### Page 1 U.S. DEPARTMENT OF ENERGY + + + + + ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS

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PUBLIC MEETING

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MONDAY SEPTEMBER 24, 2012 + + + + + The meeting was held in the Forrestal Building, Room 8E-089, 1000 Independence Avenue, S.W., Washington, D.C., at 9:00 a.m., Doug Brookman and James Raba, Facilitators, presiding. PRESENT: DOUG BROOKMAN, Facilitator, Pacific Solutions, Inc. JAMES RABA, Facilitator, Department of Energy BETSY KOHL, Department of Energy STEPHEN WITKOWSKI, Department of Energy ALSO PRESENT: BEN BARRINGTON, Navigant Consulting, Inc. LINCOLN BILLINGS, Intertek DONALD BRUNDAGE, Southern Company JENNIFER CLEARY, Association of Home Appliance Manufacturers ANDREW DeLASKI, Appliance Standards Awareness Project

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### Page 2 CAMILLA DUNHAM WHITEHEAD, Lawrence Berkeley National Laboratory JULIA FARBER, UL LLC AMANDA GONZALEZ, Energy Solutions MAITHILI IYER, Lawrence Berkeley National Laboratory STEVE LEYBOURN, Association of Home Appliance Manufacturers TIM LONG, Lawrence Berkeley National Laboratory PHIL MANTHEI, Alliance Laundry Systems JOANNA MAUER, Appliance Standards Awareness Project MARK MENZER, Intertek RENATA MORTAZAVI, Natural Resources Canada CHUN CHUN NI, Lawrence Berkeley National Laboratory ED OSANN, Natural Resources Defense Council JUDITH REICH, Navigant Consulting, Inc. LOUIS STARR, Northwest Energy Efficiency Alliance TIMOTHY SUTHERLAND, Navigant Consulting, Inc.

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### Page 3 TABLE OF CONTENTS Welcome, Opening Remarks, and................4 Agenda Review Rulemaking Introduction and.................16 Background Regulatory History, Test Procedure.........17 Issues, Rulemaking Process Overview
Market and Technology Assessment,...........38 Screening Analysis, and Engineering Analysis Manufacturer Impact Analysis................57 Markups Analysis, Energy and Water Use.....67 Analysis, Life-Cycle Cost and Payback Period Analysis, Shipments Analysis, National Impact Analysis, Consumer Subgroup Analysis, Utility Impact Analysis, Employer Impact Analysis, Emissions Analysis, and Regulatory Impact Analysis Other Issues and Comments, Closing.......122 Remarks Adjourn

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 4 P-R-O-C-E-E-D-I-N-G-S (9:00 a.m.)

MR. RABA: Okay, let's get started. Please take your seats. Welcome. Whether you're attending today's public meeting via in person or via the webinar, this is the U.S. Department of Energy's public meeting about energy conservation standards for commercial clothes washers. Today is Monday, September 24th, 2012, here in the Forrestal Building in Washington, D.C. My name is Jim Raba with the Department of Energy. I will be acting as your facilitator at the outset, and then turn it over to Doug Brookman when he arrives. As facilitator, I'm your process custodian. My job is to ensure that we satisfy the purpose for the meeting, and in so doing anyone who wishes has an opportunity to speak. So good morning, good to see you all this morning, those present in the room, and good to hear from you, those present via the 

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 5 webinar. Steve Witkowski, would you have any opening remarks? Please. MR. WITKOWSKI: No. I just want to thank you all for coming. We appreciate your participation, and as it says in the purpose of the meeting, this is for DOE to present its methodology for the standards rulemaking for commercial clothes washers, and this being a framework document meeting, we are here to get your input, either verbally or in writing and, you know, to ask for your participation. We have a great deal to cover today. This is a half a day meeting, and there's another meeting on dehumidifiers this afternoon. So I'm not going to say any more than welcome, and we'll get started. MR. RABA: Well, thank you, Steve. Steve, Steve Witkowski is your presiding officer for today. Traditionally, we start off by doing introductions around the room, and then followed by introductions from those Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 6 that are with us via the webinar. I'm going to start in a clockwise fashion to my left. Introduce yourself, please. Turn your microphone on before speaking. State your name and organization. Speak loud and clear, and then turn your microphone off when you finish speaking. MS. GONZALEZ: Hi. This is Amanda Gonzalez with Energy Solutions on behalf of the California Investor-Owned Utilities. MS. CLEARY: Jennifer Cleary with the Association of Home Appliance Manufacturers.
MR. MANTHEI: Phil Manthei, Alliance Laundry Systems.
MR. BILLINGS: Lincoln Billings, Intertek Testing Services. MS. KOHL: Betsy Kohl, DOE General Counsel. MR. WITKOWSKI: You know who I am. MR. RABA: That was Steve Witkowski, DOE. In the back please. Go to a Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 7 microphone. There's one behind you there, the stand up mic, remote. MR. LONG: Hi. Tim Long from LBNL. MR. RABA: Okay. Again, please introduce yourselves. State your name loud and clear and the organization.
MS. NI: Chun Chun Ni from LBNL as well.
MS. REICH: I'm Judith Reich from Navigant.
MR. BARRINGTON: I'm Ben Barrington from Navigant. MR. SUTHERLAND: Timothy Sutherland from Navigant. MS. IYER: Maithili Iyer from LBNL. MS. DUNHAM WHITEHEAD: Camilla Dunham Whitehead, LBNL. MR. RABA: Well, thank you. We're going to do the same introductions, again likewise via the webcast. Again, speak -- state your name and organization, speak loud and clear, and when you're finished, please Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 8 place your telephone on mute when you're finished speaking. This will help here in the room to reduce audio feedback that can occur between the speakers and the microphones here in the room. So again, please those participating via webinar, please introduce yourselves, name and organization. You can turn off mute please, if you're on the -- calling by telephone. (No response.) MR. RABA: Okay, nothing heard. If they have a queue from the sound stage here, if someone would like to speak via the webinar, please let us know. Raise your hand and queue it up. I'll get back, we'll do more introductions, around the room. Thank you. Two ways for the folks participating remotely to provide questions and comments. One is via telephone. Indicate that you would like to provide a question or comment by raising your hand. And in the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 9 GoToMeeting software, the moderator will be notified that your hand is raised, and once called upon, state your name and organization. Speak loud and clear. Also, via the GoToMeeting, use the question window in GoToMeeting to submit a question to be relayed to the moderator, and note that if it's a technical question of some length, it's best to use this function to help us understand clearly what your comments or thoughts are. One more thing. We have another guest here this morning. Please again turn your microphone on. State your name loud and clear, and your organization represented. MS. MAUER: Joanna Mauer with the Appliance Standards Awareness Project. MR. RABA: Okay, thank you and welcome. So thank you all for being here this morning. As part of our going over our overview of the meeting today, there's some things here we'd like to call our norms. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 10 These have been, come over the years as something that's kind of reliable for us. In my previous life, I would call these rules of engagement, but here they're

norms. First, please listen as an ally. Use short, succinct statements to keep to the point. Hold sidebar conversations outside the room; focus on issues, not personalities. One person speak at a time. Raise your hand to be recognized, and state your name for the record. And cell phones, please set them to silent or vibrate mode. Any questions so far? (No response.) MR. RABA: Okay. Some housekeeping items. You've all been given a visitor's badge. Please display that in full view above the waist so the security can see you. Emergency exits, each end of the passageway there are stairwells. Go all the way down to the first floor. Ground level will be under the building, first floor and exit first Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 11 floor. We had one situation we did have to evacuate, but the point is think about emergency exits if the elevators are not working. Likewise, restrooms are either under the passageways, either direction. Places to eat for a coffee break or lunch, if you're going to stay that long. We have a cafeteria, a small snack bar directly below us on the ground level floor. Take the elevators, go straight down. It's right directly below us, and also later on if you happen to want to stay for lunch, the meeting's over, something like that, we have a cafeteria at the far end of the building, the west building. You can go down to the ground floor again and walk in the long passageway just past the auditorium and up the escalator there and follow the crowd. If you do leave the building, you must come back through security and participate with all the checks and things Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 12 like that. So if you want to go to the other building, go down underground and follow the rest of the people there, okay. Evaluation forms. At the end of today's public meeting, we'll be handing out these evaluation forms. We need comments from you as to how you think the meeting went, okay, some constructive comments there. And upon entry, you received a receipt with your laptop computer. DB Security gave it to you and they'll be looking for that upon exit to check the receipt and match the computer, and you'll be good to go. If you've not already done so, please leave your business card with Brenda, so we can have a record of who's here and we can share that too. Now we have some more people that have come in the room. Please welcome to the public meeting for commercial clothes washers here at DOE. Take your seats, please, around the table. There's plenty of room here. As you Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 13 come in the room, please introduce yourself, your organization. Turn your microphone on and speak clearly and loudly. Your name and organization, please sir. MR. MENZER: Hi. I'm Mark Menzer with Intertek Labs. MR. BRUNDAGE: Don Brundage, Southern Company, electric utility. MR. RABA: Sir? MR. OSANN: Ed Osann with the Natural Resources Defense Council. MR. RABA: And we have one more coming in. We have one in the back there. Use the stand up microphone please sir and introduce yourself. MR. LEYBOURN: Steve Leybourn. Steve Leybourn, Association of Home Appliance Manufacturers. MR. RABA: Okay, and again, please turn your microphone on. State your name and organization clearly. MS. STARR: Louis Starr, Northwest Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 14 Energy Efficiency Alliance. MR. RABA: Did you get that? Okay. Thank you very much. Now turn your microphones off so we can get started then too. Okay. So you all received a packet of information when you came in the door. I'm referring to this packet right here. It contains an agenda, a slide deck, which we're presenting from today, and which is the basis for discussion, and a copy of the Federal Register notice that announced the meeting. We'll start briefly by going over the agenda today, the purpose of today's meeting is to present DOE's methodology for conducting energy conservation standards rulemaking for commercial clothes washers. DOE will seek input from you and others about the planned methodologies, assumptions, and data sources. After each presentation, we'll entertain comments and discussion. We'll take a break around 10:30, a Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 15 short break there, and following that we'll continue with presentations and more comments. We're scheduled to finish today at 12:00 noon, so are there any comments or questions about today's agenda? (No response.) MR. RABA: Okay. So please keep the focus up here. Turn your cell phones to silent mode, if you would please, and limit sidebar conversations. Is there anyone now who wishes to make an opening statement, a brief opening statement? None seeing at this time, note that throughout today's presentation, presentations, there will be other slides like this one to cue for issues. We'd like comments and feedback on. So you see this come up from time to time at the appropriate times, okay. And Steve Witkowski, would you care to make rulemaking introductions. Okay, good to go. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 16 MR. WITKOWSKI: I should stress, though, that the information for submitting comments is here in your data sheet as well as on line. So that's what we're looking for. We hope you participate in this entire rulemaking process. Thank you. MR. RABA: Thank you. Again, we're here to listen to you, and we want your data, feedback and comments as well. So a lot to cover. Let's get started. Our first presenter will be Tim Sutherland from Navigant Consulting. MR. SUTHERLAND: Test, there we go. Okay. I'll reintroduce myself. Tim Sutherland from Navigant. We know why we're here, so I'll continue. Throughout today's presentation, in specific areas DOE solicits comment. We'll present those in green boxes like this. The comment numbers correspond to the comment numbers that appear in the framework document, and as always, DOE Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 17 welcomes comment on the specific issues identified, as well as any other issues that anyone may wish to comment on. And here are the instructions for submitting written comments after today's meeting. The key date to note is that the comment period ends October 12th. So let's briefly review the regulatory history for commercial clothes washers. The Energy Policy Act of 2005, which we'll abbreviate as EPACT, that amended the Energy Policy and Conservation Act of 1975, or EPCA, to include commercial clothes washers as a covered product. EPACT established the first energy conservation standards, and in addition, it required DOE to complete two rulemaking cycles to determine whether to further amend those standards. The first final rule was issued by DOE December 18th, 2009. That satisfied the first rulemaking cycle. The second final rule is required by January 1st, 2015, and the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 18 current rulemaking will satisfy that second requirement. EPACT 2005 also provided the definition for commercial clothes washers, in terms of what's considered a covered product. So I won't read through this entire definition, but the key point here is we're dealing with soft-mount clothes washers.For horizontal access or frontloading, the capacity limit is 3.5 cubic feet. For vertical access or top-loading, the capacity limit is 4.0 cubic feet, and these are primarily washers that are found in multi

