Vol. 77 Friday, No. 28 February 10, 2012

Part III

Department of Energy

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

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DEPARTMENT OF ENERGY by contacting Ms. Edwards to initiate Technologies Program, EE–2J, 1000 the necessary procedures. In addition, Independence Avenue SW., 10 CFR Part 431 persons can attend the public meeting Washington, DC 20585–0121. [Docket Number EERE–2010–BT–STD– via Webinar. For more information, refer Telephone: (202) 586–8654. Email: 0048] to the Public Participation section near [email protected]. the end of this notice. Ami Grace-Tardy, U.S. Department of RIN 1904–AC04 Any comments submitted must Energy, Office of the General Counsel, Energy Conservation Program: Energy identify the NOPR for Energy GC–71, 1000 Independence Avenue Conservation Standards for Conservation Standards for Distribution SW., Washington, DC 20585–0121. Distribution Transformers Transformers, and provide docket Telephone: (202) 586–5709. Email: number EERE–2010–BT–STD–0048 [email protected]. AGENCY: Office of Energy Efficiency and and/or regulation identifier number SUPPLEMENTARY INFORMATION: Renewable Energy, Department of (RIN) number 1904–AC04. Comments Energy. may be submitted using any of the Table of Contents ACTION: Notice of proposed rulemaking following methods: I. Summary of the Proposed Rule and public meeting. 1. Federal eRulemaking Portal: A. Benefits and Costs to Consumers www.regulations.gov. Follow the B. Impact on Manufacturers SUMMARY: The Energy Policy and instructions for submitting comments. C. National Benefits Conservation Act of 1975 (EPCA), as 2. Email: DistributionTransformers- II. Introduction amended, prescribes energy [email protected]. Include the A. Authority B. Background conservation standards for various docket number and/or RIN in the consumer products and certain 1. Current Standards subject line of the message. 2. History of Standards Rulemaking for commercial and industrial equipment, 3. Mail: Ms. Brenda Edwards, U.S. Distribution Transformers including low-voltage dry-type Department of Energy, Building III. General Discussion distribution transformers, and directs Technologies Program, Mailstop EE–2J, A. Test Procedures the U.S. Department of Energy (DOE) to 1000 Independence Avenue SW., 1. General prescribe standards for various other Washington, DC 20585–0121. If 2. Multiple kVA Ratings products and equipment, including possible, please submit all items on a 3. Dual/Multiple-Voltage Basic Impulse other types of distribution transformers. CD. It is not necessary to include Level 4. Dual/Multiple-Voltage Primary EPCA also requires DOE to determine printed copies. whether more-stringent, amended Windings 4. Hand Delivery/Courier: Ms. Brenda 5. Dual/Multiple-Voltage Secondary standards would be technologically Edwards, U.S. Department of Energy, Windings feasible and economically justified, and Building Technologies Program, 950 6. Loading would save a significant amount of L’Enfant Plaza SW., Suite 600, B. Technological Feasibility energy. In this notice, DOE proposes Washington, DC 20024. Telephone: 1. General amended energy conservation standards (202) 586–2945. If possible, please 2. Maximum Technologically Feasible for distribution transformers. The notice submit all items on a CD, in which case Levels also announces a public meeting to it is not necessary to include printed C. Energy Savings 1. Determination of Savings receive comment on these proposed copies. standards and associated analyses and 2. Significance of Savings Written comments regarding the D. Economic Justification results. burden-hour estimates or other aspects 1. Specific Criteria DATES: DOE will hold a public meeting of the collection-of-information a. Economic Impact on Manufacturers and on February 23, 2012, from 9 a.m. to requirements contained in this proposed Consumers 1 p.m., in Washington, DC. The meeting rule may be submitted to Office of b. Life-Cycle Costs will also be broadcast as a Webinar. See Energy Efficiency and Renewable c. Energy Savings section VII Public Participation for Energy through the methods listed d. Lessening of Utility or Performance of Products Webinar registration information, above and by email to _ _ e. Impact of Any Lessening of Competition participant instructions, and Chad S [email protected]. f. Need for National Energy Conservation information about the capabilities For detailed instructions on g. Other Factors available to Webinar participants. submitting comments and additional 2. Rebuttable Presumption DOE will accept comments, data, and information on the rulemaking process, IV. Methodology and Discussion of Related information regarding this notice of see section VII of this document (Public Comments proposed rulemaking (NOPR) before and Participation). A. Market and Technology Assessment after the public meeting, but no later Docket: The docket is available for 1. Scope of Coverage than April 10, 2012. See section VII review at www.regulations.gov, a. Definitions Public Participation for details. including Federal Register notices, b. Underground Mining Transformer Coverage ADDRESSES: The public meeting will be framework documents, public meeting c. Low-Voltage Dry-Type Distribution held at the U.S. Department of Energy, attendee lists and transcripts, Transformers Forrestal Building, Room 8E–089, 1000 comments, and other supporting d. Negotiating Committee Discussion of Independence Avenue SW., documents/materials. A link to the Scope Washington, DC 20585. To attend, docket Web page can be found at: http:// 2. Equipment Classes please notify Ms. Brenda Edwards at www.regulations.gov/ a. Less-Flammable Liquid-Immersed (202) 586–2945. Please note that foreign #!docketDetail;rpp=10;po=0;D=EERE- Transformers 2010-BT-STD-0048. b. Pole- and Pad-Mounted Liquid- nationals visiting DOE Headquarters are Immersed Distribution Transformers subject to advance security screening FOR FURTHER INFORMATION CONTACT: c. BIL Ratings in Liquid-Immersed procedures. Any foreign national James Raba, U.S. Department of Energy, Distribution Transformers wishing to participate in the meeting Office of Energy Efficiency and 3. Technology Options should advise DOE as soon as possible Renewable Energy, Building a. Core Deactivation

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b. Symmetric Core c. Current Approach and Key Assumptions E. Review Under Executive Order 13132 c. Intellectual Property 2. Valuation of Other Emissions F. Review Under Executive Order 12988 B. Screening Analysis Reductions G. Review Under the Unfunded Mandates 1. Nanotechnology Composites N. Discussion of Other Comments Reform Act of 1995 C. Engineering Analysis 1. Trial Standard Levels H. Review Under the Treasury and General 1. Engineering Analysis Methodology 2. Proposed Standards Government Appropriations Act, 1999 2. Representative Units 3. Alternative Methods I. Review Under Executive Order 12630 3. Design Option Combinations 4. Labeling J. Review Under the Treasury and General 4. A and B Loss Value Inputs 5. Imported Units Government Appropriations Act, 2001 5. Materials Prices V. Analytical Results and Conclusions K. Review Under Executive Order 13211 6. Markups A. Trial Standard Levels L. Review Under the Information Quality a. Factory Overhead B. Economic Justification and Energy Bulletin for Peer Review b. Labor Costs Savings VII. Public Participation c. Shipping Costs 1. Economic Impacts on Customers A. Attendance at the Public Meeting 7. Baseline Efficiency and Efficiency Levels a. Life-Cycle Cost and Payback Period B. Procedure for Submitting Prepared 8. Scaling Methodology b. Customer Subgroup Analysis General Statements for Distribution 9. Material Availability c. Rebuttable-Presumption Payback C. Conduct of the Public Meeting 10. Primary Voltage Sensitivities 2. Economic Impact on Manufacturers D. Submission of Comments 11. Impedance a. Industry Cash-Flow Analysis Results E. Issues on Which DOE Seeks Comment 12. Size and Weight b. Impacts on Employment VIII. Approval of the Office of the Secretary D. Markups Analysis c. Impacts on Manufacturing Capacity I. Summary of the Proposed Rule E. Energy Use Analysis d. Impacts on Subgroups of Manufacturers F. Life-Cycle Cost and Payback Period e. Cumulative Regulatory Burden Title III, Part B of the Energy Policy Analysis 3. National Impact Analysis and Conservation Act of 1975 (EPCA or 1. Modeling Transformer Purchase a. Significance of Energy Savings the Act), Public Law 94–163 (42 U.S.C. Decision b. Net Present Value of Customer Costs and 6291–6309, as codified), established the 2. Inputs Affecting Installed Cost Benefits a. Equipment Costs Energy Conservation Program for c. Indirect Impacts on Employment ‘‘Consumer Products Other Than b. Installation Costs 4. Impact on Utility or Performance of 3. Inputs Affecting Operating Costs Equipment Automobiles.’’ Part C of Title III of a. Transformer Loading 5. Impact of Any Lessening of Competition EPCA (42 U.S.C. 6311–6317) established b. Load Growth Trends 6. Need of the Nation to Conserve Energy a similar program for ‘‘Certain Industrial c. Electricity Costs 7. Summary of National Economic Impacts Equipment,’’ including distribution d. Electricity Price Trends 8. Other Factors transformers.1 Pursuant to EPCA, any e. Standards Compliance Date C. Proposed Standards f. Discount Rates new or amended energy conservation 1. Benefits and Burdens of Trial Standard g. Lifetime standard that the Department of Energy Levels Considered for Liquid-Immersed h. Base Case Efficiency (DOE) prescribes for certain equipment, Distribution Transformers G. National Impact Analysis—National such as distribution transformers, shall Energy Savings and Net Present Value 2. Benefits and Burdens of Trial Standard be designed to achieve the maximum Levels Considered for Low-Voltage, Dry- Analysis improvement in energy efficiency that is 1. Shipments Type Distribution Transformers 3. Benefits and Burdens of Trial Standard technologically feasible and 2. Efficiency Trends economically justified. (42 U.S.C. 3. Equipment Price Forecast Levels Considered for Medium-Voltage, 4. Discount Rate Dry-Type Distribution Transformers 6295(o)(2)(A) and 6316(a)). 5. Energy Used in Manufacturing 4. Summary of Benefits and Costs Furthermore, the new or amended Transformers (Annualized) of the Proposed Standards standard must result in a significant H. Customer Subgroup Analysis VI. Procedural Issues and Regulatory Review conservation of energy. (42 U.S.C. I. Manufacturer Impact Analysis A. Review Under Executive Orders 12866 6295(o)(3)(B) and 6316(a)). In 1. Overview and 13563 accordance with these and other 2. Government Regulatory Impact Model B. Review Under the Regulatory Flexibility Act statutory provisions discussed in this 3. GRIM Key Inputs notice, DOE proposes amended energy a. Manufacturer Production Costs 1. Description and Estimated Number of b. Base-Case Shipments Forecast Small Entities Regulated conservation standards for distribution c. Product and Capital Conversion Costs a. Methodology for Estimating the Number transformers. The proposed standards d. Standards Case Shipments of Small Entities are summarized in the following tables: e. Markup Scenarios b. Manufacturer Participation Table I.1, through Table I.3 that describe 4. Discussion of Comments c. Distribution Transformer Industry the covered equipment classes and a. Material Availability Structure and Nature of Competition proposed trial standard levels (TSLs), b. Symmetric Core Technology d. Comparison Between Large and Small Table I.4 that shows the mapping of TSL Entities c. Patents Related to Amorphous Steel to energy efficiency levels (ELs),2 and Production 2. Description and Estimate of Compliance 5. Manufacturer Interviews Requirements Table I.5 through Table I.8 which show a. Conversion Costs and Stranded Assets a. Summary of Compliance Impacts the proposed standard in terms of b. Shortage of Materials 3. Duplication, Overlap, and Conflict With minimum electrical efficiency. These c. Compliance Other Rules and Regulations proposed standards, if adopted, would d. Effective Date 4. Significant Alternatives to the Proposed apply to all covered distribution e. Emergency Situations Rule transformers listed in the tables and J. Employment Impact Analysis 5. Significant Issues Raised by Public manufactured in, or imported into, the K. Utility Impact Analysis Comments 6. Steps DOE Has Taken To Minimize the L. Emissions Analysis 1 Economic Impact on Small For editorial reasons, upon codification in the M. Monetizing Carbon Dioxide and Other U.S. Code, Parts B and C were redesignated as Parts Emissions Impacts Manufacturers A and A–1, respectively. 1. Social Cost of Carbon C. Review Under the Paperwork Reduction 2 A detailed description of the mapping of trial a. Monetizing Carbon Dioxide Emissions Act standard level to energy efficiency levels can be b. Social Cost of Carbon Values Used in D. Review Under the National found in the Technical Support Document, chapter Past Regulatory Analyses Environmental Policy Act of 1969 10 section 10.2.2.3 pg 10–10.

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United States on or after January 1, kVA ratings shown in the tables shall the kVA ratings immediately above and 2016. As discussed in section IV.C.8 of meet a minimum energy efficiency level below that rating.3 this notice, any distribution transformer calculated by a linear interpolation of with a kVA rating falling between the the minimum efficiency requirements of

TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS (COMPLIANCE STARTING JANUARY 1, 2016)

Phase Proposed Equipment class Design line Type count BIL TSL

1 ...... 1, 2 and 3 ...... Liquid-immersed ...... 1 Any ...... 1 2 ...... 4 and 5 ...... Liquid-immersed ...... 3 Any ...... 1 Note: BIL means ‘‘basic impulse insulation level.’’

TABLE I.2—PROPOSED ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS (COMPLIANCE STARTING JANUARY 1, 2016)

Phase Proposed Equipment class Design line Type count BIL TSL

3 ...... 6 ...... Low-voltage, dry-type ...... 1 ≤10 kV 1 4 ...... 7 and 8 ...... Low-voltage, dry-type ...... 3 ≤10 kV 1 Note: BIL means ‘‘basic impulse insulation level.’’

TABLE I.3—PROPOSED ENERGY CONSERVATION STANDARDS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS (COMPLIANCE STARTING JANUARY 1, 2016)

Phase Proposed 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 Note: 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 PROPOSED ENERGY CONSERVATION STANDARD

Proposed Energy efficiency Type Design line Phase count TSL level

Liquid-immersed ...... 1 1 1 1 2 1 ...... Base 3 1 ...... 1 4 3 ...... 1 5 3 ...... 1 Low-voltage, dry-type ...... 6 1 1 Base 7 3 ...... 2 8 3 ...... 2 Medium-voltage, dry-type ...... 9 3 2 1 10 3 ...... 2 11 3 ...... 1 12 3 ...... 2 13A 3 ...... 1 13B 3 ...... 2

3 kVA is an abbreviation for kilovolt-ampere, classify transformers. A transformer’s kVA rating represents its output power when it is fully loaded which is a capacity metric used by industry to (i.e., 100 percent).

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TABLE I.5—PROPOSED ELECTRICAL EFFICIENCIES FOR ALL LIQUID-IMMERSED DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES (COMPLIANCE STARTING JANUARY 1, 2016)

Standards by kVA and equipment class Equipment class 1 Equipment class 2 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 1500 ...... 99.48

TABLE I.6—PROPOSED ELECTRICAL EFFICIENCIES FOR ALL LOW-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES (COMPLIANCE STARTING JANUARY 1, 2016)

Standards by kVA and equipment class Equipment class 3 Equipment class 4 kVA % kVA %

15 ...... 97.73 15 ...... 97.44 25 ...... 98.00 30 ...... 97.95 37.5 ...... 98.20 45 ...... 98.20 50 ...... 98.31 75 ...... 98.47 75 ...... 98.50 112.5 ...... 98.66 100 ...... 98.60 150 ...... 98.78 167 ...... 98.75 225 ...... 98.92 250 ...... 98.87 300 ...... 99.02 333 ...... 98.94 500 ...... 99.17 750 ...... 99.27 1000 ...... 99.34

TABLE I.7—PROPOSED ELECTRICAL EFFICIENCIES FOR ALL MEDIUM-VOLTAGE DRY-TYPE DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES (COMPLIANCE STARTING JANUARY 1, 2016)

Standards by kVA and equipment class Equipment class 5 Equipment class 6 Equipment class 7 Equipment class 8 Equipment class 9 Equipment class 10 kVA % kVA % kVA % kVA % kVA % kVA %

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 1000 ...... 99.28 667 ...... 99.18 1000 ...... 99.20 667 ...... 99.15 1000 ...... 99.11 833 ...... 99.31 1500 ...... 99.37 833 ...... 99.23 1500 ...... 99.30 833 ...... 99.20 1500 ...... 99.21 2000 ...... 99.43 2000 ...... 99.36 2000 ...... 99.28 2500 ...... 99.47 2500 ...... 99.41 2500 ...... 99.33

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A. Benefits and Costs to Consumers 4 TABLE I.8—IMPACTS OF PROPOSED 2045, in 2010$, ranges from $2.9 billion STANDARDS ON CUSTOMERS OF DIS- (at a 7-percent discount rate) to $12.2 Table I.8 presents DOE’s evaluation of TRIBUTION TRANSFORMERS—Contin- billion (at a 3-percent discount rate) the economic impacts of the proposed ued over 30 years (2016–2045). This NPV standards on customers of distribution expresses the estimated total value of transformers, as measured by the Average Median pay- future operating cost savings minus the average life-cycle cost (LCC) savings and Design Line LCC sav- back period estimated increased equipment costs for the median payback period (PBP). DOE ings (2010$) (years) distribution transformers purchased in measures the impacts of standards 2016–2045, discounted to 2010. 13B ...... 4,709 12.5 relative to a base case that reflects likely In addition, the proposed standards trends in the distribution transformer * No consumers are impacted by the pro- would have significant environmental market in the absence of amended posed standard because no change from the benefits. The energy savings are minimum efficiency standard is proposed for standards. The base case predominantly design lines 2 and 6. expected to result in cumulative consists of products at the baseline greenhouse gas emission reductions of efficiency levels evaluated for each B. Impact on Manufacturers 122.1 million metric tons (Mt) 5 of representative unit, which correspond The industry net present value (INPV) carbon dioxide (CO2) from 2016–2045. to the existing energy conservation is the sum of the discounted cash flows During this period, the proposed standard level of efficiency for to the industry from the base year standards are expected to result in distribution transformers established through the end of the analysis period emissions reductions of 99.7 thousand either in DOE’s 2007 rulemaking or by (2011 through 2045). Using a real tons of nitrogen oxides (NOX) and 0.819 EPACT 2005. The average LCC savings discount rate of 7.4 percent for liquid- tons of mercury (Hg).6 are positive for all but two of the design immersed distribution transformers, The value of the CO2 reductions is lines, for which customers are not 9 percent for medium-voltage dry-type calculated using a range of values per impacted by the proposed standards. distribution transformers, and 11.1 metric ton of CO2 (otherwise known as (Throughout this document, percent for low-voltage dry- type the Social Cost of Carbon, or SCC) ‘‘distribution transformers’’ are also distribution transformers, DOE developed by a recent interagency estimates that the industry net present referred to as simply ‘‘transformers.’’) process. The derivation of the SCC value (INPV) for manufacturers of values is discussed in section IV.M. liquid-immersed, medium-voltage dry- TABLE I.8—IMPACTS OF PROPOSED DOE estimates the net present monetary type and low-voltage dry-type value of the CO emissions reduction is STANDARDS ON CUSTOMERS OF DIS- 2 distribution transformers is $625 between $0.71 and $12.5 billion, TRIBUTION TRANSFORMERS million, $91 million, and $220 million, expressed in 2010$ and discounted to respectively, in 2011$. Under the 2010. DOE also estimates the net present Average Median pay- proposed standards, DOE expects that Design Line LCC sav- back period monetary value of the NOX emissions ings (2010$) (years) liquid-immersed manufacturers may reduction, expressed in 2010$ and lose up to 6.3 percent of their INPV, discounted to 2010, is between $0.069 Liquid-Immersed which is approximately $39.6 million; billion at a 7-percent discount rate and medium-voltage manufacturers may lose $0.210 billion at a 3-percent discount 1 ...... 36 20.2 up to 7.1 percent of their INPV, which rate.7 is approximately $6.5 million; and low- 2 ...... * N/A * N/A Table I.9 summarizes the national voltage dry-type manufacturers may lose 3 ...... 2,413 6.3 economic costs and benefits expected to up to 7.7 percent of their INPV, which 4 ...... 862 5.0 result from today’s proposed standards 5 ...... 7,787 4.0 is approximately $16.8 million. for distribution transformers. Additionally, based on DOE’s Low-Voltage, Dry-Type interviews with the manufacturers of distribution transformers, DOE does not 5 A metric ton is equivalent to 1.1 short tons. A 6 ...... * N/A * N/A short ton is equal to 2,000 pounds. Results for NOX expect any plant closings or significant and Hg are presented in short tons (referred to here 7 ...... 1,714 4.5 loss of employment. as simply ‘‘tons.’’) 8 ...... 2,476 8.4 6 DOE calculates emissions reductions relative to C. National Benefits the most recent version of the Annual Energy Medium-Voltage, Dry-Type DOE’s analyses indicate that the Outlook (AEO) Reference case forecast. This proposed standards would save a forecast accounts for emissions reductions from in- 9 ...... 849 2.6 place regulations, including the Clean Air Interstate significant amount of energy—an 10 ...... 4,791 8.8 Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not estimated 1.58 quads over 30 years the Clean Air Mercury Rule (CAMR, 70 FR 28606 11 ...... 1,043 10.7 (2016–2045). In addition, DOE expects (May 18, 2005)). Subsequent regulations, including 12 ...... 6,934 9.0 the energy savings from the proposed the Cross-State Air Pollution rule issued on July 6, 13A ...... 25 16.5 2011, do not appear in the AEO forecast at this standards to be equivalent to the energy time. output from 2.40 gigawatts (GW) of 7 DOE is aware of multiple agency efforts to 4 For the purposes of this document, the generating capacity by 2045. determine the appropriate range of values used in ‘‘consumers’’ of distribution transformers are The cumulative national net present evaluating the potential economic benefits of referred to as ‘‘customers.’’ Customers refer to value (NPV) of total consumer costs and reduced Hg emissions. DOE has decided to await electric utilities in the case of liquid-immersed further guidance regarding consistent valuation and transformers, and to utilities and building owners savings of the proposed standards for reporting of Hg emissions before it once again in the case of dry-type transformers. distribution transformers sold in 2016– monetizes Hg in its rulemakings.

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

Present value Discount rate Category billion 2010$ (percent)

Benefits: Operating Cost Savings ...... 5.58 7 17.44 3 CO2 Reduction Monetized Value (at $4.9/t) * ...... 0.71 5 CO2 Reduction Monetized Value (at $22.3/t) * ...... 4.13 3 CO2 Reduction Monetized Value (at $36.5/t) * ...... 7.20 2.5 CO2 Reduction Monetized Value (at $67.6/t) * ...... 12.54 3 NOX Reduction Monetized Value (at $2,537/ton) * ...... 0.069 7 0.210 3

Total Benefits** ...... 9.78 7 21.7 3 Costs: Incremental Installed Costs ...... 2.67 7 5.21 3 Net Benefits: Including CO2 and NOX ...... 7.10 7 16.5 3

* The CO2 values represent global monetized values of the SCC in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t rep- resents the 95th percentile of the SCC distribution calculated using a 3% discount rate. A metric ton is equivalent to 1.1 short tons. A short ton is equal to 2,000 pounds. Results for NOX are presented in short tons (referred to here as simply ‘‘tons.’’) ** Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, and the average of the low and high NOX values used in DOE’s analysis.

The benefits and costs of today’s of market transactions while the value used a 3-percent discount rate along proposed standards, for equipment sold of CO2 reductions is based on a global with the SCC series corresponding to a in 2016–2045, can also be expressed in value. Second, the assessments of value of $22.3/metric ton in 2010, the terms of annualized values. The operating cost savings and CO2 savings cost of the standards proposed in annualized monetary values are the sum are performed with different methods today’s proposed standards is $302 of: (1) The annualized national that use different time frames for million per year in increased equipment economic value of the benefits from analysis. The national operating cost costs. The benefits are $631 million per consumer operation of equipment that savings is measured for the lifetime of year in reduced equipment operating meets the proposed standards distribution transformers shipped in costs, $244 million in CO2 reductions, (consisting primarily of operating cost 2016–2045. The SCC values, on the and $7.78 million in reduced NOX savings from using less energy minus other hand, reflect the present value of emissions. In this case, the net benefit increases in equipment purchase and some future climate-related impacts amounts to $581 million per year. Using installation costs, which is another way resulting from the emission of one a 3-percent discount rate for all benefits of representing consumer NPV), and (2) metric ton of carbon dioxide in each and costs and the SCC series the annualized monetary value of the year. These impacts continue well corresponding to a value of $22.3/metric benefits of emission reductions, beyond 2100. ton in 2010, the cost of the standards 8 including CO2 emission reductions. Estimates of annualized benefits and proposed in today’s rule is $308 million Although combining the values of costs of today’s proposed standards are per year in increased equipment costs. operating savings and CO2 emission shown in Table I.10. (All monetary The benefits are $1,026 million per year reductions provides a useful values below are expressed in 2010$.) in reduced operating costs, $244 million perspective, two issues should be The results under the primary estimate in CO2 reductions, and $12.4 million in considered. First, the national operating are as follows. Using a 7-percent reduced NOX emissions. In this case, the savings are domestic U.S. consumer discount rate for benefits and costs other net benefit amounts to $975 million per monetary savings that occur as a result than CO2 reduction, for which DOE year.

TABLE I.10—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR DISTRIBUTION TRANSFORMERS

Monetized (million 2010$/year) Discount rate Low net Primary esti- benefits esti- High net ben- mate * mate * efits estimate *

Benefits:

8 DOE used a two-step calculation process to rates of 3 and 7 percent for all costs and benefits value. The fixed annual payment is the annualized convert the time-series of costs and benefits into except for the value of CO2 reductions. For the value. Although DOE calculated annualized values, annualized values. First, DOE calculated a present latter, DOE used a range of discount rates, as shown this does not imply that the time-series of cost and value in 2011, the year used for discounting the in Table I.9. From the present value, DOE then benefits from which the annualized values were NPV of total consumer costs and savings, for the calculated the fixed annual payment over a 30-year determined would be a steady stream of payments. time-series of costs and benefits using discount period, starting in 2011 that yields the same present

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TABLE I.10—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR DISTRIBUTION TRANSFORMERS— Continued

Monetized (million 2010$/year) Discount rate Low net Primary esti- benefits esti- High net ben- mate * mate * efits estimate *

Operating Cost Savings ...... 7% ...... 631 ...... 594 ...... 659. 3% ...... 1,026 ...... 950 ...... 1,075. CO2 Reduction at $4.9/t** ...... 5% ...... 58.6 ...... 58.6 ...... 58.6. CO2 Reduction at $22.3/t** ...... 3% ...... 244 ...... 244 ...... 244. CO2 Reduction at $36.5/t** ...... 2.5% ...... 389 ...... 389 ...... 389. CO2 Reduction at $67.6/t** ...... 3% ...... 742 ...... 742 ...... 742. NOX Reduction at $2,537/ton** ...... 7% ...... 7.78 ...... 7.78 ...... 7.78. 3% ...... 12.4 ...... 12.4 ...... 12.4.

Total † ...... 7% plus CO2 range ...... 697 to 1380 .. 660 to 1343 .. 726 to 1409. 7% ...... 883 ...... 846 ...... 911. 3% plus CO2 range ...... 1097 to 1780 1021 to 1704 1146 to 1829. 3% ...... 1,283 ...... 1,207 ...... 1,331. Costs: Incremental Product Costs ...... 7% ...... 302 ...... 338 ...... 285. 3% ...... 308 ...... 351 ...... 289. Total Net Benefits: Total † ...... 7% plus CO2 range ...... 400 to 1083 .. 327 to 1010 .. 445 to 1128. 7% ...... 581 ...... 507 ...... 626. 3% plus CO2 range ...... 789 to 1472 .. 670 to 1353 .. 857 to 1540. 3% ...... 975 ...... 855 ...... 1,043. * The Primary, Low Net Benefits, and High Net Benefits Estimates utilize forecasts of energy prices from the AEO 2011 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 values (in 2010$) of the social cost of CO2 emissions in 2010 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 $67.6 per metric ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2010$) 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 SCC value calculated at a 3% discount rate, which is $22.3/metric ton in 2010 (in 2010$). In the rows labeled as ‘‘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.

DOE has tentatively concluded that this notice and related information transformers.9 The Energy Policy Act of the proposed standards represent the collected and analyzed during the 1992 (EPACT 1992), Public Law 102– maximum improvement in energy course of this rulemaking effort, DOE 486, amended EPCA and directed the efficiency that is technologically may adopt energy efficiency levels Department to prescribe energy feasible and economically justified, and presented in this notice that are either conservation standards for distribution would result in the significant higher or lower than the proposed transformers. (42 U.S.C. 6317(a)) The conservation of energy. DOE further standards, or some combination of Energy Policy Act of 2005 (EPACT notes that equipment achieving these energy efficiency level(s) that 2005), Public Law 109–25, amended proposed standard levels are already incorporate the proposed standards in EPCA to establish energy conservation commercially available for at least some, part. standards for low-voltage, dry-type if not most, equipment classes covered distribution transformers.10 (42 U.S.C. by today’s proposal. Based on the II. Introduction 6295(y)) Under 42 U.S.C. analyses described above, DOE has The following section briefly 6313(a)(6)(C)(i), DOE must review tentatively concluded that the benefits discusses the statutory authority energy conservation standards for of the proposed standards to the Nation underlying today’s proposal, as well as commercial and industrial equipment (energy savings, positive NPV of some of the relevant historical and amend the standards as needed no consumer benefits, consumer LCC background related to the establishment later than six years from the issuance of savings, and emission reductions) of energy conservation standards for a final rule establishing or amending a would outweigh the burdens (loss of distribution transformers. standard for a covered product. A final INPV for manufacturers and LCC rule establishing any amended A. Authority increases for some consumers). standards based on such notice of DOE also considered more stringent Title III, Part B of the Energy Policy energy efficiency levels as trial standard and Conservation Act of 1975 (EPCA or 9 For editorial reasons, upon codification in the levels, and is still considering them in the Act), Public Law 94–163 (42 U.S.C. U.S. Code, Parts B and C were redesignated as Parts 6291–6309, as codified), established the A and A–1, respectively this rulemaking. However, DOE has 10 EPACT 2005 established that the efficiency of tentatively concluded that, in some Energy Conservation Program for a low-voltage dry-type distribution transformer cases, the potential burdens of the more ‘‘Consumer Products Other Than manufactured on or after January 1, 2007 shall be stringent energy efficiency levels would Automobiles.’’ Part C of Title III of the Class I Efficiency Levels for distribution EPCA (42 U.S.C. 6311–6317) established transformers specified in Table 4–2 of the ‘‘Guide outweigh the projected benefits. Based for Determining Energy Efficiency for Distribution on consideration of the public a similar program for ‘‘Certain Industrial Transformers’’ published by the National Electrical comments DOE receives in response to Equipment,’’ including distribution Manufacturers Association (NEMA TP 1–2002).

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proposed rulemaking (NOPR) must be must make this determination after Additionally, 42 U.S.C. 6295(q)(1), as completed within two years of receiving comments on the proposed applied to covered equipment via 42 publication of the NOPR. (42 U.S.C. standard, and by considering, to the U.S.C. 6316(a), specifies requirements 6313(a)(6)(C)(iii)(I)). greatest extent practicable, the following when promulgating a standard for a type DOE publishes today’s proposed rule seven factors: or class of covered equipment that has pursuant to Part C of Title III, which 1. The economic impact of the two or more subcategories. DOE must establishes an energy conservation standard on manufacturers and specify a different standard level than program for covered equipment that consumers of the equipment subject to that which applies generally to such consists essentially of four parts: (1) the standard; type or class of equipment for any group Testing; (2) labeling; (3) the 2. The savings in operating costs of covered equipment that has the same establishment of Federal energy throughout the estimated average life of function or intended use if DOE conservation standards; and (4) the covered equipment in the type (or determines that equipment within such compliance certification and class) compared to any increase in the group (A) consumes a different kind of enforcement procedures. For those price, initial charges, or maintenance energy from that consumed by other distribution transformers for which DOE expenses for the covered products that covered equipment within such type (or determines that energy conservation are likely to result from the imposition class); or (B) has a capacity or other standards are warranted, the DOE test of the standard; performance-related feature which other procedures must be the ‘‘Standard Test 3. The total projected amount of equipment within such type (or class) Method for Measuring the Energy energy, or as applicable, water, savings does not have and such feature justifies Consumption of Distribution likely to result directly from the a higher or lower standard. (42 U.S.C. Transformers’’ prescribed by the imposition of the standard; 6294(q)(1) and 6316(a)) In determining National Electrical Manufacturers 4. Any lessening of the utility or the whether a performance-related feature Association (NEMA TP 2–1998), subject performance of the covered equipment justifies a different standard for a group to review and revision by the Secretary likely to result from the imposition of of equipment, DOE must consider such in accordance with certain criteria and the standard; factors as the utility to the consumer of conditions. (42 U.S.C. 6293(b)(10), 5. The impact of any lessening of the feature and other factors DOE deems 6314(a)(2)–(3) and 6317(a)(1)) competition, as determined in writing appropriate. Id. Any rule prescribing Manufacturers of covered equipment by the Attorney General, that is likely to such a standard must include an must use the prescribed DOE test result from the imposition of the explanation of the basis on which such procedure as the basis for certifying to standard; higher or lower level was established. DOE that their equipment complies with 6. The need for national energy and (42 U.S.C. 6295(q)(2) and 6316(a)) the applicable energy conservation Federal energy conservation water conservation; and standards adopted under EPCA and requirements generally supersede State when making representations to the 7. Other factors the Secretary of laws or regulations concerning energy public regarding the energy use or Energy (Secretary) considers relevant. conservation testing, labeling, and efficiency of those types of equipment. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) standards. (42 U.S.C. 6297(a)–(c) and (42 U.S.C. 6314(d)) The DOE test EPCA, as codified, also contains what 6316(a)) DOE may, however, grant procedures for distribution transformers is known as an ‘‘anti-backsliding’’ waivers of Federal preemption for currently appear at title 10 of the Code provision, which prevents the Secretary particular State laws or regulations, in of Federal Regulations (CFR) part 431, from prescribing any amended standard accordance with the procedures and subpart K, appendix A. that either increases the maximum other provisions set forth under 42 DOE must follow specific statutory allowable energy use or decreases the U.S.C. 6297(d)). criteria for prescribing amended minimum required energy efficiency of DOE has also reviewed this regulation standards for covered equipment. As a covered product. (42 U.S.C. 6295(o)(1) pursuant to Executive Order (EO) 13563, indicated above, any amended standard and 6316(a)) Also, the Secretary may not issued on January 18, 2011 (76 FR 3281, for covered equipment must be designed prescribe an amended or new standard Jan. 21, 2011). EO 13563 is to achieve the maximum improvement if interested persons have established by supplemental to and explicitly reaffirms in energy efficiency that is a preponderance of the evidence that the principles, structures, and technologically feasible and the standard is likely to result in the definitions governing regulatory review economically justified. (42 U.S.C. unavailability in the United States of established in EO 12866. To the extent 6295(o)(2)(A) and 6316(a)) Furthermore, any covered product type (or class) of permitted by law, agencies are required DOE may not adopt any amended performance characteristics (including by EO 13563 to: (1) Propose or adopt a standard that would not result in the reliability), features, sizes, capacities, regulation only upon a reasoned significant conservation of energy. (42 and volumes that are substantially the determination that its benefits justify its U.S.C. 6295(o)(3) and 6316(a)) same as those generally available in the costs (recognizing that some benefits Moreover, DOE may not prescribe a United States. (42 U.S.C. 6295(o)(4) and and costs are difficult to quantify); (2) standard: (1) For certain equipment, 6316(a)) tailor regulations to impose the least including distribution transformers, if Further, EPCA, as codified, burden on society, consistent with no test procedure has been established establishes a rebuttable presumption obtaining regulatory objectives, taking for the equipment, or (2) if DOE that an energy conservation standard is into account, among other things, and to determines by rule that the proposed economically justified if the Secretary the extent practicable, the costs of standard is not technologically feasible finds that the additional cost to the cumulative regulations; (3) select, in or economically justified. (42 U.S.C. consumer of purchasing equipment choosing among alternative regulatory 6295(o)(3)(A)–(B) and 6316(a)) In complying with the energy conservation approaches, those approaches that deciding whether a proposed amended standard will be less than three times maximize net benefits (including standard is economically justified, DOE the value of the energy savings a potential economic, environmental, must determine whether the benefits of consumer will receive in the first year public health and safety, and other the standard exceed its burdens. (42 of using the equipment. (See 42 U.S.C. advantages; distributive impacts; and U.S.C. 6295(o)(2)(B)(i) and 6316(a)) DOE 6295(o)(2)(B)(iii) and 6316(a)) equity); (4) to the extent feasible, specify

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performance objectives, rather than anticipated present and future benefits permitted by law, benefits justify costs specifying the behavior or manner of and costs as accurately as possible. In its and that net benefits are maximized. compliance that regulated entities must guidance, the Office of Information and B. Background adopt; and (5) identify and assess Regulatory Affairs has emphasized that available alternatives to direct such techniques may include 1. Current Standards regulation, including providing identifying changing future compliance On August 8, 2005, the Energy Policy economic incentives to encourage the costs that might result from Act of 2005 (EPACT 2005) amended desired behavior, such as user fees or technological innovation or anticipated EPCA to establish energy conservation marketable permits, or providing behavioral changes. For the reasons standards for low-voltage, dry-type information upon which choices can be stated in the preamble, DOE believes distribution transformers (LVDTs).11 made by the public. that today’s notice of proposed (EPACT 2005, Section 135(c); 42 U.S.C. DOE emphasizes as well that EO rulemaking (NOPR) is consistent with 6295(y)) The standard levels for low- 13563 requires agencies to use the best these principles, including the voltage dry-type distribution available techniques to quantify requirement that, to the extent transformers appear in Table II.1.

TABLE II.1—FEDERAL ENERGY EFFICIENCY 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 1000 ...... 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 percent of nameplate load.

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

TABLE II.2—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 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. 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

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

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

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 Note: BIL means ‘‘basic impulse insulation level.’’ Note: All efficiency values are at 50 percent 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 69 FR 45376. DOE then held a webcast including several spreadsheets that Distribution Transformers on material it had published relating to remain available on DOE’s Web site.14 In a notice published on October 22, the ANOPR, followed by a public Some commenters asserted that DOE’s 1997 (62 FR 54809), DOE stated that it meeting on the ANOPR on September proposed standards might adversely had determined that energy 28, 2004. In August 2005, DOE issued a affect replacement of distribution conservation standards were warranted draft of certain of the analyses on which transformers in certain space- for electric distribution transformers, it planned to base the standards for constrained (e.g., vault) installations. In relying in part on two reports by DOE’s liquid-immersed and medium-voltage, response, DOE issued a notice of data Oak Ridge National Laboratory (ORNL). dry-type distribution transformers, availability and request for comments on this and another issue. 72 FR 6186 These reports—Determination Analysis along with documents that supported (Feb. 9, 2007) (the NODA). In the of Energy Conservation Standards for the draft analyses.13 DOE did this to NODA, DOE sought comment on Distribution Transformers, ORNL–6847 enable stakeholders to review the (1996) and Supplement to the whether it should include in the LCC analyses and make recommendations as analysis potential costs related to size ‘‘Determination Analysis,’’ ORNL–6847 to standard levels. (1997)—are available on the DOE Web constraints of distribution transformers site at: http://www.eere.energy.gov/ On April 27, 2006, DOE published its installed in vaults. DOE also outlined buildings/appliance_standards/ Final Rule on Test Procedures for different approaches as to how it might commercial/ Distribution Transformers. The rule: (1) account for additional installation costs distribution_transformers.html. In 2000, Established the procedure for sampling for these space-constrained applications DOE issued its Framework Document and testing distribution transformers so and requested comments on linking for Distribution Transformer Energy that manufacturers can make energy efficiency levels for three-phase Conservation Standards Rulemaking, representations as to their efficiency, as liquid-immersed units with those of describing its proposed approach for well as establish that they comply with single-phase units. Finally, DOE developing standards for distribution Federal standards; and (2) contained addressed how it was inclined to transformers, and held a public meeting enforcement provisions, outlining the consider a final standard that is based to discuss the Framework Document. procedure the Department would follow on energy efficiency levels derived from The document is available on the above- should it initiate an enforcement action trial standard level (TSL) 2 and TSL 3 referenced DOE Web site. Stakeholders against a manufacturer. 71 FR 24972 for three-phase units and TSLs 2, 3 and also submitted written comments on the (codified at 10 CFR 431.198). 4 for single-phase units. 72 FR 6189. Based on comments on the 2006 NOPR, document, addressing a range of issues. On August 4, 2006, DOE published a Subsequently, DOE issued draft and the NODA, DOE created new TSLs NOPR in which it proposed energy reports as to certain of the key analyses to address the treatment of three-phase contemplated by the Framework conservation standards for distribution units and single-phase units. In October Document.12 It received comments from transformers (the 2006 NOPR). 71 FR 2007, DOE published a final rule that stakeholders on these draft reports and, 44355. Concurrently, DOE also issued a created the current energy conservation on July 29, 2004, published an advance technical support document (TSD) that standards for liquid-immersed and notice of proposed rulemaking (ANOPR) incorporated the analyses it had medium-voltage dry-type distribution for distribution transformer standards. performed for the proposed rule, transformers. 72 FR 58190 (October 12,

12 Copies of all the draft analyses published 13 Copies of the four draft NOPR analyses 14 The spreadsheets developed for this before the ANOPR are available on DOE’s Web site: published in August 2005 are available on DOE’s rulemaking proceeding are available at: http://www. http://www.eere.energy.gov/buildings/appliance_ Web site: http://www.eere.energy.gov/buildings/ eere.energy.gov/buildings/appliance_standards/ standards/commercial/distribution_transformers_ appliance_standards/commercial/distribution_ commercial/distribution_transformers_draft_ draft_analysis.html. transformers_draft_analysis_nopr.html. analysis_nopr.html.

