago, but all of the**  **11 manufacturers are looking at the idea of 12 providing integrated air-moving solutions.**  **13 So, I really think that they should be party 14 to this and not excluded. I mean, the idea**  **15 that they are pure motor manufacturers that 16 aren't looking at providing an integrated**  **17 solution is just not correct. 18 MODERATOR BROOKMAN: Okay. Thank**  **19 you. 20 Andrew?**  **21 MR. DELASKI: I guess I will just 22 point out that there are motor manufacturers** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 149**  **1 in the room here. One of them just spoke. 2 Thank you, Scott, for speaking up.**  **3 And they have been in this process 4 from the very beginning. And it has been an**  **5 open, public process, and motor manufacturers, 6 to the best of my knowledge, are very familiar**  **7 with this rulemaking process. They have a 8 trade association that tracks DOE very**  **9 closely. 10 So, the notion that the motor**  **11 manufacturers aren't paying attention to 12 what's going on here I think is not accurate.**  **13 I think they are paying attention very 14 closely, and it does affect their business.**  **15 I think DOE is regulating the 16 furnace fan, which the motor is an integral**  **17 piece of, and some of the design options that 18 are more in the control of the furnace**  **19 manufacturers, for the reason that Jim 20 described, have already been screened out.**  **21 So, it is somewhat you can't have 22 it both ways. You know, it is about the motor** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 150**  **1 at this point to a large extent, but that is 2 because the things that are more in the**  **3 furnace manufacturer's control have been 4 screened out because of the size constraints.**  **5 So, they're here and they're 6 paying attention, and their interests are**  **7 being represented well, I think, by their 8 representatives.**  **9 MODERATOR BROOKMAN: Terry? 10 MR. SMALL: Well, I'm not**  **11 disagreeing with you, but I do believe that it 12 is worrisome. We didn't get a direct answer**  **13 as to whether these people were specifically 14 included in all of the data-gathering or maybe**  **15 even visited. I don't know. 16 MODERATOR BROOKMAN: Okay. Yes?**  **17 MR. WINNINGHAM: This is Dave from 18 Allied.**  **19 I think the key issue here is that 20 it assumed a zero capital impact to**  **21 manufacturers, and I think from the 22 manufacturers, including the motor** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 151**  **1 manufacturers, I just don't believe that to be**

**2 accurate. 3 MODERATOR BROOKMAN: Okay.**  **4 Aniruddh? 5 MR. ROY: Aniruddh Roy.**  **6 Just to respond to Andrew 7 deLaski's point, you know, considering just**  **8 HVAC manufacturers or the OEMs as being part 9 of the furnace fan industry also impacts the**  **10 manufacturer impact analysis. Now you have a 11 lesser number of manufacturers being included**  **12 in that model, which is not true because the 13 motor manufacturers, even though they are**  **14 involved in the process, are being impacted to 15 a certain degree by whatever comes out of this**  **16 rulemaking. 17 So, I think the point I was trying**  **18 to make was that in the manufacturer impact 19 analysis I hope that they have been considered**  **20 in those assumptions and whatever inputs that 21 went into that spreadsheet.**  **22 MR. DELASKI: Just to respond, you**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 152**  **1 know, this is true for every single rulemaking 2 the Department does, right, a refrigerator**  **3 stand or compressor manufacturers, insulation 4 manufacturers. A motor standard affects the**  **5 copper and aluminum industry. This standard 6 may affect the copper and aluminum industry.**  **7 So, at some point, the party that 8 is regulated in this instance is the furnace**  **9 manufacturer who has to certify that it is 10 compliant, right? So, they're the industry,**  **11 and I think this is as Diane put it, you 12 know, how you draw your box does matter, but**  **13 you have to draw a box. And where are you 14 going to stop?**  **15 And I think you have to do it. I 16 think the Department has been appropriate here**  **17 to regulate, go out to pay attention to the 18 regulated entity, as opposed to a supplier.**  **19 MODERATOR BROOKMAN: Thank you, 20 Andrew.**  **21 Charlie Stephens? 22 MR. STEPHENS: I'll turn this off** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 153**  **1 afterward. 2 Charlie Stephens.**  **3 I just wanted to add, I was going 4 to say a lot of what Andrew just said. But I**  **5 would add that there is quite a bit of 6 discussion of this, if you read the NOPR**  **7 document. And I don't think a lot of what is 8 in there actually could have been written**  **9 without motor manufacturer input, at least the 10 way I read it. So, it seems to me that at**  **11 some point they must have been consulted 12 because I wouldn't be able to read that**  **13 otherwise. 14 MODERATOR BROOKMAN: Thank you.**  **15 Jim? 16 MR. VERSHAW: Yes, I don't know**  **17 the answer to this, but the real question is, 18 since there was no capital effect on motor**  **19 manufacturers, can they turn off 3 million 20 PSCs a year and turn on 3 more million**  **21 Brushless Permanent Magnet motors without 22 investing capital in their plants?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 154**  **1 MODERATOR BROOKMAN: Okay. Harvey 2 Sachs>**  **3 MR. SACHS: Jim, it pains me to 4 say anything good about what DOE contractors**  **5 have done, but my understanding is that the 6 purchase price of that motor will include the**  **7 capitalization that the motor supplier did. 8 That is built into it. It is just that it is**  **9 treated as a purchased item with a variable 10 cost it would be volume-dependent or**  **11 whatever rather than a capitalization by 12 the HVAC manufacturer. Is that what I should**  **13 be understanding? So, it is not ignored. 14 MODERATOR BROOKMAN: Chris?**  **15 MR. LAU: Chris Lau. 16 Yes, I would agree with that**  **17 assessment. 18 MODERATOR BROOKMAN: Okay. Karen**  **19 Meyers, joining us through the web, has a**

**20 comment. 21 Karen, unmute your phone, and we**  **22 hope to hear you in the room.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 155**  

### 1 (No audible response.) **2 There is nothing yet. 3 Karen, are you trying?**  **4 (No audible response.) 5 I'm sorry, Karen. I'm sorry to**  **6 everyone who is joining us via the web. I 7 hope you are able to follow this fairly well**  **8 because we are having technical difficulty 9 today. And it is a little atypical for it to**  **10 be this bad; it really is. 11 Keep trying. We want to get you**  **12 in here. 13 Terry?**  **14 MR. SMALL: Unless I have 15 misunderstood something, I don't believe you**  **16 have any return on capital in the analysis, 17 based around what the investment the motor**  **18 guys may have to make. 19 In other words, they will have to**  **20 sell their product at a higher price, and I 21 think some places the assumption is the price**  **22 of the motor doesn't go up. So, where is the**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 156**  **1 return on capital that these guys will have to 2 make to step up to the plate with 70-80**  **3 percent BPMs in five or ten years? 4 MR. LAU: So, this is Chris Lau**  **5 with Navigant. 6 Just to highlight prior**  **7 statements, we do draw a boundary layer around 8 the regulated entity, which are the HVAC**  **9 product manufacturers. We have taken feedback 10 from the industry on pricing. However, given**  **11 the folks in the room, if they want to 12 contribute additional information about the**  **13 impact of this standard on the pricing of 14 motors, DOE would welcome that.**  **15 MODERATOR BROOKMAN: Charlie 16 Stephens?**  **17 MR. STEPHENS: Yes, I just hate to 18 keep going over this again and again. But in**  **19 the lamp rulemaking the price of phosphorous 20 and the impact on phosphorous miners and**  **21 processors was a factor, and it was taken into 22 account in the price of the phosphors that the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 157**  **1 lamp manufacturers would have to pay to 2 acquire those phosphors.**  **3 And I presume the same thing will 4 occur here where the price that the HVAC**  **5 manufacturers will have to pay for the motors 6 will be taken into account. There will be**  **7 price impacts, but you can't draw the boundary 8 all the way back to the mine where the copper**  **9 is produced, the copper ore is mined. So, you 10 draw it around the regulated entity who has to**  **11 certify that the product meets the standard 12 when it is shipped to the marketplace. And I**  **13 presume that is HVAC manufacturers. 14 MODERATOR BROOKMAN: A final**  **15 commentary, and then, we are moving on. 16 MR. SMALL: I mean, I agree with**  **17 you, Charlie. However, though, the assumption 18 is made here that the motor price doesn't**  **19 change over 30 years, I believe. So, I guess 20 I still wonder who gets squeezed here.**  **21 MODERATOR BROOKMAN: Kevin? 22 MR. FOLEY: Okay. Moving on to** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 158**  **1 slide 38, the cost of using the engineering 2 analysis represents the cost of the furnace**  **3 fan and not the cost of the entire HVAC 4 product.**  **5 The following components are 6 included in the MPC estimates: fan motor and**  **7 integrated controls, the PCB, the impeller, 8 the fan housing, components used to direct or**  **9 guide airflow, and multi-staging components 10 and controls.**  **11 MODERATOR BROOKMAN: Diane? 12 DR. JAKOBS: I had a question**  **13 about this one. In order to get a multi-stage 14 furnace, you have to add a multi-stage gas**  **15 valve and you have to add a multi-stage 16 inducer.**  **17 MR. FOLEY: Yes. 18 DR. JAKOBS: So, are those in**  **19 there? 20 MR. FOLEY: Yes.**  **21 DR. JAKOBS: Components used? No? 22 Multi-staging components** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 159**  **1 MR. FOLEY: Multi-staging 2 components and controls.**  **3 DR. JAKOBS: Okay. 4 MR. FOLEY: And within that, we**  **5 include the gas valve, the inducer assembly, 6 the presser switch, and additional wiring**  **7 needed for that. 8 Moving on, DOE separated furnished**  **9 fan product classes into high-volume and 10 low-volume product classes, factors that**  **11 impact that manufacturers' production cost and 12 purchasing power. DOE is aware that the**  **13 purchasing power will be different for 14 high-volume and low-volume manufacturers, and**  **15 DOE took this into account when developing the 16 MPCs.**  **17 So, for the high-volume product 18 classes, we have non-weatherized gas furnaces,**  **19 weatherized gas furnaces, electric furnaces, 20 modular blowers. And for low-volume, we have**  **21 oil furnaces. 22 MODERATOR BROOKMAN: Let me just** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 160**  **1 pause you there. 2 Karen Meyers is trying again.**  **3 This time she has provided a question in 4 writing.**  **5 And her question is: is DOE 6 assuming that, if furnace manufacturers have**  **7 to switch 100 percent of our production to BPM 8 motors, that furnace manufacturers will not**  **9 incur any capital costs? 10 MR. LAU: Can you repeat the**  **11 question one more time? 12 MODERATOR BROOKMAN: Is DOE**  **13 assuming that, if furnace manufacturers have 14 to switch 100 percent of our production to BPM**  **15 motors, that furnace manufacturers will not 16 incur any capital costs?**  **17 MR. LAU: Chris Lau with Navigant. 18 We will actually go into this in**  **19 some depth later today when we cover the 20 manufacturing impact analysis. But, for the**  **21 time being, we assume there are very minimal 22 capital conversion costs involved with moving** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 161**  

### 1 towards BPM motors. **2 MODERATOR BROOKMAN: Okay. We 3 will get into it in more detail. Okay.**  **4 MR. FOLEY: Okay. Moving on to 5 slide 40, Sam kind of went over this earlier.**  **6 But DOE used the design option approach to 7 estimate the cost of technologies not**  **8 commercially-available in furnace fan 9 applications.**  **10 So, for inverter controls, DOE 11 estimated these costs based on discussions**  **12 with manufacturers and, then, cost estimates 13 for inverter drives using similar residential**  **14 applications such as clothes washers. 15 The premium of constant airflow**  **16 BPM motor, DOE used the 10-percent markup on 17 the estimated cost for the cost in airflow**  **18 BPM motor as the additional premium cost for 19 this.**  **20 And for backward-inclined 21 impellers, DOE used photographs and**  **22 specifications used in research reports to**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 162**  **1 determine the cost model inputs. 2 MODERATOR BROOKMAN: Comments on**  **3 these cost figures? 4 Jim?**  **5 MR. VERSHAW: I'm just curious. 6 What was the constant torque motor values that**  **7 you assigned to it? 8 MR. FOLEY: Oh, for the costs?**  **9 MR. VERSHAW: Yes. 10 MR. FOLEY: Those are actually on**  **11 the next page. I think it was yes, these 12 include everything, but I'm not sure of the**  **13 exact cost on it. So, I think it would be 10 14 percent or 90 percent of that 128. So, this**  **15 includes that cost adder, that 10-percent cost 16 adder.**  **17 MR. VERSHAW: Ten percent cost 18 adder from a**  **19 MR. FOLEY: From a constant 20 airflow.**  **21 MR. VERSHAW: Talking about 22 constant torque.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 163**  **1 MR. FOLEY: Oh, your question was 2 constant torque?**  **3 MR. VERSHAW: Yes. 4 MR. FOLEY: Oh, okay. I don't**  **5 remember the exact cost. Well, they are in 6 the TSD, I believe.**  **7 MODERATOR BROOKMAN: Maybe we can 8 dig that out.**  **9 Terry, you're next. 10 MR. SMALL: I can't believe that**  **11 sort of a little, teeny manufacturer would 12 only pay 32 cents more for a backward-inclined**  **13 impeller compared to the industry giants. 14 I guess, to me, there's not much**  **15 differentiation between high-volume and 16 low-volume for backward-inclined impellers,**  **17 which is something that is really not readily 18 available anyway. What is the assumption**  **19 behind that? 20 MR. FOLEY: I think we just put**  **21 those in our cost estimate and used different 22 input production volumes for that. And then,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 164**  **1 that's what it spit out, was that 32 cents 2 addition.**  **3 MR. SMALL: Well, I would 4 definitely go back and revisit that, not that**  **5 that really I mean, that is a best-tech 6 sort of level. So, I guess that is really**  **7 maybe that doesn't have that much influence on 8 the rulemaking. But that's not right,**  **9 definitely. 10 MODERATOR BROOKMAN: Aniruddh?**  **11 MR. ROY: So, page 5 26 of the 12 engineering analysis does display the prices**  **13 for high-volume and low-volume constant torque 14 BPMs. It states 1590 for high-volume and 1957**  **15 for low-volume products. 16 MODERATOR BROOKMAN: Is this some**  **17 sort of averaging going on here? 18 MR. FOLEY: For that one?**  **19 MODERATOR BROOKMAN: For the 20 slide.**  **21 MR. FOLEY: Yes, that was market 22 and market weighed, yes.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 165**  **1 MODERATOR BROOKMAN: Okay. 2 Diane?**  **3 DR. JAKOBS: Sorry. I have just 4 another question. One of the things we are**  **5 seeing as BPM motors are becoming more 6 prevalent**  **7 (Interruption by static.) 8 MODERATOR BROOKMAN: Okay, Diane.**  **9 DR. JAKOBS: I'll try again. 10 So, I think the gentleman from**  **11 Southern Company brought up the issue of power 12 factors. And we are starting to hear that we**  **13 might have requirements for adding filters to 14 our appliances that use BPM technology. And**  **15 I understand that those can cost $10 to $20. 16 Is that a component that you included?**  **17 MR. FOLEY: That was not included 18 in this, no.**  **19 DR. JAKOBS: Thank you. 20 MODERATOR BROOKMAN: Thank you.**  **21 Okay. 22 MR. FOLEY: All right. So, moving** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 166**  **1 on to the cost-efficiency curves, here is the 2 cost-efficiency results for non-weatherized**  **3 gas, non-condensing at 1200 CFM. And the red 4 dotted line shows the proposed standard level.**  **5 Moving on, here is the 6 cost-efficiency results for electric furnace,**  **7 the modular blowers. You might notice that 8 the costs for multi-staging were reduced, and**  **9 that is because you don't need as many 10 components moving from gas to electric**  **11 multi-staging. 12 And then, this is the results for**  **13 the low-volume product class, non-weatherized 14 oil, non-condensing. Again, at 1200 CFM.**  **15 MODERATOR BROOKMAN: Steve 16 Rosenstock?**  **17 MR. ROSENSTOCK: Steven 18 Rosenstock, EEI.**  **19 It is the manufacturing production 20 costs, not retail cost, correct?**  **21 MR. FOLEY: Correct. 22 MR. ROSENSTOCK: Okay. Thank you.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 167**  **1 MR. FOLEY: All right. So, as Sam 2 mentioned before, we would invite additional**  **3 FER data, using that test procedure proposed 4 in the SNOPR, and as well as additional**  **5 comments and recommendations regarding our 6 capacity analysis that I discussed earlier.**  **7 MODERATOR BROOKMAN: Any 8 additional comments here?**  **9 Yes, Aniruddh? 10 MR. ROY: Kevin, page 5 22 of the**  **11 engineering analysis, there is a table in 12 there which has the factory parameter**  **13 assumptions. 14 MR. FOLEY: Yes, yes.**  **15 MR. ROY: Where did these 16 assumptions go into? Which spreadsheet tool**  **17 did they go into? 18 MR. FOLEY: Those go into our cost**  **19 model 20 MR. ROY: Okay.**  **21 MR. FOLEY: where we developed 22 the materials.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 168**  **1** 

### MR. ROY: Okay. And this annual

**2** 

### production volume of 1.25 million for the

**3** 

### furnaces or furnace fans

**4** 

### MR. FOLEY: Yes.

**5** 

### MR. ROY: is that for the entire

**6** 

### industry?

**7** 

### MR. FOLEY: Right. I think that

**8** 

### was for the high-volume. And then, there is

**9** 

### a different table for the low-volume

**10** 

### manufacturers.

**11** 

### MR. ROY: Okay. Okay. Because

**12** 

### there is only one table for

**13** 

### MR. FOLEY: Maybe it is described

**14** 

### in a paragraph below it.

**15** 

### MR. ROY: Okay. Yes. My comment

**16** 

### was only going to be that, historically, we

**17** 

### have seen anywhere between 2 and 3 million

**18** 

### products shipped, and that is over the last

**19** 

### five to ten years.

**20** 

### MR. FOLEY: Okay. Was that

**21** 

### furnaces or furnace fans?

**22** 

### MR. ROY: Well, yes, furnaces.

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 169**  **1 MR. FOLEY: Right. Okay. 2 MR. ROY: But since you're**  **3 including only high-volume, it would be nice 4 to have a low-volume table also that showed**  **5 the exact numbers. 6 MR. FOLEY: Right. Okay. Thank**  **7 you for that. 8 MODERATOR BROOKMAN: Yes, Diane?**  **9 DR. JAKOBS: I forgot. 10 (Laughter.)**  **11 MODERATOR BROOKMAN: That's okay. 12 DR. JAKOBS: So, the request for**  **13 comment, you're specifically saying the test 14 procedure from April 2nd, 2013, and I was not**  **15 very happy with some of the parts of that test 16 procedure. So, I don't want to waste**  **17 laboratory time testing to that test procedure 18 because I am really anxious that you change**  **19 parts of it. 20 Some of that, there was that**  **21 mixing thing. There's stuff about where you 22 measure pressures. And so, that would be** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 170**  **1 difficult. Until we had a final test 2 procedure, I would have hard time, even though**  **3 I am so involved with all this. Not everyone 4 at Rheem shares my enthusiasm.**  **5 (Laughter.) 6 And I don't think I could get lab**  **7 time, unless I could assure them that that 8 data would be good towards the final rule.**  **9 So, thank you. 10 MODERATOR BROOKMAN: In your**  **11 previous written comments, did you address all 12 these issues?**  **13 DR. JAKOBS: Yes, I would. Yes. 14 MODERATOR BROOKMAN: Okay. So,**  **15 you'll do it again? 16 MR. MAJETTE: Yes, I can speak on**  **17 behalf of Diane. 18 (Laughter.)**  **19 Most of her emails are going 20 straight into our files.**  **21 MODERATOR BROOKMAN: Okay. Okay. 22 Good. Well, that's what is helpful for the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 171**  

### 1 Department. That's good. Okay. **2 Yes, Gary? 3 MR. CLARK: Excuse my ignorance.**  **4 For these types of comments, if we were to 5 supply data, is it confidential or is it**  **6 public record? 7 MODERATOR BROOKMAN: Do you want**  **8 to address this? Or Kavita? 9 MS. VAIDYANATHAN: Hi. This is**  **10 Kavita Vaidyanathan. 11 You would mark it as confidential**  **12 business information if you deem that it is 13 for your company, and we would review that.**  **14 If we come out, if we come back with a 15 question about it, we would come back to you**  **16 before we release it. 17 MODERATOR BROOKMAN: Sam, do you**  **18 want to address this also, because Navigant 19 has a different standing in this, right? Or**  **20 Chris? Because they are different stratum, 21 different flavors, of this submission.**  **22 MR. LAU: So, during the**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 172**  **1 manufacturer interview process, we are able to 2 sign NDAs with various manufacturers, and you**  **3 submit the data directlyá 4 MR. CLARK: Yes, I understand that**  **5 whole process. 6 MR. LAU: Right.**  **7 MR. CLARK: It was just 8 MR. LAU: But if you submit as a**  **9 public comment, unless you have marked it 10 otherwise, it is public information.**  **11 MODERATOR BROOKMAN: Okay. Okay. 12 Final comments here in this**  **13 section? 14 (No response.)**  **15 Okay. I am going to suggest we go 16 to lunch. We have covered a lot of ground.**  **17 We are a little behind schedule here, but I 18 believe we will make it up. It is now 12:05.**  **19 It takes just about an hour under 20 the best of circumstances to eat lunch here.**  **21 I mean, that is if you don't leave campus. 22 So, there is a big cafeteria down to the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 173**  **1 ground floor and about 100 yards thataway. 2 And I would suggest we all go there en masse.**  **3 This room will be locked. You can 4 leave your stuff here.**  **5 You will need a badge. You might 6 need an ID to get back through the security**  **7 portal because they will check. Once you go 8 to the cafeteria, you will have to re-enter**  **9 through security at the cafeteria exit. 10 So, we have made good progress.**  **11 We will resume at 1:05 right here. 12 And for those of you joining us**  **13 via the web, I hope that you're not 14 frustrated, that we can make this work a**  **15 little better in the afternoon for you. 16 Thank you.**  **17 (Whereupon, the foregoing matter 18 went off the record for lunch at 12:06 p.m.**  **19 and went back on the record at 1:15 p.m.) 20** 

**21**

**22**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 174**  **1** 

### A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N

**2** 

### (1:15 p.m.)

**3** 

### MODERATOR BROOKMAN: We are going

**4** 

### to pick up where we left off, which is with

**5** 

### markups analysis and energy use and hear from

**6** 

### Victor Franco.

**7** 

### MR. FRANCO: Good afternoon. My

**8** 

### name is Victor Franco.

**9** 

### MODERATOR BROOKMAN: Let's bring

**10** 

### this meeting back to order, please.

**11** 

### Okay, here we go.

**12** 

### MR. FRANCO: Good afternoon. My

**13** 

### name is Victor Franco. I'm from Lawrence

**14** 

### Berkeley National Laboratory and I will be

**15** 

### presenting the markup analysis and energy use,

**16** 

### as well as the life-cycle cost and payback

**17** 

### period analysis.

**18** 

### The markups relate consumer prices

**19** 

### to manufacturer selling price. And DOE uses

**20** 

### two markups, baseline and incremental.

**21** 

### Baseline markups are applied to the baseline

**22** 

### price and incremental markups are applied to

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 175**  

### 1 the incremental costs. **2 Basically, incremental markups do 3 not include fixed costs such as overhead and**  **4 labor that do not scale up with higher 5 efficiency.**  **6 Distribution channels through 7 which products move from manufacturers to**  **8 producers were developed. DOE, for this 9 analysis, assumed three separate distribution**  **10 channels, one for replacement, one for new 11 construction, and one for new construction of**  **12 manufactured home. 13 Depending on the distribution**  **14 channel, DOE included different market 15 participants, including the manufacturer,**  **16 wholesaler, mechanical contractor, general 17 contractor, manufactured home manufacturer,**  **18 and manufactured home dealer. I will go into 19 more detail about the specific distribution**  **20 channels and which market participants are 21 associated with each.**  **22 Finally, the sales taxes,**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 176**  **1 wholesaler, mechanical contractor and general 2 contractor markups were developed for each of**  **3 the geographical areas in the analysis. 4 So, hopefully this illustrates our**  **5 distribution channels. So again, we have a 6 replacement distribution channel which**  **7 basically starts at the manufacturer, goes to 8 the wholesaler, mechanical contractor, and**  **9 then consumer. 10 The new construction distribution**  **11 channel is essentially the same with the 12 addition of the general contractor between the**  **13 consumer and general mechanical contractor. 14 In addition, we have for new**  **15 construction only manufactured homes where we 16 have the manufacturer, manufactured home**  **17 manufacturer, manufactured home dealer, and 18 the consumer. Essentially, these distribution**  **19 channels are the same from the preliminary 20 analysis.**  **21 One thing to note here, the only 22 change was for manufactured home dealer before** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 177**  **1 the preliminary analysis we had manufactured 2 home contractor. Now it is changed to**  **3 manufactured home dealer, based on stakeholder 4 input.**  **5 These slides presents a summary of 6 the changes between the preliminary analysis**  **7 and the NOPR. And a lot of the slides that I 8 will be presenting, as well as the NIA and**  **9 shipments will have something similar to this. 10 So, it is very condensed. Obviously, it has**  **11 a lot of information. So, please ask 12 questions if you have any.**  **13 Each of these slides will put the 14 primary inputs to the analysis, as well as a**  **15 short description of what done in the 16 preliminary analysis and if there were any**  **17 changes in the NOPR. 18 As I mentioned before, the**  **19 distribution channels essentially are the 20 same, except that the manufacturer contractor**  **21 is now a manufacturer dealer. 22 The manufactured markups were** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 178**  **1 updated for each product class, based on 2 updated information from the SEC 10-K reports.**  **3 For other markups, such as 4 wholesaler or mechanical contract, general**  **5 contractor, a home manufacturer contractor, 6 there was no additional updated data that was**  **7 available and there were no changes to those. 8 For the manufacturer home dealer,**  **9 we did change the data source. Before we were 10 using all other specialty trade contractor**  **11 sector from the 2007 Economic Census. This 12 includes a lot of different types of**  **13 contractor, including the home dealer. But 14 since it includes all these other contractors,**  **15 the markups associated with that are probably**