family housing, common laundry areas or coin laundries or laundromats. In a brief look at the actual standards, so the first table there shows the standards that were established by EPACT 2005. Modified Energy Factor or MEF of 1.26, and that's a minimum, and a Water Factor or WF of 9.5, and that is a maximum. Those are the current standards. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 19 The first DOE rulemaking cycle amended these standards by product class. It introduced separate standards for top-loading clothes washers and front-loading clothes washers, which are shown in the second table. For top-loaders, the standard willbe 1.6 MEF, 8.5 Water Factor, and for frontloaders, the standard will be 2.0 MEF, 5.5 Water Factor, and again, those become effective January 8th, 2013. I'll just pause to see if there are any questions on anything we've covered so far. Okay. Let's quickly review some of the test procedure issues that we, that are relevant to this current rulemaking. EPCA requires commercial clothes washers to use the same test procedure as residential clothes washers, and on March 7th of this year, DOE published a final rule amending its procedures for residential clothes washers. That final rule included minor Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 20 amendments to Appendix J-1, which is the test procedure that is currently effective. It also introduced a new test procedure at Appendix J-2, which we'll discuss over the next couple of slides. Appendix J-2 retains -- retains calculations for the MEF and Water Factor metrics. It also establishes two new metrics, shown in this green box. The first is Integrated Modified Energy Factor or IMEF, which incorporates stand-by power measurement. The second is Integrated Water Factor or IWF, which incorporates water consumption from all the wash temperatures included in the energy test cycle, rather than just the cold wash cold rinse, which is what Water Factor is based on. Appendix J-2 will be required for use beginning March 7th, 2015, and that applies to both residential clothes washers and commercial clothes washers. This is important to note because the current clothes Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 21 washer standards and the amended standards that will be effective at that time are based on MEF and Water Factor, as measured according to Appendix J-1. And MEF and Water Factor, as measured according to Appendix J-1, are not equivalent to MEF and Water Factor, as measured according to Appendix J-2. So to deal with this, DOE is considering developing correction factors for translating the MEF and Water Factor values measured under Appendix J

1 into their equivalent Appendix J-2 values. Those correction factors would apply beginning March 7th, 2015, to determine compliance with the 2013 standard levels, and they would remain effective until the date of any new standards that may arise from the current rulemaking. Just another slide to visually show the timelines that we're talking about. So on the top, we show the residential clothes washers, which are using Appendix J-1 until Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 22 March of 2015, switching over to Appendix J-2. In addition, they'll be using the IMEF and IWF metrics at that point. On the bottom, we show the commercial clothes washer timeline, using Appendix J-1 until March of 2015, at which point, as we just discussed, switching over to Appendix J-2, still based on MEF and Water Factor, but using the conversion factors to be developed. And then from 2018 onwards, that will be determined during the course of this rulemaking. Whether the standards remain in terms of MEF or IMEF and Water Factor or Integrated Water Factor. So let's pause here for comments. Item 1-1, DOE invites comments on developing correction factors for translating the Appendix J-1 MEF and Water Factor values into their equivalent Appendix J-2 values, that would apply beginning March 7th, 2015, at which time commercial clothes washer Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 23 manufacturers will be required to use Appendix J-2. DOE also welcomes any data on the appropriate correction factors. MR. RABA: We have two comments. Go ahead, please, you're first. MR. BRUNDAGE: Don Brundage, Southern Company. Not specifically to this correction factor, but the way I understand the washer test procedure, a large portion of the energy savings is the reduced drying time from reduced water in the clothes. Has there been any modeling or research to see whether, to validate the reduced drying time?
MR. SUTHERLAND: I'm not sure exactly what you mean by "reduced drying time." In the test procedure, one of the components of energy consumption is an approximation of the dryer energy, and that derives from a measurement of the remaining moisture content. So in Appendix J-2, that equation Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 24 has been changed. I'm not aware of any studies or anything that have validated that portion of the equation, but -- MR. BRUNDAGE: The reason I'm asking was I was at an Electric Power Research Institute meeting last week, and they were telling me about some of their ongoing research, and they've done some metering on residential washers and dryers in real live situations. They said they weren't, they hadn't made it through all their internal validations. They weren't ready to release data, but they said their findings were that there was very little energy savings from reduced moisture content, because people still dried them the same way, even if they came out of the washer with less water in them. MR. SUTHERLAND: Okay. MR. BRUNDAGE: I strongly encouraged them to submit that before your comment deadline, but I don't have any hard Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 25 data. But they had told me they did not find much energy savings on dryer, on the dryer side. MR. SUTHERLAND: Okay, thank you. As always, DOE welcomes whatever data may be out there. So we strongly welcome submission of that data. MR. BRUNDAGE: Yeah. MR. RABA: I saw a hand over here first and then over there second. MR. MANTHEI: Phil Manthei, Alliance Laundry Systems. I think this one just doesn't pass the common sense test. DOE's proposing to use a lot of resources and time to produce correction factors which could be, have an error. I think the requirement is that any existing model that's in production, when there's a standard or a test procedure change, still has to be valid after the test procedure. Why can't DOE general counsel look Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 26 at a way to continue to use Appendix J-1 for three more years, and not waste resources for doing something that's really not necessary? MS. KOHL: So this is Betsy Kohl with DOE General Counsel's office. There's a statutory requirement that the test procedure for commercial clothes washers be the same as the test procedure for residential clothes washers, and the requirement for compliance with that residential clothes washer test procedure is keyed off of the new standards, and that's March 7th, 2015.
So we're

-- compliance with the
statute is what's driving this. But we welcome comment obviously on what those correction factors might be. MR. RABA: Thank you, Phil. Yes, over here for Ed on this side too. MR. OSANN: Yes. This is Ed Osann with NRDC. Just to follow up on the first point that was made, we think it's important to consider the potential energy savings, the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 27 validity of the potential energy savings derived from the test procedure in the commercial washer context. The savings from reduced moisture content are most effectively captured with a dryer with, that is sensor operated, and in the commercial setting, it is more common perhaps than in the residential setting, for dryers to be operated on a time dry basis. We think it would be appropriate for DOE to collect data on the existing stock of dryers in the commercial setting, and the availability of a sensor dry feature in today's stock of commercial dryers. MR. RABA: Thank you. On the right please, from AHAM. Your name please? MS. CLEARY: Jennifer Cleary. Can you just expand a little bit on how you are thinking about doing these correction factors? MR. SUTHERLAND: I think probably a similar process that was used for residential, where units that are currently available on Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 28 the market would be tested to both test procedures, and the correlation of Appendix J

1 results to Appendix J-2 results, that would be the basis for their correction factors. MS. CLEARY: And would you be using minimally compliant units or a mixture? MR. SUTHERLAND: I don't think that's been decided yet. MS. KOHL: Hi, this is Betsy Kohl at DOE OGC. We're aware of the statutory provisions and the reference to minimally compliant, so we'll be taking that into account when we develop the correction factors.

questions? audience. MR. SUTHERLAND: Thanks, Betsy. MR. RABA: Any other comments or Anything from our webinar

