Hello, and welcome to the Talking Operations Web Conference, LED Signals and the Energy Policy Act. I will be giving a brief introduction to the web conferencing environment before turning the decision over to Jeff Lynnly, who will be moderator of today's presentation. Today's presentation is being recorded. So this seminar will last approximately 90 minutes with 60 minutes indicated for the presenters and 30 minutes for the audience question and answer. If you think of a question you can type it in chat area on the lower right side of your screen. Please indicate who your question is directed to unless it's intended for all presenters and panelists. In addition, please make sure that you commit your questions to all participants rather than just the host or speaker. Presenters will be be unable to answer your questions during their presentation, but Jeff will use the questions typed in the chat box for the question and answer session in the last 30 minutes of the presentation. Again today's session is being recorded. A file containing the audio and the visual portion of the seminar will be posted to the National Transportation Operation Coalition, or NTOC website within the next week. Due to the size of the file, recorded files are available for viewing and listening purposes only, and cannot be saved to your own computer. We encourage you to direct others in your office who may not have been able to attend this conference to access the recording. The PowerPoint presentations used during the seminar will be available on the NTOC site as well. Attendees will be notified as the availability of the PowerPoints, the recordings, and the closed captioning of this seminar. At this time, I would like to introduce, Jeff Lynnly, the moderator of today's webcast. Mr. Lynnly is the director of the Office of Transportation Management and the Federal Highway Administration. Within FHWA, Mr. Lynnly's office is responsible for traffic signal operation issues. With that, I will turn things over to Jeff, who will introduce our first speaker. Thank you, Jennifer. I wanted to just spend a minute and give you about a two minute background on how this issue came about and how we got to today. Back in, oh, maybe around Thanksgiving, we at FHWA became aware that there were some provisions in the Energy Policy Act which passed congress last August at about the same time our own reauthorization passed that had to do with traffic signal installations and seemed to indirectly require conversion of traffic signals to LED technology over a very short period of time. And we were concerned about the potential impacts of those requirements on both the industry and on the owners and operators of traffic signals. We have a series of discussions with the department of energy, and with representatives of industry and the transportation community, and over the course of those discussions, we became a lot less concerned about the overall and immediate impact of these requirements, but continued to be concerned that most folks were unaware that they existed and unaware of the actual and potential impacts. And we determined that the primary need was to share some more information to the community about what the actual requirements were and what we thought the impacts might be which is what led us to this webcast and some other outreach that we are in the process of doing. We held a meeting back in early January, where we decided to do this. The folks represented in that meeting represented several of the associations that part of the National Transportation Operations Coalition, which helps sponsor this webcast, including the Institute of Transportation Engineers, A.S.H.T.O., the National Electrical Manufacturer Associations and the American Public Works Association. So I wanted to say up front, I I appreciate the that's those groups in particular have put out in trying to get the word out on this issue and I think those groups are probable responsible for a large chunk of the audience that's on the webcast today. Jennifer has covered the administrative details, so I'm going to get right into the presentation; the presentations we have outlined here are designed to give you some sense of the requirements, the industry reaction to those requirements, and the transportation communities' perspective on those requirements and we'll kind of do those presentations in that order. The first speaker is Michael MacCabe. Michael is a senior engineer in the Department of Energy Building Technologies program where he's responsible for the department's lighting and appliance standard programs. Michael served in a variety of positions in D.O.E. during a career spanning nearly 34 years. Recently he served as the deputy Chief of Staff to the Assistant Secretary for Energy Efficiency and Renewable Energy, as the Program Manager for the Billing and Technologies Program. He assumed his current responsibilities last July. Throughout his career, Mr. MacCabe's work has focused on energy efficiency and residential and commercial buildings. For example in 1996, Mr. MacCabe directed the development of the department's appliance standards process improvement rule making and most recently he was responsible for the implementation of the requirements of the Energy Policy Act of 2005 regarding energy performance test procedures, and energy conservation standards for consumer products in certain commercial and Industrial equipment. We'll hear more about that work as it relates to today's subject in a second. Mr. MacCabe holds a bachelor's of science in chemical engineering degree from Catholic University and he will talk today about the Department of Energy's perspective on this issue -- Mike? Thank you, Jeff. Good afternoon. Good morning, everybody. Jeff said I will give an overview of the program. I have been involved off and on with