EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

1

U.S. DEPARTMENT OF ENERGY 

PUBLIC MEETING ON THE PRELIMINARY ANALYSES FOR 

RESIDENTIAL WATER HEATERS, DIRECT HEATING EQUIPMENT, 

AND POOL HEATERS 

Room 1E-245 

U.S. Department of Energy 

1000 Independence Avenue, S.W. 

Washington, D.C. 20585 

9:00 a.m. 

Monday, February 9, 2009 

 DOUG BROOKMAN, Facilitator 

U.S. Department of Energy Attendees

 MARK FRIEDRICHS 

 MOHAMMAD KHAN 

 

 FRANCINE PINTO, ESQ. 

 ERIC STAS, ESQ. 

Attendees

 KARIM AMRANE, Ph.D., Vice President 

 Regulatory and Research 

 Air Conditioning, Heating and Refrigeration 

 Institute (AHRI) 

 2111 Wilson Boulevard, Suite 500 

 Arlington, Virginia 22201-3001 

 ASHLEY ARMSTRONG, Managing Consultant 

 Navigant Consulting, Inc. 

 1801 K Street, NW, Suite 500 

 Washington, D.C. 20006 

 TIMOTHY BALLO, Esq., Associate Attorney 

 EarthJustice 

 1625 Massachusetts Avenue, Suite 702 

 Washington, D.C. 20036 

 MIKE BEYERLE, Marketing Manager 

 GE Consumer and Industrial 

 Appliance Park, AP35-1312 

 Louisville, Kentucky 40225 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

2

Attendees

 JOSEPH BOROS, Engineering Manager 

 Rheem Water Heater Division 

 2600 Gunter Park Drive East 

 Montgomery, Alabama 36109 

 DONALD M. BRUNDAGE, Principal Engineer 

 Southern Company Services 

 241 Ralph McGill Boulevard NE 

 Atlanta, Georgia 30308 

 LANE WESLEY BURT, Energy Policy Analyst 

 National Resources Defense Council 

 1200 New York Avenue, NW, Suite 400 

 Washington, D.C. 20005 

 JOSHUA BUTZBAUGH, Research Analyst 

 D&R International 

 1300 Spring Street, Suite 500 

 Silver Spring, Maryland 20910 

 BELINDA CARR, Administrative Analyst 

 Energetics, Inc. 

 7067 Columbia Gateway Drive 

 Columbia, Maryland 21046 

 ANDREW deLASKI, Executive Director 

 Appliance Standards Awareness Project (ASAP) 

 20 Belgrade Avenue, Suite 1 

 Boston, Massachusetts 02131 

 LANCE DeLAURA 

 Market Strategy, Codes & Standards Manager 

 Southern California Gas Company (SoCal Gas) 

 Sempra Energy Utilities 

 555 W. Fifth Street 

 Los Angeles, California 90013-1045 

 PHIL L. GAUTHIER, Manager 

 Certification Services 

 Air Conditioning, Heating & Refrigeration 

 Institute (AHRI) 

 2111 Wilson Boulevard, Suite 500 

 Arlington, Virginia 22201-3001 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

3

Attendees

 ROBERT S. GLASS 

 Director of Engineering 

 Raypak, Inc. 

 2151 Eastman Avenue 

 Oxnard, California 93030 

 JEFFREY KINGMAN, Senior Consultant 

 Navigant Consulting 

 1801 K Street, Suite 500 

 Washington, D.C. 20006 

 ALEX LEKOV, Staff Research Associate 

 Lawrence Berkeley National Laboratory 

 One Cyclotron Road, MS 90-4000, Building 90 

 Berkeley, California 94720 

 ROGER MARRAN, President 

 Energy Kinetics 

 51 Molasses Hill Road 

 Lebanon, New Jersey 08853 

 KAREN B. MEYERS, Manager 

 Industry Relations 

 Rheem Manufacturing Company 

 5600 Old Greenwood Road 

 Fort Smith, Arkansas 72917-7010 

 

 MIKE RIVEST, Managing Director 

 Navigant Consulting, Inc. 

 1801 K Street, Suite 500 

 Washington, D.C. 20006 

 GREGORY ROSENQUIST, Program Manager 3 

 Lawrence Berkeley National Laboratory 

 One Cyclotron Road, MS 90-4000, Building 90 

 Berkeley, California 94720 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

4

Attendees

 STEVEN J. ROSENSTOCK, P.E. 

 Manager, Energy Solutions 

 Edison Electric Institute (EEI) 

 701 Pennsylvania Avenue, NW 

 Washington, D.C. 20004-2696 

 HARVEY SACHS, Ph.D., Senior Fellow 

 Buildings Program 

 American Council for an Energy-Efficient 

 Economy (ACEEE) 

 529 14th Street, NW, Suite 900 

 Washington, D.C. 20004 

 FRANK STANONIK, Chief Technical Advisor 

 Air Conditioning, Heating and Refrigeration 

 Institute (AHRI) 

 2111 Wilson Boulevard, Suite 500 

 Arlington, Virginia 22201-3001 

 MOLLY TROMBLEY-McCANN, Project Manager 

 Energy Solutions 

 1610 Harrison Street 

 Oakland, California 94612 

 CONSTANTIN von WENTZEL, Associate Director 

 Navigant Consulting, Inc. 

 77 S. Bedford Street, Suite 400 

 Burlington, Massachusetts 01803 

 TED WILLIAMS, Director 

 Building Codes & Standards 

 American Gas Association (AGA) 

 400 N. Capitol Street, NW 

 Washington, D.C. 20001 

 KEN SAGAN, CGP, Program Manager 

 Energy Efficiency 

 Energy & Green Building Department 

 Advocacy Group 

 National Association of Home Builders 

 1201 15th Street, NW 

 Washington, D.C. 20005-2800 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

5

Attendees

 THOMAS STROUD, Senior Manager 

 Codes & Standards 

 Hearth, Patio & Barbeque Association 

 1901 North Moore Street, Suite 600 

 Arlington, Virginia 22209-1726 

 ERIC TRUSKOSKI, Design Engineer 

 Bradford White Corporation 

 200 Lafayette Street 

 Middleville, Michigan 49333 

 MATT WATKINS, Environmental Policy Analyst 

 Air, Waste and Wildlife Advocacy 

 National Association of Home Builders 

 1201 15th Street, NW 

 Washington, D.C. 20005-2800 

 GEORGE M. KUSTERER 

 Director of Technical Services 

 Bock Water Heaters, Inc. 

 110 S. Dickinson Street 

 Madison, Wisconsin 53703 

 RAY LONG, Renewable Energy Analyst 

 D&R International, Ltd. 

 1300 Spring Street 

 Silver Spring, Maryland 20910 

 TERRENCE J. MULLEN, President & CEO 

 Bock Water Heaters, Inc. 

 110 S. Dickinson Street 

 Madison, Wisconsin 53703 

 JOHN CONFREY, Vice President 

 Engineering and Service Division 

 Noritz 

 11150 Grace Avenue 

 Fountain Valley, California 92706 

 ADAM DARLINGTON, Consultant 

 Navigant Consulting 

 1801 K Street, NW, Suite 500 

 Washington, D.C. 20006 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

6

Attendees

 PAUL DANA, Vice President 

 Global Product Engineering 

 A.O. Smith Water Products Company 

 500 Tennessee Waltz Parkway 

 Ashland City, Tennessee 37015 

 WILLIAM M. HEALY, Ph.D., Group Leader 

 Heat Transfer & Alternative Energy 

 Systems Group 

 Building and Fire Research Laboratory 

 United States Department of Commerce 

 National Institutes of Standards & Technology 

 100 Bureau Drive, Stop 8632 

 Gaithersburg, Maryland 20899-8632 

 

 MATTHEW O’HARE, Consultant 

 Navigant Consulting, Inc. 

 1801 K Street NW, Suite 500 

 Washington, DC 20006 

 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

7

A G E N D A 

ITEM: PAGE: 

Welcome 8 

 U.S. Department of Energy 

Opening Remarks, Introductions and 

Agenda Review 8 

 Doug Brookman 

Rulemaking Overview 14 

 Mohammed Khan 

Brief Opening Remarks from Interested 

Parties 19 

 Doug Brookman 

Market and Technology Assessment, Screening 

Analysis, Engineering Analysis, and 

Preliminary Manufacturer Impact Analysis 30 

 Ashley Armstrong and Matthew O’Hare 

Markups to Determine Product Price Analysis, 

Energy Use Characterization, and Life-Cycle 

Cost Analysis 135 

 Alex Lekov 

Afternoon Session

Shipments Analysis and National Impact 

Analysis 230 

 Alex Lekov 

NOPR Analysis 280 

 Ashley Armstrong, Jeff Kingman and 

 Greg Rosenquist 

Discussion of Other Issues and Final Remarks 

From Interested Parties 300 

 Doug Brookman 

Next Steps and Closing Remarks 303 

 Mohammed Khan 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

8

1 P R O C E E D I N G S 

2 (9:07 a.m.) 

3 Welcome

4 Opening Remarks, Introductions and Agenda Review

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Okay. Let’s begin, ladies and 

gentlemen. 

 Good morning, everybody, and welcome. This 

is the U.S. Department of Energy’s Public Meeting on 

Preliminary Analyses for Residential Water Heaters, 

Direct Heating Equipment, and Pool Heaters. 

 Today is Monday, February 9th. It’s a 

beautiful day in Washington, D.C. So glad you could 

join us. Thanks for being here on time so we could get 

started on time. 

 My name’s Doug Brookman from Public Solutions 

in Baltimore. I’ll be helping to facilitate this 

meeting today, along with all of you. 

 It’s our tradition to start with 

introductions and so let’s do that. So we’ll go around 

the room, if we can, and your name and organizational 

affiliation. We’re fortunate to have new microphones 

for those of you who haven’t been here in the last few 

weeks. They work rather well. 

 Those of you that are seated on the 

periphery, your name will not be in the record, but we 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

9

got a listing of you when you registered, so that will 

be distributed at the end of the day today. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 George, we’ll start with you. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters, Madison, Wisconsin. 

 MR. STROUD: I’m Tom Stroud with Hearth, 

Patio and Barbeque Association, Arlington, Virginia. 

 MR. DANA: Paul Dana with A.O. Smith. 

 MR. BEYERLE: Mike Beyerle, General Electric. 

 MS. MEYERS: Karen Meyers, Rheem 

Manufacturing. 

 MR. BOROS: Joe Boros, Rheem Manufacturing. 

 MR. GLASS: Robert Glass, Raypak. 

 MR. deLASKI: Andrew deLaski, Appliance 

Standards Awareness Project. 

 MR. DeLAURA: Lance DeLaura, Southern 

California Gas Company and San Diego Gas and Electric 

Company. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

Pacific Gas and Electric Company. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. 

 MR. TRUSKOSKI: Eric Truskoski, Bradford 

White Corporation. 

 MR. STANONIK: Frank Stononik, Air 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

10

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Conditioning, Heating and Refrigeration Institute. 

 DR. SACHS: Harvey Sachs, American Council 

for An Energy Efficient Economy. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. 

 MR. WILLIAMS: Ted Williams, American Gas 

Association. 

 MR. CONFREY: John Confrey, Noritz North 

America Corporation. 

 MR. BROOKMAN: Do you want to introduce 

yourself, Eric? 

 MR. STAS: Eric Stas, DOE. 

 MR. BROOKMAN: Thank you. 

 MR. KHAN: Mohammed Khan, 

Department of Energy. 

 MR. BROOKMAN: Alex. 

 DR. LEKOV: Alex Lekov, Lawrence Berkeley 

National Laboratory. 

 MR. O'HARE: Matt O’Hare, Navigant 

Consulting. 

 MS. ARMSTRONG: Ashley Armstrong, Navigant 

Consulting. 

 MR. von WENTZEL: Constantin von Wentzel, 

Navigant Consulting. 

 MR. KINGMAN: Jeffrey Kingman, Navigant 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

11

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Consulting. 

 MR. MARRAN: Roger Marran, Energy Kinetics. 

 MR. MULLEN: Terry Mullen, Bock Water 

Heaters. 

 MR. BROOKMAN: We’re doing introductions. 

Would you introduce yourself, please? Name and 

organizational affiliation. Yes, we’re going to go 

around this way. 

 MR. WATKINS: Matt Watkins, Home Builders 

Association. 

 MR. SAGAN: Ken, Energy Efficiency. 

 MR. LONG: Ray Long, D&R International. 

 MR. BUTZBAUGH: Joshua Butzbaugh, D&R 

International. 

 MR. GAUTHIER: Phil Gauthier, Air 

Conditioning, Heating and Refrigeration Institute. 

 MR. BROOKMAN: Thank you. Thanks to all of 

you, and thanks once again for being here on time. Oh, 

we missed somebody. Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. 

 MR. BROOKMAN: Thanks, Tim. I think many of 

you are familiar with these proceedings. I’m going to 

do a very brief Agenda Review and then we’re going to 

have a brief overview and then we’ll provide an 

opportunity for each of you, any of you that wish to do 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

12

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

so, to make introductory remarks. 

 I think all of you received a copy of the 

packet when you registered and walked in the door. In 

that packet is an Agenda and the slides that will be 

the basis of the presentation and the precursors for 

discussion today, as well as the Federal Register 

Notice. 

 We are now doing this first opening segment 

which will end shortly. Following that, Mohammed Khan 

will do a Rulemaking Overview. Immediately the 

overview, as I said, there’s an opportunity for any of 

you that wish to do so to make brief summary 

introductory remarks about key issues and concerns from 

your perspective. 

 Immediately following that, Market and 

Technology Assessment, Screening Analysis, Engineering 

Analysis, and Preliminary Manufacturer Impact Analysis, 

all those analyses described. 

 We’ll take a break midmorning, around about 

11:15 or so, and then we’ll go from there to Markups to 

Determine Product Price Analysis, Energy Use 

Characterization, and Life-Cycle Cost Analysis. That 

might run us all the way till, say, 12:30 or 1 o’clock. 

 We’ll take lunch when we finish with that 

segment, and then return from lunch and do Shipments 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

13

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Analysis, National Impact Analysis. We’ll take a break 

midafternoon, and then describe the various elements of 

the NOPR Analyses. 

 Around about 4 o’clock or so, there’s an 

opportunity for anybody that wishes to do so to make 

final remarks, raise any other additional issues you 

wish to raise at that point, and we intend to close 

today somewhere between 4 and 5. That’s our plan. 

 Questions, comments here at the outset? 

 (No response.) 

 MR. BROOKMAN: How many of you are new to 

these kind of proceedings? 

 (Show of hands.) 

 MR. BROOKMAN: So most of you are familiar. 

Those of you that are new, please feel free to speak 

up. This is your opportunity to ask questions. We try 

and make as many opportunities for that to happen as 

possible. 

 I would ask for your consideration for what 

we consider, I believe, common courtesy. I’d ask that, 

if you would, please, speak one at a time. Please say 

your name for the record each time you speak. The 

microphones, they’ve got a little bright green LED. If 

it’s not bright green, it’s not on and you can just 

leave it on, I think. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

14

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

 I’m going to be queuing people to speak as 

best I can by name. I also wish to encourage follow-up 

comment. It’s useful for the department to hear the 

back and forth between different points of view and so 

we’ll make sure the record somehow reflects the name 

exchange following that dialogue. 

 Please keep the focus here. Turn your cell 

phones on silent mode. If you need to have a sidebar 

conversation with the person next to you, please keep 

it very brief and if it’s going to be more than about 

20 seconds, especially since these microphones work 

well now, take it out of the room. We’ll understand. 

It’s no problem. I’m going to ask you to please be 

concise and share the air time as we’re going along 

today. 

 So then, additional questions, comments here 

at the outset? 

 (No response.) 

 MR. BROOKMAN: Okay. I see none. 

20 Rulemaking Overview

21 

22 

23 

24 

25 

 MR. KHAN: Good morning, everyone. Welcome, 

and thank you for participating in today’s meeting on 

Energy Conservation Standards for Residential Water 

Heaters, Pool Heaters, and Direct Heating Equipment. 

 My name’s Mohammed Khan. I’m the project 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

15

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

manager for this activity, and I’ll be providing a 

brief overview of the rulemaking process and then 

throughout the day we’ll hear from analysts on the 

details of the analysis that we’ve performed to date 

from the Lawrence Berkeley National Laboratory as well 

as Navigant Consulting. 

 The purpose of today’s meeting. There are 

several purposes of today’s meeting. First, we want to 

explain the analyses, methodologies and also 

characterize our preliminary analysis results. 

 Second, we want to have a two-way discussion. 

We want to discuss some specific issues associated with 

this rulemaking and also hear and listen to your 

thoughts and potential concerns about what we’ve done 

so far, and, lastly, we want to describe what are the 

next step and what you should be anticipating from the 

department. 

 EPCA. This is the Energy Policy and 

Conservation Act. It requires the Department of Energy 

to consider seven important factors when promulgating 

new efficiency standards. 

 This table lists the factors and shows the 

corresponding analysis the department performs to 

satisfy the EPCA requirement. So as an example, DOE 

performs an LCC Analysis and also Manufacturer Impact 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

16

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Analysis to determine the potential economic impacts to 

consumers and also manufacturers, respectively. 

 Okay. Steps in the rulemaking. Here’s a 

flow chart showing the relationships between the 

various analyses the department has performed at this 

stage of the rulemaking. 

 The upper flow chart in yellow depicts the 

major steps associated with the overall rulemaking 

process. We’re currently in the preliminary phase, as 

highlighted in the red circle and then broken out in 

the other chevron charts below. 

 Specifically what we want to convey here are 

the relevant analyses and their relationships. So 

starting with the first major analysis segment, the 

Engineering Analysis, which correlates equipment costs 

and equipment efficiency, it uses data from both the 

Market and Technology Assessment as well as the 

Screening Analysis. 

 Next, the cost data is combined with energy 

use data to generate LCC results, and, finally, this 

information, in combination with shipments projections, 

yield projections for national energy savings as well 

as net present value. 

 Key documents. Last month the department 

published in the Federal Register its Notice announcing 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

17

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

a public meeting for this rulemaking. The Notice 

provided a broad summary of the applicable statutory 

authority, rulemaking history and the pre-NOPR 

analyses. 

 The Notice also says that details of the 

analyses are collectively contained in the Technical 

Support Document or TSD for short, and it also can be 

found online. 

 What’s most important about the TSD? The 

Executive Summary and Chapter 2 are the key components. 

The Executive Summary provides an overview of the 

preliminary phase of the rulemaking process, while 

Chapter 2 provides an indepth review of the analysis’s 

key results and a discussion of the comments received 

from the Framework Document just prior. 

 Okay. Now similar to the earlier flow chart, 

this flow chart shows the various analyses that are 

associated with the next phase of the rulemaking which 

is the development of the Notice of Proposed Rulemaking 

or NOPR for short. 

 This phase begins with the refinement of the 

Preliminary Analyses, based on data and feedback the 

department receives from stakeholders and other 

interested parties. 

 Based on certain criteria, Trial Standard 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

18

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Levels or TSLs are then selected and also applied 

throughout the remainder of the analyses sets. So 

prior to the final rule, a manufacturer analysis along 

with other essential analyses are then completed. 

 As I said at the very beginning, we want to 

have -- we want to make this as a two-way discussion. 

So comments from all participants are very, very 

important. I cannot over-emphasize that. Your 

feedback, your data, input and so forth is critical to 

us in making it as robust as possible. 

 So again, thank you for participating and we 

look forward to getting a two-way discussion going on 

here. 

 Thank you. 

 MR. BROOKMAN: Thank you. I forgot to 

mention one thing at the outset. 

 This meeting will be recorded. There will be 

a complete transcript of the meeting today. I just 

wanted to make sure everybody’s clear on that point. 

 So now there’s an opportunity, for anybody 

that wishes to do so, to make brief introductory 

remarks, summary of your concerns and issues, 

particularly relevant to these proceedings, and I know 

Frank Stanonik has requested the opportunity to speak, 

so I’m going to queue him up first. He has prepared 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

19

1 

2 

3 

written remarks and I’m going to pass them around right 

now, Mohammed. 

 Frank Stanonik. 

4 Brief Opening Remarks from Interested Parties

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. STANONIK: This is Frank Stanonik, and as 

Doug mentioned, I’m not going to read these comments 

and I hope I’m not the only one, but in any event, we 

do have a couple of issues we want to bring up at this 

time. 

 Probably most significantly, and I’m not 

going to belabor this, but I think everybody 

appreciates the tough economic conditions that we’re 

currently experiencing in the United States, 

particularly in the manufacturing industry and the 

appliance manufacturing industry, and as this analysis 

goes forward, we think it is very important that this 

current economic situation for our members be factored 

in. 

 It does change things a lot and I’ll just, as 

an aside, mention that -- and we’ll provide data to DOE 

and further comments, but we’ve seen drops in shipments 

in this last period, I’d say in the last year, that 

I’ve never seen in 30 years, never. So a significant 

change and it does change everything in the analysis. 

 We also have some concerns with particular 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

20

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

products. Some of the issues we have is we’re 

concerned that the analysis is not really capturing the 

significance of keeping the size of the water heater 

small enough to fit through doorways and to be able to 

be installed where the -- well, whatever millions, tens 

of millions of water heaters currently are installed. 

 I mean, you can’t get in a situation where 

you’re going to force people to basically rebuild or 

tear down some structure just to get their water heater 

in and out and so we’re not sure DOE’s really fully 

appreciating that. 

 We also have some questions regarding the 

estimates of the consumption. I’d just make that 

point. 

 Regarding water heaters, one other issue that 

we’re concerned about is in the case of particularly 

the gas-fired instantaneous water heaters. In this 

analysis, DOE has applied an 8.8 percent reduction 

factor in looking at the efficiency of these products. 

This is based on one study, one study looking at one 

household, looking at one water heater. 

 We just think that something as important as 

this analysis, that’s just not acceptable to treat that 

piece of information as, if you will, the “gospel.” 

 If I walked in here and said that I found one 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

21

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

household in the United States where the average hot 

water use was 20 gallons and suggested or recommended 

that DOE redo their analysis to assume everybody uses 

20 gallons of water, I’d be laughed out of the room, as 

I should be, and we’re not commenting on whether that 

study was good or bad. That’s not the issue. 

 The point is it’s one data point and it’s a 

little bit hard to accept that that becomes a 

significant factor in this analysis just on one piece 

of field information. 

 Then as for direct heating equipment, room 

heaters, we really have two issues there. Again, we 

think it’s important to recognize that these products, 

many of these products don’t require electric supply, 

and in fact people use them as emergency heat in power 

outages and that’s a very real utility that needs to be 

factored into the analysis for direct heating 

equipment. 

 And then, currently, the analysis is dividing 

fireplace heaters into two categories, depending on 

whether they’re recessed or not, and at least to our 

experience that particular feature, as far as we can 

tell, really doesn’t impact the efficiency of the 

product, but if that continues in this analysis, they 

will have very different efficiency requirements, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

22

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

depending on whether they’re sticking on to the wall or 

in the wall, and we’re not sure that that’s really an 

appropriate division. 

 Then I’ll just mention we’re very interested 

to hear, see what we learn at this meeting. There’s a 

lot of information in the TSD and hopefully no one is 

surprised, but we are asking the department to extend 

the comment period past March 16th. 

 MR. BROOKMAN: Thank you. Other brief 

summary remarks here at the outset? Yes, Don Brundage. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. I agree with everything Frank just said. 

 I have some additional concerns. Heat pump 

water heaters. Some of the specific issues related to 

those seem to be sort of glossed over in the Technical 

Support Document. One in particular seems to be the 

Technical Support Document seems to be saying that as 

long as, okay, it’s blowing cold air, you run the 

heater higher, that will take care of it. That does 

not address the fact that you’ve got an intermittent -- 

basically an air conditioning you can’t cut off that is 

in the middle of a dwelling unit and it’s going to 

cause uneven temperatures within the space and that’s a 

utility and comfort issue that needs to be included. 

 Thanks. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

23

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Thank you. Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. Just to 

raise one point that I don’t think was an issue DOE 

specifically sought comment on. 

 The department is, I think, assuming that 

five years is the appropriate lead time, based on the 

statutory requirement, that DOE completed rulemaking in 

2000 to impose standards effective in 2005. DOE is 

maintaining or proposing to maintain that five-year 

lead time. 

 The fact is the deadline has expired. 

Standards were required to be implemented in 2005, and 

I think there is ample authority for DOE to narrow the 

amount of lead time it’s going to provide, particularly 

if it, you know, is not going to impose something 

that’s going to force the market, like a heat pump 

water heater, water heater standard for electric water 

heaters. 

 MR. BROOKMAN: Thank you. Yes. 

 MR. STROUD: As an add-on to -- 

 MR. BROOKMAN: Please say your name. 

 MR. STROUD: Oh, I’m sorry. Tom Stroud, 

HPBA. Just an additional comment on Frank’s comment 

about adding fireplaces, recessed fireplaces into a 

standard that is equal to wall furnaces. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

24

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 These fireplaces are designed as decorative 

products to a CSA ANSI standard that has a side benefit 

of heat. They’re not designed as furnaces. They’re 

designed as a yellow flame decorative piece that has 

that ability to put some heat and to put them into the 

same category as a furnace, I think, is going to be 

very restrictive. 

 MR. BROOKMAN: Thank you. Andrew deLaski. 

 MR. deLASKI: Thanks, Doug. Andrew deLaski, 

Appliance Standards Awareness Project. 

 I want to make just a couple of opening 

comments about mostly providing a little bit of context 

from our perspective. 

 I think most of the context that we need for 

today’s meeting and for this proceeding was provided by 

President Obama last Thursday when he came over here to 

the department, and I think probably for the first time 

in American history, a president of the United States 

called out this particular program and he issued a 

memorandum and in that memorandum he made a commitment 

to meet all the deadlines for appliance standards due 

over the next few years, actually specifically those 

due by August 8th, and then to accelerate deadlines, if 

possible, for standards due after August 8th. 

 It’s a remarkable, I think, commitment. It 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

25

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

may sound small to say I’m going to meet my legal 

commitments, but as those of you who work in the 

department and in the consulting team know, it’s no 

small feat and I think he would the first president 

since George I, George Bush, to do so. 

 In his remarks and in the press coverage, the 

Administration touted the savings numbers on the order 

of 50 quads from the standards that will be completed 

in the next few years. Fifty quad is an enormous 

amount of energy savings. By my reckoning, it’s the 

primary energy involved in producing electricity for 

every American household for two and a half years. 

It’s a big commitment and a big opportunity. 

 I want to make two points in reaction. One 

is first to congratulate the staff and the consulting 

teams of DOE. The president couldn’t make that 

commitment, couldn’t make that directive to the agency 

absent the work that the staff’s been doing for the 

past two plus years, once the Consent Decree was signed 

to get the rulemakings on track. He couldn’t make that 

commitment because most of these rulemakings, indeed 

nearly all, are underway. It’s work that has been 

started for nearly all those 30 products. 

 I think it almost must be a huge boost, I 

mean, to have the United States president say what you 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

26

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

do is integral to the energy policy of the nation is 

huge and I think it’s a testament to the work that the 

department staff does every day to develop energy 

efficiency standards and to the consulting teams. 

 It’s also, I think, a charge to those of us 

who are outside stakeholders to engage and to work to 

find the standards that meet the statutory criteria, to 

achieve the largest energy savings that are technically 

feasible and economically justified. 

 The second point I want to make is about 

small decisions. The 50 quads can’t all happen at 

once. This isn’t like cars. This isn’t NHTSA setting 

standards for automobiles where we have one technology. 

It’s 30 technologies. Many, I’d say probably more than 

two dozen, rulemakings, with each one entailing dozens, 

if not hundreds, of decisions that affect the ultimate 

energy savings that can be achieved. 

 It’s only by the step by step work of the 

staff and through meetings like this one that those 50 

quads of energy savings will be achieved. Every 

seemingly small decision has an impact on our ability 

as a nation to meet the overall savings objectives, 

whether it be about test methods, about the levels 

analyzed, the treatment of external benefits, legal 

interpretations, these are all part of the small 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

27

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

decisions that build up towards achieving the massive 

energy savings that are possible through this standard, 

through the standards we’re discussing today and 

through the overall package of standards that the 

president called out last week as being one of the 

centerpieces of how we’re going to meet our energy 

objectives in the years ahead. 

 So we look forward to participating in this 

proceeding and in helping to meet those objectives. 

 Thank you. 

 MR. BROOKMAN: Thank you, Andrew. Other 

summary remarks here at the outset. Yes, George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. When the analysis was done with regard to the 

MPC which is the Manufacturer’s Production Cost, that 

was done just almost two years ago, the price of steel 

has increased tremendously since that was done, and I 

would hope that DOE can recalculate those figures 

because it would have a direct impact. 

 The other item of concern is DOE used the 

Water Heater Analysis Model, WHAM, to estimate energy 

use for water heaters. This is a very, very old 

analysis and may be outdated and in some cases does not 

consider other types of water-heating products. 

 So I would request that DOE again find a 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

28

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

better analysis model to calculate estimated energy 

use. 

 One other item that, looking through the 

documentation, the TSD, and I could not find it and 

maybe it was done, but DOE performed no environmental 

impact study in the TSD. 

 Thank you. 

 MR. BROOKMAN: Thank you, George. Other 

comments here at the outset before we launch into the 

materials. Harvey Sachs. 

 DR. SACHS: Harvey Sachs, American Counsel 

for An Energy Efficient Economy, and I’d like to bring 

up a general point that the department has stated in 

Chapter 2 of the TSD that it has the ability to use 

relevant factors, including size categories, as 

determining classes for the purposes of this analysis 

and for the purposes of the rulemaking. 

 I want to park that because I think it may 

become important in some of our discussions later. 

 The second comment is really seeking a 

response that I was gratified to hear the recognition 

that certain of the hearth-type products are designed 

to be decorative. They’re not designed as heat 

products, yet if used year-round, as they may well be, 

they are putting heat into the house year-round, and it 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

29

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

would seem appropriate to consider a capacity 

limitation for these, perhaps analogous to the energy 

use of other parasitics during the summer season, such 

as large plasma televisions. 

 So I will queue up the thought that if these 

are decorative rather than heating appliances, we may 

want to consider a BTU input limit or BTU output limit 

for them. 

 MR. BROOKMAN: Okay. So thanks for looking 

for a possible solution there. Yes, please. 

 MR. STROUD: I just want to respond quickly 

to that, in that there are actually two different 

product categories. There is a decorative product and 

there is a heating product, and what I was saying 

actually refers to the heating product. It has that 

element of decorative to it and when you change it into 

a high-efficiency unit, it turns into blue flame and 

looks like a furnace, it even looks like a furnace, 

it’s not quite the same animal. 

 MR. BROOKMAN: Okay. So thanks, Tom, for 

that and there will be many opportunities for ongoing 

discussion as we go along today. Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. Just a real quick comment. 

 I wanted to thank the department for 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

30

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

following the spirit of NAECA in that it’s trying to 

analyze as many competitive products in this category 

as possible. This will reduce market shifts caused by 

efficiency standards. It is taking a market- and fuelneutral type of approach, and I really appreciate the 

fact that the department is really doing again a very 

thorough job in trying to analyze all of the markets 

for this rulemaking. 

 Thank you very much. 

 MR. BROOKMAN: Thanks, Steve. Okay. Other 

comments here at the outset? 

 (No response.) 

 MR. BROOKMAN: So then let’s proceed and go 

right straight into the Market and Technology 

Assessment. Ashley Armstrong. 

16 Market and Technology Assessment, Screening Analysis,

17 Engineering Analysis, and Preliminary Manufacturer 

18 Impact Analysis

19 

20 

21 

22 

23 

24 

25 

 MS. ARMSTRONG: Good morning, everyone. For 

those that don’t know me, my name is Ashley Armstrong. 

I’m going to begin today’s presentation by talking 

about three of the analyses the department developed as 

part of the Preliminary Rulemaking. 

 The first is the Market and Technology 

Assessment. As far as the Market and Technology 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

31

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Assessment goes, we attempt to characterize the market 

that includes manufacturers, product classes, product 

definition, the efficiency that’s available in the 

market, shipments, just to name a few characteristics. 

 The next analysis is a Screening Analysis. 

The purpose of the Screening Analysis is to apply DOE’s 

four criteria to establish what technologies to 

evaluate further in the analysis and which of those to 

screen out. 

 And the last analysis is the Engineering 

Analysis and the purpose of the Engineering Analysis is 

to characterize the manufacturer cost versus efficiency 

relationship. 

 So to start off with the market 

characteristics for the water-heating industry, we 

found that there’s three major manufacturers, domestic, 

that hold 90 percent of the storage water heater 

market. The majority of the products are manufactured 

in the United States. However, there are several 

manufacturing facilities located overseas. 

 We found there’s roughly 4.4 million gas, 4.5 

million electric, and 24,000 oil-fired storage water 

heaters shipped annually. 

 The instantaneous gas-fired market is 

primarily manufactured overseas. We identified five 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

32

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

manufacturers of those products. Most of these 

companies are foreign-owned and foreign-operated, and 

there’s over 322,000 shipments per year. 

 So these are the six product classes for 

which DOE currently has standards. As you can see, the 

two that are laid out, tabletop and electric 

instantaneous, are not being considered for amendment 

to the standard as part of today’s rulemaking. We’re 

only considering the other four. 

 To go into the next, the market 

characteristics for direct heating equipment, DOE 

identified eight manufacturers of direct heating 

equipment. That includes three manufacturers of all 16 

types of direct heating equipment and five 

manufacturers exclusively of fireplace-type heaters. 

 At least three of the manufacturers produce 

direct heating equipment domestically. Some of these 

products are sold exclusively into the replacement 

market-only and there is over a 170,000 units shipped 

in 2005 and that does include fireplace heaters. 

 So on the next slide are the 16 existing 

product classes as established by NAECA for direct 

heating equipment. You can see that there’s four 

product types and then they’re further disaggregated by 

heating capacity in order for standard-setting 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

33

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

purposes. 

 So the first issue. We’re going to go 

through the slides today and you’ll see slides like 

this that say request for comment and I’m going to 

present the information. Then I’m going to turn it 

over to you guys for a discussion of the issues. 

 So the first issue DOE’s seeks your input on 

is vented fireplace heaters. As some of you noted in 

your earlier discussion, DOE did not separate fireplace 

heaters into a separate product class. Instead, they 

put them into their existing product classes. 

 DOE determined that fireplace heaters use the 

same function. They use the same fuel. They function 

similarly and they do not contain any performancerelated features that would affect the measurement of 

AFUE, Annual Fuel Utilization Efficiency, using DOE’s 

Test Procedures. 

 DOE notes that the AHRI Directory also 

includes fireplaces within their existing room heater 

or wall furnace categories. 

 So I’m going to pass the discussion to you 

guys as to whether fireplace heaters should be included 

in DOE’s existing product classes for direct heating 

equipment and I’m going to show them on the next slide. 

 So we’ve proposed new descriptions to those 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

34

in the CFR which kind of help manufacturers figure out 

which product classes they would cover, whether it be 

recessed or non-recessed. So we would like your 

feedback on this and whether you think that they should 

be included in the existing categories. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Are vented fireplace heaters 

distinctive enough so they do not require special 

definition? 

 MS. ARMSTRONG: Are you asking me? 

 MR. BROOKMAN: Yes. 

 MS. ARMSTRONG: We believe that they fall 

into the existing categories, that they would be able 

to pilot light gas logs. You would be able to 

distinguish where they should fall. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik. There’s two 

different fixes, I guess. 

 Certainly, we think that they need a 

definition. The current situation -- 

 MR. BROOKMAN: That bright green means go. 

 MR. STANONIK: Fireplace heaters certainly 

need a unique definition. There is in fact today a 

specific standard, safety standard for that product, 

but we do agree that within this rulemaking, they can 

be included with one of the other current existing 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

35

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

types and our recommendation would be that they would 

just be included with room heaters, as I mentioned in 

the earlier comments, to -- currently, at least as 

proposed in the preliminary TSD, there’s some 

implication that, depending on whether it sticks out of 

the wall or is in the wall, somehow it’s more efficient 

one way or the other and from our experience in terms 

of what is out there as fireplace heaters, you don’t 

see that distinction in the market. 

 So at least at this point, our recommendation 

continues to be to just put them into the same grouping 

as vented room heaters and I’d just make one other 

point here and apologize for not being a 100 percent 

sure on this, but we have in place, at least, the 

intent, if we haven’t done it already, in fact, in our 

directory, to specifically identify fireplace heaters. 

 You know, right now we show wall furnace, 

floor furnace, room heater. We will have a separate 

denotation, I guess, for fireplace -- 

 MR. BROOKMAN: In the next round? In your 

next -- 

 MR. STANONIK: Some time soon. It’s in the 

works, but I think it may have got temporarily put 

aside as we had a significant merger over the last 

year. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

36

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Okay. So other comments 

related to this Equipment Class Designation, Vented 

Fireplace Heaters? Yes. 

 MS. ARMSTRONG: I actually have a question 

for Frank. 

 MR. BROOKMAN: Yes, Ashley, please. 

 MS. ARMSTRONG: Frank, you had mentioned that 

you had recommended the department considered adding a 

definition for fireplace heaters, and I don’t know what 

it would do at this time, but do you have a definition 

from like an industry standard that you have 

recommended that DOE should review and at least 

consider if they decide to? 

 MR. STANONIK: Oh, yeah. I mean, the first 

place I would go is just look at the safety standard 

which is ANSI Z.21-88, I believe, which is Vented 

Fireplace Heaters. I think they probably have at least 

a workable definition in there. 

 MS. ARMSTRONG: Okay. Thank you. 

 MR. BROOKMAN: Tom, go ahead. 

 MR. STROUD: I guess my position or our 

position is that we don’t have a problem working on an 

efficiency standard for that fireplace, but I don’t 

think it needs to be grouped together in the same 

category as a furnace, you know, and I guess perhaps 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

37

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

what I’d advocate for is having separate efficiency 

standards for that kind of a product because it’s never 

going to get to the point where it’s 90-92-94 percent. 

It’s not going to happen in that product. 

 MR. BROOKMAN: Okay. Frank Stanonik. 

 MR. STANONIK: I have a question for Ashley 

and I really feel bad because I haven’t read the whole 

TSD yet and so I may be asking things that are already 

there. 

 But you mentioned that you’ve identified 

eight manufacturers of direct heating equipment. Are 

those manufacturers identified some place in the TSD 

information? 