(No response.) MR. RABA: Okay, none assuming. Proceed with another one. MR. SUTHERLAND: Okay, thank you. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 29 Okay. So here are two comments related to the use of new metrics. When using Appendix J-2, or this is with regards to using Appendix J-2, DOE invites comment on whether to establish new energy efficiency standards for commercial clothes washers, based on the new IMEF metric, which would incorporate standby and off mode, and Item 1-3, DOE invites comment on whether to establish new water efficiency standards based on the new IWF metric, which would incorporate water consumption from all the temperature cycles included as part of the energy test cycle. MR. RABA: Yes, comment or question? State your name and organization. MS. CLEARY: Jen Cleary with AHAM. On Item 1-2, I was wondering if DOE is considering doing a consumer use study, to determine how the usage for inactive versus standby might be different in the commercial context versus the residential context? Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 30 MR. SUTHERLAND: I'm not aware of any plans for consumer usage studies, but DOE does plan to conduct standby power testing as part of its investigation into the possibility of using the new metric.MS. CLEARY: I just have a followup question, Jen Cleary. MR. RABA: Sure, go ahead. MS. CLEARY: Do you also anticipate that the definition of standby might be the same or different for commercial? MR. SUTHERLAND: That will be one of the issues under investigation during this rulemaking. MR. RABA: As we go through the comments and the questions, again, I would like to hear from you with your written comments as well. It would be very helpful. Thank you. Anybody else here in the room? Remotely? (No response.) MR. RABA: Okay. Let's go ahead, Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 31 please. MR. SUTHERLAND: Okay. One additional note. There may be other test procedure issues that crop up during the course of this rulemaking. So DOE will consider any other test procedure issues relating to the use of Appendix J-2 throughout this rulemaking for commercial clothes washers. Okay. We have just a few slides here to describe the overall rulemaking process. For energy conservation standards rulemaking, new or amended standards must be designed to achieve the maximum improvement in efficiency that is technologically feasible and economically justified, and DOE performs a variety of analyses to make that determination. This table shows the analyses that DOE conducts to determine technological feasibility, and we'll discuss each of these analyses in greater detail throughout today's Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 32 presentation. The second table shows the seven factors that DOE must consider, to determine whether new or amended standards are economically justified, and the seven factors required by EPCA are shown on the left, and the corresponding analyses that DOE conducts are shown on the right. Again, we'll discuss each of these analyses in more detail throughout today's presentation. Here's an overall look at the schedule for this rulemaking. Beginning with the framework, which was published on August 13th of 2012. The next step will be the NOPR, which is the Notice of Proposed Rulemaking, with a target publishing date of January 31st, 2014, and the final rule target date is December 31st, 2014. As shown on the timeline, the 2013 standards will become effective January 8th, 2013. DOE plans to leverage the analyses Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 33 that were performed during the previous commercial clothes washer rulemaking, which wrapped up at the end of 2009, beginning of 2010, leverage those analyses to allow DOE to proceed directly to the NOPR stage, following the framework stage. Here's a quick look at the various analyses that DOE will perform during the NOPR period. When DOE publishes the NOPR, that will be a preliminary determination of whether standards should be amended, and if so, the proposed new levels. The results of the NOPR will be presented in a technical support document or TSD, and there will be a public meeting and comment period following publication. After that, DOE will revise its NOPR analyses as necessary, based on public comments. Also, there will be consideration of the Department of Justice determination of any impacts on market competition. Finally, the final rule will Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 34 provide DOE's determination of whether standards should be amended, and if so, the new standard levels. The final rule will also provide the compliance date of any new standards, and the final rule will have its own separate technical support document. So any questions on the overall process, before we continue discussing the individual NOPR analyses? MR. RABA: Go ahead, please. MS. CLEARY: Jen Cleary with AHAM. I was just wondering why DOE decided not to do
an ANOPR. MR. SUTHERLAND: The ANOPR or the preliminary analysis, DOE felt that because the prior rulemaking wrapped up at the beginning of 2010, that DOE would be able to leverage a lot of the analysis that was performed during that period, which would allow it to effectively shorten the analysis period for this rulemaking. So DOE felt that that would allow it to go straight to the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 35 NOPR. MR. RABA: Other questions,
comments? (No response.) MR. RABA: Before we proceed, I saw a couple of folks arrive, albeit late. Those who just arrived recently, please state your name with the microphone over there, remote microphone, and your organization represented. MR. DeLASKI: Andrew DeLaski, Appliance Standards Awareness Project. MS. FARBER: Julia Farber with UL. MR. RABA: Anyone else, please, that slipped in? Okay. Go ahead. Okay. Wait, wait. MS. GONZALEZ: I actually have a question. MR. RABA: Name and organization? MS. GONZALEZ: Yes. This is Amanda Gonzalez on behalf of the California IOUs. When you said that DOE would consider any other issues with the test procedure for Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 36 commercial clothes washers, does that mean that DOE will consider amending them for the commercial clothes washer rulemaking? MR. SUTHERLAND: DOE, statutorily, commercial clothes washers are required to use the residential test procedure. But DOE will investigate any test procedure issues that need to be investigated. Well, Betsy, do you have any -- okay. MR. RABA: Thank you. Others, please? Go ahead. MR. BRUNDAGE: Don Brundage, Southern Company. While you have to use the same test procedure, you could do something like make assumptions that for commercial, they have to make assumptions about percentage in the market of things like water sensors and the dryers and that submarket. There's ways to do it that could address some of these issues on commercial while using the same test procedure. MR. WITKOWSKI: Okay. In the back Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 37 there please, Andrew DeLaski? MR. DeLASKI: I have follow-up. This is Andrew DeLaski. I just want to follow up on Don's point. It just strikes me, just thinking about this, that there's no reason why the residential clothes washer test method might not have a commercial section, just to make that sort of explicit, that you could have a commercial section of a residential clothes washer test method, and it may be a way around this. If it is a problem, it might be a way to deal with it. I see Betsy smiling, thinking this is maybe a little too creative for her. But it's something to think about. MS. KOHL: Thanks very much. This is Betsy Kohl with DOE OGC. MR. RABA: Okay, great.
MR. SUTHERLAND: Great. We're right on time, so this is good. Okay. So we're going to dive into the individual Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 38 analyses that DOE will be conducting in development of the NOPR. First up is the market and technology assessment. The purpose of this analysis is to characterize the overall commercial clothes washer industry and the market. As part of this analysis, DOE will gather historical shipments and other relevant data, and as part of the technology assessment, DOE will identify technology options that exist for improving energy efficiency. First, request for comment here, Item 3-1. DOE requests information that would contribute to the market assessment for commercial clothes washers, and this includes information on current product features and efficiencies, product feature and efficiency trends, and historical product shipments and prices. MR. RABA: Wait. Before we Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 39 proceed, I have two hands raised, one remotely, and then one here in the room. MR. SUTHERLAND: Oh. MR. RABA: Remotely, we have Renata Mortazavi hand raised. Yes, go ahead please. Is the -- are we hearing anything from the audio? Oh my. MS. MORTAZAVI: Hello. Can you hear me now? MR. RABA: Yes, thank you. Welcome. MS. MORTAZAVI: Hi. Oh my gosh. It saves me typing. I just want -- MR. RABA: Wait, wait, stop. Please say your name for the record and the organization you represent?
MS. MORTAZAVI: Yes. It's Renata Mortazavi from Office of Energy Efficiency, Natural Resources Canada. I just want to make a quick comment to the last comment actually, around the test procedure difference for the residential. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 40 I don't see why do we have to have two different test procedures for commercial clothes washers, because they are the same units. So they will be testing the same way as the residential dryer. That's it. MR. RABA: Renata, this is Jim Raba, facilitator. Would you please state again a little more slowly? The audio's not that great here. No. I can hear your enthusiasm, but the audio's not that great, and so just do it again, please. MS. MORTAZAVI: Because somebody mentioned that you have to have two different test procedures for the commercial style clothes washers. I want to know the reason why we have to develop two different test procedures for commercial clothes washers? They are the same unit, right? But it's the same with residential machine, right? So we don't really need to have, worry about separate test procedure for clothes washer for a commercial clothes washer. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 41 MR. RABA: Okay. We'll note that for the record, thank you. Over here, please. Phil Manthei. MR. MANTHEI: I'm sorry. Oh.
MR. RABA: Your name and organization? MR. MANTHEI: Phil Manthei, Alliance Laundry Systems. For the request for comment on the slide up there, obviously the big issue right now is of course that the products for the new standard, that it takes effect on January 8th, 2013, are not in the marketplace yet. It's very difficult for DOE or anyone, probably, to make the assessment as to, you know, how that impacts and what the market will be like, until later on in 2013, early 2014. And then I guess I'll also address Renata's question. Yes, there are some differences. Yes, they are very similar. The basic construction of a commercial clothes Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 42 washer in this rulemaking is very similar to a residential. However, there are issues, as we just talked about, possibly regarding such things as the standby power and how those usage factors for the standby power would be, would be addressed for commercial, because they are probably going to be different. MR. RABA: Thank you. Others? (No response.) MR. RABA: Okay. MR. OSANN: Question. MR. RABA: Oh sir. Your name and organization, please. MR. OSANN: Ed Osann with NRDC. This request for comment includes historic product shipments and prices. There was, I think, significant attention to shipments in the last rulemaking, and noting a trend for -- a downward, a downward trend in unit shipments. That may or may not have Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 43 stabilized, and I'm wondering whether DOE can provide an indication of what elements of the prior analyses you're intending to repurpose for this rulemaking, compared with what analyses that will be done anew. It's one thing to say you've got analyses that were done for the 2010 rule; but how much of that, what are the components that you're actually going to be reusing, and what about new inputs to those components? MR. SUTHERLAND: Well, for the market and technology assessment, clearly DOE will be seeking to supplement the prior analysis with more recent data on shipments from 2009, 2010, onwards. So that data, of

course, would be updated with more recent data. Some of the information on the technology itself, product features, efficiency features, much of that information will probably, DOE will probably be able to
carry over. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 44 But it will really be a case-by

case basis, in terms of information that DOE's able to reference from the last rulemaking, versus information that needs to be reassessed for this rulemaking. Any other questions? Okay. A quick mention of product classes. During the last rulemaking, DOE established two separate product classes basedon location of access, top-loading and frontloading, and DOE is considering retaining these two product classes for the current rulemaking. So a request for comment on this topic. DOE seeks comment on the merits of retaining two product classes, based on location of access, top-loading and frontloading.
MR. RABA: Go ahead.
MR. OSANN: Ed Osann for NRDC. We recommend that DOE revisit the product class determinations that were made for the 2010 rule. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 45 At that time, prior to that time, there was a single product category in the initial statutory authorization for efficiency standards for commercial clothes washers, and in the 2010 rule, a separation of those classes was made, based upon assumed customer utility, deriving from shorter cycle times for top-loaders versus front-loaders. This was based largely on a Consumer Reports assessment that presented cycle times for front-loaders in the range of 70 to 110 minutes, or something along those lines. Whether or not that was ever apt for