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2007) (the 2007 Final Rule) (codified at because it believes that many of the • Metglas, Inc. 10 CFR 431.196(b)–(c)). same methodologies and data sources • National Electrical Manufacturers The above paragraphs summarize that were used during the 2007 Association development of the 2007 Final Rule. rulemaking rule remain valid. On April • National Resources Defense Council • The preamble to the rule included 5, 2011, DOE held a public meeting to National Rural Electric Cooperative additional, detailed background discuss the preliminary TSD. Association • information on the history of that Representatives of manufacturers, trade Northwest Power and Conservation rulemaking. 72 FR 58194–96. Council associations, electric utilities, energy • After the publication of the 2007 Final conservation organizations, Federal Pacific Gas and Electric Company • Progress Energy Rule, certain parties filed petitions for regulators, and other interested parties • Prolec GE review in the United States Courts of attended this meeting. In addition, other • Appeals for the Second and Ninth U.S. Department of Energy interested parties submitted written The ERAC subcommittee for medium- Circuits, challenging the rule. Several comments about the TSD addressing a additional parties were permitted to voltage liquid-immersed and dry-type range of issues. These comments are distribution transformers held meetings intervene in support of these petitions. discussed in the following sections of (All of these parties are referred to on September 15 through 16, 2011, the NOPR. October 12 through 13, 2011, November below collectively as ‘‘petitioners.’’) The On July 29, 2011, DOE published in petitioners alleged that, in developing 8 through 9, 2011, and November 30 the Federal Register a notice of intent through December 1, 2011; the ERAC its energy conservation standards for to establish a subcommittee under the distribution transformers, DOE did not subcommittee also held public webinars Energy Efficiency and Renewable on November 17 and December 14. comply with certain applicable Energy Advisory Committee (ERAC), in provisions of EPCA and of the National During the course of the September 15, accordance with the Federal Advisory 2011, meeting, the subcommittee agreed Environmental Policy Act (NEPA), as Committee Act and the Negotiated amended (42 U.S.C. 4321 et seq.) DOE to its rules of procedure, ratified its Rulemaking Act, to negotiate proposed schedule of the remaining meetings, and and the petitioners subsequently Federal standards for the energy entered into a settlement agreement to defined the procedural meaning of efficiency of medium-voltage dry-type consensus. The subcommittee defined resolve the petitions. The settlement and liquid immersed distribution agreement outlined an expedited consensus as unanimous agreement transformers. 76 FR 45471. Stakeholders from all present subcommittee timeline for the Department to strongly supported a consensual determine whether to amend the energy members. Subcommittee members were rulemaking effort. DOE believed that, in allowed to abstain from voting for an conservation standards for liquid- this case, a negotiated rulemaking immersed and medium-voltage dry-type efficiency level; their votes counted would result in a better informed NOPR neither toward nor against the distribution transformers. Under the and would minimize any potential original settlement agreement, DOE was consensus. negative impact of the NOPR. On DOE presented its draft engineering, required to publish by October 1, 2011, August 12, 2011, DOE published in the either a determination that the life-cycle cost and national impacts Federal Register a similar notice of analysis and results. During the standards for these distribution intent to negotiate proposed Federal transformers do not need to be amended meetings of October 12 through 13, standards for the energy efficiency of or a NOPR that includes any new 2011, DOE presented its revised analysis low-voltage dry-type distribution proposed standards and that meets all and heard from subcommittee members transformers. 76 FR 50148. The purpose applicable requirements of EPCA and on a number of topics. During the of the subcommittee was to discuss and, NEPA. Under an amended settlement meetings on November 8 through 9, if possible, reach consensus on a agreement, the October 1, 2011, 2011, DOE presented its revised proposed rule for the energy efficiency deadline for a DOE determination or analysis, including life-cycle cost of distribution transformers. proposed rule was extended to February sensitivities based on exclusion ZDMH The ERAC subcommittee for medium- 1, 2012. If DOE finds that amended and amorphous steel as core materials. voltage liquid-immersed and dry-type standards are warranted, DOE must During the meetings on November 30 distribution transformers consisted of publish a final rule containing such through December 1, 2011, DOE representatives of parties having a amended standards by October 1, 2012. presented its revised analysis based on On March 2, 2011, DOE published in defined stake in the outcome of the 2011 core-material prices. proposed standards, listed below. the Federal Register a notice of public • At the conclusion of the final meeting, meeting and availability of its ABB Inc. subcommittee members presented their • AK Steel Corporation preliminary TSD for the Distribution efficiency level recommendations. For • American Council for an Energy- Transformer Energy Conservation medium-voltage liquid-immersed Efficient Economy distribution transformers, the advocates, Standards Rulemaking, wherein DOE • American Public Power Association represented by the Appliance Standards discussed and received comments on • Appliance Standards Awareness Awareness Project (ASAP), issues such as equipment classes of Project distribution transformers that DOE • ATI-Allegheny Ludlum recommended efficiency level (also would analyze in consideration of • Baltimore Gas and Electric referred to as ‘‘EL’’) 3 for all design lines amending the energy conservation • Cooper Power Systems (also referred to as ‘‘DLs’’). The National standards for distribution transformers, • Earthjustice Electrical Manufacturers Association the analytical framework, models and • Edison Electric Institute (NEMA) and AK Steel recommended EL tools it is using to evaluate potential • Fayetteville Public Works 1 for all DLs except for DL 2, for which standards, the results of its preliminary Commission no change from the current standard analysis, and potential standard levels. • Federal Pacific Company was recommended. Edison Electric 76 FR 11396. The notice is available on • Howard Industries Inc. Institute (EEI) and ATI Allegheny the above-referenced DOE Web site. To • LakeView Metals Ludlum recommended EL1 for DLs 1, 3, expedite the rulemaking process, DOE • Efficiency and Renewables and 4 and no change from the current began at the preliminary analysis stage Advisory Committee member standard or a proposed standard of less

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than EL 1 for DLs 2 and 5. Therefore, the from subcommittee members on various proposed to allow compliance testing in subcommittee did not arrive at topics. During the meetings of any secondary configuration and at the consensus regarding proposed standard November 9, 2011, DOE presented its lowest basic impulse level (BIL) rating levels for medium-voltage liquid- revised analysis. During the meetings of and to require compliance at the lowest immersed distribution transformers. December 1, 2011, DOE presented its BIL at which dual or multiple voltage For medium-voltage dry-type revised analysis based on 2011 core- distribution transformers are rated to distribution transformers, the material prices. operate. subcommittee arrived at consensus and At the conclusion of the final meeting, The Northwest Power and recommended a proposed standard of subcommittee members presented their Conservation Council (NPCC) and EL2 for DLs 11 and 12, from which the energy efficiency level Northwest Energy Efficiency Alliance proposed standards for DLs 9, 10, 13A, recommendations. For low-voltage dry- (NEEA) 16 jointly submitted comments 13B would be scaled. Transcripts of the type distribution transformers, the that the test procedure should adhere to subcommittee meetings and all data and advocates, represented by ASAP, specifications that do not make it materials presented at the subcommittee recommended EL4 for all DLs, NEMA difficult for the most challenging meetings are available at the DOE Web recommended EL 2 for DLs 7 and 8, and designs to comply with the standard, or site at: http://www.eere.energy.gov/ no change from the current standard for else these transformer designs may be buildings/appliance_standards/ DL 6. EEI, AK Steel and ATI Allegheny eliminated from the marketplace. commercial/distribution_ Ludlum recommended EL 1 for DLs 7 (NPCC/NEEA, No. 11 at p. 2) 17 NPCC transformers.html. and 8, and no change from the current and NEEA further noted that they would The ERAC subcommittee held standard for DL 6. The subcommittee support a change to allow meetings on September 28, 2011, did not arrive at consensus regarding a manufacturers to test at a single voltage October 13–14, 2011, November 9, 2011, proposed standard for low-voltage dry- for models with a range of voltage taps and December 1–2, 2011, for low- type distribution transformers. that is ± 5 percent, using the middle voltage distribution transformers. The Transcripts of the subcommittee voltage of that range. (NPCC/NEEA, No. ERAC subcommittee also held webinars meetings and all data and materials 11 at p. 3) Finally, NPCC and NEEA on November 21, 2011, and December presented at the subcommittee meetings requested that DOE explicitly explain 20, 2011. During the course of the are available at the DOE Web site at: the benefit of any changes to the test September 28, 2011, meeting, the http://www.eere.energy.gov/buildings/ procedure, since certain changes could subcommittee agreed to its rules of appliance_standards/commercial/ make future and past ratings more procedure, finalized the schedule of the distribution_transformers.html. difficult to consistently compare. remaining meetings, and defined the (NPCC/NEEA, No. 11 at p. 3) procedural meaning of consensus. The III. General Discussion NEMA commented that distribution subcommittee defined consensus as A. Test Procedures transformers are rated to operate at unanimous agreement from all present multiple kilovolt ampere (kVA) ratings Section 7(c) of the Process Rule 15 subcommittee members. Subcommittee corresponding to passive cooling, active indicates that DOE will issue a final test members were allowed to abstain from cooling, or a combination of both. procedure, if one is needed, prior to voting for an efficiency level; their votes NEMA stated that the regulation should issuing a proposed rule for energy counted neither toward nor against the clarify that transformers with multiple conservation standards. DOE published consensus. kVA ratings should comply at the base its test procedure for distribution The ERAC subcommittee for low- rating (passive cooling). (NEMA, No. 13 transformers in the Federal Register as voltage distribution transformers at pp. 2–3) a final rule on April 27, 2006. 71 FR consisted of representatives of parties Although DOE does not intend to 24972. having a defined stake in the outcome eliminate features offering unique utility of the proposed standards. 1. General from the marketplace, it wishes to • AK Steel Corporation gather more information on the specific Currently, DOE requires distribution • American Council for an Energy- efficiency differences between winding transformers to comply with standards Efficient Economy configurations as well as the relative with their windings in the configuration • Appliance Standards Awareness frequencies of their uses. With this in that produces the greatest losses. (10 Project mind and considering the comments, • ATI-Allegheny Ludlum CFR 431, Subpart K, Appendix A) DOE proposes to continue requiring • EarthJustice During the April 5, 2011, public compliance testing in the primary and • Eaton Corporation meeting, DOE addressed issues and secondary winding configuration with • Federal Pacific Company solicited comments about amending the the highest losses, as is currently • Lakeview Metals energy conservation standards for required under appendix A to subpart K • Efficiency and Renewables distribution transformers, the analytical of 10 CFR part 431. DOE agrees that Advisory Committee member framework and results of its preliminary passive cooling is the most common • Metglas, Inc. analysis, and potential energy efficiency • National Electrical Manufacturers standards. At the outset, DOE proposed 16 The Northwest Power and Conservation Association to amend the test procedure under Council (NPCC) and Northwest Energy Efficiency • Natural Resources Defense Council appendix A to subpart K of 10 CFR part Alliance (NEEA) submitted joint comments and are • ONYX Power 431, Uniform Test Method for hereinafter referred to as NPCC/NEEA. • Pacific Gas and Electric Company Measuring the Energy Consumption of 17 This short-hand citation format is used • throughout this document. For example: ‘‘(NPCC/ Schneider Electric Distribution Transformers. DOE NEEA, No. 11 at p. 2)’’ refers to a (1) a joint • U.S. Department of Energy statement that was submitted by NPCC and NEEA DOE presented its draft engineering, 15 The Process Rule provides guidance on how and is recorded at http://www.regulations.gov/ life-cycle cost and national impacts DOE conducts its energy conservation standards #!home in the docket under ‘‘Energy Conservation rulemakings, including the analytical steps and Standards for Distribution Transformers,’’ Docket analysis and results. During the sequencing of rulemaking stages (such as test Number EERE–2010–BT–STD–0048, as comment meetings of October 14, 2011, DOE procedures and energy conservation standards). (10 number 11; and (2) a passage that appears on page presented its revised analysis and heard CFR part 430, Subpart C, Appendix A). 2 of that statement.

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mode of operation for distribution transformers with varying BIL levels, the presumption that DOE would allow transformers employed in power DOE should align its requirements with compliance testing in any of the distribution and clarifies that those of the Institute of Electrical and secondary configurations manufacturers are only required to Electronics Engineers (IEEE) standards (‘‘secondaries’’), DOE should insert the demonstrate compliance at kVA ratings (C57.12.00 for liquid-filled, NEMA word ‘‘primary’’ into the testing that correspond to passive cooling.18 ST20–1992:3.3 for low-voltage) and requirements [at section 5.0, DOE requests comment and require testing in the ‘‘as shipped’’ Determining the Efficiency Value of the corroborating data on how often condition, which would base the Transformer, under appendix A to distribution transformers are operated efficiency on the highest BIL rating, subpart K of 10 CFR part 431], and with their primary and secondary matching IEEE and industry practice. require the manufacturer to ‘‘determine windings in different configurations, (NEMA, No. 13 at p. 2) Federal Pacific the basic model’s efficiency at the and on the magnitude of the additional Transformers (FPT) stated that medium- ‘primary’ voltage at which the highest losses in less efficient configurations. voltage distribution transformers with losses occur or at each ‘primary’ voltage multiple configurations should be held at which the distribution transformer is 2. Multiple kVA Ratings to the efficiency standard of the rated to operate.’’ Howard Industries Currently, DOE is nonspecific on configuration with the highest BIL noted that, for multiple-voltage which kVA rating should be used to rating because the distribution distribution transformers, this insertion assess compliance in the case of transformer is required to be much would clarify that distribution distribution transformers with more larger for the higher BIL rating and, transformer efficiency is determined by than one kVA. therefore, cannot reasonably meet the the primary voltage and that the low- ABB’s recommendations on energy efficiency level of the lower BIL voltage or secondary winding transformers with multiple kVA ratings rating. (FPT, No. 27 at p. 13) FPT also configuration that is used would be at depended on how the transformer was expressed their support for testing on the manufacturer’s discretion. (HI, No. cooled. For naturally-cooled the highest BIL efficiency rating for re- 23 at p. 2) transformers, ABB recommended that connectable distribution transformers. HVOLT commented that distribution they should be required to meet the (FPT, Pub. Mtg. Tr., No. 34 at p. 40) 19 transformers with dual or multiple- efficiency standard for every kVA rating. ABB commented that DOE should not voltage primary windings should be However, ABB suggested that forced- change the test requirement to allow allowed to comply while the primaries cooled transformers should only have to compliance at the lowest BIL rating. are connected in series. HVOLT meet the efficiency standard at the According to ABB, there is no way to explained that utilities purchase these naturally-cooled kVA rating. This is ascertain which operating condition a transformers to upgrade a distribution because the forced-cooled rating, which distribution transformer will use over its circuit to higher voltages within a few is meant only for temporary overload lifetime. ABB stated that DOE should years of purchase and that these conditions, is dependent on the require that the efficiency be met on any transformers will spend more than 90 operation of auxiliary cooling fans that operational configuration for which the percent of their lives with the primary have a lower operating life than the distribution transformer is designed for windings connected in series. (HVOLT, transformer. (ABB, No. 14 at pp. 3–5) continuous operation. (ABB, No. 14 at No. 33 at p. 2) DOE has received nearly unanimous p. 2) DOE understands that, in contrast to feedback that transformers in DOE needs to gather more information the secondary windings, reconfigurable distribution applications are seldom in order to be certain that allowing primaries typically exhibit a larger designed to rely on active cooling even compliance at any BIL rating would not variation in efficiency between series occasionally and that the majority of result in lowered energy savings relative and primary connections. As the above designs lack active cooling altogether. to what is predicted by DOE’s analysis. commenters have pointed out, however, DOE wishes to clarify that DOE proposes to maintain the current such transformers are often purchased with the intent of upgrading the local manufacturers are only required to requirement to comply in the power grid to a higher operating voltage demonstrate compliance at kVA ratings configuration that gives rise to the with lowered overall system losses. In that correspond to passive cooling. greatest losses. that sense, transformers with 3. Dual/Multiple-Voltage Basic Impulse 4. Dual/Multiple-Voltage Primary reconfigurable primaries can be seen as Level Windings a stepping stone toward greater overall Currently, DOE requires distribution Currently, DOE requires energy savings, even if those savings do transformers to comply with standards manufacturers to comply with energy not occur within the transformer itself. using the BIL rating of the winding conservation standards with DOE conducted several sensitivity configuration that produces the greatest distribution transformer primary analyses to examine the effects of a losses. (10 CFR 431, Subpart K, windings (‘‘primaries’’) in the reconfigurable primary winding on Appendix A) configuration that produces the highest efficiency and found that the difference Several stakeholders commented that losses. (10 CFR 431, Subpart K, between the efficiency of the secondary distribution transformers with multiple Appendix A) and the efficiency of the primary was BIL ratings should comply with the Where DOE invited additional more significant than in the case of efficiency based on the highest BIL comments about the test procedures, configurable secondary windings. DOE wishes to obtain more rating, as the transformer core is based Howard Industries added that, under information on both the difference in on the highest BIL rating. (Hammond losses between different winding (HPS), No. 3 at p. 1; NEMA, No. 13 at 19 This short-hand citation format for the public configurations as well as the different p. 2; and FPT, No. 27 at p. 13) NEMA meeting transcript is used throughout this document. For example: ‘‘(FPT, Pub. Mtg. Tr., No. configurations’ relative frequency of noted that for dual/multiple distribution 34 at p. 40)’’ refers to a comment on the page operation in practice. DOE requests number of the transcript of the ‘‘Public Meeting on 18 Passive cooling is cooling that does not require Energy Conservation Standard Preliminary Analysis comment on this proposal to continue to fans, pumps, or other energy-consuming means of for Distribution Transformers,’’ held in Washington, mandate compliance in the highest-loss increasing thermal convection. DC, April 5, 2011. configuration and data illustrating the

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efficiency differences between primary Furthermore, HVOLT commented that dry-type distribution transformers winding configurations. a distribution transformer that is comply with standards at 50 percent designed for a dual voltage rating does loading and that low-voltage, dry-type 5. Dual/Multiple-Voltage Secondary not have an even multiple quantity of distribution transformers comply at 35 Windings series connections compared to parallel percent loading. Currently, DOE requires transformers connection designs. This means that Warner Power (WP) commented that to comply with their secondary there are already unused windings that a single 35 percent test load for low- windings in the configuration that will be in the parallel connection. voltage dry-type distribution produces the greatest losses. (10 CFR Because the testing procedure requires transformers (LVDTs) does not 431, Subpart K, Appendix A) that they be tested on the lowest BIL adequately reflect known service Interested parties commented that connections, these types of distribution conditions at widely varying, and often DOE should not change the current test transformers effectively have a higher low, average loads. It cited several requirement to permit compliance efficiency requirement. HVOLT believes studies indicating a lower average load testing in any secondary configuration dual voltage distribution transformers factor and a shrinking load factor and at the lowest BIL rating for transformers are being unduly burdened by the test recommended LVDTs be certified at 15 with dual/multiple-voltage secondary procedure. (HVOLT, Pub. Mtg. Tr., No. percent and 35 percent loading. (WP, windings, and that these transformers 34 at pp. 38–39) No. 30 at pp. 1–2) In addition, Warner should comply with an energy HI recommended that DOE adjust the Power suggested that a weighted curve efficiency level using the combination efficiency value by 0.1 for dual/ between 10 percent and 80 percent load of connections that produces the highest multiple-voltage liquid-immersed factors would be better than a single 35 losses. (HPS, No. 3 at p.1; NPCC/NEEA, distribution transformers with windings percent load factor. It recommended No. 11 at p. 3; and ABB, No. 14 at p. having a ratio other than 2:1, due to the using published data to more accurately 2) ABB also noted that there is no way complexity of the winding for these reflect real load conditions, accounting to determine the connection on which a distribution transformers. HI noted that for daily, weekly, and seasonal unit will be operated over its lifetime. a similar approach was taken by the variations. For LVDT transformers, it Schneider Electric (SE) commented Canadian Standards Associations that NEMA ST20–1992: 3.3 [Dry-Type pointed out that the load profile should Standards. (HI, No. 23 at p. 2) characterize the typical use in different Transformers for General Applications, DOE understands that some types of buildings. (WP, No. 30 at p.5) NEMA ST 20–1992(R1997)] requires distribution transformers may be NPCC and NEEA opined that, with that ‘‘low-voltage [transformers] be shipped with reconfigurable secondary better loading data for distribution shipped with the connections done for windings, and that certain transformers, they would support the highest voltage’’ and requested that configurations may have different testing at multiple loading points, such ‘‘all compliance testing be done in the efficiencies. Currently, DOE requires as 15, 35, 50 and 70 percent, with a configuration requirement of ST–20.’’ distribution transformers to be tested in weighted-average calculation that is (SE., No. 18 at p. 5) Similarly, NEMA the configuration that exhibits the unique to each class. They noted, commented that ‘‘DOE should align its highest losses, which is usually with the however, that such data is likely not requirements with those of IEEE secondary windings in parallel. available. (NPCC/NEEA, No. 11 at pp. standards (C57.12.00 for liquid-filled, Whereas the IEEE Standard 20 requires a 2–3) NEMA ST 20–1992: 3.3 for low-voltage), distribution transformer to be shipped requiring testing in the ’as shipped’ with the windings in series, a HVOLT commented that the test condition.’’ (NEMA, No. 13 at p. 2) manufacturer testing for compliance procedure-required load values for all Further, NEMA noted that industry could need to test the distribution three categories of distribution practice is to ship these units in the transformer for energy efficiency, transformers appeared reasonable for series connection. Similarly, FPT disassemble the unit, reconfigure the the foreseeable future. Otherwise, with asserted that, ‘‘for units with multiple windings, and reassemble the unit for electric vehicles and plug-in hybrids (series-parallel) low-voltage ratings, the shipping at added time and expense. entering the market, HVOLT opined that efficiency standard should be based on Nonetheless, DOE would need to obtain root-mean-square loading will increase the highest voltage (series) connection, more specific information on the in the long-term but may take decades which matches the IEEE standard and potential net energy losses associated to have an effect. (HVOLT, No. 33 at p. industry practice.’’ (FPT, No. 27 at with permitting distribution 1) NPCC and NEEA announced that they p. 11) transformers to be tested in any are collecting additional field data to Several interested parties expressed secondary winding configuration and inform the appropriateness of the test support for DOE’s proposal to allow proposes to maintain the current procedure loading points. (NPCC/NEEA, compliance testing in any secondary requirement of compliance in the No. 11 at p. 2) configuration at the lowest voltage configuration that produces the greatest NEMA, ABB, and Schneider Electric rating. (Power Partners, Inc. (PP), Pub. losses. (SE) all commented that DOE should not Mtg. Tr., No. 34 at p. 40; HVOLT, No. DOE requests comment on secondary modify its test procedures by 33 at p. 2; HI, No. 23 at p.2; and PP, No. winding configurations, and on the considering weighted-average loadings 19 at p. 2) HVOLT noted that about 99 magnitude of the additional losses for core deactivation efficiency percent of dual/multiple-voltage single- associated with the less efficient standards. (NEMA, No. 13 at p. 2; ABB, phase, pole-type transformers are used configurations as well as the relative No. 14 at pp. 2–3; and SE., Pub. Mtg. in the series connection, and the work frequencies of operation in each Tr., No. 34 at p. 57) ABB further to otherwise reconnect to the secondary winding configuration. clarified that this approach would be is burdensome. (HVOLT, No. 33 at p.2) inaccurate because the true load varies Similarly, HI pointed out that very few 6. Loading by every distinct installation. Instead, it transformers are ever reconnected for Currently, DOE requires that both asserted that the current load factors are parallel operation and that testing liquid-immersed and medium-voltage, more appropriate because they reflect requirements in a parallel configuration the aggregate impact on the national can be burdensome. (HI, No. 23 at p. 2) 20 IEEE C57.12.00. grid. (ABB, No. 14 at pp. 2–3)

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NPCC and NEEA recommended that design parameters that drove Information Administration’s (EIA) DOE attempt to gather data on actual distribution transformer software to Annual Energy Outlook 2011 core deactivation designs and control create designs at the highest efficiencies (AEO2011). algorithms before it changes the test achievable at the time. 71 FR 44362 2. Significance of Savings procedure. Additionally, NPCC and (August 4, 2006) and 72 FR 58196 NEEA suggested that DOE gather data (October 12, 2007). DOE used these As noted above, 42 U.S.C. on the performance of distribution designs to establish max-tech levels for 6295(o)(3)(B) prevents DOE from transformers under various load its LCC analysis and scaled them to adopting a standard for covered conditions. If this data is unavailable or other kVA ratings within a given design equipment if such a standard would not inconclusive, they suggested that DOE line, thereby establishing max-tech result in ‘‘significant’’ energy savings. not change the test procedure at this efficiencies for all the distribution While EPCA does not define the term time but rather ensure that core transformer kVA ratings. ‘‘significant,’’ the U.S. Court of Appeals deactivation technology is examined in for the District of Columbia, in Natural C. Energy Savings the next rulemaking for distribution Resources Defense Council v. transformers. (NPCC/NEEA, No. 11 at p. 1. Determination of Savings Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress 3) Section 325(o)(2)(A) of EPCA, 42 intended ‘‘significant’’ energy savings in Warner Power (WP) indicated its U.S.C. 6295(o)(2)(A), requires that any this context to be savings that were not intent to submit data concerning new or amended standard must be ‘‘genuinely trivial.’’ The energy savings modified test procedures which would chosen so as to achieve the maximum for all of the TSLs considered in this better capture core deactivation improvement in energy efficiency that is rulemaking are non-trivial and, technologies. (WP, Pub. Mtg. Tr., No. 34 technologically feasible and therefore, DOE considers them at p. 42) economically justified. In determining DOE is proposing to maintain the use ‘‘significant’’ within the meaning of whether economic justification exists, of a single, discrete loading point for EPCA section 325(o). key factors include the total projected distribution transformers because the amount of energy savings likely to result D. Economic Justification use of weighted-average loadings would directly from the standard and the represent a fairly significant change in 1. Specific Criteria savings in operating costs throughout the test procedure, possibly causing the estimated average life of the covered As noted previously, EPCA requires some units that meet energy equipment. To understand the national DOE to evaluate seven factors to conservation standards to no longer do economic impact of potential efficiency determine whether a potential energy so. In the future, DOE may consider regulations for distribution conservation standard is economically modifying this approach. DOE transformers, DOE conducted a national justified. (42 U.S.C. 6295(o)(2)(B)(i)) The welcomes relevant data in conjunction impact analysis (NIA) using a following sections describe how DOE with comments on typical distribution spreadsheet model to estimate future has addressed each of the seven factors transformer loading profiles. national energy savings (NES) from in this rulemaking. B. Technological Feasibility amended energy conservation a. Economic Impact on Manufacturers standards.21 For each TSL, DOE 1. General and Consumers forecasted energy savings beginning in There are distribution transformers 2016, the year that manufacturers would In determining the impacts of an available at all of the energy efficiency be required to comply with amended amended standard on manufacturers, levels considered in today’s notice of standards, and ending in 2045. DOE DOE first determines the quantitative proposed rulemaking. Therefore, DOE quantified the energy savings for each impacts using an annual cash-flow believes all of the energy efficiency TSL as the difference in energy approach. This includes both a short- levels adopted by today’s notice of consumption between the ‘‘standards term assessment, based on the cost and proposed rulemaking are case’’ and the ‘‘base case.’’ The base case capital requirements during the period technologically feasible. represents the forecast of energy between the issuance of a regulation and consumption in the absence of amended when entities must comply with the 2. Maximum Technologically Feasible regulation, and a long-term assessment Levels mandatory efficiency standards, and takes into consideration market demand over a 30-year analysis period. The When DOE proposes to adopt, or for more-efficient equipment. industry-wide impacts analyzed include decline to adopt, an amended or new The NIA spreadsheet model calculates INPV (which values the industry on the standard for a type of covered product, the electricity savings in ‘‘site energy’’ basis of expected future cash flows), section 325(o)(2) of EPCA, 42 U.S.C. expressed in kilowatt-hours (kWh). Site cash flows by year, changes in revenue 6295(o)(2), requires that DOE determine energy is the energy directly consumed and income, and other measures of the maximum improvement in energy by distribution transformer products at impact, as appropriate. Second, DOE efficiency or maximum reduction in the locations where they are used. DOE analyzes and reports the impacts on energy use that is technologically reports national energy savings on an different types of manufacturers, paying feasible. While developing the energy annual basis in terms of the aggregated particular attention to impacts on small conservation standards for liquid- source (primary) energy savings, which manufacturers. Third, DOE considers immersed and medium-voltage, dry- is the savings in the energy that is used the impact of standards on domestic type distribution transformers that were to generate and transmit the site energy. manufacturer employment and codified under 10 CFR 431.196, DOE (See TSD chapter 10.) To convert site manufacturing capacity, as well as the determined the maximum energy to source energy, DOE derived potential for standards to result in plant technologically feasible (‘‘max-tech’’) annual conversion factors from the closures and loss of capital investment. energy efficiency level through its model used to prepare the Energy Finally, DOE takes into account engineering analysis using the most cumulative impacts of different DOE efficient materials, such as core steels 21 The NIA spreadsheet model is described in regulations and other regulatory and winding materials, and applied section IV.G of this notice. requirements on manufacturers.

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For individual consumers, measures that DOE can identify the percentage of Attorney General’s determination in the of economic impact include the changes consumers estimated to receive LCC final rule. in LCC and the PBP associated with new savings or experience an LCC increase, f. Need for National Energy or amended standards. The LCC, which in addition to the average LCC savings Conservation is separately specified in EPCA as one associated with a particular standard of the seven factors to be considered in level. In addition to identifying ranges Certain benefits of the proposed determining the economic justification of impacts, DOE evaluates the LCC standards are likely to be reflected in for a new or amended standard (42 impacts of potential standards on improvements to the security and U.S.C. 6295(o)(2)(B)(i)(II)), is discussed identifiable subgroups of consumers reliability of the Nation’s energy system. in the following section. For consumers that may be disproportionately affected Reductions in the demand for electricity in the aggregate, DOE also calculates the by a national standard. may also result in reduced costs for national net present value of the maintaining the reliability of the c. Energy Savings economic impacts on consumers over Nation’s electricity system. DOE the forecast period used in a particular While significant conservation of conducts a utility impact analysis to rulemaking. energy is a separate statutory estimate how standards may affect the Federal Pacific suggested that DOE requirement for imposing an energy Nation’s needed power generation establish reference efficiencies by rating, conservation standard, EPCA requires capacity. (See 42 U.S.C. as defined by NEMA Premium, for those DOE, in determining the economic 6295(o)(2)(B)(i)(VI)) users who want efficiencies higher than justification of a standard, to consider Energy savings from the proposed current minimum efficiencies. However, the total projected energy savings that standards are also likely to result in they did not want these reference are expected to result directly from the environmental benefits in the form of efficiencies to become the new standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) reduced emissions of air pollutants and minimum efficiency mandates. (FPT, DOE uses the NIA spreadsheet results in greenhouse gases associated with energy No. 27 at p. 2) its consideration of total projected production. DOE reports the The National Rural Electric energy savings. environmental effects from the proposed Cooperative Association (NRECA) standards, and from each TSL it recommended that DOE not raise the d. Lessening of Utility or Performance of considered, in the environmental efficiency standards for the liquid-filled Products assessment contained in chapter 15 in distribution transformers, since many In establishing classes of products, the NOPR TSD. DOE also reports rural utilities with low distribution and in evaluating design options and estimates of the economic value of transformer loads cannot economically the impact of potential standard levels, emissions reductions resulting from the justify the current energy efficiency DOE sought to develop standards for considered TSLs. level. (NRECA, No. 31 and 36 at p. 1) distribution transformers that would not DOE appreciates the comments and lessen the utility or performance of g. Other Factors considers impacts to consumers, these products. (42 U.S.C. EPCA allows the Secretary of Energy, manufacturers, and utilities in TSD 6295(o)(2)(B)(i)(IV)) None of the TSLs in determining whether a standard is chapters 8, 12, and 14, respectively. presented in today’s NOPR would economically justified, to consider any DOE welcomes comment on these substantially reduce the utility or other factors that the Secretary analyses and on any subset of performance of the equipment under considers relevant. (42 U.S.C. consumers, manufacturers, or utilities consideration in the rulemaking. 6295(o)(2)(B)(i)(VII)) In developing the that could be disproportionately DOE requests comment on the proposals of this notice, DOE has also affected. possibility of reduced equipment considered the matter of electrical steel performance or utility resulting from availability. This factor is discussed b. Life-Cycle Costs today’s proposed standards, particularly further in section V.B.8. The LCC is the sum of the purchase the risk of reducing the ability to 2. Rebuttable Presumption price of a type of equipment (including perform periodic maintenance and the its installation) and the operating risk of increasing vibration and acoustic As set forth in 42 U.S.C. expense (including energy and noise. 6295(o)(2)(B)(iii), EPCA creates a maintenance and repair expenditures) rebuttable presumption that an energy discounted over the lifetime of the e. Impact of Any Lessening of conservation standard is economically product. The LCC savings for the Competition justified if the additional cost to the considered energy efficiency levels are EPCA directs DOE to consider any consumer of a product that meets the calculated relative to a base case that lessening of competition that is likely to standard is less than three times the reflects likely trends in the absence of result from standards. It also directs the value of the first-year of energy savings amended standards. The LCC analysis Attorney General of the United States resulting from the standard, as requires a variety of inputs, such as (Attorney General) to determine the calculated under the applicable DOE equipment prices, equipment energy impact, if any, of any lessening of test procedure. DOE’s LCC and payback consumption, energy prices, competition likely to result from a period (PBP) analyses generate values maintenance and repair costs, proposed standard and to transmit such used to calculate the PBP for consumers equipment lifetime, and consumer determination to the Secretary within 60 of potential amended energy discount rates. DOE assumed in its days of the publication of a proposed conservation standards. These analyses analysis that consumers will purchase rule, together with an analysis of the include, but are not limited to, the the considered equipment in 2016. nature and extent of the impact. (42 three-year PBP contemplated under the To account for uncertainty and U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) rebuttable presumption test. However, variability in specific inputs, such as DOE will transmit a copy of today’s DOE routinely conducts an economic product lifetime and discount rate, DOE proposed rule to the Attorney General analysis that considers the full range of uses a distribution of values with with a request that the Department of impacts to the consumer, manufacturer, probabilities attached to each value. A Justice (DOJ) provide its determination Nation, and environment, as required distinct advantage of this approach is on this issue. DOE will address the under 42 U.S.C. 6295(o)(2)(B)(i). The

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results of this analysis serve as the basis that provides an overall picture of the (xiii) Welding transformer. for DOE to definitively evaluate the market for the products concerned, Additional detail on the definitions of economic justification for a potential including the purpose of the products, each of these excluded transformers can standard level (thereby supporting or the industry structure, and market found in TSD chapter 3. rebutting the results of any preliminary characteristics. This activity includes DOE received multiple comments determination of economic both quantitative and qualitative seeking clarification on various terms justification). The rebuttable assessments, based primarily on used in the definition of a distribution presumption payback calculation is publicly available information. The transformer. NEMA requested that DOE discussed in section V.B.1.c of this subjects addressed in the market and amend the definitions of two NOPR and chapter 8 of the NOPR TSD. technology assessment for this transformer types explicitly excluded rulemaking include scope of coverage, from the distribution transformer IV. Methodology and Discussion of definitions, equipment classes, types of definition, namely ‘‘rectifier Related Comments products sold and offered for sale, and transformer’’ and ‘‘testing transformer.’’ DOE used two spreadsheet tools to technology options that could improve NEMA suggested that both definitions estimate the impact of today’s proposed the energy efficiency of the products should require the nameplates of such standards. The first spreadsheet under examination. Chapter 3 of the transformers to identify the transformers calculates LCCs and PBPs of potential TSD contains additional discussion of as being for such uses only. (NEMA, No. new energy conservation standards. The the market and technology assessment. 13 at p. 10) Furthermore, NEMA second provides shipments forecasts recommended that transformers used and calculates national energy savings 1. Scope of Coverage inside underground tunneling and net present value impacts of This section addresses the scope of equipment should be added to the potential new energy conservation coverage for today’s proposal, stating definition for underground mining standards. DOE also assessed which products would be subject to distribution transformers because this manufacturer impacts, largely through amended standards. The numerous equipment is specialized and requires a use of the Government Regulatory comments DOE received on the scope of compact transformer. (NEMA, No. 13 at Impact Model (GRIM). The two today’s proposal are also summarized p. 10) FPT agreed with NEMA and spreadsheets are available online at the and addressed in this section. recommended that DOE amend the definition of ‘‘underground mining rulemaking Web site: http:// a. Definitions www1.eere.energy.gov/buildings/ transformer’’ with the following appliance_standards/commercial/ Today’s proposed standards sentence: ‘‘The term ‘mining’ may also distribution_transformers.html. rulemaking concerns distribution be understood to mean underground Additionally, DOE estimated the transformers, which include three tunneling or digging.’’ FPT added that impacts of energy conservation categories: liquid-immersed, low-voltage the term ‘‘mining’’ should be clarified to standards for distribution transformers dry-type (LVDT) and medium-voltage encompass any underground operation on utilities and the environment. DOE dry-type (MVDT). The definition of a involving the removal of material used a version of EIA’s National Energy distribution transformer was presented underground, such as digging or Modeling System (NEMS) for the utility in EPACT 2005 and then further refined tunneling, which have the same and environmental analyses. The NEMS by DOE when it was codified into 10 restrictions with the size of distribution model simulates the energy sector of the CFR 431.192 by the April 27, 2006 final transformers, but might not be U.S. economy. EIA uses NEMS to rule for distribution transformer test considered to be mining applications. prepare its Annual Energy Outlook procedures (71 FR 24995) as follows: (FPT, No. 27 at pp. 10–11) Finally, PP commented that DOE should clarify the (AEO), a widely known energy forecast Distribution transformer means a definitions of input and output voltage for the United States. The version of transformer that— to reflect the three-phase system NEMS used for appliance standards (1) Has an input voltage of 34.5 kV or voltages and not the line to ground analysis is called NEMS–BT 22 and is less; (2) Has an output voltage of 600 V or voltage, which is typically the input based on the AEO version with minor less; voltage for single-phase transformers. modifications.23 The NEMS–BT offers a (3) Is rated for operation at a (PP, No. 1 at p. 1) sophisticated picture of the effect of frequency of 60 Hz; and DOE agrees that these additions to the standards because it accounts for the (4) Has a capacity of 10 kVA to 2500 definitions of ‘‘rectifier transformer’’ interactions between the various energy kVA for liquid-immersed units and 15 and ‘‘testing transformer’’ are helpful in supply and demand sectors and the kVA to 2500 kVA for dry-type units; but aiding the consumer to distinguish economy as a whole. (5) The term ‘‘distribution rectifier and testing transformers and A. Market and Technology Assessment transformer’’ does not include a therefore proposes to amend its transformer that is an— definitions correspondingly. For the market and technology (i) Autotransformer; Additionally, DOE believes that assessment, DOE develops information (ii) Drive (isolation) transformer; transformers used for the removal of (iii) Grounding transformer; material underground are subject to 22 BT stands for DOE’s Building Technologies (iv) Machine-tool (control) similar space constraints as traditional Program. transformer; 23 mining transformers and therefore their The EIA allows the use of the name ‘‘NEMS’’ (v) Non-ventilated transformer; to describe only an AEO version of the model ability to meet higher efficiency (vi) Rectifier transformer; without any modification to code or data. Because standards are similarly restricted. the present analysis entails some minor code (vii) Regulating transformer; modifications and runs the model under various (viii) Sealed transformer; However, DOE wishes to learn more policy scenarios that deviate from AEO (ix) Special-impedance transformer; about the nature of those applications in assumptions, the name ‘‘NEMS–BT’’ refers to the (x) Testing transformer; order to define the units precisely. model as used here. For more information on (xi) Transformer with tap range of 20 Consequently, DOE proposes to NEMS, refer to The National Energy Modeling System: An Overview, DOE/EIA–0581 (98) percent or more; maintain the current definition of (Feb.1998), available at: http://tonto.eia.doe.gov/ (xii) Uninterruptible power supply ‘‘mining transformer’’ unless it is able to FTPROOT/forecasting/058198.pdf. transformer; or determine that the expansion, as

