Department of Energy

Home , Distribution transformer, Energy market, Induction regulator, Payback (2013), Transformers (comics), Transformer types

Vol. 78 Thursday, No. 75 April 18, 2013

Part II

10 CFR Part 431 Energy Conservation Program: Energy Conservation Standards for Distribution Transformers; Final Rule

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23336 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

DEPARTMENT OF ENERGY FOR FURTHER INFORMATION CONTACT: b. Pole-Mounted Liquid-Immersed James Raba, U.S. Department of Energy, Distribution Transformers 10 CFR Part 431 Office of Energy Efficiency and c. Network and Vault Liquid-Immersed Renewable Energy, Building Distribution Transformers [Docket No. EERE–2010–BT–STD–0048] d. BIL Ratings in Liquid-Immersed Technologies Program, EE–2J, 1000 Distribution Transformers RIN 1904–AC04 Independence Avenue SW., e. Data Center Transformers Washington, DC, 20585–0121. Energy Conservation Program: Energy f. Noise and Vibration Telephone: (202) 586–8654. Email: g. Multivoltage Capability Conservation Standards for Distribution_Transformers@ h. Consumer Utility Distribution Transformers ee.doe.gov. 3. Technology Options a. Core Deactivation AGENCY: Office of Energy Efficiency and Ami Grace-Tardy, U.S. Department of b. Symmetric Core Renewable Energy, Department of Energy, Office of the General Counsel, GC–71, 1000 Independence Avenue c. Intellectual Property Energy. d. Core Construction Technique SW., Washington, DC, 20585–0121. ACTION: Final rule. B. Screening Analysis Telephone: (202) 586–5709. Email: 1. Nanotechnology Composites SUMMARY: The Energy Policy and [email protected]. C. Engineering Analysis Conservation Act of 1975 (EPCA), as SUPPLEMENTARY INFORMATION: 1. Engineering Analysis Methodology amended, prescribes energy 2. Representative Units Table of Contents conservation standards for various 3. Design Option Combinations consumer products and certain I. Summary of the Final Rule and Its Benefits 4. A and B Loss Value Inputs 5. Materials Prices commercial and industrial equipment, A. Benefits and Costs to Customers B. Impact on Manufacturers 6. Markups including distribution transformers. a. Factory Overhead EPCA also requires the U.S. Department C. National Benefits D. Conclusion b. Labor Costs of Energy (DOE) to determine whether II. Introduction c. Shipping Costs more-stringent standards would be A. Authority 7. Baseline Efficiency and Efficiency Levels technologically feasible and B. Background 8. Scaling Methodology economically justified, and would save 1. Current Standards a. kVA Scaling a significant amount of energy. In this 2. History of Standards Rulemaking for b. Phase Count Scaling final rule, DOE is adopting more- Distribution Transformers 9. Material Availability III. General Discussion 10. Primary Voltage Sensitivities stringent energy conservation standards 11. Impedance for distribution transformers. It has A. Test Procedures 1. General 12. Size and Weight determined that the amended energy 2. Multiple kVA Ratings D. Markups Analysis conservation standards for this 3. Dual/Multiple Basic Impulse Level E. Energy Use Analysis equipment would result in significant 4. Dual/Multiple-Voltage Primary F. Life-Cycle Cost and Payback Period conservation of energy, and are Windings Analysis technologically feasible and 5. Dual/Multiple-Voltage Secondary 1. Modeling Transformer Purchase economically justified. Windings Decision 6. Loading 2. Inputs Affecting Installed Cost DATES: The effective date of this rule is B. Technological Feasibility a. Equipment Costs June 17, 2013. Compliance with the 1. General b. Installation Costs amended standards established for 2. Maximum Technologically Feasible 3. Inputs Affecting Operating Costs distribution transformers in this final Levels a. Transformer Loading rule is required as of January 1, 2016. C. Energy Savings b. Load Growth Trends ADDRESSES: The docket for this 1. Determination of Savings c. Electricity Costs rulemaking is available for review at 2. Significance of Savings d. Electricity Price Trends D. Economic Justification e. Standards Compliance Date www.regulations.gov, including Federal 1. Specific Criteria f. Discount Rates Register notices, framework documents, a. Economic Impact on Manufacturers and g. Lifetime public meeting attendee lists and Consumers h. Base Case Efficiency transcripts, comments, negotiated b. Life-Cycle Costs i. Inputs to Payback Period Analysis rulemaking, and other supporting c. Energy Savings j. Rebuttable-Presumption Payback Period documents/materials. All documents in d. Lessening of Utility or Performance of G. National Impact Analysis—National the docket are listed in the Equipment Energy Savings and Net Present Value www.regulations.gov index. However, e. Impact of Any Lessening of Competition Analysis not all documents listed in the index f. Need for National Energy Conservation 1. Shipments g. Other Factors 2. Efficiency Trends may be publicly available, such as 2. Rebuttable Presumption 3. National Energy Savings information that is exempt from public IV. Methodology and Discussion of Related 4. Equipment Price Forecast disclosure. Comments 5. Net Present Value of Customer Benefit A link to the docket Web page can be A. Market and Technology Assessment H. Customer Subgroup Analysis found at: http://www.regulations.gov/ 1. Scope of Coverage I. Manufacturer Impact Analysis #!docketDetail;rpp=10;po=0;D=EERE- a. Definitions 1. Overview 2010-BT-STD-0048. The regulations.gov b. Underground and Surface Mining 2. Product and Capital Conversion Costs Web page will contain simple Transformer Coverage a. Product Conversion Costs instructions on how to access all c. Step-Up Transformers b. Capital Conversion Costs documents, including public comments, d. Low-Voltage Dry-Type Distribution 3. Markup Scenarios Transformers 4. Other Key GRIM Inputs in the docket. e. Negotiating Committee Discussion of 5. Discussion of Comments For further information on how to Scope a. Core Steel review the docket, contact Ms. Brenda 2. Equipment Classes b. Small Manufacturers Edwards at (202) 586–2945 or by email: a. Less-Flammable Liquid-Immersed c. Conversion Costs [email protected]. Transformers 6. Manufacturer Interviews

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23337

7. Sub-Group Impact Analysis 2. Summary of and Responses to the economically justified. (42 U.S.C. J. Employment Impact Analysis Significant Issues Raised by the Public 6295(o)(2)(A), 6316(a)) Furthermore, any K. Utility Impact Analysis Comments, and a Statement of Any new or amended standard must result in L. Emissions Analysis Changes Made as a Result of Such significant conservation of energy. (42 M. Monetizing Carbon Dioxide and Other Comments Emissions Impacts 3. Description and Estimated Number of U.S.C. 6295(o)(3)(B), 6316(a)) In 1. Social Cost of Carbon Small Entities Regulated accordance with these and other a. Monetizing Carbon Dioxide Emissions a. Methodology for Estimating the Number statutory provisions addressed in this b. Social Cost of Carbon Values Used in of Small Entities rulemaking, DOE is adopting amended Past Regulatory Analyses b. Distribution Transformer Industry energy conservation standards for c. Current Approach and Key Assumptions Structure distribution transformers. The amended 2. Valuation of Other Emissions c. Comparison Between Large and Small standards are summarized in Table I.1 Reductions Entities through Table I.3. Table I.4 shows the N. Labeling Requirements 4. Description and Estimate of Compliance O. Discussion of Other Comments mapping of trial standard levels (TSLs) Requirements 2 1. Supplementary Trial Standard Levels a. Liquid-Immersed to energy efficiency levels (ELs), and 2. Efficiency Levels b. Low-Voltage Dry-Type Table I.5 through Table I.8 show the 3. Impact of Standards on Transformer c. Medium-Voltage Dry-Type standards in terms of minimum Refurbishment d. Summary of Compliance Impacts electrical efficiency. These amended 4. Alternative Means of Saving Energy 5. Steps Taken To Minimize Impacts on standards apply to all equipment that is 5. Alternative Rulemaking Procedures Small Entities and Reasons Why Other listed in Table I.1 and manufactured in, 6. Proposed Standards—Weighting of Significant Alternatives to Today’s Final Benefits vs. Burdens or imported into, the United States on Rule Were Rejected or after January 1, 2016. As discussed in a. General Comments 6. Duplication, Overlap, and Conflict With b. Standards on Liquid-Immersed Other Rules and Regulations section IV.C.8 of this preamble, any Distribution Transformers 7. Significant Alternatives to Today’s Rule distribution transformer having a c. Standards on Low-Voltage Dry-Type 8. Significant Issues Raised by Public kilovolt-ampere (kVA) rating falling Distribution Transformers Comments between the kVA ratings shown in the d. Standards on Medium-Voltage Dry-Type 9. Steps DOE Has Taken To Minimize the tables shall meet a minimum energy Distribution Transformers Economic Impact on Small efficiency level calculated by a linear e. Response to Comments on Standards Manufacturers Proposed in Notice of Proposed interpolation of the minimum efficiency C. Review Under the Paperwork Reduction requirements of the kVA ratings Rulemaking Act V. Analytical Results and Conclusions D. Review Under the National immediately above and below that 3 A. Trial Standard Levels Environmental Policy Act of 1969 rating. B. Economic Justification and Energy E. Review Under Executive Order 13132 For the reasons discussed in this Savings F. Review Under Executive Order 12988 preamble, particularly in Section V, 1. Economic Impacts on Customers G. Review Under the Unfunded Mandates DOE is adopting TSL 1 for liquid- a. Life-Cycle Cost and Payback Period Reform Act of 1995 immersed distribution transformers. b. Customer Subgroup Analysis H. Review Under the Treasury and General c. Rebuttable Presumption Payback DOE acknowledges the input of various Government Appropriations Act, 1999 2. Economic Impact on Manufacturers stakeholders in support of a more I. Review Under Executive Order 12630 a. Industry Cash-Flow Analysis Results stringent energy conservation standard J. Review Under the Treasury and General b. Impacts on Employment for liquid-immersed distribution Government Appropriations Act, 2001 c. Impacts on Manufacturing Capacity K. Review Under Executive Order 13211 transformers. DOE notes that the d. Impacts on Subgroups of Manufacturers potential for significant disruption in e. Cumulative Regulatory Burden L. Review Under the Information Quality Bulletin for Peer Review the steel supply market at higher 3. National Impact Analysis efficiency levels was a key element in a. Significance of Energy Savings M. Congressional Notification b. Net Present Value of Customer Costs and VII. Approval of the Office of the Secretary adopting TSL 1 in this rulemaking. DOE will monitor the steel and liquid- Benefits I. Summary of the Final Rule and Its immersed distribution transformer c. Indirect Impacts on Employment Benefits 4. Impact on Utility or Performance of markets and by no later than 2016, Equipment Title III, Part B of the Energy Policy determine whether interim changes to 5. Impact of Any Lessening of Competition and Conservation Act of 1975 (EPCA or market conditions, particularly the 6. Need of the Nation To Conserve Energy the Act), Public Law 94–163 (42 U.S.C. supply chain for amorphous steel, 7. Summary of National Economic Impacts 6291–6309, as codified), established the justify re-evaluating the efficiency 8. Other Factors Energy Conservation Program for C. Conclusion standards adopted in today’s 1. Benefits and Burdens of Trial Standard Consumer Products Other Than rulemaking. Levels Considered for Liquid-Immersed Automobiles. Part C of Title III of EPCA Although DOE proposed TSL 1 for Distribution Transformers (42 U.S.C. 6311–6317) established a low-voltage dry-type distribution 2. Benefits and Burdens of Trial Standard similar program for ‘‘Certain Industrial transformers, DOE is adopting in this Levels Considered for Low-Voltage Dry- Equipment,’’ including distribution final rule TSL 2 for such transformers Type Distribution Transformers transformers.1 Pursuant to EPCA, any for the reasons discussed in greater 3. Benefits and Burdens of Trial Standard new or amended energy conservation detail in Section IV.I.5.B. DOE Levels Considered for Medium-Voltage standard that DOE prescribes for certain acknowledges that various stakeholders Dry-Type Distribution Transformers 4. Summary of Benefits and Costs equipment, such as distribution (Annualized) of Today’s Standards transformers, shall be designed to 2 A detailed description of the mapping of trial VI. Procedural Issues and Regulatory Review achieve the maximum improvement in standard level to energy efficiency levels can be energy efficiency that DOE determines found in the Technical Support Document, chapter A. Review Under Executive Orders 12866 10 section 10.2.2.3. and 13563 is technologically feasible and 3 kVA, an abbreviation for kilovolt-ampere, is a B. Review Under the Regulatory Flexibility capacity metric used by industry to classify Act 1 For editorial reasons, upon codification in the transformers. A transformer’s kVA rating represents 1. Statement of the Need for, and U.S. Code, Parts B and C were redesignated as Parts its output power when it is fully loaded (i.e., 100 Objectives of, the Rule A and A–1, respectively. percent).

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23338 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

argued that concerns regarding small sourcing cores from third parties or no later than 2016, determine whether manufacturers should not be a barrier to investing in mitering machines. DOE market conditions justify re-evaluating adopting TSL 3 because small will monitor the low-voltage dry-type the efficiency standards adopted in manufacturers have the option of either distribution transformer market, and by today’s rulemaking.

TABLE I.1—ENERGY CONSERVATION STANDARDS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS [Compliance starting January 1, 2016]

Phase Adopted Equipment classes Design line Type count BIL* TSL

1 ...... 1, 2 and 3 ...... Liquid-immersed ...... 1 All ...... 1 2 ...... 4 and 5 ...... Liquid-immersed ...... 3 All ...... 1 * BIL means ‘‘basic impulse insulation level’’ and measures how resistant a transformer’s insulation is to large voltage transients.

TABLE I.2—ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS [Compliance starting January 1, 2016]

Phase Adopted Equipment class Design line Type count BIL* TSL

3 ...... 6 ...... Low-voltage dry-type ...... 1 ≤ 10 kV .... 2 4 ...... 7 and 8 ...... Low-voltage dry-type ...... 3 ≤ 10 kV .... 2 * BIL means ‘‘basic impulse insulation level’’ and measures how resistant a transformer’s insulation is to large voltage transients.

TABLE I.3—ENERGY CONSERVATION STANDARDS FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS [Compliance starting January 1, 2016]

Phase Adopted Equipment class Design line Type count BIL* TSL

5 ...... 9 and 10 ...... Medium-voltage dry-type ...... 1 25–45 kV 2 6 ...... 9 and 10 ...... Medium-voltage dry-type ...... 3 25–45 kV 2 7 ...... 11 and 12 ...... Medium-voltage dry-type ...... 1 46–95 kV 2 8 ...... 11 and 12 ...... Medium-voltage dry-type ...... 3 46–95 kV 2 9 ...... 13A and 13B ...... Medium-voltage dry-type ...... 1 ≥96 kV ..... 2 10 ...... 13A and 13B ...... Medium-voltage dry-type ...... 3 ≥96 kV ..... 2 * BIL means ‘‘basic impulse insulation level’’ and measures how resistant a transformer’s insulation is to large voltage transients.

TABLE I.4—TRIAL STANDARD LEVEL TO ENERGY EFFICIENCY LEVEL MAPPING FOR DISTRIBUTION TRANSFORMER ENERGY CONSERVATION STANDARDS

Efficiency Type Design line Phase count TSL Energy efficiency level (%)

Liquid-immersed ...... 1 1 1 1 (0.4 actual)* ...... 99.11 2 1 ...... Base (0.5 actual)* ...... 98.95 3 1 ...... 1 (1.1 actual)* ...... 99.49 4 3 ...... 1 ...... 99.16 5 3 ...... 1 ...... 99.48 Low-voltage dry-type ...... 6 1 2 Base ...... 98.00 7 3 ...... 3 ...... 98.60 8 3 ...... 2 ...... 99.02 Medium-voltage dry-type ...... 9 3 2 1 ...... 98.93 10 3 ...... 2 ...... 99.37 11 3 ...... 1 ...... 98.81 12 3 ...... 2 ...... 99.30 13A 3 ...... 1 ...... 98.69 13B 3 ...... 2 ...... 99.28 * Because of scaling, actual efficiency values unavoidably differ from nominal EL values.

TABLE I.5—ELECTRICAL EFFICIENCIES FOR ALL LIQUID-IMMERSED DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES [Compliance starting January 1, 2016]

Equipment Class 1 Equipment Class 2 kVA % kVA %

Standards by kVA and Equipment Class

10 ...... 98.70 15 ...... 98.65

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23339

TABLE I.5—ELECTRICAL EFFICIENCIES FOR ALL LIQUID-IMMERSED DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES— Continued [Compliance starting January 1, 2016]

Equipment Class 1 Equipment Class 2 kVA % kVA %

15 ...... 98.82 30 ...... 98.83 25 ...... 98.95 45 ...... 98.92 37.5 ...... 99.05 75 ...... 99.03 50 ...... 99.11 112.5 ...... 99.11 75 ...... 99.19 150 ...... 99.16 100 ...... 99.25 225 ...... 99.23 167 ...... 99.33 300 ...... 99.27 250 ...... 99.39 500 ...... 99.35 333 ...... 99.43 750 ...... 99.40 500 ...... 99.49 1,000 ...... 99.43 667 ...... 99.52 1,500 ...... 99.48 833 ...... 99.55 2,000 ...... 99.51 2,500 ...... 99.53

TABLE I.6—ELECTRICAL EFFICIENCIES FOR ALL LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES [Compliance starting January 1, 2016]

Equipment Class 3 Equipment Class 4 kVA % kVA %

Standards by kVA and Equipment Class

TABLE I.7—ELECTRICAL EFFICIENCIES FOR ALL MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES [Compliance starting January 1, 2016]

Equipment Equipment Equipment Equipment Equipment Equipment Class 5 Class 6 Class 7 Class 8 Class 9 Class 10 kVA % kVA % kVA % kVA % kVA % kVA %

Standards by kVA and Equipment Class

15 ...... 98.10 15 ...... 97.50 15 ...... 97.86 15 ...... 97.18 ...... 25 ...... 98.33 30 ...... 97.90 25 ...... 98.12 30 ...... 97.63 ...... 37.5 ...... 98.49 45 ...... 98.10 37.5 ...... 98.30 45 ...... 97.86 ...... 50 ...... 98.60 75 ...... 98.33 50 ...... 98.42 75 ...... 98.13 ...... 75 ...... 98.73 112.5 ...... 98.52 75 ...... 98.57 112.5 ...... 98.36 75 ...... 98.53 ...... 100 ...... 98.82 150 ...... 98.65 100 ...... 98.67 150 ...... 98.51 100 ...... 98.63 ...... 167 ...... 98.96 225 ...... 98.82 167 ...... 98.83 225 ...... 98.69 167 ...... 98.80 225 ...... 98.57 250 ...... 99.07 300 ...... 98.93 250 ...... 98.95 300 ...... 98.81 250 ...... 98.91 300 ...... 98.69 333 ...... 99.14 500 ...... 99.09 333 ...... 99.03 500 ...... 98.99 333 ...... 98.99 500 ...... 98.89 500 ...... 99.22 750 ...... 99.21 500 ...... 99.12 750 ...... 99.12 500 ...... 99.09 750 ...... 99.02 667 ...... 99.27 1,000 ...... 99.28 667 ...... 99.18 1,000 ...... 99.20 667 ...... 99.15 1,000 ...... 99.11 833 ...... 99.31 1,500 ...... 99.37 833 ...... 99.23 1,500 ...... 99.30 833 ...... 99.20 1,500 ...... 99.21 2,000 ...... 99.43 ...... 2,000 ...... 99.36 ...... 2,000 ...... 99.28 2,500 ...... 99.47 ...... 2,500 ...... 99.41 ...... 2,500 ...... 99.33

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23340 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

A. Benefits and Costs to Customers 4 TABLE I.8—IMPACTS OF TODAY’S C. National Benefits STANDARDS ON CUSTOMERS OF DIS- Table I.8 summarizes DOE’s DOE’s analyses indicate that today’s TRIBUTION TRANSFORMERS—Contin- evaluation of the economic impacts of standards would save a significant today’s standards on customers who ued amount of energy. The lifetime savings purchase distribution transformers, as for equipment purchased in the 30-year Average period that begins in the year of measured by the average life-cycle cost LCC Median pay- (LCC) savings and the median payback Design line back period compliance with amended standards savings years period (PBP). DOE measures the impacts 2011$ (2016–2045) amounts to 3.63 quads. The cumulative net present value of standards relative to a base case that (NPV) of total customer costs and reflects likely trends in the distribution 13B ...... 4,346 12.2 savings of today’s standards for transformer market in the absence of * No customers are impacted by today’s distribution transformers, in 2011$, amended standards. The base case standard because there is no change from the ranges from $3.4 billion (at a 7-percent predominantly consists of products at minimum efficiency standard for design line 6. ** discount rate) to $12.9 billion (at a 3- the baseline efficiency levels evaluated See section IV.A.3.d for discussion of core construction technique. percent discount rate). This NPV for each representative unit, which expresses the estimated total value of correspond to the existing energy B. Impact on Manufacturers future operating-cost savings minus the conservation standards for distribution estimated increased equipment costs for transformers. (Throughout this The industry net present value (INPV) equipment purchased in 2016–2045, document, ‘‘distribution transformers’’ is the sum of the discounted cash flows to the industry from the base year discounted to 2012. are also referred to as simply In addition, today’s standards would ‘‘transformers.’’) through the end of the analysis period (2012 to 2045). Using a real discount have significant environmental benefits. rate of 7.4 percent for liquid-immersed The energy savings would result in TABLE I.8—IMPACTS OF TODAY’S cumulative emission reductions of 264.7 distribution transformers, 9 percent for STANDARDS ON CUSTOMERS OF DIS- million metric tons (Mt) 5 of carbon medium-voltage dry-type distribution TRIBUTION TRANSFORMERS dioxide (CO ), 223.3.thousand tons of transformers, and 11.1 percent for low- 2 nitrogen oxides (NO ), 182.9 thousand voltage dry-type distribution X Average tons of sulfur dioxide (SO ), and 0.6 ton Median pay- transformers, DOE estimates that the 2 Design line LCC back period of mercury (Hg).6 savings years INPV for manufacturers of liquid- 2011$ The value of the CO2 reductions is immersed, medium-voltage dry-type, calculated using a range of values per and low-voltage dry-type distribution Liquid-Immersed metric ton of CO2 (otherwise known as transformers is $575.1 million, $68.7 the Social Cost of Carbon, or SCC) 1 ...... 72 18.2 million, and $237.6 million, developed by a recent interagency 2 ...... 66 5.9 respectively, in 2011$. Under the process. The derivation of the SCC 3 ...... 2,753 8.6 standards of today’s rule, DOE expects values is discussed in section IV.M. 4 ...... 967 7.0 that manufacturers of liquid-immersed DOE estimates the net present monetary units may lose as much as 8.4 percent 5 ...... 4,289 6.3 value of the CO2 emissions reduction is of their INPV, which is approximately between $0.80 billion and $13.31 ** Low-voltage dry-type $48.2 million; medium-voltage billion, expressed in 2011$ and manufacturers may lose as much as 4.2 6 ...... N/A * N/A * discounted to 2012. DOE also estimates percent of their INPV, which is the net present monetary value of the 7 ...... 1,678 3.6 approximately $2.9 million; and low- 8 ...... 2,588 7.7 NOX emissions reduction, expressed in voltage manufacturers may lose as much 2011$ and discounted to 2012, is $93.2 Medium-voltage dry-type as 4.7 percent of their INPV, which is million at a 7-percent discount rate and approximately $11.1 million. $234.1 million at a 3-percent discount 9 ...... 787 2.6 Additionally, based on DOE’s rate.7 10 ...... 4,455 8.6 interviews with the manufacturers of Table I.9 summarizes the national 11 ...... 996 10.6 distribution transformers, DOE does not economic costs and benefits expected to 12 ...... 6,790 8.5 expect any plant closings or significant result from today’s standards for 13A ...... ¥27 16.1 loss of employment. distribution transformers.

TABLE I.9—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF DISTRIBUTION TRANSFORMER ENERGY CONSERVATION STANDARDS

Present value Category billion Discount rate 2011$ %

Benefits

Operating Cost Savings ...... 6.30 7

4 For purposes of this document, the ‘‘consumers’’ 5 A metric ton is equivalent to 1.1 short tons. 70 FR 25162 (May 12, 2005)). Subsequent of distribution transformers are referred to as Results for NOX and Hg are presented in short tons. regulations, including the CAIR replacement rule, ‘‘customers.’’ Customers refer to electric utilities in 6 DOE calculated emissions reductions relative to the Cross-State Air Pollution Rule (76 FR 48208 the case of liquid-immersed transformers, and to the Annual Energy Outlook (AEO) 2011 Reference (August 8, 2011)), do not appear in the projection. utilities and building owners in the case of dry-type case, which incorporated projected effects of all 7 DOE has decided to await further guidance transformers. emissions regulations promulgated as of January 31, regarding consistent valuation and reporting of Hg 2011, including the Clean Air Interstate Rule (CAIR, emissions before it monetizes Hg in its rulemakings.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23341

TABLE I.9—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF DISTRIBUTION TRANSFORMER ENERGY CONSERVATION STANDARDS—Continued

Present value Category billion Discount rate 2011$ %

18.2 3 * CO2 reduction monetized value ($4.9/t case) ...... 0.80 5 * CO2 reduction monetized value ($22.3/t case) ...... 4.38 3 * CO2 reduction monetized value ($36.5/t case) ...... 7.51 2 .5 * CO2 reduction monetized value ($67.6/t case) ...... 13 .31 3 ** NOX reduction monetized value ($2,591/ton) ...... 0 .09 7 0.23 3 Total benefits † ...... 10.77 7 22.8 3

Costs

Incremental installed costs ...... 2 .89 7 5.22 3

Net Benefits

Including CO2 and NOX reduction monetized value ...... 7.88 7 17.6 3

* The CO2 values represent global monetized values of the SCC in 2011$ in 2011 under several scenarios. The values of $4.9, $22.3, and $36.5/per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. ** The value represents the average of the low and high NOX values used in DOE’s analysis. † Total benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $22.3/t.

The benefits and costs of today’s of market transactions, whereas the percent discount rate along with the standards, for equipment sold in 2016– value of CO2 reductions is based on a SCC series corresponding to a value of 2045, can also be expressed in terms of global value. Second, the assessments of $22.3/ton in 2011), the cost of the annualized values. The annualized operating cost savings and CO2 savings standards in today’s rule is $266 million monetary values are the sum of: (1) The are performed using different methods per year in increased equipment costs, annualized national economic value of that employ different time frames for while the benefits are $581 million per the benefits from customer operation of analysis. The national operating cost year in reduced equipment operating equipment that meets today’s standards savings is measured for the lifetime of costs, $237 million in CO2 reductions, (consisting primarily of operating cost distribution transformers shipped in and $8.60 million in reduced NOX savings from using less energy, minus 2016–2045. The SCC values, on the emissions. In this case, the net benefit increases in equipment purchase and other hand, reflect the present value of amounts to $561 million per year. Using installation costs, which is another way some future climate-related impacts a 3-percent discount rate for all benefits of representing customer NPV), and (2) resulting from the emission of one ton and costs (and the SCC series the annualized monetary value of the of carbon dioxide in each year. Those corresponding to a value of $22.3/ton in benefits of emission reductions, impacts continue well beyond 2100. 2011), the cost of the standards in 8 including CO2 emission reductions. Estimates of annualized benefits and today’s rule is $282 million per year in Although combining the values of costs of today’s standards are shown in increased equipment costs, while the operating cost savings and CO2 emission Table I.10. The results under the benefits are $983 million per year in reductions provides a useful primary estimate are as follows. (All reduced operating costs, $237 million in perspective, two issues should be monetary values below are expressed in CO2 reductions, and $12.67 million in considered. First, the national operating 2011$.) Using a 7-percent discount rate reduced NOX emissions. In this case, the cost savings are domestic U.S. customer for benefits and costs (other than CO2 net benefit amounts to $950 million per monetary savings that occur as a result reduction, for which DOE used a 3- year.

8 DOE used a two-step calculation process to rates of three and seven percent for all costs and same present value. The fixed annual payment is convert the time-series of costs and benefits into benefits except for the value of CO2 reductions. For the annualized value. Although DOE calculated annualized values. First, DOE calculated a present the latter, DOE used a range of discount rates, as annualized values, this does not imply that the value in 2012, the year used for discounting the shown in Table I.10. From the present value, DOE time-series of cost and benefits from which the NPV of total consumer costs and savings, for the then calculated the fixed annual payment over a 30- annualized values were determined is a steady time-series of costs and benefits using discount year period (2016 through 2045) that yields the stream of payments.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23342 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE I.10—ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR DISTRIBUTION TRANSFORMERS SOLD IN 2016–2045

Million 2011$/year Discount rate % Primary esti- Low net bene- High net bene- mate * fits estimate * fits estimate *

Benefits

Operating cost savings ...... 7 581 559 590. 3 983 930 1003. CO2 reduction monetized value ($4.9/t case) ** ...... 5 57.7 57.7 57.7. CO2 reduction monetized value ($22.3/t case) ** ...... 3 237 237 237. CO2 reduction monetized value ($36.5/t case) ** ...... 2.5 377 377 377. CO2 reduction monetized value ($67.6/t case) ** ...... 3 721 721 721. NOX reduction monetized value ($2,591/ton) ** ...... 7 8.60 8.60 8.60. 3 12.67 12.67 12.67. Total benefits† ...... 7% plus CO2 648 to 1311 625 to 1288 656 to 1319. range 7 827 805 836. 3% plus CO2 1053 to 1716 1000 to 1663 1074 to 1737. range 3 1233 1179 1253.

Costs

Incremental equipment costs ...... 7 266 300 257. 3 282 325 271.

Net Benefits

Total† ...... 7% plus CO2 381 to 1044 325 to 988 400 to 1063. range 7 561 504 579. 3% plus CO2 771 to 1434 675 to 1338 803 to 1466. range 3% 950 854 982. * This table presents the annualized costs and benefits associated with transformers shipped in 2016–2045. These results include benefits to customers that accrue after 2045 from equipment purchased in 2016–2045. Costs incurred by manufacturers, some of which may be incurred in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The Primary, Low Benefits, and High Benefits estimates utilize projections of energy prices from the AEO2012 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental equipment costs reflect a constant equipment price trend in the Primary Estimate, an increasing price trend in the Low Benefits Estimate, and a declining price trend in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.2. ** The CO2 values represent global monetized values of the SCC, in 2011$, in 2011 under several scenarios. The values of $4.9, $22.3, and $36.5 per metric ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX (in 2011$) is the average of the low and high values used in DOE’s analysis. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $22.3/t. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values.

D. Conclusion some of the relevant historical 486, amended EPCA and directed the background related to the establishment Department of Energy to prescribe Based on the analyses culminating in of today’s amended standards. this final rule, DOE found the benefits energy conservation standards for those to the nation of the standards (energy A. Authority distribution transformers for which DOE determines such standards would be savings, consumer LCC savings, positive Title III, Part B of the Energy Policy NPV of customer benefit, and emission technologically feasible, economically and Conservation Act of 1975 (EPCA or justified, and would result in significant reductions) outweigh the burdens (loss the Act), Public Law 94–163 (42 U.S.C. of INPV and LCC increases for some energy savings. (42 U.S.C. 6317(a)) The 6291–6309, as codified), established the Energy Policy Act of 2005 (EPACT users of this equipment). DOE has Energy Conservation Program for 2005), Public Law 109–58, amended concluded that the standards in today’s ‘‘Consumer Products Other Than EPCA to establish energy conservation final rule represent the maximum Automobiles.’’ Part C of Title III of improvement in energy efficiency that is standards for low-voltage dry-type EPCA (42 U.S.C. 6311–6317) established 10 technologically feasible and a similar program for ‘‘Certain Industrial distribution transformers. (42 U.S.C. economically justified, and would result Equipment,’’ including distribution 6295(y)) in significant conservation of energy. transformers.9 The Energy Policy Act of 10 1992 (EPACT 1992), Public Law 102– EPACT 2005 established that the efficiency of II. Introduction a low-voltage dry-type distribution transformer manufactured on or after January 1, 2007 shall be The following section briefly 9 For editorial reasons, upon codification in the the Class I Efficiency Levels for distribution discusses the statutory authority U.S. Code, Parts B and C were redesignated as Parts transformers specified in Table 4–2 of the ‘‘Guide underlying today’s final rule, as well as A and A–1, respectively. for Determining Energy Efficiency for Distribution

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23343

For those distribution transformers for the covered equipment in the type (or determines that equipment within such which DOE determines that energy class) compared to any increase in the group: (A) Consumes a different kind of conservation standards are warranted, price, initial charges, or maintenance energy from that consumed by other the DOE test procedures must be the expenses for the covered products that covered equipment within such type (or ‘‘Standard Test Method for Measuring are likely to result from the imposition class); or (B) has a capacity or other the Energy Consumption of Distribution of the standard; performance-related feature which other Transformers’’ prescribed by the 3. The total projected amount of equipment within such type (or class) National Electrical Manufacturers energy, or as applicable, water, savings does not have and such feature justifies Association (NEMA TP 2–1998), subject likely to result directly from the a higher or lower standard. (42 U.S.C. to review and revision by the Secretary imposition of the standard; 6295(q)(1) and 6316(a)) In determining of Energy in accordance with certain 4. Any lessening of the utility or the whether a performance-related feature criteria and conditions. (42 U.S.C. performance of the covered equipment justifies a different standard for a group 6293(b)(10), 6314(a)(2)–(3) and likely to result from the imposition of of equipment, DOE must consider such 6317(a)(1)) Manufacturers of such the standard; factors as the utility to the customer of covered equipment must use the 5. The impact of any lessening of such a feature and other factors DOE prescribed DOE test procedure as the competition, as determined in writing deems appropriate. Id. Any rule basis for certifying to DOE that their by the Attorney General, that is likely to prescribing such a standard must equipment complies with the applicable result from the imposition of the include an explanation of the basis on energy conservation standards adopted standard; which such higher or lower level was 6. The need for national energy and under EPCA and when making established. (42 U.S.C. 6295(q)(2) and representations to the public regarding water conservation; and 7. Other factors the Secretary of 6316(a)) the energy use or efficiency of those Federal energy conservation types of equipment. (42 U.S.C. 6314(d)) Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) requirements generally supersede State The DOE test procedures for laws or regulations concerning energy distribution transformers appear at title EPCA, as codified, also contains what is known as an ‘‘anti-backsliding’’ conservation testing, labeling, and 10 of the Code of Federal Regulations standards. (42 U.S.C. 6297(a)–(c) and (CFR) part 431, subpart K, appendix A. provision, which prevents the Secretary from prescribing any amended standard 6316(a)) DOE may, however, grant DOE is required to follow certain waivers of Federal preemption for statutory criteria for prescribing that either increases the maximum allowable energy use or decreases the particular State laws or regulations, in amended standards for covered accordance with the procedures and equipment. As indicated above, any minimum required energy efficiency of other provisions set forth under 42 amended standard for covered a covered product. (42 U.S.C. 6295(o)(1) U.S.C. 6297(d)). equipment must be designed to achieve and 6316(a)) Also, the Secretary may not the maximum improvement in energy prescribe an amended or new standard DOE has also reviewed this regulation efficiency that is technologically if interested persons have established by pursuant to Executive Order (EO) 13563, feasible and economically justified. (42 a preponderance of the evidence that issued on January 18, 2011 (76 FR 3281, U.S.C. 6295(o)(2)(A) and 6316(a)) the standard is likely to result in the January 21, 2011). EO 13563 is Furthermore, DOE may not adopt any unavailability in the United States of supplemental to and explicitly reaffirms standard that would not result in the any covered product type (or class) of the principles, structures, and significant conservation of energy. (42 performance characteristics (including definitions governing regulatory review U.S.C. 6295(o)(3) and 6316(a)) reliability, features, sizes, capacities, established in EO 12866. To the extent Moreover, DOE may not prescribe a and volumes) that are substantially the permitted by law, agencies are required standard: (1) For certain equipment, same as those generally available in the by EO 13563 to: (1) Propose or adopt a including distribution transformers, if United States. (42 U.S.C. 6295(o)(4) and regulation only upon a reasoned no test procedure has been established 6316(a)) determination that its benefits justify its for the equipment, or (2) if DOE Further, EPCA, as codified, costs (recognizing that some benefits determines by rule that the amended establishes a rebuttable presumption and costs are difficult to quantify); (2) standard is not technologically feasible that a standard is economically justified tailor regulations to impose the least or economically justified. (42 U.S.C. if the Secretary finds that the additional burden on society, consistent with 6295(o)(3) and 6316(a)) In deciding cost to the customer of purchasing obtaining regulatory objectives, taking whether an amended standard is equipment complying with an energy into account, among other things, and to economically justified, DOE must conservation standard level will be less the extent practicable, the costs of determine whether the benefits of the than three times the value of the energy cumulative regulations; (3) select, in standard exceed its burdens. (42 U.S.C. savings during the first year that the choosing among alternative regulatory 6295(o)(2)(B)(i) and 6316(a)) DOE must customer will receive as a result of the approaches, those approaches that make this determination after receiving standard, as calculated under the maximize net benefits (including comments on the proposed standard, applicable test procedure. See 42 U.S.C. potential economic, environmental, and by considering, to the greatest 6295(o)(2)(B)(iii) and 6316(a). public health and safety, and other extent practicable, the following seven Additionally, 42 U.S.C. 6295(q)(1), as advantages; distributive impacts; and factors: applied to covered equipment under 42 equity); (4) to the extent feasible, specify 1. The economic impact of the U.S.C. 6316(a), specifies requirements performance objectives, rather than standard on manufacturers and when promulgating a standard for a type specifying the behavior or manner of customers of the equipment subject to or class of covered equipment that has compliance that regulated entities must the standard; two or more subcategories. DOE must adopt; and (5) identify and assess 2. The savings in operating costs specify a different standard level than available alternatives to direct throughout the estimated average life of that which applies generally to such regulation, including providing type or class of equipment for any group economic incentives to encourage the Transformers’’ published by the National Electrical of covered equipment that has the same desired behavior, such as user fees or Manufacturers Association (NEMA TP 1–2002). function or intended use if DOE marketable permits, or providing

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23344 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

information upon which choices can be behavioral changes. For the reasons B. Background made by the public. stated in the preamble, DOE believes 1. Current Standards DOE emphasizes as well that EO that today’s final rule is consistent with 13563 requires agencies to use the best these principles, including the On August 8, 2005, EPACT 2005 available techniques to quantify requirement that, to the extent amended EPCA to establish energy anticipated present and future benefits permitted by law, benefits justify costs conservation standards for low-voltage and costs as accurately as possible. In its and that net benefits are maximized. dry-type distribution transformers 11 guidance, the Office of Information and Consistent with EO 13563, and the (LVDTs). (EPACT 2005, Section Regulatory Affairs has emphasized that range of impacts analyzed in this 135(c); 42 U.S.C. 6295(y)) The standard such techniques may include rulemaking, the energy efficiency levels for low-voltage dry-type identifying changing future compliance standard adopted herein by DOE distribution transformers appear in costs that might result from Table II.1. See Table I.6 above for achieves maximum net benefits. technological innovation or anticipated today’s amended LVDT standards.

TABLE II.1—FEDERAL ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS

Single-phase Three-phase kVA Efficiency % kVA Efficiency %

15 ...... 97.7 15 ...... 97.0 25 ...... 98.0 30 ...... 97.5 37.5 ...... 98.2 45 ...... 97.7 50 ...... 98.3 75 ...... 98.0 75 ...... 98.5 112.5 ...... 98.2 100 ...... 98.6 150 ...... 98.3 167 ...... 98.7 225 ...... 98.5 250 ...... 98.8 300 ...... 98.6 333 ...... 98.9 500 ...... 98.7 750 ...... 98.8 1,000 ...... 98.9 Note: Efficiencies are determined at the following reference conditions: (1) for no-load losses, at the temperature of 20 °C, and (2) for load losses, at the temperature of 75 °C and 35% of nameplate load.

DOE incorporated these standards On October 12, 2007, DOE published 58190, 58239–40. These standards are into its regulations, along with the a final rule that established energy codified at 10 CFR 431.196(b) and (c). standards for several other types of conservation standards for liquid- See Tables I.5 and I.7 above for today’s products and equipment, in a final rule immersed distribution transformers and amended liquid-immersed and medium- published on October 18, 2005. 70 FR medium-voltage dry-type distribution voltage dry-type (MVDT) standards. 60407, 60416–60417. These standards transformers, which are shown in Table appear at 10 CFR 431.196(a). II.2 and Table II.3, respectively. 72 FR

TABLE II.2—FEDERAL ENERGY CONSERVATION STANDARDS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS

Single-phase Three-phase kVA Efficiency % kVA Efficiency %

10 ...... 98.62 15 ...... 98.36 15 ...... 98.76 30 ...... 98.62 25 ...... 98.91 45 ...... 98.76 37.5 ...... 99.01 75 ...... 98.91 50 ...... 99.08 112.5 ...... 99.01 75 ...... 99.17 150 ...... 99.08 100 ...... 99.23 225 ...... 99.17 167 ...... 99.25 300 ...... 99.23 250 ...... 99.32 500 ...... 99.25 333 ...... 99.36 750 ...... 99.32 500 ...... 99.42 1,000 ...... 99.36 667 ...... 99.46 1,500 ...... 99.42 833 ...... 99.49 2,000 ...... 99.46 ...... 2,500 ...... 99.49 Note: All efficiency values are at 50% of nameplate-rated load, determined according to the DOE test-procedure. 10 CFR part 431, subpart K, appendix A.

11 EPACT 2005 established that the efficiency of the Class I Efficiency Levels for distribution Transformers’’ published by the National Electrical a low-voltage dry-type distribution transformer transformers specified in Table 4–2 of the ‘‘Guide Manufacturers Association (NEMA TP 1–2002). manufactured on or after January 1, 2007, shall be for Determining Energy Efficiency for Distribution

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23345

TABLE II.3—FEDERAL ENERGY CONSERVATION STANDARDS FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS

Single-phase Three-phase BIL* BIL kVA 20–45 kV 46–95 kV ≥96 kV kVA 20–45 kV 46–95 kV ≥96 kV Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency % % % % % %

15 ...... 98.10 97.86 ...... 15 ...... 97.50 97.18 ...... 25 ...... 98.33 98.12 ...... 30 ...... 97.90 97.63 ...... 37.5 ...... 98.49 98.30 ...... 45 ...... 98.10 97.86 ...... 50 ...... 98.60 98.42 ...... 75 ...... 98.33 98.12 ...... 75 ...... 98.73 98.57 98.53 112.5...... 98.49 98.30 ...... 100 ...... 98.82 98.67 98.63 150...... 98.60 98.42 ...... 167 ...... 98.96 98.83 98.80 225...... 98.73 98.57 98.53 250 ...... 99.07 98.95 98.91 300...... 98.82 98.67 98.63 333 ...... 99.14 99.03 98.99 500...... 98.96 98.83 98.80 500 ...... 99.22 99.12 99.09 750...... 99.07 98.95 98.91 667 ...... 99.27 99.18 99.15 1,000...... 99.14 99.03 98.99 833 ...... 99.31 99.23 99.20 1,500...... 99.22 99.12 99.09 2,000 ...... 99.27 99.18 99.15 2,500 ...... 99.31 99.23 99.20 * BIL means ‘‘basic impulse insulation level.’’ Note: All efficiency values are at 50% of nameplate rated load, determined according to the DOE test-procedure. 10 CFR part 431, subpart K, appendix A.

2. History of Standards Rulemaking for Distribution Transformers. The rule: (1) 72 FR 6189. Based on comments on the Distribution Transformers established the procedure for sampling 2006 NOPR and the NODA, DOE created In a notice published on October 22, and testing distribution transformers so new TSLs to address the treatment of 1997 (62 FR 54809), DOE stated that it that manufacturers can make three-phase units and single-phase units had determined that energy representations as to their efficiency, as and incorporated increased installation conservation standards were warranted well as establish that they comply with costs for pole-mounted and vault for electric distribution transformers, Federal standards; and (2) outlined the transformers. In October 2007, DOE relying in part on two reports by DOE’s procedure the Department of Energy published a final rule that created the Oak Ridge National Laboratory (ORNL). would follow should it initiate an current energy conservation standards In 2000, DOE issued and took comment enforcement action against a for liquid-immersed and medium- on its Framework Document for manufacturer. 71 FR 24972 (codified at voltage dry-type distribution Distribution Transformer Energy 10 CFR 431.198). transformers. 72 FR 58190 (October 12, On August 4, 2006, DOE published a Conservation Standards Rulemaking, 2007) (the 2007 Final Rule) (codified at NOPR in which it proposed energy describing its proposed approach for 10 CFR 431.196(b)–(c)). The preamble to conservation standards for distribution developing standards for distribution the rule included additional, detailed transformers (the 2006 NOPR). 71 FR transformers, and held a public meeting background information on the history 44355. Concurrently, DOE also issued a to discuss the framework document. of that rulemaking. 72 FR 58194–96. technical support document (TSD) that The document is available at: http:// After the publication of the 2007 final incorporated the analyses it had www.regulations.gov/ rule, certain parties filed petitions for performed for the proposed rule.14 review in the United States Courts of #!docketDetail;dct=FR%252BPR% Some commenters asserted that DOE’s Appeals for the Second and Ninth 252BN%252BO%252BSR; proposed standards might adversely Circuits, challenging the rule. Several rpp=10;po=0;D=EERE-2006-STD-0099. affect replacement of distribution additional parties were permitted to On July 29, 2004, DOE published an transformers in certain space- intervene in support of those petitions. advance notice of proposed rulemaking constrained (e.g., vault) installations. In (All of these parties are referred to (ANOPR) for distribution transformer response, DOE issued a notice of data 12 below collectively as ‘‘petitioners.’’) The standards. 69 FR 45375. In August availability and request for comments petitioners alleged that, in developing 2005, DOE issued draft analyses on on this and another issue. 72 FR 6186 its energy conservation standards for which it planned to base the standards (February 9, 2007) (the NODA). In the distribution transformers, DOE did not for liquid-immersed and medium- NODA, DOE sought comment on comply with certain applicable voltage dry-type distribution whether it should include in the LCC provisions of EPCA and of the National transformers, along with supporting analysis potential costs related to size 13 Environmental Policy Act (NEPA), as documentation. constraints of distribution transformers On April 27, 2006, DOE published its amended (42 U.S.C. 4321 et seq.) DOE installed in vaults, and requested Final Rule on Test Procedures for and the petitioners subsequently comments on linking energy efficiency entered into a settlement agreement to levels for three-phase liquid-immersed 12 The ANOPR published in July 2004 is available resolve the petitions. The settlement units with those of single-phase units. at: http://www.regulations.gov/#!documentDetail; agreement outlined an expedited D=EERE-2006-STD-0099-0069. 13 These analyses are available in the docket 14 The NOPR TSD published in August 2006 is timeline for the Department of Energy to folder at: http://www.regulations.gov/ available at: http://www.regulations.gov/ determine whether to amend the energy #!docketDetail;D=EERE-2006-STD-0099. #!documentDetail;D=EERE-2006-STD-0099-0140. conservation standards for liquid-

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23346 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

immersed and medium-voltage dry-type negotiated rulemaking would result in a voting for an efficiency level; in such distribution transformers. Under the better-informed NOPR. On August 12, cases their votes counted neither toward original settlement agreement, DOE was 2011, DOE published in the Federal nor against the consensus. required to publish by October 1, 2011, Register a similar notice of intent to DOE presented its draft engineering, either a determination that the negotiate proposed Federal standards life-cycle cost, and national impacts standards for those distribution for the energy efficiency of low-voltage analysis and results. During the transformers do not need to be amended dry-type distribution transformers. 76 meetings of October 12 through 13, or a NOPR that includes any new FR 50148. The purpose of both 2011, DOE presented its revised analysis proposed standards and that meets all subcommittees was to discuss and, if and heard from subcommittee members applicable requirements of EPCA and possible, reach consensus on a proposed on a number of topics. During the NEPA. Under an amended settlement rule for the energy efficiency of meetings on November 8 through 9, agreement, the October 1, 2011, distribution transformers. 2011, DOE presented its revised deadline for a DOE determination or The ERAC subcommittee for medium- analysis, including life-cycle cost proposed rule was extended to February voltage liquid-immersed, and dry-type sensitivities based on excluding ZDMH 1, 2012. If DOE finds that amended distribution transformers consisted of and amorphous steel as core materials. standards are warranted, DOE agreed to representatives of parties, listed below, During the meetings on November 30 publish a final rule containing such having a defined stake in the outcome through December 1, 2011, DOE amended standards by October 1, 2012. of the proposed standards and included: presented its revised analysis based on Today’s final rule satisfies the amended • ABB Inc. 2011 core-material prices. At the conclusion of the final meeting, settlement agreement. • AK Steel Corporation subcommittee members presented their On March 2, 2011, DOE published in • American Council for an Energy- efficiency level recommendations. For the Federal Register a notice of public Efficient Economy medium-voltage liquid-immersed meeting and availability of its • American Public Power Association distribution transformers, the energy preliminary TSD for the distribution • Appliance Standards Awareness efficiency Advocates, represented by the transformer energy conservation Project Appliance Standards Awareness Project standards rulemaking, wherein DOE • ATI-Allegheny Ludlum (ASAP), recommended efficiency level discussed and received comments on • Baltimore Gas and Electric (also referred to as ‘‘EL’’) 2 for all design issues such as equipment classes that • Cooper Power Systems lines (also referred to as ‘‘DLs’’). The DOE would analyze in consideration of • Earthjustice National Electrical Manufacturers amending the energy conservation • Edison Electric Institute Association (NEMA) and AK Steel standards, the analytical framework, • Fayetteville Public Works models and tools it is using to evaluate recommended EL 1 for all DLs except Commission potential standards, the results of its for DL 2, for which no change from the • Federal Pacific Company preliminary analysis, and potential current standard was recommended. • Howard Industries Inc. standard levels. 76 FR 11396. The notice Edison Electric Institute (EEI) and ATI • LakeView Metals is available on the above-referenced Allegheny Ludlum recommended EL1 • Efficiency and Renewables Advisory DOE Web site. To expedite the for DLs 1, 3, and 4 and no change from Committee member rulemaking process, DOE began at the the current standard or a proposed • Metglas, Inc. preliminary analysis stage because it standard of less than EL 1 for DLs 2 and • National Electrical Manufacturers believed that many of the same 5. Therefore, the subcommittee did not Association methodologies and data sources that arrive at consensus regarding proposed • National Resources Defense Council were used during the 2007 final rule standard levels for medium-voltage • National Rural Electric Cooperative remain valid. On April 5, 2011, DOE liquid-immersed distribution Association held a public meeting to discuss the transformers. • Northwest Power and Conservation preliminary TSD. Representatives of For medium-voltage dry-type Council manufacturers, trade associations, distribution transformers, the • Pacific Gas and Electric Company electric utilities, energy conservation • subcommittee arrived at consensus and Progress Energy recommended a proposed standard of organizations, Federal regulators, and • Prolec-GE EL2 for DLs 11 and 12, from which the other interested parties attended this • meeting. In addition, other interested U.S. Department of Energy proposed standards for DLs 9, 10, 13A, parties submitted written comments The ERAC subcommittee for medium- and 13B would be scaled. Transcripts of about the TSD addressing a range of voltage liquid-immersed, and dry-type the all subcommittee meetings (for all issues. Those comments are discussed distribution transformers held meetings transformer types) and all data and in the following sections of the final in 2011 on September 15 through 16, materials presented at the subcommittee rule. October 12 through 13, November 8 meetings are available via a link under On July 29, 2011, DOE published in through 9, and November 30 through the DOE Web site at: http:// the Federal Register a notice of intent December 1; the ERAC subcommittee www.regulations.gov/ to establish a subcommittee under also held public webinars on November #!docketDetail;D=EERE-2010-BT-STD- DOE’s Energy Efficiency and Renewable 17 and December 14. The meetings were 0048. Energy Advisory Committee (ERAC), in open to the public. During the The ERAC subcommittee held accordance with the Federal Advisory September 15, 2011, meeting, the meetings in 2011 on September 28, Committee Act and the Negotiated subcommittee agreed to its rules of October 13–14, November 9, and Rulemaking Act, to negotiate proposed procedure, ratified its schedule of the December 1–2 for low-voltage Federal standards for the energy remaining meetings, and defined the distribution transformers. The ERAC efficiency of medium-voltage dry-type procedural meaning of consensus. The subcommittee also held webinars on and liquid-immersed distribution subcommittee defined consensus as November 21, 2011, and December 20, transformers. 76 FR 45471. Stakeholders unanimous agreement from all present 2011. The meetings were open to the strongly supported a consensual subcommittee members. Subcommittee public. During the September 28, 2011, rulemaking effort. DOE decided that a members were allowed to abstain from meeting, the subcommittee agreed to its

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23347

rules of procedure, finalized the distribution transformers were proposed determination that a test procedure schedule of the remaining meetings, and at the negotiating committee’s amendment is not required under this defined the procedural meaning of consensus level. Liquid-immersed standard must be published in the consensus. The subcommittee defined distribution transformers were proposed Federal Register. (42 U.S.C. consensus as unanimous agreement at TSL 1. Low-voltage dry-type 6314(a)(1)(A)(ii)) from all present subcommittee distribution transformers were proposed As detailed below, in today’s notice, members. Subcommittee members were at TSL 1. In the NOPR, DOE sought DOE determines that an amended test allowed to abstain from voting for an comment on a number of issues related procedure is not necessary because the efficiency level; their votes counted to the rulemaking.15 2006 test procedure is reasonably neither toward nor against the Following publication of the NOPR, designed to produce test results that consensus. DOE received several comments reflect energy efficiency and energy use, The ERAC subcommittee for low- expressing a desire to see some of the and an amended test procedure that voltage distribution transformers NOPR suggestions extended and more precisely measures energy consisted of representatives of parties analyzed for liquid-immersed efficiency and energy use for every having a defined stake in the outcome distribution transformers. In response, possible distribution transformer of the proposed standards and included: DOE generated a supplementary NOPR configuration would be unduly • AK Steel Corporation analysis with three additional TSLs. The burdensome to conduct. • American Council for an Energy- three TSLs presented were based on 1. General possible new equipment classes for Efficient Economy Several parties commented on the test • Appliance Standards Awareness pole-mounted distribution transformers, procedure for distribution transformers. Project network/vault-based distribution The California Investor Owned Utilities • ATI-Allegheny Ludlum transformers, and those with high basic (CA IOUs) commented that DOE should • EarthJustice impulse level (BIL) ratings. On June 4, not modify the test procedure. (CA • Eaton Corporation 2012 DOE published a notice IOUs, No. 189 at p. 1) Today’s rule • Federal Pacific Company announcing the availability of this contains no test procedure amendments, • Lakeview Metals supplementary analysis 16 and of a but the rule does clarify the test • Efficiency and Renewables Advisory public meeting to be held on June 20, procedure’s application in response to Committee member 2012 to present and receive feedback on comments. DOE may revisit the issue of • Metglas, Inc. it. DOE also generated an additional • TSL in a June 18, 2012 analysis test procedures in a future proceeding. National Electrical Manufacturers NEMA commented that because of published on DOE’s Web site. Association variability in process, materials, and • Natural Resources Defense Council III. General Discussion testing, manufacturers must • ONYX Power ‘‘overdesign’’ transformers in order to • Pacific Gas and Electric Company A. Test Procedures have confidence that their products will • Schneider Electric DOE published its test procedure for meet standards. (NEMA, No. 170 at p. 3) • U.S. Department of Energy distribution transformers in the Federal DOE notes that its compliance DOE presented its draft engineering, Register as a final rule on April 27, procedures already contain allowances life-cycle cost and national impacts 2006. 71 FR 24972. Section 7(c) of the for statistical variation as a result of analysis and results. During the meeting Process Rule 17 indicates that DOE will measurement, laboratory, and testing of October 14, 2011, DOE presented its issue a final test procedure, if one is procedure variability. Manufacturers are revised analysis and heard from needed, prior to issuing a proposed rule also required to take certification subcommittee members on various for energy conservation standards. sampling plans and tolerances into topics. During the meeting of November Under 42 U.S.C. 6314(a)(1), at least account when developing their certified 9, 2011, DOE presented its revised every seven years, DOE must evaluate ratings after testing a sample of analysis. During the meeting of whether to amend test procedures for minimum units from the production of December 1, 2011, DOE presented its each class of commercial equipment a basic model. The represented revised analysis based on 2011 core- based on whether an amended test efficiency equation essentially allows a material prices. procedure would more accurately or manufacturer to ‘‘represent’’ a basic At the conclusion of the final meeting, fully comply with the requirements that model of distribution transformer as subcommittee members presented their test procedures be reasonably designed having achieved a higher efficiency than energy efficiency level to produce test results that reflect calculated through testing the minimum recommendations. For low-voltage dry- energy efficiency, energy use, and sample for certification. DOE is not type distribution transformers, the estimated operating costs during a adopting any modifications to its Advocates, represented by ASAP, representative average use cycle, and certification or enforcement sampling recommended EL4 for all DLs; NEMA that the test procedures are not unduly procedures in this final rule, but it may recommended EL 2 for DLs 7 and 8, and burdensome to conduct.18 Any further address them in a separate no change from the current standard for proceeding at a later date if it finds such DL 6. EEI, AK Steel and ATI Allegheny 15 On February 24, 2012, DOE published a practices to be overly strict or generous. Ludlum recommended EL 1 for DLs 7 technical correction to the NOPR, amending and Additionally, Schneider Electric and 8, and no change from the current adding values in certain tables in the NOPR. 77 FR 10997. commented that DOE’s test procedure is standard for DL 6. The subcommittee 16 77 FR 32916. inadequate or ambiguous in several did not arrive at consensus regarding a 17 The Process Rule provides guidance on how areas, including test environment drafts, proposed standard for low-voltage dry- DOE conducts its energy conservation standards ambient method internal temperatures, type distribution transformers. rulemakings, including the analytical steps and test environment ambient temperature DOE published a NOPR on February sequencing of rulemaking stages (such as test procedures and energy conservation standards). (10 variation, ambient method test delays, 10, 2012, which proposed amended CFR Part 430, subpart C, appendix A). standards for all three transformer types. 18 In addition, if the test procedure determines must meet additional requirements at 42 U.S.C. 77 FR 7282. Medium-voltage dry-type estimated annual operating costs, such procedure 6314(a)(3).