the program since 1979, and my presentation will give I a quick overview of the building technologies program, quickly get into the 2005 legislation, what it requires, what we are doing in response to that, and what we can expect in the future. The Office of Energy Efficiency and Renewable Energy is focused on Friday-ing clean renewable and reliable, affordable, energy technologies to the marketplace. The focus on this is not just because we are driven by how much energy has been used in the nation, 102 quads total and the focus on the building sector is because today 40 quads or roughly 40% of all the energy that's used in the country is used by the building sectors, whether it's residential buildings, commercial buildings, and this is a significant growth in the last 25 years. So there's been a great deal of emphasis lately within the department and in the legislation on the building structure to reduce the growth and the size of the energy use in the building sector. The building technologies program responds to our overall guidance as a long-term research goal of net zero energy buildings by the year 2025. That's a building during the course of a year of noncommercial or residential that will reduce as much energy as it will consume during the course of the year. Buildings will system be connected to the grid, but at some point, they will be putting energy into the grid, and other points they will be taking it out. Our building technologies program is really divided into two aspects. Research, which is the focus of the net zero energy building goal, and regulations, the regulatory programs are responding to a variety of legislative requirements, which direct us to develop test procedures and energy conservation standards for certain consumer products, as household products such as furnaces and central air conditioners, refrigerators and commercial and Industrial equipment. For the first, you know, couple of slides, I haven't talked about street lighting, traffic control lighting at all, which are -- they are not in buildings, typically. They are out on the highways and the like. We have tried to capture within the department all of the energy used within the nation, divide it up into different sectors, and this street lighting, traffic control lighting, all of the lighting that is done in this country is a responsibility as far as research and regulatory activities of the building technologies program. So our research program, for example, has been very active, one of their principal focuses is on solid state lighting research, principally to bring white light into the marketplace. We are seeing some of those products already. And the regulatory program and the lighting area, we have standards for fluorescent lamp ballasts and they are getting into traffic control lighting. I have a macro perspective, it's mentioned 102 squad quads of energy that's being used annually in the country. Electricity production for all uses represents roughly 38 quads or about 40% of all the nation's energy that is used is electricity. And as you look down, lighting, energy, consumption is 8% of all the energy that is used in this country, whether or not it's residential lighting, commercial, industrial, or highway lighting represented 8% of the energy or roughly one-fifth of the electricity that is generated in this country goes into lighting. For us, lighting is a significant issue. Both with regards to emissions, emissions reduction but also for us to reach our net zero energy goal over the next decade or so, lighting, residential, commercial, industrial, and highway lightings will become a larger and larger focus of our activities. It's our goal and expectation that the 22% of electricity going into lighting can, in the next, 15, 25 years be cut in half. To focus getting into the 2005 legislation as Jeff has indicated or as he stated, on August 8, 2005, the Energy Policy Act of 2005 was passed by Congress and signed by the President. That piece of legislation has requirements with regards to energy efficiency, energy production, tax credits, nuclear energy, fossil energy, coal use, coal research but a very small part of it deals with energy efficiency in the commercial residential and Industrial building sector and highway lighting. Specifically, section 135 includes traffic signals, pedestrian modules. The legislation broken down into two subparts one on test procedures, and it directs us as to what the test procedures are to be based on. And they are based on I.T.E. specifications that are referenced in the current EPA Energy Star requirements for traffic signals. The legislation also establishes standards. The law is very clear in this regard. It's very different than much law, where most legislation directs an agency to come up with regulations and in this case, the act specifically said, here's what the test procedures should have been based on and here are what the standards are to be. Under the test procedures -- well, I mentioned the legislation says the test procedures are to be based on I.T.E. specifications. There are a number of questions that we believe need to be answered before we can establish the regulations, setting the test procedures. But we are preparing a notice of proposed rule making regarding test procedures and also manufacturer and certification compliance issues. Basically telling the manufacturers how they are to test, how they are to report to the department of energy. This test procedure rule is going to be built on the test procedures that are specified in the legislation. We expect the notice of proposed rule making to be published in the "Federal Register" later this year, and late spring, early summer. And the audience for the most part for that rule making is going to be manufacturers because we regulate the manufacturers of equipment. We don't