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suggested by NEMA and FPT, is transformers and discusses its transformers used in mobile warranted and able to be implemented methodology for this in chapter 6 of the applications and any data helpful in with sufficient specificity. DOE requests TSD. Additionally, DOE determined considering whether standards are comment on that proposal and any during the previous standards warranted. DOE also requests comment information useful in understanding rulemaking that 5 kVA transformers on the likelihood of this exclusion how transformers used in certain were below the kVA limit ‘‘commonly serving as a loophole in the face of underground applications differ and understood to be distribution increasing standards. could be defined precisely. Finally, DOE transformers.’’ 69 FR 45381. DOE DOE does not propose to exclude also wishes to remove any ambiguity in proposes to maintain that stance for this transformers used in renewable energy the terms ‘‘input voltage’’ and ‘‘output rulemaking as these units are generally applications simply because of the voltage’’ and requests comment on too small to be employed in power potential difference in loading that they where that ambiguity lies. distribution and collectively consume may experience. DOE currently Multiple interested parties submitted extremely little power. Similarly, units understands that the users who buy comments regarding the kVA ratings larger than 2.5 MVA (DOE’s current transformers for those applications tend that are currently included in the scope upper limit) are usually considered to value losses highly and that such of coverage. PP commented that DOE substation transformers, which DOE is transformers would have little trouble should consider removing single-phase not proposing to cover. DOE invites meeting standards. Furthermore, DOE liquid-immersed distribution comment on its proposal to maintain the notes that its choices for the test transformers rated above 250 kVA with current scope of coverage. procedure loading points do not imply a low-voltage rating of 600V from the Interested parties also solicited that it intends to exclusively cover scope of the regulation. They contended clarification from DOE on transformers transformers with precisely those that these transformers constitute a very that are used in a variety of loading values. Rather, DOE accounts low volume of shipments (481 units in applications. FPT requested that DOE for consumers purchasing transformers 2009) and MVA capacity shipped (201 clarify whether existing efficiency optimized for loading values other than MVA in 2009) and therefore the overall standards apply to transformers used in the test procedure value in its LCC national energy savings would not be aircraft, trains/locomotives, offshore analysis. significant. (PP, No. 19 at pp. 1–3; Pub. drilling platforms, mobile substations, DOE proposes to continue to not set Mtg. Tr., No. 34 at p. 34) PP added that ships, and other similar applications. standards for step-up transformers, the impact of increased weight and (FPT, No. 27 at p. 2) Furthermore, FPT because they are not ordinarily dimensions is greater in these sizes recommended that DOE investigate considered to be performing a power where maximum tank size and weight whether transformers being used in distribution function. However, DOE is constraints are critical. Moreover, PP wind farms or solar energy applications aware that step-up transformers may be proposed that DOE should consider 500 should be exempted since these designs able to be used in place of step-down kVA the upper limit of kVA ratings should be optimized at higher loading transformers and may represent a covered and shift the lower limit from levels than the test procedure loading potential loophole as standards 10 to 5 kVA. (PP, Pub. Mtg. Tr., No. 34 points of 35 percent (low-voltage dry- increase. DOE requests comment on its at pp. 46, 73–74; PP, No. 19 at pp. 1– type) and 50 percent (liquid-immersed proposal to continue not to set 2) Similarly, NPCC and NEEA urged and medium-voltage dry-type). (FPT, standards for step-up transformers. DOE to decide whether to include No. 27 at p. 2) Lastly, CDA commented Finally, DOE received an inquiry with single-phase liquid-immersed that DOE should expand the scope of regards to how it plans to deal with core distribution transformers down to 5 the rulemaking to include step-up deactivation technology. Specifically, kVA in the scope of coverage. (NPCC/ transformers of kVA sizes that are Schneider Electric wanted to know if NEEA, No. 11 at p. 9) currently included in the scope, such as DOE would change the definition of BBF and Associates suggested that transformers used in wind farms. (CDA, transformers to include banks of DOE investigate increasing the scope of No. 17 at pp. 2–3) transformers. (SE., Pub. Mtg. Tr., No. 34 the rulemaking to include transformers EPACT 2005 defined the term at p. 57) Core-deactivation technology from 2500 kVA to 20 MVA. (BBF, Pub. ‘‘distribution transformer,’’ 42 U.S.C. employs a system of smaller Mtg. Tr., No. 34 at p. 279) CDA 6291(35)(B)(ii), to mean a transformer transformers to replace a single, larger recommended that DOE include that (i) has an input voltage of 34.5 transformer. For example, using this transformers up to 30,000 kVA (30 kilovolts or less; (ii) has an output technology, three transformers sized at MVA) in its scope, including sub-station voltage of 600 volts or less; and (iii) is 25 kVA and operated in parallel could transformers. It noted that these units rated for operation at a frequency of 60 replace a single 75 kVA transformer. are within the distribution system, and Hertz. The definition goes on to The smaller transformers that compose are substantial in unit shipment generally exclude certain specialized- the system can then be activated and volumes. (CDA, No. 17 at pp. 1–2, 4) application distribution transformers. At deactivated using core deactivation DOE understands that larger (250–833 this time, DOE is not proposing to cover technology based on the loading kVA) single-phase, liquid-immersed distribution transformers used in mobile demand. At present, DOE is not units are currently covered and is not applications because they do not proposing to set efficiency standards for proposing to exclude them from represent traditional power distribution. banks of transformers, but notes that consideration for this rulemaking. For example, aircraft and marine each constituent transformer would be Because these ratings were covered by transformers frequently operate at 400 subject to an efficiency standard if, on the previous rulemaking for distribution Hz, and mobile substation transformers its own, it meets the definition of a transformers, DOE is statutorily often fall outside the currently defined distribution transformer. prohibited from backsliding and voltage and kVA ranges. Furthermore, excluding such products from transformers used in mobile b. Underground Mining Transformer regulation at this time. (See 42 U.S.C. applications could be unduly impacted Coverage 6295(o)(1)6316(a)) However, DOE notes by any increases in size and weight In the October 12, 2007, final rule on that it is accounting for the added life- required to reach higher efficiencies. energy conservation standards for cycle costs of larger and heavier DOE requests comment on the topic of distributions transformers, DOE codified

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into 10 CFR 431.192 the definition of an than many of the transformers excluded SE requested that DOE analyze LVDTs ‘‘underground mining distribution from the definition of distribution in a separate rulemaking from liquid- transformer’’ as follows: transformers under 10 CFR 431.192. immersed distribution transformers and Underground mining distribution (FPT, No. 27 at pp. 8–10) MVDTs. It noted that the law defines transformer means a medium-voltage In view of the above, DOE them separately and that LVDT dry-type distribution transformer that is understands that underground mining distribution transformers are used in built only for installation in an transformers are subject to a number of applications that are different from underground mine or inside equipment constraints that are not usually concerns those of MVDT distribution for use in an underground mine, and for transformers used in general power transformers. SE further noted that that has a nameplate which identifies distribution. Because space is critical in LVDT distribution transformers may the transformer as being for this use mines, an underground mining warrant an expanded scope of coverage only. 72 FR 58239. transformer may be at a considerable and encouraged DOE to reassess the In that same final rule, DOE also disadvantage in meeting an efficiency range of kVAs covered, product clarified that although it believed these standard. Underground mining definitions, exemptions, and loading transformers were within its scope of transformers are further disadvantaged points. (SE., No. 18 at p. 1) FPT coverage, it was not establishing any by the fact that they must supply power suggested that DOE evaluate LVDT energy conservation standards for at several output voltages distribution transformers at a later date underground mining transformers. At simultaneously. For this rulemaking, because this product category is not part the time, DOE recognized that these DOE again proposes not to set standards of the court order. (FPT, No. 27 at p. 1) transformers were subject to unique and for underground mining transformers, Rather, FPT believed that DOE should extreme dimensional constraints which but recognizes the possibility of a establish non-mandatory efficiencies for impact their efficiency and performance loophole. Therefore, DOE continues to LVDT distribution transformers so that capabilities. Therefore, DOE established leave underground mining transformers consumers who wish to purchase higher a separate equipment class for mining off of the list of exempt distribution efficiency units can have a point of transformers and stated that it may transformers and reserve a separate reference. (FPT, No. 27 at pp. 1–2) consider energy conservation standards equipment class for mining CDA observed that the current for such transformers at a later date. transformers. DOE may set standards in Although DOE did not establish energy efficiency levels for LVDT distribution the future if it believes that conservation standards for such transformers are at NEMA TP–1 levels underground mining transformers are transformers, it also did not add and that the 2010 MVDT and liquid- being purchased as a way to circumvent underground mining transformers to the immersed distribution transformer energy conservation standards. list of excluded transformers in the efficiency levels were set at definition of a distribution transformer. c. Low-Voltage Dry-Type Distribution approximately TSL 4. 72 FR 58239–40 DOE retained that it had the authority Transformers (CDA, No. 17 at p. 3). CDA believed that to cover such equipment if, during a it is appropriate for DOE to evaluate and 10 CFR 431.192 defines the term later analysis, it found technologically adjust the minimum efficiency ‘‘low-voltage dry-type distribution feasible and economically justified standards for LVDT distribution transformer’’ to be a distribution energy conservation standard levels. 72 transformers, wherever cost-effective, to transformer that: FR 58197. levels that are comparable to the 2010 In response to the March 2, 2011 (1) Has an input voltage of 600 volts levels for other [MVDT and liquid- preliminary analysis, NEMA or less; immersed] distribution transformers. recommended that underground mining (2) Is air-cooled; and (CDA, No. 17 at p. 3) Earthjustice distribution transformers, including (3) Does not use oil as a coolant. commented that DOE must revisit transformers used inside underground Because EPACT 2005 prescribed standards for LVDT distribution tunneling equipment, should be standards for LVDTs, which DOE transformers as part of EPCA’s included on the exemption list to clarify incorporated into its regulations at 70 requirement that standards be that the standards shall not apply to FR 60407 (October 18, 2005) (codified at reevaluated not later than six years after them. (NEMA, No. 13 at p. 10) NPCC 10 CFR 431.196(a)), LVDTs were not issuance. Earthjustice noted that, on and NEEA commented that DOE should included in the 2007 standards October 18, 2005, DOE codified the remove any confusion about the rulemaking. As a result, the settlement efficiency standards for LVDT coverage of underground mining agreement following the publication of distribution transformers that were set transformers either by setting standards the 2007 final rule does not impact forth in EPACT 2005 (70 FR 60407) and for these units or adding them to the list LVDT standards. that DOE must now publish, by October of excluded transformers. (NPCC/NEEA, Two interested parties, EEI and SE., 18, 2011, either a new proposed No. 11 at p. 9) requested clarification on whether standard or a determination that FPT urged DOE to exclude mining LVDT distribution transformers would amended standards are not warranted. transformers from minimum efficiency be included in this rulemaking. (EEI, (Earthjustice, No. 20 at pp. 1–2) In joint levels because it would result in undue Public Mtg. Tr., No. 34 at p. 56, 27; SE., comments, the Appliance Standards economic hardship for the mining No. 7 at p. 1) In particular, SE Awareness Project (ASAP), American industry and unrealistic design questioned whether Congress would be Council for an Energy Efficient constraints on mining equipment that involved in amending standards for Economy (ACEEE), and Natural use such transformers. FPT pointed out LVDTs. (SE., No. 7 at p. 1) Further, SE Resources Defense Council (NRDC) that mining transformers make up a expressed concern that there does not agreed with Earthjustice that DOE is small portion of the market and that the appear to be a timeline for the LVDT obligated under EPCA to review the total amount of energy they consume is distribution transformer rulemaking and efficiency standards for liquid- very small compared to the national that one is needed in order to plan immersed and MVDT distribution energy consumption rate. FPT also potential capital expenditures for any transformers and amend the efficiency noted that a mining transformer is more new efficiency levels. (SE., Pub. Mtg. standards for LVDT distribution specialized in its design and application Tr., No. 34 at p. 19) transformers if justified. (ASAP/ACEEE/

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NRDC, No. 28 at p. 5) HVOLT also (iii) Designed to feed a system of 4. Copper primary and secondary believed that DOE should consider variable capacity system of windings; LVDT distribution transformers at this interconnected secondaries, and 5. An electrostatic shield; or time. (HVOLT, No. 33 at p. 2) EEI (iv) Built per the requirements of IEEE 6. Multiple outputs at the same believed that LVDT distribution C57.12.40-(year) ° transformers could be included in the ii. A ‘‘vault-type’’ transformer is one— voltage a minimum of 15 apart, which rulemaking, since they are covered (i) Designed for use in a vault, when summed together equal the products under the statute and are now (ii) Designed for occasional transformer’s input kVA capacity. under a DOE regulatory purview. (EEI, submerged operation in water, and 2. Equipment Classes Pub. Mtg. Tr., No. 34 at pp. 21, 27) (iii) Built per the requirements of IEEE Without regard to whether DOE may C57.12.23-(year) or IEEE C57.12.24- DOE divides covered equipment into have a statutory obligation to review (year), respectively. classes by: (a) the type of energy used; standards for LVDTs, DOE has analyzed iii. Data center transformer means a (b) the capacity; or (c) any performance- all three transformer types and is three-phase low-voltage dry-type related features that affect consumer proposing standards for each in this distribution transformer that— utility or efficiency. (42 U.S.C. 6295(q)) rulemaking. (i) Is designed for use in a data center Different energy conservation standards Schneider Electric suggested distribution system and has a nameplate may apply to different equipment expanding coverage to include sealed identifying the transformer as being for classes (ECs). For the preliminary units within the range of Design Lines this use only; analysis and for today’s NOPR, DOE 6 and 7: single-phase 15 and 25 kVA (ii) Has a maximum peak energization analyzed the same ten ECs as were used and three-phase 15 kVA distribution current (or in-rush current) less than or in the previous distribution transformers. Further, it suggested that equal to four times its rated full load transformers energy conservation an additional three-phase 15 kVA current multiplied by the square root of standards rulemaking.24 These ten design line, which would include 2, as measured under the following equipment classes divided up the SCOTT–T and OPEN DELTA designs, be conditions— population of distribution transformers created to meet the definition of sealed (iii) During energization of the by: transformers. (SE., No. 7 at p. 2) DOE is transformer without external devices attached to the transformer that can (a) Type of transformer insulation— not making this change because the liquid-immersed or dry-type, EPACT 2005 definition of a distribution reduce inrush current; transformer and the definition currently (iv) The transformer shall be (b) Number of phases—single or three, ¥ codified at 10 CFR 431.192 both energized at zero +/ 3 degrees voltage (c) Voltage class—low or medium (for explicitly prohibit the inclusion of such crossing of A phase. Five consecutive dry-type units only), and transformers. energization tests shall be performed (d) Basic impulse insulation level (for with peak inrush current magnitudes of medium-voltage, dry-type units only). d. Negotiating Committee Discussion of all phases recorded in every test. The Scope maximum peak inrush current recorded On August 8, 2005, the President Negotiation participants noted that in any test shall be used; signed into law EPACT 2005, which both network/vault transformers and (v) The previously energized and then contained a provision establishing ‘‘data center’’ transformers may de-energized transformer shall be energy conservation standards for two of experience disproportionate difficulty energized from a source having DOE’s equipment classes—EC3 (low- in achieving higher efficiencies due to available short circuit current not less voltage, single-phase, dry-type) and EC4 certain features that may affect than 20 times the rated full load current (low-voltage, three-phase, dry-type). consumer utility. (ABB, Pub. Mtg. Tr., of the winding connected to the source; With standards thereby established for No. 89 at p. 245) The definitions below and low-voltage, dry-type distribution had been proposed at various points by (vi) The source voltage shall not be transformers, DOE no longer considered committee members and DOE seeks less than 5 percent of the rated voltage these two equipment classes for comment on both whether it would be of the winding energized; and standards during the previous appropriate to establish separate (vii) Is manufactured with at least two rulemaking. Since the current equipment classes for any of the of the following other attributes: rulemaking is considering new following types and, if so, on how such 1. Listed by NRTL for a K-factor standards for distribution transformers, classes might be defined such that it rating, as defined in UL standard 1561: DOE has preliminarily decided to also was not financially advantageous for 2011 Fourth Edition, greater than K–4; revisit low-voltage, dry-type distribution consumers to purchase transformers in 2. Temperature rise less than 130°C transformers to determine if higher either class for general use. with class 220 insulation or temperature efficiency standards are justified. Table i. A ‘‘network transformer’’ is one— rise less than 110°C with class 200 IV.1 presents the ten equipment classes (i) Designed for use in a vault, insulation; within the scope of this rulemaking (ii) Designed for occasional 3. A secondary winding arrangement analysis and provides the kVA range submerged operation in water, that is not delta or wye (star); associated 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

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

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TABLE IV.1—DISTRIBUTION TRANSFORMER EQUIPMENT CLASSES—Continued

EC # Insulation Voltage Phase BIL Rating kVA Range

5 ...... Dry-Type ...... Medium ...... Single ...... 20–45kV BIL 15–833 kVA 6 ...... Dry-Type ...... Medium ...... Three ...... 20–45kV BIL 15–2500 kVA 7 ...... Dry-Type ...... Medium ...... Single ...... 46–95kV BIL 15–833 kVA 8 ...... Dry-Type ...... Medium ...... Three ...... 46–95kV BIL 15–2500 kVA 9 ...... Dry-Type ...... Medium ...... Single ...... ≥ 96kV BIL 75–833 kVA 10 ...... Dry-Type ...... Medium ...... Three ...... ≥ 96kV BIL 225–2500 kVA

ABB commented that the currently did not separately analyze LFLI set in the liquid-immersed equipment defined equipment classes do not cover transformers, but relied on the analysis classes. Therefore, DOE did not consider the product scope as defined in 10 CFR for the mineral oil liquid-immersed LFLI in a separate equipment class for part 431.192, which defines medium- transformers. 72 FR 58202 (October 12, the NOPR analysis. voltage as between 601 V and 34.5 kV. 2007). b. Pole- and Pad-Mounted Liquid- Therefore, it recommended changing the For the preliminary analysis, DOE Immersed Distribution Transformers equipment classes analyzed, or at least revisited the issue in light of additional revising the definition in the CFR. (ABB, research on LFLI transformers and During negotiations, several parties No. 14 at p. 9) conversations with manufacturers and raised the question of whether pole- DOE is uncertain of how its current industry experts. DOE first considered mounted, pad-mounted, and possibly equipment classes are inconsistent with whether LFLI transformers offered the other types of liquid-immersed its published definition of ‘‘medium- same utility as dry-type equipment, and transformers should be considered in voltage dry-type’’ and requests further came to the same conclusion as in the separate equipment classes. (ABB, Pub. comment on the issue. last rulemaking. While LFLI Mtg. Tr., No. 89 at p. 230) DOE transformers can be used in some acknowledges that as standards rise, a. Less-Flammable Liquid-Immersed applications that historically use dry- transformer types which previously had Transformers type units, there are applications that similar incremental costs may start to In the August 2006 standards NOPR, cannot tolerate a leak or fire. In these diverge and requests comment on DOE solicited comments about how it applications, customers assign higher whether and why separate equipment should treat distribution transformers utility to a dry-type transformer. Since classes are warranted for pole-mounted, filled with an insulating fluid of higher LFLI transformers can achieve higher pad-mounted, and other types of liquid- flash point than that of traditional efficiencies than comparable dry-type immersed distribution transformers. mineral oil. 71 FR 44369 (August 4, units, combining LFLIs and dry-types 2006). Known as ‘‘less-flammable, into one equipment class may result in c. BIL Ratings in Liquid-Immersed liquid-immersed’’ (LFLI) transformers, standard levels that dry-type units are Distribution Transformers these units are marketed to some unable to meet. Therefore, DOE decided During negotiations, several parties applications where a fire would be not to analyze LFLI transformers in the raised the question of whether liquid- especially costly and traditionally same equipment classes as dry-type immersed distribution transformers served by the dry-type market, such as distribution transformers. should have standards set according to indoor applications. Similarly, DOE revisited the issue of BIL rating, as do medium-voltage, dry- During preliminary interviews with whether or not LFLI transformers type distribution transformers. (ABB, manufacturers, DOE was informed that should be analyzed separately from Pub. Mtg. Tr., No. 89 at p. 218) DOE LFLI transformers might offer the same traditional liquid-immersed units. DOE acknowledges that as standards rise, BIL utility as dry-type transformers since concluded, once again, that LFLI ratings which previously had similar they were unlikely to catch fire. transformers could achieve any incremental costs may start to diverge Manufacturers also stated that LFLI efficiency level that mineral oil units and requests comment on whether and transformers could have a minor could achieve. Although their insulating why separate equipment classes are efficiency disadvantage relative to fluids are slightly more viscous, this warranted for liquid-immersed traditional liquid-immersed disadvantage has little efficiency transformers of different BIL ratings. transformers because their more viscous impact, and diminishes as efficiency DOE requests particular comment on insulating fluid requires more internal increases and heat dissipation how many BIL bins are appropriate to ducting to properly circulate. requirements decline. Furthermore, at cover the range and where the specific In the October 2007 final rule, DOE least one manufacturer suggested that boundaries of those bins should lie. determined that LFLI transformers LFLI transformers might be capable of should be considered in the same higher efficiencies than mineral oil 3. Technology Options equipment class as traditional liquid- units because their higher temperature The technology assessment provides immersed transformers. DOE concluded tolerance may allow the unit to be information about existing technology that the design of a transformer (i.e., downsized and run hotter than mineral options to construct more energy- dry-type or liquid-immersed) was a oil units. Additionally, HVOLT agreed efficient distribution transformers. performance-related feature that affects with DOE that high temperature liquid- There are two main types of losses in the energy efficiency of the equipment filled transformer insulation systems transformers: no-load (core) losses and and, therefore, dry-type and liquid- have a similar space factor to mineral oil load (winding) losses. Measures taken to immersed should be analyzed systems and should thus have similar reduce one type of loss typically separately. Furthermore, DOE found losses. (HVOLT, No. 33 at p. 2) For these increase the other type of losses. Some that LFLI transformers could meet the reasons, DOE believes that LFLI examples of technology options to same efficiency levels as traditional transformers would not be improve efficiency include: (1) Higher- liquid-immersed units. As a result, DOE disproportionately affected by standards grade electrical core steels, (2) different

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conductor types and materials, and (3) In consultation with interested are presented in Table IV.2. Further adjustments to core and coil parties, DOE identified several detail on these technology options can configurations. technology options and designs for be found in chapter 3 of the preliminary consideration. These technology options 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 control unit (which consumes little square (RMS) loading specified in the that a new iron-based amorphous alloy power itself) switches on an additional test procedure, where some transformers ribbon for distribution transformers was transformer, which reduces winding in the system could be deactivated. At developed that has enhanced magnetic losses at the cost of additional core loadings where all transformers are properties while remaining ductile after losses. The control unit knows how activated, which may be the case at the annealing. Further, IREQ noted that a efficient each combination of test procedure loading, the combined distribution transformer assembly using transformers is for any given loading, core and coil losses of the system of this technology has been developed. and is constantly monitoring the unit’s transformers could exceed those of a (IREQ, No. 10 at pp. 1–2) power output so that it will use the single, larger transformer. This would DOE was not able to analyze the optimal number of cores. In theory, result in a lower efficiency for the described material in the NOPR phase of there is no limit to the number of system of transformers compared to the the rulemaking, but intends to explore transformers that may operate in single, larger transformer. it further in the final rule. Two of the parallel in this sort of system, but cost challenges facing amorphous steel considerations would imply an optimal In response to the preliminary include availability of the raw material number. analysis, NEMA commented that core deactivation technology is unrelated to and core manufacturing capacity. DOE DOE spoke with a company that is the design of a transformer, but rather is seeks comment and analysis about developing a core deactivation amorphous steels that offer greater raw technology. Noting that many dry-type related to the system of which it is a material availability and greater transformers are operated at very low part. Therefore, NEMA commented, it is capacity to manufacture amorphous loadings a large percentage of the time outside the scope of this rulemaking, core steel. (e.g., a building at night), the company because all transformers must comply a. Core Deactivation seeks to reduce core losses by replacing with DOE regulations. (NEMA, No. 13 at p. 3) ABB agreed that core deactivation As noted previously, core a single, traditional transformer with two or more smaller units that could be technology is not related to the design deactivation technology employs the of a transformer, but rather related to the concept that a system of smaller activated and deactivated in response to design of the system in which the transformers can replace a single, larger load demands. In response to load transformer is deployed. ABB noted that transformer. For example, three 25 kVA demand changes, a special unit controls transformers operating in parallel could the transformers and activates and/or core deactivation technology input replace a single 75 kVA transformer. deactivates them in real-time. voltage source is disconnected from the DOE understands that winding losses Although core deactivation transformer terminals, similar to a are proportionally smaller at lower load technology has some potential to save switchgear component and, as such, is factors, but for any given current, a energy over a real-world loading cycle, not an integral element of the smaller transformer will experience those savings might not be represented distribution transformer any more than greater winding losses than a larger in the current DOE test procedure. a disconnect switch or circuit breaker. transformer. As a result, those losses Presently, the test procedure specifies a ABB commented that DOE does not may be more than offset by the smaller single loading point of 50 percent for consider other systems for energy transformer’s reduced core losses. As liquid-immersed and MVDT efficiency, but if it is to look at core loading increases, winding losses transformers, and 35 percent for LVDT. deactivation technology, perhaps it become proportionally larger and The real gain in efficiency for core should also consider technologies that eventually outweigh the power saved by deactivation technology comes at maintain the load power factor closer to using the smaller core. At that point, the loading points below the root mean unity. (ABB, No. 14 at pp. 3, 6)

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Howard Industries (HI) commented not typically power on at 33 percent and directly analyze core deactivation that core deactivation technology does 66 percent load. Rather, the switching technology, although DOE believes it not currently exist for liquid-immersed point is where the system operates with may be possible to evaluate the transformers, and has not been the lowest total losses and is specific to technology using its existing evaluated for feasibility. In its opinion, the transformer design. (WP, No. 30 at transformer designs. DOE also core deactivation technology could p. 7) Finally, Warner Power stated that acknowledges that operating a core cause several issues, such as flicker core deactivation technology allows a deactivation bank of transformers problems and in-rush current/surge transformer to achieve higher efficiency instead of a single unit may save energy protection. Additionally, HI believed at low loading values. WP hypothesized and lower LCC for certain consumers. that there are patent issues for this that average power consumption will go At present, however, DOE is adopting technology. For these reasons, HI down in buildings and transformer core the position that each of the constituent recommended that DOE not consider losses will start to become more transformers must comply with the core deactivation technology for liquid- significant, thus making core energy conservation standards under the immersed transformers. (HI, No. 23 at deactivation technology more desirable. scope of the rulemaking. (WP, Pub. Mtg. Tr., No. 34 at p. 42) pp. 4, 11) Edison Electric Institute (EEI) b. Symmetric Core agreed that core deactivation should not NRECA and the NRECA Transmission be considered for liquid-immersed & Distribution Engineering Committee DOE understands that several transformers, which face significant (T&DEC) commented that core companies worldwide are commercially load diversity because multiple deactivation technology would be producing three-phase transformers buildings and/or homes can be served extremely difficult to successfully with symmetric cores—those in which by a single transformer. EEI commented implement from an economical each leg of the transformer is identically that, due to this load diversity, it is viewpoint. (NRECA/T&DEC, No. 31 and connected to the other two. The highly unlikely that core deactivation 36 at p. 2) Southern Company (SC) symmetric core uses a continuously would provide energy savings for agreed and noted that core deactivation wound core with 120-degree radial liquid-immersed transformers. (EEI, No. technology does not seem practical or symmetry, resulting in a triangularly 29 at pp. 4–5) cost-effective because it would use more shaped core when viewed from above. materials than a single transformer, In a traditional core, the center leg is HVOLT commented that core which would increase the weight and magnetically distinguishable from the deactivation is not feasible. Based on cost of the unit. SC further noted that other two because it has a shorter HVOLT calculations, core deactivation the increased weight could be average flux path to each. In a only achieves fewer losses than a single, problematic for pole-mounted symmetric core, however, no leg is full-sized unit when loaded below 15 transformers. (SC, No. 22 at p. 3) magnetically distinguishable from the percent. Core deactivation also requires FPT commented that DOE should not other two. considerations for impedance, consider core deactivation in the One manufacturer of symmetric core regulation, switching devices, and efficiency standard rulemaking at this transformers cited several advantages to transformer reliability, making the time because it is only advantageous in the symmetric core design. These technology unattractive for efficiency certain situations with low loading include reduced weight, volume, no- regulations. (HVOLT, No. 33 at pp. 2– requirements, and thus only represents load losses, noise, vibration, stray 3) Furthermore, HVOLT performed a small portion of the market. (FPT, No. magnetic fields, inrush current, and loading analyses of core deactivation 27 at p. 3) Rather, FPT suggested that power in the third harmonic. Thus far, technology and found that the only DOE encourage users to de-energize the DOE has seen limited cost and loading point where it beats traditional LVDT from the primary switch/breaker. efficiency data for only a few symmetric transformers was at zero percent. FPT also noted that the technology core units from testing done by (HVOLT, Pub. Mtg. Tr., No. 34 at p. 60) would face challenges with medium- manufacturers. DOE has not seen any However, Warner Power indicated that voltage transformers, such as pre-strikes, designs for symmetric core units HVOLT’s analysis was based on re-strikes, ferroresonance, and reducing modeled in a software program. assumed numbers rather than actual the life of the primary circuit DOE understands that, because of designs and stated that core deactivation sectionalizing device. (FPT, No. 27 at p. zero-sequence fluxes associated with technology is more efficient than 3) wye-wye connected transformers, HVOLT’s analysis indicated. (WP, Pub. Berman Economics was interested to symmetric core designs are best suited Mtg. Tr., No. 34 at p. 62) Warner Power know if DOE would also be looking at to delta-delta or delta-wye connections. also commented that the 0.75 scaling the potential differences in stress and While traditional cores can circumvent factor did not accurately capture the wear on the transformer as one is the problem of zero-sequence fluxes by efficiency of the smaller component activating and deactivating the core introducing a fourth or fifth unwound transformers in a core deactivation deactivation transformer. (BE, Pub. Mtg. leg, core symmetry makes extra legs system and asserted that it would prefer Tr, No. 34 at p. 62) inherently impractical. Another way to to see a linear scaling factor (WP, No. 30 DOE appreciates all of the comments mitigate zero-sequence fluxes comes in at pp. 6–7, 11). Furthermore, Warner from interested parties regarding core the form of a tertiary winding, which is Power pointed out that core deactivation technology. DOE delta-connected and has no external deactivation technology is better suited understands that core deactivation connections. This winding is dormant for many small loads than for large, technology is most easily implemented when the transformer’s load is balanced discrete loads. The multiple, smaller in LVDT distribution transformer across its phases. Although symmetric loads create a smooth load profile designs. Implementing core deactivation core designs may, in theory, be made throughout the day without sudden technology in medium-voltage tolerant of zero-sequence fluxes by large demands. (WP, No. 30 at p. 7) distribution transformers is possible, but employing this method, this would Warner Power also commented that, for poses difficulties for switching the come at extra cost and complexity. core deactivation technology, it is primary and secondary connections. For Using this tertiary winding, DOE important to note that the secondary the NOPR, DOE has not fully quantified believes that symmetric core designs and tertiary component transformers do these difficulties because it did not can service nearly all distribution

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transformer applications in the United manufacture and require specialized models to simulate the cost and States. Most dry-type transformers have equipment that is currently uncommon efficiency of a comparable symmetric a delta connection and would not in the industry. However, DOE did not core design. To do this, DOE reduced require a tertiary winding. Similarly, find a reasonable basis to screen this core losses and core weight while most liquid-immersed transformers technology option out of the analysis, increasing labor costs to approximate serving the industrial sector have a delta and is aware of at least one the symmetric core designs. These connection. These market segments manufacturer producing dry-type adjustments were based on data could use the symmetric core design symmetric core designs commercially in received from manufacturers, published without any modification for a tertiary the United States. literature, and through conversations For the preliminary analysis, DOE winding. However, in the United States with manufacturers. Table IV.3 most utility-operated distribution lacked the data necessary to perform a indicates the range of potential transformers are wye-wye connected. thorough engineering analysis of adjustments for each variable that DOE These transformers would require the symmetric core designs. To generate a considered and the mean value used in tertiary winding in a symmetric core cost-efficiency relationship for design. symmetric core design transformers, the analysis. DOE understands that symmetric core DOE made several assumptions. DOE designs are more challenging to adjusted its traditional core design

TABLE IV.3—SYMMETRIC CORE DESIGN ADJUSTMENTS

[Percentage changes] Range Core losses Core weight (W) (lbs) 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 that there are several variations of the significantly less expensive than flat of the traditional three-phase symmetric core design being made stack steel equipment and that the labor transformer designs to develop a cost- around the world and that licenses are production times are lower. (HEX, Pub. efficiency relationship for symmetric available. Furthermore, it commented Mtg. Tr., No. 34 at p. 52) Hex Tec added core technology. DOE did not model a that amorphous metal suppliers are that labor requirements, both TAC time tertiary winding for the wye-wye emerging in India and China, and process times, are lower for connected liquid-immersed design lines concluding that there are no barriers to symmetric core designs than for (DLs). Based on its research, DOE adopting symmetric core technology conventional designs. (HEX, No. 35 at believes that the losses associated with with an amorphous core. (HEX, No. 35 p. 2) the tertiary winding may offset the at p. 1) Hex Tec pointed out that Hex Tec submitted data showing that benefits of the symmetric core design amorphous units up to 3 MVA in size the weight of three-phase, 75 kVA LVDT and that the tertiary winding will add have been produced using Evans symmetric core designs ranged from 390 cost to the design. Therefore, DOE distributed gap core construction, but to 600 pounds between 98.6 and 99.2 modeled symmetric core designs for the are labor intensive and difficult to percent efficiency. These weights are three-phase, liquid-immersed design produce, and concluded that amorphous lower than the weights of comparably lines without a tertiary winding to designs are easier to make using a efficient designs using conventional examine the impact of symmetric core symmetric core. (HEX, No. 35 at p. 1) cores. (HEX, No. 35 at p. 7) Hex Tec also technology on the subgroup of Finally, Hex Tec submitted a letter submitted data comparing the applications that do not require the written by the Vice President of efficiency, dimensions, core and coil tertiary winding. Research & Development at Metglas that material content, and cost of several conventional designs for three-phase, 75 NPCC and NEEA jointly commented indicates that symmetric core units kVA LVDT units to those of otherwise that DOE should revise its assumptions using amorphous steel of 15 to 100 kVA identical symmetric core designs. (HEX, about costs and limitations of symmetric demonstrated core losses of 0.13 Watts/ No. 35 at p. 8) Hex Tec noted it took the core designs in accordance with lb at an induction of 1.2 T. The letter same amount of labor time as a major information provided by manufacturers also noted that audible sound levels conventional-design manufacturer to of these technologies. (NPCC/NEEA, No. were low. (HEX, No. 35 at p. 14) produce a three-phase 75 kVA LVDT 11 at p. 2) Furthermore, NPCC and Hammond (HPS) commented that its rated at CSL3,25 and that it was able to NEEA noted that DOE should revise its analytical and prototype work indicated do so with lower material costs. (HEX, analysis for symmetric core designs to that symmetric core designs do not Pub. Mtg. Tr., No. 34 at p. 110) Hex Tec account for labor costs that mirror those experience a core loss advantage but do also submitted data showing of conventional core designs. NPCC and have higher manufacturing costs. (HPS, comparisons between the weight, losses, NEEA recommended that DOE request No. 3 at p. 2) However, Hex Tec and costs of conventional core designs additional data from manufacturers that commented that it builds symmetric and symmetric core designs at 1000 are producing this technology. (NPCC/ cores with labor costs and material NEEA, No. 11 at pp. 4, 6) savings that are comparable to those 25 ‘‘Candidate Standard Levels’’ (CSLs) are Hex Tec (HEX) commented that DOE incurred by conventional construction. analogous to the Efficiency Levels (ELs) DOE should consider a symmetric core (HEX, Pub. Mtg. Tr., No. 34 at p. 25) Hex utilizes together in the NOPR to create Trial Standard Levels (TSLs). This particular commenter design using amorphous core steel in its Tec noted that the equipment to refers to CSL3 from the 2007 rulemaking, not the evaluation. (HEX, No. 35 at p. 1) It noted produce symmetric wound cores is present one.