**16 not accurate. 17 What the DOE did was looked at**  **18 product -- different sources, did a literature 19 search, as well as stakeholder input, and**  **20 generated its own markup based on that for 21 them.**  **22 The sales taxes were updated to**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 179**  **1 the 2013 Sales Tax Clearinghouse data. 2 Here are the results of that**  **3 analysis, in terms of the baseline markup and 4 incremental markup for each of the product**  **5 classes. As you can see, the baseline markup 6 is higher than the incremental markup. And**  **7 for each product class, the markups are 8 different.**  **9 DR. JAKOBS: I have a question. 10 This is Diane Jakobs from Rheem.**  **11 So when you talk about 12 incremental, what is the increment, like in**  **13 efficiency or somewhere every time it goes 14 from like the wholesaler to the mechanical**  **15 contractor it increments, there is a markup? 16 I don't know. When is the increment, I guess,**  **17 is what I am trying to get at. 18 MR. FRANCO: Yes, yes. It is a**  **19 very good question. So, essentially you can 20 think of it in this way. If you have -- well**  **21 let's say you have baseline equipment that 22 costs let's say $100. So for that $100, you** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 180**  **1 apply the baseline markup. And say the markup 2 is three. So that gives you $300 is your**  **3 consumer price for that baseline equipment. 4 Now, let's say you have a more**  **5 efficient equipment and the manufacturer cost 6 of that is $200. So the incremental between**  **7 the baseline equipment and this more efficient 8 equipment is $100. And for that $100**  **9 increment, we applied this incremental markup 10 to it.**  **11 So, let's say the incremental 12 markup is two. So for that $100 increment,**  **13 you multiply that times two. You get $200. 14 So in essence, your total consumer price would**  **15 be $500 for the more efficient equipment 16 versus $300 for the baseline equipment.**  **17 DR. JAKOBS: So if you were saying 18 if you just looked at it all lumped together,**  **19 the margin on that higher efficient, more 20 efficient equipment would be a smaller margin?**  **21 MR. FRANCO: It would be not in 22 terms of the manufacturer. The manufacturer** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 181**  **1 markup is essentially the same. It remains 2 constant between the baseline incremental.**  **3 But in the distribution chain, there are 4 several different participants that might have**  **5 some fixed costs, where those things don't 6 change.**  **7 So primarily, for example, the 8 general contractor, mechanical contractor.**  **9 But in terms of the manufacturer, they have 10 exactly the same markup.**  **11 MODERATOR BROOKMAN: Dave, go 12 ahead.**  **13 MR. WINNINGHAM: I believe what 14 you are stating is the markup dollars remain**  **15 the same and the actual markup percentage is 16 reduced, as I read in the NOPR. And I am just**  **17 curious as to why DOE feels that is accurate. 18 MR. FRANCO: Well what we had to**  **19 distinguish between the total, all the 20 distribution channel and just the**  **21 manufacturer. 22 In terms of the manufacturer, the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 182**  **1 markup between the baseline and incremental is 2 exactly the same. So, in terms of the**  **3 manufacturer it is the same. In terms of the 4 whole distribution channels it does change.**  **5 MR. WINNINGHAM: You mean dollars 6 not in percents.**  **7 MR. FRANCO: No, in percentage. 8 In percentage terms. So, it might not --**  **9 MR. WINNINGHAM: But you are 10 showing --**  **11 MODERATOR BROOKMAN: Microphone. 12 MR. WINNINGHAM: This is David at**  **13 Allied. 14 But you are showing a reduction in**  **15 the incremental markup from the manufacturer. 16 MR. FRANCO: Well, no. This is**  **17 the whole distribution chain. 18 MR. WINNINGHAM: Okay.**  **19 MR. FRANCO: So, it would be in 20 terms of if we go back to this, it would be in**  **21 terms of the wholesaler and mechanical 22 contractor, there is a reduction. In terms of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 183**  **1 the manufacturer markup, it remains the same. 2 It is actually constant.**  **3 MODERATOR BROOKMAN: Greg. 4 MR. WAGNER: Greg Wagner. So, in**  **5 terms of economics, we are going to have 6 higher priced products in the marketplace and**  **7 that is going to lead to lower sales and 8 people taking lower margins. Is that what I**  **9 understand you saying? 10 MR. FRANCO: Well, in terms of the**  **11 -- and we will get to this a little bit in the 12 shipments analysis. But in terms of the**  **13 contractor, their margins remain the same in 14 terms of profits. It is just that their fixed**  **15 costs shouldn't be different because of the 16 more efficient equipment.**  **17 MR. WAGNER: Well but with higher 18 costs, there is going to be lower sales. This**  **19 is Econ 101. I took that a long, long time 20 ago.**  **21 So with that increased cost, it 22 increases -- reduces the number of units sold.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 184**  **1 And therefore, lower margins are going to go 2 along with that to make up for that lack of**  **3 volume. I'm confused how that could be. 4 MODERATOR BROOKMAN: Charlie, do**  **5 you want try this? 6 MR. STEPHENS: I've been doing**  **7 this a long time. Charlie Stephens. 8 As a consumer, when I pay for a**  **9 furnace, if I pay for a more efficient 10 furnace, at the end of that distribution**  **11 chain, I am paying for its shipping; I am 12 paying for its warehousing, maybe more than**  **13 once; I am paying for whatever cost the 14 contractor has to have it in stock. But there**  **15 is no incremental cost in any of those things 16 that I just said for a product that doesn't**  **17 weigh anymore, that isn't any bigger than the 18 one it is replacing. All of those costs of**  **19 distribution that I have to pay for as a 20 consumer are the same, whether it is a more**  **21 efficient furnace or a less efficient furnace. 22 Because the thing doesn't take up any more** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 185**  **1 warehouse space than the one it is replacing. 2 It doesn't cost any more to ship it. It is**  **3 the same size. It weighs the same. All of 4 those costs that I have to pay for at the**  **5 consumer level are the same for the more 6 efficient product and for the less efficient**  **7 product. 8 So, there is no incremental cost**  **9 there for the more efficient product, which is 10 why that markup at the end of the distribution**  **11 chain where I live as a consumer is smaller 12 than the base markup just to get the furnace**  **13 there and have warehouse space and have the 14 shipping costs and everything, regardless of**  **15 what furnace it is and how efficient it is. 16 MR. FRANCO: Those costs are**  **17 two-thirds of the overall costs? 18 MR. STEPHENS: Some of the costs**  **19 two-thirds of the -- 20 MR. FRANCO: Is it the**  **21 distribution? 22 MR. STEPHENS: Well, distribution,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 186**  **1 warehousing. There is fixed costs all the way 2 along the way that have nothing to do with how**  **3 efficient the product is. 4 MR. FRANCO: Right.**  **5 MR. STEPHENS: Those costs don't 6 change and, therefore, the margins don't**  **7 change. Now, they could mark it up more if 8 they wanted to but then they would be making**  **9 more margin on the same costs. 10 MODERATOR BROOKMAN: Gary, do you**  **11 have a comment? 12 MR. CLARK: I just have a quick**  **13 question. 14 In many cases the different**  **15 options that are available or being analyzed 16 are currently available in the marketplace.**  **17 Did the DOE do any consumer research to in 18 fact kind of validate the math that is going**  **19 on here? You know, kind of a mystery shopper. 20 Go out and say I need a new furnace for my**  **21 house and do that across the country and look 22 at different options and see if it lines up** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 187**  **1 with this manner? 2 MR. FRANCO: No, DOE did not do**  **3 this. There are some surveys that get into 4 that. But it is a very specific question.**  **5 Yes, it would have to be a very 6 specific survey, as you are mentioning.**  **7 MODERATOR BROOKMAN: I guess I saw 8 Jim first.**  **9 MR. VER SHAW: A couple questions. 10 So, if a furnace costs a manufacturer $100 to**  **11 build, would mark it up to $318. And then 12 what does the two go on?**  **13 MR. FRANCO: The two goes on on 14 the incremental for the more efficient**  **15 equipment. 16 MR. VER SHAW: But the more**  **17 efficient equipment was included in the $100 18 of manufacturer costs.**  **19 So, if I build $100 furnace, it is 20 marked up to $300 round numbers. And then if**  **21 I add $25 in there, is it marked up to $375 22 and then gets more on top of that?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 188**  **1 MR. FRANCO: No, no, no. That 2 additional $25 would be at that two value, so**  **3 it would be $50. 4 MR. VER SHAW: But don't most**  **5 manufacturers have a gross margin, based on 6 sales that kind of stays the same?**  **7 MR. FRANCO: Well again, since 8 this is the markup of the whole distribution**  **9 channel, in terms of -- 10 MR. VER SHAW: No, you just said**  **11 that if I had $100 furnace it would be marked 12 up to $318. And if I added $25 for**  **13 efficiency, I wouldn't get a 3.18 markup on 14 the $25.**  **15 MR. FRANCO: So if we go back to 16 the --**  **17 MR. VER SHAW: Because all of that 18 is costs that I have added into the product**  **19 but you are not going to let me charge -- get 20 the same markup on that as the other. It had**  **21 nothing to do with transportation and all that 22 other stuff.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 189**  **1 MODERATOR BROOKMAN: Chris has a**

**2 comment. 3 MR. LAU: So the markup to get**  **4 from your production costs to your sales 5 price, your first customer, is actually taken**  **6 into account in the manufacturer impact 7 analysis.**  **8 And then what Victor is presenting 9 is the markup from that MSP all the way to the**  **10 end user. So they are distinct. Am I**

**11 correct? 12 MR. FRANCO: Exactly. Yes, and**  **13 just to go back to your question. So, the 14 markup would be the same. You would have a**  **15 better response. It is around 1.3 to 1.4 is 16 the actual markup of the manufacturer and that**  **17 doesn't vary. 18 MR. VER SHAW: All right. I will**  **19 go read it a little bit closer and figure it**

**20 out. 21 The other point is that if we have**  **22 go build bigger furnaces, wider furnaces to**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 190**  **1 meet the requirement, that is going to 2 increase the shipping costs and the**  **3 warehousing costs and all the other stuff. 4 And I am not sure that that should be an**  **5 incremental, a lower number than the other. 6 Because you had to do more than just add a**  **7 different motor and a different set of 8 controls.**  **9 MODERATOR BROOKMAN: Don. 10 MR. BRUNDAGE: Just a quick**  **11 comment on there not being any incremental 12 costs for shipping more expensive items. The**  **13 carrying cost of inventory will go up if you 14 have a more expensive item. And the insurance**  **15 on that inventory will go up if you have a 16 more expensive item.**  **17 So, it would not go up as much but 18 it would not be a zero increase.**  **19 MODERATOR BROOKMAN: Okay, 20 Charlie.**  **21 MR. MC CRUDDEN: Charlie McCrudden 22 ACCA.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 191**  **1 Can you go back to slide 47, the 2 distribution channel graphic? Can you define**  **3 manufacturer for me so I am clear? Is it the 4 manufacturer of the motor or the manufacturer**  **5 of the furnace? 6 MR. FRANCO: It is the**  **7 manufacturer of the furnace. 8 MR. MC CRUDDEN: Of the furnace,**  **9 okay. 10 MR. FRANCO: Yes.**  **11 MR. MC CRUDDEN: And the words 12 replacement and new construction replacement**  **13 is a replacement furnace -- 14 MR. FRANCO: That's correct, yes.**  **15 MR. MC CRUDDEN: -- and not a 16 replacement motor.**  **17 MR. FRANCO: That is correct, yes. 18 MR. MC CRUDDEN: Okay.**  **19 MR. FRANCO: Yes, that is correct. 20 MR. MC CRUDDEN: Okay.**  **21 MODERATOR BROOKMAN: Diane. 22 DR. JAKOBS: So, I just had one** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 192**  **1 experience where we have a modulating furnace 2 and a long time ago it was a big deal. So it**  **3 was a premium product. And what happened was 4 an alternate vendor for the control came in**  **5 and they wanted us to switch controls. And 6 they felt like they knew our cost because they**  **7 had done this mystery shopper thing. And they 8 got an installed cost and then they**  **9 backtracked. And they were talking about they 10 knew the cost of our control and they were way**  **11 off. 12 And it was really surprising. And**  **13 all we could think there was a premium on the 14 increased margin at every step for this**  **15 premium product, even the guy installing 16 charged a premium because it was a premium**  **17 product. I mean the actual cost of it, what 18 they thought our control cost was like double**  **19 of what it actually was. 20 So, it is not like increasing the**  **21 efficiency that the incremental cost goes 22 down. Just in this one experience that I had,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 193**  **1 it seems to have gone up. 2 MODERATOR BROOKMAN: Gary.**  **3 MR. CLARK: Sometimes in the 4 marketplace you see these premiums on higher**  **5 efficiency or more deluxe products because the 6 complexity of the products in fact increase.**  **7 And so, in the steps along the 8 channel, there is more training costs, there**  **9 is more risk, installation risk, more 10 performance risk. And so as they teach you**  **11 back in Economics 101, because of that risk 12 there is a risk premium that is applied to the**  **13 products. 14 And so that is why sometimes you**  **15 see some of those situations. And that is why 16 it would be good to understand how these**  **17 markups kind of compare to what in fact really 18 happens with distributors and with contractors**  **19 in the marketplace, so that it as realistic a 20 risk premium being applied as possible.**  **21 MODERATOR BROOKMAN: Harvey? 22 MR. SACHS: I'm innocent. I never** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 194**  **1 took -- 2 PA ANNOUNCEMENT: May I have your**  **3 attention please? May I have your attention 4 please?** 

**5 MR. SACHS: No. 6 PA ANNOUNCEMENT: An alarm has**  **7 been activated in the north building. As a 8 precaution, that building has been evacuated.**  **9 At this time, you do not need to evacuate your 10 building.**  **11 Additional information will be 12 provided after the alarm is resolved.**  **13 MODERATOR BROOKMAN: Is that the 14 north building?**  **15 PA ANNOUNCEMENT: May I have your attention 16 please? May I have your attention please?**  **17 An alarm has been activated in the 18 north building. As a precaution, that**  **19 building has been evacuated. At this time, 20 you do not need to evacuate your building.**  **21 Additional information will be 22 provided after the alarm is resolved.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 195**  **1 MODERATOR BROOKMAN: Okay. 2 PA ANNOUNCEMENT: May I have your**  **3 attention please? May I have your attention 4 please?**  **5 An alarm has been activated in the 6 north building. As a precaution, that**  **7 building has been evacuated. At this time, 8 you do not need to evacuate your building.**  **9 Additional information will be 10 provided after the alarm is resolved.**  **11 MODERATOR BROOKMAN: Okay, Harvey, 12 it is your turn.**  **13 MR. SACHS: Strange forms of 14 competition we get here. Harvey Sachs, ACEEE.**  **15 With all due respect, we have all 16 had similar issues with premium products and**  **17 premium services having premium markups. But 18 the situation we are talking about here, it**  **19 seems to me it differs in two respects. One 20 of them is we are talking about compliance for**  **21 minimal efficiency with competitive products. 22 So everybody has it. And the differentiation** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 196**  **1 of a premium, a higher premium doesn't seem to 2 be part of the calculus on this.**  **3 Again, I say this as never having 4 had a business course or Eco 101 but I think**  **5 we need to keep this situation separate. 6 MODERATOR BROOKMAN: Andrew.**  **7 MR. DE LASKI: The other point I 8 would make is that what we see here is the**  **9 norm for DOE rulemakings. This is pretty 10 similar. This is not an innovation in this**  **11 docket. 12 So for what it is worth, I mean I**  **13 understand people's comments but I also think 14 that this is not something they just cooked up**  **15 in this docket for the first time. And it is 16 a reflection of what we are seeing happening**  **17 in the marketplace. And a big piece of it, it 18 is a 30-year analysis, right? So, as the**  **19 technology gets mature, I think the risk 20 premiums go away over time as technology**  **21 matures. 22 MR. CLARK: Right, which if I were** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 197**  **1 -- sorry. Gary Clark. 2 I agree and I would build that**  **3 into the model, what you just described. 4 There will be more trouble at first with**  **5 contractors and with distribution. And so 6 that risk premium would be higher at the**  **7 beginning of the implementation phase and then 8 reduce over time. And it seems like that**  **9 would be appropriate to include in a 10 calculation like this, if you are really**  **11 changing something as significantly as this 12 is.**  **13 And so, -- 14 MR. DE LASKI: And it also reduces**  **15 sales. The increase in cost will reduce the 16 number of items sold.**  **17 MODERATOR BROOKMAN: Final 18 comments on the markups shown in slide 48 and**  **19 49? Yes, Charlie. 20 MR. STEPHENS: Charlie Stephens.**  **21 Yes, I don't think we can presume, unless you 22 have got somewhere in the analysis later, and** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 198**  **1 sometimes this does come in later, about what 2 the price elasticity for furnaces but where I**  **3 live, it is pretty low, especially for 4 replacement furnaces. No one is not going to**  **5 buy a furnace because it costs $100 more or 6 $200 more when the heat exchanger has holes in**  **7 it and it is 30 degrees outside and they need 8 a new furnace.**  **9 But there will be a price 10 elasticity for furnaces and you could maybe**  **11 presume that there is some price elasticity. 12 I hope that is taken into account in the**  **13 shipments analysis. I don't know whether they 14 do or not.**  **15 MR. VER SHAW: Yes, Jim VerShaw,**

**16 one more comment. 17 MR. STEPHENS: Yes, and I don't**  **18 think, you know based on our own experience in 19 the field with these things, we found**  **20 technicians out there who literally see so 21 little difference in some of these TSLs from**  **22 a standard base furnace, that they don't**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 199**  **1 actually know that they are dealing with it. 2 They don't even know that that it has a**  **3 different motor in it. They just follow the 4 manufacturer's instructions for setting it up**  **5 and to them, it doesn't look a whole lot 6 different. So, I don't think we are talking**  **7 about a major technological leap here at some 8 TSLs. Not necessarily all TSLs and we hope**  **9 that if it is different in some of the upper 10 levels that that is taken into account. But**  **11 that is not true for every TSL here. 12 MODERATOR BROOKMAN: Okay, thank**  **13 you. 14 MR. VER SHAW: Jim VerShaw. The**  **15 thing we have to look out for is that if we 16 drive the base cost and, therefore, the**  **17 selling price to the homeowner up high enough, 18 they are going to be looking at repairing even**  **19 heat exchanger, you can get a new heat 20 exchanger assembly and put in and most people**  **21 have lifetime heat exchanger warranties 22 anyway. So you have to be careful of that.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 200**  **1 Look at what happened when RF-22 2 was "banned" and all of a sudden people were**  **3 buying replacement outdoor units with no 4 charge in them at all that they could use**  **5 their R-22 system because they didn't want to 6 replacement system and go to 410-A. And the**  **7 same number of sales that dropped when we went 8 from 10 to 13 on SEER, it all drove lower**  **9 sales and more repair, which bends the curve 10 here on the energy savings. Because not only**  **11 do you not get the electrical savings but you 12 are not going to get the gas savings that you**  **13 would get if you go to the higher efficiency 14 furnaces than what is out there.**  **15 So it is important to understand 16 the balance here. I want to make sure that**  **17 when we go through this that we have done the 18 analysis correctly and we understand fully the**  **19 effect on cost, the effect of energy savings. 20 And I think if we get more data to the folks**  **21 working on it, they will see where we are and 22 maybe we can get to the right point, such that** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 201**  **1 we get the right standard developed here. 2 MODERATOR BROOKMAN: Okay, we are**  **3 moving on here, shortly. Harvey. 4 MR. SACHS: Harvey Sachs, ACEEE.**  **5 Jim, I have looked at the Hardy 6 and AHRI data on the SEER 10 to 13 transition.**  **7 And leaving out the R-22 issue, where I think 8 everyone admits EPA screwed up badly, I find**  **9 that much of the difference in sales late 10 2005-2006, or was it 2006-2007, really**  **11 reflects the difference in the run-up in sales 12 of SEER 10 units and their warehousing for**  **13 sales in the SEER 13 year. 14 And if you really integrate those**  **15 curves -- we go offline on that. But I just 16 want to make sure the record shows that I**  **17 didn't roll over and say yes to that. 18 MODERATOR BROOKMAN: So now we are**  **19 moving on to energy use characterization. 20 MR. FRANCO: Thank you for those**  **21 comments. Now we are moving to the energy use 22 characterization, energy use analysis.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 202**  