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23348 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

coordination of coil and ambient test premature failure due to elevated DOE clarifies today that manufacturers methods, temperature data records, and temperatures. Accordingly, distribution should use a transformer’s base kVA application of voltage or current. transformers rarely contain such rating to assess compliance. For (Schneider, No. 180 at p. 12) DOE components and, when they do, rarely distribution transformers with more examined the test procedure make use of them except in occasional than one kVA rating, base kVA rating components identified by Schneider overload situations. As a result, they means the kVA rating that corresponds Electric and determined that, at this play little role in the design of the to the lowest temperature rise that time, no change to the test procedure is transformer or in a transformer’s ability actively removes heat from the necessary to address the issues raised. to operate efficiently even when distribution transformer without Further, the existing, statutorily- equipped. engagement of any fans, pumps, or other prescribed test procedure is an industry Apart from ratings corresponding to equipment. It is the base kVA rating and standard familiar to manufacturers. DOE active cooling, transformers may also the base kVA rating only, which continues to believe that the procedure carry additional ratings (i.e., above the manufacturers should base their is reasonably designed to produce test ‘‘base rating’’) corresponding to passive certified ratings on and on which DOE results that reflect energy efficiency and cooling and reflecting different will assess compliance. In no case energy use without being unduly temperature rises. A transformer would should a distribution transformer be burdensome to conduct. be rated for higher kVA if allowed to certified using any kVA rating Finally, DOE’s present sampling plans rise to a greater temperature and, by corresponding to heat removal or require a minimum number of units be extension, dissipate more energy. enhanced convection by auxiliary tested in order to calculate the DOE sought comment on whether the equipment. represented efficiency of a basic model. test procedure needs greater specificity (10 CFR 429.47 (a)). Prolec-GE with respect to multiple kVA ratings. No 3. Dual/Multiple Basic Impulse Level commented that DOE’s compliance party argued that distribution Distribution transformers may be built protocols allow too small a statistical transformers should comply with such that different winding variation, particularly because silicon standards at any ratings corresponding configurations carry different BIL steel sees a greater variation in losses to active cooling, for the reasons ratings. In the past, MVDT transformers than does the amorphous variety. discussed above. Four manufacturers were placed into equipment classes by (Prolec-GE, No. 177 at p. 17) To the (Howard Industries, Cooper Power BIL rating (among other criteria) and the extent Prolec-GE is concerned about the Systems, Prolec-GE, and Schneider question arose of which rating (if there variability in their production, DOE Electric), one trade organization were more than one) should be used to notes that the statistical sampling plans (NEMA), and one utility (Progress assess compliance. Currently, DOE allow for manufacturers to increase the Energy) all commented that compliance requires distribution transformers to sample size, which should help better should be based exclusively on a comply with standards using the BIL characterize the variability association transformer’s ‘‘base’’ rating, or the rating rating of the winding configuration that with the production. DOE’s existing that corresponds to the lowest produces the greatest losses. (10 CFR sampling plans are a balance between temperature rise. (Prolec-GE, No. 177 at part 431, subpart K, appendix A) manufacturing burden associated with p. 6; Schneider, No. 180 at p. 2; PEMCO, BIL rating offers additional utility in testing and accurately characterizing the No. 183 at p. 2; PE, No. 192 at p. 3; HI, the form of increased resistance to large efficiency of a given basic model based No. 151 at p. 12; NEMA, No. 170 at pp. voltage transients arising, for example, on a sample of the production. While 6–7) ABB argued that compliance from lightning strikes, but requires some DOE is not adopting any changes to its should be based on a transformer’s base design compromises that affect existing sampling plans in today’s final rating and on any others (if any) efficiency, primarily with respect to rule, DOE welcomes data showing the corresponding to passive cooling. (ABB, winding clearances. A transformer rated production variability for different types No. 158 at pp. 2–4) HVOLT commented for a given BIL must be designed as and efficiencies of distribution that the term ‘‘passive cooling’’ may not such, even if the windings may be transformers to help better inform any be sufficient to clarify DOE’s intent reconfigured such that they carry a changes that may be considered in a because some transformers have more lower rating. For this reason, Progress separate and future proceeding. than one rating which may be achieved Energy, PEMCO, NEMA, Cooper Power with passive cooling. (HVOLT, No. 146 Systems, Power Partners, and Howard 2. Multiple kVA Ratings at p. 49) Industries all commented that The current test procedure is not Though prevalent in certain types of transformers with multiple BIL ratings specific regarding which kVA rating larger transformers, active cooling is not should comply only at the highest BIL should be used to assess compliance in a significant feature in the design or for which they are rated. (HI, No. 151 at the case of distribution transformers that operation of distribution transformers. p. 12; Power Partners, No. 155 at p. 1– have more than one rating. Though less Distribution transformers are seldom 2; Cooper, No. 165 at p. 2; NEMA, No. common in distribution transformers equipped with active cooling features or 170 at p. 7; Prolec-GE, No. 177 at p. 6; than in other types of transformers (e.g., designed to make use of them. PEMCO, No. 183 at p. 2; PE, No. 192 at ‘‘power’’ or ‘‘substation’’ transformers), Additionally, units which are equipped p. 3) ABB commented that transformers active cooling measures such as fans or with such features are rarely operated should meet the efficiency levels of all pumps are sometimes used to aid using them. As a result, active cooling of its rated BILs, because there is no way cooling. Greater heat dissipation features bear little influence on to know in advance how a transformer capacity means that the transformer can transformer efficiency and are not will be operated over its lifetime. (ABB, be safely operated at higher loading appropriate for use in measuring energy No. 158 at p. 4) levels for longer periods of time. Active efficiency. Similarly, transformers with Although DOE agrees there is no way cooling components generally carry more than one rating corresponding to to be sure how a distribution much shorter lifetimes than the passive cooling will experience reduced transformer will be operated over its transformer itself, however, and the equipment lifetime when operated at lifetime, it does not believe multiple BIL failure of any cooling component would those high ratings and are therefore best ratings currently present an energy expose the transformer at-large to evaluated at their lowest, ‘‘base’’ rating. conservation standards circumvention

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23349

risk. Designing transformers to higher transformer will ultimately be used. of knowing which position would BIL ratings adds cost and consumers (BG&E, No. 182 at p. 2; ComEd, No. 184 produce the greatest losses and, would be unlikely to utilize them unless at p. 2) therefore, the test procedure should genuinely required by the application. ABB submitted comments and data remain unchanged with respect to DOE clarifies that transformers may explaining that the ratios of the losses winding configuration requirements. be certified at any BIL for which they of different winding positions varied (ABB, No. 158 at p. 2; CA IOUs, No. 189 are rated, including the highest BIL considerably and, as a result, that there at p. 1–2) ratings. This does nothing to change was no reliable way to predict which DOE is concerned that secondary DOE’s requirement that distribution configuration would carry the lowest windings may have significantly transformers comply in the losses. ABB and the California IOUs different losses in various configuration that produces the greatest supported maintaining the test configurations and that, furthermore, losses, however, even if that procedure’s current requirements. (ABB, there is no reliable way to predict in configuration itself does not carry the No. 158 at p. 2; CA IOUs, No. 189 at pp. which configuration the transformer highest BIL rating. For example, a 1–2) will be operated over the majority of its MVDT distribution transformer may DOE is concerned that the primary lifetime. Just as with dual/multiple have two winding configurations, winding configuration can have a primary windings, changing the respectively BIL rated at 60 kV and 125 significant impact on energy requirement of testing in the kV. Although the distribution consumption and that by relaxing the configuration producing the highest transformer must meet only the 125 kV restriction of compliance in the losses, may diminish forecasted energy standards, it may produce greater losses configuration producing the highest savings. As a result, DOE is not (and thus need to be certified) in the 60 losses, any forecasted energy savings modifying any test procedure kV configuration. may be diminished. DOE is not requirements in today’s rule, but may modifying any test procedure reexamine the topic in a dedicated test 4. Dual/Multiple-Voltage Primary requirements in today’s rule, but may procedure rulemaking in the future. Windings reexamine the topic in a dedicated test 6. Loading Currently, DOE requires procedure rulemaking in the future. manufacturers to comply with energy Currently, DOE requires that both conservation standards while the 5. Dual/Multiple-Voltage Secondary liquid-immersed and medium-voltage distribution transformer’s primary Windings dry-type distribution transformers windings (‘‘primaries’’) are in the DOE understands that some comply with standards at 50 percent configuration that produces the highest distribution transformers may be loading and that low-voltage dry-type losses. (10 CFR part 431, subpart K, shipped with reconfigurable secondary distribution transformers comply at 35 appendix A) windings, and that certain percent loading. DOE wishes to clarify DOE understands that, in contrast to configurations may have different that the loading discussed herein the secondary windings, reconfigurable efficiencies. Currently, DOE requires pertains only to that which primaries typically exhibit a larger distribution transformers to be tested in manufacturers must use to test their variation in efficiency between series the configuration that exhibits the equipment. DOE’s economic analysis and primary connections. Such highest losses. Whereas the IEEE uses loading distributions that attempt transformers are often purchased with standard 19 requires a distribution to reflect the most recent understanding the intent of upgrading the local power transformer to be shipped with the of the United States electrical grid. DOE grid to a higher operating voltage and windings in series, a manufacturer does not believe that all (or the average lowered overall system losses. testing for compliance might need to of all) customers utilize transformers at Several parties commented on the disassemble the unit, reconfigure the the required test procedure loading matter of primary winding windings, and reassemble the unit for values. configurations in response to the NOPR. shipping at added time and expense. Several parties commented on the Kentucky Association of Electric Several parties commented on the appropriateness of these test loading Cooperatives (KAEC), Cooper Power matter of reconfigurable secondary values. ABB, ComEd, Cooper, EEI, Systems, NEMA, and Progress Energy windings. Cooper Power Systems, Howard, KAEC, NEMA, NRECA, commented that it is least burdensome KAEC, NEMA, Progress Energy, and PEMCO, Prolec-GE, and Schneider all for manufacturers if they can report Schneider Electric supported commented that the values were losses in the same configuration in conducting testing with windings in appropriate and should continue to be which the transformers are shipped, series, as is the IEEE convention and as used. (ABB, No. 158 at p. 5; ComEd, No. which by Institute of Electrical and would produce the highest voltage. 184 at p. 2; Cooper, No. 165 at p. 2; EEI, Electronics Engineers (IEEE) standards (Cooper, No. 165 at pp. 1–2, 6 No. 222 No. 185 at p. 4; HI, No. 151 at p. 12; must be the series configuration. (KAEC, at p. 3; HI, No. 151 at p. 12; KAEC, No. KAEC, No. 149 at p. 3; NEMA, No. 170 No. 149 at p. 2; NEMA, No. 170 at p. 6; 149 at p. 2; NEMA, No. 170 at p. 6; PE, at p. 12; NRECA, No. 172 at p. 4; PE, No. 192 at p. 10; PE, No. 192 at p. No. 192 at p. 10; PE, No. 192 at p. 2; PEMCO, No. 183 at p. 2; Prolec-GE, No. 2; Prolec-GE, No. 177 at p. 5; Schneider, Schneider, No. 180 at p. 2; Schneider, 177 at p. 7; Schneider, No. 180 at p. 3) No. 180 at p. 2; Schneider, No. 180 at No. 180 at p. 8) Progress Energy commented that it p. 8; Cooper Power Systems, No. 222 at Power Partners and Prolec-GE believed the current values suffice for p. 3) Howard Industries and Prolec-GE commented that testing should be the present but that DOE should further commented that manufacturers should permitted in any winding configuration explore the topic in the future. (PE, No. be allowed to test distribution at the discretion of the manufacturer. 192 at p. 3) BG&E commented that transformers with their primaries in any (Power Partners, No. 155 at p. 1; Prolec- utilities had oversized transformers in configuration. (HI, No. 151 at p. 12; GE, No. 177 at pp. 3–4) the past due to lack of ability to Prolec-GE, No. 177 at p. 5) Utilities Additionally, ABB and the California accurately monitor loading and that Baltimore Gas and Electric and IOUs commented that there was no way loading will increase in the future. Commonwealth Edison supported (BG&E, No. 182 at p. 3) Finally, MGLW testing in the configuration in which the 19 IEEE C57.12.00–2010. and the Copper Development

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23350 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Association commented that DOE 2. Maximum Technologically Feasible for the products that are the subject of should use a test procedure that requires Levels this rulemaking. The NIA spreadsheet measurements at several loading levels When DOE considers an amended model calculates energy savings in site and reporting of efficiency as a weighted standard for a type or class of covered electricity, which is the energy directly average of those. (MLGW, No. 133 at p. equipment, it must determine the consumed by transformers at the 2; CDA, No. 153 at p. 4) maximum improvement in energy locations where they are used. DOE DOE understands that distribution efficiency or maximum reduction in reports national energy savings on an transformers experience a range of energy use that is technologically annual basis in terms of the primary loading levels when installed in the feasible for that equipment. (42 U.S.C. energy savings, which is the savings in field. DOE understands that the majority 6295(p)(1); 42 U.S.C. 6316(a)) While the energy that is used to generate and of stakeholders, including developing the energy conservation transmit the site electricity. To convert manufacturers and utilities, support standards for liquid-immersed and site electricity to primary energy, DOE retention of the current testing medium-voltage dry-type distribution derived annual conversion factors from requirements and DOE determined that transformers that were codified under the model used to prepare the Energy its existing test procedure provides 10 CFR 431.196, DOE determined the Information Administration’s (EIA) results that are representative of the maximum technologically feasible (max- Annual Energy Outlook 2012 (AEO performance of distribution tech) energy efficiency level through its 2012). Recent data suggests that transformers in normal use. Although engineering analysis. The max-tech electricity related losses, which DOE may examine the topic of potential design incorporates the most efficient includes conversion from the primary loading points in a dedicated test materials, such as core steels and fuel source and the transmission of procedure rulemaking in the future, at winding materials, and applied design electricity, is about twice that of site this time, DOE does not believe that the parameters that create designs at the electricity use. potential improvement in testing highest efficiencies achievable at the 2. Significance of Savings precision outweighs the complexity and time. 71 FR 44362 (August 4, 2006) and the burden of requiring testing at 72 FR 58196 (October 12, 2007). DOE As noted above, 42 U.S.C. different loadings depending on each used those designs to establish max-tech 6295(o)(3)(B) prevents DOE from individual transformer’s characteristics. levels for its LCC analysis, then scaled adopting a standard for covered equipment if such a standard would not B. Technological Feasibility them to other kVA ratings within a given design line to establish max-tech result in significant energy savings. 1. General efficiencies for all the distribution While EPCA does not define the term In each standards rulemaking, DOE transformer kVA ratings. For today’s ‘‘significant,’’ the U.S. Court of Appeals conducts a screening analysis based on rule, DOE determined max-tech in for the District of Columbia, in Natural information it has gathered on all exactly the same manner. Resources Defense Council v. current technology options and Herrington, 768 F.2d 1355, 1373 (DC C. Energy Savings prototype designs that could improve Cir. 1985), indicated that Congress the efficiency of the products that are 1. Determination of Savings intended ‘‘significant’’ energy savings in this context to be savings that were not the subject of the rulemaking. As the For each TSL, DOE projected energy first step in such analysis, DOE ‘‘genuinely trivial.’’ The energy savings savings from the products that are the for all of the TSLs considered in this develops a list of technology options for subject of this rulemaking purchased in consideration in consultation with rulemaking are non-trivial and, the 30-year period that begins in the therefore, DOE considers them manufacturers, design engineers, and year of compliance with amended other interested parties. DOE then significant within the meaning of EPCA standards (2016–2045). The savings are section 325(o). determines which of these means for measured over the entire lifetime of improving efficiency are technologically products purchased in the 30-year D. Economic Justification feasible. DOE considers technologies 20 period. DOE quantified the energy 1. Specific Criteria incorporated in commercially available savings attributable to each TSL as the products or in working prototypes to be difference in energy consumption As noted previously, EPCA requires technologically feasible. 10 CFR 430, between each standards case and the DOE to evaluate seven factors to subpart C, appendix A, section 4(a)(4)(i) base case. The base case represents a determine whether a potential energy There are distribution transformers projection of energy consumption in the conservation standard is economically available at all of the energy efficiency absence of amended mandatory justified. (42 U.S.C. 6295(o)(2)(B)(i)) The levels considered in today’s final rule. efficiency standards, and considers following sections describe how DOE Therefore, DOE believes all of the market forces and policies that affect has addressed each of the seven factors energy efficiency levels adopted by demand for more efficient products. in this rulemaking. today’s final rulemaking are DOE used its national impact analysis a. Economic Impact on Manufacturers technologically feasible. (NIA) spreadsheet model to estimate and Consumers Once DOE has determined that energy savings from amended standards particular technology options are In determining the impacts of an technologically feasible, it further 20 In the past DOE presented energy savings amended standard on manufacturers, evaluates each of them in light of the results for only the 30-year period that begins in the DOE first determines the quantitative following additional screening criteria: year of compliance. In the calculation of economic impacts using an annual cash-flow impacts, however, DOE considered operating cost (1) Practicability to manufacture, install, savings measured over the entire lifetime of approach. This includes both a short- or service; (2) adverse impacts on products purchased in the 30-year period. Because term assessment, based on the cost and product utility or availability; and (3) some transformers sold in 2045 will reach the capital requirements during the period adverse impacts on health or safety. For maximum transformer lifetime of 60 years, DOE between the issuance of a regulation and calculated economic impacts through 2105. DOE further details on the screening analysis has chosen to modify its presentation of national when entities must comply with the for this rulemaking, see chapter 4 of the energy savings to be consistent with the approach regulation, and a long-term assessment final rule TSD. used for its national economic analysis. for a 30-year analysis period. The

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23351

industry-wide impacts analyzed include may be disproportionately affected by a how standards may affect the Nation’s INPV (which values the industry on the national standard. needed power generation capacity. (See basis of expected future cash flows), 42 U.S.C. 6295(o)(2)(B)(i)(VI)) c. Energy Savings cash flows by year, changes in revenue Energy savings from the amended and income. Second, DOE analyzes and Although significant conservation of standards are also likely to result in reports the impacts on different types of energy is a separate statutory environmental benefits in the form of manufacturers, paying particular requirement for imposing an energy reduced emissions of air pollutants and attention to impacts on small conservation standard, EPCA requires greenhouse gases associated with energy manufacturers. See section VI.B for DOE, in determining the economic production. DOE reports the further discussion. Third, DOE justification of a standard, to consider environmental effects from today’s considers the impact of standards on the total energy savings that are standards, and from each TSL it domestic manufacturer employment and expected to result directly from the considered, in chapter 15 of the TSD for manufacturing capacity, as well as the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) the final rule. DOE also reports potential for standards to result in plant DOE uses the NIA spreadsheet results in estimates of the economic value of closures and loss of capital investment. its consideration of total projected emissions reductions resulting from the Finally, DOE takes into account energy savings. considered TSLs (see section IV.M of this final rule). cumulative impacts of various DOE d. Lessening of Utility or Performance of regulations and other regulatory Equipment g. Other Factors requirements on manufacturers. For individual customers, measures of In establishing classes of equipment, EPCA allows the Secretary of Energy, economic impact include the changes in and in evaluating design options and in determining whether a standard is LCC and the PBP associated with new the impact of potential standard levels, economically justified, to consider any or amended standards. The LCC, which DOE sought to develop standards for other factors that the Secretary of Energy is separately specified in EPCA as one distribution transformers that would not considers relevant. (42 U.S.C. of the seven factors to be considered in lessen the utility or performance of the 6295(o)(2)(B)(i)(VII)) Under this determining the economic justification equipment. (42 U.S.C. provision, DOE has also considered the for a new or amended standard (42 6295(o)(2)(B)(i)(IV)) None of the TSLs matter of electrical steel availability. U.S.C. 6295(o)(2)(B)(i)(II)), is discussed presented in today’s final rule would This factor is discussed further in in the following section. For customers lessen the utility or performance of the sections IV.C.9. and IV.I.5.a. equipment under consideration in the in the aggregate, DOE also calculates the 2. Rebuttable Presumption national NPV of the economic impacts rulemaking. on customers over the forecast period As set forth in 42 U.S.C. e. Impact of Any Lessening of applicable to a particular rulemaking. 6295(o)(2)(B)(iii), EPCA creates a Competition rebuttable presumption that an energy b. Life-Cycle Costs EPCA directs DOE to consider any conservation standard is economically The LCC is the sum of the purchase lessening of competition that is likely to justified if the additional cost to the price of a type of equipment (including result from standards. It also directs the customer of a type of equipment that its installation) and the operating Attorney General of the United States meets the standard is less than three expense (including energy and (Attorney General) to determine the times the value of the first-year of maintenance and repair expenditures) impact, if any, of any lessening of energy savings resulting from the discounted over the lifetime of the competition likely to result from a standard, as calculated under the equipment. The LCC savings for the proposed standard and to transmit such applicable DOE test procedure. DOE’s considered energy efficiency levels are determination to the Secretary, together LCC and PBP analyses generate values calculated relative to a base case that with an analysis of the nature and used to calculate the PBP for consumers reflects likely trends in the absence of extent of the impact. (42 U.S.C. of potential amended energy amended standards. The LCC analysis 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE conservation standards. These analyses requires a variety of inputs, such as transmitted a copy of its proposed rule include, but are not limited to, the equipment prices, equipment energy and NOPR TSD to the Attorney General three-year PBP contemplated under the consumption, energy prices, with a request that the Department of rebuttable presumption test. However, maintenance and repair costs, Justice (DOJ) provide its determination DOE routinely conducts an economic equipment lifetime, and customer on this issue. DOJ’s response, that the analysis that considers the full range of discount rates. DOE assumed in its proposed energy conservation standards impacts to the customer, manufacturer, analysis that customers will purchase are unlikely to have a significant Nation, and environment, as required the considered equipment in 2016. adverse impact on competition, is under 42 U.S.C. 6295(o)(2)(B)(i). The To account for uncertainty and reprinted at the end of this final rule. results of that analysis serve as the basis variability in specific inputs, such as for DOE to definitively evaluate the f. Need for National Energy equipment lifetime and discount rate, economic justification for a potential Conservation DOE uses a distribution of values with standard level (thereby supporting or probabilities attached to each value. A Certain benefits of the amended rebutting the results of any three-year distinct advantage of this approach is standards for distribution transformers PBP analysis). The rebuttable that DOE can identify the percentage of are likely to be reflected in presumption payback calculation is customers estimated to receive LCC improvements to the security and discussed in sections IV.F.3.j and savings or experience an LCC increase, reliability of the Nation’s energy system. V.B.1.c of this final rule. in addition to the average LCC savings Reductions in the demand for electricity associated with a particular standard may also result in reduced costs for IV. Methodology and Discussion of level. In addition to identifying ranges maintaining the reliability of the Related Comments of impacts, DOE evaluates the LCC Nation’s electricity system. DOE DOE used two spreadsheet tools to impacts of potential standards on conducted a utility impact analysis, estimate the impact of today’s amended identifiable subgroups of customers that described in section IV.K to estimate standards. The first spreadsheet

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23352 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

calculates LCCs and PBPs of potential TSD contains additional discussion of LVDT products, the following kVA new energy conservation standards. The the market and technology assessment. ranges would add value to the national second provides shipments forecasts impact benefits: 1kVA through 500kVA 1. Scope of Coverage and calculates impacts of potential new single phase and 3kVA through energy conservation standards on This section addresses the scope of 1500kVA three phase. (Schneider, No. national NES and NPV. DOE also coverage for today’s final rule, stating 180 at p. 4) Similarly, CDA requested an assessed manufacturer impacts, largely what equipment will be subject to increased range, urging DOE to extend through use of the Government amended standards. its kVA coverage to sizes about 2,500 Regulatory Impact Model (GRIM). The a. Definitions kVA. (CDA, No. 153 at p. 2) two spreadsheets are available online at Earthjustice expressed concern over the rulemaking Web site: http:// Today’s standards rulemaking sealed and non-ventilating transformers. concerns distribution transformers, www1.eere.energy.gov/buildings/ It felt that these products represented a which include three categories: Liquid- appliance_standards/product.aspx/ potential loophole for smaller immersed, low-voltage dry-type (LVDT), productid/66. transformers in DL7 and noted that DOE Additionally, DOE estimated the and medium-voltage dry-type (MVDT). should revise its definition to ensure impacts of energy conservation The definition of a distribution these units do not displace covered standards for distribution transformers transformer was presented in EPACT units. (Earthjustice, No. 195 at p. 6) on utilities and the environment using 2005, then further refined by DOE when Similarly, Earthjustice noted revisions a version of the Energy Information it was codified into 10 CFR 431.192 by to the definition of ‘‘uninterruptible Administration’s (EIA’s) National the April 27, 2006, final rule for power supply transformer might be distribution transformer test procedures Energy Modeling System (NEMS) for the necessary’’ as some manufacturers are (71 FR 24972). utility and environmental analyses. The selling exempt UPS units, that are Additional detail on the definitions of NEMS model simulates the energy otherwise not covered, for general each of these excluded transformers, purpose applications at a cost of 30–40 sector of the U.S. economy. EIA uses which are defined at 10 CFR 431.192, NEMS to prepare its Annual Energy percent lower than covered can found in chapter 3 of the TSD. transformers. (Earthjustice, No. 195 at p. Outlook (AEO), a widely known energy Many stakeholders expressed support forecast for the United States. The 6) CDA requested that DOE seek for the defined scope of coverage legislation to expand its scope to version of NEMS used for appliance presented in the NOPR. (ABB, No. 158 standards analysis, called NEMS–BT,21 include power transformers. (CDA, No. at p. 5; Cooper, No. 165 at p. 2; HI, No. 153 at p. 2) is based on the AEO version with minor 151 at p. 12; KAEC, No. 149 at p. 4; 22 Schneider Electric requested that DOE modifications. The NEMS–BT offers a NEMA, No. 170 at p. 8; PEMCO, No. 183 sophisticated picture of the effect of reevaluate several definitions in its at p. 2; Prolec-GE, No. 177 at p. 7) scope of coverage. First, it asked that standards because it accounts for the NRECA pointed out that while some of interactions between the various energy DOE address its tap ranges and the its members might purchase distribution determination of covered equipment supply and demand sectors and the transformers outside the scope of economy as a whole. versus products versus exempt coverage so few of these types of equipment to possibly capture further A. Market and Technology Assessment transformers are made it does not energy savings. Second, it requested that warrant a change in coverage. (NRECA, For the market and technology DOE re-evaluate special impedance No. 172 at p. 4–5) Progress Energy assessment, DOE develops information transformers and ranges. Finally, it agreed, noting that while utilities will that provides an overall picture of the noted that because low voltage is occasionally purchase transformers market for the equipment concerned, limited to 600 volts and below, market outside of this range, it is a very small including the purpose of the equipment, conditions have created multiple percentage of the total number of the industry structure, and market voltages in the 1.2kV class of distribution transformers purchased. 23 characteristics. This activity includes equipment, but current standards (PE, No. 192 at p. 4) EEI was not aware both quantitative and qualitative require this equipment to be evaluated of any of member that purchased units assessments, based primarily on as medium voltage or excluded since outside of the current defined kVA publicly available information. The the secondary voltage is limited to less range. (EEI, No. 185 at p. 5) Finally, subjects addressed in the market and than 600 volts. (Schneider, No. 180 at p. BG&E and ComEd noted that DOE has technology assessment for this 12) Schneider believes that these spent a significant amount of time rulemaking included scope of coverage, equipment groups and definitions developing efficiency levels for each definitions, equipment classes, types of require reconsideration to prevent kVA size and that therefore they equipment sold and offered for sale, and circumvention of standards and capture supported the current scope. (BG&E, No. technology options that could improve further energy savings. 182 at p. 3; ComEd, No. 184 at p. 3) DOE appreciates the comment on its the energy efficiency of the equipment Power Partners was also in support of scope of coverage. With respect to kVA, under examination. Chapter 3 of the the current scope, but noted that if DOE’s current standards are consistent separate product classes were with several NEMA publications. For 21 BT stands for DOE’s Building Technologies Program (http://www1.eere.energy.gov/buildings/). established for overhead transformers liquid-immersed and medium-voltage 22 The EIA allows the use of the name ‘‘NEMS’’ and network/vault transformers the kVA dry-type transformers, both DOE to describe only an AEO version of the model scope for those product classes should coverage and that of NEMA’s TP–1 without any modification to code or data. Because be aligned with the specific standard extends to 833 kVA for single- the present analysis entails some minor code modifications and runs the model under various requirements for those product phase units and 2500 kVA for three- policy scenarios that deviate from AEO standards. (Power Partners, No. 155 at p. phase units. For low-voltage dry-type assumptions, the name ‘‘NEMS–BT’’ refers to the 3) units, both DOE coverage and that of model as used here. For more information on Several stakeholders expressed that NEMA’s Premium specification extends NEMS, refer to The National Energy Modeling System: An Overview, DOE/EIA–0581 (98) (Feb. additional kVA ranges should be added to 333 kVA for single-phase units and 1998), available at: http://tonto.eia.doe.gov/ to the scope of coverage. Specifically, FTPROOT/forecasting/058198.pdf. Schneider Electric requested that for 23 See 10 CFR 431.196.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23353

1000 kVA for three-phase units. DOE determined that a transformer is subject nameplate which identifies the cites these documents as evidence that to standards, DOE’s test procedure transformer as being for this use only.’’ its kVA scope is consistent with requires that a transformer comply with (Joy Global Surface Mining, No. 214 at industry understanding. DOE may the standard when tested in the p. 1) ABB and PEMCO agreed that revise its understanding in the future as configuration that produces the greatest ordinary (i.e., non-surface) mining the market evolves, but for today’s rule losses, regardless of whether that transformers should be moved to the maintains the kVA scope proposed in configuration alone would have placed exclusion list in 10 CFR 431.192 (5). the NOPR. the transformer at-large within the scope (ABB, No. 158 at p. 5; PEMCO, No. 183 For sealed and nonventilating of coverage under 10 CFR 431.192. at p. 2) PEMCO felt strongly that transformers, uninterruptible power underground mining transformers supply transformers, special impedance b. Underground and Surface Mining Transformer Coverage should be in the list of transformers transformers, and those with tap ranges excluded from the efficiency standard, of greater than twenty percent, DOE In the October 12, 2007, final rule on pointing out that ‘‘underground mining notes that these types of equipment are energy conservation standards for transformers require the use of much specifically excluded from standards distributions transformers, DOE codified heavier cores and thus have an even under EPCA, as amended, 42 USC 6291 into 10 CFR 431.192 the definition of an larger reason to be excluded than some (35)(B)(ii)), as codified at 10 CFR underground mining distribution product types already excluded.’’ 431.192. transformer as follows: (PEMCO, No. 183 at p. 2) NEMA Cooper Power systems requested Underground mining distribution commented that all underground clarification on several points relating to transformer means a medium-voltage mining transformers should be made scope of coverage. Some transformers dry-type distribution transformer that is exempt from the DOE energy efficiency are built with the ability to output at built only for installation in an regulation for MVDT due to the special underground mine or inside equipment multiple voltages, any number of which circumstances they must operate under; for use in an underground mine, and may fall within DOE’s scope of dimensions and weight are critical for that has a nameplate which identifies coverage. For transformers having these products, and to reduce the weight the transformer as being for this use multiple nominal voltage ratings that and size these transformers are operated straddle the present boundaries of only. 72 FR 58239. In that same final rule, DOE also near full load, therefore, compliance DOE’s scope of coverage (i.e., a with DOE regulation will not optimize secondary voltage of 600/1200 volts), clarified that although it believed those transformers were within its scope of efficiency. (NEMA, No. 170 at p. 11) Cooper recommended that DOE clarify Cooper Power suggested that DOE whether the entire distribution coverage, it was not establishing energy conservation standards for underground expand the definition of mining transformer is exempt from efficiency transformers to include both liquid standards. Cooper felt it was unclear if mining transformers. At the time, DOE filled and dry-type transformers, and both configurations would have to meet recognized that the mining transformers specify that this only applies to the efficiency standard, neither would were subject to unique and extreme transformers used inside the mine itself; meet the standard, or only the dimensional constraints that impact Cooper supports the exclusion of these secondary voltage of 600 would have to their efficiency and performance transformers from efficiency standards. meet the standard. (Cooper Power capabilities. Therefore, DOE established (Cooper, No. 165 at p. 2) ABB asserted Systems, No. 222 at p. 3) Second, for a separate equipment class for mining that the definition of mining three-phase transformers with wye- transformers and stated that it might transformers should be expanded to connected phase windings or single- consider energy conservation standards include transformers used for digging or phase transformers that are rated for for such transformers at a later date. externally connecting in a wye Although DOE did not establish energy tunneling. Furthermore, ABB asserted configuration, where the phase-to-phase conservation standards for such that such equipment should be moved voltage exceeds the present boundaries transformers, it also did not add to the exclusion list in 10 CFR 431.192 of the definition of distribution underground mining transformers to the (5). (ABB, No. 158 at p. 6) transformer, Cooper requested that DOE list of excluded transformers in the DOE has learned from comments clarify that these units are exempt from definition of a distribution transformer. received throughout the rulemaking that the standard because the secondary DOE maintained that it had the mining transformers are subject to voltage exceeds 600 volts. (Cooper authority to cover such equipment if, several constraints that are not usually Power Systems, No. 222 at p. 3) during a later analysis, it found concerns for transformers used in DOE clarifies that the definition of technologically feasible and general power distribution. Because distribution transformer refers to a economically justified energy space is critical in mines, an transformer having an output voltage of conservation standard levels. 72 FR underground mining transformer may 600 volts or less, not having only an 58197. be at a considerable disadvantage in output voltage of less than 600 volts. If Several stakeholders commented on meeting an efficiency standard. the transformer has an output of 600 DOE’s definition for mining Underground mining transformers are volts or below and meets the other transformers during the current further disadvantaged by the fact that requirements of the definition, DOE rulemaking. Joy Global Surface Mining they must supply power at several considers it to be a distribution recommended that surface mining output voltages simultaneously. For transformer within the scope of transformers be added to the exemption today’s rule, DOE will again set no coverage and therefore subject to list under the following definition: standards for underground mining standards. This applies equally to ‘‘Surface mining transformer is a transformers but expands this treatment transformers with split secondary medium-voltage dry-type distribution to include surface mining transformers. windings (as in Cooper’s first example) transformer that is built only for Moreover, as commenters point out, and to three-phase transformers where installation in a surface mine, on-board surface mining transformers are used to the delta connection may fall below 601 equipment for use in a surface mine or operate specialized machinery which volts and the wye connection may not. for equipment used for digging or carries space constraints of its own. DOE also clarifies that once it is drilling above ground. It shall have a Furthermore, mining transformers in

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23354 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

general perform a role that may differ transformers would be unlikely to deter Liquid-immersed and medium-voltage from general power distribution in some users from installing step-up dry-type transformers tend to fall within many regards, including lifetime, transformers in place of covered DOE’s scope of coverage only if stepping loading, and often the need to supply transformers. They expressed their down voltage because the input voltage power at several voltages concern that DOE had not addressed upper limit (34.5 kV) is much greater simultaneously. As DOE had intended potential loopholes that had been than the output voltage limit (600 V). No its prior determination regarding mining identified in the rulemaking. such distinction exists for LVDT transformers to apply to all mining (Earthjustice, No, 195 at pp. 5–6) transformers, which are covered for activities, for today’s rule, DOE will Advocates agreed with comments made input and output voltages of 600 V or again set no standards for underground during negotiations arguing that step-up below, regardless of whether stepping mining transformers but clarify that this transformers should be covered by new voltage up or down. Nonetheless, determination also applies to surface standards due to similarities to because of the circumvention risk, DOE mining transformers. Thus, DOE has distribution transformer that could will monitor the use of step-up amended the definition of ‘‘mining easily lead to substitution and transformers and consider establishing transformer’’ to include surface mining circumvention. (Advocates, No. 186 pp. standards for them, if warranted. transformers. 5–6) Finally, Berman Economics d. Low-Voltage Dry-Type Distribution In view of the above, DOE recognizes commented that because step-up Transformers a potential means to circumvent energy transformers had not been included in efficiency standards requirements for the 2007 final rule, leaving them 10 CFR 431.192 defines the term distribution transformers. Therefore, uncovered may lead to unintended ‘‘low-voltage dry-type distribution DOE continues to leave both circumvention. (Berman Economics, No. transformer’’ to be a distribution underground and surface mining 221 at p. 7) transformer that has an input voltage of transformers off of the list of Other stakeholders expressed their 600 V or less; is air-cooled; and does not distribution transformers that are not support for DOE’s decision to not use oil as a coolant. covered under 10 CFR 431.192, but separately define and set standards for Because EPACT 2005 prescribed instead reserve a separate equipment step-up transformers. (Cooper, No. 165 standards for LVDTs, which DOE class for mining transformers. DOE may at p. 2; NEMA, No. 170 at p. 8; BG&E, incorporated into its regulations at 70 set standards in the future if it believes No. 182 at p. 3) APPA and EEI agreed, FR 60407 (October 18, 2005) (codified at that underground or surface mining pointing out that while in emergency 10 CFR 431.196(a)), LVDTs were not transformers are being purchased as a conditions one can occasionally see a included in the 2007 standards way to circumvent energy conservation step-up transformer used as a step-down rulemaking. As a result, the settlement standards for distribution transformers transformer, these situations are rare agreement following the publication of otherwise covered under 10 CFR and overall do not result in significant the 2007 final rule does not affect LVDT 431.192. transformer efficiency loss. (APPA, No. standards. Without regard to whether 191 at p. 6; EEI, No. 185 at p. 5–6) DOE may have a statutory obligation to c. Step-Up Transformers Progress Energy commented similarly, review standards for LVDTs, DOE has In the 2012 NOPR, DOE proposed to noting that they do not purchase step- analyzed all three transformer types and continue to not set standards for step-up up transformers for use as step-down is proposing standards for each in this transformers, as these transformers are transformers. (PE, No. 192 at p. 4) ABB rulemaking. not ordinarily considered to be and Prolec-GE agreed with the decision e. Negotiating Committee Discussion of performing a power distribution to not set separate standards for step-up function. However, DOE was aware that transformers but requested that these Scope step-up transformers may be able to be transformers be identified on their Negotiation participants noted that used in place of step-down transformers nameplate uniformly across the both network/vault transformers and (i.e., by operating them backwards) and industry. (ABB, No. 158 at p. 6; Prolec- ‘‘data center’’ transformers may may represent a potential means to GE, No. 177 at p. 7) PEMCO commented experience disproportionate difficulty circumvent any energy efficiency that no action was necessary as the in achieving higher efficiencies because requirements as standards increase. In product class falls outside the current of certain features that may affect the NOPR, DOE requested comment definition of a distribution transformer. consumer utility. (ABB, Pub. Mtg. Tr., regarding this issue. (PEMCO, No. 183 at p. 2) Schneider No. 89 at p. 245) In the NOPR, DOE Many stakeholders expressed support Electric sought clarification given the reprinted definitions for these terms, for adding step-up transformers to the existing definition in section 431.192 which were proposed at various points scope of coverage. Howard Industries and noted that the current standards do by committee members. 77 FR 7301. commented that there is no practical not exclude step-up LVDT transformers DOE sought comment in its NOPR about reason for excluding these transformers, as written. (Schneider, No. 180 at p. 4) whether it would be appropriate to and that DOE should require step-up For today’s rule, DOE continues to establish separate equipment classes for transformers to meet the same efficiency consider step-up transformers as any of the following types and, if so, as step-down, as long as either the equipment that is not covered, because how such classes might be defined such output or input voltage is 600 volts or they do not perform a function that it was not financially advantageous less. They expressed concern that traditionally viewed as power for customers to purchase transformers eliminating these transformers would distribution. Transformer coverage is in either class for general use. Please see present a potential loophole. (HI, No. not determined simply based on IV.A.2.c for further discussion of DOE’s 151 at p. 12) Prolec-GE agreed, noting whether the transformer is stepping equipment classes in today’s final rule. that to eliminate this loophole, step-up voltage up or down. DOE clarifies that transformers should at least indicate liquid-immersed step-up transformers 2. Equipment Classes their purpose on their nameplates. usually fall outside of the rulemaking DOE divides covered equipment into (Prolec-GE, No. 146 at pp. 55–56) scope of coverage because of limits on classes by: (a) The type of energy used; However, Earthjustice commented that input and output voltage, and not (b) the capacity; and/or (c) any simply requiring nameplates for these because they are excluded per se. performance-related features that affect

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23355

consumer utility or efficiency. (42 (b) Number of phases—single or three, transformers, DOE no longer considered U.S.C. 6295(q)) Different energy (c) Voltage class—low or medium (for these two equipment classes for conservation standards may apply to dry-type units only), and standards during the 2007 final rule. In different equipment classes (ECs). For (d) Basic impulse insulation level (for today’s rulemaking, however, DOE has the preliminary and NOPR analyses, medium-voltage dry-type units only). decided to address all three types of DOE analyzed the same 10 ECs as were On August 8, 2005, the President distribution transformers and is used in the previous distribution signed into law EPACT 2005, which establishing new standards for all three transformers energy conservation contained a provision establishing types of distribution transformers, standards rulemaking.24 These 10 energy conservation standards for two of including low-voltage dry-type equipment classes subdivided the DOE’s equipment classes—EC3 (low- distribution transformers. Table IV.1 population of distribution transformers voltage, single-phase dry-type) and EC4 presents the ten equipment classes by: (low-voltage, three-phase dry-type). proposed in the NOPR and finalized in (a) Type of transformer insulation— With standards thereby established for this rulemaking and provides the liquid-immersed or dry-type, low-voltage dry-type distribution associated kVA range with each.

TABLE IV.1—DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES

EC Insulation Voltage Phase BIL Rating kVA Range

1 ...... Liquid-immersed ...... Medium ...... Single ...... 10–833 kVA 2 ...... Liquid-immersed ...... Medium ...... Three ...... 15–2500 kVA 3 ...... Dry-type ...... Low ...... Single ...... 15–333 kVA 4 ...... Dry-type ...... Low ...... Three ...... 15–1000 kVA 5 ...... Dry-type ...... Medium ...... Single ...... 20–45kV 15–833 kVA 6 ...... Dry-type ...... Medium ...... Three ...... 20–45kV 15–2500 kVA 7 ...... Dry-type ...... Medium ...... Single ...... 46–95kV 15–833 kVA 8 ...... Dry-type ...... Medium ...... Three ...... 46–95kV 15–2500 kVA 9 ...... Dry-type ...... Medium ...... Single ...... ≥ 96kV 75–833 kVA 10 ...... Dry-type ...... Medium ...... Three ...... ≥ 96kV 225–2,500 kVA

a. Less-Flammable Liquid-Immersed feature that affects the energy efficiency same equipment classes as dry-type Transformers of the equipment and, therefore, dry- distribution transformers. type and liquid-immersed should be Similarly, DOE revisited the issue of During the previous rulemaking, DOE analyzed separately. Furthermore, DOE whether or not LFLI transformers solicited comments about how it should found that LFLI transformers could meet should be analyzed separately from treat distribution transformers filled the same efficiency levels as traditional traditional liquid-immersed units. DOE with an insulating fluid of higher flash concluded, once again, that LFLI point than that of traditional mineral liquid-immersed units. As a result, DOE did not separately analyze LFLI transformers could achieve any oil. 71 FR 44369 (August 4, 2006). efficiency level that mineral oil units Known as ‘‘less-flammable, liquid- transformers, but relied on the analysis for the mineral oil liquid-immersed could achieve. Although their insulating immersed’’ (LFLI) transformers, these fluids are slightly more viscous, this units are marketed to some applications transformers. 72 FR 58202 (October 12, 2007). disadvantage has little efficiency impact where a fire would be especially costly and diminishes as efficiency increases and traditionally served by the dry-type DOE revisited the issue in this and heat dissipation requirements market, such as indoor applications. rulemaking in light of additional decline. Furthermore, at least one During preliminary interviews with research on LFLI transformers and manufacturer suggested that LFLI manufacturers, DOE was informed that conversations with manufacturers and transformers might be capable of higher LFLI transformers might offer the same industry experts. DOE first considered efficiencies than mineral oil units utility as dry-type transformers since whether LFLI transformers offered the because their higher temperature they were unlikely to catch fire. same utility as dry-type equipment, and tolerance may allow the unit to be Manufacturers also stated that LFLI came to the same conclusion as in the downsized and run hotter than mineral transformers could have a minor last rulemaking. While LFLI oil units. For these reasons, DOE efficiency disadvantage relative to transformers can be used in some believes that LFLI transformers would traditional liquid-immersed applications that historically use dry- not be disproportionately affected by transformers because their more viscous type units, there are applications that standards set in the liquid-immersed insulating fluid requires more internal cannot tolerate a leak or fire. In these equipment classes. Therefore, DOE did ducting to properly circulate. applications, customers assign higher not consider LFLI in a separate In the October 2007 standards final utility to a dry-type transformer. Since equipment class. rule, DOE determined that LFLI LFLI transformers can achieve higher transformers should be considered in efficiencies than comparable dry-type b. Pole-Mounted Liquid-Immersed the same equipment class as traditional units, combining LFLIs and dry-types Distribution Transformers liquid-immersed transformers. DOE into one equipment class may result in During negotiations and in response concluded that the design of a standard levels that dry-type units are to the NOPR, several parties raised the transformer (i.e., dry-type or liquid- unable to meet. Therefore, DOE decided question of whether pole-mounted, pad- immersed) was a performance-related not to analyze LFLI transformers in the mounted, and possibly other types of

24 See chapter 5 of the TSD for further discussion of equipment classes.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23356 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

liquid-immersed transformers should be for distribution transformers. (EEI, No. 228 at pp. 2–3; Power Partners, No. 155 considered in separate equipment 185 at p. 7; NRECA, No. 172 at p. 7) at p. 2) Stakeholders felt that this classes. For example, pole-mounted NRECA supported the concept of separate equipment class should have distribution transformers may carry separation, but this support was efficiency standards that are unchanged differential incremental cost qualified by concerns that DOE might from the levels that have been in effect characteristics and face different size raise the efficiency levels. (NRECA, No. since January 1, 2010, set in the 2007 and weight constraints than 172 at pp. 5–6) final rule. (Cooper, No. 165 at p. 3; transformers mounted on the ground. Based on the array of views on this Cooper Power Systems, No. 222 at p. 4; They may also have different features, issue and the potential energy and cost EEI, No. 185 at p. 3; NEMA, No. 170 at and experience different loading savings to weigh, DOE conducted p. 8; PE, No. 192 at p. 5; Prolec-GE, No. conditions than some other transformer further analysis of this of liquid- 177 at pp. 7, 12; PE, No. 192 at p. 8) types. These type of questions led DOE immersed transformers issue and Many manufacturers noted that to request comment in the NOPR on presented the findings of its network/vault transformers should be whether pole-mounted distribution supplementary analysis at a public separated based on the tight size and transformers warranted consideration in meeting on June 20, 2012. 77 FR 32916 space restrictions placed on them. a separate equipment classes. A number (June 4, 2012). In today’s rule, DOE has (NEMA, No. 225 at p. 3; Prolec-GE, No. of parties responded. In response to chosen not to separate pad and pole- 146 at p. 15; ABB, No. 158 at p. 9) In suggestions in these comments, DOE mounted transformers. DOE’s concerns many cases, manufacturers stated that gave more detailed consideration to about steel competitiveness and higher efficiency transformers cannot fit separating pole-mounted distribution availability were not resolved through into existing vaults and still maintain transformers in a supplementary NOPR comments in response to both the NOPR required safety and maintenance analysis, announced in a June 4, 2012, and the supplemental analysis. clearance. (NEMA, No. 170 at p. 3) Notice of Public Meeting and Data Moreover, the comments did not Stakeholders argued that any increase in Availability. 77 FR 32916. demonstrate that establishing standards size due to increased efficiency APPA, ASAP, BG&E, ComEd, for transformers separated by those on standards would eliminate any Howard, Progress Energy, Pepco, and pads and those on poles was superior to economic benefit from higher efficiency Power Partners all supported separation the approach taken in the proposed rule. due to the extremely high costs of of pole-mounted transformers into Therefore, DOE chose not to finalize modifying existing vault or other separate equipment classes for the separate standards for pad-mounted underground infrastructure in urban above-mentioned reasons. Size and transformers in today’s final rule. areas. (Adams Electric Coop, No. 163 at weight was the most commonly-cited However, DOE appreciates the concerns p. 2; BG&E, No. 223 at pp. 2–3; ConEd, reason. (APPA, No. 191 at p. 7, No. 237 about allowing manufacturers to No. 184 at p. 4; NRECA, No. 172 at p. at p. 3; ASAP, No. 146 at pp. 69–70; standardize manufacturing and design 3; Pepco, No. 145 at p. 23; ABB, No. 158 BG&E, No. 146 at p. 69, No. 182 at p. practices across product lines. DOE may at p. 9; Howard Industries, No. 226 at 4; ComEd, No. 184 at p. 8, No. 227 at consider establishing separate pp. 1–2; APPA, No. 191 at p. 4; Pepco, p. 2; HI, No. 151 at p. 4, No. 226 at p. equipment classes for pole-mounted No. 145 at p. 3; ConEd, No. 236 at pp. 1; PE, No. 192 at p. 5, Pepco, No. 146 distribution transformers in the future, 1–2) Others pointed out that expansion at p. 68, No. 145 at pp. 2–3; Power but at present believes the equipment of vaults and manholes in city Partners, No. 155 at p. 2) class structure proposed in the NOPR to environments is sometimes even ABB, NEMA, Berman Economics, be justified for today’s final rule. physically impossible due to space Cooper, EEI, AK Steel, and KAEC stated constraints. (ConEd, No. 184 at p. 4) c. Network and Vault Liquid-Immersed that the increase in standards did not Howard Industries noted that often Distribution Transformers warrant separate treatment of pole- American National Standards Institute mounted transformers, stating that During negotiations, several parties (ANSI) standards govern the sizes of separation adds complexity to the raised the question of whether network, these types of transformers based on regulation and does not allow vault, and possibly other types of liquid- established maximum dimensional manufacturers of both pole-mounted immersed transformers should be constraints due to vault sizing. (HI, No. and other types of liquid-immersed considered in separate equipment 151 at p. 3) Prolec-GE commented that distribution transformers to standardize classes. In the 2012 NOPR, DOE the application of these transformers not manufacturing and design practices considered separating these types of only requires them to be compact, but across product lines. (ABB, No. 158 at transformers and sought comment from also built to a much higher level of p. 6; Berman Economics, No. 150 at p. manufacturers on this matter. ruggedness and durability. (Prolec-GE, 19, No. 221 at p. 4; Cooper, No. 165 at In response to the NOPR, many No. 238 at pp. 1–2) p. 3; EEI, No. 229 at p. 2; AK Steel, No. stakeholders commented on separation Con Edison, who is the largest user of 230 at p. 3; KAEC, No. 149 at p. 4; of network and vault transformers into network- and vault-based distribution NEMA, No. 170 at p. 12) new equipment classes. Several transformers in the United States, The Advocates, NEMA, and Prolec-GE stakeholders expressed support for pointed out that while it agrees with commented that separation may be separate equipment classes for network separation of network-based warranted but only if DOE opted for and vault transformers, noting that they transformers, modifications were higher standards than were proposed in agreed with the definition put forth by needed to the definition presented in the NOPR. (Advocates, No. 158 at p. 13; the negotiations working group. (ABB, Appendix 1–A to include transformers Prolec-GE, No. 177 at p. 3; NEMA, No. No. 158 at p. 6; Adams Electrical Coop, purchased by Con Edison, who is the 170 at p. 14) No. 163 at p. 2; APPA, No. 191 at p. 6; largest user of network- and vault-based NEMA further noted that the matter BG&E, No. 182 at p. 3; BG&E, No. 223 distribution transformers in the United was complicated and that there were at p. 2; CFCU, No. 190 at p. 1; ConEd, States. (ConEd, No. 236 at p. 2) advantages to both approaches. (NEMA, No. 184 at p. 4; EEI, No. 229 at p. 2; Other stakeholders noted that while No. 225 at p. 4) Finally, EEI and NRECA KAEC, No. 149 at p. 4; NEMA, No. 146 network and vault transformers could commented that DOE should explore at p. 67; NEMA, No. 170 at p. 11; experience dimensional problems at the matter but in the next rulemaking NRECA, No. 172 at p. 5; NRECA, No. higher efficiencies, these problems are

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23357

diminished at lower levels. Berman class for these transformer types, but No. 238 at p. 2) ‘‘To prevent substitution Economics notes that ‘‘the de minimis may consider doing so in a future of higher BIL rated transformers as a increase in efficiency proposed by DOE rulemaking. means of circumventing the efficiency in this NOPR do not appear to warrant standard, Cooper recommends using d. BIL Ratings in Liquid-Immersed any such special treatment.’’ (Berman coil voltage as a defining criterion for Distribution Transformers Economics, No. 150 at p. 21) ASAP the 150 kV BIL class. Transformers agreed, noting that if the final rule During negotiations, several parties having an insulation system designed to efficiency levels stayed as modest as raised the question of whether liquid- withstand 150 kV BIL and either a line- those in the NOPR then separation was immersed distribution transformers to-ground or line-to-neutral voltage that not necessary. (ASAP, No. 146 at pp. should have standards set according to is 19 kV (e.g. 34500GY/19920 or 19920 66–67) BIL rating, as do medium-voltage dry- Delta) or greater would be required to Multiple stakeholders expressed type distribution transformers. (ABB, qualify as a true 150 kV BIL distribution hesitation about separating vault Pub. Mtg. Tr., No. 89 at p. 218) Other transformer.’’ (Cooper Power Systems, transformers. Berman Economics parties responded in response to the No. 222 at pp. 3–4) recommended that DOE consider a NOPR with suggestions about how to NEMA and KAEC recommended that separate class for network transformers address BIL ratings in liquid-immersed the efficiency levels proposed in the only, as the additional electronics and distribution transformers. NEMA NOPR be set for liquid-immersed protections required of a networked pointed out that as BIL increases, a transformers at 95 kV BIL and below transformer likely would make it an greater volume of core material is only, while all other BILs remain at the uneconomic substitute for a non- needed, adding both expense and no- current standard. (NEMA, No. 170 at p. networked transformer, an argument load losses. (NEMA, No. 170 at p. 4) 10; KAEC, No. 149 at p. 5) Prolec-GE that could not be made for vault Cooper agreed with separation by BIL, agreed that the liquid-immersed transformers. (Berman Economics, No. pointing out that ‘‘standards by BIL transformers should be separated at 95 221 at p. 5) Furthermore, Advocates level will help differentiate transformers kV BIL and below and above 95 kV. It pointed out that vault transformers may that require more insulation and that are also suggested that DOE add more be a compliance loophole/risk and, at less efficient by nature.’’ (Cooper, No. design lines for these equipment classes, minimum, nameplate marking that 165 at p. 3) Howard Industries opined as it did not believe the scaling was reads ‘‘For installation in a vault only,’’ that it felt 200 kV BIL and higher accurate. (Prolec-GE, No. 177 at p. 8) should be required for this equipment. transformers should have their own Power Partners commented that there (Advocates, No. 235 at p. 4) Others category whose efficiency levels were should be several BIL divisions for noted that the idea of vault transformers capped at those set in the 2007 Final liquid-immersed distribution being used as substitutes for pad- Rule. It noted that high BIL ratings transformers and suggested that DOE mounted transformers is ‘‘fraught with require additional insulation to meet have equipment classes for the over-simplifications and faulty American National Standards Institute following: 7200/12470Y 95BIL, 14400/ assumptions.’’ (APPA, No. 237 at pp. 2– (ANSI) requirements and such 2490Y 125BIL, 19920/34500Y 150BIL, 3) They believed that substitution additional insulation limits the and 34500 200 BIL. (Power Partners, No. would not occur if DOE defined and achievable efficiency for these 155 at p. 3) carved out network and vault transformers. (HI, No. 151 at p. 12) Several stakeholders supported the transformers per the IEEE definitions. Berman Economics supported concept of exploring how BIL affects (APPA, No. 237 at pp. 2–3) It was also separation, and commented that DOE efficiency but felt that it was not a pointed out that utilities pay as much as could split at 200 kV if these significant enough issue to delay two times as much for a vault transformers would not be cheaper than publication of this rule. They proposed transformer as for pad-mounted units of 150 BIL transformers at the newly set that DOE investigate this concept in the similar capacity. (EEI, No. 229 at p. 5) standard. (Berman Economics, No. 221 next rulemaking. (PE, No. 192 at p. 6; DOE appreciates the attention and at p. 6) BG&E does not purchase 200 kV NRECA, No. 172 at p. 6; EEI, No. 185 at depth of thought given by stakeholders BIL transformers but supported p. 8; ComEd, No. 184 at p. 10; BG&E, to this nuanced rulemaking issue. At maintaining the current 2007 Final Rule No. 182 at p. 5; APPA, No. 191 at p. 7) this time, DOE believes that establishing efficiency levels for these transformers Similarly, ABB commented that at the a new equipment class for network and due to construction and weight current proposed levels, ABB does not vault based transformers is unnecessary. limitations. (BG&E, No. 223 at p. 2) recommend moving to a separate BIL It is DOE’s understanding that there is Several stakeholders felt that separate range for liquid-immersed transformers. no technical barrier that prevents standards should be set for all If efficiency levels were to increase, network and vault based transformers transformers with a BIL of 150 kV or ABB would support a change, but did from achieving the same levels of higher. (NRECA, No. 228 at p. 3; not feel it is warranted with the efficiency as other liquid-immersed Advocates No. 235 at pp. 4–5; EEI, No. proposed levels. (ABB, No. 158 at p. 7) distribution transformers. However, 229 at pp. 5–6; APPA, No. 237 at p. 3) HVOLT agreed that at proposed levels, DOE does understand that there are Stakeholders who supported a split at separating by BIL was likely not needed, additional costs, besides those to the 150 kV felt that all transformers with and pointed out that efficiency impacts physical transformer, which may be BILs above this level should not have of varied BIL were smaller in liquid- incurred when a replacement increasing standards in this rule; the immersed transformers than in dry-type transformer is significantly larger than standards should remain at efficiency transformers. (HVOLT, No. 146 at p. 73) the original transformer and does not levels set in the 2007 final rule. (NEMA, DOE appreciates all of the input allow for the necessary space and No. 225 at p. 3–4; Howard Industries, regarding separating standards for maintenance clearances. Rather than No. 226 at p. 2) Prolec-GE pointed out different BIL ratings of liquid-immersed establishing a new equipment class, that a class of only 200 kV and above distribution transformers. Similar to DOE has considered the costs for such is of extremely limited volume and network- and vault-based transformers, vault replacements in the NIA. Please provides no benefit, stating that there is DOE may give strong consideration to see section X. Therefore, as stated, DOE a significant step up in cost for higher establishing equipment classes by BIL is not establishing a new equipment efficiencies at 150 kV BIL. (Prolec-GE, rating when considering increased

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23358 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

future standards, but does not perceive Fourth Edition, Dry-Type General be used in the test procedure. (Cooper, a strong technological need for such Purpose and Power Transformers; No. 165 at p. 3) separation at the efficiency levels under 2. temperature rise less than 130°C DOE appreciates the comments consideration in today’s rule and does with class 220 25 insulation or received about data center transformers. not, therefore, establish separate temperature rise less than 110°C with In today’s rule, DOE is not establishing equipment classes for liquid-immersed class 200 26 insulation; separate equipment classes for data distribution transformers by BIL rating. 3. a secondary winding arrangement center transformers for several reasons. that is not delta or wye (star); First, after reviewing the proposed e. Data Center Transformers 4. copper primary and secondary definition with technical experts, DOE During negotiations, participants windings; has come to believe that not all of the noted that data center transformers may 5. an electrostatic shield; or listed clauses in the definition are experience disproportionate difficulty 6. multiple outputs at the same directly related to efficiency as it would in achieving higher efficiencies due to voltage a minimum of 15° apart, which pertain to the specific operating certain features that may affect when summed together equal the environment of a data center. For consumer utility. In the NOPR, DOE transformer’s input kVA capacity. example, the requirement for copper proposed the definition below for data Several stakeholders responded to the windings would seem generally to aid center transformers and sought request for comment on data center efficiency rather than hinder it. Second, comment both on the definition itself, transformers. HVOLT agreed with the DOE believes that there may be risk of and whether to separate data center idea of creating a separate equipment circumvention of standards and that a transformers into their own equipment class for data center transformers, but transformer may be built to satisfy the class. It noted that separation, the noted that ‘‘the concept of the inrush data center definition without equipment classes must be defined such current held to four times rating is not significant added expense. Third, DOE that it would not be financially accurate.’’ (HVOLT, No. 146 at p. 65) understands that operators of data advantageous for consumers to purchase NEMA and KAEC supported the centers are generally themselves data center transformers for general use. establishment of a separate equipment interested in equipment with high i. Data center transformer means a class for data center transformers as well efficiencies because they often face large three-phase low-voltage dry-type as the definition developed by the electricity costs. If that were true, they distribution transformer that— working group and recommended that may be purchasing at or above today’s (i) is designed for use in a data center the efficiency levels for this new class standard and be unaffected by the rule. distribution system and has a nameplate remain at EL0, which is equivalent to Finally, DOE understands that the most identifying the transformer as being for the levels of NEMA’s standard TP–1 significant technical requirement of data this use only; 2002. (NEMA, No. 170, at p. 9; KAEC, center transformers to be related to (ii) has a maximum peak energizing No. 149 at p. 4 NEMA, No. 170 at p. 5) inrush current. In the worst possible current (or in-rush current) less than or ABB agreed, noting that it supported the case, DOE understands that operators of equal to four times its rated full load definition developed by the working data center transformers can (and current multiplied by the square root of group and a separate equipment class perhaps already do) take measures to 2, as measured under the following for LVDT data center transformers. limit inrush current external to the conditions— (ABB, No. 158 at p. 6) Cooper Power transformer. For these reasons, DOE is 1. during energizing of the supported the definition, and not establishing a separate equipment transformer without external devices recommended that the efficiency level class for data center transformers in attached to the transformer that can for these transformers remain at the today’s rule. reduce inrush current; baseline. (Cooper, no. 165 at p. 3) f. Noise and Vibration 2. the transformer shall be energized NRECA noted that few of its members at zero +/¥ 3 degrees voltage crossing serve data centers and that it does not Progress Energy recommended to DOE of a phase. Five consecutive energizing have any data on load factors and peak that ‘‘any change in efficiency tests shall be performed with peak responsibility factors for data centers, requirements fully investigates the inrush current magnitudes of all phases but pointed to Uptime Institute and impact of higher sound levels and/or recorded in every test. The maximum Lawrence Berkeley National vibration.’’ (PE No, 92 at p. 10) Progress peak inrush current recorded in any test Laboratories as sources that may have Energy noted that higher sound or shall be used; such data available. (NRECA, No. 172 at vibration levels or both will be of 3. the previously energized and then p. 5) Howard Industries commented that significant concern where users are de-energized transformer shall be this proposal would not directly affect nearby. (PE, No. 192 at p. 10) Southern energized from a source having it or its products and until further California Edison reported that it had available short circuit current not less information is given it could give no experienced ferroresonance issues with than 20 times the rated full load current response on whether or, so had not amorphous core transformers in the of the winding connected to the source; there is a necessity for establishing a past. Further, it expressed and separate equipment class at this time. ferroresonance concerns about lower 4. the source voltage shall not be less (HI, No. 151 at p. 3) Finally, Cooper loss designs with M2 core steel. than 5 percent of the rated voltage of the power suggested that, if a separate (Southern California Edison, No. 239 at winding energized; and definition for data center transformers is p. 1) However, neither EEI nor APPA (vii) is manufactured with at least two adopted, a 75 percent load level should were aware of vibration or acoustic of the following other attributes: noise issues associated with higher 1. Listed as a Nationally Recognized 25 International Electrotechnical Commission efficiency transformers but conceded Testing Laboratory (NRTL), under the Standard 60085 Electrical Insulation—Thermal that, if there were to be ferroresonance Occupational Safety and Health Evaluation and Designation, 3rd edition, 2004, page issues with higher efficiency Administration, U.S. Department of 11 table 1. transformers, it could impact customer 26 International Electrotechnical Commission Labor, for a K-factor rating greater than Standard 60085 Electrical Insulation—Thermal satisfaction, especially in residential K–4, as defined in Underwriters Evaluation and Designation, 3rd edition, 2004, page areas. (EEI, No. 185 at p. 19; APPA, No. Laboratories (UL) Standard 1561: 2011 11 table 1. 191 at p. 13–14) Cooper Power Systems

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23359

commented that it did not expect that Prolec-GE believes that this issue is such units (HI, No. 151 at p. 5) Based the new standards as proposed will limited to simpler dual voltage ratings on the limited data submitted, DOE does have any negative effect on performance where the ratio of the two primary not understand ranchrunners to be used or increase vibration or acoustic noise. voltages is exactly 2:1, and that this in applications where even minimal size (Cooper, No. 165 at p. 6) potential loophole was not intended increases would necessarily trigger great DOE understands that, in certain under the proposed regulations. (Prolec- cost increases. Furthermore, DOE does applications, noise, and vibration, or GE, No. 238 at p. 2) not believe large size or weight harshness (NVH) could be especially For the reason outlined in view of this increases are likely at the standard problematic. However, based on Prolec-GE comment, DOE is not levels under consideration. DOE may comments, DOE does not believe that establishing equipment classes by consider further consideration of the NVH concerns would be significant multivoltage capability in today’s final impact of increased size and weight in under the efficiency levels proposed rule. Nevertheless, DOE may consider future rulemakings, but is not and it does not propose to establish doing so in future rulemakings, or establishing separate equipment classes equipment classes using NVH as criteria consider modification of the test for ranchrunners in today’s final rule. for today’s rule. DOE notes that several procedure as discussed in III.A.4, Dual/ manufacturers offer technologies that Multiple-Voltage Primary Windings. 3. Technology Options reduce NVH in cases where it may be of h. Consumer Utility unusual concern. The technology assessment provides A primary consideration in information about existing technology g. Multivoltage Capability establishment of equipment classes is options to construct more energy- As discussed in section IIII.A, many whether or not the equipment under efficient distribution transformers. distribution transformers have primary consideration offers differential utility There are two main types of losses in and secondary windings that may be to the consumer. DOE sought comment transformers: No-load (core) losses and reconfigured to accommodate multiple on the establishment of a number of load (winding) losses. Measures taken to voltages. In some configurations, the equipment classes, including pole- reduce one type of loss typically transformer may operate less efficiently. mounted, data-center, network/vault- increase the other type of losses. Some NEMA commented that DOE should based, and high BIL distribution examples of technology options to exclude from further consideration transformers to explore whether improve efficiency include: (1) Higher- transformers with multiple primary stakeholders believed equipment utility grade electrical core steels, (2) different windings, because they are could be affected. ABB commented that conductor types and materials, and (3) disadvantaged in meeting higher the levels proposed in the NOPR were adjustments to core and coil efficiencies. (NEMA, No. 225 at p. 6) On unlikely to reduce equipment configurations. the other hand, Prolec-GE commented performance or utility. (ABB, No. 158 at that dual voltage distribution p. 10) In consultation with interested transformers should be included and Although most stakeholder discussion parties, DOE identified several treated the same as high BIL units, and of space-constrained applications technology options and designs for expressed concern about 7200 X 14400 centered around network/vault-based consideration. These technology options volt transformers where it could be less distribution transformers, Howard are presented in Table IV.2 Further expensive for a user to purchase the Industries mentioned another compact detail on these technology options can dual voltage unit than to purchase a application—‘‘ranchrunners’’—and be found in chapter 3 of the final rule 14400 volt single voltage unit. Further, requested a separate equipment class for TSD.

TABLE IV.2—OPTIONS AND IMPACTS OF INCREASING TRANSFORMER EFFICIENCY

No-load losses Load losses Cost impact

To decrease no-load losses

Use lower-loss core materials ...... Lower ...... No change * ...... Higher. Decrease flux density by: Increasing core cross-sectional area (CSA) ...... Lower ...... Higher ...... Higher. Decreasing volts per turn ...... Lower ...... Higher ...... Higher. Decrease flux path length by decreasing conductor CSA ...... Lower ...... Higher ...... Lower. Use 120° symmetry in three-phase cores ** ...... Lower ...... No change ...... TBD.

To decrease load losses

Use lower-loss conductor material ...... No change ...... Lower ...... Higher. Decrease current density by increasing conductor CSA ...... Higher ...... Lower ...... Higher. Decrease current path length by: Decreasing core CSA ...... Higher ...... Lower ...... Lower. Increasing volts per turn ...... Higher ...... Lower ...... Lower. * Amorphous core materials would result in higher load losses because flux density drops, requiring a larger core volume. ** Sometimes referred to as a ‘‘hexa-transformer’’ design.