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kVA and 2000 kVA for MVDTs. (HEX, kVA sizes and 35 kV. (HI, No. 23 at pp. symmetric cores. Moreover, Hexaformer No. 35 at pp. 9–10) 3–4, 6–7, 11) Finally, Howard AB and other companies owning Warner Power pointed out that recent commented that all efficiency intellectual property related to the improvements in the manufacturing improvements for symmetric core manufacture of symmetric core designs process for symmetric core designs, liquid-immersed designs are theoretical have demonstrated an eagerness to leveraged by increasing volumes, will at this point. (HI, No. 23 at pp. 3–4, 6– license such technology to others that bring labor costs down to approximately 7, 11) are using it to build symmetric core 10 percent below labor costs for Southern Company commented that transformers commercially today. conventional cores. (WP, No. 30 at p. 3) symmetric core technology is not Warner Power commented that the Warner Power commented that feasible for utility applications because well-known symmetric core design symmetric cores use a wound core with they require wye-wye connections, (Hexaformers) is subject to worldwide no scrap and approximately 15 percent while symmetric cores have a delta patents for the core winding and lower weight than that of conventional connection. SC noted that, while a assembly process, but multiple licenses cores. (WP, No. 30 at p. 3) Warner felt tertiary winding may enable the have been authorized and the IP owner that DOE’s symmetric core analysis symmetric core design to be connected has indicated it will entertain additional contained some significant errors that in the system, SC has had trouble in the licenses. The basic design concept is not would generate the wrong output, and past with tertiary windings and has patented, and several other that the manufacturing cost estimates discontinued purchasing transformers manufacturers make symmetric cores, so for symmetric cores were overstated. that use them. (SC, No. 22 at p. 2) patents should not be a limiting factor. (WP, No. 30 at p. 9; WP Pub. Mtg. Tr., Howard Industries and HVOLT also (WP, No. 30 at pp. 3–4) No. 34 at p. 111) noted that most utility transformers are EEI noted that, if certain higher- Power Partners commented that DOE wye-wye connected and would need a efficiency designs are covered by should not set a standard based on delta tertiary winding to use symmetric patents, then the number of symmetric core designs because they are core technology, which would drive manufacturers may decrease, which not common in the industry and could down efficiency while increasing costs. would increase transformer prices. It place an unreasonable burden on (HI, No. 23 at pp. 3–4, 6–7, 11; HVOLT, recommended that DOE discuss any smaller manufacturers who would be Pub. Mtg. Tr., No. 34 at p. 50; HVOLT, relevant patents and indicate whether unable to invest in the equipment Pub. Mtg. Tr., No. 34 at p. 50) they will be in place after 2016. (EEI, necessary for the technology. (PP, No. DOE attempts to consider all designs No. 29 at p. 10) 19 at p. 2) NEMA agreed, commenting that are technologically feasible and DOE understands that symmetric core that symmetric core is in its infancy and practicable to manufacture and believes technology may ultimately offer a lower- has low penetration in the industry and that symmetric core designs can meet cost path to higher efficiency, at least in should not be introduced into the these criteria. However, DOE has not certain applications, and that few regulation until it has been proven in been able to obtain or produce sufficient symmetric cores are produced in the the marketplace. (NEMA, No. 13 at p. 3) data to modify its analysis of symmetric United States. However, DOE notes FPT commented that symmetric core cores since the preliminary analysis. again that it has been unable to secure technology should not be used as the Therefore, although not screened out, data that are sufficiently robust for use basis for increasing efficiency levels and DOE has not considered symmetric core as the basis for an energy conservation noted that, while the technology may be designs for its NOPR analyses. DOE standard, but encourages interested advantageous in some areas, it may welcomes comment and submission of parties to submit data that would assist present problems with larger engineering data that would be useful in in DOE’s analysis of symmetric core transformers. (FPT, No. 27 at pp. 3–4, analyzing symmetric core designs in the technology. 13) Warner Power disagreed and stated final rule. that symmetric core designs and core B. Screening Analysis c. Intellectual Property deactivation technology should be DOE uses the following four screening included in the scope of DOE’s analysis, In setting standards, DOE seeks to criteria to determine which design recommending several symmetric core analyze the efficiency potentials of options are suitable for further and core deactivation design option commercially available technologies consideration in a standards combinations. (WP, No. 30 at p. 9) and working prototypes as well as the rulemaking: NEEA reiterated that symmetric core availability of those technologies to the 1. Technological feasibility. manufacturers have stated that there market at-large. If certain market Technologies incorporated in should not be any patent concerns for participants own intellectual property commercial products or in working the technology, since it is not yet that enable them to reach efficiencies prototypes will be considered to be patented. (NEEA, No. 11 at p. 4; NEEA, that other participants practically technologically feasible. Pub. Mtg. Tr., No. 34 at p. 261) Howard cannot, amended standards may reduce 2. Practicability to manufacture, Industries disagreed and commented the competitiveness of the market. install, and service. If mass production that DOE should not consider In the case of distribution of a technology in commercial products symmetric core technology because it is transformers, stakeholders have raised and reliable installation and servicing of patented by Hexaformer AB of Sweden, potential intellectual property concerns the technology could be achieved on the which would result in increased surrounding both symmetric core scale necessary to serve the relevant licensing costs. (HI, No. 23 at pp. 3–4, technology and amorphous metals in market at the time of the effective date 6–7, 11) Furthermore, HI noted that no particular. DOE currently understands of the standards, then that technology manufacturers in North America that symmetric core technology itself is will be considered practicable to currently produce the design for liquid- not proprietary, but that one of the more manufacture, install, and service. immersed units. (HI, No. 23 at pp. 3–4, commonly employed methods of 3. Impacts on product utility to 6–7, 11) HI also pointed out that production is the property of the consumers. If a technology is Hexaformer AB does not produce units Swedish company Hexaformer AB. determined to have significant adverse higher than 200 kVA and 24 kV, However, Hexaformer AB’s method is impact on the utility of the product to whereas most utilities require larger not the only one capable of producing significant subgroups of consumers, or

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result in the unavailability of any (10 CFR part 430, subpart C, appendix manufacture, install, and service; would covered product type with performance A) adversely affect equipment utility or characteristics (including reliability), In the preliminary analysis, DOE equipment availability; or would have features, sizes, capacities, and volumes identified the technologies for adverse impacts on health and safety. In that are substantially the same as improving distribution transformer the engineering analysis, DOE only products generally available in the efficiency that were under considered those design options that United States at the time, it will not be consideration. DOE developed this satisfied the four screening criteria. The considered further. initial list of design options from the design options that DOE did not 4. Safety of technologies. If it is technologies identified in the consider because they were screened determined that a technology will have technology assessment. Then DOE out are summarized in Table IV.4. significant adverse impacts on health or reviewed the list to determine if the safety, it will not be considered further. design options are practicable to

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 serv- ice. Amorphous Core Material in Stacked Core Configuration ...... Technological feasibility; Practicability to manufacture, install, and serv- ice. 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 serv- ice. Nanotechnology Composites ...... Technological feasibility.

Chapter 4 of the TSD discusses each may have high resistivity, high determines the maximum of these screened-out design options in permeability, or other properties that technologically feasible energy more detail. The chapter also includes make them attractive for use in efficiency level. a list of emerging technologies that electrical transformers. DOE knows of DOE must consider those distribution could impact future distribution no current commercial efforts to employ transformers that are designed to transformer manufacturing costs. these materials in distribution achieve the maximum improvement in Multiple interested parties transformers and no prototype designs energy efficiency that the Secretary of commented that they agreed with the using this technology, but welcomes Energy determines to be technologically technology options screened out of the comment on such technology and its feasible and economically justified. (42 analysis by DOE. (EEI, No. 29 at p. 5; HI, implications for the future of the U.S.C. 6295(o)(2)(A)) Therefore, an No. 23 at p. 5; NPCC/NEEA, No. 11 at industry. important role of the engineering p. 3) Metglas concurred that using NEMA and ABB Transformers both analysis is to identify the maximum amorphous metals in a stack core commented that, because technologically feasible efficiency level. configuration is technically infeasible. nanotechnology composite technology The maximum technologically feasible (Metglas, Pub. Mtg. Tr., No. 34 at p. 66) is not commercially available in the level is one that can be reached by Howard Industries also recommended U.S., manufacturers cannot discuss it adding efficiency improvements and/or that DOE screen out symmetric core publicly. (NEMA, No. 13 at p. 4; ABB, design options, both commercially designs and core deactivation No. 14 at p. 7) Howard Industries, Inc. feasible and in prototypes, to the technology from their analysis based on was unaware of any nanotechnology baseline units. DOE believes that the proprietary concerns. (HI, No. 23 at composite technology for distribution design options comprising the p. 5) transformers. (HI, No. 23 at p. 4) maximum technologically feasible level DOE appreciates the feedback and DOE appreciates confirmatory must have been physically remains interested in advances that feedback, and does not propose to demonstrated in a prototype form to be would allow a currently screened consider nanotechnology composites in considered technologically feasible. technology to be considered as a design the current rulemaking. In general, DOE can use three option. As for symmetric core designs, C. Engineering Analysis methodologies to generate the DOE has not screened this technology manufacturing costs needed for the out because it is aware that The engineering analysis develops engineering analysis. These methods manufacturers around the world are cost-efficiency relationships for the are: building and selling such transformers. equipment that are the subject of a However, without additional rulemaking by estimating manufacturer (1) The design-option approach— information regarding the technology, costs of achieving increased efficiency reporting the incremental costs of DOE has been unable to fully evaluate levels. DOE uses manufacturing costs to adding design options to a baseline this as a design option. determine retail prices for use in the model; LCC analysis and MIA. In general, the (2) The efficiency-level approach— 1. Nanotechnology Composites engineering analysis estimates the reporting relative costs of achieving DOE understands that the efficiency improvement potential of improvements in energy efficiency; and nanotechnology field is actively individual design options or (3) The reverse engineering or cost researching ways to produce bulk combinations of design options that assessment approach—involving a material with desirable features on a pass the four criteria in the screening ‘‘bottom up’’ manufacturing cost molecular scale. Some of these materials analysis. The engineering analysis also assessment based on a detailed bill of

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materials derived from transformer transformers. It found that many of the option combination and A and B teardowns. units share similar designs and combination, the OPS software DOE’s analysis for the distribution construction methods. Thus, DOE generated an optimized transformer transformers rulemaking is based on the simplified the analysis by creating design based on the material prices that design-option approach, in which engineering design lines (DLs), which were also part of the inputs. design software is used to assess the group kVA ratings based on similar Consequently, DOE obtained thousands cost-efficiency relationship between principles of design and construction. of transformer designs for each various design option combinations. The DLs subdivide the equipment representative unit. The performance of This is the same approach that was classes, to improve the accuracy of the these designs ranged in efficiency from taken in the previous rulemaking for engineering analysis. These DLs a baseline level, equivalent to the distribution transformers. differentiate the transformers by current distribution transformer energy insulation type (liquid-immersed or dry- 1. Engineering Analysis Methodology conservation standards, to a theoretical type), number of phases (single or max-tech efficiency level. When developing its engineering three), and primary insulation levels for After generating each design, DOE analysis for distribution transformers, medium-voltage, dry-type (three used the outputs of the OPS software to DOE divided the covered equipment different BIL levels). into equipment classes. As discussed, After developing its DLs, DOE then help create a manufacturer selling price distribution transformers are classified selected one representative unit from (MSP). The material cost outputs of the by insulation type (liquid-immersed or each DL for study in the engineering OPS software, along with labor dry-type), number of phases (single or analysis, greatly reducing the number of estimates were marked up for scrap three), primary voltage (low-voltage or units for direct analysis. For each factors, factory overhead, shipping, and medium-voltage for dry-types) and basic representative unit, DOE generated non-production costs to generate an impulse insulation level (BIL) rating (for hundreds of unique designs by MSP for each design. Thus, DOE dry-types). Using these transformer contracting with Optimized Program obtained a cost versus efficiency design characteristics, DOE developed Services, Inc. (OPS), a software relationship for each representative ten equipment classes. Within each of company specializing in transformer unit. Finally, after DOE had generated these equipment classes, DOE further design since 1969. The OPS software the MSPs versus efficiency relationship classified distribution transformers by used three primary inputs that it for each representative unit, it their kilovolt-ampere (kVA) rating. received from DOE, (1) a design option extrapolated the results the other, These kVA ratings are essentially size combination, which included core steel unanalyzed, kVA ratings within that categories, indicating the power grade, primary and secondary conductor same engineering design line. handling capacity of the transformers. material, and core configuration; (2) a 2. Representative Units For DOE’s rulemaking there are over 100 loss valuation combination; and (3) kVA ratings across all ten equipment material prices. For each representative For the preliminary analysis, DOE classes. unit, DOE examined anywhere from 8 to analyzed 13 DLs that cover the range of DOE recognized that it would be 16 design option combinations and for equipment classes within the impractical to conduct a detailed each design option combination, the distribution transformer market. Within engineering analysis on all kVA ratings, OPS software generated 518 designs each DL, DOE selected a representative so it sought to develop an approach that based off of unique loss valuation unit to analyze in the engineering simplified the analysis while retaining combinations. These loss valuation analysis. A representative unit is meant reasonable levels of accuracy. DOE combinations are known in industry as to be an idealized distribution consulted with industry representatives A and B evaluation combinations and transformer typical of those used in high and transformer design engineers to represent a customer’s present value of volume applications. Table IV.5 outlines develop an understanding of the future losses in a transformer core and the design lines and representative units construction principles for distribution winding, respectively. For each design selected for each equipment class.

TABLE IV.5—ENGINEERING DESIGN LINES AND REPRESENTATIVE UNITS FOR ANALYSIS

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

1 ...... 1 ...... Liquid-immersed, single-phase, rectangular tank ...... 10–167 50 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 240/120V secondary, rectangular tank. 2 ...... Liquid-immersed, single-phase, round tank ...... 10–167 25 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 120/240V secondary, round tank. 3 ...... Liquid-immersed, single-phase ...... 250–833 500 kVA, 65 °C, single-phase, 60Hz, 14400V primary, 277V secondary.

2 ...... 4 ...... Liquid-immersed, three-phase ...... 15–500 150 kVA, 65 °C, three-phase, 60Hz, 12470Y/7200V pri- mary, 208Y/120V secondary. 5 ...... Liquid-immersed, three-phase...... 750–2500 1500 kVA, 65 °C, three-phase, 60Hz, 24940GrdY/ 14400V primary, 480Y/277V secondary.

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 pri- mary, 208Y/120V secondary, 10kV BIL.

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TABLE IV.5—ENGINEERING DESIGN LINES AND REPRESENTATIVE UNITS FOR ANALYSIS—Continued

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

6 ...... 9 ...... Dry-type, medium-voltage, three-phase, 20–45kV BIL 15–500 300 kVA, 150 °C, three-phase, 60Hz, 4160V Delta pri- mary, 480Y/277V secondary, 45kV BIL. 10 ..... Dry-type, medium-voltage, three-phase, 20–45kV BIL 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 4160V primary, 480Y/277V secondary, 45kV BIL.

8 ...... 11 ..... Dry-type, medium-voltage, three-phase, 46–95kV BIL 15–500 300 kVA, 150 °C, three-phase, 60Hz, 12470V primary, 480Y/277V secondary, 95kV BIL. 12 ..... Dry-type, medium-voltage, three-phase, 46–95kV BIL 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 12470V primary, 480Y/277V secondary, 95kV BIL.

10 ...... 13 ..... Dry-type, medium-voltage, three-phase, 96–150kV BIL 225–2500 2000 kVA, 150 °C, three-phase, 60Hz, 12470V primary, 480Y/277V secondary, 125kV BIL. * EC = Equipment Class

ABB commented that the definition of BIL) three-phase representative unit to EC9 to align with 10 CFR 431.192. design lines for equipment class 4 better represent the range of BILs (ABB, No. 14 at p. 10) leaves an uncovered kVA range from covered and to provide for more NEMA commented that it found the 150 kVA to 225 kVA, and recommended accurate scaling. (ABB, No. 14 at p. 11) representative unit for DL 5, DL 13, and that DOE extend the scope of DL 8 to be To improve the scaling within the LVDT the units for the single-phase liquid- 150–1000 kVA. (ABB, No. 14 at p. 12) equipment classes, ABB also immersed design lines all to be In view of the ABB comment, DOE recommended that DOE consider a 100 satisfactory. (NEMA, No. 13 at p. 4) would like to clarify that DL 7 covers kVA (10 BIL) single-phase However, NEMA stated that DOE should kVA ratings up through 150 kVA, and representative unit and a 25 kVA (10 consider at least one representative unit that DL 8 covers kVA ratings beginning BIL) three-phase unit. (ABB, No. 14 at for each of the three equipment classes with 225 kVA. DOE does not specify p. 12) For DL13, ABB recommended for single-phase medium-voltage dry- any ratings in between 150 and 225 kVA that DOE consider a representative unit type transformers. (NEMA, No. 13 at p. because it is not aware of any standard in the 200 kV BIL class, such as 34500 5) NEMA also suggested an additional ratings between these two ratings. V (200 BIL). For EC 10, ABB representative unit for each of the three Furthermore, 10 CFR 431.196(a) states recommended that DOE consider a LVDT design lines. (NEMA, No. 13 at p. that low-voltage dry-type distribution representative unit at 200 kV BIL in 5) For DL1, NEMA commented that DOE transformers with kVA ratings not order to analyze a unit at the upper limit should examine an additional appearing in the table [of designated of the BIL rating for the equipment representative unit of 167 kVA, 65 kVA ratings and efficiencies] shall have class. (ABB, No. 14 at p. 10) degrees Celsius, single-phase, 60 Hz, their minimum efficiency level 14400V primary, 240/120 secondary, determined by linear interpolation of ABB also disagreed with the rectangular tank. (NEMA, No. 13 at p. 4) the kVA and efficiency values assumption that single-phase MVDT For DL2, NEMA felt that DOE should immediately above and below that kVA units have one-third the losses of three- examine an additional representative rating. Therefore, DOE has not altered phase MVDT units and commented that unit of 100 kVA, 65 degrees Celsius, the design lines for low-voltage dry-type DOE should directly analyze single- single-phase, 60 Hz, 14400V primary, transformers. phase MVDT units. It further noted that 120/240 secondary, round tank. (NEMA, Additionally, ABB had several this assumption was not made for No. 13 at p. 5) recommendations for DOE regarding liquid-immersed or LVDT units. (ABB, Howard Industries also recommended representative units. First, ABB No. 14 at pp. 5, 10) ABB suggested that several representative units for DOE to commented that DOE correctly noted in DOE analyze several single-phase consider. Howard noted that it is not the 2007 rulemaking that BIL does not MVDT representative units including optimum to require the same efficiency impact efficiency for liquid-immersed the following: 50 kVA (45 BIL), 300 kVA for the entire range of BIL ratings for transformers as significantly as it (45 BIL), 50 kVA (95 BIL), and 300 kVA liquid-immersed distribution impacts MVDT units. However, since (95 BIL). ABB also recommended that transformers. It suggested that DOE DOE does not separate out the liquid- DOE analyze 150 kVA (200 BIL) and 500 examine representative units with immersed efficiency levels by BIL and kVA (200 BIL) units if DOE does not higher BIL ratings for the single-phase performs its analysis on the 15 kV change the definition of EC 9, or 50 kVA liquid-immersed design lines, such as voltage class, it understates the energy (200 BIL) and 300 kVA (200 BIL) if it 19920 V (150 kV BIL), as well as for savings for units with a higher BIL and does change the definition of EC 9 to dual primary voltage ratings, such as makes it more difficult for these units to align with 10 CFR part 431.192. (ABB, 7200 × 19920 V primary voltages. (HI, meet the efficiency standard. ABB No. 14 at p. 10) To provide for better No. 23 at p. 5) Also, Howard Industries recommended that DOE analyze scaling, ABB recommended that DOE recommended that DOE consider a representative units for liquid-immersed consider the following representative representative unit for DL5 with a 150 design lines in the 200 kV BIL class, units for three-phase MVDT: 30 kVA (45 kV BIL and a dual voltage primary, such such as a 34500 V (200 BIL) unit. (ABB, BIL), and 30 kVA (95 BIL). ABB also as 12470GRDY/7200 x 24500GRDY/ No. 14 at pp. 7–8) For the liquid- recommended that DOE analyze 500 19920. (HI, No. 23 p. 5) Further, it immersed design lines, ABB kVA (200 BIL) units if it does not commented that large three-phase recommended that DOE consider a 150 change the definition of EC10, or 30 liquid-immersed transformers with low- kVA (200 BIL) single-phase kVA (200 BIL) and 300 kVA (200 BIL) voltage ratings, such as 208Y/120, representative unit and a 30 kVA (200 units if it does change the definition of should be examined because these

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designs are difficult to manufacture minimum, consider 14400/24940Y (125 Overall, NPCC and NEEA commented even under the present efficiency BIL). Power Partners noted that it is that the representative units selected standards. (HI, No. 23 at p. 5) Finally, more difficult to meet the efficiency should accurately represent products Howard Industries noted that DOE may standards at these higher voltages, and that are being sold in the marketplace, need to consider additional suggested detailed specifications for and recommended that DOE adjust its representative units in order to perform revision to the representative units for analysis based on feedback from accurate scaling for pole type DL2 and DL3. (PP, No. 19 at pp. 2–3) manufacturers. (NPCC/NEEA, No. 11 at transformers. It recommended that DOE In regards to the representative unit p. 5) consider kVA ranges of 10–50 kVA, 75– for DL13, FPT commented that dry-type In view of the above comments, DOE 167 kVA, and 250–833 kVA for accurate transformers with primaries rated for slightly modified its representative units scaling of pole-mount units. (HI, No. 23 125 kV BIL are more commonly rated at for the NOPR analysis. For the NOPR, at p. 8) 24900V and 150 kV BIL units typically DOE analyzed the same 13 Power Partners noted that it could not have 34500 volt primaries. (FPT, No. 27 representative units as in the determine the BIL rating for design line at p. 14) Hex Tec stated that, for DL 13, preliminary analysis, but also added a 1. (PP, Pub. Mtg. Tr., No. 34 at p. 71) ‘‘MVDT three-phase units, 2000 kVA design line, and therefore representative Howard Industries and Power Partners 12470, 480/277 with a 95 kV BIL is the unit, by splitting the former design line both supported using 125 BIL 14400 workhorse of that market.’’ (HEX, Pub. 13 into two new design lines, 13A and volt designs for design lines 1–3. (PP, Mtg. Tr., No. 34 at p. 81) For 96–150 kV 13B. This new representative unit is Pub. Mtg. Tr., No. 34 at p. 72; HI, Pub. BIL, FPT believed that 24900 or 24940 shown in Table IV.6. The representative Mtg. Tr., No. 34 at p. 72) NRECA and volts would be more appropriate for the units selected by DOE were chosen T&DEC commented that the 14.4 kV primary voltage of the representative because they comprise high volume primary voltage selected for DOE’s unit in DL13. (FPT, Pub. Mtg. Tr., No. segments of the market for their analysis of design lines 1 through 3 is 34 at p. 81) Hammond commented that respective design lines and also provide, appropriate in that it represents a large the representative unit for DL13 should in DOE’s view, a reasonable basis for portion of the market. However, they have a primary of 24940 V Delta for the scaling to the unanalyzed kVA ratings. commented that DOE should explain 125 kV BIL. (HPS, No. 3 at p. 3) DOE chooses certain designs to analyze how other voltages above and below this Schneider Electric (SE) suggested as representative of a particular design level would be impacted. (NRECA/ adding another design line for low- line or design lines because it is T&DEC, No. 31 and 36 at p. 3) In DL 3, voltage three-phase units at 15 kVA. SE impractical to analyze all possible PP suggested analyzing the smallest and felt that this would be beneficial to the designs in the scope of coverage for this largest transformers in addition to the national impact analysis because that rulemaking. DOE will consider midpoint. (PP, Pub. Mtg. Tr., No. 34 at design line is readily available in the extending its direct analysis further to p. 136) Power Partners would support marketplace. (SE, Pub. Mtg. Tr., No. 34 substantiate the efficiency standard the use of 14400 volt 125 BIL coil at p. 83) SE also commented that DOE proposed for the final rule and will voltage as the means of analysis for all should analyze two representative units publish sensitivity results to help assess liquid-filled design lines. (PP, Pub. Mtg. for each of the three existing LVDT the accuracy of its analysis in the areas Tr., No. 34 at p. 83) PP would also design lines. It recommended that DOE not directly analyzed. DOE also notes support 14400 volts in the design lines split the analyzed kVA ranges into two that as a part of the negotiations process, for single-phase liquid-immersed ranges and analyze a representative unit DOE has worked directly with multiple transformers. (PP, Pub. Mtg. Tr., No. 34 in each. (SE, No. 18 at p. 7) interested parties to develop a new at p. 71) It commented that DOE should Central Moloney commented that the scaling methodology for the NOPR that increase the voltage of its liquid- 25 kVA pole unit is shown as 240/120 addresses some of the aforementioned immersed representative units to but that the standard is 120/240. (CM, interested party concerns regarding 34500GY/19920 (150 BIL) or, at a Pub. Mtg. Tr., No. 34 at p. 72) scaling.

TABLE IV.6—ENGINEERING DESIGN LINES (DLS) AND REPRESENTATIVE UNITS FOR ANALYSIS

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

1 ...... 1 ...... Liquid-immersed, single-phase, rectangular tank .... 10–167 50 kVA, 65 °C, single-phase, 60Hz, 14400V pri- mary, 240/120V secondary, rectangular tank, 95kV BIL. 2 ...... Liquid-immersed, single-phase, round tank ...... 10–167 25 kVA, 65 °C, single-phase, 60Hz, 14400V pri- mary, 120/240V secondary, round tank, 125 kV BIL. 3 ...... Liquid-immersed, single-phase ...... 250–833 500 kVA, 65 °C, single-phase, 60Hz, 14400V pri- mary, 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 pri- mary, 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-phase, 20–45kV 15–500 300 kVA, 150 °C, three-phase, 60Hz, 4160V Delta BIL. primary, 480Y/277V secondary, 45kV BIL.

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TABLE IV.6—ENGINEERING DESIGN LINES (DLS) AND REPRESENTATIVE UNITS FOR ANALYSIS—Continued

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

10 ...... Dry-type, medium-voltage, three-phase, 20–45kV 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 4160V pri- BIL. mary, 480Y/277V secondary, 45kV BIL. 8 ...... 11 ...... Dry-type, medium-voltage, three-phase, 46–95kV 15–500 300 kVA, 150 °C, three-phase, 60Hz, 12470V pri- BIL. mary, 480Y/277V secondary, 95kV BIL. 12 ...... Dry-type, medium-voltage, three-phase, 46–95kV 750–2500 1500 kVA, 150 °C, three-phase, 60Hz, 12470V pri- BIL. mary, 480Y/277V secondary, 95kV BIL. 10 ...... 13A ...... Dry-type, medium-voltage, three-phase, 96–150kV 75–833 300 kVA, 150 °C, three-phase, 60Hz, 24940V pri- BIL. mary, 480Y/277V secondary, 125kV BIL. 13B ...... Dry-type, medium-voltage, three-phase, 96–150kV 225–2500 2000 kVA, 150 °C, three-phase, 60Hz, 24940V pri- BIL. mary, 480Y/277V secondary, 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 that aluminum has become relatively Mtg. Tr., No. 34 at p. 261) Lastly, There are many different more common. This is due to the HVOLT noted that wound cores in kVA combinations of design options that relative prices of copper and aluminum. sizes beyond 300 kVA will tend to buzz, could be considered for each In recent years, copper has become even but Hex Tec clarified that the wound representative unit DOE analyzes. While more expensive compared to aluminum. cores used in symmetric core designs DOE also noted that certain design DOE cannot consider all the possible above 300 kVA do not induce any lines were lacking a design to bridge the combinations of design options, DOE additional audible sound. (HVOLT, Pub. efficiency values between the lowest Mtg. Tr., No. 34 at p. 51; Hex Tec, Pub. attempts to select design option efficiency amorphous designs and the combinations that are common in the Mtg. Tr., No. 34 at p. 51) next highest efficiency designs. In an DOE clarifies that although it was not industry while also spanning the range effort to close that gap for the done so in the preliminary analysis, of possible efficiencies for a given DL. preliminary analysis, DOE evaluated DOE has incorporated its supplementary For each design option combination ZDMH and M2 core steel as the highest designs into the reference case for the chosen, DOE evaluates 518 designs efficiency designs below amorphous for NOPR analysis. Additionally, DOE aims based on different A and B factor 26 the liquid-immersed design lines. to consider the most popular design combinations. For the engineering Similarly, DOE evaluated H–0 DR and option combinations, and the design analysis, DOE reused many of the M3 core steel as the highest efficiency option combinations that yield the design option combinations that were designs below amorphous for dry-type greatest improvements in efficiency. analyzed in the previous rulemaking for design lines. While DOE is unable to consider all distribution transformers. The joint comments submitted by potential design option combinations, it For the preliminary analysis, DOE NPCC and NEEA as well as those does consider multiple designs for each considered a design option combination submitted by ASAP, ACEEE, and NRDC representative unit and has considered that uses an amorphous steel core for indicated that DOE should include these additional design options in its NOPR each of the dry-type design lines, supplementary designs in the reference analysis based on stakeholder whereas DOE’s previous rulemaking did case analysis for the NOPR. (NPCC/ comments. not consider amorphous steel designs NEEA, No. 11 at pp. 5–6; ASAP/ACEEE/ As for wound core designs, DOE did for the dry-type design lines. Instead, NRDC, No. 28 at p. 3) NPCC and NEEA consider analyzing them for all of its DOE had considered H–0 domain added that DOE should consider all dry-type representative units that are refined (H–0 DR) steel as the maximum- potential design options in its analyses 300 kVA or less in the NOPR. However, technologically feasible design. to ensure that all the cost-effective based on limited availability in the However, DOE is aware that amorphous means of reaching higher efficiencies United States, DOE did not believe that steel designs are now used in dry-type have been considered. (NPCC/NEEA, it was feasible to include these designs distribution transformers. Therefore, No. 11 at p. 4) For example, several in their final engineering results. For DOE considered amorphous steel stakeholders recommended that DOE similar availability reasons, DOE chose designs for each of the dry-type examine wound core designs for its to exclude its wound core ZDMH and transformer design lines in the analysis of dry-type distribution M3 designs from its low-voltage dry- preliminary analysis. transformers. (NPCC/NEEA, No. 11 at type analysis. Based on how uncommon During preliminary interviews with pp. 2, 4–5; EMS, Pub. Mtg. Tr., No. 34 these designs are in the current market, manufacturers, DOE received comment at p. 86; PG&E, Pub. Mtg. Tr., No. 34 at DOE believes that it would be that it should consider additional design p. 87; ASAP, Pub. Mtg. Tr., No. 34 at p. unrealistic to include them in option combinations using aluminum 88) Joint comments from ASAP, ACEEE, engineering curves without major for the primary conductor rather than and NRDC and PG&E and SCE noted adjustments. copper. While manufacturers that DOE should consider wound core DOE did not consider wound core commented that copper is still used for designs for its low-voltage dry-type designs for DLs 10, 12, and 13B because the primary conductor in many design lines, where high sales volume they are 1500 kVA and larger. DOE distribution transformers, they noted could better justify the additional understands that conventional wound equipment and tooling costs of core designs in these large kVA ratings 26 A and B factors correspond to loss valuation will emit an audible ‘‘buzzing’’ noise, and are used by DOE to generate distribution switching to wound core production. transformers with a broad range of performance and (ASAP/ACEEE/NRDC, No. 28 at p. 3; and will experience an efficiency design characteristics. PG&E/SCE, No. 32 at p. 1; PG&E, Pub. penalty that grows with kVA rating such

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that stacked core is more attractive. DOE submitted by manufacturers.27 There is design software requires A and B values notes, however, that it does consider a a variety of reasons that manufacturers as inputs. (OPS, Pub. Mtg. Tr., No. 34 wound core amorphous design in each would choose to limit flux density (e.g., at p. 123) For all of these reasons, DOE of the dry-type design lines. vibration, noise). Further detail on this continued to use A and B factors in the DOE also received interested party change can be found in chapter 5 of the NOPR to generate the range of designs feedback indicating that DOE should TSD. for the engineering analysis. consider step-lap miter designs for its dry-type design lines. (NPCC/NEEA, No. 4. A and B Loss Value Inputs 5. Materials Prices 11 at p. 4; Metglas, Pub. Mtg. Tr., No. As discussed, one of the primary In distribution transformers, the 34 at p. 91) In the preliminary analysis, inputs to the OPS software is an A and primary materials costs come from DOE had only analyzed fully-mitered B combination for customer loss electrical steel used for the core and the designs for the dry-type design lines, evaluation. In the preliminary analysis, aluminum or copper conductor used for but stakeholders noted that step-lap DOE generated each transformer design the primary and secondary winding. As miter designs could potentially yield in the engineering analysis based upon these are commodities whose prices greater efficiencies than the fully- an optimized lowest total owning cost frequently fluctuate throughout a year mitered designs. However, during the evaluation for a given combination of A and over time, DOE attempted to negotiations process, interested parties and B values. Again, the A and B values account for these fluctuations by clarified that step-lap mitering may not represent the present value of future examining prices over multiple years. be cost-effective in the smaller dry-type core and coil losses, respectively and For the preliminary analysis, DOE designs because the smaller average DOE generated designs for over 500 conducted the engineering analysis steel piece size gives rise to a larger different A and B value combinations analyzing materials price information destruction factor, and larger losses, for each of the design option over a five-year time period from 2006– than would be predicted by modeling. combinations considered in the 2010, all in constant 2010$. Whereas (ONYX, Pub. Mtg. Tr., No. 30 at p. 43) analysis. DOE used a five-year average price in In response to the preliminary Stakeholders agreed that it would not be the previous rulemaking for distribution analysis, Berman Economics appropriate to consider step-lap transformers, for the preliminary commented that designing a transformer mitering for design line 6, a 25 kVA analysis in this rulemaking, DOE to total owning cost based on A and B unit, to reflect its scarcity or absence selected one year from its five-year time factors will result in a higher first cost from the market. Therefore, in the NOPR frame as its reference case, namely 2010. transformer than a design that aims to DOE analyzed step-lap miter designs for Additionally, DOE considered high and minimize first cost for a given efficiency each of the dry-type design lines except low materials price sensitivities from level. (BE, No. 16 at p. 6) Additionally, design line 6. that same five-year time frame, 2008 and In the preliminary analysis, DOE Berman Economics noted that many 2006 respectively. considered several premium grade core utilities and customers do not specify an steels. It examined H0–DR, ZDMH, and A and B value when ordering DOE decided to use current (2010) SA1 amorphous core steels in its transformers, and will just ask for the materials prices in its analysis for the designs, as well as the standard M-grade lowest first cost design. (BE, Pub. Mtg. preliminary analysis because of steels. DOE requested comment on Tr., No. 34 at p. 123) feedback from manufacturers during whether there were other premium DOE notes that the designs created in interviews. Manufacturers noted the grade core steels that should be the engineering analysis span a range of difficulty in choosing a price that considered in the analysis. ABB costs and efficiencies for each design accurately projects future materials commented that ZDMH, H0–DR, and option combination considered in the prices due to the recent variability in SA1 amorphous steels cover all the high analysis. This range of costs and these prices. Manufacturers also performance core steel grades that are efficiencies is determined by the range commented that the previous five years currently commercially available. (ABB, of A and B factors used to generate the had seen steep increases in materials No. 14 at p. 13) Therefore, DOE designs. Although DOE does not prices through 2008, after which prices continued to analyze them for the NOPR generate a design for every possible A declined as a result of the global and did not consider any additional and B combination, because there are economic recession. Further detail on premium core steels. infinite variations, DOE believes that its these factors can be found in appendix DOE did opt to add two design option 500-plus combinations have created a 3A. Due to the variability in materials combinations that incorporate M-grade sufficiently broad design space. By prices over this five-year timeframe, steels that have become popular choices using so many A and B factors, DOE is manufacturers did not believe a five- at the current standard levels. For all confident that it produces the lowest year average price would be the best medium-voltage, dry-type design lines first cost design for a given efficiency indicator, and recommended using the (9–13B), DOE added a design option level and also the lowest total owning current materials prices. combination of an M4 step-lap mitered cost design. Furthermore, although all To estimate its materials prices, DOE core with aluminum primary and distribution transformer customers do spoke with manufacturers, suppliers, secondary windings. For design line 8, not purchase based on total owning and industry experts to determine the DOE added a design option combination cost, the A and B combination is still a prices paid for each raw material used of an M6 fully mitered core with useful tool that allows DOE to generate in a distribution transformer in each of aluminum primary and secondary a large number of designs across a broad the five years between 2006 and 2010. windings. DOE understands both range of efficiencies and costs for a While prices fluctuate during the year combinations to be prevalent baseline particular design line. Finally, OPS and can vary from manufacturer to options in the present transformer noted at the public meeting that its manufacturer depending on a number of market. variables, such as the purchase quantity, For the NOPR analysis, DOE also 27 During the negotiations process, DOE’s DOE attempted to develop an average subcontractor, Navigant Consulting, Inc. (Navigant), made the decision to remove certain participated in a bidirectional exchange of materials price for the year based on the high flux density designs from DL7 in engineering data in an effort to validate the OPS price a medium to large manufacturer order to be consistent with designs designs generated for the engineering analysis. would pay.