 MS. ARMSTRONG: They are. They’re in Chapter 

3. 

 MR. STANONIK: Okay. 

 MS. ARMSTRONG: And that includes fireplace 

manufacturers. 

 MR. STANONIK: Okay. 

 MR. BROOKMAN: So, Ashley, do you have any 

additional cues for our group? 

 MS. ARMSTRONG: I think that sums it up, 

unless anyone has anything else to say. 

 MR. BROOKMAN: Andrew deLaski. 

 MR. deLASKI: Doug, I have a question on a 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

38

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

slide that’s not directly on the point raised here but 

one of the previous slides. Is now the time? 

 MR. BROOKMAN: Please. 

 MR. deLASKI: In your Market Characteristics 

for the Water Heater Market, -- 

 MR. BROOKMAN: Slide 12. 

 MR. deLASKI: -- there are several 

manufacturing facilities located overseas for storage 

water heaters. 

 Are those manufacturer facilities in North 

America or are they truly overseas? Are they North 

American facilities or are they somewhere else? 

 MS. ARMSTRONG: I think they’re both. 

 MR. deLASKI: Both. And they manufacture for 

the U.S. domestic market? 

 MS. ARMSTRONG: Correct. 

 MR. deLASKI: Okay. 

 MS. ARMSTRONG: And Chapter 3 has additional 

information about that, too. 

 MR. deLASKI: Okay. Great. Thanks. 

 MR. BROOKMAN: Okay. Yes, Alex. Please use 

the microphone. 

 DR. LEKOV: Alex Lekov, Lawrence Berkeley 

National Laboratory, and just to add to the discussion 

about the decorationization of the fireplaces, the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

39

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

reasons DOE did it this way is because AHRI’s Directory 

of Certified Products essentially separates the 

products into the room heater category and wall furnace 

category. About 20 percent of the fireplace models are 

in the wall furnace category. This led the entire 

analysis to account for this particular fraction. 

 MR. BROOKMAN: Okay. Thank you. 

 MS. ARMSTRONG: Okay. Okay. So the next 

issue I’d like to request is the Product Class 

Organization for Direct Heating Equipment. 

 So DOE specifically analyzed the relationship 

between annual fuel utilization efficiency and the 

input rating for direct heating equipment by reviewing 

AHRI’s Directory as well as the available product 

literature which has efficiency information in it for 

gas wall fan-type direct heating equipment. 

 DOE found that the market data kind of shows 

two trends. For lower-efficiency products, those with 

efficiencies ranging between 73 and 77 percent, DOE 

found that the market data generally shows an 

increasing efficiency with increased capacity trends, 

and for high-efficiency products, those with 

efficiencies greater than 78 percent AFUE, DOE found 

the opposite trend. 

 For gas wall gravity-type direct heating 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

40

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

equipment, DOE found that manufacturers are not 

currently producing product over the full range of 

efficiencies. For gas floor-type direct heating 

equipment, DOE found that the directory only lists 23 

models. Seventy-five percent of them have an input 

rating above 37,000 BTUs per hour and they also have an 

AFUE that corresponds with the AFUE requirements of the 

current standard for the higher-capacity equipment and 

DOE believes that some of this information suggests 

that this existing product class could actually be 

consolidated into one, and for the last one, for gas 

room-type direct heating equipment, the market data 

shows the general trend of increasing AFUE with input 

capacity, and DOE believes that some input capacity 

ranges could possibly be consolidated, and this is 

something we discussed at the Framework meeting. 

 So you can see on the next slide DOE has 

proposed to reduce the number of equipment classes for 

direct heating equipment. There’s currently 16 as 

established by NAECA. This would take it down to 10. 

They would still be distinguished by heating capacity 

but some of the intermediate capacities got lumped into 

one. 

 So we request your comments specifically on 

the consolidation of the direct heating equipment 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

41

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

product classes. 

 MR. BROOKMAN: Yes, Lance. 

 MR. DeLAURA: This is Lance DeLaura. I have 

a question about -- and this pertains not only to the 

direct heating equipment but also to water heating when 

we get there. 

 MS. ARMSTRONG: Sure. 

 MR. DeLAURA: In our area we have a unique 

situation with the South Coast Air Quality Management 

District, both in the L.A. and Riverside Counties, and 

also Orange County, as well, but now it’s moving down 

into the San Diego Area. 

 I just got notice that they’re going to be 

adopting very similar air quality regulations to that 

of the SCAQMD. 

 So my question is, as you’re assessing this, 

and I realize it’s a regional issue, are you 

considering those additional costs that would be 

necessary for equipment to comply in those areas? 

 MS. ARMSTRONG: I’m guessing you’re talking 

about the super-ultra-low NOX -- 

 MR. DeLAURA: Yes. 

 MS. ARMSTRONG: -- requirements, right? 

Okay. So at this point in time DOE has lumped them all 

together in one product class. In order for DOE to 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

42

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

separate them out, you would have to make the argument 

that there’s some performance-related feature with 

respect to those type of products which would cause 

them or which would warrant them to be considered 

differently than, say, a regular water heater that 

would be shipped to all the rest of the regions for 

direct heating equipment. 

 MR. DeLAURA: I don’t think it’s a 

performance issue. I think it’s a cost issue. 

 MS. ARMSTRONG: Okay. 

 MR. DeLAURA: The cost for the water heaters 

alone in Southern California is dramatically higher. 

We have manufacturers in here that can verify that. I 

see heads bobbing. It will be similar in terms of the 

cost increase. It’s a different product, different 

burners, different product for that type of equipment. 

 MS. ARMSTRONG: Okay. 

 MR. BROOKMAN: I see Mike Rivest wishes to 

comment. 

 MR. RIVEST: Mike Rivest. I think what would 

drive the analysis would be if the incremental costs 

were different. So if the base costs are higher but 

the cost to achieve the efficiency are no different, 

then it wouldn’t warrant the separate product class. 

So that would be the investigation and the decisions to 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

43

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

be made. 

 MS. ARMSTRONG: Exactly. 

 MR. BROOKMAN: So those comments, those 

specific comments surrounding that incremental cost 

would be especially helpful to the department. 

 Yes, Frank Stanonik. 

 MR. STANONIK: I’m Frank Stanonik. To answer 

the question that Ashley asked, we certainly agree with 

the concept of trying to whittle down these number of 

input categories. You know, whether you’ve captured it 

or not, we’re still looking at that and discussing it 

with our manufacturer members, but we certainly think 

that this is a situation where we can reduce the number 

of input categories and correspondingly different 

efficiency levels for this type of product. 

 MR. BROOKMAN: Thank you. 

 MR. STANONIK: We agree with that idea. 

 MS. ARMSTRONG: Okay. 

 MR. BROOKMAN: Other comments on 

consolidation of product classes, taking them down to 

10? 

 (No response.) 

 MR. BROOKMAN: Okay. 

 MS. ARMSTRONG: Okay. The next industry I’m 

going to speak about is the pool heater industry. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

44

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DOE identified five manufacturers of pool 

heaters. All the manufacturers were domestically-owned 

and operated. The majority of the products were 

shipped domestically, as well, and DOE estimated that 

there was approximately 300,000 pool heaters shipped in 

2007. 

 The only product class DOE is considering for 

this rulemaking is gas-fired residential pool heaters. 

At the Framework meeting, we discussed possibly the 

idea of having an input capacity range to distinguish 

what is a residential gas-fired water heater -- I mean 

gas-fired pool heater. 

 We did not, for the purposes of the 

Preliminary Analysis, establish an input capacity 

range. That is because EPCA did not specifically 

establish an input capacity limit for determining scope 

of coverage for residential pool heaters. EPCA does, 

however, define the idea of a consumer product and that 

is any article which, to any significant extent, is 

distributed in commerce for personal use or consumption 

by individuals. 

 So manufacturers should consider pool heaters 

intended for residential use, i.e., those marketed for 

use in a residence, as covered by the residential gasfired pool heater energy consumption standards, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

45

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

regardless of input capacity. 

 So we also received a question regarding spa 

heaters. Spa heaters are not a separate product class. 

Section 321 of EPCA does define a pool heater as being 

capable of heating water in swimming pools, spas, hot 

tubs or similar applications, as spa heaters perform 

similar functions as pool heaters and they are included 

in the pool heater definition. 

 DOE did not include electric equivalent, 

i.e., heat pump pool heaters, in this rulemaking. 

 So the next -- sorry. 

 MR. BROOKMAN: Let’s just pause here. Yes, 

is it Robert? Say your name, Robert. 

 MR. GLASS: Robert Glass, Raypak. I just 

wanted to make a comment concerning DOE’s not 

considering the electric heaters for spas in that the 

majority of the spas and hot tubs that are manufactured 

are actually manufactured with electric heaters that 

are built into them. 

 So there’s actually a very small amount of 

gas spa heaters that are manufactured and sold and 

distributed in North America. 

 MR. BROOKMAN: Thank you. Okay. 

 MS. ARMSTRONG: Okay. So the next rulemaking 

analysis I’m going to speak about is the Technology 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

46

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Assessment. 

 DOE reviewed the old TSDs from previous 

rulemakings, literature regarding the markets, product 

tear -- we tore down products of available equipment on 

the market, and we gathered input from interested 

parties to develop a list of technologies for each of 

the products in the rulemaking, as well as the 

technologies actually described in Chapter 3 of the TSD 

because of the long list of technologies and the number 

of products in this rulemaking, I’m not going to go 

through each of them. 

 However, one I’m going to highlight is add-on 

heat pump water heaters. Add-on heat pump water 

heaters were not considered in this rulemaking. An 

add-on heat pump water heater is defined as an air-towater heat pump designed for use with a storage-type 

water heater or storage tank that is not specified or 

supplied by the manufacturer. 

 So for add-on heat pump water heaters that 

are not considered water heaters from the actual point 

of manufacturer, they are field-installed and added on 

to an existing storage-type water heater which is 

purchased separately. 

 Add-on water heaters cannot function as a 

water heater until they are coupled with a storage 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

47

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

tank, thus DOE did not consider them in this 

rulemaking. 

 DOE believes that they do not meet the 

definition of a water heater from the point of 

manufacture. 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: Don Brundage, South Company. 

Not including them raises another issue which hasn’t 

really, I don’t think, been very valid before. 

 If you have an add-on heat pump water heater, 

this could be added to a water tank which does not have 

any elements associated with it. 

 Is there any regulation on a water storage 

tank as far as insulation levels on it? If not, you 

potentially would have a situation with heat pump water 

heaters or if you were to stick a very high standard on 

electric water heaters where someone could get a 

poorly-insulated tank and after-market add elements to 

it and bypass the rulemaking. 

 I’m just asking is there any regulation on a 

water -- on a residential-type water storage tank at 

this time? 

 MR. BROOKMAN: A stand-alone storage tank. 

 MS. ARMSTRONG: Well, there’s standards for 

them, correct? So like the purpose of this rulemaking 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

48

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

is to consider amended standards for all types of 

storage tanks. So any of the ones that would be 

coupled with them would have to meet the existing and 

then future standards. 

 MR. BRUNDAGE: Well, that was my question. I 

haven’t seen any standards on insulation levels for a 

tank. 

 MR. BROOKMAN: Just a stand-alone tank. 

 MR. BRUNDAGE: Just a stand-alone tank. 

 MS. ARMSTRONG: Oh, a separate tank. 

 MR. BROOKMAN: Yeah. Not connected -- 

 MS. ARMSTRONG: Just a separate tank. 

 MR. BROOKMAN: Not characterized or 

classified as a water heater. 

 Harvey Sachs. 

 MS. ARMSTRONG: I see what you’re saying. 

 DR. SACHS: Harvey Sachs, ACEEE. 

 MR. BROOKMAN: Harvey, pardon me. So what 

would be the utility in doing that? Just to circumvent 

the rule? 

 MR. BRUNDAGE: I’m just concerned about 

possible circumventing the rule because these add-on 

heat pump water heaters would be not covered under this 

rulemaking. So what sort of tank are they going to put 

them into? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

49

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Yeah. But what would be the 

utility and the application? 

 MR. BRUNDAGE: Well, I was thinking more in 

terms of if you go to some of these extreme things with 

like four-inch tank insulation, what happens if someone 

just gets a tank and adds some elements to it? 

 MR. BROOKMAN: Okay. Harvey, thank you for 

being patient. 

 DR. SACHS: Thank you. Harvey Sachs, ACEEE. 

A couple of comments, one of them with respect to Don 

Brundage’s question. 

 Part of the very impressive accomplishments 

of this industry is the very low cost of the resistant 

electric water heater and I suspect the challenge of 

do-it-yourself would be very much like the challenge of 

trying to build your Chevrolet from the parts bin. 

That would be extremely expensive. 

 The broader comment is that this discussion 

of the add-on water heater brings to mind the 

conversation last week in this room on walk-in coolers 

where it seemed to be a general consensus emerging that 

if a contractor were to buy from manufacturer A the 

structure for a walk-in cooler and from manufacturer B 

the refrigeration engine for that, that contractor 

would be the manufacturer under the definition of the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

50

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

law. So that in fact, one could argue that the add-on 

heat pump water heater is a manufactured product but 

regulation would de facto fall to the local code 

officials because the manufacturer would be the person 

who assembled that add-on unit to a tank supplied by 

another vendor. 

 So it’s not at all clear that under -- for 

the purposes of the law and this regulation that the 

add-on heat pump water heater, which is on the market, 

is not a covered product. 

 MR. BROOKMAN: Or that anybody that assembled 

it would successfully circumvent. 

 DR. SACHS: That whoever attempted to sell to 

an end user and, please, I’m not going to be guilty of 

committing law, would appear from the discussion last 

week to be under the terms of the law as interpreted by 

General Counsel last week to be in fact the 

manufacturer of that product for sale. 

 MR. BROOKMAN: Let’s go to Frank first, then 

to Steve. 

 MR. STANONIK: Frank Stanonik, AHRI. Just to 

answer Don’s question, while I don’t think there is a 

federal requirement for an unfired storage tank, there 

certainly is and has been an ASHRAE 90.1 requirement 

that specifies a maximum standby loss or a maximum -- 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

51

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

minimum level of insulation for an unfired storage 

tank. I’m not sure everybody -- 

 MS. ARMSTRONG: That’s true. 

 MR. STANONIK: -- recognizes that, but in 

your situation, you know, you would start with an 

unfired storage tank and if you were in a state that 

did have some energy code that at least matched 90.1, 

as all the states are being encouraged to do, you’d at 

least have that regulation. 

 MR. BROOKMAN: So, Ashley, say that again. 

We didn’t hear you. 

 MS. ARMSTRONG: I’m pretty sure -- I could go 

back and check this, but, Frank, I’m pretty sure the 

unfired storage tank in 90.1-99 was subsequently 

adopted by DOE, the standby loss requirements, the 

commercial ones. 

 MR. STANONIK: I’m sorry. Could you repeat 

that again? 

 MS. ARMSTRONG: Sure. The ASHRAE 

requirements for unfired storage hot water tanks that 

fall under the ASHRAE preview were subsequently adopted 

by DOE. 

 MR. STANONIK: They were? Okay. 

 MS. ARMSTRONG: I think. I’m pretty sure. I 

can go back and doublecheck that for you after -- I 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

52

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

know there’s a standby loss requirement. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. To 

kind of follow on Harvey’s comments, one of the big 

questions of the walk-in cooler and freezer workshop 

last week was, you know, what percentage of these 

products are custom built in the field versus, you 

know, kind of -- I don’t want to say off-the-shelf but 

a manufactured product pretty much is standardized 

product. 

 Again, if it was in the Technical Support 

Document, I think the more custom it is, I think the --

I would especially agree with the decision because it’s 

harder to make -- you know, if they’re literally 

building them in the field one by one, with certain 

base components but still just separate field 

conditions, I think it makes it almost impossible, it 

makes it very hard to make a standard, unless it’s, you 

know, regularly-manufactured product, you know, with 

production lines. 

 Thank you. 

 MR. BROOKMAN: So additional comments on this 

point before we proceed? Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. I think it 

is a matter of general concern as the market develops 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

53

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that certainly the Energy Star Product Classes do not 

include, to the best of my knowledge, the add-on water 

heater, but the development of the heat pump water 

heater under the umbrella -- market under the umbrella 

of Energy Star is likely to also induce additional 

activity for the add-on water heaters. 

 It will be competing in the same product 

class as seen by the customer and do not have a 

referenceable standard for those is going to lead to 

some market inefficiencies that should be of concern to 

the department, to the manufacturers and to the 

efficiency advocates alike. 

 Thank you. 

 MR. BROOKMAN: Thank you. Okay. We’re going 

to proceed now. 

 MS. ARMSTRONG: Okay. So the next analysis 

is the Screening Analysis. 

 DOE uses four criteria in the Screening 

Analysis. They include technological feasibility, 

practicality to manufacture, install and service, and 

by that we mean is it practical to manufacture, install 

and service the entire market pursuant to the standard, 

the average impact on product utility and product 

availability, and whether there would be adverse impact 

on health and safety. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

54

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 So for the Screening Analysis for water 

heaters, DOE applied the screening criteria to gasfired, oil-fired, electric storage and instantaneous 

water heaters. DOE was able to screen out 10 of the 

technologies and DOE selected 16 and I didn’t go 

through all of them but Chapter 4 has the complete 

details of those technologies for which DOE is 

considering and those technologies for which DOE is 

not. 

 One important technology to note and where we 

would like your comment is integral heat pump water 

heaters. I’m going to present a couple of slides and 

then I’m going to turn it over to the floor for some 

discussion on heat pump water heaters. 

 So DOE found approximately that there might 

be in the future 10,000 shipments per year, less than 

one percent of the storage water heater market. DOE 

recently announced an incentive program for heat pump 

water heaters. That’s the Energy Star Program. The 

requirements include an energy factor of two for a star 

rating of 50 and warranty requirements. 

 DOE wanted to point out that some major 

manufacturers have released product announcements for 

heat pump water heaters, including GE. DOE reviewed 

some more recent studies since the 2001 previous 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

55

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

rulemaking regarding the reliability of heat pump water 

heaters. That includes the Oak Ridge National Lab 

study, the California Energy Commission study, and 

where they actually tested some of the heat pump water 

heater components and units that were previously 

available on the market. 

 So to key up the discussion, DOE invites 

comments as to whether heat pump water heaters are 

practical to install. What we mean by that is can heat 

pump water heaters replace the existing installations 

of all electric-type equivalents? Are there any air 

flow requirements that would impede them from going 

into certain spaces? Are there any impacts on small 

residences? Just to name a few. 

 DOE also seeks comments on whether heat pump 

water heaters would be practical to service and whether 

they are reliable. Could you service the entire market 

for heat pump water heaters by the time an amended 

standard is promulgated? That would be in 2015. 

 The next one would be DOE invites comments on 

whether heat pump water heaters are practical to 

manufacture. Would manufacturers have time to turn 

over all their production lines to meet the demand of 

the market by the effective date of the standard? 

 DOE would like to begin a discussion of all 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

56

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

these issues with respect to integral heat pump water 

heaters. 

 MR. BROOKMAN: Four different issues. 

Installation, service, reliability and practicality for 

manufacturer. Let’s see if we can address them all. 

 Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. I’d like to 

begin with a question with respect to Slide 28. The 

statement is Bullet 1, “Approximately 10,000 per year, 

less than one percent,” which I think we would all 

agree is characteristic of today’s market. 

 Is that the department’s estimate which is 

what I thought I heard you saying of what sales would 

be -- 

 MS. ARMSTRONG: No. 

 DR. SACHS: -- at some point in the Energy 

Star Program? 

 MS. ARMSTRONG: And if I did say that, I 

messed up. Alex can talk about this later in the 

Shipments Analysis, but so far as the DOE projections 

of how heat pump water heaters and how that market 

might grow as the Energy Star Program comes, you know, 

more into the market, but I think that Alex will touch 

on that later in the Shipments Analysis, if that’s okay 

with you. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

57

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: This 10,000 per year, what is 

that? 

 MS. ARMSTRONG: Currently. 

 MR. BROOKMAN: Current. Okay. So four items 

that the department requested comment on. Maybe we’re 

not quite to it yet. 

 Yes, Andrew. 

 MR. deLASKI: Andrew deLaski, Appliance 

Standards Awareness Project. 

 Ashley, I guess I want to question the 

premise of your question. You have set up your 

question saying can this be done by 2015 and as Tim 

outlined in his opening remarks, the 2015 date is an 

arbitrary date. 

 The law says that this standard must be set 

by 2005 or should be effective in 2005 which has gone 

by, the last I checked. 

 The department is obligated to use time as a 

variable in determining the proper standard, the 

standard that meets the criteria in the statute of 

seven criteria that you laid out earlier, economically 

justified, technically feasible. 

 So the reason why I say your question is 

misframed is that if it had to be effective in a year, 

it can’t be done, but if it’s 2015, perhaps. If it’s 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

58

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

2020, it’s a different question. So the time frame -- 

so the question is, is it practical to make heat pump 

water heaters certainly is within some time frame and 

the question is what’s the cost to do so within a 

certain time frame, and I think the department is 

obligated to look at a range of implementation dates 

for all the standard levels to determine what is going 

to meet the statutory criteria. 

 So we’re kind of going -- we’re picking 2015 

or you picked 2015 in your question, but it has no 

basis in the law. So we need to be asking this 

question, I think, more with respect to can it be done 

within some time frame and if it can, then the 

department must analyze these higher levels. 

 MR. BROOKMAN: Andrew, would you suggest a 

time frame, or Tim, since you included him in your 

comment? 

 MR. deLASKI: I think the department should 

look at a range of time frames for each of the standard 

levels, starting with as short as perhaps 18 months and 

as long as perhaps seven or eight years. 

 MR. BROOKMAN: Okay. Don, go ahead. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. I find it kind of difficult to even address 

this question because it’s are they practical to 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

59

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

install, are they practical to service, are they 

reliable. 

 When we were looking at the last round of 

water heaters and chose incremental gains in water 

heaters, the stuff the -- the products that were 

similar to what was going to be implemented were, for 

the most part, on the market. There were some issues 

with refrigerant foam and things like that that 

provided uncertainty, but there’s really not a product 

out there to compare against. It doesn’t exist yet for 

what would be mass produced and available in 2015. So 

that makes it very difficult to answer your questions 

here. 

 MR. BROOKMAN: Nevertheless, the department 

would at least like to hear from manufacturers on what 

they perceive to be the practicality for installation, 

service, reliability and manufacturer, as well, whether 

it’s in 2010 or 2015. So maybe we could address that 

point. 

 Steve, go ahead. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Again getting back to the Slide 28, again just to -- in 

terms of the way you’ve described it, the Energy Star, 

it’s not an incentive program. There’s no monetary 

issues involved with it whatsoever. It’s a criteria 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

60

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that they’ve set to get a label, but there’s no 

financial incentive whatsoever. 

 In terms of incentive, there’s a federal tax 

credit for heat pump water heaters and I believe the 

level is 1.7 for those tax credits. I’d have to 

doublecheck but again just -- 

 MS. ARMSTRONG: Not for energy -- 

 MR. ROSENSTOCK: What? 

 MS. ARMSTRONG: It’s 2.0, right, Josh, for 

Energy Star? 

 MR. ROSENSTOCK: I know, but I’m saying but 

for the federal -- 

 MS. ARMSTRONG: For the federal tax credit. 

 MR. ROSENSTOCK: For the federal tax credit 

which is an incentive program, -- 

 MS. ARMSTRONG: They’re the same. 

 MR. BROOKMAN: Okay. Thank you. Frank 

Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. A 

couple of points. First of all, just to state the 

obvious in case some of the new people aren’t aware of 

it, but we would certainly disagree with Andrew deLaski 

that DOE has some latitude in the five-year effective 

date. We have a very clear different view of what the 

law says and where DOE is in this process and we think 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

61

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

right now they’re obligated to provide five years. 

 Having said that, obviously there will be 

more discussion about it. 

 But on the issue of heat pump water heaters, 

well, the heat pump water heater has been held up as 

the Holy Grail to the water heater industry for 20+ 

years and it certainly is appropriate to ask these 

questions, but these questions have been asked and have 

been tried to be answered in that same time period. 

 It’s a very complex situation and I think we 

need to recognize that we have in place certain things 

that perhaps weren’t there before, including and Energy 

Star Program, certainly a much greater recognition by 

all stakeholders about the need to save energy. 

 I would hope to not reveal secrets, that 

probably every water heater manufacturer is looking at, 

you know, to what extent they can maintain a feasible 

business providing heat pump water heaters, if that can 

be done, but to, at this point in time, to really look 

at, you know, can we get to a situation where that 

might be a minimum requirement in five years or three 

years or whatever number years. 

 Right now, I’m going to say is -- I’ll say 

that question should be taken off the table. Again, 

I’m going to go back to my prefacing remarks. The 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

62

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

water heater industry is in a very tight situation at 

the moment, as are American consumers. You know, who’s 

going to buy these much higher heat pump water heaters? 

Last time I checked I don’t think our members were on 

the list to get any bail-out money and so again, I 

mean, everyone recognizes that, you know, electric 

resistance water heaters, you can’t go much farther 

than you are and that product has to evolve and it’s 

legitimate to talk about perhaps helping the market 

evolve the product, but I don’t think we’re anywhere 

near a situation where one can talk about setting a 

minimum that would require a heat pump water heater. 

 MR. BROOKMAN: Molly, can I ask you to defer 

for just a moment? 

 So the department is issuing an invitation 

here for manufacturers to be rather specific, not speak 

in generalities, about what they would face in the 

manufacture of a heat pump water heater, about the 

practicalities related to installation, service, 

reliability and manufacture, all four, and then we will 

take the other side of that coin, since Frank framed 

that up just then. 

 So would anybody wish to take the department 

up on their offer to do this? 

 MR. BEYERLE: Sure. Mike Beyerle, GE. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

63

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Thank you. 

 MR. BEYERLE: We’ve obviously announced that 

we will be producing a heat pump water heater some time 

in the near future. 

 The question’s a little bit rhetorical from 

our standpoint. Obviously we believe it’s practical to 

manufacture, install and service. We believe that 

there will be a great deal of consumer acceptance and 

this market will in the future be much larger than the 

10,000 pieces that you’ve identified at the present 

time and we think it should be a minimum standard some 

time in the near future. 

 I think that remains to be seen. The product 

is not out yet, but we expect it to do very, very well 

once it comes out. 

 MR. BROOKMAN: Okay. And so all aspects of 

installation, service, reliability and manufacture, you 

noted all four. 

 MR. BEYERLE: Right. GE Consumer and 

Industrial is in the appliance manufacturing business. 

We make over 10 million appliances a year. Obviously 

if our products were not reliable, we wouldn’t still be 

in business. If we couldn’t service them, we wouldn’t 

be in business. We have facilities to do both. 

 MR. BROOKMAN: Thank you. Anybody else that 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

64

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

wishes to comment from the manufacturing side before we 

move to the counterpoint? 

 (No response.) 

 MR. BROOKMAN: No additional manufacturing 

input. Harvey Sachs. Oh, pardon me. I left Molly 

out. Molly, you’re first. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. I wanted to direct a question back at Frank. 

 You were saying that everybody is looking at 

heat pump water heaters as an option but that you don’t 

feel that in a five-year time frame it could be a 

practical minimum standard. 

 I’m wondering what you think needs to happen 

in the interim time frame in order to advance water 

heaters to the point where they could become a minimum 

standard. What would you be looking for to make that 

happen? 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. At this 

point, realistically, patience. I think things have 

been put into the market, including other companies 

entering and providing the product, that in fact are 

changing circumstances that may actually, if you will, 

allow that product to take root, just as in the last 

whatever number of years we’ve seen residential 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

65

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

instantaneous tankless water heaters take root in the 

U.S. market. 

 You know, there’s some analogies there and so 

I honestly think it’s just a question of letting some 

of the things, the structure that’s been put there, 

letting it mature a little bit and in fact see how the 

market responds, see how the American consumers respond 

to the availability of this higher-technology electric 

water heater that is reliable, that will give them the 

hot water they want and that will hold up. 

 MR. BROOKMAN: Harvey Sachs. Microphone. 

 DR. SACHS: Harvey Sachs, ACEEE. I guess my 

reputation for complimenting the department is not 

quite as well established as I would like, but I am 

concerned that the questions on Slides 30 and 31 really 

miss a very important opportunity, that when we look at 

historical record of failures, we’re looking at a very 

different class of market entrants from the class of 

market participants that has announced or has discussed 

heat pump water heaters today. 

 We’re talking about the difference between 

laboratory-based applied R&D companies in some cases, 

commercial niche companies in some cases, versus major 

consumer appliance companies, as Mike Beyerle has 

stressed, companies that have an enormous stake 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

66

themselves in the reliability of their products, and an 

analysis which ignores that is bound to misrepresent 

the potential of the heat pump water heater. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 I’m also concerned that cost effectiveness 

has to be looked at several different ways, one of 

which is that the unit profits on a higher-cost product 

are likely to be greater even in a very competitive 

market than on a lower-priced product, that the heat 

pump water heater and the condensing water heater may 

be a good business even in this time of difficulty that 

we’re in now 

 I want to say that consumer preference can be 

very strong. We have seen this in market studies where 

consumers showed a very sophisticated understanding of 

the values of very expensive heat pump water heaters 

and we have seen this in the consumer preferences 

exhibited for condensing furnaces and other high-priced 

products in another thought-to-be-commodity market. 

 And finally, questions on 30 and 31 take a 

very different cast if the department avails itself of 

the opportunities to consider capacity-based classes of 

products, that, for example, the issues of air flow, 

small impacts on small residences, and so on, are very 

different for 50-gallon and above heat pump water 

heaters that produce much more hot water than they are 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

67

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

for 30-gallon and below, and we believe that the 

department will not adequately reflect the potential of 

the product classes without considering larger and 

smaller products as separate classes without committing 

to where that line should be at this point. 

 MR. BROOKMAN: Okay. Thank you. So that 

other data you cited, Harvey, I know the department 

would welcome seeing that in great detail in your 

comments. That will help them. 

 DR. SACHS: Harvey Sachs again. The results 

of our heat pump water heater and other water heater 

preferences study that was done in conjunction with the 

labeling program a number of years ago. 

 MR. BROOKMAN: Thank you. So then other 

comments on this series of issues before we move on? 

Frank Stanonik. 

 MR. STANONIK: Frank Stanonik with AHRI. 

First of all, I just want to certainly tell DOE that, 

to the extent we can because obviously, you know, this 

does get into some sensitive private information for 

the manufacturers, but to the extent we can, we will 

include in our written comments some responses to these 

questions. 

 But I think you’ve also missed a question and 

again because we’ve seen it come up with the tankless, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

68

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

residential tankless gas-fired water heaters, I think 

if we go forward here and really look at heat pump 

water heaters being part of the American water heater 

market, there may be a need to look at the question of, 

okay, how do they perform in use versus what the test 

procedure says and I say that without having really any 

prejudice or knowledge to suggest, you know, how that 

-- which way that goes, but obviously if -- I can tell 

you that the test procedure -- pretty much that heat 

pump is always doing the work, is doing the heating, 

and if we know anything, when you look at residential 

hot water use patterns, they’re all over, and so there 

might be an issue of in the real use to what extent is 

the heated water coming from the heat pump as opposed 

to some back-up. 

 I mean that’s the question. I don’t know 

what the answer is. 

 MR. BROOKMAN: Okay. Thank you. Yes. 

 MR. BEYERLE: Mike Beyerle, GE. Along those 

lines as part of our product development, we obviously 

have product in the field. We’d be glad to supply the 

department with some of our data concerning field usage 

of product and give you some information to work off 

of. 

 MR. BROOKMAN: Thank you. Very helpful from 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

69

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the department’s point of view and other manufacturers, 

as well, if they’re willing to do so. 

 Okay. So then let’s go. Move on. 

 MS. ARMSTRONG: Okay. The next industry 

we’re going to speak about is Direct Heating Equipment 

and Pool Heaters. 

 We applied the same four screening criteria. 

For direct heating equipment, we screened on 13 

technologies. For pool heaters, we screened on five, 

and like I said previously, Chapter 4 has all the 

details of the screening criteria and the discussion of 

those for which we screened in and screened out. 

 The next analysis we’re going to speak about 

is the Engineering and I’m actually going to pass the 

presentation to one of my colleagues, who’s going to 

give you all the details about our Engineering 

Analysis. 

 MR. BROOKMAN: Yes, Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Ashley, 

just one comment on your Screening Analysis for Direct 

Heating Equipment and it’s more of a caution. 

 One of the product categories is a gravity 

wall furnace. At least as far as we had looked at the 

Technical Support Document, we would just caution that 

in the analysis, don’t add too many devices to a 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

70

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

gravity wall furnace that require electrical energy 

because in fact at some point you’re going to make it 

be a fan-type wall furnace. You’re going to basically 

take it out of the category. 

 MS. ARMSTRONG: Yeah. And Matt is going to 

speak about what efficiency levels we exactly -- we did 

an efficiency level approach, so which efficiency 

levels we did consider and then just as a reference 

point for clarity what technologies are included in 

those efficiency levels. 

 MR. STANONIK: Okay. 

 MS. ARMSTRONG: Thank you. 

 MR. O’HARE: Hello. My name is Matt O’Hare, 

and I’m going to discuss the Preliminary Engineering 

Analysis results conducted for the Residential Heating 

Products Rulemaking. 

 The Engineering Analysis results develops the 

cost-efficiency relationship to demonstrate the 

incremental manufacture cost of achieving increased 

energy efficiency. The results of the Engineering 

Analysis are used downstream in the Life-Cycle Costs, 

the National Impacts, and the Manufacturing Impacts 

Analyses. 

 So, first, I’d like to talk about the 

representative products. For analysis purposes, DOE 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

71

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

examined products with specific characteristics. Since 

the energy efficiency can vary depending on the 

characteristics of those products, DOE refers to these 

as the representative products. 

 For example, DOE examined a specific rate of 

storage volume for storage water heaters since the heat 

losses from the tank and ultimately the energy factor 

are a function of the storage volume. DOE identified 

these representative products in order to facilitate 

the Engineering Analysis because each of our product 

classes covers a range of storage volumes and input 

capacities. 

 DOE determined the representative products by 

reviewing publicly-available data, including the AHRI 

Directory and Shipments data. 

 DOE based representative products on those 

models with the highest number of shipments within each 

product class. DOE conducted the Engineering Analysis 

with representative products and then expanded that 

analysis to the entire range of products within each 

product class. 

 Here are the representative products that DOE 

identified for the Engineering Analysis for each of the 

product classes that were analyzed in today’s 

rulemaking. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

72

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Let’s just pause here. 

Comments on these representative product classes? 

Should there be any? 

 (No response.) 

 MR. BROOKMAN: Okay. 

 MR. O'HARE: All right. The first step in 

developing the cost-efficiency curves is to identify 

the baseline products. The baseline unit is the 

reference point against which DOE measures the changes 

in the manufacture and production costs and energy 

efficiencies. 

 For the baseline unit, each product class 

represents the basic characteristics of the products in 

that class, and the baseline efficiency levels 

typically correspond to the lowest energy efficiency 

level that is available on the market and which in this 

case is the current Federal Energy Conservation 

Standards for each of the product classes. 

 The baseline efficiency levels for this 

analysis correspond to the current Federal Energy 

Conservation Standards that were previously identified 

for each product class. 

 All right. So next, DOE identified the 

maximum technologies available for each product class 

at the time this analysis was completed. The maximum 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

73

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

technologies, or Max-Tech, for a given product class, 

the maximum improvement in energy efficiency that is 

technologically feasible. 

 DOE reviewed manufacturer product literature 

and prototype information to determine the maximum 

technologies for each product class. The Max-Tech 

efficiency levels for each product class are shown here 

and similar to the baseline units, these correspond to 

the representative products within each product class. 

 Okay. So next, DOE used an efficiency level 

approach to develop the cost-efficiency curves. The 

efficiency level approach calculates the relative cost 

of increasing energy efficiency from one level to the 

next. 

 DOE conducted tear-downs of representative 

products at a variety of efficiency levels from a 

variety of different manufacturers. This information 

was added to the cost model to calculate our 

manufacturer production costs. 

 The cost model generated product costs which 

are direct costs, such as direct material and labor 

costs, as well as non-production costs or conversion 

costs which are indirect costs, such as building, 

tooling, and equipment costs. 

 These production costs and conversion costs 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

74

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

total the full cost of production which we refer to as 

the manufacturer’s selling price after a profit is 

added. 

 DOE also received feedback from manufacturers 

during the engineering interviews and implemented this 

feedback in the cost model to generate today’s results. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Matt, 

I’m sorry, I’m going to take you back one slide. 

 MR. O'HARE: Yes. 

 MR. STANONIK: The .77 EF, was that for a 40-

gallon gas product that had an input less than 75,000 

BTU? 

 MR. O'HARE: DOE identified that the 

condensing gas-fired water heater that is available in 

the market is at an input capacity that is slightly 

above that input range that’s specified -- 

 MR. STANONIK: So -- 

 MR. O'HARE: -- for residential products, but 

for the cost model, we scaled down a product within 

that range. 

 MR. STANONIK: So, in a sense, it’s a 

projected EF? 

 MR. O'HARE: Yes, we used the cost model to 

scale that. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

75

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. STANONIK: Okay. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. I guess I’m 

a little bit puzzled that the Max-Tech level considered 

by DOE for standards is lower than the Max-Tech level, 

if I recall correctly, in the Energy Star Program for 

the equivalent condensing storage water heater category 

which I believe is set at .8 and may be at .82. 

 So I don’t know if you all have met each 

other in terms of the two sides of DOE but it is 

curious. 

 MR. BROOKMAN: Ashley Armstrong. Microphone, 

please. Is probably is not on. 

 MS. ARMSTRONG: Is that it? So for the 

condensing gas-fired water heaters, the ones currently 

on the market are tested with a thermal efficiency 

because they have the input rating just above the 

residential limit. 

 DOE reviewed several studies which found a 

range of EFs and then we also gathered feedback during 

our engineering interviews. We heard ranges, you know, 

between .77 all the way up to .82. Actually, we heard 

ranges below .77, too. 

 So, Harvey, we picked the number to be 

representative of that product class because there’s 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

76

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

not a gas-fired residential product that’s certified 

with an EF rating. 