HYDRO-Quebec (IREQ) notified DOE annealing. Further, IREQ noted that a In response to the NOPR, HYDRO- that a new iron-based amorphous alloy distribution transformer assembly using Quebec offered more information on ribbon for distribution transformers was this technology has been developed. their iron-based amorphous alloy developed that has enhanced magnetic (IREQ, No. 10 at pp. 1–2) ribbon. It noted that it has two properties while remaining ductile after technologies to produce this amorphous

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23360 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

ribbon: (1) A continuous in-line losses. The control unit knows how energy conservation standards under the annealing of an amorphous ribbon efficient each combination of scope of the rulemaking. moving forward at several meters per transformers is for any given loading, b. Symmetric Core second and giving a curved shape to the and is constantly monitoring the unit’s ribbon that remains flexible afterwards power output so that it will use the DOE understands that several and can easily be wound into a toroidal optimal number of cores. In theory, companies worldwide are commercially core with excellent soft magnetic there is no limit to the number of producing three-phase transformers properties, and (2) a new kernel transformers that may operate in with symmetric cores—those in which topology for an electrical distribution parallel in this sort of system, but cost each leg of the transformer is identically transformer compromising a magnetic considerations would imply there is an connected to the other two. The core made by rolling up the flexible optimal number. symmetric core uses a continuously annealed amorphous metal ribbon In response to the NOPR, Progress wound core with 120-degree radial around the coil. (HQ, No. 125 at p. 1) Energy noted that the response time of symmetry, resulting in a triangularly Hydro-Quebec explains that production core deactivation systems might impair shaped core when viewed from above. of this rolled-up-core transformer power quality by increasing the In a traditional core, the center leg is technology is automated, and the transformer impedance during the magnetically distinguishable from the automated continuous production initial cycles of motor starting events. other two because it has a shorter process makes the product cost (PE, No. 171 at p. 1) DOE spoke with a average flux path to each leg. In a competitive with foreign production. company that is developing a core symmetric core, however, no leg is ‘‘As for Hydro-Quebec’s flexible ribbon, deactivation technology. Noting that magnetically distinguishable from the the annealing technology is compatible many dry-type transformers are other two. One manufacturer of symmetric core with implementation of compact, high- operated at very low loadings a large transformers cited several advantages to throughput, automated, and continuous percentage of the time (e.g., a building its design. These include reduced production processes directly at the at night), the company seeks to reduce weight, volume, no-load losses, noise, casting plant and would thereby benefit core losses by replacing a single, vibration, stray magnetic fields, inrush from the same advantages pertaining to traditional transformer with two or more amorphous steels.’’ (HQ, No. 125 at current, and power in the third smaller units that could be activated harmonic. Thus far, DOE has seen p. 2) and deactivated in response to load DOE understands that Hydro-Quebec limited cost and efficiency data for only demands. In response to load demand a few symmetric core units from testing and others worldwide are conducting changes, a special unit controls the research on cost-effective manufacture done by manufacturers. DOE has not transformers and activates and/or seen any designs for symmetric core of amorphous core transformers, and deactivates them in real-time. believes that such efforts may ultimately units modeled in a software program. Although core deactivation save energy and economically benefit DOE understands that, because of technology has some potential to save consumers. At the present, however, zero-sequence fluxes associated with energy over a real-world loading cycle, DOE does not understand such wye-wye connected transformers, those savings might not be represented technology to necessarily enable symmetric core designs are best suited in the current DOE test procedure. achievement of higher efficiency levels. to delta-delta or delta-wye connections. Presently, the test procedure specifies a Furthermore, DOE did not attempt to While traditional cores can circumvent model such technology in its single loading point of 50 percent for the problem of zero-sequence fluxes by engineering analysis because it could liquid-immersed and MVDT introducing a fourth or fifth unwound not obtain data on what such technology transformers, and 35 percent for LVDT. leg, core symmetry makes extra legs costs when applied at commercial The real gain in efficiency for core inherently impractical. Another way to scales. deactivation technology comes at mitigate zero-sequence fluxes comes in loading points below the root mean the form of a tertiary winding, which is a. Core Deactivation square (RMS) loading specified in the delta-connected and has no external As noted previously, core test procedure, where some transformers connections. This winding is dormant deactivation technology employs the in the system could be deactivated. At when the transformer’s load is balanced concept that a system of smaller loadings where all transformers are across its phases. Although symmetric transformers can replace a single, larger activated, which may be the case at the core designs may, in theory, be made transformer. For example, three 25 kVA test procedure loading, the combined tolerant of zero-sequence fluxes by transformers operating in parallel could core and coil losses of the system of employing this method, this would replace a single 75 kVA transformer. transformers could exceed those of a come at extra cost and complexity. DOE understands that winding losses single, larger transformer. This would Using this tertiary winding, DOE are proportionally smaller at lower load result in a lower efficiency for the believes that symmetric core designs factors, but for any given current, a system of transformers compared to the can service nearly all distribution smaller transformer will experience single, larger transformer. transformer applications in the United greater winding losses than a larger In response to the NOPR, Progress States. Most dry-type transformers have transformer. As a result, those losses Energy Carolinas, Inc. commented that a delta connection and would not may be more than offset by the smaller core deactivation is not a proven require a tertiary winding. Similarly, transformer’s reduced core losses. As technology and would subject utility most liquid-immersed transformers loading increases, winding losses customers to lower reliability. serving the industrial sector have a delta become proportionally larger and DOE acknowledges that operating a connection. These market segments eventually outweigh the power saved by core deactivation bank of transformers could use the symmetric core design using the smaller core. At that point, the instead of a single unit may save energy without any modification for a tertiary control unit (which consumes little and lower LCC for certain consumers. winding. However, in the United States power itself) switches on an additional At present, however, DOE is adopting most utility-operated distribution transformer, which reduces winding the position that each of the constituent transformers are wye-wye connected. losses at the cost of additional core transformers must comply with the These transformers would require the

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23361

tertiary winding in a symmetric core symmetric core designs commercially in core design. To do this, DOE reduced design. the United States. core losses and core weight while DOE understands that symmetric core For the preliminary analysis, DOE increasing labor costs to approximate designs are more challenging to lacked the data necessary to perform a the symmetric core designs. These manufacture and require specialized thorough engineering analysis of adjustments were based on data symmetric core designs. To generate a received from manufacturers, published equipment that is currently uncommon cost-efficiency relationship for literature, and through conversations in the industry. However, DOE did not symmetric core design transformers, with manufacturers. Table IV.3 find a reasonable basis to screen this DOE made several assumptions. DOE indicates the range of potential technology option out of the analysis, adjusted its traditional core design adjustments for each variable that DOE and is aware of at least one models to simulate the cost and considered and the mean value used in manufacturer producing dry-type efficiency of a comparable symmetric the analysis.

TABLE IV.3—SYMMETRIC CORE DESIGN ADJUSTMENTS

[Percentage changes] Range Core losses Core weight W lb Labor hours

. Minimum ...... ¥0.0 ¥12.0 +10.0 Mean ...... ¥15.5 ¥17.5 +55.0 Maximum ...... ¥25.0 ¥25.0 +100.0

DOE applied the adjustments to each designs not be included in the final rule technology requires a license from of the traditional three-phase based on previous comments that Hexaformer. Overall, they feel that the transformer designs to develop a cost- highlighted significant issues with the cost to adapt to this technology would efficiency relationship for symmetric proposed designs. (BG&E, No. 182 at p. be large, impractical, and time core technology. DOE did not model a 5) Cooper Power pointed out that consuming. (HI, No. 151 at p. 12) tertiary winding for the wye-wye symmetric core designs have not proven Progress Energy Carolinas, Inc. connected liquid-immersed design lines themselves in the market place, and concurred with Howard Industries that (DLs). Based on its research, DOE therefore should be excluded in terms of the winding configuration for symmetric believes that the losses associated with their technological feasibility. (Cooper, core designs would be problematic. the tertiary winding may offset the No. 165 at p. 4) Similarly, Prolec-GE They pointed out that the delta tertiary benefits of the symmetric core design saw many issues with the use of winding needed will be subject to and that the tertiary winding will add symmetric core in medium-voltage thermal failure, and increase the losses cost to the design. Therefore, DOE liquid-filled transformers, and did not of the transformer. Furthermore, they modeled symmetric core designs for the believe that this technology offered pointed out that the presence of a delta three-phase liquid-immersed design benefits. (Prolec-GE, No. 177 at p. 10) tertiary winding on a wye-wye three- lines without a tertiary winding to ABB and NEMA both observed that phase distribution transformer will examine the impact of symmetric core any information regarding symmetric provide a source for zero-sequence technology on the subgroup of core technology for distribution currents to ground faults on the source applications that do not require the transformers is currently considered distribution system, resulting in tertiary winding. strategic and proprietary and cannot be backfeed and, consequently, a DOE attempts to consider all designs entered into the public record at this potentially hazardous situation. (PE, No. that are technologically feasible and time. (ABB, No. 158 at p. 7) NEMA 171 at p. 1) practicable to manufacture and believes argued further that while it is important Finally, Schneider Electric asserted that symmetric core designs can meet for DOE to understand the potential of that the efficiency levels proposed in these criteria. However, DOE was not emerging technologies, such the NOPR are not high enough to lead able to obtain or produce sufficient data technologies should not be introduced manufacturers to evaluate symmetric to modify its analysis of symmetric into the regulation until they have core technology. It commented that, to cores after the preliminary analysis. For proven themselves in the marketplace; fully explore these and other this reason, DOE did not consider symmetric core designs are currently of technologies, the implementation time symmetric core designs as part of the low penetration in the industry and and efficiency levels must be increased. NOPR analysis. have not been proven to offer potential It was Schneider Electric’s opinion that In response to the NOPR, several for efficiency improvement. (NEMA, No. further, increasing the levels in small manufacturers expressed support for 170 at p. 11) increments and only giving four years to excluding symmetric core designs from Howard Industries commented that transition does not allow for proper DOE’s analysis. ComEd, EEI, Progress symmetric core technology is not research and development to be Energy, NRECA, and APPA all appropriate for the majority of the U.S. completed to properly comment on any commented that they were pleased to distribution transformer market, noting new technology. (Schneider, No. 180 at see symmetric core designs excluded that this style of design results in much p. 5) from the NOPR analysis. (ComEd, No. deeper tanks and larger pads as well as In response to the NOPR, DOE did not 184 at p. 11; EEI, No. 185 at p. 9; APPA, a new winding configuration. It also receive any data that would force No. 191 at p. 9; PE, No. 192 at p. 7; pointed out that symmetric core designs reconsideration of the symmetric core NRECA, No. 172 at p. 7) BG&E are patented by Hexaformer AB, in analysis conducted during the recommended that symmetric core Sweden, and manufacturing this preliminary analysis. Stakeholders

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23362 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

expressed support for the exclusion of EL 2. Since the NOPR, however, DOE including both large and small this technology from the NOPR analysis. has reassessed the assumption that butt- manufacturers. (CA IOUs, No. 189 at p. For all of the above reasons, DOE does lapping is not possible beyond EL 2. For 2) Schneider Electric reiterated its not consider symmetric core designs as design lines 6 and 8, the topic of butt- support of efficiency levels higher than part of the final rule analysis. lapping is less consequential. All of those proposed in the NOPR. (Schneider, No. 180 at p. 1) c. Intellectual Property DOE’s design line 6 analysis is centered around butt-lapping,27 while the use of DOE understands that the ability to In setting standards, DOE seeks to mitering for larger LVDT units produce transformers using a variety of analyze the efficiency potentials of (represented by design line 8) is construction techniques is important to commercially available technologies prevalent in both the market and DOE’s preserving design flexibility. After and working prototypes, as well as the analysis. receiving the above-referenced availability of those technologies to the DOE received several comments on comments on the NOPR, DOE consulted market at-large. If certain market core construction method as it relates to with technical design experts and participants own intellectual property design line 7. During the negotiated learned that butt-lapping is that enables them to reach efficiencies rulemaking, ASAP commented that DOE technologically feasible for DL 7 that other participants practically should further explore whether butt- through EL 3. DOE revises its cannot, amended standards may reduce lapping was possible beyond EL 2. understanding of the limits of butt- the competitiveness of the market. (ASAP, No. 146 at p. 135, pp. 25–26) lapped core construction in today’s rule In the case of distribution HVOLT, a power and distribution to extend through EL 3 in DL 7. transformers, stakeholders have raised transformer consulting company, B. Screening Analysis potential intellectual property concerns commented that butt-lapping could surrounding both symmetric core probably get very close to EL 3, but not DOE uses the following four screening technology and amorphous metals in be the most cost competitive choice at criteria to determine which design particular. DOE currently understands that level. (HVOLT, No. 146 at p. 135) options are suitable for further that symmetric core technology itself is ASAP also commented that DOE should consideration in a standards not proprietary, but that one of the more explore more design options in the rulemaking: commonly employed methods of interest of creating a smoother curve, 1. Technological feasibility. production is the property of the and that butt-lapped options should be Technologies incorporated in Swedish company Hexaformer AB. among them. (ASAP, No. 146 at pp. commercial products or in working However, Hexaformer AB’s method is 24–25) prototypes will be considered to be not the only one capable of producing In response to the NOPR, ASAP, two technologically feasible. symmetric cores. Moreover, Hexaformer manufacturers of LVDTs, and California 2. Practicability to manufacture, AB and other companies owning Investor-Owned Utilities urged DOE to install, and service. If mass production intellectual property related to the reconsider the technological of a technology in commercial products manufacture of symmetric core designs assumptions (including butt-lapping and reliable installation and servicing of have demonstrated an eagerness to capabilities at higher TSLs) behind its the technology could be achieved on the license such technology to others that TSL 1 proposal. ASAP stated that it scale necessary to serve the relevant are using it to build symmetric core believed a more careful consideration of market at the time of the effective date transformers commercially today. the record and a more thorough of the standards, then that technology DOE understands that symmetric core investigation of the impacts on small, will be considered practicable to technology may ultimately offer a lower- domestic manufacturers would lead manufacture, install, and service. 3. Impacts on product utility to cost path to higher efficiency, at least in DOE to TSL 3, noting that many consumers. If a technology is certain applications, and that few manufacturers supported at least TSL 2 determined to have significant adverse symmetric cores are produced in the during the negotiated rulemaking and impact on the utility of the product to United States. However, DOE notes believed that TSL 2 could be attained significant subgroups of consumers, or again that it has been unable to secure using butt-lapping. (ASAP, No. 186 at result in the unavailability of any data that are sufficiently robust for use pp. 3, 7–8) Eaton generally covered product type with performance as the basis for an energy conservation recommended that DOE standardize characteristics (including reliability), standard, but encourages interested efficiency levels to EL 3 (i.e., NEMA parties to submit data that would assist ® features, sizes, capacities, and volumes Premium ), stating that such efficiency in DOE’s analysis of symmetric core that are substantially the same as levels are realistic using current technology in future rulemakings. products generally available in the technology and are very close to the United States at the time, it will not be d. Core Construction Technique standards DOE proposed in the NOPR. considered further. DOE examines a number of core (Eaton, No. 157 at p. 2) The California 4. Safety of technologies. If it is construction techniques in its IOUs commented that DOE should determined that a technology will have engineering analysis, including butt- revise its analysis to reflect that core significant adverse impacts on health or lapping, full mitering, step-lap mitering, construction techniques are currently safety, it will not be considered further. and distributed gap wound used to produce efficiencies higher than (10 CFR part 430, subpart C, appendix construction. Particularly in the low- TSL 1 for both small and large A) voltage dry-type market, where some manufacturers. (CA IOUs, No. 189 at p. In the preliminary analysis, DOE smaller manufacturers may not own 2) The group of utilities also stated that identified the technologies for large mitering machines, core NEMA lists 11 manufacturers improving distribution transformer committed to delivering LVDTs at construction methodology is of concern. ® efficiency that were under In the NOPR, DOE did not examine butt- NEMA Premium efficiency levels, consideration. DOE developed this lapped core construction as a design initial list of design options from the 27 Except for the amorphous design options, option for design line 7 for steel grades because DOE eliminates consideration of technologies identified in the above M6 and, as a result, found only amorphous cores in butt-lapped and other stacked technology assessment. Then DOE butt-lapped designs are feasible through configurations in its screening analysis. reviewed the list to determine if the

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23363

design options are practicable to adverse impacts on health and safety. In design options that DOE did not manufacture, install, and service; would the engineering analysis, DOE only consider because they were screened adversely affect equipment utility or considered those design options that out are summarized in Table IV.4. equipment availability; or would have satisfied the four screening criteria. The

TABLE IV.4—DESIGN OPTIONS SCREENED OUT OF THE ANALYSIS

Design option excluded Eliminating screening criteria

Silver as a Conductor Material ...... Practicability to manufacture, install, and service. High-Temperature Superconductors ...... Technological feasibility; Practicability to manufacture, install, and service. Amorphous Core Material in Stacked Core Configuration ...... Technological feasibility; Practicability to manufacture, install, and service. Carbon Composite Materials for Heat Removal ...... Technological feasibility. High-Temperature Insulating Material ...... Technological feasibility. Solid-State (Power Electronics) Technology ...... Technological feasibility; Practicability to manufacture, install, and service. Nanotechnology Composites ...... Technological feasibility.

Chapter 4 of the TSD discusses each technology is not currently available for costs of achieving increased efficiency of these screened-out design options in distribution transformers. (NRECA, No. levels. DOE uses manufacturing costs to more detail. The chapter also includes 172 at p. 7; APPA, no. 191 at p. 9; EEI, determine retail prices for use in the a list of emerging technologies that No. 185 at p. 9; BG&E, No. 182 at p. 5) LCC analysis and MIA. In general, the could impact future distribution ComEd and Progress Energy noted that, engineering analysis estimates the transformer manufacturing costs. due to lack of availability, efficiency improvement potential of nanotechnology composites should not individual design options or 1. Nanotechnology Composites be included in DOE’s final rule. combinations of design options that DOE is aware that materials science (ComEd, No. 184 at p. 11; PE, No. 192 pass the four criteria in the screening research is being conducted into the use at p. 7) analysis. The engineering analysis also of nanoscale engineering to improve Stakeholders also noted that determines the maximum certain properties of materials used in information on nanotechnology is not technologically feasible (‘‘max-tech’’) transformers. Nanotechnology is the currently readily available. ABB pointed energy efficiency level. manipulation of matter on an atomic out that any information regarding the DOE must consider those distribution and molecular scale. Such materials application and design of transformers that are designed to have small-scale structures created nanotechnology in distribution achieve the maximum improvement in through novel manufacturing transformers is considered strategic and energy efficiency that the Secretary of techniques that may give rise to proprietary and that these composites Energy determines to be technologically improved properties (e.g., higher are not currently commercially available feasible and economically justified. (42 resistivity in steel) not natively present in the distribution transformer market. U.S.C. 6295(o)(2)(A)) Therefore, an in the bulk material. At present, DOE (ABB, No. 158 at p. 7) NEMA agreed, important role of the engineering has not learned of any such materials stating, ‘‘this technology is in its analysis is to identify the maximum that meet DOE’s criteria of being infancy. Information regarding an technologically feasible efficiency level. practicable to manufacture and does not individual manufacturer’s application of The maximum technologically feasible consider nanotechnology composites in this technology is considered strategic level is one that can be reached by its engineering analysis. and proprietary and cannot be divulged adding efficiency improvements and/or Many stakeholders were supportive of in the public record at this time.’’ design options, both commercially DOE’s decision to exclude (NEMA, No. 170 at p. 11) feasible and in prototypes, to the nanotechnology from their analysis in DOE understands that the baseline units. DOE believes that the the NOPR. Howard Industries and nanotechnology field is actively design options comprising the Cooper Power both expressed that researching ways to produce bulk maximum technologically feasible level nanotechnology is not a proven material with desirable features on a must have been physically technology in the field of distribution molecular scale. Some of these materials demonstrated in a prototype form to be transformers; nanotechnology is still in may have high resistivity, high considered technologically feasible. the research phase and further permeability, or other properties that In general, DOE can use three development would be required prior to make them attractive for use in methodologies to generate the being viable in the distribution electrical transformers. DOE knows of manufacturing costs needed for the transformer field. (HI, No. 151 at p. 12; no current commercial efforts to employ engineering analysis. These methods Cooper, No. 165 at p. 4) Prolec-GE these materials in distribution are: agreed, pointing out that this technology transformers and no prototype designs (1) The design-option approach— is ‘‘still in its infancy and there is not using this technology. Therefore, DOE reporting the incremental costs of enough public information to make a does not consider nanotechnology adding design options to a baseline practicable analysis if benefits exist.’’ composites in the today’s rulemaking. model; (Prolec-GE, No. 177 at p. 11) While (2) the efficiency-level approach— NRECA, EEI and APPA all expressed C. Engineering Analysis reporting relative costs of achieving interest in the development of advanced The engineering analysis develops improvements in energy efficiency; and technologies that could result in more cost-efficiency relationships for the (3) the reverse engineering or cost efficient transformers, they agree with equipment that are the subject of a assessment approach—involving a the above stakeholders that this rulemaking by estimating manufacturer ‘‘bottom up’’ manufacturing cost

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23364 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

assessment based on a detailed bill of Services, Inc. (OPS), a software engineering analysis. (ATI, No. 181 at materials derived from transformer company specializing in transformer p. 1) teardowns. design since 1969. The OPS software DOE acknowledges both that it may DOE’s analysis for this rulemaking is used three primary inputs that it not have analyzed every possible design based on the design-option approach, in received from DOE: (1) A design option and that, conversely, some designs which design software is used to assess combination, which included core steel would be unlikely to be considered by the cost-efficiency relationship between grade, primary and secondary conductor many purchasers, but notes that the goal various design option combinations. material, and core configuration; (2) a of the engineering analysis is to both This is the same approach that was loss valuation combination; and (3) explore the limits of design possibility taken in the 2007 final rule for material prices. For each representative and establish a cost/efficiency behavior. distribution transformers. unit, DOE examined anywhere from 8 to The Life-Cycle Cost and Payback Period Analysis, in turn, examines which of the 1. Engineering Analysis Methodology 16 design option combinations and for each design option combination, the designs would be cost-effective for When developing its engineering OPS software generated 518 designs individual purchasers. It would not be analysis for distribution transformers, based on unique loss valuation practical to attempt to analyze every DOE divided the covered equipment combinations. These loss valuation possible physical design. Regarding into equipment classes. As discussed, combinations are known in industry as NEMA’s comments, DOE is always distribution transformers are classified A and B evaluation combinations and seeking constructive feedback to aid in by insulation type (liquid immersed or represent a customer’s present value of the accuracy of its engineering analysis, dry type), number of phases (single or future losses in a transformer core and but cautions that comparisons between three), primary voltage (low voltage or winding, respectively. For each design designs must be made carefully in order medium voltage for dry-type option combination and A and B to be sure that they remain valid across distribution transformers) and basic combination, the OPS software a wide variety of market forces and impulse insulation level (BIL) rating (for generated an optimized transformer construction techniques. A dry types). Using these transformer design based on the material prices that manufacturer’s cost of producing design characteristics, DOE developed were also part of the inputs. higher-efficiency units in today’s market ten equipment classes. Within each of Consequently, DOE obtained thousands may be different than the cost of these equipment classes, DOE further of transformer designs for each meeting those same efficiencies after classified distribution transformers by representative unit. The performance of establishment of energy conservation their kilovolt-ampere (kVA) rating. these designs ranged in efficiency from standards, which may lead to These kVA ratings are essentially size a baseline level, equivalent to the production at higher volumes. categories, indicating the power handling capacity of the transformers. current distribution transformer energy 2. Representative Units For DOE’s rulemaking, there are over conservation standards, to a theoretical For the preliminary analysis, DOE 100 kVA ratings across all ten max-tech efficiency level. analyzed 13 DLs that cover the range of equipment classes. After generating each design, DOE equipment classes within the DOE recognized that it would be used the outputs of the OPS software to distribution transformer market. Within impractical to conduct a detailed help create a manufacturer selling price each DL, DOE selected a representative engineering analysis on all kVA ratings, (MSP). The material cost outputs of the unit to analyze in the engineering so it sought to develop an approach that OPS software, along with labor analysis. A representative unit is meant simplified the analysis while retaining estimates, were marked up for scrap to be an idealized unit typical of those reasonable levels of accuracy. DOE factors, factory overhead, shipping, and used in high volume applications. consulted with industry representatives non-production costs to generate a MSP In view of comments received from and transformer design engineers to for each design. Thus, DOE obtained a stakeholders throughout the analysis develop an understanding of the cost versus efficiency relationship for period, DOE slightly modified its construction principles for distribution each representative unit. Finally, after representative units for the NOPR transformers. It found that many of the DOE had generated the MSPs versus analysis. For the NOPR, DOE analyzed units share similar designs and efficiency relationship for each the same 13 representative units as in construction methods. Thus, DOE representative unit, it extrapolated the the preliminary analysis, but also added simplified the analysis by creating results to the other, unanalyzed, kVA a design line, and therefore engineering design lines (DLs), which ratings within that same engineering representative unit, by splitting the group kVA ratings based on similar design line. former design line 13 into two new principles of design and construction. PEMCO commented that DOE design lines, 13A and 13B. This new The DLs subdivide the equipment generated too many designs, and that representative unit allows DOE’s classes in order to improve the accuracy many were impractical or unlikely to analysis to better reflect the behavior of of the engineering analysis. These DLs sell. (PEMCO, No. 183 at p. 1) EMS high kVA, high BIL medium-voltage differentiate the transformers by Consulting made an opposite remark, dry-type units and is shown in Table insulation type (liquid immersed or dry that DOE’s chosen methodology omits IV.5. The representative units selected type), number of phases (single or many possible solutions. (EMS, No. 178 by DOE were chosen because they three), and primary insulation levels for at p. 5) Finally, NEMA commented that comprise high volume segments of the medium-voltage dry-type distribution the ‘‘steepness’’ of some of DOE’s curves market for their respective design lines transformers (three different BIL levels). were lower than was shown by some and also provide, in DOE’s view, a After developing its DLs, DOE then manufacturers, ABB in particular. reasonable basis for scaling to the selected one representative unit from (NEMA, No. 170 at p. 4, p. 3) In other unanalyzed kVA ratings. DOE chooses each DL for study, greatly reducing the words, NEMA questioned whether cost certain designs to analyze as number of units for direct analysis. For might rise more quickly with efficiency representative of a particular design line each representative unit, DOE generated than DOE’s analysis suggested. or design lines because it is impractical hundreds of unique designs by Conversely, ATI Allegheny commented to analyze all possible designs in the contracting with Optimized Program that DOE did excellent work on the scope of coverage for this rulemaking.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23365

DOE also notes that as a part of the to develop a new scaling methodology interested party concerns regarding negotiations process, DOE worked for the NOPR that addresses some of the scaling. directly with multiple interested parties

TABLE IV.5—ENGINEERING DESIGN LINES (DLS) AND REPRESENTATIVE UNITS FOR NOPR ANALYSIS

Representative unit for this EC * DL Type of distribution transformer kVA range engineering design line

1 ...... 1 ...... Liquid-immersed, single-phase, rec- 10–167 50 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 240/120V sec- tangular tank. ondary, rectangular tank, 95kV BIL. 2 ...... Liquid-immersed, single-phase, 10–167 25 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 120/240V sec- round tank. ondary, round tank, 125 kV BIL. 3 ...... Liquid-immersed, single-phase ...... 250–833 500 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 277V secondary, 150kV BIL. 2 ...... 4 ...... Liquid-immersed, three-phase ...... 15–500 150 kVA, 65 °C, three-phase, 60Hz, 12470Y/7200V primary, 208Y/120V secondary, 95kV BIL. 5 ...... Liquid-immersed, three-phase ...... 750–2500 1500 kVA, 65 °C, three-phase, 60Hz, 24940GrdY/14400V primary, 480Y/ 277V secondary, 125 kV BIL. 3 ...... 6 ...... Dry-type, low-voltage, single-phase 15–333 25 kVA, 150 °C, single-phase, 60Hz, 480V primary, 120/240V secondary, 10kV BIL. 4 ...... 7 ...... Dry-type, low-voltage, three-phase .. 15–150 75 kVA, 150 °C, three-phase, 60Hz, 480V primary, 208Y/120V secondary, 10kV BIL. 8 ...... Dry-type, low-voltage, three-phase .. 225–1000 300 kVA, 150 °C, three-phase, 60Hz, 480V Delta primary, 208Y/120V secondary, 10kV BIL. 6 ...... 9 ...... Dry-type, medium-voltage, three- 15–500 300 kVA, 150 °C, three-phase, 60Hz, 4160V Delta primary, 480Y/277V phase, 20–45kV BIL. secondary, 45kV BIL. 10 ..... Dry-type, medium-voltage, three- 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 4160V primary, 480Y/277V sec- phase, 20–45kV BIL. ondary, 45kV BIL. 8 ...... 11 ..... Dry-type, medium-voltage, three- 15–500 300 kVA, 150 °C, three-phase, 60Hz, 12470V primary, 480Y/277V sec- phase, 46–95kV BIL. ondary, 95kV BIL. 12 ..... Dry-type, medium-voltage, three- 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 12470V primary, 480Y/277V sec- phase, 46–95kV BIL. ondary, 95kV BIL. 10 ...... 13A ... Dry-type, medium-voltage, three- 75–833 300 kVA, 150 °C, three-phase, 60Hz, 24940V primary, 480Y/277V sec- phase, 96–150kV BIL. ondary, 125kV BIL. 13B ... Dry-type, medium-voltage, three- 225–2500 2000 kVA, 150 °C, three-phase, 60Hz, 24940V primary, 480Y/277V sec- phase, 96–150kV BIL. ondary, 125kV BIL. * EC means equipment class (see Chapter 3 of the TSD). DOE did not select any representative units from the single-phase medium-voltage equipment classes (EC5, EC7 and EC9), but calculated the analytical results for EC5, EC7, and EC9 based on the results for their three-phase counterparts.

3. Design Option Combinations consider amorphous steel designs for next highest efficiency designs. In an There are many different the dry-type design lines. Instead, DOE effort to close that gap for the combinations of design options that had considered H–0 domain refined (H– preliminary analysis, DOE evaluated could be considered for each 0 DR) steel as the maximum- ZDMH and M2 core steel as the highest representative unit DOE analyzes. While technologically feasible design. efficiency designs below amorphous for DOE cannot consider all the possible However, DOE is aware that amorphous the liquid-immersed design lines. combinations of design options, DOE steel designs are now used in dry-type Similarly, DOE evaluated H–0 DR and attempts to select design option distribution transformers. Therefore, M3 core steel as the highest efficiency combinations that are common in the DOE considered amorphous steel designs below amorphous for dry-type industry while also spanning the range designs for each of the dry-type design lines. DOE incorporated these of possible efficiencies for a given DL. transformer design lines in the supplementary designs into the For each design option combination preliminary analysis. During preliminary interviews with reference case (i.e., DOE’s default set of chosen, DOE evaluates 518 designs manufacturers, DOE received comment assumptions without any sensitivity based on different A and B factor 28 that it should consider additional design analysis) for the NOPR analysis. combinations. For the engineering option combinations using aluminum Additionally, DOE aimed to consider analysis, DOE reused many of the for the primary conductor rather than the most popular design option design option combinations that were copper. While manufacturers combinations, and the design option analyzed in the 2007 final rule for commented that copper is still used for combinations that yield the greatest distribution transformers. 72 FR 58190 the primary conductor in many improvements in efficiency. While DOE (October 12, 2007). distribution transformers, they noted was unable to consider all potential For the preliminary analysis, DOE that aluminum has become relatively design option combinations, it did considered a design option combination more common. This is due to the consider multiple designs for each that uses an amorphous steel core for relative prices of copper and aluminum. representative unit and considered each of the dry-type design lines, In recent years, copper has become even additional design options in its NOPR whereas DOE’s 2007 final rule did not more expensive compared to aluminum. analysis based on stakeholder DOE also noted that certain design comments. 28 A and B factors correspond to loss valuation and are used by DOE to generate distribution lines were lacking a design to bridge the As for wound core designs, DOE did transformers with a broad range of performance and efficiency values between the lowest consider analyzing them for all of its design characteristics. efficiency amorphous designs and the dry-type representative units that are

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23366 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

300 kVA or less in the NOPR. However, company stated in its NOPR comments operating inside the United States cater based on limited availability in the that it still supports efficiency levels to niches outside of DOE’s scope of United States, DOE did not believe that higher than those proposed in the NOPR coverage, and would not be directly it was feasible to include these designs (as evidenced by discussions during the affected by the rule. Finally, DOE spoke in their final engineering results. For negotiated rulemaking meetings.) with several small domestic similar availability reasons, DOE chose (Schneider, No. 180 at p. 1) manufacturers and learned that some to exclude its wound core ZDMH and ASAP commented that it perceived are already able to miter cores, and M3 designs from its low-voltage dry- there to be a ‘‘gap’’ in the DL 7 data, and would make the decision to butt-lap or type analysis. Based on how uncommon that DOE should seek to fill that gap by miter at EL3 based on economics and these designs are in the current market, exploring other design option without facing large capital investment DOE believes that it would be combinations corresponding to butt- decisions. More detail can be found in unrealistic to include them in lapped core construction. (ASAP, No. Section IV.I.5.b. engineering curves without major 146 at p. 24–25, 135) In response, DOE 4. A and B Loss Value Inputs adjustments. first generated analysis for two DOE did not consider wound core additional design option combinations: As discussed, one of the primary designs for DLs 10, 12, and 13B because An M4 core with aluminum windings inputs to the OPS software is an A and they are 1500 kVA and larger. DOE and an M3 core with copper windings. B combination for customer loss understands that conventional wound DOE includes both sets of results in its evaluation. In the preliminary analysis, core designs in these large kVA ratings final rule engineering analysis. In DOE generated each transformer design will emit an audible ‘‘buzzing’’ noise, general, DOE notes that preservation of in the engineering analysis based upon and will experience an efficiency a number of design options was a strong an optimized lowest total owning cost penalty that grows with kVA rating such consideration in selection of the final evaluation for a given combination of A that stacked core is more attractive. DOE standard. Second, given these two new and B values. Again, the A and B values notes, however, that it does consider a design lines discussed above, DOE represent the present value of future wound core amorphous design in each revisited the question of whether DL 7 core and coil losses, respectively and of the dry-type design lines. for LVDTs was achievable by DOE generated designs for over 500 DOE did opt to add two design option manufacturers with butt lapping different A and B value combinations combinations that incorporate M-grade techniques in order to avoid purchasing for each of the design option steels that have become popular choices mitering equipment. Specifically, DOE combinations considered in the at the current standard levels. For all consulted with technical design experts, analysis. medium-voltage dry-type design lines and they confirmed butt-lapping was DOE notes that the designs created in (9–13B), DOE added a design option technically feasible through EL 3. In the engineering analysis span a range of combination of an M4 step-lap mitered addition, as detailed in section IV.A.3, costs and efficiencies for each design core with aluminum primary and DOE received public comment option combination considered in the secondary windings. For design line 8, supporting this conclusion and did not analysis. This range of costs and DOE added a design option combination receive public comments directly efficiencies is determined by the range of an M6 fully mitered core with refuting this conclusion. (See, e.g., of A and B factors used to generate the aluminum primary and secondary ASAP, No. 186 at pp. 3, 7–8; Eaton, No. designs. Although DOE does not windings. DOE understands both 157 at p. 2; CA IOUs, No. 189 at p. 2) generate a design for every possible A combinations to be prevalent baseline Consequently, DOE modified the and B combination, because there are options in the present transformer LVDT standard proposed from TSL 1 to infinite variations, DOE believes that its market. TSL 2 in today’s final rule. 500-plus combinations have created a For the NOPR analysis, DOE also DL 7 analysis illustrating the sufficiently broad design space. By made the decision to remove certain possibility of constructing butt-lapped using so many A and B factors, DOE is high flux density designs from DL7 to be cores at EL3 led DOE to reconsider the confident that it produces the lowest consistent with designs submitted by impacts to small manufacturers. DOE first cost design for a given efficiency manufacturers.29 There is a variety of originally assumed that a small level and also the lowest total owning reasons that manufacturers would manufacturer without the equipment cost design. Furthermore, although all choose to limit flux density (e.g., needed to construct mitered cores distribution transformer customers do vibration, noise). Further detail on this would have to either invest in such not purchase based on total owning change can be found in chapter 5 of the equipment at considerable expense, cost, the A and B combination is still a TSD. The design remains that way for source cores from a third party, or exit useful tool that allows DOE to generate today’s final rule. that market. As explained in Section a large number of designs across a broad In response to the NOPR, Eaton noted IV.I.1, DOE calculates the net present range of efficiencies and costs for a that this rule provides many design value of the industry (‘‘INPV’’) in particular design line. Finally, OPS options, and allows for the use of attempting to quantify impacts to noted at the public meeting that its various designs and different grades of manufacturers under different scenarios. design software requires A and B values steel, but encouraged DOE to During the NOPR, DOE calculated LVDT as inputs. (OPS, Pub. Mtg. Tr., No. 34 standardize the efficiency levels to INPV to be between $200 million and at p. 123) For all of these reasons, DOE NEMA Premium® (i.e., EL 3). (Eaton, $235 million (in 2011$). In today’s final continued to use A and B factors from No. 157 at p. 2) Although Schneider rule, that figure rises to $227 million to the NOPR to generate the range of supported the LVDT efficiency levels $249 million (in 2011$). designs for the final rule engineering proposed by DOE in the NOPR, the In addition, as described in the NOPR analysis. and as DOE confirmed for the final rule, 29 During the negotiations process, DOE’s DOE understands that the majority of 5. Materials Prices subcontractor, Navigant Consulting, Inc. (Navigant), the LVDT market volume is currently In distribution transformers, the participated in a bidirectional exchange of engineering data with industry representatives in an imported, much of it from large, well- primary materials costs come from effort to validate the OPS designs generated for the capitalized manufacturers in Mexico. electrical steel used for the core and the engineering analysis. Furthermore, many small businesses aluminum or copper conductor used for

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23367

the primary and secondary winding. As these prices by adding a processing cost for both material and wholesale energy, these are commodities whose prices increment to the underlying index price. should reflect from the most recent frequently fluctuate throughout a year DOE determined the current 2011 index published data for the most recent and over time, DOE attempted to price from the LME and COMEX, two year.’’ (BG&E No. 182 at p. 5; ComEd, account for these fluctuations by well-known commodities benchmarks. No. 184 at p. 11) ASAP commented that examining prices over multiple years. These indices only had current 2011 DOE should re-optimize its engineering For the preliminary analysis, DOE values available, so DOE used the analysis with respect to the new pricing conducted the engineering analysis producer price index for copper and to find the most accurate results. (ASAP, analyzing materials price information aluminum to convert the 2011 index No. 146 at p. 153) over a five-year time period from 2006– price into prices for the time period of DOE notes that because it analyzes 2010, all in constant 2010$. Whereas 2006–2010. DOE then applied a unique such a large breadth of designs, its DOE used a five-year average price in processing cost adder to the index price engineering analysis is less sensitive to the 2007 final rule for distribution for each of its conductor groupings. To changes in materials prices than it transformers, for the preliminary derive the adder price, DOE compared otherwise would be. DOE performed a analysis in this rulemaking, DOE the difference in the LME index price to sensitivity analysis during the selected one year from its five-year time the 2011 price paid by manufacturers, preliminary analysis phase of the frame as its reference case, namely 2010. and applied this difference to the index rulemaking in order to understand the Additionally, DOE considered high and price in each year. DOE inquired with magnitude of the effect of a change in low materials price sensitivities from many manufacturers, both large and material prices and found it to be very that same five-year time frame, 2008 and small, to derive these prices. Materials small. The differential pricing between 2006 respectively. price cases for the final rule are the designs, upon which the LCC, NIA, DOE decided to use current (2010) identical to those of the NOPR. Further and other economics results are based, materials prices in its analysis for the detail can be found in chapter 5 of the are even less sensitive. DOE believes its preliminary analysis because of TSD. conclusions would not vary between feedback from manufacturers during DOE reviewed core steel prices with either case. interviews. Manufacturers noted the manufacturers and industry experts and DOE appreciates the above-listed difficulty in choosing a price that found them to be accurate within the feedback from commenters, however, accurately projects future materials range of prices paid by manufacturers in for today’s rule, DOE continues to use prices due to the recent variability in 2010. However, based on feedback in the 2010 and 2011 materials prices that these prices. Manufacturers also negotiations, DOE adjusted steel prices were first included in the NOPR as commented that the previous five years for M4 grade steels and lower grade reference case scenarios, which is the had seen steep increases in materials steels. most recent and accurate information prices through 2008, after which prices Several stakeholders commented on available to DOE. DOE presents both declined as a result of the global the material prices used in the NOPR. cases as recent examples of how the economic recession. Further detail on ABB, NRECA, and NEMA all noted that steel market fluctuates and uses both to these factors can be found in appendix the material costs appeared to be too derive economic results. It also 3A. Due to the variability in materials low, both for 2010 and 2011. (ABB, No. considered high and low price scenarios prices over this five-year timeframe, 158 at pp. 7–8; NEMA, No. 170 at p. 11; based on the 2008 and 2006 materials manufacturers did not believe a five- NRECA, No. 146 at p. 159) Similarly, prices, respectively, but adjusted the year average price would be the best Prolec-GE pointed out that, as the prices in each of these years to consider indicator, and recommended using the economy recovers, demand for these greater diversity in materials prices. For current materials prices. materials will increase, as will their the high price scenario, DOE increased To estimate its materials prices, DOE prices. They agreed that DOE’s material the 2008 prices by 25 percent, and for spoke with manufacturers, suppliers, price projections were too low. (Prolec- the low price scenario, DOE decreased and industry experts to determine the GE, No. 177 at p. 11) ATI specifically the 2006 prices by 25 percent as prices paid for each raw material used noted that DOE’s price for M3 steel was additional sensitivity analyses. DOE in a distribution transformer in each of too low in the 2011 price scenario, and believes that these price sensitivities the five years between 2006 and 2010. commented that this price is a very accurately account for any pricing While prices fluctuate during the year important one in the analysis. (ATI, No. discrepancies experienced by smaller or and can vary from manufacturer to 146 at pp. 74–75) Progress Energy larger manufacturers, and adequately manufacturer depending on a number of concurred, noting that the price of consider potential price fluctuations. variables, such as the purchase quantity, silicon core steel in DOE’s analysis was For the engineering analysis, DOE did DOE attempted to develop an average lower than actual prices, and not attempt to forecast future materials materials price for the year based on the recommended that DOE revise all their prices. DOE continued to use the 2010 price a medium to large manufacturer material prices. (PE, No. 192 at p. 7) materials price in the reference case would pay. Cooper and HI agreed with these scenario, added a 2011 reference With the onset of the negotiations, stakeholders that DOE’s material prices scenario, and also considered high and DOE was presented with an opportunity were too low, specifically pointing out low sensitivities to account for any to implement a 2011 materials price that surcharges need to be included to potential fluctuations in materials case based on data it had gathered more accurately reflect real world prices. The LCC and NIA consider a before and during the negotiation prices. (Cooper, No. 165 at p. 4; HI, No. scenario, however, in which transformer proceedings. Relative to the 2010 case, 151 at p. 12) prices increase in the future based on the 2011 prices were lower for all steels, APPA did not disagree with DOE’s increasing materials prices, among other particularly M2 and lower grade steels. material prices, but pointed out that if variables. Further detail on this scenario For the NOPR, DOE reviewed its DOE choose to update them, they can be found in chapter 8 of the TSD. materials prices during interviews with should update wholesale electric prices manufacturers and industry experts and to the most recent year available as well. 6. Markups revised its materials prices for copper (APPA, No. 191 at p. 9) BG&E and DOE derived the manufacturer’s and aluminum conductors. DOE derived ComEd agreed, pointing out ‘‘base costs, selling price for each design in the

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23368 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

engineering analysis by considering the For today’s rule, DOE continued to type designs in order to prevent short full range of production costs and non- apply the same factory overhead circuit problems. production costs. The full production markup to prefabricated amorphous In response to interested party cost is a combination of direct labor, cores as to other cores built in-house. feedback, DOE applied an incremental direct materials, and overhead. The This approach is consistent with the increase in core assembly time to overhead contributing to full production suggestion of the manufacturers, and amorphous designs in the liquid- cost includes indirect labor, indirect DOE notes that factory overhead for a immersed design line 5 (1500 kVA). material, maintenance, depreciation, given design applies to many items This additional core assembly time of 10 taxes, and insurance related to company aside from the core production. hours is consistent with DOE’s assets. Non-production cost includes the Furthermore, since DOE already treatment of amorphous designs in cost of selling, general and accounts for decreased labor hours in its large, dry-type design lines. However, administrative items (market research, designs using prefabricated amorphous DOE did not account for additional advertising, sales representatives, and cores, but also considers an increased hardware costs for bracing in the liquid- logistics), research and development core price based on a prefabricated core immersed designs using amorphous (R&D), interest payments, warranty and rather than the raw amorphous material, cores. This is because DOE already risk provisions, shipping, and profit it already accounts for the tradeoffs accounts for bracing costs for all of its factor. Because profit factor is included associated with developing the core in- liquid-immersed designs, which use in the non-production cost, the sum of house versus out-sourced. wound cores, in its analysis. DOE production and non-production costs is During negotiations, DOE learned determined that it adequately accounted an estimate of the manufacturer’s selling from both manufacturers of transformers for these bracing costs in the smaller price. DOE utilized various markups to and manufacturers of transformer cores kVA sizes using amorphous designs, arrive at the total cost for each and thus only made the change to the that mitering and, to a greater extent, ≥ component of the distribution step-lap mitering result in a per-pound large ( 1500 kVA) design lines. DOE did transformer. These markups are cost of finished cores higher than the not model varying incremental cost outlined in greater detail in chapter 5 of per-pound cost of butt-lapped units increases starting with zero for large the TSD. built to the same specifications. (ONYX, amorphous designs, as the Northwest DOE interviewed manufacturers of Pub. Mtg. Tr., No. 30 at p. 43) In view Energy Efficiency Alliance (NEEA) and distribution transformers and related of the manufacturer comments, DOE Northwest Power and Conservation Council (NPCC) suggested, noting that products to learn about markups, among understands that butt-lapping is other topics, and observed a number of the impact of these incremental costs common at baseline efficiencies in very different practices. In absence of a are often very minor for large, expensive today’s low-voltage market. consensus, DOE attempted to adapt transformer designs. (NEEA, No. 11 at p. manufacturer feedback to inform its In response, DOE opted to increase 7) Following discussion with Federal current modeling methodology while mitering costs for both low- and Pacific and other manufacturers of acknowledging that it may not reflect medium-voltage dry-type designs. In the medium- and low-voltage transformers, the exact methodology of many medium-voltage case, DOE incorporated DOE explored its estimates of labor manufacturers. DOE feels that it is a processing cost of 10 cents per core hours and increased those relating to necessary to model markups, however, pound for step-lap mitering. In the low- core assembly for design lines 6–13B. since there are costs other than material voltage case, DOE incorporated a Details on the specific values of the and labor that affect final manufacturer processing cost of 10 cents per core adjustments can be found in chapter 5 selling price. The following sections pound for ordinary mitering and 20 of the TSD. describe various facets of DOE’s cents per core pound for step-lap c. Shipping Costs markups for distribution transformers. mitering. DOE used different per pound adders for step-lap mitering for During its interviews with a. Factory Overhead medium-voltage and low-voltage units manufacturers in the preliminary DOE uses a factory overhead markup because the base case design option for analysis, DOE was informed that to account for all indirect costs each is different. For low-voltage units, manufacturers often pay shipping associated with production, indirect DOE modeled butt-lapped designs at the (freight) costs to the customer. materials and energy use (e.g., annealing baseline efficiency level whereas Manufacturers indicated that they furnaces), taxes, and insurance. In the ordinary mitering was modeled at the absorb the cost of shipping the units to preliminary analysis, DOE derived the baseline for medium-voltage. Therefore, the customer and that they include cost for factory overhead by applying a using a step-lap mitered core represents these costs in their total cost structure 12.5 percent markup to direct material a more significant change in technology when calculating profit markups. As production costs. for low-voltage dry-type transformers such, manufacturers apply a profit In the preliminary analysis, DOE than for medium-voltage transformers, markup to their shipping costs just like applied the same factory overhead necessitating higher markup. any other cost of their production markup to its prefabricated amorphous b. Labor Costs process. Manufacturers indicated that cores as it did to its other design options these costs typically amount to where the manufacturer was assumed to In the preliminary analysis, DOE anywhere from four to eight percent of produce the core. Since the factory accounted for additional labor and revenue. overhead markup accounts for indirect material costs for large (≥1500 kVA), In the 2007 final rule, DOE accounted production costs that are not easily tied dry-type designs using amorphous for shipping costs exclusively in the to a particular design, it was applied metal. The additional labor costs LCC analysis. These costs were paid by consistently across all design types. accounted for special handling the customer, and thus did not include DOE did not find that there was considerations, since the amorphous a markup from the manufacturer based sufficient substantiation to conclude material is very thin and can be difficult on its profit factor. In the preliminary that manufacturers would apply a to work with in such a large core. They analysis, DOE included shipping costs reduced overhead markup for a design also accounted for extra bracing that is in the manufacturer’s cost structure, with a prefabricated core. necessary for large, wound core, dry- which is then marked up by a profit

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23369

factor. These shipping costs account for 7. Baseline Efficiency and Efficiency representative units where the delivering the units to the customer, Levels harmonized per-phase efficiency value who may then bear additional shipping DOE analyzed designs over a range of would have been unachievable for one costs to deliver the units to the final efficiency values for each representative of the representative units. end-use location. As such, DOE unit. Within the efficiency range, DOE Although DOE’s current test accounts for the first leg of shipping developed designs that approximate a procedure specifies a load value at costs in the engineering analysis and continuous function of efficiency. which to test transformers, DOE then any subsequent shipping costs in However, DOE only analyzes recognizes that different consumers see the LCC analysis. The shipping cost was incremental impacts of increased real-world loadings that may be higher estimated to be $0.22 per pound of the efficiency by comparing discrete or lower. In those cases, consumers may transformer’s total weight. DOE derived efficiency benchmarks to a baseline choose a transformer offering a lower the $0.22 per pound by relying on the efficiency level. The baseline efficiency LCC even when faced with a higher first shipping costs developed in its 2007 level evaluated for each representative cost. If DOE’s cost/efficiency design final rule, when DOE collected a sample unit is the existing energy conservation cloud were redrawn to reflect loadings of shipping quotations for transporting standard level of efficiency for other than those specified in the test transformers. In that rulemaking, DOE distribution transformers established procedure, different designs would estimated shipping costs as $0.20 per either in DOE’s 2007 final rule for migrate to the optimum frontier of the pound based on an average shipping medium-voltage transformers or by cloud. Additionally, although DOE’s distance of 1,000 miles. For the EPACT 2005 for low-voltage engineering analysis reflects a range of preliminary analysis, DOE updated the transformers. The incrementally higher transformers costs for a given EL, the cost to $0.22 per pound based on the efficiency benchmarks are referred to as LCC analysis only selects transformer price index for freight shipping between designs near the lowest cost point. 2007 and 2010. Additional detail on ‘‘efficiency levels’’ (ELs) and, along with these shipping costs can be found in MSP values, characterize the cost- 8. Scaling Methodology efficiency relationship above the chapter 5 and chapter 8 of the TSD. a. kVA Scaling For the NOPR, DOE revised its baseline. shipping cost estimate to account for the For today’s rule, DOE considered For today’s rule, DOE performed a rising cost of diesel fuel. DOE adjusted several criteria when setting ELs. First, detailed analysis on each representative its previous shipping cost of $0.20 (in DOE harmonized the efficiency values unit and then extrapolated the results of 2006 dollars) from the 2007 final rule to across single-phase transformers and the its analysis from the unit studied to the a 2011 cost based on the producer price per-phase kVA equivalent three-phase other kVA ratings within that same index for No. 2 diesel fuel. This yielded transformers. For example, a 50 kVA engineering design line. DOE performed a shipping cost of $0.28 per pound. DOE single-phase transformer would have this extrapolation to develop inputs to also retained its shipping cost the same efficiency requirement as a 150 the national impacts analysis. The calculation based on the weight of the kVA three-phase transformer. This technique it used to extrapolate the transformer to differentiate the shipping approach is consistent with DOE’s findings of the representative unit to the costs between lighter and heavier, methodology from the 2007 final rule other kVA ratings within a design line typically more efficient, designs. and from the preliminary analysis of is referred to as ‘‘the 0.75 scaling rule.’’ In the preliminary analysis, DOE this rulemaking. Therefore, DOE This rule states that, for similarly applied a non-production markup to all selected equivalent ELs for several of designed transformers, costs of cost components, including shipping the representative units that have construction and losses scale with the costs, to derive the MSP. DOE based this equivalent per-phase kVA ratings. ratio of their kVA ratings raised to the cost treatment on the assumption that Second, DOE selected equally spaced 0.75 power. The relationship is valid manufacturers would mark up the ELs by dividing the entire efficiency where the optimum efficiency loading shipping costs when calculating their range into five to seven evenly spaced points of the two transformers being final selling price. The resulting increments. The number of increments scaled are the same. DOE used the same shipping costs were, as stated, depended on the size of the efficiency methodology to scale its findings during approximately four to eight percent of range. This allowed DOE to examine the 2007 final rule on distribution total MSP. impacts based on an appropriate transformers. Based on comments received and resolution of efficiency for each Because it is not practical to directly DOE’s additional research into the representative unit. analyze every combination of design treatment of shipping costs through Finally, DOE adjusted the position of options and kVAs under the manufacturer interviews, DOE decided some of the equally spaced ELs and rulemaking’s scope of coverage, DOE to retain the shipping costs in its examined additional ELs. These minor selected a smaller number of units it calculation of MSP, but not to apply any adjustments to the equally spaced ELs believed to be representative of the markups to the shipping cost allowed DOE to consider important larger scope. Many of the current design component. Therefore, shipping costs efficiency values based on the results of lines use representative units retained were added separately into the MSP the software designs. For example, DOE from the 2007 final rule with minor calculation, but not included in the cost adjusted some ELs slightly up or down modifications. To generate efficiency basis for the non-production markup. in efficiency to consider the maximum values for kVA values not directly The resulting shipping costs were still efficiency potential of non-amorphous analyzed, DOE employed a scaling in line with the estimate of four to eight design options. Other ELs were added to methodology based on physical percent of MSP for all the dry-type consider important benchmark principles (overviewed in Appendix 5B) design lines. For the liquid-immersed efficiencies, such as the NEMA and widely used by industry in various design lines, the shipping costs ranged Premium® efficiency levels for LVDT forms. DOE’s scaling methodology is an from six to twelve percent of MSP and distribution transformers. Last, DOE approximation and, as with any averaged about nine percent of MSP. considered additional ELs to approximation, can suffer in accuracy as This practice was retained for the final characterize the maximum- it is extended further from its reference rule. technologically feasible design for value.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23370 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Additionally, DOE modified the way Berman Economics, No. 150 at p. 2; and that any standards should be it splices extrapolations from each NRECA, No. 2; Pepco, No. 145 at pp. 1– derived from independent analysis of representative unit to cover equipment 2; Advocates, No. 186 at pp. 9–10) DOE each. (ABB, No. 158 at p. 7; APPA, No. classes at large. Previously, DOE thanks the commenters for making that 191 at p. 7; Cooper, No. 165 at p. 3; extrapolated curves from individual clear, and has revised its presentation of NEMA, No. 170 at p. 10; NEMA, No. 170 data points and blended them near the final rule economic results accordingly. at p. 3; PE, No. 192 at p. 6; Prolec-GE, boundaries to set standards. Currently, For today’s rule, DOE finds the NOPR No. 146 at p. 85; Prolec-GE, No. 177 at DOE fits a single curve through all methodology well-supported by a large p. 9; Schneider, No. 180 at p. 5) available data points in a space and number of stakeholders and continues In today’s rule, DOE follows the believes that the resulting curve is to employ it. DOE believes transformers convention of the NOPR and does not smoother and offers a more robust are approximately well-modeled as impose the constraint that single- and scaling behavior over the covered kVA power-law devices. In other words, three-phase efficiencies must be linked. range. attributes of the devices should grow in DOE notes, however, that standards DOE received a number of comments proportion to the size raised to a were harmonized across phase counts in on the matter of scaling across kVA constant power. The ideal, the case of single-phase MVDT ranges. Cooper Power Systems mathematically derived value of that equipment classes, where market supported the use of the .75 exponent, exponent is .75, but in practice volume is minimal and direct analysis though noted that it may not hold for transformers may not be constructed of such units a lower priority. higher kVA values. (Cooper, No. 165 at ideally and other effects may drive the p. 4) MGLW commented that for single- exponent above or below .75. DOE 9. Material Availability phase pad-mounted distribution believes allowing the exponent to float Throughout this rulemaking, DOE transformers the exponent may from .75 where justified may help to received several comments expressing approach .75, but that it was not account for certain size-dependent concern over the availability of accurate for single-phase pole-mounted effects not always well captured by the materials, including core steel and distribution transformers, whose curve theoretical .75 result. conductors, needed to build energy would be of polynomial form. (MLGW, b. Phase Count Scaling efficient distribution transformers. No. 127 at p. 1) PEMCO proposed to use These issues pertain to a global scarcity a curve in logarithmic space, which In the 2007 final rule, DOE covered of materials as well as issues of would create an even more complex both single- and three-phase materials access for small behavior in linear coordinates. (PEMCO, transformers and harmonized standards manufacturers. No. 183 at p. 2) Progress Energy across phases. More specifically, DOE DOE is aware that many core steels, commented that DOE should avoid set standards such that a single-phase including amorphous steels, have scaling altogether, and instead use data transformer of a certain type (e.g., liquid constraints on their supply and presents from vendors. (PE, No. 192 at p. 6) ABB, immersed) and kVA rating (e.g., 100) an analysis of global steel supply in TSD APPA, BG&E, EEI, Howard, NEMA, would be required to meet the same appendix 3–A. NRECA, Power Partners, Prolec-GE, standard as would a three-phase Commonwealth Edison, and Schneider transformer of the same type and three 10. Primary Voltage Sensitivities all commented that DOE’s general times the kVA rating (in this example, DOE understands that primary voltage approach was sound, but that the 300 kVA liquid immersed). In certain and the accompanying BIL may accuracy of the procedure may be cases, DOE believes there is sound increasingly affect efficiency of liquid- improved with more data-validated technological basis for doing so. For immersed transformers as standards modeling. (ABB, No. 158 at p. 7; APPA, example, three-phase liquid-immersed rise. DOE may conduct primary voltage No. 191 at pp. 7–8; APPA, No. 237 at p. distribution transformers mounted on sensitivity analysis in order to better 3; BG&E, No. 182 at p. 5; EEI, No. 185 poles are frequently constructed using quantify the effects of BIL and primary at p. 9; HI, No. 151 at p. 12; NEMA, No. three single-phase cores inside of a voltage on efficiency, and may use such 170 at p. 10; NRECA, No. 172 at p. 6; single housing. Although miscellaneous information to consider establishing Power Partners, No. 155 at p. 3; Prolec- losses may vary slightly (e.g., bus losses) equipment classes by BIL rating for GE, No. 146 at pp. 82–83; Prolec-GE, No. across three- and single-phase pole- liquid-immersed distribution 177 at p. 10; ComEd, No. 184 at p. 10; mounted units, one would expect the transformers. Schneider, No. 180 at p. 5) core-and-coil efficiencies to be identical In the case of equipment class 1, for a similar construction choices such 11. Impedance which addresses single-phase liquid- as steel grade, winding grade, core In the engineering analysis, DOE only immersed distribution transformers, geometry, etc. considered transformer designs with some stakeholders expressed confusion In many other cases, however, there impedances within the normal on the scaling. Because this equipment may not be a strong technical basis for impedance ranges specified in Table 1 class contains three design lines and strongly coupling single- and three- and Table 2 of 10 CFR 431.192. These because DOE is deriving a standard phase standards. Several parties impedances represent the typical range using a straight line in logarithmic commented on the matter in response to of impedance that is used for a given space, it is possible that the three ELs, the NOPR. liquid-immersed or dry-type transformer one from each design line) may not fall Howard Industries and Power based on its kVA rating and whether it exactly in-line. In that case, as occurred Partners both supported linking single- is single-phase or three-phase. for equipment class one with TSL 1, and three-phase standards, as was done Several stakeholders expressed DOE best fit a straight line through three in the 2007 final rule. (HI, No. 151 at p. concern over efficiency standards that points. APPA, EEI, Berman Economics, 12; Power Partners, No. 155 at p. 3) could potentially cause changes in NRECA, Pepco, and the Advocates both ABB, APPA, Cooper, NEMA, Progress impedance. Progress Energy, BG&E, commented that because DOE did not Energy, Prolec-GE, and Schneider, NEMA and ComEd all commented that propose a standard that aligned with however, argued that construction the increased efficiency levels in the each of these ELs, the economic results differences resulted in there being no 2010 standards resulted in changes in were not exact. (APPA, No. 191 at p. 3; logical reason to link the two standards, impedance values. (PE, No. 192 at p. 11;

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23371

BG&E, No. 182 at p.10; ComEd, No. 184 adjusted as easily and will result in an limit for size or weight beyond the fixed at p. 15; NEMA, No. 170 at pp. 18–19) increased X/R. (ABB, No. 158 at p. 10) height measurements it was already ‘‘Manufacturers are already having ConEd also pointed out that higher considering for the rectangular tank challenges with transformer designs that efficiencies may lead to higher inrush sizes. DOE understands that larger meet the efficiencies required in the currents, which may require installation transformers may require additional Final Rule dated October 12, 2007, the of more robust and costly distribution installation costs such as a new pole minimum impedance requirement of components to be installed which change-out or vault expansion. To the 5.3% and weight limit of 3,600 lbs would increase costs. (ConEd, No. 236 extent that it had data on these * * * for select ComEd designs * * * at p. 4) additional costs, DOE accounted for only one of five suppliers from which On the other hand, various them in its LCC analysis, as described ComEd is currently purchasing can meet stakeholders claimed that there was no in section IV.F. However, DOE did not the efficiency, impedance and weight direct relationship between impedance choose to limit its design specifications requirements.’’ (ComEd, No. 184 at p. and efficiency levels. EEI commented based on a specific size or weight 15) Howard Industries concurred that that they would be concerned if higher constraint. changes in efficiency standards may standards would make it more difficult Nonetheless, DOE notes that the also change impedance, commenting for manufacturers to meet the necessary majority of its designs are within weight that for SPS type designs higher requirements for impedance, inrush constraints suggested by stakeholders. efficiency levels typically bring lower current and X/R ratio, but noted that In design line 2, over 95 percent of impedance which leads to short circuit they are not currently aware of any DOE’s designs are below 650 pounds. In let-through current. (HI, No. 151 at p. existing direct relationship. (EEI, No. design line 3, over 62 percent of DOE’s 12) BG&E also noted that if higher 185 at p. 20) Prolec-GE agreed, noting designs are below 3,600 pounds, and efficiency standards drive impedance that they did not see any issues with when only the designs with the lowest ranges outside of the IEEE required inrush, X/R ratios, or impedance at the first cost are considered, nearly 74 range, utilities will be forced to change levels proposed in the NOPR. (Prolec- percent of the designs are less than out a whole block of transformers, even GE, No. 177 at p. 16) 3,600 pounds. The majority of the if only one is directly affected, to ensure For today’s rule, DOE continued to designs that exceed 3,600 pounds are at matching impedances and a safe, consider only designs within the normal the maximum efficiency levels using an reliable installation. (BG&E, No. 182 at impedance ranges used in the amorphous core steel. p. 10) NRECA and APPA second this preliminary analysis. DOE believes that DOE worked with manufacturers to point, noting that transformers must this demonstrates the possibility of explore the magnitude of the effect of meet IEEE standards concerning manufacturing a variety of impedances longer buses and leads and found it to impedance values while simultaneously at efficiencies well in excess of those be small relative to the gap between meeting or exceeding the DOE adopted in today’s rule. While certain efficiency levels. Nonetheless, DOE minimum efficiency standards. applications may have specifications made small upward adjustments to bus (NRECA, No. 172 at p. 11; APPA, No. that are more stringent than these and lead losses of all medium-voltage 191 at p. 14) Schneider Electric pointed normal impedance ranges, DOE believes dry-type design lines. Details on the out that changes in impedance levels that the majority of applications are able specific values of the adjustments made impact the voltage drop of the system to tolerate impedances within these can be found in chapter 5 of the TSD. ranges. Since DOE considers a wide and potential increased impedance due D. Markups Analysis to higher efficiency designs could array of designs within the normal impact overall energy conservation; the impedance ranges, it adequately The markups analysis develops impact in line losses from the increased accounts for the cost considerations of appropriate markups in the distribution impedance could offset any benefits higher and lower impedance tolerances. chain to convert the estimates of obtained in the transformer. (Schneider, Furthermore, DOE believes the manufacturer selling price derived in No. 180 at p. 11) ABB expressed standards under consideration in the the engineering analysis to customer concern that the X/R ratio could rise NOPR to be of modest enough increase prices. In the preliminary analysis, DOE with increasing standards which could to minimize serious concern with determined the distribution channels for result in higher losses in the respect to impedance and X/R ratio. distribution transformers, their shares of the market, and the markups associated distribution system as a whole. It is 12. Size and Weight ABB’s opinion that if there is an with the main parties in the distribution applicable industry standard for a In the preliminary analysis, DOE did chain, distributors, contractors and specific transformer then the X cannot not constrain the weight of its designs. electric utilities. be adjusted as easily and will result in DOE accounted for the full weight of Based on comments from interested an increased X/R. (ABB, No. 158 at p. each design generated by the parties, for the NOPR DOE added a new 10) Furthermore, it noted that as optimization software based on its distribution channel to represent the efficiency increases, resistance materials and hardware. Similarly, DOE direct sale of transformers to utilities, decreases, causing a higher X/R ratio. let several dimensional measurements which account for approximately 80 They commented that if there is no of its designs vary based on the optimal percent of liquid-immersed transformer applicable industry standard on a core/coil dimensions plus space factors. shipments. Howard Industries and specific transformer for impedance However, DOE did hold certain tank Prolec-GE agreed with DOE’s estimate values, the X could be offset to correlate and enclosure dimensions constant for that 80 percent of transformers are sold with the change in R, however, this its design lines. Most notably, DOE by manufacturers to utilities. (HI, No. would lead to an increase in the percent fixed the height dimension on all of its 151 at p. 8; Prolec-GE, No. 177 at p. 13) [voltage] regulation 30 and higher losses rectangular tank transformers. For each For the final rule, DOE retained this in the transformer. If there is an design that had variable dimensions, distribution channel. industry standard, the X cannot be DOE accounted for the additional cost of DOE developed average distributor installing the unit, where applicable. and contractor markups by examining 30 In other words, how well a transformer For today’s engineering analysis, DOE the installation and contractor cost maintains output voltage as load increases. did not restrict its designs based on a estimates provided by RS Means

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23372 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Electrical Cost Data 2011.31 DOE For utilities, the cost of serving the and that they should not be changed. developed separate markups for next increment of load varies as a (PEMCO, No.183 at p. 2) baseline equipment (baseline markups) function of the current load on the As previously mentioned, DOE was and for the incremental cost of more- system. To correctly estimate the cost able to validate its load models for efficient equipment (incremental impacts of improved transformer single-phase liquid-immersed markups). Incremental markups are efficiency, it is therefore important to transformers using submitted data, so it coefficients that relate the change in the capture the correlation between electric retained the loading used in the NOPR installation cost due to the increase system loads and operating costs and for the final rule. For three-phase liquid- equipment weight of some higher- between individual transformer loads immersed transformers, DOE believes efficiency models. and system loads. For this reason, DOE that the comment from Cooper does not Chapter 6 of the final rule TSD estimated hourly loads on individual provide an adequate basis for changing provides additional detail on the liquid-immersed transformers using a the loading range that was viewed as markups analysis. statistical model that simulates two reasonable by the parties to the E. Energy Use Analysis relationships: (1) The relationship negotiation and the loading values between system load and system The energy use analysis produced provided by utilities comport with marginal price; and (2) the relationship DOE’s estimated loadings. energy use estimates and end-use load between the transformer load and shapes for distribution transformers. system load. Both are estimated at a Dry-type distribution transformers are The energy use estimates enable regional level. primarily installed on buildings and evaluation of energy savings from the Transformer loading is an important owned by the building owner/operator. operation of distribution transformer factor in determining which types of Commercial and industrial (C&I) utility equipment at various efficiency levels, transformer designs will deliver a customers are typically billed monthly, while the end-use load characterization specified efficiency, and for calculating with the bill based on both electricity allows evaluation of the impact on transformer losses. For the NOPR, DOE consumption and demand. Hence, the monthly and peak demand for estimated a range of loading for different value of improved transformer electricity. types of transformers based on analysis efficiency depends on both the load The energy used by distribution done for the 2007 final rule. During the impacts on the customer’s electricity transformers is characterized by two negotiations the load distributions were consumption and demand and the types of losses. The first are no-load presented and found to be reasonable by customer’s marginal prices. losses, which are also known as core the parties. In addition, data submitted The customer sample of dry-type losses. No-load losses are roughly by Moon Lake Electric during the distribution transformer owners was constant and exist whenever the negotiations were used to validate the taken from the EIA Commercial transformer is energized (i.e., connected load models for single-phase liquid- Buildings Energy Consumption Survey to live power lines). The second are load immersed distribution transformers. (CBECS) databases.32 Survey data for losses, which are also known as For the NOPR, higher-capacity three- the years 1992 and 1995 were used, as resistance or I2R losses. Load losses vary phase liquid-immersed and medium- these are the only years for which with the square of the load being served voltage dry-type transformers were monthly customer electricity by the transformer. loaded at 20 to 66 percent, and smaller consumption (kWh) and peak demand Because the application of capacity single-phase medium-voltage (kW) are provided. To account for distribution transformers varies liquid-immersed transformers were changes in the distribution of building significantly by type of transformer loaded at 20 to 60 percent. Low-voltage floor space by building type and size, (liquid immersed or dry type) and dry-type transformers were loaded at 3 the weights defined in the 1992 and ownership (electric utilities own to 45 (mean of 25) percent. 1995 building samples were rescaled to approximately 95 percent of liquid- Cooper stated that the average loading reflect the distribution in the most immersed transformers; commercial/ used for liquid-filled transformers was recent (2003) CBECS survey. CBECS industrial entities use mainly dry type), underestimated, and historical utility covers primarily commercial buildings, DOE performed two separate end-use evaluation factors suggest 50 percent but a significant fraction of transformers load analyses to evaluate distribution loading for single-phase liquid- are shipped to industrial building transformer efficiency. The analysis for immersed transformers and closer to 60 owners. To account for this in the liquid-immersed transformers assumes percent for three-phase liquid-immersed sample, data from the 2006 that these are owned by utilities and transformers. (Cooper, No. 165 at p. 5) Manufacturing Energy Consumption uses hourly load and price data to EEI stated that higher capacity three- Survey (MECS) 33 were used to estimate estimate the energy, peak demand, and phase distribution transformers are the amount of floor space of buildings cost impacts of improved efficiency. For likely to be serving large industrial that might use the type of transformer dry-type transformers, the analysis facilities with higher loading factors. covered by the rulemaking. The assumes that these are owned by (EEI, No. 185 at p. 14) Utilities statistical weights assigned to the commercial and industrial customers, so stakeholders responded with a wide building sample were rescaled to reflect the energy and cost savings estimates range of average loading values that they this additional floor space. Only the are based on monthly building-level have on their distribution transformers: weighting of large buildings were demand and energy consumption data ComEd stated that its aggregated load rescaled. and marginal electricity prices. In both factors range from approximately 40 to 70 percent depending on the customer cases, the energy and cost savings are 32 1992 Commercial Building Energy estimated for individual transformers class. (ComEd, No. 184 at p. 2) MLGW Consumption and Expenditures Survey (CBECS); and aggregated to the national level stated that its average aggregated load 1995; U.S. Department of Energy—Energy using weights derived from either utility factor was approximately 17 percent Information Administration; http:// across its distribution system. (MLGW, www.eia.doe.gov/emeu/cbecs/microdat.html. or commercial/industrial building data. 33 Manufacturing Energy Consumption Survey No. 133 at p. 1) PEPCO agreed that the (MECS); 2006 U.S. Department of Energy—Energy 31 RSMeans Electrical Cost Data 2011; 2010; J.H. average aggregate load factors presented Information Administration; http://www.eia.gov/ Chiang, C. Babbitt. in the NOPR were a good compromise emeu/mecs/contents.html.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23373

F. Life-Cycle Cost and Payback Period (normally higher) due to a more equipment affect the calculation of the Analysis stringent standard by the change in present value of annual operating cost DOE conducts LCC and PBP analyses average annual operating cost (normally savings from a proposed standard. Table to evaluate the economic impacts on lower) that results from the standard. IV.16 below summarizes the major individual customers of potential energy For any given efficiency level, DOE inputs to the LCC and PBP analysis, and conservation standards for distribution measures the PBP and the change in whether those inputs were revised for transformers.34 The LCC is the total LCC relative to an estimate of the base- the final rule. customer expense over the life of a type case efficiency levels. The base-case DOE calculated the LCC and PBP for of equipment, consisting of purchase estimate reflects the market in the a representative sample (a distribution) and installation costs plus operating absence of amended energy of individual transformers. In this costs (expenses for energy use, conservation standards, including the manner, DOE’s analysis explicitly maintenance and repair). To compute market for equipment that exceeds the recognized that there is both variability the operating costs, DOE discounts current energy conservation standards. and uncertainty in its inputs. DOE used future operating costs to the time of Equipment price, installation cost, Monte Carlo simulations to model the purchase and sums them over the and baseline and standard affect the distributions of inputs. The Monte Carlo lifetime of the equipment. The PBP is installed cost of the equipment. process statistically captures input the estimated amount of time (in years) Transformer loading, load growth, variability and distribution without it takes customers to recover the power factor, annual energy use and testing all possible input combinations. increased purchase cost (including demand, electricity costs, electricity Therefore, while some atypical installation) of a more efficient type of price trends, and maintenance costs situations may not be captured in the equipment through lower operating affect the operating cost. The analysis, DOE believes the analysis costs. DOE calculates the PBP by compliance date of the standard, the captures an adequate range of situations dividing the change in purchase cost discount rate, and the lifetime of in which transformers operate.