regulate the consumer of the equipment. We don't regulate the retailer or the seller of the equipment. Our regulations and the lighting and the appliance standard program deal with the manufacturer and the import of the products. So we have been, for example, talking to the manufacturers trade association, in our effort to develop this notice of proposed rule making. Our regulations for the most part build on the fact that there is competition out in the marketplace. There's a lot of it. Information in the marketplace, industry, trade associations, in many cases, for many of the products that we regulate, published consumer directories listing products. Those directories may be intended for a residential consumer, or a commercial consumer. There are a lot of programs in place that we rely on and as a result, our regulations tend to build on those programs and are based on manufacturer, self-testing and reporting to the D.O.E. The standards, as I mentioned are clearly laid out in the legislation. The table showing this are the requirements that we adopted in the final bill that we published back in October of 2005. These are the same levels that are in the EPA Energy Star guidelines. They deal with the red balls, both 12 and 8-inch, red arrows, and the question mark there, I guess in the transfer from the one form to the other, it's 12-inch and 8-inch, not 12 -- I'm not certain what the metrics are. Also green balls and arrows. And those the widest requirement, both maximum and nominal wattages were those levels that the manufacturers were required to meet in order to qualify for the Energy Star. So essentially the Energy Star product prior to January 1, 2006 is now going to be the norm of what is going to be sold. The legislation as such does require Energy Star to be the standard of what is going to be manufactured and imported as of January 1 of this year. There's been questions as far as what do the standards really mean? As Jeff has mentioned they took effect January 1 of 2006. They apply to the manufacturer of products. The import of products. So as of January 1, any domestic manufacturer who produces a traffic signal module has to meet the standard levels that are in the previous slide if it is a red ball, red arrow, green ball, green arrow. The product is imported. It has to be, on January 1 or later, has to meet the standards, regardless of the date that that product was manufactured. So if a product is manufactured offshore, I would say on December 15th, and it was an incandescent traffic signal module, and was exported to the U.S., cleared customs, got to customs on January 31st, it would have been refused, because for the purpose of this program, the date it's imported is defined to be the date of manufacturer. Without regards to when the manufacturer actually produced the product. It treats the domestically manufactured products a little bit different than foreign manufactured products. Foreign manufactured products, the date of import is considered the date of manufacturer. For U.S. Manufactured products, the date that it was manufactured is the date of manufacturer. Again, it applies to manufacturers. It's not a retail requirement. It's not an installer's requirement. It's not a requirement for state or local transit authorities, traffic highway departments of it's a manufacturer requirement. As the previous slide showed, it is for red and green balls and arrows. It does not apply to amber. There's also provisions in the legislation that provide exception to California to keep their standards for pedestrian modules. It applies to the manufacturing products. So if the county had product in their warehouse that was manufactured before the effective date, they can install it tomorrow. They can install it a year from now. If a county or a state highway department is going out to repair an existing traffic signal and needs to put in a new lens, or a new bulb be, they can do that because this, again, is for the manufacturer of modules, not the repair, not the servicing of modules. It also does not require existing product to be replaced or retrofitted. It's a manufacturer requirement. It requires the future, the legislation sets the standards for the red and the green. While we have the authority to go beyond that, we are not planning any further performance standards at this point in time. We have a number of other rule makings that we have on our plate. We've got 22 rule makings that we have scheduled out for the next five years, and amber bulbs, for example, aren't on the list. The amount of energy they use because they are short duty cycle. I would not expect that they would meet the requirements to be considered any time soon, if at all. So at this point in time, we are not looking. We do not plan any updates to the EPAs 2005 standards for the modules. That is we are not looking to increase the stringency is. We are not looking at adopting performance standards for other product categories such as the amber balls or lane controls. I understand, for example, that the I.T.E. specifications have been recently updated in the 2005 version that does deal with amber. We are not planning on picking up those procedures. That test procedure rule making, we mentioned while we are aware that the 2005 updates exist and they do affect some of the products, we are looking in the rule making to adopt test procedures. We will look at the 2005 version to see what improvements there are there that we can incorporate by reference, and move the '85 version of the I.T.E. Standards that are a starting point, but it's to look at the I.T.E. stand as, the '85 version, with regard to how manufacturers will test the rate of their products. Beyond that, we expect there will be comments, issues made in the rule making that we will be ab dressing during that time frame, both in the comment