### 1 Essentially, we are trying to **2 calculate the field energy consumption of 3 furnace fans for each household in our**  **4 analysis. For furnace fans, we are 5 calculating the energy use, different**  **6 operating modes, heating, cooling, and 7 constant circulation.**  **8 To do this, we need to first 9 calculate the furnace fan power at those**  **10 operating modes and match that to the furnace 11 fan operating hours at those specific**  **12 operating modes. I will go into more detail 13 in later slides about furnace power and**  **14 furnace fan operating hours. 15 In addition to this, DOE includes**  **16 the impact of furnace fan and AC energy use. 17 This includes the impact of more efficient**  **18 furnace fans on overall energy use of 19 household space conditioning equipment, as**  **20 well as the impact of standby energy use for 21 more efficient furnace fans.**  **22 Again, this is a summary of the**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 203**  **1 changes between the preliminary analysis and 2 the NOPR analysis for each of the primary**  **3 inputs for the energy use. 4 First we have the furnace fan**  **5 sizing. Essentially, the furnace fan is sized 6 depending on the square footage of the**  **7 household; that is, we are being looked at; 8 the outer design temperature of the location**  **9 of that household; and we match that to the 10 shipments by capacity.**  **11 For the NOPR analysis, the 12 household sample was changed from RECS 2005 to**  **13 RECS 2009 data and there was a slight change 14 in the methodology requirements for heating**  **15 and cooling, which I will go to more detail in 16 in the subsequent slides.**  **17 The furnace fans performance 18 curves were also updated with new data. And**  **19 this is the data that was used for engineering 20 analysis. Primarily, it is from manufacturers**  **21 specifications but also includes some test 22 data and data that was gathered based on** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 204**  **1 comments. 2 Next we have the system curves.**  **3 The system curves come from -- are based on 27 4 field studies, representing 1300 data points.**  **5 There were no changes to these values or data 6 for this analysis. There were slight changes**  **7 of how that was mapped to the household, which 8 I will explain further.**  **9 Yes? 10 DR. JAKOBS: This is Diane from**  **11 Rheem. It says Max ESP set to 1.2 inch water 12 column. Is that like selected data points in**  **13 your analysis? That is not the test standard 14 is it?**  **15 MR. FRANCO: No. I will go into 16 that.**  **17 DR. JAKOBS: Okay. 18 MR. FRANCO: So, that is the next**  **19 point. 20 So the other change was in the**  **21 preliminary analysis we set a maximum of one 22 external static pressure to be our maximum** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 205**  **1 that would be that households would go to 2 because we weren't as confident in terms of**  **3 our curves going beyond one external static 4 pressure.**  **5 There is field data. There are 6 some households that go beyond one. With**  **7 improved performance curves, we do go to 1.2. 8 There are not a lot of households that go but**  **9 we allow households to go beyond, up to 1.2 10 internal static pressure.**  **11 MODERATOR BROOKMAN: Steve 12 Rosenstock.**  **13 MR. ROSENSTOCK: Steve Rosenstock. 14 Yes, I saw you have impact on furnace and AC**  **15 equipment energy use, the impact of more 16 efficient fans on gas and air conditioning**  **17 use. What about the impact of higher 18 efficiency furnaces and air conditioners and**  **19 heat pumps on the fan energy use? Was that 20 accounted for?**  **21 MR. FRANCO: This is related to 22 heat pumps.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 206**  **1 MR. ROSENSTOCK: And air 2 conditioners and furnaces. If you have a 90**  **3 AFUE furnace going to 14 SEER air conditioner 4 and heat pump, reducing the operating hours of**  **5 the fan, especially in existing homes, they 6 are going to cycle off more because they will**  **7 meet the indoor conditions quicker. 8 MR. FRANCO: That is correct.**  **9 Yes, that is taken into account. Correct. 10 MR. ROSENSTOCK: Okay, thank you.**  **11 MR. FRANCO: So, if there is no 12 more questions, I'll move on. Heating and**  **13 cooling operating hours were updated to 14 include the new sample, RECS 2009 and also we**  **15 have updated the adjustment factors. I will 16 explain what those are in a separate slide**  **17 with the latest data. 18 The continuous operating hours or**  **19 based on Minnesota and Wisconsin survey data 20 and adjusted to represent national numbers.**  **21 There was no change to this analysis for this 22 rulemaking and this matches the furnace fan** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 207**  **1 test procedure assumptions. 2 DOE did add sensitivities to see**  **3 how the effects of less household using 4 continuous fan would have on the LCC results.**  **5 And those are included in Appendix 8-H. 6 In addition, there is a reference**  **7 to recent national survey that is included 8 there. I will have a little bit more**  **9 information about continuous fan in a separate 10 slide.**  **11 Again, the impact of the furnace 12 fan AC energy consumption was not changed from**  **13 the preliminary analysis. 14 MODERATOR BROOKMAN: Don Brundage.**  **15 MR. BRUNDAGE: Is your use of the 16 furnace fan being driven totally by the need**  **17 to meet the heating load? 18 MR. FRANCO: That is one of them;**  **19 heating load, cooling load, and also the 20 continuous fan operation. Those are the three**  **21 modes. 22 But in terms of heating, yes, it** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 208**  **1 is to meet the heating load. 2 MR. BRUNDAGE: Okay. What I was**  **3 thinking was you are looking at Minnesota and 4 Wisconsin data. In more temperate climates,**  **5 you are often having times that fans are used 6 just for ventilation mode in homes without**  **7 having any heating or cooling. Are you making 8 assumptions on that based on the Minnesota and**  **9 Wisconsin data or are you adjusting that for 10 assuming more ventilation hours without**  **11 heating in more temperate climates? 12 MR. FRANCO: Yes, that is correct.**  **13 For the Minnesota to Wisconsin, DOE believes 14 that those are not representative of the**  **15 country as a whole. So, DOE didn't make 16 adjustments to those operating hours to**  **17 reflect different climates. And those, you 18 can find those assumptions in the TSD as well**  **19 as in the test procedure. Those are the same 20 assumptions.**  **21 MR. BRUNDAGE: Okay. 22 MR. FRANCO: So hopefully this** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 209**  **1 slide helps a little bit to again reemphasize 2 what we were talking about in terms of**  **3 calculating the energy use of the fan. And we 4 will go to a graphical representation.**  **5 But first of all, we start here 6 with this blue household furnace fan energy**  **7 use. That is what we are trying to calculate. 8 We take into account the impact of the furnace**  **9 fan energy use, as we have already talked. 10 And we also do calculate the operating hours**  **11 and power at each operating mode. We have the 12 power and operating hours.**  **13 If you go to the power 14 calculation, you need to develop furnace fan**  **15 performance curves for each product class and 16 efficiency level and match that to the system**  **17 curve that is for each individual household. 18 For the operating hours, we have**  **19 the heating and cooling operating hours that 20 come from the RECS 2009 data and the constant**  **21 fan, as I talked about that come from the 22 survey and the adjustments that we assume for** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 210**  **1 national. 2 So first, I will talk about the**  **3 power. 4 MR. VER SHAW: This is Jim**  **5 VerShaw. Quick question. So this is where 6 the 1.2 comes in? The system curve actually**  **7 goes up to 1.2 to get to 2000? 8 MR. FRANCO: That is correct, yes.**  **9 Yes, and there are some households that do 10 that.**  **11 MR. VER SHAW: I'm not sure that 12 there are many furnaces that will give you**  **13 2000 CFM at 1.2 inches of static. 14 MR. FRANCO: That is correct, yes.**  **15 Usually, the CFM at that is much reduced. So 16 you might get like, if you are in cooling**  **17 mode, you might get like 300 CFM per ton and 18 that might be below. But that is the --**  **19 MR. VER SHAW: I'm sorry, I cut 20 you off but I understand.**  **21 Another question. I see you have 22 got cooling as the highest speed tap. There** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 211**  **1 are a number of furnaces out there that 2 require more air for heating than they do for**  **3 the rated cooling. 4 MR. FRANCO: Yes.**  **5 MR. VER SHAW: So how do you -- 6 when you do the FER, do you put heating in**  **7 twice or do you use the cooling for the 8 heating or what do you do?**  **9 MR. FRANCO: So I will go into 10 more details on that but yes, you are correct.**  **11 MR. VER SHAW: Okay. 12 MR. FRANCO: Depending on the**  **13 household, you actually have to meet the needs 14 of the household. There are some households**  **15 that we have modeled such that the heating is 16 the highest level and the cooling is whatever**  **17 is appropriate for that household. So if they 18 need --**  **19 MR. VER SHAW: Well actually that 20 was more of a procedural question. If I was**  **21 going to create an FER and my heating air flow 22 was higher than my cooling air flow, then cube** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 212**  **1 max becomes cube heat. And I have to use cube 2 max twice?**  **3 MR. JASINSKI: This is Sam 4 Jasinski, Navigant Consulting.**  **5 Yes, Jim, you bring up a very good 6 question and I think it is one that is an**  **7 important distinction to make in that Victor 8 is talking about the energy use analysis,**  **9 which is very different than -- it is related 10 to and consistent with but different than how**  **11 the rating metric is calculated. 12 So, to answer Jim's question about**  **13 what is done for the rating metric FER in 14 instances where the maximum might be a heating**  **15 setting, in the test procedure SNOPR, DOE 16 proposed that if the maximum setting is**  **17 designated for heating, then that setting 18 could be used. And as Jim stated, in the FER**  **19 equation, E-max and E-heat would be 20 equivalent. So essentially, you would put in**  **21 that energy consumption twice. 22 For the other variation on that is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 213**  **1 if the maximum setting is designated for 2 cooling only, then that would be reflective of**  **3 a situation where those two energy 4 consumptions would be different. So E-max**  **5 would be different than E-heat. 6 MR. FRANCO: So I just wanted to**  **7 go over this a little bit. Hopefully, this 8 will help the understanding.**  **9 Obviously, this is a simplified 10 version of what we did in analysis. But**  **11 basically here what is represented is the 12 system curve, which is the purple line, which**  **13 is you going from zero up to about 1600 CFM. 14 And then you see the intersection of the above**  **15 three curves, each representing different 16 airflow speed setting.**  **17 And just for this example, the 18 cooling is the top. The red represents the**  **19 heating. And the green represents the 20 continuous fan.**  **21 Obviously, depending on the model, 22 these settings would be different but this is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 214**  **1 just to illustrate the analysis. 2 These curves represent technology,**  **3 PSC. That is why they have this airflow 4 curve. And now as you can see, the**  **5 intersection between let's look at the 6 cooling, which is the blue line and the**  **7 purple. That is our operating point. 8 And so for this example, the**  **9 operating point is around 0.6 external static 10 pressure. So, if we go down and follow that**  **11 dashed line, and we hit the blue curve, there 12 are these linear decreasing curves, that is**  **13 the watts per external static pressure. And 14 so where the dashed line meets that blue line,**  **15 that will give us the watts for that operating 16 mode.**  **17 So, in this case, for cooling, 18 that is around 500 watts, 550 watts. And then**  **19 we can do the same for heating, around 400, 20 and the same for continuous fan, a little bit**  **21 lower than that, maybe 350. 22 So again, to emphasize what was** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 215**  **1 done to produce the performance curves, first, 2 DOE gathered data that was used in the**  **3 engineering analysis. That includes 4 particular literature data, as well as test**  **5 data, and data from stakeholders. 6 Based on that data, we were able**  **7 generate airflow and watts per external static 8 pressure, curves, performance curves. And**  **9 then once the engineering analysis was 10 completed, we matched these curves to the FER**  **11 values. And that gives us all the different 12 product classes and furnace fan sizes.**  **13 MODERATOR BROOKMAN: Diane. 14 DR. JAKOBS: Okay, I just want to**  **15 point out that what we are actually talking 16 about in the test procedure will be a little**  **17 bit different, where we are going to set it up 18 at a specific static at the highest airflow.**  **19 And then we are just going to change the fan 20 speed. And whatever static you get is what**  **21 you get. 22 So, it is going to be a little** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 216**  **1 different. If I was going to calculate it 2 mathematically, I mean this is the way to do**  **3 it, there is an assumption in here the 4 parabola that you call the system curve.**  **5 MR. FRANCO: Exactly, yes. 6 DR. JAKOBS: And that is a common**  **7 assumption. But I don't really know if it is 8 a good assumption. I just know it is a common**  **9 assumption. But there will be -- what 10 manufacturers are actually going to do in**  **11 their test procedure will be different than 12 what you assumed for the analysis.**  **13 MR. FRANCO: That's correct, yes. 14 So again, it goes back to the test**  **15 procedure metric versus the field use. What 16 we have done here for the field is tried to**  **17 simulate a field operation. There are some 18 studies that show the actual model that was**  **19 being tested in the field, the static 20 pressure, as well as the watts that are**  **21 generated. 22 From that, we could compare the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 217**  **1 system curve for those units and, in essence, 2 it is very similar to what we are doing.**  **3 DR. JAKOBS: Okay, just one more 4 point. Actually because I was on a committee**  **5 in Canada, too, that in the states when people 6 design duct work, usually the most airflow is**  **7 the in cooling speed. So hopefully, people 8 design their duct work for the cooling speed.**  **9 Where in Canada, if you have a heating-only 10 market, you would be designing your duct work**  **11 for the heating airflow, which these days are 12 getting closer but there is kind of a climatic**  **13 difference in how the duct work is designed. 14 MR. FRANCO: Correct. Thank you.**  **15 DR. JAKOBS: Thank you. 16 MR. FRANCO: So moving on, these**  **17 are -- we wanted to make sure that our 18 performance curves meet criteria that are**  **19 usually found in furnace models. So for 20 example, the cooling mode generate typically**  **21 manufacturer specifications are that they are 22 400 CFM per ton at 0.5 inches water column.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 218**  **1 And so we make sure that all the curves meet 2 that criteria.**  **3 For the heating mode, we take into 4 account two criteria. First, we look at the**  **5 fraction of the cooling mode that is found in 6 various models that we looked at, as well as**  **7 the minimum static pressure in the test 8 procedure to meet the airflow requirements in**  **9 the test procedure. 10 Next, we look at the continuous**  **11 fan and we look at the fraction of the cooling 12 airflow as well, based on models.**  **13 Next, the furnace fan is sized to 14 take into account the heating and cooling**  **15 requirements of the household, based again on 16 the household square footage, the heating and**  **17 cooling outdoor design temperature, and the 18 historical furnace AC shipments by capacity.**  **19 MR. HUNT: Hi, this is Marshall 20 Hunt, PG and E. On the slide 56, you cannot,**  **21 in my experience in teaching a lot of people 22 manual DACCA, you cannot design an air** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 219**  **1 conditioning system with a furnace external 2 static pressure of 0.5. By the time you get**  **3 in the coil, the wet coil, the filter, you 4 have nothing left for ducts.**  **5 So and why isn't that 0.65 like we 6 have in the rating of the furnace fans?**  **7 MR. FRANCO: No, that is a good 8 point. This is the furnace fan. That is how**  **9 it is being designed by the manufacturers. In 10 the field, you do encounter that 0.65 is a**  **11 common -- that the system presents 0.65. This 12 is just the setting up the performance curves,**  **13 not what is actually being installed in the 14 field.**  **15 MODERATOR BROOKMAN: Gary. 16 MR. CLARK: Just a quick question**  **17 once again on the half-inch external static 18 pressure. You have a note that says that it**  **19 is actually lower in manufactured homes. Is 20 that right?**  **21 MR. FRANCO: That is correct, yes. 22 MR. CLARK: And do you have data** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 220**  **1 that would support that? 2 MR. FRANCO: The manufactured**  **3 homes that we were looking at seemed to 4 indicate that that was the rating. These are**  **5 more manufactured home furnaces that are sized 6 for manufactured home.**  **7 There are some models that are 8 actually the same as residential but they are**  **9 sold as manufactured home. They may have a 10 slightly different rating. But the typical**  **11 old size that are actually taller, they fit 12 this criteria.**  **13 MODERATOR BROOKMAN: Charlie. 14 MR. STEPHENS: Charlie Stephens.**  **15 I can actually explain that. 16 Manufactured home furnaces,**  **17 generally they are electrical forced air 18 furnaces, not all but most, have no return**  **19 ducting. So there is no external static 20 component on the return side at all.**  **21 MR. CLARK: Yes, I understand how 22 they are installed and how they are designed.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 221**  **1 MR. STEPHENS: Actually, that 2 comes from measurements on our side. So these**  **3 numbers are actually quite consistent with 4 what we have measured in hundreds of**  **5 manufactured homes over the period of 20 years 6 out where we are. So, we are actually quite**  **7 supportive of those numbers. 8 MR. CLARK: Well, my experience**  **9 over the past 30 plus years is that 10 manufactured homes have higher external static**  **11 pressure than the typical site-built home in 12 the preponderance of cases. So maybe you have**  **13 something unusual out your way. 14 MR. STEPHENS: We have a lot of**  **15 measurements in the field of homes that are up 16 to 40 years old and they are pretty consistent**  **17 with what we are seeing right here. 18 MR. CLARK: Likewise.**  **19 MODERATOR BROOKMAN: Okay. 20 MR. FRANCO: So, moving on, to**  **21 additional points. 22 So for each household we are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 222**  **1 making sure that the temperature rise for 2 heating is within the specifications. If not,**  **3 then the airflow setting is adjusted so that 4 it meets that.**  **5 The cooling airflow, similarly, is 6 adjusted so that it lies between 300 to 500**  **7 CFM per ton. On average, we are getting 8 between 350 and 450. That is kind of the**  **9 range for these households but we do allow for 10 a little bit wider range.**  **11 So, this is in summary of an 12 example for one of the performance curves.**  **13 The other performance curves are available in 14 the TSD. I know this is a little bit hard to**  **15 look at here. Hopefully, in the printed 16 version it is a little bit easier.**  **17 This is just one of the operating 18 modes. This is for heating. And this is for**  **19 specific product class, non-weatherized, 20 non-condensing, at 3-ton. And the TSD we have**  **21 for the different tons and other product 22 classes.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 223**  **1 So, as you can see here, the first 2 slide is external static pressure versus CFM.**  **3 These are the airflow performance curves and 4 for each technology.**  **5 So, I will go briefly for the 6 color scheme of this. So, we have the first**  **7 EL 0, essentially the baseline EL 1, our PSC 8 motors. And they actually overlap. So what**  **9 you would see is the red curve. That is the 10 airflow for that.**  **11 The next is the green, which 12 represents the PSC with controls. After that,**  **13 we have the PPM constant torque, which is 14 represented at EL3 and EL4. They actually**  **15 both overlap and those are represented by the 16 straighter line, the sloped line; that is the**  **17 light blue. 18 And finally, we also have the BPM**  **19 variable speed, which are the flatter lines on 20 top, which kind of grayish blue color. They**  **21 also overlap. 22 Next on your right we have the --** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 224**  **1 or your left, we have the CFM per watts versus 2 external static pressure. And as you can see,**  **3 the higher efficiency in general have a better 4 watts per CFM, versus PSC and PSC with**  **5 controls. 6 And finally, we have watts per**  **7 external static pressure. And this is what 8 essentially we use. Depending on the external**  **9 static pressure, you would be using these 10 watts for these different technologies.**  **11 So next, I will talk about 12 operating hours. So, as we discussed before,**  **13 we have the power and then we multiply that 14 times operating hours to get our energy use.**  **15 So the first part is we were 16 calculating heating and cooling operating**  **17 hours. And essentially, we are using this 18 equation. We have the furnace on time ratio**  **19 that takes into account the blower on and 20 blower off periods. And we also have the**  **21 heating and cooling load, which comes from the 22 RECS 2009 households divided by the alpha** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 225**  **1 capacity, either heating or cooling. And that 2 gives us our operating hours. And then we**  **3 adjust, we have adjustment factors which I 4 will expand.**  **5 So, in terms of adjustment 6 factors, we had just for greater building**  **7 shell efficiency in the future, this is based 8 on AEO 2012 Building Efficiency Index. We**  **9 also adjust for average climate conditions, 10 based on the 10-year NOAA climate data.**  **11 The RECS 2009 data is also 12 adjusted to take into account non-furnace fan**  **13 energy use. And the operating hours also take 14 into account the heat produced by the motor.**  **15 In the analysis, we assumed that 95 percent of 16 the heat is useful heat from the motors.**  **17 MR. ROSENSTOCK: Steve Rosenstock, 18 Edison Electric Institute. Just a quick one**  **19 on that one. So, if the motor is using let's 20 just use a nice easy number, one kilowatt**  **21 hours using that 0.94 kilowatt hours is heat 22 that will be used in the stream in the heating** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 226**  **1 that is available to add heat for the heating 2 system?**  **3 MR. FRANCO: That's correct. 4 MR. ROSENSTOCK: Okay, I just**  **5 wanted to double check what you meant by that 6 94 percent. Thank you very much.**  **7 MODERATOR BROOKMAN: Jim. 8 MR. VER SHAW: Jim VerShaw. So,**  **9 on the first bullet adjusting heat load 10 building shell efficiency, so are you assuming**  **11 that most of these furnaces will go into new 12 construction? What was your split between**  **13 houses that don't get upgraded to houses that 14 do?**  **15 MR. FRANCO: So it depends on 16 product class. But if we look at the sort of**  **17 the larger part of class of condensing and 18 non-condensing it is about I believe 80 to 20**  **19 percent; 80 percent are replacements, 20 20 percent are new construction.**  **21 If you go to other product 22 classes, that varies.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 227**  **1 MR. VER SHAW: So how did that 2 adjusting for the building shell efficiency,**  **3 how did that -- 4 MR. FRANCO: So the AEO 2012 data**  **5 comes for in terms of retrofits and new 6 construction. In terms of retrofits, there is**  **7 an adjustment factor. I believe it is about 8 0.93. And for new construction it is, I don't**  **9 remember exactly but it is different, 10 definitely different. I think it is 0.95. So**  **11 it is a different adjustment factor. 12 And the details are provided in**  **13 the appendix in terms of what those factors**

**14 are. 15 Finally, we have the continuous**  **16 fan operating mode hours. And based on the 17 surveys and our adjustments to that survey**  **18 data, we come up with nationally 11 percent of 19 households use continuous circulation either**  **20 at some time or throughout the year. 21 DOE conducted sensitivity**  **22 analysis, assuming nine percent and five**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 228**  **1 percent of households use continuous 2 circulation and provides the results for the**  **3 LCC analysis in Appendix, it should read 8-H. 4 In this appendix, we also provide**  **5 a reference to recent national survey which 6 was actually just became available September**  **7 2003, which was showing 19 percent of 8 households using continuous circulation.**  **9 Do you have a question? 10 MR. ROSENSTOCK: Steve Rosenstock,**  **11 Edison Electric Institute. 12 So this is how you came up with**  **13 what we see in the NOPR, the 1870 hours as the 14 national average in Table 3.3 or III.3?**  **15 MR. FRANCO: Oh, this is in the**

**16 TSD? 17 MR. ROSENSTOCK: No, in the NOPR.**  **18 MR. FRANCO: Oh, in the NOPR, yes. 19 MR. ROSENSTOCK: Using this**  **20 information, that is how you came up with the 21 1870 as a national average for single stage**  **22 systems?**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 229**  **1 MR. FRANCO: Actually, that is 2 from the test procedure analysis.**  **3 MR. ROSENSTOCK: Okay. 4 MR. FRANCO: And that is actually**  **5 using RECS 2005 data. It is very similar. We 6 did the similar adjustments and that is just**  **7 an average. 8 MR. ROSENSTOCK: Okay.**  **9 MR. FRANCO: When we are doing 10 this analysis, it might be slightly -- it is**  **11 probably slightly different because it is 12 using RECS 2009 but it is very close.**  **13 MR. ROSENSTOCK: Okay. 14 MR. FRANCO: So it is not exactly**  **15 1870 but it is pretty similar. 16 MR. ROSENSTOCK: So in terms of**  **17 this continuous mode operation, obviously 18 there is a huge difference between five and 19**  **19 percent. What did DOE decide to do in terms 20 of this factor?**  **21 MR. FRANCO: So DOE is using 11 22 percent.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 230**  **1 MR. ROSENSTOCK: Eleven. 2 MR. FRANCO: This new study, DOE**  **3 wasn't able to fully review. It just came out 4 late September. It is showing 19 percent but**  **5 obviously, that includes people that are using 6 it not as much and some people are using it**  **7 quite a bit. 8 So, we don't know how comparable**  **9 those are to the results that we were using 10 before.**  **11 MR. BRUNDAGE: So let me make sure 12 I understand what you are saying. You are**  **13 saying 11 percent of households have none zero 14 hours for using the fan for general**  **15 circulation and there is a distribution of how 16 many hours those 11 percent use the fan for**  **17 circulation. 18 MR. FRANCO: That is correct.**  **19 MR. BRUNDAGE: Okay. 20 MR. FRANCO: So essentially, for**  **21 example if you are in the north it might be 22 like half, a little bit less than half of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 231**  **1 those would be using continuous fan the whole 2 year. Then the rest would be some that maybe**  **3 are using it only in the heating season, maybe 4 only in the cooling season and maybe only for**  **5 short periods of time. So there is a 6 distribution of operating hours.** 