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- an apt characterization of cycle times for commercial front-loaders, it certainly doesn't appear to hold true today. The products in the market that have front-loaders that have cycle times in the range of 30 minutes, from several manufacturers. These front-loaders are performing in a time, in the time frame that is comparable to top-loaders. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 46 So we think this bears a thorough reexamination and consideration of a single product class. MR. SUTHERLAND: Thank you. MS. CLEARY: Jennifer Cleary with AHAM. We would disagree respectfully with that comment. We think that the product class separation should remain the same, and DOE got that analysis correct in the last rulemaking. MR. RABA: We certainly invite your written comments from DOE's view also, both sides. Anybody else in the room? (No response.) MR. RABA: Okay, go ahead. MR. SUTHERLAND: Okay, and to wrap up this section, a discussion of the technology assessment portion. DOE will consider technology options that it considered during the previous rulemaking. A subset of those are shown here, plus any new available technologies that may be available. So DOE seeks -- Item 3-3, DOE seeks Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 47 comments on whether any of the technologies listed in the table should be removed from consideration, or whether any other technologies not listed in the table should be added for consideration. I'll go back to that table if there are any comments on that. (No response.) MR. SUTHERLAND: Okay. We'll move along to the screening --
MR. RABA: One comment. MR. SUTHERLAND: Oh sorry, go ahead. MR. OSANN: We'd recommend that DOE consider a feature that might be characterized as cycle-based pricing. It's a combination of the controls in the machine and the coin box or fee collection system that will allow for differentiation based upon water temperature selection, so the customers actually have an incentive to go for a warm or cold water wash. This is a feature that's offered by Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 48 more than one manufacturer today. We may loop back and find there's a test procedure issue in how to effectively characterize or capture the energy savings. But it is a feature. It's in the market now. It has a potential to save perhaps a significant amount of energy, and we think it ought to be assessed in the technology assessment. MR. RABA: Thank you. That comment was from Ed Osann of the Natural Resources Defense Council. Other comments or questions? (No response.) MR. SUTHERLAND: Great, thank you. MR. RABA: All right. MR. SUTHERLAND: Okay. So we'll move along to the screening analysis. The purpose of the screening analysis is to screen out technology options that DOE will not consider during this rulemaking, and there are four specific criteria that DOE uses. The first is technological feasibility. The second is the practicability Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 49 to manufacture, install and service that technology. The third is whether that technology has any adverse impacts on product utility or availability, and the fourth is whether that technology has any adverse impacts on health or safety. So Item 4-1 seeks comment on whether any of the technologies listed in that table should be removed from consideration, based on any of these screening criteria, and if so, please provide specific details regarding the specific screening criteria that would preclude consideration technology option. MR. RABA: Thoughts? (No response.) MR. RABA: Go ahead. of that

MR. SUTHERLAND: Okay. So we'll move along to the engineering analysis. The purpose of the engineering analysis is to determine the relationship between manufacturer cost and energy efficiency. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 50 Part of that is defining the different efficiency levels on the market. So these two tables show the preliminary efficiency levels for consideration during this rulemaking. For top-loading commercial clothes washers, DOE is unaware of any top-loading washers currently on the market that exceed the January 2013 standard levels. So the baseline efficiency level for top-loaders is defined as the 2013 DOE standard of 1.6 MEF and 8.5 Water Factor. For front-loaders, DOE has the four efficiency levels defined here. Again, the baseline is defined as the 2013 DOE standard of 2.0 MEF,
5.5 Water Factor. Level 1 and Level 2 are based on the Consortium for Energy Efficiency tier levels. So Level 1 corresponds to CEE Tier 2 of 2.2 MEF, 4.5 Water Factor. Level 2 corresponds to CEE Tier 3, which is 2.4 MEF, 4.0 Water Factor, and Level 3 represents the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 51 maximum available efficiency currently on the market, of 2.6 MEF and 3.7 Water Factor. We have, I believe, four requests for comment on these efficiency levels. So let me read through all four, and then I'll go back to that table and we can, we'll take
comments. So the first, Item 5-1, seeks input on whether the January 2013 standard levels are appropriate for characterizing the baseline efficiency levels for both products, product classes. Item 5-2, DOE seeks input on whether any higher efficiency levels should be considered for top-loading washers. If so, the basis for such consideration. Item 5-3, DOE seeks input on the appropriateness of the higher efficiency levels that have been identified for front-loading washers, and Item 5-4, DOE seeks input on the appropriate maximum technologically feasible energy efficiency levels, and the basis for why those Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 52 should be selected. So I'll go back to the table showing the efficiency levels if you have any
comments. MS. CLEARY: Jen Cleary with AHAM. I just have a question. I think in the framework document, DOE stated that it will use Appendix J-1 for the engineering analysis, but use J-2 for the energy and water use analysis. Can you just explain why that would be? MR. SUTHERLAND: I'm not familiar with exactly what you're referring to, but DOE's intention is to use Appendix J-2 for the purpose of performing the analysis and establishing the new standards. DOE will be using Appendix J-1, as we discussed earlier, to develop correction factors if it decides to do that. So it will really be a combination of both. MS. CLEARY: Just so I understand what you said, this is Jen Cleary following Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 53 up. The only reason you think you would use J-1 would be to develop the correction factor. So like as a basis for comparison, and there wouldn't be any other -- MR. SUTHERLAND: Well, I don't want to say that there wouldn't be any other purpose. That would be the primary purpose for using it. MS. CLEARY: Okay. What else might it be used for? MR. SUTHERLAND: Well, to be determined. MS. CLEARY: Okay. MR. RABA: Further questions,
comments? (No response.) MR. RABA: Okay. MR. SUTHERLAND: Brief description here of DOE's approach for determining the cost efficiency relationship. DOE uses a combination of two approaches: The efficiency level approach and the design option approach. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 54 The efficiency level approach, for that approach, DOE solicits industry-aggregated incremental costs for achieving each higher efficiency level. As part of the design option approach, DOE performs reverse engineering teardowns to validate the cost efficiency relationships obtained using the efficiency level approach. Just a note on proprietary designs. Those will only be considered if they do not present a unique path to a given efficiency level. So DOE requests feedback on the use of the efficiency level approach, to determine the cost efficiency relationship, supplemented as needed by a design option approach. Item 5-6, are there any proprietary designs or technologies of which DOE should be aware in this rulemaking? If so, what are these designs or technologies, and how should DOE acquire the cost data necessary for evaluating them? Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 55 MR. RABA: I see a hand raised.

MR. OSANN: Yeah. This is Ed Osann with NRDC. This actually goes to the previous request for comment on the engineering analysis and efficiency levels for consideration.
MR. RABA: Sure. MR. OSANN: I didn't quite get it in before you switched subjects. MR. RABA: No problem. MR. OSANN: I just wanted to clarify that there are no max tech levels shown here, and ask whether it is in fact DOE's intention to develop a max tech level for each product class? MR. SUTHERLAND: That will be determined during the course of the rulemaking as part of that analysis. MR. OSANN: The max tech level will be determined, not whether to identify a max tech level, but what the specific level is? MR. SUTHERLAND: That's correct. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 56 MR. RABA: Okay. Comments? (No response.) MR. RABA: Go ahead. MR. SUTHERLAND: Thanks. Okay, and last note relating to the engineering analysis, are impacts on consumer utility. EPCA requires DOE to consider any lessening of utility or performance likely to result from a new standard. So DOE will consider whether new standards may impact consumer utility of commercial clothes washers. On this topic, request for comment, Item 5-7, DOE seeks comment on whether any new standards may impact the utility of commercial clothes washers, and if such impacts exist, can the effects be quantified, and if so, how? (No response.) MR. SUTHERLAND: No comments, okay. At this point, we are going to jump ahead to the manufacturer impact analysis, and I'll turn it over to Ben Barrington, who will Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 57 present that.
MR. BARRINGTON: Thanks for all this equipment. (Pause.)
MR. BARRINGTON: Is that pretty good? Thanks. Thanks very much, Tim. I may need to move this up a little bit. Good morning, everyone. I'm Ben Barrington with Navigant Consulting. I help conduct the manufacturer impact analysis as part of DOE's efficiency standards rulemakings. I'm going to walk you through sort of why we do the manufacturer impact analysis and sort of the process that we follow. So the manufacturer impact analysis fulfills two of EPCA's requirements, to determine economic justification of a proposed efficiency standard. Specifically, those are the economic impacts on manufacturers themselves, but also the impact on the industry at large and the competitive dynamics therein. There Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 58 are some format changes described in a 2006 report to Congress. It's available in the link displayed below, primarily relating to specific activities that have to happen as part of the manufacturer impact analysis. So there are roughly five stages that happen as part of this portion of the analysis. It's downstream from the engineering and shipments analysis, and so we use inputs that are created as part of those other analyses, in performing the MIA. But it starts off with an industry profile, in which we aim to identify current and past industry structure, ownership structure, whether things are manufactured domestically, whether they're imported, things of this sort. Along with that, we examine the annual reports and 10-Ks as filed in the SEC by manufacturers of these products that are publicly traded, and where available, publicly Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 59 available information from their annual reports as well, to develop an industry weighted average set of financial parameters. Also during that phase, we look through databases of companies that engage in this type of activity, looking through the North American Industry Classification System codes relevant to this particular industry, to develop a list of manufacturers, and identify if any of those are small businesses or other subgroups of manufacturers that we're considering in this particular rulemaking. Beyond that, we also work to develop our framework for analysis, which is an industry discounted cash flow, to determine the net present value of the industry itself, both with amended standards and absent amended standards. I should stop and pause and solicit any questions that anyone might have on this point. (No response.) Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 60 MR. BARRINGTON: Okay. I'll move forward, then. Once that framework has been developed, we also developed an interview guide that we circulate to members of industry, to get their input on a variety of topics, ranging from the key issues that they see relevant to this particular rulemaking, to how they anticipate shipments might change over time, how they anticipate consumer preference for products might change over time, pricing, so on and so forth. I won't go through them, but there are about a dozen different topics that we address during the course of these interviews. We also circulate these interviews with a non

disclosure agreement, that maintains confidentiality of the information provided by manufacturers during interviews, between Navigant Consulting and the manufacturer themselves.
Once we’ve circulated these interview guides and booked a day to conduct Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 61 the interviews, we moved forward with those, and as I mentioned, those are carried out on a confidential basis. Thereafter, we take the information provided by manufacturers, additional information that's been developed through the course of other analyses like the engineering and shipments analysis, and work that together into an industry cash flow, and then discount that back to the present value at the weighted average cost of capital for the manufacturers represented in our analysis. The key quantitative aspects of the manufacturer impact analysis are the industry net present value, as well as the impact on domestic employment. Additionally, we also assess the cumulative regulatory burden associated with the rulemaking, the effects on competition as required by EPCA, as well as the disproportionate effects on any particular subgroup of manufacturers that we've Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 62 previously identified. So that brings us to these two last areas in our sort of preliminary screening of the industry to date. We've identified one small business manufacturer of commercial clothes washers, and we've also identified one low volume manufacturer of commercial clothes washers, that is a sort of carryover subgroup that was analyzed separately in the last rulemaking. So we're moving forward with doing that again. With regards to the cumulative regulatory burden, these are other regulations that could affect the industries impacted by this rulemaking, and those include standards on residential clothes washers, clothes dryers, as well as room air conditioners, as well as the ROHS or Reduction of Hazardous Substances directive. I think that takes us to our first comment. In our attempts to identify small businesses that are engaged in manufacturing Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 63 or commercial clothes washers, we would greatly appreciate any input from industry who could help point us in that direction. So if there are any comments? (No response.)
MR. BARRINGTON: None? Okay. Additionally, we're open to considering additional manufacturers subgroups that we may not have considered to date. As mentioned, we're doing, we're looking at the disproportionate effects on small business manufacturers and low volume manufacturers. So if there are any other subgroups that we should consider, I'd greatly appreciate your input. MR. RABA: Go ahead. MR. OSANN: Ed Osann from NRDC. Two questions. Is the disproportionate -- the analyses to determine disproportionate impacts, is that a standard DOE analysis, or is that -- is generally applied across all product categories, or is that one-off for Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 64 this particular rulemaking? MS. KOHL: Betsy Kohl from DOE OGC. As far as impacts to small businesses, we're required by the Regulatory Flexibility Act to look at those impacts in every rulemaking that we do. So that's a standard analysis. MR. OSANN: I guess my question was, is the methodology for assessing those impacts standardized? MS. KOHL: Yes. I mean -- this is Betsy Kohl, DOE OGC. There may be differences, depending on the specific facts, the industries that are out there. But typically, the analysis is pretty much the