 DR. SACHS: I appreciate that -- Harvey Sachs 

again. I appreciate that, Ashley, and it’s very 

helpful, but it will bias the results of the analysis 

to have a roughly five percent lower EF representation 

which corresponds to less gas use avoided and it is a 

matter of concern that we would see such divergence 

between the Energy Star Program of DOE and the 

rulemaking analysis of DOE. 

 Thank you. 

 MR. BROOKMAN: Thank you. Additional 

comments in this vein? Otherwise, we’re going to go 

forward. Yes, to Robert. 

 MR. GLASS: Robert Glass, Raypak. I’ve got a 

question, Matt, with the product tear-down analysis. 

 In the document, it identifies the total 

number of products that were identified, but because 

we’re looking at water heaters, direct heating, and 

pool heaters, is there a breakdown of how many of those 

39 units or 36 units that were done in each of those 

different classifications, just from water heating, 

direct heating, and pool heating? 

 MR. O'HARE: I don’t have that information in 

front of me right now. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

77

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. ARMSTRONG: And that’s not something we 

would follow separately. This is Ashley again. 

 MR. BROOKMAN: Ashley, you need to stick your 

-- 

 MS. ARMSTRONG: I’ve got a microphone in 

front of me. 

 MR. BROOKMAN: Yeah. 

 MS. ARMSTRONG: So I can tell you -- 

 MR. BROOKMAN: You’ve got to -- 

 MS. ARMSTRONG: -- products from all three 

industries, I can tell you there’s a range of 

efficiencies and a full range of manufacturers, but we 

don’t distinguish exactly which ones those are and how 

many are -- it was a good amount. 

 MR. GLASS: Well, I don’t think -- Robert 

Glass with Raypak. I don’t think it’s too much to ask 

just how many units were torn down because that has a 

bearing on what is the effect of analysis that has been 

done. 

 So, I mean, if in pool heaters, if there were 

six, then you ought to be able to say six. If there 

was two, you ought to be able to say two. We’re not 

asking for any type of clarification on what models, 

what efficiencies or anything else. 

 MS. ARMSTRONG: I’ll get back to you. I 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

78

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

don’t know the number off the top of my head, but I can 

find the number. 

 MR. BROOKMAN: Do we have them here? 

 MS. ARMSTRONG: We might be able to get them 

for you. 

 MR. BROOKMAN: So maybe after the break, we 

can have that information. 

 Let me see. George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. Can I then assume, which I shouldn’t really 

do, the baseline efficiency for the gas-fired water 

heater, that was a standard atmospheric non-condensingtype unit? 

 MR. O'HARE: Yes. 

 MR. KUSTERER: At .59? 

 MR. O'HARE: Yes. 

 MR. KUSTERER: And then the .77, that was a 

condensing-type water heater? 

 MR. O'HARE: Yes. 

 MR. KUSTERER: Thank you. 

 MR. O'HARE: And we’ll go over some of those 

specifics. 

 MR. BROOKMAN: Other questions about these 

three matrices, 36, 37, 38, before we move on to the 

further description of the efficiency level approach? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

79

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Tom. 

 MR. STROUD: Well, I’d like to ask Frank 

Stanonik a question to see if he can respond to this 

any better than I. 

 Is it realistic that a fan unit, gas wall fan 

direct, would be 10 percent higher than a gas wall 

gravity? What I’ve heard in the past is that there are 

not those kind of differences in efficiency, but maybe 

we’ll have to deal with that separately. 

 MR. STANONIK: Frank Stanonik, AHRI. I mean, 

the baseline levels are the current federal minimum. 

 MR. STROUD: Okay. 

 MR. STANONIK: So to the extent those 

products, they’re out there. 

 MR. STROUD: Okay. 

 MR. BROOKMAN: Okay. 

 MR. O'HARE: Okay. I think we’re on Slide 40 

now. This is Matt O’Hare. 

 DOE conducted the efficiency level approach 

to the Engineering Analysis by first analyzing the 

representative products within each product class. DOE 

then expanded the analysis to the full range of 

products within each product class using the cost model 

and the cost model was expanded using inputs that 

include information on market data technologies that 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

80

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

DOE identified as well as input from manufacturers. 

 Now, I’d like to present the methodology that 

DOE used to generate the inputs for the cost model, 

the bill of materials used for the cost model, then 

ultimately the manufacturer production costs were 

developed using reverse engineering, representative 

units were selected and torn down to generate a bill of 

materials, and the bill of materials included both raw 

materials and purchase parts. 

 The cost model then captures the cost of raw 

materials and those purchase parts as well as any 

fabrication processes and final assembly that was 

required to create the final product. 

 All right. Then, lastly, DOE developed the 

cost efficiency results. DOE first defined the 

baseline unit specifications which include cost and the 

features that manufacturers typically include in those 

units. 

 Next, DOE identified the maximum technologies 

available as well as common efficiency levels between 

the baseline and the Max-Tech. Next, DOE conducted 

tear-downs for a variety of efficiency levels and used 

that information in the cost model to generate 

manufacture production costs, and then, finally, DOE 

calculated the manufacturer production costs for all 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

81

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the efficiency levels being considered. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs from ACEEE. I guess 

I have some concerns about Slides 34, 41, and 42. 

 The department has been presenting this 

reverse engineering and cost-efficiency curve 

development information over a period of many of these 

rulemakings over a period of decades. We’ve certainly 

seen indications of great efforts to improve the 

methodology for doing the tear-downs, for doing the 

cost-efficiency curve development, and yet we have a 

very strong sense that in essentially every case the 

department has significantly over-estimated the cost to 

the consumer of compliance with the next generation of 

standards. 

 This is almost a unique opportunity in that 

we’re dealing with both very mature technologies, for 

example tank installation, gas burners, and with a 

variety of things which have enormous potential for 

learning curve improvements. 

 We think it’s time for the department to sit 

back and review on its own for the public record the 

history of the success and shortfalls in its estimates 

of projecting costs for efficiency as actually 

delivered in the standards. That work must be done 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

82

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

with due respect to what Mr. Kusterer has pointed out, 

the near-term changes in commodity prices which have 

affected so many products over the last four years or 

so, but let’s do a sanity check. Let’s see how well we 

have done and how much credence we should give to the 

third decimal estimates that we’re getting from this 

process. 

 Thank you. 

 MR. BROOKMAN: Thank you. Don Brundage. 

 MR. BRUNDAGE: Don Brundage. Quick note on 

that. 

 In the case of the air conditioning 

rulemaking, I would not agree with that. The air 

conditioning rulemaking for CR-13 was done at a time of 

depressed commodity prices and if you look on the 

market when it actually was implemented, the prices 

were substantially higher in real life than what the 

DOE had projected. So often they’re lower, not always. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs. Point very well 

taken, Don. We’ve done a little bit of work, not at 

the level of sophistication we would expect of the 

department, to try to look at the effects of commodity 

price changes, and we certainly are asking that that be 

done as a variable the department could not have 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

83

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

forecast. 

 We absolutely agree that there were a variety 

of things which led there, but let’s stay on water 

heaters and I’d be happy to share our information with 

you later on air conditioners. 

 MR. BRUNDAGE: In general, I think an 

approach like a long-term, maybe five-year, rolling 

average of commodity prices might be better than trying 

to take the snapshot at the time of the rulemaking. 

 MR. BROOKMAN: Okay. Thank you, Don. Okay. 

Yes, Constantin. 

 MR. von WENTZEL: Constantin von Wentzel, 

Navigant Consulting. 

 We actually do use five-year averages for the 

raw material prices going into the cost model. 

 MR. BROOKMAN: Yes, please, Karen. 

 MS. MEYERS: This is Karen Meyers with Rheem, 

and I just want to say for the record that Rheem does 

agree with the comment made by Don. 

 In the case of the air conditioning 

rulemaking, it was devastating to the industry and a 

lot of domestic manufacturing, and we urge the 

department to be very careful in estimating the cost to 

the consumer. It cost a lot of manufacturing jobs when 

we get it wrong and it’s been devastating for this 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

84

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

industry and as the water heater rule affects us, also, 

we ask that a lot of diligence be put into this because 

we don’t want another rulemaking to cost even more U.S. 

manufacturing jobs. 

 MR. BROOKMAN: Thank you. Frank Stanonik. 

 MR. STANONIK: Frank Stanonik with AHRI, and, 

you know, in general, I certainly would agree with 

Harvey because, you know, obviously we’re a strong 

believer in having the best information we can have, 

but I think -- and this is a little bit off the topic 

and I apologize for that, but I think what needs to be 

recognized here, just because to me, it’s become -- the 

light’s go on, is the installed cost -- I mean, we’re 

talking about the manufactured cost and the price of 

this commodity, okay, and yet when the SEGWHAI project 

out in California was going, they did some, at least 

what I understand to be, fairly good surveying and the 

average installed cost of a garden-variety gas water 

heater was approaching a thousand dollars. 

 Now, you can talk about whether this product 

costs $200 or $250 or whatever, but when the installed 

-- the cost of the installation is factors more than 

the commodity, you know, I’m not sure we’re looking at 

the right part of the equation anymore or, more 

importantly perhaps, and again I’m all for having 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

85

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

better information, but if we have better information 

on that, how does that look in the bigger picture of 

what that consumer pays at the end of the day when 

they’re paying the hopefully qualified technician two 

or three times more than what they bought the product 

for to put it in. 

 MR. BROOKMAN: Okay. Thank you. We’re going 

to keep going here. 

 MR. O'HARE: Okay. 

 MR. BROOKMAN: Did they address, Matt, the 

slides you wanted them to address? 

 MR. O'HARE: I think so, yes. 

 MR. BROOKMAN: Okay. 

 MR. O'HARE: Okay. So the next three slides 

are a summary of the Engineering Analysis results for 

gas-fired, oil-fired and electric storage water 

heaters. 

 I’m going to briefly go through these results 

and additional details can be found in Chapter 5 of the 

Preliminary Technical Support Document and first 

presented here is the Engineering Analysis results for 

gas-fired storage water heaters at the representative 

rated storage volume of 40 gallons. 

 MR. BROOKMAN: Yes, Alex. 

 DR. LEKOV: Alex Lekov, Lawrence Berkeley 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

86

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

National Laboratory. 

 I’d just like to use the opportunity to go 

back to the slide for gas-fired storage water heaters, 

to supplement the information the department provided 

about the selection of the condensing level at .77. 

 MR. BROOKMAN: Which slide are you on? 

 DR. LEKOV: I’m on Slide 43. 

 MR. BROOKMAN: Okay. Thank you. 

 DR. LEKOV: And we’re looking at the Max-Tech 

level. 

 So there are no residential products internal 

condensing water heaters. The department utilized two 

studies, one from GPI and one from California Energy 

Commission. In one of the studies, the folks who did 

the study converted thermal efficiency matrix to energy 

factor and it was reported at .77. Therefore, the 

department selected this level as the only available 

currently as the measure. 

 MR. BROOKMAN: Thank you, Alex. Okay. Let’s 

hear from this gentleman. First, your name. 

 MR. GAUTHIER: Phil Gauthier, AHRI. The MaxTech product for .77 is an interpolation from a 

commercial product. Did this -- my question is did 

this price analysis include the flammable vapor 

ignition resistance requirements for residential 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

87

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

products? 

 MR. O'HARE: Yes, we included that. 

 MR. GAUTHIER: Okay. 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: I’m curious on the proposed 

efficiency levels on gas equipment, why, when on 

Standard Level 3, when you added electronic ignition, 

the power vent was added there. 

 It was not my understanding you really were 

required to do a power vent if you did electronic 

ignition. 

 MR. O'HARE: Because DOE used an efficiency 

level approach to this analysis, these are the 

efficiency levels that we identified as the most 

prevalent on the market and then they’re associated 

manufacture production costs and these are just the 

technologies that DOE identified that are typically 

included by the manufacturers and the incremental 

increase in the manufacturer production costs isn’t 

tied directly to any one particular technology here. 

 So this is the total cost of manufacture at 

each of these efficiency levels. 

 MR. BRUNDAGE: So you would look separately 

at things like electronic ignition versus power vent? 

 MR. von WENTZEL: Constantin von Wentzel, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

88

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Navigant Consulting. 

 We certainly priced them out separately, if 

that’s what your question is. 

 MR. BRUNDAGE: Okay. 

 MR. BROOKMAN: Okay. Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. What’s 

conspicuously lacking here, even admitting that this is 

an engineering efficiency level analysis, is the option 

of doing a pair of flue and vent dampers as opposed to 

a power vent, and in part that doesn’t show well 

because of the implied defect in the test method that 

doesn’t account for the value of the entrained bypass 

air, but in part this is an alternative technology path 

that may have much lower costs than the power vent and 

it actually also may have much less entrained air cost 

than the large amounts of air associated with the power 

vent and its need to reduce the exhaust temperature 

down to the level PVC can handle. 

 MR. BROOKMAN: Okay. Thank you, Harvey. So 

additional comments on 43 since we’re there before we 

present 44 and 45? 

 MR. KUSTERER: Yes. 

 MR. BROOKMAN: Yes, please, George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. Just to add on to Mr. Sachs’s comment, I 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

89

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

don’t know if it’s an add-on, but I’m somewhat 

confused. 

 With Level 3, Level 4 and Level 5, you’re 

classifying a power vent that’s a power fan-assistedtype device or are you saying this is a vent damper? A 

power vent or a vent damper are two different things. 

So this is a fan-assisted, the power vent is a fanassisted-type device? 

 MR. von WENTZEL: It’s a power vent. It’s a 

fan-assisted device. 

 MR. KUSTERER: Okay. 

 MR. BROOKMAN: Thanks, Constantin. Okay. 

 MR. O'HARE: Okay. Here are the Engineering 

Analysis results for oil-fired storage water heaters at 

the representative-rated storage volume of 30 gallons 

and here are the Engineering Analysis results for 

electric storage water heaters at the representativerated storage volume of 50 gallons. 

 For this next part of the analysis, I’d like 

to go through the next six slides and then open the 

floor for discussion. 

 As part of the Engineering -- yes? 

 MR. BROOKMAN: Let’s pause for these, 44 and 

45, before we move on. Frank. 

 MR. STANONIK: Frank Stanonik with AHRI. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

90

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Harvey’s always forever pushing buttons. 

 (Laughter.) 

 MR. STANONIK: Frank Stanonik, AHRI. 

 MR. BROOKMAN: Let’s see if I can remember 

that one. 

 MR. STANONIK: On the Engineering Analysis 

for electric storage water heaters, I guess I’m curious 

as to the analysis shows some benefits, some value in 

going from three inches to four inches of foam 

insulation. 

 First of all, we all recognize that the 

insulation has diminishing returns as you increase in 

the thickness, but more importantly, certainly our 

experience and the manufacturers’ experience doing 

their own tests as well as the ones we do in our 

certification program is that I guess I’d be hardpressed to actually see real tests or have seen real 

tests where you went from three to four and you saw 

some change in the energy factor without other design 

changes to that water heater, in fact to a limit -- to 

eliminate many of the thermal short-circuits. 

 I just don’t think that adding one inch of 

foam and leaving everything else alone on that water 

heater a this level, three to four, is necessarily 

going to get you a point of energy factor in the real 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

91

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

world. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. In 

terms of these .95 water heaters, I know they’re out in 

the market because I have one and I was just wondering, 

do they all have four inches of foam insulation? 

 MR. O'HARE: We identified this -- Ashley? 

 MR. BROOKMAN: Ashley. 

 MS. ARMSTRONG: Frank, to your first comment 

about the one inch of insulation and its return, so the 

reason we put the technologies up here is not to 

describe the only design option that’s included to get 

you to the next level, but it’s so people have just the 

sense of what the costs include. 

 Now that being said, from our tear-down 

analysis, yes, we found water heaters that had a 

variety of these technologies and the efficiency level. 

 So that’s what you’re seeing there. That might not be 

the only difference, though, Frank, between like a .94 

and a .95, though, but the costs will reflect all the 

differences that we found because they’re going to be 

included. 

 MR. BROOKMAN: Thank you. Molly. No? Okay. 

 Andrew deLaski. 

 MR. deLASKI: Andrew deLaski, Appliance 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

92

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Standards Awareness Project. 

 Just to flag for the department a point that 

we’ll look to, perhaps elaborate in our written 

comments, that it strikes me that we may be missing 

some efficiency levels that should be looked at. So, 

for example, on the electric side, I think I heard 

someone commented earlier that the Energy Star level is 

2.0 as opposed to 2.2. So that is, there may be some 

level between the Max-Tech and Level 5 that would merit 

analysis. 

 If we’re pushing the technology to the max, 

we may be testing some of those limits that may not 

exist if we choose a level that, for instance, the 

Energy Star Program is designed to promote and the same 

on the condensing water heater side. You know, you’ve 

chosen a Max-Tech level for condensing that includes a 

variety of features that get you to that level. There 

may be an intermediate level. Harvey suggested .82 as 

perhaps being the Max-Tech level. Maybe .77 is a 

condensing that doesn’t go to the Max-Tech. So 

fleshing out these step change technologies may be a 

valuable way to flesh out the efficiency levels. 

 MR. O'HARE: And as far as supplying, you 

know, your written feedback to us, if you could 

identify those specific efficiency levels, that’s the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

93

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

type of feedback that DOE would definitely be looking 

for. 

 MR. deLASKI: Okay. Thank you. 

 MR. BROOKMAN: Molly, please. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. 

 I’m curious because not all of the 

technological differences are included in the table 

description, are they included somewhere in the 

Technical Support Documents so we can see exactly what 

all of the differences are between the different 

efficiency levels? 

 MR. BROOKMAN: Constantin. 

 MR. von WENTZEL: Constantin von Wentzel, 

Navigant Consulting. 

 I’m afraid we haven’t listed all of them 

because we had so many tear-downs and so many products. 

It really depends on the manufacturer and what path 

they chose. So it’s not a universal list, so to speak. 

It’s not like everybody uses the same approaches to 

reduce the energy consumption of their products. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. 

 I’m just concerned that the way the table is 

formatted, that it implies that the one inch of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

94

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

insulation is what gets you to that next level of 

efficiency, but it sounds like that might not actually 

be the case, that it might be other technologies that 

are making that possible. 

 MR. von WENTZEL: It is the main driver. 

Constantin von Wentzel. I apologize. That is the main 

driver. That’s why we listed it, but there might be 

other minor factors, depending on the manufacturer and 

the implementation that also work into that. 

 MR. BROOKMAN: If it was a significant 

factor, you would have listed it separately? 

 MR. von WENTZEL: Correct. 

 MR. BROOKMAN: Correct. Okay. Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. We will ask 

in our comments about the level chosen at EF 2.2 for 

the heat pump water heater. Again, the Energy Star 

Program shows a slightly lower level at 2.0 which I 

believe may allow evaporative -- resistance evaporators 

for the condensate and a lot of traditional analysis 

has been at the level of EF 2.5 and which is 

substantial additional savings. 

 So the actual level chosen, I hope, has been 

well treated by the materials I’ve not had time to 

finish reading. 

 MR. BROOKMAN: Okay. So we’re going to keep 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

95

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

moving here. 

 MR. O'HARE: Okay. As I said, I’d like to go 

through the next few slides and then open the floor for 

discussion. 

 As part of the Engineering Analysis, DOE also 

reviewed energy efficiency equations that define the 

existing Federal Energy Conservation Standards for gasfired and electric storage water heaters. 

 DOE looked at the slopes for these equations. 

In particular, DOE added this part of the analysis in 

response to a request from AHRI and several 

manufacturers and the current equations consider that 

the increase in standby losses as the tank volume 

increases -- considers that there’s a standby in the 

losses as tank volume increases because of the increase 

in the tank surface area. 

 The current energy efficiency equations show 

that as the rate of storage volume increases, the 

energy factor decreases. The energy efficiency 

equations allow DOE to expand the analysis on the 

representative products to the entire range of storage 

volumes within each product class. 

 As an example to facilitate this discussion, 

DOE plotted the models of the 2008 AHRI Directory for 

electric storage water heaters. The horizontal axis 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

96

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

here shows the rated volume and the vertical axis shows 

the energy factor for each of the models. 

 DOE also plotted each efficiency level being 

considered for the representative rated storage volume 

and extended those efficiency levels to the full range 

of storage volumes. DOE did this by maintaining the 

slopes specified by the current Federal Energy 

Conservation Standard for each of those efficiency 

levels and from this graph, DOE found that 

manufacturers do not currently offer models that would 

meet all of the efficiency levels that DOE is 

considering for the full range of storage volumes. 

 This data also reveals that the relationship 

between energy factor and rated storage volume may have 

changed as manufacturers have introduced new designs 

since the 2001 water heater rulemaking. 

 As one alternative for developing revised 

energy efficiency equations for electric storage water 

heaters, DOE reviewed current market data from the AHRI 

Directory as well as manufacturers’ product literature. 

DOE conducted a regression analysis on models across a 

range of efficiencies and rated storage volumes and the 

resulting slopes from that regression analysis were -- 

the slopes were less steep than that -- than the slope 

defined by the current Federal Energy Conservation 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

97

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Standard and on this example, the graph also shows the 

cap at 0.95 EF. 

 This is to address the thermodynamic 

characteristics of electric storage water heaters which 

may not be able to meet levels beyond 0.95 EF with 

traditional insulation improvements and we could also 

use this same approach for revised energy efficiency 

equations for gas-fired storage water heaters as shown 

in this example. 

 In order to further verify the relationship 

between energy factor and rated storage volume for the 

development of these alternative energy efficiency 

equations, DOE is currently testing and tearing down 

various models that are currently available and on the 

market from a variety of different manufacturers in 

order to identify those characteristics beyond those 

that are described in publicly-available market 

literature. 

 This analysis will also allow DOE to 

determine the changes that manufacturers employ for 

given model series and the changes that -- the 

manufacturers -- the changes that manufacturers employ 

as the rated volume for that given model series 

changes, and more information on this can be found in 

Section 15 of Chapter 5, the Engineering Analysis of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

98

1 the Preliminary Technical Support Document. 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 At this time, DOE requests comments as to the 

development of these alternative energy efficiency 

equations for gas-fired and electric storage water 

heaters and DOE’s approach to this, and Doug, if I 

could pass it back to you to facilitate the discussion. 

 MR. BROOKMAN: Thank you. Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. To 

go back to your Slide 48 or 49, whichever one, when you 

mean model series, and again I probably should have 

read that part of it, do you mean that within each 

manufacturer that you would go kind of, I’ll say, model 

by model within a size capacity and saying, okay, for 

model series A of manufacturer B, this is the 

efficiency level, then for model -- for 40-gallon model 

C of manufacturer B, it will be a separate -- because 

aren’t there like hundreds of model series by each 

manufacturer, dozens? 

 MR. O'HARE: Yes, we tried to go through all 

of those and look at groupings of series as well as 

groupings of similar technologies and tried to 

aggregate that all right here. 

 MR. BROOKMAN: The series correspond to the 

broader characteristics. 

 MR. ROSENSTOCK: So how many more ranges 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

99

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

could you possibly have under this approach in terms of 

-- you know, you have the category 40-gallon storage? 

How many model series could you have in that -- 

 MR. BROOKMAN: Ashley. 

 MS. ARMSTRONG: For the purposes of studying 

a standard, DOE is not proposing to do a different one 

for each series, right, just for the development of a 

new slope for the equation, we looked at each series 

independently and then aggregated it to find just one 

new slope across the range for the entire product 

class. 

 MR. BROOKMAN: Mike Rivest. 

 MR. RIVEST: Taking a step back, the intent 

of this analysis is to use real-world data to observe 

what is in fact the slope of current product based on 

variations in volume. 

 So the idea of looking within a 

manufacturer’s product series is just to try and to 

make sure that we don’t -- that we focus on the volume 

and try to eliminate other factors in the product 

design that could account for differences in 

efficiency. 

 So the goal here is simply to derive new 

equations based on empirical data as opposed to just 

relying on the old federal equation and doing our 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

100

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

analysis at one volume and then assuming that old 

slope. 

 MR. BROOKMAN: Okay. Thank you. That was 

helpful. Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. As I look 

at these two graphs, the effect would seem to be to 

somewhat relax the EF requirements for the smaller 

units and somewhat stiffen the requirements, make them 

more stringent for the larger units under a range of 

alternative EF default values for the 50. That seems 

to be the effect with the combination of capping in the 

lower slopes. 

 Is that what I should be seeing here or am I 

misreading? 

 MS. ARMSTRONG: This is Ashley. This is just 

one example of one of the things that caught our eye as 

this example, was that we needed to further investigate 

the changes that were being employed across like a 

model series because I’ll just say, for example, you 

can see on the graph right there that between 30 and 

80, there’s manufacturers offering, and I’m not sure 

off the top of my head if these are in the same model 

series, but there are manufacturers offering water 

heaters at the same volume and for some model series, 

we found that those water heaters say that they have 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

101

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the same improvements in efficiency in them. 

 So in order to capture the small changes that 

might be made, whether it be to the EF or whether it 

may be to the design, we decided to take it a step 

further and test and tear down a variety of different 

products in the marketplace so we could actually 

capture the changes in EF and also decide that if the 

exact improvements were being made across the board 

which would be able to group them in the same model 

series. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. I think 

partially to answer Harvey’s question, first of all, as 

mentioned here, this was something we requested the 

department to look at and rather than -- I would ask 

you to, rather than think that perhaps it’s a question 

of relaxing for the smaller volumes, I think what we 

saw was in fact for the larger volume products, there 

may be more options for saving some more energy as 

opposed to what you might be able to do with the 40-

gallon gas or 50-gallon electric, and as Mike said, 

Mike Rivest said, if you just look at what is out there 

on the market and we published that information in our 

directory, in this case we’re perhaps suggesting that 

with some alteration in that slope, perhaps there is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

102

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

some additional energy that can be saved that you 

wouldn’t see if you only looked at the baseline model. 

That’s really the point of this. 

 I would just put one other thing out there, 

well, because we discussed it a little bit, is that 

again in the interests of trying to, you know, save 

energy that we can at reasonable costs and so on, you 

know, another option that may come out of this, as we 

develop this whole issue, is, you know, maybe there’s 

two equations. At a certain point you just change the 

equation for a size of products. 

 MR. BROOKMAN: Ashley. 

 MS. ARMSTRONG: Yeah. Just to follow-up, 

Frank. This is Ashley. Just a follow-up with a 

question back to you regarding changing the equations 

and by that, do you mean maybe a flat line up to a 

certain volume and then a decreasing slope line or do 

you mean two separate slopes or the possibility of 

both? 

 MR. STANONIK: Well, a flat line -- Frank 

Stanonik, AHRI. A flat line is a slope. 

 MS. ARMSTRONG: Well, okay. 

 MR. STANONIK: At this point, Ashley, you 

know, I’m not going to presume what the answer would 

be. I’m just saying it may be two different equations. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

103

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. ARMSTRONG: Sure. 

 MR. BROOKMAN: Okay. Thank you. Molly. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. 

 This is a question for both the manufacturers 

and possibly for Ashley. What do you think is 

accounting for this increase in efficiency for the 

larger volume models? Primarily, why are we seeing 

that these are getting more efficient while the smaller 

volumes aren’t? 

 MR. BROOKMAN: Since you’re there, Ashley, 

you want to start? Oh, Frank’s ready. Frank, go 

ahead. 

 MR. STANONIK: Well, I mean -- Frank 

Stanonik, AHRI. 

 I think it’s a very basic example of, let’s 

say, theoretical analysis meets reality of 

manufacturing products and, in fact, you know, when 

people manufacture products, they put the hardware 

together and stuff. You don’t necessarily see this 

nice smooth incremental change when you go from -- in 

fact, you know, you’re going to look at the logic. 

 Why are the 30-, 40-, 50-, 75-gallon storage 

water heaters? Who knows why they evolved to that, but 

that’s what the market wanted, but as you build the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

104

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

product and you introduce those energy-conserving 

measures, you know, well, in some cases, they do better 

than what the analysis says when you get to a larger 

product. Once you’ve made that investment, you just 

end up with a more efficient than the smooth continuum. 

You go up every size and you get two more points or 

whatever. You know, it’s reality meeting the theory. 

 MR. BROOKMAN: Joe. 

 MR. BOROS: Joe Boros with Rheem 

Manufacturing Company. 

 Frank, I should also add that size is a real 

constraint. There are certain doorways and attic 

installations that physically will not be able to 

install water heaters and so I think as we look at the 

equations and the slope of the line, there are clear 

size constraints that must be considered when we’re 

talking about replacement of water heaters. 

 MR. BROOKMAN: Thank you. So the 

department’s still seeking comments. Constantin, you 

want to add in here or you’re just standing? Sorry. 

Just letting you back to your seat. Frank, please. 

 MR. STANONIK: Doug, I’m sorry, but I have 

one -- Frank Stanonik, AHRI. 

 I do have one question on, I guess it is, 

Slide 50. There is a statement, “DOE is conducting 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

105

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

testing to confirm and validate energy factors,” and 

then underneath it says, “conducting testing to verify 

EFs beyond the required two significant figures.” Why? 

What do you hope to gain from that? 

 MR. BROOKMAN: Ashley. 

 MS. ARMSTRONG: It gets to my point earlier. 

Matt, if you’d show that graph for the .950 across that 

board? 

 Frank, that kind of raised some questions in 

our eyes because we found a couple model series, and 

you and I have talked about this before, where for like 

between 30 and 80, you’ll have a .95 across the board 

and the manufacturer will be like, well, it might be 

two inches of insulation. Well, doesn’t seem quite 

right and it might be that it’s attributable, so it 

might be .952, .954, .958, whatever, or obviously .958, 

but -- and then we further take them apart to make sure 

that, you know, two inches is across the board or maybe 

it’s .875, maybe it’s two and a quarter, depending on 

the range size. So we can vary that slope just to make 

sure because with the model series you would get a 

straight line out of that across the board. 

 MR. STANONIK: Frank Stanonik, AHRI. And, 

Ashley, I assume you’ve seen some of the work that Bill 

did about the inherent accuracy of the -- 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

106

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. ARMSTRONG: Yes, I know -- 

 MR. STANONIK: Okay. 

 MS. ARMSTRONG: -- where you’re going with 

this. 

 MR. STANONIK: All right. I’m not going any 

further. 

 MS. ARMSTRONG: I knew where you were going, 

but we’re trying to figure out what distinguishes, you 

know, a 30-gallon with a .95 and, say, a 60 or 70 with 

a .95. 

 MR. BROOKMAN: Okay. So let me refer you 

back to the slide that asks for comments on validating 

the alternative energy efficiency equations with teardown analysis. Should there be additional comments on 

this? Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. Given the 

points that have just been made about the third 

decimal, I think it’s a very interesting research area, 

but I’ve looked at a little bit of the literature 

myself on the inherent accuracy and I hope there is no 

consideration being given to thinking that a third 

decimal would have any consumer value at all. 

 MS. ARMSTRONG: No. 

 DR. SACHS: Thank you. 

 MR. BROOKMAN: Okay. Thank you. So for the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

107

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

record, Ashley says no. 

 Additional comments on this series of slides 

because I think we’re due for a break now. Let’s take 

a break and when we return, we’ll take up Manufacturing 

Impact -- I guess we have -- we’re not quite through 

with Engineering Analysis, are we? 

 MR. O'HARE: No, we’re not quite through. 

 MR. BROOKMAN: How much more? 

 MR. O'HARE: We got about, I think, 10 more 

slides, maybe. 

 MR. BROOKMAN: Let’s take a break. Folks, 

it’s now 10 minutes after 11. We will resume at 11:25. 

Please wear your badges inside the building. 

 (Recess.) 

 MR. BROOKMAN: Okay. Let’s resume. Okay. 

We are continuing on with the Engineering Analysis 

segment. Matthew. 

 MR. O'HARE: Okay. This is Matt O’Hare 

again. These are the Engineering Analysis results for 

instantaneous gas-fired water heaters at the 

representative input capacity of 199 KBTUs per hour. 

 Okay. Then during the Framework, DOE 

received comments regarding safety concerns for nearcondensing instantaneous gas-fired water heaters. DOE 

considered both condensing and near-condensing 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

108

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

efficiency levels because DOE identified products that 

are currently available and on the market and at this 

time, DOE requests comments as to how manufacturers 

would change current designs to mitigate the corrosive 

effects of condensation that may be present in some 

installations and how manufacturers might alter their 

designs and practices if a potential energy 

conservation standard required all installations to 

operate at a near-condensing efficiency level. 

 Doug, if I could pass it back to you for 

discussion? 

 MR. BROOKMAN: Please. So comments. You see 

the specific query there from the department. Comments 

on safety issues, instantaneous gas-fired water heater 

operating at near-condensing efficiency levels. We’ve 

heard from this in the past. 

 Let me see. Is it John? 

 MR. CONFREY: John Confrey from Noritz North 

America Corporation. 

 MR. BROOKMAN: Thank you. 

 MR. CONFREY: Well, you know, I’m only 

speaking for us as a company, -- 

 MR. BROOKMAN: Sure. 

 MR. CONFREY: -- but it’s pretty standard, 

you know, throughout the market that we deal with the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

109

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

acidic condensation with the stainless steel heat 

exchanger specifically for our condensing product which 

runs about .92. 

 We have a primary copper heat exchanger and a 

secondary stainless steel heat exchanger. 

 I’ve heard some companies also talk about 

using titanium in the secondary heat exchangers. I 

don’t know if that’s realistic on a cost basis, but 

I’ve heard talk about that. 

 So in the 83-84-85 range, you know, using the 

phrase “near-condensing” is actually maybe a little bit 

of a misnomer because condensing actually means fully 

condensing. So near-condensing actually means near 

fully condensing. So it is quite a bit of condensation 

that may happen in that range. 

 So we would want to change our copper heat 

exchanger in our standard product, most likely the two 

stainless steel or something better, to deal with that 

acidic condensate. 

 MR. BROOKMAN: At those lower ranges? 

 MR. CONFREY: It would certainly be a 

consideration, certainly be a consideration. We have 

some product on the LP side that bumps into that range, 

but if the minimum was going to be in that range, we 

definitely would be leaning towards a stainless steel. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

110

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Okay. Is that nationwide? 

 MR. CONFREY: Yeah. I mean, for cost 

consideration we would want to keep the standard 

product nationwide as much as possible. 

 MR. BROOKMAN: Yes, Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Just 

building on that a little bit, I think, as John raised 

a good point, I mean, again it’s fine in this kind of 

analysis to talk about near-condensing, but you have to 

keep in mind that this -- the manufacturers, you know, 

want to build a water heater they can sell anywhere in 

the United States and in the DOE Test Procedures, the 

incoming cold water is 57 -- 58, 57 degrees, all right, 

and one thing you can be sure of is that there are 

parts of the United States where the incoming cold 

water is not that warm and so while in this, you know, 

analysis you may see precondensing, as John said, from 

the manufacturer’s standpoint, and keeping in mind that 

safety always comes first, you’re really talking about 

probably forcing them to make a product that they have 

to design that soon will be fully condensing, that 

you’re asking them to walk up to this edge and trust 

both their skill in manufacturing and skill in 

installation and the hundred percent knowledge of reallife hot water use in the United States and then assume 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

111

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that nothing bad will happen. 

 I’m not going to roll those dice. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. Frank, 

with his great experience, always see the glass as 

being about a quarter full and in my naiveté, I think 

it’s about three quarters, but what I heard from John 

and I’m really asking this as a sanity check is that 

the so-called near-condensing levels he is required to 

engineer with a heat exchanger that resists condensate. 

 On the other hand, what I’m not hearing is 

any assertion that for the never steady state operation 

of an instant water heater, that he has to design a 

condensate collection and disposition system, as well. 

 So that we have some of the costs of the 

condensing unit, but we probably are not going to be 

involved in condensate collection, is that appropriate? 

 MR. CONFREY: Well, that assumes the 

contractor is going to install the product properly. 

We now, even with our 82-83 energy factor products, ask 

that a condensate collector be installed in the vent 

pipe. 

 However, we know very well that, you know, in 

a large percentage of the installations that doesn’t 

happen. At the higher energy factor levels, it becomes 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

112

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

even more dangerous. So we would have to have the 

stainless steel heat exchanger and our condensing 

product has a stainless steel heat exchanger with the 

condensate collector inside it. So we would likely go 

with that or a similar type. 

 MR. BROOKMAN: George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 In my combat dictionary, near is only good 

for horseshoes and hand grenades. So I’m not quite 

sure what near-condensing is. 

 However, in the Engineering Analysis, my 

question to DOE is not only investigating the product 

but also investigating the venting system, and I think 

that is the major issue for safety, would be the 

venting issues, that were the venting issues taken into 

to consideration during the analysis? 

 Thank you. 

 MR. BROOKMAN: Yes, Alex. 

 DR. LEKOV: Alex Lekov, Lawrence Berkeley 

National Laboratory. 

 I’ll have more details during the explanation 

of the installation when we did the LCC Analysis, but 

the answer to George’s question is yes, at those 

efficiency levels, DOE accounts for venting system in 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

113

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the stainless steel category treatment. 

 MR. KUSTERER: Thank you. 

 MR. BROOKMAN: Let me ask the consulting 

team. Did you define near-condensing anywhere? Is 

that a standard definition in some -- 

 MS. ARMSTRONG: This is Ashley. 83-84-85 is 

what we’re talking about. 

 MR. BROOKMAN: Okay. 83-84-85 range. Okay. 

John. 

 MR. CONFREY: John Confrey, Noritz North 

America Corporation. 

 I think, in general, the rule of thumb is 83 

is the borderline between condensing and noncondensing. That’s not necessarily the design. I mean 

that’s not the design rule but that’s the rule of 

thumb. 

 MR. BROOKMAN: Okay. So other comments on 

this series here? 

 (No response.) 

 MR. BROOKMAN: Okay. 

 MR. O'HARE: Okay. Now, continuing with the 

remainder of the Engineering Analysis results, I’d like 

to proceed through the next few slides and additional 

detail again can be found in Chapter 5 of the 

Preliminary Technical Support Document. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

114

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 These are the Engineering Analysis results 

for gas wall fan-type direct heating equipment at the 

representative input capacity range of over 42,000 BTUs 

per hour, and here’s the Engineering Analysis results 

for gas wall gravity-type direct heating equipment at 

the representative input capacity range of over 27,000 

and up to 46,000 BTUs per hour. 

 The Engineering Analysis results for gas 

floor-type direct heating equipment at the 

representative input capacity range of over 37,000 BTUs 

per hour. 