**7 MODERATOR BROOKMAN: Great. Go 8 ahead, Marshall.**  **9 MR. HUNT: Is it held constant 10 over the analysis period?**  **11 MR. FRANCO: It is held constant 12 for the analysis period.**  **13 MR. HUNT: At 11 percent? 14 MR. FRANCO: Yes.**  **15 MR. HUNT: So I guess would -- I 16 guess my observation would be that the new**  **17 data suggests that the 11 percent number is 18 conservative. And I urge the Department to**  **19 carefully evaluate it as you prepare the final 20 rule.**  **21 MR. FRANCO: We will take that 22 into account.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 232**  **1 MODERATOR BROOKMAN: Greg. 2 MR. WAGNER: This is Greg Wagner.**  **3 What percentage of that circulation mode is in 4 the cooling season versus heating season?**  **5 MR. FRANCO: I don't recall 6 exactly but it depends on what part of the**  **7 country you are as well. So, it is again 8 based on these surveys and it varies by**  **9 region, we assume. 10 MR. WAGNER: So that is accounted**  **11 for then with heating hours taken out of the 12 equation because that heat is being used to**  **13 heat the structure? 14 MR. FRANCO: Exactly, yes.**  **15 MR. WAGNER: So, in your model 16 those would be accounted for but the cooling**  **17 hours are not because of the SEER and HSPF? 18 MR. FRANCO: That is correct, yes.**  **19 MODERATOR BROOKMAN: Don. 20 MR. BRUNDAGE: Just a final note.**  **21 If you are assuming a greater percentage of 22 variable speed fans in the future, that is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 233**  **1 going to cut the need for constant 2 circulation. So, that needs to be accounted**  **3 for in the study. 4 MODERATOR BROOKMAN: Okay, thank**  **5 you. Let's proceed with the summary results. 6 MR. FRANCO: So, the next slide**  **7 includes the summary results. Here, we just 8 have the summary results for non-condensing**  **9 furnaces and condensing furnace product 10 classes. And as you can see from here we have**  **11 all the efficiency levels. We have the 12 results designated by annual electricity total**  **13 use, then the electricity use savings. And in 14 addition, we have the additional fuel use.**  **15 And this is in million BTUs versus the other 16 ones in kilowatt hours just so that you can**  **17 compare those dollars. And we have 18 non-condensing/condensing.**  **19 As you can see, the results are 20 different for those two regions, based on the**  **21 fact that you will have more heating or 22 cooling, depending on those two product** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 234**  **1 classes. 2 MODERATOR BROOKMAN: Steve**  **3 Rosenstock. 4 MR. ROSENSTOCK: Steve Rosenstock,**  **5 Edison Electric Institute. 6 I am looking at the slide and**  **7 then, of course, I love to match numbers. So 8 I went back to slide 31, which had the -- this**  **9 is back in the engineering analysis for a 10 non-weatherized gas furnace, non-condensing**  **11 with the FER calculation for the baseline 12 showing 430 watts or 476 watts in terms of**  **13 baseline usage for those furnace fans. 14 When I look at the -- again, going**  **15 back to NOPR, I don't know how many -- if it 16 is a single-stage system 1870 hours, I am**  **17 getting 804 kilowatt hours to 890 kilowatt 18 hours per year in the baseline, not 1014.**  **19 Are you assuming a lot more 20 operating hours for this analysis, compared to**  **21 what you are showing in the NOPR? I have a 22 couple more questions after that.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 235**  **1 MR. FRANCO: Sure. You can go to 2 the LCC spreadsheet and actually the best --**  **3 there might be -- in Chapter 7, there might be 4 operating hours that is aggregated by**  **5 operating mode. And you could add those up. 6 I believe those add up to around 1870.**  **7 MR. ROSENSTOCK: Yes, I know I am 8 just using one or two data points just seeing**  **9 that again, you know, just kind of based on 10 the numbers I am seeing, it would seem like**  **11 the baseline PSC usage seems a little higher 12 than what I am seeing in the NOPR and the**  **13 earlier part of the -- 14 Just again, I am trying to compare**  **15 the operating hours and the watts that you are 16 saying under the FER. I don't know if there**  **17 is something else going on. 18 MR. FRANCO: Let me just bring one**  **19 additional -- this takes into account 20 different sizes. So you would --**  **21 MR. ROSENSTOCK: Different sizes, 22 okay.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 236**  **1 MR. FRANCO: -- have to have a 2 shipment weighted by size.**  **3 MR. ROSENSTOCK: A shipment 4 weighted average, okay.**  **5 But I was using 1200 and 2000 CFM 6 and I was getting 890 when I am using the 2000**  **7 CFM number with the FER. 8 MR. FRANCO: Actually the shipment**  **9 weighted would be closer to about 3.3 tons, 10 which is --**  **11 MR. ROSENSTOCK: Okay, which is 12 closer to 1200 CFM.**  **13 MR. FRANCO: It would be higher 14 than 1200. So it would be like maybe 1300.**  **15 MR. ROSENSTOCK: Okay, 1300. 16 MR. FRANCO: And you should be**  **17 getting close to the 1000. 18 MR. ROSENSTOCK: It actually is**  **19 1300 in the FER equation. At the 1870 hours, 20 you are close to 820 kilowatt hours per year.**  **21 MR. FRANCO: Yes. 22 MR. ROSENSTOCK: The higher the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 237**  **1 CFM, the higher the watts. 2 MR. FRANCO: I'm sorry?**  **3 MR. ROSENSTOCK: The higher the 4 CFM, the higher the watts. If you are at 1330**  **5 it is going to be closer to like 440 watts, 6 rather than 476 watts times the operating**  **7 hours. 8 MODERATOR BROOKMAN: Where is this**  **9 data? 10 MR. FRANCO: I'm sorry?**  **11 MODERATOR BROOKMAN: The -- 12 MR. ROSENSTOCK: Oh, it's in the**  **13 LCC. I will try to review the LCC. But 14 again, just looking at this data here.**  **15 The next question I had was it 16 says electric use savings. Now, I am at**  **17 additional fuel use. When I look at some of 18 these, I see, for example, improved PSC versus**  **19 inverter-driven PSC. You go from 119 to 268 20 kilowatt hours' savings. So that you double**  **21 the kilowatt hour savings but the additional 22 fuel use is only up by about seven percent.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 238**  **1 How is that possible? 2 MR. FRANCO: This has to do with**  **3 the curve, how the curve interacts with the 4 system curve. So if we went back to the**  **5 curves, depending on the data that we get in 6 terms of system curves is primarily PSC**  **7 motors. So from that, you would have to find 8 the intersection of that curve.**  **9 As you can see here, you would 10 actually, if you are around here, you would be**  **11 higher watts. So, there would be less of them 12 in fact in terms of heating.**  **13 MR. ROSENSTOCK: So you are saying 14 the motor-driven would cause a higher external**  **15 static pressure? 16 MR. FRANCO: No, no, no. If, for**  **17 example, say you are operating around this 18 region, then you would potentially about the**  **19 same watts. 20 MR. ROSENSTOCK: But you are**  **21 showing twice as much energy savings. 22 MR. FRANCO: And that might come** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 239**  **1 from continuous fan circulation and it could 2 also come for the constant. It just depends**  **3 on how you are matching up the -- 4 MR. ROSENSTOCK: Okay. Because --**  **5 MR. FRANCO: But you have to 6 realize that these curves are very, very**  **7 different. So when you are matching that to 8 the system curve, which is fixed, of that**  **9 household, then it results in -- 10 MR. ROSENSTOCK: Yes, it just**  **11 seemed counter-intuitive. When you look at 12 these numbers, it is like wait a minute, there**  **13 should be kind of an analogy between the 14 energy savings and the additional fuel use.**  **15 And you are seeing different numbers and 16 different percentages. You know, it is like**  **17 you go from 539 to 543 kilowatt hours saved 18 between constant-torque BPM multi-staging and**  **19 then you have lower additional fuel use. It 20 just seemed kind of counter to me.**  **21 And also when I did my 22 calculation, if you say 539 kilowatt hours** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 240**  **1 times 3413 times 94 percent useful heat, I get 2 1.73 million BTUs that you might need of**  **3 additional fuel use. And you are showing 4 0.54. And that is before -- that is just the**  **5 raw energy. 6 And then of course for the furnace**  **7 efficiency of 0.8, you would need 2.16 million 8 BTUs. Again, and you have got 0.54, so I**  **9 didn't know -- I couldn't figure out what was 10 going on.**  **11 MODERATOR BROOKMAN: Diane. 12 MR. ROSENSTOCK: This is just**  **13 heating-only mode. Right? Right, this is just 14 heating-only mode.**  **15 MR. FRANCO: These results? 16 MR. ROSENSTOCK: Yes.**  **17 MR. FRANCO: No, these results are 18 the total.**  **19 MR. ROSENSTOCK: These are 20 annualized, okay.**  **21 MR. FRANCO: This is the total 22 energy. Sorry about the confusion. Yes.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 241**  **1 This is total so it includes operating 2 heating, cooling, and continuous fan**  **3 operation. 4 MR. ROSENSTOCK: Right, okay.**  **5 Thanks. 6 DR. JAKOBS: Diane Jakobs from**  **7 Rheem. 8 And if we go to the next slide**  **9 again, with the summary of results. 10 MR. FRANCO: Sure.**  **11 DR. JAKOBS: I noticed back when I 12 was at home that the constant-torque BPM motor**  **13 and the constant-airflow BPM motor, the 14 savings are really close to each other and,**  **15 within the accuracy of this analysis, I would 16 consider them the same.**  **17 So one of the things that were -- 18 one of the assumptions that were discussed in**  **19 the technical support document was this 20 roll-up, everyone at a high efficiency level**  **21 would continue to buy that at that level. And 22 the lower efficiency, the volume where people** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 242**  **1 are buying lower efficiency, it would roll up. 2 But I really think that people**  **3 will realize, just as the technical support 4 document said that it wasn't economically**  **5 justified to have a constant air flow BPM 6 motor, anyone who is just focused on energy**  **7 savings eventually is going to figure out that 8 they can get the same thing for a lot less**  **9 money with the constant-torque motor. 10 MR. FRANCO: Just a quick response**  **11 to that. So, these are average results. And 12 we are looking at a distribution of results.**  **13 So there are a fraction of households that 14 actually do benefit and benefit quite**  **15 significantly, especially if they are in the 16 lower end of the external static pressure**  **17 distribution. For the households that are in 18 the higher end, yes, they wouldn't benefit.**  **19 And that is taken into account in the LCC 20 analysis.**  **21 And in the LCC results, you can 22 see how many people are net benefit/net cost.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 243**  **1 That is taken into account. 2 DR. JAKOBS: That has been one of**  **3 the concerns that I think utilities haven't 4 been able to predict how much savings there is**  **5 for their rebate programs. So, a consumer is 6 not going to know whether they have good duct**  **7 work or bad duct work. Certainly, the guy who 8 installed it told them that it was good.**  **9 I don't know if -- it is not 10 something that people can really control when**  **11 they make their purchasing decision. 12 MODERATOR BROOKMAN: Harvey Sachs.**  **13 DR. JAKOBS: Oh, I can't call on 14 you.**  **15 MR. SACHS: You can call on me for 16 anything you want. Harvey Sachs, ACEEE.**  **17 If we look back about five years 18 before the time at which we had the large**  **19 incentives for ECM motors, we did have 20 substantial sales. And I would suggest that**  **21 AHR had a press release one day that pointed 22 out that incremental cost was about $1,000 per** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 244**  **1 unit for the ECMs. 2 To the best of my knowledge, these**  **3 were sold as amenity, much more than for 4 energy efficiency. And the constant air flow**  **5 unit will still offer many advantages, as I 6 understand it, over the so-called X13. And I**  **7 believe that even furnaces are sold to some 8 people with amenity in mind and I am not the**  **9 only one. So, I am not sure. 10 So from my perspective, and Paul,**  **11 turn your ears off, the X13 is sort of a 12 crippled ECM that doesn't offer these**  **13 value-added amenities, particularly in terms 14 of very good humidity control and speed**  **15 matching with the air conditioning compressor 16 or the flame.**  **17 So, I am not sure that I have put 18 a lot of stock in the small difference in**  **19 savings between the BPM and the 20 constant-airflow unit just as we seem to see**  **21 a lot of people buying luxury cars that don't 22 get better mileage.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 245**  **1 MODERATOR BROOKMAN: Yes? 2 DR. JAKOBS: I think if they**  **3 experience -- I am an engineer. My husband is 4 an engineer. A lot of people in my family are**  **5 engineers. Trying to figure out like the AHRI 6 data base, it is a big purchase. I have had**  **7 friends call and kind of walk them through it 8 on the phone to figure out. The people, they**  **9 are looking at -- I mean engineers, they are 10 looking at their savings. And this may not be**  **11 focused on the furnace but they are looking at 12 a matched system and what they are going to**  **13 save in air conditioning. 14 And I think we talk about the**  **15 comfort being better with an ECM motor that 16 that is possible. And we try to talk about**  **17 the sound being reduced but the people that I 18 have talked about, that is really hard to**  **19 quantify. And any data that is available is 20 energy-efficiency related.**  **21 So, I know there are people. They 22 just want the best, no matter what it is.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 246**  **1 MODERATOR BROOKMAN: I think we 2 are due for a break right now.**  **3 DR. JAKOBS: Okay. It's getting**

**4 warm. 5 MR. VER SHAW: Can I ask one more**  **6 question before we break?**

**7 MODERATOR BROOKMAN: Yes. 8 MR. VER SHAW: If you go to that**  **9 slide 59, can I look back at slide 33 and show 10 the 42 percent savings from constant-torque**  **11 motor and 50 percent -- should that line up 12 here?**  **13 MR. FRANCO: No. So, that is a 14 very important point. So, again, one is the**  **15 metric. It is a single point metric with just 16 a single external static pressure.**  **17 Here, in this analysis, we are 18 taking into account the variability that is**  **19 accounted in the field. So, there are some 20 households with these large external static**  **21 pressures. 22 MR. VER SHAW: Which one is this?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 247**  **1 MR. FRANCO: This is the energy 2 use results. This is the field -- the energy**  **3 use field. 4 MR. VER SHAW: So, is this what we**  **5 are using, what you are using to determine the 6 savings that this level will get you?**  **7 MR. FRANCO: Exactly. And this is 8 just average. If you go to the Chapter 7,**  **9 there is actually -- 10 MR. VER SHAW: That's Chapter 7,**  **11 okay. 12 MR. FRANCO: -- a discussion of**  **13 actually the minimum, maximum, and 14 distribution of percentile. So, you can kind**  **15 of see the distribution of the results. 16 MODERATOR BROOKMAN: Marshall.**  **17 MR. HUNT: So this is where you 18 are using the 11,000 Monte Carlo type runs to**  **19 get the probability for all these different 20 combinations.**  **21 MR. FRANCO: Exactly, 10,000, yes. 22 MR. HUNT: So, it is not a simple** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 248**  **1 calculation. 2 MR. FRANCO: No. No, we tried to**  **3 model all the households. 4 MR. HUNT: Thank you.**  **5 MODERATOR BROOKMAN: Let's take a 6 break. It is now 2:30 and let's just take a**  **7 ten-minute break so that we get back here 8 quickly. You know where the restrooms are.**  **9 There is a Coke machine on the ground floor, 10 just about, pretty close to where we are.**  **11 Just make a left-hand turn around the corner 12 and you can find the Coke machines. But go**  **13 quickly because we are going to resume at**