TABLE IV.6—KEY INPUTS FOR THE LCC AND PBP ANALYSIS

Inputs NOPR description Changes for the final rule

Affecting Installed Costs

Equipment price ...... Derived by multiplying manufacturer selling price (from the engineer- No change. ing analysis) by distributor markup and contractor markup plus sales tax for dry-type transformers. For liquid-immersed transformers, DOE used manufacturer selling price plus small distributor markup plus sales tax. Shipping costs were included for both types of transformers. Installation cost ...... Includes a weight-specific component derived from RS Means Elec- Added pole replacement cost for trical Cost Data 2011 and a markup to cover installation labor, pole design line 3. replacement costs for design line 2 and equipment wear and tear. Baseline and standard design se- The selection of baseline and standard-compliant transformers de- No change. lection. pends on customer behavior. The fraction of purchases evaluated was 10% for liquid-immersed transformers, 2% for low-voltage dry- type and 2% for medium-voltage dry-type transformers.

Affecting Operating Costs

Transformer loading ...... Modeled loading as a function of transformer capacity and utility cus- No change. tomer density. Load growth ...... 0.5% per year for liquid-immersed and 0% per year for dry-type No change. transformers. Power factor ...... Assumed to be unity ...... No change. Annual energy use and demand ..... Derived from a statistical hourly load simulation for liquid-immersed No change. transformers, and estimated from the 1992 and 1995 Commercial Building Energy Consumption Survey data for dry-type transformers using factors derived from hourly load data. Load losses varied as the square of the load and were equal to rated load losses at 100% loading. Electricity costs ...... Derived from tariff-based and hourly based electricity prices. Capacity No change. costs provided extra value for reducing losses at peak. Electricity price trend ...... Obtained from Annual Energy Outlook 2011 (AEO2011) ...... Updated to AEO 2012. Price trends for liquid-immersed transformers are based on a mix of generating fuel prices. Maintenance cost ...... Annual maintenance cost did not vary as a function of efficiency ...... No change. Compliance date ...... Assumed to be 2016 ...... No change. Discount rates ...... Mean real discount rates ranged from 3.7% for owners of liquid-im- No change. mersed transformers to 4.6% for dry-type transformer owners. Lifetime ...... Distribution of lifetimes, with mean lifetime for both liquid and dry-type No change. transformers assumed to be 32 years.

34 Customers refer to electric utilities in the case and building owners in the case of dry-type of liquid-immersed transformers, and to utilities transformers.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23374 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

The following sections contain brief manufacturing from 1967 to 2010. These pounds heavier for a design line 3 discussions of comments on the inputs data show a long-term decline from transformer. While EEI stated that it and key assumptions of DOE’s LCC and 1975 to 2003, and then a steep increase may take less than a 1,418 pound PBP analysis and explain how DOE took since then. DOE believes that there is increase for a design line 3 distribution these comments into consideration. considerable uncertainty as to whether transformer to require a pole change out the recent trend has peaked, and would (EEI, No. 229 at p. 2), neither EEI nor its 1. Modeling Transformer Purchase be followed by a return to the previous members provided comments to support Decision long-term declining trend, or whether a different value. Therefore, DOE The LCC spreadsheet uses a purchase- the recent trend represents the believes there is not a compelling reason decision model that specifies which of beginning of a long-term rising trend to change from the approach used in the the hundreds of designs in the due to global demand for distribution NOPR. Utility poles are primarily made engineering database are likely to be transformers and rising commodity of wood. Both ANSI 36 and the National selected by transformer purchasers to costs for key transformer components. Electrical Safety Code (NESC) 37 provide meet a given efficiency level. The Given the uncertainty, DOE chose to use guidelines on how to estimate the engineering analysis yielded a cost- constant prices (2010 levels) for both its strength of a pole based on the tree efficiency relationship in the form of LCC and PBP analysis and the NIA. For species, pole circumference and other manufacturer selling prices, no-load the NIA, DOE also analyzed the factors. Natural variability in wood losses, and load losses for a wide range sensitivity of results to alternative growth leads to a high degree of of realistic transformer designs. This set transformer price forecasts. variability in strength values across a of data provides the LCC model with a DOE did not receive comments on the given pole class. Thus, NESC also distribution of transformer design most appropriate trend to use for real provides guidelines on reliability, choices. transformer prices, and it retained the which result in an acceptable DOE used an approach that focuses on approach used for the NOPR for today’s probability that a given pole will exceed the selection criteria customers are final rule. the minimal required design strength. Because poles are sized to cope with known to use when purchasing b. Installation Costs transformers. Those criteria include first large wind stresses and potential costs, as well as what is known in the Higher efficiency distribution accumulation of snow and ice, this transformer industry as total owning transformers tend to be larger and results in ‘‘over-sizing’’ of the pole cost (TOC). The TOC method combines heavier than less efficient designs. The relative to the load by a factor of two to first costs with the cost of losses. degree of weight increase depends on four. Accounting for this ‘‘over-sizing,’’ Purchasers of distribution transformers, how the design is modified to improve DOE estimated that the total fraction of especially in the utility sector, have long efficiency. In the NOPR analysis, DOE pole replacements would not exceed 25 used the TOC method to determine estimated the increased cost of percent of the total population. Chapter which transformers to purchase. installing larger, heavier transformers 6 of the final rule TSD explains the The utility industry developed TOC based on estimates of labor cost by approach used to arrive at this figure. evaluation as an easy-to-use tool to transformer capacity from Electrical HI commented that there very likely reflect the unique financial environment Cost Data 2011 Book by RSMeans.35 will be a sizeable number of situations faced by each transformer purchaser. To DOE retained the same approach for the where a new pole may be required, but express variation in such factors as the final rule. DOE’s analysis of increase in it noted that DOE’s assumption that up cost of electric energy, and capacity and installation labor costs as transformer to 25 percent of the total pole-mounted financing costs, the utility industry weight increases is described in detail transformer population may require developed a range of evaluation factors, in chapter 6 of the final rule TSD. pole replacements is probably a called A and B values, to use in their For pole-mounted transformers, reasonable figure. (HI, No. 151 at p. 8) calculations. A and B are the equivalent represented by design lines (DL) 2 and EEI, APPA and NRECA suggested that first costs of the no-load and load losses 3, the increased weight may lead to the pole change-out fraction be (in $/watt), respectively. situations where the pole needs to be increased to as high as 50 percent to 75 DOE used evaluation rates as follows: replaced to support the additional percent of units located in cities with 10 percent of liquid-immersed weight of the transformer. This in turn populations of at least 25,000. (EEI, No. transformers were evaluated, 2 percent leads to an increase in the installation 185 at p. 14; NRECA, No. 172 at p. 10; APPA, No. 191 at p. 12) EEI, NRECA, of low-voltage dry-type transformers cost. To account for this effect in the and APPA did not provide evidence or were evaluated, and 2 percent of analysis, three steps are needed: rationale to support their suggestion of medium-voltage dry-type transformers The first step is to determine whether a higher change-out fraction for urban were evaluated. The transformer the pole needs to be changed. This utilities in their comments. Therefore, selection approach is discussed in detail depends on the weight of the existing DOE believes there is not a compelling in chapter 8 of the final rule TSD. transformer compared to the weight of the transformer under a proposed reason to change from the approach 2. Inputs Affecting Installed Cost efficiency level, and on assumptions used in the NOPR. The second step is to determine the a. Equipment Costs about the load-bearing capacity of the pole. In the NOPR analysis, it was cost of a pole change-out. In the NOPR In the LCC and PBP analysis, the assumed that a pole change-out will phase, specific examples of pole change- equipment costs faced by distribution only be necessary if the weight increase out costs were submitted by the sub- transformer purchasers are derived from is larger than 15 percent of the weight committee. These examples were the MSPs estimated in the engineering of the baseline unit, which DOE used to consistent with data taken from the analysis and the overall markups represent the existing transformer, and estimated in the markups analysis. more than 150 pounds heavier for a 36 American National Standards Institute (ANSI), To forecast a price trend for the design line 2 transformer, and 1,418 Wood Poles—Specifications and Dimension, ANSI NOPR, DOE derived an inflation- O5.1.2008, 2008. 37 Institute of Electrical and Electronics Engineers adjusted index of the PPI for electric 35 J.H. Chiang, C. Babbitt ; RSMeans Electrical (IEEE), 2012 National Electrical Safety Code power and specialty transformer Cost Data 2011; 2010. (NESC), IEEE C2–2012, 2012.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23375

RSMeans Building Construction Cost average pole replacement cost was it used for pad-mounted transformers, database.38 Based on this information, $7,100, which includes the cost of the which range from $2,169 for design line for design line 2 with a capacity of 25 new pole along with any replacement 1 (at 50 kVA) to $8,554 for design line kVA, a triangular distribution was used material used during the installation. 5 (at 1500 kVA), encompass the to estimate pole change-out costs, with (BG&E, No. 223 at p. 2) ComEd also situation described by Westar. stated that DOE may have a lower limit at $2,025 and an upper 3. Inputs Affecting Operating Costs limit at $5,999. For design line 3 with underestimated the cost of pole change- a capacity of 500 kVA, DOE used a outs. At ComEd, the average pole a. Transformer Loading similar distribution with a lower limit of replacement cost is in the range of DOE’s assumptions about loading of $5,877 and an upper limit of $13,274 for $4,000–$5,000, which includes the cost different types of transformers are pole replacement, and a distribution of the new pole along with any described in section IV.E. DOE generally with a lower limit of $5,877 and an replacement material and labor. estimated that the loading of larger upper limit of $16,899 for multi-pole (ComEd, No. 184 at p. 13) Progress capacity distribution transformers is (platform) replacement. These costs are Energy stated that it realized average greater than the loading on smaller in addition to the weight-based pole replacement costs of $2,200 during capacity transformers. installation cost described above. 2011, but it noted that during the Utility poles have a finite lifetime so, negotiated meetings, utilities reported b. Load Growth Trends in some cases, pole change-out due to pole replacement costs upwards of The LCC analysis takes into account increased transformer weight should be $12,000. Progress Energy recommended the projected operating costs for counted as an early replacement of the that DOE continue to use the pole distribution transformers many years pole; i.e., it is not correct to attribute the replacement costs that they have been into the future. This projection requires full cost of pole replacement to the using so that the final rule will not be an estimate of how the electrical load on transformer purchase. Equivalently, if a delayed. (Progress Energy, No. 192 at p. transformers will change over time. In pole is changed out when a transformer 9) EEI suggested that DOE increase the the NOPR analysis, for dry-type is replaced, it will have a longer lifetime pole change-out cost estimates to a transformers, DOE assumed no-load relative to the pole it replaces, which range of values (or a weighted average) growth, while for liquid-immersed offsets some of the cost of the pole provided by EEI member companies. transformers DOE used as the default installation. To account for this effect, (EEI, No. 185 at p. 14) scenario a one-percent-per-year load pole installation costs are multiplied by The information that DOE received growth. It applied the load-growth factor a factor n/pole-lifetime, which regarding average pole replacement to each transformer beginning in 2016. approximately represents the value of costs was of limited use because most of To explore the LCC sensitivity to the additional years of life. The the utilities did not provide their variations in load growth, DOE included parameter n is chosen from a flat average pole replacement costs for the in the model the ability to examine distribution between 1 and the pole transformer capacities used in the scenarios with zero percent, one lifetime, which is assumed to be 30 analysis. However, DOE notes that the percent, and two percent load growth. years.39 pole replacement costs mentioned in the DOE did not receive comments DOE received a number of comments above comments fall within the range of regarding its load-growth assumptions, on pole replacement costs. Westar stated costs that DOE used for its pole- and it retained the assumptions mounted design lines (design lines 2 that it costs them approximately $2,330 described above for the final rule and 3). DOE recognizes that there may to replace an existing pole with a 50- analysis. be some cases where the pole foot Class 1 pole for a 100 kVA c. Electricity Costs replacement cost may be outside this distribution transformer, which might range, but these would account for a DOE used estimates of electricity be the new norm for residential areas. It very small fraction of situations. prices and costs to place a value on added that whenever they replace a pole Westar stated that when mounting a transformer losses. For the NOPR, DOE they would lose NESC grandfathering bank of three-phase transformers on a performed two types of analyses. One for that structure and have to redo pole, if the weight increased beyond investigated the nature of hourly everything on the pole to bring it up to 2,000 pounds per position (which transformer loads, their correlation with the current NESC code, instead of wouldn’t be out of the realm of the overall utility system load, and their merely switching out the transformer. possibility for a transformer using correlation with hourly electricity costs This results in additional labor. (Westar, amorphous core steel), they would need and prices. Another estimated the No. 169 at p. 2) BG&E commented that to use a 500kVA pad mount. (Westar, impacts of transformer loads and DOE’s methodology may not reflect the No. 169 at p. 2) DOE recognizes that in resultant losses on monthly electricity true costs of pole change-outs, as pole some situations pole replacement may usage, demand, and electricity bills. replacement costs quoted by industry not be an acceptable option to utilities DOE used the hourly analysis for liquid- experts are either estimates or they when replacing transformers. DOE immersed transformers, which are reflect actual costs from previous years. believes that the range of installation owned predominantly by utilities that In BG&E’s experience, actual costs tend costs that it used for pole replacement, pay costs that vary by the hour. DOE to exceed the estimates by a significant in combination with the weight-based used the monthly analysis for dry-type amount (20 to 60 percent). In 2011, its installation costs, captures the cost of transformers, which typically are owned situations where a pad mount would be by commercial and industrial 38 J.H. Chiang, C. Babbitt; RSMeans Electrical Cost needed. establishments that receive monthly Data 2011; 2010. 39 As the LCC represents the costs associated with Westar commented that a new design electricity bills. purchase of a single transformer, to account for for a pad-mounted transformer could For the hourly price analysis, DOE multiple transformers mounted on a single pole, the require larger fiberglass pads than they used marginal costs of electricity, which pole cost should also be divided by a factor currently use, or they would have to are the costs to utilities for the last representing the average number of transformers per pole. No data is currently available on the fraction start pouring a concrete pad for each kilowatt-hour of electricity produced. of poles that have more than one transformer, so pad mount. (Westar, No. 169 at p. 3) The general structure of the hourly this factor is not included. DOE believes that the installation costs marginal cost equation divides the costs

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23376 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

of electricity to utilities into capacity regions use similar capacity markets or past market behavior, however, the components and energy cost require load serving entities (LSEs) to market revenues will likely be relatively components, which are respectively contract for specified amounts of low over many hours and extremely applied as marginal demand and energy capacity. Examples of operating regions high during a limited number of price charges for the purpose of determining that use capacity markets or require spike hours. Accurate modeling and the value of transformer electrical acquisition of specified levels of forecasting of price spikes is an losses. For each component, DOE capacity include CAISO,44 MISO,45 and extremely difficult task. For the ERCOT estimated the economic value for both ISO New England.46 NRECA region, DOE believes that its capacity no-load losses and load losses. acknowledges the existence of capacity cost approach is an appropriate proxy to Commenting on DOE’s hourly price markets, but implies that the capacity capture the high price spikes that can analysis, NRECA stated that marginal payments can be ignored because their occur in energy-only markets. energy prices recover the system purpose is to reduce price volatility. Many publicly owned utilities (POU) generation capacity costs, and demand (NRECA, No. 156 at p. 5) DOE disagrees are not required to participate in charges are not needed to collect with this position because ISOs have capacity markets or mandated to attain capacity charges. (NRECA, No. 156 at stated that the capacity markets and specified amounts of generation pp. 4–5) It added that use of demand contracts are needed to maintain system capacity. Capacity attainment is at the charges introduces bias towards reliability, not just mitigate price sole discretion of those POU’s governing improved cost-effectiveness of more volatility.47 bodies, but DOE expects that POUs efficient transformers. (NRECA, No. 156 Whether an area has a capacity market would continue to build or contract at p. 7) or capacity requirements, a reduction in with sufficient capacity to provide DOE disagrees with NRECA’s position electricity demand due to more efficient reliable service to their customers. As that demand charges are not needed to transformers would lower the amount of this capacity procurement will impose a collect capacity charges. DOE agrees capacity purchases required by LSEs, cost that is incremental to the utility’s that marginal energy prices in a single which would lower capacity system marginal energy cost, the use of price-clearing auction can provide for procurement costs. DOE’s application of capacity costs is also appropriate for recovery of some amount of generation demand charges captures these lower evaluation of transformer economics for capacity cost, but it is unlikely that an procurement costs. these utilities. energy-only market (one that relies only DOE acknowledges that not all Although DOE believes it is on market incentives for investment) electricity markets have structured appropriate to include demand charges, would provide for full recovery of capacity markets or capacity for the final rule, DOE reviewed its system generation capacity costs.40 Even requirements. The Electric Reliability capacity cost methodology and found with the addition of revenues from an Council of Texas (ERCOT), an energy- that the demand charges used in the ancillary services market, recovery only market without set requirements NOPR analysis were too high. In the would likely still fall below the full for generation capacity procurement, is NOPR, demand charges were based on amount of generation capacity cost for a premised on the energy market and the the full fixed cost of new generation. For new generator. Indeed, recent market ancillary service markets being able to the final rule, the revised demand evaluation reports by the Midwest provide sufficient revenues to attract charges are based on the full cost of new Independent System Operator (ISO) and new market entrants as needed. The generation net of the revenues that the California ISO (CAISO) demonstrate that expectation is that as reserve margins generator could earn from the hourly energy and ancillary service market decline, market prices would increase to energy market. This quantification of prices in those markets are far below the provide the needed revenues for new capacity costs net of market revenues is levels that would be necessary to fully investment. In the long-term, absent the consistent with the design of the compensate a new generation owner for cessation of demand growth, one would nation’s capacity markets, including their generation capacity cost.41 PJM (a expect market revenues to equal the full PJM RPM Capacity Market 49 and the regional transmission operator in the cost of a new market entrant.48 Given ISO–NE Forward Capacity Market.50 In eastern U.S.) addresses the gap between addition, this method is used to develop the full going-forward costs 42 and the committees/mrc/20100120/20100120-item-02- marginal costs for the evaluation of revenues from energy and ancillary review-of-generation-costs-and-compensation.ashx. distributed resources, energy efficiency, 44 CAISO 2011, p. 181, http://www.caiso.com/ and demand response programs in services markets through the addition of Documents/2011AnnualReport-MarketIssues- 43 a separate capacity market. Most other Performance.pdf. regions without organized capacity 51 45 MISO 2010, p. viii; https:// markets, such as California. The 40 On an ‘‘Energy Only’’ Electricity Market Design www.midwestiso.org/Library/Repository/Report/ modifications for the final rule For Resource Adequacy, 2005; William W. Hogan; IMM/2010%20State%20of%20the%20Market% significantly reduce the capacity cost http://www.ferc.gov/EventCalendar/files/ 20Report.pdf. used in the LCC analysis. The approach 20060207132019-hogan_energy_only_092305.pdf. 46 ISO New England 2010 Annual Markets Report, 41 CAISO 2011 Market Issues and Performance p. 33, http://www.iso-ne.com/markets/mkt_anlys is described further in chapter 8 of the Report, pp. 45–48, http://www.caiso.com/ _rpts/annl_mkt_rpts/2010/amr10_final_060311.pdf. final rule TSD. Documents/2011AnnualReport-MarketIssues- 47 ISO New England 2010, p. 33, http://www.iso- In the NOPR, to value the capacity Performance.pdf. MISO 2010 State of the Market ne.com/markets/mkt_anlys_rpts/annl_mkt_rpts/ costs, DOE used advanced coal Report Executive Summary, Executive Summary, 2010/amr10_final_060311.pdf. PJM 2009, p. 29, technology to reflect generation capacity p. viii, https://www.midwestiso.org/Library/ http://www.pjm.com/∼/media/committees-groups/ Repository/Report/IMM/2010%20State%20of committees/mrc/20100120/20100120-item-02- %20the%20Market%20Report.pdf. review-of-generation-costs-and-compensation.ashx. provide adequate reliability would likely force a 42 The term ‘‘going forward costs’’ includes, but CAISO 2011, p. 181, http://www.caiso.com/ market redesign or the introduction of new LSE is not limited to, all costs associated with fuel Documents/2011AnnualReport-MarketIssues- obligations such as resource adequacy transportation and fuel supply, administrative and Performance.pdf. NYISO 2010, p. 156; http:// requirements. general, and operation and maintenance on a power www.nyiso.com/public/markets_operations/ 49 PJM 2009, Executive Summary p. 6. plant.http://law.onecle.com/california/utilities/ documents/studies_reports/index.jsp. 50 ISO–NE 2010, p. 33; http://www.iso-ne.com/ 390.html. 48 If an energy-only market is functioning markets/mkt_anlys_rpts/annl_mkt_rpts/2010/ 43 A Review of Generation Compensation and properly, it must be able to provide sufficient amr10_final_060311.pdf. Cost Elements in the PJM Markets, 2009, p. 30, revenues to incent new market entrants over the 51 See http://docs.cpuc.ca.gov/efile/PD/ http://www.pjm.com/∼/media/committees-groups/ long term. Failure to incent sufficient generation to 162141.pdf.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23377

costs for no-load loss generation. trends, compared to changes in other section IV.F.1. For the base case, NRECA stated that substituting the analysis inputs, is relatively small. initially transformer purchasers are capacity cost of a combustion turbine/ allowed to choose among the entire e. Standards Compliance Date combined-cycle plant for the avoided range of transformers at each design cost of a new coal-fired plant appears to DOE calculated customer impacts as if line. Transformers are chosen based on reduce the savings and cost- each new distribution transformer either lowest first cost, or if the effectiveness of the more-efficient purchase occurs in the year that purchaser is an evaluator, on lowest transformer designs. (NRECA, No. 156 at manufacturers must comply with the Total Owning Cost (TOC). During the p. 9) DOE agrees with NRECA’s standard. As discussed in section II.A, negotiations (see section II.B.2) criticism of the approach used for the if DOE finds that amended standards for manufacturers and utilities stated that NOPR. For the final rule DOE assumed distribution transformers are warranted, ZDMH is not currently used in North that capacity costs for no-load loss DOE agreed to publish a final rule America, so designs using ZDMH as a generation depend on the type of containing such amended standards by core steel were excluded from the base generation that is built, and that these October 1, 2012. The compliance date of case. January 1, 2016, provides manufacturers losses are served by base load capacity. i. Inputs to Payback Period Analysis DOE estimated the capacity cost by with over three years to prepare for the assuming that marginal capacity is amended standards. The payback period is the amount of time it takes the consumer to recover the added in the proportions 40 percent f. Discount Rates coal, 40 percent natural gas combined- additional installed cost of more The discount rate is the rate at which cycle, and 20 percent wind. These efficient products, compared to baseline future expenditures are discounted to proportions are based on the capacity products, through energy cost savings. estimate their present value. DOE Payback periods are expressed in years. mix estimated in the AEO 2011 employs a two-step approach in projection. Payback periods that exceed the life of calculating discount rates for analyzing the product mean that the increased d. Electricity Price Trends customer economic impacts. The first total installed cost is not recovered in step is to assume that the actual For the relative change in electricity reduced operating expenses. customer cost of capital approximates The inputs to the PBP calculation are prices in future years, DOE relied on the appropriate customer discount rate. price forecasts from the Energy the total installed cost of the product to The second step is to use the capital the customer for each efficiency level Information Administration (EIA) asset pricing model (CAPM) to calculate Annual Energy Outlook (AEO). For the and the average annual operating the equity capital component of the expenditures for each efficiency level. final rule analysis, DOE used price customer discount rate. For the forecasts from AEO 2012. The PBP calculation uses the same preliminary analysis, DOE estimated a inputs as the LCC analysis, except that In the NOPR, to project the relative statistical distribution of commercial discount rates are not needed. change in electricity prices for liquid- customer discount rates that varied by immersed transformers, DOE used the transformer type by calculating the cost j. Rebuttable-Presumption Payback average electricity prices from AEO of capital for the different types of Period 2011. NRECA stated that gas-fired transformer owners. As noted above, EPCA, as amended, combustion turbines and combined More detail regarding DOE’s estimates establishes a rebuttable presumption cycle units are being used to service of commercial customer discount rates that a standard is economically justified base loads today, as well as meeting is provided in chapter 8 of the final rule if the Secretary finds that the additional peak demand (NRECA, No. 156 at p. 9), TSD. cost to the consumer of purchasing a and EEI asserted that natural gas is the g. Lifetime product complying with an energy marginal fuel ‘‘a lot’’ of the time (EEI, conservation standard level will be less No. 0051–0030 at p. 108). DOE agrees DOE defined distribution transformer than three times the value of the energy with both of these statements. For the life as the age at which the transformer (and, as applicable, water) savings final rule, DOE assumed that future retires from service. For the NOPR during the first year that the consumer analysis, DOE estimated, based on a production cost of electricity for will receive as a result of the standard, report by Oak Ridge National utilities, the primary owners of liquid- as calculated under the test procedure Laboratory,52 that the average life of immersed transformers, would be in place for that standard. (42 U.S.C. distribution transformers is 32 years. influenced by the price of fuel for 6295(o)(2)(B)(iii)) For each considered This lifetime estimate includes a generation (i.e., coal and natural gas). To efficiency level, DOE determines the constant failure rate of 0.5 percent/year estimate the relative change in the price value of the first year’s energy savings due to lightning and other random to produce electricity in future years in by calculating the quantity of those failures unrelated to transformer age, today’s rule, DOE applied separate price savings in accordance with the and an additional corrosive failure rate trends to both no-load and load losses. applicable DOE test procedure, and of 0.5 percent/year starting at year 15. DOE used the sales weighted price trend multiplying that amount by the average DOE did not receive any comments on of both natural gas and coal to estimate energy price forecast for the year in transformer lifetime and it retained the the relative price change for no-load which compliance with the amended NOPR approach for the final rule. losses; and natural gas only to estimate standards would be required. the relative price change for load losses. h. Base Case Efficiency These trends are based on the AEO 2012 G. National Impact Analysis—National projections and are described in greater To determine an appropriate base case Energy Savings and Net Present Value detail in chapter 8 of the TSD. against which to compare various Analysis potential standard levels, DOE used the Appendix 8–D of this final rule TSD DOE’s NIA assessed the national purchase-decision model described in provides a sensitivity analysis for energy savings (NES) and the national equipment of a sub-set of representative 52 Barnes. Determination Analysis of Energy NPV of total customer costs and savings design lines. These analysis shows that Conservation Standards for Distribution that would be expected to result from the effect of changes in electricity price Transformers. ORNL–6847. 1996. amended standards at specific efficiency

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23378 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

levels. (‘‘Customer’’ refers to purchasers product class for equipment sold from projections. The base-case projections of the equipment being regulated.) 2016 through 2045. The forecasts characterize energy use and customer To make the analysis more accessible provided annual and cumulative values costs for each equipment class in the and transparent to all interested parties, for all four output parameters. In absence of amended energy DOE used an MS Excel spreadsheet addition, DOE analyzed scenarios that conservation standards. DOE compared model to calculate the energy savings used inputs from the AEO 2012 Low these projections with projections and the national customer costs and Economic Growth and High Economic characterizing the market for each savings from each TSL.53 DOE used the Growth cases. These cases have higher equipment class if DOE were to adopt NIA spreadsheet to calculate the NES and lower energy price trends compared amended standards at specific energy and NPV, based on the annual energy to the reference case. NIA results based efficiency levels (i.e., the standards consumption and total installed cost on these cases are presented in cases) for that class. data from the energy use appendix 10–B of the final rule TSD. Table IV.27 and Table IV.38 characterization and the LCC analysis. DOE evaluated the impacts of summarize all the major NOPR inputs to DOE forecasted the energy savings, amended standards for distribution the shipments analysis and the NIA, and energy cost savings, equipment costs, transformers by comparing base-case whether those inputs were revised for and NPV of customer benefits for each projections with standards-case the final rule.

TABLE IV.7—INPUTS FOR THE SHIPMENTS ANALYSIS

Input NOPR description Changes for final rule

Shipments data ...... Third-party expert (HVOLT) for 2009 ...... No change. Shipments forecast ...... 2016–2045: Based on AEO 2011 ...... Updated to AEO 2012. Dry-type/liquid-immersed market Based on EIA’s electricity sales data and AEO2011 ...... Updated to AEO 2012. shares. Regular replacement market ...... Based on a survival function constructed from a Weibull distribution function No change. normalized to produce a 32-year mean lifetime *. Elasticities, liquid-immersed ...... For liquid-immersed transformers ...... No change. • Low: 0.00 • Medium: ¥0.04 • High: ¥0.20 Elasticities, dry-type ...... For dry-type transformers ...... No change. • Low: 0.00 • Medium: ¥0.02 • High: ¥0.20 * Source: ORNL 6804/R1, The Feasibility of Replacing or Upgrading Utility Distribution Transformers During Routine Maintenance, page D–1.

TABLE IV.8—INPUTS FOR THE NATIONAL IMPACT ANALYSIS

Changes for the final Input NOPR description rule

Shipments ...... Annual shipments from shipments model ...... No change. Compliance date of standard ...... January 1, 2016 ...... No change. Equipment Classes ...... Separate ECs for single- and three-phase liquid-immersed distribution trans- No change formers. Base case efficiencies ...... Constant efficiency through 2044. Equal to weighted-average efficiency in No change. 2016. Standards case efficiencies ...... Constant efficiency at the specified standard level from 2016 to 2044 ...... No change. Annual energy consumption per unit ... Average rated transformer losses are obtained from the LCC analysis, and No change. are then scaled for different size categories, weighted by size market share, and adjusted for transformer loading (also obtained from the LCC analysis). Total installed cost per unit ...... Weighted-average values as a function of efficiency level (from LCC anal- No change. ysis). Electricity expense per unit ...... Energy and capacity savings for the two types of transformer losses are No change. each multiplied by the corresponding average marginal costs for capacity and energy, respectively, for the two types of losses (marginal costs are from the LCC analysis). Escalation of electricity prices ...... AEO 2011 forecasts (to 2035) and extrapolation for 2044 and beyond ...... Updated to AEO 2012. Electricity site-to-source conversion .... A time series conversion factor; includes electric generation, transmission, No change and distribution losses. Discount rates ...... 3% and 7% real ...... No change. Present year ...... 2010 ...... 2012.

53 DOE understands that MS Excel is the most the basis for the spreadsheet models provides rulemaking help explain the models and how to use widely used spreadsheet calculation tool in the interested parties with access to the models within them, and interested parties can review DOE’s United States and there is general familiarity with a familiar context. In addition, the TSD and other analyses by changing various input quantities its basic features. Thus, DOE’s use of MS Excel as documentation that DOE provides during the within the spreadsheet.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23379

1. Shipments DOE was not able to explicitly model full-fuel-cycle, beginning at the source DOE projected transformer shipments the replace versus refurbish decision of energy production. (Pub. L. 109–58 for the base case by assuming that long- due to lack of necessary data, the price (August 8, 2005)). NAS appointed a term growth in transformer shipments elasticity should account for any committee on ‘‘Point-of-Use and Full- will be driven by long-term growth in decrease in the shipments due to a Fuel-Cycle Measurement Approaches to electricity consumption. The detailed decision on the customer’s part to Energy Efficiency Standards’’ to conduct dynamics of transformer shipments is refurbish transformers as opposed to the study, which was completed in May highly complex. This complexity can be purchasing a new unit. DOE’s approach 2009. The NAS committee defined full- seen in the fluctuations in the total is described in chapter 9 of the final rule fuel-cycle energy consumption as quantity of transformers manufactured TSD. Comments on the issue of including, in addition to site energy use: as expressed by the U.S. Department of replacing versus refurbishing are Energy consumed in the extraction, processing, and transport of primary Commerce, Bureau of Economic discussed in section IV.O.3 of this preamble. fuels such as coal, oil, and natural gas; Analysis (BEA), transformer quantity energy losses in thermal combustion in index. DOE examined the possibility of 2. Efficiency Trends power generation plants; and energy modeling the fluctuations in DOE did not include any base case losses in transmission and distribution transformers shipped using a bottom-up efficiency trend in its shipments and to homes and commercial buildings. model where the shipments are national energy savings models. AEO In evaluating the merits of using triggered by retirements and new forecasts show no long term trend in point-of-use and full-fuel-cycle (FFC) capacity additions, but found that there transmission and distribution losses, measures, the NAS committee noted were not sufficient data to calibrate which are indicative of transformer that DOE uses what the committee model parameters within an acceptable efficiency. DOE estimates that the referred to as ‘‘extended site’’ energy margin of error. Hence, DOE developed probability of an increasing efficiency consumption to assess the impact of the transformer shipments projection by trend and the probability of a decreasing energy use on the economy, energy assuming that annual transformer efficiency trend are approximately security, and environmental quality. shipments growth is equal to growth in equal, and therefore assumed no trend The extended site measure of energy electricity consumption as given by the in base case or standards case efficiency. consumption includes the energy AEO 2012 forecast through 2035. For 3. National Energy Savings consumed during the generation, the years from 2036 to 2045, DOE transmission, and distribution of extrapolated the AEO 2012 forecast with For each year in the forecast period, electricity but, unlike the full-fuel-cycle the growth rate of electricity DOE calculates the national energy measure, does not include the energy consumption from 2025 to 2035. The savings for each standard level by consumed in extracting, processing, and model starts with an estimate of the multiplying the stock of products transporting primary fuels. A majority of overall growth in transformer capacity affected by the energy conservation the NAS committee concluded that and then estimates shipments for standards by the per-unit annual energy extended site energy consumption particular design lines and transformer savings. Cumulative energy savings are understates the total energy consumed sizes using estimates of the recent the sum of the NES for each year. to make an appliance operational at the market shares for different design and To estimate national energy savings, site. As a result, the NAS committee size categories. Chapter 9 of the final DOE uses a multiplicative factor to recommended that DOE consider rule TSD provides a detailed description convert site energy consumption into shifting its analytical approach over of how DOE projected shipments for primary energy consumption (the time to use a full-fuel-cycle measure of each of the equipment classes in today’s energy required to convert and deliver energy consumption when assessing final rule. the site energy). This conversion factor national and environmental impacts, DOE recognizes that increase in accounts for the energy used at power especially with respect to the transformer prices due to standards may plants to generate electricity and losses calculation of greenhouse gas (GHG) cause changes in purchase of new in transmission and distribution. The emissions. For those appliances that use transformers. Although the general conversion factor varies over time multiple fuels, the NAS committee trend of utility transformer purchases is because of projected changes in the indicated that measuring full-fuel-cycle determined by increases in generation, power plant types projected to provide energy consumption would provide a utilities conceivably exercise some electricity to the country. The factors more complete picture of energy discretion in how much transformer that DOE developed are marginal consumed and permit comparisons capacity to buy—the amount of ‘‘over- values, which represent the response of across many different appliances, as capacity’’ to purchase. In addition, some the system to an incremental decrease in well as an improved assessment of utilities may choose to refurbish consumption associated with standards. impacts. transformers rather than purchase a new For today’s rule, DOE used annual In response to the NAS committee transformer if the price of the latter conversion factors based on the version recommendations, on August 18, 2011, increases significantly. of NEMS that corresponds to AEO 2012, DOE announced its intention to use full- To capture the customer response to which provides energy forecasts through fuel-cycle measures of energy use and transformer price increase, DOE 2035. For 2036–2047, DOE used greenhouse gas and other emissions in estimated the customer price elasticity conversion factors that remain constant the national impact analyses and of demand. In DOE’s estimation of the at the 2035 values. emissions analyses included in future purchase price elasticity, it used a logit Section 1802 of EPACT 2005 directed energy conservation standards function to characterize the utilities’ DOE to contract a study with the rulemakings. 76 FR 51282 While DOE response to the price of a unit capacity National Academy of Science (NAS) to stated in that notice that it intended to of transformer. The functional form examine whether the goals of energy use the Greenhouse Gases, Regulated captures what can be called an average efficiency standards are best served by Emissions, and Energy Use in price elasticity of demand with a term measuring energy consumed, and Transportation (GREET) model to to capture the estimation error, which efficiency improvements, at the actual conduct the analysis, it also said it accounts for all other effects. Although point of use or through the use of the would review alternative methods,

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23380 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

including the use of NEMS. After perspective. The 7-percent real value is I. Manufacturer Impact Analysis evaluating both models and the an estimate of the average before-tax rate 1. Overview approaches discussed in the August 18, of return to private capital in the U.S. 2011 notice, DOE has determined NEMS economy. The 3-percent real value DOE performed a manufacturer is a more appropriate tool for this represents the ‘‘social rate of time impact analysis (MIA) to estimate the specific use. Therefore, DOE intends to preference,’’ which is the rate at which financial impact of amended energy use the NEMS model, rather than the society discounts future consumption conservation standards on GREET model, to conduct future FFC flows to their present value. manufacturers of distribution analyses. 77 FR 49701 (Aug. 17, 2012). transformers and to calculate the impact DOE did not incorporate FFC measures H. Customer Subgroup Analysis of such standards on employment and into today’s final rule because it did not In analyzing the potential impacts of manufacturing capacity. The MIA has want to introduce a new method in the new or amended standards, DOE both quantitative and qualitative final phase of a rulemaking. Rather, in evaluates impacts on identifiable groups aspects. The quantitative part of the today’s rule, DOE continues to use its (i.e., subgroups) of customers that may MIA primarily relies on the Government standard measures of energy use and be disproportionately affected by a Regulatory Impact Model (GRIM), an greenhouse gas and other emissions in national standard. industry cash-flow model with inputs the national impact analyses and A number of parties expressed specific to this rulemaking. The key emissions analyses. specific concerns about size and space GRIM inputs are data on the industry cost structure, product costs, shipments, 4. Equipment Price Forecast constraints for network/vault transformers. (BG&E, No. 182 at p. 6; and assumptions about markups and As noted in section IV.F.2, DOE ComEd, No. 184 at p. 11; Pepco, No. 145 conversion expenditures. The key assumed no change in transformer at pp. 2–3; PE, No. 192 at p. 8; Prolec- output is the INPV. Different sets of prices over the 2016–2045 period. In GE, No. 177 at p. 12) shipment and markup assumptions addition, DOE conducted sensitivity For today’s final rule, DOE evaluated (scenarios) will produce different analysis using alternative price trends. purchasers of vault-installed results. The qualitative part of the MIA Based on PPI data for electric power and transformers (mainly utilities addresses factors such as product specialty transformer manufacturing, concentrated in urban areas), characteristics, impacts on particular DOE developed one forecast in which represented by design lines 4 and 5, as sub-groups of firms, and important prices decline after 2010, and one in a customer subgroup, and examined the market and product trends. The which prices rise. These price trends, impact of standards on these groups complete MIA is outlined in chapter 12 and the NPV results from the associated using the methodology of the LCC and of the TSD. sensitivity cases, are described in PBP analysis. DOE examined the 2. Product and Capital Conversion Costs appendix 10–C of the final rule TSD. impacts of larger transformer volume New and amended energy with regard to costs for vault 5. Net Present Value of Customer conservation standards will cause enlargement. DOE assumed that if the Benefit manufacturers to incur conversion costs volume of a unit in a standard case is The inputs for determining the net to bring their production facilities and larger than the median volume of present value (NPV) of the total costs product designs into compliance. For transformer designs for the particular and benefits experienced by consumers the MIA, DOE classified these design line, a vault modification would of considered appliances are: (1) Total conversion costs into two major groups: be warranted. To estimate the cost, DOE annual installed cost; (2) total annual (1) Product conversion costs and (2) compared the difference in volume savings in operating costs; and (3) a capital conversion costs. DOE’s between the unit selected in the base discount factor. DOE calculates net estimates of the product and capital case against the unit selected in the savings each year as the difference conversion costs for distribution standard case, and applied fixed and between the base case and each transformers can be found in section variable costs. In the 2007 final rule, standards case in total savings in V.B.2.a of today’s final rule and in DOE estimated the fixed cost as $1,740 operating costs and total increases in chapter 12 of the TSD. installed costs. DOE calculates operating per transformer and the variable cost as cost savings over the life of each $26 per transformer cubic foot.55 For a. Product Conversion Costs product shipped during the forecast today’s notice, these costs were adjusted Product conversion costs are period. to 2011$ using the chained price index investments in research, development, In calculating the NPV, DOE for non-residential construction for testing, marketing, and other non- multiplies the net savings in future power and communications to $1,886 capitalized costs necessary to make years by a discount factor to determine per transformer and $28 per transformer product designs comply with the new or their present value. DOE estimates the cubic foot. DOE considered instances amended energy conservation standard. NPV using both a 3-percent and a where it may be extremely difficult to DOE based its estimates of the product 7-percent real discount rate, in modify existing vaults by adding a very conversion costs that would be required accordance with guidance provided by high vault replacement cost option to to meet each TSL on information the Office of Management and Budget the LCC spreadsheet. Under this option, obtained from manufacturer interviews, (OMB) to Federal agencies on the the fixed cost is $30,000 and the the engineering analysis, and the NIA development of regulatory analysis.54 variable cost is $733 per transformer shipments analysis. For the distribution The discount rates for the determination cubic foot. transformer industry, a large portion of of NPV are in contrast to the discount The customer subgroup analysis is product conversion costs will be related rates used in the LCC analysis, which discussed in detail in chapter 11 of the to the production of amorphous cores, are designed to reflect a consumer’s final rule TSD. which would require the development of new designs, materials management, 55 54 OMB Circular A–4 (Sept. 17, 2003), section E, See section 7.3.5 of the 2007 final rule TSD, and safety measures. Procurement of ‘‘Identifying and Measuring Benefits and Costs. available at http://www1.eere.energy.gov/buildings/ Available at: www.whitehouse.gov/omb/ appliance_standards/commercial/pdfs/ such technical expertise may be memoranda/m03-21.html. transformer_fr_tsd/chapter7.pdf. particularly difficult for manufacturers

VerDate Mar<15>2010 20:30 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23381

without experience using amorphous forecasts, and shipment efficiency among steel suppliers, trade policy and steel. distributions. In addition, DOE made raw material prices. With respect to minor changes to its conversion cost Earthjustice’s comment, while DOE b. Capital Conversion Costs methodology in response to comments agrees that the LCC is highly sensitive Capital conversion costs are as described below. These updated to relative steel price assumptions at investments in property, plant, and inputs affected the values calculated for certain TSLs, DOE notes that a decline equipment necessary to adapt or change the conversion costs and markups in silicon transformer prices would be existing production facilities such that described above, as well as the INPV unlikely to materially change the slope new equipment designs can be results presented in section V.B.2. of the silicon steel transformer cost fabricated and assembled. For capital curve. Therefore, the incremental costs 5. Discussion of Comments conversion costs, DOE prepared bottom- (and LCC savings) would not change up estimates of the costs required to The following section discusses a significantly. To NEEP’s comment, DOE meet standards at each TSL for each number of comments DOE received on agrees that competition between silicon design line. To do this, DOE used the February 2012 NOPR MIA steel suppliers, the incumbent equipment cost estimates provided by methodology. DOE has grouped the amorphous metal suppliers and new manufacturers and equipment suppliers, comments into the following topics: market entrants will impact future an understanding of typical Core steel, small manufacturers, prices. However, DOE does not believe manufacturing processes developed conversion costs, and benefits versus it is possible to predict the relative during interviews and in consultation burdens. movements in these prices. Throughout with subject matter experts, and the a. Core Steel the negotiation process, stakeholders properties associated with different core have argued for different price points for and winding materials. Major drivers of The issue of core steel is critical to different steels under different capital conversion costs include this rulemaking. This section discusses scenarios. The eventual relative prices changes in core steel type (and comments related to steel price of steels in the out years will be in part thickness), core weight, core stack projections, steel mix and competition subject to the aforementioned market height, and core construction between suppliers, and steel supply and forces, the direction and magnitude of techniques, all of which are production capacity. Most of these which cannot be known at this time. For interdependent and can vary by issues are highly interconnected. these reasons, DOE performed a efficiency level. DOE uses estimates of Steel Prices. Several stakeholders sensitivity analysis that included a wide the core steel quantities needed for each commented on the steel prices used by range of potential core steel prices to steel type, as well as the most likely DOE. Prolec-GE believes that the steel evaluate their impact on LCC savings as core construction techniques, to model supply assessment in appendix 3A of discussed in section V.B.3. the additional equipment the industry the TSD was too optimistic about Diversity of Steel Mix and would need to meet the efficiencies supply and price in a post-recession Competition. Most stakeholders stated a embodied by each TSL. global environment and that any preference for a market in which analysis for higher than current level traditional and amorphous steel could 3. Markup Scenarios efficiencies should evaluate a much effectively compete, but there was In the NOPR MIA, DOE modeled two higher range of material price variance disagreement over which efficiency standards-case markup scenarios to that what DOE used in the NOPR. level would strike that balance, represent the uncertainty regarding the (Prolec-GE, No. 52 at p. 13) APPA notes particularly for liquid-immersed potential impacts on prices and that the analysis in appendix 3A of the distribution transformers. The various profitability for manufacturers following TSD provides good information about steel types that are available on the the implementation of amended energy prices from 2006 to 2010, but it does not market for distribution transformers are conservation standards: (1) A include information about the listed in Table 5.10 in chapter 5 of the preservation of gross margin percentage significant increase in prices compared TSD. Stakeholders generally sought a markup scenario, and (2) a preservation to 2002–2003 levels. standard that would allow of operating profit markup scenario. Northeast Energy Efficiency manufacturers to use a diversity of These scenarios lead to different Partnerships argued that, when faced electrical steels that are cost-competitive markups values, which, when applied with competition, conventional high- and economically feasible. This issue is to the inputted MPCs, result in varying grade electrical steel prices could come critical to stakeholders for several revenue and cash flow impacts. While down and compete effectively with the reasons, including what some worried DOE has modified several inputs to the more efficient amorphous materials. would be a lack of amorphous steel GRIM for today’s final rule, it continues (NEEP, No. 193 at p. 3) Earthjustice supply, a transition to a market that to analyze these two markup scenarios expressed similar sentiments, stating currently has only one global supplier for the final rule. For a complete that the analysis conducted by DOE on with significant capacity, as well as discussion, see the NOPR or chapter 12 DL1 presents an unrealistic picture of forced conversion costs associated with of the TSD. the LCC impacts of meeting TSLs 2 and the manufacturing of amorphous steel 3 with conventional steels in that design cores. 4. Other Key GRIM Inputs line because competitive pressure from Both APPA and Adams Electric Key inputs to the GRIM characterize amorphous metal will likely reduce the Cooperative (AEC) commented that it is the distribution transformer industry price for grain-oriented electrical steels important that DOE preserve the cost structure, investments, shipments, and, therefore, improve the LCC savings competitive market by allowing both and markups. For today’s final rule, for consumers. (Earthjustice, No. 195 at grain-oriented steel and amorphous core DOE made several updates to the GRIM p. 1–3) transformers to be price competitive. to reflect changes in these inputs since DOE recognizes that steel prices have APPA and AEC are concerned about the publication of the NOPR. Specifically, proven highly volatile in the past and availability and price of the core DOE incorporated changes made in the could continue to fluctuate in the future materials if only one product is engineering analysis and NIA, including for a variety of reasons, including competitively viable because this will updates to the MPCs, shipment macroeconomic factors, competition affect jobs for traditional steel

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23382 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

manufacturers and also small since the amorphous metal supplier competition because the efficiency transformer manufacturers that may not (Metglas) could compete. (Advocates, levels assigned to design lines 2 and 5 be able to afford or have the expertise No. 186 at p. 10–11) Additional in TSL 1 were set well above the to convert their plants to accommodate amorphous metal suppliers may also crossover point for competition between amorphous core construction. (APPA, enter the market because barriers to multiple core materials and therefore No. 191 at p. 5; AEC, No. 163 at p. 3) entry into amorphous metal transformer the implementation of TSL 1 would Wisconsin Electric also stated that it is production are, according to Metglas, curtail the availability of multiple important to have a mix of suppliers quite limited. (Metglas, No. 102 at p. 2) options for core material choices for available to keep the price of amorphous Also, based on the results of an analysis liquid-immersed transformers. ATI did steel in check and to mitigate the risk of conducted by an industry expert for not support any of the new TSLs unforeseen situations, such as natural ASAP, the Advocates believe that it proposed in DOE’s supplementary disasters. (Wisconsin Electric, No. 168 would be very unlikely that TSL 4 analysis, which were higher than TSL 1 at p. 2) standards from the NOPR for liquid- and which would, according to ATI, Some stakeholders, in particular immersed transformers would result in have significant impacts on the ACEEE, ASAP, NRDC, and Northwest amorphous metal market share competitiveness of grain-oriented Power and Conservation Council exceeding 20 percent in the near- and electrical steel and result in nearly (NPCC), asserted that competition can medium-term due to the current complete conversion of the liquid- still be maintained at efficiency levels dominant position of silicon steel, immersed market to amorphous cores. higher than those proposed in the inertia in utility decision making, and (ATI Allegheny, No. 218 at p. 1) Instead, NOPR. These stakeholders believe that the ability of steel makers to lower ATI proposed an alternative TSL which TSL 1 favors silicon steel and will, prices to protect against market share consists of what it believes are more therefore, raise the price for silicon steel erosion. Furthermore, increases in the accurate crossover points for the liquid- while relegating amorphous steel to standards for LVDT and MVDT immersed design lines: EL 1.3 for DL 1, niche status, relative to a higher TSL. transformers, which have markets where EL 0 for DL2, EL 0.7 for DL 3, EL 1 for They noted that industry sources and amorphous metal does not compete and DL 4, and EL 0.7 for DL 5. (ATI press accounts confirm that electrical is not expected to compete at the levels Allegheny, No. 218 at p. 1) steel is a very high profit margin proposed by DOE, will increase silicon Cooper Power stated that the product and the lack of strong steel tonnage. In the longer term, silicon currently proposed efficiency levels are competition for M3 in the current steel manufacturers can make strategic at the maximum levels that allow use of market appears to be contributing to investment decisions that will enable both silicon and amorphous core steels. very high M3 prices. (Advocates, No. them to compete, such as increasing Higher efficiency levels will tip the 186 at p. 10) Therefore, the Advocates production of High B steel or entering market in favor of amorphous materials argued that a modified TSL 4 (EL2 for amorphous metal production. that are not available in the quantities all design lines) for liquid-immersed (Advocates, No. 186 at pp. 12–13) needed and do not have the desired transformers could be met using either Berman Economics also argued that diversity of suppliers to maintain a amorphous metal or silicon steel, competition between traditional and healthy market. (Cooper Power, No. 165 thereby increasing competition. ASAP amorphous steel is still possible with at p. 4) Cooper Power had found had suggested during the NOPR public higher standards for liquid-immersed through one of its analyses that the meeting that moving into a market transformers because, according to crossover point at which transformer where there would be three shipments data from ABB, TSL 4 has the price is equivalent between M3 and domestically based competitors would greatest diversity of core materials. amorphous was at EL 0.5 for all design be a better competitive outcome than (Berman Economics, No. 221 at p. 7) lines 1, 3, 4, and 5 and EL 0.25 for DL2. the status quo of two competitors who On the other hand, many stakeholders According to Cooper Power, the best have the lion’s share of the market. believe that competition among steel choice for raising the efficiency levels (ASAP, No. 146 at p. 38) In response to suppliers will not be possible at levels and keeping both M3 core steel and the supplementary analysis of June 20, higher than those proposed in the amorphous core steel competitive with 2012, the Advocates suggested the NOPR. At the NOPR public meeting, one another would be to choose EL 0.5. adoption of TSL C, which they believed ATI stated that the proposed standards (Cooper Power Systems, No. 222 at p. 2) would provide for robust competition maintain a competitive balance between During the NOPR public meeting, among core material suppliers. alternative materials and grain-oriented Cooper Power commented that, past EL (Advocates, No. 235 at p. 1) They also electrical steel, which has adequate 1, it is no longer a level playing field noted that TSL D, which consists of EL supply from annual global production between amorphous and silicon core 2 for pad-mounted transformers and EL levels exceeding two million metric tons steel. (Cooper Power, No. 146, at p. 49– 1 for pole-mounted transformers, would and price competition from several 50) HVOLT also commented that the favor the continued use of grain producers. (ATI, No. 146 at p. 18) ATI crossover point between M3 and oriented electrical steel for the majority believes that higher standards will amorphous is at EL 1, and it’s a hard of the market and allow silicon steel and result in cost-effective design options move to amorphous past that level. amorphous metal to reach rough cost limited to amorphous metal cores for (HVOLT, No. 146 at p. 51) The United parity for pad-mounted transformers. liquid-immersed transformers. Such a Auto Workers (UAW) is concerned that (Advocates, No. 235 at p. 4) ACEEE, situation would cost U.S. jobs, increase requiring efficiency levels beyond TSL– ASAP, NRDC, and NPCC further cited the risk of supply shortages and 1 for liquid-immersed transformers some transformer manufacturers as disruptions, and create a non- would impose unwarranted conversion saying TSL 4 or 3.5 (EL 2 or EL 1.5) for competitive market for new liquid- costs on transformer producers, force liquid-immersed transformers would immersed designs which ATI expects the use of amorphous metals that are not lead to robust competition because a will eliminate any projected LCC available in adequate supply, and create market currently served by two steel savings. (ATI, No. 54 at p. 2) significant anticompetitive market suppliers (AK Steel and ATI Allegheny Furthermore, ATI stated that even TSL power for the producer of amorphous Ludlum) would then be served by three 1 may have adverse impacts on metal electrical steel. (UAW, No. 194 at