 Lastly, for direct heating equipment the gas 

room-type direct heating equipment at the 

representative input capacity range of over 27,000 and 

up to 46,000 BTUs per hour. 

 If you want to stop for any comments, Doug? 

 MR. BROOKMAN: Let’s stop here, sure, and see 

if there’s any comments on these tables. Frank 

Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. If you 

go back to, I guess it’s Slide 55, the gravity wall 

furnace, this -- specifically, I guess the issue I was 

pointing out, if you look at efficiency levels 4 and 5, 

4 and Max-Tech, you essentially have brought an 

external electric supply to a gravity-type furnace and 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

115

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

in our assessment, you’ve really -- you’ve redefined 

it. I mean, it’s no longer a gravity wall furnace. 

You might as well just call it a fan-type wall furnace 

because with bringing that electric supply, again the 

practical result will be that it’s going to jump 

categories and just be a fan-type wall furnace. 

 So I guess to be clear on this, we really 

don’t think efficiency levels 4 and 5 for this product 

class are realistic. 

 MR. BROOKMAN: Okay. Thank you. Harvey 

Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. Again a 

question that will reveal my lack of homework. 

 On these product classes, what are we 

assuming for the supply air, room or outside, and if 

it’s room, did we consider the outdoor supply air 

option with these installation implications? 

 MR. O'HARE: As far as the question regarding 

if this is assuming indoor air used for combustion or 

outdoor air, is the assumption that we’re using indoor 

for combustion that’s being exhausted out of the room? 

Yeah. They’re all vented. 

 DR. SACHS: So we’re -- Harvey Sachs again. 

We’re assuming for all of these that we are looking at 

indoor air exhausted outdoors, but we did not look at 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

116

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the technology option for the wall-hung equipment where 

there’s no duct work involved of using outdoor supply 

air? 

 MR. O'HARE: Well, at these efficiency 

levels, again our efficiency level approach, we 

identified the most prevalent efficiency levels and 

their associated manufacturer production costs. So 

these technologies that we have identified here do not 

directly -- as far as the incremental increase in the 

manufacturer production costs, those don’t tie directly 

to any specific of the technologies that we identified 

in the manufacturer technology assessment, the Market 

and Technology Assessment. 

 DR. SACHS: Harvey Sachs, ACEEE. Did you 

consider at any time the costs of outdoor supply air 

across this range of technology of levels? 

 MR. BROOKMAN: Alex, please. 

 DR. LEKOV: Alex Lekov, Lawrence Berkeley 

National Laboratory. 

 I believe Harvey’s question, it essentially 

relates to the installation of the equipment, is this 

correct? 

 DR. SACHS: Harvey Sachs. It has some 

implications for installation. It has some 

implications for manufacturing design. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

117

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Would you restate the 

question, Harvey? 

 DR. SACHS: Harvey Sachs, ACEEE. In the 

department’s Technical Analysis -- analyses for the 

Technical Support Document, did you consider for wallhung or wall-mounted equipment the use of outdoor air 

supply as opposed to indoor air? 

 MR. BROOKMAN: Alex. 

 DR. LEKOV: The efficiency aspect of this is 

addressed by the Test Procedure. The Test Procedure 

tests this equipment under certain temperature 

settings. There are installation parts which you 

referred to bringing outdoor air through certain vents 

or taking air from the conditioned space. Basically, 

it’s addressed in the analysis. 

 We are applying a set of false venting 

arrangements similar to the ones that were applying in 

the furnace rulemaking where we utilized the so-called 

furnace model. 

 MR. BROOKMAN: Frank, follow-up there. Go 

ahead. 

 MR. STANONIK: Frank Stanonik with AHRI. I 

think, first of all, to recognize that this is an AFUE 

Test Procedure for this type of equipment, in many ways 

similar to the AFUE Test Procedure that you would want 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

118

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

on a residential boiler, and I say boiler because of 

the indoor procedure, and to some -- because of that, 

to some degree, the -- let’s call them the losses 

associated with using room air for combustion and that 

are not specifically captured in the test procedure but 

there is some measurement -- not measurement but some 

attribution of that and that, similarly and perhaps 

more importantly, that those test procedures -- again, 

that’s the tool we have to measure, but that AFUE Test 

Procedure really doesn’t, the best I can recall, 

doesn’t provide any significant boost in your 

efficiency because you have a direct vent product. 

 In terms of certainly the AFUE procedure for 

things like boilers and direct heating equipment, the 

fact that you might have a direct vent product, I’m not 

aware that the Test Procedures provides a significant 

accounting of that. 

 DR. SACHS: Thank you. 

 MR. BROOKMAN: Thank you. So if I’m not 

mistaken, we’re up to Slide 57 and we’re about to 

proceed. George. 

 MR. KUSTERER: One quick comment. 

 MR. BROOKMAN: Yes. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

119

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 Just to kind of add a little credence to -- 

not that he needs it -- to Mr. Stanonik’s comment with 

regard to gas wall gravity-type, you’ve got Max-Techinduced draft. That no longer makes that a gravitytype heater. 

 Thank you. 

 MR. BROOKMAN: Thank you, thank you. 

 MR. O'HARE: Okay. We’re on 58 now. This is 

Matt O’Hare. 

 Engineering Analysis results for gas-fired 

pool heaters at the representative input capacity of 

250,000 BTUs per hour and please note that for the 

baseline levels 1, 2 and 3, the numbers on the left, 

for the manufacturer production costs numbers on the 

left are for standing pilot models, and the numbers on 

the right are for electronic ignition models, and just 

as with the instantaneous gas-fired water heaters 

during the Framework, DOE received comments regarding 

safety concerns for near-condensing gas-fired pool 

heaters. 

 DOE included both condensing and nearcondensing efficiency levels because DOE identified 

products at these efficiency levels that are currently 

available and on the market and DOE requests comments 

as to how manufacturers would change current designs to 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

120

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

mitigate the corrosive effects of condensation that may 

be present in some installations and how manufacturers 

might alter their designs and practices if a potential 

energy conservation standard required all installations 

to operate at a near-condensing efficiency level. 

 Doug, if I could send it back to you? 

 MR. BROOKMAN: So comments? John. Pardon 

me. Robert, Robert. 

 MR. GLASS: Robert Glass with Raypak. Got a 

couple of questions on your Slide 58. 

 Number 1. You show between your pilot and 

electronic ignition, you’re showing a $3 cost 

difference between that. That’s way understated. I 

mean, when you have an electronic ignition control, you 

don’t get it for $3 and so recognizing it is the sum of 

the components that are there but that’s way 

understated through the analysis. 

 The other question that I have is as far as 

the Efficiency Level 6, you indicate that it’s a sealed 

combustion condensing system and yet when you look at 

your costs between 7 and 8 that is condensing and 

condensing, the costs there are just barely above the 

Category 5 that’s there. 

 If a product is condensing, it’s condensing 

and as a result, the materials of the design have to be 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

121

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

suitable for the condensing application. So I think 

the costs there are severely understated, as well. 

 MR. BROOKMAN: Thank you. Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Just 

adding to something Robert just said, this level about 

sealed combustion condensing and the corresponding 

efficiency level, I think again in terms of the tools 

we have available to measure that if that was simply a 

condensing pool heater that vented and used the indoor 

air for combustion, you’d still see the same efficiency 

level. So I’m not sure how sealed combustion becomes 

part of the factor of obtaining that efficiency level. 

 I mean, it might be done simply because of 

the convenience, if you will, but whether the air is 

coming from the indoor or outdoor to supply the 

combustion doesn’t change in this case the resulting 

thermal efficiency measure. 

 MR. BROOKMAN: Constantin. 

 MR. von WENTZEL: Constantin von Wentzel, 

Navigant Consulting. 

 To address both comments, certainly we value 

feedback from manufacturers regarding the costs they 

encounter with the components they use. We noted 

differences in prices between the gas valves, for 

instance, whether they’re a milivolt or a 120 or 24 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

122

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

VAC-operated model versus the other components that are 

required and that was the cost difference that we came 

up with at the time and we solicited feedback from all 

manufacturers that got back to us. So that’s to 

address the first comment. 

 The second comment regarding sealed 

combustion, that’s just to illustrate the construction 

of the heat exchanger and the whole combustion system. 

It’s not to draw a difference between indoor versus 

outdoor air supply. It really has more to do with how 

the pool heater’s constructed. 

 MR. BROOKMAN: Yes, Robert. 

 MR. GLASS: Robert Glass, Raypak. One of the 

things that you may find from the standpoint of the 

pricing of the gas valves as far as the milivolt versus 

the DSI is it’s purely a supply issue. There are very 

few milivolt valves that are used and hence the 

manufacturers charge a whole lot more for them. 

 So the volume of the product that’s used is 

much, much less on the milivolt side than it is on the 

electronic ignition and that’s the difference in your 

cost of just the gas valves themselves. 

 I also did want to mention something as far 

as the 86 percent efficiency level that is out there. 

 The one thing that is unique about pool 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

123

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

heaters than most other gas appliances is that a large 

number of them are installed outdoors and there are 

some manufacturers that have stated efficiencies of 86 

percent. That may work on a design that is installed 

for outdoors and has no venting actually attached to it 

because the vent is integral to the unit. 

 So they’re actually able to obtain slightly 

higher thermal efficiencies because there is no venting 

attached to it, but once you attach vent, you have that 

same product that’s installed indoors, you can no 

longer have that 86 percent efficient unit because then 

you will condense in the unit. That condensate will go 

back into the unit and then you’ll have damage to it. 

 So there’s something that’s unique about the 

pool heater design that the same unit can be installed 

indoors or outdoors and I think DOE needs to be aware 

of the efficiency limitations, very similar to the 

boiler rulemaking, from the standpoint of staying away 

from the condensing. 

 Eighty-four percent is about as high as you 

can go with the pool heater to not have condensaterelated issues. 

 MR. BROOKMAN: Harvey. 

 DR. SACHS: Harvey Sachs, ACEEE. We’ve seen 

several times in the last few minutes the recentlyEE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

124

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

concluded boiler and furnace standard evoked and 

there’s something very important there that I would 

like to remind all of us about, which was that for 

residential boilers, there was consensus agreement 

proposed by the manufacturers and the environmental 

advocates which used a performance standard, an AFUE, 

coupled with a couple of prescriptive measures in terms 

of controls. 

 This was rejected by the prior 

administration. Frank has referred to a couple of 

things that are efficiency options that may not be 

fully reflected in the Test Procedure as we know it but 

which would be amenable to inclusion as prescriptive 

features, if that were a joint desire or a finding by 

the department of cost effectiveness. 

 So we would hope that the new Administration, 

with its aggressive goals, is going to be a little bit 

more open to this approach of some prescriptive plus 

performance standards and would be looking for products 

for which that might offer the opportunity for win-win. 

 MR. BROOKMAN: Okay. Thank you. 

 MR. STAS: Eric Stas, DOE. I just want to 

clarify for the record that DOE was under Consent 

Decree when the proposal Harvey’s talking about came 

in. We approached the court with that and we were not 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

125

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

given the leeway at that time to do an SNOPR. We went 

with the final rule. 

 MR. BROOKMAN: Thank you for that 

clarification. Okay. 

 So other comments on this gas-fired pool 

heaters and other issues related because we’re about to 

conclude Engineering Analysis? 

 (No response.) 

 MR. BROOKMAN: Keep going. 

 MR. O'HARE: So 60? 

 MR. BROOKMAN: Yep. 

 MR. O'HARE: So the last thing I’d like to 

present is the methodology DOE used to translate 

manufacturer production costs to manufacturer selling 

prices. 

 The manufacturer selling price is the price 

at which the manufacturers can recover all production 

and non-production costs and earn a profit. Nonproduction costs can include selling, general and 

administrative costs, for example. 

 DOE calculated the manufacturer’s selling 

price by multiplying the manufacturer production costs 

by the calculated manufacturer markups. DOE determined 

the manufacturer markups by reviewing 10-K reports 

filed by publicly-traded heating products companies as 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

126

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

well as by talking with the manufacturers during the 

engineering interviews. 

 These manufacturer’s selling prices are used 

in the downstream analysis and the manufacturer markups 

are shown here on the screen, and then that concludes 

the presentation for the Engineering Analysis. 

 Doug, if I could send it back to you, if 

there are any remaining questions or comments for the 

Market and Technology Assessment, the Screening 

Analysis, or the Engineering Analysis? 

 MR. BROOKMAN: Okay. Thank you. 

 MR. O'HARE: Thank you. 

 MR. BROOKMAN: So there are all kinds of -- 

lots of content here in the Engineering Analysis and we 

haven’t heard comment yet on the manufacturing selling 

prices and the potential markups. 

 So let’s hear about any of those at this 

time. 

 (No response.) 

 MR. BROOKMAN: No additional comments, no 

confirmation or refutation on these markups? I knew I 

could get somebody. Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. This is 

obviously one particular issue where, as a trade 

association, we are not going to be able to give 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

127

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

detailed specific answers, but I can tell you that in 

some of the discussions we’ve had so far, in certain, 

I’ll say, subcategories, there is some concern that the 

markup has been miscalculated or misrepresented, and 

hopefully between the written comments we submit and 

some follow-up, possibly some private conversations 

with some of the manufacturers, we can perhaps finetune some of these. 

 But we thought in some cases it was -- missed 

the mark. 

 MR. BROOKMAN: Thank you. The department 

would welcome the specifics there. 

 Okay. Let’s proceed then with Manufacturer 

Impact Analysis. 

 MS. ARMSTRONG: Okay. My name is Ashley, and 

the next thing I’m going to speak about is the 

Preliminary Manufacturer and Engineering Interview that 

we conducted as part of these Preliminary Analyses. 

 DOE conducted onsite and telephone interviews 

with manufacturers of the three industries. Some of 

the topics that we discussed are the Engineering 

Analysis development and results, some of the key 

issues, the current market conditions, along with the 

others represented on the slide. 

 So to go kind of quickly just to try to cut 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

128

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

some time here, but for the key issues identified by 

some of the residential water heater manufacturers 

include the Energy Star Program and setting any 

potential standard with enough room so that you still 

have an Energy Star Program at the end of the day, any 

increases in installation costs, whether that be 

attributed to electrical connections, vent 

configurations, these increases in cost may decrease 

their market share, and further calls for storage water 

heaters which are instantaneous. 

 The increases in shipping costs, so as their 

products grow larger, they can get less in an actual 

freight container and how that will affect their 

prices, and will they be able to further pass that on 

to the consumer? Will the consumer absorb that 

additional cost or will the manufacturers have to eat a 

portion of it? Then the safety concerns for 

instantaneous which you’ve already gone through. Nearcondensing levels. 

 The next one is fuel switching and for fuel 

switching, that means setting a level, setting gas 

storage water heaters and electric storage water 

heaters at levels that they don’t distort the current 

market. So, in other words, setting, just as an 

example, heat pump water heaters for electric while you 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

129

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

allow gas water heaters to be unchanged and then how 

will that affect the market and what portion of 

consumers might switch on the basis of increases in the 

cost alone? 

 The next one is equipment switching and 

that’s just within the gas market. So causing the gas 

storage water heaters to switch market share to 

instantaneous water heaters and vice versa, depending 

on first cost effects as to where the levels fall out. 

 For direct heating equipment, there were 

increases -- 

 MR. BROOKMAN: Go ahead. Steve Rosenstock. 

 MR. ROSENSTOCK: If possible, can we, before 

we get to direct heating, can we just talk about water 

heating? 

 MS. ARMSTRONG: Yeah. Go ahead. 

 MR. BROOKMAN: We are just a tab -- 

 MS. ARMSTRONG: You can stop me at any time. 

 MR. BROOKMAN: We are just a tad behind. As 

we’re going through, if you have questions, let’s 

address them, unless there’s a block we can do all in 

one chunk, but go ahead, Steve. 

 MR. ROSENSTOCK: Okay. Just going back real 

quick, just a couple comments on Slide 64 and then 

Slide 66. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

130

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. ARMSTRONG: Sure. 

 MR. ROSENSTOCK: You mentioned the Energy 

Star Program, and we’re going to have some written 

comments about it, but we think there’s some issues 

with the way -- what happened with the Energy Star 

requirements for residential water heaters. 

 I think the DOE and the consultant should 

review all the testimony that happened before that 

standard was announced. I think there’s still a lot of 

issues with what happened as a result and the levels 

that were set. 

 Slide 66, in terms of I think you’ve 

characterized it correctly, but again you said it was 

just for the gas side. It’s not necessarily just for 

the gas side. There are instantaneous electric water 

heaters out there where that could be -- that could 

happen, as well. 

 Thank you. 

 MS. ARMSTRONG: Great. I’m just summarizing 

the feedback that we got from manufacturers and since 

electric instantaneous water heaters were included. 

 MR. BROOKMAN: George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. I was going to say Harvey Sachs, ACEEE, but 

that’s okay. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

131

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 With regard to the Energy Star Program, it 

definitely was extremely unfair to the oil-fired water 

heater industry. It totally excluded us which I think 

was irresponsible. 

 The second item is because there are quite a 

few oil-fired pieces of equipment out there, they’re 

extremely efficient, and secondly, with regard to 

equipment switching, again oil was excluded. There is 

a tremendous amount of oil switching obviously due to 

the cost of the product, the way it skyrocketed, and 

the different types of manufacturing. So there is a 

lot of fuel switching which I don’t think DOE took into 

consideration. 

 Thank you. 

 MR. BROOKMAN: Thank you. 

 MS. ARMSTRONG: So the next one I’m going to 

talk about are the direct heating equipment preliminary 

manufacturer interviews. 

 This included increases in installation 

costs, similar to what I just spoke about, regarding 

electrical connections, regarding the power vents, et. 

cetera, condensate removal, and how that will increase 

the installation costs to the consumers and if they 

will -- it may further decrease their market share as a 

result of consumers purchasing alternative equipment, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

132

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

and then another thing manufacturers noted was the 

effect of derating their products. So instead of -- 

because these are space-constrained products, some of 

them are recessed into the wall and they have to fit 

into that space, possibly derating such that it would 

adversely impact the product utility. 

 I’m going to keep going to pool heater key 

issues, if there’s no others. 

 Similar story here. Increases in 

installation costs with respect to the venting and the 

electrical connections, depending at certain efficiency 

levels, requiring those. The product price increases 

resulting in a declining market. Not everyone has to 

purchase a pool heater for their home and any increases 

in equipment costs, the worry that this might further 

decrease their shipment levels and decrease their 

market share, and lastly, which we’ve already been 

over, the safety issues at the near-condensing levels 

and what manufacturers might have to do to accommodate 

designs at those levels or to change the designs for 

all of the installations at those levels. 

 MR. BROOKMAN: So let’s pause for all of 

those preceding slides, take -- now that you’ve had a 

chance to catch your breath, unlike Ashley. Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. I guess 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

133

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

this is a good place to just put this reminder out, but 

in the direct heating equipment key issues, as I 

mentioned earlier today, we certainly think that one of 

the things that needs to be looked at is the ability to 

continue to provide direct heating equipment that can 

be operated when the power goes out. There is a 

segment of that market that’s the product people have 

and they have recognized that it has that added feature 

that when for whatever reason they lose their electric 

power, they can still get some heat into the house and, 

admittedly, I think if you look at -- you know, we’re 

not talking about necessarily houses that have been 

added to the stock, housing stock in the last five or 

10 years. These tend to be older, smaller homes and 

perhaps even a little different socioeconomic situation 

there. 

 MR. BROOKMAN: Thank you. Yes, Robert. 

 MR. GLASS: Robert Glass with Raypak. One of 

the things that you had just mentioned concerning the 

increase in efficiencies and things was affect, that it 

would affect the market share. I think that’s 

incorrect. 

 I think it would affect the market size 

because it’s an opportunity. Somebody does not have to 

buy a pool heater in order to do it. So if the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

134

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

efficiency goes up and the cost goes up, it’s going to 

-- there’s going to be less people buying them, so 

actually it’s market size, not market share. 

 MS. ARMSTRONG: Right. I was referring to 

total shipments, so a decrease in total shipments. 

 MR. BROOKMAN: Thank you. Okay. Additional 

comments? Yes, Frank. 

 MR. STANONIK: Sorry, Doug. Frank Stanonik, 

AHRI, and this one -- again, I’m not sure if this is 

the place and in this case, I’m bringing this up 

without having really talked to any of the involved 

manufacturers. 

 But it just struck me that at least in 

Southern California, the manufacturers of gas-fired 

tankless water heaters come, I believe it’s 2012, 2010, 

2012, will have to provide -- will have to comply with 

a NOX emission limit that heretofore they hadn’t been 

required to comply with and I don’t have any 

information how drastic redesign or changes that will 

require, and I don’t, you know, have any sense they 

will be necessarily as severe as what happened with the 

storage water heater industry, but that is a change, 

that is a good market for them, and that is an impact 

that they, I would guess at this point, are already 

trying to deal with, but I think it may have to be 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

135

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

rolled into this impact -- this analysis. 

 MS. ARMSTRONG: That will be considered as 

part of the cumulative regulatory burden and the MIA 

which we’ll speak about this afternoon. 

 MR. STANONIK: Okay. All right. 

 MR. BROOKMAN: Other comments on these 

features in the Preliminary Manufacturer Impact 

Analysis? 

 (No response.) 

 MR. BROOKMAN: Okay. So -- 

 MS. ARMSTRONG: Great. I’m going to pass the 

presentation to Alex to discuss Markups, Energy Use and 

Life-Cycle Cost. 

14 Markups to Determine Product Price Analysis, Energy Use 

15 Characterization, and Life-Cycle Cost Analysis

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: Hello, everyone. My name is Alex 

Lekov from Lawrence Berkeley National Laboratory, and 

I’ll be presenting details on the Life-Cycle Cost 

Analysis that DOE performed for the three products 

included in this rulemaking. 

 As shown under the slide here, I’ll be 

addressing at this point the three analyses circled in 

red, Markups for Product Price Determination, Energy 

Use Characterization, and Life-Cycle Cost and Payback 

Analysis. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

136

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 The purpose of the Markups for Product Price 

Determination is to characterize the channels for how 

the products are distributed from the manufacturer to 

the consumer. 

 Once the distribution channels are 

determined, the next step is to determine the prices 

paid by the consumer based on the manufacturer’s 

selling price. 

 The Energy Use Characterization allow to 

develop the energy consumption savings for selected 

product efficiency levels. 

 Overall, the Life-Cycle Cost Analysis and the 

Payback Period Analysis are to develop the consumer 

life-cycle cost savings and payback for higherefficiency standards. 

 This chart is the key for the entire 

presentation. In fact, throughout the presentation, 

I’ll focus on each of the components you see on this 

chart. The upper essentially outlines the entire flow 

of the LCC and Payback Period Analysis. The middle 

part of the chart shows the analysis to develop the 

equipment install cost. The lower part of the chart 

again includes an analysis to develop the operating 

expenses. Both of those are used as the final inputs 

to the Payback Period and Life-Cycle Cost Analysis. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

137

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 In terms of total installed costs, the major 

inputs are the baseline and standard level manufacturer 

costs and essentially selling price coming from the 

Engineering Analysis, the markup values which will be 

explained a little bit later on combined with the sales 

taxes to arrive at the consumer price. At that point, 

the consumer price is combined with the installation 

cost to derive the total installed cost. 

 As I said, the lower part of the chart shows 

the derivation of the operating expenses. We started 

the development of the energy consumption and 

everything is done at the household level. It’s 

combined with the energy prices to arrive at the energy 

cost. 

 At that point, we also -- it’s necessary to 

estimate the repair and maintenance costs associated 

with the specific household to arrive at the annual 

operating expenses. 

 Annual operating expenses, combined with 

several economic parameters and the energy price 

standard, give us the lifetime operating expenses. So 

those two final parameters are key for the entire 

analysis set that I’m presenting. 

 On this chart, we have a summary of the math 

utilized within the LCC Analysis. LCC Analysis 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

138

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

essentially evaluates the total installed costs, plus 

the sum of the operating costs, discounted to the 

effective year of the standard. 

 As shown on the full chart at the bottom, we 

are talking about the first costs and the operating 

costs in terms of the consumer. So all this economic 

evaluation is done from the consumer perspective. 

 The specific math DOE utilized is that it 

accounts and models the uncertainty and variability of 

different inputs. The LCC results are expressed as the 

difference between two LCC calculations, one for the 

baseline and one for the considered standard levels. 

 For transparency, DOE utilizes spreadsheet 

format combined with the Crystal Ball which essentially 

allows to acquire a statistical sampling, called Monte 

Carlo Simulation. Some of the attendees here are 

familiar with this approach which has been used by DOE 

in multiple rulemakings. 

 With that, I am switching to the first major 

analysis block which is the Markup Analysis. As 

briefly mentioned, the purpose is to determine the 

consumer product price based on manufacturer cost and 

to characterize the product distribution channels and 

market segments. 

 Major inputs are here and listed here are 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

139

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

sources from the major inputs. As Ashley just a bit 

ago mentioned, manufacturer markups are determined 

within the Engineering Analysis and after that we have 

other parties involved with the distribution and 

delivering the product to the consumer. The sources 

for all of those are listed here. Basically, mostly 

the data come from U.S. Census Bureau, information from 

Air Conditioning Contractors of America publication as 

well from IRS and so on. 

 The basic inputs from the Markup Analysis are 

the baseline and incremental markups. 

 The next two slides, I’ll talk about the 

distribution channels for the three products as 

determined by DOE. DOE looked separately at the 

distribution channels for replacement and for new 

homes. 

 In terms of replacement, there were 

identified two major channels through the retailers and 

through the wholesale distributors. In case of the new 

homes market segment, the distribution happened through 

the wholesale distributors and after that, we have the 

builder involved in the process of delivering the 

product to the consumer. 

 I need to mention here that in the case of 

new homes, DOE distinguishes between two groups of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

140

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

builders. New homes Channel A essentially reflects the 

participation of builders with annual revenues of more 

than $10 million which account for about half of the 

value of the new residential single-family 

constructions and in this particular case, this type of 

participants generally employ their own master plumber 

rather than contractor which is reflected in Channel B 

where we have smaller builders. 

 MR. BROOKMAN: Yes, go ahead, George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 With the distribution channels with regard to 

water heaters, replacement A shows manufacturer, 

retailer and then consumer. Most municipalities, 

states, local government, anybody that has the 

authority having jurisdiction over the installation of 

equipment generally must be installed by a qualified 

whether it’s a plumber or a contractor, whatever the 

case may be. 

 Now, we know that the Lowes, the Home Depots 

and so forth, we know that consumers go in there and 

buy the product, generally install it themselves, 

generally have a problem with it. 

 So I would suggest in the replacement A, that 

DOE consider putting contractor-installer in there. In 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

141

replacement B, it says manufacturer, distributor, 

contractor, consumer. I would suggest that they add 

one more line in there with regard to the distribution 

channel. Some of us, storage water heater 

manufacturers, do not sell to distributors directly but 

we sell through rep agencies. Rep agencies therefore 

put a markup on it and I don’t think that was taken 

into consideration by DOE. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: What’s a rep agency? 

 MR. KUSTERER: A rep agency are people who 

rep our products. We sell directly to them. We don’t 

sell through distributors. They sell to distributors. 

 MR. BROOKMAN: Okay. 

 MR. KUSTERER: Go ahead, Mohammed. 

 MR. KHAN: Mohammed Khan, DOE. I just wonder 

if you could maybe elaborate on the differences between 

a rep agency and distributor. 

 MR. KUSTERER: Okay. I would define a 

distributor as a wholesaler, supplier, HVAC supply 

house, where contractors will purchase their equipment. 

A rep agency is an agency that reps a variety of 

products and they actually buy from the manufacturer, 

in turn sell to the distributor. So there is another 

chain of events there where a markup is added. 

 With regard to -- 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

142

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: I apologize. Just an 

interruption in terms of a clarification question. 

 So you’re suggesting in case of the 

replacement market to have a third chain which replaces 

the distributors with the representative? 

 MR. KUSTERER: No, no, no. You need to add a 

representative. 

 DR. LEKOV: Okay. If there is any 

information or fraction of the market to work through 

this path? 

 MR. KUSTERER: We can get you that 

information. That’s not a problem. But basically for 

our product, everything is sold through -- not sold to 

the distributor/wholesaler but is sold through a rep 

agency. All our product throughout the country is sold 

through a rep agency. They in turn sell it to the 

wholesaler who then in turn sells it to the contractor. 

 DR. LEKOV: Just another clarification. 

During the 2001 rulemaking, this particular chain was 

discussed in detail. So it was established at that 

time. Now your note basically suggests a change to -- 

 MR. KUSTERER: No. That information was 

provided during our interviews. 

 DR. LEKOV: Thank you. 

 MR. KUSTERER: With new homes, again 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

143

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

manufacturer, distributor, you would have to again put 

in that rep agency, so that would be an additional 

there, and new homes, B, you’d probably have to add it 

to there, as well. So in all four categories, you need 

to put that rep agency in there and again for lack of a 

better word, that’s all I know. 

 MR. BROOKMAN: Is that Bock Water Heaters or 

is that the -- 

 MR. KUSTERER: Well, I can only speak for 

Bock Water Heaters. I can’t -- but I know a number of 

other tank-type water heater manufacturers who do 

distribute through rep agencies. 

 MR. TRUSKOSKI: This is Eric Truskoski with 

Bradford White. We follow the same practice. 

 MR. BROOKMAN: Okay. Thank you. Thank you. 

Yes, Frank Stanonik. 

 MR. STANONIK: Frank Stanonik with AHRI, and 

since we’re on this slide, a couple questions, Alex. 

 First of all, in the Channel A for new homes, 

you show a manufacturer, distributor, builder, and then 

to the consumer. It seems to me that the distributor 

in this case might also be a retailer and, I guess, 

have you, in looking at this analysis, have you 

considered, let’s say, a broader term of distributor 

include, you know, the fact that maybe the new home 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

144

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

builder just buys literally a truckload from a major 

retailer and, I mean, I assume that goes on to some 

level. I don’t know if it makes a difference or not. 

I just wondered if you had considered that. 

 DR. LEKOV: DOE did not consider this 

particular scenario. What I would say, DOE explored 

significant amount of sources and got information from 

an expert. Nobody pointed us to this particular 

distribution path, but we’ll look for some evidence. 

 MR. STANONIK: Just kind of a question, but 

the other question which I think perhaps is a little 

more significant, in all of the analysis in terms of 

what we have seen in the TSD, I daresay that in every 

case, the contractor markup, whether it’s new 

construction or replacement, is the same number and I 

just wonder, is that -- I mean, do you have some, you 

know, real information to back that up or is that just 

an assumption that was done for the analysis? 

 I mean, first of all, you know, again I’ve 

stepped out of what I know about. It just seems to me 

that when you’re dealing with a new home situation and 

the contractor in fact is dealing with the builders of 

new homes, I guess I just always had the thought that 

-- in terms of what that -- whatever deal that 

contractor might have negotiated with the builder would 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

145

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

have been very different than -- especially if he’s 

selling, you know, a large quantity -- the contractor’s 

getting a large quantity of business as opposed to 

selling one water heater to one person. 

 DR. LEKOV: DOE utilized R.S. Means to 

estimate for the contractor equipment markup which is 

the value used across the board. 

 MR. STANONIK: Okay. All right. Well, then 

-- Frank Stanonik with AHRI. I’ll just make the point 

that we will certainly discuss that point with our 

members and see if have with R.S. Means as an estimate 

that the contractor markup is universally the same. 

 MR. BROOKMAN: Okay. So let’s look at the 

distribution channels for direct heating equipment and 

pool heaters. 

 DR. LEKOV: In terms of direct heating 

equipment and pool heaters, the department again looked 

at separate and replacement new homes distribution 

channels. 

 Direct heating equipment mirrors the 

distribution channels shown here, mirror the ones done 

for central heating equipment. So there are no changes 

here. 

 In terms of pool heaters, the equipment comes 

from distributor and depending whether there is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

146

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

replacement or new homes, there is an additional step 

which involves a service company or a pool builder. 

 MR. BROOKMAN: So comments on these 

distribution channels? Yes, Frank Stanonik. 

 MR. STANONIK: I hope I’m not jumping the gun 

on Robert here, but Frank Stanonik, AHRI. 

 The pool heaters on new homes, just because 

it’s different it kind of strikes me, so the assumption 

here is that, okay, I’ve got a new home and the 

manufacturer marked it up, the distributor marked it 

up, the contractor who built the pool marked it up, but 

then the guy who sold me the new home didn’t. I think 

that’s a little unusual. 

 DR. LEKOV: In fact, that is very well 

documented in the expert report we got and utilized 

here. The actual builder of a house has nothing to do 

with the pool. There is a full discount. So the 

consumer receives the house and once the house is owned 

by the consumer, he starts to handle the construction 

of the pool and the associated pool heater. 

 So the pool heater at this time, the pool 

builder at this time also supplies the equipment. 

 MR. BROOKMAN: So the new home does not come 

with the pool. It’s after the new home has been 

purchased, then the pool is put in. Lance. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

147

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. DeLAURA: In a former life, I was a home 

builder for 20 years and I absolutely agree with what 

you just said. They’re not connected. 

 MR. BROOKMAN: I see. Robert. 

 MR. GLASS: Robert Glass with Raypak. You’re 

actually talking different things here. You’re talking 

new homes but you can also be talking new pools. 

People can have existing homes and then decide to go 

ahead and build a pool in the backyard and so from that 

standpoint, with what we’re looking at, you’ve got a 

replacement meaning they already have a pool and 

they’re replacing the unit. 

 Under the new homes side, you have two 

different classifications that are being addressed 

here. The new home side would probably be more what 

Frank was talking about, that if you’re building a home 

and somebody is building a home and a pool that goes 

along with that, you always have the opportunity for 

the builder to contract out to have a pool builder 

build the pool and do it, but then how he transfers 

that cost on to the actual consumer at that point, 

there may be markups associated with it. 

 MR. BROOKMAN: Okay. Thank you. So 

additional comments on these distribution channels? 

This has been useful to this discussion. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

148

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 (No response.) 

 MR. BROOKMAN: Okay. So keep going. 

 DR. LEKOV: So markup relates the consumer 

price to cost of goods sold and I’ll provide the 

definition. The cost of goods sold represents what the 

retailer or distributor pays for purchasing and 

handling the equipment. 

 On this slide, I’ll discuss the concept of 

the baseline and incremental markups and I would like 

to bring to everybody the fact that this is not a new 

concept. Some of the attendees are familiar with it. 

It’s used across the rulemakings, standard rulemakings 

done by DOE. 

 The baseline markup relates the price to 

costs prior to increase the efficiency of the equipment 

and essentially it indicates the consumer price that 

covers all of the retailers’ or distributors’ expenses 

plus profit. In addition, it includes also the direct 

labor costs. 

 Incremental markup, on the other hand, 

relates to the incremental change in consumer price to 

the incremental change in cost of goods sold. The key 

here is that some part of the equipment cost is marked 

up at the different value than the cost of the baseline 

part of the equipment and in reality the incremental 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

149

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

markup essentially does not account for the or does not 

include the direct labor cost. 

 This slide provides a summary of the overall 

markups developed for all product classes. With the 

completion of the Markup Analysis, we have the 

information to make the next step and determine the 

consumer price. So the manufacturer’s selling price as 

developed in the Engineering Analysis, plus the markups 

and sales tax, gives us the consumer price of the 

products. 

 A big part of the total installed cost of the 

equipment is the installation cost. On the next couple 

of slides, I’ll present some details of how DOE 

determined the installation costs for these three 

products. 

 Installation costs represents the labor and 

material necessary to install the appliance. The 

installation cost is developed separately for new 

construction and replacement. This slide shows the 

components involved in the installation cost for water 

heaters. The table, left part of the table lists the 

components and the right part of the table, its 

applicability to the four water heater product classes. 

 As you see here, the installation components 

involve a summary term called “basic installation,” 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

150

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

also the issues of venting, drain pan, larger burner 

kit, electrical configurations, condensate filter, 

space constraints, as well as the additional costs 

associated with heat pump water heaters. 

 I will say in front that the big part of this 

information comes from the R.S. Means which is North 

America’s leading supplier of construction cost 

information. 

 The basic installation for water heaters 

includes items, such as setting up and putting in place 

new water heaters, removal of old water heaters, the 

fees associated with it, trip charge for the 

contractor, gas and water piping, and DOE also included 

additional charge for handling larger equipment. 

 On the next slide, I’ll focus on a couple of 

key parts of the installation cost work done for this 

product, starting with the venting cost. 

 In the case of gas storage water heaters, DOE 

accounted for commonly-vented water heaters that are 

together with the central furnace and isolated water 

heaters separately vented. I also forgot to say that 

for all of the products, DOE always develops separate 

installation costs for replacement situation and for 

the new construction. 

 Again about the storage water heater, DOE did 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

151

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

a specific installation cost for the power vent design 

that include venting system which is configured to sit 

on the side of the wall and it’s composed of plastic 

vent pipes. 

 In the case of the condensing efficiency 

level, the venting system is similar to the one for 

power vent design. 

 In the case of instantaneous gas water 

heaters, DOE accounted for the power vent design which 

includes the cost of electricity outlet as well as the 

required venting. For replacement situation, again 

accounted for the installation of new vent system as 

well as for commonly-vented water heater which includes 

different costs, like a disconnecting water system and 

so on. 

 The installation costs for the condensing 

design further includes plastic vents and the cost of 

the condensate, to remove the condensate disposal. 

 For oil storage water heater, I’ll just 

mention that we distinguish between the cost of 

applying regular type L vents versus the usage of the 

stainless steel vent at the efficiency levels above 

.62. 

 A lot of details about venting approach are 

in the TSD, Chapter 8. As well, there is specific 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

152

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Appendix 8-A, which addresses many of these issues. 

 MR. BROOKMAN: Let’s pause for a moment on 

water heaters. Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Alex, 

it’s -- in what you’ve gone over here, particularly 

Slide 83, at least the indication is that the analysis 

doesn’t consider that there are any space constraints 

relative to gas storage water heaters or, for that 

matter, oil storage water heaters, and I guess I would 

just want to point out that -- and maybe just a 

question of what measures you’ve looked at, but 

obviously there is still a need with those types of 

storage water heaters to make sure the tank, the 

finished tank doesn’t get too wide. It still has to go 

through a door and you have the added situation that -- 

and again it’s not necessarily identified here, but 

certainly some ways to improve efficiency on these 

products is to increase the heat exchange area which in 

some cases means you end up making a taller water 

heater. 