same. MR. RABA: Thank you, Ed. Other comments or questions? (No response.) MR. RABA: In all, you may want to again, certainly we invite, DOE invites your comments in written form after this, as we proceed on from the public meeting here to Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 65 think about it, and if you have something that you'd like to raise as part of the issue to move the process forward constructively, it would be very helpful. MR. BARRINGTON: Okay. I think we have one more request for comment. With regards to cumulative regulatory burden, if there are other products that are also simultaneously being regulated by DOE in terms of minimum efficiency standards. We welcome your comment on those, as well as any other things outside of the scope of efficiency standards that might impact your business. MR. RABA: None seen in the room at this time. Any via the webinar would like offer comment or question at this time? Well, we've proceeded quite ahead of schedule this morning, which is a good sign, so he's being very efficient. So let's take a break to come back at 10:30 by that clock up there. Remember there's a coffee shop Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 66 directly below us on the ground floor, and as you walk about the building, be sure you wear your pink badge above the waist so it's very visible. Otherwise, security may stop you and I don't know who they are. But yes, please do that. So a good start to the day, and take a break. Be back here at 10:30 please. (Whereupon, the above-entitled matter briefly went off the record.) MR. RABA: Please take your seats. Brenda's passed out a record of our attendance here. From the attendance, you can see who is here, the business cards and the sign-ins. So we did before the break the manufacturer impact analysis, and now we will start with the markups analysis, energy and water use analysis and so forth and so on. Say it. (Off record comments.) MS. IYER: Okay. All right. Good morning, everybody. My name is Maithili Iyer. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 67 I am with the Lawrence Berkeley National Laboratory. In the next hour or so, I'll be covering analysis, the economic analysis that follows engineering work. As part of this, you see that there are many boxes that I'm supposed to cover in the next hour or so. I'll try to be as detailed or short as required, and I appreciate any comments or questions from all of you. Feel free to interrupt me whenever you feel like it. I will first cover the life cycle cost analysis, and cover two important inputs to this piece of analysis. These two are mark-ups and energy and water use. This is a flow chart of the life cycle cost and payback period analysis inputs. The yellow boxes here represent the data inputs; the green ones represent intermediate analyses, and the blue boxes are the output results. There are several intermediate steps to finally get to the life Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 68 cycle cost and national impacts. One of the important things, since the life cycle cost looks at the total cost of owning and operating an appliance over the life of the equipment, we look at the purchase expense or the total installed cost, and the annual operating expense, which is basically a part of the lifetime operating expense. For this, we require energy and water use to establish energy and water consumption of the commercial clothes washer unit, and the consumer retail price markup, which is required to develop the retail prices, once we have the manufacturer price. DOE needs to understand the distribution channel in order to develop the markups. The boxes in the middle of this flow diagram show the distribution channel of commercial clothes washers. You'll notice that we have manufacturers and route operators supplyingthe units to common area laundry in multiNeal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 69 family establishments, and distributors or wholesalers supplying to laundromats. In order to get to the final retail price, DOE will develop whatever markup is necessary to move from the manufactured product to the consumers, which are basically the laundromats and multi-family buildings here. You will see that this graph is from 1998. It is fairly old. We would like inputs from the stakeholders, if this distribution channel still represents what we see in the market today. There are essentially two types of markups that we consider under this. One is the baseline markup and the other is the incremental markup. The baseline markup typically includes all those costs that are part of moving a manufactured product to its final consumer retail price. This will include things like salaries, wages, rentals, etcetera. What this Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 70 will not include is the sales tax. The incremental markups, on the other hand, are those costs -- include those costs that are specific to a more efficient product. So this is generally very small, and will not include salaries or rentals, but will include specific costs that are required to sell a more efficient product. So something like marketing of a more efficient product will become part of this cost. In order to develop these markups, DOE will utilize data from the SEC 10-K reports that are filed by companies or part of the distribution chains, and also the economic Census data from the U.S. Census Bureau. DOE will also develop and apply a sales tax, and will use the data from sales tax clearinghouse for this purpose. We have a specific request for comment here. Item 7-1 requests comments from you on the distribution channels that we just described. Item 7-2 seeks input on the data Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 71 sources that will be used for developing the markups. MR. BROOKMAN: Maybe you can go back to the diagram. Good morning, everyone. Surely we can comment on this. This is 1998. Come on. Yes, okay. (No response.) MS. IYER: Okay. So that concludes the markups analysis. We will now look at the second key input to the LCC analysis, which establishes the operating cost expense as the input. The purpose of the energy and water use analysis is to develop annual energy and water consumption data, to establish the life cycle cost at varying efficiency levels for the product. DOE will utilize the per unit energy and water use data at different efficiency levels for the product, for both the top-loading and front-loading, and utilize this in connection with the usage of the unit, Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 72 the number of cycles that any clothes washer unit goes through. The test procedure that describes the calculation of energy and water use utilizes a single value for the number of cycles, based on residential use. DOE therefore needs to establish an appropriate range for the commercial clothes washer units in the field. In the past, DOE utilized research studies available from Multi-Housing Laundry Association, the Coin Laundry Association, Consortium for Energy Efficiency, and Southern California Edison, to establish the usage for these products. The two primary applications that DOE will consider under this are, as we have already discussed, will be multi-family buildings and laundromats. This is specific request for data. DOE requests per cycle energy and water use for each efficiency level, for both the top- and the front-loading Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 73 clothes washers. The past studies that I mentioned, which were used in the previous rulemaking, established the average number of cycles for multi-family applications as 3.4 cycles, and for laundromats, six cycles per day. Now you see that there is a wide variation in the number of cycles that we have from different studies. We would definitely want to improve this estimate, and if there are any new studies that people want to point us to, we welcome those. This slide provides more detail as to how we calculate the energy use, the annual energy use by efficiency level for a specific application type. The green box here represents, takes the annual usage per application type, which is the total number of cycles per year, and multiplies that by the per cycle energy use, to arrive at the annual energy use by Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 74 efficiency level for that application. The equation here is from the test procedure, and you would notice that the energy component comprises of three parts: the machine energy, the water heating energy and the dryer energy. The machine energy is primarily the motor energy required to turn the agitator or to rotate the wash basket. So the annual energy use is basically per cycle energy use times the number of cycles. We have a request for comment here. Item 6-1. Here, DOE seeks input on the approaches considered for specifying the typical annual energy and water consumption. Most importantly, we would like information on establishing the commercial clothes washers in the field. data
usage or of

MR. RABA: Ed Osann. MR. OSANN: Yeah. This is Ed Osann with NRDC. In this portion of the framework document, DOE states that other applications, Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 75 meaning other than multi-family housing and coin laundry, include lodging establishments, inpatient health care facilities and nursing homes. Relative to multi-family buildings and laundromats, these other applications are a small segment of the market. In the prior rulemaking, the 2010 rule, the entire analysis seemed to ignore the on-premise laundry segment. There were analyses that were carried forward in some detail for coin laundry, laundromat sector and multi-family, and really no analysis. I don't think they were even included in the unit count for machines that were used for on-premise laundry. I guess I would start with a question, that there is no -- it is clear that machines that are used for on-premise laundry that meet the size qualification in the statute are in fact covered products, are they Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 76 not? MS. KOHL: Betsy Kohl, DOE OGC. If it meets the definition in the statute, then yes, it's a covered product. MR. OSANN: Okay. Yes, it refers to other commercial applications in addition to multi-family housing, common areas and coin laundries. I would just point out that while this may be a relatively small segment of product line, the usage factors may in fact be greater than say common area laundry rooms. So it would seem to be worthwhile for DOE to acquire data on on-premise laundry usage, and develop usage factors and do a comparable degree of analysis as was done for these other two categories.
MR. BROOKMAN: Okay, thank you. Don Brundage.
MR. BRUNDAGE: I'm trying to envision what sort of applications you're talking about. You're talking about something like a business that has laundries for Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 77 uniforms or small equipment located at a place like a hotel, or what -- can you give examples? MR. OSANN: Ed Osann. Yes, as noted in the framework document, the hospitality industry, bed and breakfast, there of course is a wide range of equipment that is supplied by this industry that's beyond the size thresholds that limit the scope of covered products. But there are what you might call family size or small load machines that are offered by most of the purveyors of commercial products, specifically for the on-premise laundry market. MR. BROOKMAN: Thank you. Additional comments? MS. IYER: Thank you. We will now move to describing the life cycle cost and payback period analysis in greater detail. The purpose of the life cycle cost analysis is to assess the net life cycle cost impact on Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 78 consumers for differing efficiency levels of the product. As we have explained before, this includes the purchase expense, which is the consumer price and the installation, and the operating cost of running that equipment over the lifetime. The operating cost is discounted over the lifetime of the unit to present value, to get us the total life cycle cost. The difference of the life cycle cost between a baseline unit and the standard or potential efficiency level, or the unit potential efficiency level gives us the life cycle cost impact. DOE implements this analysis in an Excel spreadsheet, and as part of this, will also calculate payback period, which measures the amount of time it takes to recover a presumed increased price of higher efficiency product through reduction in operating costs. Recognizing that several of the Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 79 inputs to the LCC analysis have a lot of variability and uncertainty associated with it, DOE will model these uncertainties and variabilities using a Monte Carlo simulation, and by assigning probability distributions to these input variables. We saw that -- we noticed the wide range of variability in the clothes washer usage. This introduces uncertainty in the energy and water use value, and we addressed this uncertainty through the variability that is assigned to the usage factor. This type of analysis allows DOE to quantify the percentage of consumers that may benefit from a potential standard, and those that may not. The benefits are calculated with respect, in relation to a base case efficiency distribution, and therefore that distribution is very critical, so as to not overstate the benefits accruing from a particular efficiency level. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 80 We come up with a comment here, Item 8-1. Here, DOE seeks input on the extent to which purchasers of commercial clothes washers are able to either pass on the higher purchase cost of more efficient clothes washers, or are otherwise able to recover these costs. This is relevant for the multi