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23383

p. 2) EEI is very concerned about the p. 4) Likewise, the United Steelworkers Supply and Capacity. The ability of availability of steels if DOE decides to Union (USW) supports the currently core steel producers to increase supply increase any efficiency levels above proposed efficiency levels because they if necessary is another related key issue those proposed in the NOPR because, as allow end-users to choose between discussed by stakeholders. Some DOE’s life-cycle analyses have shown, competing technologies rather than stakeholders were concerned that the ‘‘tipping’’ point where many relying on a single option. (USW, No. suppliers may not have the capacity to domestic steelmakers are not 148 at p. 2) produce certain steels in quantities great competitive is usually at levels that are DOE recognizes the importance of enough to meet demand at higher equal to or less than TSL 1 for liquid- maintaining a competitive market for efficiency levels, while other immersed transformers. Domestic transformer steel supply in which stakeholders believed that suppliers will steelmakers agreed, explaining that the traditional steel and amorphous steel be fully capable of expanding capacity anticompetitive ramifications of a suppliers can both participate. This was as needed. decision to promulgate a standard a critical consideration in DOE’s Several stakeholders expressed greater than TSL 1 for the liquid- assessment of the rule’s impact on concerns about utilities being unable to immersed market would not be competition. As with the discussion on serve customers due to steel supply economically justified. According to AK future prices, the precise ‘‘crossover constraints in the distribution chain. EEI Steel and ATI, since amorphous metal is point’’ is variable depending on a stated that its members do not want to currently competitive but may not be in number of factors, including firm repeat the situation they faced in 2006– sufficient supply, and non-amorphous pricing strategies, global demand and 2008 when there were transformer manufacturers may not be able to supply, trade policy, market entry, and shortages and utilities were told that compete with amorphous metal on a economies of scale among producers there would be delays of months or even first-cost basis beyond TSL 1, any and consumers of the core steel. The years before certain transformers would decision by DOE to promulgate a magnitudes of these potential influences be available. (EEI, No. 185 at p. 10) standard greater than TSL 1 would on the cross-over point cannot be APPA noted that the threat of transfer significant market power, precisely known in advance. transformer rationing may return in an including potential price increases, to DOE attempted to survey improved economy and hamper the the maker of amorphous metal. (AK manufacturers about the mix of core ability of utilities to meet their Steel and ATI, No. 188 at p. 2–3) AK steel used currently for transformers obligation to serve customers. (APPA, Steel also commented that DOE should meeting various efficiency levels and No. 191 at p. 10) Likewise, Consolidated finalize a standard equivalent to TSL 1 also queried the industry about their Edison believes that the possible from the NOPR rather than adopt the expectations for core steel mix at those requirement to use higher grade core new TSLs A through D proposed in the efficiencies should the next DOE steels in order to achieve higher supplementary analysis because it standard require them. However, efficiencies may result in supply believes that the new TSLs, which are beyond those presentations made scarcity, increased costs, and tough more stringent, would have significant publicly by various manufacturers competition for these materials after anticompetitive effects that will harm during the negotiations—which recovery from the global recession. both electric utilities and the public demonstrated conflicting views on the (ConEd, No. 236 at p. 4) Commonwealth through increased prices. (AK Steel, No. ‘‘crossover point’’—DOE could not Edison Company is very concerned 230 at p. 12–13) NEMA supports the gather sufficient data to calculate about the availability of a quality steel currently proposed efficiency levels manufacturer expectations of the supply for the transformer because higher levels will tip the scale crossover point at various TSLs. While manufacturing industry and that a in favor of amorphous materials that are several stakeholders have pointed to the limited supply of transformers will have not available in the quantities needed ‘‘tipping point’’ shown by the LCC’s a significant negative effect on the and do not have the desired diversity of steel selection analysis as evidence that company’s ability to provide safe and suppliers to maintain a healthy market. the market will transition to amorphous reliable electric service to its customers. (NEMA, No. 170 at p. 14) In response to entirely for some design lines, DOE (ComEd, No. 184 at p. 11) Howard the supplementary analysis, NEMA repeats here that not every possible Industries is also concerned about the argued that the new TSLs (with the design was analyzed and that the LCC limited availability of critical core exception of TSL A if DL 2 remains at tool is highly sensitive to price materials such as M2 and amorphous, EL 0) would all result in steel supply assumptions which have been shown to which could pose a large risk to the shortages or a bias in favor of be extremely variable over time and transformer and utility industries and amorphous. (NEMA, No. 225 at p. 4) among suppliers. Balancing all of the may become a particularly troublesome AEC believes that DOE appropriately evidence in this docket, DOE believes issue if the economy and housing balanced high transformer efficiency that the levels established by today’s markets return to more normal levels. with a viable competitive market in the final rule will maintain a choice of steel (Howard Industries, No. 226 at p. 2) In NOPR. (AEC, No. 163 at p. 3) NRECA mix for the industry. As discussed in addition, the USW stated that the agreed, stating that DOE has achieved the weighing of benefits and burdens number of transformer producers with the correct balance of high transformer section (section IV.I.5.d), DOE remains the equipment to build reliable efficiency while maintaining a viable concerned about the potential for transformers with amorphous ribbon competitive market, because any significant disruption in the steel cores is relatively small. Therefore, a efficiency level above those supply market at levels higher than sudden transition to amorphous ribbon recommended in the NOPR will greatly those established by today’s rule. would result in a fragile supply chain impact competition and, therefore, As for the conversion costs that may for distribution transformers, potentially affect jobs for steel manufacturers and be required should some manufacturers leading to large cost increases and small transformer manufacturers that decide to begin making, or to increase supply shortages that would place the may not have the resources to convert production of, amorphous core security of the U.S. electrical their plants to accommodate amorphous transformers, DOE accounts for them in transmission grid at risk. (USW, No. 148 core construction. (NRECA, No. 228 at the GRIM analysis. at p. 2) ATI stated during the NOPR

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23384 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

public meeting that a scenario in which availability of steels supplied by foreign competitors. (Advocates, No. 186 at p. grain-oriented electrical steel is not vendors, especially amorphous steel. 11) The Advocates also noted that one available as a core material option could Both Commonwealth Edison Company of the largest global suppliers of silicon result in a long-term situation where no and Baltimore Gas and Electric steel for transformers, POSCO (formerly domestic companies would produce the Company stated that the overseas Pohang Iron and Steel Company), is strategically important material for procurement of steel could result in entering the amorphous metal market. transformers that are the critical link in specification issues and that there could The company approved a plan for the U.S. electrical grid. (ATI, No. 146 at be a negative impact on the U.S. electric commercializing amorphous metal p. 19) grid if DOE sets a standard that requires production in 2010 and will soon begin Some stakeholders also emphasized the use of a specific core steel that is not production and marketing of amorphous the importance of being able to use M3 readily available in the domestic market metal with plans to produce up to 1 steel, which is more readily available and which does not have a proven track kiloton (kt) in 2012, 5 kt in 2013, and than other more efficient steels. Prolec- record. (ComEd, No. 184 at p. 12 and 10 kt in 2014. (Advocates, No. 235 at p. GE noted that silicon steel grades above BG&E, No. 182 at p. 7) Power Partners 3) Schneider Electric stated that, with M3 have significant supply limitations has stated that grades of grain-oriented the exception of amorphous, there are and predicted no change in that electrical steel better than M2 for wound sufficient suppliers worldwide (Europe situation for the foreseeable future. core applications are only available and Asia) who have either increased Therefore, Prolec-GE continues to see from international sources and supply capacity or who have near term plans to the need for a balanced approach to capacity is very limited. (Power increase capacity to meet the growing higher efficiencies such that M3 silicon Partners, No. 155 at pp. 3–4) In demand for high-grade steels. The steel and amorphous metal can compete addition, Progress Energy is concerned company feels it is better to allow global for a share of the liquid-immersed that amorphous and mechanically market conditions to dictate business market, which would allow scribed core steel will not be available plans rather than the DOE because manufacturers to have a sufficient in sufficient quantities because manufacturing and freight costs play a supply of these materials to serve domestic transformer vendors rely on lesser role than supply and demand in customer requirements. (Prolec-GE, No. basically one amorphous core steel determining the final price for high- 52 at pp. 11–12) Progress Energy also provider. This supplier may not have grade steels, whether domestic or stated that M2 core steel is in short the capacity to provide enough foreign, as long as there are sufficient supply because it is only a small part of amorphous material to meet demand suppliers worldwide. (Schneider, No. a silicon core steel producer’s output from all U.S. transformer manufacturers 180 at p. 6) In addition, Hydro-Quebec and M3 and M4 grades of core steel as well as overseas business if the should be required for 85 percent or has stated that the equipment for efficiency levels are increased beyond making amorphous steels is mainly used more of any required efficiency level so EL 1 for liquid-immersed distribution that utilities will not face shortage to serve the distribution transformer transformers. (Progress Energy, No. 192 market, which allows amorphous steel situations that would have negative at pp. 7–8) ABB has indicated that impacts on grid reliability. (Progress to be less influenced by other non- amorphous steel is a sole source product transformer markets that may impact Energy, No. 192 at pp. 7–8) Likewise, for the U.S., and, as demand increases Power Partners voiced concern about steel price and availability. Amorphous for it, there could be a tight global steel production lines are also much the U.S. supply of core steel should supply as well as upward price DOE adopt an efficiency that requires smaller than silicon steel lines, thereby pressure. (ABB, No. 158 at p. 8) ABB has the use of grades better than M3. Power allowing amorphous steel makers to add also expressed concerns about Partners stated that the current domestic production capacity by small mechanically scribed steel. This type of capacity for M2 will not support 100 increments with relatively low capital steel has only four global suppliers, and percent of all liquid-immersed expenditures and in a relatively short its availability may be subject to transformers and, therefore, time frame. Hydro-Quebec therefore international trade restrictions. (ABB, recommended that DOE only consider believes that amorphous steel No. 158 at p. 8) According to Cooper efficiency levels that can be attained production can be tightly connected Power Systems, ZDMH is in large part with M3 core steel with no loss with increasing demand. (Hydro- unavailable in the U.S. and should evaluation. The grades better than M3 Quebec, No. 125 at p. 2) Metglas, has should be employed when the utility therefore represent only a small fixed also stated that an increase in capacity loss evaluation justifies its use. (Power percentage of overall usage. (Cooper to even 100 percent of 2016 demand Partners, No. 155 at pp. 3–4) Southern Power Systems, No. 222 at p. 2) would only require an approximately California Edison has stated that greater However, some stakeholders are more $200M investment in amorphous metal market demand for M2 core steel may confident that the supply of higher casting capacity and an even smaller create supply shortages and result in efficiency steels would increase to meet total industry investment by core/ high steel prices. (Southern California demand due to higher standards. transformer makers in amorphous metal Edison, No. 239 at p. 1) According to ACEEE, ASAP, NRDC, and NPCC transformer manufacturing capacity. Central Moloney, M2 and higher grades believe that it is highly unlikely that Metglas further stated that it has a of steel are premium products within amorphous production will not expand technology transfer program to assist the steel manufacturing process which in response to higher standards because: any U.S. transformer maker in quickly comprise no more than 15 percent of (1) The U.S. producer of amorphous progressing into production of overall steel production. Central metal has demonstrated its ability to amorphous metal-based transformers. Moloney is concerned that the add capacity over the past several years (Metglas, No. 102 at p. 2) Berman marketplace will not be able to support as producers of high-value electricity Economics supports Metglas’ position, the demand of these premium products (e.g., wind producers) have favored arguing that Metglas has demonstrated if efficiency levels are increased. amorphous metal products, and (2) its willingness and capability to (Central Moloney, No. 224 at pp. 1–2) other manufacturers are exploring increase capacity as a result of the 2007 Stakeholders have also expressed amorphous production and there are no Final Rule and should be expected to do several concerns regarding the legal barriers to entry for new so again, particularly considering the

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23385

financial resources available to Metglas acknowledges that the current also concerned about small from its parent, Hitachi. Moreover, since amorphous supplier may be able to manufacturer impacts resulting from the there are no patent restrictions on expand capacity to meet additional use of amorphous steel, stating that amorphous steel, there is nothing to demand and a few other companies small transformer manufacturers that prevent silicon steel from diversifying to have begun the initial stages of may not be able to afford or have the include an amorphous line should it developing capacity. The eventual steel expertise to convert their plants to choose to do so. (Berman Economics, quality and production capacity of these accommodate amorphous core No. 150 at p. 10) Berman Economics emerging amorphous sources are construction may be forced to go out of also believes that DOE improperly unknown at this time. Therefore, DOE business. (APPA, No. 191 at p. 5) assumes that increased use of has been careful in selecting a TSL that HVOLT commented that producing amorphous will reduce silicon steel would allow manufacturers to use not stacked core products with mitering production in an effort to ensure that only amorphous and mechanically would take millions of dollars and small silicon steel production does not suffer scribed steel,that is currently produced manufacturers in some states cannot profit losses as amorphous becomes in limited quantities, but also grain- afford that investment, and may be more competitive. Additionally, oriented steels. forced to go out of business. (HVOLT, Earthjustice claimed that DOE did not DOE believes that the Earthjustice No. 146 at pp. 50–51) Furthermore, at rationally analyze the potential impacts comment that DOE did not rationally higher efficiency levels, even if small associated with steel production analyze the potential impacts associated manufacturers can continue to use butt- capacity constraints because, according with steel production capacity lapping, they may not be able to sell to the NOPR, adopting TSLs 2 or 3 for constraints actually refers to two related their transformers at a price where liquid-immersed transformers would but separate issues in the NOPR and material costs are recovered. (HVOLT, lead to shortages of amorphous metal NOPR TSD. In the TSD, DOE explains No. 146 at p. 151) that the availability of total core steel such that grain-oriented electrical steel However, other stakeholders have would not be an issue until TSL 4 cores would have to be used in non- suggested that small manufacturer because both conventional and cost-effective applications, but in the effects have been overemphasized in amorphous steels would be available to TSD, those TSLs would split the market DOE’s analysis. ACEEE, ASAP, NRDC, use until that point. In the NOPR, DOE between amorphous and grain-oriented and NPCC disagreed with DOE’s small explains that the availability of steels and DOE expects minimal core business analysis, claiming that it amorphous steel may be an issue at steel capacity issues at TSLs that do not overstates impacts on small business force the entire market into amorphous TSLs 2 and 3, and that manufacturers may need to use other types of steels, manufacturers of LVDT transformers. steel usage. (Earthjustice, No. 195 at pp. The NOPR record and an investigation 1–2) such as M3, which are not the lowest cost options. These statements are not by the Advocates indicate that the vast DOE is aware that there is currently contradictory because, although majority of covered transformers are only one global supplier of amorphous amorphous steel capacity may not be manufactured by a handful of large steel with any significant capacity and able to expand to meet all demand at manufacturers with all of their major that the parent company is foreign- TSLs 2 and 3, that does not imply that production facilities in Mexico. Since owned (although a substantial share of total core steel capacity would be small, domestic manufacturers cannot its production takes place domestically insufficient because manufacturers still compete on price with Mexican through its U.S. subsidiary). At the same have the option of using M3 or M2 or production facilities, domestic time, a few other steel producers have other steels at these levels. manufacturers focus on specialty announced plans to begin, or have transformers which are generally recently begun, very limited production b. Small Manufacturers outside the scope of the regulation or on of amorphous metal. DOE is also aware An important area of discussion high-efficiency offerings. (Advocates, that there are only a few suppliers for among stakeholders is the impact of No. 186 at pp. 5–6) Furthermore, even mechanically scribed steel and that energy efficiency standards on small if DOE finds that there are a significant some of these suppliers are also foreign- manufacturers. At the NOPR public number of small manufacturers with owned. Given the lack of suppliers of meeting, ASAP had suggested that DOE U.S. production facilities making domain-refined (e.g., H0, ZDMH) and should do additional work to better covered LVDT transformers, the amorphous steels, DOE agrees that the document and understand the scale of Advocates suggest that DOE should still amended energy conservation standards the impacts on small manufacturers. adopt TSL 3 because any small should provide manufacturers with the (ASAP, No. 146 at p. 170) manufacturer with long term viability in option to cost-effectively use grain- Some stakeholders expressed concern the distribution transformer market can oriented silicon steels, which have that standards higher than those build compliant transformers. DOE’s fewer supply constraints. This would proposed in the NOPR would have a record indicates that the least-cost help ensure that utilities have access to significant negative impact on small option for building LVDT transformers transformers, particularly in the event of manufacturers. NEMA is very concerned at TSL 3 entails step-lap mitering and stronger economic growth (a driver of with the possibility that higher some small manufacturers already have transformer demand) or a natural efficiency standards will negatively mitering equipment. The Advocates disaster, both concerns raised by impact small manufacturing facilities commented that for companies that commenters. Furthermore, DOE and may drive some small companies, currently lack mitering machines, understands that M2 cannot be in particular LVDT transformer industry experts have testified that a produced at the quantities equivalent to manufacturers, out of business. (NEMA, step lap mitering machine costs between current M3 yields due to the nature of No. 170 at pp. 4, 8) In addition, at least $0.5 million and $1 million, which is a the silicon steel production process. one small NEMA manufacturer of small investment that should be well Given these facts, DOE concluded that liquid-immersed distribution within reach for viable manufacturing a standard that could not be achieved by transformers has reported that it cannot companies, even if they are small. The M3 would not be economically justified. stay in business at levels higher than Advocates also indicate that DOE may On the other hand, DOE also EL1. (NEMA, No. 170 at p. 6) APPA is have placed too much emphasis on

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23386 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

small business impacts in its decision- provide ill-defined benefits for a small mitering by using higher grade steels. making criteria. Companies also have number of manufacturers. Even if some While these would likely not be the the option of sourcing their cores from domestic small manufacturers may be designs of choice for high-volume third party suppliers, who can obtain affected by the new standards, DOE manufacturers because the capital cost better materials prices than all but the should do a more comprehensive of a mitering machine has a much lower largest transformer makers, regardless of analysis of how much the standards per unit cost given their larger volumes, the efficiency levels chosen. In fact, they would impact those small this option may allow low-volume cite to the NOPR to support the notion manufacturers. The investments needed players, such as small manufacturers, to that market pressures are already likely to meet new standards may be avoid investing in mitering machines or to be pushing small transformer affordable for companies which have sourcing their cores due to financial manufacturers to purchase sourced covered transformers as a significant constraints. However, at TSL 3 and cores regardless of the efficiency levels part of their business, and companies higher, manufacturers may not be able adopted. (Advocates, No. 186 at p. 6) that have covered transformers as a to continue using butt-lapping Furthermore, although small small portion of their business may technology with steels that are readily manufacturers may not get the same choose to exit this part of the market or available. treatment from steel suppliers as large source their cores. (NEEP, No. 193 at pp. Although sourced cores may be the manufacturers do, small manufacturers 4–5) most cost-effective strategy in the near will face this disadvantage regardless of DOE understands that small term, some manufacturers indicated the standard level chosen. (Advocates, companies face additional challenges during interviews that production of No. 186 at p. 5) from an increase in standards because cores is an important part of the value Similar sentiments were expressed by they are more likely to have lower chain and that they could ill-afford to California Investor Owned Utilities (CA production volumes, fewer engineering cede it to third parties. On the other IOUs). According to the CA IOUs, resources, a lack of purchasing power hand, some manufacturers indicated although DOE repeatedly emphasizes for high performance steels, and less they are able to successfully compete the concern that small manufacturers access to capital. because of their sourcing strategies, not may be disproportionately impacted by For liquid-immersed distribution in spite of them, because they can meet higher standard levels and leans on this transformers, DOE does not believe that a variety of customer needs more concern as justification for selecting small manufacturers will face quickly and cheaply than would TSL 1 for low-voltage dry-type significant capital conversion costs at otherwise be possible. Particularly transformers, there are actually very few TSL 1 because they can continue to because most small U.S. LVDT small manufacturers in this market and produce silicon steel cores using M3 or manufacturers are heavily involved in those small manufacturers that do exist better grades rather than invest in the transformer market not otherwise primarily focus on design lines that are amorphous technology should they covered by statute, which constitutes exempted from coverage. The CA IOUs make that business decision. roughly 50 percent of all LVDT sales, commented that some small Alternatively, they could source their DOE believes that sourcing DOE- manufacturers that do produce covered cores, a common industry practice. covered mitered cores represents a transformers are focusing on high For the LVDT market, DOE conducted viable strategic alternative for small efficiency NEMA Premium® further analysis based on comments LVDT manufacturers, given that it is a transformers, indicating that smaller received on the NOPR to reevaluate the common industry business strategy for manufacturers are already capable of impact of higher standards on small low volume product lines. producing higher efficiency manufacturers. Although there may not In conclusion, DOE believes that TSL transformers. Furthermore, small be many small LVDT manufacturers that 2, the level established by today’s manufacturers could source their cores, produce covered equipment in the U.S. standards, affords small LVDT and many are currently doing so today, and small manufacturers may hold only transformer manufacturers with several which offsets any need to upgrade core a low percentage of market share, the strategic paths to compliance: (1) construction equipment. (CA IOUs, No. Department of Energy does consider Investing in mitering capability, (2) 189 at pp. 2–3) impacts on small manufacturers to be a continuing to use low-capital butt-lap Also, Earthjustice has commented that significant factor in determining an core designs with higher grade steels, (3) DOE has arbitrarily relied on impacts on appropriate standard level. As discussed sourcing cores from third-party core small manufacturers in rejecting in the engineering analysis, because manufacturers, or (4) focus on the stronger standards for low-voltage dry- commenters suggested that EL3, the exempt portion of the market. type (LVDT) units despite there being efficiency level selected at TSL 2 for few, if any, small manufacturers of this DL7 (equivalent to NEMA Premium®), c. Conversion Costs equipment who are likely to be could be achieved with a butt-lap Berman Economics questioned DOE’s impacted. DOE has not explained why design, DOE further investigated the methodology for calculating conversion sourcing cores is not an acceptable efficiency limits of butt-lapping costs, which was described in section option for any small manufacturer and, potential. The primary reason that DOE IV.I.3.c of the NOPR. Berman argued given the evidence in the TSD that proposed TSL 1 over TSL 2 in the NOPR that DOE provided unreasonable sourcing cores is a more profitable was because it did not appear that TSL estimates of conversion costs because approach for small manufacturers of 2 could be met using butt-lapping DOE based estimates on an arbitrary LVDTs, DOE’s reliance on the adverse technology, which would have caused percent of total R&D expenditures across financial impacts to small undue hardship on small manufacturers all equipment regulated by DOE. manufacturers associated with that utilize this technology. However, in Therefore, the conversion cost estimates producing such cores in-house in response to comments from the NOPR, are not relevant to the proposed rejecting stronger LVDT standards is DOE analyzed additional design option regulatory action. (Berman Economics, unreasonable. (Earthjustice, No. 195 at combinations using butt-lapping No. 150 at pp. 14–15) pp. 3–5) technology for DL 7 in its engineering In response, the percentages that DOE NEEP has suggested that DOE should analysis and determined that EL 3 can used to determine product conversion not sacrifice large national benefits to still be achieved without the need for costs for liquid-immersed transformer

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23387

manufacturers were based solely on today’s rule and the rule compliance assumptions may result in deviations information relevant to the distribution date is the accepted methodology vetted from this pattern. For example, in the transformer industry, not for all during the preliminary analysis and the preservation of gross margin percentage equipment regulated by DOE. DOE’s standard model used for DOE scenario, DOE applied a single uniform estimates for product conversion rulemakings. This methodology also ‘‘gross margin percentage’’ markup expenses for liquid-immersed considers the possibility that some across all efficiency levels so that, as distribution transformer manufacturers manufacturers, such as small production costs increase with would be based upon the extent to manufacturers, may have difficulty efficiency, the absolute dollar markup which the industry would need to obtaining loans. increases as well. Therefore, the highest convert to amorphous technology. This In addition, Berman Economics efficiency levels do not result in the methodology is similar to the one used argued that an increased market demand highest drop in INPV because for the 2007 final rule but modified to for amorphous steel relative to silicon manufacturers are able to compensate reflect feedback from manufacturers steel may reduce investment for higher conversion costs by charging during interviews and to consider the expenditures rather than increase them higher prices. technology required to meet the because the annealing oven for an efficiency levels from the current amorphous steel core costs substantially 6. Manufacturer Interviews rulemaking. less than the annealing oven for a DOE interviewed manufacturers Berman Economics also commented silicon steel core. Some transformer representing approximately 65 percent that DOE’s estimates of stranded assets manufacturers may also be able to of liquid-immersed distribution were illogical for production, financial, source cores, which, Berman Economics transformer sales, 75 percent of and corporate strategy reasons. From a stated, DOE incorrectly considered an medium-voltage dry-type transformer production perspective, there is likely to undesirable market activity. Berman sales, and 50 percent of low-voltage dry- be a net increase in demand for silicon Economics noted that an outsourcing type transformer sales. These interviews steel at EL 2 for liquid-immersed opportunity allows manufacturers to were in addition to those DOE transformers so assets such as annealing specialize, use cash for other strategic conducted as part of the engineering ovens would not be stranded. Berman purposes, and pursue multiple analysis. DOE outlined the key issues Economics stated most annealing ovens objectives. (Berman Economics, No. 150 for the rulemaking for manufacturers in are very old and have already been at pp. 16–17) the NOPR. 77 FR 7282 (February 10, DOE takes into account conversion depreciated, and manufacturing 2012). DOE considered the information costs associated with a given TSL. investment may be expensed in the year received during these interviews in the While the cost of a single annealing purchased according to current tax laws, development of the NOPR and this final oven for an amorphous steel core may so the cost of all recently purchased rule. annealing ovens has already been be less than the cost of a single recovered. From a strategic perspective, annealing oven for a silicon steel core, 7. Sub-Group Impact Analysis if a manufacturer chooses not to offer an other factors, particularly throughput amorphous line of products, DOE levels, associated tooling, and the R&D DOE identified small manufacturers should not put itself in a position to expenses allocated to the development as a subgroup in the MIA. DOE favor that manufacturer’s strategy over of new designs and production describes the impacts on small another. Furthermore, Berman processes, also drive conversion costs manufacturers in section VI.B. below. Economics stated that DOE based calculations. J. Employment Impact Analysis stranded assets on an arbitrary percent With respect to core sourcing, as with of new capital conversion costs which the above discussion related to the Employment impacts include direct may have been a holdover from the LVDT market, DOE notes that it is not and indirect impacts. Direct decision on microwave ovens. (Berman making any judgment on the value of employment impacts are any changes in Economics, No. 150 at pp. 15–16) one business strategy versus another. the number of employees of DOE agrees that the calculations in Whether sourcing cores is a viable manufacturers of the equipment subject the NOPR for stranded assets were option for any given manufacturer is a to standards, their suppliers, and related incorrectly derived in the GRIM and has decision for each manufacturer in the service firms. The MIA addresses those revised the model for the final rule. For context of its unique environment. impacts. Indirect employment impacts the final rule, stranded assets in the However, during interviews, some are changes in national employment standards case are derived from the manufacturers indicated that production that occur due to the shift in share of the industry’s net property, of cores is an important part of the value expenditures and capital investment plant and equipment (PPE) that is chain and doubted their long-term caused by the purchase and operation of estimated to no longer be useful due to viability should they outsource that more efficient appliances. Indirect energy conservation standards. The function. employment impacts from standards change has no substantial effect on the Finally, Berman Economics has noted consist of the jobs created or eliminated overall results. See TSD chapter 12 for that the logic explained by DOE that in the national economy, other than in more details. more stringent levels of efficiency are the manufacturing sector being Berman Economics also stated that associated with larger adverse industry regulated, due to: (1) Reduced spending DOE has overestimated capital impacts does not hold true in the GRIM, by end users on energy; (2) reduced conversion costs because the which indicates that the model contains spending on new energy supply by the Department assumed a 100 percent a multiplicity of unknown logic errors utility industry; (3) increased consumer front-load in investment prior to the and its results must be viewed as spending on the purchase of new 2016 effective date rather than a least- spurious. (Berman Economics, No. 150 equipment; and (4) the effects of those cost method of financing, such as a at p. 18) three factors throughout the economy. long-term loan. (Berman Economics, No. Although higher efficiency levels are DOE’s employment impact analysis 150 at p. 16) often correlated with greater adverse addresses these impacts. No public Accounting for investments in the industry impacts, certain offsetting comments were received on this time frame between the effective date of factors based on DOE’s markup analysis.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23388 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

One method for assessing the possible analysis. Because ImSET does not SO2 emissions from affected electric effects on the demand for labor of such incorporate price changes, the generating units (EGUs) are subject to shifts in economic activity is to compare employment effects predicted by ImSET nationwide and regional emissions cap sector employment statistics developed may over-estimate actual job impacts and trading programs. Title IV of the by the Labor Department’s Bureau of over the long run. For the final rule, Clean Air Act sets an annual emissions Labor Statistics (BLS). BLS regularly DOE used ImSET only to estimate short- cap on SO2 for affected EGUs in the 48 publishes its estimates of the number of term employment impacts. contiguous States and the District of jobs per million dollars of economic For more details on the employment Columbia (DC). SO2 emissions from 28 activity in different sectors of the impact analysis, see chapter 13 of the eastern States and DC were also limited economy, as well as the jobs created final rule TSD. under the Clean Air Interstate Rule elsewhere in the economy by this same K. Utility Impact Analysis (CAIR), which created an allowance- economic activity. Data from BLS based trading program that operates indicate that expenditures in the utility The utility impact analysis estimates along with the Title IV program. 70 FR sector generally create fewer jobs (both several important effects on the utility 25162 (May 12, 2005) CAIR was directly and indirectly) than industry that would result from the remanded to the U.S. Environmental expenditures in other sectors of the adoption of new or amended standards. Protection Agency (EPA) by the U.S. economy.56 There are many reasons for To calculate this, DOE first obtained the Court of Appeals for the District of these differences, including wage energy savings inputs associated with Columbia Circuit (D.C. Circuit) in 2008, differences and the fact that the utility efficiency improvements to the but it remained in effect. On July 6, sector is more capital-intensive and less considered products from the NIA. 2011 EPA issued a replacement for labor-intensive than other sectors. Then, DOE used that data in the NEMS– CAIR, the Cross-State Air Pollution Rule BT model to generate forecasts of Energy conservation standards have the (CSAPR). 76 FR 48208 (August 8, 2011). electricity consumption, electricity effect of reducing consumer utility bills. The version of NEMS–BT used for generation by plant type, and electric Because reduced consumer today’s rule assumes the generating capacity by plant type, that expenditures for energy likely lead to implementation of CSAPR.57 would result from each TSL. Finally, increased expenditures in other sectors The attainment of emissions caps DOE calculates the utility impact of the economy, the general effect of typically is flexible among EGUs and is analysis by comparing the results at efficiency standards is to shift economic enforced through the use of emissions each TSL to the latest AEO Reference activity from a less labor-intensive allowances and tradable permits. Under case. For the final rule, the estimated sector (i.e., the utility sector) to more existing EPA regulations, any excess impacts for the considered standards are labor-intensive sectors (e.g., the retail SO2 emissions allowances resulting the differences between values derived and service sectors). Thus, based on the from the lower electricity demand from NEMS–BT and the values in the BLS data alone, DOE believes net caused by the imposition of an AEO 2012 reference case. efficiency standard could be used to national employment may increase Chapter 14 of the final rule TSD permit offsetting increases in SO because of shifts in economic activity describes the utility impact analysis. No 2 emissions by any regulated EGU. In past resulting from amended standards for public comments were received on this rulemakings, DOE recognized that there transformers. analysis. For the standard levels considered in was uncertainty about the effects of today’s final rule, DOE estimated L. Emissions Analysis efficiency standards on SO2 emissions indirect national employment impacts In the emissions analysis, DOE covered by the existing cap-and-trade using an input/output model of the U.S. estimated the reduction in power sector system, but it concluded that no economy called Impact of Sector Energy emissions of CO2, SO2, NOX, and Hg reductions in power sector emissions Technologies version 3.1.1 (ImSET). from amended energy conservation would occur for SO2 as a result of ImSET is a special-purpose version of standards for distribution transformers. standards. the ‘‘U.S. Benchmark National Input- DOE used the NEMS–BT computer Beginning in 2015, however, SO2 Output’’ (I–O) model, which was model, which is run similarly to the emissions will fall as a result of the designed to estimate the national AEO NEMS, except that distribution Mercury and Air Toxics Standards employment and income effects of transformers energy use is reduced by (MATS) for power plants, which were energy-saving technologies. The ImSET the amount of energy saved (by fuel announced by EPA on December 21, software includes a computer-based I–O type) due to each TSL. The inputs of 2011. 77 FR 9304 (Feb. 16, 2012). In the model having structural coefficients that national energy savings come from the final MATS rule, EPA established a characterize economic flows among the NIA spreadsheet model, while the standard for hydrogen chloride as a 187 sectors. ImSET’s national economic output is the forecasted physical surrogate for acid gas hazardous air I–O structure is based on a 2002 U.S. emissions. The net benefit of each TSL pollutants (HAP), and also established a benchmark table, specially aggregated to is the difference between the forecasted standard for SO2 (a non-HAP acid gas) the 187 sectors most relevant to emissions estimated by NEMS–BT at as an alternative equivalent surrogate industrial, commercial, and residential each TSL and the AEO Reference Case. building energy use. DOE notes that 57 On December 30, 2011, the D.C. Circuit stayed NEMS–BT tracks CO2 emissions using a the new rules while a panel of judges reviews them, ImSET is not a general equilibrium detailed module that provides results and told EPA to continue administering CAIR. See forecasting model, and understands the with broad coverage of all sectors and EME Homer City Generation, LP v. EPA, Order, No. uncertainties involved in projecting inclusion of interactive effects. For 11–1302, Slip Op. at *2 (D.C. Cir. Dec. 30, 2011). employment impacts, especially On August 21, 2012, the D.C. Circuit vacated today’s rule, DOE used the version of CSAPR. See EME Homer City Generation, LP v. changes in the later years of the NEMS–BT based on AEO 2012, which EPA, No. 11–1302, 2012 WL 3570721 at *24 (D.C. generally represents current legislation Cir. Aug. 21, 2012). The court ordered EPA to 56 See Bureau of Economic Analysis, Regional and environmental regulations, continue administering CAIR. AEO 2012 had been Multipliers: A User Handbook for the Regional finalized prior to both these decisions, however. Input-Output Modeling System (RIMS II). including recent government actions, for DOE understands that CAIR and CSAPR are similar Washington, DC. U.S. Department of Commerce, which implementing regulations were with respect to their effect on emissions impacts of 1992. available as of December 31, 2011. energy efficiency standards.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23389

standard for acid gas HAP. The same period for each TSL. This section When attempting to assess the controls are used to reduce HAP and summarizes the basis for the monetary incremental economic impacts of carbon non-HAP acid gas; thus, SO2 emissions values used for CO2 and NOX emissions dioxide emissions, the analyst faces a will be reduced as a result of the control and presents the values considered in number of serious challenges. A recent technologies installed on coal-fired this rulemaking. report from the National Research power plants to comply with the MATS For CO2, DOE is relying on a set of Council 58 points out that any requirements for acid gas. AEO 2012 values for the social cost of carbon assessment will suffer from uncertainty, assumes that, in order to continue (SCC) that was developed by a speculation, and lack of information operating, coal plants must have either government interagency process. A about: (1) Future emissions of flue gas desulfurization or dry sorbent summary of the basis for those values is greenhouse gases; (2) the effects of past injection systems installed by 2015. provided below, and a more detailed and future emissions on the climate Both technologies, which are used to description of the methodologies used is system; (3) the impact of changes in reduce acid gas emissions, also reduce provided as an appendix to chapter 16 climate on the physical and biological SO2 emissions. Under the MATS, NEMS of the final rule TSD. environment; and (4) the translation of shows a reduction in SO2 emissions 1. Social Cost of Carbon these environmental impacts into when electricity demand decreases (e.g., economic damages. As a result, any as a result of energy efficiency Under section 1(b)(6) of Executive effort to quantify and monetize the standards). Emissions will be far below Order 12866, 58 FR 51735 (Oct. 4, harms associated with climate change the cap that would be established by 1993), agencies must, to the extent will raise serious questions of science, permitted by law, ‘‘assess both the costs CSAPR, so it is unlikely that excess SO2 economics, and ethics and should be emissions allowances resulting from the and the benefits of the intended viewed as provisional. lower electricity demand would be regulation and, recognizing that some Despite the serious limits of both needed or used to permit offsetting costs and benefits are difficult to quantification and monetization, SCC quantify, propose or adopt a regulation increases in SO2 emissions by any estimates can be useful in estimating the regulated EGU. Therefore, DOE believes only upon a reasoned determination social benefits of reducing carbon that efficiency standards will reduce that the benefits of the intended dioxide emissions. Consistent with the regulation justify its costs.’’ The purpose SO2 emissions in 2015 and beyond. directive quoted above, the purpose of of the SCC estimates presented here is Under CSAPR, there is a cap on NOX the SCC estimates presented here is to emissions in 28 eastern States and the to allow agencies to incorporate the make it possible for agencies to District of Columbia. Energy monetized social benefits of reducing incorporate the social benefits from conservation standards are expected to CO2 emissions into cost-benefit analyses reducing carbon dioxide emissions into have little effect on NOX emissions in of regulatory actions that have small, or cost-benefit analyses of regulatory those States covered by CSAPR because ‘‘marginal,’’ impacts on cumulative actions that have small, or ‘‘marginal,’’ excess NOX emissions allowances global emissions. The estimates are impacts on cumulative global emissions. resulting from the lower electricity presented with an acknowledgement of Most Federal regulatory actions can be demand could be used to permit the many uncertainties involved and expected to have marginal impacts on offsetting increases in NOX emissions. with a clear understanding that they global emissions. However, standards would be expected should be updated over time to reflect For such policies, the agency can to reduce NOX emissions in the States increasing knowledge of the science and estimate the benefits from reduced (or not affected by the caps, so DOE economics of climate impacts. costs from increased) emissions in any As part of the interagency process that estimated NOX emissions reductions future year by multiplying the change in from the standards considered in developed the SCC estimates, technical emissions in that year by the SCC value today’s rule for these States. experts from numerous agencies met on appropriate for that year. The net The MATS limit mercury emissions a regular basis to consider public present value of the benefits can then be from power plants, but they do not comments, explore the technical calculated by multiplying each of these include emissions caps and, as such, literature in relevant fields, and discuss future benefits by an appropriate DOE’s energy conservation standards key model inputs and assumptions. The discount factor and summing across all would likely reduce Hg emissions. For main objective of this process was to affected years. This approach assumes this rulemaking, DOE estimated develop a range of SCC values using a that the marginal damages from mercury emissions reductions using the defensible set of input assumptions increased emissions are constant for NEMS–BT based on AEO 2012, which grounded in the existing scientific and small departures from the baseline incorporates the MATS. economic literatures. In this way, key emissions path, an approximation that Chapter 15 of the final rule TSD uncertainties and model differences is reasonable for policies that have provides further information on the transparently and consistently inform effects on emissions that are small emissions analysis. the range of SCC estimates used in the relative to cumulative global carbon rulemaking process. M. Monetizing Carbon Dioxide and dioxide emissions. For policies that Other Emissions Impacts a. Monetizing Carbon Dioxide Emissions have a large (non-marginal) impact on As part of the development of this The SCC is an estimate of the global cumulative emissions, there is a rule, DOE considered the estimated monetized damages associated with an separate question of whether the SCC is monetary benefits from the reduced incremental increase in carbon dioxide an appropriate tool for calculating the benefits of reduced emissions. This emissions of CO2 and NOX that are emissions in a given year. It is intended expected to result from each of the to include (but is not limited to) changes concern is not applicable to this considered TSLs. To make this in net agricultural productivity, human rulemaking, and DOE does not attempt calculation similar to the calculation of health, property damages from to answer that question here. the NPV of customer benefit, DOE increased flood risk, and the value of 58 National Research Council. ‘‘Hidden Costs of considered the reduced emissions ecosystem services. Estimates of the Energy: Unpriced Consequences of Energy expected to result over the lifetime of SCC are provided in dollars per metric Production and Use.’’ National Academies Press: equipment shipped in the forecast ton of carbon dioxide. Washington, DC 2009.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23390 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

61 It is important to emphasize that the $0 to $20 per metric ton CO2 for 2007 PAGE models. These models are interagency process is committed to emission reductions (in 2007$). 73 FR frequently cited in the peer-reviewed updating these estimates as the science 58772, 58814 (Oct. 7, 2008). In addition, literature and were used in the last and economic understanding of climate EPA’s 2008 Advance Notice of Proposed assessment of the Intergovernmental change and its impacts on society Rulemaking on Regulating Greenhouse Panel on Climate Change. Each model improves over time. Specifically, the Gas Emissions Under the Clean Air Act was given equal weight in the SCC interagency group has set a preliminary identified what it described as ‘‘very values that were developed. goal of revisiting the SCC values at such preliminary’’ SCC estimates subject to time as substantially updated models revision. 73 FR 44354 (July 30, 2008). Each model takes a slightly different become available, and to continue to EPA’s global mean values were $68 and approach to model how changes in emissions result in changes in economic support research in this area. In the $40 per metric ton CO2 for discount meantime, the interagency group will rates of approximately 2 percent and 3 damages. A key objective of the continue to explore the issues raised by percent, respectively (in 2006$ for 2007 interagency process was to enable a this analysis and consider public emissions). consistent exploration of the three comments as part of the ongoing In 2009, an interagency process was models while respecting the different interagency process. initiated to offer a preliminary approaches to quantifying damages assessment of how best to quantify the taken by the key modelers in the field. b. Social Cost of Carbon Values Used in benefits from reducing carbon dioxide An extensive review of the literature Past Regulatory Analyses emissions. To ensure consistency in was conducted to select four sets of To date, economic analyses for how benefits are evaluated across input parameters for these models: Federal regulations have used a wide agencies, the Administration sought to Climate sensitivity, socio-economic and range of values to estimate the benefits develop a transparent and defensible emissions trajectories, and discount associated with reducing carbon dioxide method, specifically designed for the rates. A probability distribution for emissions. In the model year 2011 CAFE rulemaking process, to quantify avoided climate sensitivity was specified as an final rule, the Department of climate change damages from reduced input into all three models. In addition, Transportation (DOT) used both a CO2 emissions. The interagency group the interagency group used a range of ‘‘domestic’’ SCC value of $2 per metric did not undertake any original analysis. scenarios for the socio-economic ton of CO and a ‘‘global’’ SCC value of 2 Instead, it combined SCC estimates from parameters and a range of values for the $33 per metric ton of CO for 2007 2 the existing literature to use as interim discount rate. All other model features emission reductions (in 2007$), values until a more comprehensive were left unchanged, relying on the increasing both values at 2.4 percent per analysis could be conducted. The model developers’ best estimates and year. It also included a sensitivity outcome of the preliminary assessment 59 judgments. analysis at $80 per metric ton of CO2. by the interagency group was a set of A domestic SCC value is meant to five interim values: Global SCC The interagency group selected four reflect the value of damages in the estimates for 2007 (in 2006$) of $55, SCC values for use in regulatory United States resulting from a unit $33, $19, $10, and $5 per ton of CO2. analyses. Three values are based on the change in carbon dioxide emissions, These interim values represent the first average SCC from three integrated while a global SCC value is meant to sustained interagency effort within the assessment models, at discount rates of reflect the value of damages worldwide. U.S. government to develop an SCC for 2.5 percent, 3 percent, and 5 percent. A 2008 regulation proposed by DOT use in regulatory analysis. The results of The fourth value, which represents the assumed a domestic SCC value of $7 per this preliminary effort were presented in 95th percentile SCC estimate across all metric ton of CO2 (in 2006$, with a several proposed and final rules and three models at a 3-percent discount range of $0 to $14 for sensitivity were offered for public comment in rate, is included to represent higher- analysis) for 2011 emission reductions, connection with proposed rules, 60 than-expected impacts from temperature also increasing at 2.4 percent per year. including the joint EPA–DOT fuel change further out in the tails of the A regulation for packaged terminal air economy and CO2 tailpipe emission SCC distribution. For emissions (or conditioners and packaged terminal proposed rules. emission reductions) that occur in later heat pumps finalized by DOE in October years, these values grow over time, as of 2008 used a domestic SCC range of c. Current Approach and Key Assumptions depicted in Table IV.9. Additionally, the interagency group determined that a 59 See Average Fuel Economy Standards Since the release of the interim range of values from 7 percent to 23 Passenger Cars and Light Trucks Model Year 2011, values, the interagency group 74 FR 14196 (March 30, 2009) (final rule); Final percent should be used to adjust the reconvened on a regular basis to Environmental Impact Statement Corporate Average global SCC to calculate domestic Fuel Economy Standards, Passenger Cars and Light generate improved SCC estimates, effects,62 Trucks, Model Years 2011–2015 at 3–90 (Oct. 2008) which were considered for this although preference is given to (Available at: http://www.nhtsa.gov/fuel-economy). consideration of the global benefits of 60 proposed rule. Specifically, the group See Average Fuel Economy Standards, reducing CO2 emissions. Passenger Cars and Light Trucks, Model Years considered public comments and 2011–2015, 73 FR 24352 (May 2, 2008) (proposed further explored the technical literature 61 The models are described in appendix 15–A of rule); Draft Environmental Impact Statement in relevant fields. The interagency group Corporate Average Fuel Economy Standards, the final rule TSD. relied on three integrated assessment 62 Passenger Cars and Light Trucks, Model Years It is recognized that this calculation for 2011–2015 at 3–58 (June 2008) (Available at: models (IAMs) commonly used to domestic values is approximate, provisional, and http://www.nhtsa.gov/fuel-economy). estimate the SCC: The FUND, DICE, and highly speculative.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23391

TABLE IV.9—SOCIAL COST OF CO2, 2010–2050 [in 2007 dollars per metric ton]

Discount Rate Year 5% 3% 2.5% 3% Average Average Average 95th Percentile

2010 ...... 4.7 21.4 35.1 64.9 2015 ...... 5.7 23.8 38.4 72.8 2020 ...... 6.8 26.3 41.7 80.7 2025 ...... 8.2 29.6 45.9 90.4 2030 ...... 9.7 32.8 50.0 100.0 2035 ...... 11.2 36.0 54.2 109.7 2040 ...... 12.7 39.2 58.4 119.3 2045 ...... 14.2 42.1 61.7 127.8 2050 ...... 15.7 44.9 65.0 136.2

It is important to recognize that a To monetize the CO2 emissions overstated the environmental benefits number of key uncertainties remain, and reductions expected to result from from NOX reduction attributed to the that current SCC estimates should be amended standards for distribution efficiency levels in the proposed rule. treated as provisional and revisable transformers, DOE used the values APPA suggested that DOE use emissions since they will evolve with improved identified in Table A1 of the ‘‘Social allowance prices from EPA’s Clean Air scientific and economic understanding. Cost of Carbon for Regulatory Impact Interstate Rule and the NOX Budget The interagency group also recognizes Analysis Under Executive Order Trading Program, which averaged that the existing models are imperfect 12866,’’ which is reprinted in appendix $15.89 per ton in 2011. (APPA, No. 191 and incomplete. The National Research 16–A of the final rule TSD, at p. 2) Council report mentioned above points appropriately escalated to 2011$. To In response, DOE disagrees with out that there is tension between the calculate a present value of the stream APPA’s claim that ‘‘[t]hese emissions goal of producing quantified estimates of monetary values, DOE discounted the markets and their subsequent prices of the economic damages from an values in each of the four cases using were designed to monetize the incremental metric ton of carbon and the specific discount rate that had been environmental cost of polluting in its the limits of existing efforts to model used to obtain each SCC value. entirety.’’ Emissions allowance prices in these effects. There are a number of 2. Valuation of Other Emissions any given market are a function of concerns and problems that should be Reductions several factors, including the stringency addressed by the research community, of the regulations and the costs of including research programs housed in As noted above, new or amended complying with regulations, as well as many of the agencies participating in energy conservation standards would the initial allocation of allowances. The the interagency process to estimate the reduce NOX emissions in those 22 States prices do not reflect the potential SCC. that are not affected by the CAIR. DOE damages caused by emissions that still DOE recognizes the uncertainties estimated the monetized value of NOX take place. There is extensive literature embedded in the estimates of the SCC emissions reductions resulting from on valuation of benefits of reducing air used for cost-benefit analyses. As such, each of the TSLs considered for today’s pollutants, including valuation of rule using a range of dollar per ton DOE and others in the U.S. Government reduced NOX emissions from electricity 64 intend to periodically review and values cited by OMB. These values, generation.66 The values that DOE has reconsider those estimates to reflect which range from $370 per ton to $3,800 used are consistent with the estimates in increasing knowledge of the science and per ton of NOX from stationary sources, the literature. measured in 2001$ (equivalent to a economics of climate impacts, as well as DOE has decided to await further range of $450 to $4,623 per ton in improvements in modeling. In this guidance regarding consistent valuation 2011$), are based on estimates of the context, statements recognizing the and reporting of Hg emissions before it mortality-based benefits of NO limitations of the analysis and calling X monetizes Hg in its rulemakings. for further research take on exceptional reductions from stationary sources made significance. by EPA. In accordance with OMB N. Labeling Requirements guidance, DOE conducted two In summary, in considering the In the NOPR, DOE responded to calculations of the monetary benefits potential global benefits resulting from comments regarding the classification derived using each of the above values reduced CO2 emissions, DOE used the and labeling of rectifier and testing for NO , one using a discount rate of 3 most recent values identified by the X transformers. In response to these percent and the other using a discount interagency process, adjusted to 2011$ comments, DOE acknowledged that the rate of 7 percent.65 using the GDP price deflator. For each proposed additions to the definitions Commenting on the NOPR, APPA of the four cases specified, the values helped to clarify ‘‘rectifier’’ and ‘‘testing stated that DOE has significantly used for emissions in 2011 were $4.9, transformers’’ and proposed to amend $22.3, $36.5, and $67.6 per metric ton 64 the definitions accordingly. 63 U.S. Office of Management and Budget, Office avoided (values expressed in 2011$). of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal 66 See e.g., Burtraw, Dallas, Karen Palmer, Ranjit 63 Table A1 presents SCC values through 2050. Regulations and Unfunded Mandates on State, Bharvirkar, and Anthony Paul (2001). Cost-Effective For DOE’s calculation, it derived values after 2050 Local, and Tribal Entities, Washington, DC Page 64. Reduction of NOX Emissions from Electricity using the 3-percent per year escalation rate used by 65 OMB, Circular A–4: Regulatory Analysis (Sept. Generation. Discussion Paper 00–55REV. Resources the interagency group. 17, 2003). for the Future, Washington, DC.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23392 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Cooper Power expressed support for Prolec-GE and PEMCO expressed transformers. DOE addresses these other the plan DOE set forth in the NOPR to similar ideas, both commenting that all comments below. clarify rectifier and testing transformers. excluded transformers should be 1. Supplementary Trial Standard Levels (Cooper, No. 165 at p. 2) Howard identified by type and indicate that they Industries also expressed support, are excluded from standards. (PEMCO, DOE created TSLs that each consist of noting that while they do not No. 183 at p. 2; Prolec-GE, No. 177 at specific efficiency levels for a set of manufacture rectifier or testing p. 7) Schneider concurred, stating ‘‘all design lines. For the NOPR, DOE transformers, they find DOE’s nameplate non-regulated transformers should examined seven TSLs for liquid- request to ‘‘indicate that they are for require labeling—not just rectifier and immersed distribution transformers, six such purposes exclusively’’ to be testing transformers.’’ (Schneider, No. TSLs for low-voltage dry-type acceptable. (HI, No. 151 at p. 12) 180 at p.3) distribution transformers, and five TSLs Earthjustice commented that the Prolec-GE encouraged DOE to for medium-voltage dry-type addition of labeling requirements for establish labeling requirements or distribution transformers. For liquid-immersed distribution rectifier and testing transformers can guidelines for covered products for use transformers, joint comments submitted help prevent misapplication of these in the United States. They believed that, by ASAP, ACEEE, NRDC and NPCC exempt products, but they feel at present, without specifications for recommended that DOE modify TSL 4 additional changes, such as requiring labeling products, those charged with to represent their collective final any print or electronic marketing for certification, compliance and position from the Negotiated such units to indicate their use enforcement would have difficulty Rulemaking, which advocated including specifically, may also be necessary to identifying which products were to EL 2 for all liquid-immersed ensure enforcement. (Earthjustice, No. meet which standards a difficult time distribution transformer design lines. (In 195 at p. 5; Earthjustice No. 146 at p. 44) with inconsistent labeling. (Prolec-GE, the NOPR, DOE misstated and analyzed However, Progress Energy commented No. 177 at pp. 16–17) Schneider Electric the Advocates collective final position that rectifier and testing transformers also expressed that regulated products from the Negotiated Rulemaking as EL3 are already very specialized and usually should have labeling rules with the for all liquid-immersed distribution more expensive than distribution following language ‘‘DOE 10 CFR PART transformer design lines.). They also transformers; therefore, there is a very 431 COMPLIANT.’’ Schneider would recommended that DOE examine a TSL low chance of a utility attempting to also like DOE certification regulations 3.5 level, which would correspond to EL replace a distribution transformer with (10 CFR part 429) expanded to include 1.5 across the board. (ASAP, ACEEE, one of these transformers. (PE, No. 192 non-regulated products. (Schneider, No. NRDC, NPCC, No. 186 at p. 9) at p. 4) APPA concurred, noting that 180 at p. 3) In response to these comments DOE they were unaware of rectifier or testing GE commented that refurbished units considered four new TSLs, labeled A, B, transformers being used as a loophole. should be labeled as such and have the C and D, to explore possible energy (APPA, No. 191 at p. 6) Similarly, original manufacturer’s nameplate savings below EL 2. TSL C, consisting HVOLT pointed out that the physical removed. (GE, No. 146 at p. 114) of EL 2 for all liquid-immersed differences between rectifier and DOE had initially considered distribution transformer design lines, distribution transformers would be amending the definitions of ‘‘rectifier correctly represents the collective final fairly obvious without a nameplate transformer’’ and ‘‘testing transformer’’ position of ASAP, ACEEE, NRDC, and marking. Furthermore, they feel that to include a labeling requirement. NPCC in the negotiations. DOE adding the word ‘‘rectifier’’ to the Commenters, however, have pointed out presented these new TSLs to nameplate would only add more that a number of transformer types stakeholders at a public meeting on June congestion. (HVOLT, No. 146 at p. 46) would benefit from a clear set of 20, 2012. In response to the NOPR, many labeling requirements, which could aid Several parties stated that these new stakeholders expressed their support for manufacturers, consumers, and DOE TSLs, while being technologically clearly identifying transformers itself in determining whether a given feasible, would present issues due to excluded from DOE standards through a sample is covered or determined by the increased transformer size and weight. standardized labeling system. ABB manufacturer as meeting the standards. NRECA, Howard Industries, and NEMA recommended that the text ‘‘DOE Given the breadth of the issue, DOE stated that this issue would increase the Excluded: Transformer type’’ be makes no changes to labeling frequency of pole replacement by included on the nameplate for all of the requirements in today’s rule, but may utilities. (NRECA, No. 228 at p. 2; HI, excluded type transformers, and address the matter of distribution No. 218 at p.1; NEMA, No. 225 at p. 6) suggested that this labeling requirement transformer labeling in a future Central Maloney commented that their be added to CFR part 429. (ABB, No. rulemaking. DOE appreciates the designs at the new TSLs exceeded 158 at p. 5) ABB also noted that they comments and feedback regarding customer weight specifications for their agree with the proposal to not set labeling supplied by the stakeholders. single-phase, pole-mounted distribution standards for step-up transformers, and Issues regarding labeling, compliance, transformers at various kVA capacities. that all step-up transformers be and enforcement may, however, be (CM, No. 224 at p.3) Others stated that identified on the nameplate with considered in a different proceeding. the economic benefits of TSLs B through uniform language. (ABB, No. 158 at p. D could only be realized with core steels O. Discussion of Other Comments 6) NEMA agreed with ABB, stating that other than M3 (NEMA, No. 225 at pp. ‘‘labeling should be applied in a Comments DOE received in response 4, 5; ATI No. 218 at p. 1), which could consistent manner for all designated to the NOPR analysis on the soundness transfer significant market power to non-regulated distribution and validity of the methodologies and producers of SA1 core steel (AK, No. transformers’’ and suggested the data DOE used are discussed in 230 at p. 4) and lead to unintended anti- following language be used: ‘‘This previous parts of section IV. Other competitive results. (ATI, No. 218 at p. _____Transformer is NOT intended for stakeholder comments in response to 1; AK, No. 230 at p. 5) use as a Distribution Transformer per 10 the NOPR addressed specific issues DOE concluded that all of these new CFR 431.192’’ (NEMA, No. 170 at p. 7) associated with amended standards for TSLs would result in similar burdens as

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23393

the TSLs 2, and 3 that were analyzed in rule DL 6 is held at the baseline because will most likely not meet the proposed the NOPR. As discussed further in DOE did not find positive economic efficiency levels. (AEC, No. 163 at p. 3; section 5.C.1 of this final rule, all of benefits to the consumer above that NRECA, No. 172 at p. 3) HI requested these TSLs would face issues regarding level. Small, single-phase transformers that DOE seek authority over the the type of steel used in liquid- tend to be lightly-loaded and have a refurbished/repair industry to minimize immersed transformers. DOE is more difficult time than their larger, use of lower-efficiency transformers. concerned that the current supplier of three-phase counterparts recovering (HI, No. 151 at p. 11) amorphous steel, together with others increases in first cost. DOE believes this DOE acknowledges that a significant that might enter the market, would not change provides increased customer increase in the cost of new transformers be able to increase production of benefits with TSL 2. could encourage growth in the use of amorphous steel rapidly enough to refurbished transformers by some 3. Impact of Standards on Transformer supply the amounts that might be utilities, and that refurbished Refurbishment needed by transformer manufacturers transformers likely would be less before 2015. Although the industry can A number of parties expressed efficient than new transformers meeting manufacture liquid-immersed concern that amended standards on today’s standards. Although DOE was distribution transformers at TSL 3 from transformers would induce use of not able to explicitly model the likely M3 or lower grade steels, the positive rebuilt or refurbished distribution extent of refurbishing at each LCC and national impacts results are transformers rather than the more considered TSL, it did include in its based on lowest first-cost designs, expensive new transformers. (HI, shipments analysis a price elasticity which include amorphous steel for all No.151 at pp. 9, 12; Cooper, No. 165 at parameter that captures the response of the design lines analyzed. If p. 5; Prolec-GE, No. 177 at p. 14; the market to higher costs in a general manufacturers were to meet standards at ComEd, No. 184 at p. 13; Westar, No. way (see chapter 9 of the final rule TSL 3 using M3 or lower grade steels, 169 at p. 3) Several parties stated that TSD). Furthermore, DOE believes that DOE’s analysis shows that the LCC the higher the initial cost increase due the costs of new transformers meeting impacts are negative. Given that the to energy efficiency standards, the today’s standards, which are recommended TSLs face similar issues higher the likelihood that utilities will approximately 3.0 percent (design line as TSL 3, DOE did not incorporate them use more recycled equipment. (EEI, No. 2) and 13.1 percent (design line 3) into the final rule. 185 at p. 17; APPA, No. 191 at p. 12; higher than today’s typical single-phase Progress Energy, No. 192 at p. 9) BG&E liquid-immersed distribution 2. Efficiency Levels stated that if new transformer transformers, and approximately 6.9 ASAP, ACEEE, NRDC and NPCC requirements significantly increase percent (design line 4) and 12.6 percent stated that DOE has not evaluated the costs, it may consider purchasing (design line 5) higher than today’s potential impacts of the proposed refurbished designs to address the size typical three-phase liquid-immersed standards for liquid-immersed and weight problems of transformers transformers, would not be so high as to distribution transformers since the meeting the standard. (BG&E, No. 182 at induce a significant level of refurbishing proposed standard levels are not the p. 9) Fort Collins Utilities commented instead of replacement. same as the levels in TSL 1 for that it would be purchasing fewer new Earthjustice asserted that ‘‘the statute equipment class 1. They said that DOE’s transformers and re-winding more of its leaves room for DOE to regulate the final standard must be based on analysis existing transformer units. (CFCU, No. efficiency of rebuilt transformers’’ and and results for the actual efficiency 190 at p. 3) that ‘‘it is reasonable for DOE to levels established by the final rule. Some parties specifically stated that determine that rewound transformers (ASAP, ACEEE, NRDC, NPCC, No. 186 setting standards for liquid-immersed are ‘new covered products’ subject to at p. 9) Similarly, NEEP stated that the distribution transformers greater than energy conservation standards if the proposed TSL 1 for liquid-immersed TSL 1 would increase the use of less- title of the rewound transformer is then distribution transformers did not have efficient, refurbished transformers, and transferred to an end-user.’’ all the corresponding ELs for the various this would reduce the energy savings (Earthjustice No. 195 at p. 6) Other design lines. It noted that DOE proposed from such standards. (NEMA, No. 170 at commenters reached opposite 98.95 percent for design line 2, which p. 3; USW, No. 188 at pp. 4, 18–19) AEC conclusions regarding whether DOE has does not correspond to any EL. (NEEP, and NRECA stated that if DOE raises the authority to regulate refurbished or No. 193 at p. 2) standards above the levels proposed in rewound transformers. AEC agreed with In response to these comments, for the NOPR, it is likely that costs will statements made by DOE’s Office of the this final rule, DOE analyzed the actual increase dramatically, increasing the General Counsel during negotiations efficiency ratings proposed in the NOPR likelihood that more existing that existing and recycled transformers for equipment class 1 (single-phase transformers will be recycled via are not ‘‘covered’’ equipment and would liquid-immersed transformers) at TSL 1. refurbishment, rewinding, or rebuilding. not have to meet the proposed energy These efficiencies are 99.11 percent for (AEC, No. 163 at p. 3; NRECA, No. 172 efficiency standards for new products design line 1, 98.95 percent for design at p. 3) that are ‘‘covered.’’ (AEC No. 163 at line 2, and 99.49 percent for design line Several parties stated that rebuilt or p. 3) 3. These efficiencies correspond to EL refurbished transformers would be less DOE has analyzed this issue for many 0.4 for design line 1, EL 0.5 for design efficient than new transformers and, years. For instance, in its August 4, line 2, and EL 1.1 for design line 3. therefore, the energy saving goals of 2006, NOPR, DOE summarized its legal The TSLs that DOE used for the final standards would be undermined. (HI, authority to regulate new, used and rule are presented in section V.A of this No. 151 at pp. 9, 12; Cooper, No. 165 at refurbished transformers and sought preamble. DOE notes that, for the final p. 5; Prolec-GE, No. 177 at p. 14) AEC public comment on the issue. 71 FR rule, it has slightly modified the and NRECA stated that, in some cases, 44356, 44366–67. In that notice, DOE definition of TSL 2 for low-voltage dry- the efficiency of transformers may noted that for the entire history of its type distribution transformers from the actually increase as a result of appliance and commercial equipment NOPR definition. Where previously DL refurbishment or rewinding, but the energy conservation standards program, 6 had been at EL 3 in TSL 2, in today’s efficiency of the refurbished transformer DOE has not sought to regulate used