 In replacement situations, that also presents 

some difficulties, introducing a taller product where a 

shorter one existed, particularly in the case of the 

venting and the vent connector because the vent 

connector needs to be sloped upward to the vent and 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

153

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

again we’re dealing with the real world and some of 

these replacement installations as far as the venting 

system are already marginal systems and trying to now 

put in a higher water heater and still have that -- 

without replacing the vent connector, if one wants to 

do it properly, those two things don’t -- are 

incompatible. In fact, there’s now an added cost 

because I have to redesign part of the vent system. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: Here is the answer. DOE, in 

fact, did an extensive analysis to assess the space 

constraints associated with increasing the installation 

of the water heaters above two inches installation and 

it is an additional cost that’s added and the matters 

how to do this is described in the document. 

 MR. BROOKMAN: In the TSD? 

 DR. LEKOV: Right. 

 MR. BROOKMAN: All right. Frank, keep going. 

 MR. STANONIK: Frank Stanonik, AHRI. So, 

Alex, I’m going to -- so are we to interpret that at 

least in the case of -- and again I didn’t read it all 

yet, but in the case of gas and oil storage water 

heaters, none of these levels in the analysis would 

require more than two inches of insulation? 

 DR. LEKOV: For gas, you’re right, that’s for 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

154

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

gas. There is no more than two inches of insulation. 

 MR. STANONIK: Okay. 

 DR. LEKOV: For oil, the space constraint 

issue is applied and it’s very expensive to apply in 

the case of electric water heaters. 

 MR. BROOKMAN: Yes, George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 I just need to allude to what Mr. Stanonik 

had just mentioned with regard to flues and so forth 

with the higher efficiencies. As Frank alluded, some 

of these heat exchangers may have to be taller. We’re 

concerned about getting it through a door, but what we 

need to be concerned about is the venting system, as 

Frank alluded to, and again in some cases, even in a 

replacement situation, we may have to redesign the 

entire venting system. Where it’s no longer natural 

draft, we may have to put in some type of a power 

venting device which is another added cost. 

 So these are things that DOE needs to take 

into consideration. 

 MR. BROOKMAN: Thank you. Let’s proceed. 

Yes, Mohammed. 

 MR. KHAN: Mohammed Khan, DOE. Just to 

follow on the same issue here about the growth in 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

155

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

height as a result of increased surface area of the 

internal heat exchanger. 

 I was just wondering whether manufacturers 

consider versus making that taller, making the heat 

exchanger wider in diameter or bigger in girth as -- in 

an attempt to maintain the same height. I was just 

wondering whether that’s an approach or if you have any 

comment or any idea, you know, what’s more frequent. 

Do you tend to make them taller? Do you tend to make 

them wider, the heat exchanger part? 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters again. 

 Normally flue diameters are generally -- can 

run anywheres from four -- well, on the oil side, 

they’re generally six inches for a residential 

application. Again now, if we were thinking of making 

it wider, say go to seven or eight inch, it’s going to 

decrease the volume of the stored water which 

definitely has an impact. It would again make the 

water heater wider if we wanted to keep the same 

storage and we would still have to change the venting 

system because most appliances out there today are sixinch vent. 

 So here we come out with an eight-inch flue 

or an eight-inch exhaust vent. Now we have to tell the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

156

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

consumer they have to go to full eight-inch because 

that’s what the Code requires. So, in other words, you 

know, FAP-31 for oil-fired water storage heaters 

basically tells you what the flue diameter of the 

appliance is, is the flue diameter that you have to put 

in to the venting system or to the chimney. 

 So again, with -- it may be an option, but it 

would be a difficult option. 

 MR. BROOKMAN: Okay. Thank you. Yes, Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. One 

other factor, and I’m sure every one of the 

manufacturers could give you a better sense of how 

significant this is or isn’t, okay, but if you increase 

the diameter of the flue, all right, the ratio of the 

surface area that you have for heat exchange versus the 

volume of products of combustion passing through that 

flue is different at a four-inch flue versus a threeinch flue and different, I think, in the wrong 

direction. 

 You know, you want to maximize how much 

surface area is, if you will, touching the products of 

combustion. You make a bigger flue and you’re changing 

that ratio, I think, in probably the wrong direction, 

but again what the real impact is, the experts could 

tell you. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

157

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Lance. 

 MR. DeLAURA: One other quick comment. I’d 

mentioned this previously. In California, we have 

water heater cabinets that are outside because of the 

modest climate and so there’s a size constraint there. 

If you get too big in girth or too high in the height, 

it’s not going to fit in the cabinet. 

 Also, a number of builders in the early to 

late ‘60s, maybe all the way up through the mid ‘70s, 

put water heaters, my house is one of them, where the 

hinges are for the garage, between the hinge point of 

the garage and the garage wall, and the water heater 

barely fits in there. So you actually run into a point 

where you’re going to have to relocate the water heater 

if you get much bigger in girth. 

 MR. BROOKMAN: Molly. 

 MS. TROMBLEY-McCANN: So it sounded like 

there was about a two-inch clearance in width where you 

could tolerate an increase of about two inches in 

width, that sounded like what Dr. Lekov was saying 

before you get into increased installation costs. 

 Is there a sense of how much taller you could 

go before you start running into these flue and venting 

problems? Is there -- like could we -- is it two 

inches? Is it five inches? Like how much play is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

158

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

there in the system? 

 MR. DeLAURA: Could I answer that relative to 

the situation I just described? At two inches, the 

water heater will not fit in that configuration between 

-- 

 MR. BROOKMAN: Two inches broader, bigger 

girth? 

 MR. DeLAURA: Bigger girth, will not fit 

between the opening of the wall and the door hinge. 

 MR. BROOKMAN: In your house? 

 MR. DeLAURA: In my house in particular, 

which is a fairly stock design for that vintage. 

 The other issue in the water heater cabinets, 

depending on what the size of the water heater is 

that’s already installed, you could be running up 

against a problem. 

 MR. BROOKMAN: What about height? 

 MR. DeLAURA: Height, there’s a little more 

forgiveness in the water heater cabinets. 

 MR. BROOKMAN: George, you’re next. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 Height is -- and again depending on the 

scenario, but we have situations where we have water 

heaters in crawl spaces. So in some cases -- and in 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

159

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the majority of the standard homes, in my particular 

house which is a standard home that was built, I guess, 

when Columbus came here, but if I had a water heater 

that was -- let me say it -- let me put it to you this 

way. 

 I have a 30-gallon water heater in my house. 

If I were to put in a 50-gallon water heater which is 

just a little bit higher, there is no way, my vent 

would be pointing down and again it would be against 

Code and create a problem. 

 So even an inch or two in some cases would be 

significant to the installation of that equipment. 

 MR. BROOKMAN: Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. I think 

George was primarily talking about the oil-fired 

product and the answer, unfortunately, to your question 

is there isn’t an easy answer because the -- when you 

look at the gas and electric products, the 

manufacturers historically offered short models, what I 

would call even a medium model, which I’m not sure -- 

there was a universal definition of medium, but there 

was -- and then a tall, okay, and so it’s not so much 

what is the right size but dealing with the fact that, 

again whatever the number is, 90, 100 million water 

heaters out there, more than that probably, but 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

160

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

whatever that number, the manufacturer has to -- would 

like to have and we hope he can have a replacement 

model that will go in there and so the issue is not 

there’s this magic number you can’t exceed the height, 

the issue is trying to write a regulation that will 

still allow the manufacturer to build a complying 

product that fits that height. 

 MR. BROOKMAN: Molly. 

 MS. TROMBLEY-McCANN: So just to follow up, 

if -- assuming that a water heater of a certain size 

has been installed, how much bigger could the water 

heater get for that same installation location before 

it would become a problem? Is there, you know, -- you 

could go up two inches from whatever you were 

previously? Do you understand what I’m saying? 

 MR. STANONIK: I think I understand what 

you’re saying. Frank Stanonik, AHRI. And again, all 

right, let’s -- I’m going to hopefully answer it but 

maybe a little bit differently. 

 All right. I’ve got whatever this existing 

installation is and in fact the draft for the vent 

connector just meets the Code and the basic Code is, if 

I remember right, like one inch -- 

 MR. KUSTERER: Quarter of an inch per foot of 

rise. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

161

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. STANONIK: Okay. Quarter of an inch per 

foot of rise. Thank you, George. Okay. I just made 

it, okay, and so I’ve got right now a properly-designed 

venting system, all right, and if you’ve looked at 

drafters on water heaters, they’re -- I don’t know that 

anybody makes them any smaller than they do today. 

Okay. 

 So if I -- literally, if I brought in another 

water heater that’s an inch taller, that vent connector 

no longer is to the Code and, more importantly from our 

aspect, probably won’t operate properly. You probably 

won’t get proper venting out of that system and so that 

vent connector now has to be changed out and hopefully 

that’s all. Hopefully you have room to just change 

where it enters the venting system. 

 So there isn’t, you know, an answer because 

what we don’t know is, okay, of whatever size, how were 

they installed? Were they installed with venting 

systems had room for adjustments or were they installed 

with venting systems that, you know, made it but 

literally just made it? 

 I mean, you know, nobody likes -- you know, 

everybody wants to put the water heater out of the way. 

They don’t want to devote any floor space to it. It’s 

the ugly child and it just goes in the back somewhere. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

162

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Alex, take us pretty quickly 

through Preliminary -- pardon me. I left a couple 

people out. 

 Joe, and then Robert. 

 MR.BOROS: Joe Boros with Rheem 

Manufacturing. 

 I’m looking at -- maybe a question for Alex. 

I’m looking at Appendix 8 where you’ve provided 

calculations for space constraints for three-inch 

insulation. 

 If I understand correctly that’s for electric 

water heaters. 

 DR. LEKOV: That’s correct. 

 MR. BOROS: There’s a $219 adder that’s 

identified here. Was that put into the cost analysis 

in the Payback? There’s a note here relating to a $36 

adder as what is being applied rather than the $219. 

 Could you explain that? 

 DR. LEKOV: It has to do with the 

applicability -- to the type of installation, the 

location of the water heater, and there’s some 

assumptions of which part of this applies to the 

average cost. 

 So I would say I don’t remember this exact 

statement there, but I assume that you are talking 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

163

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

about the average cost which is applicable to all 

households, but it will be distribution as with all 

other parameters which will vary from zero to the 

whatever costs we calculate. 

 MR. BROOKMAN: Robert. 

 MR. GLASS: Thank you. Robert Glass with 

Raypak. 

 One question on the comment on the water 

heaters we’re talking about here is that with the 

recognition with new home construction an increase in 

height, the diameter, whatever else is really not a big 

deal, but when you’re talking that that’s -- represents 

a very, very small percentage of the overall market of 

the water heaters, the thing that you need to look at 

is these units are certified with minimum clearances to 

combustibles and as a result of that, as they’re 

installed, they can’t be installed any closer than what 

those minimum clearances are, but if you come in and 

try to put a replacement that is of larger diameter or 

height that affects the clearances, if they were 

installed at minimum clearances at one diameter and 

you’re looking to put a replacement in that’s larger 

diameter, it may not fit because you may not meet the 

minimum clearances that are required. 

 So that’s one thing that DOE has to take into 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

164

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

account from the replacement side of the market and the 

replacement side of the market is the ultimate vast 

majority of the water heating market. 

 MR. BROOKMAN: Okay. Thank you. Now, Alex, 

quickly, push us through pool heaters and direct 

heating equipment. 

 DR. LEKOV: Okay. About -- first, let me 

mention about the heat pump installation. 

 So, in addition to other costs, in the case 

of heat pump water heaters, DOE added costs for 

condensate pump, for longer water line to the drain, as 

well as accounted for space constraints, including 

adding ventilation provision using a fully-levered 

closet door, and one additional cost is for a larger 

drain panel. 

 In the case of direct heating equipment, DOE 

derived the installation cost from the -- using the 

same approach which was outlined in the 1993 TSD. It’s 

added installation costs for designs that require 

electricity and this was done, of course, for the 

replacement market only. 

 For pool heaters, DOE derived the 

installation costs data from using essentially R.S. 

Means mostly. The main additional installation costs 

are for the electronic ignition and electronic and 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

165

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

condensing design. 

 MR. BROOKMAN: Yes, Robert. 

 MR. GLASS: Robert Glass with Raypak. With 

the higher-efficiency equipment that you indicate 

you’ve included condensate drain piping, the one thing 

that DOE may not have taken into account is that you’re 

probably going to need a condensate pump because these 

units are not located necessarily right next to the 

house and many times they’re located as far away from 

the house as possible and as a result of that, you 

can’t just take that condensate and put it in the grass 

or in the flowers. They’re not going to like the acid 

of the condensate. So you may also have to factor in a 

condensate pump and appropriate piping, more than just 

piping from the unit to a drain, in order to account 

for that with the high-efficiency units that you have 

here, and I don’t believe DOE’s taken that into 

consideration. 

 MR. BROOKMAN: Okay. Thank you. 

 DR. LEKOV: We accounted for a longer time to 

this so-called PT Trap, essentially, which is 

apparently mandated by the Code in this situation, and 

regarding the adding the condensate pump, we added this 

for the part of the installation. I need to 

doublecheck this, but it’s definitely a point to be 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

166

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

considered. 

 MR. BROOKMAN: Okay. Direct heating 

equipment. 

 DR. LEKOV: I already mentioned what we did 

for direct heating equipment. 

 MR. BROOKMAN: Great. Okay. So then 

additional comments on that before we go to the next -- 

go to the next slide, Installation Costs Flow Chart. 

 DR. LEKOV: Yeah. Basically, this flow chart 

-- 

 MR. BROOKMAN: Let me interrupt. Folks, 

we’re going to take a break for lunch in about five 

minutes, so hang in there. Okay? 

 DR. LEKOV: I would suggest the next three 

slides to wrap up the total installed costs -- 

 MR. BROOKMAN: Yep. 

 DR. LEKOV: -- components and after that. So 

the flow chart here, on the left part are shown the 

determination of the hours associated with installing 

the equipment. On the right part, we have the cost, 

the labor cost as well as the material cost. Both 

combined produce the installation costs. It’s done 

individually for every single household in the 

analysis. 

 The next slide shows examples of how, in 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

167

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

general, the installation cost was determined. This is 

the case of gas-fired storage water heater basic 

installation replacement case. As you see, it’s a 

standard R.S. Means calculation. On the very left part 

are the charges, the description of the charges. After 

that are the costs itself and the bottom corner, right 

bottom corner, you get the total costs derived for this 

particular installation component. 

 Appendix 8-A includes tables for all 

equipment and cases. 

 Once we have the equipment costs as well as 

the installation, it’s possible to derive the total 

installed costs. Again, here is an illustration in the 

case of gas-fired storage water heaters and as the 

upper line shows the cost, essentially the installation 

cost -- the total installed cost versus the energy 

factor. 

 In this particular case, you could see three 

groups of points. The left part, the three points 

illustrate the total installed costs of natural draft 

design. The next three points, there is a jump to show 

the power vent design costs and the point on the very 

right of the chart shows the cost for the condensing 

design. 

 So I’m about at the half point of the LCC 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

168

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

presentation. 

 MR. BROOKMAN: Let’s pause here and take 

questions and comments on the preceding one, two, 

three, four slides at least, perhaps five, and just 

summary comments or other issues that haven’t been 

covered already. Yes, Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Alex, 

on this installation cost determination, have you yet 

in this analysis tried to, I’m going to say, reconcile 

the estimates that came out of this table here with the 

kind of information we saw in the SEGWHAI project 

which, by my rough guess, would indicate that the 

installation costs are at least $2-300 more than your 

estimate? 

 DR. LEKOV: We looked at the SEGWHAI 

estimate. 

 MR. STANONIK: Excuse me, excuse me. Let me 

clear. My understanding is that the SEGWHAI didn’t 

estimate. They did a survey in that study. 

 DR. LEKOV: Let me use the word we looked at 

the SEGWHAI numbers. 

 MR. STANONIK: Okay. 

 DR. LEKOV: And my recollection is that in 

terms of total installed costs, DOE estimated higher 

than SEGWHAI. As everybody knows, as engineers know, 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

169

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

R.S. Means approach is considered pretty conservative. 

Generally, it provides costs at about 30 percent of 

what’s generally charged in the field, but DOE went 

directly with the R.S. Means numbers. 

 MR. BROOKMAN: Additional questions, comments 

on these, on this set of slides? Robert. 

 MR. GLASS: Yeah. Just one other comment on 

Slide 87 from the standpoint of when you’re getting 

over there with a unit at .77 and you end up having the 

same installation costs as units that are .64 through 

.66. 

 The .77 being a condensing unit, you’ve got 

to have dealing with the condensate-managed 

neutralization that I don’t believe is taken into 

consideration because you’ve got a flat line from a .64 

all the way over and including the .77 and so the 

installation costs cannot be the same because you don’t 

have that condensate management that you have to do at 

the .77. 

 DR. LEKOV: We have -- I don’t know why it’s 

not visible here on the chart. The installation costs 

for the condensing design is the same as for the power 

vent with the additional cost of the condensate 

disposal. It’s included. 

 MR. GLASS: Okay. Well, it’s not on that 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

170

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

chart that’s behind you. 

 DR. LEKOV: Okay. I will check. 

 MR. BROOKMAN: Okay. Thank you. So I think 

that we should pause for lunch, even if we’re not ready 

and I think we are. 

 Let me offer this. We don’t want to short 

shrift any of these slides, these last few slides, even 

though our attention seems to be waning right now. So 

when we return for lunch, immediately when we return 

from lunch, if we want to double back and cover 

anything, any additional comments on the record, we’ll 

do it at that point. 

 It’s now 1 o’clock by the clock up there. It 

typically takes about an hour to eat lunch here in the 

Forrestal Building. So let’s pause now. This room 

will be locked. You can leave your stuff here. We 

will return and start literally at 2 o’clock on the 

nose. We’re a little behind schedule but we will catch 

it up. Please wear your badges in the building. 

 (Whereupon, at 1 o’clock p.m., the meeting 

was recessed for lunch, to reconvene this same day at 2 

o’clock p.m.) 

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

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

171

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 (2:00 p.m.) 

 MR. BROOKMAN: Okay. Let’s start back here. 

Please take your seats. 

 Let me, as a housekeeping matter, the 

department has made a Xerox copy of the attendees, all 

of the -- compiled all of the business cards and 

they’re available on the Registration Desk over there, 

if anybody wants to get that now or when we take our 

afternoon break. 

 So we’re going to resume where we left off 

which is with Alex and I think we’re at Energy Use 

Characterization. 

 DR. LEKOV: So just to summarize, we ended up 

with the derivation of the total install cost. 

 Now, the remaining part of this presentation 

focuses on the derivation of the operating expenses. 

The first step to start the process which essentially 

involves, first, the determination of the energy use is 

to select the household example. We started with 2001. 

 This particular slide here shows the sample 

for water heaters, shows the assumptions that followed 

through the database in order to arrive at the sample 

for the three fuel types. 

 One thing to mention here is that the gas 

storage water heater and the gas instantaneous water 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

172

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

heaters use one and the same sample. 

 DHE and pool heaters are also selected based 

on the criteria from direct database. 

 Once we have the samples determined for the 

Monte Carlo simulations, the next step is to perform 

the load calculations and to assign the base case 

products. Basically for water heaters, we used the hot 

water draw model, and I’ll focus on the pool heater a 

little bit later, and pool heaters and DHE was 

calculated using RECS energy use. 

 Base case assignments are based on the 

estimated market share distribution at each efficiency 

level. 

 MR. BROOKMAN: If you have questions about 

these methodologies, you should speak up. Some of this 

is -- I think many of you are familiar with this, but 

those of you that are new. 

 DR. LEKOV: On this, the previous slide, most 

of the things I’ll be going in detail, so you’ll have 

opportunity for questions. 

 MR. BROOKMAN: Okay. Good. 

 DR. LEKOV: Now, we’re talking -- 

 MR. BROOKMAN: Right now, Robert, yes. 

 MR. GLASS: Robert Glass with Raypak. Base 

case assignment based on estimated market share 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

173

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

distribution of each efficiency level. In other words, 

did you take the listing of the products in the AHRI 

Directory and then kind of weight how many there were 

in each classification and identify them in that 

because that’s not market share? It’s not even close 

to market share. 

 DR. LEKOV: Here is the story. For all 

product, with the exception of pool heaters, we -- the 

department received information from AHRI. For pool 

heaters was not available this information. Therefore, 

we went through the number of models and developed this 

particular distribution which you called market share 

from this information. 

 MR. BROOKMAN: So he’s not defining market 

share as you’re defining market share, it seems, 

Robert. 

 DR. LEKOV: For this particular -- 

 MR. GLASS: Yeah. Well, and as a result -- 

Robert Glass with Raypak. I mean, as a result of it, 

then don’t use the word “market share” because it’s a 

misnomer. 

 What you’ve identified is you’ve taken it 

based on the number of models at a specific efficiency 

level and therefore the number of models that are 

listed in the directory under those is what identifies 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

174

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

how you’ve gone ahead and selected it, but that’s not a 

market share. 

 DR. LEKOV: It’s a labeling issue, Robert, 

because we need some matter to derive the market share 

and that’s an approach which the department uses 

sometimes when there is no -- I agree it’s not market 

share. 

 MR. BROOKMAN: It would be a segmentation or 

something like that. 

 DR. LEKOV: Yeah. 

 MR. BROOKMAN: Yeah. Okay. Okay. Keep 

going, Alex. 

 DR. LEKOV: So hot water draw model. This is 

the matter used to calculate the hot water use at 

household level. 

 Again, this tool was used during the 2001 

rulemaking. Many folks here are familiar with it. It 

essentially has been developed in 1996 by EPRI, 

additionally improved by our lab in 1999 and 2006, and 

used for this particular rule. 

 As you see here, it accounts for a number of 

parameters. Most of them are constructed either from 

RECS database or from weather data. 

 Results. The results for hot water use are 

presented in this box chart and for the three fuel 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

175

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

types you see what are the ranges of use in the United 

States households. 

 In order to understand the chart, the box in 

the middle represents the average values, the average 

value for this particular product class, and the thick 

line represents the median. The upper end and bottom 

end, the upper end is the distribution are also shown. 

The values for gas storage water heaters are assumed to 

be the same for gas instantaneous water heaters. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, Edison 

Electric Institute. 

 On this slide, the values that are shown 

within the box, the 45.5 and the 43, are those the 

averages or the medians? 

 DR. LEKOV: Those are the averages. The 

median is the thick line below it. 

 MR. ROSENSTOCK: Okay. So those are the 

averages, okay, and my next question is for the DOE 

Test Procedure, again I didn’t read the revised one, 

but is the Test Procedure still assuming a total daily 

usage of 64.3 gallons? 

 DR. LEKOV: Yes, it is. 

 MR. ROSENSTOCK: Thank you. 

 DR. LEKOV: As I mentioned, DOE assumed the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

176

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

same values for hot water use for storage and 

instantaneous, and this slide is to invite comments on 

this assumption, whether it’s correct to assume that 

instantaneous gas-fired water heaters have the similar 

assumption for daily use as storage water heaters. 

 MR. BROOKMAN: Similar with respect to? 

Similar in terms of number of gallons, actual 

consumption, the actual consumption. 

 DR. LEKOV: Number of gallons. 

 MR. BROOKMAN: Okay. Frank Stanonik. 

 DR. SACHS: No, Harvey. 

 MR. BROOKMAN: Harvey. Pardon me. Almost 

twins, I would say. 

 DR. SACHS: You want to get him first. 

 MR. STANONIK: I didn’t raise my hand. 

 DR. SACHS: Harvey Sachs, ACEEE. I guess, 

Alex, I’m a little bit confused, both about Slide 90 

and about what we’re going to do with the information. 

 This is model-derived estimates of hot water 

use, but it’s not clear to me how the model is 

populated from household occupants to showers per day, 

from household occupants to loads of wash per week, and 

is that based on field data or is that ethereal guesses 

or -- it’s not -- is that detailed in the TSD how this 

model was populated? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

177

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: That is in an appendix called Hot 

Water Draw Model which I hope we will answer in detail, 

but it’s probably worth it to say that we’re talking 

this model is an equation, an equation which addresses 

here the five boxes you see, the five boxes show the 

groups of parameters. 

 So it’s the coefficients and each of these 

ones could be five or six different information pieces. 

It includes like a number, like a number of persons in 

the household, number of school-aged children, adults 

below 64, above 64, and many other parameters. It 

includes also information about hot water-using 

appliances other than water heaters, like dishwashers 

and clothes washers. This is in fact DOE refined the 

model now to account for the 2007 clothes washer rule 

and for 2010 dishwasher rule. 

 So there is a number of regression 

coefficients derived by EPRI and refined by DOE now to 

arrive at this result. 

 Now, where this information comes, most of it 

is household-specific information as derived from RECS 

and some of it is weather data from the sources as 

described in the TSD. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. Thank you 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

178

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

very much, Alex, but what you have told me suggests 

that it is very poorly constrained by anything 

resembling near-current field data on actual water 

uses. It’s not closely calibrated. 

 DR. LEKOV: Okay. In fact, we did some 

assessment of available field data and you know very 

well how little is available and how inconclusive it 

is. 

 Our not full-scale validation showed us those 

are pretty reasonable or probably the distribution 

which we could expect. 

 DR. SACHS: Thank you. Harvey Sachs again. 

I would infer that you’ve done a very elegant job with 

the available information and presented us with 

relatively good precision, but we really don’t have an 

adequate basis of field data to understand anything 

about the accuracy of the average draws, average water 

use presented here. 

 DR. LEKOV: With that, DOE will ask the 

stakeholders to provide as much possible information to 

refine the answer and basically come to the information 

Harvey’s asking for. 

 MR. BROOKMAN: Robert. 

 MR. GLASS: Robert Glass with Raypak. Just a 

point or a question of clarification. Alex, I thought 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

179

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that you had said that you used the value, the 64.3 

gallons, that the gentleman from Edison Electric was 

talking about, and yet in here, in the next -- the 

Slide 92, it says that you used 45.5. 

 So you haven’t used or that number has 

changed because that’s the question that you just 

asked. 

 DR. LEKOV: If the understanding was that we 

used the Test Procedure default value, that’s not 

correct. The only value used is the distributions 

which are derived through the use of the hot water 

number. So the answer is DOE never used the default 

test procedure 64.3 gallons per day use as listed in 

the Test Procedures. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Just to follow on, the DOE 

Test Procedure is just used for the Engineering 

Analysis. These numbers that you’re seeing in the box 

are used for the Life-Cycle Cost Analysis. So they’re 

two separate numbers but it’s just they’re -- I was 

just asking about them just to find out about the 

significance and the difference, but they’re using them 

in different analytical portions of this rulemaking. 

 MR. BROOKMAN: So this is such an important 

data point. Are there other sources of data that the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

180

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

department can obtain that would help to understand 

these differing consumption patterns? Is there 

something out there that -- Lance. 

 MR. DeLAURA: Harvey, I was in the room. Did 

you talk about Jim Lutz and the work that he’s done? 

You did. Okay. Never mind. 

 MR. BROOKMAN: Okay. Don. 

 MR. BRUNDAGE: The department would use the 

64.3 for the rebuttable presumption three-year payback 

test, but for their economic analysis here, they’re 

using these 40 something gallon numbers. 

 These numbers look in the range of what I 

would expect. I’ll try to find some numbers for you. 

In my company, finding numbers and being able to give 

you numbers to go in the public domain are two 

different questions. I’m sure that’s true with 

everyone. 

 MR. BROOKMAN: I was wondering, Frank, if you 

all gather this kind of data and then you can aggregate 

it, just not to put you on the spot, mind you. 

 MR. STANONIK: Frank Stanonik with AHRI. 

We’ve been trying for years. 

 MR. BROOKMAN: That doesn’t sound especially 

hopeful. 

 Okay. Well, I’m certain the department 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

181

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

appreciates any efforts that you can bring forward. 

 Harvey. Go ahead, Francine, follow-up. 

 MS. PINTO: Francine Pinto from GC. Frank, 

are you satisfied then, since you’ve been trying for 

years to get this data, are you satisfied with what DOE 

has done here? 

 (Laughter.) 

 MS. PINTO: Not to put you on the spot. 

 MR. STANONIK: Frank Stanonik, AHRI. I will 

say -- well, basically, yes. I mean, I don’t -- 

haven’t seen any data to the contrary. The data I have 

seen and including some much older work does certainly 

point in the direction that the average hot water, 

daily hot water use in the American household is 

something less than the 64.3 that was assumed in the 

DOE Test Procedures. 

 The last attempt that was tried to look at 

available data out there, and I only recall this 

because of how it came out, was that EEI did some 

looking at that. AGA did some looking at that and, 

amazingly, they both came out with an estimate of 

around 50 gallons of hot water a day from -- at least 

back when that was done, they were a little more openly 

competitive and so it was just surprising they kind of 

came to the same answer. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

182

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: This is Harvey Sachs with ACEEE. 

Francine, I would respectfully suggest that since 1980, 

the department has been forced to be derelict in the 

basic gathering of field information that would allow 

estimates of energy savings to be made on a national 

basis. 

 It’s not only about patterns of hot water use 

but we have no assurance at all that voluntary programs 

are actually saving what they think they save because 

we simply do not know enough of this fundamental common 

information because -- which cannot be -- whose value 

cannot be captured by individual firms and which would 

have enormous value to all of them as they design their 

products and to those of us in other sectors who are 

trying to look for ways to improve energy savings. 

 We hope that this will change but -- and it’s 

certainly not General Counsel’s fault, but we cannot 

suggested that the department has fulfilled the 

obligations entrusted to it under its charter. 

 MR. BROOKMAN: So let’s proceed with product 

assignment and base case. Mohammed. 

 MR. KHAN: Yes, Mohammed Khan here, DOE. We 

had a lot of discussion a moment ago about the 

appropriateness of the range of average values for the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

183

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

water heater types here on Slide 91, but I just want to 

remind folks that the particular question was regarding 

the assumption about instantaneous water heaters, the 

consumption associated with those. So I just want to 

ask one more time before we move on if we can get any 

comment on that. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. The 

question I have is how you’re going to take these 

numbers of typically 45.5 gallons per day, do the LCC 

Analyses and then map this back into the EF values 

since there are questions about how EF relates to 

actual water uses, to actual water use patterns as well 

as water use volumes. 

 MR. BROOKMAN: Maybe we could try to address 

Mohammed’s question and then return to yours, Harvey. 

 Does anybody have anything, any -- would be 

willing to offer a comparison on instantaneous gasfired -- the volumes -- yes, John. 

 MR. CONFREY: I have a comment, I guess, to 

the negative. I don’t think there is any data 

available to suggest there is a difference and I think 

that’s why nobody’s offering the data. 

 MR. BROOKMAN: No data to suggest any 

difference? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

184

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. CONFREY: Right. 

 MR. BROOKMAN: So it’s a reasonable 

assumption to presume that they’re pretty much the 

same? 

 MR. CONFREY: I don’t know. 

 MR. BROOKMAN: Okay. 

 DR. SACHS: Harvey Sachs, ACEEE. We are 

aware of two utility studies today which have not yet 

been published. We will urge their authors to hurry 

up, but they are indicating -- the leaked information 

is that the decreases in energy use are not 

proportional to the differences in rated EF between the 

tankless and tank-type water heaters. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: With that, I will show the slides 

which explain the product assignments in the base case. 

 Here, this chart shows -- table shows the 

values which were assumed for the analysis and the main 

thing to notice here is that the base case product 

efficiency assignments account for the fact that not 

all consumers purchase products at the current minimum 

level and also that LCC Analysis recognizes that 

consumers already are purchasing products at the 

efficiency greater than or equal to the considered 

efficiency values. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

185

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 So the data is provided by AHRI mostly for 

water heaters. One notable exception are the values 

for -- at Level 6 which is for gas storage water heater 

and electric storage water heaters which include values 

based on the Energy Star market penetration in 2015. 

In fact, this is the 50 percent of what Energy Star 

anticipates at this time. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Looking at these numbers, I’ll just concentrate on the 

electric storage, assuming that heat pump water heaters 

at a 2.2 energy factor get a five percent share in five 

years where right now they’re about -- all heat pump 

water heaters are about .2 percent, that might be a 

little on the aggressive side and as I said before, 

because of the issues with Energy Star, I personally 

have a hard time believing that the market share is 

going to be that high. That’s my own personal belief, 

just my thoughts. 

 Thank you. 

 MR. BROOKMAN: Thank you. Don Brundage. 

 MR. BRUNDAGE: First, let me make sure I 

understand what I’m looking at. 

 Are we talking current market shares here? 

 DR. LEKOV: That’s the base case market share 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

186

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

in 2015. 

 MR. BRUNDAGE: Okay. All right. And this 

was based on residential market or total shipped or 

what? 

 DR. LEKOV: This is based on the shipments by 

efficiency as provided by AHRI. 

 MR. BRUNDAGE: Okay. Five percent looks a 

little high, especially for the residential market. 

There’s some commercial niche markets that even now 

heat pump water heaters do well in. I think five 

percent of the residential market is -- that’s a little 

high. 

 Thank you. 

 MR. BROOKMAN: Thanks for those comments. 

Yes, Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. I guess 

I want to make sure that I heard what I heard. Okay. 

 This information was information we provided 

to you, historical information on shipments by 

efficiency levels for the baseline product, and I 

thought I heard you say that this was the projected 

market shares in 2015 when the rule would go into 

effect. 

 DR. LEKOV: Basically, we kept -- 

 MR. STANONIK: Or earlier, if Andrew wants 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

187

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

it. 

 DR. LEKOV: -- the AHRI 2007 data constant. 

 MR. STANONIK: So you kept it constant. 

Okay. So this does not at the moment factor in the 

introduction of the Energy Star level at the beginning 

of this year? 

 DR. LEKOV: No. 

 MR. STANONIK: Okay. 

 MR. BROOKMAN: These percentages are the same 

as 2007, correct? Okay. Karim. 

 DR. AMRANE: Karim Amrane, AHRI. Maybe Frank 

will correct me if I’m wrong, but I don’t think we 

provided shipment data on heat pumps. 

 MR. STANONIK: No, that’s why I say, that 

level we -- they made up the numbers. I’m sorry. 

Frank Stanonik, AHRI. At that level, they had to make 

some assumptions. We did not provide data. 

 MR. BROOKMAN: Thanks for that clarification. 

 DR. LEKOV: For Level 6, just for the record, 

Level 6, DOE took the numbers from the Energy Star 

Program projection. In fact, it used 50 percent of the 

energy. Those are not made -- nothing. 

 MR. BROOKMAN: Is it Terry? I believe it’s 

Terry. 

 MR. MULLEN: Yes, Terry Mullen with Bock 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

188

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Water Heaters. 

 Just making an observation on the oil-fired 

storage. It seems like the market share numbers are 

somewhat, I think, slanted toward the lower efficiency 

units where I think the actual market share in Level 5 

would be much -- and actually Level 6 -- much greater 

than the numbers shown. 

 MR. BROOKMAN: Can you say what -- or you can 

provide it in your written comments. 

 MR. MULLEN: Well, we did provide information 

that market share levels or units, volumes at those 

levels. 

 MR. BROOKMAN: Okay. Great. 

 MR. MULLEN: But it’s substantially more than 

that. 

 MR. BROOKMAN: Okay. Thank you. 

 DR. LEKOV: DOE reflected exactly the values 

that came from the data submittals. 

 MR. BROOKMAN: You aggregated them and that’s 

what you came up with. Just guessing. Okay. AHRI 

data. 

 Okay. So additional comments on the product 

assignment and base case, this chart on 93, before we 

move on? Okay. Yes, please. 

 MR. BEYERLE: Mike Beyerle with GE. Of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

189

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

course, five percent is, of course, an extrapolate, 

everybody’s best estimate, but as a point of 

comparison, if you look at a comparable fairly 

expensive, fairly complicated product, which is frontload laundry, front-load laundry went from a zero 

percent market share in the United States to a 30 

percent market share in the United States within 12 

years. So it’s not unreasonable to expect maybe five 

percent on something like this within a five-year time 

period. 

 MR. BROOKMAN: Okay. Thanks for the analogy. 

 DR. LEKOV: With that, let’s look at energy 

calculations. 

 So for water heaters, DOE used the WHAM 

Model. It’s the same model which was used also 

throughout the 2001 water heaters rulemaking, and on 

the next slide, I’ll focus on some specifics related to 

the application of the model. 

 The top three bullets, major bullets 

essentially are talking about which efficiency 

characteristics are used, about the temperature 

parameters and the sources and how those were 

developed. 

 I’ll go directly to the explanation of how we 

adjusted the WHAM equation to account for the heat pump 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

190

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

water heaters. So what we did there was to account for 

the specific operation of this type of equipment and 

essentially the performance was adjusted to account for 

the different ambient temperatures as well as to 

account for the cooling and heating impacts on 

condition space. 

 Because this is such an important adjustment, 

I’ll a little bit elaborate on this. So we used two 

models, John Maxwell as well as the model from the DOE 

Weatherization program, to derive the adjustment for 

the different ambient temperatures. In fact, the 

result is that the operation is assumed that switches 

100 percent to resistant electric heating when the 

temperature is below freezing and there is significant 

fraction of time above 32 degrees Fahrenheit when the 

unit operates using the electric resistance elements 

because of insufficient water availability. 

 Another major adjustment was made for the 

energy used of instantaneous gas water heaters. 

Basically, DOE adjusted the performance again to 

account for the field conditions and it’s based on 2006 

CEC report. 

 During the interpretative statement, Frank 

Stanonik basically expressed -- he essentially was 

surprised that this is done based on a single data 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

191

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

point, but in fact over the last three years, DOE 

representatives were at different forums where this was 

mentioned and there were very good explanations of the 

thermal conditions that result in this efficiency, the 

duration, and in fact DOE was not able to record any 

negative statements about the CEC results. 

 As a result of this, DOE is applying this for 

the Preliminary Analysis and as you’ll see on the next 

slide, it requests comment on this assumption. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. On 

Slide 95, you say, “An 8.8 percent reduction.” Is that 

in the stated efficiency, the stated energy factor, 

that you’re knocking it down by 8.8 percent compared to 

the Test Procedure? 

 DR. LEKOV: It’s done in an elaborate way 

within the formula, but effectively it results in an 

8.8 percent additional energy factor of the reported 

energy. 