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In general, stakeholders agreed with 2006 prices by 25 percent as additional London Metal Exchange (LME) indices. DOE’s approach for analyzing materials sensitivity analyses. DOE believes that (PP, Pub. Mtg. Tr., No. 34 at pp. 100, prices in the preliminary analysis. these price sensitivities accurately 118; PP, No. 19 at p. 3) To this point, Power Partners and EEI agreed with account for any pricing discrepancies Hex Tec added that the fabrication cost DOE’s approach of using 2010 materials experienced by smaller or larger varies by wire size. (HEX, Pub. Mtg. Tr., prices in the reference case and manufacturers, and adequately consider No. 34 at p. 118) examining alternate years’ materials potential price fluctuations. For the NOPR, DOE reviewed its prices as sensitivities. (PP, Pub. Mtg. NPCC and NEEA jointly commented materials prices during interviews with Tr., No. 34 at p. 100; EEI, Pub. Mtg. Tr., that DOE should forecast future manufacturers and industry experts and No. 34 at p. 100) Howard Industries materials prices based on spot revised its materials prices for copper noted that 2010 prices are reasonable for commodities future prices. (NPCC/ and aluminum conductors. As suggested the reference case as long as DOE uses NEEA, No. 11 at pp. 6–7) Similarly, FPT by Power Partners, DOE derived these the 2010 prices with any additional commented that 2010 materials prices prices by adding a processing cost design runs. (HI, No. 23 at p. 6) may not be a good indication of future increment to the underlying index price. Similarly, ABB agreed with DOE’s steel prices, which will likely increase. DOE determined the current 2011 index approach to use a single reference year, (FPT, No. 27 at p. 12) On the other price from the LME and COMEX. These such as 2010, for the materials prices, hand, Berman Economics commented indices only had current 2011 values and noted that materials prices are that the pricing of core steels over the available, so DOE used the producer reaching an all-time high in 2011. (ABB, past few years has declined, even price index for copper and aluminum to No. 14 at p. 14) Finally, Power Partners though standard levels have shifted the convert the 2011 index price into prices commented that DOE did a reasonable market to higher core steel grades. As a for the time period of 2006–2010. DOE job grouping the various wire sizes into result, Berman Economics stated that then applied a unique processing cost ranges. (PP, Pub. Mtg. Tr., No. 34 at core steel production could be expected adder to the index price for each of its p. 118) to expand in light of new energy conductor groupings. To derive the Conversely, Southern Company and conservation standards without any adder price, DOE compared the FPT commented that DOE’s approach significant impacts on the materials difference in the LME index price to the for generating reference case materials prices. (BE, No. 16 at p. 10) 2011 price paid by manufacturers, and prices could be improved. Southern For the engineering analysis, DOE did applied this difference to the index Company noted that 2010 materials not attempt to forecast future materials price in each year. DOE inquired with prices may be lower than future prices. DOE continued to use the 2010 many manufacturers, both large and materials prices once the economy materials price in the reference case small, to derive these prices. Further improves and there is a limited scenario, added a 2011 reference detail can be found in chapter 5 of the availability of supplies coupled with scenario, and also considered high and TSD. increased demand. (SC, No. 22 at p. 4) low sensitivities to account for any DOE reviewed core steel prices with FPT also commented that DOE should potential fluctuations in materials manufacturers and industry experts and consider whether there will be an prices. The LCC and NIA consider a found them to be accurate within the adequate supply of higher grade core scenario, however, in which transformer range of prices paid by manufacturers in steels at the price points identified in prices increase in the future based on 2010. However, based on feedback in the analysis, noting that smaller increasing materials prices, among other negotiations, DOE adjusted steel prices manufacturers are likely not able to variables. Further detail on this scenario for M4 grade steels and lower grade purchase materials at the same price can be found in chapter 8 of the TSD. steels. points as larger manufacturers and may Several stakeholders commented that As for FPT’s concern regarding have to pay more, especially if there is the average materials prices DOE prefabricated amorphous cores, an increase in demand resulting from calculated for the 2006–2010 timeframe, estimated at $2.38 per pound in 2010, amended standards. (FPT, No. 27 at particularly for year 2010, were not DOE notes that this price was derived p. 2) accurate. NEMA recommended that from speaking with several North With the onset of the negotiations, DOE gather additional information from American suppliers of prefabricated DOE was presented with an opportunity manufacturers on this topic. (NEMA, amorphous cores, and aligns with to implement a 2011 materials price No. 13 at p. 6) FPT commented that marked-up price estimates for raw case based on data it had gathered DOE’s price of $2.38 per pound for amorphous ribbon. Therefore, so DOE before and during the negotiation amorphous steel appeared to be low, continued to use this price estimate in proceedings. Relative to the 2010 case, and questioned whether the price had the NOPR for the 2010 price scenario. the 2011 prices were lower for all steels, been verified with suppliers of 6. Markups particularly M2 and lower grade steels. amorphous material. Joint comments For the NOPR, DOE continued to use submitted by ASAP, ACEEE, and NRDC DOE derived the manufacturer’s the 2010 materials prices as a reference stated that DOE’s materials prices were selling price for each design in the case scenario, but added a second, 2011 too high compared to market prices in engineering analysis by considering the price case. DOE presents both cases as 2010. (ASAP/ACEEE/NRDC, No. 28 at p. full range of production costs and non- recent examples of how the steel market 2) HVOLT commented that DOE’s prices production costs. The full production fluctuates and uses both to derive for copper and aluminum were cost is a combination of direct labor, economic results. It also considered understated, noting that current copper direct materials, and overhead. The high and low price scenarios based on prices are around $6.50. (HVOLT, No. overhead contributing to full production the 2008 and 2006 materials prices, 33 at p. 1; HVOLT, Pub. Mtg. Tr., No. cost includes indirect labor, indirect respectively, but adjusted the prices in 34 at p. 117) Power Partners commented material, maintenance, depreciation, each of these years to consider greater that the prices for aluminum wire were taxes, and insurance related to company diversity in materials prices. For the too high and that prices for copper wire assets. Non-production cost includes the high price scenario, DOE increased the were too low, suggesting that DOE cost of selling, general and 2008 prices by 25 percent, and for the derive its conductor prices by adding a administrative items (market research, low price scenario, DOE decreased the processing cost to the COMEX or advertising, sales representatives, and

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logistics), research and development for factory overhead based on the design prefabricated amorphous cores, but also (R&D), interest payments, warranty and option. (ABB, No. 14 at pp. 14–15) considers an increased core price based risk provisions, shipping, and profit DOE appreciates the comments and on a prefabricated core rather than the factor. Because profit factor is included considered other approaches for raw amorphous material, it already in the non-production cost, the sum of calculating factory overhead for the accounts for the tradeoffs associated production and non-production costs is NOPR. However, DOE was unable to with developing the core in-house an estimate of the manufacturer’s selling determine an alternate methodology that versus outsourced. price. DOE utilized various markups to could accurately estimate factory During negotiations, DOE learned arrive at the total cost for each overhead costs. In the absence of further from both manufacturers of transformers component of the distribution information for how to calculate factory and manufacturers of transformer cores transformer. These markups are overhead based on labor costs or design that mitering and, to a greater extent, outlined in greater detail in chapter 5 of options, DOE continued to use its step-lap mitering, result in a per-pound the TSD. approach based on the material cost of finished cores higher than butt- NPCC and NEEA jointly commented production costs. DOE notes that factory lapped units built to the same that DOE should vet the non-production overhead costs are not applied to the specifications. (ONYX, Pub. Mtg. Tr., markup with manufacturers to ensure material production cost component, No. 30 at p. 43) This helps to account that it is accurate. (NPCC/NEEA, No. 11 but are simply estimated based on the for the fact that butt-lapping is common at p. 6) Berman Economics added that production costs. at baseline efficiencies in today’s low- manufacturers do not price their units In the preliminary analysis, DOE voltage market. applied the same factory overhead in the same way that DOE did in its In response, DOE opted to increase markup to its prefabricated amorphous analysis; rather, they look at their costs mitering costs for both low- and cores as it did to its other design options and the market and generate a medium-voltage dry-type designs. In the where the manufacturer was assumed to competitive price accordingly. medium-voltage case, DOE incorporated produce the core. Since the factory Therefore, Berman Economics suggested a processing cost of 10 cents per core overhead markup accounts for indirect that DOE only look at the material and pound for step-lap mitering. In the low- production costs that are not easily tied labor costs and refrain from including to a particular design, it was applied voltage case, DOE incorporated a the other markups. (BE, Pub. Mtg. Tr., consistently across all design types. processing cost of 10 cents per core No. 34 at p. 96) DOE did not find that there was pound for ordinary mitering and 20 DOE interviewed manufacturers of sufficient substantiation to conclude cents per core pound for step-lap distribution transformers and related that manufacturers would apply a mitering. DOE used different per pound products to learn about markups, among reduced overhead markup for a design adders for step-lap mitering for other topics, and observed a number of with a prefabricated core. medium-voltage and low-voltage units very different practices. In absence of a Hammond Power Systems and because the base case design option for consensus, DOE attempted to adapt Howard Industries agreed with DOE’s each is different. For low-voltage units, manufacturer feedback to inform its decision to apply the same factory DOE modeled butt-lapped designs at the current modeling methodology while overhead to prefabricated amorphous baseline efficiency level whereas acknowledging that it may not reflect cores. (HPS, No. 3 at p. 4; HI, No. 23 at ordinary mitering was modeled at the the exact methodology of many p. 6) On the other hand, NPCC and baseline for medium-voltage. Therefore, manufacturers. DOE feels that it is NEEA jointly commented that factory using a step-lap mitered core represents necessary to model markups, however, overhead should not be applied to a more significant change in technology since there are costs other than material prefabricated cores because the markup for low-voltage dry-type transformers and labor that affect final manufacturer would already be included in the selling and thus the higher markup. selling price. The following sections price of the prefabricated core. (NPCC/ b. Labor Costs describe various facets of DOE’s NEEA, No. 11 at p. 7) ABB, however, markups for distribution transformers. noted that even though manufacturers In the preliminary analysis, DOE accounted for additional labor and a. Factory Overhead may outsource various components of the transformer manufacturing, such as material costs for large (≥1500 kVA), DOE uses a factory overhead markup enclosures, cores, or coils, DOE should dry-type designs using amorphous to account for all indirect costs assume a vertical manufacturing process metal. The additional labor costs associated with production, indirect in which the manufacturer produces all accounted for special handling materials and energy use (e.g., annealing components in-house. (ABB, No. 14 at considerations, since the amorphous furnaces), taxes, and insurance. In the pp. 14–15) NEMA commented that DOE material is very thin and can be difficult preliminary analysis, DOE derived the should gather additional data from to work with in such a large core. They cost for factory overhead by applying a individual manufacturers on the topic of also accounted for extra bracing that is 12.5 percent markup to direct material factory overhead. (NEMA, No. 13 at necessary for large, wound core, dry- production costs. p. 6) type designs in order to prevent short Several stakeholders commented that For the NOPR analysis, DOE circuit problems. factory overhead is more commonly continued to apply the same factory NPCC, NEEA, and NEMA commented estimated as a markup on labor costs, overhead markup to prefabricated that DOE should consult individual not material costs. (NPCC/NEEA, No. 11 amorphous cores as to other cores built manufacturers to gather information at pp. 2, 6; ASAP/ACEEE/NRDC, No. 28 in-house. This approach is consistent about the additional costs DOE at p. 2; PP, Pub. Mtg. Tr., No. 34 at p. with the suggestion of the associates with large amorphous 102; HEX, Pub. Mtg. Tr., No. 34 at p. manufacturers, and DOE notes that designs. (NPCC/NEEA, No. 11 at p. 6; 103) ABB commented that factory factory overhead for a given design NEMA, No. 13 at p. 6) NPCC and NEEA overhead should not be tied to direct applies to many items aside from the added that DOE should consider a range material costs, but rather to the design core production. Furthermore, since of assumed incremental costs starting at option being produced and the volume DOE already accounts for decreased zero when analyzing amorphous core being produced, using a fixed quantity labor hours in its designs using designs. (NPCC/NEEA, No. 11 at p. 7)

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Several manufacturers also not model varying incremental cost weight and typically amounts to four to commented on the issue of additional increases starting with zero for large eight percent of the total MSP. DOE costs for large amorphous designs. amorphous designs, as NEEA and NPCC derived the $0.22 per pound by relying Howard Industries commented that suggested, noting that the impact of on the shipping costs developed in its these designs face similar cost increases these incremental costs are oftentimes previous rulemaking on distribution as those that DOE identified for large very minor for large, expensive transformers, when DOE collected a dry-type designs using an amorphous transformer designs. In response to sample of shipping quotations for core. It noted that typically these liquid- Federal Pacific’s comment and data transporting transformers. In that immersed designs require an additional from other manufacturers of medium- rulemaking, DOE estimated shipping 10 hours of handling, added cost for the and low-voltage transformers, DOE costs as $0.20 per pound based on an epoxy and catalyst used in sealing the explored its estimates of labor hours and average shipping distance of 1,000 amorphous cores, and additional increased those relating to core miles. For the preliminary analysis, bracing depending on the weight of the assembly for design lines 6–13B. Details DOE updated the cost to $0.22 per core/coil assembly. Howard Industries on the specific values of the adjustments pound based on the price index for estimated this cost as an extra $100 to can be found in chapter 5 of the TSD. freight shipping between 2007 and $200 for additional materials and Finally, in response to ABB’s 2010. Additional detail on these hardware. (HI, No. 23 at p. 6) comment that DOE should apply shipping costs can be found in chapter ABB commented that if DOE accounts different labor and material costs to 5 and chapter 8 of the TSD. for additional labor and material costs each design option in the analysis, DOE DOE received several comments about for large amorphous designs, then it notes that it already does account for the methodology for deriving shipping should apply the same logic to all costs differently based on the design costs. NEMA commented that DOE design options, and also noted that large options used. Labor requirements are, should gather additional information liquid-immersed amorphous designs for example, determined in part based from manufacturers. (NEMA, No. 13 at would have the same costs as the dry- on the grade of core steel, the core p. 6) Federal Pacific commented that type designs. ABB noted that large weight, and the number of turns in the weight increases as transformers become wound cores would have more labor winding. Similarly, material costs are more efficient, and noted that shipping and hardware compared to small wound determined specific to each material costs would thus increase if standards cores, and that stacked cores will have input based on each design’s were amended. (FPT, No. 27 at pp. 4– more labor than wound cores. Finally, specifications. 5) Several stakeholders commented that ABB noted that stacked M2 would DOE should consider the cost of fuel in c. Shipping Costs require more labor than stacked M6 its shipping cost calculation, steel. (ABB, No. 14 at p. 15) Power During its interviews with particularly since it has increased in Partners commented that DOE needed to manufacturers in the preliminary recent years. (NRECA/T&DEC, No. 31 add in additional assembly time for analysis, DOE was informed that and 36 at p. 3; EEI, Pub. Mtg. Tr., No. liquid-immersed transformers using manufacturers often pay shipping 34 at p. 95; EEI, No. 29 at p. 5) NPCC amorphous cores. (PP, Pub. Mtg. Tr., No. (freight) costs to the customer. and NEEA jointly commented that 34 at p. 102) Finally, Hex Tec noted that Manufacturers indicated that they shipping costs will increase with time certain core construction methods (e.g., absorb the cost of shipping the units to as diesel fuel prices rise. (NPCC/NEEA, symmetric core designs) make the the customer and that they include No. 11 at p. 7) handling of amorphous material much these costs in their total cost structure For the NOPR, DOE revised its easier, which can eliminate the need for when calculating profit markups. As shipping cost estimate to account for the extra handling. (HEX, Pub. Mtg. Tr., No. such, manufacturers apply a profit rising cost of diesel fuel. DOE adjusted 34 at p. 103) markup to their shipping costs just like its previous shipping cost of $0.20 (in During negotiations, Federal Pacific any other cost of their production 2006 dollars) from the previous commented that it believed DOE was process. Manufacturers indicated that rulemaking to a 2011 cost based on the underestimating labor hours for core these costs typically amount to producer price index for No. 2 diesel assembly for all low- and medium- anywhere from four to eight percent of fuel. This yielded a shipping cost of voltage dry-type design lines. revenue. $0.28 per pound. DOE also retained its In response to interested party In the previous rulemaking for shipping cost calculation based on the feedback, DOE applied an incremental distribution transformers, DOE weight of the transformer to differentiate increase in core assembly time to accounted for shipping costs exclusively the shipping costs between lighter and amorphous designs in the liquid- in the LCC analysis. These costs were heavier, typically more efficient, immersed design line 5 (1500 kVA). paid by the customer, and thus did not designs. This additional core assembly time of 10 include a markup from the In the preliminary analysis, DOE hours is consistent with DOE’s manufacturer based on its profit factor. applied a non-production markup to all treatment of amorphous designs in In the preliminary analysis, DOE cost components, including shipping large, dry-type design lines. However, included shipping costs in the costs, to derive the MSP. DOE based this DOE did not account for additional manufacturer’s cost structure, which is cost treatment on the assumption that hardware costs for bracing in the liquid- then marked up by a profit factor. These manufacturers would mark up the immersed designs using amorphous shipping costs account for delivering shipping costs when calculating their cores. This is because DOE already the units to the customer, who may then final selling price. The resulting accounts for bracing costs for all of its bear additional shipping costs to deliver shipping costs were, as stated, liquid-immersed designs, which use the units to the final end-use location. approximately four to eight percent of wound cores, in its analysis. DOE As such, DOE accounts for the first leg total MSP. determined that it adequately accounted of shipping costs in the engineering During the public meeting, ASAP for these bracing costs in the smaller analysis and then any subsequent asked if DOE had found market data that kVA sizes using amorphous designs, shipping costs in the LCC analysis. The indicated that shipping costs should be and thus only made the change to the shipping cost was estimated to be $0.22 included in the sale price. (ASAP, Pub. large (≥1500 kVA) design lines. DOE did per pound of the transformer’s total Mtg. Tr., No. 34 at p. 102) HPS

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commented that DOE’s assumption that relationship above the baseline. These removed from the analysis and instead shipping costs are typically four to eight ELs are ultimately used by DOE if it replaced with exactly what those levels percent of MSP is accurate, but noted decides to amend the existing energy were and where it was mandated, i.e., in that it does not typically mark up conservation standards. EISA 2007. (SE., Pub. Mtg. Tr., No. 34 shipping costs. (HPS, No. 3 at p. 5) ABB For the NOPR, DOE considered at p. 119) commented that shipping costs are several criteria when setting ELs. First, DOE has found that multiple sets of recognized as an expense to DOE harmonized the efficiency values efficiency levels and candidate standard manufacturers, but that they do not across single-phase transformers and the levels have confused stakeholders in the impact the profit markup of the per-phase kVA equivalent three-phase past, and prefers to limit this manufacturer because transformers must transformers. For example, a 50 kVA document’s discussion to those ELs at be priced based on the market. Rather, single-phase transformer would have hand. EEI is correct to point out that the shipping costs reduce the profit of the the same efficiency requirement as a 150 previous rule’s standard is the current sale. Additionally, ABB noted that kVA three-phase transformer. This rule’s baseline. DOE is statutorily shipping costs are typically only two to approach is consistent with DOE’s prohibited from decreasing efficiency four percent of total transformer costs. methodology from the previous standards, and so any discussion of (ABB, No. 14 at p. 15) Similarly, Federal rulemaking and from the preliminary future standards necessarily begins with Pacific commented that manufacturers analysis of this rulemaking. Therefore, what is in effect at the time. bear the cost of shipping, but they do DOE selected equivalent ELs for several Berman Economics noted that high- not mark up the shipping cost in their of the representative units that have cost designs that are above the profit markup or other markups. (FPT, equivalent per-phase kVA ratings. minimum first cost amount for a given No. 27 at p. 17) Conversely, Howard Second, DOE selected equally spaced EL should not be considered in DOE’s Industries agreed with DOE’s approach ELs by dividing the entire efficiency analysis because they do not represent in which markups were applied to the range into five to seven evenly spaced the cost required to comply with the cost of shipping. Howard Industries increments. The number of increments standard. It felt that, by including these added that it agreed that shipping costs depended on the size of the efficiency designs, DOE artificially increases the are typically four to eight percent of range. This allowed DOE to examine cost estimate from the Monte Carlo revenues. (HI, No. 23 at p. 6) impacts based on an appropriate analysis. (BE, No. 16 at pp. 6–7) Based on the comments received and resolution of efficiency for each Although DOE’s current test DOE’s additional research into the representative unit. procedure specifies a load value at treatment of shipping costs through Finally, DOE adjusted the position of which to test transformers, DOE manufacturer interviews, DOE has some of the equally spaced ELs and recognizes that different consumers see preliminarily decided to retain the examined additional ELs. These minor real-world loadings that may be higher shipping costs in its calculation of MSP, adjustments to the equally spaced ELs or lower. In those cases, consumers may but not to apply any markups to the allowed DOE to consider important choose a transformer offering a lower shipping cost component. Therefore, efficiency values based on the results of LCC even when faced with a higher first shipping costs were added separately the software designs. For example, DOE cost. If DOE’s cost/efficiency design into the MSP calculation, but not adjusted some ELs slightly up or down cloud were redrawn to reflect loadings included in the cost basis for the non- in efficiency to consider the maximum other than those specified in the test production markup. The resulting efficiency potential of non-amorphous procedure, different designs would shipping costs were still in line with the design options. Other ELs were added to migrate to the optimum frontier of the estimate of four to eight percent of MSP consider important benchmark cloud. Additionally, although DOE’s for all the dry-type design lines. For the efficiencies, such as the NEMA engineering analysis reflects a range of liquid-immersed design lines, the Premium efficiency levels for LVDT transformers costs for a given EL, the shipping costs ranged from six to twelve distribution transformers. Last, DOE LCC analysis only selects transformer percent of MSP and averaged about nine considered additional ELs to designs near the lowest cost point. percent of MSP. characterize the maximum- 8. Scaling Methodology technologically feasible design for 7. Baseline Efficiency and Efficiency representative units where the For the preliminary analysis, DOE Levels harmonized per-phase efficiency value performed a detailed analysis on each DOE analyzed designs over a range of would have been unachievable for one representative unit and then efficiency values for each representative of the representative units. extrapolated the results of its analysis unit. Within the efficiency range, DOE EEI requested that DOE provide from the unit studied to the other kVA developed designs that approximate a summary tables of the ELs and the ratings within that same engineering continuous function of efficiency. proposed TSLs to highlight any design line. DOE performed this However, DOE only analyzes differences between the two. (EEI, Pub. extrapolation to develop inputs to the incremental impacts of increased Mtg. Tr., No. 34 at p. 125) Furthermore, national impacts analysis. The efficiency by comparing discrete EEI pointed out that CSL 0 is TSL 3 or technique it used to extrapolate the efficiency benchmarks to a baseline 4 from the last rulemaking and is more findings of the representative unit to the efficiency level. The baseline efficiency efficient than a 2005 or 2007 unit. (EEI, other kVA ratings within a design line level evaluated for each representative Pub. Mtg. Tr., No. 34 at p. 113) is referred to as ‘‘the 0.75 scaling rule.’’ unit is the existing energy conservation NEMA recommended that the TSLs This rule states that, for similarly standard level of efficiency for from the previous rulemaking be designed transformers, costs of distribution transformers established visually overlaid with the ELs from this construction and losses scale with the either in DOE’s previous rulemaking or rulemaking to allow easier comparisons ratio of their kVA ratings raised to the by EPACT 2005. The incrementally between the recent standards and the 0.75 power. The relationship is valid higher efficiency benchmarks are current rulemaking. (NEMA, No. 13 at where the optimum efficiency loading referred to as ‘‘efficiency levels’’ (ELs) pp. 6–7) points of the two transformers being and, along with MSP values, Schneider Electric commented that it scaled are the same. DOE used the same characterize the cost-efficiency would like to see the label ‘‘CSL 0’’ methodology to scale its findings during

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the previous rulemaking on distribution transformers while, in reality, as the considerations may produce a behavior transformers. transformers get smaller, more better modeled using a different In response to the preliminary insulation is needed to maintain the exponent. A number of commenters analysis, DOE received multiple same BIL. FPT believed that the 0.75 suggested that the smaller transformers comments regarding the 0.75 scaling scaling rule was less accurate for lower in particular had difficulty meeting rule. HVOLT expressed its support for kVA ratings (below 500 kVA), in part standards, which seems to imply that the use of the 0.75 scaling rule. because small kVA sizes require very the overall shape of the efficiency curve (HVOLT, Pub. Mtg. Tr., No. 34 at p. 139) small wires that are dramatically more should come from a lower overall Several other stakeholders stated that expensive than larger wires in larger exponent. This would tend to project they believed the 0.75 scaling rule is kVA sizes. FPT also claimed that lower efficiencies at lower kVAs and accurate over small kVA ranges, but can current standards are more difficult to higher efficiencies at higher kVAs. DOE break down near the limits of the meet at the lower kVA sizes. (FPT, No. seeks to further understand how kVA scaling range. (HPS, No. 3 at p.4; NPCC/ 27 at pp. 14–17) rating and other factors combine to NEEA, No. 11 at pp. 7–8; NEMA, No. 13 PP expressed frustration that the affect transformer efficiency, and seeks at pp. 4, 6; SE., No. 18 at p.7; HI, No. design work involved extrapolating comment to that end. 23 at p. 7; FPT, Pub. Mtg. Tr., No. 34 from a 500 kVA model to a 833 kVA Negotiating parties agreed that at p. 137) NPCC, NEEA and NEMA model and believed that the deriving results for the ‘‘high’’ and recommended that DOE consider extrapolations did not hold true. (PP, ‘‘low’’ BIL MVDT equipment classes, analyzing additional design lines and Pub. Mtg. Tr., No. 34 at p. 135) namely, 5,6,9, and 10, was the most representative units to maintain the Because it is not practical to directly appropriate way to correctly establish integrity of the scaling. (NPCC/NEEA, analyze every combination of design relative standards such that the various No. 11 at pp. 7–8; NEMA, No. 13 at pp. options and kVAs under the efficiencies were logical with respect to 4–6) FPT also suggested introducing rulemaking’s scope of coverage, DOE each other. (ASAP, Pub. Mtg. Tr., No. ## additional designs to the analysis, selected a smaller number of units it (docket number unavailable) at p. 175) noting that it has found it difficult to believed to be representative of the Parties agreed that standards should be meet the efficiency levels on the lower- larger scope. Many of the current design set by adding 10 percent in losses to end kVAs for the dry-types. (FPT, Pub. lines use representative units retained equipment classes 7 and 8 to derive Mtg. Tr., No. 34 at p. 136) Schneider from the 2007 rulemaking with minor standards for equipment classes 9 and Electric recommended that DOE expand modifications. To generate efficiency 10 and subtracting 10 percent in losses its kVA ranges within the design lines values for kVA values not directly from classes 7 and 8 to derive standards and overlay the design lines to allow for analyzed, DOE employed a scaling for classes 5 and 6. DOE’s own analysis multiple evaluation points within the methodology based on physical suggests that this method of scaling is scaling rule. (SE., No. 18 at p. 7) Howard principles (overviewed in Appendix 5B) reasonable and proposes using it to Industries believed that DOE should and widely used by industry in various derive standards as it does it today’s adjust the 0.75 scaling factor to account forms. DOE’s scaling methodology is an notice. for more efficient and costlier materials approximation and, as with any Furthermore, several parties noted needed to stay within the size and approximation, can suffer in accuracy as that liquid-immersed transformers weight constraints of customers’ it is extended further from its reference experienced smaller, but not demands. (HI, No. 23 at p. 7) value. insignificant, performance benefits or EEI commented that the 0.75 scaling Several of the comments on this topic penalties as a function of BIL and noted rule may not be accurate for scaling suggest that DOE could improve the that standards for liquid-immersed units outside a single standard deviation of accuracy of its scaling by limiting the could be tweaked in the same manner kVA size. EEI recommended that DOE range over which it is applied. To that as those from MVDT units. Doing so work with manufacturers to create new end, DOE has added a design line (13A would permit capture of increased formulas for scaling beyond a single to address the case of high BIL, small energy savings at the more-efficient BILs standard deviation. (EEI, No. 29 at p. 6) kVA medium-voltage dry-type units while still permitting manufacture of Warner Power stated that the 0.75 while redesignating the former 13 the higher BIL transformers at scaling rule is less accurate for higher ‘‘13B’’.) DOE will seek to corroborate reasonable expense. scaling ratios where transformer designs scaling results with direct analysis in DOE requests comment on scaling change significantly, but felt that the other areas that fall outside of the across both BIL and kVA ratings as it rule was accurate for scaling where the scaling ranges put forth by commenters applies to both dry-type and liquid- ratio of kVAs was between 0.8 and 1.2. for the final rule. immersed transformers and on specific (WP, No. 30 at pp. 7, 11) Additionally, DOE modified the way ways for DOE to establish a sound ABB noted that the 0.75 scaling rule it splices extrapolations from each methodology for deriving BIL is accurate within about a half order of representative unit to cover equipment adjustment factors in the liquid- magnitude when all other parameters classes at large. Previously, DOE immersed case. DOE also requests are constant. ABB also stated that in extrapolated curves from individual comment on how standards are best their experience the 0.75 coefficient data points and blended them near the harmonized across phase counts for all increases as the kVA decreases and boundaries to set standards. Currently, types of transformers and how standards approaches 1.0 as an upper limit. ABB DOE fits a single curve through all for single-phase transformers may be added that the same is true as the BIL available data points in a space and scaled to produce those of three-phase increases. (ABB, No. 14 at pp. 10, 13) believes that the resulting curve will transformers and vice-versa. Hammond agreed that the 0.75 scaling both be smoother and offer a more rule can be problematic for smaller robust scaling behavior over the covered 9. Material Availability kVAs of higher voltage and BIL ratings. kVA range. DOE received several comments (HPS, No. 3 at p. 4) Metglas explained Finally, although the laws of physics expressing concern over the availability that the scaling rule assumes one has applied to an ideal transformer yield a of materials, including core steel and the same percentage insulation in the scaling exponent of 0.75, DOE conductors, needed to build energy cross-section of the conductor in the recognizes that real-world engineering efficient distribution transformers.

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These issues pertain to a global scarcity amended standard levels. It added that considers the cost considerations of of materials as well as issues of there is not enough amorphous steel to higher and lower impedance tolerances. materials access for small meet the demand of the entire DOE requests comment on impedance manufacturers. transformer industry, and noted that values and on any related parameters NPCC, NEEA, Schneider Electric, and prices for amorphous steel could (e.g., inrush current, X/R ratio) that may the joint comments from ASAP, ACEEE increase substantially if it was the sole be used in evaluation of distribution and NRDC all indicated that DOE core material used in distribution transformers. DOE requests particular should revise its selling prices to make transformer designs. (SC, No. 22 at p. 1) comment on how any of those sure they are in line with market prices. DOE is aware that many core steels, parameters may be affected by energy They commented that DOE’s selling including amorphous steels, have conservation standards of today’s prices were too high compared to the constraints on their supply and presents proposed levels or higher. prices supplied by manufacturers at the an analysis of global steel supply in 12. Size and Weight public meeting. (NPCC/NEEA, No. 11 at Appendix 3–A. p. 2 and pp. 6–7; SE., No. 18 at p. 8; In the preliminary analysis, DOE did 10. Primary Voltage Sensitivities ASAP/ACEEE/NRDC, No. 28 at pp. 1–2) not constrain the weight of its designs. The ASAP, ACEEE and NRDC joint DOE understands that primary voltage DOE accounted for the full weight of comments further specified that and the accompanying BIL may each design generated by the commenters at the meeting noted that increasingly affect efficiency of liquid- optimization software based on its the price of a small purchase quantity immersed transformers as standards materials and hardware. Similarly, DOE going through a distributor was still 40– rise. DOE may conduct primary voltage let several dimensional measurements 60% lower than DOE’s price estimates. sensitivity analysis in order to better of its designs vary based on the optimal They added that, if DOE is unable to quantify the effects of BIL and primary core/coil dimensions plus space factors. determine how to adjust its cost inputs, voltage on efficiency, and may use such However, DOE did hold certain tank it should apply an adjustment factor to information to consider establishing and enclosure dimensions constant for the final selling price to bring it in line equipment classes by BIL rating for its design lines. Most notably, DOE with current market prices. If DOE liquid-immersed distribution fixed the height dimension on all of its cannot determine prices for LVDT, the transformers. rectangular tank transformers. For each design that had variable dimensions, joint commenters recommended that 11. Impedance DOE apply the adjustment factor from DOE accounted for the additional cost of the liquid-immersed analysis to the dry- In the preliminary analysis, DOE only installing the unit, where applicable. type analysis. (ASAP/ACEEE/NRDC, considered transformer designs with Several interested parties expressed No. 28 at pp. 1–2) impedances within the normal concerns about the size and weight of Conversely, HVolt, Inc. commented impedance ranges specified in Table 1 the designs used in DOE’s analysis. that DOE’s finished transformer prices and Table 2 of 10 CFR part 431.192. Power Partners commented that single- are too low and that several These impedances represent the typical phase liquid-immersed units above 500 manufacturers have generated selling range of impedance that is used for a kVA are very difficult to design for the prices (using current materials prices given liquid-immersed or dry-type current standard level when accounting and low markups) that are 2.5–4 times transformer based on its kVA rating and for the weight and size constraints that higher than DOE’s prices at CSL 6. whether it is single-phase or three- users specify. (PP, Pub. Mtg. Tr., No. 34 (HVOLT, No. 33 at p. 1) phase. at p. 46) Power Partners and Howard Manufacturers often accuse DOE or Commonwealth Edison (ComEd) Industries commented that this issue is over-representing manufacturer selling commented that its single-phase particularly a concern for pole-mounted prices, while parties interested in overhead transformer specification only transformers, and noted that many increasing energy efficiency accuse it of allows impedances between 5.3 and 6.2 customers put large (500 kVA single- under-representing these prices. DOE is percent for 250, 333, and 500 kVA phase) units on poles. (PP, Pub. Mtg. interested in tailoring its analysis to transformers. Furthermore, ComEd Tr., No. 34 at p. 75; HI, Pub. Mtg. Tr., align more closely with the market and commented that manufacturers are No. 34 at p. 77) Pepco Holdings, Inc. believes the best way for parties to already having difficulty creating (PHI) stated that the largest transformer demonstrate falsely high or low prices is designs with the minimum impedance that it will hang on a pole is 333 kVA, to submit actual purchase or bid records requirement of 5.3 percent based on the but noted that it, too, has concerns for designs close to DOE’s representative current standard level. (ComEd, No. 24 about weight and size. (PHI, Pub. Mtg. units. If needed, such records could be at p. 3) Similarly, Central Moloney Tr., No. 34 at p. 77) submitted under the terms of a non- commented that it also has limitations Many stakeholders noted that size and disclosure agreement. Finally, DOE on the impedance of the transformers, weight limitations exist for certain notes that it is the incremental, and not which get harder to meet at larger sizes. customer specifications. Power Partners, absolute, cost of added efficiency that (Central Moloney, Pub. Mtg. Tr., No. 34 Central Moloney (CM), and PHI all dominates the cost-effectiveness at p. 78) commented that restrictions exist for calculations that it performs. For the NOPR, DOE continued to size and weight, and stated that DOE Consequently, errors in the absolute consider designs within the normal should account for maximum weight prices will have a smaller effect on the impedance ranges used in the and dimensional limits. (PP, Pub. Mtg. rule outcome than errors in the cost of preliminary analysis. While certain Tr., No. 34 at p. 73; CM, Pub. Mtg. Tr., marginal efficiency. DOE requests applications may have specifications No. 34 at p. 77; PHI, Pub. Mtg. Tr., No. further comment on manufacturer that are more stringent than these 34 at p. 74) PHI noted that these selling price and any accompanying normal impedance ranges, DOE believes restrictions are especially important for data that can help substantiate such that the majority of applications are able pole-mount, subway, subsurface, and comment. to tolerate impedances within these network transformers. (PHI, No. 26 and Southern Company commented that ranges. Since DOE considers a wide 37 at p. 1) Power Partners commented DOE should consider the limited supply array of designs within the normal that over 80 percent of new transformers of amorphous steel when evaluating impedance ranges, it adequately manufactured are for replacement, and

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noted that replacement pole-mount and leads. (HVOLT, Pub. Mtg. Tr., No. mentioned by EEI as a separate transformers need to fit into the existing 91 at p. 290) distribution channel. pole space. As such, Power Partners DOE worked with manufacturers to In the preliminary analysis, DOE suggested a maximum weight of 650 explore the magnitude of the effect of developed average distributor and pounds for the representative unit in longer buses and leads and found it to contractor markups by examining the DL2 (25 kVA single-phase) and a be small relative to the gap between installation and contractor cost maximum weight of 3,600 pounds for efficiency levels. Nonetheless, DOE estimates provided by RS Means the representative unit in DL3 (500 kVA made small upward adjustments to bus Electrical Cost Data 2011. DOE single-phase). (PP, No. 19 at p. 3) and lead losses of all medium-voltage, developed separate markups for Conversely, PG&E commented that the dry-type design lines. Details on the baseline products (baseline markups) large transformers in its service area are specific values of the adjustments made and for the incremental cost of more- typically pad-mounted and noted that can be found in Chapter 5 of the TSD. efficient products (incremental weight is not a big concern. (PG&E, Pub. markups). Incremental markups are Mtg. Tr., No. 34 at p. 74) D. Markups Analysis coefficients that relate the change in the For the NOPR engineering analysis, The markups analysis develops installation cost due to the increase DOE did not restrict its designs based on appropriate markups in the distribution equipment weight of some higher- a limit for size or weight beyond the chain to convert the estimates of efficiency models. fixed height measurements it was manufacturer selling price derived in FPT agreed with the distributor already considering for the rectangular the engineering analysis to customer markups that DOE developed for liquid- tank sizes. DOE understands that larger prices. In the preliminary analysis, DOE immersed transformers. (FPT, No. 27 at transformers may require additional determined the distribution channels for p. 17) HPS agreed that a 15-percent installation costs such as a new pole distribution transformers, their shares of markup is appropriate for distributor change-out or vault expansion. To the the market, and the markups associated markup. (HPS, No. 3 at p. 6) ABB and extent that it had data on these with the main parties in the distribution NEMA, on the other hand, additional costs, DOE accounted for chain, distributors, contractors and recommended that DOE consult with a sample of major distributors to obtain a them in its LCC analysis, as described electric utilities. better understanding of internal in section IV.F. However, DOE did not Several stakeholders commented that markups. (ABB, No. 14 at p. 18; NEMA, choose to limit its design specifications DOE’s analysis failed to include the No. 13 at p. 8) DOE was not able to based on a specific size or weight distribution channel that delivers conduct a representative survey of constraint. liquid-immersed transformers directly transformer distributors within the During negotiation meetings, several from manufacturers to large utilities. context of the current rulemaking. Given parties noted that transformers in (NEEA, No. 11 at p. 2, Joint Comments the supportive comments from FPT and underground vaults could face PG&E and SCE, No. 32 at p. 2, and EMS, HPS, DOE retained the markup used in staggering cost increases if obligated to Public Meeting Transcript, No. 34 at p. the preliminary analysis for the NOPR comply with unmodified standards. 145) EMS Consulting commented that for liquid-immersed and low-voltage (ABB, Pub. Mtg. Tr., No. 89 at p. 245) when large utilities purchase directly dry-type transformers. However, based The parties proposed to create a from manufacturers, the commission of on input received from manufacturers separate equipment class for such units the manufacturer’s representative is during the negotiated rulemaking and began discussing how such a class included in the price of the transformer process, DOE revised the distributor and might be defined in terms of physical and should not be added in separately. contractor markups that affect the retail features and such that it would not (EMS, Public Meeting Transcript, No. 34 price for medium-voltage dry-type represent a standards loophole. DOE at p. 145) PG&E and SCE noted that transformers to 1.26 and 1.16, requests comment on the possibility of because utilities often pay much less for respectively. establishing a separate equipment class transformers purchased in bulk, the HVOLT suggested that DOE’s for vault transformers and how such a selling prices DOE presented in the estimated contractor labor and materials class could be defined. preliminary analysis are too high. (Joint markup that affects the installation costs Nonetheless, DOE notes that the Comments PG&E and SCE, No. 32 at p. of 1.43 is too high. (HVOLT, Public majority of its designs are within the 2) For the NOPR, DOE added a new Meeting Transcript, No. 34 at p. 149) weight constraints suggested by Power distribution channel to represent the DOE used RS Means Electrical Cost Partners. In design line 2, over 95 direct sale of transformers to Data 2010 to estimate a contractor labor percent of DOE’s designs are below 650 independently owned utilities, which and materials markup of 1.43. This pounds. In design line 3, over 62 account for approximately 80 percent of markup is justified as it includes: (1) percent of DOE’s designs are below liquid-immersed transformer shipments. Direct labor required for installation, 3,600 pounds, and when only the This sales channel removes a distributor including unloading, uncrating, hauling designs with the lowest first cost are markup, which had included the within 200 feet of the loading dock, considered, nearly 74 percent of the commission of the manufacturer’s setting in place, connecting to the designs are less than 3,600 pounds. The representative in the preliminary distribution network, and testing; and majority of the designs that exceed analysis. The inclusion of this channel (2) equipment rentals necessary for 3,600 pounds are at the maximum reduces the overall markup for liquid- completion of the installation such as a efficiency levels using an amorphous immersed transformers. forklift, and/or hoist. core steel. EEI stated that a distribution channel Chapter 6 of the NOPR TSD provides During negotiations, Federal Pacific from manufacturers to distributors to additional detail on the markups and HVOLT commented that substation- multi-site commercial and/or industrial analysis. style designs common to the medium- customers (i.e., large purchasers) may voltage, dry-type market are larger than represent 10 percent to 25 percent of E. Energy Use Analysis the designs that DOE had previously dry-type transformer sales. (EEI, No. 29 The energy use and end-use load modeled and would exhibit bus and at p. 6) DOE did not find data that characterization analysis (chapter 6) lead losses reflecting their longer buses would allow it to include the channel produced energy use estimates and end-

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use load shapes for distribution DOE received a number of comments negotiations were used to validate the transformers. The energy use estimates on its preliminary analysis for liquid- load models for single-phase liquid- enabled evaluation of energy savings immersed transformers. immersed transformers. For the final from the operation of distribution Regarding the price-load correlation rule, if stakeholders are able to provide, transformer equipment at various incorporated into the end-use load or assist in providing such data, DOE efficiency levels, while the end-use load characterization, EEI suggested that DOE will use it to validate and modify the characterization allowed evaluation of obtain data for 2009/2010 to develop a transformer load models as needed. the impact on monthly and peak more complete picture of the savings Dry-type transformers are primarily demand for electricity from the associated with reducing core and coil installed on buildings and owned by the operation of transformers. losses in liquid-filled transformers. (EEI, building owner/operator. Commercial The energy used by distribution No. 29 at p. 6) Because changes to the and industrial (C&I) utility customers transformers is characterized by two functional form of the price-load are typically billed monthly, with the types of losses. The first are no-load correlation are small compared to the bill based on both electricity losses, which are also known as core variability in the model, updating the consumption and demand. Hence, the losses. No-load losses are roughly data will not affect the resulting price- value of improved transformer constant and exist whenever the load correlation. Thus, DOE continued efficiency depends on both the load transformer is energized (i.e., connected to use 2008 Federal Energy Regulatory impacts on the customer’s electricity to live power lines). The second are load Commission (FERC) Form714 lambda consumption and demand and the losses, which are also known as data and market prices for the NOPR customer’s marginal prices. resistance or I2R losses. Load losses vary analysis. The customer sample of dry-type with the square of the load being served EEI also suggested that DOE use tariffs distribution transformer owners was by the transformer. to determine the prices paid for base taken from the EIA Commercial Because the application of load electricity generation, because Buildings Energy Consumption Survey distribution transformers varies reducing the constant core losses will (CBECS) databases. Survey data for the significantly by type of transformer not save electricity at marginal rates. years 1992 and 1995 were used, as these (liquid-immersed or dry-type) and (EEI, No. 29 at p. 8) NRECA stated that are the only years for which monthly ownership (electric utilities own most NRECA members make wholesale customer electricity consumption (kWh) approximately 95 percent of liquid- purchases at tariff rates that reflect and peak demand (kW) are provided. To immersed transformers, commercial/ installed, existing resources, with only a account for changes in the distribution industrial entities use mainly dry-type), small increment based on hourly, of building floor space by building type DOE performed two separate end-use market-based purchases. (NRECA, No. and size, the weights defined in the load analyses to evaluate distribution 31 and 36 at p. 4) They concluded that 1992 and 1995 building samples were transformer efficiency. The analysis for DOE’s approach overemphasized rates rescaled to reflect the distribution in the liquid-immersed transformers assumes for purchases made on the hourly most recent 2003 CBECS survey. CBECS that these are owned by utilities and market. covers primarily commercial buildings, uses hourly load and price data to The energy savings from more but a significant fraction of transformers estimate the energy, peak demand, and efficient distribution transformers are a are shipped to industrial building cost impacts of improved efficiency. For small decrement to the total energy owners. To account for this in the dry-type transformers, the analysis consumption. The hourly price reflects sample, data from the 2006 assumes that these are owned by the cost of serving a small, marginal Manufacturing Energy Consumption commercial and industrial customers, so change in load, and is therefore the Survey (MECS) were used to estimate the energy and cost savings estimates appropriate method to use to estimate the amount of floor space of buildings are based on monthly building-level the costs savings associated with energy that might use the type of transformer demand and energy consumption data savings. This is true for both coil losses covered by the rulemaking. The weights and marginal electricity prices. In both and winding losses, and is independent assigned to the building sample were cases, the energy and cost savings are of how the transformer owner pays for rescaled to reflect this additional floor estimated for individual transformers the bulk of their power purchases. DOE space. Only the weights of large and aggregated to the national level produced a detailed comparison of buildings were rescaled. using weights derived from either utility tariff-based marginal prices and hourly Regarding DOE’s energy use or commercial/industrial building data. marginal prices for peaking end-uses as characterization, EEI stated that DOE For utilities, the cost of serving the part of the Commercial Unitary Air should use EIA’s 2006 MECS to develop next increment of load varies as a Conditioner & Heat Pump rulemaking.28 baseline electricity consumption and function of the current load on the This analysis confirmed that, on an demand for industrial facilities. (EEI, system. To correctly estimate the cost annual average basis, both methods lead No. 29 at p. 8) Using CBECS data as a impacts of improved transformer to similar cost estimates. proxy, they said, may lead to incorrect efficiency, it is therefore important to Regarding hourly load data, NEMA analysis on transformers for the capture the correlation between electric recommended that DOE consult with industrial facilities being modeled. (EEI, system loads and operating costs and utilities, building owners, and other No. 29 at p. 8) The MECS survey data between individual transformer loads end-users to obtain any available field does not contain any building-level and system loads. For this reason, DOE data. (NEMA, No. 13 at p. 8) DOE information on energy consumption, estimated hourly loads on individual consulted with a variety of industry and contains no information whatsoever liquid-immersed transformers using a contacts but was unable to find any on electricity demand. Thus, DOE statistical model that simulates two source of metered hourly load for retained use of CBECS data for the relationships: (1) The relationship transformers. Data submitted by NOPR analysis. between system load and system subcommittee member K. Winder of Transformer loading is an important marginal price; and (2) the relationship Moon Lake Electric during the factor in determining which types of between the transformer load and transformer designs will deliver a system load. Both are estimated at a 28 See http://www1.eere.energy.gov/buildings/ specified efficiency, and for calculating regional level. appliance_standards/commercial/ac_hp.html. transformer losses. In the preliminary