family laundry application. Item 8-6. DOE requests data from interested parties to characterize the current mix of commercial clothes washers, washer efficiencies in the market. Any comments? MR. BROOKMAN: Ed Osann. MR. OSANN: Yes, this is Ed Osann from NRDC. I think one of the areas that could benefit from more development in the record is more transparency on typical contract arrangements between route operators and the host building owners. I think there was very little in the record the last time around about that, but typical contract terms, typical coin box Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 81 splits. These would be useful things to have in the record, and I think that it ought to be possible to acquire that information, under the same kind of confidentiality protection that's afforded to manufacturers. MS. IYER: Okay. MR. BROOKMAN: Okay, thank you. Other comments? (No response.) MS. IYER: Okay. Here's an example of the Monte Carlo simulation. This is an efficiency distribution from the prior rulemaking, from the 2010 commercial clothes washer LCC analysis. This sort of describes how we conduct this analysis. The plot here on the X axis provides the life cycle cost savings for a specific efficiency level, and the Y axis shows the probability of its occurrence. The bold blue line that separates the red bars from the blue bars is the point where there is -- this is the point of no impact. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 82 Everything to its right is LCC benefit, and everything to its left is not. The dotted line represents the mean LCC savings. It is 179 here, and the table here provides the percentage of population that actually is benefitting from that, which is 85 percent. So this sort of explains how the LCC analysis really takes care of the wide distribution that we see amongst consumers. I will now move to covering all the other inputs that go into the LCC analysis. I'll start with energy prices. Energy prices, in combination with energy use, covers the operating cost pertaining to energy use for a commercial clothes washer. DOE will develop the electricity prices from the EIA Form 861 data and the natural gas and oil prices from the Natural Gas Monthly and The Petroleum Navigator, also published by the EIA. The EIA Form 861 data provides Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 83 utility-based data, which allows DOE to develop these average prices for 13 geographic regions. These include the nine Census divisions and the four large states. DOE will use the residential population rate for these geographic areas, to come up with an average price for the nation. For projecting the energy prices out to the future, DOE will utilize EIA's Annual Energy Outlook, that provides projections for reference, high and low cases. We also welcome other quantitative price projections that may be available, and stakeholders want DOE to run sensitivities on. The water and waste water prices, in combination with water usage, covers the operating costs pertaining to water. DOE will develop the water and waste water prices by utilizing the water and waste water rate survey conducted by the American Water Works Association and the Raftelis Financial Consultants. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 84 The water and waste water rate survey covers about 216 water utilities, and about 153 waste water utilities. Since 216 is not a large enough number to represent all the water utilities and all geographic areas, DOE will develop the average prices at the four Census region level. To forecast the future prices, DOE will use the historical Bureau of Labor's consumer price index for water and sewerage for this purpose. Again, DOE may evaluate other projections that may be available, and the stakeholders may want to provide. We have a request for comment here. Item 8-2. Here we seek input from all parties on the planned approach for estimating current and future energy and water and waste water prices. Questions? MR. BROOKMAN: Ed Osann. MR. OSANN: Yes. This is Ed Osannfrom NRDC. I had thought that the AWWARaftelis survey covered a large scope of Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 85 utilities than 200 plus water and 100 plus

sewer. Are you citing to a particular, to a particular survey publication, or are those, is that the number of utilities that may have been comparable for the entire series, or what's the basis for the numbers that you cited on the number of utilities? MS. IYER: Water and waste water rate survey, but I'll allow Camilla to speak more on that. MR. BROOKMAN: Would you find a microphone? MS. DUNHAM WHITEHEAD: Camilla Dunham Whitehead, LBNL. Whoops. Yeah, this refers to the 2010 AWWA and Raftelis survey, and those were the numbers of utilities that were, that had responded to their survey. So what we try to do is generalize the information recorded in the AWWA-Raftelis survey to the entire country, and as Maithili said, to the four Census regions. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 86 MS. IYER: Thank you. We'll now look at discount rates as an input. Discount rates are developed to allow DOE to discount the future operating costs to present day. DOE will use similar approach as it has done before for other commercial product standards rulemaking. DOE will develop the estimates of discount rates based on the cost of capital for companies to purchase commercial clothes washers. This may be in the form of funds that are required to be raised in the form of finance cost, from debt incurred, or in the form of equity from capital used, interest from equity used. The data that DOE will use to develop the discount rate is Damodaran Online and Ibbotson Associates. We will use whatever publicly available data exists, and if there are other data that stakeholders would want to refer us to, we'll be happy to receive those. Specific comment here, Item 8-5. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 87 DOE seeks stakeholder input on the planned approach for estimating discount rates for commercial customers.
MR. BROOKMAN: Ed Osann. MR. OSANN: Yes. This is Ed Osann from NRDC. I have a question about the application of the discount rate. In the past, DOE has used this to discount financial costs, and also discount energy savings. Is it still your intention to use a discount rate to discount energy savings? MS. IYER: It's the operating cost that we are discounting. The purchase of the equipment happens at the time, you know, in the present day terms. So that doesn't need to be discounted. This is from the consumer perspective. So any expense that is incurred in the future is going to be discounted, based on this. MR. OSANN: Right. We appreciate the use and the need for a discount rate in Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 88 the, in financial analyses. I think we have a long-standing objection to the use of the same discount rates, those that are developed for financial analyses, for discounting energy savings. Just make a record of that. MR. BROOKMAN: Okay, okay. MS. IYER: Okay. In this slide, we combine three inputs to the LCC analysis: the maintenance, repair and installation costs. We combine three, all three over here, even though installation cost pertains to the initial or the first cost at the time of the equipment purchased. The maintenance and repair occurs over the lifetime of the equipment, and are actually part of the operating costs. We do that because DOE does not have information indicating that routine repair and maintenance or installation of a more efficient commercial clothes washer unit will be that much different from a baseline unit. Since LCC savings are calculated as Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 89 the difference between a baseline unit and those of a more efficient unit, we expect the difference to be negligible or zero. That brings us to a comment. Item 8-3. DOE seeks input on whether it is correct to assume that changes in maintenance, repair and installation costs will be negligible for more efficient commercial clothes washers, and if we are not correct about that, DOE is interested in the reasons as to why it is so, and specific ways that DOE should correct this assumption.
MR. BROOKMAN: Yes. No comments here. Okay.
MS. IYER: Okay. Product lifetimes. Product lifetimes are important to calculate the operating cost over the life of the equipment. The past DOE analysis utilized the following product lifetimes: we calculated 7.13 as the life, an average life for a laundromat application, and 11.25 years for multi-family laundry application. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 90 These were developed based on the sources that are listed here. We would like to update these, if there is any change, and we are also looking for other studies that provide inputs on the lifetime. Request for comment here. Item 8

- 4. DOE seeks input on appropriate lifetimes for the commercial clothes washer classes covered in this rulemaking. MR. BROOKMAN: Ed Osann. MR. OSANN: Ed Osann with NRDC. I'd just note in the previous slide there's no presentation of information for on-premise laundries. MS. IYER: We have utilized whatever studies were available, and those didnot cover smaller establishments with onpremise laundry. So if you have information available, we would definitely encourage you to submit that. MR. BROOKMAN: Yes, please. Amanda, is it? Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 91 MS. GONZALEZ: Yes. This is Amanda Gonzalez on behalf of the California IOUs. Can you just mention how those lifetimes were calculated?
MS. IYER: Sure. MS. GONZALEZ: Did you take intoaccount the market-rated averages for toploading and front-loading?
MS. IYER: Yes. MS. GONZALEZ: Because the -- (Simultaneous speaking.) MS. GONZALEZ: --seemed low. MS. IYER: Yeah. The studies listed over here, you would notice that they all have a wide range. DOE made the assumption that because laundromats experience heavier usage, we considered those studies or those data sets that pointed to ten years or less, and came up with an average based on a number of data sets that were available. For multi-family laundry applications, because it does experience less Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 -- 21 22 Page 92 usage, sorry let me correct myself. It was ten years or more, and in the case of -- in the case of multi-family laundry applications, it is basically seven years or more. That was ten years or less. I'm just blabbering here. So we used those data sets, that sort of fell into that criteria, to develop the averages. MR. BROOKMAN: Okay. Additional questions or comments. Yes, please Phil. MR. MANTHEI: Phil Manthei, Alliance Laundry Systems. I would suggest that DOE, of course, contact our customers, who are the multi-housing route operators, and you know, I don't even see them listed up there as a source of information. Certainly, you know, they could tell you a lot about, you know. MR. BROOKMAN: Phil, are they represented by an entity, or are they kind of

MR. MANTHEI: Sure. There's MultiHousing Laundry Association. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 93 MS. IYER: Right. We did not have any study that pointed to lifetime, but we definitely look for it. MR. MANTHEI: But certainly you can ask each one of them, you know, and you know who they are. You can go to the Multi-Housing Laundry Association and get their names. You can get their names from our letters from our customers that were submitted to the Department of Justice during the last rulemaking.
MS. IYER: Yes. MR. BROOKMAN: Okay, thank you. Additional comments? (No response.) MS. IYER: Thank you. That concludes all the inputs to the LCC analysis. We will now cover shipments analysis. The purpose of the shipments analysis is to quantify the changes in product shipments, due to a potential efficiency standard. The shipments model is pretty Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 94 straightforward, in that it forecasts or projects future shipments when the standard comes into effect, for the entire period of the analysis. The shipments model is developed based on different data sources and includes historical shipments data. The model primarily serves two purpose. One is of course to project the future shipments during the analysis period. The second is to develop a stock that is sort of vintage-based, that allows us to assign the correct efficiency or energy and water use to the entire stock. So we use a stock turnover methodology and we develop the affected stock as part of the shipments model. The first step in developing shipments projections is to come up with the base case projection. That is when, in the event of no standards. Rather than extrapolating the current trend of shipments, the shipments model uses driver inputs, driver Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 95 variables as inputs, to inform the shipments pertaining to particular market segments. We looked at two market segments here. One due to new construction or new installations, and the second that is due to retirements of the existing clothes washer units. The new construction shipments are driven off of housing starts, in combination with the purchase rate for these multi-family housing establishments. The retirements, of course, come from the lifetime distribution function. We have data listed here that we need for developing the shipments model, which includes historical data, as well as saturation rates to properly account for the existing stock of products. In the past, we have used the AHAM fact book, RECS, and American Housing Survey, for coming up with saturation rates. I have highlighted market share efficiencies as one of the data points here. It is not a direct Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 96 input to the shipments model, but is a very important input for the National Impact Analysis, which we'll cover later. This is a plot of the historical shipments data. The Y axis has the total shipments in millions, and we cover from mid