 MR. BROOKMAN: John. 

 MR. CONFREY: John Confrey, Noritz North 

America Corporation. 

 Obviously, I have a problem with this. I 

mean, to Frank’s point, this is, you know, based on 

exactly one data point, one water heater in a house 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

192

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that only had two people in it. So it’s not 

representative of even, you know, say the average 

family, the data point, the data that this is coming 

from. So to pick an extreme data point and then base a 

decision on that, I think, is, you know, again to 

Frank’s point, very dangerous. 

 I think Harvey will probably raise his hand 

next and say, you know, what he mentioned before about 

utilities doing tests and I think if utilities are 

doing tests and shows that there’s a difference, then 

we can take that a little more seriously, but this 8.8 

percent data point is kind of out of left field and, 

you know, we had meetings with AHRI where all the 

manufacturers, all the instantaneous manufacturers 

objected to this and AHRI represented us in objecting 

against this to the CEC when they proposed it for part 

of -- I think it was the Title 24 tabulation. 

 There definitely is, you know, some objection 

from the industry on this. 

 MR. BROOKMAN: Thank you. 

 DR. LEKOV: DOE’s not defending other 

people’s results. It has been used in their analysis. 

As I mentioned, it’s more than just taking this point 

because also there are this explanation of the general 

partners which are big fraction of the general partners 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

193

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

are short draws that are not able essentially to store 

the energy used in the beginning and end of the draw. 

It goes directly to the pool. 

 So it’s a weighted average of number of flows 

of draws. This is what I write in the report. Any 

data and input provided would be for the valuable 

refinement. 

 MR. BROOKMAN: John. 

 MR. CONFREY: John Confrey, Noritz North 

America Corporation. Because there is a possible 

explanation for why this is possible, it doesn’t mean 

that it’s true, in my opinion. 

 MR. BROOKMAN: So DOE would really welcome 

any data, however it could be freed up, for this 

purpose. Don. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. 

 I’m trying to understand how this 8.8 percent 

adjustment is being used. It’s going to be used in the 

cost-benefit of choosing the efficiency levels of the 

-- this is my understanding. It’s going to be used in 

the cost-benefit of choosing efficiency levels and 

figuring out how much -- what would be the economic 

efficiency point, but it’s not going to change the 

measured efficiency level of the water heater and how 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

194

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the standard is set, is that correct? 

 DR. LEKOV: Of course, this is correct. 

 MR. BRUNDAGE: Okay. 

 DR. LEKOV: Also, it’s applied throughout the 

base case and the efficiency standard levels. 

 MR. BRUNDAGE: I would say that ideally what 

we need to have is a draw pattern with shorter draws. 

It was not -- with storage water heaters, it’s not a 

big issue. I think it’s more of an issue when you 

start talking instantaneous. A revised test procedure, 

I think, would be the best, cleanest solution, but I 

know ASHRAE’s working on one, but it’s probably not 

going to be ready in time for this rulemaking. 

 Thank you. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. First 

of all, Alex, just a quick point of clarification on 

Bullet Number 2. it says, “And rated capacity,” and at 

least my experience is that designation of “P” means 

input and if that’s true, I would suggest calling it 

something other than rated capacity because capacity, 

we tend to think of the volume. 

 DR. LEKOV: You’re correct. Just a typo 

here. 

 MR. STANONIK: All right. And to this other 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

195

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

issue of the tankless gas water heater factor to reduce 

the efficiency in this report and everything, okay, 

the fact -- if you have talked to other people, the 

point is that there is still this one study and it 

looked at one product in one home with two people. 

 Alex, I don’t remember if that product was a 

variable input product or a constant input product, but 

there’s quite a few models out today that are variable 

input. The manufacturers, I think, have tried to 

evolve the product to have better performance at lower 

flow rates because they recognize that not every use is 

at three gallons a minute or whatever, and I just think 

that there is -- you know, Doug has asked, well, if we 

have more data. Well, we don’t have data and even if 

that’s -- that may be being developed, but that still 

gets back to the point of taking -- there’s no other 

way to say it -- one data point and applying that as a 

universal rule in an analysis as important as this. 

That’s just not a valid conclusion. 

 MR. BROOKMAN: I really think we’re getting 

repetitive and it’s time to move on. 

 MR. STANONIK: You’re right. 

 MR. BROOKMAN: Harvey, go ahead briefly. 

 DR. SACHS: Harvey Sachs, ACEEE. First of 

all, I would like to express agreement with Mr. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

196

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Brundage, which may shock him, that our comments in the 

Framework did ask that we look hard at the rating 

method. 

 Secondly, it’s not a single study on the 

difference in rated and effective efficiency. There is 

a field study to which Mr. Stanonik has referred. 

There’s been extensive work with alternate draw 

patterns considered to be more reflective of daily use, 

both by Pacific Gas and Electric and by Consumers 

Union, the latter published in October. 

 These indicate that the DOE test method gives 

approximately nine EF points higher value to a tankless 

water heater than its infield performance would suggest 

for the comparable tank type. Whether the nine points 

could be seven or six or 13 is a different issue, but 

the laboratory studies which go well beyond the CEC 

2006 consistently indicate that the EF proceeding is 

not a good reflector of the infield performance. 

 MR. BROOKMAN: Okay. Thank you, Harvey. 

Steve, briefly. We’re going to keep moving on. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 

just wanted to go back to the bullet on Energy Use of 

Heat Pump Water Heaters. It says, “Performance 

Adjusted to Account for Different Ambient 

Temperatures.” 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

197

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 I guess it’s T -- then I see above “T Ambient 

Temperature of the Air Surrounding the Water Heater 

Based on Installation Location Assignment.” 

 So am I to infer that for heat pump water 

heaters that T Ambient has been changed for heat pump 

water heaters compared to other storage water heaters? 

 DR. LEKOV: No. Here is a description of the 

adjustment. As I mentioned, there in fact were done 

two adjustments. One is for below freezing 

temperatures and I think this is not what you refer to. 

You are referring to the cases when an electricresistant element operates when the surrounding 

temperature is above the freezing point. 

 So this particular adjustment accounts for 

the cases when households that operates the water 

heater has a larger water use which cannot be 

compensated by the operation of the heat pump water 

heater. So the electric-resistant elements are kicking 

off independently of what the temperature is and there 

is data used in this study to allow for this 

adjustment. 

 MR. BROOKMAN: Let’s move on to Energy Use 

Results and the next table, Based on Average Annual 

Energy Use Results. 

 I guess not. Molly. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

198

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. 

 I had a quick question about you say you 

account for the cooling effect of the heat pump. Do 

you include the possible cooling benefit in the summer 

months from the additional cooling that comes from the 

heat pump? 

 DR. LEKOV: DOE’s analysis accounts for the 

costs that the household experienced during the heating 

season and for benefits during the cooling season. The 

results indicate that the heating costs are much, much 

higher than the benefits during the summer. 

 MR. BROOKMAN: Go ahead, Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Again going back to that Slide 95 again, when I saw 

different ambient temperatures, I thought you were 

changing the ambient temperature just for that water 

heater and kind of the bigger picture, the slide makes 

it appear that you’re treating some water heaters a 

little differently than the other water heaters when 

you’re going through the analysis. 

 Now, obviously there are probably good 

reasons for that, but again it’s a matter of if you’re 

doing certain things for certain water heaters, like 

field conditions or we’ve got a large family here, so 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

199

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

it’s going to kick on certain things that aren’t in the 

Test Procedure, I have a little hesitation with that, 

you know. You’re treating different products a little 

differently but with significant impacts on some of the 

life-cycle cost results. 

 DR. LEKOV: That’s correct. It has about 10 

percent impact on the energy usage on water heaters. 

The model developed by John Maxwell has been 

extensively used over the last four years and the 

report on many occasions. 

 MR. BROOKMAN: So now let’s press on. Energy 

Use Results. 

 DR. LEKOV: So here is the average energy use 

results for the three products, all product classes. 

 MR. BROOKMAN: Yes, please, George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 I noticed with the gas-fired storage, there 

is zero electric consumption and for instantaneous, 

there is zero electric consumption. Given the fact 

that we have electronic ignitions and we have 

electronic modules, I mean, what’s the reasoning for 

zero electric? 

 DR. LEKOV: It’s a baseline efficiency level 

which is assumed has no electricity consumption. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

200

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. KUSTERER: Well, that’s an assumption 

that shouldn’t have been made because it does consume 

electricity. 

 MR. BROOKMAN: The baseline models, a good 

portion of them use those electronic switching and 

ignition and the like? 

 MR. KUSTERER: Millivolt is basically from 

the year one, so millivolt controls are no longer used 

but yes, they do use -- they do consume electricity. 

 DR. LEKOV: That’s reflected here. It has a 

small use of electricity kilowatt hours to account 

exactly for the ignition issues. 

 MR. KUSTERER: But not on the gas and 

instantaneous. 

 DR. LEKOV: On the gas-fired storage water 

heater, it’s a natural draft unit and that’s it. The 

baseline unit, .59, has no electronic ignition. 

 MR. KUSTERER: But it still has an electronic 

control or an aquistat or it still requires power. 

 MR. BROOKMAN: Let’s go to Constantin. Go 

ahead. 

 MR. von WENTZEL: I disagree with you 

earlier, George, but there are instantaneous gas water 

heaters on the market that do not require external 

power and that do operate on standing pilot systems 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

201

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

currently. 

 MR. KUSTERER: I appreciate that, but there 

are -- 

 MR. von WENTZEL: And they have -- 

 MR. KUSTERER: -- also units on the market 

that use electronic controls and that needs to be taken 

into -- 

 MR. von WENTZEL: And they have electronic 

controls in them, even though they use standing pilot 

systems. 

 MR. KUSTERER: Okay. But that still requires 

consumption. 

 MR. von WENTZEL: But not of line power. 

They either run -- some of them run on little water 

generators, others run just off of the standing pilot. 

It doesn’t necessarily require line power which is what 

I believe the issue is here. 

 MR. BROOKMAN: Okay. So irrespective, if 

anybody in the room wishes to comment and provide more 

data to the department on how these numbers would be 

adjusted, that would be helpful. 

 Steve Rosenstock. 

 MR. ROSENSTOCK: So again, just to -- again 

from the earlier slides, that 17.0 for the 

instantaneous gas water heater is after the 8.8 percent 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

202

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

adjustment? 

 DR. LEKOV: Back to 95? 

 MR. ROSENSTOCK: No, 97. Where it says 17.0 

million BTUs per year for the instantaneous gas-fired 

water heater. 

 DR. LEKOV: Oh, okay. 

 MR. ROSENSTOCK: That’s after the adjustment? 

 DR. LEKOV: Thank you. Yes, it accounts for 

8.8. 

 MR. ROSENSTOCK: Thank you. 

 MR. BROOKMAN: Okay. So other comments on 

this table showing water heaters and direct heating 

equipment and pool heaters, efficiency levels, fuel and 

electricity? 

 (No response.) 

 MR. BROOKMAN: Okay. Historical Energy 

Prices. This ought to be non-controversial. 

 DR. LEKOV: Okay. So with that, -- 

 MR. BROOKMAN: Always is, always has been. 

 DR. LEKOV: -- we figured out the consumption 

and now we need energy prices to get the cost 

advantage. 

 So DOE developed historical and forecasted 

data. Here are the four fuel types and the sources are 

listed here. The data is developed for the 13 regions 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

203

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

as commonly used in the analysis. 

 Next slide is the forecasted data and 

essentially not much to say. It is taken from the 2008 

AO. The forecast is until 2030. After that, we apply 

an extension methodology that EIA developed for FEMP 

and that’s also been commonly used in other 

rulemakings. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. As we move 

forward with this, of course, we’ll be interested in 

what you do on sensitivities to these price forecasts 

and as well as doing the updates as they become 

available for 2009-2010 and so on. 

 DR. LEKOV: The 2009 just became available 

and will be reflected in the DOE’s NOPR Analysis. 

 DR. SACHS: Thank you. Harvey Sachs again, 

ACEEE. 

 It’s certainly not a critique of your work, 

but the surprising decoupling of the electricity and 

natural gas forecasts beyond the year 2020 is really 

quite surprising. 

 MR. BROOKMAN: Additional comments? Yes, 

Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. DOE has 

done some analysis of what this standard will do to the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

204

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

price of gas and it would be very helpful to have the 

projections of energy prices, of natural gas prices 

that are used to derive the life-cycle costs of these 

products to reflect the fact that standards will impact 

the price of natural gas. 

 MR. BROOKMAN: They aren’t reflected here? 

 DR. LEKOV: The gentleman from EarthJustice, 

essentially he refers to the DOE’s Preliminary Analysis 

impact of the standards on the natural gas prices which 

are done at the end of the National Impact Analysis, 

and basically are you suggesting to have to look to 

include the reduction in the cost in the forecast here. 

 MR. BALLO: Tim Ballo, EarthJustice. Yeah. 

Well, essentially, you’re saying that the standard will 

impact the price of natural gas in one part of your 

analysis and then to have the rest of the analysis not 

reflect that impact. I think if the department does 

show the impact, the whole analysis should reflect it. 

 DR. LEKOV: As we’ll mention probably in 

about an hour at the pace we are going, the natural gas 

impact price scenarios are for this group here to 

provide the input for the actual analyses that are 

going to happen during the NOPR phase. DOE proposes to 

do this in the NOPR phase. 

 MR. BROOKMAN: Steve Rosenstock. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

205

 DR. LEKOV: So there were no intention in the 

discussions to be reflected. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Go ahead, Steve. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI, and 

as before you’re assuming that some of these will be 

placed in commercial facilities when you’re doing the 

analysis? 

 DR. LEKOV: Excuse me? 

 MR. ROSENSTOCK: For the price projections, 

that a certain percentage will be at commercial rates 

rather than residential rates? 

 DR. LEKOV: For the current DOE analysis 

assumes that these three products will be entirely 

installed in the residential environment. 

 MR. BROOKMAN: Okay. Final comments on these 

two charts, these two forecasts? Yes, Robert. 

 MR. GLASS: Robert Glass with Raypak, and I’m 

sorry, I need to digress for just a second, just to the 

last thing that we talked about, the baseline energy 

costs. 

 The pool heater was listed. It had 78 

percent thermal efficiency for the baseline and then it 

had an assumed fuel consumption in million BTUs per 

year. 

 The thing that we have is right now, the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

206

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

minimum efficiency level is 78 percent but there are 

essentially -- there are exactly zero products 

commercially available today at 78 percent. The lowest 

efficiency product that is currently being sold is at 

79 percent and so the analysis in Section 7 starts at 

the 78 and then shows savings that are going along but 

there’s no product being sold at 78 percent. 

 So I’m just kind of wondering why. I know 

that 78 percent is the baseline, but showing that value 

and showing savings going along is -- doesn’t fit the 

current pattern of products in the North American 

market. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: I understand the confusion. 

Essentially, the baseline is needed because the 

analysis needs to refer to the minimum current 

standard. In the analysis, in the analysis, DOE uses 

base case. Base case represents the mixture of 

efficiency levels at the effective date of the standard 

and, essentially, it 100 percent addresses your concern 

and you’ll see the results for the base case which 

shows a much higher penetration of efficiency levels at 

80 and plus. 

 MR. BROOKMAN: This 78 percent reflects a 

distribution? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

207

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: No. 

 MR. BROOKMAN: No? 

 DR. LEKOV: That’s the -- exactly what’s 

listed here is a baseline average annual use. 

 MR. BROOKMAN: Okay. Go ahead, Robert. 

 MR. GLASS: Just one follow-up comment. The 

only issue is then when you’re projecting what the 

annual energy savings are as a result of whatever level 

is attained, it won’t be truly reflective because it’s 

the -- the line that you’re starting at is not what’s 

being used here. The minimum efficiency of any product 

currently available in the market is higher than the 

minimum. 

 So your savings that you’re projecting will 

not be realized and cannot be realized. That’s the 

only comment. That’s the reason why I’m raising that. 

 MR. BROOKMAN: Okay. Thank you for that. 

 DR. LEKOV: That’s completely addressed 

through the so-called base case concept which 

essentially is very different from the baseline 

concept. I think two more sentences, you’ll see what 

has been. 

 MR. BROOKMAN: Okay. So then let’s proceed 

then with repair and maintenance. 

 DR. LEKOV: So annual operating expenses 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

208

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

require also to account what the household will use for 

-- will essentially use for repair and maintenance. 

 The maintenance is the price of a regular 

scheduled product maintenance and the table here 

summarizes the actions done in terms of maintenance for 

the products under consideration in this rulemaking. 

 DOE put a significant effort to document the 

repair and maintenance calculations and they are in 

Chapter 8 of the TSD as well as in Appendix 8-B. There 

are specific assumptions which I could start talking 

about those but are related to the heat pump water 

heaters. They’re associated to all storage water 

heaters, instantaneous and pool heaters, and DHE. This 

is in terms of maintenance. 

 MR. BROOKMAN: Yes, sorry, Mike. 

 MR. BEYERLE: Mike Beyerle, GE. I would just 

like to challenge on the preventive maintenance for 

heat pump water heaters. I don’t know what product you 

used to gather your assumptions on, but properly done, 

this product requires no more maintenance than does 

your household refrigerator which is essentially none. 

 DR. LEKOV: That’s half true. In terms of 

the way the analysis was done, in fact, there is -- the 

analysis says preventive maintenance to check the 

evaporator and refrigeration system for units that are 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

209

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

installed outside of the indoor space. That’s the 

statement about the heaters and refrigerators is 

correct when it’s located where the refrigerators are 

located. But for conditions which we have essentially 

literature collected to reflect this issue from 

Australia’s experience describe equipment which they 

have installed outside. Anyway, this resulted in a 

certain fraction of households getting this result. 

 MR. BROOKMAN: Mike, go ahead. 

 MR. BEYERLE: Okay. I guess my only concern, 

okay, is that there are some units that will -- that 

are high-maintenance design. I’m speaking of a lowmaintenance design, okay, and that you may improperly 

judge the product based upon the experiences currently 

in the market today. 

 MR. BROOKMAN: And in our markets, will they 

be placed outside? 

 MR. BEYERLE: I believe in the United States 

most of the units will be inside. 

 DR. LEKOV: But there is a fraction that -- 

 MR. BEYERLE: There will be a fraction. 

 DR. LEKOV: -- will be in other locations. 

 MR. BROOKMAN: Okay. Thank you for that 

clarification. 

 So here you see two tables talking about 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

210

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

maintenance costs and repair costs. Yes, finish with 

that. 

 DR. LEKOV: And with that, I could continue 

with the repair costs. 

 Okay. Repair costs is the price for 

replacing or repairing components which have failed. 

The table here again summarizes the main components 

which we assume that may need repair and those are 

pilot ignition, electronic ignition, power vent or 

draft vent, circulating air blowers, and heat pump 

compressor and evaporator. On the right side are the 

products which this is related to. 

 Again, the methodology for assessing the cost 

of this component is essentially identifying the 

component, finding the reference that shows the 

frequency of related maintenance and assign a cost to 

this. 

 So for all those as listed here, as 

applicable for all products in this rulemaking, DOE 

developed the detailed methodologies which are 

documented in Appendix 8-B and Chapter 8. 

 MR. BROOKMAN: Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Alex, I 

can’t help but note the footnote that says, “No repair 

costs for electric storage water heaters.” 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

211

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 I -- well, I guess I believe on occasion, 

since it’s fairly easy to do, that the heating elements 

on electric storage water heaters get changed out when 

they fail. Why is the analysis not considering that? 

 DR. LEKOV: If there is data to reflect this, 

DOE will do it. In our really extensive evaluation of 

the available experience, we were not able to find any 

references to element changes. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. I’ve been 

pleasantly surprised, Alex, recently at the kinds of 

data that the distributors groups have been able to 

generate, and I suspect that a few calls to people will 

be able to get a good estimate of the number of 

replacement resistive elements per year. 

 My comments would follow Frank’s and I was 

just curious if my mother-in-law was the only one in 

the country that had to replace the resistive elements. 

 MR. BROOKMAN: John. 

 DR. SACHS: And had her son-in-law do it. 

 MR. CONFREY: John Confrey from Noritz. I 

noticed the repair costs here are applied only to a 

fraction of households. 

 My question is in reference to the deliming 

costs for the instantaneous gas-fired water heaters. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

212

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Shouldn’t those be also only applied to a fraction of 

households? 

 DR. LEKOV: It’s always done as to a fraction 

of households, depending on the sets of conditions and 

assumptions in the analysis. 

 MR. CONFREY: The deliming costs was, also? 

 DR. LEKOV: The deliming costs -- 

 MR. CONFREY: Because that’s in -- 

 DR. LEKOV: It’s a maintenance and it’s 

applied on an annual basis. 

 MR. CONFREY: On a fraction of households or 

on -- so deliming every household every year? 

 DR. LEKOV: Every year, deliming costs. 

 MR. CONFREY: I guess my point is I think 

that’s excessive. I think it should be a fraction of 

households. 

 DR. LEKOV: Give this direction in your 

comment, if there is any information about this, and it 

will be considered. 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: Well, the problem I see with 

that is the operator’s manuals for Rinnai and the other 

instantaneous water heaters recommends doing it on an 

annual basis and I think that’s the reason the 

department’s doing it this way. They say to do it in 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

213

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the manual on an annual basis. 

 MR. BROOKMAN: John. 

 MR. CONFREY: John Confrey from Noritz again. 

I believe a tank water heater’s manual also says drain 

the tank every year, get rid of the lime that’s in the 

tank. There’s no maintenance costs put in here. 

 MR. BROOKMAN: George, go ahead. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 If you look at -- I don’t have -- oh, yeah. 

Excuse me just one second. I don’t mean to belabor 

this. But if you look in here, it’s well defined. 

 MR. CONFREY: What is that? TSD? 

 MR. KUSTERER: That’s the TSD and the pricing 

is all defined. Where it says like on the oil-fired 

storage heater included in annual contract, you’ll see 

that there’s an additional charge for that, but it’s 

all in the TSD. 

 MR. CONFREY: John Confrey, Noritz again. 

But there’s no maintenance cost for gas-fired and 

electric storage water heaters, right, in this program? 

 MR. KUSTERER: You’d have to ask him. 

 MR. BROOKMAN: Alex. 

 DR. LEKOV: The fact is in the TSD, DOE 

mentions that gas storage and electric storage 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

214

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

manufacturers recommend it be drained and flushed 

annually to minimize deposition of sediment, 

maintenance operating efficiency, so on. 

 MR. KUSTERER: And replace anode rods. 

 DR. LEKOV: And in the report we used, it 

says, “Indicates that this practice is seldomly done.” 

 MR. CONFREY: John Confrey, Noritz. 

 DR. LEKOV: So it relates to your question 

about deliming. If you have this type of experience -- 

 MR. CONFREY: Right. I would argue that 

deliming is seldomly done or done on a fraction of 

households and if it is, we should apply a fraction of 

households and then also add maintenance costs to the 

tanks to a fraction of the households. 

 MR. BROOKMAN: Okay. Thanks for that 

comment. Don. 

 MR. BRUNDAGE: One final comment on this. 

The deliming process for a gas tankless is something 

that really seems to be beyond what the homeowner could 

do. The flushing of an electric or gas water heater is 

just sticking a bucket under the valve and running it 

for a minute every year or two. 

 I don’t -- I’ve seen the -- I think that may 

be one of the differences, is it’s a homeowner thing 

and doesn’t require outside labor costs. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

215

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Okay. Thank you. Yes, 

Robert. 

 MR. GLASS: This question has absolutely 

nothing to do with deliming. So I’m questioning the 

pool heater reference to “and every five-year 

preventive maintenance schedule.” 

 Recognizing that the vast majority of pool 

heaters are installed outdoors and they are a seasonal 

product which means they’re shut down during the winter 

time, Number 1, all manufacturers state that the 

product should be inspected annually, particularly from 

the standpoint of the fact that it’s been off for an 

extended period of time. 

 Pool heaters are great places for mice and 

other small rodents to be able to develop homes and as 

a result of that failure to provide an annual 

maintenance when you’re starting the product back up 

again can lead to product problems as a result of 

things that may be in there, spiders growing in 

orifices, as I said, rats getting in there. Those are 

things that ought to be considered. 

 So to indicate that it’s just a once every 

five-year preventive maintenance is not appropriate. 

 MR. BROOKMAN: Thank you. 

 MR. GLASS: One additional carry-on is also 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

216

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

in the TSD, it talks about the estimated cost to 

replace the electronic ignition. 

 On the vast majority of product that are out 

there, they use integrated controls where the ignition 

control is a function on an integrated board and you 

cannot replace just that portion of it. So the cost 

that’s estimated in there is much lower than it should 

be because you’re having to replace the entire 

integrated board if you are replacing just the 

electronic ignition. 

 MR. BROOKMAN: So if you’d send in that 

information to the department, that’d be very helpful. 

 Okay. So let’s keep going, Alex. 

 DR. LEKOV: On the first part of Robert’s 

statement, the department has consideration and report 

to the terms of it, but I think those are very valuable 

pieces of information that should be considered. 

 With that, let’s talk about the process. 

Basically, the left part of the chart shows the 

determination of the labor hours and some material 

costs. The second part is associated labor and 

material costs to arrive at the total repair costs. 

That’s just general process. 

 At the end of this section, this is just to 

emphasize the department’s desire to have -- to get 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

217

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

estimates and possible information about the analytical 

inputs for the heat pump water heaters in terms of 

installation, maintenance, and energy consumption. 

 MR. BROOKMAN: So we’ve had some comment 

that’s close to this. Any more specific comments on 

estimated of installation, maintenance and repair costs 

for heat pump water heaters? Mike. 

 MR. BEYERLE: Mike Beyerle, GE. We’d be glad 

to work with the department to publish some nice 

numbers. 

 MR. BROOKMAN: Thank you. Let’s keep going. 

 DR. LEKOV: Now, we had annual energy costs 

and we arrived at annual operating expenses. 

 The next step is to arrive at the life-cycle 

cost operating expenses. So we’ll be looking at the 

set of economic parameters and energy price trends. 

This particular slide shows the department’s approach 

to develop the discount rates and to estimate the 

equipment lifetime. 

 The main thing here to note is the discount 

rate, rated separately for new construction, 

replacement, also distributions based on the Federal 

Reserve Board’s Survey of Consumer Finances for six 

sequential time periods which account for hundreds of 

thousands of data points which result in the average 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

218

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

values as you see here on the screen. 

 MR. BROOKMAN: Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Please refresh my memory. I know that in past 

analyses, I’ve seen that discount rates of three 

percent and seven percent being used for much of the 

analysis and I think that’s kind of by -- it seems like 

it’s been by statute. 

 DR. LEKOV: That’s National Impact Analysis. 

Those are the values mandated by R&D for the National 

Impact Analysis. For the Life-Cycle Cost Analysis, the 

department always does some approach arriving at 

distribution discount rate price. 

 MR. ROSENSTOCK: Okay. 

 MR. BROOKMAN: Additional comments on these 

discount rates? 

 (No response.) 

 MR. BROOKMAN: Then on to Equipment Lifetime. 

 DR. LEKOV: Okay. The next important 

parameter is the derivation of equipment lifetime. The 

table shows the lifetimes used and derived for -- the 

distribution of lifetimes as derived for this analysis 

and that’s about it. I’m not going to read the values. 

 Any comments? 

 MR. BROOKMAN: Yes, let’s pause and let them 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

219

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

look. Frank Stanonik. 

 MR. STANONIK: Frank Stanonik with AHRI. And 

this is probably -- well, I’ll see who answers the 

question, I guess. 

 Certainly in reviewing this information and 

particularly when we get to this part of it, DOE in the 

analysis has provided life-cycle costs and payback 

periods. I just wonder at this point if DOE is willing 

to perhaps provide some indication of what it will 

consider a reasonable payback period as opposed to one 

that is -- would, let’s say, cause a possible level to 

be eliminated because it was too long a payback period. 

 MR. BROOKMAN: Would you restate that 

question? 

 MR. STANONIK: Yeah. Basically, what is -- 

in looking at the analysis you have payback periods 

that might range from anywhere from a year or so to 30-

40 years, and I was hoping that DOE might be willing to 

at least give some idea of what it considers to be a 

reasonable payback period in looking at potential 

efficiency requirements. 

 MR. KHAN: Mohammed Khan, DOE. Frank, I 

think generally we would consider a payback period that 

is close to or exceeds the expected lifetime of an 

appliance an unreasonable one. So the ones that could 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

220

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

be considered reasonable I would imagine would be lower 

than that or something less than expected lifetime. 

 MR. BROOKMAN: Frank, do you want to follow 

on there? 

 MR. STANONIK: Nope. Thank you. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. I’m a bit 

embarrassed as I look at Slide 103, the quoted average 

lifetime for instantaneous gas-fired water heaters, and 

the reason I’m a bit embarrassed is that that number, 

20 years, used to be on our website and someone asked 

us where we got it from and we couldn’t figure out 

where we got it from. So I’m very curious if you’ve 

been able to get a source for that 20-year lifetime so 

I can put it back up on mine. 

 DR. LEKOV: It’s probably your website. 

 DR. SACHS: That was what I was afraid of. 

We have taken it down from our website. 

 DR. LEKOV: In fact, we had a number which is 

in the documentation. 

 MR. BROOKMAN: Okay. So other comments on 

these data points, these data generally, I should say? 

Yes, please, Terry. 

 MR. MULLEN: Terry Mullen, Bock Water 

Heaters. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

221

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 Again just an observation. I’m not sure why 

gas-fired storage water heaters would have a longer 

expected life than an oil-fired. They’re essentially 

identical tanks. 

 MR. BROOKMAN: Okay. Thank you. Moving on 

to Preliminary Results. Yes, please, Robert. 

 MR. GLASS: Robert Glass with Raypack. What 

is DOE using from the standpoint of estimated life for 

heat pump water heaters? There’s no line that’s in 

here. So what is being used from an analysis 

standpoint? 

 DR. LEKOV: Heat pump water heaters are part 

of the electric storage water heaters. 

 MR. BROOKMAN: So you’ve got to say more than 

that. You mean they’re combined -- 

 MS. ARMSTRONG: So it’s the same as electric. 

 DR. LEKOV: The next two slides, you could -- 

you probably saw this in the Executive Summary. So, 

basically, those are the LCC savings and payback 

results for gas-fired and electric storage water 

heaters. 

 The main thing here for people who are 

relatively new to the process to pay attention to the 

Average Savings column. Also, there is assessment of 

the households that -- assessment of the fraction of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

222

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

households, net cost, no impact, and net savings, and 

as well as the additional information provided in the 

documentation is about the median and the average 

payback. 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: You don’t show a chart here 

for pool heaters, but I would make sure you use an 

appropriately low price per kilowatt hour there because 

pool heaters are kind of unique in that they are always 

an off-peak load and at least in my company, a high 

percentage of people on pool heaters are on time-of-use 

rates and pay a low price for the time the pool 

heater’s operating. 

 Thank you. 

 MR. BROOKMAN: Thank you. Steve Rosenstock. 

 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

Looking at again these LCC savings, during the last 

rulemaking for water heaters, as I recall, there was a 

-- DOE did this band where they said kind -- what they 

called a band of significance and what they said 

basically, I don’t know if DOE is going to stay with 

this methodology for water heaters or not, but they 

said basically plus or minus two percent of the base 

life-cycle cost was “within the” -- it was not 

significant and so the numbers kind of changed rather 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

223

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

-- it was interesting because with certain water 

heaters, instead of 90 percent, let’s say, or 80 

percent net benefit, you took out that significance, 

you were down to like 20 percent at, you know, 

“significant” savings. 

 So I didn’t know if DOE was going back to 

doing something similar to that for this water heater 

analysis. It was surprising when they did it last 

time, I have to say, and I’m just kind of curious if 

DOE has made a decision about whether they’re going to 

use that sort of band again for water heaters. 

 DR. LEKOV: That’s the format which has been 

uniformly used over the last several years. Your 

recollection is from 2001. I don’t believe we did it 

after that at all. 

 Having said this, if this is something of 

interest to the stakeholders, -- 

 MR. ROSENSTOCK: Well, it was, as I recall --

again, I’d have to check my notes, but as I recall, it 

was done for residential water heaters, as well. 

 DR. LEKOV: It’s possible. 2001. 

 MR. ROSENSTOCK: Yeah. So again, I’ll say 

I’m neutral at this point but just -- I was just very 

-- I didn’t know if DOE was going to reintroduce that 

or not for this rulemaking. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

224

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 Okay. Thank you. 

 MR. BROOKMAN: Please. 

 MR. DANA: Paul Dana, A.O. Smith Corporation. 

In 6, 8 and 12, it talks about a rebuttable payback 

period being three times the annual savings, first year 

annual savings. Are you considering using that? 

 DR. LEKOV: Yes, the -- it include -- there 

is a section in the analysis which shows the table of 

the equipment that meets the three years equitable 

payback requirements. It’s available in Chapter 8. 

 MR. BROOKMAN: Thank you. Yes, please, Joe. 

 MR.BOROS: Joe Boros with Rheem 

Manufacturing. 

 On the LCC savings, Slide 105, there is a --

for Efficiency Line 6, which is the heat pump, there 

seems to be a fairly large difference between the 

median and average payback. 

 Could you please comment on that? Is that a 

data issue? 

 DR. LEKOV: Yeah. What this means is that 

basically the payback is distribution that have very 

long tail. There is very small number of households 

that encounter very large costs. So if you -- when you 

do average, this will show up in the average value. 

When you do a median, which is exactly half of the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

225

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

example, it will come with number -- you mentioned the 

distribution like this, no tail on this side and very 

large on the negative side. So that’s just 

analytically how it is. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE, and thank 

you for bringing up that point because it’s one I 

wanted to bring up from a slightly different direction. 

 When we combine the relatively high capital 

costs of a heat pump water heater or, for that matter, 

a condensing gas water heater with a subset of 

households which have very small water use, you will 

get this long tail and for this reason, we believe that 

it’s an important working assumption for the department 

in the NOPR to consider the possibility of dividing 

water heaters into two classes by capacity, so that we 

have a class that we might provisionally call family 

service and a class we might provisionally call 

specialty or smaller uses, and I believe that that will 

greatly affect the LCC, and it’s within the statutory 

authority of the department. 

 Thank you. 

 MR. BROOKMAN: Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. We were 

just talking about the rebuttable presumption payback 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

226

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

period. 

 I’d note that in the TSD, it appears that 

heat pump water heaters would have a simple payback of 

2.7 years which is within the three-year rebuttable 

presumption period. So it’s then incumbent on the 

department to explain why it believes that the 

presumption is rebutted and that heat pump water 

heaters are not economically justified because standing 

on that simple payback period analysis, they would be 

under the statute. 

 DR. LEKOV: It’s just a calculation math. As 

you correctly pointed, it’s a simple payback based on 

test procedure assumptions. This one is based on field 

conditions. So apparently under field conditions, the 

heat pump water heaters operate much more inefficient 

compared to the conditions described by the DOE Test 

Procedure. 

 MR. BROOKMAN: Hold on. Tim. 

 MR. BALLO: Tim Ballo. Just to follow on, it 

may be true that the field conditions represent a more 

realistic analysis in the last cost analysis. However, 

Congress has kind of made this choice for the 

department. If the simple payback period analysis 

shows a three-year or less payback, it’s presumptively 

justified and I think the department would have to come 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

227

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

up with some sort of reasoning, other than the fact 

they like their analysis better. Congress has made 

that choice. 

 MS. PINTO: This is Francine Pinto from GC. 

As we’ve said, you’ve made this comment in several 

other proceedings, and as we’ve said before, it’s a 

rebuttable presumption and DOE always does a full 

analysis and takes into consideration all the criteria 

in EPCA. 

 So I’ll leave it at that, but we’ve made that 

statement every proceeding and we understand your 

comment. 

 MR. BROOKMAN: Thank you, Francine. George. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 Alex, I’m kind of confused. I might have 

been napping there for a minute and I do apologize. 

 But I Slide 104, we’re looking at, okay, say 

Item Number 3, Energy Factor .64, go all the way over, 

it tells me it’s going to take 41.5 years for a 

payback? Is that what it tells me? 

 DR. LEKOV: That’s correct. The reason is 

you could go back and look at the average savings. In 

fact, you’re talking about an introduction of very 

expensive design options which essentially has no 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

228

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

payback beyond the lifetime that could -- 

 MR. KUSTERER: So then it would behoove me as 

a property owner or homeowner to buy the most least 

efficient product and therefore get a payback. Isn’t 

that -- I mean, if I go Level 1, go all the way across 

which is not a .62, I’ll be paid back in a year and a 

half. So I should not spend the extra money to buy a 

more efficient product because I’m going to only have a 

41-year payback period. That’s not a very good 

investment. 

 DR. LEKOV: That’s not the criteria for a 

personal decision. This is an analytical approach that 

illustrates what is the implication of Life-Cycle Cost 

Analysis. 

 MR. KUSTERER: I see. Thank you. 

 MR. BROOKMAN: Okay. Steve Rosenstock. 

 MR. ROSENSTOCK: Quick question. Steve 

Rosenstock, EEI. 

 For that Line 3, where it says .64, the 

average operating cost, is that fuel plus maintenance 

or is that energy plus maintenance? Is that why it 

went up for that product? 

 DR. LEKOV: That explains includes 

everything. It includes first the operating savings, 

plus the maintenance and repair costs. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

229

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. ROSENSTOCK: Thank you. 

 MR. BROOKMAN: Okay. So additional comments? 

We’ve been, I think, dealing with both 104 and 105. 

Additional comments on these slides? 

 (No response.) 

 MR. BROOKMAN: I think at some point here 

before long we should take a break. 

 DR. LEKOV: That’s exactly the time to take a 

break because we’re done with the LCC Analysis. 

 MR. BROOKMAN: Yeah. So let’s take a break 

now. It’s almost 3:30. Let’s resume at 3:45. Please 

wear your badges inside the building. There are 

restrooms on both ends of the hall. So there’s a soda 

machine downstairs just around the corner to the left 

from the elevators. 

 (Recess.) 

 MR. BROOKMAN: Okay. We are proceeding, and 

I believe we’re on Slide 107 or something like that. 

For those of you that are new to these proceedings, 

once we get to the NOPR slides, they tend to go -- 

they’re a lot more prospective and so they go quicker. 

 SPEAKER: Yeah. We’ll fix that. 

 (Laughter.) 