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analysis, DOE assumed non-residential medium-voltage are loaded at 35 factor, and the other is a modeling load factors of 35 percent, 40 percent, percent. Low-voltage transformers are parameter that adjusts the ratio of the and 25 percent for medium-voltage loaded at 25 percent. RMS load relative to the square of the single-phase, medium-voltage three- DOE received a number of comments transformer peak load. Neither of these phase, and low-voltage transformers that apply to both the hourly and factors is known with great accuracy. respectively. Several stakeholders monthly load models. The LCC spreadsheet allows the user to commented on the load factors DOE Regarding load (coil) losses, EEI adjust the power factor. Adjusting the used to characterize commercial and suggested that DOE use diversity factors power factor from one to 0.95 may scale industrial loads. EEI suggested that DOE to account for the fact that significantly the energy losses up slightly, but as all use Electric Power Research Institute less than 100 percent of load losses are transformer designs are affected equally, (EPRI) and/or utility load factor studies correlated with peak demands for a there should be no significant impact on to develop separate commercial and building or distribution system. Using the selection of designs that meet the industrial load factors to use in its this method, they said, would prevent candidate standard level. In the absence analysis. (EEI, No. 29 at p. 7) suggested overestimating cost savings. (EEI, No. 29 of additional field data on both RMS that load factors for large commercial at p. 8) DOE already employs diversity loads and power factors in different buildings have been trending upward factors to account for the fact that load transformer installations, DOE does not because of the increased numbers of (coil) losses often do not correlate with believe that these small adjustments can data centers. (HEX, Public Meeting system or building peak loads. significantly improve the accuracy of Transcript, No. 34 at p. 192) EEI Several stakeholders questioned the LCC calculations. whether DOE’s analysis of responsibility suggested that, based on EPRI data, DOE NEEA commented on the calculation factor accounts for the diversity of loads use higher load factors (50–55 percent of load losses, recommending that DOE that transformers serve. NRECA, for for commercial buildings and 70–80 use hourly marginal line losses rather instance, commented that diversity percent for industrial buildings). (EEI, than annual average line losses to adjust among a transformer’s loads must be Public Meeting Transcript, No. 34 at p. distribution transformer loads to system 168) ABB stated that DOE’s current considered to set the responsibility factor for an individual transformer, if generation loads. It stated that using assumptions about average load factors hourly marginal line losses would more are sufficiently accurate. (ABB, No. 14 at multiple customers are served through a transformer. (NRECA, No. 31 and 36 at accurately reflect the value of load p. 18) FPT stated commercial and losses. (NEEA, No. 11 at p. 10) DOE industrial users tend to load their p. 4) EEI also expressed concern that DOE’s analysis of responsibility factor found no data supporting the use of transformers to a lower percent of hourly marginal line losses rather than nameplate than utilities would load excluded diversity of loads. (EEI, No. 29 at p. 7) CDA recommended that DOE’s average annual line losses in calculating residential liquid-filled transformers load losses. Thus, it continued to use because of the greater risk and impact of analysis of responsibility factor consider the effect of load (winding) losses that average annual line losses for the NOPR an outage of a transformer in a analysis. commercial or industrial installation. likely occur simultaneously with system (FTP, No. 27 at p. 19) peaks. (CDA, No. 17 at p. 3) F. Life-Cycle Cost and Payback Period Several subcommittee members The statistical model that DOE uses to Analysis commented that in rural areas the estimate the responsibility factor for DOE conducts LCC and PBP analyses number of customers per transformer is each individual transformer accounts likely to be significantly lower than in for the diversity of loads. The to evaluate the economic impacts on urban or suburban areas, which in turn responsibility factor model is applied to individual customers of potential energy results in lower RMS loads. (APPA and the load (winding) losses. The model conservation standards for distribution NRECA, Public Meeting Transcript, No. accounts for the effect of diversity of transformers. The LCC is the total 91 at p. 201) To account for this effect, individual transformer loads with customer expense over the life of a DOE performed an analysis to determine respect to the peak of the aggregate load product, consisting of purchase and an average population density in the of the system that contains the installation costs plus operating costs territory served by each of the utilities transformer. Winding losses are (expenses for energy use, maintenance represented in the LCC simulation. For included in the analysis. and repair). To compute the operating each utility, EIA Form 861 data were Several stakeholders commented on costs, DOE discounts future operating used to generate a list of counties served DOE’s use of a power factor of 1 in its costs to the time of purchase and sums by the utility. Census data were used to end-use load characterization. PG&E them over the lifetime of the product. determine the average housing unit and SCE stated that DOE should The PBP is the estimated amount of density in each county. An average over consider a power factor less than unity. time (in years) it takes customers to counties was then used to assign the (Joint Comments PG&E and SCE, No. 32 recover the increased purchase cost utility to a low density, average density at p. 1) EEI suggested that DOE use a (including installation) of a more or high density category, with the cutoff power factor other than 1 to account for efficient product through lower for low density set at 32 households per decreased transformer efficiency from operating costs. DOE calculates the PBP square mile. For those utilities serving increased harmonic parasitic loads. by dividing the change in purchase cost primarily low density areas the median (EEI, Public Meeting Transcript, No. 34 (normally higher) due to a more of the RMS load distribution is reduced at p. 156) stringent standard by the change in from 35 percent to 25 percent. In DOE’s analysis, transformer loss average annual operating cost (normally For the NOPR, DOE modified its estimates are calculated relative to the lower) that results from the standard. analysis of dry-type transformer loading peak load on the transformer. The ratio For any given efficiency level, DOE to: (1) model commercial and industrial of the peak load on a transformer to the measures the PBP and the change in building installations separately; and (2) transformer capacity is modeled by a LCC relative to an estimate of the base- reflect how transformers are used in the distribution. There are two additional case efficiency levels. The base-case field. Higher-capacity medium-voltage parameters that can affect the overall estimate reflects the market in the transformers are loaded at 40 percent scale of transformer loading relative to absence of amended energy and smaller capacity transformers its rated capacity. One is the power conservation standards, including the

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market for products that exceed the savings from a proposed standard. Table distribution) of individual transformers. current energy conservation standards. IV.1 summarizes all the major inputs to In this manner, DOE’s analysis Equipment price, installation cost, the LCC and PBP analysis, and whether explicitly recognized that there is both and baseline and standard affect the those inputs were revised for the variability and uncertainty in its inputs. installed cost of the equipment. proposed rule. DOE used Monte Carlo simulations to Transformer loading, load growth, Commenting on the preliminary model the distributions of inputs. The power factor, annual energy use and analysis, SC stated that because the Monte Carlo process statistically demand, electricity costs, electricity assumptions DOE uses in its LCC and captures input variability and price trends, and maintenance costs PBP analyses are not always correct and distribution without testing all possible affect the operating cost. The not specific to an individual utility or input combinations. Some atypical compliance date of the standard, the user, the conclusions are most likely situations may not be captured in the discount rate, and the lifetime of inaccurate for some utilities. (SC, No. 22 analysis, but DOE believes the analysis equipment affect the calculation of the at p. 4) DOE calculated the LCC and PBP captures an adequate range of situations present value of annual operating cost for a representative sample (a in which transformers operate.

TABLE IV.1—KEY INPUTS FOR THE LCC AND PBP ANALYSES

Inputs Preliminary analysis description Changes for proposed rule

Affecting Installed Costs: Equipment price ...... Derived by multiplying manufacturer selling Added a case for liquid-immersed trans- price (from the engineering analysis) by dis- formers that are sold directly to utilities. tributor markup and contractor markup plus sales tax for dry-type transformers. For liq- uid-immersed transformers, DOE used manufacturer selling price plus small dis- tributor markup plus sales tax. Shipping costs were included for both types of trans- formers. Installation cost ...... Includes a weight-specific component, derived Updated the installation factors to use RS from RS Means Electrical Cost Data 2010 Means Electrical Cost Data 2011. Improved and a markup to cover installation labor, the modeling of pole replacements for de- pole replacement costs for design line 2 sign line 2. and equipment wear and tear. Baseline and standard design selection ..... The selection of baseline and standard-com- Adjusted the percent of evaluators to: 10% for pliant transformers depended on customer liquid-immersed transformers, and 2% for behavior. For liquid-immersed transformers, low-voltage dry-type and 2% for medium- the fraction of purchases evaluated was voltage dry-type transformers. 75%, while for dry-type transformers, the fraction of evaluated purchases was 50% for small capacity medium-voltage and 80% for large-capacity medium-voltage. Affecting Operating Costs: Transformer loading ...... Loading depended on customer and trans- Adjusted loading as a function of transformer former characteristics. capacity and utility customer density. Load growth ...... 0.5% per year for liquid-immersed and 0% per No change. year for dry-type transformers. Power factor ...... Assumed to be unity ...... No change. Annual energy use and demand ...... Derived from a statistical hourly load simula- No change. tion for liquid-immersed transformers, and estimated from the 1992 and 1995 Com- mercial Building Energy Consumption Sur- vey 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 No change. electricity prices. Capacity costs provided extra value for reducing losses at peak. Electricity price trend ...... Obtained from Annual Energy Outlook 2010 Updated to Annual Energy Outlook 2011 (AEO2010). (AEO 2011). Maintenance cost ...... Annual maintenance cost did not vary as a No change. function of efficiency. Compliance date ...... Assumed to be 2016 ...... No change. Discount rates ...... Mean real discount rates ranged from 4.0% The mean real discount rates were adjusted for owners of pole-mounted, liquid-im- to 3.7% for owners of liquid-immersed mersed transformers to 5.1% for dry-type transformers and 4.6% for dry-type trans- transformer owners. formers. Lifetime ...... Distribution of lifetimes, with mean lifetime for No change. both liquid and dry-type transformers as- sumed to be 32 years.

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The following sections contain brief type, about 10 percent for medium- 2. Inputs Affecting Installed Cost discussions of comments on the inputs voltage dry-type, and about 20 percent a. Equipment Costs and key assumptions of DOE’s LCC for high-capacity dry-type distribution analysis and explain how DOE took transformers. (FPT, No. 27 at p. 4) ABB In the LCC and PBP analysis, the these comments into consideration. agreed that DOE overestimated the equipment costs faced by distribution number of evaluators. They estimated transformer purchasers are derived from 1. Modeling Transformer Purchase the MSPs estimated in the engineering Decision that evaluators represent less than 1 percent for low-voltage dry-type and analysis and the overall markups The LCC spreadsheet uses a purchase- small medium-voltage dry-type, and less estimated in the markups analysis. decision model that specifies which of than 5 percent for large medium-voltage Several stakeholders recommended the hundreds of designs in the dry-type. (ABB, No. 14 at p. 19) Other that DOE lower its estimate of transformer selling prices. Based on its engineering database are likely to be stakeholders agreed that DOE’s Internet review of selling prices, Metglas selected by transformer purchasers to estimates of evaluators are too high. said the prices DOE generated are too meet a given efficiency level. The (EEI, No. 29 at p. 8; ASAP, Public high. (MET, Public Meeting Transcript, engineering analysis yielded a cost- Meeting Transcript, No. 34 at p. 197) No. 34 at p. 97) PG&E and SCE efficiency relationship in the form of NEMA commented that the percent of suggested that DOE calibrate its prices manufacturer selling prices, no-load evaluators seems high for some product against market data and exclude the cost losses, and load losses for a wide range lines, and recommended that DOE of any additional features from the price of realistic transformer designs. This set obtain information from individual estimates. (Joint Comments PG&E and of data provides the LCC model with a manufacturers and end-users, or distribution of transformer design SCE, No. 32 at p. 2) ASAP, ACEEE and examine shipments data to determine NRDC agreed that DOE’s estimated choices. evaluators. (NEMA, No. 13 at p. 8) DOE used an approach that focuses on selling prices are too high, and ASAP et al. recommended that the DOE the selection criteria customers are recommended that DOE adjust its survey enough users and suppliers to known to use when purchasing estimates based on market research, and develop a better estimate of the transformers. Those criteria include first then apply an adjustment factor to bring percentage of units purchased in 2010 costs, as well as what is known in the final transformer selling prices in line that had significantly higher efficiency transformer industry as total owning with observed prices. (Joint Comments than the minimum standard. (Joint cost (TOC). The TOC method combines ASAP, ACEEE and NRDC, No. 28 at pp. Comments ASAP, ACEEE and NRDC, first costs with the cost of losses. 1–2) No. 28 at p. 4) Purchasers of distribution transformers, For the NOPR analysis, DOE reviewed especially in the utility sector, have long Conducting a representative survey of bid documents on the Internet after the used the TOC method to determine users or manufacturers is not possible current standards took effect in 2010 which transformers to purchase. DOE within the scope of the present and found a wide range of prices. DOE refers to purchasers who use the TOC rulemaking. For the NOPR analysis, also received confidential data from method as evaluators. DOE revised the evaluation rates, based NEEA on utility transformer purchases The utility industry developed TOC on the available data and stakeholder that showed a wide range of prices. The evaluation as an easy-to-use tool to comments. DOE revised its evaluation data did not clearly indicate that DOE’s reflect the unique financial environment rates as follows: 10 percent for liquid- estimated customer prices are too high. faced by each transformer purchaser. To immersed, 2 percent for low-voltage, DOE notes that the inclusion of a new express variation in such factors as the and 2 percent for medium-voltage dry- distribution channel for liquid results in cost of electric energy, and capacity and type transformers. The transformer a lower average markup and thus lower financing costs, the utility industry selection approach is discussed in detail average customer price for these developed a range of evaluation factors, in chapter 8 of the NOPR TSD. products. called A and B values, to use in their FPT stated that only utilities really EEI stated that DOE should consider calculations. A and B are the equivalent evaluate based on A and B factors, so transformer pricing data from 2006 first costs of the no-load and load losses another method needs to be used to onward, because that period reflects the (in $/watt), respectively. analyze other types of customers. FPT increasing global demand for In the preliminary analysis, DOE recommended that DOE base its analysis distribution transformers as well as the assumed that 75 percent of liquid- of industrial and commercial customers increase in commodity costs for key immersed transformers are purchased on PBP criteria. (FPT, No. 27 at p. 5) transformer components. EEI asserted using TOC evaluation. DOE assumed DOE effectively bases its analysis on that transformer prices have not that 25 percent of low-voltage dry-type PBP; the results are converted to declined, but rather increased, transformers are purchased using TOC equivalent A and B factors so that the compared to the rate of inflation. (EEI, evaluation. For medium-voltage dry- same model structure can be used in all No. 29 at pp. 2–4) type transformers, DOE assumed that 50 the spreadsheets. To forecast a price trend for the percent of smaller capacity units are HI stated that fewer customers will NOPR, DOE derived an inflation- purchased with TOC evaluation and evaluate their purchases when DOE adjusted index of the PPI for electric that 85 percent of larger capacity units mandates higher efficiency levels, power and specialty transformer are purchased using TOC evaluation. which would result in purchase of manufacturing over 1967–2010. These Several stakeholders commented on transformers with less than optimum data show a long-term decline from DOE’s estimate of the share of efficiency for their application. (HI, No. 1975 to 2003, and then a steep increase purchasers who make purchase 23 at p. 9) DOE acknowledges that since then. DOE believes that there is decisions based on TOC. FPT said that evaluation rates may vary depending on considerable uncertainty as to whether DOE significantly overstated the the standard for a given design line. the recent trend has peaked, and would percentage of evaluators for dry-type Because DOE has no basis for estimating be followed by a return to the previous distribution transformers. They this phenomenon, however, it used the long-term declining trend, or whether estimated there are 0 percent to 1 same evaluation rates for each of the the recent trend represents the percent evaluators for low-voltage dry- considered CSLs. beginning of a long-term rising trend

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due to global demand for distribution transformers, an increase in transformer other factors. Natural variability in transformers and rising commodity weight may generate an increase in the wood growth leads to a high degree of costs for key transformer components. required pole class to sustain the load. variability in strength values across a Given the uncertainty, DOE has chosen (ComEd, No. 24 at p. 1) PP agreed that given pole class. Thus, NESC also to use constant prices (2010 levels) for additional transformer weight could provides guidelines on reliability, both its LCC and PBP analysis and the make pole-mounting difficult. (PP, No. which result in an acceptable NIA. For the NIA, DOE also analyzed 19 at p. 1) NRECA and T&DEC stated probability that a given pole will exceed the sensitivity of results to alternative that the added cost of replacing utility the minimal required design strength. transformer price forecasts. DOE poles is especially burdensome for rural Because poles are sized to cope with developed one forecast in which prices electric cooperatives. (Joint Comments large wind stresses and potential decline after 2010, and one in which NRECA and T&DEC, No. 31 and 36 at accumulation of snow and ice, this prices rise. Appendix 10–C of the NOPR pp. 1–2) results in ‘‘over-sizing’’ of the pole TSD describes the historic data and the Other stakeholders stated that relative to the load by a factor of two to derivation of the default and alternative standards that result in heavier four. Because of this ‘‘over-sizing’’ DOE price forecasts. transformers would not necessarily limited the total fraction of pole DOE requests comments on the most require pole change-outs. ASAP et al. replacements to 25 percent of the total appropriate trend to use for real stated that increased weight due to population. transformer prices, both in the short run higher efficiency will not require pole The second step is to determine the (to 2016) and the long run (2016–2045). change-outs. They noted that the cost of a pole change-out. Specific primary determining factor in selecting b. Installation Costs examples of pole change-out costs were pole size is the horizontal load, not the submitted by the sub-committee. These Higher efficiency distribution vertical load, which is affected by the examples were consistent with data transformers tend to be larger and transformer weight. (Joint Comments taken from the RSMeans Building heavier than less efficient designs. In ASAP, ACEEE and NRDC, No. 28 at p. Construction Cost database. Based on the preliminary analysis, DOE included 2–3) PG&E and SCE stated that this information, a triangular the increased cost of installing larger, replacement of the pole (or pad) is more distribution was used to estimate pole heavier transformers as a component of a function of transformer upsizing than change-out costs, with a lower limit at the first cost of more efficient of increased size due to efficiency $2,025 and an upper limit at $5,999. transformers. DOE presented the improvement, adding that when Utility poles have a finite life-time, so installation cost model and solicited replacing in-kind utility transformers, that pole change-out due to increased comment from stakeholders. the rate of pole change-out due to transformer weight should be counted Commenting on the preliminary increased size and weight of higher- as an early replacement of the pole; i.e. analysis, several stakeholders stated that efficiency improvements is very low. it is not correct to attribute the full cost DOE should revise its assumption that They also noted that for new of pole replacement to the transformer 25 percent of pole-mounted liquid- construction, pole change-out is purchase. Equivalently, if a pole is immersed transformers greater than unnecessary because there is no existing changed out when a transformer is 1,000 pounds will require an additional pole to change out. (Joint Comments replaced, it will have a longer lifetime $2,000 cost for pole change-out. (Joint PG&E and SCE, No. 32 at p. 2) relative to the pole it replaces, which Comments PG&E and SCE, No. 32 at p. In general, as transformers are offsets some of the cost of the pole 2; Joint Comments ASAP, ACEEE and redesigned to reach higher efficiency, installation. To account for this affect, NRDC, No. 28 at p. 2–3; NEEA, No. 11 the weight and size also increase. The pole installation costs are multiplied by at p. 8) The above comments reflect a degree of weight increase depends on a factor n/pole-lifetime, which misunderstanding of DOE’s preliminary how the design is modified to improve approximately represents the value of analysis. The 25 percent referred to in efficiency. For pole-mounted the additional years of life. The the comments was the maximum pole transformers, represented by design line parameter n is chosen from a flat change-out fraction in the algorithm (DL) 2, the increased weight may lead to distribution between 1 and the pole DOE used to estimate when change-outs situations where the pole needs to be lifetime, which is assumed to be 30 would be required when the weight of replaced to support the additional years.29 the transformer exceeds 1,000 pounds. weight of the transformer. This in turn PHI noted that if a pole-mount EEI noted that several of its members leads to an increase in the installation transformer exceeds 900 pounds, they expressed concern that more efficient cost. To account for this effect in the are required to have two crews for the liquid-immersed transformers would analysis, three steps are needed: replacement, a heavy-duty rigger and have much higher weights, which The first step is to determine whether traffic control crew, adding to the would increase costs in terms of the pole needs to be changed. This expense of the installation. (PHI, No. 26 installation and pole structural integrity depends on the weight of the at p. 1) DOE’s analysis accounts for for retrofits of existing pole-mounted transformer in the base case compared increase in installation labor costs as transformers. (EEI, No. 29 at p. 2) APPA to the weight of the transformer under transformer weight increases and is commented that DOE must adequately a proposed efficiency level, and on described in detail in chapter 6 of the account for the costs of pole assumptions about the load-bearing NOPR TSD. replacements due to larger transformers. capacity of the pole. In the LCC Regarding pad-mounted transformers, (APPA, No. 21 at p. 2) SC stated that calculation, it is assumed that a pole ComEd commented that new standards pole change-outs may be necessary change-out will only be necessary if the when transformers are replaced because weight increase is larger than 15 percent 29 As the LCC represents the costs associated with larger diameter poles will be needed to and greater than 150 lbs of the weight purchase of a single transformer, to account for support transformer weight increases, of the baseline unit. Utility poles are multiple transformers mounted on a single pole, the and that larger diameter poles may be primarily made of wood. Both ANSI and pole cost should also be divided by a factor representing the average number of transformers per required with new transformer NESC provide guidelines on how to pole. No data is currently available on the fraction installations. (SC, No. 22 at p. 3) ComEd estimate the strength of a pole based on of poles that have more than one transformer, so commented that for pole-mounted the tree species, pole circumference and this factor is not included.

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could require that the pads for some transformers is greater than the loading D of the NOPR TSD provides a pad-mounted transformers receive on smaller transformers. sensitivity analysis for equipment of foundation upgrades to accommodate each product group with the largest b. Load Growth Trends the increased size and weight, which market shares, for liquid-immersed might require that generators be The LCC takes into account the transformers design lines 1 and 5 are deployed to maintain customer services projected operating costs for examined, for low-voltage dry-type during the upgrade. (ComEd, No. 24 at distribution transformers many years transformers design line 7 is examined, p. 3) APPA also stated that DOE must into the future. This projection requires and for medium-voltage dry-type adequately account for the costs of pad an estimate of how the electrical load on transformers design line 12. These mount replacements due to larger transformers will change over time. In analysis shows that the effect of changes transformers. (APPA, No. 21 at p. 2) HI the preliminary analysis, for dry-type in electricity price trends, compared to noted that symmetric core technology transformers, DOE assumed no load changes in other analysis inputs, is could affect installation practices growth, while for liquid-immersed relatively small. DOE evaluated a because the core design has a triangular transformers DOE used as the default variety of potential sensitivities, and the footprint that requires a much deeper scenario a one-percent-per-year load robustness of analysis results with pad to accommodate the deeper tanks. growth. It applied the load growth factor respect to the full range of sensitivities, (HI, No. 23 at p. 3) At present, DOE’s to each transformer beginning in 2016. in weighing the potential benefits and model does not include any additional To explore the LCC sensitivity to burdens of the proposed rule. variations in load growth, DOE included costs that may be required for pad- e. Standards Compliance Date mounted transformers at higher in the model the ability to examine efficiency levels. DOE requests data on scenarios with zero percent, one DOE calculated customer impacts as if the weight and size thresholds that percent, and two percent load growth. each new distribution transformer might be expected to trigger pad mount DOE did not receive comments purchase occurs in the year upgrades and on approximate costs of a regarding its load growth assumptions, manufacturers must comply with the typical upgrade. and it retained the assumptions standard. For the preliminary analysis, DOE received comments on the affect described above for the NOPR analysis. this was assumed to be January 1, 2016. Several stakeholders commented on that that symmetric core technology c. Electricity Costs the compliance date for new efficiency would have on installation costs. standards for distribution transformers. NRECA described theoretical evaluation DOE needed estimates of electricity Howard Industries stated that the that indicates weight and labor costs prices and costs to place a value on feasibility of the proposed date depends would increase for symmetric core transformer losses for the LCC on the magnitude of changes in the new technology. (NRECA, No. 31 and 36 at calculation. As discussed in section rulemaking and the supply chain p. 3) The engineering analysis estimated IV.E, DOE created two sets of electricity limitations that will occur once the the weight of transformers that utilize prices to estimate annual energy expenses for its analysis: an hourly- economy recovers. They estimated that symmetric core technology. As they will need until the January 1, 2016, mentioned above, the LCC and PBP based estimate of wholesale electricity costs for the liquid-immersed date to comply with new efficiency analysis accounts for increase in levels for liquid-immersed distribution installation labor costs as transformer transformer market, and a tariff-based estimate for the dry-type transformer transformers. (HI, No. 23 at p. 1) EEI weight increases. agreed that the compliance date for any EEI noted that several of its members market. IV.E also presents the comments received on this topic and DOE’s new standards should be no sooner than expressed concern that more efficient January 1, 2016. (EEI, No. 29 at p. 4) transformers will be larger in size response. DOE received a few comments Schneider Electric commented that the (height, width, and depth), which will regarding electricity cost estimation. previous standard for low-voltage dry- have an impact for all retrofit situations, Electricity cost estimates are discussed type transformers was implemented especially in underground vaults, which in detail in chapter 7 of the NOPR TSD. within 16 months because many in many urban areas cannot be manufacturers already were producing physically expanded, or can only be d. Electricity Price Trends enough compliant transformers that it expanded at a great cost in terms of For the relative change in electricity was a stock product. It noted that materials, labor, and street closures. prices in future years, DOE relied on circumstances are not the same for the (EEI, No. 29 at p. 2) Because vault- price forecasts from the Energy new standard levels, and a longer period installed transformers account for a Information Administration (EIA) should be allowed for compliance. (SE., small fraction of transformer Annual Energy Outlook (AEO). For the No. 18 at p. 5) (NEEA agreed with the installations, and mainly affect urban preliminary analysis, DOE used price current compliance date, but said that if utilities that have underground forecasts from AEO 2011. the final rule is not stringent, DOE distribution systems, DOE chose to PG&E and SCE considered DOE’s should consider an earlier date and/or analyze these transformers as part of the forecasted electricity prices in the should examine the interaction between customer subgroup analysis. This preliminary analysis to be low. They stringency of standards with the number analysis, and the approach DOE used to recommended that DOE revisit their of models already in production. account for installing larger-volume electric price forecast to ensure it (NEEA, No. 11 at p. 10) transformers, is described in section accurately reflects historical trends and As discussed in section II.A, if DOE IV.H. potential future global scenarios that finds that amended standards for 3. Inputs Affecting Operating Costs may drive electricity prices higher than distribution transformers are warranted, otherwise anticipated. (Joint Comments DOE must publish a final rule a. Transformer Loading PG&E and SCE, No. 32 at p. 2) For the containing such amended standards by DOE’s assumptions about loading of proposed rule, DOE updated the price October 1, 2012. The statutorily- different types of transformers are forecast to AEO 2011 and examined the required compliance date of January 1, described in section IV.E. DOE generally sensitivity of analysis results to changes 2016, provides manufacturers with over estimated the loading on larger in electricity price trends. Appendix 8– three years to prepare for manufacturing

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distribution transformers to the new Meeting Transcript, No. 34 at p. 126; and the national customer costs and standards. PHI, Public Meeting Transcript, No. 34 savings from each TSL. DOE at p. 210) DOE did not receive any f. Discount Rates understands that MS Excel is the most additional data that provide a basis for widely used spreadsheet calculation The discount rate is the rate at which changing its 32-year assumption on tool in the United States and there is future expenditures are discounted to distributor lifetime, so it retained the general familiarity with its basic estimate their present value. DOE approach used in the preliminary features. Thus, DOE’s use of MS Excel employs a two-step approach in analysis for the NOPR analysis. as the basis for the spreadsheet models calculating discount rates for analyzing h. Base Case Efficiency provides interested parties with access customer economic impacts. The first to the models within a familiar context. step is to assume that the actual To determine an appropriate base case In addition, the TSD and other customer cost of capital approximates against which to compare various documentation that DOE provides the appropriate customer discount rate. candidate standard levels, DOE used the during the rulemaking help explain the The second step is to use the use the purchase-decision model described in capital asset pricing model (CAPM) to section IV.F.1. For the base case, models and how to use them, and calculate the equity capital component initially transformer purchasers are interested parties can review DOE’s of the customer discount rate. For the allowed to choose among the entire analyses by changing various input preliminary analysis, DOE estimated a range of transformers at each design quantities within the spreadsheet. statistical distribution of commercial line. DOE used the NIA spreadsheet to customer discount rates that varied by During the negotiation process, ERAC calculate the NES and NPV, based on transformer type by calculating the cost subcommittee members noted that the annual energy consumption and of capital for the different types of currently there are no transformers total installed cost data from the energy transformer owners. using ZDMH as a core material sold in use characterization and the LCC Commenting on the preliminary the U.S. market. (ABB, Public Meeting analysis. DOE forecasted the energy analysis, EEI stated that small Transcript, No. 91 at p. 276) Therefore, savings, energy cost savings, product businesses and entities under financial DOE screened out designs using this costs, and NPV of customer benefits for duress likely would face significantly material in the base case selection. For each product class for products sold higher effective discount rates. (EEI, No. higher efficiency levels, the LCC from 2016 through 2045. The forecasts 29 at p. 8) The intent of the LCC analysis samples from all design options provided annual and cumulative values analysis is to estimate the economic identified in the engineering analysis. for all four output parameters. In Subcommittee members provided impacts of higher-efficiency addition, DOE analyzed scenarios that data on market share as a function of transformers over a representative range used inputs from the AEO 2011 Low of customer situations. While the efficiency. For some design lines, the Economic Growth and High Economic discount rates used may not be lower boundary of the price-efficiency Growth cases. These cases have higher applicable for all customers, DOE curve produced in the engineering and lower energy price trends compared believes that they reflect the financial analysis is quite flat, so that the choice situation of the majority of transformer algorithm in the LCC analysis showed to the Reference case. NIA results based customers. units being selected in the base case on these cases are presented in More detail regarding DOE’s estimates with efficiencies substantially higher appendix 10–B of the NOPR TSD. of commercial customer discount rates than the current DOE minimum DOE evaluated the impacts of is provided in chapter 8 of the NOPR standard. DOE modified its approach so amended standards for distribution TSD. that the fraction of units selected in the transformers by comparing base-case base case at different efficiency levels is g. Lifetime projections with standards-case consistent with the provided market projections. The base-case projections DOE defined distribution transformer share data. characterize energy use and customer life as the age at which the transformer costs for each product class in the retires from service. For the preliminary G. National Impact Analysis—National Energy Savings and Net Present Value absence of amended energy analysis, DOE assumed, based on a conservation standards. DOE compared report by Oak Ridge National Analysis 30 these projections with projections Laboratory, that the average life of DOE’s NIA assessed the national characterizing the market for each distribution transformers is 32 years. energy savings (NES) and the national product class if DOE were to adopt This lifetime assumption includes a NPV of total customer costs and savings amended standards at specific energy constant failure rate of 0.5 percent/year that would be expected to result from efficiency levels (i.e., the standards due to lightning and other random amended standards at specific efficiency cases) for that class. failures unrelated to transformer age and levels. (‘‘Customer’’ refers to purchasers an additional corrosive failure rate of of the product being regulated.) The tables below summarize all the 0.5 percent/year starting at year 15. To make the analysis more accessible major NOPR inputs to the shipments Commenting on this assumption, and transparent to all interested parties, analysis and the NIA, and whether those HVOLT and PHI suggested that DOE use DOE used an MS Excel spreadsheet inputs were revised for the proposed a lifetime of 30 years. (HVOLT, Public model to calculate the energy savings rule.

TABLE IV.2—INPUTS FOR THE SHIPMENTS ANALYSIS

Input Preliminary analysis description Changes for proposed rule

Shipments data ...... Third-party expert (HVOLT) for 2009 ...... No change.

30 Barnes. Determination Analysis of Energy Conservation Standards for Distribution Transformers. ORNL–6847. 1996.

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TABLE IV.2—INPUTS FOR THE SHIPMENTS ANALYSIS—Continued

Input Preliminary analysis description Changes for proposed rule

Shipments forecast ...... 2016–2045: Based on AEO 2010 ...... Updated to AEO 2011. Dry-type/liquid-immersed market shares...... Based on EIA’s electricity sales data and Updated to AEO 2011. AEO2010. Regular replacement market ...... Based on a survival function constructed from No change. a Weibull distribution function normalized to produce a 32-year mean lifetime. Source: ORNL 6804/R1, The Feasibility of Replac- ing or Upgrading Utility Distribution Trans- formers During Routine Maintenance, page D–1. 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

TABLE IV.3—INPUTS FOR THE NATIONAL IMPACT ANALYSIS

Input Preliminary analysis description Changes for proposed rule

Shipments ...... Annual shipments from shipments model ...... No change. Compliance date of standard ...... January 1, 2016 ...... No change. Base case efficiencies ...... Constant efficiency through 2044. Equal to weighted- No change. average efficiency in 2016. Standards case efficiencies ...... Constant efficiency at the specified standard level from No change. 2016 to 2044. Annual energy consumption per unit ...... Average rated transformer losses are obtained from the No change. LCC analysis, and are then scaled for different size categories, weighted by size market share, and ad- justed for transformer loading (also obtained from the LCC analysis). Total installed cost per unit ...... Weighted-average values as a function of efficiency No change. level (from LCC analysis). Electricity expense per unit ...... Energy and capacity savings for the two types of trans- No change. former losses are each multiplied by the cor- responding 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 2010 forecasts (to 2035) and extrapolation for Updated the escalation of electricity 2044 and beyond. prices forecast using AEO 2011. Electricity site-to-source conversion ...... A time series conversion factor; includes electric gen- Updated conversion factors from NEMS. eration, transmission, and distribution losses. Conver- sion varies yearly and is generated by DOE/EIA’s National Energy Modeling System (NEMS) program. Discount rates ...... 3% and 7% real ...... No change. Present year ...... Equipment and operating costs are discounted to the No change. year of equipment price data, 2010.