80's to 2010 here. You'll see, and this pertains to some of the comments that were there earlier about the shipments trendyou'll see that there's an increasing trend, up to late 90's, and then the shipments start to decline. The four black diamonds here are from AHAM, that we received as part of the last rulemaking. Because of the declining trend, DOE in the past rulemaking projected a flat shipments out to the future. We attributed some of the decline to conversions of apartments to condos. We did find justification for that assumption from the American Housing Survey. You'll see that we have five new Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 97 data points, which are actually based on the quantity index of commercial laundry equipment. It includes all the equipment that falls in this category, not just the product that is being covered. But you would see that there is a pretty good correlation between the AHAM data submittal over there and the quantity index. We have just plotted this, to sort of show that we are continuing to see a declining trend, and would like input from stakeholders on what they think about the trend. This is a request for historical sales data, and for market share efficiency. These are by product class. We come to a specific request for comment, Item 9-1. DOE seeks historical shipments data, broken down by product class. Item 9-2, DOE seeks input on whether conversions from apartments to condos or townhouses are still occurring. Questions? MR. BROOKMAN: Ed Osann. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 98 MR. OSANN: Yes. This is Ed Osann with NRDC. What is the basis -- what's the source for the quantity index? MS. IYER: Bureau of Economic Affairs. MR. OSANN: Okay, and is it a unitbased index, or is it a dollar-based index? MS. IYER: They're available in both. This is quantity, so it's unit-based. MR. OSANN: Thank you.
MR. BROOKMAN: Comments on conversions from apartments to condos and townhouses? (No response.) MR. BROOKMAN: No comments. Okay. MS. IYER: Okay. Once we have developed the base case shipments projections, DOE needs to come up with standards case shipments projections. These are developed pretty much the same way, except now we account for impact on shipments from potential price increases from a new standard. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 99 Realizing that data that captures the purchase price impact on shipments and the operating cost savings on the shipments is not easy to procure, and particularly for a commercial clothes washer unit, which is a small segment of the total clothes washer market. We request data on that, but in the absence of any such data, DOE may use the purchase price elasticities that were developed for the residential clothes washer rulemaking. DOE will also, if we're not able to come up with a proper elasticity, we may create scenarios based on specific drops in shipments as a sensitivity, and DOE will also account for any cross-price elasticity impacts between the product classes, to forecast the market shares into the future. We have a specific request for comment. Item 9-3, request input from manufacturers and other stakeholders on Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 100 historical shipments by efficiency, historical prices of commercial clothes washers for specific product categories. This will allow us to determine purchase price elasticities. Item 9-4 seeks input from manufacturers and stakeholders on the potential impact of amended commercial clothes washer energy conservation standards on equipment shipments, and whether the elasticities developed for residential clothes washers would be appropriate for commercial clothes washers. MR. BROOKMAN: Yes, please. Julia. MS. FARBER: Sorry. This is just a point of clarification that I have. So is the Department of Energy considering, also in doing these price elasticity reviews, are you also considering any incentive programs that might be out there, to encourage people to purchase any of these products? MS. IYER: Since we are focusing mainly on price increases pertaining to Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 101 standards, we don't really consider those programs for this particular purpose. MS. FARBER: Thank you. MR. BROOKMAN: You see the comment boxes 9-3 and 9-4, historical shipments and elasticities. No additional comments or questions? (No response.) MS. IYER: That concludes shipments analysis. We will now cover the National Impact Analysis. National Impact Analysis allows DOE to assess national energy and water savings, and the national economic impact. In order to develop annual national energy and water savings, DOE utilizes the shipments projections that is generated by the shipments model, and the per unit energy and water use data developed as part of the LCC analysis, to develop the energy and water consumption of the entire stock of commercial clothes washer units in the country. DOE aggregates all of the costs and Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 102 the consumption, and reports national energy savings and national water savings. DOE discounts the operating cost savings, to come up with the Net Present Value. This graph here, which is a flow chart of how this is implemented, will explain it further as to how base case and standards case annual energy and water use is developed. You will see that the shipments analysis on top provides both the base case and the standards case projection of shipments. The time period considered is from 2018, the potential year for the energy conservation standards to kick in, up to 2047, which is a 30-year period. DOE potentially will calculate annual energy and water consumption for every single year in that period, and will calculate energy and water consumption as it pertains to the complete stock of commercial clothes washer units in the country. These are aggregated to arrive at Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 103 the total, which is the base case cumulative energy and water savings, water use, and the standards case cumulative energy and water

use. These are then converted from site to source, using a site to source energy conversion factor, to arrive at the source energy and water use in the base case and the standards case. The difference between the two gives us the national energy and water savings. The NPV, the National Consumer Net Present Value follows a similar procedure. The inputs come from shipments model in the form of base case and standards case projections, and DOE will develop two streams of costs here, operating costs and the total equipment costs. The operating costs come from the energy and water costs, and the repair and maintenance costs for the same analysis period that we computed the national energy savings Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 104 for. The equipment cost informs the part of total equipment cost increase for the same period of analysis. These are discounted to arrive at the Net Present Value and the difference between the operating cost savings and the, excuse me, equipment cost increase, gives us the national Net Present Value.This slide talks about shipmentrated efficiency data and market share efficiency data, and how it is important for calculating the National Impact Analysis, or conducting the National Impact Analysis, and projecting future changes in efficiency. The historical trends in product efficiency helps DOE to project future product efficiencies. Other than that, DOE also uses other market pull programs that may be in existence, such as Energy Star or others, that informs the base case efficiency trend. The market share efficiency data is utilized to create the market share efficiency Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 105 distribution when the standards kick in. In the past, DOE has utilized a roll up scenario to project the standards impact, which basically moves all the units below a certain standard level out of the market and moves the efficiency to the standard level. DOE will also report the full fuel cycle measure of energy and greenhouse gases as part of the NIA. Basically, what the full fuel cycle does is it goes beyond the power sector to calculate the extraction, processing and transportation of fuels to the power sector. We will present detailed technical documentation in the technical support document. This is a data request for historical shipment-weighted average efficiency by product class. We request data going as far back as 1997, because the more data we have, the better we are able to project the future trends. We're coming up for request for Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 106 comment. Item 10-1, DOE seeks historical shipment-weighted efficiency data by product class. We also seek historical market share, showing the percentage of equipment shipments by efficiency level for as many product classes as possible. MR. BROOKMAN: No comments here. MS. IYER: Okay. Moving on -- okay. MR. MANTHEI: Phil Manthei from Alliance Laundry Systems. MR. BROOKMAN: Phil. MR. MANTHEI: I guess I would think that you would have all the data up to the last rulemaking, and from the historical, you wouldn't need to really ask for that again, right? It would just be the more recent? MS. IYER: We do have some data. It wasn't very detailed the last time around. We had the shipment-weighted efficiency data for three years. So any new data we can get will always be useful. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 107 Okay. I will now move on to consumer subgroup analysis. The purpose of the consumer subgroup analysis is to analyze economic impacts of standards on those

consumers that are likely to be disproportionately impacted by a potential standard. The method DOE employs to assess this impact is to extend the LCC, or the Life Cycle Cost analysis, to examine the impacts on specifically defined groups. In the past rulemaking, DOE looked at specific groups such as laundromats, small businesses, or landlord-owned apartment buildings, small lodging establishments that have on-site laundries. So we covered some of the subgroups as part of the consumer subgroup analysis. We have a request for comment. DOE requests input on any consumer subgroups it should consider when analyzing the standards for commercial clothes washers, and in fact Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 108 we'd like to develop these subgroups based on stakeholder input. Yeah. MR. BROOKMAN: Ed Osann. MR. OSANN: Osann with NRDC. In this context, are consumer subgroups subgroups of purchasers of the equipment, or subgroups of users of the equipment? MS. IYER: Purchasers. MR. OSANN: So for instance, Americans With Disabilities, ADA-compliant, availability of ADA-compliant equipment would not be a consideration? MS. IYER: If they purchased their own equipment, they will be. The way we define the consumer here is somebody who is purchasing it and operating it. MR. BROOKMAN: Additional comments? MS. IYER: Okay. We now move to utility impact analysis. The purpose of the utility impact analysis is to assess the overall impact from a conservation standard on electric and gas utilities that supply energy. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 109 The national energy savings from the National Impact Analysis forms the input to this analysis. DOE will use the NEMS-BT model, which is a variant of the national energy modeling system developed by the EIA, for conducting this analysis. The analysis will be developed for two cases, the base case and the standards case, and the standards case will be run as a departure from the AEO reference case. Request for comment. Item 13-1. DOE seeks input from stakeholders regarding its plan to use the NEMS-BT model to conduct the utility impact analysis. We would like input on whether NEMS-BT model is appropriate for this analysis, and if not, we would like inputs as to why. We would also like inputs from the stakeholders on any other model that they consider more appropriate for conducting this analysis.
MR. BROOKMAN: No comments on NEMS. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 110 Okay. MS. IYER: Okay. We move to employment impact analysis. The basic purpose of the employment impact analysis is to assess the overall impact from a conservation standard on national employment at that level. Employment impacts include both direct and indirect impacts. The direct impacts were already covered by Ben in the manufacturer impact analysis that he covered. The indirect employment impacts result from any changes from a reduced energy consumption or changes in equipment prices. These can be in the form of substitution effect or income effect. DOE intends to use an input/output model to assess these impacts. The impact of sector energy technology is an input/output model of the
U.S. economy that DOE plans to use. We have another request for comment here. Item 14-1, DOE welcomes feedback on its approach to assessing national employment Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 111 impacts. (No response.)
MS. IYER: No comments?
MR. BROOKMAN: No comments on employment impacts. MS. IYER: Moving on, emissions analysis. The purpose of the emissions analysis is to assess the environmental impacts from a potential energy conservation standard on commercial clothes washers. These will include impact from power sector emissions, as well as the full fuel cycle emissions, and also the site emissions from the use of oil and gas from water heating. DOE will base the emissions factors for full fuel cycle on EIA's Annual Energy Outlook, and will supplement that with other data sources for developing the multipliers. The standard power sector emissions will include carbon dioxide, sulfur dioxide, nitrogen oxides and mercury. The full fuel Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 112 cycle in addition will provide emissions of methane and nitrous oxide, both of which are recognized as greenhouse gases. MR. BRUNDAGE: Yes. Don Brundage. I just want to emphasize the importance in looking at electric utility emissions, and making sure you supplement data from other sources. Things are moving very rapidly, with additions of emission controls and retirements of plants. So it's very important to do a good job on this, because the future is not the past for these emissions. Thank you. MR. BROOKMAN: Thank you. MS. IYER: Thanks. DOE also monetizes emissions reductions for carbon dioxide and nitrogen oxide. For this, DOE will use the most current social cost of carbon values developed by inter-agency reviews. At the present time, the inter