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23394 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

units that have been reconditioned or Several parties commented on the 15; Schneider, No. 180 at p. 1; USW, No. rebuilt, or that have undergone major negotiated rulemaking process. 148 at p. 1) Other parties agreed, noting repairs. DOE stated that given there is Despite praising the consensus that a higher standard would cause a no legislative history to ascertain agreement on the medium-voltage-dry- transition to amorphous steel, and urged Congressional intent and the potential type units, the Advocates commented DOE not to move to higher standard ambiguity of the statutory language, this that overall the process ‘‘produced levels, as the proposed standards are the conclusion was based on detailed virtually no benefits.’’ (Advocates, No. highest justified levels. (USW, No. 148 analysis and interpretation of numerous 186 at p. 14) In contrast, NEMA at p. 2; Weststar, No. 169 at p. 1 and p. statutory provisions in the EPCA, commented that the process was 4; Adams Electrical Coop, No. 163 at p. namely 42 U.S.C. 6302, 6316(a) and extremely valuable and resulted in a 1; APPA, No. 191 at p. 2; Steelmakers, 6317(a)(1). Importantly, DOE analyzed better analysis. (NEMA, No. 170 at p. 2) No. 188 at p. 2; PECO, No. 196 at p. 1; the meaning of a ‘‘newly covered Eaton remarked that the negotiation NEMA, No. 170 at p. 2; MTEMC, No. product’’ and whether a refurbished process improved the resulting proposal 210 at p. 1; EEI, No. 185 at p. 2; BG&E, transformer could nonetheless fall for LVDT distribution transformers and No. 182 at p. 2; BSE, No. 152 at p. 1) under this definition. (42 USC sec. was a more efficient vehicle for ATI agreed, noting that the NOPR 6302) The most reasonable considering stakeholder input. (Eaton, efficiency levels are the proper levels to interpretation of the statutory definition No. 157 at p. 2) Progress Energy ensure M3 and amorphous metals are is that Congress intended that this recommended that the spirit of the cost competitive with each other. (ATI provision apply to newly manufactured negotiating committee be retained No. 181 at p. 2) KAEC commented that products and equipment the title of indefinitely through formation of a task increased standards could pose a threat which has not passed for the first time force of stakeholders that could advise to small manufacturers. (KAEC, No. 126 to a consumer of the product. This DOE in the future. (PE, No. 192 at p. 2) at p. 2) BSE commented that an increase conclusion was reiterated in the October DOE appreciates feedback on the in standards would increase the capital 12, 2007 final rule. (72 FR 58203) And negotiation process and will consider its expense of the transformer, which will this remains DOE’s position today. The use in appropriate future rulemakings. in turn have a negative impact on rates issue was raised during the negotiations, Currently, DOE has no plans to form a that consumers are charged for their and again, DOE emphasized that task force on distribution transformer electricity with very minimal gains in refurbished transformers were not standards. efficiency. (BSE, No. 152 at p. 1) NEMA ‘‘covered’’ equipment as defined by 6. Proposed Standards—Weighting of noted that there are no utility problems EPCA. (DOE No. 95 at p. 95) Despite Benefits vs. Burdens at the current proposed levels. (NEMA, DOE’s lack of legal authority, DOE has DOE received many comments that No. 170 at p. 13) Steelmakers continued to evaluate the degree to commented that DOE’s proposal for which utilities may purchase a supported or criticized the Department’s weighing of the benefits and burdens in liquid-immersed transformers correctly refurbished product rather than a new states that the standards it is proposing transformer, as discussed above. its selection of the proposed levels, particularly for liquid-immersed and will not lessen the utility or 4. Alternative Means of Saving Energy low-voltage dry type transformers. The performance of distribution transformers, while noting that Rockwood Electric commented that a first section below presents general increasing standards would negatively more effective means of saving energy comments on all of the transformer impact utility. (Steelmakers, No. 188 at than requiring energy conservation in superclasses, and the following sections the distribution transformers themselves present comments specifically on each pp. 15–16) AEC and NRECA both noted would be to require that power of the superclasses. The final section that under any revised analysis, DOE distribution occur at higher voltages and presents a response to the comments by should not consider increasing the thereby reduce resistive losses. DOE. proposed efficiency levels, as the (Rockwood Electric, No. 167 at p. 1) evidence has shown that there would be a. General Comments CFCU advocated that DOE seek more many negative impacts on domestic cost-effective means of finding Many stakeholders expressed their steelmakers, domestic transformer efficiency in electric distribution support for the standards proposed by manufacturers, electric utilities, and systems than by increasing efficiency DOE. (AK, No. 146 at p. 143; ATI, No. end-use customers. (AEC, No. 163 at p. standards for distribution transformers. 146 at p. 7; ATI, No. 181 at p. 1–2; CDA, 1; NRECA, No. 172 at pp. 2, 6) NRECA (CFCU, No. 190 at p. 2) DOE has no No. 153 at p. 1; ComEd, No. 184 at p. supported the proposed efficiency levels plans to address distribution voltage 1; Cooper, No. 165 at p. 1; DE, No. 179 in the NOPR as they minimize the ratings in the present rulemaking, and at p. 1; JEC, No. 173 at p. 2; KAEC, No. concerns associated with size and does not consider the possibility to fall 126 at p. 1–2; KAEC, No. 149 at p. 7; weight issues. (NRECA, No. 172 at p. 8) within its scope of coverage. NEMA, No. 146 at p. 146; NRECA, No. APPA members recommend that the 146 at p. 158; PECO, No. 196 at p. 1; proposed efficiency levels should be 5. Alternative Rulemaking Procedures UAW, No. 194 at p. 1; USW, No. 148 at viewed as the maximum achievable Prior to publication of the NOPR, DOE p. 1; Adams Electrical Coop, No. 13) levels. (APPA, No. 191 at p. 2) held a series of negotiating sessions to Others pointed out that these levels are Other parties believe that DOE should discuss standards for all three types of well-balanced, allowing cold rolled choose more stringent efficiency levels. distribution transformer under the grain-oriented steel (CRGO)/amorphous ASAP, ACEEE, NRDC and NPCC stated Negotiated Rulemaking Act. The competition, energy savings, and that a more thorough consideration of negotiating parties succeeded in arriving benefits to consumers without unduly the record and completion of critical at a consensus standard for medium- harming manufacturers. (ATI, No. 146 at missing or incomplete analyses will voltage dry-type transformers, which is p. 9; Cooper, No. 143 at p. 1; Cooper, lead DOE to the conclusion that higher adopted in today’s rule. Such adoption No. 146 at p. 13–14; (FedPac, No. 132 standards are justified for both low- was supported by a broad spectrum of at p. 1 and pp. 3–4; HVOLT, No. 144 at voltage dry-type and medium-voltage parties as discussed previously p. 1 and pp. 10–11; NEMA, No. 146 at liquid-immersed transformers. They (Advocates, 4/10/12 comment at p. 2) p. 12–13; Prolec-GE, No. 146 at p. 14– stated that higher standards than those

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23395

proposed would yield shorter paybacks NOPR were without merit and the At the NOPR public meeting, ASAP for consumers and much larger existing 2010 standards should be commented that the standard levels environmental and energy system maintained instead. (CCED, No. 174 at proposed for liquid-immersed benefits. The Advocates noted that other p. 3) transformers are far below the point that major countries, including China and Some stakeholders expressed would maximize consumer benefits India, make use of amorphous core opinions about how steel availability because DOE put an inordinate amount transformers to a greater degree than should factor into the standards that of weight on manufacturer impacts to does the United States. (Advocates, No. DOE chooses. Progress Energy urged the detriment of consumer benefits. 186 at pp. 2–3) Metglas requested that DOE not to set a standard that would (ASAP, No. 146 at p. 27) They also DOE revise the proposed regulation result in the use of specific steels that commented that DOE placed significant because it deprives consumers of have questionable supply availability, weight on steel manufacturer impacts billions of dollars in potential energy noting that M3 and M4 grades of core but did not conduct a more detailed savings and millions of tons of harmful steel should be required for 85 percent analysis on those impacts, in particular pollution reductions by favoring older, or more of any required efficiency level. one which includes employment at each less efficient transformer designs over (PE, No. 192 at p. 7–8) Earthjustice felt TSL for steel manufacturers. (ASAP, No. innovative U.S.-made energy-efficient that DOE failed to rationally analyze the 146 at p. 143) ASAP recommended that technologies. (Metglas, No. 102 at p. 3) potential impacts associated with steel DOE select EL 2 for liquid-immersed EMS Consulting commented that production capacity constraints while units. (ASAP, No. 146 at p. 18) DOE’s rationale for setting lower deciding on standard levels. Berman Economics stated that DOE’s standards to minimize impact on the (Earthjustice, No. 195 at p. 1) The rationale for choosing TSL 1 for liquid- distribution transformer industry will Advocates noted that in the long term, immersed transformers, that a higher cost the country significant potential amorphous steel is likely to standard would require an unacceptable energy savings and recommended predominate in the transformer market increase in cost to industry, suggests higher standards for both liquid- due to higher efficiency. They that DOE prefers that consumers pay immersed and low-voltage dry-type commented that countries such as China more money than to require additional transformers. Based on EMS’ and India are fostering a transition to investment on the part of calculations, a standard set between EL highly efficient transformers and more manufacturers. (Berman Economics, No. 1.5 and EL 2 for liquid-immersed amorphous steel is used in these 150 at p. 2–3) Berman Economics also transformers would allow the nation to countries than in the United States. argues that DOE’s rejection of EL 2 for gain additional energy savings while (Advocates, No. 186 at pp. 13–14) liquid-immersed transformers is an increasing demand for grain-oriented indication that DOE is focused on b. Standards on Liquid-Immersed steels and creating a new market for avoiding competition for silicon steel Distribution Transformers amorphous steel. The market for grain- even at the cost of energy and consumer oriented steels will also expand as a The Advocates felt that DOE savings and environmental preservation. result of higher standards for low- emphasized the worst-case scenario for (Berman Economics, No. 150 at p. 4) voltage dry-type transformers, which manufacturer impacts when rejecting EMS recommended a level between EL may be able to achieve EL 3 with M4/ TSL 2 and TSL 3 for liquid-immersed 1.5 and EL 2.0. (EMS, No. 178 at p. 7) M5 material and butt-lap cores or EL 4 transformers. (Advocates, No. 186 at p. Several stakeholders felt that DOE with step-lap mitering, and the 12) They noted that at TSL 4 for liquid- relied on impacts on small investment required by industry to meet immersed transformers, potential costs manufacturers too heavily, and noted EL 4 is well-justified considering to manufacturers are still far less than that small manufacturers can build up benefits to end users. (EMS, No. 178 at potential benefits to consumers. to TSL 3. (Earthjustice, No. 195 at p. 2; p. 8) (Advocates, No. 186 at p. 11) The Advocates, No. 186 at p. 11; NEEP, No. Some stakeholders commented that Advocates stated that DOE estimates 193 at p. 1; ASAP, No. 146 at pp. 26– the proposed standards were too high that TSL 4 could result in a potential 27; CA IOUs, No. 189 at p. 3) and were not economically justified. loss of industry value of 12 percent Some stakeholders stated that setting (WE, No. 168 at p. 1,3; Sioux Valley under the ‘‘maintenance of profits’’ higher standards may result in reduced Energy, No. 159 at p. 1; Polk-Burnett scenario, a potential impact well within benefits to consumers. EEI stated that Electric Cooperative, No. 175 at p. 1; the norm of DOE estimates for other utilities are concerned that if standards PJE, No. 202 at p. 1; MEC, No. 161 at standards rulemakings. (Advocates, No. are set so high that transformer p. 1; East Miss. EPA, No. 166 at p. 1; 186 at p. 3) The Advocates stated that manufacturers need to use steels with Central Electric Power Coop, No. 176 at a standard in the range of TSL 3.5 to possible supply constraints, there may p. 1) Specifically, stakeholders noted TSL 4 would promote robust be negative impacts on the electrical that the proposed standards would competition between silicon steel and grid, which would have a negative cause hardships to electricity amorphous metal, maximizing benefits impact on consumers. (EEI, No. 185 at consumers. (KEC, No. 164 at p. 1; BEC, for consumers and producing much p. 13) No. 204 at p. 1; BEC, No. 205 at p. 1; larger energy savings for the Nation. EEI stated that several members CHELCO, No. 203 at p. 1) East Central They stated that TSL 4 or 3.5 can be met expressed concern that the more Energy agreed, noting that the proposed even if amorphous metal supplies do efficient transformers will be larger in standards achieve little to no benefit not increase. They added that if DOE size (height, width, and depth), which and would cost extra for manufacturers. feels that more time would provide will have an impact for all retrofit (East Central Energy, No. 160 at p. 1) greater confidence that supply of situations, and they would have much BEC pointed out that the cost savings amorphous steel could increase to help larger weights, which would increase were overstated in the NOPR. (BEC, No. meet market needs triggered by a TSL costs in terms of installation and pole 205 at p. 1) Westar Energy commented 3.5 or TSL 4 standard, they would not structural integrity for retrofits of that they were hesitant to support even object to moving the effective date of existing pole-mounted transformers. an increase to EL1 for liquid-immersed today’s rule a year or two further into (EEI, No. 185 at p. 11) A number of units. (Westar, No. 169 at p. 1) CCED the future. (Advocates, No. 186 at pp. electric utilities made similar noted that the standards proposed in the 9–11) comments. (BG&E, No. 182 at p. 6;

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23396 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

ComEd, No. 184 at p. 11; EMEPA, No. was the only level presented in the small manufacturers in this market, and 166 at p. 1; PECO, No. 196 at p. 1; supplementary rulemaking that met the that those small manufacturers that do Pepco, No. 145 at p. 3; WE, No. 168 at three principles that they applied exist in the market primarily focus on p. 3; Westar, No. 169 at p. 2) Howard during the rulemaking process to select design lines that are exempted from Industries also stated that the increased levels, but suggested that the level be coverage. (CA IOUs, No. 189 at pp. size and weight will sometimes be a moved to EL 0 for design line 2. (NEMA, 2–3) constraint and result in increased costs. No. 225 at p. 4) Prolec-GE expressed Schneider Electric and FedPac both (HI, No. 151 at p. 7) their support for TSL A as well, expressed support for the low-voltage A number of parties expressed believing that these efficiency levels dry type proposed standards in the specific concerns about size and space provide additional energy savings while NOPR. (FedPac, No. 132 at p. 2; constraints for network/vault preserving manufacturers’ ability to use Schneider, No. 180 at p. 1) FedPac transformers. (BG&E, No. 182 at p. 6; both silicon and amorphous steel to noted that the proposed standards may ComEd, No. 184 at p. 11; Pepco, No. 145 meet the demand of the market. In the be slightly high for 3-phase above 150 at pp. 2–3; PE, No. 192 at p. 8; Prolec- absence of TSL A, they recommended kVA and may put small manufacturers GE, No. 177 at p. 12) These concerns TSL 2 as the maximum possible at risk due to potentially large capital lead several parties to recommend a alternative, which they noted would investments necessary to remain in separate equipment class for network/ result in higher cost and heavier and business at these levels. (FedPac, No. vault transformers. (DOE addresses this larger pole units. (Prolec-GE, No. 238 at 132 at pp. 2–3) issue in section IV.A.2.) EEI and several p. 3) Some stakeholders demonstrated electric utilities stated that efficiency support for NEMA Premium® levels for standards for network/vault c. Standards on Low-Voltage Dry-Type low-voltage dry-type transformers. transformers should be the same as the Distribution Transformers Eaton noted that NEMA Premium® efficiency levels that have been in effect The Advocates stated that for LVDT represents an opportunity to produce since January 1, 2010. (EEI, No. 185 at transformers, DOE rejected TSL 3 efficiency gains and encourage new p. 3; Pepco, No. 145 at p. 2; PE, No. 192 despite its own economic analysis technologies and recommended at p. 8; Prolec-GE, No. 177 at p. 12) showing greater net consumer savings, adopting NEMA Premium® for DL7 and Northern Wasco supported the DOE and mean paybacks of five to twelve DL8. (Eaton, No. 157 at p. 2) NEEP proposal for liquid-immersed units and years, well within a transformer’s pointed out that industry parties believed anything beyond would not be typical 30-year lifespan. (Advocates, No. suggested higher efficiency on the cost-effective. (NWC, No. 147 at p. 1) 186 at p. 3) They stated that a more record during negotiations, including UAW agreed, noting that any level thorough investigation of impacts on NEMA Premium®. (NEEP, No. 193 at above TSL 1 would not be economically domestic small manufacturers and a p. 5) justified. (UAW, No. 194 at p. 2) ATI better balancing of public benefits and NEMA recommended that DOE select stated that efficiency levels in excess of manufacturer impacts will lead DOE to ELs 0, 2 and 2 for DLs 6, 7 and 8, the NOPR proposal would create a non- adopt TSL 3, the maximum level which respectively. NEMA noted that NEMA competitive market for new medium- yields net present value benefits for Premium® was still in development. voltage liquid-type designs that would consumers and can incontrovertibly be (NEMA, No. 170 at p. 5) NEMA eliminate projected LCC savings. (ATI, achieved using silicon steel cores. They expressed concern that high efficiency No. 54 at p. 2) Steelmakers commented said that if DOE rejects TSL 3, the standards for LVDT transformers would that promulgating energy conservation agency should at least adopt TSL 2, hurt small U.S. manufacturers. (NEMA, standards greater than TSL 1 for liquid- which represents the NEMA Premium® No. 170 at p. 5) immersed transformers would transfer level (30 percent reduction in losses) for significant competitive power to the all transformers. They added that DOE d. Standards on Medium-Voltage Dry- sole maker of amorphous metal. overestimated the savings from the Type Distribution Transformers (Steelmakers, No. 188 at pp. 9–10) proposed standards (i.e., TSL 1). The Advocates expressed support for After the supplementary analysis was (Advocates, No. 186 at pp. 3–4) the proposed standards for medium- presented, which included the new However, they recommend that if TSL 3 voltage dry-type (MVDT) transformers. TSLs described in section IV.O.1, a is not adopted, TSL 2 should be chosen, (The Advocates, No. 186 at p. 2) FedPac handful of stakeholders recommended as a number of manufacturers are noted that the DOE was correct in its that DOE adopt one of the TSLs already committed to manufacturing at NOPR decision to not increase presented in the supplementary NEMA Premium®. (Advocates, No. 186 standards for single-phase MVDTs. analysis. The Advocates recommended at p. 7–8) ASAP commented that DOE (FedPac, No. 132 at p. 2) that DOE adopt TSL C, following the should select EL 4 for DL7 and DL8. NEMA made specific supplementary rulemaking process, to (ASAP, No. 146 at p. 19) EMS stated recommendations for medium-voltage, increase energy savings relative to the that low-voltage dry-type standards dry type transformers. First, it levels proposed in the NOPR and should be set at TSL 2 or TSL 3. (EMS, recommended for DL13 that the increase life cycle cost savings. No. 178 at p. 7) efficiency level allow for 10 percent (Advocates, No. 235 at p. 2) They added CA IOUs stated that TSL 3 is the more loss that DL12, as these are high that if DOE wants to foster a more highest achievable efficiency level at BIL transformers. Second, it noted that gradual market growth for amorphous which low-voltage dry-type distribution for single-phase transformers the single- metal, TSL D would achieve such an transformers can be constructed using phase efficiency should be less than the outcome by lowering the standard for grain-oriented steel, and they three-phase efficiency by a maximum of pole type transformers, but would still recommend that DOE consider adopting 30 percent higher losses and should not approach the national savings of TSL C. standards at this level. They noted that exceed 2010 standard. (NEMA, No. 170 (Advocates, No. 235 at p. 1) Berman while DOE expresses concern that small at p. 4) Economics agreed that TSL C or D manufacturers are disproportionately NEMA stated that for medium-voltage should be selected as they provide the impacted by standards for low-voltage dry-type transformers used in high-rise best balance. (Berman Economics, No. dry-type transformers, DOE’s analysis buildings, it recommended different 221 at p. 1) NEMA stated that TSL A shows that there are actually very few treatment because of size and weight

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23397

limitations (elevator capacity) in distribution transformer size and weight For low-voltage dry-type distribution existing installations. It stated that for the efficiency levels in today’s final transformers, the efficiency levels in manufacturers are confident that the rule, which were unanimously agreed to each TSL can be characterized as sizes and weights of the high-rise MVDT by the negotiation committee, will not follows: TSL 1 represents the maximum transformer in compliance with the adversely impact the continued efficiency level achievable with M6 core current standards can continue to be installation and replacement of these steel; TSL 2 represents EL 3 for design used without significant problems, but transformers. line 7, EL 2 for design line 8 and no going to any higher efficiency levels for V. Analytical Results and Conclusions efficiency increase for design line 6; high-rise MVDT transformers will TSL 3 represents the maximum EL adversely impact the continued A. Trial Standard Levels achievable using butt-lap miter core installation and replacement of this type Table V.1 through Table V.3 present manufacturing for single-phase of transformer. (NEMA, No. 170 at p. 4) the TSLs analyzed and the distribution transformers, and full miter BG&E and ComEd also stated that core manufacturing for three-phase designs that increase the size and corresponding efficiency level for the distribution transformers; TSL 4 weight of dry-type transformers could representative unit in each transformer prohibit replacement of existing units design line. The mapping of TSLs to represents the maximum NPV with 7 used in high-rise buildings. (BG&E, No. corresponding efficiency levels for each percent discounting; TSL 5 represents 182 at p. 6; ComEd, No. 184 at p. 11) design line is described in detail in the maximum source energy savings chapter 10, section 10.2.2.3 of the final with positive NPV with 7 percent e. Response to Comments on Standards rule TSD. The baseline in the tables is discounting; and TSL 6 represents the Proposed in Notice of Proposed equal to the current energy conservation maximum technologically feasible level Rulemaking standards. (max tech). For liquid-immersed distribution DOE acknowledges the comments For medium-voltage dry-type transformers, the efficiency levels in described above and has taken them distribution transformers based on the each TSL can be characterized as into account in developing today’s final subcommittee consensus detailed in follows: TSL 1 represents an increase in rule. As stated previously, DOE seeks to section II.B.2, above, the efficiency set the highest energy conservation efficiency where a diversity of electrical levels in each TSL can be characterized standards that are technologically steels are cost-competitive and as follows: TSL 1 represents EL1 for all feasible, economically justified, and that economically feasible for all design design lines; TSL 2 represents an will result in significant energy savings. lines; TSL 2 represents EL1 for all In section V.C, DOE explains why it has design lines; TSL 3 represents the increase in efficiency where a diversity adopted the standards established by maximum efficiency level achievable of electrical steels are cost-competitive this final rule, and it addresses the with M3 core steel; TSL 4 represents the and economically feasible for all design issues raised in the preceding maximum NPV with 7 percent lines; TSL 3 represents the maximum comments. DOE agrees with many of the discounting; TSL 5 represents EL 3 for NPV with 7 percent discounting; TSL 4 concerns associated with higher all design lines; TSL 6 represents the represents the maximum source energy efficiency transformers, and these maximum source energy savings with savings with positive NPV with 7 considerations contributed to the positive NPV with 7 percent percent discounting; and TSL 5 selection of today’s standards. In discounting; and TSL 7 represents the represents the maximum particular, DOE believes that the maximum technologically feasible level technologically feasible level (max increase in medium-voltage dry-type (max tech). tech).

TABLE V.1—EFFICIENCY VALUES OF THE TRIAL STANDARD LEVELS FOR LIQUID-IMMERSED TRANSFORMERS BY DESIGN LINE

TSL Design line Baseline 1 2 3 4 5 6 7

Percent

1 ...... 99.08 99.11 99.16 99.16 99.22 99.25 99.31 99.50 2 ...... 98.91 98.95 99.00 99.00 99.07 99.11 99.18 99.41 3 ...... 99.42 99.49 99.48 99.51 99.57 99.54 99.61 99.73 4 ...... 99.08 99.16 99.16 99.16 99.22 99.25 99.31 99.60 5 ...... 99.42 99.48 99.48 99.51 99.57 99.54 99.61 99.69

TABLE V.2 EFFICIENCY VALUES OF THE TRIAL STANDARD LEVELS FOR LOW-VOLTAGE DRY-TYPE TRANSFORMERS BY DESIGN LINE

TSL Design line Baseline 1 2 3 4 5 6

Percent

6 ...... 98.00 98.00 98.00 98.80 99.17 99.17 99.44 7 ...... 98.00 98.47 98.60 98.80 99.17 99.17 99.44 8 ...... 98.60 99.02 99.02 99.25 99.44 99.58 99.58

VerDate Mar<15>2010 20:30 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23398 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE V.3—EFFICIENCY VALUES OF THE TRIAL STANDARD LEVELS FOR MEDIUM-VOLTAGE DRY-TYPE TRANSFORMERS BY DESIGN LINE

TSL Design line Baseline 1 2 3 4 5

Percent

9 ...... 98.82 98.93 98.93 99.04 99.04 99.55 10 ...... 99.22 99.29 99.37 99.37 99.37 99.63 11 ...... 98.67 98.81 98.81 99.13 99.13 99.50 12 ...... 99.12 99.21 99.30 99.46 99.46 99.63 13A ...... 98.63 98.69 98.69 99.04 99.84 99.45 13B ...... 99.15 99.19 99.28 99.28 99.28 99.52

B. Economic Justification and Energy discusses the inputs DOE used for For each design line, the key outputs Savings calculating the LCC and PBP. The LCC of the LCC analysis are a mean LCC and PBP results are calculated from 1. Economic Impacts on Customers savings and a median PBP relative to the transformer cost and efficiency data that base case, as well as the fraction of a. Life-Cycle Cost and Payback Period are modeled in the engineering analysis customers for which the LCC will To evaluate the net economic impact (section IV.C). During the negotiated decrease (net benefit), increase (net of standards on transformer customers, rulemaking, DOE presented separate cost), or exhibit no change (no impact) DOE conducted LCC and PBP analyses transformer cost data based on 2010 and relative to the base-case product for each TSL. In general, higher- 2011 material prices to the committee forecast. No impacts occur when the efficiency equipment would affect members. DOE conducted its LCC and base-case equals or exceeds the customers in two ways: (1) Annual PBP analysis utilizing both the 2010 and efficiency at a given TSL. Table V.4 operating expense would decrease, and 2011 material price cost data. The through Table V.17 show the key results (2) purchase price would increase. average results of these two analyses are for each transformer design line. Section IV.F.2 of this preamble presented here.

TABLE V.4—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 1 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4** 5** 6 7

Efficiency (%) ...... 99 .11 99 .16 99 .16 99 .22 99.25 99 .31 99 .50 Transformers with Net LCC Cost (%) * ...... 37.3 44.2 44 .2 7 .0 7 .0 11 .2 42 .6 Transformers with Net LCC Benefit (%) * ...... 62 .5 55.6 55 .6 92 .9 92 .9 88 .8 57.4 Transformers with No Change in LCC (%) * ...... 0.2 0.2 0.2 0.2 0.2 0.0 0.0 Mean LCC Savings ($) ...... 83 153 153 696 696 618 365 Median PBP (Years) ...... 17 .7 24.7 24 .7 10 .8 10 .8 13 .7 24.6 * Rounding may cause some items to not total 100 percent. ** The results are the same for these TSLs because in both cases customers are expected to purchase the least cost transformer designs that meet the EL. The least cost transformer designs are the same for TSLs 4 and 5.

TABLE V.5—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 2 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6 7

Efficiency (%) ...... 98 .95 99 .00 99 .00 99 .07 99.11 99 .18 99 .41 Transformers with Net LCC Cost (%) * ...... 41.5 18.2 18 .2 11 .4 13 .1 17 .8 67.2 Transformers with Net LCC Benefit (%) * ...... 55 .2 81.8 81 .8 88 .6 86 .9 82 .2 32.8 Transformers with No Change in LCC (%) * ...... 3.4 0.0 0.0 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 66 278 278 343 330 311 ¥579 Median PBP (Years) ...... 5 .9 9 .9 9 .9 11 .1 13.0 15 .5 31 .6 * Rounding may cause some items to not total 100 percent.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23399

TABLE V.6—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 3 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6 7

Efficiency (%) ...... 99 .49 99 .48 99 .51 99 .57 99.54 99 .61 99 .73 Transformers with Net LCC Cost (%) * ...... 14.5 13.9 12 .0 4 .0 5 .3 4 .0 29 .9 Transformers with Net LCC Benefit (%) * ...... 84 .2 84.8 86 .9 95 .9 94 .7 96 .0 70.1 Transformers with No Change in LCC (%) * ...... 1.3 1.3 1.2 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 2709 2407 3526 5527 5037 6942 4491 Median PBP (Years) ...... 8 .5 8 .3 5 .8 6 .5 6 .4 7 .2 19 .1 * Rounding may cause some items to not total 100 percent.

TABLE V.7—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 4 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6 7

Efficiency (%) ...... 99 .16 99 .16 99 .16 99 .19 99.22 99 .25 99 .50 Transformers with Net LCC Cost (%) * ...... 6 .6 6 .6 6 .6 7 .6 2 .5 2 .5 5 .9 Transformers with Net LCC Benefit (%) * ...... 92 .8 92.8 92 .8 91 .8 96 .9 96 .9 94.1 Transformers with No Change in LCC (%) * ...... 0.6 0.6 0.6 0.6 0.6 0.6 0.0 Mean LCC Savings ($) ...... 977 977 977 1212 3603 3603 4349 Median PBP (Years) ...... 7 .0 7 .0 7 .0 9 .1 5 .6 5 .6 10 .2 * Rounding may cause some items to not total 100 percent.

TABLE V.8—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 5 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6 7

Efficiency (%) ...... 99 .48 99 .48 99 .51 99 .57 99.54 99 .61 99 .69 Transformers with Net LCC Cost (%) * ...... 30.5 30.5 19 .9 9 .8 14 .8 9.1 41 .9 Transformers with Net LCC Benefit (%) * ...... 69 .1 69.1 80 .0 90 .2 85 .2 91 .0 58.1 Transformers with No Change in LCC (%) * ...... 0.4 0.4 0.1 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 3668 3668 6852 10382 8616 12014 4619 Median PBP (Years) ...... 6 .5 6 .5 6 .5 9 .1 8 .5 11 .4 22.5 *Rounding may cause some items to not total 100 percent.

TABLE V.9—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 6 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6

Efficiency (%) ...... 98 .00 98 .00 98 .93 99 .17 99.17 99 .44 Transformers with Net LCC Cost (%) * ...... 0 .0 0 .0 16 .5 37 .8 37 .8 96.6 Transformers with Net LCC Benefit (%) * ...... 0 .0 0 .0 83 .5 62.2 62 .2 3 .4 Transformers with No Change in LCC (%) * ...... 100.0 100.0 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 0 0 325 148 148 -992 Median PBP (Years) ...... 0 .0 0 .0 12 .4 15.7 15 .7 31 .7 * Rounding may cause some items to not total 100 percent.

TABLE V.10—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 7 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6

Efficiency (%) ...... 98 .47 98 .60 98 .80 99 .17 99.17 99 .44 Transformers with Net Increase in LCC (%) * ..... 1 .5 1 .3 1 .7 3 .3 3 .3 45 .6

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23400 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE V.10—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 7 REPRESENTATIVE UNIT— Continued

Trial standard level 1 2 3 4 5 6

Transformers with Net LCC Savings (%) * ...... 98 .4 98 .7 98.3 96 .7 96 .7 54 .4 Transformers with No Impact on LCC (%) * ...... 0 .1 0 .1 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 1526 1678 1838 2280 2280 212 Median PBP (Years) ...... 3 .9 3 .6 4 .1 6 .3 6 .3 16 .8 *Rounding may cause some items to not total 100 percent.

TABLE V.11—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 8 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5 6

Efficiency (%) ...... 99 .02 99 .02 99 .25 99 .44 99.58 99 .58 Transformers with Net Increase in LCC (%) * ..... 4 .7 4 .7 13 .3 9.0 79 .3 79 .3 Transformers with Net LCC Savings (%) * ...... 95 .3 95 .3 86.7 91 .0 20 .7 20 .7 Transformers with No Impact on LCC (%) * ...... 0 .0 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 2588 2588 2724 4261 ¥2938 ¥2938 Median PBP (Years) ...... 7 .7 7 .7 11 .3 10.1 22 .5 22 .5 * Rounding may cause some items to not total 100 percent.

TABLE V.12—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 9 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 98 .93 98 .93 99 .04 99 .04 99.55 Transformers with Net Increase in LCC (%) * ...... 3 .6 3 .6 5 .9 5 .9 57 .4 Transformers with Net LCC Savings (%) * ...... 83 .2 83 .2 94.1 94 .1 42 .6 Transformers with No Impact on LCC (%) * ...... 13 .3 13.3 0.0 0.0 0.0 Mean LCC Savings ($) ...... 787 787 1514 1514 ¥299 Median PBP (Years) ...... 2 .6 2 .6 6 .1 6 .1 18 .5 * Rounding may cause some items to not total 100 percent.

TABLE V.13—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 10 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 99 .29 99 .37 99 .37 99 .37 99.63 Transformers with Net Increase in LCC (%) * ...... 0 .7 17 .9 17 .9 17 .9 88.8 Transformers with Net LCC Savings (%) * ...... 98 .8 82 .1 82.1 82 .1 11 .2 Transformers with No Impact on LCC (%) * ...... 0 .5 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 4604 4455 4455 4455 ¥14727 Median PBP (Years) ...... 1 .1 8 .6 8 .6 8 .6 27 .5 * Rounding may cause some items to not total 100 percent.

TABLE V.14—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 11 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 98 .81 98 .81 99 .13 99 .13 99.50 Transformers with Net Increase in LCC (%) * ...... 21 .9 21 .9 25 .9 25.9 82 .7 Transformers with Net LCC Savings (%) * ...... 78 .1 78 .1 74.1 74 .1 17 .4 Transformers with No Impact on LCC (%) * ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 996 996 1849 1849 ¥4166 Median PBP (Years) ...... 10 .6 10.6 13 .6 13 .6 24 .1 * Rounding may cause some items to not total 100 percent.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23401

TABLE V.15—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 12 REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 99 .21 99 .30 99 .46 99 .46 99.63 Transformers with Net Increase in LCC (%) * ...... 7 .1 7 .6 17 .1 17 .1 85 .4 Transformers with Net LCC Savings (%) * ...... 92 .9 92 .4 82.9 82 .9 14 .6 Transformers with No Impact on LCC (%) * ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 4537 6790 8594 8594 ¥14496 Median PBP (Years) ...... 6 .0 8 .5 12 .3 12.3 24 .7 * Rounding may cause some items to not total 100 percent.

TABLE V.16—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 13A REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 98 .69 98 .69 98 .84 99 .04 99.45 Transformers with Net Increase in LCC (%) * ...... 54 .2 54 .2 45 .5 66.3 98 .5 Transformers with Net LCC Savings (%) * ...... 45 .8 45 .8 54.5 33 .7 1 .5 Transformers with No Impact on LCC (%) * ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... ¥27 ¥27 311 ¥1019 ¥12053 Median PBP (Years) ...... 16 .1 16.1 16 .2 20 35 .3 * Rounding may cause some items to not total 100 percent.

TABLE V.17—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 13B REPRESENTATIVE UNIT

Trial standard level 1 2 3 4 5

Efficiency (%) ...... 99 .19 99 .28 99 .28 99 .28 99.52 Transformers with Net Increase in LCC (%) * ...... 30 .5 27 .3 27 .3 27.3 70 .4 Transformers with Net LCC Savings (%) * ...... 69 .3 72 .7 72.7 72 .7 29 .6 Transformers with No Impact on LCC (%) * ...... 0 .2 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 2494 4346 4346 4346 ¥6823 Median PBP (Years) ...... 4 .5 12 .2 12.2 12 .2 20 .6 * Rounding may cause some items to not total 100 percent.

b. Customer Subgroup Analysis DOE included only the three-phase Chapter 11 of the final rule TSD liquid-immersed design lines in this explains DOE’s method for conducting In the customer subgroup analysis, analysis, since those types account for the customer subgroup analysis and DOE estimated the LCC impacts of the the vast majority of vault-installed presents the detailed results of that distribution transformer TSLs on transformers. Table V.18 shows the analysis. purchasers of vault-installed mean LCC savings at each TSL for this transformers (primarily urban utilities). customer subgroup.

TABLE V.18—COMPARISON OF MEAN LIFE-CYCLE COST SAVINGS FOR LIQUID-IMMERSED TRANSFORMERS PURCHASED BY CONSUMER SUBGROUP [2011$]

Trial standard level Design line 1 2 3 4 5 6 7

Medium Vault Replacement Subgroup

4 ...... ¥1236 ¥1236 ¥1236 ¥3078 ¥759 ¥759 ¥377 5 ...... 2387 2387 ¥6183 ¥4421 ¥6156 ¥2905 4619

All Customers

4 ...... 977 977 977 1212 3603 3603 4349 5 ...... 3668 3668 6852 10382 8616 12014 4619

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23402 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

c. Rebuttable Presumption Payback that level is economically justified. As However, DOE routinely conducts an required by EPCA, DOE based the economic analysis that considers the As discussed in section IV.F.3.j, EPCA calculations on the assumptions in the full range of impacts to the customer, establishes a rebuttable presumption DOE test procedure for distribution manufacturer, Nation, and environment, that an energy conservation standard is transformers. (42 U.S.C. as required under 42 U.S.C. economically justified if the increased 6295(o)(2)(B)(iii), 6316(a)) As a result, 6295(o)(2)(B)(i). The results of that purchase cost for equipment that meets DOE calculated a single rebuttable- analysis serve as the basis for DOE to the standard is less than three times the presumption payback value, and not a definitively evaluate the economic value of the first-year energy savings distribution of PBPs, for each TSL. justification for a potential standard resulting from the standard. (42 U.S.C. Table V.19 and Table V.21 show the level (thereby supporting or rebutting 6295(o)(2)(B)(iii), 6316(a)) DOE rebuttable-presumption PBPs for the the results of any three-year PBP calculated a rebuttable-presumption considered TSLs. The rebuttable analysis). Section V.C addresses how PBP for each TSL to determine whether presumption is fulfilled in those cases DOE considered the range of impacts to DOE could presume that a standard at where the PBP is three years or less. select today’s standard.

TABLE V.19—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS

Trial standard level Design line Rated capacity kVA 1 2 3 4 5 6 7

1 ...... 50 ...... 17.5 17.7 17.7 12.5 12.5 14.9 20.0 2 ...... 25 ...... 22.5 20.7 20.7 16.5 17.1 18.3 34.2 3 ...... 500 ...... 9.1 9.0 9.0 7.6 8.0 7.5 16.9 4 ...... 150 ...... 8.1 8.1 8.1 5.5 5.5 5.5 17.5 5 ...... 1500 ...... 13.1 13.1 8.4 8.5 8.7 10.0 19.9

TABLE V.20—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS

Trial standard level Design line Rated capacity kVA 1 2 3 4 5 6

6 ...... 25 ...... 0.0 0.0 12.5 14.5 14.5 25.7 7 ...... 75 ...... 3.8 3.5 4.0 6.1 6.1 14.1 8 ...... 300 ...... 6.5 6.5 10.0 9.3 19.4 19.4

TABLE V.21—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS

Trial standard level Design line Rated capacity kVA 1 2 3 4 5

9 ...... 300 ...... 1.8 1.8 4.2 4.2 14.1 10 ...... 1500 ...... 1.3 5.5 5.5 5.5 19.9 11 ...... 300 ...... 10.0 10.0 12.7 12.7 18.3 12 ...... 1500 ...... 5.9 7.3 11.5 11.5 19.7 13A ...... 300 ...... 12.7 12.7 12.5 21.4 27.9 13B ...... 2000 ...... 5.7 10.4 10.4 10.4 18.7

2. Economic Impact on Manufacturers that implementing that standard level distribution transformer manufacturer: would have on the distribution liquid-immersed, medium-voltage dry- For the MIA in the February 2012 transformer industry. For today’s final type, and low-voltage dry-type. To NOPR, DOE used changes in INPV to rule, DOE continues to use the evaluate the range of cash flow impacts compare the direct financial impacts of methodology presented in the NOPR at on the distribution transformer industry, different TSLs on manufacturers (77 FR 77 FR 7282 (February 10, 2012). DOE modeled two different scenarios 7282, February 10, 2012). DOE used the using different assumptions for markups a. Industry Cash-Flow Analysis Results GRIM to compare the INPV of the base that correspond to the range of case (no new or amended energy The tables below depict the financial anticipated market responses to new conservation standards) to that of each impacts (represented by changes in and amended standards. These TSL. The INPV is the sum of all net cash INPV) of amended energy standards on assumptions correspond to the bounds flows discounted by the industry’s cost manufacturers as well as the conversion of a range of market responses that DOE of capital (discount rate) to the base costs that DOE estimates manufacturers anticipates could occur in the standards year. The difference in INPV between would incur at each TSL. The effect of case (i.e., where new and amended the base case and the standards case is amended standards on INPV was energy conservation standards apply). an estimate of the economic impacts analyzed separately for each type of Each of the two scenarios results in a

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23403

unique set of cash flows and discusses each of these scenarios in full, The MIA results for liquid-immersed corresponding industry values at each and they are also presented in chapter distribution transformers are as follows: TSL. The February 2012 NOPR 12 of the TSD.

TABLE V.22—MANUFACTURER IMPACT ANALYSIS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS—PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Trial standard level Units Base case 1 2 3 4 5 6 7

INPV ...... 2011$ M 575.1 526.9 465.9 461.7 389.0 382.1 358.4 181.6 Change in INPV ...... 2011$ M ...... (48.2) (109.3) (113.4) (186.1) (193.0) (216.7) (393.5) % ...... (8.4) (19.0) (19.7) (32.4) (33.6) (37.7) (68.4) Capital Conversion Costs ...... 2011$ M ...... 25.3 57.8 60.6 92.8 96.2 101.5 124.5 Product Conversion Costs ...... 2011$ M ...... 24.2 65.2 65.7 96.1 96.1 96.1 96.1 Total Conversion Costs ...... 2011$ M ...... 49.4 123.0 126.3 188.9 192.3 197.7 220.6 *Note: Parentheses indicate negative values.

TABLE V.23—MANUFACTURER IMPACT ANALYSIS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS—PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP

Trial standard level Units Base case 1 2 3 4 5 6 7

INPV ...... 2011$ M 575.1 551.6 508.1 506.2 477.8 473.8 486.6 575.6 Change in INPV ...... 2011$ M ...... (23.5) (67.0) (68.9) (97.3) (101.4) (88.5) 0.5 % ...... (4.1) (11.7) (12.0) (16.9) (17.6) (15.4) 0.1 Capital Conversion Costs ...... 2011$ M ...... 25.3 57.8 60.6 92.8 96.2 101.5 124.5 Product Conversion Costs ...... 2011$ M ...... 24.2 65.2 65.7 96.1 96.1 96.1 96.1 Total Conversion Costs ...... 2011$ M ...... 49.4 123.0 126.3 188.9 192.3 197.7 220.6

At TSL 1, DOE estimates impacts on standard. In the lower-bound scenario, could induce manufacturers to build INPV for liquid-immersed distribution DOE assumes manufacturers can only more amorphous capacity, when transformer manufacturers to range from maintain annual operating profit in the compared to TSL 1, because amorphous ¥$48.2 million to ¥$23.5 million, standards case. Therefore, these core transformers become incrementally corresponding to a change in INPV of conversion investments, and more cost competitive. Because DL2 ¥8.4 percent to ¥4.1 percent. At this manufacturers’ higher working capital represents the largest share of core steel level, industry free cash flow is needs associated with more expensive usage of all design lines, this has a estimated to decrease by approximately transformers, drain cash flow and lead significant impact on investments. 54.4 percent to $16.4 million, compared to a greater reduction in INPV, when There are more severe impacts on to the base-case value of $36.0 million compared to the upper-bound scenario. industry in the lower-bound in the year before the compliance date In the upper bound scenario, DOE profitability scenario when these greater (2015). assumes manufacturers will be able to one-time cash outlays are coupled with While TSL 1 can be met with fully markup and pass on the higher slight margin pressure. In the high- traditional steels, including M3, in all product costs, leading to higher profitability scenario, manufacturers are design lines, amorphous core operating income. This higher operating able to maintain gross margins, transformers will be incrementally more income essentially offsets the mitigating the adverse cash flow competitive on a first cost basis. conversion costs and the increase in impacts of the increased investment in According to manufacturer interviews, working capital requirements, leading to working capital (associated with more this would likely induce some a negligible change in INPV at TSL1 in expensive transformers). manufacturers to gradually build the upper-bound scenario. At TSL 3, DOE estimates impacts on amorphous steel transformer production At TSL 2, DOE estimates impacts on INPV for liquid-immersed distribution capacity. Because the production INPV for liquid-immersed distribution transformer manufacturers to range from process for amorphous cores is entirely transformer manufacturers to range from ¥$113.4 million to ¥$68.9 million, separate from that of silicon steel cores, ¥$109.3 million to ¥$67.0 million, corresponding to a change in INPV of large investments in new capital, corresponding to a change in INPV of ¥19.7 percent to ¥12.0 percent. At this including new core cutting equipment ¥19.0 percent to ¥11.7 percent. At this level, industry free cash flow is and annealing ovens will be required. level, industry free cash flow is estimated to decrease by approximately Additionally, a great deal of testing, estimated to decrease by approximately 137.6 percent to ¥$13.6 million, prototyping, design and manufacturing 133.7 percent to ¥$12.1 million, compared to the base-case value of engineering resources will be required compared to the base-case value of $36.0 million in the year before the because most manufacturers have $36.0 million in the year before the compliance date (2015). relatively little experience, if any, with compliance date (2015). TSL 3 results are similar to TSL 2 amorphous steel transformers. These TSL 2 requires the same efficiency results because the efficiency levels are capital and production conversion levels as TSL 1, except for DL 2, which the same except for DL3 and DL5, which expenses lead to a reduction in cash is increased from baseline to EL1. EL1, each increase to EL 2 under TSL 3. The flow in the years preceding the as opposed to the baseline efficiency, increase in stringency makes amorphous

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23404 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

core transformers slightly more cost consider moving production offshore or $36.0 million in the year before the competitive in these DLs, according to exiting the market altogether. The compliance date (2015). the engineering analysis, which would negative impacts are again driven by the The impacts at TSL 6 are similar to likely increase amorphous core large conversion costs associated with those DOE expects at TSL 5, except that transformer capacity needs—all other new amorphous steel production lines. slightly more amorphous core things being equal—and drive more If the higher first costs at TSL 4 drive production capacity will be needed investment to meet the standards. more utilities to refurbish rather than because TSL 6-compliant transformers At TSL 4, DOE estimates impacts on replace failed transformers, a scenario will have somewhat heavier cores and INPV for liquid-immersed distribution many manufacturers predicted at the thus require more amorphous steel. This transformer manufacturers to range from efficiency levels and prices embodied in leads to slightly greater capital ¥$186.1 million to ¥$97.3 million, TSL 4, reduced transformer sales could expenditures at TSL 6 compared to TSL corresponding to a change in INPV of cause further declines in INPV. 5. ¥32.4 percent to ¥16.9 percent. At this At TSL 5, DOE estimates impacts on At TSL 7, DOE estimates impacts on level, industry free cash flow is INPV for liquid-immersed distribution INPV for liquid-immersed distribution estimated to decrease by approximately transformer manufacturers to range from transformer manufacturers to range from 206.6 percent to ¥$38.4 million, ¥$193.0 million to ¥$101.4 million, or ¥$393.5 million to $0.5 million, compared to the base-case value of a change in INPV of ¥33.6 percent to corresponding to a change in INPV of $36.0 million in the year before the ¥17.6 percent. At this level, industry ¥68.4 percent to 0.1 percent. At this compliance date (2015). free cash flow is estimated to decrease level, industry free cash flow is During interviews, manufacturers by approximately 210.8 percent to estimated to decrease by approximately expressed differing views on whether ¥$39.9 million, compared to the base- 246.2 percent to ¥$52.7 million, the efficiency levels embodied in TSL 4 case value of $36.0 million in the year compared to the base-case value of would shift the market away from before the compliance date (2015). $36.0 million in the year before the silicon steels entirely. Because DL3 and TSL 5 would likely shift the entire compliance date (2015). DL5 must meet EL4 at this TSL, DOE market to amorphous core transformers, The impacts at TSL 7 are similar to expects the majority of the market leading to even greater investment those DOE expects at TSL 6, except that would shift to amorphous core needs than TSL 4, and further driving slightly more amorphous core transformers at TSL 4 and above. Even the adverse impacts discussed above. production capacity will be needed assuming a sufficient supply of At TSL 6, DOE estimates impacts on because TSL 7-compliant transformers amorphous steel were available, TSL 4 INPV for liquid-immersed distribution will have somewhat heavier cores and and above would require a dramatic transformer manufacturers to range from thus require more amorphous steel. This build up in amorphous core transformer ¥$216.7 million to ¥$88.5 million, leads to slightly greater capital production capacity. DOE believes this corresponding to a change in INPV of expenditures at TSL 7 compared to TSL wholesale transition away from silicon ¥37.7 percent to ¥15.4 percent. At this 6, incrementally reducing industry steels could seriously disrupt the level, industry free cash flow is value. market, drive small businesses to either estimated to decrease by approximately The MIA results for low-voltage dry- source their cores or exit the market, 217.5 percent to ¥$42.3 million, type distribution transformers are as and lead even large businesses to compared to the base-case value of follows:

TABLE V.24—MANUFACTURER IMPACT ANALYSIS LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS— PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Trial standard level Units Base case 1 2 3 4 5 6

INPV ...... 2011 $M 237.6 229.6 226.5 219.0 198.7 190.8 159.0 Change in INPV ...... 2011 $M ...... (8.0) (11.1) (18.6) (38.9) (46.8) (78.6) % ...... (3.4) (4.7) (7.8) (16.4) (19.7) (33.1) Capital Conversion Costs ...... 2011 $M ...... 4.5 5.3 12.0 28.5 30.7 45.6 Product Conversion Costs...... 2011 $M ...... 2.9 3.6 5.0 8.0 8.0 8.0 Total Conversion Costs ...... 2011 $M ...... 7.4 9.0 17.0 36.5 38.7 53.6 * Note: Parentheses indicate negative values.

TABLE V.25—MANUFACTURER IMPACT ANALYSIS LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS— PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO

Trial standard level Units Base case 1 2 3 4 5 6

INPV ...... 2011 $M 237.6 252.4 249.4 265.7 279.9 298.6 356.6 Change in INPV ...... 2011 $M ...... 14.8 11.8 28.1 42.3 61.0 118.9 % ...... 6.2 5.0 11.8 17.8 25.7 50.1 Capital Conversion Costs ...... 2011 $M ...... 4.5 5.3 12.0 28.5 30.7 45.6 Product Conversion Costs...... 2011 $M ...... 2.9 3.6 5.0 8.0 8.0 8.0 Total Conversion Costs ...... 2011 $M ...... 7.4 9.0 17.0 36.5 38.7 53.6 * Note: Parentheses indicate negative values.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23405

At TSL 1, DOE estimates impacts on distribution transformer manufacturers a steep learning curve. This is reflected INPV for low-voltage dry-type to range from ¥$18.6 to $28.1 million, in the large conversion costs and distribution transformer manufacturers corresponding to a change in INPV of adverse impacts on INPV in the to range from ¥$8.0 million to $14.8 ¥7.8 percent to 11.8 percent. At this Preservation of Operating Profit million, corresponding to a change in level, industry free cash flow is scenario. Most manufacturers DOE INPV of ¥3.4 percent to 6.2 percent. At estimated to decrease by approximately interviewed expected many low-volume this level, industry free cash flow is 31.9 percent to $10.4 million, compared manufacturers to exit the DOE-covered estimated to decrease by approximately to the base-case value of $15.2 million market altogether if amorphous steel 5.0 percent to $14.5 million, compared in the year before the compliance date was required to meet the standard. As to the base-case value of $15.2 million (2015). such, DOE believes TSL 4 could lead to in the year before the compliance date TSL3 represents EL4 for DL6, DL7, greater consolidation than the industry (2015). and DL8. Although manufacturers may would experience at lower TSLs. TSL 1 provides many design paths for be able to meet EL4 using M4 steel, At TSL 5, DOE estimates impacts on manufacturers to comply. DOE’s comments and interviews suggest INPV for low-voltage dry-type engineering analysis indicates uncertainty about the ability of M4 to distribution transformer manufacturers manufacturers can continue to use the meet EL 4 for all design lines. to range from ¥$46.8 million to $61.0 low-capital butt-lap core designs, Manufacturers may be forced to use million, corresponding to a change in meaning investment in mitering or higher-grade and thinner steels like M3, INPV of ¥19.7 percent to 25.7 percent. wound core capability is not necessary. H1, and H0. However, these thinner At this level, industry free cash flow is Manufacturers can use higher-quality steels, in combination with larger cores, estimated to decrease by approximately grain oriented steels in butt-lap designs will dramatically slow production 93.9 percent to $0.9 million, compared to meet TSL1, source some or all cores, throughput and therefore require the to the base-case value of $15.2 million or invest in modified mitering capability industry to expand capacity to maintain in the year before the compliance date (if they do not already have it). current shipments. This is the reason for (2015). At TSL 2, DOE estimates impacts on the increase in conversion costs. In the INPV for low-voltage dry-type lower-bound profitability scenario, The impacts at TSL 5 are similar to distribution transformer manufacturers when DOE assumes the industry cannot those DOE expects at TSL 4, except that to range from ¥$11.1 million to $11.8 fully pass on incremental costs, these slightly more amorphous core million, corresponding to a change in investments and the higher working production capacity will be needed INPV of ¥4.7 percent to 5.0 percent. At capital needs drain cash flow and lead because TSL 5-compliant transformers this level, industry free cash flow is to the negative impacts shown in the will have somewhat heavier cores and estimated to decrease by approximately preservation of operating profit thus require more amorphous steel. This 9.1 percent to $13.8 million, compared scenario. In the high-profitability leads to slightly greater capital to the base-case value of $15.2 million scenario, impacts are slightly positive expenditures at TSL 5 compared to in the year before the compliance date because DOE assumes manufacturers are TSL 4. (2015). able to fully recoup their conversion At TSL 6, DOE estimates impacts on TSL 2 differs from TSL1 in that DL7 expenditures through higher operating INPV for low-voltage dry-type must meet EL3, up from EL2. Comments cash flow. distribution transformer manufacturers received from the NOPR and At TSL 4, DOE estimates impacts on to range from ¥$78.6 million to $118.9 consultations with technical experts INPV for low-voltage dry-type million, corresponding to a change in suggest that butt-lap technology can still distribution transformer manufacturers ¥ ¥ INPV of 33.1 percent to 50.1 percent. be used to achieve EL 3 for DL 7. to range from $38.9 million to $42.3 At this level, industry free cash flow is However, DOE expects the high volume million, corresponding to a change in ¥ estimated to decrease by approximately manufacturers which supply most of the INPV of 16.4 percent to 17.8 percent. 138 percent to ¥$5.8 million, compared market to employ mitered cores at this At this level, industry free cash flow is to the base-case value of $15.2 million efficiency level. Therefore, the increase estimated to decrease by approximately in the year before the compliance date in conversion costs for DL 7, which 87.2 percent to $1.9 million, compared (2015). represents more than three-quarters of to the base-case value of $15.2 million the market by core weight in this in the year before the compliance date The impacts at TSL 6 are similar to superclass, is primarily driven by the (2015). those DOE expects at TSL 5, except that need to purchase additional core cutting TSL 4 and higher would create slightly more amorphous core equipment to accommodate the significant challenges for the industry production capacity will be needed production of larger, mitered cores. and likely disrupt the marketplace. because TSL 6-compliant transformers Furthermore, manufacturers also DOE’s conversion costs at TSL 4 assume will have somewhat heavier cores and indicated that there would be a reduced the industry will entirely convert to thus require more amorphous steel. This burden at TSL 2 relative to TSL 1 amorphous wound core technology to leads to slightly greater capital because they would be able to meet the efficiency standards. Few expenditures at TSL 6 compared to standardize the use of NEMA Premium® manufacturers of distribution TSL 5. (with the exception of DL 6). transformers in this superclass have any The MIA results for medium-voltage At TSL 3, DOE estimates impacts on experience with amorphous steel or dry-type distribution transformers are as INPV for low-voltage dry-type wound core technology and would face follows:

VerDate Mar<15>2010 20:30 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23406 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE V.26—MANUFACTURER IMPACT ANALYSIS MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS— PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Trial standard level Units Base case 1 2 3 4 5

INPV ...... 2011 $M 68.7 67.3 65.7 57.9 58.0 34.5 Change in INPV ...... 2011 $M ...... (1.4) (2.9) (10.7) (10.7) (34.1) % ...... (2.0) (4.2) (15.6) (15.5) (49.7) Capital Conversion Costs ...... 2011 $M ...... 0.2 0.5 3.9 3.9 13.9 Product Conversion Costs...... 2011 $M ...... 2.0 2.0 3.7 3.7 8.2 Total Conversion Costs ...... 2011 $M ...... 2.2 2.6 7.7 7.7 22.1 * Note: Parentheses indicate negative values.

TABLE V.27—MANUFACTURER IMPACT ANALYSIS MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS— PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO

Trial standard level Units Base case 1 2 3 4 5

INPV ...... 2011 $M 68.7 69.3 71.7 74.4 74.3 81.5 Change in INPV ...... 2011 $M ...... 0.7 3.0 5.7 5.6 12.9 % ...... 1.0 4.4 8.3 8.2 18.7 Capital Conversion Costs ...... 2011 $M ...... 0.2 0.5 3.9 3.9 13.9 Product Conversion Costs...... 2011 $M ...... 2.0 2.0 3.7 3.7 8.2 Total Conversion Costs ...... 2011 $M ...... 2.2 2.6 7.7 7.7 22.1 * Note: Parentheses indicate negative values.

At TSL 1, DOE estimates impacts on to range from ¥$2.9 million to $3.0 At TSL 4, DOE estimates impacts on INPV for medium-voltage dry-type million, corresponding to a change in INPV for medium-voltage dry-type distribution transformer manufacturers INPV of ¥4.2 percent to 4.4 percent. At distribution transformer manufacturers to range from ¥$1.4 million to $0.7 this level, industry free cash flow is to range from¥$10.7 million to $5.6 million, corresponding to a change in estimated to decrease by approximately million, corresponding to a change in INPV of ¥2.0 percent to 1.0 percent. At 6.0 percent to $4.2 million, compared to INPV of ¥15.5 percent to 8.2 percent. this level, industry free cash flow is the base-case value of $4.4 million in At this level, industry free cash flow is estimated to decrease by approximately the year before the compliance date estimated to decrease by approximately 2.3 percent to $4.3 million, compared to (2015). ¥53.4 percent to $2.1 million, the base-case value of $4.4 million in compared to the base-case value of $4.4 Compared to TSL 1, TSL 2 requires the year before the compliance date million in the year before the EL2, rather than EL1, in DLs 10, 12, and (2015). compliance date (2015). TSL 1 represents EL1 for all MVDT 13B. Because M4 (as well as the TSL 3 and TSL 4 require EL2 for DL9 design lines. For DL12, the largest commonly used H1) can still be and DL10, but EL4 for DL11 through design line by core steel usage, employed to meet these levels, DOE DL13B, which hold the majority of the manufacturers have a variety of steels expects similar results at TSL 2 as at volume. Several manufacturers were available to them, including M4, the TSL 1. Slightly greater conversion costs concerned TSL 3 would require some of most common steel in the superclass. will be required as the compliant the high volume design lines to use H1 Additionally, the vast majority of the transformers will have heavier cores, all or H0, or transition entirely to market already uses step-lap mitering other things being equal, meaning amorphous wound cores (with which technology. Therefore, DOE anticipates additional capacity may be necessary the industry has experience). Without a only moderate conversion costs for the depending on each manufacturer’s cost effective M-grade steel option, the industry, mainly associated with slower current capacity utilization rate. As with industry could face severe disruption. throughput due to larger cores. Some TSL 1, TSL 2 will not require significant Even assuming a sufficient supply of Hi- manufacturers may need to slightly changes to most manufacturers B steel, which is generally used and expand capacity to maintain throughput production processes because the priced for the power transformer and/or modify equipment to thickness of the steels will not change market, relatively large expenditures manufacturer with greater precision and significantly, if at all. would be required in R&D and tighter tolerances. In general, however, At TSL 3, DOE estimates impacts on engineering as most manufacturers conversion expenditures should be INPV for medium-voltage dry-type would have to move production to steel relatively minor compared to INPV. For distribution transformer manufacturers with which they have little experience. this reason, TSL 1 yields relatively to range from ¥$10.7 million to $5.7 DOE estimates total conversion costs minor adverse changes to INPV in the million, corresponding to a change in would more than double at TSL 3, standards case. INPV of ¥15.6 percent to 8.3 percent. relative to TSL 2. If, based on the At TSL 2 (the consensus At this level, industry free cash flow is movement of steel prices, EL4 can be recommendation from the negotiating estimated to decrease by approximately met cost competitively only through the committee), DOE estimates impacts on 53.4 to $2.1 million, compared to the use of amorphous steel or an exotic INPV for medium-voltage dry-type base-case value of $4.4 million in the design with little or no current place in distribution transformer manufacturers year before the compliance date (2015). scale manufacturing, manufacturers

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23407

would face significant challenges that their production process, large labor expenditures, not decrease them, DOE believes would lead to investments and stranded assets, some but current production equipment consolidation and likely cause many manufacturers expect to strongly would not be stranded, mitigating the low-volume manufacturers to exit the consider shifting production offshore at incentive to move production offshore. product line. TSL 3 due to the increased labor Corroborating this, the largest At TSL 5, DOE estimates impacts on expenses associated with the production manufacturer and domestic employer in INPV for medium-voltage dry-type processes required to make amorphous this market has indicated that the distribution transformer manufacturers steel cores. In summary, at TSLs 1 and standard in this final rule, will not to range from ¥$34.1 million to $12.9 2, DOE does not expect significant cause their company to reconsider million, corresponding to a change in impacts on employment, but at TSL 3 or production location. As such, DOE does INPV of ¥49.7 percent to 18.7 percent. greater, which would require more not expect significant changes to At this level, industry free cash flow is investment, the impact is very domestic MVDT industry employment estimated to decrease by approximately uncertain. levels as a result of the standard in 189.1 percent to ¥$3.9 million, Low-Voltage Dry-Type. Based on today’s final rule. For TSLs that would compared to the base-case value of $4.4 interviews with manufacturers, DOE require amorphous cores, DOE does million in the year before the estimates that there are approximately anticipate significant changes to compliance date (2015). 2,200 employees associated with DOE- domestic MVDT industry employment TSL 5 represents max-tech and yields covered LVDT production. levels. results similar to but more severe than Approximately 75 percent of these c. Impacts on Manufacturing Capacity TSL 4 results. The engineering analysis employees are located outside of the shows that the entire market must U.S. Typically, high volume units are Based on manufacturer interviews, convert to amorphous wound cores at made in Mexico, taking advantage of DOE believes that there is significant TSL 5. Because the industry has no lower labor rates, while custom designs excess capacity in the distribution experience with wound core are made closer to the manufacturer’s transformer market. Shipments in the technology, and little, if any, experience customer base or R&D centers. DOE does industry are well down from their peak with amorphous steel, this transition not expect large changes in domestic in 2007, according to manufacturers. would represent a tremendous challenge employment to occur due to today’s Therefore, DOE does not believe there for industry. Interviews suggest most standard. Most production already would be any production capacity manufacturers would exit the market occurs outside the U.S. and, by and constraints at TSLs that do not require rather altogether or source their cores large, manufacturers agreed that most dramatic transitions to amorphous rather than make the investments in design changes necessary to meet higher cores. For those TSLs that require plant, equipment, and the R&D required energy conservation standards would amorphous cores in significant volumes, to meet such levels. increase labor expenditures, not DOE believes there is potential for b. Impacts on Employment decrease them. If, however, small capacity constraints in the near term manufacturers began sourcing cores due to limitations on core steel Liquid-Immersed. Based on availability. However, for the levels in interviews with manufacturers and instead of manufacturing them in-house, there could be a small drop in today’s rule, DOE does not foresee any other industry research, DOE estimates capacity constraints. that there are roughly 5,000 employees employment at these firms. This associated with DOE-covered liquid- employment would presumably transfer d. Impacts on Subgroups of immersed distribution transformer to the core makers, some of whom are Manufacturers domestic and some of whom are foreign. production and some three-quarters of Small manufacturers, niche In summary, DOE does not expect these workers are located domestically. equipment manufacturers, and significant changes to domestic LVDT DOE does not expect large changes in manufacturers exhibiting a cost industry employment levels as a result domestic employment to occur due to structure substantially different from the of today’s standards. Higher TSLs may today’s standard. Manufacturers industry average could be affected lead to small declines in domestic generally agreed that amorphous core disproportionately. Therefore, using employment as more firms will be steel production is more labor-intensive average cost assumptions to develop an challenged with what amounts to clean- and would require greater labor industry cash-flow estimate is sheet redesigns. Facing the prospect of expenditures than tradition steel core inadequate to assess differential impacts green field investments, these production. So long as domestic plants among manufacturer subgroups. DOE manufacturers may elect to make those are not relocated outside the country, considered small manufacturers as a investments in lower-labor cost DOE expects moderate increases in subgroup in the MIA. For a discussion countries.67 domestic employment at TSL1 and of the impacts on the small Medium-Voltage Dry-Type. Based on TSL2. There could be a small drop in manufacturer subgroup, see the interviews with manufacturers, DOE employment at small, domestic Regulatory Flexibility Analysis in estimates that there are approximately manufacturing firms if small section VI.B and chapter 12 of the final 1,850 employees associated with DOE- manufacturers began sourcing cores. rule TSD. This employment would presumably covered MVDT production. transfer to the core makers, some of Approximately 75 percent of these e. Cumulative Regulatory Burden whom are domestic and some of whom employees are located domestically. While any one regulation may not are foreign. There is a risk that higher With the exception of TSLs that require impose a significant burden on energy conservation standards that amorphous cores, manufacturers agreed manufacturers, the combined effects of largely require the use of amorphous that most design changes necessary to recent or impending regulations may steel could cause even large meet higher standards would increase have serious consequences for some manufacturers who are currently manufacturers, groups of manufacturers, 67 A green field investment is a form of foreign producing transformers in the U.S. to direct investment where a parent company starts a or an entire industry. Assessing the evaluate offshore options. Faced with new venture in a foreign country by constructing impact of a single regulation may the prospect of wholesale changes to new operational facilities from the ground up. overlook this cumulative regulatory

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23408 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

burden. In addition to energy addition to amended energy year of compliance with amended conservation standards, other conservation standards for distribution standards (2016–2045). The savings are regulations can significantly affect transformers. The Department did not measured over the entire lifetime of manufacturers’ financial operations. receive comments regarding cumulative products purchased in the 30-year Multiple regulations affecting the same regulatory burden issues for the NOPR. period, which in the case of manufacturer can strain profits and lead DOE addresses the full details of the transformers extends through 2105. DOE companies to abandon product lines or cumulative regulatory burden analysis quantified the energy savings markets with lower expected future in chapter 12 of the final rule TSD. attributable to each TSL as the returns than competing products. For difference in energy consumption these reasons, DOE conducts an analysis 3. National Impact Analysis between each standards case and the of cumulative regulatory burden as part a. Significance of Energy Savings base case. Table V.28 presents the of its rulemakings pertaining to estimated energy savings for each appliance efficiency. During previous For each TSL, DOE projected energy stages of this rulemaking, DOE savings for transformers purchased in considered TSL. The approach used is 68 identified a number of requirements in the 30-year period that begins in the further described in section IV.G.