**14 2:40. 15 And I have the handouts here, the**  **16 Xeroxed copy of the business cards. 17 (Whereupon, the foregoing meeting**  **18 went off the record at 2:29 p.m. and went back 19 on the record at 2:41 p.m.)**  **20 MODERATOR BROOKMAN: Okay, we're 21 going to proceed with life-cycle cost and**  **22 payback period analysis. And back to Victor.**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 249**  **1 MR. FRANCO: So, I will be talking 2 about the life-cycle cost and payback period**  **3 analysis. And some of these slides I will go 4 a little bit quickly. I might go back and**  **5 forth with some of the slides and I would 6 appreciate any questions.**  **7 So, the life-cycle cost analysis 8 and payback results are calculated using a**  **9 spreadsheet, using Excel and Crystal Ball. 10 And as mentioned before, this requires doing**  **11 a Monte Carlo simulation analysis. We used 12 10,000 to generate our results.**  **13 The LCC equals the total installed 14 cost -- did everybody hear what I said before**  **15 or should I repeat it? Okay. 16 So, the LCC includes the total**  **17 installed costs plus the sum of operating 18 costs. Those include maintenance, repair, and**  **19 operating costs due to energy savings. And 20 they are all discounted to the base here,**  **21 2019, which is the compliance year. 22 Just a note that the economic** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 250**  **1 evaluation was performed from the consumer 2 perspective.**  **3 So, this is just to illustrate the 4 different inputs in the LCC analysis. If you**  **5 start here at your right, the end results are 6 the life-cycle cost and life-cycle cost**  **7 savings. And the payback period. And we will 8 be discussing those results at the very end.**  **9 The inputs include, as I have 10 described, operating costs, including**  **11 maintenance, repair, and operating costs 12 related to energy use savings. And on the**  **13 top, we have total installed costs, which 14 include the consumer prices, which we**  **15 discussed in terms of markups and manufacturer 16 costs, as well as installation costs.**  **17 I have three slides that summarize 18 the methodology, the sources, and the changes,**  **19 that were applied for the NOPR. So, I won't 20 go through this just to briefly go to some of**  **21 the inputs. So, we have consumer prices that 22 also includes the learning curve; inflation** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 251**  **1 costs, maintenance, repair, marginal energy 2 prices, energy price trends, discount rates,**  **3 lifetime, and base-case efficiencies. So, 4 this is pretty standard in DOE rulemaking.**  **5 All these are available and it is very similar 6 methodology.**  **7 These are the sources that are 8 summarized for some of the primaries that I**  **9 described earlier. And I will go to the next 10 slide but I will probably jump back to this**  **11 slide. 12 Yes?**  **13 MR. BRUNDAGE: I have got a lot of 14 questions or issues with your repair cost. Is**  **15 this right place to get into that or the next 16 slide?**  **17 MODERATOR BROOKMAN: I think so, 18 Don. Yes.**  **19 MR. FRANCO: The next slide, once 20 we get through repair costs, I will explain**  **21 and then I will go back to this slide, 22 actually.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 252**  **1 MODERATOR BROOKMAN: Oh. 2 MR. FRANCO: So there is actually**  **3 two places I will go back to this slide, the 4 repair and the base-case efficiencies.**  **5 So, if you can hold your question. 6 MR. BRUNDAGE: Okay.**  **7 MR. FRANCO: So, just to briefly 8 go to the changes between the NOPR and**  **9 preliminary analysis, DOE changed from the 10 preliminary analysis from 2018 to 2019 the**  **11 compliance year. Dollar values are in 2012 12 dollars. The building sample that is being**  **13 used is from RECS 2009. And the labor costs 14 were updated to using 2012 RS Means.**  **15 Installation costs included 16 updated methodology. The full methodology is**  **17 explained in Appendix 8-D and includes an 18 additional two hours of additional labor for**  **19 more efficient blower motors. 20 Now, I will go back to the**  **21 previous slide in terms of maintenance and 22 repair. And that is where your question is** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 253**  **1 probably the best. 2 So, for the previous analysis, the**  **3 costs for repair and maintenance were 4 annualized. And we only considered the**  **5 replacement costs of the replacement of the 6 motor only.**  **7 For this analysis, the cost is 8 actually added to the year, when the**  **9 maintenance and repair occurs, as well as we 10 add the repair costs for the controls, and the**  **11 capacitor in terms of PSC designs. 12 I'll go back to the previous**  **13 slide. For the repair primarily, here are the 14 assumptions are made. In terms of the**  **15 lifetime of the motor, we use small motors 16 final rule distribution. On average, 30,000**  **17 operating hours is the average lifetime that 18 is assumed for PSC motors.**  **19 Controls are assumed to fail on 20 average the 12th year. And overall, the**  **21 failure rate of the motor for the controls is 22 7.5 percent for simple controls, 15 percent** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 254**  **1 for moderate complex controls, and 30 percent 2 for complex controls.**  **3 And this is a good time to ask 4 your questions.**  **5 DR. JAKOBS: Okay. This is Diane 6 Jakobs from Rheem.**  **7 So, you have a 12-year average 8 failure on the control.**  **9 MR. FRANCO: Yes. 10 DR. JAKOBS: Are you talking about**  **11 the control on a BPM motor? 12 MR. FRANCO: That is correct, yes.**  **13 DR. JAKOBS: That's good. 14 MODERATOR BROOKMAN: You think**  **15 that is on target? 16 DR. JAKOBS: Yes, from what I was**  **17 looking at. I hope that someday we can fix 18 that.**  **19 MODERATOR BROOKMAN: Okay. Do you 20 want to ask your question here?**  **21 MR. BRUNDAGE: Yes, and it has got 22 several parts. One is that you are assuming** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 255**  **1 the same length of life for the motor -- for 2 the fan as for the furnace. But it looked**  **3 bouncing between the furnace TSD and the 4 furnace fan TSD. There is about at least 50**  **5 percent more shipments of furnace fans than 6 there are furnaces, which implies a shorter**  **7 lifespan. 8 The other thing that doesn't**  **9 appear to be happening here is any 10 consideration of chained failures. If a**  **11 capacitor goes out, unless it is caught before 12 it actually happens, it is liable to result in**  **13 the burnout of a motor, which I can tell you 14 from personal experience on an indoor furnace**  **15 fan. And the other thing is I am not -- so, 16 the capacitors last 60,000 hours. I would**  **17 love to get some help from ACCA or somebody 18 else on this. But when I had my capacitor**  **19 replaced, they said you really need to replace 20 them about every eight years because they burn**  **21 out, which doesn't sound like 60,000 hours, 22 unless you are doing a continuous operation.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 256**  **1 Do you have any information on 2 this sort of thing?**  **3 MR. MC CRUDDEN: For you 4 personally?**  **5 (Laughter.) 6 MR. BRUNDAGE: For me.**  **7 MODERATOR BROOKMAN: Well, you 8 might want to send a certified technician.**  **9 MR. MC CRUDDEN: I can send one of 10 our members.**  **11 No, I don't have anything to add 12 right here. But this is something that I am**  **13 going to have to go back and see if there is 14 better information that I can provide to**  **15 better inform this process. 16 MR. BRUNDAGE: I think the big**  **17 thing I would see is not just the particular 18 lifetime hours, but there doesn't appear to be**  **19 any consideration of chain failures. 20 MODERATOR BROOKMAN: Okay. Please**  **21 say your name. 22 MR. SELKING: Paul Selking with** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 257**  **1 Regal. 2 Relative to the capacitor**  **3 question, we do manufacturer those also. And 4 it does vary by manufacturer. I can tell you,**  **5 for our products they do comply to the EIA-456 6 standard, which is a 60,000 hour standard but**  **7 there is no requirement. ARI or no one 8 mandates that you have to buy that capacitor**  **9 that meets that standard. So, it does vary, 10 based on the capacitor no different than**  **11 buying anything. There is not a mandate to 12 meet that standard. It is one that some**  **13 manufacturers do meet. Some don't. So that 14 would be the variance that you may be seeing**  **15 on the eight years, in your particular case. 16 MODERATOR BROOKMAN: Can you**  **17 comment on why fan shipments are more than 18 motor shipments?**  **19 MR. SELKING: I don't -- I'm not 20 familiar --**  **21 MODERATOR BROOKMAN: Furnace 22 shipments. Charlie?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 258**  **1 MR. STEPHENS: Yes, I would like 2 to ask a question as to how the analysts**  **3 separated out the shipments of the fans that 4 are for the covered classes and the ones that**  **5 are for the exempt or not covered classes. 6 MODERATOR BROOKMAN: Do we have**  **7 information about that? 8 MR. FRANCO: Well, maybe I am a**  **9 little confused. So, we are assuming that the 10 furnaces are the same in terms of shipments.**  **11 We don't account for how many motors, for 12 example, are shipped. It is just furnace**  **13 shipments. 14 So the furnace shipments and the**  **15 furnace analysis are the same as previous 16 analysis in terms of furnace shipments. We**  **17 don't account for how many more motors, except 18 here in the repair, obviously, some of those**  **19 will be replaced during the lifetime of the 20 furnace.**  **21 MODERATOR BROOKMAN: Jim. 22 MR. VER SHAW: Yes, Jim VerShaw.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 259**  **1 Looking under the repair thing, it 2 says the failure rate based on motor lifetime**  **3 operating hours of 30,000 average. So, if you 4 have got a multi-stage furnace that runs about**  **5 2900 or whatever I did the math, 11 years. 6 So, are you assuming that a multi-stage**  **7 furnace will have a motor failure in 11 years 8 in your analysis?**  **9 MR. FRANCO: On average, it might 10 fail.**  **11 MR. VER SHAW: It might. What did 12 you put in the analysis?**  **13 MR. FRANCO: It is a distribution. 14 So, sometimes it actually fails earlier.**  **15 Sometimes if fails later on. 16 MR. VER SHAW: So, the mean is --**  **17 MR. FRANCO: So, the mean -- so, 18 for example if we were talking about, let's**  **19 say 2000 hours, on average, then that is 15 20 years, on average, failure of the motor.**  **21 MR. VER SHAW: So in the 22 life-cycle cost analysis, you had a** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 260**  **1 distribution of failures. 2 MR. FRANCO: Yes, and then**  **3 obviously sometimes the motor will not fail 4 before the furnace.**  **5 MR. VER SHAW: Well, yes. So, but 6 your mean failure time was 30,000 hours?**  **7 MR. FRANCO: That is correct, yes. 8 MODERATOR BROOKMAN: Diane.**  **9 DR. JAKOBS: So, I didn't get to 10 see the spreadsheets that were uploaded**  **11 yesterday because I was on the plane. So, do 12 you have a different Weibull distribution than**  **13 you did for the one that is a year old from 14 the life-cycle cost analysis that is a year**  **15 old? 16 MR. FRANCO: I don't know. It is**  **17 exactly the same. I don't believe it is 18 different. It is the same as before.**  **19 DR. JAKOBS: It is the same 20 Weibull so that the failure rate is the same**  **21 as what you had assumed before. 22 MR. FRANCO: Yes, exactly.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 261**  **1 DR. JAKOBS: So that said that 2 furnace fans had a 26.68-year life.**  **3 MR. FRANCO: Okay, yes. That is 4 the confusing part. So, there is two Weibull**  **5 functions that we have. One is related to the 6 lifetime of the furnace equipment, the total**  **7 furnace equipment and that relates to this 8 23-year average.**  **9 Then there is a different Weibull 10 that you can find in the appendix for repair**  **11 and maintenance, which is related to this 12 30,000 operating hours. And then there it**  **13 might be around 15 years for the furthest 14 band.**  **15 DR. JAKOBS: That is for the 16 capacitor. No?**  **17 MR. FRANCO: For the capacitor, we 18 assumed 60,000 hours for that.**  **19 DR. JAKOBS: Okay. 20 MODERATOR BROOKMAN: Brian Rocky**  **21 writes a question. His question is: Control 22 lifetime from 1992 GTI study is greatly** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 262**  **1 different than control lifetime for current 2 generation motors. How was that considered?**  **3 MR. FRANCO: DOE did not have any 4 more of data. That was the only data that DOE**  **5 had at the time. So, if there is any newer 6 data, please provide that.**  **7 MODERATOR BROOKMAN: Okay. Are 8 there other questions about repair? Did you**  **9 make it all the way through slide 66? 10 MR. FRANCO: No, not yet. We are**  **11 in the middle of that. 12 MODERATOR BROOKMAN: Don.**  **13 MR. BRUNDAGE: Just a comment, the 14 fact that you are using a 1992, 20-year-old**  **15 study may be the difference. Because I 16 suspect that the fans had a lot less**  **17 complexity in 1992 than they have today and 18 may have more possible failure modes.**  **19 But it did seem pretty persuasive, 20 if you are talking about the same population,**  **21 and I am not sure they are between furnace fan 22 shipments and furnace shipments, with better** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 263**  **1 than 50 percent more furnace fan shipments. 2 That implies the life of a furnace fan is less**  **3 than a furnace. 4 I realize that even if they were**  **5 the same, a furnace fan will, obviously, not 6 outlast the furnace. You will replace them**  **7 both at the same time. So, you will have 8 somewhat higher just off the distributions but**  **9 it still doesn't seem like a reasonable 10 assumption of it lasts just as long.**  **11 MODERATOR BROOKMAN: Okay, thank 12 you. Yes, Dave.**  **13 MR. WINNINGHAM: This is Dave with 14 Allied. In your analysis, did you assume the**  **15 same life of the motor for the various motor 16 technologies?**  **17 MR. FRANCO: Yes. Yes, we did, 18 based on this 30,000 operating hours.**  **19 MR. WINNINGHAM: So your 20 assumption is that a PSC motor and a**  **21 constant-torque motor and a full ECM motor all 22 have the same lifetime.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 264**  **1 MR. FRANCO: That is correct, -- 2 MR. WINNINGHAM: Okay, I don't**  **3 know -- 4 MR. FRANCO: -- in terms of the**  **5 repair costs. 6 MR. WINNINGHAM: I don't know that**  **7 we would agree with that. 8 MODERATOR BROOKMAN: Yes, Terry.**  **9 MR. SMALL: I'm wondering why you 10 all didn't do a sensitivity analysis on that.**  **11 You really don't have any hard data. So, it 12 would be wise, maybe, to throw out some**  **13 scenarios, rather than just assuming furnace 14 fans last as long as a furnace.**  **15 MODERATOR BROOKMAN: Okay, thank 16 you. Yes, Aniruddh.**  **17 MR. ROY: Aniruddh Roy, AHRI. So, 18 just to be clear Table 3.2.6 of Chapter 3 of**  **19 the TSD says assumes an average lifetime of 20 26.7 years for the furnace fans across all**  **21 product classes. 22 And over here under the repair,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 265**  **1 you say that there is a 30 percent chance of 2 failure on complex controls with the 12-year**  **3 average failure rate from the 1992 DTI furnace 4 study.**  **5 So, that is a 30 percent of the 6 furnace fan completely failing. Right?**  **7 MR. FRANCO: No, these are three 8 different components here. The first one is**  **9 the furnace fan failing, which is the 30,000 10 operating hours.**  **11 MR. ROY: Right. 12 MR. FRANCO: The one that you are**  **13 referring to is actually the controls. So, 14 the controls, assuming that they are**  **15 repairable, it would just be the controls that 16 are being repaired.**  **17 MR. ROY: But when you get to 18 complex controls, it could reach a stage where**  **19 you would have to replace the furnace fan 20 completely as well. Right?**  **21 MR. FRANCO: Yes, so they overlap 22 somehow. And if for example, we model that** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 266**  **1 the fan actually needs to replaced, that takes 2 over. So, the whole fan is replaced, versus**  **3 just the controls. 4 MR. ROY: Okay, so how is the**  **5 assumption of 26.7 years valid, then? 6 MR. FRANCO: Yes, so just to make**  **7 very clear. So the furnace lifetime is 23.6 8 years. For a lot of these, say the lifetime**  **9 of the furnace fan is 15 years. So, if we 10 have a household where the furnace fan lasts**  **11 15 years, it will get repaired or replaced 12 actually at the 15th year. And then the**  **13 analysis period is up to the end of the 14 lifetime of the furnace.**  **15 MR. ROY: Okay. 16 MR. FRANCO: There are cases where**  **17 you might have two repairs or multiple 18 repairs. So you might have every ten years**  **19 you have a repair of the furnace fan. So say, 20 for example, you come up with ten years repair**  **21 and so you would be repairing at the 10th 22 year, the 20th year, and obviously the furnace** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 267**  **1 is completely replaced at 23.6. 2 MR. ROY: Okay and so the LCC**  **3 accounts for that. 4 MR. FRANCO: Yes. And again,**  **5 emphasize that these are distributions. And 6 so it is different for each household.**  **7 MODERATOR BROOKMAN: Harvey. 8 MR. SACHS: Victor, I think we**  **9 have got some confusion in nomenclature. In 10 my many decades of consumer experience, I**  **11 actually would differentiate four classes of 12 failures. There is the furnace failure, with**  **13 the longest interval because it is terminal, 14 like life. At the other extreme, there is the**  **15 motor controller failure, which is quite 16 separate for ECMs from the motor failure. It**  **17 is quite common to replace the controller for 18 several hundred dollars -- got that Paul --**  **19 without having to replace its motor. 20 There is a motor failure and there**  **21 is a fan failure, which in my experience is 22 rather uncommon, since we do have rock** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 268**  **1 diverters that we call air filters. So, it is 2 not always clear to me in this discussion**  **3 which level of failure is being referred to 4 and which level of repair is important.**  **5 Just as one final note, in the 6 furnaces I can remember and visualize, the**  **7 bearings have been part of the motor. The fan 8 bearings have been part of the motor. It is**  **9 not separately supported on a direct drive 10 unit.**  **11 So, in terms of understanding 12 repair costs and consumer impacts, that is**  **13 four different levels. 14 MR. FRANCO: Correct.**  **15 MODERATOR BROOKMAN: Thank you. 16 We are going to move on.**  **17 MR. FRANCO: Great. So, let me go 18 back to the NOPR changes and I am kind of**  **19 halfway there. 20 So, let's next talk about energy**  **21 prices. For this analysis, energy prices were 22 updated using 2011 EIA data. And energy price** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 269**  **1 trends were updated from 2012 early release to 2 final version.**  **3 The discount rates also included 4 updated data from the survey of consumer**  **5 finance, a survey that was conducted in 2010 6 and updated interest rate data.**  **7 For in terms of lifetime, we have 8 seen some input from manufacturers regarding**  **9 using the same lifetime distribution for all 10 furnace lifetime. And so we applied the same**  **11 furnace lifetime to all products. 12 Next, we have the base-case**  **13 efficiency distributions. And the previous 14 analysis we assumed that the PSC market share**  **15 was evenly split between the baseline and the 16 improved PSC, EL 1 50-50.**  **17 Now that we have some test data 18 and model data, we actually found out that the**  **19 split was about 40, 60 percent from our data 20 that we have.**  **21 In terms of base-case efficiency 22 distributions for BPM motor market share, we** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 270**  **1 essentially did the same analysis from 2 previous using the models that are available**  **3 in the market and assumed that that was the 4 market share in 2018 in the preliminary**  **5 analysis. 6 We got manufacturer input, stating**  **7 that the market share at the start of the 8 compliance year should be closer to 35**  **9 percent. So, that is what we used for this 10 analysis.**  **11 MODERATOR BROOKMAN: Don Brundage. 12 MR. BRUNDAGE: Don Brundage.**  **13 Annual Energy Outlook 2013 has been out for 14 quite some time. I am wondering why it was**  **15 not used for the energy price trends. 16 MR. FRANCO: When the analysis was**  **17 conducted, it was not available for us to redo 18 the analysis at that time.**  **19 MR. BRUNDAGE: I will get into 20 this more when we get into the science**  **21 societal impacts but you really need to, when 22 talking about the benefits, to use the most** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 271**  **1 recent possible information because things are 2 changing very dramatically in the electric**  **3 utility industry. Thank you. 4 MODERATOR BROOKMAN: Okay, thank**  **5 you. 6 MR. FRANCO: So, if there are any**  **7 other questions about lifetime or -- 8 MODERATOR BROOKMAN: Additional**  **9 comments? Because we are going to keep moving 10 right along because we are a little bit behind**  **11 schedule. I want to make sure we get all this 12 in today.**  **13 MR. FRANCO: Now here we have the 14 results. These are just for one product line.**  **15 So we have non-weatherized, condensing gas 16 furnace fans.**  **17 And just to show, we have the 18 installed cost. You can see how it varies**  **19 between the different efficiency levels. But 20 we have the discounted operating cost, which**  **21 again, includes the repair, maintenance and 22 energy use, energy savings, operating costs.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 272**  **1 And the total represents the total of those 2 installed and the discounted operating cost.**  **3 The average savings are listed 4 here for the difference between the baseline**  **5 and the different efficiency levels. 6 The next thing to note is the**  **7 number of consumers that experience impact. 8 We have net costs, no impact, and net benefit.**  **9 So, no impact would represent people that are 10 already at efficiency level. They would not**  **11 be impacted by a standard joint efficiency 12 level. Net costs are people being impacted in**  **13 that benefit -- for having that benefit. 14 Yes?**  **15 MR. ROSENSTOCK: Steve Rosenstock, 16 EEI.**  **17 Please correct me. I thought no 18 impact was basically plus or minus two percent**  **19 basically of the -- where you said no impact, 20 you just kind of struck me there. When it**  **21 says like 41 or 34 percent, I thought no 22 impact meant that because you are doing a** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 273**  **1 30-year analysis, it was plus or minus two 2 percent that it was DOE's thought was that it**  **3 is really no economic impact because it is 4 within an error band.**  **5 MR. FRANCO: No, it actually 6 represents, for example, let's go to Level 4,**  **7 which is the proposed standard for this 8 equipment. Thirty-four percent we are**  **9 assuming are already at or above that 10 efficiency they will be purchasing that**  **11 equipment already. So, they are not being, 12 they wouldn't be impacted by the standard.**  **13 MR. ROSENSTOCK: Steve Rosenstock. 14 Yes, okay, that is a little different. You**  **15 are saying a third of the consumers would buy 16 something even though it is a 50 percent price**  **17 increase? 18 MR. CLARK: No, he's saying 34**  **19 percent are already buying it. 20 MR. ROSENSTOCK: Yes, I am stunned**  **21 at that. 22 MODERATOR BROOKMAN: They are** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 274**  **1 already at that efficiency level, Steve. 2 MR. ROSENSTOCK: Okay.**  **3 MODERATOR BROOKMAN: Diane. 4 DR. JAKOBS: Okay, so this part**  **5 confuses me a little bit. 6 Between level 4 and level 5, we**  **7 have got level 4 is a 5.4 year payback, level 8 5 is a 11.7. And in the average savings,**  **9 there is big difference, like double. 10 But then on slide 59, that was**  **11 back where those two lines, the electricity 12 use savings were about the same.**  **13 MR. FRANCO: Yes, yes. 14 DR. JAKOBS: Okay.**  **15 MR. FRANCO: And this is a good 16 slide to clarify that whole point.**  **17 I would point out first is to look 18 at the net cost. And so if you compare the**  **19 net cost of level 4 to level 5, you will see 20 there is a big difference. Twenty-four**  **21 percent have a net cost at level 4. And at 22 level 5, there is a 45 percent net cost.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 275**  **1 So, there will be 45 percent of 2 the consumers that would be impacted by the**  **3 standards. So, they would actually have 4 negative LCC savings.**  **5 Now, the 27 percent, which are 6 obviously less than 45, have very large**  **7 savings, actually. And so the average LCC is 8 still positive. But in terms of the impact to**  **9 consumers of 45 percent consumers are impacted 10 in this case.**  **11 MODERATOR BROOKMAN: Gary. 12 MR. CLARK: Just a quick question.**  **13 Where it says installed cost, what is the 14 definition of that?**  **15 MR. FRANCO: Yes, the installed 16 cost includes the -- so this should be labeled**  **17 total installed costs. The installed costs 18 include the installation cost for this**  **19 equipment, as well as the consumer. 20 MR. CLARK: So this is to the**  **21 consumer installed cost? 22 MR. FRANCO: Yes, exactly.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 276**  **1 MR. CLARK: It is ridiculously 2 low. To get a furnace installed in somebody's**  **3 house for $339 -- 4 MR. FRANCO: Yes, this is just the**  **5 furnace fan component. Obviously, this is not 6 the furnace. The furnace may be maybe around**  **7 $2,000, based on the 2011. 8 MR. CLARK: I'm sorry, my mistake.**  **9 MR. FRANCO: This is just the cost 10 of the furnace fan. So in a sense, it is an**  **11 incremental. 12 MODERATOR BROOKMAN: Aniruddh.**  **13 MR. ROY: Aniruddh Roy, AHRI. 14 It looks like these payback period**  **15 years correlate with Table 5.29 within the 16 NOPR on page 64128. And for some reason, the**  **17 numbers don't match up here for the payback 18 period years between the slide and what is in**  **19 the NOPR. 20 Which ones are more accurate or**  **21 which one is the accurate number? 22 MR. FRANCO: I don't have access** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 277**  **1 to that right now but there might be an 2 average median payback.**  **3 MR. ROY: Yes, it says consumer 4 median payback period years. And it starts**  **5 with 1.4 on the slide, and goes to 1.35 within 6 the NOPR, and goes up to 11.03. So, it looks**  **7 like the first one and the last one match up 8 to a certain degree but then the ones in the**  **9 middle -- 10 MR. FRANCO: Yes, sorry about the**  **11 confusion. I would like to clarify it. 12 This is in terms of efficiency**  **13 level. So, this includes all the efficiency 14 levels. What is reported in the NOPR is**  **15 actually by TSLs. And so those are going to 16 be different.**  **17 Alex, the next presenter, will 18 actually go over the TSLs in the next --**  **19 MODERATOR BROOKMAN: Okay, final 20 comment. Then, we are moving on. Steve.**  **21 MR. ROSENSTOCK: Steve Rosenstock. 22 Yes, I just find it really interesting. It** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 278**  **1 just seems like a new interpretation that 2 someone would go up to efficiency level 5,**  **3 even though the installed cost is nearly 4 doubled and it is an 11.7 year payback. I**  **5 just find that just fascinating. I am sure a 6 lot of people would love to meet those 30**  **7 percent of the consumers but I just find that 8 really just -- under that interpretation that**  **9 they do it. 10 MODERATOR BROOKMAN: But the**  **11 recommended level is 4, Steve. 12 MR. ROSENSTOCK: What?**  **13 MODERATOR BROOKMAN: The 14 recommended level is 4.**  **15 MR. ROSENSTOCK: I know but they 16 are saying under level 5, though, the analysis**  **17 says that 29 percent of the consumers are 18 going to buy that fan anyway, --**  **19 MODERATOR BROOKMAN: Yes. 20 MR. ROSENSTOCK: -- at double the**  **21 cost almost and a 12-year payback. 22 MODERATOR BROOKMAN: Okay. Now,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 279**  **1 we are moving on. 2 MR. FRANCO: Next, we conducted a**  **3 consumer subgroup analysis for this product. 4 We looked at both low-income households and**  **5 senior citizen households. The results here 6 are presented for condensing gas furnace and**  **7 you can see the comparison between the average 8 LCC savings and the median payback period.**  **9 MR. BRUNDAGE: What discount rate 10 did you use for low income and senior average**  **11 LCC savings? 12 MR. FRANCO: The discount rates is**  **13 the distribution and it is assumed to be the 14 same as in the general population. So, it**  **15 depends on when you are sampling what that is. 16 MR. BRUNDAGE: I think that is a**  **17 laughable assumption that low-income people 18 have the same cost of capital as high-income**  **19 people. It is probably going to be more like 20 20 percent credit cards or payday lenders for**  **21 a significant portion of them, as opposed to 22 foregoing one percent interest on their bank** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 280**  **1 accounts. You really need to have a higher 2 discount rate if you are talking about low**  **3 income, predictably low income consumers. 4 MODERATOR BROOKMAN: Okay, thank**  **5 you. 6 MR. FRANCO: Now, just to clarify,**  **7 the discount rate is applied for to bring back 8 to the present value the operating cost**  **9 savings. So, it is not -- 10 MR. BRUNDAGE: Well whatever**  **11 interest rate you are using as the fundamental 12 part of the life-cycle cost savings, whether**  **13 it is the interest rate costs or the discount 14 rate costs, those are going to be much higher**  **15 than that for low-income consumers. 16 MR. FRANCO: If there is any**  **17 additional comments? 18 MODERATOR BROOKMAN: There you see**  **19 the consumer subgroup analysis comments on 20 this.**  **21 Now we are going to hear about 22 shipments, NIA, RIA, and MIA analyses, plural.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 281**  **1 MR. SMALL: Doug? 2 MODERATOR BROOKMAN: Yes, Terry?**  **3 MR. SMALL: I hate to go backwards 4 a little bit but could somebody, Victor, I**  **5 know the term rebuttable payback, the rule 6 that says that you need to recoup your**  **7 investment within three years of making it is 8 sort of the presumable rebuttable payback**  **9 period. 10 So, how does that work exactly**  **11 with the median payback period again? In 12 other words, if we picked a level 4, why is it**  **13 that that doesn't appear to meet that -- 14 MR. FRANCO: The rebuttable**  **15 payback is actually a different part of the 16 analysis. It is not related to the LCC**  **17 assumptions. 18 MR. SMALL: Is there a correlation**  **19 between LCC payback and that rebuttable -- 20 MR. FRANCO: No, not exactly.**  **21 Actually, the rebuttable payback is based on 22 test procedures assumptions in terms of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 282**  **1 energies. 2 MODERATOR BROOKMAN: John**  **3 Cymbalsky is back there. 4 MR. CYMBALSKY: So the rebuttable**  **5 presumption is that if it pays back in less 6 than three years, we can just adopt it without**  **7 doing all this analysis. 8 MR. SMALL: Oh, I see. So really,**  **9 we are taking it to the next level to verify 10 that -- because it didn't immediately pass**  **11 that test. 12 MR. CYMBALSKY: Right. Exactly.**  **13 That's right. So anything that we would 14 propose over a three-year payback must meet**  **15 the rigor of this analysis. 16 MR. SMALL: Okay, I understand.**  **17 MODERATOR BROOKMAN: Okay, now we 18 are moving on. Alex?**  **19 Alex Lekov, shipments analysis. 20 DR. LEKOV: Good afternoon. Alex**  **21 Lekov, Lawrence Berkeley National Laboratory. 22 And as Doug just said, I will be presenting** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 283**  **1 the shipments analysis next part of this DOE 2 presentation.**  **3 So, shipments analysis are an 4 essential part of the national impact analysis**  **5 and the purpose is to forecast the furnace 6 fans that would be expected to be shipped**  **7 between 2019 and 2048. 8 In terms of methodology, the**  **9 shipment analysis, which I would also refer to 10 those as shipments model, look both at**  **11 shipment projections and shipment in terms of 12 efficiencies.**  **13 So, in terms of shipment 14 projections, the shipment model estimates the**  **15 number of furnace fans in each product class 16 shipped annually in the absence of new**  **17 standards, which we will call base case and as 18 well as for all of the standard cases for the**  **19 analysis period. 20 And it is done for three market**  **21 segments: replacement, new constructions, and 22 new owners. And I will talk more about those** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 284**  **1 on one of the next slides. 2 In terms of efficiency, the**  **3 shipments model also projects the percent of 4 shipments in each product class and each**  **5 efficiency levels. Again, both in the base 6 case and for the standard case.**  **7 The shipment models also accounts 8 for impacts of standards on shipment by using**  **9 price elasticities. 10 So, as I said the purpose of the**  **11 shipment analysis is to arrive at total 12 shipments. And we are looking here at the sum**  **13 of three market segments, new installations, 14 new owners, and replacement shipments.**  **15 The input for all this, for the 16 derivation of the shipment at all these three**  **17 levels will be discussed in more details in 18 the next couple of slides. But as you see**  **19 here, for the new installations, we are 20 accounting for the projected new housing**  **21 starts as well as the historical market share 22 of new construction installations. For the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 285**  **1 new owners, we are looking at information 2 about a new owner shipment. And for the**  **3 replacement shipments, we are looking again at 4 the historical annual shipments and apply this**  **5 based on the lifetime of the equipment 6 expressed as the retirement function.**  **7 Also as you see here on this 8 slide, the replacement shipments will account**  **9 for some small fractions which relate to 10 demolished houses, early replacement and**  **11 equipment and switching non-furnace fan 12 products to furnace fan products as well as**  **13 switching between the furnace fan product 14 costs.**  **15 This slide illustrates or lists 16 the sources for the shipments model. And on**  **17 the left side, the inputs are listed related 18 as used in the shipments model and those**  **19 account for the historical annual shipments, 20 retirement function, the historical new**  **21 construction market saturation, projected new 22 construction start, as well as the relative** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 286**  **1 price elasticities. 2 So in terms of sources, I will**  **3 kind of briefly mention here the annual 4 shipments, depending on the product cost, is**  **5 usually we are starting with AHRI historical 6 shipments. We have a full set for a period**  **7 1972 to 2012. And for weatherized gas 8 furnaces, it is a combination of from the AHRI**  **9 shipment as well as the packaged AC shipments. 10 For the mobile home equipment, we are using**  **11 data from census, as well as another major 12 source is the American Housing Survey. There**  **13 is also source listed for electric furnaces, 14 which comes from -- is explained in more**  **15 detail in 2011 furnace standards final rule. 16 As said on the slide here, the**  **17 retirement function is based on the lifetime 18 distribution, which Victor explained in**  **19 details. The new construction market is 20 mostly based on government data from a census**  **21 bureau, as well as using RECS 2009 saturation 22 data.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 287**  **1 In terms of housing start, we 2 updated to 2012 projections. And for relative**  **3 price elasticities is the same that has been 4 used by DOE during the last ten years for**  **5 appliance standards rulemaking. 6 As was this format are showing the**  **7 differences between the preliminary analysis 8 and the NOPR changes is used throughout this**  **9 part of the presentation. 10 So again, the inputs are listed on**  **11 the left side and the preliminary analysis, 12 which most of you are familiar from the**  **13 previous round of the rulemaking are in the 14 middle and the NOPR changes are on the right**  **15 side. 16 So, mostly what is happening here**  **17 is we updated to a new data, more recent data. 18 Well before usually the data was 2010,**  **19 approximately, we are updated when it was 20 available to 2011. This is the case of the**  **21 historical shipments from GAMA, for example. 22 Retirement function mentioned the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 288**  **1 lifetime was discussed in detail and also is 2 mentioned in the earlier presentation that for**  **3 this round, we are applying single 4 distributions for all product classes.**  **5 We did an enhancement to the 6 shipments model here in terms of early**  **7 replacement. We applied a fraction of 8 shipments during the period 1998 to 2010 to**  **9 account for early replacement. 10 Projected construction starts**  **11 again updated with newer data. Shipments to 12 new owner, it is essentially as a result of**  **13 overall changes to the shipments model, they 14 also appropriately changed.**  **15 Most important change that occurs 16 is probably the one under forecasting the**  **17 condensing market shares. Previous 18 preliminary analysis were done under the**  **19 presumption of the regional analysis for 20 furnaces.**  **21 So, this was mandatory this year. 22 So the analysis change to essentially to** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 289**  **1 assume in the north instead of 100 percent 2 converting to condensing standards basic is**  **3 essentially also heavily impacted on the type 4 of furnace fans. Now the fractions are 75**  **5 percent in the compliance year going up to 97 6 percent 30 years during that years' period.**  **7 MODERATOR BROOKMAN: We need to 8 keep moving rapidly. So, comments on these**  **9 two slides, the shipments analysis. 10 Yes, Greg?**  **11 MR. WAGNER: Going back a slide, 12 you have the income from 1980 to 2002. Go**  **13 back one slide. The bottom line the relative 14 price. It is the elasticity would be a little**  **15 different in this time period. In the last 16 decade there has been shrinking of real wages**  **17 versus that time period where there be 18 expansion wages. And why not use more recent**  **19 data? 20 MODERATOR BROOKMAN: Okay, so if**  **21 you could supply that in your written 22 comments, that would be helpful.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 290**  **1 MR. WAGNER: Well, why is not 2 being used, I guess, is the question.**  **3 MODERATOR BROOKMAN: Okay. 4 DR. LEKOV: So my understanding is**  **5 that this period 1980 to 2002, the data was 6 available for the income of the households, in**  **7 addition to the shipments. So, that is the 8 information which is applied here.**  **9 Also, it is consistent throughout 10 many other products that DOE regulates.**  **11 MODERATOR BROOKMAN: Diane. 12 MR. WAGNER: But that is skewing**  **13 the data with the income levels. 14 MODERATOR BROOKMAN: Okay.**  **15 DR. JAKOBS: Actually in the 16 technical support document, there are**  **17 references. And I think what Alex said is 18 this is what DOE has been using in the last**  **19 ten years. But if you look at the references, 20 one of them is from 1971 and then there is one**  **21 about appliances from the 1940s. 22 So, they are really old papers** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 291**  **1 that are in the technical support document. 2 MODERATOR BROOKMAN: Okay.**  **3 DR. JAKOBS: So, if you didn't 4 like the '90s, you are not going to like the**  **5 '40s. 6 (Laughter.)**  **7 MODERATOR BROOKMAN: Okay, 8 additional comments on the shipments analysis**  **9 before we move on? 10 Okay, keep going, Alex.**  **11 DR. LEKOV: So, this is a request 12 welcomes comments on the shipments and demand**  **13 elasticities. 14 MODERATOR BROOKMAN: That's what**  **15 we just finished. So now we are moving on. 16 DR. LEKOV: So, here are the**  **17 results. The left bar are the historical 18 shipments. And here are DOE's projections for**  **19 the next period. All the product classes are 20 in different colors.**  **21 MODERATOR BROOKMAN: Steve 22 Rosenstock?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 292**  **1 MR. ROSENSTOCK: Steve Rosenstock, 2 EEI. I am just kind of curious.**  **3 You know basically, new homes 4 sales have basically flat-lined over the last**  **5 four years. And again, I am not sure about 6 repair versus replace but all of a sudden, it**  **7 looks like things are just going to surging 8 again starting this year or next year over the**  **9 next several years. And I am just kind of 10 curious in terms of what is the main driver**  **11 behind this, I will say significant jump up 12 over the next I will say eight years before**  **13 more, I will say a flatter kind of projection 14 onward.**  **15 DR. LEKOV: So, this is based on 16 new construction projections. Remember that**  **17 the market was down. Usually let's say one 18 and a half million units were going towards**  **19 new construction in terms of furnaces went 20 down to 300,000 at the bottom of the market.**  **21 And now the EEA projects for the next period 22 growth.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 293**  **1 MODERATOR BROOKMAN: Charlie? 2 MR. STEPHENS: I think you will**  **3 find that the lag in that jump up is about 23 4 years, about a furnace lifetime. It is an**  **5 echo of that other thing that is kind of 6 fogged over a little bit on the left. All**  **7 those furnaces that you see in that big peak 8 on the left are going to have to get replaced**  **9 by another one. So, you should see exactly 10 the same shape with a little bit of about a**  **11 23-year delay or one furnace lifetime delay. 12 DR. LEKOV: I would just add here**  **13 that Charlie is correct, in general. Maybe a 14 little bit there is a little bit not exact**  **15 match, due to impact of early replacement and 16 other factors.**  **17 MODERATOR BROOKMAN: So, let's 18 proceed to the next slide.**  **19 DR. LEKOV: So shipments model is 20 a very big part of the overall national impact**  **21 analysis, which the purpose is to estimate the 22 impact of the energy conservation standard for** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 294**  **1 the period 2019 to 2048 expressed in terms of 2 national energy savings but reported as**  **3 primary energy savings and net present value. 4 In essence, to do this for each**  **5 product class in each standard case, we 6 calculate per unit cost increased and per unit**  **7 energy savings due to a standard, as well as 8 account for the number of units in stock and**  **9 energy savings each year from between 2019 and 10 2048.**  **11 So, this is here a list of the 12 inputs that go into national impact analysis**  **13 divided in two sections. The upper are the 14 inputs related to the national energy savings**  **15 and the bottom, the ones that relate to the 16 national present value. I will not read here**  **17 every single thing. Mostly, many of the 18 results are simply coming from LCC analysis.**  **19 I will focus a little bit on base case 20 efficiencies distribution, which is a key**  **21 input. I will explain it on maybe one or two 22 slides later.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 295**  **1 And I would like to mention here 2 about the way DOE reports the energy, which is**  **3 essentially by converting the site energy into 4 primary energy consumption, which everybody is**  **5 familiar here, plus an additional component 6 which is applying the so-called**  **7 full-fuel-cycle factors into account for the 8 energy use for resource extraction and**  **9 distribution losses. 10 So, you will see the results**  **11 usually will mirror them. Two tables; one 12 simply the primary savings related to the**  **13 site-to-power plant, as well as the one 14 accounting for the full-fuel-cycle and just**  **15 kind of put this in front. The difference is 16 very, very small but it is accounted and**  **17 presented here. 18 Again, following the usual format**  **19 here, we are listing the changes between the 20 preliminary analysis and the NOPR changes. In**  **21 essence, primarily adjusting for the years, 22 for example the compliance years now in 2019.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 296**  **1 The dollar year has changed to 2012. 2 The LCC output results to NIA are**  **3 essentially updated based on the new LCC 4 analysis. We also the rebound effect, which**  **5 was applied in the preliminary analysis is 6 applied also in the NIA analysis, with the**  **7 refinement of being calculated for each 8 household exactly to match for the actual**  **9 operations savings associated with it. 10 The primary most important change**  **11 here relates to the base-case efficiencies 12 distributions on which we got some**  **13 stakeholders' comments, which were applied 14 and, on the next slide, I will go in more**  **15 details about the details of how this was 16 done.**  **17 MODERATOR BROOKMAN: Steve 18 Rosenstock.**  **19 MR. ROSENSTOCK: Steve Rosenstock, 20 Edison Electric Institute.**  **21 In terms of the rebound effect, it 22 looks like it was changed but I am just kind** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 297**  **1 of curious. I didn't memorize Chapter 10, 2 please forgive me. What is the range of**  **3 rebound effect now under the revised analysis? 4 DR. LEKOV: It is about the same,**  **5 the 20 percent. 6 MR. ROSENSTOCK: Still in terms of**  **7 20 percent? 8 DR. LEKOV: Yes.**  **9 MR. ROSENSTOCK: Okay, thank you. 10 DR. LEKOV: So, here a little bit**  **11 more details related to the development of the 12 base case efficiencies. So, two parts of it.**  **13 The bottom part actually is to illustrate the 14 so-called rollup scenario used when we are**  **15 going from one to another standard cases. And 16 the chart on the left part is to illustrate**  **17 DOE's projections of the trend for BPM market 18 shares and, again, are based on stakeholders'**  **19 input. The red part at the historical 20 information data and the blue part shows the**  **21 actually the trends for this efficiency 22 distributions, which increased from about 35** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 298**  **1 percent in 2019 to 45 percent at the end of 2 the analysis period 2048.**  **3 MODERATOR BROOKMAN: Harvey Sachs. 4 MR. SACHS: Harvey Sachs, ACEEE.**  **5 In the blue portion of the curve on slide 81, 6 did the Department actually look at, for**  **7 example, material costs in comparison to BPM 8 to a PSC, since we will be producing, under**  **9 your scenario, very large volumes of both, the 10 material costs is probably going to dominate**  **11 the product costs. 12 DR. LEKOV: So, I am trying to**  **13 relate your question to the trends. In fact, 14 these trends here don't have much assumptions.**  **15 They were plain response to earlier DOE 16 assumption in the preliminary analysis. The**  **17 stakeholders said this is too high. Here are 18 the values that the manufacturer project. So,**  **19 DOE directly applied those values. 20 MR. SACHS: We will address this in**  **21 comments but if the -- at comparable 22 production volumes, if there isn't a large** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 299**  **1 difference, a significance difference in 2 manufacturing costs, which is dominated by the**  **3 materials, and we are not talking rare earth 4 magnets here, then that shift could be greatly**  **5 underestimated in terms of market share. 6 MODERATOR BROOKMAN: Okay. Yes,**  **7 Diane? 8 DR. JAKOBS: If we look at this**  **9 chart on standard level 4, it is saying that 10 28 percent would be baseline 5 and 72 percent**  **11 at baseline 4. 12 So, we already established that**  **13 baseline you wouldn't be saving any more 14 money, you would just be paying a larger first**  **15 cost. And I think that the benefits will be 16 harder, that there will be a shift down from**  **17 baseline 5. 18 So ECM motors people will be more**  **19 likely to buy the less expensive X or 20 constant-torque motor, instead of a**  **21 constant-CFM motor because they will be able 22 to have the benefit, they will get a better** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 300**  **1 SEER level. But some of the benefits are more 2 esoteric about comfort and sound levels. So,**  **3 there will be people who buy them but I don't 4 think that this proportion is correct.**  **5 MODERATOR BROOKMAN: Okay, Andrew. 6 MR. DE LASKI: How can I comment**  **7 in the opposite direction? Which it seems to 8 me that if there a third of customers today**  **9 who are buying ECMs because they like them, as 10 Steve pointed out, they are paying -- it is**  **11 not a great payback, yet they are buying them, 12 why does that go away? In fact, in would**  **13 expect that manufacturers will seek to 14 differentiate products to be able to offer**  **15 premium products that they can, that Charlie's 16 contractors can sell at a markup.**  **17 So, there would be a lot of -- I 18 would think the engineering departments will**  **19 go to work to figure out how am I going to 20 come up with next thing that I can sell at a**  **21 premium. And I know you don't know what that 22 is today but there are some ideas because** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 301**  **1 there are some ideas right here in the 2 documents here.**  **3 So, I think this is a very 4 conservative estimate of energy savings**  **5 because I think DOE, in most dockets that I 6 have seen, does both a roll-up scenario and a**  **7 shift scenario of some sort. So, I am a 8 little surprised that there is no shift**  **9 scenario here. 10 So, Alex, I guess that would be my**  **11 recommendation to you that you should also, as 12 is practiced in other dockets, is to do some**  **13 sort of shift modeling that would reflect that 14 there are drivers out there to find ways to**  **15 differentiate products above whatever the new 16 baseline is going to be.**  **17 DR. LEKOV: Yes, this is correct. 18 This is roll-ups scenario. And thank you for**  **19 your input on the shift. 20 MODERATOR BROOKMAN: Okay, keep it**  **21 moving. 22 DR. LEKOV: So, the next part of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 302**  **1 the presentation I will present DOE's process 2 of developing the so-called trial standard**  **3 levels and the reasoning behind it to come at 4 the proposed TSL.**  **5 Probably it is worth it to explain 6 the structure of this table. So, we have a**  **7 list of the product classes that are under 8 consideration in this rulemaking and the**  **9 numbers that you see on the right side are 10 essentially the efficiency level number as**  **11 listed in the engineering analysis. 12 So, at the bottom of the table,**  **13 clearly lists the criteria that allowed DOE to 14 generate those six TSLs. The TSL 4, which**  **15 ultimately was proposed, is the one that 16 yields maximum national present value at 7**  **17 percent discount rate and for which the 18 percentage of LCC winners is higher than the**  **19 percentage of LCC losers. So, that is the 20 outcome in terms of how the scheme, the TSL**  **21 scheme was generated. And it will be better 22 illustrated as we proceed on the next slide.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 303**  **1 MODERATOR BROOKMAN: Are you on 2 the first slide, Don?**  **3 MR. BRUNDAGE: Yes, this is 4 probably going to be a question more for DOE**  **5 staff than for Alex. But I would like to 6 understand how you are handling and**  **7 calculating the quads of national energy 8 savings, the overlap between the energy**  **9 savings here and over on the air conditioner 10 rulemaking. Because the energy use of an air**  **11 conditioner includes the indoor fan. And if 12 you specify a high efficiency indoor fan, that**  **13 means that for a given SEER value, the rest of 14 the system can be less efficient than it would**  **15 have been otherwise, unless you redo the test 16 procedure.**  **17 How are you avoiding double 18 counting the energy savings?**  **19 MR. MAJETTE: I can't answer that 20 question at the moment. I think it is**  **21 probably better to write that out. And that 22 is probably going to be a programmatic** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 304**  **1 response that needs to go to that. I just 2 can't answer that right here.**  **3 MR. BRUNDAGE: Yes, I wasn't 4 necessarily expecting -- I just wanted to**  **5 bring it up that it is an issue. You are 6 claiming energy savings over on the air**  **7 conditioner side that includes some of the 8 same energy you have here. And it is fine for**  **9 you to claim it here and adjust it lower over 10 there.**  **11 But it is probably going to be a 12 policy thing on which rulemaking you claim it**  **13 under. So, it is an issue. 14 MODERATOR BROOKMAN: Alex.**  **15 DR. LEKOV: This question was 16 discussed in detail during the preliminary**  **17 analysis. In essence, DOE does not account 18 for the cooling savings at the base case.**  **19 In what is essentially account 20 here in terms of fan operation is for the**  **21 standard cases, where the SEER savings are 22 already calculated into whatever manufacturing** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 305**  **1 exists. And when the new standard arrives, 2 you have a differential in the savings and**  **3 this is what actually DOE is accounting for. 4 MR. BRUNDAGE: So you are saying,**  **5 for example, the 1.86 quads on the top line 6 there already has the air conditioning cooling**  **7 mode energy savings taken out of it. 8 DR. LEKOV: It includes the three**  **9 modes of operation, including the fraction of 10 the cooling mode that is not related to**  **11 baseline operation. It may be -- 12 MR. BRUNDAGE: That is a perfectly**  **13 valid way of doing it within the context of 14 this rulemaking but when you get around to**  **15 calculating the energy savings off of air 16 conditioning, you have got some of the same**  **17 energy using the test procedure is getting 18 counted again, because they are also going to**  **19 be counting cooling mode fan use as part of 20 their energy use.**  **21 I will include it in my comments 22 but I think it is a major issue, since almost** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 306**  **1 everyone has air conditioning and furnace on 2 a national basis, that there is opportunity to**  **3 double count the savings. 4 MODERATOR BROOKMAN: Okay, thank**  **5 you. Yes, Aniruddh. 6 MR. ROY: I would agree with what**  **7 Don says because the FER equation does have 8 the CH term, which is the annual furnace fan**  **9 cooling operating hours and there is potential 10 for overlap, based on that term being in the**  **11 equation. 12 Also, I have a question on the**  **13 energy savings, the national fuel cycle energy 14 savings and quads between TSL 3 and TSL 4.**  **15 So, TSL 3 states cumulative savings of 2.332. 16 TSL is saying 4.576. And the only difference**  **17 between the two design options being the fact 18 that TSL 4 has multi-staging, in addition to**  **19 the constant torque. 20 How is DOE able to get an energy**  **21 savings of almost double the quads with just 22 multi-staging being the difference between the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 307**  