1. Shipments transformers shipped using a bottom-up 2035. The model starts with an estimate DOE constructed a simplified forecast model where the shipments are of the overall growth in transformer of transformer shipments for the base triggered by retirements and new capacity and then estimates shipments case by assuming that long-term growth capacity additions, but found that there for particular design lines and in transformer shipments will be driven were not sufficient data to calibrate transformer sizes using estimates of the by long-term growth in electricity model parameters within an acceptable recent market shares for different design consumption. The detailed dynamics of margin of error. Hence, DOE developed and size categories. Chapter 9 provides transformer shipments is highly the transformer shipments forecast a detailed description of how DOE complex. This complexity can be seen assuming that annual transformer conducted its shipments forecasts. in the fluctuations in the total quantity shipments growth is equal to forecasted EEI suggested that the shipment of transformers manufactured as growth in electricity consumption as projections are overly optimistic and expressed by the U.S. Department of given by the AEO 2011 forecast up to should be closer to a flat line of growth. Commerce, Bureau of Economic the year 2035. For the years from 2036 (EEI, No. 29 at p. 9) The historical Analysis (BEA), transformer quantity to 2045, DOE extrapolated the AEO shipments data based on the BEA’s index. DOE examined the possibility of 2011 forecast with the growth rate of quantity index data for power and modeling the fluctuations in electricity consumption from 2025 to distribution transformers show a

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relatively flat trend between the late commented that it has not observed utilities purchasing replacement 1970s and 2007. The data show a sharp increased refurbishing with the current equipment would consider refurbishing increase in 2008, a higher-than-average regulation since January 1, 2010, but it failed units instead of purchasing new level in 2009, and a steep plunge in believes new regulations may well equipment. (AK, Public Meeting 2010. This recent trend apparently increase the use of rebuilt transformers. Transcript, No. 95 at p. 101) DOE reflects purchasers stocking up on (ABB, No. 14 at p. 19) NRECA said that received comment from committee transformers in advance of the standards some of its members are already making members that a small number of that took effect in 2010. Given this greater efforts to maintain and refurbish municipal utilities were already unusual market situation, DOE believes older units rather than purchase costlier purchasing refurbished equipment as that holding future shipments at the new, more efficient units. (NRECA, No. part of their normal day-to-day 2010 level would be unrealistic. For the 31 and 36 at p. 4) operations. (APPA, Public Meeting NOPR, DOE’s base case forecast shows To capture the customer response to Transcript, No. 95 at p. 169) On the shipments gradually returning to the transformer price increase, DOE other hand, PG&E stated that the risks level of 2008 by the end of the forecast estimated the customer price elasticity involved with using refurbished period. of demand. Although the general trend equipment (e.g., shorter lifetimes, Commenting on the preliminary of transformer purchases is determined shorter warrantee, inconsistent analysis, NEMA noted that in some by increases in generation, utilities equipment quality) give this option markets, liquid-immersed and medium- conceivably exercise some discretion in limited appeal to larger investor-owned voltage dry-type transformers compete how much transformer capacity to utilities. (PG&E, Public Meeting against one another, and for some buy—the amount of ‘‘over-capacity’’ to Transcript, No. 95 at p. 172) DOE applications, liquid-immersed units purchase. The ratio of transformer acknowledges that uncertainty exists have additional costs for liquid capacity to load varies according to regarding the issue of refurbishing vs. containment or fire protection. NEMA economic considerations, namely the replacement. However, it did not encouraged DOE to consider whether price of transformers, and the income receive data that provided a reasonable higher prices for liquid-immersed units generated by each unit of capacity basis for changing the analysis used for due to standards might cause users to purchased (essentially the price of the NOPR. DOE intends to further shift to dry-type transformers. (NEMA, electricity). When transformer costs are investigate this issue for the final rule. No. 13 at p. 7) ABB said that they have low, utilities may increase their Toward that end, DOE request further not observed a shift in market share investment in capacity in order to information that would allow it to between equipment classes as a result of economically meet future increases in quantify the likely extent of current regulations, but they asked that demand, and they will be more likely to refurbishment at different potential any new regulation be analyzed as to its do so when returns, indicated by standard levels. potential impact in shifting demand electricity prices, are high. Any decrease between equipment classes. (ABB, No. in sales induced by an increase in the 2. Efficiency Trends 14 at p. 19) price of distribution transformers is due DOE did not include any base case In principle, the appropriate way to to a decrease in this ratio. In DOE’s efficiency trends in its shipments and address the probability that a customer estimation of the purchase price national energy savings models. AEO switches to a different product class in elasticity, it used a logit function to forecasts show no long term trend in response to an increase in the price of characterize the utilities’ response to the transmission and distribution losses. a specific product is to estimate the price of a unit capacity of transformer. DOE estimates that the probability of an cross-price elasticity of demand The functional form captures what can increasing efficiency trend and the between competing classes. To estimate be called an average price elasticity of probability of a decreasing efficiency this elasticity, DOE would need demand with a term to capture the trend are approximately equal, and historical data on the shipments and estimation error, which accounts for all therefore used a zero trend in base case price of the liquid-immersed and other effects. Technically, the price efficiency. DOE seeks further comment medium-voltage dry-type transformers. elasticity should therefore account for on its decision to use frozen efficiencies The shipments data at that level of any decrease in the shipments due to a for the analysis period. Specifically, disaggregation is available only for two decision on the customer’s part to DOE would like comments on years (2001 and 2009), which is not refurbish transformers as opposed to additional sources of data on trends in sufficient to support the estimation of purchasing a new unit. DOE’s approach efficiency improvement. cross-price elasticity of liquid-immersed is described in chapter 9 of the NOPR distribution transformers. Thus, for the TSD. 3. Equipment Price Forecast NOPR DOE did not estimate potential During the negotiated rulemaking, As noted in section IV.F.2, DOE switching from liquid-immersed to dry- DOE heard from many stakeholders that assumed no change in transformer type transformers. DOE requests data there is a growing potential for utilities prices over the 2016–2045 period. In that would allow it to estimate such to repair failed transformers and return addition, DOE conducted sensitivity switching for the final rule. them to service for less than the cost of analysis using alternative price trends. Some stakeholders expressed concern a purchasing a new transformer. Some Based on PPI data for electric power and that higher prices due to new standards manufacturers commented that if the specialty transformer manufacturing, will increase refurbishing of cost of a new transformer increased by DOE developed one forecast in which transformers, which would reduce 20 percent utilities may refurbish rather prices decline after 2010, and one in purchase and shipments of new than purchase new equipment to which prices rise. These price trends, transformers. (EEI, Public Meeting replace failed equipment. (ABB, Public and the NPV results from the associated Transcript, No. 34 at p. 249; NEEA, No. Meeting Transcript, No. 95 at p. 100) sensitivity cases, are described in 11 at p. 9; HI, No. 23 at p. 13) NEMA DOE received a market potential study Appendix 10–C of the NOPR TSD. commented that the analysis should from AK Steel stating that the consider the replace versus refurbish replacement market could represent up 4. Discount Rate decision for each considered standard to 80 percent of the liquid-immersed In calculating the NPV, DOE level. (NEMA, No. 13 at pp. 7, 9) ABB market over the next 15 years and that multiplies the net savings in future

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years by a discount factor to determine national standard. For this rulemaking, larger transformer volume with regard to their present value. For today’s NOPR, DOE identified purchasers of vault- costs for vault enlargement. DOE DOE estimated the NPV of appliance installed transformers (mainly utilities assumed that if the volume of a unit in consumer benefits using both a 3- concentrated in urban areas) as a standard case is larger than the percent and a 7-percent real discount subgroups that could be median volume of transformer designs rate. DOE uses these discount rates in disproportionately affected, and for the particular design line, a vault accordance with guidance provided by examined the impact of proposed modification would be warranted. To the Office of Management and Budget standards on these groups using the estimate the cost, DOE compared the (OMB) to Federal agencies on the methodology of the LCC and PBP difference in volume between the unit development of regulatory analysis.31 analysis. selected in the base case against the unit The discount rates for the determination Kentucky Association of Electric selected in the standard case, and of NPV are in contrast to the discount Cooperatives, Inc. (KAEC) stated that applied fixed and variable costs. In the rates used in the LCC analysis, which rural electric cooperatives should be 2007 final rule, DOE estimated the fixed are designed to reflect a consumer’s analyzed as a customer subgroup in the cost as $1,740 per transformer and the perspective. The 7-percent real value is LCC subgroup analysis because they variable cost as $26 per transformer an estimate of the average before-tax rate will face disproportionate costs for any cubic foot.32 For today’s notice, these of return to private capital in the U.S. amended efficiency standards. KAEC costs were adjusted to 2010$ using the economy. The 3-percent real value stated that rural electric cooperatives chained price index for non-residential represents the ‘‘social rate of time typically are loaded at only 25 percent, construction for power and preference,’’ which is the rate at which not the 50 percent loading assumed in communications to $1854 per society discounts future consumption the test procedure. (KAEC, No. 4 at p. transformer and $28 per transformer flows to their present value. 2) DOE’s estimate of average root mean cubic foot. DOE considered instances square (RMS) loading for a 50 kVA pad- where it may be extremely difficult to 5. Energy Used in Manufacturing mounted transformer for the national modify existing vaults by adding a very Transformers sample is approximately 35 percent. For high vault replacement cost option to FPT stated that DOE should account rural electric cooperatives DOE used the the LCC spreadsheet. Under this option, for the additional energy needed to estimate provided by KAEC to lower the the fixed cost is $30,000 and the produce more efficient transformers, average loading for rural customers, as variable cost is $733 per transformer such as energy use associated with described in section IV.E of this cubic foot. working with higher-grade core steels. document. The customer subgroup analysis is (FPT, No. 27 at p. 4) HI and SC made Several interested parties commented discussed in detail in chapter 11 of the similar comments. (HI, No. 23 at p. 7; that it is important for DOE to take into NOPR TSD. consideration the problem that may SC, No. 22 at p. 3) In response, DOE I. Manufacturer Impact Analysis notes that EPCA directs DOE to consider arise in installing larger transformers in the total projected amount of energy, or space-constrained situations. HI 1. Overview as applicable, water, savings likely to commented that DOE needs to do more DOE performed a manufacturer result directly from the imposition of analysis on the size constraints for impact analysis (MIA) to estimate the the standard when determining whether submersible and vault type financial impact of amended energy a standard is economically justified. (42 transformers. (HI, No. 23 at p. 13) conservation standards on U.S.C. 6295(o)(2)(B)(i)(III)) DOE ComEd stated that for street and manufacturers of distribution interprets this to include energy used in building vaults, larger transformers transformers and to calculate the impact potentially could cause severe problems the generation, transmission, and of such standards on employment and during replacement because of distribution of fuels used by appliances manufacturing capacity. The MIA has equipment openings, operating or equipment. In addition, DOE is both quantitative and qualitative clearances, and the loading capacity of evaluating the full-fuel-cycle measure, aspects. The quantitative part of the floors and elevators. It stated that: (1) which includes the energy consumed in MIA primarily relies on the Government Existing building vaults typically have extracting, processing, and transporting Regulatory Impact Model (GRIM), an only a few inches of clearance; and (2) primary fuels. DOE’s current accounting industry cash-flow model with inputs larger transformers may not be able to be of primary energy savings and the full- specific to this rulemaking. The key maneuvered through building hallways fuel-cycle measure are directly linked to GRIM inputs are data on the industry or may exceed the weight limitations of cost structure, product costs, shipments, the energy used by appliances or building elevators and floors. It added and assumptions about markups and equipment. DOE believes that energy that although a slightly larger conversion expenditures. The key used in manufacturing of appliances or transformer would not create a space output is the industry net present value equipment falls outside the boundaries issue for street/sidewalk vaults, a larger (INPV). Different sets of shipment and of ‘‘directly’’ as intended by EPCA. transformer may violate certain Thus, DOE did not consider such energy company operating clearances inside markup assumptions (scenarios) will use in the NIA. the vault, and possibly be deemed a produce different results. The qualitative part of the MIA addresses H. Customer Subgroup Analysis safety issue. (ComEd, No. 24 at p. 2) PHI noted that the existing manholes factors such as product characteristics, In analyzing the potential impacts of provided for subsurface, subway, and impacts on particular sub-groups of new or amended standards, DOE network transformers would have to be firms, and important market and evaluates impacts on identifiable groups enlarged to install a larger unit, which product trends. The complete MIA is (i.e., subgroups) of customers that may requires time and additional costs. (PHI, outlined in Chapter 12 of the NOPR be disproportionately affected by a No. 26 and 37 at p. 1) TSD. For the NOPR, DOE evaluated vault- 31 OMB Circular A–4 (Sept. 17, 2003), section E, 32 See section 7.3.5 of the 2007 final rule TSD, ‘‘Identifying and Measuring Benefits and Costs. installed transformers represented by available at http://www1.eere.energy.gov/buildings/ Available at: www.whitehouse.gov/omb/ design lines 4 and 5 as a customer appliance_standards/commercial/pdfs/ memoranda/m03-21.html. subgroup. DOE examined the impacts of transformer_fr_tsd/chapter7.pdf).

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DOE conducted the MIA for this disproportionately affected by about the GRIM can be found in Chapter rulemaking in three phases. In Phase 1 standards. DOE applied the small 12 of the TSD. of the MIA, DOE prepared a profile of business size standards published by 3. GRIM Key Inputs the distribution transformer industry, the Small Business Administration which includes a top-down cost (SBA) to determine whether a company a. Manufacturer Production Costs analysis of manufacturers used to derive is considered a small business 65 FR Manufacturing a higher-efficiency preliminary financial inputs for the 30836, 30848 (May 15, 2000), as product is typically more expensive GRIM (e.g., sales general and amended at 65 FR 53533, 53544 (Sept. than manufacturing a baseline product. administration (SG&A) expenses; R&D 5, 2000) and codified at 13 CFR part The changes in the MPCs of the expenses; and tax rates). DOE used 121. To be categorized as a small analyzed products can affect the public sources of information, including business under NAICS 335311(‘‘Power, revenues, gross margins, and cash flow company Securities and Exchange Distribution and Specialty Transformer of the industry, making these product Commission (SEC) 10–K filings, Manufacturing’’), a distribution cost data key GRIM inputs for DOE’s Moody’s company data reports, transformer manufacturer and its analysis. corporate annual reports, the U.S. affiliates may employ a maximum of During the engineering analysis, DOE Census Bureau’s Economic Census, and 750 employees. The 750-employee used transformer design software to Hoover’s reports. threshold includes all employees in a create a database of designs spanning a In Phase 2 of the MIA, DOE prepared business’s parent company and any broad range of efficiencies for each of an industry cash-flow analysis to other subsidiaries. Based upon this the representative units. This design quantify the impacts of a new energy classification, DOE identified at least 31 software generated a bill of materials. conservation standard. In general, more small distribution transformer The software also provided information stringent energy conservation standards manufacturers that qualify as small pertaining to the labor necessary to can affect manufacturer cash flow in businesses. The distribution transformer construct the transformer, including the three distinct ways: (1) Create a need for small manufacturer sub-group is number of turns in the windings and increased investment, (2) raise discussed in Chapter 12 of the TSD and core dimensions, including stack height, production costs per unit, and (3) alter in section VI.B.1 of today’s notice. which enabled DOE to estimate per unit revenue due to higher per-unit prices labor costs. The Department then and possible changes in sales volumes. 2. Government Regulatory Impact Model applied markups to allow for scrap, In Phase 3 of the MIA, DOE DOE uses the GRIM to quantify the handling, factory overhead, and non- conducted structured, detailed standards-induced changes in cash flow production costs to estimate the interviews with a representative cross- that result in a higher or lower industry manufacturer selling price. section of manufacturers. During these value. The GRIM analysis uses a These designs and their MSPs are interviews, DOE discussed engineering, standard, annual cash-flow analysis that subsequently inputted into the LCC manufacturing, procurement, and incorporates products costs, markups, customer choice model. For each CSL financial topics to validate assumptions shipments, and industry financial and within each design line, the LCC used in the GRIM and to identify key information as inputs, and models model uses a Monte Carlo analysis and issues or concerns. See section IV.I.4 for criteria described in section F to select a description of the key issues changes in costs, investments, and manufacturer margins that would result a subset of all the potential designs manufacturers raised during the options (and associated MSPs). This interviews. from new and amended energy conservation standards. The GRIM subset is meant to represent those Additionally, in Phase 3, DOE designs that would actually be shipped evaluates sub-groups of manufacturers spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in the market under various standard that may be disproportionately levels. DOE inputted into the GRIM the impacted by standards or that may not with the base year of the analysis, 2011, and continuing to 2045. DOE calculates weighted average cost of the designs be accurately represented by the average selected by the LCC model and scaled cost assumptions use to develop the INPVs by summing the stream of annual discounted cash flows during this those MPCs to other selected capacities industry cash-flow analysis. For in each design line’s KVA range. example, small manufacturers, niche period, using a discount rate of 7.4 players, or manufacturers with cost percent for liquid immersed b. Base-Case Shipments Forecast structures that largely differ from the transformers, 9 percent for medium- The GRIM estimates manufacturer industry average could be more voltage dry-type transformers, and 11.1 revenues based on total unit shipment negatively affected. percent for low-voltage dry-type forecasts and the distribution of these For the MIA, DOE grouped the cash transformers. The difference in INPV values by capacity and design line. flow results for design lines made by the between the base case and a standards Changes in sales volumes and product same sets of manufacturers serving the case represents the financial impact of mix over time can significantly affect same markets in order to assess the the amended standard on manufacturer finances. For this analysis, impacts of amended energy manufacturers. DOE’s discount rate the GRIM uses the NIA’s annual conservation standards with more estimate was derived from industry shipment forecasts from 2011 to 2045, granularity. DOE separately analyzed financials and then modified according the end of the analysis period. See the industries of three transformer to feedback during manufacturer Chapter 9 of the TSD for additional ‘‘superclasses’’—liquid-immersed, interviews. details. medium-voltage dry-type, and low- DOE typically presents its estimates of voltage dry-type—based on differences industry impacts by groups of the major c. Product and Capital Conversion Costs in the tooling and equipment, product equipment types served by the same Amended energy conservation designs, customer types, and manufacturers. For the distribution standards will cause manufacturers to characteristics of the markets in which transformer industry, DOE presents its incur conversion costs to bring their they operate. The Department estimates of industry impacts for each production facilities and product considered small manufacturers as a superclass. The GRIM results are shown designs into compliance. For the MIA, separate subgroup because they may be in section V.B.2.a. Additional details DOE classified these conversion costs

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into two major groups: (1) Product materials. Major drivers of capital expertise and equipment. For conversion costs and (2) capital conversion costs include changes in manufacturers without experience with conversion costs. Product conversion core steel type (and thickness), core amorphous steel, a standard costs are investments in research, weight, core stack height, and core necessitating the use of the material development, testing, marketing, and construction techniques, all of which would require the development or the other non-capitalized costs necessary to are interdependent and can vary by procurement of the technical expertise make product designs comply with the efficiency level. DOE uses estimates of necessary to produce cores. Because new or amended energy conservation the core steel quantities needed by steel amorphous steel is extremely thin and standard. Capital conversion costs are type for each TSL, and then most likely brittle after annealing, materials investments in property, plant, and core construction techniques, to model management, safety measures, and equipment necessary to adapt or change the additional equipment the industry design considerations that are not existing production facilities such that would need to meet the efficiencies associated with non-amorphous steels new product designs can be fabricated embodied by each TSL. would need to be implemented. and assembled. For the liquid-immersed sector, For the liquid immersed distribution Several manufacturers commented on conversion costs are entirely driven at transformers, because of the industry’s the capital and product conversion costs each TSL by the need of the industry to relative inexperience with amorphous that would be necessary to meet expand capacity for amorphous technology, DOE estimated product particular efficiency levels. Power production. Based on interviews with conversion costs would equal two times Partners stated that any new standards manufacturers and equipment suppliers, annual industry R&D expenses for those would require additional retooling and DOE assumed an amorphous production TSLs where a majority of the market investment (Power Partners, Public line with 1,200 tons of annual capacity would be expected to transition to Meeting Transcript, No. 19 at p. 1). would cost $950,000. This figure amorphous material. These one-time Howard Industries commented that DOE includes costs associated with an expenditures account for the design, should consider the full impact of annealing oven, core cutting machine, engineering, prototyping, and other R&D capital investments for higher efficiency lacing tables and other miscellaneous efforts the industry would have to designs, such as symmetric core equipment. As the increasing stringency undertake to move to a predominately designs, which would require large of the TSLs drive amorphous adoption, amorphous market. At TSL 1, the only capital investments and patent fees, and conversion costs increase. TSL which did not show a clear move amorphous core designs, which would For the low-voltage and medium- to amorphous technology, DOE require large capital investments for voltage dry-type market, DOE took two estimated product conversion costs of additional floor space, laminators, approaches to estimate capital one times industry annual R&D. cutters, stackers, encapsulation conversion costs. First, DOE used an In the low-voltage and medium- equipment, and annealing ovens. industry feedback approach. The voltage dry-type market, DOE aggregated (Howard Industries, Public Meeting Department interviewed manufacturers estimates of product conversion costs Transcript, No. 23 at p. 10–11) and industry experts about the capital from manufacturers that were gathered Additionally, Federal Pacific indicated conversion costs for design lines at during interviews and scaled those that manufacturers who do not currently increasing efficiency levels, aggregated estimates to represent the market share have the experience and resources the conversion cost feedback, and of those not interviewed. Again, for needed to manufacture amorphous cores market-shared weighted the feedback to those levels that indicated a clear shift themselves will have to spend a determine likely industry capital to amorphous (or, in the case of LVDT, significant amount of money in conversion costs. For the second potentially wound cores), DOE assumed certifying amorphous core transformers approach, DOE performed a bottoms-up one-time product conversion costs equal to the IEEE C57 short circuit analysis of conversion costs based on to two times annual industry R&D requirements if DOE efficiency levels core steel selections forecasted by the expenses. necessitate the use of amorphous steel LCC and production equipment costs (a In conclusion, both capital and in core production. (Federal Pacific, more detailed description of the product conversion costs are key inputs Public Meeting Transcript, No. 27 at analysis can be found in chapter 12 of to the GRIM and directly impact the p. 3) the TSD). The two approaches yielded change in INPV that results from new DOE recognizes manufacturers would results with similar orders of standards. DOE assumed that all incur conversion costs to modify their magnitude. For those levels that do not conversion-related investments occur plants and equipment to produce higher require amorphous wound cores, the between the year of publication of the efficiency distribution transformers. capital costs are largely driven by the final rule 33 and the year by which DOE explicitly considers these need to modify existing or purchase manufacturers must comply with the expenditures it in its GRIM analysis; the new core cutting machines and standard (2016). DOE’s estimates of following describes the department’s associated equipment and tooling. This conversion costs can be found in section methodology for estimating potential need arises as increasingly stringent V.B.2.a of today’s notice and a detailed conversion costs for each TSL. TSLs require thinner steels, heavier description of the estimation For capital conversion costs, DOE cores, and mitered core construction methodology can be found in TSD prepared bottom-up estimates of the techniques, all of which slow chapter 12. costs required to meet standards at each throughput and reduce existing TSL for each design line. To do this, capacity. At those TSLs where d. Standards Case Shipments DOE used equipment cost estimates amorphous cores become the dominant As discussed in section F, DOE provided by manufacturers and steel of choice, DOE used the same modeled standard case shipments based equipment suppliers, an understanding amorphous core production line output on what units the LCC customer choice of typical manufacturing processes and cost assumptions as discussed model selected at each efficiency level. developed during interviews and in above for the liquid immersed market. DOE’s shipments analysis includes an consultation with subject matter As it relates to product conversion elasticity factor based on the potential experts, and the properties associated costs, DOE understands the production with different core and winding of amorphous cores requires unique 33 I.e., 2012.

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for transformer purchasers to elect to the cost of sales go up, DOE assumes of raw materials, especially higher refurbish rather than replace failed manufacturers are generally required to efficiency electrical steels. Power transformers as the purchase price reduce their markups to a level that Partners commented that: (1) There is a increases. The shipments analysis is maintains base case operating profit in limited global supply of core steels in discussed in more detail in chapter 9 of absolute dollars. Therefore, operating grades better than M3, (2) the domestic the TSD. margin in percentage terms is reduced supply of M2 steel is not enough to between the base case and standards support 100 percent of all liquid- e. Markup Scenarios case. This markup scenario represents a immersed transformer production, and As discussed above, manufacturer low bound to industry profitability (3) grades of grain oriented electrical selling prices include direct under an energy conservation standard. steel better than M2 (e.g., ZDMH) is in manufacturing production costs (i.e., limited supply and only available from 4. Discussion of Comments labor, material, and overhead estimated a foreign supplier. (Power Partners, in DOE’s MPCs) and all non-production During the April 2011 public meeting, Public Meeting Transcript, No. 19 at p. costs (i.e., SG&A, R&D, and interest), interested parties commented on the 4) Howard Industries also commented along with profit. To calculate the MSPs assumptions and results of the on the limited availability of ZDMH and in the GRIM, DOE applied markups to preliminary TSD. Oral and written M2 steel, stating that ZDMH steel is the MPCs estimated in the engineering comments discussed several topics, only produced in Japan and that analysis and selected in the LCC for including conversion costs, material production of M2 steel by AK Steel and each design line and efficiency level. availability, amorphous steel, and Allegheny Ludlum (the two primary Modifying these markups in the symmetric core technology. DOE suppliers of M2) is unlikely to increase. standards case yields different sets of addresses these comments below. (Howard Industries, Public Meeting impacts on manufacturers. For the MIA, a. Material Availability Transcript, No. 23 at p. 10–11) DOE modeled two standards-case The use and availability of amorphous markup scenarios to represent the Manufacturers noted that the steel, in particular, is a major concern in uncertainty regarding the potential availability of raw materials is the distribution transformer industry. impacts on prices and profitability for particularly a concern at higher DOE understands that amorphous steel manufacturers following the efficiency levels, where transformer is currently produced by only two implementation of amended energy designs would be based upon a very companies in the world (Metglas and conservation standards: (1) A limited selection of steel types. AT&M), both of which are foreign- preservation of gross margin percentage Hammond stated that the supply of high owned and one of which only supplies markup scenario, and (2) a preservation grade steels, such as domain-refined the Chinese market. Southern Company of operating profit markup scenario. steels, would not be sufficient to meet argued that a standard level that These scenarios lead to different demand if the efficiency standard forces requires the use of amorphous steel markups values, which, when applied all designs to use that type of steel. could cause domestic suppliers of grain- to the inputted MPCs, result in varying Hammond also stated that shortages oriented steel to go out of business or revenue and cash flow impacts. could occur if levels are pushed force them to lay off employees. Under the preservation of gross anywhere beyond the current level. (Southern Company, Public Meeting margin percentage scenario, DOE (Hammond, Public Meeting Transcript, Transcript, No. 22 at p. 1) Also, Howard applied a single uniform ‘‘gross margin No. 3 at p. 4 and 6) According to EEI, Industries commented that, because percentage’’ markup across all efficiency scarcity of raw materials would be production in China is not exported, levels. As production costs increase especially problematic if standards are amorphous steel will likely need to be with efficiency, this scenario implies raised beyond CSL 2 for most design supplied by U.S. manufacturers. that the absolute dollar markup will lines. Also, EEI noted that if the (Howard Industries, Public Meeting increase as well. Based on publicly efficiency levels selected are so high Transcript, No. 23 at p. 10–11) However, available financial information for that they can only be met with one or Metglas stated that AT&M (the Chinese manufacturers of distribution two design options, manufacturers amorphous supplier) has announced transformers and comments from would be faced with limited choices in aggressive expansion in its plants and is manufacturer interviews, DOE assumed suppliers and higher costs, and expected to export at some point in the the non-production cost markup— customers would be faced with limited future. (Metglas, Public Meeting which includes SG&A expenses; R&D choices in designs and with higher Transcript, No. 34 at p. 259) expenses; interest; and profit—to be prices. (EEI, Public Meeting Transcript, Nevertheless, due to the limited current 1.25 for distribution transformers. No. 29 at p. 1 and 4) Furthermore, as supply of amorphous steel, Federal Because this markup scenario assumes noted by KAEC, the transformer Pacific suggested that DOE should that manufacturers would be able to industry may not be able to respond to consider whether the increased demand maintain their gross margin percentage demand under emergency situations if for amorphous steel from any proposed markups as production costs increase in increased efficiency levels reduce the standard levels could be met by the response to an energy conservation number of options available for core compliance date. (Federal Pacific, standard, it represents a high bound to steels and those steels are in limited Public Meeting Transcript, No. 27 at industry profitability under an energy supply or subject to long lead times. p. 2–3) conservation standard. (KAEC, Public Meeting Transcript, No. Manufacturers suggested several In the preservation of operating profit 4 at p. 3) Southern Company also noted analyses which DOE should consider scenario, DOE adjusted the that an improved economy would performing in order to determine core manufacturer markups in the GRIM at increase demand for transformers and steel availability. ABB recommended each TSL to yield approximately the exacerbate the shortage of core steels that DOE should project the same earnings before interest and taxes necessary to build higher efficiency consumption of all grades of core steels in the standards case in the year after transformers. (Southern Company, for each efficiency level in the analysis the compliance date of the amended Public Meeting Transcript, No. 22 at p. so that the industry can assess the standards as in the base case. Under this 1) Many manufacturers expressed underlying impact on supply. (ABB, scenario, as the cost of production and concerns about the limited availability Public Meeting Transcript, No. 14 at p.

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17) Schneider Electric recommended parameters of this sample of selected which the market must move to that DOE should work with the steel designs, such as the distribution of core amorphous by default. industry to gain insights into core steel steel types and average core weights by With respect to amorphous demand availability. (Schneider, Public Meeting steel type, were critical inputs into the and capacity, at this time, DOE Transcript, No. 18 at p. 9) NEMA steel demand analysis. DOE found the understands there is only one credible recommended that DOE should discuss average core weight of the designs supplier to the U.S. market of high- core steel supply with large and small selected for each design line’s grade amorphous core steel. (Although manufacturers, and that DOE should representative unit at each efficiency there is one notable Chinese supplier also forecast the supply and cost of steel level. with substantial capacity, DOE at each CSL and TSL considered in the Next, the Department used the .75 understands the company has no history analysis. (NEMA, Public Meeting scaling rule to extrapolate these average of exporting the material and serves Transcript, No. 13 at p. 7–8) Also, core weights to those units forecast to be only China’s rapidly growing domestic Berman Economics commented that the shipped within a design line but not at market at this time. Despite Metglas’ shape of the material supply curve is the KVA range of the representative unit comment above that this supplier is more relevant than the current quantity that is directly analyzed in the expected to export soon, several of supply. Once demand increases, the engineering and LCC analyses. For manufacturers expressed skepticism at market would respond by supplying example, DOE extrapolated the core that possibility in interviews and also more steel, according to Berman weight of the 50 kVA representative unit noted the quality of the steel was poor. Economics. (Berman Economics, Public for DL1 to a 100 kVA unit in DL1. This At this time, DOE has little reason to Meeting Transcript, No. 34 at p. 260) implicitly assumes that the distribution believe the company will commence DOE agrees with comments that of core steel types used in transformers exporting substantial amounts of high standards could shift the mix and remains constant within the kVA range quality amorphous steel in the near quantities of core steels demanded by represented by each design line. future.) Based on publically available transformer manufacturers and could Although the calculation of core weights information, DOE estimates the alter the market dynamics among core for units at the extremes of a kVA range domestic supplier of amorphous metal steel and transformer manufacturers. may benefit from an adjusted scaling has a global capacity of approximately Therefore, DOE interviewed many rule or intermediate design lines, time 100,000 metrics tons per year, 40 players in the core steel supply chain. constraints have limited the extent of percent of which is U.S. based. DOE DOE investigated core steel availability the analysis. However, for the most part, estimates less than 10,000 tons are with large and small distribution the .75 scaling rule is a suitable method currently used for covered US transformers manufacturers, core for scaling across kVAs. transformers. Notably, the company has manufacturers, and steel suppliers. DOE substantially ramped up capacity in a Using the shipments analysis, which discussed several topics during these relatively short time, growing from a projected kVA demand by design line interviews, including market capacity 30,000-tons-per-year level in 2005 and and capacity, DOE calculated total core for each type of core steel, prospects for lending credence to the notion that its expansion, barriers to obtaining those steel demand from transformers covered supply can escalate quickly. The steels, and impacts on competition. by this rule. While DOE recognizes the amorphous supplier is a subsidiary of a Based on its engineering analysis, core steel market is global in scope, its large conglomerate and has commented DOE recognizes that some high projections include only core steel used that it has the financial resources to efficiency steels are substantially more in distribution transformers covered by expand. cost-effective at higher TSLs than lower- this rulemaking for use in the U.S. [In While DOE believes the company grade or traditional steels. Furthermore, response to Southern Company’s could substantially grow capacity the most stringent TSLs can only be met comment regarding additional demand beyond its current levels in time for a with certain core steels, typically that may come from an improved 2016 compliance date, there still exists amorphous, depending on the design economy, DOE notes that the shipment a significant risk of supply constraints, line. Based on its interviews and market analysis is based on the EIA forecast of given the magnitude of the surge in research, DOE understands these steels economic growth throughout the amorphous demand that could are currently produced in limited analysis period, and thus accounts for potentially be compelled by TSL 2 and quantities by a small handful of higher-the-current rates of economic above. It is worth noting that this is a suppliers, some of which do not growth.] global market (indeed, as discussed, produce steels domestically. In reference to the comments DOE estimates less than 10 percent of To better understand the impact of summarized above, based on industry all amorphous core from this supplier is standards on materials availability, DOE research and the core steel analysis, used in U.S. transformers). Therefore, conducted an extensive analysis of the DOE agrees with Power Partners that even if the company could increase core steel market, as discussed in TSD domestic steel suppliers do not capacity substantially, it is unlikely, appendix 3A. currently have the capacity to supply according to most projections, that To evaluate the impacts of standards the entire distribution transformer demand would remain flat in markets on the core steel market and transformer market with M2, nor does DOE believe receiving the other 90 percent of this manufacturers, DOE first estimated the domestic suppliers could cost- supplier’s business. core steel consumption of transformer effectively produce enough M2 to do so Beyond potential capacity constraints, manufacturers in 2016 (the first year of because the nature of silicon steel DOE is also concerned about the required compliance with the proposed production limits M2 output to one competitive impact—among both steel standard) in the base case and the pound for every four pounds of M3. Due manufacturers and distribution standards cases. To do this, DOE had to to this manufacturing constraint, if M3 transformer manufacturers—of a evaluate the designs selected by the LCC was not able to be used due to standard that threatened to shift most of customer choice model at each EL for standards, steel manufacturers would be the market to amorphous steel. In highly each design line. This model estimated unlikely to produce M2 at levels competitive markets, standard economic the distribution of designs that would be potentially demanded by standards, theory dictates that higher prices would selected at any given standard level. Key which could create a tipping point at encourage additional suppliers and

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production to come online, bringing DOE did not explicitly analyze levels that require the use of amorphous prices back to a long-run equilibrium. In symmetric core as a design option for steel would sharply increase conversion the very long run, that may be true here. consideration in the engineering. costs. Due to the thickness and However, the highly sophisticated Therefore, symmetric core construction brittleness of amorphous steel, unique nature of amorphous ribbon production, was not considered in the MIA. production processes and new material which is based on extensive know-how handling processes must be applied. c. Patents Related to Amorphous Steel gained over years of production and Manufacturers noted that they would Production high fixed costs, creates barriers to entry need to make extensive capital that, while not legal (i.e., patents) in Some manufacturers were concerned investments in amorphous core nature, suggest there is a significant risk about patents on amorphous steel production equipment, including core that there will be no alternative sources production. ASAP has questioned cutting machines, annealing ovens, and of supply by the compliance date or whether or not there are any patent lacing tables. even in the few years beyond it. issues that exist for amorphous Dry-type manufacturers also stated Therefore, DOE is concerned about the manufacturers entering the market. that a standard that moves the industry lack of alternative amorphous suppliers (ASAP, Public Meeting Transcript, No. to wound cores would also greatly and the virtual monopoly supplier that 34 at p. 262) However, according to increase conversions costs. Since the would likely exist in the short term at Metglas, the basic amorphous patent vast majority of LVDT and MVDT higher TSLs, particularly given the expired in 1999, so barriers to entry are manufacturers produce stacked cores, a engineering constraints on the economic based more on know-how than on move to wound cores would lead to production of M2 and very limited patents. (Metglas, Public Meeting extensive stranded assets. In some cases, supply of ZDMH. Transcript, No. 34 at p. 262) manufacturers may consider purchasing Because there are no more patents prefabricated cores rather than b. Symmetric Core Technology that create a barrier to entry in the modifying their facilities to produce Several stakeholders commented on production of amorphous steel, DOE did wound cores due to the extensive the costs that may be associated with not consider patents in its analysis of conversion costs. the implementation of symmetric core amorphous steel production capacity. Additionally, dry-type manufactures technology. Howard Industries stated However, DOE did consider the stated that a revised standard that does that symmetric core designs would technical barriers that exist and not require amorphous steel or wound require large capital investments and accounted for the engineering and R&D core designs could still lead to capital patent fees. (Howard Industries, Public investment necessary to begin conversion costs. As the standard Meeting Transcript, No. 23 at p. 10–11) production. increases, manufacturers are likely to Conversely, NEEA stated that capital use higher grade steels for core investments for the technology are low 5. Manufacturer Interviews production. Because high grade steels according to symmetric core DOE interviewed manufacturers tend to be thinner, additional Georg manufacturers (NEEA, Public Meeting representing approximately 65 percent machines, core assembly lines and Transcript, No. 11 at p. 4). Furthermore, of liquid-immersed transformer sales, 75 workstations, custom miter cutters, and HVOLT argued that, although there may percent of medium-voltage dry-type panel boards may be needed in order to be specific patents with different kinds transformer sales, and 30 percent of maintain existing throughput levels. of construction, patents fundamentally low-voltage dry-type transformer sales. Some manufacturers mentioned that related to core configurations should These interviews were in addition to stranded assets may also be an issue have expired by now given that those DOE conducted as part of the when equipment needs to be retired symmetric core technology was engineering analysis. The information and/or replaced if it cannot be patented in the 1930s. (HVOLT, Public gathered during these interviews repurposed for higher efficiency Meeting Transcript, No. 34 at p. 49) enabled DOE to tailor the GRIM to designs. DOE accounted for stranded Symmetric core manufacturers reflect the unique financial assets in the GRIM. commented on the benefits of characteristics of the distribution b. Shortage of Materials symmetric core technology. Hex Tec transformer industry. All interviews noted that the equipment used to provided information that DOE used to The availability of higher efficiency produce symmetric wound cores is evaluate the impacts of potential new grain-oriented electrical steels is a key significantly less expensive than flat and amended energy conservation issue for all manufacturers of stacked steel equipment for the same standards on manufacturer cash flows, distribution transformers. size and the labor production times are manufacturing capacities, and Manufacturers stated that there is lower. (Hex Tec, Public Meeting employment levels. currently a limited supply of M4, M3, Transcript, No. 34 at p. 52) Furthermore, During the manufacturer interviews, M2, ZDMH, H–0 DR, and SA1 according to Hex Tec, intellectual DOE asked manufacturers to describe amorphous steels on the market and property should not be a concern their major concerns about this manufacturers expressed concern that because there are a number of rulemaking. The following sections higher standards may increase both symmetric core designs available and describe the most significant issues demand and prices. Of these steels, M4 therefore plenty of variance in design. identified by manufacturers. DOE also and M3 steels are currently the most (Hex Tec, Public Meeting Transcript, includes additional concerns in chapter widely produced, with suppliers such No. 34 at p. 49) Hex Tec has also 12 of the NOPR TSD. as AK Steel, Allegheny Ludlum, submitted a letter from the Vice ThyssenKrupp, Nippon, JFE, Wuhan, President of Research & Development at a. Conversion Costs and Stranded Assets Novolipetsk, Posco, ArcelorMittal, Orb, Metglas which indicates that Hex Tec’s For manufacturers of distribution Baosteel, Stalproduct, Angang, and core winding machine for amorphous transformers, liquid-immersed, Arcelor/Hunan. However, as the grade symmetric core designs can be easily medium-voltage dry-type, and low- of grain-oriented electrical steel scaled for commercialization. (Hex Tec, voltage dry-type, conversion costs and improves, its availability decreases. M2 Public Meeting Transcript, No. 35 at stranded assets are a major concern. All is a higher grade than M3 but it is p. 11–14) manufacturers stated that efficiency produced by fewer suppliers, such as

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AK Steel, Allegheny Ludlum, d. Effective Date by the utility industry; (3) increased ThyssenKrupp, Nippon, and JFE. The Manufacturers expressed concerns consumer spending on the purchase of availability of deep domain-refined steel about the amount of time being new products; and (4) the effects of such as ZDMH, H–0 DR, and SA1 provided for the implementation of a those three factors throughout the amorphous is even more limited. H–0 possible new standard. Manufacturers economy. One method for assessing the possible DR is only produced by Nippon, JFE, indicated that more time is needed to effects on the demand for labor of such AK Steel, Posco, and Baosteel, and meet a new standard, especially if the shifts in economic activity is to compare ZDMH is only produced by Nippon. standard requires a very high efficiency Amorphous steel is only produced by sector employment statistics developed level. In order to avoid stranding too by the Labor Department’s Bureau of Hitachi (MetGlas) and AT&M, but many assets and materials, sufficient Labor Statistics (BLS). BLS regularly AT&M only supplies the Chinese time must be given to manufacturers for publishes its estimates of the number of market. If efficiency levels are set so the purchase and use of new equipment, jobs per million dollars of economic high that only amorphous can be used, development of new designs if needed, activity in different sectors of the then domestic manufacturers may be and transitioning of customers to new economy, as well as the jobs created subject to monopolistic pricing from product offerings. Also, some elsewhere in the economy by this same suppliers. manufacturers stated that standards for economic activity. Data from BLS Manufacturers further stated that, in low-voltage dry-type transformers, indicate that expenditures in the utility addition to being in limited supply, which were not included in the sector generally create fewer jobs (both higher efficiency steels are also: (1) previous 2007 rulemaking, should be on directly and indirectly) than an extended timeline. More expensive, (2) subject to tariffs expenditures in other sectors of the when imported from a foreign supplier, e. Emergency Situations economy.34 There are many reasons for (3) subject to long lead times for both these differences, including wage Liquid-immersed transformer differences and the fact that the utility domestic and international suppliers, manufacturers stated that the ability to and (4) difficult to obtain for sector is more capital-intensive and less obtain waivers during emergency labor-intensive than other sectors. manufacturers that do not have situations is an important issue for contracts in place with suppliers. Energy conservation standards have the them. For example, when a natural effect of reducing consumer utility bills. Furthermore, due in part to the major disaster occurs, there may be a sharp capital investment required to build a Because reduced consumer increase in demand for transformers and expenditures for energy likely lead to steel plant, barriers to entry are high and manufacturers may not be able to meet increased expenditures in other sectors capacity cannot be easily increased. DOE’s efficiency requirements under of the economy, the general effect of Transformer manufacturers feel that all these circumstances due to limitations efficiency standards is to shift economic these factors contribute to the limited of high efficiency steel availability. In activity from a less labor-intensive availability of higher efficiency steel. order to adequately supply areas facing sector (i.e., the utility sector) to more such emergency situations, c. Compliance labor-intensive sectors (e.g., the retail manufacturers requested the ability to and service sectors). Thus, based on the Some manufacturers emphasized the obtain waivers so that they can produce BLS data alone, DOE believes net importance of compliance and transformers as quickly as possible. national employment may increase enforcement. According to Because the TSLs proposed in today’s because of shifts in economic activity manufacturers, insufficient enforcement rulemaking can be met using traditional resulting from amended standards for could result in an unfair competitive steels, DOE does not anticipate that steel transformers. advantage for some companies who opt availability during emergency situations For the standard levels considered in not to comply. Manufacturers were will affect manufacturer compliance today’s direct final rule, DOE estimated with the proposed TSLs. particularly concerned about importers indirect national employment impacts of foreign manufactured products. One J. Employment Impact Analysis using an input/output model of the U.S. specific issue is the scope of coverage economy called Impact of Sector Energy DOE considers employment impacts Technologies version 3.1.1 (ImSET). for low-voltage dry-type transformers, in the domestic economy as one factor which is currently the scope ImSET is a special-purpose version of in selecting a proposed standard. the ‘‘U.S. Benchmark National Input- recommended by NEMA in the 2006 Employment impacts include direct and Output’’ (I–O) model, which was TP1 rulemaking. The market for indirect impacts. Direct employment designed to estimate the national products inside of scope and the market impacts are any changes in the number employment and income effects of for products outside of scope are of employees of manufacturers of the energy-saving technologies. The ImSET approximately equal in terms of products subject to standards, their software includes a computer-based I–O revenue. As a result, if standards suppliers, and related service firms. The model having structural coefficients that increase for products that are in-scope, MIA addresses those impacts. Indirect characterize economic flows among the manufacturers are concerned there employment impacts are changes in 187 sectors. ImSET’s national economic would be an increase in demand for national employment that occur due to I–O structure is based on a 2002 U.S. products that are out-of-scope and are the shift in expenditures and capital benchmark table, specially aggregated to not be subject to the same compliance investment caused by the purchase and the 187 sectors most relevant to burdens. Some of these out-of-scope operation of more efficient appliances. industrial, commercial, and residential products are highly inefficient, so if Indirect employment impacts from building energy use. DOE notes that they become more widely used, the standards consist of the jobs created or ImSET is not a general equilibrium energy savings resulting from more eliminated in the national economy, efficient in-scope transformers may be other than in the manufacturing sector 34 See Bureau of Economic Analysis, Regional significantly offset by the additional being regulated, due to: (1) Reduced Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II). energy needed to run less efficient out- spending by end users on energy; (2) Washington, DC. U.S. Department of Commerce, of-scope transformers. reduced spending on new energy supply 1992.