agency estimates of the potential global Neal R. Gross & Co., Inc. 202-234-4433

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6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 113 benefits resulting from carbon dioxide emissions are provided in this slide. We do anticipate that these values are likely to change, depending on the contributions of CO or other GHG emissions, 2 and the economic damage that ensues from them. So we are aware that this is not something to be cast in stone. MR. BROOKMAN: Don Brundage.
MR. BRUNDAGE: One more comment. On your carbon emissions, are you basing the emissions on measured emissions or the input fuels? MS. IYER: These will be, since we are going through a full fuel cycle, these will include the measured, the emissions that pertain to the power sector, and those that actually will impact through the fuel supply chain. MR. BRUNDAGE: Okay. The reason I'm bringing it up is there are some plants, and my own company has one, that removes and Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 114 sequesters carbon dioxide. We have one currently under construction for completion in 2014, which will remove two-thirds of the carbon dioxide. So some of the standard ways of calculating this may not be true in the future as they have in the past. MS. IYER: Okay, duly noted. Since we use NEMS-BT for the power sector emissions, I'm assuming that EIA actually has in its database information about, you know, plants that have this capacity, and incorporates that. MR. BROOKMAN: Okay, thank you. MS. IYER: So we now come up with a specific request for a comment. DOE seeks input on its plan to use NEMS-BT and other sources to analyze emissions impacts on potential standards on commercial clothes washers. (No response.)
MS. IYER: Okay. Moving on to Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 115 regulatory impact analysis. This will be the last analysis I'll be covering today. Recognizing that there are several other efforts that are ongoing, either from utilities or manufacturers or other interested parties, that helps improve the efficiency of commercial clothes washer units, DOE will conduct its regulatory impact analysis for all the non-regulatory approaches that are out there. For this purpose, DOE will evaluate actual impacts that have been there from other such programs in the past, and will also include any existing programs that are likely to have impact in the future. That's pretty much the conclusion of regulatory impact analysis. Thank you very much.
MR. BROOKMAN: Thank you. Ed
Osann.
MR. OSANN: Going back to the monetization of the emissions reduction, what slide is that? Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 116 MS. IYER: I have it up.

MR. OSANN: Okay, Slide No. 108. MR. BROOKMAN: Thank you. I think she's got it. MR. OSANN: Is this simply a side bar or an illustrative analysis, or is this incorporated into the economic component of the National Impact Analysis? MS. IYER: This is not incorporated, as far as I know, and correct me, Betsy, if I'm wrong. But DOE reports this. Betsy, do you want to take this question? MR. BROOKMAN: Betsy. MS. KOHL: Sure. This is Betsy Kohl at DOE OGC. I can probably confirm it, but I think it's not part of the, strictly part of that seven-factor analysis. It might be under the others, or just something that we consider as part of establishing the standard. MR. BROOKMAN: Thank you. MS. IYER: Any other questions or Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 117 comments? MS. FARBER: Can I ask a clarifying question? MS. IYER: Okay. MR. BROOKMAN: Yes, Julia. MS. FARBER: Hi. This is Julia from UL. I'm actually not asking -- I'm just asking out of curiosity. I have some points of clarification. Could somebody in the room share with me what exactly happens to these products when they're done being used in the cycle? Do they get sold to somebody else or do they get trashed? Is there some other fate for them? MR. BROOKMAN: Phil. MR. MANTHEI: Well, it depends on

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- if you're mainly talking about the multihousing segment, is that what you're talking about, or the --
MS. FARBER: I-- sure. (Laughter.) MR. MANTHEI: Okay. The coin Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 118 laundry segment, those probably get trashed, because those are pretty well done by their lifetime. But the multi-housing, depending on the contract or leasing arrangement, the buyers of our product, the route operators, may redeploy them. They may refurbish them and redeploy them. There's, you know again, I suggest DOE discuss that and ask those kind of questions, you know, with our customers. But I know that is what happens. MS. FARBER: Thank you. So then going back to that one slide where you were asking clarification on and updates from 1998, about what happens to the cycle, just curious that there is potential for these products to be used, reutilized or in certain parts of the sector, if they have another life, that should be considered in that piece, where the end is not really the end, and they get either broken down in other pieces and move forward. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 119 I'm also asking also clarification, probably to you as well at Alliance. If there is a movement in that direction in the industry, to start thinking of the products as a source of -- another way to either recycle or break down the product, reuse some of those aspects, so that they don't necessarily just go right to landfill? Just out of curiosity. MR. MANTHEI: Phil Manthei from Alliance. I'm going to probably defer a little bit to Jennifer Cleary from AHAM, but AHAM has quite a record of, to respond on how white goods, as they're called, clothes washers and major appliances, are recycled in the United States, and it's like 99 percent or something like that, mainly because they're primarily, you know, metal. MR. BROOKMAN: Jennifer. MS. CLEARY: Jen at AHAM. Yes, I'd be glad to discuss that maybe later on. It's just, it's very detailed and complex, but just building on what Phil said. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 120 MS. FARBER: Yes, fair enough. The reason I was asking is because I was also thinking is, do you know where those products sold? Like are those pieces sold? Because if so, then that may also impact the way that you do the analysis, of how, the economic impact is there a potential to create another part of the industry that's not really part of the larger stream. They're just ideas, I know. I'm just asking questions, that's all. MR. BROOKMAN: Yes, please. Amanda. MS. GONZALEZ: Hi, yes. This is Amanda Gonzalez on behalf of the California IOUs. There's actually been research done on that question, to look at the energy and cost savings associated with refurbishing clothes washers, relative to buying them new. So I could point you to that, if you're interested. If you'd give me your business card afterwards. MS. FARBER: Yes, absolutely. All Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 121 right. Well, that will conclude my question session. Thank you very much for indulging

me. MR. BROOKMAN: Additional and perhaps final questions, before I turn it back to Stephen Witkowski for final comments? (No response.) MS. IYER: I have a request. MR. BROOKMAN: Yes please, go ahead. MS. IYER: I have a request. Amanda, can you point me to the study that you're referring to as well?
MS. GONZALEZ: Yes. MS. IYER: Thank you. MR. BROOKMAN: Take us to the last slide. So I see that the Department has furnished a copy of the business cards for individuals present here today that signed in. So thanks to the Department for doing that. Then back to Stephen Witkowski -- MS. KOHL: Before -- this is Betsy. Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 122 MR. BROOKMAN: Betsy, yes.

MS. KOHL: I just wanted to make one point of clarification to the discussion that we had on Slides 15 and 16, about that March 7th, 2015 date on the test procedure. That, as many of you in the room know, is contingent on DOE adoption of those new standards that we established in that direct final rule at the end of May. And as many of you in the room also know, notice for that is due at the end of the week. So keep a lookout for that.
MR. BROOKMAN: Thank you. Stephen Witkowski. It's not on.
MR. WITKOWSKI: Well, on Slide 113 is the information for submitting your comments, and please note that the comment period date closes on October 12th. We strongly encourage you to get your comments in and get them in by that date, and I want to thank you all for coming today and participating, and we look forward to as Neal R. Gross & Co., Inc. 202-234-4433

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7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Page 123 many comments and as much data as you can provide. So thank you very much. MR. BROOKMAN: Thank you. I'm going to hand out an evaluation form, send that around. We welcome your comments. Julia. And if any of you are staying for the afternoon meeting, that will commence on time at one o'clock. (Whereupon, the above-entitled matter went off the record at 11:42 a.m.)

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### Neal R. Gross & Co., Inc. 202-234-4433

### Page 132 Jim 4:12 40:6 Labs 13:6 50:22 53:22 54:1 load 77:12 6:14 25:11,11 Joanna 2:6 9:16 landfill 119:8 54:4,9,12,14 loaders 19:8 41:3,4,7,7 92:10 job 4:17 112:12 landlord-owned 55:14,19,21,21 loading 18:10 92:10,21 93:4 Judith 2:10 7:9 107:14 72:22 73:16 74:1 44:10,17 91:8 106:10,10,13 Julia 2:2 35:12 laptop 12:10 78:13,14 79:22 located 77:1 117:16,22 119:9,9 100:13 117:5,6 large 23:9 57:21 81:18 84:7 105:5 location 44:9,16 manufacture 49:1 123:6 83:4 84:4,22 105:6 106:5 110:6 lodging 75:2 manufactured jump 56:20 largely 45:9 levels 21:15 33:12 107:15 58:16 69:5,19 Justice 33:20 93:10 larger 120:9 34:3 50:2,4,9,14 long 2:5 7:3,3 11:8 manufacturer 3:8 justification 57:17 late 35:6 96:11 50:19 51:4,9,11 11:17 48:1 49:22 56:21 96:20 Laughter 117:21 51:14,18,22 52:3 long-standing 88:2 57:10,13,15 58:6 justified 31:16 32:5 laundries 18:15 55:5,12 71:16,20 look 18:16 25:22 60:19 61:14 62:5 J-1 20:1 21:4,6,22 76:8,22 90:14 78:1 32:11 33:7 59:4 62:7 66:16 68:14

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### Neal R. Gross & Co., Inc. 202-234-4433142

C E R T I F I C A T E

This is to certify that the foregoing transcript

In the matter of: Conservation Standards for Clothes Washers: Public Meeting

Before: US DOE

Date: 09-24-12

Place: Washington, DC

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

----------------------- Court Reporter

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