 MR. BROOKMAN: So far today, you’ve 

successfully fixed it all. Yes, that’s correct. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

230

1 

2 

 MR. KUSTERER: The numbers have decreased. 

 MR. BROOKMAN: Okay. Let’s proceed. Alex. 

3 Shipments Analysis and National Impact Analysis

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: Okay. So now I’m presenting the 

details on the National Impact Analysis. 

 The two blocks interact here. The purpose -- 

there are two of them, Shipments and National Impact 

Analysis. So the Shipments is to estimate the 

shipments over the analytical period for this 

rulemaking, and the National Impact Analysis 

essentially is to estimate the national energy savings 

and the economic impact in terms of NPV for the 

considered efficiency levels. 

 Here is a flow chart of the process we will 

be following. It’s basically in order to do the NES 

and NPV Analysis, we need some inputs. Many of them 

are coming from the LCC Analysis results and the 

important part comes from the shipment model, and as 

you see on the chart, those, both NES and NPV, are 

calculated for the period 2013-2043. 

 With that, I’ll start to explain the Shipment 

Analysis. You could look at this chart, the upper 

part, where it shows how the analyses were performed 

for new construction and the lower part for the 

replacements. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

231

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 In the case of new construction, the 

information we analyzed comes from the information 

about the new home construction as well as the 

information about the saturation of water heaters in 

new homes. 

 Those are the results and after that adjusted 

for potential fuel switching between the fuel types and 

this way you can arrive with the adjusted new 

construction shipments. 

 The replacement shipments, basically the new 

main input sections are the historical shipments and 

the water heater lifetime. Once this is done, both 

replacement and new construction shipments are combined 

to arrive at all shipment by fuel type. In addition, 

we separate the gas shipment to two parts, for storage 

and instantaneous. 

 MR. BROOKMAN: George. 

 MR. KUSTERER: Real quick question, Alex. 

George Kusterer, Bock Water Heaters. 

 Due to the economic impact and the downturn 

in construction, will DOE reassess this calculation or 

analysis? 

 DR. LEKOV: Couple of slides later, you’ll 

see the actual forecast and you’ll be able to comment 

in a more concrete way. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

232

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. KUSTERER: Thank you. 

 DR. LEKOV: The shipment models -- 

 MR. BROOKMAN: Let Harvey go here. Sorry, 

Alex. 

 DR. LEKOV: No problem. 

 DR. SACHS: Harvey Sachs, ACEEE. I would 

request that you turn your attention to Slide 110, the 

column under -- line under New Construction Shipments 

which parenthetically says, “For Heat Pump Water 

Heaters,” and as I look at that, it’s not at all clear 

to me that that shift would be a shift to gas water 

heaters if the gas water heater standard were 

condensing and the costs of the gas water heater for 

new construction are comparable then to the heat pump 

water heater. 

 So that it’s not at all clear that this is a 

unidirectional error but in fact is dependent upon the 

technologies compared. I see already a shift to power 

vents in areas of the north to avoid the chimney 

entirely when coupled with condensing gas furnaces. 

 DR. LEKOV: With that, this chart just shows 

the principle applied in an area where we’ll be 

discussing the -- 

 MR. BROOKMAN: It’s not meant to be fully 

descriptive? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

233

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: Yeah. 

 DR. SACHS: Thank you. I apologize for 

barking at you. 

 DR. LEKOV: No problem. 

 MR. BROOKMAN: That’s okay. A useful 

comment. 

 DR. LEKOV: So shipment model inputs. 

Basically, on the left side are all the inputs for the 

three products. On the right side are the sources. 

 So for all product, new construction and 

replacement, lifetime is needed, comes from lifetime -- 

from Life-Cycle Cost Analysis. 

 New construction shipments. In the case of 

water heaters, what’s needed is the forecasted new 

housing as well as the water heater saturation in the 

new housing. For pool heaters and DHE-only, forecasted 

new constructions are needed. 

 Historical shipments for the three products, 

the sources are listed on the right side, water heater, 

AHRI data submittals, and DHE, also. Pool heaters, DOE 

purchased commercially-available data which had some 

information about the pool heaters market, and more 

information about this will appear during the 

discussion of the pool heater shipment model. 

 The last is the shipments distribution by 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

234

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

product class, again came from the AHRI data submittal. 

 MR. BROOKMAN: All shipments model inputs. 

Robert. 

 MR. GLASS: Robert Glass, Raypak. I’ve just 

got a question or a comment on the new construction 

from a shipments standpoint that you’re looking at. 

 The thing that we’re seeing across the 

country is that the new construction are tending to be 

on smaller-sized lots from the standpoint of increasing 

the density of housing in particular areas and as a 

result of that, the smaller the lot size the less the 

likelihood of a pool actually being installed on those 

lots. 

 So where you’re projecting out from the 

standpoint of addressing the new construction 

standpoint, the size of that market is actually 

declining because of the lot size issues and 

municipalities that have lot clearance issues from the 

standpoint of your neighbor not smelling your products 

of combustion from your gas pool heater. 

 So there’s more and more restrictions that 

are making it -- the size of the new home construction 

that have pools is actually a declining market and I 

don’t know that DOE has that information. 

 MR. BROOKMAN: Thank you. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

235

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: There will be more discussion on 

this. This is a very valuable point, Robert. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: Here is one, I’ll characterize, 

interesting part of the analysis. 

 DOE developed a separate approach for the 

assessment of market penetration of instantaneous gasfired water heaters. In fact, what DOE did is to model 

three scenarios of instantaneous gas-fired water heater 

market penetration based on experience with 

instantaneous water heaters in Australia. 

 Why Australia? It happens that Australia has 

a similar mixture of products, storage and 

instantaneous. Also, they had -- they started with 

instantaneous water heaters much earlier on a larger 

scale than U.S. about 20 years ago. 

 On the other hand, there are also 

differences. The Australian market, the consumer price 

of storage and instantaneous water heaters are very 

similar while in the United States, at that point 

there is somewhat of a significant differential. 

 Therefore, DOE develops scenarios that are 

lower than the Australian market. In fact, the default 

scenario is 50 percent of what’s happening in Australia 

and the lower scenario is 75 percent lower, higher 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

236

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

scenario is 25 percent. 

 At that point, DOE requests input from 

stakeholders about the model used to assess the market 

penetration of instantaneous gas-fired water heaters in 

the United States. 

 MR. BROOKMAN: Frank. 

 MR. STANONIK: Frank Stanonik with AHRI. 

Well, first of all, the comment and at the risk of 

belaboring the point, I mean, this is a pretty 

interesting graph, but if you tried to graph what we 

know so far in the instantaneous water heater market in 

the U.S., you certainly had a growth curve that’s 

probably a little different than this, but since 

certainly ’08 and who knows when it actually started, 

I’ll say in ’08, I suspect the growth didn’t continue 

to go up. 

 So there may be, some of us hope, a very 

short blip there, but at least a period of time of a 

flattening, if not a slight droop, in this curve and 

the residual effect of that, I think, is going to 

change these curves and I’ll tell you, assuming our 

members are willing to share the information, I think 

they will be, we will try and give you the most recent 

year-end shipment data on all the water-heating 

products just so you can see what’s happened. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

237

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 But then my other question which I just don’t 

understand is, in all cases here, roughly around 2015, 

the assumption is the market flattens out and basically 

the product reaches, I guess, on constant level and 

that just somehow to me seems, I don’t know, a little, 

I guess, counterintuitive. 

 I mean, if it’s growing, why wouldn’t -- and 

if there’s some -- well, why wouldn’t you at least show 

some further continued growth? 

 DR. LEKOV: It’s direct outcome from the 

Australian market. They essentially anticipate that 

under their conditions, market participant water 

heaters will get to a 55 percent penetration and will 

stay there. There are reasons why people, not the 

entire market, will convert to instantaneous water 

heaters. So that’s the Australian market, 55 percent. 

 DOE’s scenarios assume 50 percent of this 

25/75, the three curves here. When we impose the 

trends essentially in the spreadsheets of the 

Australian model, it ends up in 2016. It just -- this 

is the year where the 27.5 percent, let’s say, in the 

50 percent scenario in the United States will be 

accomplished. 

 MR. STANONIK: Frank Stanonik with AHRI. One 

more question. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

238

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 Alex, do you have some idea within this 

Australia experience what the average difference in 

efficiency was between the Australian instantaneous and 

the Australian storage product? 

 DR. LEKOV: They are utilizing the same type 

of instantaneous water heater that is here in the 

United States. So if you convert energy factor, the 

same thing, 82 percent, let’s say. 

 MR. STANONIK: Okay. What about the storage 

product? 

 DR. LEKOV: The storage products, I don’t 

want to speculate right now, but -- 

 MR. STANONIK: Okay. 

 DR. LEKOV: -- I don’t see a reason how they 

could be different because they are exact -- the 

designs are as here in the United States. 

 MR. STANONIK: I’m sorry. One more. I’m 

sorry, John. One more thing. 

 I guess my point is, but we have some things 

in motion that may narrow the gap between a storage, 

gas storage water heater and the instantaneous, and if 

that gap is, say, I’ll say, appreciably different than 

what you see in Australia, that becomes a significant 

factor to discount this pattern. 

 DR. LEKOV: That’s a good point. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

239

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Let’s hear from John. John, 

go ahead. 

 DR. LEKOV: When we did the model, we 

evaluated the technology, our understanding is most of 

what Australia has is natural draft water heaters. If 

you are indicating that the U.S. market is about to 

change above that, that could be a consideration. 

 MR. BROOKMAN: John. 

 MR. CONFREY: Real quickly. In the research 

-- John Confrey, Noritz. 

 The research I’ve done, Australia was really 

the only analog that you could find anywhere for the 

U.S., and second, to Frank’s point, this -- the data 

that your curve is based on, it looks like, 2007. If 

you put 2008 there, I think it’s probably going to bump 

this a little, you know, a little beyond -- slow down a 

little bit and you might want to update the 2008. 

 MR. BROOKMAN: So thank you for being 

responsive to the question because the department is 

wondering how you all would think about using this 

Australian data, whether you think it’s relevant, 

whether you think that experience will be reflected 

here in this forecast period. 

 MR. CONFREY: There are differences, clear 

differences between the two markets, but it’s the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

240

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

closest analog. 

 MR. BROOKMAN: Harvey Sachs. 

 DR. SACHS: Harvey Sachs, ACEEE. Data 

developed during the SEGWHAI project in California and 

from other sources strongly suggests that the 

incremental costs of tankless water heater installation 

over tank-type water heater installation in existing 

houses is extremely high. 

 The water heater market now and for the 

foreseeable future will be roughly 80 percent 

replacements and 20 percent new construction. So 

although we’re seeing some activity in replacements 

with tankless water heaters today, this seems to be 

driven more by people looking for the unlimited hot 

water than for the energy efficiency and for this and 

reasons dealing with demographics would suggest that 

the penetration predicted here is probably high since 

it’s only the new construction market for whom a 

compelling case can be made of attractive economics 

relative to the value presented to the customer. 

 I suspect John is not in full agreement with 

that perspective, but it may be helpful. 

 MR. BROOKMAN: Okay. Thank you. It is 

helpful. 

 DR. LEKOV: I would just show this on the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

241

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

results slides, but basically in 2006, it was seven 

percent of the gas-fired market and -- 

 MR. BROOKMAN: Is that new construction? 

 DR. LEKOV: The DOE model predicts 27.5 in 

seven years and so that’s a trend. 

 MR. BROOKMAN: Joe. 

 MR.BOROS: Joe Boros with Rheem. I would 

like to point out that there are some product 

differences between the U.S. and Australia. 

 First, the products are mostly installed 

outdoors in Australia, both the storage and the 

tankless-type products, and that does make a difference 

in terms of the venting and the total cost of providing 

the solution and installation. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: DOE’s work here in no way is 

taking any cost information in Australia or 

installation. It’s just product penetration. 

 MR. BROOKMAN: Robert. 

 MR. GLASS: In regards to in the Technical 

Support Document, Figure 9.39, which talks about the 

historic and model shipments for the gas pool heaters, 

it shows starting about 2008, it shows a shipments 

number that is -- the slope is twice what the 

historical data that we’ve had, and I’m just kind of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

242

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

questioning or asking how DOE has come up with that, 

particularly from the standpoint that in 2007-2008, the 

market’s come down along with everybody else’s market, 

but the slope of the line that you’re showing on there 

is twice what the previous 27 years has been and we’d 

like to understand why. 

 DR. LEKOV: Yeah. It’s a -- this is about 

three slides away from here. I want to go sequentially 

and I’ll get to pool heaters and at that point, we’ll 

explain the details. 

 MR. GLASS: Okay. I looked at the slide, 

it’s not here. 

 DR. LEKOV: So with that, this is the 

instantaneous -- the storage and instantaneous gasfired water heater historical and model shipments. 

 The slide on the left side are the gas 

storage water heaters. Essentially, you see three 

lines, historical data, model new construction, and 

model replacements. 

 What’s important is to distinguish maybe the 

period before 2007 for which we had the historical data 

and the periods after 2007. In terms of modeling the 

new construction, DOE simply utilized -- those are 

determined by the historical new housing data, the 

Census provides housing completions for the previous 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

243

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

period, and the water saturation by fuel type. So you 

arrive by year annually at the new construction 

calculation. 

 The replacements are determined by the 

historical shipments and the lifetime retirement 

function as applicable to a particular year. You just 

retire the equipment as you go year after year. 

 So on the next part, after 2007, we 

essentially -- in fact earlier, it happened earlier, 

apply the trend for the instantaneous water heaters as 

model on the other side as applied and reflected in the 

shipments of storage water heaters. 

 What I would say here is basically that’s 

about it. Everything here on the instantaneous is 

modeled based on the Australia trend, exactly tracking 

it, and it’s applied on the left part to the storage 

water heaters. 

 MR. BROOKMAN: So let’s go to the pool 

heater. 

 DR. LEKOV: The pool heater chart. The first 

thing to say is the data was done -- the analysis were 

done on data available in 2006. So some trends which 

few people, including Robert, pointed to that’s 

happened the last year or so are not reflected in this 

chart. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

244

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 Before going into the details, let me first 

outline what we have here because we have one component 

that’s different. We have models replacement. We have 

new housing installations and, in addition to this, we 

have market segment identified as first-time owners. 

Those are the folks who already have house and at a 

certain time of owning the house, they decided to build 

a pool. So they are included on this chart. 

 Now, let me start in somewhat of detail to 

determine -- to explain how essentially those trends 

came about. 

 The basic information we had in terms of pool 

heaters data came from the commercial data we purchased 

from a company called P.K. Data. What you get from 

them are historical data about number of pools, the 

historical data fractions of pools with pool heaters, 

historical data about the fuel types of different 

pools, of different pool heaters. 

 This information, we combined with data we 

had from 1993, Pool Heaters TSD, as well as information 

from databases, such as the RECS and AHS. 

 In terms of replacement, what we essentially 

did is and how those are calculated is we got the 

number of pools percent fraction, fraction of pools 

with pool heaters from P.K. Data. From RECS, we got 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

245

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

the number of pools at each year in the United States, 

and this resulted with the number of pools with the 

pool heaters. 

 In fact, in terms of stock, we obtained that 

we have about 1.3 million households owning pool 

heaters and which divided by the average lifetime as 

assumed there, six years, we arrived at about 217,000 

units per year are replaced and this is 2006. 

 MR. BROOKMAN: Let’s have them comment on the 

chart. So -- 

 DR. LEKOV: I’m not there yet. Just so far I 

explained the replacement piece. The replacement piece 

is how we arrived at the data in 2006 and Robert kind 

of requires those -- wants those details in order to 

understand how we extended the trends. 

 So after that, we had the issue of new 

owners. We calculated the new owners together 

basically for both segments, the first-time owners and 

the new constructions, and those came again mostly from 

the P.K. Data which gave us about 94,000 pool heaters 

were installed in new pools in 2006. 

 We did an additional, which I’m not going to 

discuss here, disaggregation and determined that about 

28 percent of this is in new construction and 62 

percent is in the so-called first-time owners. So what 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

246

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

you see here is 311,000. It’s the data and the last 

historical point we were able to model in 2006. 

 From that point on, we simply extended the 

information for new construction of first-time owners 

and replacement, and the data for the replacement is 

essentially a function of the retirement of the -- it’s 

a result of the retirement function. They retire, you 

need to install new, and that’s just automatically the 

model produces this trend. 

 MR. BROOKMAN: Okay. Robert, yes. 

 MR. GLASS: Robert Glass, Raypak. The first 

comment that I have is unless my eyes are playing 

tricks on me, Figure 9.39 of the Technical Support 

Document is not the same as the one that you have here, 

and when I made reference to that it was a straight 

line through 2008 and then it doubled, on the chart you 

have behind you, it’s a straight line through about 

1999 and then it doubles going up. 

 So the information you’ve presented in this 

Technical Support Document does not match what’s up on 

the screen right there. So that’s Comment Number 1. 

 Number 2. You’d indicated that you’ve 

estimated that there’s roughly 1.3 million pools in the 

United States right now. We actually just heard some 

information in the last couple of weeks that indicates 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

247

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that number’s actually closer to 700,000. So I think 

you’re double the number of pools that you’re 

estimating currently in the United States right now and 

that provides -- that’s the double thing, the double 

slope that I’m talking about. 

 The other thing is you’ve got 10 years of 

data of which the slope is very, very consistent and I 

put forth to DOE that that slope is still the same. 

That has not changed, other than the dip in the 

economic factors and things that we have now. The 

slope that you have as far as that 10 years of data up 

through ’90 continues to be the way that the market is 

moving and, if anything, it’s actually coming down for 

the reasons that I’ve mentioned earlier having to do 

with the smaller lot lines, not having as many pools, 

other issues and things that are moving on. 

 So I would just ask DOE to go ahead and look 

at that because I think the shipments data that you’re 

projecting are way out of line. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: With that, P.K. Data, which is 

essentially the marketing data we purchased, is a base 

for this estimate. That’s the first thing. 

 Second is the fact that we used RECS 2001 to 

determine the fraction of pool heaters in new 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

248

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

construction. 2005 RECS, which likely DOE will use for 

the NOPR phase, could be significantly different. So 

could be a base for reassessment. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: Together with any data the pool 

heater industry could provide. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Alex, 

we understand all that, but, first of all, Robert, how 

long has Raypak been making pool heaters? 

 MR. GLASS: Close to 60 years. 

 MR. STANONIK: Okay. So let’s just look at 

-- in this graph, let’s look at 1981 to, let’s say, 

1999. I would think that we could all agree, in 

general, that was a fairly robust period of time. We 

had some lumps in it, but in terms of housing starts 

and things of that nature, and that’s real data in a 

fairly modest growth graph, and then we go from there 

to the projections for the next 30 years and I think 

what Robert is saying, you’re showing projected growth 

that is unprecedented and it just -- I mean, this -- I 

think somewhere in this graph there’s a very erroneous 

underlying assumption because this is not the pool 

heater market. 

 MR. BROOKMAN: Francine Pinto. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

249

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. PINTO: Yes. Francine Pinto from GC. 

Robert, could you give us in writing that number and 

where it came from? 

 MR. BROOKMAN: The difference between the 1.3 

million and the 700,000, for example? 

 MR. GLASS: Robert Glass with Raypak. I will 

find out whether or not or how from the source as far 

as where it has come from, whether or not I can provide 

that information, but I will definitely look into that. 

 MR. BROOKMAN: Because that’s the key. Okay. 

Alex, let’s let him finish and then let’s move quickly 

to Shipments Analysis. 

 Frank, are you finished with your comments? 

 MR. STANONIK: Yeah. I am, yes. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: It’s a key to have data provided 

by the industry. The number Francine pointed is 

absolutely will change the trend. It’s also possible 

to take a look at the lifetime retirement function. 

Any inputs in this particular area will provide a 

significant way of improving the number. 

 MR. BROOKMAN: So, Alex, move on to Shipments 

Analysis. 

 DR. LEKOV: I am doing Shipments Analysis. 

So I explained water heaters. I explained pool 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

250

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

heaters, -- 

 MR. BROOKMAN: Yes. 

 DR. LEKOV: -- and I could go right now to 

DHE. 

 MR. BROOKMAN: Right. 

 DR. LEKOV: Which is the third product. As 

you see, there are four lines here. 

 Let me -- all of them relate to the four 

products associated with the DHE. The upper line 

represents DOE’s analysis on the gas room DHE. As you 

see here, it’s probably -- I should talk a little bit 

more in details. There are two parts of this curve. 

In terms of historical data, you see the bottom before 

the year 2000, those are the declining shipments for 

room heaters. After that, you have four or five years 

which represents the sum of fireplaces characterized as 

room heaters and the room heaters shipments. 

 After that, the flat part is the DOE’s 

forecast which is based essentially on the last four 

years of the forecast representing somewhat offsetting 

trends of fireplaces versus room heaters. 

 Now, switching to the gas wall types which 

are gas wall gravity and gas wall fan, those are the 

two lines that cross in the forecasting area. Based on 

the historical data we have, the gas wall gravity have 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

251

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

a clearly declining trend and just the opposite trend 

on the gas wall fan. 

 So what DOE did is, basically knowing the 

total shipments for these two product classes, simply 

expanded the two trends, showing declining trend for 

the gravity equipment and increasing trend for fan wall 

equipment. 

 MR. BROOKMAN: So comments -- 

 DR. LEKOV: And just to finish the last one 

so everybody to comment on the entire chart. 

 And the last, the bottom one, is the gas 

floor DHE, a very low shipment, clearly downward trend. 

 MR. BROOKMAN: You can note which lines are 

which, which data points correspond to which class. 

 So comments on those? Robert. 

 MR. GLASS: Robert Glass with Raypak. This 

analysis is based on what levels of efficiency? With 

the realization that, I mean, when you’re looking at 

the gravity wall, if the efficiency levels are going to 

be increased, the decline of that may be substantially 

faster or is this assuming, based on baseline units, 

this is what would happen 

 DR. LEKOV: No, no. No, sir. Full-scale 

shipments. There’s no efficiency involved. 

 MR. GLASS: Well, it has to be based on 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

252

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

efficiency because the issue is, if the efficiency 

requirements go up, the slope of all these lines is 

going to be significantly different. 

 As an example, if you went to the level of 

induced draft on a gravity wall furnace, that 

immediately goes to zero because you no longer have a 

gravity wall furnace or gravity wall heater. 

 So it is a direct relationship as far as what 

efficiency level DOE selects, is where the slopes are 

when you’re looking at the years from 2013 out, is a 

direct effect of where the efficiency levels are. 

 DR. LEKOV: So right now, this is a base case 

distribution. It does not reflect any new efficiency 

trends. 

 MS. ARMSTRONG: The total shipments that 

you’re projecting would stay the same. 

 MR. BROOKMAN: Use the microphone. 

 MS. ARMSTRONG: I think this is more of what 

he’s asking. So for your trend, this is a graph of 

total shipments for the market over the analysis 

period. 

 DOE projects that the total shipments value 

as it will go will be different between the base case 

and the standards case. It’s the same, correct? 

 DR. LEKOV: In terms of the chart you see 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

253

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

here and you’re talking about the gas wall gravity and 

gas wall fan, this is -- 

 MS. ARMSTRONG: I’m talking generally. 

 DR. LEKOV: Just these two trends -- 

 MS. ARMSTRONG: I know what it is and I know 

what it isn’t. 

 DR. LEKOV: Again, in terms of just the 

product class that includes gas wall gravity and gas 

wall fan, yes, the total shipments is constant because 

this is how it was derived. We have the total 

shipments and we have gas wall fan-only. 

 So here it automatically comes as a fraction 

from total. 

 MR. BROOKMAN: So then additional comments on 

these? Robert. 

 MR. GLASS: Robert Glass, Raypak. Just the 

comment I have, again when you’re looking at the data 

for the gas wall fan from 1990 through 2002, it’s a 

very, very slow up curve that’s on there, although when 

you look at the trend as far as the gas -- the wall 

gravity units, it continues to be a downturn and it’s a 

faster downturn. So you don’t have an equal number of 

units that you’re looking there. 

 So I think DOE going ahead and changing the 

slope on that gas wall fan, I don’t believe is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

254

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

justified. 

 DR. LEKOV: The historical data is extended 

to 2006. So if you look further, the points, you have 

many more points of fan wall which are clearly close to 

the trend and when you fit the curves, starting from 

the very beginning, with the entire existing historical 

data, the trend is exactly what you see. 

 MS. PINTO: Excuse me. This is Francine 

Pinto. So is all this clear? Okay. Because I am a 

little confused. 

 So, Ashley or Alex, could you clarify or 

somebody clarify so we can walk away? 

 MS. MEYERS: Just one comment. This is Karen 

Meyers with Rheem. 

 Not only is it clear but every time we raise 

a question, it is like it is just completely discounted 

and we are wrong. It is assumed from Alex that we 

actually don’t know what we’re talking about. So I’m 

just -- you know, it needs to be clear and, you know, 

if we don’t understand the analysis, we cannot provide 

meaningful comments. 

 MR. BROOKMAN: Right. So, Robert, keep 

going. 

 MR. GLASS: Robert Glass with Raypak. Again 

part of the reason why I’m asking these questions is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

255

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

because when you were looking at the pool heater one, 

you had data marks that was through ’91 and then you 

had no data marks beyond that, although in the other, 

the direct heating one, you have the same marks all the 

way through the whole process. 

 So from the standpoint of looking at this, I 

don’t know what is actually data or is interpreted data 

from DOE. So I don’t know that there’s actual shipment 

data that you have available up through 2005 and then 

you’re projecting it beyond it because you can’t 

differentiate that looking at the drawing because you 

haven’t identified current data versus extrapolated 

data on the drawings. 

 DR. LEKOV: Okay. The only data that was 

available is from the ’93 TSD. So those are the points 

you see here. After that, the extension is based on 

this historical data DOE purchased from the marketing 

company with the combination of the knowledge of what’s 

happened until, I believe, 2002, and if it’s not clear, 

which you should find a way to explain it in more 

details, it’s really hard right now to show 

spreadsheets or discuss but maybe there are other ways 

DOE could provide, if it’s not clear from the TSD, to 

provide all the details. 

 There is no problem at all to provide all the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

256

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

intermediate spreadsheets we have, all the calculations 

with those, not an issue at all. 

 MR. BROOKMAN: Let me just -- and I am clear, 

I don’t understand this at this point, but this -- 116, 

that includes the base case for shipments, and does it 

include anything else? 

 MR. ROSENQUIST: Maybe I can explain. 

 MR. BROOKMAN: Greg, please. 

 MR. ROSENQUIST: Hi. This is Greg Rosenquist 

from Lawrence Berkeley National Laboratory. 

 The shipments you see on 116 are for the base 

case. 

 MR. BROOKMAN: Right. 

 MR. ROSENQUIST: That is without standards 

and so the assumption for the analysis is that 

standards will not impact the shipments forecasts. 

 So, Robert, you were making the point that 

the entire efficiency standards, the shipments forecast 

will change. Well, that wasn’t done here, and also, 

just to be clear, the shipments, the historical 

shipments data goes out to 2007, right, and so the 

trend you see there is from that last -- those last few 

data points. 

 MR. BROOKMAN: Let’s go to Frank first, and 

then I’ll come back to you, Molly. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

257

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. STANONIK: Frank Stanonik, AHRI. I think 

in the interest of helping to clear this up and that 

last comment, I think it clicked. Okay. 

 For certain products, like water heaters, 

okay, the assumption that efficiency levels won’t 

really change shipments to some degree is -- well, 

let’s just say it’s more valid because water heater is 

not a discretionary item. Everybody wants a water 

heater. Okay. 

 When you get into direct heating equipment, 

what I just said goes out the window because again a 

good percentage of these products are supplemental 

heaters and if it dies, the product needs to be 

replaced when it fails to operate. That consumer has 

the option of not replacing it, just letting it sit 

there, and so as Robert -- that’s really Robert’s 

point. 

 As you increase the efficiency level and 

raise the efficiencies, raise the price of the product, 

 okay, you may be changing that consumer’s decision to 

say, I’m not going to replace it, I’m just going to 

forget it and I’ll save my money and I’ll wait a few 

more years and buy my heat pump water heater and my 

SEER-20 air conditioner and build a pool, yeah. 

 MR. BROOKMAN: Greg, go ahead. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

258

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. ROSENQUIST: I was going to say for 

direct heating equipment, since the shipments are so 

few, again the assumption was made that standards 

wouldn’t affect the shipments. 

 So with that comment, with, Robert, your 

comment, with Robert’s comment, we’ll definitely take 

that into account for the NOPR. 

 For water heaters, we did take into account 

the higher price of equipment, especially in the case 

of heat pump water heaters, and that’s why we’re 

showing this switch to gas water heaters under that 

scenario. 

 MR. BROOKMAN: Okay. Yes, please, Tom. 

 MR. STROUD: I just want to add to a comment 

that Frank made much earlier. Oh, Tom Stroud with 

HPBA. 

 The companies that make our gas fireplaces 

right now are going out of business right and left 

because of the downturn in the economy. There are not 

houses being built. When there are not houses being 

built, there’s not fireplaces being put in and when 

houses are built, they aren’t put in because it’s an 

accessory. 

 So I don’t see our part of that chart 

continuing as it is level. I see it bottoming out. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

259

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Okay. Thank you. We need to 

keep pressing on in the interest of time and so let’s 

just do that. 

 DR. LEKOV: So DOE requests comments for 

direct heating equipment shipments on all aspects of 

it. I would adhere to hearing quite significant input 

and questions about the pool heater analysis, also. 

 MR. BROOKMAN: Thank you. 

 DR. LEKOV: To emphasize the pool heater 

shipments models. 

 MR. BROOKMAN: We’ve already got a good start 

on this one. Molly, please go ahead. 

 MS. TROMBLEY-McCANN: Molly Trombley-McCann, 

PG&E. 

 I just want to strongly recommend that in 

further analyses you clearly differentiate between what 

is historical data and what is projected data points. 

You do that for the Pool Heater Shipments Analysis but 

you don’t do it for the DHE Shipments Analysis and I 

think that was what was so confusing. 

 MR. BROOKMAN: Thank you. That’s helpful. 

Different colors, different symbols, something. Okay. 

Great. 

 So then final comments on Slide 117, 

requesting comment on direct heating and pool, both. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

260

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 (No response.) 

 MR. BROOKMAN: Okay. Fuel Switching 

Analysis. 

 DR. LEKOV: Fuel Switching Analysis. So DOE 

looked at the potential for fuel switching, in 

particular the possibility this to happen from electric 

heat pump water heaters to gas-fired storage water 

heaters. 

 The reason for this is being the potential 

based on the significant cost differential in terms of 

heat pump water heaters. 

 So the analysis evaluated the maximum fuel 

switching potential based on the fraction of electric 

storage water heater households in which gas-fired 

storage water heaters is feasible and has a lower total 

installed cost. So those are the two main assumptions, 

feasible and has a lower total installed cost. 

 So there is a whole analysis approach to 

evaluate these two criteria and I have a flow chart if 

anybody wants to see this in more details. 

 The final result of this analysis shows that, 

depending on the technologies on the gas-fired water 

heater side, it’s possible to expect that between 3.3 

and 8.2 percent of the households in the replacement 

case may switch to gas-fired storage water heaters. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

261

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: So comments on those results, 

 that is, the preliminary assessment. Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. Just to 

reiterate a point I think Harvey was trying to make 

earlier, that I don’t think you can look at the 

electric heat pump water heater standards in isolation. 

I think you have to look at them in the context of what 

the standard is going to be for the gas-fired storage 

water heaters, that if only condensing units are 

available that’s going to change the amount to which 

the market is shifting to those products. 

 MR. BROOKMAN: Don Brundage. Hey, Don, let 

Greg follow on. Greg Rosenquist. 

 MR. ROSENQUIST: Yeah. Tim, just to answer 

your question, for the NOPR Analysis, you know, we do 

trial standard levels for repackaged certain level 

electric water heater levels with certain gas water 

heater levels and for that type -- so there, we’ll be 

considering the very point you’re raising, how the gas 

water heater efficiency will affect the fuel switching. 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: Don Brundage, Southern 

Company. 

 Just to follow up on that, considering that 

the Technical Support Document shows on paper very good 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

262

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

economics for switching to heat pump water heaters and 

very bad economics for going to gas condensing, that’s 

not a major concern to me right now. 

 I would agree there’s some significant 

opportunity for fuel switching. I don’t agree with 

your assumption there’s no switching predicted in new 

construction installations because this is your classic 

agency problem where the person who’s doing the 

construction is not going to be the one paying the 

power bill. All they care about is installed costs. 

Installed costs will be much higher with an electric 

than it would be for a gas. So I think you need to 

include switching in new construction installations. 

 MR. BROOKMAN: Thank you. Okay. We’re going 

to keep going. 

 DR. LEKOV: So DOE would request input on 

this analysis. We heard some of that right now. 

 MR. BROOKMAN: Let’s see if there are any 

others. 

 (No response.) 

 MR. BROOKMAN: I see no additional comments. 

 DR. LEKOV: This slide shows the outline of 

the remaining National Impact Analysis inputs which are 

in addition to the outcome of the Shipments Analysis. 

 The first group of inputs, total installed 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

263

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

costs, repair and maintenance costs, annual energy use, 

base case efficiencies, all those are coming from LCC 

Analysis. The standard case forecast efficiency which 

will be explained a little bit later are basically done 

utilizing the roll-up scenario that again I’ll explain 

in more details. 

 In addition, there are another set of 

parameters which include the energy prices and here is 

the methodology explaining that we’re utilizing the 

average energy prices and the forecasted energy prices 

from the AEO 2008 forecast. 

 Energy site to source conversion factors are 

included from the NEMS and corresponding to the ’07 

AEO. Discount rates were using the three and seven 

percent as mandated by OMB. Present year for this 

Preliminary Analysis is 2007. 

 In addition to this, DOE included a rebound 

effect for all three products. Just as a recollection 

here and for everybody, the rebound effect, also called 

take-back effect, refers to increased energy 

consumption that results from actions that increase 

energy efficiency and reduced consumer costs. 

 So DOE applies a certain set of values for 

the three products here. They explain in more details 

in the TSD. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

264

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: So let’s just see if there are 

any comments. Let’s receive comments on the rebound 

effect and see what people have to say about that. You 

see the listed figures there in Slide 121. 

 We’ve received comments in the past about 

rebound effect. 

 (No response.) 

 MR. BROOKMAN: No comments? Okay. Alex, 

keep going. 

 DR. LEKOV: The next slide is to explain 

DOE’s approach in terms of forecasting the 

efficiencies. 

 Basically, the slide you see shows the 

approach as applied to gas-fired storage water heaters. 

The base case efficiency distributions, as listed here, 

they are coming from the LCC Analysis. 

 The standard case efficiency distributions 

are based essentially on the roll-up scenario. It’s 

typical for the DOE’s approach for the other 

rulemakings. 

 I would like to illustrate this, for example, 

looking at Standard Level 1. So we have at the minimum 

baseline level, we have 82 percent market share of the 

minimum efficiency equipment and there is also a set of 

market share and other efficiency levels. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

265

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 When DOE considers Level 1, it rolls up the 

baseline value into the Level 1 which becomes 82.7, 

becomes 89 percent, and preserves all other 

efficiencies constant. So that’s the roll-up approach, 

how the shipments are forecasted, shipment 

efficiencies. 

 MR. BROOKMAN: Questions about this table? 

Yes, Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Well, 

more a comment than a question. 

 MR. BROOKMAN: Please. 

 MR. STANONIK: But again, the circumstances 

under which you did this forecast are different now. 

There is an Energy Star Program that started this year. 

Certainly by the end of 2009, we will have some idea of 

what that program has done to promote .62 water heaters 

and so it will possibly change your base case 

assumptions and on top of that, as you know, there is a 

second level Energy Star requirement that goes into 

effect in 2010, thank you, which again, assuming that 

the Energy Star Program for water heaters in any way 

tracks what it’s done for other products, we expect 

will have some impact on the distribution of 

efficiencies of products that are sold in the market. 

 So my comment on this is, you know, this was 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

266

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

totally -- you know, this was certainly likely valid 

dealing with the information you had when you did it, 

but that information has now changed and I think it 

needs to be revisited based on Energy Star criteria. 

 MR. BROOKMAN: Thank you. 

 DR. LEKOV: In fact, Energy Star levels are 

included here. It’s -- as you see, it’s Level 6. It’s 

-- DOE assumed 50 percent of the forecast of Energy 

Star water heaters in 2015. So we already have it and 

we pro rated all the other -- 

 MR. STANONIK: I’m sorry. Where is that? 

 DR. LEKOV: If you’ll look at the line 

labeled Efficiency Level 6, -- 

 MR. STANONIK: Yes. 

 DR. LEKOV: -- and if you’ll look at the base 

case, it shows the number -- the two percent number. 

That’s the Energy Star market penetration in 2015 as 

assumed by DOE. 

 MR. STANONIK: Okay. I’m sorry. I’m not 

tracking that at all because the Energy Star level I’m 

talking about is .62 -- 

 MR. BROOKMAN: Which is 1 today. 

 MR. STANONIK: -- which is Level 1, yeah. 

 DR. LEKOV: Looking directly at 80 percent 

level for condensing water heaters which is the Tier 2 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

267

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

for -- 

 MR. STANONIK: No, no. Tier 2 is .67. 

 DR. LEKOV: So Tier 3. The one which will be 

affected by -- 

 MR. STANONIK: I’m not talking about Tier 3. 

Okay. But again, you know, those are there. The 

products, I believe, will be there. The market will 

change. 

 MR. BROOKMAN: Let’s hear from Greg. 

 MR. ROSENQUIST: So like you’re saying, 

Frank, this is the information you gave us that’s 

reflected on 2006 or 7 and so, you know, we can change 

these base case distributions based upon any new 

information you give us about what you think the market 

share will be in 2015 or whenever the standard becomes 

effective. So we’ll be happy to take that information. 

 DR. LEKOV: It’s important to emphasize that 

DOE already accounted for the energy trends. They are 

here, Energy Star trends. They’re included in this 

forecast. 

 MR. BROOKMAN: Through 2015? 

 DR. LEKOV: The year where we’re supposed to. 

 MR. BROOKMAN: Yeah. Okay. Karen. 

 MS. MEYERS: This is Karen with Rheem. So 

let me just see if I understand. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

268

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 So you took the data that Frank gave you and 

then you extrapolated those numbers to take into 

account what the Energy Star Program would do? 