### 1 two TSLs? **2 MR. VER SHAW: Alex, go back to 3 the previous slide.**  **4 DR. JAKOBS: We need a Rosetta**

**5 Stone. 6 MR. VER SHAW: Yes, where is**  **7 Rosetta Stone? The TSL and the energy levels 8 are different.**  **9 DR. LEKOV: So, if we return to 10 engineering analysis, most of this product**  **11 class is here under TSL 3, include single 12 stage equipment. And that is when you switch**  **13 to multi-stage equipment, you take advantage, 14 essentially those longer hours at much lower**  **15 input and much smaller energy use. 16 MODERATOR BROOKMAN: Alex, why**  **17 don't you repeat that? 18 DR. LEKOV: TSL 3 is constructed**  **19 of efficiency level for each product class, 20 which is listed at efficiency level 3, which**  **21 is essentially represents an operation of a 22 single stage equipment.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 308**  **1 TSL 4 accounts for multi-stage 2 equipment.**  **3 MODERATOR BROOKMAN: Okay. Steve 4 Rosenstock.**  **5 MR. ROSENSTOCK: Steve Rosenstock, 6 EEI.**  **7 Again, going back to side 33, the 8 delta, you know when you go percentage**  **9 reduction and FER for baseline, I know it is 10 not the energy savings analysis but you are**  **11 showing that efficiency level 3, going backing 12 to the Rosetta Stone, again, percentage**  **13 reduction FER baseline 42 percent. Then you 14 go to 4, efficiency level 4, again Rosetta**  **15 Stone, it is 50 percent. So, the incremental 16 savings are eight percent.**  **17 So, I guess, again that is a fan 18 energy -- that is an FER rating. But again,**  **19 it is kind of surprising when you do that and 20 then you come over here to national impacts,**  **21 all of a sudden for a couple of those 22 categories, at least on the electric side, you** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 309**  **1 are saving eight percent and you are seeing 2 this doubling of savings from TSL 3 to TSL 4.**  **3 MODERATOR BROOKMAN: Aniruddh. 4 MR. ROSENSTOCK: I think that**  **5 might be part of the confusion there, at least 6 for those products.**  **7 MODERATOR BROOKMAN: Okay. 8 MR. ROY: Aniruddh Roy, AHRI.**  **9 So, given that multi-staging is 10 proving to save a lot of quads, as suggested**  **11 by the NOPR, did DOE ever consider the PSC and 12 multi-stage design option in its analysis?**  **13 Because I don't see it over here in the table. 14 DR. LEKOV: Just to answer**  **15 Aniruddh's question first, as described the 16 design option is defined in the efficiency**  **17 level, I don't think so. 18 MR. JASINSKI: Yes, Sam Jasinski,**  **19 Navigant Consulting. So, typically when using 20 a design option approach like this, the**  **21 technology options are applied in order of 22 cost-effectiveness. In this particular case,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 310**  **1 DOE used somewhat of a hybrid approach of an 2 efficiency-level approach in a design-option**  **3 approach. 4 Multi-staging was applied at X13**  **5 because that is where it was cost-effective. 6 But in addition to that, DOE found that there**  **7 weren't many multi-staging because of its 8 minimal or very small impact on AFUE is**  **9 typically a premium feature or luxury feature 10 that sold for comfort, not necessarily energy**  **11 savings in terms of AFUE. 12 So, it is typically found with ECM**  **13 motors or premium products that have ECM 14 motors or X13s. So, DOE had little data for**  **15 PSCs that have multi-staging. 16 Now, DOE understands that**  **17 multi-staging can be applied with PSC motors. 18 However, this savings, and this goes back to**  **19 the cost-effectiveness, the savings would be 20 different with those motors because the**  **21 primary driver of energy savings for the 22 higher efficiency motors are the lower** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 311**  **1 turn-down ratios, because of the cubic 2 relationship of power and speed.**  **3 So, multi-staging at PSC would 4 save a lot less energy. So, that plays into**  **5 the ordering of the technology options, as 6 they are applied.**  **7 But again, this is a performance 8 standard. So, certainly multi-staging could**  **9 be added to PSC motors if there is a benefit 10 and manufacturers choose to do so.**  **11 MR. SACHS: With all due respect, 12 I think there is a little bit of confusion**  **13 between AFUE as a measure of performance for 14 a rating measure for standards versus field**  **15 use, in which Scott Pigg certainly shows some 16 substantial differences in energy use, because**  **17 the multi-stage units, as installed with field 18 oversizing typically run 80 to 90 percent in**  **19 low stage with humongous oversizing of the 20 heat exchangers and the cubic claw.**  **21 The other point I think is worth 22 making but I haven't done the analysis** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 312**  **1 recently is that PCS motors not only have less 2 turndown potential but at part load, their**  **3 efficiencies are much lower than ECMs. And I 4 assume the base BPM maintains that part load**  **5 efficiency. So that would be the other reason 6 that I would be very surprised that the PSC**  **7 showed up to make sense with multi-staging. 8 MODERATOR BROOKMAN: Thank you,**  **9 Harvey. 10 Yes, Aniruddh.**  **11 MR. ROY: The reason I asked the 12 question is because DOE has evaluated**  **13 prototype levels and this could have been 14 another prototype for consideration.**  **15 MODERATOR BROOKMAN: Okay, great. 16 We are going to keep moving on here, folks.**  **17 DR. LEKOV: So, I think there is 18 an understanding here. This is the**  **19 essentially presentation of the primary 20 national energy savings at the power plant**  **21 level. 22 The next slide shows the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 313**  **1 full-fuel-cycle. As mentioned, the difference 2 is really small. For example, the proposed**  **3 TSL 4 here, we have 4.58 quads compared to 4 4.56. So that is the magnitude of the impact.**  **5 The next slide shows the net 6 present value. Here it is again, TSL 4 at 3**  **7 percent discount rate. The value is shown, 8 the total value, as well as the same**  **9 information at 7 percent discount rate. 10 MODERATOR BROOKMAN: Comments on**  **11 these slides, these last three? Okay. 12 DR. LEKOV: So, next to the**  **13 regulatory impact analysis. DOE was mandated 14 to perform analysis of policy alternatives**  **15 under Executive Order 12866. 16 To do this, DOE applied a modified**  **17 NIA spreadsheet and here is the type of 18 non-regulatory policy alternatives that are**  **19 rated and described in detail in the 20 assumptions in the DSD are traditionally done**  **21 by DOE with the specific assumptions. There 22 is data or set of data for each of these** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 314**  **1 policies. 2 The result is that no alternative**  **3 was found to be as beneficial as the proposed 4 energy conservation standards.**  **5 So, manufacturer impact analysis. 6 MODERATOR BROOKMAN: Yes, Chris** 

**7 Lau. 8 MR. LAU: Hi, folks. My name is**  **9 Chris Lau. I am with Navigant. I will be 10 discussing the manufacturer impact analysis.**  **11 The main purpose of this analysis 12 is to assess the impacts of standards on**  **13 manufacturers who assemble furnace fans as 14 part of HVAC products addressed in this**  **15 rulemaking. 16 The second purpose is to identify**  **17 and qualify the impacts on manufacturer 18 subgroups, such as the impacts on small**  **19 manufacturers. 20 The final portion of the MIA**  **21 involves discussion of direct employment, 22 competitive considerations, potential capacity** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 315**  **1 constraints, and other federal regulations 2 that go into effect around the compliance date**  **3 of this proposed standard. 4 The primary tool used is the**  **5 government regulatory impact model. It is a 6 cash flow model used to represent the industry**  **7 as a whole. The major output from the cash 8 flow model is an industry net present value,**  **9 a metric used to succinctly quantify the 10 impacts of standards on covered manufacturers.**  **11 The analysis is roughly broken 12 into three phases. Phase 1 happens during the**  **13 preliminary analysis. We create an industry 14 profile based on public and readily obtainable**  **15 materials, such as SEC filings, U.S. Census 16 data, and research reports.**  **17 The bulk of Phases 2 and 3 occur 18 during the NOPR phase of the rulemaking, where**  **19 we are today, using public data, as well as 20 input from upstream analyses we outlined in**  **21 the Government Regulatory Impact Model. 22 Key inputs are validated** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 316**  **1 manufacturers and qualitative issues are 2 discussed in interviews.**  **3 So, what do I mean by upstream 4 analyses? To model the industry we rely on**  **5 content for several of the analyses already 6 presented here today. We take financial and**  **7 product information from the MTA. We take 8 manufacturer production costs from the**  **9 engineering analysis. We take annual 10 shipments from the shipments analysis.**  **11 To complete our model, we 12 supplement two key pieces of content. We**  **13 develop a markup scenario, a high and low 14 scenario, and we use content from the**  **15 engineering analysis, factory tours, and 16 discussions with manufacturers to estimate**  **17 conversion costs. 18 With regard to the markup**  **19 scenarios, the upper bound is the preservation 20 of gross margin percentage. In this scenario,**  **21 manufacturers are able to maintain the same 22 gross margins on a percentage basis, as the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 317**  **1 products get more efficient. This suggests 2 that manufacturers are able to pass on**  **3 increased production costs to their customers. 4 The lower bound is the**  **5 preservation of operation profit. DOE applies 6 a market of each TSL that results in the same**  **7 operating profit and dollar value before and 8 after the standard. What this means is as**  **9 manufacturers' capital base increase as a 10 result of the standard and investments**  **11 required to meet the standard, manufacturers 12 do not earn additional profit from those**  **13 investments. And so you can see some of those 14 values here.**  **15 If you think in terms of gross 16 margins as opposed to markup, 1.3 there is**  **17 roughly a 23 to 24 percent gross margin and 18 1.25 is roughly a 20 percent gross margin, if**  **19 that helps folks in the room. 20 The other piece we calculate are**  **21 conversion costs, capital conversion costs and 22 product conversion costs. Based on interviews** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 318**  **1 and tear downs, DOE estimates capital 2 conversion costs. In this case, DOE expected**  **3 minimal and new plant property and equipment 4 would be required for the design options**  **5 considered in TSL 4. We do expect higher 6 product conversion costs, based on industry R**  **7 and D spending and feedback from 8 manufacturers. We estimate that total product**  **9 conversion cost industry come out to about 3.1 10 million.**  **11 Yes, Steve? 12 MR. ROSENSTOCK: Hi, Steve**  **13 Rosenstock, Edison Electric Institute. 14 Those values are different than**  **15 the handouts? 16 MR. LAU: It is. There is a final**  **17 correct ahead that was made this morning. 18 This what is on the screen will**  **19 reflect what is in the NOPR. 20 MR. ROSENSTOCK: Oh, okay. And**  **21 you are saying the total cost for all of 22 industry for this new standard is $3 million** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 319**  **1 per year or just as a one-time investment? 2 MR. LAU: So the investment is for**  **3 the whole industry, it is made between the 4 announcement year and the standards years,**  **5 over a five-year period. 6 MR. ROSENSTOCK: So they can do**  **7 this for $600,000 a year, the whole entire 8 industry for all their factories?**  **9 MR. LAU: For all their product 10 lines, correct.**  **11 DR. JAKOBS: Are you including the 12 cost of testing?**  **13 MR. LAU: So this includes R and 14 D, product design, certification. It does not**  **15 include compliance with certification testing. 16 MODERATOR BROOKMAN: The total is**  **17 $3.1 million? 18 MR. LAU: That is correct.**  **19 MODERATOR BROOKMAN: So these 20 figures on the screen are significantly**  **21 different than the slide. 22 MR. LAU: That's right. The** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 320**  **1 figures on the printed copies come out to $1.1 2 million. That is for TSL 1, rather than TSL** 