of the rules as well as discussion of the public meeting, which will probably be late in the summer of this year. That's the general overview. I will pass it back to Jeff. Okay. Thank you, Michael. You guys, of course, can't see the room that we are operating in, nor can you see how bad my eyes are, but I can tell that there have been a number of questions raised in the chat box that we will get to. I can't read them. That's the eye part but we will get to those at the end of the presentation. Our next speaker is Tim O'Leary. Tim is the president of Keota Traffic Corporation which comprises several intersection control and traffic signal companies, including Peak Traffic, U.S. Traffic, and National Signal. Tim joined Peak in 2001, as Executive Vice President of Operations, responsible for global operations. Peak's seven manufacturer facilities around the world. In this capacity, Tim oversaw the coordination of several facilities in Peak's Florida Global Headquarters. 2002, he was promoted to Executive Vice President for the Americas, which expanded his role to include all sales, engineering, finance, and P&L responsibility for North American operations. In December of 2002, Keota Corporation acquired Peak Traffic Americas. Keota found it to be an excellent fit to expand into the intelligent transportation system industry, and in April 2004, Tim was promoted to responsibility for a second company, as the president of U.S. Traffic. Prior to joining Peak, Tim was general manager of Husky Injection Molding Plastics in Milton, Vermont. He held positions of increasing responsibility at Husky from 1998, until 2001. Tim has held manufacturing and operations management positions in several companies throughout his career, including General Dynamic, Baxter Healthcare and United Technologies. Tim is a voting member of the Advanced Transportation Controller Joint Committee, and Vice chair of NEMA, and past director of United Way in Vermont and a past president of the National Management Association. And Tim is going to give us the industry perspective on requirements that Michael just summarized -- Tim? Good morning, thank you, Jeff. Good morning to all the participants. I see we have quite a few folks in, in this topic. I will try to cover the NEMA manufacturer perspective and, again, only speaking for one company but a general assessment of what we see in the marketplace which I think is consistent with what our other manufacturers are seeing. If we look at the chart that's brought up, it is pretty obvious over the past few years, that the growth of LED technology in signal and pedestrian modules have continued to grow for our company. The most recent spike has obviously been in the last year, where it jumped just about 20% of our total sales volume as a percentage of all products in the signal and pedestrian modules categories. The prior jump was from 2001 to 2002, where we saw a very big spike but we think that's a reflection of the change in our business than actual move in the legislation, but we are clearly seeing the growth of LEDs becoming a major part of customer demand. And just to give a little bit of background as we talk through this by customers, our combined traffic companies sell two primarily D.O.T.S and municipalities, both direct or through distribution. So a lot of our feedback may not be direct from the municipalities but from what we are seeing our distributors stocking orders for. Conversely, our next slide shows the incandescent signal volume assume decline over the same period of time. It's certainly reciprocal of the growth in LEDs but we've had to change our business model, production requirements and ordering policies to anticipate a reduction in incandescent signals and obviously with the 1/1/2006 legislation, we were seeing a significant demand for incandescent as they move to LEDs in compliance with the legislation. A couple of the trends that we see and by identified by the manufacturer, I obviously refer primarily to our own experience, Keota Traffic. Clearly we have seen a continued shift to LEDs as customers and distributors have followed the legislation that's recently been enacted. We are seeing and hearing that the primary orders we are getting for incandescent products have repaired to existing orders and those communities that have not made the complete shift to the new technology, but clearly we are building a business around inventory at the barest levels for incandescent bulbs. So looking in the rear-view mirror for our sale volume for incandescent and neon is not a good business model. We are moving more and more towards keeping the barest level as we see more and more communities shifting over. We expect to see more of U.S. and international municipalities following the same standards for conformity to the MUTCD, as well as to the Energy Star and particular sections that we are very closely following, such as section 911 Energy Efficiency and 912, the Lighting Initiatives. But clearly the products as Michael spoke to, that we are bringing in, we are making sure that the Energy Star 1.1, and this is the focus of our product development and our new build technologies. The biggest trends that we have seen in the past year would be primarily the southeastern U.S.A., obviously, the impact of hurricanes and tornadoes in that area have caused many communities due to damage replace in wholesale a number of their older signals and those communities we are seeing are coming out with new LED requirement and when previously they would have been purchasing incandescent, they have taken this opportunity to move forward with the legislation and moved to more of the LED technologies. If we look at what we have done from analysis on average cost of capital to signal, I noticed earlier some questions regarding government support for making the move.