TABLE V.28—CUMULATIVE NATIONAL ENERGY SAVINGS FOR DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2016–2045

Trial standard level 1 2 3 4 5 6 7

quads

Liquid-immersed ...... 0.92 1.56 1.76 3.31 3.30 4.09 7.01 Low-voltage dry-type...... 2.28 2.43 3.05 4.39 4.48 4.94 ...... Medium-voltage dry-type...... 0.15 0.29 0.53 0.53 0.84 ......

For this rulemaking, DOE undertook a with a new standard for distribution indicative of any change in DOE’s sensitivity analysis using nine rather transformers.69 This timeframe may not analytical methodology. The NES than 30 years of product shipments. The be statistically relevant with regard to results based on a nine-year analytical choice of a nine-year period is a proxy the product lifetime, product period are presented in Table V.29. The for the timeline in EPCA for the review manufacturing cycles or other factors impacts are counted over the lifetime of of the energy conservation standard specific to distribution transformers. products purchased in 2016–2024. established in this final rule and Thus, this information is presented for potential revision of and compliance informational purposes only and is not

TABLE V.29—CUMULATIVE NATIONAL ENERGY SAVINGS FOR DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2016–2024

Trial standard level 1 2 3 4 5 6 7

quads

Liquid-immersed ...... 0.25 0.42 0.47 0.90 0.90 1.12 1.93 Low-voltage dry-type...... 0.63 0.67 0.85 1.22 1.24 1.38 ...... Medium-voltage dry-type...... 0.04 0.08 0.15 0.15 0.23 ......

b. Net Present Value of Customer Costs the NPV using both a 7-percent and a 3- sector (OMB analysis has found the and Benefits percent real discount rate. The 7-percent average rate of return on capital to be rate is an estimate of the average before- near this rate). The three-percent rate DOE estimated the cumulative NPV of tax rate of return on private capital in reflects the potential effects of standards the total costs and savings for customers the U.S. economy, and reflects the on private consumption (e.g.,through that would result from the TSLs returns on real estate and small business higher prices for products and reduced considered for distribution transformers. capital as well as corporate capital. This purchases of energy). This rate In accordance with OMB’s guidelines on discount rate approximates the represents the rate at which society regulatory analysis,70 DOE calculated opportunity cost of capital in the private discounts future consumption flows to

68 Chapter 10 of the TSD presents tables that show products, a 3 year period after any new standard is A 9-year analysis period may not be appropriate the magnitude of the energy savings discounted at promulgated before compliance is required, except given the variability that occurs in the timing of rates of 3 percent and 7 percent. Discounted energy that in no case may any new standards be required standards reviews and the fact that for some savings represent a policy perspective in which within 6 years of the compliance date of the products, the compliance period is 5 years rather energy savings realized farther in the future are less previous standards. While adding a 6-year review than 3 years. significant than energy savings realized in the to the 3-year compliance period adds up to 9 years, 70 nearer term. DOE notes that it may undertake reviews at any OMB Circular A–4, section E (Sept. 17, 2003). 69 EPCA requires DOE to review its standards at time within the 6 year period and that the 3-year Available at: http://www.whitehouse.gov/omb/ least once every 6 years, and requires, for certain compliance date may yield to the 6-year backstop. circulars_a004_a-4.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23409

their present value. It can be which has averaged about 3 percent for case, the impacts cover the lifetime of approximated by the real rate of return the past 30 years. equipment purchased in 2016–2045. on long-term government debt (i.e., Table V.30 shows the customer NPV yield on United States Treasury notes), results for each TSL considered. In each

TABLE V.30—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR DISTRIBUTION TRANSFORMERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2016–2045

Discount Trial standard level rate % 1 2 3 4 5 6 7

billion 2011$

Liquid-immersed ...... 3 3.12 4.82 5.62 10.78 10.19 10.27 ¥8.50 7 0.58 0.69 0.91 1.92 1.60 0.74 ¥12.97 Low-voltage dry-type...... 3 8.38 9.04 10.38 13.65 11.80 5.17 ...... 7 2.45 2.67 2.82 3.34 2.22 ¥1.92 ...... Medium-voltage dry-type 3 0.49 0.79 1.12 1.12 ¥0.20 ...... 7 0.13 0.17 0.12 0.12 ¥0.89 ......

The results shown in the table reflect prices rise. The NPV results from the impacts are counted over the lifetime of the default equipment price trend, associated sensitivity cases are equipment purchased in 2016–2024. As which uses constant prices. DOE described in appendix 10–C of the final mentioned previously, this information conducted an NPV sensitivity analysis rule TSD. is presented for informational purposes using alternative price trends. DOE The NPV results based on the only and is not indicative of any change developed one forecast in which prices aforementioned nine-year analytical in DOE’s analytical methodology or decline after 2010, and one in which period are presented in Table V.31. The decision criteria.

TABLE V.31—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR DISTRIBUTION TRANSFORMERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2016–2024

Discount Trial standard level rate % 1 2 3 4 5 6 7

billion 2011$

Liquid-Immersed ...... 3 1.09 1.67 1.95 3.77 3.55 3.55 ¥3.49 7 0.26 0.31 0.41 0.88 0.73 0.29 ¥6.56 Low-voltage dry-type...... 3 3.02 3.26 3.73 4.88 4.19 1.70 ...... 7 1.19 1.30 1.37 1.60 1.04 ¥1.04 ...... Medium-voltage dry-type 3 0.18 0.28 0.39 0.39 ¥0.11 ...... 7 0.07 0.08 0.05 0.05 ¥0.46 ......

c. Indirect Impacts on Employment impact on the net demand for labor in such determination to the Secretary of the economy. The net change in jobs is Energy, together with an analysis of the DOE expects energy conservation so small that it would be imperceptible nature and extent of such impact. (42 standards for distribution transformers in national labor statistics and might be U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) to reduce energy costs for equipment offset by other, unanticipated effects on To assist the Attorney General in owners, and the resulting net savings to employment. Chapter 13 of the final making such a determination, DOE has be redirected to other forms of economic rule TSD presents detailed results. provided the Department of Justice activity. Those shifts in spending and (DOJ) with copies of this notice and the 4. Impact on Utility or Performance of economic activity could affect the TSD for review. DOE considered DOJ’s Equipment demand for labor. As described in comments on the proposed rule in section IV.J, DOE used an input/output DOE believes that the standards in preparing the final rule. model of the U.S. economy to estimate today’s rule will not lessen the utility or 6. Need of the Nation to Conserve indirect employment impacts of the performance of distribution Energy TSLs that DOE considered in this transformers. rulemaking. DOE understands that there Enhanced energy efficiency, where are uncertainties involved in projecting 5. Impact of Any Lessening of economically justified, improves the employment impacts, especially Competition Nation’s energy security, strengthens the changes in the later years of the DOE has also considered any economy, and reduces the analysis. Therefore, DOE generated lessening of competition that is likely to environmental impacts or costs of results for near-term time frames (2016– result from new and amended energy production. Reduced electricity 2020), where these uncertainties are standards. The Attorney General demand due to energy conservation reduced. determines the impact, if any, of any standards is also likely to reduce the The results suggest that today’s lessening of competition likely to result cost of maintaining the reliability of the standards are likely to have negligible from a proposed standard, and transmits electricity system, particularly during

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23410 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

peak-load periods. As a measure of this Energy savings from standards for cumulative CO2, NOX, and Hg emissions reduced demand, chapter 14 in the final distribution transformers could also reductions projected to result from the rule TSD presents the estimated produce environmental benefits in the TSLs considered in this rulemaking. reduction in generating capacity in 2045 form of reduced emissions of air DOE reports annual CO2, NOX, and Hg for the TSLs that DOE considered in this pollutants and greenhouse gases emissions reductions for each TSL in rulemaking. associated with electricity production. chapter 15 of the final rule TSD. Table V.32 provides DOE’s estimate of

TABLE V.32—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS

Trial standard level 1 2 3 4 5 6 7

Liquid-Immersed

CO2 (million metric tons) ...... 82.2 143.1 156.5 274.6 273.4 321.8 501.8 NOX (thousand tons)... 69.3 120.6 131.8 231.1 230.1 270.8 421.9 SO2 (thousand tons) .... 52.0 90.0 98.4 173.0 172.4 203.2 318.0 Hg (tons) ...... 0.2 0.3 0.3 0.6 0.6 0.7 1.1

Low-Voltage Dry-Type

CO2 (million metric tons) ...... 151.3 161.6 203.0 292.8 297.6 319.3 ...... NOX (thousand tons)... 127.6 136.4 171.3 247.0 251.0 269.3 ...... SO2 (thousand tons).... 110.1 117.6 147.8 213.2 216.7 232.4 ...... Hg (tons) ...... 0.4 0.4 0.5 0.8 0.8 0.8 ......

Medium-Voltage Dry-Type

CO2 (million metric tons) ...... 11.2 20.9 40.7 40.7 61.3 ...... NOX (thousand tons) ... 9.34 17.7 34.2 34.2 51.5 ...... SO2 (thousand tons) .... 7.06 13.29 25.65 25.65 38.69 ...... Hg (tons) ...... 0.02 0.04 0.10 0.10 0.14 ......

As part of the analysis for this rule, average value from a distribution that Table V.33 presents the global value DOE estimated monetary benefits likely uses a 3-percent discount rate), $36.5/ of CO2 emissions reductions at each to result from the reduced emissions of metric ton (the average value from a TSL. For each of the four cases, DOE CO2 and NOX that DOE estimated for distribution that uses a 2.5-percent calculated a present value of the stream each of the TSLs considered. As discount rate), and $67.6/metric ton (the of annual values using the same discussed in section IV.M, DOE used 95th-percentile value from a discount rate as was used in the studies values for the SCC developed by an distribution that uses a 3-percent upon which the dollar-per-ton values interagency process. The four sets of discount rate). These values correspond are based. DOE calculated domestic SCC values resulting from that process to the value of emission reductions in values as a range from 7 percent to 23 (expressed in 2011$) are represented by 2011; the values for later years are percent of the global values, and these $4.9/metric ton (the average value from higher due to increasing damages as the results are presented in chapter 16 of a distribution that uses a 5-percent projected magnitude of climate change the final rule TSD. discount rate), $22.3/metric ton (the increases.

TABLE V.33—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS

5% discount 3% discount 2.5% dis- 3% discount TSL rate, aver- rate, aver- count rate, rate, 95th age * age * average * percentile *

Million 2011$

Liquid-Immersed

1 ...... 259 1,390 2,377 4,230 2 ...... 454 2,428 4,151 7,390 3 ...... 494 2,649 4,530 8,060 4 ...... 855 4,609 7,891 14,024 5 ...... 851 4,588 7,855 13,960 6 ...... 991 5,366 9,195 16,325 7 ...... 1,515 8,266 14,190 25,144

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23411

TABLE V.33—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS—Continued

5% discount 3% discount 2.5% dis- 3% discount TSL rate, aver- rate, aver- count rate, rate, 95th age * age * average * percentile *

Low-Voltage Dry-Type

1 ...... 450 2,470 4,245 7,512 2 ...... 480 2,637 4,532 8,020 3 ...... 603 3,313 5,694 10,075 4 ...... 870 4,779 8,214 14,535 5 ...... 884 4,857 8,348 14,771 6 ...... 949 5,211 8,956 15,847

Medium-Voltage Dry-Type

1 ...... 35 188 321 571 2 ...... 65 350 599 1,065 3 ...... 126 680 1,164 2,067 4 ...... 126 680 1,164 2,067 5 ...... 190 1,024 1,755 3,117

DOE is well aware that scientific and Table V.34 presents the cumulative TABLE V.34—ESTIMATES OF PRESENT economic knowledge about the present values for each TSL calculated VALUE OF NOX EMISSIONS REDUC- contribution of CO2 and other using seven-percent and three-percent TION UNDER DISTRIBUTION TRANS- greenhouse gas (GHG) emissions to discount rates. FORMER TRIAL STANDARD LEVELS— changes in the future global climate and Continued the potential resulting damages to the TABLE V.34—ESTIMATES OF PRESENT world economy continues to evolve VALUE OF NOX EMISSIONS REDUC- 3% discount 7% discount rapidly. Thus, any value placed on TION UNDER DISTRIBUTION TRANS- TSL rate rate reducing CO2 emissions in this FORMER TRIAL STANDARD LEVELS rulemaking is subject to change. DOE, 3 ...... 6 to 67 ...... 3 to 27 together with other Federal agencies, 4 ...... 6 to 67 ...... 3 to 27 TSL 3% discount 7% discount will continue to review various rate rate 5 ...... 10 to 100 ...... 4 to 41 methodologies for estimating the Million 2011$ monetary value of reductions in CO2 7. Summary of National Economic and other GHG emissions. This ongoing Liquid-Immersed Impacts review will consider the comments on this subject that are part of the public 1 ...... 13 to 138 ...... 6 to 57 The NPV of the monetized benefits record for this and other rulemakings, as 2 ...... 24 to 242 ...... 10 to 100 associated with emissions reductions well as other methodological 3 ...... 26 to 263 ...... 11 to 109 can be viewed as a complement to the assumptions and issues. However, 4 ...... 44 to 454 ...... 18 to 185 NPV of the customer savings calculated consistent with DOE’s legal obligations, 5 ...... 44 to 452 ...... 18 to 184 for each TSL considered in this and taking into account the uncertainty 6 ...... 51 to 525 ...... 21 to 211 7 ...... 78 to 799 ...... 31 to 314 rulemaking. Table V.35 through Table involved with this particular issue, DOE V.37 present the NPV values that result has included in this final rule the most Low-Voltage Dry-Type from adding the estimates of the recent values and analyses resulting potential economic benefits resulting from the ongoing interagency review 1 ...... 23 to 238 ...... 9 to 92 from reduced CO and NO emissions process. 2 ...... 25 to 254 ...... 10 to 99 2 X DOE also estimated a range for the 3 ...... 31 to 319 ...... 12 to 124 in each of four valuation scenarios to cumulative monetary value of the 4 ...... 45 to 460 ...... 17 to 179 the NPV of customer savings calculated 5 ...... 45 to 468 ...... 18 to 182 economic benefits associated with NOX for each TSL considered in this emissions reductions anticipated to 6 ...... 49 to 502 ...... 19 to 195 rulemaking, at both a seven-percent and three-percent discount rate. The CO result from amended standards for Medium-Voltage Dry-Type 2 distribution transformers. The low and values used in the columns of each table high dollar-per-ton values that DOE 1 ...... 2 to 18 ...... 1 to 7 correspond to the four sets of SCC used are discussed in section IV.M. 2 ...... 3 to 34 ...... 1 to 14 values discussed above.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23412 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE V.35—LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH NET PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

Customer NPV at 3% Discount Rate added with: SCC Value of SCC Value of SCC Value of TSL SCC Value of $4.9/ $22.3/t CO2 * and $36.5/t CO2 * and $67.6/t CO2 * and t CO2 * and Low Medium Value for Medium Value for High Value for Value for NOX ** NOX ** NOX ** NOX **

Billion 2011$

1 ...... 3.4 4.6 5.6 7.5 2 ...... 5.3 7.4 9.1 12.5 3 ...... 6.1 8.4 10.3 13.9 4 ...... 11.7 15.6 18.9 25.3 5 ...... 11.1 15.0 18.3 24.6 6 ...... 11.3 15.9 19.8 27.1 7 ...... ¥6.9 0.2 6.1 17.4 Customer NPV at 7% Discount Rate added with: SCC Value of SCC Value of TSL SCC Value of $4.9/ SCC Value of $22.3/t CO2 * and $36.5/t CO2 * and $67.6/t CO2 * and t CO2 * and Low Medium Value for Medium Value for High Value for Value for NOX ** NOX ** NOX ** NOX **

Billion 2011$

1 ...... 0.8 2.0 3.0 4.9 2 ...... 1.2 3.2 4.9 8.2 3 ...... 1.4 3.6 5.5 9.1 4 ...... 2.8 6.6 9.9 16.1 5 ...... 2.5 6.3 9.6 15.7 6 ...... 1.8 6.2 10.1 17.3 7 ...... ¥11.4 ¥4.5 1.4 12.5 * These label values represent the global SCC in 2011, in 2011$. The present values have been calculated with scenario-consistent discount rates. ** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX emissions. High Value corresponds to $4,623 per ton of NOX emissions.

TABLE V.36—LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH NET PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

Customer NPV at 3% Discount Rate added with:

TSL SCC Value of $4.9/ SCC Value of SCC Value of SCC Value of $22.3/t CO2 * and $36.5/t CO2 * and $67.6/t CO2 * and t CO2 * and Low Medium Value for Medium Value for High Value for Value for NOX ** NOX ** NOX ** NOX **

Billion 2011$

1 ...... 8.8 11.0 12.8 16.1 2 ...... 9.5 11.8 13.7 17.3 3 ...... 11.0 13.9 16.3 20.8 4 ...... 14.6 18.7 22.1 28.6 5 ...... 12.7 16.9 20.4 27.0 6 ...... 6.2 10.7 14.4 21.5 Customer NPV at 7% Discount Rate added with:

Billion 2011$

1 ...... 2.9 5.0 6.7 10.0 2 ...... 3.2 5.4 7.3 10.8 3 ...... 3.4 6.2 8.6 13.0 4 ...... 4.2 8.2 11.7 18.1 5 ...... 3.1 7.2 10.7 17.2 6 ...... ¥1.0 3.4 7.1 14.1 * These label values represent the global SCC in 2011, in 2011$. The present values have been calculated with scenario-consistent discount rates.

VerDate Mar<15>2010 20:30 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23413

** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX emissions. High Value corresponds to $4,623 per ton of NOX emissions.

TABLE V.37—MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH NET PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS

Customer NPV at 3% Discount Rate added with: SCC Value of SCC Value of TSL SCC Value of $4.9/ SCC Value of $22.3/t CO2 * and $36.5/t CO2 * and $67.6/t CO2 * and t CO2 * and Low Medium Value for Medium Value for High Value for Value for NOX ** NOX ** NOX ** NOX **

Billion 2011$

1 ...... 0.5 0.7 0.8 1.1 2 ...... 0.9 1.2 1.4 1.9 3 ...... 1.3 1.8 2.3 3.3 4 ...... 1.3 1.8 2.3 3.3 5 ...... 0.0 0.9 1.6 3.0 Customer NPV at 7% Discount Rate added with: SCC Value of TSL SCC Value of $4.9/ SCC Value of SCC Value of $22.3/t CO2 * and $36.5/t CO2 * and $67.6/t CO2 * and t CO2 * and Low Medium Value for Medium Value for High Value for Value for NOX ** NOX ** NOX ** NOX **

Billion 2011$

1 ...... 0.2 0.3 0.5 0.7 2 ...... 0.2 0.5 0.8 1.2 3 ...... 0.2 0.8 1.3 2.2 4 ...... 0.2 0.8 1.3 2.2 5 ...... ¥0.7 0.2 0.9 2.3 * These label values represent the global SCC in 2011, in 2011$. The present values have been calculated with scenario-consistent discount rates. ** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX emissions. High Value corresponds to $4,623 per ton of NOX emissions.

Although adding the value of manufacture of distribution Distribution transformers are also customer savings to the values of transformers, amounting for more than highly customized products. emission reductions provides a valuable 60 percent of the distribution Manufacturers routinely build only one perspective, two issues should be transformers mass in some designs. or a handful of units of a particular considered. First, the national operating Rapid changes in the supply or pricing design and require flexibility with cost savings are domestic U.S. customer of certain grades can seriously hinder respect to construction materials to monetary savings that occur as a result manufacturers’ abilities to meet the remain competitive. Setting a standard of market transactions, while the value market demand and, as a result, this that either technologically or of CO2 reductions is based on a global rulemaking has extensively examined economically required amorphous value. Second, the assessments of the effects of electrical steel supply and material would both eliminate a large operating cost savings and the SCC are availability. amount of design flexibility and expose performed with different methods that the industry to enormous risk with use quite different time frames for DOE’s most important conclusion respect to supply and pricing of core analysis. The national operating cost from this examination is that several steel. For both reasons, DOE considered savings is measured for the lifetime of energy efficiency levels in each design electrical steel availability to be a products shipped in 2016–2045. The line are attainable only by using significant factor in determining which SCC values, on the other hand, reflect amorphous steel, which is currently TSLs were economically justified. the present value of future climate- produced by only one supplier in any C. Conclusion related impacts resulting from the significant volume and that supplier at emission of one metric ton of CO2 in present does not have enough capacity When considering proposed each year. These impacts continue well to supply the industry at all-amorphous standards, the new or amended energy beyond 2100. standard levels. Several more energy conservation standard that DOE adopts efficiency levels are reachable with the for any type (or class) of covered 8. Other Factors top grades of conventional (grain- equipment shall be designed to achieve The Secretary of Energy, in oriented) electrical steels, but this the maximum improvement in energy determining whether a standard is would result in distribution efficiency that the Secretary of Energy economically justified, may consider transformers that are unlikely to be cost- determines is technologically feasible any other factors that the Secretary competitive with the often more- and economically justified. (42 U.S.C. deems to be relevant. (42 U.S.C. efficient amorphous units. As stated 6295(o)(2)(A)) In determining whether a 6295(o)(2)(B)(i)(VII)) above, switching to amorphous steel is standard is economically justified, the Electrical steel is a critical not practicable as there are availability Secretary must determine whether the consideration in the design and concerns with amorphous steel. benefits of the standard exceed its

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23414 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

burdens to the greatest extent economically justified and saves a standard, and impacts on employment. practicable, in light of the seven significant amount of energy. Section V.B.1 presents the estimated statutory factors discussed previously. To aid the reader in understanding impacts of each TSL for the considered (42 U.S.C. 6295(o)(2)(B)(i)) The new or the benefits and/or burdens of each TSL, subgroup. DOE discusses the impacts on amended standard must also ‘‘result in tables in this section summarize the employment in transformer significant conservation of energy.’’ (42 quantitative analytical results for each manufacturing in section V.B.2.b, and U.S.C. 6295(o)(3)(B)) TSL, based on the assumptions and discusses the indirect employment For today’s rulemaking, DOE methodology discussed herein. The impacts in section V.B.3.c. considered the impacts of standards at efficiency levels contained in each TSL each TSL, beginning with the max-tech are described in section V.A. In addition 1. Benefits and Burdens of Trial level, to determine whether that level to the quantitative results presented in Standard Levels Considered for Liquid- was economically justified. Where the the tables, DOE also considers other Immersed Distribution Transformers max-tech level was not justified, DOE burdens and benefits that affect then considered the next most efficient economic justification. These include Table V.38 and Table V.39 summarize level and undertook the same evaluation the impacts on identifiable subgroups of the quantitative impacts estimated for until it reached the highest efficiency customers who may be each TSL for liquid-immersed level that is technologically feasible, disproportionately affected by a national distribution transformers.

TABLE V.38—SUMMARY OF ANALYTICAL RESULTS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7

National Energy 0.92 ...... 1.56 ...... 1.76 ...... 3.31 ...... 3.30 ...... 4.09 ...... 7.01 Savings quads.

NPV of Consumer Benefits 2011$ billion

3% discount rate 3.12 ...... 4.82 ...... 5.62 ...... 10.78 ...... 10.19 ...... 10.27 ...... ¥8.50 7% discount rate 0.58 ...... 0.69 ...... 0.91 ...... 1.92 ...... 1.60 ...... 0.74 ...... ¥12.97

Cumulative Emissions Reduction

CO2 (million 82.2 ...... 143.1 ...... 156.5 ...... 274.6 ...... 273.4 ...... 321.8 ...... 501.8 metric tons). NOX (thousand 69.3 ...... 120.6 ...... 131.8 ...... 231.1 ...... 230.1 ...... 270.8 ...... 421.9 tons). SO2 (thousand 52.0 ...... 90.0 ...... 98.4 ...... 173.0 ...... 172.4 ...... 203.2 ...... 318.0 tons). Hg (tons) ...... 0.2 ...... 0.3 ...... 0.3 ...... 0.6 ...... 0.6 ...... 0.7 ...... 1.1

Value of Emissions Reduction

CO2 2011$ mil- 259 to 4230 ..... 454 to 7390 ..... 494 to 8060 ..... 855 to 14024 ... 851 to 13960 ... 991 to 16325 ... 1515 to 25144 lion*. NOX ¥ 3% dis- 13 to 138 ...... 24 to 242 ...... 26 to 263 ...... 44 to 454 ...... 44 to 452 ...... 51 to 525 ...... 78 to 799 count rate 2011$ million. NOX ¥ 7% dis- 6 to 57 ...... 10 to 100 ...... 11 to 109 ...... 18 to 185 ...... 18 to 184 ...... 21 to 211 ...... 31 to 314 count rate 2011$ million. * Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

TABLE V.39—SUMMARY OF ANALYTICAL RESULTS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7

Manufacturer Impacts

Industry NPV 527 to 552 ...... 466 to 508 ...... 462 to 506 ...... 389 to 478 ...... 382 to 474 ...... 358 to 487 ...... 181 to 576 2011$ million. Industry NPV % (8.4) to (4.1) .... (19.0) to (11.7) (19.7) to (12.0) (32.4) to (16.9) (33.6) to (17.6) (37.7) to (15.4) (68.4) to 0.1 change.

Consumer Mean LCC Savings 2011$

Design line 1 ..... 83 ...... 153 ...... 153 ...... 696 ...... 696 ...... 618 ...... 365 Design line 2 ..... 66 ...... 278 ...... 278 ...... 343 ...... 330 ...... 311 ...... ¥579 Design line 3 ..... 2709 ...... 2407 ...... 3526 ...... 5527 ...... 5037 ...... 6942 ...... 4491 Design line 4 ..... 977 ...... 977 ...... 977 ...... 1212 ...... 3603 ...... 3603 ...... 4349 Design line 5 ..... 3668 ...... 3668 ...... 6852 ...... 10382 ...... 8616 ...... 12014 ...... 4619

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23415

TABLE V.39—SUMMARY OF ANALYTICAL RESULTS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS—Continued

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7

Consumer Median PBP years

Design line 1 ..... 17.7 ...... 24.7 ...... 24.7 ...... 10.8 ...... 10.8 ...... 13.7 ...... 24.6 Design line 2 ..... 5.9 ...... 9.9 ...... 9.9 ...... 11.1 ...... 13.0 ...... 15.5 ...... 31.6 Design line 3 ..... 8.5 ...... 8.3 ...... 5.8 ...... 6.5 ...... 6.4 ...... 7.2 ...... 19.1 Design line 4 ..... 7.0 ...... 7.0 ...... 7.0 ...... 9.1 ...... 5.6 ...... 5.6 ...... 10.2 Design line 5 ..... 6.5 ...... 6.5 ...... 6.5 ...... 9.1 ...... 8.5 ...... 11.4 ...... 22.5

Distribution of Consumer LCC Impacts

Design line 1

Net Cost % ...... 37.3 ...... 44.2 ...... 44.2 ...... 7.0 ...... 7.0 ...... 11.2 ...... 42.6 Net Benefit % ... 62.5 ...... 55.6 ...... 55.6 ...... 92.9 ...... 92.9 ...... 88.8 ...... 57.4 No Impact % ..... 0.2 ...... 0.2 ...... 0.2 ...... 0.2 ...... 0.2 ...... 0.0 ...... 0.0

Design line 2

Net Cost % ...... 41.5 ...... 18.2 ...... 18.2 ...... 11.4 ...... 13.1 ...... 17.8 ...... 67.2 Net Benefit % ... 55.2 ...... 81.8 ...... 81.8 ...... 88.6 ...... 86.9 ...... 82.2 ...... 32.8 No Impact % ..... 3.4 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

Design line 3

Net Cost (%) ..... 14.5 ...... 13.9 ...... 12.0 ...... 4.0 ...... 5.3 ...... 4.0 ...... 29.9 Net Benefit (%) 84.2 ...... 84.8 ...... 86.9 ...... 95.9 ...... 94.7 ...... 96.0 ...... 70.1 No Impact (%) .. 1.3 ...... 1.3 ...... 1.2 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

Design line 4

Net Cost (%) ..... 6.6 ...... 6.6 ...... 6.6 ...... 7.6 ...... 2.5 ...... 2.5 ...... 5.9 Net Benefit (%) 92.8 ...... 92.8 ...... 92.8 ...... 91.8 ...... 96.9 ...... 96.9 ...... 94.1 No Impact (%) .. 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.0

Design line 5

Net Cost (%) ..... 30.5 ...... 30.5 ...... 19.9 ...... 9.8 ...... 14.8 ...... 9.1 ...... 41.9 Net Benefit (%) 69.1 ...... 69.1 ...... 80.0 ...... 90.2 ...... 85.2 ...... 91.0 ...... 58.1 No Impact (%) .. 0.4 ...... 0.4 ...... 0.1 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

First, DOE considered TSL 7, the most At TSL 7, the projected change in amorphous ribbon currently serves the efficient level (max tech), which would INPV ranges from a decrease of $394 U.S. market. save an estimated total of 7.01 quads of million to an increase of $0.5 million. If In view of the foregoing, DOE energy, an amount DOE considers the decrease of $394 million were to concludes that, at TSL 7 for liquid- significant. TSL 7 has an estimated NPV occur, TSL 7 could result in a net loss ¥ immersed distribution transformers, the of customer benefit of $12.97 billion of 68.4 percent in INPV to benefits of energy savings, positive using a 7 percent discount rate, and manufacturers of liquid-immersed ¥ average customer LCC savings, $8.50 billion using a 3 percent distribution transformers. At TSL 7, generating capacity reductions, discount rate. there is a risk of very large negative emission reductions, and the estimated The cumulative emissions reductions impacts on manufacturers due to the monetary value of the emissions at TSL 7 are 501.0 million metric tons substantial capital and engineering costs reductions would be outweighed by the of CO2, 421.9 thousand tons of NOX, they would incur and the market potential multi-billion dollar negative 318.0 thousand tons of SO2, and 1.1 tons disruption associated with the likely net economic cost, the economic burden of Hg. The estimated monetary value of transition to a market entirely served by on customers as indicated by large the CO2 emissions reductions at TSL 7 amorphous steel. Additionally, if PBPs, significant increases in installed ranges from $1,515 million to $25,144 manufacturers’ concerns about their cost, and the large percentage of million. customers rebuilding rather than customers who would experience LCC At TSL 7, the average LCC impact replacing transformers at the price increases, the capital and engineering ranges from ¥$579 for design line 2 to points projected for TSL 7 are realized, costs that could result in a large $4,619 for design line 5. The median new transformer sales would suffer and reduction in INPV for manufacturers, PBP ranges from 31.6 years for design make it even more difficult to recoup and the risk that manufacturers may not line 2 to 10.2 years for design line 4. investments in amorphous transformer be able to obtain the quantities of The share of customers experiencing a production capacity. DOE also has amorphous steel required to meet net LCC benefit ranges from 32.8 concerns about the competitive impact standards at TSL 7. Consequently, DOE percent for design line 2 to 70.1 percent of TSL 7 on the electrical steel industry, has concluded that TSL 7 is not for design line 3. as only one proven supplier of economically justified.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23416 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Next, DOE considered TSL 6, which supply the amounts that would be disruption associated with the likely would save an estimated total of 4.09 needed by transformer manufacturers transition to a market almost entirely quads of energy, an amount DOE before 2015. Therefore, setting a served by amorphous steel. considers significant. TSL 6 has an standard that requires amorphous Additionally, if manufacturers’ concerns estimated NPV of customer benefit of material would expose the industry to about their customers rebuilding rather $0.74 billion using a 7 percent discount enormous risk with respect to core steel than replacing transformers at the price rate, and $10.27 billion using a 3 supply. DOE also has concerns about points projected for TSL 5 are realized, percent discount rate. the competitive impact of TSL 6 on the new transformer sales would suffer and The cumulative emissions reductions electrical steel industry. TSL 6 could make it even more difficult to recoup at TSL 6 are 321.8 million metric tons jeopardize the ability of silicon steels to investments in amorphous core of CO2, 270.8 thousand tons of NOX, compete with amorphous metal, which transformer production capacity. 203.2 thousand tons of SO2, and 0.7 ton risks upsetting competitive balance Similar to TSL 6 as described above, of Hg. The estimated monetary value of among steel suppliers and between the energy savings under TSL 5 are the CO2 emissions reductions at TSL 6 them and their customers. achievable only by using amorphous ranges from $991 million to $16,325 In view of the foregoing, DOE steel, which is currently available from million. concludes that, at TSL 6 for liquid- only one supplier with significant At TSL 6, the average LCC impact immersed distribution transformers, the volume and that supplier’s production ranges from $311 for design line 2 to benefits of energy savings, positive NPV capacity of 100,000 tons is far below $12,014 for design line 5. The median of customer benefit, positive average what would be required to meet market PBP ranges from 5.6 years for design customer LCC savings, generating demand for electrical steel. DOE is line 4 to 15.5 years for design line 2. capacity reductions, emission concerned that the current supplier, The share of customers experiencing a reductions, and the estimated monetary together with others that might enter the net LCC benefit ranges from 82.2 value of the CO2 emissions reductions market, would not be able to increase percent for design line 2 to 96.9 percent would be outweighed by the capital and production of amorphous steel rapidly for design line 4. engineering costs that could result in a enough to supply the amounts that At TSL 6, the projected change in large reduction in INPV for would be needed by transformer INPV ranges from a decrease of $217 manufacturers, and the risk that manufacturers before 2015. Therefore, million to a decrease of $89 million. If manufacturers may not be able to obtain setting a standard that requires the decrease of $217 million were to the quantities of amorphous steel amorphous material would expose the occur, TSL 6 could result in a net loss required to meet standards at TSL 6. industry to enormous risk with respect of 37.7 percent in INPV to Consequently, DOE has concluded that manufacturers of liquid-immersed to core steel supply. TSL 5 could TSL 6 is not economically justified. jeopardize the ability of silicon steels to distribution transformers. At TSL 6, Next, DOE considered TSL 5, which compete with amorphous metal, which DOE recognizes the risk of very large would save an estimated total of 3.30 risks upsetting competitive balance negative impacts on manufacturers due quads of energy, an amount DOE among steel suppliers and between to the large capital and engineering considers significant. TSL 5 has an them and their customers. costs and the market disruption estimated NPV of customer benefit of associated with the likely transition to $1.60 billion using a 7 percent discount In view of the foregoing, DOE a market entirely served by amorphous rate, and $10.19 billion using a 3 concludes that, at TSL 5 for liquid- steel. Additionally, if manufacturers’ percent discount rate. immersed distribution transformers, the concerns about their customers The cumulative emissions reductions benefits of energy savings, positive NPV rebuilding rather than replacing their at TSL 5 are 273.4 million metric tons of customer benefit, positive average transformers at the price points of CO2, 230.1 thousand tons of NOX, customer LCC savings, generating projected for TSL 6 are realized, new 172.4 thousand tons of SO2, and 0.6 ton capacity reductions, emission transformer sales would suffer and make of Hg. The estimated monetary value of reductions, and the estimated monetary it even more difficult to recoup the CO2 emissions reductions at TSL 5 value of the CO2 emissions reductions investments in amorphous transformer ranges from $851 million to $13,960 would be outweighed by the capital and production capacity. million. engineering costs that could result in a The energy savings under TSL 6 are At TSL 5, the average LCC impact large reduction in INPV for achievable only by using amorphous ranges from $330 for design line 2 manufacturers, and the risk that steel, which only one supplier currently to$8,616 for design line 5. The median manufacturers may not be able to obtain produces in any significant volume PBP ranges from 5.6 years for design the quantities of amorphous steel (annual production capacity of line 4 to 13.0 years for design line 2. required to meet standards at TSL 5. approximately 100,000 tons, the vast The share of customers experiencing a Consequently, DOE has concluded that majority of which serves global net LCC benefit ranges from 85.2 TSL 5 is not economically justified. demand). Thus, the current availability percent for design line 5 to 96.9 percent Next, DOE considered TSL 4, which is far below the amount that would be for design line 4. would save an estimated total of 3.31 required to meet the U.S. liquid- At TSL 5, the projected change in quads of energy, an amount DOE immersed transformer market demand INPV ranges from a decrease of $193 considers significant. TSL 4 has an of approximately 250,000 tons. million to a decrease of $101 million. If estimated NPV of customer benefit of Electrical steel is a critical consideration the decrease of $193 million were to $1.92 billion using a 7 percent discount in the manufacture of distribution occur, TSL 5 could result in a net loss rate, and $10.78 billion using a 3 transformers, accounting for more than of 33.6 percent in INPV to percent discount rate. 60 percent of the transformer’s mass in manufacturers of liquid-immersed The cumulative emissions reductions some designs. DOE is concerned that the distribution transformers. At TSL 5, at TSL 4 are 274.6 million metric tons current supplier, together with others DOE recognizes the risk of very large of CO2, 231.1 thousand tons of NOX, that might enter the market, would not negative impacts on manufacturers due 173.0 thousand tons of SO2, and 0.6 ton be able to increase production of to the large capital and engineering of Hg. The estimated monetary value of amorphous steel rapidly enough to costs they would incur and the market the CO2 emissions reductions at TSL 4

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23417

ranges from $855 million to $14,024 would be outweighed by the capital and In view of the foregoing, DOE million. engineering costs that could result in a concludes that, at TSL 3 for liquid- At TSL 4, the average LCC impact large reduction in INPV for immersed distribution transformers, the ranges from $343 for design line 2 to manufacturers, and the risk that benefits of energy savings, positive NPV $10,382 for design line 5. The median manufacturers may not be able to obtain of customer benefit, positive average PBP ranges from 11.1 years for design the quantities of amorphous steel customer LCC savings, generating line 2 to 6.5 years for design line 3. The required to meet standards at TSL 4. capacity reductions, emission share of customers experiencing a net Consequently, DOE has concluded that reductions, and the estimated monetary LCC benefit ranges from 88.6 percent for TSL 4 is not economically justified. value of the CO2 emissions reductions design line 2 to 95.9 percent for design Next, DOE considered TSL 3, which would be outweighed by the capital and line 4. would save an estimated total of 1.76 engineering costs that could result in a At TSL 4, the projected change in quads of energy, an amount DOE large reduction in INPV for INPV ranges from a decrease of $186 considers significant. TSL 3 has an manufacturers, and the risk that million to a decrease of $97 million. If estimated NPV of customer benefit of manufacturers may not be able to obtain the decrease of $186 million were to $0.91 billion using a 7 percent discount the quantities of amorphous steel occur, TSL 4 could result in a net loss rate, and $6.62 billion using a 3 percent required to meet standards at TSL 3 in of 32.4 percent in INPV to discount rate. a cost-effective manner. Consequently, manufacturers of liquid-immersed The cumulative emissions reductions DOE has concluded that TSL 3 is not distribution transformers. At TSL 4, at TSL 3 are 156.5 million metric tons economically justified. DOE recognizes the risk of large of CO2, 131.8 thousand tons of NOX, Next, DOE considered TSL 2, which negative impacts on manufacturers due 98.4 thousand tons of SO2, and 0.3 ton would save an estimated total of 1.56 to the substantial capital and of Hg. The estimated monetary value of quads of energy, an amount DOE engineering costs they would incur. the CO2 emissions reductions at TSL 3 considers significant. TSL 2 has an Additionally, if manufacturers’ concerns ranges from $494 million to $8,060 estimated NPV of customer benefit of about their customers rebuilding rather million. $0.69 billion using a 7-percent discount than replacing transformers at the price At TSL 3, the average LCC impact rate, and $4.82 billion using a 3-percent points projected for TSL 4 are realized, ranges from $153 for design line 1 to discount rate. new transformer sales would suffer and $6,852 for design line 5. The median The cumulative emissions reductions make it even more difficult to recoup PBP ranges from 24.7 years for design at TSL 2 are 143.1 million metric tons investments in amorphous core line 1 to 5.8 years for design line 3. The of CO2, 120.6 thousand tons of NOX, transformer production capacity. share of customers experiencing a net 90.0 thousand tons of SO2, and 0.3 ton DOE is also concerned that TSL 4, like LCC benefit ranges from 55.6 percent for of Hg. The estimated monetary value of the higher TSLs, will require amorphous design line 1 to 92.8 percent for design the CO2 emissions reduction at TSL 2 steel to be competitive in many line 4. ranges from $454 million to $7,390 applications and at least a few design At TSL 3, the projected change in million. lines. As stated previously, the available INPV ranges from a decrease of $113 At TSL 2, the average LCC impact supply of amorphous steel is well below million to a decrease of $69 million. If ranges from $153 for design line 1 to the amount that would likely be the decrease of $113 million were to $3,668 for design line 5. The median required to meet the U.S. liquid- occur, TSL 3 could result in a net loss PBP ranges from 24.7 years for design immersed distribution transformer of 19.7 percent in INPV to line 1 to 6.5 years for design line 5. The market demand. DOE is concerned that manufacturers. At TSL 3, DOE share of customers experiencing a net the current supplier, together with recognizes the risk of large negative LCC benefit ranges from 55.6 percent for others that might enter the market, impacts on manufacturers due to the design line 1 to 92.8 percent for design would not be able to increase large capital and engineering costs they line 4. production of amorphous steel rapidly would incur. At TSL 2, the projected change in enough to supply the amounts that Although the industry can INPV ranges from a decrease of $110 would be needed by transformer manufacture liquid-immersed million to a decrease of $67 million. If manufacturers before 2015. Therefore, distribution transformers at TSL 3 from the decrease of $110 million were to setting a standard that requires M3 or lower grade steels, the positive occur, TSL 2 could result in a net loss amorphous material would expose the LCC and national impacts results of 19 percent in INPV to manufacturers industry to enormous risk with respect described above are based on lowest of liquid-immersed distribution to core steel supply. first-cost designs, which include transformers. At TSL 2, DOE recognizes In addition, depending on how steel amorphous steel for all the design lines the risk of negative impacts on prices react to a standard, DOE believes analyzed. As is the case with higher manufacturers due to the significant TSL 4 could threaten the viability of a TSLs, DOE is concerned that the current capital and engineering costs they place in the market for conventional supplier, together with others that might would incur. steel. Therefore, as with higher TSLs, enter the market, would not be able to Although the industry can DOE has concerns about the competitive increase production of amorphous steel manufacture liquid-immersed impact of TSL 4 on the electrical steel rapidly enough to supply the amounts transformers at TSL 2 from M3 or lower manufacturing industry. that would be needed by transformer grade steels, the positive LCC and In view of the foregoing, DOE manufacturers before 2015. If national impacts results described above concludes that, at TSL 4 for liquid- manufacturers were to meet standards at are based on lowest first-cost designs, immersed distribution transformers, the TSL 3 using M3 or lower grade steels, which include amorphous steel for benefits of energy savings, positive NPV DOE’s analysis shows that the LCC design line 2. This design line of customer benefit, positive average impacts are negative.71 represents approximately 44 percent of customer LCC savings, generating all liquid-immersed transformer capacity reductions, emission 71 DOE conducted a sensitivity analysis where shipments by MVA. Amorphous steel is LCC results are presented for liquid-immersed reductions, and the estimated monetary transformers without amorphous steel; see currently available in significant volume value of the CO2 emissions reductions appendix 8–C in the final rule TSD. from one supplier whose annual

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23418 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

production capacity is below the Next, DOE considered TSL 1, which The energy savings under TSL 1 are amount that would be required to meet would save an estimated total of 0.92 achievable without using amorphous the demand for design line 2 under TSL quad of energy, an amount DOE steel. Therefore, the aforementioned 2. DOE is concerned that the current considers significant. TSL 1 has an risks that manufacturers may not be able supplier, together with others that might estimated NPV of customer benefit of to obtain the quantities of amorphous enter the market, would not be able to $0.58 billion using a 7-percent discount steel required to meet standards are not increase production of amorphous steel rate, and $3.12 billion using a 3-percent present under TSL 1. rapidly enough to supply the amounts discount rate. After considering the analysis and that would be needed by transformer The cumulative emissions reductions weighing the benefits and the burdens, manufacturers before 2015. If at TSL 1 are 82.2 million metric tons of DOE has concluded that at TSL 1 for manufacturers were to meet standards at CO2, 69.3 thousand tons of NOX, 52.0 liquid-immersed distribution TSL 2 using M3 or lower grade steels, thousand tons of SO2, and 0.2 ton of Hg. transformers, the benefits of energy DOE’s analysis shows that the LCC The estimated monetary value of the savings, positive NPV of customer impacts would be negative. CO2 emissions reductions at TSL 1 benefit, positive average customer LCC In view of the foregoing, DOE ranges from $259 million to $4,230 savings, generating capacity reductions, concludes that, at TSL 2 for liquid- million. immersed distribution transformers, the At TSL 1, the average LCC impact emission reductions, and the estimated benefits of energy savings, positive NPV ranges from $83 for design line 2 to monetary value of the emissions of customer benefit, positive average $3,668 for design line 5. The median reductions would outweigh the customer LCC savings, generating PBP ranges from 17.7 years for design potential reduction in INPV for capacity reductions, emission line 1 to 5.9 years for design line 2. The manufacturers. reductions, and the estimated monetary share of customers experiencing a net In view of the foregoing, DOE has value of the CO2 emissions reductions LCC benefit ranges from 55.2 percent for concluded that TSL 1 would save a would be outweighed by the capital and design line 2 to 92.8 percent for design significant amount of energy and is engineering costs that could result in a line 4. technologically feasible and reduction in INPV for manufacturers, At TSL 1, the projected change in economically justified. For the above and the risk that manufacturers may not INPV ranges from a decrease of $48 considerations, DOE today adopts the be able to obtain the quantities of million to a decrease of $24 million. If energy conservation standards for amorphous steel required to meet the decrease of $48 million were to liquid-immersed distribution standards at TSL 2 in a cost-effective occur, TSL 1 could result in a net loss transformers at TSL 1. Table V.40 manner. Consequently, DOE has of 8.4 percent in INPV to manufacturers presents the energy conservation concluded that TSL 2 is not of liquid-immersed distribution standards for liquid-immersed economically justified. transformers. distribution transformers.

TABLE V.40—ENERGY CONSERVATION STANDARDS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS

Electrical Efficiency by kVA and Equipment Class Equipment Class 1 Equipment Class 2 % kVA kVA %

2. Benefits and Burdens of Trial each TSL for low-voltage dry-type Standard Levels Considered for Low- distribution transformers. Voltage Dry-Type Distribution Transformers Table V.41 and Table V.42 summarize the quantitative impacts estimated for

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23419

TABLE V.41—SUMMARY OF ANALYTICAL RESULTS FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

National Energy Savings (quads) ...... 2.28 ...... 2.43 ...... 3.05 ...... 4.39 ...... 4.48 ...... 4.94

NPV of Customer Benefits (2011$ billion)

3% discount rate ...... 8.38 ...... 9.04 ...... 10.38 ...... 13.65 ...... 11.80 ...... 5.17 7% discount rate ...... 2.45 ...... 2.67 ...... 2.82 ...... 3.34 ...... 2.22 ...... -1.92

Cumulative Emissions Reduction

CO2 (million metric tons) ...... 151.3 ...... 161.6 ...... 203.0 ...... 292.8 ...... 297.6 ...... 319.3 NOX (thousand tons) ...... 127.6 ...... 136.4 ...... 171.3 ...... 247.0 ...... 251.0 ...... 269.3 SO2 (thousand tons) ...... 110.1 ...... 117.6 ...... 147.8 ...... 213.2 ...... 216.7 ...... 232.4 Hg (tons) ...... 0.4 ...... 0.4 ...... 0.5 ...... 0.8 ...... 0.8 ...... 0.8

Value of Emissions Reduction (2011$ million)

* CO2 ...... 450 to 7512 .. 480 to 8020 .. 603 to 10075 870 to 14535 884 to 14771 949 to 15847 NOX¥3% discount rate ...... 23 to 238 ...... 25 to 254 ...... 31 to 319 ...... 45 to 460 ...... 45 to 468 ...... 49 to 502 NOX¥7% discount rate ...... 9 to 92 ...... 10 to 99 ...... 12 to 124 ...... 17 to 179 ...... 18 to 182 ...... 19 to 195

* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

TABLE V.42—SUMMARY OF ANALYTICAL RESULTS FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6

Manufacturer Impacts

Industry NPV (2011$ million) ...... 230 to 252 .... 227 to 249 .... 219 to 266 .... 199 to 280 .... 191 to 299 .... 159 to 357 Industry NPV (% change) ...... (3.4) to 6.2 ... (4.7) to 5.0 ... (7.8) to 11.8 (16.4) to 17.8 (19.7) to 25.7 (33.1) to 50.1

Consumer Mean LCC Savings (2011$)

Design line 6 ...... 0 ...... 0 ...... 325 ...... 148 ...... 148 ...... ¥992 Design line 7 ...... 1526 ...... 1678 ...... 1838 ...... 2280 ...... 2280 ...... 212 Design line 8 ...... 2588 ...... 2588 ...... 2724 ...... 4261 ...... ¥2938 ...... ¥2938

Consumer Median PBP (years)

Design line 6 ...... 0.0 ...... 0.0 ...... 12.4 ...... 15.7 ...... 15.7 ...... 31.7 Design line 7 ...... 3.9 ...... 3.6 ...... 4.1 ...... 6.3 ...... 6.3 ...... 16.8 Design line 8 ...... 7.7 ...... 7.7 ...... 11.3 ...... 10.1 ...... 22.5 ...... 22.5

Distribution of Consumer LCC Impacts

Design line 6

Net Cost (%) ...... 0.0 ...... 0.0 ...... 16.5 ...... 37.8 ...... 37.8 ...... 96.6 Net Benefit (%) ...... 0.0 ...... 0.0 ...... 83.5 ...... 62.2 ...... 62.2 ...... 3.4 No Impact (%) ...... 100.0 ...... 100.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

Design line 7

Net Cost (%) ...... 1.5 ...... 1.3 ...... 1.7 ...... 3.3 ...... 3.3 ...... 45.6 Net Benefit (%) ...... 98.4 ...... 98.7 ...... 98.3 ...... 96.7 ...... 96.7 ...... 54.4 No Impact (%) ...... 0.1 ...... 0.1 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

Design line 8

Net Cost (%) ...... 4.7 ...... 4.7 ...... 13.3 ...... 9.0 ...... 79.3 ...... 79.3 Net Benefit (%) ...... 95.3 ...... 95.3 ...... 86.7 ...... 91.0 ...... 20.7 ...... 20.7 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

First, DOE considered TSL 6, the most of customer benefit of ¥$1.92 billion The cumulative emissions reductions efficient level (max tech), which would using a 7-percent discount rate, and at TSL 6 are 319.3 million metric tons save an estimated total of 4.94 quads of $5.17 billion using a 3-percent discount of CO2, 269.3 thousand tons of NOX, energy, an amount DOE considers rate. 232.4 thousand tons of SO2, and 0.8 ton significant. TSL 6 has an estimated NPV of Hg. The estimated monetary value of

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23420 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

the CO2 emissions reductions at TSL 6 line 8 to 6.3 years for design line 7. The the decrease of $39 million occurs, TSL ranges from $949 million to $15,847 share of customers experiencing a net 4 could result in a net loss of 16.4 million. LCC benefit ranges from 20.7 percent for percent in INPV to manufacturers of At TSL 6, the average LCC impact design line 8 to 96.7 percent for design low-voltage dry-type distribution ranges from ¥$2,938 for design line 8 line 7. transformers. At TSL 4, DOE recognizes to $212 for design line 7. The median At TSL 5, the projected change in the risk of very large negative impacts PBP ranges from 31.7 years for design INPV ranges from a decrease of $47 on the industry. As with the higher line 6 to 16.8 years for design line 7. million to an increase of $61 million. If TSLs, TSL 4 would require The share of customers experiencing a the decrease of $47 million occurs, TSL manufacturers to scrap nearly all net LCC benefit ranges from 3.4 percent 5 could result in a net loss of 19.7 production assets and create transformer for design line 6 to 54.4 percent for percent in INPV to manufacturers of designs with which most, if not all, have design line 7. low-voltage dry-type distribution no experience. DOE is concerned, in At TSL 6, the projected change in transformers. At TSL 5, DOE recognizes particular, about large impacts on small INPV ranges from a decrease of $79 the risk of very large negative impacts businesses, which may not be able to million to an increase of $119 million. on the industry. TSL 5 would require procure sufficient volume of amorphous If the decrease of $79 million occurs, manufacturers to scrap nearly all steel at competitive prices, if at all. TSL 6 could result in a net loss of 33.1 production assets and create transformer Additionally, TSL 4 requires percent in INPV to manufacturers of designs with which most, if not all, have significant investment in advanced core low-voltage dry-type distribution no experience. DOE is concerned, in construction equipment such are step- transformers. At TSL 6, DOE recognizes particular, about large impacts on small lap mitering machines or wound core the risk of very large negative impacts businesses, which may not be able to production lines, as butt lap designs, on the industry. TSL 6 would require procure sufficient volume of amorphous even with high-grade designs, are manufacturers to scrap nearly all steel at competitive prices, if at all. unlikely to comply. Given their more production assets and create transformer In view of the foregoing, DOE limited engineering resources and designs with which most, if not all, have concludes that, at TSL 5 for low-voltage capital, small businesses may find it no experience. DOE is concerned, in dry-type distribution transformers, the difficult to make these designs at particular, about large impacts on small benefits of energy savings, generating competitive prices and may have to exit businesses, which may not be able to capacity reductions, emission the market. At the same time, however, procure sufficient volume of amorphous reductions, and the estimated monetary those small manufacturers may be able steel at competitive prices, if at all. value of the CO2 emissions reductions to source their cores—and many are In view of the foregoing, DOE would be outweighed by the economic doing so to a significant extent concludes that, at TSL 6 for low-voltage burden on customers at design line 8 (as currently—which could mitigate dry-type distribution transformers, the indicated by negative average LCC impacts. benefits of energy savings, generating savings, large PBPs, and the large In view of the forgoing, DOE capacity reductions, emission percentage of customers who would concludes that, at TSL 4 for low-voltage reductions, and the estimated monetary experience LCC increases), the potential dry-type distribution transformers, the value of the CO2 emissions reductions for very large negative impacts on the benefits of energy savings, positive NPV would be outweighed by the economic manufacturers, and the potential burden of customer benefit, positive average burden on customers (as indicated by on small manufacturers. Consequently, LCC savings, generating capacity negative average LCC savings, large DOE has concluded that TSL 5 is not reductions, emission reductions, and PBPs, and the large percentage of economically justified. the estimated monetary value of the CO2 customers who would experience LCC Next, DOE considered TSL 4, which emissions reductions would be increases at design line 6 and design would save an estimated total of 4.39 outweighed by the potential for very line 8), the potential for very large quads of energy, an amount DOE large negative impacts on the negative impacts on the manufacturers, considers significant. TSL 4 has an manufacturers, and the potential burden and the potential burden on small estimated NPV of customer benefit of on small manufacturers. Consequently, manufacturers. Consequently, DOE has $3.34 billion using a 7-percent discount DOE has concluded that TSL 4 is not concluded that TSL 6 is not rate, and $13.65 billion using a 3- economically justified. economically justified. percent discount rate. Next, DOE considered TSL 3, which Next, DOE considered TSL 5, which The cumulative emissions reductions would save an estimated total of 3.05 would save an estimated total of 4.48 at TSL 4 are 292.8 million metric tons quads of energy, an amount DOE quads of energy, an amount DOE of CO2, 247.0 thousand tons of NOX, considers significant. TSL 3 has an considers significant. TSL 5 has an 213.2 thousand tons of SO2, and 0.8 ton estimated NPV of customer benefit of estimated NPV of customer benefit of of Hg. The estimated monetary value of $2.82 billion using a 7-percent discount $2.22 billion using a 7 percent discount the CO2 emissions reductions at TSL 4 rate, and $10.38 billion using a 3- rate, and $11.80 billion using a 3 ranges from $870 million to $14,535 percent discount rate. percent discount rate. million. The cumulative emissions reductions The cumulative emissions reductions At TSL 4, the average LCC impact at TSL 3 are 203.0 million metric tons at TSL 5 are 297.6 million metric tons ranges from $148 for design line 6 to of CO2, 171.3 thousand tons of NOX, of CO2, 251.0 thousand tons of NOX, $4,261 for design line 8. The median 147.8 thousand tons of SO2, and 0.5 ton 216.7 thousand tons of SO2, and 0.8 ton PBP ranges from 15.7 years for design of Hg. The estimated monetary value of of Hg. The estimated monetary value of line 6 to 6.3 years for design line 7. The the CO2 emissions reductions at TSL 3 the CO2 emissions reductions at TSL 5 share of customers experiencing a net ranges from $603 million to $10,075 ranges from $884 million to $14,771 LCC benefit ranges from 62.2 percent for million. million. design line 6 to 96.7 percent for design At TSL 3, the average LCC impact At TSL 5, the average LCC impact line 7. ranges from $325 for design line 6 to ranges from ¥$2,938 for design line 8 At TSL 4, the projected change in $2,724 for design line 8. The median to $2,280 for design line 7. The median INPV ranges from a decrease of $39 PBP ranges from 12.4 years for design PBP ranges from 22.5 years for design million to an increase of $42 million. If line 6 to 4.1 years for design line 7. The

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23421

share of customers experiencing a net currently—which could mitigate At TSL 2, the projected change in LCC benefit ranges from 83.5 percent for impacts. INPV ranges from a decrease of $11 design line 6 to 98.3 percent for design In view of the foregoing, DOE million to an increase of $12 million. If line 7. concludes that, at TSL 3 for low-voltage the decrease of $11 million occurs, TSL At TSL 3, the projected change in dry-type distribution transformers, the 2 could result in a net loss of 4.7 percent INPV ranges from a decrease of $19 benefits of energy savings, positive NPV in INPV to manufacturers of low-voltage million to an increase of $28 million. If of customer benefit, positive average dry-type distribution transformers. At the decrease of $19 million occurs, TSL LCC savings, generating capacity TSL 2, manufacturers have the option of 3 could result in a net loss of 7.8 percent reductions, emission reductions, and continuing to produce transformers in INPV to manufacturers of low-voltage the estimated monetary value of the CO2 using butt-lap technology, investing in dry-type distribution transformers. At emissions reductions would be mitering equipment, or sourcing their TSL 3, DOE recognizes the risk of outweighed by the risk of negative cores. Furthermore, since TSL 2 negative impacts on the industry, impacts on the industry, particularly the represents EL 3 for DL 7 and EL 2 for particularly the small manufacturers. small manufacturers. Consequently, DL 8 (and baseline for DL 6), While TSL 3 could likely be met with DOE has concluded that TSL 3 is not manufacturers may benefit from being economically justified. able to standardize to NEMA Premium® M4 steel, DOE’s analysis shows that this Next, DOE considered TSL 2, which levels for low-voltage dry-type design option is at the edge of its would save an estimated total of 2.43 distribution transformers. technical feasibility at the efficiency quads of energy, an amount DOE After considering the analysis and levels comprised by TSL 3. Although considers significant. TSL 2 has an weighing the benefits and the burdens, these levels could be met with M3 or estimated NPV of customer benefit of DOE has concluded that at TSL 2 for better steels, DOE is concerned that a $2.67 billion using a 7-percent discount low-voltage dry-type distribution significant number of small rate, and $9.04 billion using a 3-percent transformers, the benefits of energy manufacturers would be unable to discount rate. savings, NPV of customer benefit, acquire these steels in sufficient supply The cumulative emissions reductions positive customer LCC impacts, and quality to compete. at TSL 2 are 161.6 million metric tons emissions reductions and the estimated Additionally, TSL 3 requires of CO2, 136.4 thousand tons of NOX, monetary value of the emissions significant investment in advanced core 117.6 thousand tons of SO2, and 0.4 ton reductions would outweigh the risk of construction equipment such are step- of Hg. The estimated monetary value of small negative impacts on the lap mitering machines or wound core the CO2 emissions reductions at TSL 2 manufacturers. In particular, DOE has production lines, as butt lap designs, ranges from $480 million to $8,020 concluded that TSL 2 would save a even with high-grade designs, are million. significant amount of energy and is unlikely to comply. Given their more At TSL 2, the average LCC impact technologically feasible and limited engineering resources and ranges from $0 for design line 6 to economically justified. For the reasons capital, small businesses may find it $2,588 for design line 8. The median given above, DOE today adopts the difficult to make these designs at PBP ranges from 7.7 years for design energy conservation standards for low- competitive prices and may have to exit line 8 to 0 years for design line 6. The voltage dry-type distribution the market. At the same time, however, share of customers experiencing a net transformers at TSL 2. Table V.43 those small manufacturers may be able LCC benefit ranges from 0 percent for presents the energy conservation to source their cores—and many are design line 6 to 98.7 percent for design standards for low-voltage dry-type doing so to a significant extent line 7. distribution transformers.