**3 4. 4 MODERATOR BROOKMAN: Oh, I see.**  **5 Okay. 6 MR. LAU: That was just a copy and**  **7 paste issue. 8 MODERATOR BROOKMAN: Okay. Diane,**  **9 did you get your question answered? 10 DR. JAKOBS: Yes.**  **11 MR. BRUNDAGE: Will a corrected 12 copy of the PowerPoint be posted on the**  **13 website shortly? 14 MR. LAU: Yes.**  **15 MR. BRUNDAGE: Thank you. 16 MODERATOR BROOKMAN: Yes, Dave.**  **17 MR. WINNINGHAM: Just a quick 18 statement. Dave at Allied.**  **19 I would just advocate that those 20 product conversion costs are grossly**  **21 understated from a product development 22 standpoint.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 321**  **1 MODERATOR BROOKMAN: Okay. 2 MR. LAU: Yes, we certainly**  **3 welcome input. That is one of the reasons why 4 we presented here today.**  **5 The information we had received, 6 we received a lot of qualitative input but no**  **7 hard numbers. So, we used the qualitative 8 input we received and the R and D spending**  **9 that we estimated for the industry as a whole 10 to come up with some of these values.**  **11 MODERATOR BROOKMAN: And you could 12 imagine even if they got a few companies, they**  **13 could extrapolate it really significantly 14 improve these numbers.**  **15 MR. LAU: That's right. 16 MODERATOR BROOKMAN: So your**  **17 written comments would make a big, big 18 difference here.**  **19 Okay. 20 MR. LAU: I'm going to move on.**  **21 So what do the industry-wide 22 results look like? These are the INPV results** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 322**  **1 that DOE considers. There is a lot of numbers 2 here but I will look at two things in**  **3 particular. One is the base case valuation 4 industry at 252 million. And remember this**  **5 only takes into the furnace fans, not the 6 whole product.**  **7 And then I will look at what is 8 the fourth column, change in INPV on**  **9 percentage basis. So, how much value the 10 industry loses or gains as a result of the**  **11 standard. 12 There is a range because we model**  **13 a range of markup scenarios but in the worst 14 case, industry is expected to lose 21.6**  **15 percent of its value, as a result of the 16 decrease in profit margin and the conversion**  **17 costs required to meet the standard. 18 MODERATOR BROOKMAN: Diane.**  **19 DR. JAKOBS: Thank you. So you 20 get the range from you assume a distribution?**  **21 I mean, that is like a 30 percent range like 22 between the winners and losers. Right?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 323**  **1 MR. LAU: So, I think the 2 optimistic scenario is quite optimistic, in**  **3 that it assumes you pass on the full 4 incremental production costs to your**  **5 consumers, which I think folks in the room 6 probably don't think is realistic. But that**  **7 is our upper end. 8 And the lower end assumes that**  **9 even though an ECM motor costs more, you are 10 certainly not going to make more money off of**  **11 that, even though you are charging more, if 12 that makes sense.**  **13 MR. SACHS: This is aggregate to 14 the industry. It is not range from**  **15 manufacturer to manufacturer. 16 MR. LAU: That is correct. This**  **17 is representative of the industry as a whole. 18 MODERATOR BROOKMAN: Why don't you**  **19 repeat it, Harvey? Sorry. 20 MR. SACHS: Harvey Sachs. The**  **21 data on the INPV results slide reflect 22 industry aggregate figures, rather than range** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 324**  **1 among manufacturers. 2 MR. LAU: That is correct.**  **3 MODERATOR BROOKMAN: Thank you, 4 Harvey.**  **5 MR. LAU: So, DOE is also required 6 to look at the impact of proposed standards on**  **7 small businesses. In this case, the Small 8 Business Administration defines a small**  **9 manufacturer as one of with 750 employees or 10 less. Fourteen small manufacturers were**  **11 identified. 12 DOE did identify potentially**  **13 differential impacts on those small 14 businesses, redesigned investments industry**  **15 certification costs tend to be fixed and do 16 not scale the sales volume. As a result,**  **17 smaller manufacturers with lower sales volume 18 may find cost recovery more difficult.**  **19 Two, small manufacturers typically 20 face disadvantages relative to large**  **21 competitors in terms of technical resources. 22 That would be engineers, technicians, lab** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 325**  **1 space in the facilities. 2 And three, due to smaller**  **3 purchasing volumes, small manufacturers may 4 typically pay higher prices for components.**  **5 MR. ROSENSTOCK: Question.**

**6 MODERATOR BROOKMAN: Yes. 7 MR. ROSENSTOCK: Steve Rosenstock,**  **8 Edison Electric Institute. And what were you 9 considering the profit margin for the small**  **10 manufacturers to be? 11 MR. LAU: We don't break out a**  **12 profit margin -- we don't look at profit 13 margins specifically for small manufacturers**  **14 relative to large manufacturers. We do look 15 at a couple of different metrics to sort of**  **16 get a sense of what it means for a small 17 manufacturer versus a large. And you can see**  **18 here that product conversion costs are often 19 a concern and those are un-proportionately**  **20 like five times more significant for small 21 manufacturers.**  **22 MR. ROSENSTOCK: Right. So what**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 326**  **1 if a profit margin is less than five percent? 2 MR. LAU:á So this isn't**  **3 necessarily profit margin, per se. 4 MR. ROSENSTOCK: Oh, I know.**  **5 MR. LAU: Okay. 6 MR. ROSENSTOCK: I am asking you.**  **7 You are saying that the conversion cost would 8 be about five percent of their annual revenue.**  **9 And I am asking you what if the profit margin 10 is under five percent.**  **11 MR. LAU: That would imply that 12 they are not making a profit.**  **13 MR. ROSENSTOCK: Thank you. 14 MR. LAU: Yes. However, that is**  **15 not necessarily what this analysis is 16 insinuating.**  **17 MR. ROSENSTOCK: I know. 18 MR. LAU: Okay.**  **19 MODERATOR BROOKMAN: Terry. 20 MR. SMALL: Well, that is really**  **21 distressing as a small manufacturer. 22 I am worried Dave feels like here** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 327**  **1 that the one percent product conversion cost 2 for large manufacturer is grossly understated.**  **3 And then you just take whatever that is times 4 five. It would be disastrous for the small**  **5 manufacturer. 6 As Steve said, I mean remember**  **7 that five percent on revenues, I mean most 8 small manufacturers don't make five percent**  **9 net income. So, that would basically wipe out 10 any profitability.**  **11 MR. LAU: For the given year, yes. 12 MODERATOR BROOKMAN: Additional**  **13 comments here? Okay. Environmental impacts. 14 I wanted to make sure we preserve**  **15 time for our presentation and discussion 16 surrounding the results and proposed**  **17 standards. That seemed to me the meat of the 18 matter and the reason we have been here all**  **19 day. So, that is why I am moving us rapidly. 20 Harvey.**  **21 MR. SACHS: Harvey Sachs, ACEEE. 22 And with great respect for the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 328**  **1 work these teams have done, most of what we 2 have heard in the last hour has been reading**  **3 from the printouts. I wonder if we couldn't 4 bypass this and move directly to those final**  **5 comments in the interest of time. 6 MODERATOR BROOKMAN: Yes, I think**  **7 that what we have ahead of us is not very 8 lengthy, unless a lot of people are going to**  **9 bolt for the door, seeing as how it is 4:05. 10 But I think I would like -- I have**  **11 been accelerating us so that we can get to 12 this point rapidly so we would preserve time.**  **13 I think we are in good shape now. I do. 14 Because Alex is going to move us rapidly,**  **15 aren't you, Alex? 16 DR. LEKOV: So, in the spirit of**  **17 this statement, first emissions analysis. DOE 18 reports the environment impacts resulting from**  **19 potential energy standards due to the change, 20 particularly in the power plant emissions, but**  **21 as well as the site-based emissions, the tool 22 for this is a NEMS, a national energy modeling** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 329**  

### 1 system. **2 And the result for the CO2, NOx, 3 SO2 and mercury are shown on this slide.**  **4 MODERATOR BROOKMAN: Okay, let's 5 hear from Don first and then Steve.**  **6 MR. BRUNDAGE: Okay. I'm just 7 going to do a little one-minute spiel on this**  **8 and then we can move on. 9 I assume this was running NEMS-BT**  **10 off of 2012 annual energy outlook. Is that 11 correct?**  **12 DR. LEKOV: In essence, the 13 emissions factors are derived from the most**  **14 current version of NEMS. 15 MR. BRUNDAGE: The most current**  **16 version is '13. Everything that was talked 17 about so far that you have used has talked**  **18 about AEO '12. 19 DR. LEKOV: Yes, so you mentioned**  **20 also about using the most current sources. 21 And DOE will do this for the final rule. In**  **22 fact, there is always this time delay in the**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 330**  **1 process between the completion of the 2 analysis.**  **3 MR. BRUNDAGE: Okay. Just to go 4 over some major points on that, there have**  **5 been a lot of coal plant retirements in the 6 last year or two which are not reflected in**  **7 AEO '12. Because of the air toxic rule, there 8 will be no unscrubbed coal after approximately**  **9 2015, which would cut the sulfur dioxide. 10 On NOx, there are many, if not**  **11 most plants have to have or will have to have 12 enhanced NOx reduction and many will also,**  **13 scrubbing will remove some mercury at many 14 plants also have to have additional mercury**  **15 reduction such as bag houses. 16 But just assuming no one scrubbed**  **17 coal after about 2015, you can look up in air 18 toxics rule when the deadline is. But I**  **19 suspect these numbers are higher than what 20 will be actually experienced.**  **21 MODERATOR BROOKMAN: Okay, thank 22 you. Steve.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 331**  **1 MR. ROSENSTOCK: Steve Rosenstock, 2 Edison Electric Institute.**  **3 Also, I will note that it is says 4 you are looking upstream for power plant**  **5 emissions but it is only site emissions from 6 gas and oil furnaces, seeing that they are**  **7 ignoring any sort of upstream emissions 8 associated with gas or oil production. It**  **9 seems analytically inconsistent in that first 10 sentence.**  **11 Also, especially in terms of by 12 2019 the EPA, the big ones -- while EPA has**  **13 already set a proposed rule for emissions from 14 new power plants, they issued that rule in**  **15 September, by June of 2014, EPA is going to 16 submit rules for existing power plants. That**  **17 will have a gigantic impact on any CO2 18 numbers, especially by 2019.**  **19 Because if EPA finalizes that 20 existing power plant rule by 2015, the states**  **21 won't have to submit their state 22 implementation plans by 2016 or 2017. So by** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 332**  **1 2019, all of these numbers are going to change 2 and be quite dramatically lower, I would say.**  **3 Also, DOE has written about how 4 especially like with the ozone rule for 28**  **5 states that basically they say that any 6 efficiency standard does not have any impact,**  **7 does not create any sort of physical 8 reductions and emissions because of the cap**  **9 and trade type of scenarios for those 10 emissions.**  **11 So, again, to kind of follow on 12 with Don, I think, at least on the electric**  **13 side, that a lot of these numbers are 14 extremely overstated and especially when you**  **15 monetize them, they are going to show values 16 that are not going to be really realized in a**  **17 marketplace. Thank you. 18 MODERATOR BROOKMAN: Okay, thank**  **19 you. Let's move to monetization. 20 DR. LEKOV: So, DOE also does the**  **21 monetization by using the most current social 22 cost of carbon values. Those are based on** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 333**  **1 several models from interagency estimates. 2 And the range of prices are listed on this**  **3 slide. 4 And the results are shown here.**  **5 In essence, the results of these three or four 6 models is summarized in different discount**  **7 rate columns. And those are the results. 8 The first block shows for the**  **9 savings at the power plant level. The 10 so-called upstream emissions label represents**  **11 the upstream emissions essentially presented 12 by the full-fuel-cycle. And the total are at**  **13 the bottom. 14 MODERATOR BROOKMAN: Don?**  **15 MR. BRUNDAGE: The social cost of 16 carbon analysis done for interagency review is**  **17 out for public comment by Office of Management 18 and Budget. Will the timing of this**  **19 rulemaking allow updated social costs of 20 carbon if the OMB effort results in revisions**  **21 to that study? 22 DR. LEKOV: If it is within the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 334**  **1 timeframe of the rulemaking, it will apply 2 updated values.**  **3 MODERATOR BROOKMAN: Additional 4 comments on monitorization of emission**  **5 reductions? 6 Okay.**  **7 DR. LEKOV: This is just to 8 indicate that DOE also do utility impact**  **9 analysis with where the primary outcome is to 10 forecast the change in the electricity**  **11 generation and avoided capacity increase. 12 MODERATOR BROOKMAN: Steve.**  **13 MR. ROSENSTOCK: Steve Rosenstock, 14 Edison Electric Institute.**  **15 In your summary results, you show 16 that for all of the technical options on the**  **17 trial standard levels that there will be 18 additional fossil fuel usage under all of the**  **19 trial standard levels. 20 So, is there an analysis of the**  **21 impact on fossil fuel supplied since the 22 amount of fossil fuels will have to be** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 335**  **1 increased as a result of this standard? 2 DR. LEKOV: Not in this analysis.**  **3 MODERATOR BROOKMAN: Move on. 4 DR. LEKOV: The DOE had the**  **5 methodology that is used throughout the 6 rulemakings and your input is important.**  **7 MR. ROSENSTOCK: Okay. Again, 8 there is a little inconsistency there. Thank**  **9 you. 10 MODERATOR BROOKMAN: Okay, thank**  **11 you. Additional comments on utility impacts? 12 Employment impact analysis.**  **13 DR. LEKOV: So, DOE also does an 14 employment impact analysis in two parts,**  **15 direct and indirect employment. Direct 16 relates to the jobs directly in the industry,**  **17 which was presented in the manufacturer impact 18 analysis. This one here refers to the**  **19 so-called indirect employment impact, which is 20 essentially the impact of standards from**  **21 shifting consumer expenditures among goods and 22 services due to changing equipment and energy** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 336**  **1 costs. And those are derived using a standard 2 tool, Impact of Sector Energy Technologies,**  **3 ImSET. And the results which are small are 4 well-explained in Chapter 16 of the TSD.** 

**5 MODERATOR BROOKMAN: Comments on 6 the employment impact analysis?**  **7 Okay, then to the results. 8 DR. LEKOV: So, this part is**  **9 essentially is not presenting anything new. 10 This is a summary of the results as outlined**  **11 during the entire day. 12 Starting with the consumer average**  **13 LCC savings and median payback for the 14 considered TSL, including in the TSL 4 is**  **15 highlighted. 16 Now, the next slide is also part**  **17 of the life-cycle costs analysis impacts and 18 presents for this three product classes the**  **19 fractions of consumers that encounter costs 20 benefitting or encounter no impact.**  **21 MODERATOR BROOKMAN: Steve. 22 MR. ROSENSTOCK: Steve Rosenstock,** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 337**  **1 EEI. 2 I always appreciate these charts.**  **3 They are extremely helpful in terms of the key 4 categories.**  **5 There have been other rulemakings 6 where the percentage of consumers having net**  **7 cost is significantly lower. And looking at 8 these numbers and I know it is based on the**  **9 DOE analysis, for these key categories that at 10 least 24 percent of consumers, 24 to 33**  **11 percent of consumers will have higher 12 life-cycle costs. I am extremely concerned**  **13 about that because again, other rulemakings 14 and other trial standard levels have members**  **15 that are significantly better for the 16 consumers. I know DOE has to consider all**  **17 factors but 24 to 33 percent of consumers 18 having higher life cycle costs because of this**  **19 standard seems to be a little on the high 20 side, especially compared to other DOE**  **21 rulemakings. 22 Thank you.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 338**  

### 1 MODERATOR BROOKMAN: Okay, thank **2 you. 3 MR. SACHS: Steve, this is Harvey**  **4 Sachs, ACEEE. With terminally modeling in 5 cheek, we are still arguing for the no losers**  **6 test for utility and efficiency investments,**

**7 too? 8 MR. ROSENSTOCK: This has nothing**  **9 to do with utilities. This is about the 10 consumers, Harvey. All about the consumers,**  **11 which everybody around the table is. So, 12 one-third of us who are going to buy these**  **13 products are doing to have higher life cycle 14 costs. That is what it is about, not about**  **15 utilities. 16 MR. SACHS: I appreciate the**  **17 response. I was trying to do a metaphor but 18 I think the important point is that I don't**  **19 know the magnitudes. It might be 33 percent 20 with a net incremental cost of $1 and 53**  **21 percent with a net saving of $5 each. 22 So, it is not a figure this merit** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 339**  **1 that I find particularly useful, although it 2 is illustrative.**  **3 MR. ROSENSTOCK: Steve Rosenstock. 4 Yes, again, this is the result as published by**  **5 DOE. I know that with their Monte Carlo 6 analysis there they show a range of life cycle**  **7 cost savings and yet, these beautiful curves 8 that are shown in the technical support**  **9 document, yes, many people are, I will say, in 10 the zero to $50 range in terms of net costs or**  **11 net benefits. But there are significant 12 numbers that are well outside that range in**  **13 terms of $100, $200, et cetera. 14 Thank you.**  **15 MODERATOR BROOKMAN: Don Brundage. 16 MR. BRUNDAGE: I wonder if there**  **17 is any information or insights you could give 18 on who these people are or more particularly**  **19 where they are. Are there particular regions 20 or climatic regions that perhaps have lower**  **21 operating hours of fans and would potentially 22 have poorer economics? Do you have any** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 340**  **1 information on that? 2 DR. LEKOV: So, I would point on**  **3 to the LCC analysis spreadsheet, which 4 includes the so-called statistics page. I**  **5 think, in the pretty clear format, it has 6 extraction tables from the forecast itself for**  **7 each 10,000 runs. We did hundreds of 8 parameters in order to derive this. And the**  **9 most important information, including almost 10 everything which you just requested is in this**  **11 statistics. 12 Probably the correlations are not**  **13 there but the correlations between the 14 parameters. However, you could see clear by**  **15 base average values, as well as I think ten 16 percent base on both sides of the average,**  **17 there are maximum, minimum values. So, there 18 is a pretty extensive information DOE provides**  **19 if somebody wants to go into the detail to see 20 what actually are the details behind some of**  **21 these parameters. 22 MODERATOR BROOKMAN: Steve** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 341**  **1 Rosenstock. 2 MR. ROSENSTOCK: Steve Rosenstock,**  **3 EEI. 4 As I recall on an earlier slide,**  **5 when you broke out the all consumers versus 6 low-income consumers and seniors, I think it**  **7 was 5.4 -- again, for one of the product 8 classes here, was 5.4 years for all consumers**  **9 but low-income was 8.5 years. 10 So wouldn't that tend to imply**  **11 that they are going to have a higher 12 percentage net cost because their paybacks are**  **13 higher to begin with? 14 DR. LEKOV: It's a distribution of**  **15 results but, essentially, yes. 16 MR. ROSENSTOCK: Okay, thank you.**  **17 MODERATOR BROOKMAN: Greg. 18 MR. WAGNER: Moving on to the next**  **19 slide, but you know, this slide is interesting 20 when you think about that anywhere from a**  **21 quarter to a third of consumers are going to 22 have more costs; you move to the next slide** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 342**  

### 1 and you look at 150,000 on average are going **2 to lose their job and, on average, the 3 industry is going to lose four percent.**  **4 Those are using all the rosy 5 scenarios that we have talked about today and**  **6 in previous discussions that the Department 7 has put together.**  **8 I really am at a loss how this 9 whole thing comes out a net winner for**  **10 consumers, for the industry, or for energy 11 advocates because this is not the best use of**  **12 our money. 13 MODERATOR BROOKMAN: You want to**  **14 present 106? 15 DR. LEKOV: So, this slide**  **16 summarizes the results of several analysis 17 types, including national energy savings, net**  **18 present value, manufacturing impact analysis 19 and employment impacts for the considered**  **20 TSLs. The proposed TSL is highlighted. 21 MODERATOR BROOKMAN: Aniruddh.**  **22 MR. ROY: Aniruddh Roy, AHRI. On**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 343**  **1 page 64130 of the NOPR, DOE states that there 2 is a substantial reduction in the INPV at TSL**  **3 5 for manufacturers. And the range is not too 4 different under TSL 4. But again, it**  **5 justifies TSL 4 as being reasonable, although 6 the reduction is not "substantial" in that** 