 DR. LEKOV: The only thing we did is at Level 

6, we added two percent penetration of Energy Star 

level which is condensing water heaters at 80 percent 

efficiency. It’s 50 percent of what Energy Star 

Program indicates. So we put just this two percent and 

after that we just very slightly pro rated to have the 

total 100 percent. That’s what happened analytically. 

 MS. MEYERS: I really do not understand that. 

I’m sorry. I’m really trying here. 

 MR. ROSENQUIST: What we did is we forecasted 

how Energy Star at .8 would -- what share of the market 

it would be in 2015 and so what you see there again, 

that base case market share, is again for 2006 and so 

by 2015, again based upon information we got from 

Energy Star, we forecasted there would be two percent 

market share of .80 energy factor water heaters. 

 DR. LEKOV: I would -- if you want to look 

here, that’s the base case information. The regional 

values that came from AHRI, this value here, the only 

value was zero percent, now condensing available in -- 

 MR. STANONIK: Historical data. 

 DR. LEKOV: No, not in here. So for the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

269

forecast in 2015, since it was available data, I would 

call it trends for Energy Star, DOE assumed this two 

percent value. That’s it. Anything else here changed 

to make it 100 percent. That’s it. 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. MEYERS: Okay. So you just pulled a two 

percent number out and took it from the 2006 actual and 

said -- 

 DR. LEKOV: The two percent value came from 

the net Energy Star Program. They have in fact five 

percent, but we took -- DOE took half of it, assumed 

that five percent is very aggressive. So we did half 

of it and just used it. That’s a DOE value. 

 MR. BROOKMAN: Frank, go ahead. 

 MR. STANONIK: Frank Stanonik, AHRI. 

 MS. MEYERS: I still don’t understand. 

 MR. STANONIK: Alex, okay, then I guess what 

I want to be clear about is my concern is that your 

seven percent projection for .62 in the base case is 

too low. I don’t even care about the .77. My issue is 

that I think that projection -- I mean, this shows 

heavily that the industry is selling the baseline water 

heater, okay, and my point on this is I think with the 

Energy Star Program taking off and again if it catches 

on like other programs have been, I think your seven 

percent number at the .62 level is low. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

270

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: So what you’re saying is the 

seven percent was the values AHRI provided for 2006. 

What are you saying is that in 2015, this value will 

likely to be higher because of some aspects of Energy 

Star Program. 

 MR. STANONIK: Yes. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: Okay. 

 MR. BROOKMAN: Okay. That’s it. 

 DR. LEKOV: So that’s a comment that DOE will 

take into consideration. 

 MR. BROOKMAN: Ashley. 

 MS. ARMSTRONG: I just have a follow-up 

question, maybe for Frank or some of the manufacturers 

here. 

 If you have any idea about how the 

percentages for those lower levels might change, you 

know, like the seven percent, if you think it might be 

10, you think it might be 15, that would also be 

helpful in your comments, whatever you think it may be. 

 MR. BROOKMAN: Frank. 

 MR. STANONIK: Excuse me. Frank Stanonik, 

AHRI. 

 Again, on this particular issue, I’m 

certainly hoping and intending that at this time, by 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

271

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

certainly this time next year, I can give you realworld data from 2008-9, 2009, that will show us how 

it’s changed. 

 MR. BROOKMAN: Okay. Yes, Robert. 

 MR. GLASS: Robert Glass with Raypak. I know 

we’re not addressing it here, but the similar item 

talking about pool heaters, -- 

 MR. BROOKMAN: Yes. 

 MR. GLASS: -- again which is in Table 

10.2.5, again Number 1 with the baseline 78 percent, 

there’s one percent that’s there and there’s zero 

because there is no product at 78 percent. 

 MR. BROOKMAN: Okay. 

 MR. GLASS: And then beyond it, with the 95 

percent, there is one model that is listed. It’s one 

manufacturer that makes one model that’s listed and 

they do not own one percent of the market. 

 I think the misnomer here in the bottom, 

you’ve got shipments-weighted energy efficiencies and 

from my understanding with what you’ve generated with 

this, this is not based on shipments. This is based 

purely on the number of models that are reflected in 

the FTC Guidelines which is totally unrelated to a 

shipments relationship. 

 So I think that the reference when you make 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

272

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

their shipments-weighted energy efficiencies, you need 

to change that because it has absolutely nothing to do 

with shipments. 

 DR. LEKOV: We understand. 

 MR. BROOKMAN: Okay. Thank you. 

 DR. LEKOV: Thank you. 

 MR. BROOKMAN: Thanks, Robert. Okay. So I 

think we finally got through understanding this table. 

For those that want to consult with the staff and the 

consultant staff further immediately following the 

meeting, we’ll have another discussion on it, I 

imagine. 

 Let’s move on to Base Case and Standards Case 

Forecasted Efficiencies. There’s a question box there 

and then we’re moving on to the other National Impact 

Analysis slides. 

 DR. LEKOV: So there is a request for 

comments on the base case and standard case forecasted 

efficiencies. 

 MR. BROOKMAN: We’ve heard some about this 

already, perhaps enough. We’ll see. 

 Robert, you have additional comment? 

 MR. GLASS: No. 

 MR. BROOKMAN: Okay. So let’s move on then 

to 124. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

273

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 DR. LEKOV: So the next two slides 

essentially are showing the example of the national 

energy savings results and on the next one will be the 

NPV. This particular one shows the national energy 

savings of gas water heaters at certain efficiency 

levels and this is how the chart looks. 

 MR. BROOKMAN: Okay. 

 DR. LEKOV: The next chart shows the same, 

the results for net present value, and we have on the 

left side non-discounted value, on the right side 

discounted values, and here again this is a specific 

example for gas-fired storage water heaters, the 

efficiency level one, and you have the bars, the longer 

bars. Those are the operating cost savings. The small 

bars that go negative at the bottom are the equipment 

costs and the center bar is the line which essentially 

shows the economic impacts. The values, the discounted 

values are on the right side. 

 MR. BROOKMAN: Questions? Yes, Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Alex, 

I’m not understanding why the equipment cost is shown 

as a negative for a higher-efficiency product. 

 DR. LEKOV: That’s for any product. It’s 

essentially at this efficiency level. Essentially, 

while the operating savings are plus, essentially a 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

274

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

plus to the consumer or to the nation, the -- 

 MR. STANONIK: Oh, okay. I got it, I got it. 

 MR. BROOKMAN: It’s cost. 

 MR. STANONIK: Okay. I got it, I got it. 

 MR. BROOKMAN: It’s more expensive. It’s a 

replacement cost. Okay. And we see the discounted 

financial impacts, as well. 

 So then let’s go on to 126, Alex. 

 DR. LEKOV: So, in additional to the 

conservation analysis, DOE conducted analysis of the 

potential impacts of water heater energy conservation 

standards on natural gas prices on all sectors of the 

economy. 

 Important to bring to this audience, this 

analysis is presented to provide a base for input from 

industry partners on an analysis that DOE plans to 

include in the NOPR stage of this rulemaking. 

 So essentially, you’ll see examples of the 

methodology that will be done in the full-scale and 

during the NOPR phase of the rulemaking. 

 So what’s the methodology? Some of the folks 

who were involved with the furnace rulemaking are 

probably familiar with it. Basically, DOE analysis 

used NEMS which utilizes energy price elasticity to 

estimate the change in prices in natural gas prices 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

275

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

that would result from a change in energy demand. 

 To illustrate the problem, DOE did two 

scenarios. One of them was a set of cost-effective 

efficiency levels for the three products: gas storage, 

gas instantaneous and electric storage, and the 

scenario B is essentially the Max-Tech energy savings 

for the three products. 

 The results are listed below, but in terms of 

scenario A and scenario B, in terms of cents per 

million BTU, also they are shown and appropriate 

conversion to potential results for A and B at seven 

percent discount rate, and DOE requests comments on the 

effect of natural gas and methodology for estimating 

those impacts. 

 MR. BROOKMAN: So comments on this slide? 

George, please. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 In reading this, basically it looks like an 

assumption is being made that the higher efficiency of 

the product there would be definitely a reduction as 

far as fuel usage, but are we also assuming because 

there is a reduction in fuel usage, that the price of 

the fuel will decline? 

 DR. LEKOV: Yes. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

276

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. KUSTERER: Okay. With that in mind, we 

have seen historically over the last several months 

smaller co-ops, not large utilities, but smaller co-ops 

who have lost, say, consumers for fuel switching, 

manufacturing facilities, where there has been a 

reduction in the amount of fuel but in order for those 

companies to continue to survive, they have actually 

increased the rates of not only the gas but also the 

electric to stay profitable. 

 So I don’t feel that DOE can make an 

assumption just because we’re going to use less energy 

that the cost of that energy is going to be reduced. 

 MR. BROOKMAN: In some places the per unit 

costs will increase. 

 MR. KUSTERER: Right. 

 MR. BROOKMAN: Okay. Tim. 

 MR. BALLO: Tim Ballo, EarthJustice. This is 

a nationwide analysis and so I think that the analysis 

has to reflect wellhead prices and not the price in 

some particular region and it kind of gets away from 

that. 

 MR. KUSTERER: George Kusterer, Bock Water 

Heaters. 

 I disagree because whether it’s a small 

little co-op or a major utility, it’s still part of the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

277

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Continental United States and I think the impact should 

be considered by DOE. 

 MR. BROOKMAN: Tim, go ahead. 

 MR. BALLO: Just a follow-up. Tim Ballo. 

This is again a nationwide part of the analysis. So 

it’s going to include all those positive and negative 

impacts into one figure. 

 MR. BROOKMAN: Okay. Thank you. So then 

additional comments on Slide 26? 

 (No response.) 

 MR. BROOKMAN: And 27 is once again a request 

for comment. Impact on Natural Gas Prices Resulting 

from Energy Conservation Standards for Three Heating 

Products, all three, the appropriateness of considering 

potential impact and the magnitude of such impacts and 

the extent to which these impacts should be considered, 

transfers from producers to consumers rather than net 

economic benefits. 

 Okay. No additional -- yes, Frank. 

 MR. STANONIK: Sorry, Doug. Frank Stanonik, 

AHRI. 

 Is there a similar plan for electricity 

rates, that reduced electric consumption for more 

efficient electric waters is also going to reduce the 

price of electricity? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

278

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: I see Greg Rosenquist. 

 MR. ROSENQUIST: Yeah. Such an analysis -- 

well, not analysis but that issue was addressed in the 

LAMPS rulemaking and for gas, you know, it’s a single 

fuel, right. For electricity, it’s generated from 

multiple sources. It’s a much more complex problem and 

it’s much more diffuse in terms of exactly what effect 

it would have on electricity prices. 

 So for that rulemaking, for that NOPR, they 

concluded that it wouldn’t have any effect on 

electricity prices, unless the magnitude of the savings 

was so astronomical. 

 MR. BROOKMAN: What was that rulemaking 

again? 

 MR. ROSENQUIST: That was the LAMPS 

rulemaking. 

 MR. BROOKMAN: Okay. 

 MR. ROSENQUIST: Yeah. For the Notice of 

Proposed Rulemaking. 

 MR. BROOKMAN: So, Greg, are you saying or 

are you not saying that the same assumption might apply 

here? 

 MR. ROSENQUIST: The same assumption would 

apply here. 

 MR. BROOKMAN: Okay. Frank, okay? 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

279

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

 MR. STANONIK: Yep. 

 MR. BROOKMAN: Okay. Then the final slide in 

this segment, 128, invites other comments on other 

issues with respect to the National Impact Analysis, 

and let me say for those of you that want to do so, 

when we finish today, which ought to be not too awfully 

long from now, those of you that want to gather with me 

in the back and look at Slide 122 again and talk about 

the forecasted base case efficiency distribution and 

really understand it fully, I’m sure we can arrange to 

have our consultant team back there to really go 

through that one more time. 

 MS. PINTO: Excuse me. This is Francine 

Pinto again. 

 So again, any of the assumptions that you’ve 

heard today, if you have comments on them, please make 

sure you give them in the written comments. We’ve 

heard them here. We want to have them in writing, as 

well. 

 MR. BROOKMAN: So the next item on the agenda 

is to move to the NOPR Analyses, I think. Yep. Okay. 

Make sure you describe the role of the NOPR Analyses. 

24 NOPR Analyses

25 MS. ARMSTRONG: I’m going to describe -- Greg 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

280

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 briefly hit on this earlier and I’m just going to 

reiterate how we structured the NOPR Analyses. 

 So for the Notice of Proposed Rulemaking, we 

group product efficiencies for each product class and 

we call this bundle Trial Standard Levels. We do this 

in order to develop a list of potential amended 

standard levels, especially in the industries for which 

there could be significant product or equipment 

switching. 

 The method by which we group efficiency 

levels into trial standard levels varies but considers 

like the most energy efficiency levels, energy 

efficiency levels with the lowest life-cycle costs, 

efficiency levels with certain technologies, just to 

name a few. 

 So I’m asking for your comment on how DOE 

should group these levels and this is really specific 

for water heaters as well as other industries but for 

water heaters where you have like gas-fired storage and 

electric storage and oil-fired storage and 

instantaneous, are there any certain levels that you 

shouldn’t pair together? For example, like a baseline 

gas storage and heat pump water heater which would 

cause significant distortions in the market. So that’s 

the type of feedback we’re looking for with this slide. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

281

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Does that make sense? 

 MR. BROOKMAN: Yeah. That makes sense and so 

you can see there at the bottom of 130 some 

representative issues that might be covered, in 

addition to what Ashley said there. 

 MS. ARMSTRONG: And this can be something you 

think about. 

 MR. BROOKMAN: Ashley, you’re not suggesting 

they haven’t been thinking about this today, huh? 

 MS. ARMSTRONG: No, no, I’m not, not exactly. 

 MR. BROOKMAN: The combination of these 

things might be complex. Okay. 

 MS. ARMSTRONG: Yes. So I’m going to pass it 

to Jeff who’s going to talk to you about the 

Manufacturer Impact Analysis. 

 MR. KINGMAN: Hi. I’m Jeff Kingman. I’ll be 

working with the department over the next couple of 

months, during the NOPR stage, evaluating the impacts 

on manufacturers, and I’m going to talk about the steps 

that DOE takes to conduct this analysis. 

 The main purpose of the MIA is to assess the 

impact of energy conservation standards on 

manufacturers of these covered equipment types and 

during the analysis, we’re going to evaluate the 

subgroups and also evaluate cumulative burdens on the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

282

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

industry. We touched on that a little bit earlier 

today. 

 Most importantly, one of the main outputs for 

the MIA is an industry net present value for direct 

heating equipment, water heaters and pool heaters, and 

for that we’re going to construct a separate Excel 

model and also in important part during the MIA is 

interviews with manufacturers. 

 This slide just shows the three main phases 

of the MIA and I’m going to discuss each in the next 

few minutes. 

 This slide just shows that throughout the 

NOPR phase that the MIA is also conducted in parallel 

with the other analyses. 

 If I’m going too fast, I’m trying to make up 

a little time, but hopefully this is just for the 

future. 

 MR. BROOKMAN: We’d emphasize that point, 

that this is looking ahead a good ways, right. Months. 

 MR. KINGMAN: And the first phase is the 

industry profile and that’s just where we look at the 

analyses we already conducted that we talked about 

throughout the last eight hours or so and also we look 

at other public information sources and that’s used to 

just create from public sources an industry profile for 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

283

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

each of the three industries and just give us our best 

guess before we go and interview manufacturers of what 

the industry looks like and also during that, the 

information we bring is just basic idea of what we 

think the industry impacts would be at each TSL we 

consider. 

 Also, an important part during Phase 2 is we 

actually develop the interview guides and we send those 

to manufacturers ahead of time to hopefully have them 

start thinking about some of the issues we’re going to 

talk about when we show up. 

 Probably this is the most important part of 

the things we’re going to talk about for the MIA in the 

NOPR stage and basically we are hoping to conduct the 

interviews as soon as we can, due to the time crunch 

that we talked about earlier. We are hopefully going 

to conduct all our interviews from mid March until mid 

April. We’re hoping that, based on your feedback today 

and your written comments, that as soon as the comment 

period ends, we can change as much as we can before we 

go and show you some of the changes that we’re hoping 

to make so we have an updated version of the things we 

talked about today and so if you have any questions 

about the actual things we’re talking about or the 

different changes we’re going to make, I’m going to be 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

284

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

around after the presentation today, so we can talk 

then, too, and hopefully that way we can just address 

any questions or concerns about what’s going to happen 

during the NOPR phase then and we can kind of make up 

some of this time, too. 

 MR. BROOKMAN: Jeff, have you begun trying to 

schedule these yet? 

 MR. KINGMAN: No, we haven’t. We were hoping 

to just see when you’d be available as soon as 

possible, but we wanted to wait until after the comment 

period ends, so that we can get some kind of idea of 

how the other analyses are going to change since the 

GRIM is kind of a downstream one. 

 MS. ARMSTRONG: Let me follow up. 

 MR. BROOKMAN: Ashley, please. 

 MS. ARMSTRONG: You guys can probably expect 

a phone call, I would say, beginning of March time 

frame and feel free to reach out. Most of you have my 

card. You may not have Jeff’s. Feel free to reach out 

to me if you haven’t heard from us by then and you 

would like to participate. 

 MR. BROOKMAN: Thank you. 

 MS. MEYERS: Just a procedure question. Like 

when you have Phase 1 done, will you share that with 

the industry or do we -- how much of this do we -- 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

285

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

you’ve got this broken into phases. So will we be able 

to interact with you after Phase 1 is done? 

 MR. KINGMAN: Yes, the main part of the stuff 

that we get out of Phase 1 is the financial parameters 

that we get from public sources and so when we come to 

the interviews, we’ll have that with us and we’ll also 

publish the interview guides that we bring to give kind 

of more transparency to what we’re actually talking 

about. We’re going to disclose the actual -- not the 

results, right. 

 MS. ARMSTRONG: So what happens is when we 

develop -- this is Ashley, by the way. 

 MR. BROOKMAN: Thank you. 

 MS. ARMSTRONG: When we develop the interview 

guides, they’ll be generalizing what we’re going to ask 

people for comment on, but those will go to all 

manufacturers across the board. They will also go 

online similar to the interview guides that we have 

online now. 

 We will conduct interviews on a confidential 

basis and all the feedback we get back will be 

aggregated until the final results and, yes, it’s an 

iterative ongoing process. So during -- you know, 

before we lock down our analysis, you’re more than 

welcome to go back and forth with us. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

286

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: So that question was from 

Karen and the answer was from Jeff and then Ashley. 

Okay. 

 MR. KINGMAN: Did that answer your question? 

Do you have any other concerns about the other two 

phases before I continue? 

 MS. MEYERS: This is Karen, and just the only 

comment I’ll make is I don’t want the Manufacturers 

Impact Analysis to be -- I want it to be very thorough. 

After going through a rulemaking that has such a huge 

financial impact on us, and I’m talking about the air 

conditioning rulemaking, we’ve got to make sure that 

the economic impact to manufacturers is clearly 

understood by DOE. 

 MR. BROOKMAN: Thank you. Thanks for that. 

Okay. 

 MS. ARMSTRONG: I’ll just follow up with I’ll 

stress Jeff’s point earlier. When we send out 

interview guides, like a couple weeks in advance, it’s 

worth your while to take your time to really go through 

them because they’re going to be very, very pretty 

elaborate and they’re going to ask you for some 

information that you might not have thought of in those 

types of ways previously. So it would be helpful for 

you and us to facilitate those discussions and we’d 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

287

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

appreciate that. 

 MR. BROOKMAN: Okay. So then Cumulative 

Regulatory Burden or have you done -- Subgroup 

Analysis. Sorry. 

 MR. KINGMAN: And I think that covers it for 

this slide. 

 MR. BROOKMAN: Okay. 

 MR. KINGMAN: The only additional point is 

during the MIA, we also try to identify subgroups that 

would have different impacts than just the industry net 

present value and so any help that you guys can give us 

on who may be more differentially impacted we would 

appreciate that, too. The more information we get the 

more complete of an analysis we can do. 

 This just stresses that part of the NOPR 

phase of the -- for the MIA, we look at the cumulative 

burdens on the industry and these are just a brief list 

of some of the ones we’ve identified already and we 

request comment on other potential regulations that 

affect manufacturers in this industry. 

 MR. BROOKMAN: We’ve begun to hear some of 

these as the day went on today already. Frank. 

 MR. STANONIK: Frank Stanonik, AHRI. Just a 

quick comment because it is significant. 

 This does recognize the regulatory burden of 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

288

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

what’s identified as an ultra-low NOX gas water heater, 

a super-low NOX water heater, but I just want to make 

sure that it’s also recognized that that product, first 

of all, is a very different design and the issues of 

what one can do to make an ultra-low NOX gas water 

heater more efficient has very different answers than 

if I remove the restriction that I have to keep my NOX 

emissions down below 10 nanograms per joule and so it’s 

not directly a regulatory burden as much as the fact 

that the manufacturers have to continue to be able to 

provide that product to what might eventually be the 

entire state of California. 

 MR. KINGMAN: So you’re looking at it from a 

utility perspective, too? A consumer utility? 

 MR. STANONIK: Yes, yes. It still has to 

heat water, lots of it. 

 MR. BROOKMAN: Okay. Any other comments 

about cumulative regulatory burden? It’s a pretty good 

start on a list there. 

 MR. KINGMAN: And these are also identified 

in Chapter 3 of the TSD or Chapter 2 of the TSD. So if 

you to take a look at that, too, we list them there. 

 MR. BROOKMAN: Robert. 

 MR. GLASS: Just a quick comment. I think in 

the TSD, it was talking about the South Coast had 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

289

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

exempted pool heaters from NOX requirements. That’s 

incorrect. What they’ve done is they just have not 

increased them. Pool heaters in the South Coast are 

still on the 55 ppm, so they’re not exempt from 

requirements. They just have not been updated or 

increased the levels and I think the TSD has that 

stated incorrectly. 

 MR. BROOKMAN: Thank you. That’s a useful 

clarification. 

 MR. KINGMAN: Thanks. 

 MR. BROOKMAN: Small Business Impacts. 

 MR. KINGMAN: And also by law, one of the 

subgroups that DOE is required to look at is small 

manufacturers. 

 We’ve identified the number that we have 

found out about so far. So maybe we can work with 

industry groups or if we have left any off, we’d like 

to hear about them, too. 

 MS. ARMSTRONG: Yeah. This is Ashley. Just 

a follow-up with that to clarify Jeff’s point. 

 It’s 500 employees or fewer and that includes 

parent companies, subsidiaries, and anything like that. 

 MR. BROOKMAN: And you can see in the Slide 

143 they do identify several defined small businesses 

among these class of products. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

290

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. KINGMAN: I guess I got a little bit 

ahead of myself, but if you can identify any other 

ones, we’d appreciate it. 

 MR. ROSENQUIST: Hello, everyone. I will 

continue for the last four analysis steps for the 

Notice of Proposed Rulemaking. 

 I should say I’m Greg Rosenquist from the 

Lawrence Berkeley National Laboratory. 

 First one I’m going to be talking about is 

the Utility Impact Analysis. The purpose of this 

analysis is to determine the impact of standards on 

U.S. energy suppliers due to reductions in energy and 

peak load demand. 

 The method relied upon is using the National 

Energy Modeling System or NEMS. You’ve heard us speak 

about NEMS throughout this workshop. It forecasts 

energy prices as well as energy sales and as well as 

installed generation capacity. 

 We take inputs from the National Impact 

Analysis in the form of cumulative national energy 

savings and then we run NEMS as a standards case 

scenario relative to the base case to see how each one 

of those outputs are affected. 

 As listed here, I’m looking at how energy 

sales and prices are affected by region as well as how 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

291

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

installed generation capacity and the mix of generation 

is affected by the standards. 

 Anyone have questions on the Utility Impact 

Analysis and how that’s conducted? 

 (No response.) 

 MR. ROSENQUIST: Next, I’ll move on to the 

Employment Impact Analysis. 

 The purpose of this analysis is to determine 

the impact of standards on national employment. The 

method here is to use an input/output model called 

ImSET. It models how energy savings technologies or 

energy savings policies impact on various sectors in 

the economy, particularly how these sectors relate to 

buildings, industry and transportation. 

 What we do here is we take inputs from again 

the National Impact Analysis and put them into this 

model. These inputs are in the form of reductions in 

national energy consumption and national energy 

expenditures and again we look at how these inputs, 

when input into the ImSET model, affect income effects 

and employment effects throughout the economy. 

 I just want to make a reminder here that the 

Manufacturer Impact Analysis calculates the impacts to 

manufacturers directly. We do not do that here in this 

Employment Impact Analysis. The MIA determines the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

292

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

impacts on employment, on manufacturers of these 

products, and again the output here is the change in 

employment by sector due to the appliance standards. 

 So does anyone have any comments on how we do 

the Employment Impact Analysis? 

 MR. BROOKMAN: The direct employments come 

from the MIA? 

 MR. ROSENQUIST: Yeah. The direct -- that’s 

correct, Doug. 

 MR. BROOKMAN: Robert. 

 MR. GLASS: Robert Glass with Raypak. One of 

the concerns, and I’m not sure if it’s actually 

associated with this on the employment side, but as 

we’re looking at more efficient products, that means 

higher-technology product which means there’s training 

and a higher level of knowledge base of, say, service 

installers and things like that. 

 Does this analysis that you’re doing take 

into effect anything that’s required on higherefficiency product? 

 MR. ROSENQUIST: No, not to that level of 

detail. No, unfortunately, it doesn’t. It does things 

on a much more macro level. 

 For example, reductions in energy 

expenditures by consumers will translate into more 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

293

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

money in their pockets that they spend on things like 

the retail sector. So that level of detail in terms of 

more training for installers is not reflected in this 

type of model. 

 The next analysis step is what we call the 

Environmental Assessment, and the purpose of this 

analysis is to determine the impact of standards on 

airborne emissions, both from power plants and from the 

appliances in the household, at the site. 

 Again, for power plant emissions, we use the 

same tool or DOE plans to use the same tool as used for 

the Utility Impact Analysis and that’s the National 

Energy Modeling System or NEMS. NEMS forecasts power 

plant emissions of CO2, SO2, NOX, and mercury. 

 What’s done is take inputs from the National 

Impact Analysis in the form of national energy savings 

for the various standards, input them into the model 

and see how that impacts each one of those power plant 

emissions relative to a reference case. 

 NEMS does not cover the in-building emissions 

that occur due to these fossil fuel appliances at the 

household. So there, DOE has to use emission factors 

from the literature to estimate how those emissions of 

CO2, NOX and SO2 are affected by standards from the 

site. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

294

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: Don Brundage. 

 MR. BRUNDAGE: I’m sure it’s an oversight, 

but you’re showing in-building SO2 and NOX still 

emitted by fossil fuel appliances. They also emit CO2. 

 MR. ROSENQUIST: Yeah. I’ll talk about that 

right now. Yes, we’re definitely including CO2 from 

those fossil fuel appliances. Well, let me get to 

that. Okay. 

 MR. BRUNDAGE: I don’t need to know the 

details. We’re running late. I trust you got it 

included somewhere. 

 MR. ROSENQUIST: Okay. I do want to note, 

also, that very recent rulemakings by DOE have 

monetized the benefits of reductions in CO2, NOX and 

mercury, and DOE plans to make that same sort of 

assessment for this standards rulemaking. 

 Again, the output from the analysis is to 

show the reductions in CO2, SO2, NOX and mercury at 

both the power plant level and at the site, at the 

household where these appliances are being used, and I 

do want to mention in terms of SO2, there are the Clean 

Air Act Amendments which cap nationwide emissions of 

SO2. So standards won’t affect the emissions of SO2 

from power plants and because the Clean Air Interstate 

rule was recently reinstated or revalidated by the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

295

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

courts, that puts effectively a nationwide cap on NOX, 

as well. So standards again won’t at the power plant 

affect NOX emissions. 

 There was something called the Clean Air 

Mercury rule which was invalidated last year, so that 

would have effectively capped emissions of mercury from 

power plants in the country, but since that’s now been 

invalidated, this analysis will show that standards 

will affect mercury emissions from power plants. 

 And lastly, even though there’s a cap on SO2 

and an effective cap on NOX, we still will have 

emissions reductions from fossil fuel appliances at the 

site that will show in the analysis. 

 Does anyone have any questions? 

 (No response.) 

 MR. ROSENQUIST: If not, I will get to the 

last analysis that we’ll be going over today, the 

Regulatory Impact Analysis, and the purpose of this 

analysis is to show how non-regulatory alternatives to 

mandatory efficiency standards impact national energy 

savings as well as national economic benefits. 

 DOE realizes that there have been a lot of 

efforts in the past to promote more efficient 

appliances in the marketplace and DOE will be looking 

at how those programs have worked in the past to effect 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

296

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

efficiency changes in the marketplace. 

 They will also be looking for information on 

any data that might exist on how these programs might 

affect impacts in the future. For example, DOE is 

aware of recent legislation that has included tax 

credits for many appliances and again be looking at 

that information and taking any input as to how those 

programs might be affecting these non-regulatory 

programs that DOE will be looking at. 

 The programs that DOE will be looking at will 

be no new regulatory action, that is, no new standards, 

early replacement programs for appliances, consumer and 

manufacturer tax credits, consumer rebates, voluntary 

efficiency targets like Energy Star, and bulk 

government purchases. 

 The method that DOE will use is to take the 

NES spreadsheet model that’s developed in the National 

Impact Analysis, modify key inputs in that model to 

estimate the national energy savings and national 

economic impacts from these non-regulatory 

alternatives. 

 And finally, yes, the output from this 

analysis will be looking at the national energy savings 

and the NPV from these alternatives and comparing them 

to the effects from mandatory efficiency standards. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

297

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. BROOKMAN: So then questions or comments 

on Regulatory Impact Analysis and perhaps final 

comments on any of these Utility Impact, Employment 

Impact and Environmental Assessment and Regulatory 

Impact? Frank Stanonik. 

 MR. STANONIK: Frank Stanonik, AHRI. Greg, 

at this time is this Regulatory Impact Analysis, is it 

also including any factor regarding -- I’ve seen in a 

number of places now, particularly in new building 

standards, at least suggestions that in a new home the 

water heater would have a solar heating component. You 

still may have a water heater in there but it also be 

provided some solar heating, water heating panels. 

 At the moment, is this analysis including the 

potential impact of that? 

 MR. ROSENQUIST: That would be more reflected 

in the base case National Energy Consumption for Water 

Heating. So again, to the extent that it’s reflected 

there, it also would be reflected here, plus it isn’t 

part of the water heater itself, it’s not really 

considered as a measure to improve water heater 

efficiency. 

 MR. BROOKMAN: So then additional comments on 

these NOPR Analyses? Robert. 

 MR. GLASS: Still on Regulatory Impact 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

298

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

Analysis, you talked about several non-regulatory 

alternatives that are considered. One of them that’s 

not on here is just flat out the marketplace. If the 

marketplace is driving efficiency levels that are 

higher than what are mandated national the minimums, is 

that not an acceptable way of recognizing and realizing 

that the marketplace has the opportunity to police 

itself? 

 MR. ROSENQUIST: Well, again, the effect that 

the market has on equipment efficiency should be 

reflected in those base case efficiency distributions 

that we were all talking about on, I think, Slide 82. 

So if the marketplace is transforming the market 

already to adopt much more high-efficiency equipment, 

then the effect of standards will be small to very 

little. So to the extent again that more efficient 

appliances are already being adopted, again that will 

again reduce the effect of standards. 

 MR. BROOKMAN: Additional comments on these 

last bits of analyses? Don Brundage. 

 MR. BRUNDAGE: One last more general 

question. 

 There’s a tremendous amount of proposed 

legislation, proposed changes going on right now. If 

something gets passed that would impact this 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

299

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

rulemaking, it would just automatically get 

incorporated into consideration once it’s finalized? 

 MR. ROSENQUIST: That’s a tough one. I mean, 

you know, what we rely on so heavily to conduct these 

utility impact and environmental assessments is on the 

National Energy Modeling System which produces the 

National Energy Outlook, and, you know, it’s produced 

annually and, of course, when it’s just got released in 

January, includes any legislation currently on the 

books and so in that sense we can take into account 

again the most recent legislation that’s been passed. 

 Now anything that gets passed subsequent to 

that, it’s going to be difficult to address, of course, 

with NEMS but there’s always the opportunity with other 

techniques to try to incorporate the effects from that 

legislation into the analysis. It just won’t be done 

with the NEMS model. 

 MR. BRUNDAGE: Okay. 

 MS. PINTO: This is Francine Pinto from GC. 

We’ve had this problem come up before where I think it 

was LAMPS where EISA 2007 dramatically changed what we 

were doing and we obviously have to address it. So we 

can’t speculate at this moment what’s going to happen 

because we don’t know, but if something is enacted into 

law, we have to look at when the effective date is 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

300

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

obviously, but we have to somehow address it. So we’re 

always watching what the changes are in the law. 

 MR. BRUNDAGE: So, in other words, minor 

things we pick up in the next yearly cycle; if it’s 

really major, you’ll make adjustments as necessary? 

 MS. PINTO: Yes. 

 MR. BROOKMAN: Thank you, Don. Thank you, 

Francine. 

 So then additional and perhaps final comments 

on these analyses? 

 (No response.) 

 MR. BROOKMAN: The department would like to 

provide one more time an opportunity for anybody that 

wishes to make closing remarks at this point. Karen. 

15 Discussion of Other Issues and Final Remarks from 

16 Interested Parties

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MS. MEYERS: This is Karen from Rheem, and we 

really appreciate the opportunity to participate in 

this public meeting. 

 The only thing is that we would like to 

request is the -- we have about 60 days to provide our 

comments and the stuff was just put on the Web in 

January and there’s probably over a thousand pages of 

analysis that we have to go through. So between now -- 

actually, we have about 30 days to provide comments. 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

301

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 So we would request additional time, that the 

comment time be extended for about 30 days to give us 

adequate time to put together meaningful comments. 

 MR. BROOKMAN: Okay. Thank you. Francine 

Pinto. Tim Ballo. 

 MR. BALLO: Tim Ballo, EarthJustice. I just 

want to say the department has historically welcomed 

comments that come in after the deadline. I don’t 

think the deadline needs to be moved here. I think the 

department should just continue to review comments as 

they come in and urge stakeholders should get them in 

by the deadline that’s already been given rather than 

hold up the rulemaking. 

 MR. BROOKMAN: I’d repeat what I’ve heard 

from the department previously. They’re not shy about 

it. They’d like you to submit comments as soon as 

possible so that they don’t all end up showing up at 

the very last minute, so they can review them 

predictably, sensibly, and incorporate them. 

 MS. PINTO: Most of you know we’re under a 

Consent Decree and so we cannot miss those deadlines. 

So I’m not sure I personally would make the decision 

now because Ron Lewis, who’s the program lead, would 

have to make any decision, but I would say just off the 

cuff without a final decision being made since we have 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

302

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

to meet that deadline and there’s a lot of layers of 

review before we can actually issue a NOPR, it’s 

probably unlikely that we can extend, given the 

deadlines that we have by the court. 

 But Ron Lewis will be the one to actually 

look at the whole. He has the whole plan. He knows 

what his staff can do and so he’ll have it. We’ll 

bring that to him and definitely will pass along the 

request. 

 MR. BROOKMAN: Frank Stanonik. 

 MR. STANONIK: Just a quick comment. I 

realize we’re running late here, and I would be remiss 

to, first of all, just explain. Obviously I’ve made a 

lot of critical comments, but I want certainly DOE and 

their staff to know that the industry does appreciate 

the effort they’ve put into this. 

 We understand the time constraints they’re 

under and the pressures that are being put on them and 

I just want to make sure that it’s understood we 

appreciate that and there’s a lot right with the 

analysis, but, you know, the nature of what I have to 

do is point out where they haven’t quite got there yet. 

 MR. BROOKMAN: Sure. Understood. Other 

comments here at the end? 

 (No response.) 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

303

1 

2 

 MR. BROOKMAN: Okay. Then back to Mohammed 

Khan. 

3 Next Steps and Closing Remarks

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

 MR. KHAN: Okay. Well, Mohammed Khan, DOE. 

Again, I just want to express my appreciation for your 

participation today and also apologize for going over 

our agenda time a little bit, but, you know, we already 

talked about the due date for the comments. 

 As Francine has indicated, I will talk to Ron 

Lewis and whoever else I need to to see if we can 

extend that a bit. 

 I just want to remind you, too, about how to 

send that to us. You can e-mail it and also provide 

hard copy and please address that to Brenda Edwards and 

for you folks who don’t know her, she’s in the back 

there. So that’s who you’ll need to get it to. 

 And again, I appreciate all the comments here 

today. We will review the transcript and consider 

everything that’s been said and we also look forward to 

getting some of the data that some of you promised. 

 So again, thank you, and have a nice evening. 

 MR. BROOKMAN: Francine Pinto. 

 MS. PINTO: I just want to add one thing, 

this is Francine again, on this request to extend. 

 I think it would be wise to operate under the 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

304

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

assumption that the deadline is what it is and at the 

same time Mohammed will speak to Ron and I suppose we 

can send out an e-mail. We would have to publish 

something in the Federal Register if it was going to be 

extended because everyone has to be treated equally. 

 So I would ask you to just continue on as if 

the deadline is just what it is. 

 Thank you. 

 MR. BROOKMAN: Off the record. 

 (Whereupon, at 5:35 p.m., the meeting was 

concluded.) 

 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4
EXECUTIVE COURT REPORTERS, INC. 

 (301) 565-0064

305

1 REPORTER'S CERTIFICATE

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

 This is to certify that the attached proceedings 

before: 

UNITED STATES DEPARTMENT OF ENERGY 

In the Matter of: 

PUBLIC MEETING ON THE PRELIMINARY ANALYSES FOR 

RESIDENTIAL WATER HEATERS, DIRECT HEATING EQUIPMENT, 

AND POOL HEATERS 

 Were held as herein appears and that this is the 

original transcript thereof for the file of the 

Department, Commission, Board, Administrative Law Judge 

or the Agency. 

 Further, I am neither counsel for or related to any 

party to the above proceedings. 

 

19 Debra Derr 20 

21 

 Official Reporter 

Dated: February 17, 2009 

EE-2006-STD-0129 and EERE-2006-BT-STD-0129 COMMENT 34.4