TABLE V.43—ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS

Electrical Efficiency by kVA and Equipment Class Equipment Class 3 Equipment Class 4 kVA % kVA %

15 ...... 97.70 15 97.89 25 ...... 98.00 30 98.23 37.5 ...... 98.20 45 98.40 50 ...... 98.30 75 98.60 75 ...... 98.50 112.5 98.74 100 ...... 98.60 150 98.83 167 ...... 98.70 225 98.94 250 ...... 98.80 300 99.02 333 ...... 98.90 500 99.14 750 99.23 1000 99.28

3. Benefits and Burdens of Trial each TSL for medium-voltage dry-type Standard Levels Considered for distribution transformers. Medium-Voltage Dry-Type Distribution Transformers Table V.44 and Table V.45 summarize the quantitative impacts estimated for

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23422 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE V.44—SUMMARY OF ANALYTICAL RESULTS FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

National Energy Savings (quads) ...... 0.15 0.29 0.53 0.53 0.84

NPV of Consumer Benefits (2011$ billion)

3% discount rate ...... 0.49 0.79 1.12 1.12 ¥0.20 7% discount rate ...... 0.13 0.17 0.12 0.12 ¥0.89

Cumulative Emissions Reduction

CO2 (million metric tons) ...... 11.2 20.9 40.7 40.7 61.3 NOX (thousand tons)...... 9.34 17.7 34.2 34.2 51.5 SO2 (thousand tons) ...... 7.1 13.3 25.7 25.7 38.7 Hg (tons) ...... 0.02 0.04 0.10 0.10 0.14

Value of Emissions Reduction (2011$ million)

CO2 * ...... 35 to 571 65 to 1065 126 to 2067 126 to 2067 190 to 3117 NOX¥3% discount rate ...... 2 to 18 3 to 34 6 to 67 6 to 67 10 to 100 NOX¥7% discount rate ...... 1 to 7 1 to 14 3 to 27 3 to 27 4 to 41

* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

TABLE V.45—SUMMARY OF ANALYTICAL RESULTS FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Manufacturer Impacts

Industry NPV (2011$ million) ...... 67 to 69 66 to 72 58 to 74 58 to 74 35 to 82 Industry NPV (% change) ...... (2.0) to 1.0 (4.2) to 4.4 (15.6) to 8.3 (15.5) to 8.2 (49.7) to 18.7

Consumer Mean LCC Savings (2011$)

Design line 9 ...... 787 787 1514 1514 ¥299 Design line 10 ...... 4604 4455 4455 4455 ¥14727 Design line 11 ...... 996 996 1849 1849 ¥4166 Design line 12 ...... 4537 6790 8594 8594 ¥14496 Design line 13A ...... ¥27 ¥27 311 ¥1019 ¥12053 Design line 13B ...... 2494 4346 4346 4346 ¥6823

Consumer Median PBP (years)

Design line 9...... 2.6 2.6 6.1 6.1 18.5 Design line 10...... 1.1 8.6 8.6 8.6 27.5 Design line 11 ...... 10.6 10.6 13.6 13.6 24.1 Design line 12 ...... 6.0 8.5 12.3 12.3 24.7 Design line 13A ...... 16.1 16.1 16.2 20 35.3 Design line 13B ...... 4.5 12.2 12.2 12.2 20.6

Distribution of Consumer LCC Impacts

Design line 9

Net Cost (%)...... 3.6 3.6 5.9 5.9 57.4 Net Benefit (%) ...... 83.2 83.2 94.1 94.1 42.6 No Impact (%) ...... 13.3 13.3 0.0 0.0 0.0

Design line 10

Net Cost (%)...... 3.6 3.6 5.9 5.9 57.4 Net Benefit (%) ...... 83.2 83.2 94.1 94.1 42.6 No Impact (%) ...... 13.3 13.3 0.0 0.0 0.0

Design line 11

Net Cost (%) ...... 21.9 21.9 25.9 25.9 82.7 Net Benefit (%) ...... 78.1 78.1 74.1 74.1 17.4 No Impact (%)...... 0.0 0.0 0.0 0.0 0.0

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23423

TABLE V.45—SUMMARY OF ANALYTICAL RESULTS FOR MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS—Continued

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

Design line 12

Net Cost (%) ...... 7.1 7.6 17.1 17.1 85.4 Net Benefit (%) ...... 92.9 92.4 82.9 82.9 14.6 No Impact (%)...... 0.0 0.0 0.0 0.0 0.0

Design line 13A

Net Cost (%) ...... 54.2 54.2 45.5 66.3 98.5 Net Benefit (%) ...... 45.8 45.8 54.5 33.7 1.5 No Impact (%)...... 0.0 0.0 0.0 0.0 0.0

Design line 13B

Net Cost (%) ...... 30.5 27.3 27.3 27.3 70.4 Net Benefit (%) ...... 69.3 72.7 72.7 72.7 29.6 No Impact (%)...... 0.2 0.0 0.0 0.0 0.0

First, DOE considered TSL 5, the most emission reductions, and the estimated the risk of very large negative impacts efficient level (max tech), which would monetary value of the emissions on most manufacturers in the industry save an estimated total of 0.84 quad of reductions would be outweighed by the who have little experience with the energy, an amount DOE considers negative NPV of customer benefit, the steels that would be required. Small significant. TSL 5 has an estimated NPV economic burden on customers (as businesses, in particular, with limited of customer benefit of ¥$0.89 billion indicated by negative average LCC engineering resources, may not be able using a 7-percent discount rate, and savings, large PBPs, and the large to convert their lines to employ thinner ¥$0.20 billion using a 3-percent percentage of customers who would steels and may be disadvantaged with discount rate. experience LCC increases), and the risk respect to access to key materials, The cumulative emissions reductions of very large negative impacts on the including Hi-B steels. at TSL 5 are 61.3 million metric tons of manufacturers. Consequently, DOE has In view of the foregoing, DOE CO2, 51.5 thousand tons of NOX, 38.7 concluded that TSL 5 is not concludes that, at TSL 4 for medium- thousand tons of SO2, and 0.14 ton of economically justified. voltage dry-type distribution Hg. The estimated monetary value of the Next, DOE considered TSL 4, which transformers, the benefits of energy CO2 emissions reductions at TSL 5 would save an estimated total of 0.53 savings, positive NPV of customer ranges from $190 million to $3,117 quad of energy, an amount DOE benefit, positive impacts on consumers million. considers significant. TSL 4 has an (as indicated by positive average LCC At TSL 5, the average LCC impact estimated NPV of customer benefit of savings, favorable PBPs, and the large ranges from ¥$14,727 for design line 10 $0.12 billion using a 7-percent discount percentage of customers who would to ¥299 for design line 9. The median rate, and $1.12 billion using a 3-percent experience LCC benefits), emission PBP ranges from 35.3 years for design discount rate. reductions, and the estimated monetary line 13A to 18.5 years for design line 9. The cumulative emissions reductions value of the emissions reductions would The share of customers experiencing a at TSL 4 are 40.7 million metric tons of be outweighed by the risk of very large net LCC benefit ranges from 1.5 percent CO2, 34.2 thousand tons of NOX, 25.7 negative impacts on the manufacturers, for design line 13A to 42.6 percent for thousand tons of SO2, and 0.1 ton of Hg. particularly small businesses. design line 9. The estimated monetary value of the Consequently, DOE has concluded that At TSL 5, the projected change in CO2 emissions reductions at TSL 4 TSL 4 is not economically justified. INPV ranges from a decrease of $34 ranges from $126 million to $2,067 Next, DOE considered TSL 3, which million to an increase of $13 million. If million. would save an estimated total of 0.53 the decrease of $34 million occurs, TSL At TSL 4, the average LCC impact quad of energy, an amount DOE 5 could result in a net loss of 49.7 ranges from ¥$1019 for design line 13A considers significant. TSL 3 has an percent in INPV to manufacturers of to $8,594 for design line 12. The median estimated NPV of customer benefit of medium-voltage dry-type distribution PBP ranges from 20.0 years for design $0.12 billion using a 7-percent discount transformers. At TSL 5, DOE recognizes line 13B to 6.1 years for design line 9. rate, and $1.12 billion using a 3-percent the risk of very large negative impacts The share of customers experiencing a discount rate. on industry because they would likely net LCC benefit ranges from 33.7 The cumulative emissions reductions be forced to move to amorphous core percent for design line 13A to 94.1 at TSL 3 are 40.7 million metric tons of steel technology, with which there is no percent for design line 9. CO2, 34.2 thousand tons of NOX, 25.7 experience in this market.72 At TSL 4, the projected change in thousand tons of SO2, and 0.1 ton of Hg. In view of the foregoing, DOE INPV ranges from a decrease of $11 The estimated monetary value of the concludes that, at TSL 5 for medium- million to an increase of $6 million. If CO2 emissions reductions at TSL 3 voltage dry-type distribution the decrease of $11 million occurs, TSL ranges from $126 million to $2,067 transformers, the benefits of energy 4 could result in a net loss of 15.5 million. savings, generating capacity reductions, percent in INPV to manufacturers of At TSL 3, the average LCC impact medium-voltage dry-type distribution ranges from $311 for design line 13A to 72 See section IV.I.5.a for further detail. transformers. At TSL 4, DOE recognizes $8594 for design line 12. The median

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23424 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

PBP ranges from 16.2 years for design negative impacts on the manufacturers, the risk of small negative impacts if line 13A to 6.1 years for design line 9. particularly small businesses. manufacturers are unable to recoup The share of customers experiencing a Consequently, DOE has concluded that investments made to meet the standard. net LCC benefit ranges from 54.5 TSL 3 is not economically justified. After considering the analysis and percent for design line 13A to 94.1 Next, DOE considered TSL 2, which weighing the benefits and the burdens, percent for design line 9. would save an estimated total of 0.29 DOE has concluded that at TSL 2 for At TSL 3, the projected change in quads of energy, an amount DOE medium-voltage dry-type distribution INPV ranges from a decrease of $11 considers significant. TSL 2 has an transformers, the benefits of energy million to an increase of $6 million. If estimated NPV of customer benefit of savings, positive NPV of customer the decrease of $11 million occurs, TSL $0.17 billion using a 7-percent discount benefit, positive impacts on consumers 3 could result in a net loss of 15.6 rate, and $0.79 billion using a 3-percent (as indicated by positive average LCC percent in INPV to manufacturers of discount rate. savings for five of the six design lines, medium-voltage dry-type transformers. The cumulative emissions reductions favorable PBPs, and the large percentage At TSL 3, DOE recognizes the risk of at TSL 2 are 20.9 million metric tons of of customers who would experience large negative impacts on most CO2, 17.7 thousand tons of NOX, 13.3 LCC benefits), emission reductions, and manufacturers in the industry who have thousand tons of SO2, and 0.04 ton of the estimated monetary value of the little experience with the steels that Hg. The estimated monetary value of the emissions reductions would outweigh would be required. As with TSL 4, small CO2 emissions reductions at TSL 2 the risk of small negative impacts if businesses, in particular, with limited ranges from $65 million to $1,065 manufacturers are unable to recoup engineering resources, may not be able million. investments made to meet the standard. to convert their lines to employ thinner At TSL 2, the average LCC impact In particular, DOE has concluded that steels and may be disadvantaged with ranges from $¥27 for design line 13A TSL 2 would save a significant amount respect to access to key materials, to $6,790 for design line 12. The median of energy and is technologically feasible including Hi-B steels. PBP ranges from 16.1 years for design and economically justified. In addition, In view of the foregoing, DOE line 13A to 2.6 years for design line 9. DOE notes that TSL 2 corresponds to the concludes that, at TSL 3 for medium- The share of customers experiencing a standards that were agreed to by the voltage dry-type distribution net LCC benefit ranges from 45.8 DOE Efficiency and Renewables transformers, the benefits of energy percent for design line 13A to 92.4 Advisory Committee (ERAC) savings, positive NPV of customer percent for design line 12. subcommittee, as described in section benefit, positive impacts on consumers At TSL 2, the projected change in II.B.2. Based on the above (as indicated by positive average LCC INPV ranges from a decrease of $3 considerations, DOE today adopts the savings, favorable PBPs, and the large million to an increase of $3 million. If energy conservation standards for percentage of customers who would the decrease of $3 million occurs, TSL medium-voltage dry-type distribution experience LCC benefits), emission 2 could result in a net loss of 4.2 percent transformers at TSL 2. Table V.46 reductions, and the estimated monetary in INPV to manufacturers of medium- presents the energy conservation value of the emissions reductions would voltage dry-type distribution standards for medium-voltage dry-type be outweighed by the risk of large transformers. At TSL 2, DOE recognizes distribution transformers.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23425 2500 99.33 2500 2000 99.28 2000

RANSFORMERS T ISTRIBUTION D YPE -T RY D .5 98.36 75 98.53 ...... 5 98.36 75 98.53 OLTAGE 2500 99.41 2000 99.36 -V EDIUM M TANDARDS FOR S Electrical efficiency by kVA and equipment class ONSERVATION C .5 98.52 75 98.57 112 NERGY 2000 99.43 V.46—E ABLE T .5 98.49 45 98.10 37 .5 98.30 45 97.86 ...... 5 98.30 ...... 45 .5 98.49 97.86 ...... 45 98.10 37 15 98.10 15 97.50 15 97.86 15 97.18 ...... 97.18 ...... 97.86 15 97.50 15 98.10 15 15 97.63 98.12 30 ...... 97.90 25 98.33 30 25 ...... 37 98.13 98.42 75 98.33 50 98.60 75 50 112 75 98.73 100 98.82 150 98.65 100 98.67 150 98.51 100 98.63 ...... 98.63 98.57 150 98.51 100 100 98.67 98.80 225 150 98.65 98.69 100 98.82 225 98.69 167 167 98.83 98.91 300 225 98.82 98.89 167 98.96 300 98.81 250 250 98.95 99.11 98.99 500 300 98.93 99.02 250 99.07 1000 500 98.99 333 333 99.03 99.21 99.09 750 99.15 500 99.09 333 99.14 1500 750 99.12 500 1000 99.20 667 500 99.12 99.20 750 99.21 500 99.22 667 99.18 1000 99.28 1500 99.30 833 667 99.27 833 99.23 1500 99.37 833 99.31 Equipment class 5 Equipment class 6 Equipment class 7 Equipment class 8 Equipment class 9 Equipment class 10 kVA % kVA % kVA % kVA % kVA ...... 2500 99.47

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23426 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

4. Summary of Benefits and Costs national operating savings are domestic percent discount rate along with the (Annualized) of Today’s Standards U.S. customer monetary savings that SCC series corresponding to a value of The benefits and costs of today’s occur as a result of market transactions $22.3/ton in 2011), the cost of the standards can also be expressed in terms while the value of CO2 reductions is standards in today’s rule is $266 million of annualized values. The annualized based on a global value. Second, the per year in increased equipment costs, monetary values are the sum of: (1) the assessments of operating cost savings while the benefits are $581 million per annualized national economic value of and SCC are performed with different year in reduced equipment operating the benefits from operating products methods that use different time frames costs, $237 million in CO2 reductions, for analysis. The national operating cost that meet today’s standards (consisting and $8.60 million in reduced NOX primarily of operating cost savings from savings is measured for the lifetime of emissions. In this case, the net benefit using less energy, minus increases in products shipped in 2016–2045. The amounts to $561 million per year. Using equipment purchase costs, which is SCC values, on the other hand, reflect a 3-percent discount rate for all benefits the present value of future climate- another way of representing customer and costs (and the SCC series related impacts resulting from the NPV); and (2) the monetary value of the corresponding to a value of $22.3/ton in emission of one metric ton of CO in benefits of emission reductions, 2 2011), the cost of the standards in 73 each year. These impacts continue well including CO2 emission reductions. today’s rule is $282 million per year in The value of the CO reductions is beyond 2100. 2 increased equipment costs, while the calculated using a range of values per Table V.47 shows the annualized benefits are $983 million per year in metric ton of CO2 developed by a recent values for today’s standards for interagency process. distribution transformers. The results reduced operating costs, $237 million in Although combining the values of for the primary estimate are as follows. CO2 reductions, and $12.67 million in operating savings and CO2 reductions Using a 7-percent discount rate for reduced NOX emissions. In this case, the provides a useful perspective, two benefits and costs (other than CO2 net benefit amounts to $950 million per issues should be considered. First, the reduction, for which DOE used a 3- year.

TABLE V.47—ANNUALIZED BENEFITS AND COSTS OF STANDARDS FOR DISTRIBUTION TRANSFORMERS SOLD IN 2016–2045

Million 2011$/year Discount rate Low net High net % Primary esti- benefits benefits mate * estimate * estimate *

......

Benefits Operating cost savings ...... 7% ...... 581 ...... 559 ...... 590. 3% ...... 983 ...... 930 ...... 1003. CO2 reduction monetized value ($4.9/t case)** ...... 5% ...... 57.7 ...... 57.7 ...... 57.7. CO2 reduction monetized value ($22.3/t case)** ...... 3% ...... 237 ...... 237 ...... 237. CO2 reduction monetized value ($36.5/t case)** ...... 2.5% ...... 377 ...... 377 ...... 377. CO2 reduction monetized value ($67.6/t case)** ...... 3% ...... 721 ...... 721 ...... 721. NOX reduction monetized value ($2,591/ton)** ...... 7% ...... 8.60 ...... 8.60 ...... 8.60. 3% ...... 12.67 ...... 12.67 ...... 12.67. Total benefits† ...... 7% plus CO2 range ...... 648 to 1311 ...... 625 to 1288 ...... 656 to 1319. 7% ...... 827 ...... 805 ...... 836. 3% plus CO2 range ...... 1053 to 1716 .... 1000 to 1663 .... 1074 to 1737. 3% ...... 1233 ...... 1179 ...... 1253. Costs Incremental equipment costs ...... 7% ...... 266 ...... 300 ...... 257. 3% ...... 282 ...... 325 ...... 271. Net Benefits Total † ...... 7% plus CO2 range ...... 381 to 1044 ...... 325 to 988 ...... 400 to 1063. 7% ...... 561 ...... 504 ...... 579. 3% plus CO2 range ...... 771 to 1434 ...... 675 to 1338 ...... 803 to 1466. 3% ...... 950 ...... 854 ...... 982. * The Primary, Low Net Benefits, and High Net Benefits Estimates utilize forecasts of energy prices from the AEO 2012 reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect no change in the Primary estimate, rising product prices in the Low Net Benefits estimate, and declining product prices in the High Net Benefits estimate. ** The CO2 values represent global monetized values of the SCC, in 2011$, in 2011 under several scenarios. The values of $4.9, $22.3, and $36.5 per metric ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX (in 2011$) is the average of the low and high values used in DOE’s analysis. † Total Benefits for both the 3% and 7% cases are derived using the series corresponding to SCC value of $22.3/t. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values.

73 DOE used a two-step calculation process to rates of 3 and 7 percent for all costs and benefits annual payment is the annualized value. Although convert the time-series of costs and benefits into except for the value of CO2 reductions. For the DOE calculated annualized values, this does not annualized values. First, DOE calculated a present latter, DOE used a range of discount rates, as shown imply that the time-series of cost and benefits from value in 2012, the year used for discounting the in Table V.47. From the present value, DOE then which the annualized values were determined NPV of total consumer costs and savings, for the calculated the fixed annual payment over a 30-year would be a steady stream of payments. time-series of costs and benefits using discount period that yields the same present value. The fixed

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23427

VI. Procedural Issues and Regulatory immersed distribution transformer performance objectives, rather than Review purchases, 50 percent of small capacity specifying the behavior or manner of medium-voltage dry-type transformer compliance that regulated entities must A. Review Under Executive Orders purchases, and 80 percent of large adopt; and (5) identify and assess 12866 and 13563 capacity medium-voltage dry-type available alternatives to direct Section 1(b)(1) of Executive Order transformer purchases. Therefore, 25 regulation, including providing 12866, ‘‘Regulatory Planning and percent, 50 percent, and 20 percent of economic incentives to encourage the Review,’’ 58 FR 51735 (Oct. 4, 1993), such purchases in these segments do not desired behavior, such as user fees or requires each agency to identify the employ economic evaluation of marketable permits, or providing problem that it intends to address, transformer losses. These are the information upon which choices can be including, where applicable, the failures portions of the distribution transformer made by the public. of private markets or public institutions market in which there is market failure. DOE emphasizes as well that that warrant new agency action, as well Today’s energy conservation standards Executive Order 13563 requires agencies as to assess the significance of that would eliminate from the market those to use the best available techniques to problem. The problems addressed by distribution transformers designs that quantify anticipated present and future today’s standards are as follows: are purchased on a purely minimum benefits and costs as accurately as (1) There is a lack of consumer first cost basis, but which would not possible. In its guidance, the Office of information and/or information likely be purchased by equipment Information and Regulatory Affairs has processing capability about energy buyers when the economic value of emphasized that such techniques may efficiency opportunities in the equipment losses are properly include identifying changing future commercial equipment market. evaluated. compliance costs that might result from (2) There is asymmetric information In addition, DOE has determined that technological innovation or anticipated (one party to a transaction has more and today’s regulatory action is an behavioral changes. For the reasons better information than the other) and/ ‘‘economically significant regulatory stated in the preamble, DOE believes or high transactions costs (costs of action’’ under section 3(f)(1) of that today’s final rule is consistent with gathering information and effecting Executive Order 12866. Accordingly, these principles, including the exchanges of goods and services). section 6(a)(3) of the Executive Order requirement that, to the extent (3) There are some external benefits requires that DOE prepare a regulatory permitted by law, benefits justify costs resulting from improved energy impact analysis (RIA) on today’s rule and that net benefits are maximized. efficiency of distribution transformers and that the Office of Information and B. Review Under the Regulatory that are not captured by the users of Regulatory Affairs (OIRA) in the Office Flexibility Act such equipment. These benefits include of Management and Budget (OMB) externalities related to environmental review this rule. DOE presented to OIRA The Regulatory Flexibility Act (5 protection and energy security that are for review the draft rule and other U.S.C. 601 et seq.) requires preparation not reflected in energy prices, such as documents prepared for this of an initial regulatory flexibility reduced emissions of greenhouse gases. rulemaking, including the RIA, and has analysis (IRFA) for any rule that by law The specific market failure that the included these documents in the must be proposed for public comment, energy conservation standard addresses rulemaking record. The assessments and a final regulatory flexibility analysis for distribution transformers is that a prepared pursuant to Executive Order (FRFA) for any such rule that an agency substantial portion of distribution 12866 can be found in the technical adopts as a final rule, unless the agency transformer purchasers are not support document for this rulemaking. certifies that the rule, if promulgated, evaluating the cost of transformer losses DOE has also reviewed this regulation will not have a significant economic when they make distribution pursuant to Executive Order 13563, impact on a substantial number of small transformer purchase decisions. issued on January 18, 2011 (76 FR 3281, entities. As required by Executive Order Consequently, distribution transformers Jan. 21, 2011). EO 13563 is 13272, ‘‘Proper Consideration of Small are being purchased that do not provide supplemental to and explicitly reaffirms Entities in Agency Rulemaking,’’ 67 FR the minimum LCC to the equipment the principles, structures, and 53461 (August 16, 2002), DOE owners. definitions governing regulatory review published procedures and policies on For distribution transformers, the established in Executive Order 12866. February 19, 2003, to ensure that the Institute of Electronic and Electrical To the extent permitted by law, agencies potential impacts of its rules on small Engineers Inc. (IEEE) has documented are required by Executive Order 13563 entities are properly considered during voluntary guidelines for the economic to: (1) Propose or adopt a regulation the rulemaking process. 68 FR 7990. evaluation of distribution transformer only upon a reasoned determination DOE has made its procedures and losses, IEEE PC57.12.33/D8. These that its benefits justify its costs policies available on the Office of the guidelines document economic (recognizing that some benefits and General Counsel’s Web site (http:// evaluation methods for distribution costs are difficult to quantify); (2) tailor energy.gov/gc/office-general-counsel). transformers that are common practice regulations to impose the least burden DOE reviewed the February 2012 NOPR in the utility industry. But while on society, consistent with obtaining and today’s final rule under the economic evaluation of transformer regulatory objectives, taking into provisions of the Regulatory Flexibility losses is common, it is not a universal account, among other things, and to the Act and the procedures and policies practice. DOE collected information extent practicable, the costs of published on February 19, 2003. during the course of the previous energy cumulative regulations; (3) select, in As presented and discussed in the conservation standard rulemaking to choosing among alternative regulatory following sections, the FRFA describes estimate the extent to which approaches, those approaches that potential impacts on small distribution transformer purchases are maximize net benefits (including manufacturers associated with the evaluated. Data received from NEMA potential economic, environmental, required product and capital conversion indicated that these guidelines or public health and safety, and other costs at each TSL and discusses similar criteria are applied to advantages; distributive impacts; and alternatives that could minimize these approximately 75 percent of liquid- equity); (4) to the extent feasible, specify impacts. Chapter 12 of the TSD contains

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23428 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

more information about the impact of Of the LVDT manufacturers, DOE was experience and production economies. this rulemaking on manufacturers. able to contact and discuss potential More typically, low-volume standards with seven of the 14 small manufacturers focus their operations on 1. Statement of the Need for, and business manufacturers. Of the MVDT one or two parts of the value chain— Objectives of, the Rule manufacturers, DOE was able to reach rather than all of it—and focus on The reasons why DOE is establishing and discuss potential standards with market segments outside of the high- the standards in today’s final rule and five of the 17 small business volume baseline efficiency market. the objectives of these standards are manufacturers. DOE also obtained In terms of operations, some small provided elsewhere in the preamble and information about small business firms focus on the engineering and not repeated here. impacts while interviewing large design of transformers and source the 2. Summary of and Responses to the manufacturers. production of the cores or even the Significant Issues Raised by the Public whole transformer, while other small b. Distribution Transformer Industry firms focus on just production and Comments, and a Statement of Any Structure Changes Made as a Result of Such rebrand for companies that offer broader Liquid Immersed. Comments solutions through their own sales and Six major manufacturers supply more distribution networks. This FRFA incorporates the IRFA and than 80 percent of the market for liquid- In terms of market focus, many small public comments received on the IRFA immersed transformers. None of the firms compete entirely in distribution and the economic impacts of the rule. major manufacturers of distribution transformer markets that are not covered DOE provides responses to these transformers covered in this rulemaking by statute. DOE did not attempt to comments in the discussion below on are considered to be small businesses. contact companies operating solely in the compliance impacts of the rule and The vast majority of shipments are this very fragmented market. Of those elsewhere in the preamble. DOE manufactured domestically. Electric that do compete in the DOE-covered modified the standards adopted in utilities compose the customer base and market, a few small businesses reported today’s final rule in response to typically buy on first-cost. Many small a focus on the high-end of the market, comments received, including those manufacturers position themselves often selling NEMA Premium® from small businesses, as described in towards the higher end of the market or (equivalent to EL3, EL3, and EL2 for the preamble. in particular product niches, such as DL6, DL7 and DL8, respectively) or 3. Description and Estimated Number of network transformers or harmonic better transformers as retrofit Small Entities Regulated mitigating transformers, but, in general, opportunities. Others focus on competition is based on price after a particular applications or niches, like a. Methodology for Estimating the given unit’s specifications are data centers, and become well-versed in Number of Small Entities prescribed by a customer. the unique needs of a particular For manufacturers of distribution Low-Voltage Dry-Type. customer base. transformers, the Small Business Four major manufacturers supply Medium-Voltage Dry-Type. Administration (SBA) has set a size more than 80 percent of the market for The medium-voltage dry-type threshold, which defines those entities low-voltage dry-type transformers. None transformer market is relatively classified as ‘‘small businesses’’ for the of the major manufacturers of LVDT consolidated with one large company purposes of the statute. DOE used the distribution transformers covered in this holding a substantial share of the SBA’s small business size standards to rulemaking are small businesses. The market. Electric utilities and industrial determine whether any small entities customer base rarely purchases on users make up most of the customer would be subject to the requirements of efficiency and is very first-cost base and typically buy on first-cost or the rule. 65 FR 30836, 30848 (May 15, conscious, which, in turn, places a features other than efficiency. DOE 2000), as amended at 65 FR 53533, premium on economies of scale in estimates that at least 75 percent of 53544 (Sept. 5, 2000) and codified at 13 manufacturing. DOE estimates production occurs domestically. Several CFR part 121. The size standards are approximately 80 percent of the market manufacturers also compete in the listed by NAICS code and industry is served by imports, mostly from power transformer market. Like the description and are available at http:// Canada and Mexico. Many of the small LVDT industry, most small business www.sba.gov/sites/default/files/files/ businesses that compete in the low- manufacturers in the MVDT industry Size_Standards_Table.pdf. Distribution voltage dry-type market produce often produce transformers not covered transformer manufacturing is classified specialized transformers that are not under DOE standards. DOE estimates under NAICS 335311, ‘‘Power, covered under standards. Roughly 50 that 10 percent of the market is not Distribution and Specialty Transformer percent of the market by revenue is not covered under standards. Manufacturing.’’ The SBA sets a covered under DOE standards. This threshold of 750 employees or less for market is much more fragmented than c. Comparison Between Large and Small an entity to be considered as a small the one serving DOE-covered LVDT Entities business for this category. transformers. Small distribution transformer In the February 2012 NOPR, DOE In the DOE-covered LVDT market, manufacturers differ from large identified approximately 10 liquid- low-volume manufacturers typically do manufacturers in several ways that immersed distribution transformer not compete directly with large affect the extent to which they would be manufacturers, 14 LVDT manufacturers, manufacturers using business models impacted by the proposed standards. and 17 MVDT manufacturers of covered similar to those of their bigger rivals Characteristics of small manufacturers equipment that can be considered small because scale disadvantages in include: lower production volumes, businesses. 77 FR 7282 (February 10, purchasing and production are usually fewer engineering resources, less 2012). Of the liquid-immersed too great a barrier in this portion of the technical expertise, lack of purchasing distribution transformer small business market. The exceptions to this rule are power for high performance steels, and manufacturers, DOE was able to reach those companies that also compete in less access to capital. and discuss potential standards with six the medium-voltage market and, to Lower production volumes are the of the 10 small business manufacturers. some extent, are able to leverage that root cause of most small business

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23429

disadvantages, particularly for a small larger, and thus reduce throughput, uncertain whether small manufacturers manufacturer that is vertically most manufacturers said the industry in would elect to butt-lap with higher integrated. A lower-volume general has substantial excess capacity grade steel rather than source their cores manufacturer’s conversion costs would due to the recent economic downturn. or invest in mitering equipment, but need to be spread over fewer units than Therefore, DOE believes TSL 1 would each option remains a viable path to a larger competitor. Thus, unless the not require the typical small compliance. With respect to the other small business can differentiate its manufacturer to invest in additional paths to compliance, DOE notes that product in some way that earns a price capital equipment. However, small roughly half of the small business LVDT premium, the small business is a ‘‘price manufacturers may incur some manufacturers DOE interviewed already taker’’ and experiences a reduction in engineering and product design costs have mitering capability. DOE estimates profit per unit relative to the large associated with re-optimizing their half of all cores in small business DL7 manufacturer. Therefore, because much production processes around new transformers are currently sourced, of the same equipment would need to be baseline equipment. DOE estimates TSL according to transformer and core purchased by both large and small 1 would require industry product manufacturer interviews, as third-party manufacturers in order to produce conversion costs of only one-half of one core manufacturers already often have transformers (in-house) at higher TSLs, year’s annual industry R&D expenses. significant variable cost advantages undifferentiated small manufacturers Because these one-time costs are through bulk steel purchasing power would face a greater variable cost relatively fixed per manufacturer, they and greater production efficiencies due penalty because they must depreciate impact smaller manufacturers to higher volumes. the one-time conversion expenditures disproportionately (compared to larger over fewer units. manufacturers). The table below Each business’ ultimate decision on Smaller companies are also more illustrates this effect: how it will ultimately comply depends likely to have more limited engineering on its production volumes, the relative resources and they often operate with TABLE VI.1—ESTIMATED PRODUCT steel prices it faces, its position in the lower levels of design and CONVERSION COSTS AS A PERCENT- value chain, and whether it currently manufacturing sophistication. Smaller AGE OF ANNUAL R&D EXPENSE has mitering technology in-house, companies typically also have less among other factors. Because a small experience and expertise in working Product business may ultimately make the with more advanced technologies, such conversion business decision to build mitered cores as amorphous core construction in the Product cost as a at TSL 2, DOE estimates the cost of such conversion percentage liquid-immersed market or step-lap cost of annual a strategy to conservatively bound the mitering in the dry-type markets. R&D ex- compliance impact. Below DOE Standards that required these pense compares the relative impact on a small technologies could strain the business of the scenario in which a engineering resources of these small Typical Large small manufacturer elects to purchase a manufacturers if they chose to maintain Manufacturer $1.34 M 20 new mitering machine (rather than Typical Small a vertically integrated business model. Manufacturer 1.34 M 222 continue to butt-lap with higher grade Small distribution transformer steel or source its core production). manufacturers can also be at a While the costs disproportionately Based on interviews with small disadvantage due to their lack of impact small manufactures, the businesses and core manufacturers, DOE purchasing power for high performance standard levels, as stated above, do not believes this to be a conservative materials. If more expensive steels are require small manufacturers to invest in assessment of compliance costs, as needed to meet standards and steel cost entirely different production processes many small businesses currently source grows as a percentage of the overall nor do they require steels or core a large share of their cores. DOE product cost, small manufacturers who construction techniques with which estimates capital conversion costs of pay higher per pound prices would be these manufacturers are not familiar. A $0.75 million and product conversion disproportionately impacted. range of design options would still be costs of $0.2 million, based on Last, small manufacturers typically available. manufacturer and equipment supplier have less access to capital, which may b. Low-Voltage Dry-Type. interviews, would be incurred if small be needed by some to cover the Small manufacturers have several businesses without mitering equipment conversion costs associated with new options available to them at TSL2 based chose to invest in it. Because of the technologies. on individual economic determinations. largely fixed nature of these one-time 4. Description and Estimate of They may choose to: (1) Source their conversion expenditures that Compliance Requirements cores, (2) fabricate cores with butt- distribution transformer manufacturers lapping technology and higher-grade would incur as a result of standards, a. Liquid-Immersed steel, (3) buy a mitering machine small manufacturers who choose to Based on interviews with (enabling them to build mitered cores invest in in-house mitering capability manufacturers in the liquid-immersed with lower-grade steel than would be will likely be disproportionately market, DOE does not believe small otherwise required), or (4) exit a product impacted (compared to large manufacturers will face significant line. manufacturers). Based on information capital conversion costs at the levels Compared to higher TSLs, TSL 2 gathered in interviews, DOE estimates established in today’s rulemaking. DOE provides many more design paths for that three small manufacturers would expects small manufacturers of liquid- small manufacturers to comply. DOE’s invest in mitering equipment as result of immersed distribution transformers to engineering analysis indicates that the this rule. As Table VI.2 indicates, small continue to produce silicon steel cores, efficiency level represented by TSL 2 for manufacturers face a greater relative rather than invest in amorphous DL7 (the high-volume line) could be met hurdle in complying with standards technology. While silicon steel designs without mitering through the use of should they opt to continue to maintain capable of achieving TSL 1 would get butt-lapping higher-grade steels. It is core production in-house.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23430 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

TABLE VI.2—ESTIMATED CAPITAL AND PRODUCT CONVERSION COSTS AS A PERCENTAGE OF ANNUAL CAPITAL EXPENDITURES AND R&D EXPENSE

Capital conversion cost Product conversion cost Total conversion cost as as a percentage of an- as a percentage of an- a percentage of annual nual capital expenditures nual R&D expense EBIT

Large Manufacturer ...... 37 10 15 Small Manufacturer ...... 137 44 70

For more than half of the small and strategic paths to continue to M5, which is also common. businesses DOE interviewed, it is compete in the market at TSL 2. Additionally, design options at TSL 2 typically have larger cores, also slowing already standard practice to source a c. Medium-Voltage Dry-Type large percentage of their DOE-covered throughput. Therefore, some cores on an ongoing basis or quickly do Based on its engineering analysis and manufacturers may need to invest in so when steel prices merit such a interviews, DOE expects relatively additional production equipment. strategy. Furthermore, small businesses minor capital expenditures for the Alternatively, depending on each are currently more likely to source cores industry to meet TSL 2. DOE company’s availability capacity, for NEMA Premium® units than understands that the market is already manufacturers could employ additional standard units. Many small businesses standardized on step-lap mitering, so production shifts, rather than invest in indicated that they expect the manufacturers will not need to make additional capacity. continuance of this strategy would be major investments for more advanced For the medium-voltage dry-type the low-cost option under higher core construction. Furthermore, TSL 2 market, at TSL 2, the level proposed in standards. Therefore, the impacts in the does not require a change to much today’s notice, DOE estimates low table are not representative of the thinner steels such as M3 or H0. The capital and product conversion costs industry can use M4 and H1, thicker that are relatively fixed for both small strategy DOE expects to be employed by steels with which it has much more and large manufacturers. Similar to the many small manufacturers, but only experience and which are easier to low-voltage dry-type market, small those choosing to invest in mitering employ in the stacked-core production manufacturers will likely be equipment. process that dominates the medium- disproportionately impacted compared For all of the reasons discussed, DOE voltage market. However, some to large manufacturers due to the fixed believes the capital expenditures it investment will be required to maintain nature of the conversion expenditures. estimated above for small businesses are capacity as some manufacturers will Table VI.3 illustrates the relative likely conservative and that small likely migrate towards more M4 and H1 impacts on small and large businesses have a variety of technical steel and away from the slightly thicker manufacturers.

TABLE VI.3—ESTIMATED CAPITAL AND PRODUCT CONVERSION COSTS AS A PERCENTAGE OF ANNUAL CAPITAL EXPENDITURES AND R&D EXPENSE

Capital conversion cost Product conversion cost Total conversion cost as as a percentage of an- as a percentage of an- a percentage of annual nual capital expenditures nual R&D expense EBIT

Large Manufacturer ...... 3 9 8 Small Manufacturer ...... 40 117 98

d. Summary of Compliance Impacts those proposed in the February 2012 alternatives: (1) No standard, (2) The compliance impacts on small NOPR as discussed previously and consumer rebates, (3) consumer tax businesses are discussed above for low- based on comments and additional test credits, (4) manufacturer tax credits, and voltage dry-type, medium-voltage dry- data received from interested parties. (5) early replacement. DOE does not type, and liquid-filled distribution The previous discussion also analyzes intend to consider these alternatives transformer manufacturers. Although impacts on small businesses that would further because they are either not the conversion costs required can be result from the other TSLs DOE feasible to implement, or not expected considered substantial for both large considered. Though TSLs lower than to result in energy savings as large as and small companies, the impacts could the adopted TSL are expected to reduce those that would be achieved by the be relatively greater for a typical small the impacts on small entities, DOE is standard levels under consideration. manufacturer because of much lower required by EPCA to establish standards Thus, DOE rejected these alternatives production volumes and the relatively that achieve the maximum improvement and is adopting the standards set forth fixed nature of the R&D and capital in energy efficiency that are technically in this rulemaking. investments required. feasible and economically justified, and result in a significant conservation of 6. Duplication, Overlap, and Conflict 5. Steps Taken to Minimize Impacts on energy. Thus, DOE rejected the lower With Other Rules and Regulations Small Entities and Reasons Why Other TSLs. Significant Alternatives to Today’s Final In addition to the other TSLs being DOE is not aware of any rules or Rule Were Rejected considered, the TSD includes a regulations that duplicate, overlap, or DOE modified the standards regulatory impact analysis (chapter 17) conflict with the rule being finalized established in today’s final rule from that discusses the following policy today.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23431

7. Significant Alternatives to Today’s explained in part 6 of the IRFA, standards. In certifying compliance, Rule ‘‘Significant Alternatives to the Rule,’’ manufacturers must test their The discussion above analyzes DOE explicitly considered the impacts equipment according to the DOE test impacts on small businesses that would on small manufacturers of liquid- procedures for distribution result from the other TSLs DOE immersed and dry-type transformers in transformers, including any selecting the TSLs in today’s amendments adopted for those test considered. Though TSLs lower than rulemaking, rather than selecting a procedures. DOE has established the selected TSLs are expected to reduce higher trial standard level. It is DOE’s regulations for the certification and the impacts on small entities, DOE is belief that levels at TSL3 or higher recordkeeping requirements for all required by EPCA to establish standards would place excessive burdens on small covered consumer products and that achieve the maximum improvement manufacturers of medium-voltage dry- commercial equipment, including in energy efficiency that are technically type transformers, as would TSL 2 or distribution transformers. (76 FR 12422 feasible and economically justified, and higher for liquid-immersed and (March 7, 2011). The collection-of- result in a significant conservation of medium-voltage dry-type transformers. information requirement for the energy. Therefore, DOE rejected the Such burdens would include large certification and recordkeeping is lower TSLs. product redesign costs and also subject to review and approval by OMB In addition to the other TSLs being operational problems associated with under the Paperwork Reduction Act considered, the TSD includes a the extremely thin laminations of core (PRA). This requirement has been regulatory impact analysis (chapter 17) steel that would be needed to meet these approved by OMB under OMB control that discusses the following policy levels and advanced core construction number 1910–1400. Public reporting alternatives: (1) Consumer rebates, (2) equipment and tooling for mitering, or burden for the certification is estimated consumer tax credits, and (3) wound-core designs. Similarly, for to average 20 hours per response, manufacturer tax credits. DOE does not medium-voltage dry-type, the steels and including the time for reviewing intend to consider these alternatives construction techniques likely to be instructions, searching existing data further because they either are not used at TSL 2 are already commonplace sources, gathering and maintaining the feasible to implement or are not in the market, whereas TSL 3 would data needed, and completing and expected to result in energy savings as likely trigger a more dramatic shift to reviewing the collection of information. large as those that would be achieved by thinner and more exotic steels, to which Notwithstanding any other provision the standard levels under consideration. many small businesses have limited of the law, no person is required to 8. Significant Issues Raised by Public access. Lastly, DOE is confident that respond to, nor shall any person be Comments TSL1 for the liquid-immersed subject to a penalty for failure to comply distribution transformer market would with, a collection of information subject DOE’s MIA suggests that, while TSL1, not require small manufacturers to to the requirements of the PRA, unless TSL1, and TSL 2 present greater invest in amorphous steel technology, that collection of information displays a difficulties for small businesses than which could put them at a significant currently valid OMB Control Number. lower levels in the liquid-immersed, disadvantage. D. Review Under the National LVDT, and MVDT classes, respectively, Section VI.B discusses how small Environmental Policy Act of 1969 the impacts at higher TSLs would be business impacts entered into DOE’s greater. DOE expects that small selection of today’s standards for Pursuant to the National businesses will generally be able to distribution transformers. DOE made its Environmental Policy Act (NEPA) of profitably compete at the TSL selected decision regarding standards by 1969, DOE has determined that the rule in today’s rulemaking. DOE’s MIA is beginning with the highest level fits within the category of actions based on its interviews of both small considered and successively eliminating included in Categorical Exclusion (CX) and large manufacturers, and TSLs until it found a TSL that is both B5.1 and otherwise meets the consideration of small business impacts technologically feasible and requirements for application of a CX. explicitly enters into DOE’s choice of economically justified, taking into See 10 CFR part 1021, App. B, B5.1(b); the TSLs selected in this final rule. account other EPCA criteria. Because 1021.410(b) and Appendix B, B(1)–(5). DOE also notes that today’s standards DOE believes that the TSLs selected are The rule fits within the category of can be met with a variety of materials, economically justified (including actions because it is a rulemaking that including multiple core steels and both consideration of small business establishes energy conservation copper and aluminum windings. impacts), the reduced impact on small standards for consumer products or Because today’s TSLs can be met with businesses that would have been industrial equipment, and for which a variety of materials, DOE does not realized in moving to lower efficiency none of the exceptions identified in CX expect that material availability issues levels was not considered in DOE’s B5.1(b) apply. Therefore, DOE has made will be a problem for the industry that decision (but the reduced impact on a CX determination for this rulemaking, results from this rulemaking. small businesses that is realized in and DOE does not need to prepare an 9. Steps DOE Has Taken to Minimize moving down to TSL2 from TSL3 (in the Environmental Assessment or the Economic Impact on Small case of medium-voltage dry-type and Environmental Impact Statement for Manufacturers low-voltage dry-type) and to TSL1 from this rule. DOE’s CX determination for TSL2 (in the case of liquid-immersed) this rule is available at http:// In consideration of the benefits and was explicitly considered in the cxnepa.energy.gov/ or link directly to burdens of standards, including the weighing of benefits and burdens). http://energy.gov/nepa/downloads/cx- burdens posed to small manufacturers, 007852-categorical-exclusion- C. Review Under the Paperwork DOE concluded that TSL1 is the highest determination. level that can be justified for liquid- Reduction Act immersed and medium-voltage dry-type Manufacturers of distribution E. Review Under Executive Order 13132 transformers and TSL2 is the highest transformers must certify to DOE that Executive Order 13132, ‘‘Federalism.’’ level that can be justified for low- their equipment complies with any 64 FR 43255 (Aug. 10, 1999) imposes voltage dry-type transformers. As applicable energy conservation certain requirements on Federal

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23432 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

agencies formulating and implementing the extent permitted by law, this final the final rule and the ‘‘Regulatory policies or regulations that preempt rule meets the relevant standards of Impact Analysis’’ section of the TSD for State law or that have Federalism Executive Order 12988. this final rule respond to those implications. The Executive Order requirements. G. Review Under the Unfunded requires agencies to examine the Under section 205 of UMRA, the Mandates Reform Act of 1995 constitutional and statutory authority Department is obligated to identify and supporting any action that would limit Title II of the Unfunded Mandates consider a reasonable number of the policymaking discretion of the Reform Act of 1995 (UMRA) requires regulatory alternatives before States and to carefully assess the each Federal agency to assess the effects promulgating a rule for which a written necessity for such actions. The of Federal regulatory actions on State, statement under section 202 is required. Executive Order also requires agencies local, and Tribal governments and the 2 U.S.C. 1535(a). DOE is required to to have an accountable process to private sector. Pub. L. 104–4, sec. 201 select from those alternatives the most ensure meaningful and timely input by (codified at 2 U.S.C. 1531). For an cost-effective and least burdensome State and local officials in the amended regulatory action likely to alternative that achieves the objectives development of regulatory policies that result in a rule that may cause the of the rule unless DOE publishes an have Federalism implications. On expenditure by State, local, and Tribal explanation for doing otherwise, or the March 14, 2000, DOE published a governments, in the aggregate, or by the selection of such an alternative is statement of policy describing the private sector of $100 million or more inconsistent with law. As required by 42 intergovernmental consultation process in any one year (adjusted annually for U.S.C. 6295 (o), 6316(a), and 6317(a)(1), it will follow in the development of inflation), section 202 of UMRA requires today’s final rule would establish energy such regulations. 65 FR 13735. EPCA a Federal agency to publish a written conservation standards for distribution governs and prescribes Federal statement that estimates the resulting transformers that are designed to preemption of State regulations as to costs, benefits, and other effects on the achieve the maximum improvement in energy conservation for the products national economy. (2 U.S.C. 1532(a), (b)) energy efficiency that DOE has that are the subject of today’s final rule. The UMRA also requires a Federal determined to be both technologically States can petition DOE for exemption agency to develop an effective process feasible and economically justified. A from such preemption to the extent, and to permit timely input by elected full discussion of the alternatives based on criteria, set forth in EPCA. (42 officers of State, local, and Tribal considered by DOE is presented in the U.S.C. 6297) No further action is governments on a ‘‘significant ‘‘Regulatory Impact Analysis’’ chapter of required by Executive Order 13132. intergovernmental mandate,’’ and the TSD for today’s final rule. requires an agency plan for giving notice F. Review Under Executive Order 12988 and opportunity for timely input to H. Review Under the Treasury and With respect to the review of existing potentially affected small governments General Government Appropriations regulations and the promulgation of before establishing any requirements Act, 1999 new regulations, section 3(a) of that might significantly or uniquely Section 654 of the Treasury and Executive Order 12988, ‘‘Civil Justice affect small governments. On March 18, General Government Appropriations Reform,’’ imposes on Federal agencies 1997, DOE published a statement of Act, 1999 (Pub. L. 105–277) requires the general duty to adhere to the policy on its process for Federal agencies to issue a Family following requirements: (1) Eliminate intergovernmental consultation under Policymaking Assessment for any rule drafting errors and ambiguity; (2) write UMRA. 62 FR 12820. DOE’s policy that may affect family well-being. This regulations to minimize litigation; and statement is also available at http:// rule would not have any impact on the (3) provide a clear legal standard for energy.gov/gc/office-general-counsel. autonomy or integrity of the family as affected conduct rather than a general DOE has concluded that this final rule an institution. Accordingly, DOE has standard and promote simplification would likely require expenditures of concluded that it is not necessary to and burden reduction. 61 FR 4729 (Feb. $100 million or more by the private prepare a Family Policymaking 7, 1996). Section 3(b) of Executive Order sector. Such expenditures may include: Assessment. 12988 specifically requires that (1) investment in research and Executive agencies make every development and in capital I. Review Under Executive Order 12630 reasonable effort to ensure that the expenditures by distribution DOE has determined, under Executive regulation: (1) Clearly specifies the transformer manufacturers in the years Order 12630, ‘‘Governmental Actions preemptive effect, if any; (2) clearly between the final rule and the and Interference with Constitutionally specifies any effect on existing Federal compliance date for the new standards, Protected Property Rights’’ 53 FR 8859 law or regulation; (3) provides a clear and (2) incremental additional (March 18, 1988), that this regulation legal standard for affected conduct expenditures by consumers to purchase would not result in any takings that while promoting simplification and higher-efficiency distribution might require compensation under the burden reduction; (4) specifies the transformers, starting at the compliance Fifth Amendment to the U.S. retroactive effect, if any; (5) adequately date for the applicable standard. Constitution. defines key terms; and (6) addresses Section 202 of UMRA authorizes a other important issues affecting clarity Federal agency to respond to the content J. Review Under the Treasury and and general draftsmanship under any requirements of UMRA in any other General Government Appropriations guidelines issued by the Attorney statement or analysis that accompanies Act, 2001 General. Section 3(c) of Executive Order the final rule. 2 U.S.C. 1532(c). The Section 515 of the Treasury and 12988 requires Executive agencies to content requirements of section 202(b) General Government Appropriations review regulations in light of applicable of UMRA relevant to a private sector Act, 2001 (44 U.S.C. 3516, note) standards in section 3(a) and section mandate substantially overlap the provides for Federal agencies to review 3(b) to determine whether they are met economic analysis requirements that most disseminations of information to or it is unreasonable to meet one or apply under section 325(o) of EPCA and the public under guidelines established more of them. DOE has completed the Executive Order 12866. The by each agency pursuant to general required review and determined that, to SUPPLEMENTARY INFORMATION section of guidelines issued by OMB. OMB’s

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23433

guidelines were published at 67 FR regulatory actions. The purpose of the chapter II, of title 10 of the Code of 8452 (February 22, 2002), and DOE’s bulletin is to enhance the quality and Federal Regulations, to read as set forth guidelines were published at 67 FR credibility of the Government’s below: 62446 (October 7, 2002). DOE has scientific information. Under the reviewed today’s final rule under the Bulletin, the energy conservation PART 431—ENERGY EFFICIENCY OMB and DOE guidelines and has standards rulemaking analyses are PROGRAM FOR CERTAIN concluded that it is consistent with ‘‘influential scientific information,’’ COMMERCIAL AND INDUSTRIAL applicable policies in those guidelines. which the Bulletin defines as scientific EQUIPMENT information the agency reasonably can K. Review Under Executive Order 13211 determine will have, or does have, a ■ 1. The authority citation for part 431 Executive Order 13211, ‘‘Actions clear and substantial impact on continues to read as follows: Concerning Regulations That important public policies or private Significantly Affect Energy Supply, sector decisions. 70 FR 2667. Authority: 42 U.S.C. 6291–6317. Distribution, or Use’’ 66 FR 28355 (May In response to OMB’s Bulletin, DOE ■ 22, 2001), requires Federal agencies to conducted formal in-progress peer 2. Section 431.192 is amended by: prepare and submit to OIRA at OMB, a reviews of the energy conservation ■ a. Removing the definition of Statement of Energy Effects for any standards development process and ‘‘underground mining distribution significant energy action. A ‘‘significant analyses and has prepared a Peer transformer’’ and energy action’’ is defined as any action Review Report pertaining to the energy ■ b. Adding in alphabetical order, the by an agency that promulgates or is conservation standards rulemaking definition for ‘‘mining distribution expected to lead to promulgation of a analyses. Generation of this report transformer’’ to read as follows: final rule, and that: (1) Is a significant involved a rigorous, formal, and regulatory action under Executive Order documented evaluation using objective § 431.192 Definitions. 12866, or any successor order; and (2) criteria and qualified and independent * * * * * is likely to have a significant adverse reviewers to make a judgment as to the effect on the supply, distribution, or use technical/scientific/business merit, the Mining distribution transformer of energy, or (3) is designated by the actual or anticipated results, and the means a medium-voltage dry-type Administrator of OIRA as a significant productivity and management distribution transformer that is built energy action. For any significant energy effectiveness of programs and/or only for installation in an underground action, the agency must give a detailed projects. The ‘‘Energy Conservation mine or surface mine, inside equipment statement of any adverse effects on Standards Rulemaking Peer Review for use in an underground mine or energy supply, distribution, or use Report’’ dated February 2007 has been surface mine, on-board equipment for should the proposal be implemented, disseminated and is available at the use in an underground mine or surface and of reasonable alternatives to the following Web site: www1.eere.energy. mine, or for equipment used for digging, action and their expected benefits on gov/buildings/appliance_standards/ drilling, or tunneling underground or _ energy supply, distribution, and use. peer review.html. above ground, and that has a nameplate DOE has concluded that today’s M. Congressional Notification which identifies the transformer as regulatory action, which sets forth being for this use only. energy conservation standards for As required by 5 U.S.C. 801, DOE will * * * * * distribution transformers, is not a report to Congress on the promulgation significant energy action because the of this rule prior to its effective date. ■ 3. Section 431.196 is revised to read amended standards are not likely to The report will state that it has been as follows: have a significant adverse effect on the determined that the rule is a ‘‘major supply, distribution, or use of energy, rule’’ as defined by 5 U.S.C. 804(2). § 431.196 Energy conservation standards and their effective dates. nor has it been designated as such by VII. Approval of the Office of the the Administrator at OIRA. Accordingly, Secretary (a) Low-Voltage Dry-Type Distribution DOE has not prepared a Statement of The Secretary of Energy has approved Transformers. (1) The efficiency of a Energy Effects for the final rule. publication of today’s final rule. low-voltage, dry-type distribution L. Review Under the Information transformer manufactured on or after List of Subjects in 10 CFR Part 431 Quality Bulletin for Peer Review January 1, 2007, but before January 1, Administrative practice and On December 16, 2004, OMB, in 2016, shall be no less than that required procedure, Confidential business consultation with the Office of Science for the applicable kVA rating in the information, Energy conservation, and Technology Policy (OSTP), issued table below. Low-voltage dry-type Reporting and recordkeeping its Final Information Quality Bulletin distribution transformers with kVA requirements. for Peer Review (the Bulletin). 70 FR ratings not appearing in the table shall 2664 (January 14, 2005). The Bulletin Issued in Washington, DC, on April 9, have their minimum efficiency level establishes that certain scientific 2013. determined by linear interpolation of information shall be peer reviewed by David Danielson, the kVA and efficiency values qualified specialists before it is Assistant Secretary of Energy, Energy immediately above and below that kVA disseminated by the Federal Efficiency and Renewable Energy. rating. Government, including influential For the reasons set forth in the scientific information related to agency preamble, DOE amends part 431 of

Single-phase Three-phase kVA % kVA %

15 ...... 97.7 15 ...... 97.0

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23434 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Single-phase Three-phase kVA % kVA %

25 ...... 98.0 30 ...... 97.5 37.5 ...... 98.2 45 ...... 97.7 50 ...... 98.3 75 ...... 98.0 75 ...... 98.5 112.5 ...... 98.2 100 ...... 98.6 150 ...... 98.3 167 ...... 98.7 225 ...... 98.5 250 ...... 98.8 300 ...... 98.6 333 ...... 98.9 500 ...... 98.7 750 ...... 98.8 1000 ...... 98.9 Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test Method for Measuring the Energy Consumption of Distribution Transformers under Appendix A to Subpart K of 10 CFR part 431.

(2) The efficiency of a low-voltage for their kVA rating in the table below. minimum efficiency level determined dry-type distribution transformer Low-voltage dry-type distribution by linear interpolation of the kVA and manufactured on or after January 1, transformers with kVA ratings not efficiency values immediately above 2016, shall be no less than that required appearing in the table shall have their and below that kVA rating.

Single-phase Three-phase Efficiency Efficiency kVA (%) kVA (%)

15 ...... 97.70 15 ...... 97.89 25 ...... 98.00 30 ...... 98.23 37.5 ...... 98.20 45 ...... 98.40 50 ...... 98.30 75 ...... 98.60 75 ...... 98.50 112.5 ...... 98.74 100 ...... 98.60 150 ...... 98.83 167 ...... 98.70 225 ...... 98.94 250 ...... 98.80 300 ...... 99.02 333 ...... 98.90 500 ...... 99.14 750 ...... 99.23 1000 ...... 99.28 Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test Method for Measuring the Energy Consumption of Distribution Transformers under Appendix A to Subpart K of 10 CFR part 431.

(b) Liquid-Immersed Distribution 2016, shall be no less than that required minimum efficiency level determined Transformers. (1) The efficiency of a for their kVA rating in the table below. by linear interpolation of the kVA and liquid-immersed distribution Liquid-immersed distribution efficiency values immediately above transformer manufactured on or after transformers with kVA ratings not and below that kVA rating. January 1, 2010, but before January 1, appearing in the table shall have their

Single-phase Three-phase Efficiency Efficiency kVA (%) kVA (%)

10 ...... 98.62 15 ...... 98.36 15 ...... 98.76 30 ...... 98.62 25 ...... 98.91 45 ...... 98.76 37.5 ...... 99.01 75 ...... 98.91 50 ...... 99.08 112.5 ...... 99.01 75 ...... 99.17 150 ...... 99.08 100 ...... 99.23 225 ...... 99.17 167 ...... 99.25 300 ...... 99.23 250 ...... 99.32 500 ...... 99.25 333 ...... 99.36 750 ...... 99.32 500 ...... 99.42 1000 ...... 99.36 667 ...... 99.46 1500 ...... 99.42 833 ...... 99.49 2000 ...... 99.46 2500 ...... 99.49 Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test—Procedure, Appendix A to Sub- part K of 10 CFR part 431.

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations 23435

(2) The efficiency of a liquid- for their kVA rating in the table below. minimum efficiency level determined immersed distribution transformer Liquid-immersed distribution by linear interpolation of the kVA and manufactured on or after January 1, transformers with kVA ratings not efficiency values immediately above 2016, shall be no less than that required appearing in the table shall have their and below that kVA rating.

Single-phase Three-phase Efficiency Efficiency kVA (%) kVA (%)

10 ...... 98.70 15 ...... 98.65 15 ...... 98.82 30 ...... 98.83 25 ...... 98.95 45 ...... 98.92 37.5 ...... 99.05 75 ...... 99.03 50 ...... 99.11 112.5 ...... 99.11 75 ...... 99.19 150 ...... 99.16 100 ...... 99.25 225 ...... 99.23 167 ...... 99.33 300 ...... 99.27 250 ...... 99.39 500 ...... 99.35 333 ...... 99.43 750 ...... 99.40 500 ...... 99.49 1000 ...... 99.43 667 ...... 99.52 1500 ...... 99.48 833 ...... 99.55 2000 ...... 99.51 2500 ...... 99.53 Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test Method for Measuring the Energy Consumption of Distribution Transformers under Appendix A to Subpart K of 10 CFR part 431.

(c) Medium-Voltage Dry-Type January 1, 2016, shall be no less than appearing in the table shall have their Distribution Transformers. (1) The that required for their kVA and BIL minimum efficiency level determined efficiency of a medium-voltage dry-type rating in the table below. Medium- by linear interpolation of the kVA and distribution transformer manufactured voltage dry-type distribution efficiency values immediately above on or after January 1, 2010, but before transformers with kVA ratings not and below that kVA rating.

Single-phase Three-phase BIL* BIL ≥ ≥ kVA 20–45 kV 46–95 kV 96 kV kVA 20–45 kV 46–95 kV 96 kV Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency (%) (%) (%) (%) (%) (%)

15 ...... 98.10 97.86 ...... 15 ...... 97.50 97.18 ...... 25 ...... 98.33 98.12 ...... 30 ...... 97.90 97.63 ...... 37.5 ...... 98.49 98.30 ...... 45 ...... 98.10 97.86 ...... 50 ...... 98.60 98.42 ...... 75 ...... 98.33 98.12 ...... 75 ...... 98.73 98.57 98.53 112.5...... 98.49 98.30 ...... 100 ...... 98.82 98.67 98.63 150...... 98.60 98.42 ...... 167 ...... 98.96 98.83 98.80 225...... 98.73 98.57 98.53 250 ...... 99.07 98.95 98.91 300...... 98.82 98.67 98.63 333 ...... 99.14 99.03 98.99 500...... 98.96 98.83 98.80 500 ...... 99.22 99.12 99.09 750...... 99.07 98.95 98.91 667 ...... 99.27 99.18 99.15 1000...... 99.14 99.03 98.99 833 ...... 99.31 99.23 99.20 1500...... 99.22 99.12 99.09 ...... 2000 ...... 99.27 99.18 99.15 ...... 2500 ...... 99.31 99.23 99.20 * BIL means basic impulse insulation level. Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE Test Method for Measuring the Energy Consumption of Distribution Transformers under Appendix A to Subpart K of 10 CFR part 431.

(2) The efficiency of a medium- rating in the table below. Medium- by linear interpolation of the kVA and voltage dry-type distribution voltage dry-type distribution efficiency values immediately above transformer manufactured on or after transformers with kVA ratings not and below that kVA rating. January 1, 2016, shall be no less than appearing in the table shall have their that required for their kVA and BIL minimum efficiency level determined

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES 23436 Federal Register / Vol. 78, No. 75 / Thursday, April 18, 2013 / Rules and Regulations

Single-phase Three-phase BIL* BIL ≥ ≥ kVA 20–45 kV 46–95 kV 96 kV kVA 20–45 kV 46–95 kV 96 kV Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency (%) (%) (%) (%) (%) (%)

15 ...... 98.10 97.86 ...... 15 ...... 97.50 97.18 ...... 25 ...... 98.33 98.12 ...... 30 ...... 97.90 97.63 ...... 37.5 ...... 98.49 98.30 ...... 45 ...... 98.10 97.86 ...... 50 ...... 98.60 98.42 ...... 75 ...... 98.33 98.13 ...... 75 ...... 98.73 98.57 98.53 112.5...... 98.52 98.36 ...... 100 ...... 98.82 98.67 98.63 150...... 98.65 98.51 ...... 167 ...... 98.96 98.83 98.80 225...... 98.82 98.69 98.57 250 ...... 99.07 98.95 98.91 300...... 98.93 98.81 98.69 333 ...... 99.14 99.03 98.99 500...... 99.09 98.99 98.89 500 ...... 99.22 99.12 99.09 750...... 99.21 99.12 99.02 667 ...... 99.27 99.18 99.15 1000...... 99.28 99.20 99.11 833 ...... 99.31 99.23 99.20 1500...... 99.37 99.30 99.21 2000 ...... 99.43 99.36 99.28 2500 ...... 99.47 99.41 99.33 * BIL means basic impulse insulation level. Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE Test Method for Measuring the Energy Consumption of Distribution Transformers under Appendix A to Subpart K of 10 CFR part 431.

(d) Mining Distribution Transformers. the Energy Policy and Conservation Act, as Energy. The NOPR proposed Trial Standard [Reserved] amended (ECPA), 42 U.S.C. Level 2 for medium-voltage, dry-type 6295(o)(2)(B)(i)(V), which requires the distribution transformers, which was arrived Appendix Attorney General to make a determination of at through a consensus agreement among a the impact of any lessening of competition diverse array of stakeholders as part of a Note: The following letter from the that is likely to result from the imposition of negotiated rulemaking, and Trial Standard Department of Justice will not appear in the proposed energy conservation standards. The Level 1 for medium-voltage, liquid-immersed Code of Federal Regulations. Attorney General’s responsibility for and low-voltage, dry-type distribution U.S. Department of Justice responding to requests from other transformers, after no consensus was reached Antitrust Division departments about the effect of a program on as part of a negotiated rulemaking. Our Joseph F. Wayland competition has been delegated to the review has focused on the standards DOE has Acting Assistant Attorney General Assistant Attorney General for the Antitrust proposed adopting. We have not determined RFK Main Justice Building Division in 28 CFR § 0.40(g). the impact on competition of more stringent 950 Pennsylvania Ave., NW In conducting its analysis the Antitrust standards than those proposed in the NOPR. Washington, D.C. 20530–0001 Division examines whether a proposed Based on this review, our conclusion is (202)514–2401/(202)616–2645 (Fax) standard may lessen competition, for that the proposed energy conservation September 24, 2012 example, by substantially limiting consumer standards for medium-voltage, dry-type and Eric J. Fygi choice, by placing certain manufacturers at liquid-immersed distribution transformers, as Deputy General Counsel an unjustified competitive disadvantage, or well as low-voltage, dry-type distribution Department of Energy by inducing avoidable inefficiencies in transformers, are unlikely to have a Washington, DC 20585 production or distribution of particular significant adverse impact on competition. In Dear Deputy General Counsel Fygi: products. A lessening of competition could reaching our conclusion, we note that the I am responding to your August 16, 2012 result in higher prices to manufacturers and proposed energy standards for medium- letter seeking the views of the Attorney consumers, and perhaps thwart the intent of voltage, dry-type distribution transformers General about the potential impact on the revised standards by inducing were arrived at through a consensus competition of proposed energy conservation substitution to less efficient products. agreement among a diverse array of standards for certain types of distribution We have reviewed the proposed standards stakeholders. transformers, namely medium-voltage, dry- contained in the Notice of Proposed Sincerely, type and liquid-immersed distribution Rulemaking (77 Fed. Reg. 7282, February 10, Joseph F. Wayland transformers, as well as low-voltage, dry-type 2012) (NOPR). We have also reviewed distribution transformers. Your request was supplementary information submitted to the [FR Doc. 2013–08712 Filed 4–17–13; 8:45 am] submitted under Section 325(o)(2)(B)(i)(V) of Attorney General by the Department of BILLING CODE 6450–01–P

VerDate Mar<15>2010 19:23 Apr 17, 2013 Jkt 229001 PO 00000 Frm 00102 Fmt 4701 Sfmt 9990 E:\FR\FM\18APR2.SGM 18APR2 sroberts on DSK5SPTVN1PROD with RULES