**7 case. 8 We feel that the ranges are pretty**  **9 much the same between TSL 4 and TSL 5. So, I 10 guess what was DOE's reason or rationale for**  **11 counting the TSL 5 industry NPV as being 12 substantial versus TSL 4 not being substantial**  **13 enough to be rejected? 14 MR. LAU: This is Chris Lau with**  **15 Navigant. I think DOE simply chooses based on 16 -- selects its proposed TSL based on the**  **17 cumulative benefits versus the cumulative 18 costs, as opposed to a specific indicator.**  **19 So, TSL 5 was not rejected solely 20 because of the manufacturer impacts and TSL 4**  **21 was not being proposed solely because the 22 manufacturer impacts are acceptable, if that** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 344**  **1 makes sense. 2 MR. ROY: I understand that,**  **3 Chris, but the fact that it was a substantial, 4 like he used the word substantial to reject**  **5 TSL 5. I know you also considered NPV, and 6 the CO2 emissions reductions. You know DOE**  **7 should have recognized within the same NOPR 8 that because the range is the same, that it is**  **9 still a substantial impact to the industry and 10 they are picking the TSL 4 despite that**  **11 substantial impact being there. 12 So I think the NOPR should have**  **13 recognized that. 14 MR. LAU: We'll take that under**  **15 advisement. I think if you look at the INPV 16 impacts across multiple recent rulemakings,**  **17 recent being the last several years, I don't 18 think that the impacts modeled here are**  **19 outside of the range of what has been seen in 20 the past.**  **21 MODERATOR BROOKMAN: Harvey Sachs. 22 MR. SACHS: To me, one of the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 345**  **1 significant -- as an energy efficiency 2 advocate who believes that we need to allow**  **3 differentiation to get innovation, the 4 significant difference between 4 and 5 is that**  **5 5 includes mandatory -- not mandatory 6 modulation but performance equivalent to that,**  **7 while 4 does not. It will make it easier to 8 continue to offer differentiated products,**  **9 while getting effectively the same energy 10 savings. DOE has articulated earlier some**  **11 other benefits of 4 over 5. 12 And again, I hate to agree with**  **13 them but I think this is an important 14 distinction.**  **15 MODERATOR BROOKMAN: Okay, thank 16 you. Diane.**  **17 MR. WINNINGHAM: This is Dave with 18 Allied.**  **19 MODERATOR BROOKMAN: Yes. 20 MR. WINNINGHAM: Level 4 has**  **21 modulating X13 or constant-torque. 22 MR. SACHS: I'm sorry.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 346**  **1 Multi-stage I meant. 2 MR. WINNINGHAM: Yes, it is; 4 and**  **3 5 both are multi-staged. The only difference 4 is type of motor.**  **5 MR. SACHS: I'm sorry. You are 6 undoubtedly right. I confuse myself easily**  **7 nowadays. But even so, I think my basic point 8 of allowing more differentiation remains.**  **9 MODERATOR BROOKMAN: Okay, thanks 10 for the clarification, Dave, and thank you,**  **11 Harvey. Now, Diane. 12 DR. JAKOBS: While I was still at**  **13 home and looking at all this, I was trying to 14 figure out a way to gracefully talk about lost**  **15 jobs. And I am shocked by this 300,000 but in 16 Fort Smith, Arkansas, our manufacturing is**  **17 down 20 percent since 2006. And if you Google 18 layoffs, it is Whirlpool, it is Trane, and it**  **19 is Rheem. 20 I have a Ph.D. I had a choice. I**  **21 could make reports or I could build things. 22 And in my career, I wanted to build things.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 347**  **1 I don't know what else to say. Thank you. 2 MODERATOR BROOKMAN: Thank you.**  **3 Additional thoughts, comments on this results 4 slide?**  **5 Don Brundage. 6 MR. BRUNDAGE: I don't think that**  **7 the NPVs are out of line with what you have 8 done in other rulemakings. The problem I have**  **9 is that your lack of data on some major 10 assumptions, I think these are very optimistic**  **11 savings. And with fundamental parts of the 12 underlying economics based on things like**  **13 20-year-old study of how long fans last, there 14 is more uncertainty in this one than there are**  **15 in a lot of rulemakings. And that would tend 16 to mean there is a need to err on the side of**  **17 caution and what standard levels you set. 18 Because as we all know, DOE can**  **19 raise efficiency levels but they can never 20 lower them. If you mess up, it is up to**  **21 Congress to fix it because DOE cannot. 22 Thank you.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 348**  **1 MODERATOR BROOKMAN: Steve. 2 MR. ROSENSTOCK: Steve Rosenstock,**  **3 EEI. 4 Again, just as I have been to so**  **5 many rulemakings, I am kind of surprised that 6 the employment impacts just is so solid across**  **7 all TSLs. I have seen with other rulemakings 8 there does seem to be some variation based on**  **9 the difference in the NPV. 10 But given that, basically the**  **11 range is make it a loss of zero to 301,000 12 jobs, if I am reading this correctly, of**  **13 domestic production workers. So the mid-point 14 is 150,000 jobs, domestic jobs lost by 2019.**  **15 Am I reading that correctly? Is that the DOE 16 projection?**  **17 MR. LAU: No, actually, this is a 18 mistake. Actually, before I say it, let me**  **19 double check them all but I think that those 20 numbers there are just supposed to be it is**  **21 just 301, not thousands. Because remember, we 22 are just talking about furnace fans here.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 349**  **1 They are not 301,000 people that are on 2 production lines for furnace fans today.**  **3 MR. ROSENSTOCK: Oh, okay. Steve 4 Rosenstock. Yes, I thank you for that**  **5 clarification. But again -- 6 MR. LAU: And I apologize.**  **7 MR. ROSENSTOCK: -- we are just 8 reading what you --**  **9 MR. LAU: Yes. 10 MR. ROSENSTOCK: But it still --**  **11 okay. Thank you for that clarification. 12 MODERATOR BROOKMAN: Okay, Harvey.**  **13 MR. SACHS: I would like to just 14 put a context on the jobs discussion, thanking**  **15 Navigant for that clarification. 16 There is today an element in or**  **17 lurking next door to us in this room and that 18 is the competition from offshore technologies**  **19 that threaten to displace our duct equipment 20 in general.**  **21 Charlie has left now but he says 22 they are starting to see substantial benefits** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 350**  **1 to customers from replacing 5-ton RTUs with 2 2-ton mini splits. Energy? And that is where**  **3 the lost jobs threat is. 4 And from my perspective, and I**  **5 realize it is a hard one to share, this is 6 part of trying to help our manufacturing base**  **7 be competitive with this global alternative 8 that is penetrating both in the commercial**  **9 more quickly and in the residential sectors 10 more slowly.**  **11 MODERATOR BROOKMAN: Dave. 12 MR. WINNINGHAM: Harvey, I**  **13 appreciate those comments and we all recognize 14 we have to compete on a global basis.**  **15 But I think if you look at the 16 outcome of our products today, we have**  **17 products that have unheard of efficiency 18 levels. We have products that are 25 SEER and**  **19 above. We have products that are above 98 20 percent AFUE. Motor efficiency is a key**  **21 issue. I don't dispute that. But there are 22 some fundamental things here associated with** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 351**  **1 this NOPR that I don't feel that we are 2 helping the industry here domestically compete**  **3 on a global basis. 4 You know in today's market, in the**  **5 U.S. it is primarily single stage PSC. And we 6 are making a major shift here toward**  **7 multi-staged constant-torque kind of as a line 8 in the sand. We are greatly increasing the**  **9 complexity of the product. We are going to 10 increase the consumer cost, as well as**  **11 maintenance cost. 12 The maintenance cost, alone, could**  **13 be two to three times what is spent in 14 maintenance costs today. The energy savings**  **15 for weatherized products and for packaged 16 products is really not valid because any**  **17 savings associated with an FER will be 18 normalized into the design for SEER and HSPF.**  **19 You know DOE has done a tremendous 20 amount of work on this. And there is a lot of**  **21 people who have put hard work into this but it 22 is clear there are still many, many issues** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 352**  **1 related to this NOPR from the lack of a test 2 procedure to basic FER data to support all of**  **3 the assumptions going in here. The 4 development costs, the capital impacts, as**  **5 well as the emissions reductions. 6 So, I would earnestly ask the**  **7 Department to please consider these very 8 carefully before proceeding with a standard**  **9 that, as it was stated before, once it is out, 10 you can't undo it, and to consider all of the**  **11 impacts. 12 MR. SACHS: Thank you, Dave. And**  **13 one of the things that I have talked with a 14 couple of my peers on the advocacy side about**  **15 is that we strongly support the idea that we 16 should not finalize the performance rule**  **17 before we have the rating method. We are 18 strongly with it.**  **19 And I have heard a lot of detailed 20 comments about possible shortcomings in the**  **21 DOE's analysis. The thing that has really hit 22 me, and it may just be that you all are a** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 353**  **1 polite group, is a sense that many of the 2 manufacturers here are okay with doing it if**  **3 we do it right. And we are strongly 4 supportive of that. We are strongly**  **5 supportive of fixing whatever errors there 6 are. I have a gut sense of where it ought to**  **7 come out but that is not in the analytical 8 sense.**  **9 We will work with you. And we may 10 yet ask for a pound of flesh in terms of**  **11 shortening the compliance interval but we do 12 want to get it right.**  **13 MODERATOR BROOKMAN: It seems like 14 we are moving towards our final comments.**  **15 There are just a couple more brief slides we 16 could just take a peek at. They are the final**  **17 slides of this packet. 18 DR. LEKOV: So, somebody have the**  **19 emissions impacts? 20 MODERATOR BROOKMAN: Yes, and then**  **21 we can conclude any other final remarks. 22 DR. LEKOV: And this is the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 354**  **1 standard. 2 MODERATOR BROOKMAN: Okay. Okay,**  **3 it is just a summary. 4 So then, I think we are moving**  **5 toward any other comments, issues here as we 6 move towards closure in this meeting, things**  **7 that have been sufficiently, things that you 8 would like to bring to the floor here at the**  **9 end. 10 Marshall, are you?**  **11 MR. HUNT: California Utilities 12 look forward to making more comments. I**  **13 really appreciate. I was here to listen and 14 I have learned a lot.**  **15 MODERATOR BROOKMAN: Okay, thank 16 you.**  **17 Terry. 18 MR. SMALL: Well, first I would**  **19 like to thank the staff for a herculean effort 20 here. This is a very complex subject.**  **21 I think we are in a bit of 22 unchartered territory. To me, that tells me** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 355**  **1 that we need to proceed with caution. I 2 really don't think -- I think for instance**  **3 that your shipment, the way the economy is 4 recovering or not recovering or whatever, we**  **5 are on a very slow boat. So, what is the 6 rush? I mean I don't see that we are all of**  **7 a sudden going to run out of energy. We seem 8 to be finding new sources.**  **9 And so I think that this all bodes 10 that we use caution in this rulemaking. I**  **11 don't see what the hurry is. Get the test 12 procedure. Let us go back through and apply**  **13 the final test procedure to our products, then 14 make comments. No hurry, in my mind.**  **15 MODERATOR BROOKMAN: Okay. 16 MR. SMALL: And if you get it**  **17 wrong, there could be some severe 18 consequences. As a small manufacturer, I**  **19 think this could devastate some of our small 20 manufacturers that don't have the resources to**  **21 meet some of the requirements in the proposal. 22 So that is mine.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 356**  **1 MODERATOR BROOKMAN: Steve 2 Rosenstock.**  **3 MR. ROSENSTOCK: Steve Rosenstock, 4 EEI. And I want to thank Don Brundage for**  **5 sending this to me. EPRI has done a nice 6 report. You know with some of the motors in**  **7 terms of the power factors or harmonic issues 8 at the higher TSLs, EPRI did a full report**  **9 last year in September 2012. They also put 10 out, they were nice enough to send me a**  **11 PowerPoint presentation they did about their 12 report Grid Impacts due to Increased**  **13 Penetration of Newer Harmonic Sources. When 14 they tried to look at multiple technologies,**  **15 including CFLs, LEDs, electric vehicles, and 16 ECMs in the marketplace.**  **17 And so the presentations in the 18 public domains I am going to probably add that**  **19 to my comments, since anybody can look at 20 that. The EPRI report is, obviously,**  **21 confidential. So, Don, I think is working 22 with --** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 357**  **1 MR. BRUNDAGE: I have started the 2 paperwork to try to get a nondisclosure so**  **3 they can be provided to Navigant but the 4 PowerPoint summary of that is available and**  **5 will be included in comments. 6 MR. ROSENSTOCK: Yes, and we think**  **7 that it will help DOE. Thank you. 8 MODERATOR BROOKMAN: Thank you.**  **9 Aniruddh. 10 MR. ROY: Just based on our**  **11 discussion earlier regarding the fact that we 12 are not sure when the test procedure will be**  **13 released, even though DOE has said that it 14 will be released by the end of this month and,**  **15 you know, some of the other issues that were 16 pointed out earlier today regarding the**  **17 extension, we would like to request that DOE 18 extend the comment period deadline. And we**  **19 will also submit that request in writing to 20 DOE.**  **21 MODERATOR BROOKMAN: Thank you. 22 Harvey Sachs.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 358**  **1 MR. SACHS: Harvey Sachs, ACEEE. 2 I think it is implicit in my**  **3 comments earlier that we do not believe this 4 comment period should close until there is a**  **5 bit of time after the test method is firmed 6 up.**  **7 The other comment I wanted to make 8 is that I appreciate Don and Steve bringing in**  **9 the power factor issue. I do understand this 10 has been a matter of some concern for a number**  **11 of utilities and rightfully so. We are 12 working on some other things in terms of water**  **13 heater controls and stuff to try to address 14 this. But the immediate point would be that**  **15 my only impression is that first of all the 16 furnace fan has a factor of four less power**  **17 draw than the compressor. And very few of the 18 compressors today are inverter drive in**  **19 variable capacity. 20 So the problem will present itself**  **21 first with the air conditioning compressor and 22 much later in terms of magnitude with the** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 359**  **1 furnace fan. My gut sense is that the furnace 2 fan has a somewhat more diverse load factor --**  **3 diversity than the air conditioning compressor 4 but I may be wrong on that.**  **5 But I do want to make the point 6 that in the context, this is something that**  **7 should be addressed much more urgently to the 8 compressor manufacturers than to the fan**  **9 manufacturers. 10 MR. BRUNDAGE: One final comment**  **11 on the power quality issues. This is not a 12 utility issue. It is a consumer issue that**  **13 there is not a lot of data on it. If you have 14 a home that is not wired to current standards,**  **15 particularly in an older one with a smaller 16 neutral, you can have potential for things**  **17 like fires from overloading the neutral from 18 having too many harmonic loads on it.**  **19 And it may be something to 20 consider for DOE to assume, at least a small**  **21 percentage of the cost of wiring upgrades at 22 homes for part of going to furnace fans or** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 360**  **1 other equipment that has power harmonic 2 issues. Because it is a real issue out there.**  **3 And I think it does need to be addressed at 4 some point.**  **5 It is not strictly speaking a 6 utility issue but there is nobody really**  **7 available to raise that issue. So, it is an 8 issue, particularly with some older homes.**  **9 Thank you. 10 MODERATOR BROOKMAN: Okay, thank**  **11 you. Harvey. 12 MR. SACHS: One final note in the**  **13 form of a question on this, having done a 14 little bit of wiring myself and Don and I had**  **15 a little bit of conversation about this. So, 16 I am really going to direct this at Charlie.**  **17 It would seem to me that if I am putting in a 18 new furnace, it is my responsibility as a**  **19 contractor to assure that the wiring back to 20 the panel is appropriate. And that is where**  **21 the neutral and grounder merged. So you are 22 helping your guys understand the need, if** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 361**  **1 there is an undersized common to replace that 2 romex or conduit or whatever back to the box,**  **3 aren't you? 4 MR. DURFEE: I can't address that.**  **5 I do the policy, not the technology, not the 6 technical stuff.**  **7 MR. SACHS: Let's talk to Wes. 8 MR. DURFEE: Yes. But I will say**  **9 yes. I mean I think our contractors 10 understand that this is an electrified product**  **11 and the occupants of the homes or the 12 buildings, their safety is paramount.**  **13 MR. SACHS: And Don, similarly it 14 would seem that this would also be an area of**  **15 interest to the utility. And I wonder if data 16 have been gathered by either Edison or EPRI on**  **17 the frequency of this undersizing to 18 equipment. It would seem to be an interesting**  **19 little field study. 20 MODERATOR BROOKMAN: So this seems**  **21 like it is moving us off point a little bit 22 here, although it is an important point.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 362**  

### 1 But nevertheless, for the conduct **2 of this meeting, I want to thank all of you. 3 A very, very productive meeting. Lots of**  **4 really good information came forward. So, I 5 thank you all from my point and turn it back**  **6 to Ron Majette for closing remarks. 7 MR. MAJETTE: I just wanted to**  **8 thank all the commenters. I was joking about 9 the eye gouging. I didn't realize that we**  **10 were going to get our eyes gouged out. 11 It has been a long day and we,**  **12 just speaking as a spokesperson for the 13 Department, very much appreciate it. I**  **14 appreciate that we kind of made the meeting a 15 little bit informal and we were able to dive**  **16 into the weeds to some degree, as a matter of 17 fact to a large degree. However, that going**  **18 into the weeds actually fleshed out a lot of 19 issues that we need to look at a little bit**  **20 more. 21 And again, I do hope that**  **22 everybody will take the comments that they**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 363**  **1 presented today in some shape, form, or 2 fashion, and make sure that they write that**  **3 back up so we can actually explore that 4 dialogue away from the meeting so that the**  **5 team can actually look at all that 6 information.**  **7 We appreciate your valuable time. 8 I know it costs a lot for your companies to**  **9 send you out and I hope you have got a benefit 10 out of this, as well as the benefit that you**  **11 provided to the general public by presenting 12 your company's viewpoints here at this type of**  **13 forum. 14 I will take the time out just to**  **15 thank the DOE staff and the technical staff. 16 If it looked at any point in time like we were**  **17 defending anything, it is just there was a lot 18 of work put into trying to put this document**  **19 together. And the numbers are from our 20 viewpoint from the data that we have been able**  **21 to collect and gather through various sources. 22 And I know it has been frustrating** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 364**  **1 at some points in time during the day where we 2 can only give out a portion of where we may**  **3 have obtained certain data but that is because 4 of confidentiality issues. Trust me, if you**  **5 tell it to me then that means that the whole 6 world knows about it. So there are things**  **7 that the laboratory staff will know that we 8 are not privy to. However, that data that**  **9 they have collected is part of the research 10 and documentation that goes into the final**  **11 report. 12 Now, as far as we have for steps**  **13 forward, the immediate thing that we will do 14 right away is any corrections to the slides,**  **15 especially those that were made as of last 16 night. We will make sure that we get those**  **17 put up on the website immediately, so that you 18 will have the most latest and accurate data**  **19 that we have available. 20 MR. SACHS: Will you notify us of**  **21 when that is done? 22 MR. MAJETTE: No.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 365**  **1 (Laughter.) 2 MR. MAJETTE: Okay, I'm sorry,**  **3 Harvey. Of course. We will notify as fast 4 possible. I guess our mini meetings will be**  **5 maybe through an email blast that we notify 6 you of those corrections and that the new**  **7 slides are online. 8 Internally, we have to do some**  **9 more research just to exactly find out where 10 we are in the test procedure process. It is**  **11 extremely close to a point that we are nearing 12 what we can publish. However, I do not have**  **13 that information. I thought I was going to 14 have that all figured out by the time this**  **15 meeting was over but there was a couple of 16 little nuances that we need to work through.**  **17 And as soon as I have some information on that 18 or advance notice of when we are about to**  **19 publish, I will get that information out to 20 you as soon as possible. I know that that is**  **21 key to a lot of your base comments in 22 finalizing your comments.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 366**  **1 As we stand right now, we are 2 going to have to hold the statutory line that**  **3 the 12/24 will be the closing date for final 4 comments for the rulemaking. However, I do**  **5 realize, as a result of the meeting today 6 there are a lot of things that we need to**  **7 factor in. And just give us time to go 8 through it. There is a lot of programmatic**  **9 decisions that would have to be made before we 10 can make a comment to extend anything.**  **11 So right now, we are going to 12 stick with the 12/24 until further notice.**  **13 MR. SACHS: This is Harvey Sachs 14 from ACEEE.**  **15 And Kavita, I am really looking to 16 you to perhaps put some distance in this. My**  **17 sense from the manufacturers at this table is 18 that if we had a test method on our rule**  **19 today, it would still be an enormous strain to 20 do the calculations, run the spreadsheets, and**  **21 everything else during the holiday season and 22 get this thing completed by the 24th of** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 367**  **1 December. 2 I think that is unreasonable. I'm**  **3 not sure how DOE got into this box but I am 4 extremely uncomfortable with going forward**  **5 without giving people time to exercise the 6 test method against their product lines and**  **7 against their plants. 8 MS. VAIDYANATHAN: We appreciate**  **9 your comments and we have heard the comments 10 from all the manufacturers about extending the**  **11 deadline. 12 Statutorily, we have the statutory**  **13 deadline is December 31st for us to get a 14 final rule out and we are working towards**  **15 that. But we understand with the government 16 shutdown and the other issues that we have had**  **17 that we have put out information a little 18 later. And we know that you want time for it.**  **19 So, if you can submit that comment 20 to us in writing, we will consider that.**  **21 MR. SACHS: I promise to use my 22 influence at NRVC to not file suit if you slip** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 368**  

### 1 this, as well as the half-dozen or so other **2 deadlines you have slipped. 3 DR. JAKOBS: Could I just -- I**  **4 think that if you really do want data from 5 manufacturers that we need that extra time.**  **6 I think that there are a lot of 7 assumptions that were made for good reasons**  **8 and we just have to check our assumptions. 9 So, it would be good to have the opportunity**  **10 to do that. 11 MS. VAIDYANATHAN: Thank you. We**  **12 do appreciate those comments. I mean -- 13 MR. SACHS: Just say yes.**  **14 MS. VAIDYANATHAN: Unfortunately, 15 I can't because we have a statutory deadline.**  **16 And as a lawyer, I look at the statutes and 17 the regulations to ensure that we are**  **18 following all of them as closely as possible 19 and we are meeting those deadlines.**  **20 So as of now, we are trying to 21 meet that deadline of December 31st to get a**  **22 final rule out. So, we need our comments by**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 369**  **1 12/24. 2 MR. SACHS: Harvey Sachs again.**  **3 Have you thought about the downstream 4 implications of this becoming contested**  **5 because people did not have time to comment 6 because the comment deadline closed before**  **7 they could do their relevant analyses? 8 MS. VAIDYANATHAN: I have not**  **9 because I did not realize that the test 10 procedures were needed to give that data that**  **11 you need for the standards. But now that I 12 know that information from the manufacturers,**  **13 and if you could put that in writing, we would 14 consider that as one of the comments.**  **15 MR. ROY: Aniruddh Roy, AHRI. 16 Kavita, I have a question for you.**  **17 Doesn't the statutory deadline 18 also apply to the energy conservation**  **19 standards? So, wouldn't DOE miss the deadline 20 anyway with respect to not being able to issue**  **21 a final energy conservation standard rule by 22 December 31st?** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 370**  **1 MS. VAIDYANATHAN: Right now, we 2 are hoping to not miss any kind of deadlines.**  **3 We have, in the past, made from the end of 4 final comment to a final rule, we have been**  **5 able to publish it within nine days. 6 MR. ROY: Right.**  **7 MS. VAIDYANATHAN: So, it is 8 possible. I can't tell you in this instance.**  **9 MR. ROY: Right, but we were under 10 the impression that the EISA of 2007 requires**  **11 that a final rule be issued by December 31,**

**12 2013. 13 MS. VAIDYANATHAN: Right.**  **14 MR. ROY: So, you might come up 15 with a test procedure by the end of this month**  **16 but it is very unlikely that the NOPR, the 17 Energy Conservations Standards NOPR will be**  **18 converted into a final rule because you have 19 to consider the comments that you receive by**  **20 December 24th. And it would take some time to 21 digest those comments and then issue a final**  **22 rule, which would be most likely past December**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 371**  **1 31st. Right?**

**2 MS. VAIDYANATHAN: From our 3 standpoint, we are hoping to meet the**  **4 deadline. So, we are hoping to be able to 5 consider all the comments and be able to meet**  **6 the deadline, at this point. 7 If things change, we will**  **8 obviously let everybody, all the interested 9 parties know.**  **10 MR. BRUNDAGE: I have got a bigger 11 problem with DOE putting out a final rule on**  **12 December 31st after a comment deadline of 13 December 24th than the December 24th deadline.**  **14 Because that is basically, even if it were in 15 the middle of March or something, not enough**  **16 time to adequately consider. With holidays 17 and everything else going on, I really don't**  **18 think a reasonable person would think that it 19 is possible to adequately consider complex**  **20 comments and issue a final rule in one week. 21 That would be stretching**  **22 credibility any time of the year. On the week**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 372**  **1 between Christmas and New Year's it is, 2 frankly ludicrous.**  **3 I really would like to see more 4 time between the comment deadline and when you**  **5 -- because I don't think you have time to 6 adequately even digest, much less respond, to**  **7 the comments with that kind of schedule. 8 MS. VAIDYANATHAN: Thank you. I**  **9 appreciate that comment and we will take that 10 into consideration. I mean, we are looking at**  **11 all comments and we understand that we have to 12 look at -- we will look at them and give**  **13 reasonable interpretations and reasonable 14 assurances to make sure we comment on all of**  **15 your public comments and respond to them in an 16 adequate manner.**  **17 So, we do understand that we do 18 need time.**  **19 MR. SACHS: Just to pile on a bit, 20 this is Harvey again. I don't think you can**  **21 get through Diane's comments in that period of 22 time.** 

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 373**  

### 1 (Laughter.) **2 MS. VAIDYANATHAN: Well, we have 3 received some of Diane's comments already and**  **4 we are looking through those. 5 DR. JAKOBS: Diane has been**  **6 worried for weeks and I actually, I sent some 7 questions. So yes, thank you.**  **8 MODERATOR BROOKMAN: Let's go 9 home. Thank you very much, as always.**  **10 (Whereupon, at 4:57 p.m., the 11 foregoing meeting was adjourned.)** 

**12 13**  **14 15**  **16 17**  **18 19**  **20 21**  **22**

### 202-234-4433 **Neal R. Gross and Co., Inc. Page 374** 

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This is to certify that the foregoing transcript

In the matter of:

Before:

Date:

Place:

was duly recorded and accurately transcribed under my direction; further, that said transcript is a true and accurate record of the proceedings.

----------------------- Court Reporter 421

Residential Furnace Fans

US DOE

12-03-13

Washington, DC