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forecasting model. Given the relatively coverage of all sectors and inclusion of reductions in power sector emissions small change to expenditures due to interactive effects. For today’s rule, DOE would occur for SO2. energy conservation standards and the used the version of NEMS–BT based on As discussed above, the AEO 2011 resulting small changes to employment, AEO2011, which incorporated projected NEMS used for today’s NOPR assumes however, DOE believes that the size of effects of all emissions regulations the implementation of CAIR, which any forecast error caused by using promulgated as of January 31, 2011. established a cap on NOX emissions in ImSET will be small. SO2 emissions from affected electric 28 eastern States and the District of For more details on the employment generating units (EGUs) are subject to Columbia. With CAIR in effect, the impact analysis, see chapter 13 of the nationwide and regional emissions cap energy conservation standards for NOPR TSD. and trading programs, and DOE has distribution transformers are expected to have little or no physical effect on K. Utility Impact Analysis determined that these programs create uncertainty about the impact of energy NOX emissions in those States covered The utility impact analysis estimates conservation standards on SO by CAIR, for the same reasons that they several important effects on the utility 2 emissions. Title IV of the Clean Air Act may have little effect on SO2 emissions. industry that would result from the sets an annual emissions cap on SO for However, the standards would be adoption of new or amended standards. 2 affected EGUs in the 48 contiguous expected to reduce NOX emissions in For this analysis, DOE used the NEMS– States and the District of Columbia (DC). the 22 States not affected by CAIR. For BT model to generate forecasts of SO emissions from 28 eastern States these 22 States, DOE used NEMS–BT to electricity consumption, electricity 2 and DC are also limited under the Clean estimate NOX emissions reductions from generation by plant type, and electric Air Interstate Rule (CAIR, 70 Fed. Reg. the standards considered in today’s generating capacity by plant type, that 25162 (May 12, 2005)), which created an NOPR. would result from each TSL. DOE allowance-based trading program that On December 21, 2011, EPA obtained the energy savings inputs announced national emissions would gradually replaced the Title IV associated with efficiency standards for hazardous air pollutants program in those States and DC. improvements to considered products (NESHAPs) for mercury and certain Although CAIR was remanded to EPA from the NIA. DOE conducts the utility other pollutants emitted from coal and by the U.S. Court of Appeals for the impact analysis as a scenario that oil-fired EGUs. (See http://epa.gov/ District of Columbia Circuit (DC departs from the latest AEO 2011 mats/pdfs/20111216MATSfinal.pdf.) Circuit), see North Carolina v. EPA, 550 reference case. In other words, the The NESHAPs do not include a trading F.3d 1176 (DC Cir. 2008), it remained in estimated impacts of a proposed program and, as such, DOE’s energy effect temporarily, consistent with the standard are the differences between conservation standards would likely DC Circuit’s earlier opinion in North values forecasted by NEMS–BT and the reduce Hg emissions. For the emissions Carolina v. EPA, 531 F.3d 896 (DC Cir. values in the AEO 2011 reference case. analysis for this rulemaking, DOE As part of the utility impact analysis, 2008). On July 6, 2011 EPA issued a estimated mercury emissions reductions DOE used NEMS–BT to assess the replacement for CAIR, the Cross-State using NEMS–BT based on AEO2011, impacts on electricity prices of the Air Pollution Rule. 76 FR 48208 (August which does not incorporate the reduced need for new electric power 8, 2011). (See http://www.epa.gov/ NESHAPs. DOE expects that future plants and infrastructure projected to crossstaterule/). On December 30, 2011, versions of the NEMS–BT model will result from the considered standards. In however, the DC Circuit stayed the new reflect the implementation of the NEMS–BT, changes in power generation rules while a panel of judges reviews NESHAPs. infrastructure affect utility revenue them, and told EPA to continue FPT requested that the DOE perform requirements, which in turn affect enforcing CAIR (see EME Homer City an emissions analysis for the additional electricity prices. DOE estimated the Generation v. EPA, No. 11–1302, Order energy required to process higher-grade change in electricity prices projected to at *2 (DC Cir. Dec. 30, 2011)). The AEO materials for more efficient core steels. result over time from each TSL. 2011 NEMS–BT used for today’s NOPR (FPT, No. 27 at p. 4) HI maintained that Chapter 14 of the NOPR TSD assumes the implementation of CAIR. higher-efficiency transformers will describes the utility impact analysis. The attainment of emissions caps weigh more, which will result in higher typically is flexible among EGUs and is air emissions from extra oven energy for L. Emissions Analysis enforced through the use of emissions annealing and extra energy use for In the emissions analysis, DOE allowances and tradable permits. Under processing raw materials. (HI, No. 23 at estimated the reduction in power sector existing EPA regulations, any excess p. 12) As discussed in section IV.G.5, emissions of CO2, NOX, and Hg from SO2 emissions allowances resulting DOE did not include the energy used to amended energy conservation standards from the lower electricity demand manufacture transformers in its analysis for distribution transformers. DOE used caused by the imposition of an because EPCA directs DOE to consider the NEMS–BT computer model, which efficiency standard could be used to the total projected amount of energy is run similarly to the AEO NEMS, permit offsetting increases in SO2 savings likely to result directly from the except that distribution transformer emissions by any regulated EGU. imposition of the standard and DOE energy use is reduced by the amount of However, if the standard resulted in a interprets this to only include energy energy saved (by fuel type) due to each permanent increase in the quantity of used in the generation, transmission, TSL. The inputs of national energy unused emissions allowances, there and distribution of fuels used by savings come from the NIA spreadsheet would be an overall reduction in SO2 appliances or equipment. DOE did not model, while the output is the emissions from the standards. While include the emissions associated with forecasted physical emissions. The net there remains some uncertainty about such energy use for the same reason. benefit of each TSL is the difference the ultimate effects of efficiency M. Monetizing Carbon Dioxide and between the forecasted emissions standards on SO2 emissions covered by estimated by NEMS–BT at each TSL and the existing cap-and-trade system, the Other Emissions Impacts the AEO Reference Case. NEMS–BT NEMS–BT modeling system that DOE As part of the development of this tracks CO2 emissions using a detailed uses to forecast emissions reductions proposed rule, DOE considered the module that provides results with broad currently indicates that no physical estimated monetary benefits likely to

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result from the reduced emissions of emissions in a given year. It is intended have a large (non-marginal) impact on CO2 and NOX that are expected to result to include (but is not limited to) changes global cumulative emissions, there is a from each of the considered TSLs. In in net agricultural productivity, human separate question of whether the SCC is order to make this calculation similar to health, property damages from an appropriate tool for calculating the the calculation of the NPV of customer increased flood risk, and the value of benefits of reduced emissions. This benefit, DOE considered the reduced ecosystem services. Estimates of the concern is not applicable to this notice, emissions expected to result over the SCC are provided in dollars per metric and DOE does not attempt to answer lifetime of products shipped in the ton of carbon dioxide. that question here. forecast period for each TSL. This When attempting to assess the At the time of the preparation of this section summarizes the basis for the incremental economic impacts of carbon notice, the most recent interagency monetary values used for each of these dioxide emissions, the analyst faces a estimates of the potential global benefits emissions and presents the values number of serious challenges. A recent resulting from reduced CO2 emissions in considered in this rulemaking. report from the National Research 2010, expressed in 2010$, were $4.9, For today’s NOPR, DOE is relying on Council35 points out that any $22.3, $36.5, and $67.6 per metric ton a set of values for the social cost of assessment will suffer from uncertainty, avoided. For emissions reductions that carbon (SCC) that was developed by an speculation, and lack of information occur in later years, these values grow interagency process. A summary of the about (1) future emissions of greenhouse in real terms over time. Additionally, basis for those values is provided below, gases, (2) the effects of past and future the interagency group determined that a and a more detailed description of the emissions on the climate system, (3) the range of values from 7 percent to 23 methodologies used is provided as an impact of changes in climate on the percent should be used to adjust the appendix to chapter 16 of the NOPR physical and biological environment, global SCC to calculate domestic TSD. and (4) the translation of these effects,36 although preference is given to consideration of the global benefits of 1. Social Cost of Carbon environmental impacts into economic damages. As a result, any effort to reducing CO2 emissions. Under section 1(b)(6) of Executive quantify and monetize the harms It is important to emphasize that the Order 12866, 58 FR 51735 (Oct. 4, associated with climate change will interagency process is committed to 1993), agencies must, to the extent raise serious questions of science, updating these estimates as the science permitted by law, ‘‘assess both the costs economics, and ethics and should be and economic understanding of climate and the benefits of the intended viewed as provisional. change and its impacts on society regulation and, recognizing that some Despite the serious limits of both improves over time. Specifically, the costs and benefits are difficult to quantification and monetization, SCC interagency group has set a preliminary quantify, propose or adopt a regulation estimates can be useful in estimating the goal of revisiting the SCC values within only upon a reasoned determination social benefits of reducing carbon 2 years or at such time as substantially that the benefits of the intended dioxide emissions. Consistent with the updated models become available, and regulation justify its costs.’’ The purpose directive quoted above, the purpose of to continue to support research in this of the SCC estimates presented here is the SCC estimates presented here is to area. In the meantime, the interagency to allow agencies to incorporate the make it possible for agencies to group will continue to explore the monetized social benefits of reducing incorporate the social benefits from issues raised by this analysis and CO2 emissions into cost-benefit analyses reducing carbon dioxide emissions into consider public comments as part of the of regulatory actions that have small, or cost-benefit analyses of regulatory ongoing interagency process. ‘‘marginal,’’ impacts on cumulative actions that have small, or ‘‘marginal,’’ b. Social Cost of Carbon Values Used in global emissions. The estimates are impacts on cumulative global emissions. Past Regulatory Analyses presented with an acknowledgement of Most Federal regulatory actions can be the many uncertainties involved and To date, economic analyses for expected to have marginal impacts on Federal regulations have used a wide with a clear understanding that they global emissions. should be updated over time to reflect range of values to estimate the benefits For such policies, the agency can associated with reducing carbon dioxide increasing knowledge of the science and estimate the benefits from reduced (or economics of climate impacts. emissions. In the model year 2011 CAFE costs from increased) emissions in any final rule, the Department of As part of the interagency process that future year by multiplying the change in developed the SCC estimates, technical Transportation (DOT) used both a emissions in that year by the SCC value ‘‘domestic’’ SCC value of $2 per metric experts from numerous agencies met on appropriate for that year. The net ton of CO2 and a ‘‘global’’ SCC value of a regular basis to consider public present value of the benefits can then be comments, explore the technical $33 per metric ton of CO2 for 2007 calculated by multiplying each of these emission reductions (in 2007$), literature in relevant fields, and discuss future benefits by an appropriate key model inputs and assumptions. The increasing both values at 2.4 percent per discount factor and summing across all year. It also included a sensitivity main objective of this process was to affected years. This approach assumes develop a range of SCC values using a analysis at $80 per metric ton of CO2. that the marginal damages from See Average Fuel Economy Standards defensible set of input assumptions increased emissions are constant for grounded in the existing scientific and Passenger Cars and Light Trucks Model small departures from the baseline Year 2011, 74 FR 14196 (March 30, economic literatures. In this way, key emissions path, an approximation that uncertainties and model differences 2009) (Final Rule); Final Environmental is reasonable for policies that have Impact Statement Corporate Average transparently and consistently inform effects on emissions that are small the range of SCC estimates used in the Fuel Economy Standards, Passenger relative to cumulative global carbon Cars and Light Trucks, Model Years rulemaking process. dioxide emissions. For policies that a. Monetizing Carbon Dioxide Emissions 36 It is recognized that this calculation for 35 National Research Council. ‘‘Hidden Costs of domestic values is approximate, provisional, and The SCC is an estimate of the Energy: Unpriced Consequences of Energy highly speculative. There is no a priori reason why monetized damages associated with an Production and Use.’’ National Academies Press: domestic benefits should be a constant fraction of incremental increase in carbon Washington, DC 2009. net global damages over time.

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2011–2015 at 3–90 (Oct. 2008) emissions. To ensure consistency in literature and were used in the last (Available at: http://www.nhtsa.gov/ how benefits are evaluated across assessment of the Intergovernmental fuel-economy). A domestic SCC value is agencies, the Administration sought to Panel on Climate Change. Each model meant to reflect the value of damages in develop a transparent and defensible was given equal weight in the SCC the United States resulting from a unit method, specifically designed for the values that were developed. change in carbon dioxide emissions, rulemaking process, to quantify avoided Each model takes a slightly different while a global SCC value is meant to climate change damages from reduced approach to model how changes in reflect the value of damages worldwide. CO2 emissions. The interagency group emissions result in changes in economic A 2008 regulation proposed by DOT did not undertake any original analysis. damages. A key objective of the assumed a domestic SCC value of $7 per Instead, it combined SCC estimates from interagency process was to enable a metric ton of CO (in 2006$, with a 2 the existing literature to use as interim consistent exploration of the three range of $0 to $14 for sensitivity values until a more comprehensive models while respecting the different analysis) for 2011 emission reductions, analysis could be conducted. The approaches to quantifying damages also increasing at 2.4 percent per year. outcome of the preliminary assessment taken by the key modelers in the field. See Average Fuel Economy Standards, by the interagency group was a set of An extensive review of the literature Passenger Cars and Light Trucks, Model five interim values: Global SCC was conducted to select three sets of Years 2011–2015, 73 FR 24352 (May 2, estimates for 2007 (in 2006$) of $55, input parameters for these models: 2008) (Proposed Rule); Draft $33, $19, $10, and $5 per ton of CO . 2 Climate sensitivity, socio-economic and Environmental Impact Statement These interim values represent the first emissions trajectories, and discount Corporate Average Fuel Economy sustained interagency effort within the rates. A probability distribution for Standards, Passenger Cars and Light U.S. government to develop an SCC for climate sensitivity was specified as an Trucks, Model Years 2011–2015 at 3–58 use in regulatory analysis. The results of input into all three models. In addition, (June 2008) (Available at: http:// this preliminary effort were presented in the interagency group used a range of www.nhtsa.gov/fuel-economy). A several proposed and final rules and scenarios for the socio-economic regulation for packaged terminal air were offered for public comment in parameters and a range of values for the conditioners and packaged terminal connection with proposed rules, discount rate. All other model features heat pumps finalized by DOE in October including the joint EPA–DOT fuel were left unchanged, relying on the of 2008 used a domestic SCC range of economy and CO tailpipe emission 2 model developers’ best estimates and $0 to $20 per metric ton CO2 for 2007 proposed rules. emission reductions (in 2007$). 73 FR judgments. 58772, 58814 (Oct. 7, 2008). In addition, c. Current Approach and Key The interagency group selected four EPA’s 2008 Advance Notice of Proposed Assumptions SCC values for use in regulatory Rulemaking on Regulating Greenhouse Since the release of the interim analyses. Three values are based on the Gas Emissions Under the Clean Air Act values, the interagency group average SCC from three integrated identified what it described as ‘‘very reconvened on a regular basis to assessment models, at discount rates of preliminary’’ SCC estimates subject to generate improved SCC estimates, 2.5 percent, 3 percent, and 5 percent. revision. 73 FR 44354 (July 30, 2008). which were considered for this The fourth value, which represents the EPA’s global mean values were $68 and proposed rule. Specifically, the group 95th percentile SCC estimate across all $40 per metric ton CO2 for discount considered public comments and three models at a 3-percent discount rates of approximately 2 percent and 3 further explored the technical literature rate, is included to represent higher- percent, respectively (in 2006$ for 2007 in relevant fields. The interagency group than-expected impacts from temperature emissions). relied on three integrated assessment change further out in the tails of the In 2009, an interagency process was models (IAMs) commonly used to SCC distribution. For emissions (or initiated to offer a preliminary estimate the SCC: The FUND, DICE, and emission reductions) that occur in later assessment of how best to quantify the PAGE models.37 These models are years, these values grow in real terms benefits from reducing carbon dioxide frequently cited in the peer-reviewed over time, as depicted in Table IV.7.

TABLE IV.7—SOCIAL COST OF CO2, 2010–2050 [In 2007 dollars per metric ton]

Discount rate (%) Year 3 5 3 2.5 Average

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

37 The models are described in appendix 15–A of the NOPR TSD.

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It is important to recognize that a 2. Valuation of Other Emissions coverage and implanted phase number of key uncertainties remain, and Reductions harmonization to guard against that current SCC estimates should be DOE investigated the potential incentivizing replacement of three- phase transformers with three smaller treated as provisional and revisable monetary benefit of reduced NOX since they will evolve with improved emissions from the TSLs it considered. single-phase units. scientific and economic understanding. As noted above, new or amended energy HVOLT asserted that the previous The interagency group also recognizes conservation standards would reduce 2007 rulemaking misstated the potential of three-phase distribution transformers that the existing models are imperfect NOX emissions in those 22 States that early on in the rulemaking. and incomplete. The National Research are not affected by the CAIR. DOE Furthermore, HVOLT commented that, Council report mentioned above points estimated the monetized value of NOX emissions reductions resulting from as a result, the final selected TSL for out that there is tension between the three-phase distribution transformers goal of producing quantified estimates each of the TSLs considered for today’s NOPR based on environmental damage was low compared to the TSL selected of the economic damages from an for single-phase transformers. HVOLT incremental metric ton of carbon and estimates found in the relevant scientific literature. Available estimates believes that this has caused a the limits of existing efforts to model misperception to the public that three- these effects. There are a number of suggest a very wide range of monetary values, ranging from $370 per ton to phase transformers received a less- concerns and problems that should be $3,800 per ton of NO from stationary stringent standard, when it is in fact of addressed by the research community, X sources, measured in 2001$ (equivalent equal stringency to the standard for including research programs housed in to a range of $450 to $4,623 per ton in single-phase transformers. HVOLT many of the agencies participating in 2010$).39 In accordance with OMB requested that this point be clarified in the interagency process to estimate the guidance, DOE conducted two the NOPR. (HVOLT, No. 33 at p. 2) Relative to single-phase designs, DOE SCC. calculations of the monetary benefits understands three-phase transformers to derived using each of the economic DOE recognizes the uncertainties have an efficiency disadvantage related values used for NO , one using a real embedded in the estimates of the SCC X to harmonics and zero-sequence fluxes. discount rate of 3 percent and the other used for cost-benefit analyses. As such, That disadvantage happens to be of such using a real discount rate of DOE and others in the U.S. Government a size that efficiency will be similar, all intend to periodically review and 7 percent. 40 DOE is aware of multiple agency else constant, for transformers with the reconsider those estimates to reflect same power per phase. For example, a increasing knowledge of the science and efforts to determine the appropriate range of values used in evaluating the 75 kVA three-phase unit should have economics of climate impacts, as well as potential economic benefits of reduced efficiency similar to that of a 25 kVA improvements in modeling. In this Hg emissions. DOE has decided to await single-phase unit designed to similar context, statements recognizing the further guidance regarding consistent specifications. During the 2007 limitations of the analysis and calling valuation and reporting of Hg emissions rulemaking, DOE created additional for further research take on exceptional before it once again monetizes Hg in its TSLs to ‘‘harmonize’’ efficiency across phase counts in responses to significance. rulemakings. stakeholder comment that standards In summary, in considering the N. Discussion of Other Comments should be set thus. potential global benefits resulting from Comments DOE received in response For the NOPR, DOE relaxed the phase reduced CO2 emissions, DOE used the harmonization constraint on single- most recent values identified by the to the preliminary analysis on the soundness and validity of the phase efficiency, particularly for LVDT interagency process, adjusted to 2010$ and MVDT equipment classes. DOE using the GDP price deflator. For each methodologies and data DOE used are discussed in section IV. Other believes that market shift will not occur of the four cases specified, the values stakeholder comments in response to unless standards are dramatically used for emissions in 2010 were $4.9, the preliminary analysis addressed the disproportionate. $22.3, $36.5, and $67.6 per metric ton DOE acknowledges that acceptance of burdens and benefits associated with 38 this ‘‘constant efficiency per phase’’ avoided (values expressed in 2010$). new energy conservation standards. principle is not universal and seeks To monetize the CO2 emissions DOE addresses these other stakeholder comment on where and why this reductions expected to result from comments below. amended standards for distribution principle may or may not apply. transformers, DOE used the values 1. Trial Standard Levels Hammond Power Solutions and identified in Table A1 of the ‘‘Social Current standards maintain Howard Industries expressed agreement Cost of Carbon for Regulatory Impact ‘‘harmonized’’ standards across phases, with DOE’s method to develop TSLs. Analysis Under Executive Order which means that a single-phase (HPS, No. 3 at p. 5; HI, No. 23 at p. 7) 12866,’’ which is reprinted in appendix transformer must meet the same However, ASAP commented that it would like to see the TSL at the 16–A of the NOPR TSD, appropriately efficiency standard of its three-phase minimum LCC point as well as the escalated to 2010$. To calculate a analog of three times the kVA. DOE is aware of the potential for misapplied maximum level that is cost-effective, present value of the stream of monetary which typically would fall above the values, DOE discounted the values in standards to shift market demand to segments with relatively less stringent LCC. (ASAP, Pub. Mtg. Tr., No. 34 at p. each of the four cases using the specific 127) Furthermore, ASAP encouraged discount rate that had been used to 39 For additional information, refer to U.S. Office DOE to consider a TSL that retained a obtain the SCC values in each case. of Management and Budget, Office of Information variety of core materials as an option, and Regulatory Affairs, 2006 Report to Congress on and to include a wide range of TSLs for the Costs and Benefits of Federal Regulations and consideration. (ASAP, Pub. Mtg. Tr., No. 38 Table A1 presents SCC values through 2050. Unfunded Mandates on State, Local, and Tribal For DOE’s calculation, it derived values after 2050 Entities, Washington, DC 34 at p. 128) ABB commented that DOE using the 3-percent per year escalation rate used by 40 OMB, Circular A–4: Regulatory Analysis (Sept. should develop a structured the interagency group. 17, 2003). methodology that evaluates and ranks

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each CSL and TSL based on longer than 3 to 5 years. (FPT, No. 27 (DL1 and DL4). It is their understanding technological feasibility, economic at p. 18) that most of the manufacturers operating justification, and maximum DOE appreciates comment on in the DL1 and DL4 markets already improvement in energy efficiency. appropriate standard levels and have amorphous capabilities, and very (ABB, No. 14 at pp. 16, 19–20) ABB acknowledges that maintaining few smaller manufacturers operate in added that DOE should recognize the availability of equipment offering this market segment. (ASAP/ACEEE/ risk of inadvertently shifting demand unique consumer utility is important. NRDC, No. 28 at pp. 4–5) Alternatively, between kVA within the same DOE believes, however, that it has made Power Partners commented that DOE equipment class, between single-phase an effort to quantify the costs of more should not set a standard level that and three-phase units within the same efficient equipment to a variety of requires a core steel above the M3 grade. product group (e.g. MVDT or LVDT), consumers as well as the costs of (PP, No. 19 at p. 4) between product groups (e.g., between additional size and weight. DOE conducted several analyses in liquid-immersed and MVDT), and The Kentucky Association of Electric order to meet its obligation to evaluate between new product offerings and Cooperatives, Inc. (KAEC) commented the economic justifiability of a proposed refurbished transformers. (ABB, No. 14 that the current minimum efficiency standard, notable among them the LCC at pp. 16, 19–20) Edison Electrical standards for liquid-immersed and PBP Analysis and the NIA. Institute requested that DOE provide distribution transformers already Summaries of those analyses are present detailed tables explaining how the CSL represent the maximum energy in this notice, with more detailed numbers in the preliminary analysis efficiency that is economically justified, descriptions of the methodology in the relate to the TSL numbers in the NOPR. and any higher efficiency level will TSD. In proposing or setting standards, (EEI, No. 29 at p. 6) come at a high cost. (KAEC, No. 4 at pp. DOE considers a variety of criteria, 1–2) Power Partners commented that DOE constructs TSLs from efficiency including the availability of materials increases to the current minimum levels (ELs), the NOPR analog of the needed to reach a given efficiency. In efficiency standards are not justified the case of core steel, DOE has Preliminary Analysis’ CSLs, using based on the increased costs to conducted a supply analysis (presented several economic factors (e.g., maximum manufacturers, customers, and in appendix 3A of the NOPR TSD) LCC) and technological factors (e.g., ultimately, consumers. (PP, No. 19 at p. examining the ability of the market to maximum LCC where a variety of core 1) FPT noted that it is not in favor of supply steel at different efficiency levels materials are available) factors. DOE did increasing efficiency standards for dry- and requests comment on the not choose a TSL corresponding to type distribution transformers because methodology and results of this minimized LCC savings above the higher efficiency levels will take away analysis. The barriers to entry and the maximum, but does have a TSL customer choices for the most optimum potential for limited supply of corresponding to the CSL above transformer design. (FPT, No. 27 at pp. amorphous steel, and the potential for maximum LCC savings that offers 1, 18) Additionally, FPT commented significant price in the near future, are increased efficiency. DOE does not use that, because most MVDTs are custom important qualitative factors that DOE is CSLs from the Preliminary Analysis to built, they should not be subject to considering. construct TSLs, but does outline in standards. (FPT, No. 27 at pp. 1, 18) The Copper Development Association section V.A the ELs packaged into each Furthermore, HVOLT noted that any (CDA) and Pacific Gas & Electric (PG&E) TSL. Finally, DOE is concerned about standard level should not require a commented that DOE should set the possibility of inadvertently shifting specific design, including materials, standards levels at the highest efficiency demand between equipment. configurations and manufacturing that is technologically feasible and 2. Proposed Standards methods. HVOLT believes that the 2007 economically justified. (CDA, No. 17 at rule reached the limits for many of these p. 1; PG&E, Pub. Mtg. Tr., No. 34 at pp. NRECA and T&DEC cautioned that considerations, and once the inputs are 24–25) The American Public Power raising efficiency standards for medium- corrected, the analysis will indicate this Association (APPA) noted that the voltage dry-type transformers would result. (HVOLT, No. 33 at p. 3) October 2007 final rule for distribution limit a customer’s purchase choices and Berman Economics suggested that transformers achieved the highest increase costs both for utilities and their DOE set the efficiency standard at the efficiency levels that are economically customers. They stated that higher highest level justified, which appeared justified and expressed concern that efficiency standards would not be to be CSL 4 in the preliminary analysis when efficiency levels gravitate to the economically justified for rural electric or CSL 2 at a minimum after adjusting highest levels achievable, the cost cooperatives. (NRECA/T&DEC, No. 31 for overpricing. BE suggested that benefit analysis breaks down as and No. 36 at pp. 1–2) FPT stated its change itself affects manufacturers more peripheral costs rise. Pole replacements opposition to new efficiency standards than the amount of change because any and pad mount replacements–due to that would limit the choices available to change in efficiency standards requires larger distribution transformers–also customers to achieve the optimum manufacturers to re-optimize designs to add costs that might not be adequately transformer design for each ensure compliance. (BE, No. 16 at p. 2) captured in the DOE analysis. (APPA, circumstance. (FPT, No. 27 at p. 1) PHI Joint comments submitted by ASAP, No. 21 at p. 2) recommended that DOE not raise ACEEE and NRDC noted that DOE’s HVOLT opined that this rulemaking is efficiency standards for liquid- analysis shows that amorphous steel is a reassessment of the previous immersed distribution transformers cost-effective and commented that DOE distribution transformers rulemaking because they cannot withstand should propose standards that utilize but with new economic parameters. It additional increases in weight or amorphous steel technology for a asserted that national standards should dimensions. (PHI, Nos. 26 and 37 at p. portion of the market. They believed be doable with known technology, not 1) FPT commented that, if the efficiency that DOE should identify the portion of require an invention, and not put a lot levels for medium-voltage dry-type the market that would be the least of manufacturers out of business. transformers are increased, the PBP for disrupted by standards set at an (HVOLT, Pub. Mtg. Tr., No. 34 at p. 116) the cost increase to meet the higher amorphous level, such as small, pad- NRECA and the Transmission & mandated efficiency should be no mounted liquid-immersed transformers Distribution Engineering Committee

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(T&DEC) together recommended that 3. Alternative Methods today’s proposed rule. DOE examined DOE not raise the efficiency standards Mr. Kenneth Harden (HK), a design seven TSLs for liquid-immersed for liquid-filled distribution engineer, offered to DOE a copy of his distribution transformers, six TSLs for transformers, because the current levels thesis, which evaluated the impact of low-voltage, dry-type distribution already represent the economically federal regulations and operational transformers, and five TSLs for medium- justified maximum efficiency. Both conditions on the efficiency of low- voltage dry-type distribution added that many users in rural areas voltage dry-type distribution transformers. Table V.1 through Table with low transformer loads cannot transformers, and provided V.3 present the TSLs analyzed and the economically justify the current level. recommendations to optimize future corresponding efficiency level for the (NRECA/T&DEC, Nos. 31 and 36 at p. 1) rulemakings certifying the energy representative unit in each transformer Additionally, the added weight and efficiency of low-voltage dry-type design line. For other capacities in each increased dimensions of the higher distribution transformers. It also design line, the corresponding efficiency distribution transformers recommended the specification of low- efficiencies for each TSL are given in would require pole replacement for voltage dry-type distribution appendix 8–B in the NOPR TSD. The many cooperatives and other utilities. transformers and the design of baseline in the tables is equal to the NRECA/T&DEC opined that when transformers for industrial power current energy conservation standard. higher efficiency levels are mandated, networks. (HK, No. 12 at p. 1) For liquid-immersed distribution the result could be less production, less- DOE appreciates Mr. Harden’s transformers, the efficiency levels in competitive materials, questionable submission and would welcome a each TSL can be characterized as availability, and reduced competition. meeting to discuss some of the thoughts follows: TSL 1 represents an increase in (NRECA/T&DEC, Nos. 31 and 36 at p. 3) he has put forth on the rulemaking efficiency where a diversity of electrical process in general and on distribution steels are cost-competitive and FPT noted that if DOE sets higher transformers in particular. economically feasible for all design efficiency standards, it should lines; TSL 2 represents EL1 for all coordinate with the EPA to reinstitute 4. Labeling design lines; TSL 3 represents the the Energy Star program for distribution Both NEMA and FPT recommended maximum efficiency level achievable transformers so that manufacturers can that DOE establish a uniform approach with M3 core steel; TSL 4 represents the use the label to market their products. for how to mark a distribution maximum NPV with 7 percent (FPT, No. 27 at p. 4) FPT also transformer nameplate to indicate discounting; TSL 5 represents EL 3 for commented that higher efficiency levels compliance with the applicable energy all design lines; TSL 6 represents the based on a specified loading of 35 conservation standard in 10 CFR maximum source energy savings with percent or 50 percent could result in 431.196. (FPT, No. 27 at p. 20; NEMA, positive NPV with 7 percent greater losses for applications that No. 13 at p. 9) NEMA proposed the discounting; and TSL 7 represents the operate at higher load factors. FPT following: ‘‘DOE 10 CFR PART 431 maximum technologically feasible level provided an example of a NEMA COMPLIANT.’’ (NEMA, No. 13 at p. 9) (max tech). Premium transformer versus a TP1 DOE appreciates the comments For low-voltage, dry-type distribution transformer with an 80-degree regarding labeling and will take it under transformers, the efficiency levels in temperature rise, indicating that the TP1 consideration as it continues to explore each TSL can be characterized as transformer with the lower temperature appropriate requirements for follows: TSL 1 represents the maximum rise could have a greater efficiency at certification, compliance, enforcement efficiency level achievable with M6 core loadings above 50 percent. (FPT, No. 27 and how labeling may fit into those steel; TSL 2 represents NEMA premium at pp. 5–7) processes. Certification requirements for levels; TSL 3 represents the maximum The Kentucky Association of Electric distribution transformers can be found EL achievable using butt-lap miter core Cooperatives (KAEC) believed that in 10 CFR 429.47. manufacturing for single-phase liquid-immersed single-phase standards 5. Imported Units distribution transformers, and full miter are adequate and achieve maximum core manufacturing for three-phase NEMA commented that, although distribution transformers; TSL 4 efficiency while being economically covered non-compliant products that justifiable. It believed the biggest represents the maximum NPV with 7 are imported for export must be marked percent discounting; TSL 5 represents efficiency gains have already been as such, U.S. Customs and Border made. In addition, KAEC expressed the maximum source energy savings Protection will likely have difficulty with positive NPV with 7 percent concern that, as a small manufacturer, it determining which products are discounting; and TSL 6 represents the would need higher capital investment to covered, and whether a covered product maximum technologically feasible level meet any increase in efficiency is compliant, other than those marked (max tech). standards, and that its energy savings for export. (NEMA, No. 13 at p. 9) For medium-voltage, dry-type would be less and payback periods DOE notes that it is the responsibility distribution transformers, the efficiency longer because it and other rural electric of the importer, and not United States levels in each TSL can be characterized cooperatives serve fewer customers. Customs, to establish compliance just as as follows: TSL 1 represents EL1 for all (KAEC, Pub. Mtg. Tr., No. 34 at pp. 22– any manufacturer would. DOE design lines; TSL 2 represents an 23) welcomes further comment and increase in efficiency where a diversity As stated previously, DOE seeks to set evidence that can suggest imported of electrical steels are cost-competitive the highest energy conservation transformers are failing to meet and economically feasible for all design standards that are technologically standards. lines; TSL 3 represents the maximum feasible, economically justified, and that V. Analytical Results and Conclusions NPV with 7 percent discounting; TSL 4 will result in significant energy savings represents the maximum source energy and appreciates any analysis that would A. Trial Standard Levels savings with positive NPV with 7 assist DOE in evaluating the appropriate DOE analyzed the benefits and percent discounting; and TSL 5 standard using these parameters. burdens of the TSLs developed for represents the maximum

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technologically feasible level (max tech).

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

TSL Design line Baseline 1 2 3 4 5 6 7

1 ...... 99.08 99.16 99.16 99.16 99.22 99.25 99.31 99.50 2 ...... 98.91 98.91 99.00 99.00 99.07 99.11 99.18 99.41 3 ...... 99.42 99.48 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 [In percent]

TSL Design line Baseline 1 2 3 4 5 6

6 ...... 98.00 98.00 98.60 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

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

TSL Design line Baseline 1 2 3 4 5

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 99.04 99.45 13B ...... 99.15 99.19 99.28 99.45 99.45 99.52

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

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 .16 99 .16 99 .16 99 .22 99.25 99 .31 99 .50 Transformers with Net LCC Cost (%) ...... 57.9 57 .9 57 .9 4.8 4.8 8.0 55.4

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

Trial standard level 1 2 3 4 5 6 7

Transformers with Net LCC Benefit (%) ...... 41 .8 41 .8 41 .8 95.0 95 .0 92 .0 44 .6 Transformers with No Change in LCC (%) ...... 0.2 0.2 0.2 0.2 0.2 0.0 0.0 Mean LCC Savings ($) ...... 36 36 36 641 641 532 50 Median PBP (Years) ...... 20 .2 20.2 20 .2 7 .9 7 .9 10 .0 19 .2

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 .91 99 .00 99 .00 99 .07 99.11 99 .18 99 .41 Transformers with Net LCC Cost (%) ...... 0 .0 14 .2 14 .2 9 .8 11 .2 15.8 80 .2 Transformers with Net LCC Benefit (%) ...... 0 .0 85 .8 85 .8 90 .2 88.8 84 .3 19 .8 Transformers with No Change in LCC (%) ...... 100.0 0.0 0.0 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 0 309 309 338 300 250 ¥736 Median PBP (Years) ...... 0 .0 6 .9 6 .9 8 .0 9 .5 11 .5 24.3

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 .48 99 .48 99 .51 99 .57 99.54 99 .61 99 .73 Transformers with Net LCC Cost (%) ...... 15.7 15 .7 11 .2 4.0 5.3 3.9 25.1 Transformers with Net LCC Benefit (%) ...... 83 .0 83 .0 87 .7 96.0 94 .6 96 .1 74 .9 Transformers with No Change in LCC (%) ...... 1.4 1.4 1.2 0.0 0.0 0.0 0.0 Mean LCC Savings ($)...... 2,413 2,413 3,831 5,591 5,245 6,531 4,135 Median PBP (Years) ...... 6 .3 6 .3 4 .0 4 .7 4 .6 5 .2 13 .3

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 .22 99.25 99 .31 99 .60 Transformers with Net LCC Cost (%) ...... 6 .0 6 .0 6 .0 1 .9 1 .9 1 .9 31 .1 Transformers with Net LCC Benefit (%) ...... 93 .5 93 .5 93 .5 97.5 97 .5 97 .6 63 .9 Transformers with No Change in LCC (%) ...... 0.6 0.6 0.6 0.6 0.6 0.6 0.0 Mean LCC Savings ($) ...... 862 862 862 3,356 3,356 3,362 1,274 Median PBP (Years) ...... 5 .0 5 .0 5 .0 4 .1 4 .1 4 .1 14 .6

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 (%) ...... 19.1 19 .1 13 .2 7.8 10.4 7.9 39 .9 Transformers with Net LCC Benefit (%) ...... 80 .6 80 .6 86 .8 92.2 89 .6 92 .1 60 .1

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

Trial standard level 1 2 3 4 5 6 7

Transformers with No Change in LCC (%) ...... 0.4 0.4 0.1 0.0 0.0 0.0 0.0 Mean LCC Savings ($) ...... 7,787 7,787 10,288 12,513 11,395 12,746 3,626 Median PBP (Years) ...... 4 .0 4 .0 4 .2 6 .3 5 .7 8 .3 16 .9

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 .60 98 .93 99 .17 99.17 99 .44 Transformers with Net Increase in LCC (%) ...... 0.0 71.5 17 .6 36 .2 36 .2 93 .4 Transformers with Net LCC Savings (%) ...... 0.0 28 .5 82 .4 63 .8 63 .8 6.6 Transformers with No Impact on LCC (%) ...... 100 .0 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 0 ¥125 335 187 187 ¥881 Median PBP (Years) ...... 0 .0 24 .7 13.0 16 .3 16 .3 32 .4

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 (%) ...... 1.8 1.8 2.0 3.7 3.7 46.4 Transformers with Net LCC Savings (%) ...... 98 .2 98 .2 98 .0 96 .3 96.3 53 .6 Transformers with No Impact on LCC (%) ...... 0 .0 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 1,714 1,714 1,793 2,270 2,270 270 Median PBP (Years) ...... 4 .5 4 .5 4 .7 6 .9 6 .9 18 .1

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 (%) ...... 5.2 5.2 15.3 10 .5 78 .5 78 .5 Transformers with Net LCC Savings (%) ...... 94 .8 94 .8 84 .7 89 .5 21.5 21 .5 Transformers with No Impact on LCC (%) ...... 0 .0 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 2,476 2,476 2,625 4,145 ¥2,812 ¥2,812 Median PBP (Years) ...... 8 .4 8 .4 12 .3 11.0 24 .5 24 .5

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 (%) ...... 3.4 3.4 5.7 5.7 53.4 Transformers with Net LCC Savings (%) ...... 83 .4 83 .4 94 .3 94 .3 46.6 Transformers with No Impact on LCC (%) ...... 13 .3 13 .3 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 849 849 1,659 1,659 237 Median PBP (Years) ...... 2 .6 2 .6 6 .2 6 .2 19 .1

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 16.7 16 .7 16 .7 84 .8

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

Trial standard level 1 2 3 4 5

Transformers with Net LCC Savings (%) ...... 98 .8 83 .3 83 .3 83 .3 15.2 Transformers with No Impact on LCC (%) ...... 0 .5 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 4,509 4,791 4,791 4,791 ¥12,756 Median PBP (Years) ...... 1 .1 8 .8 8 .8 8 .8 28 .4

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 (%) ...... 20.6 20 .6 25 .7 25 .7 76 .1 Transformers with Net LCC Savings (%) ...... 79 .4 79 .4 74 .3 74 .3 23.9 Transformers with No Impact on LCC (%) ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 1,043 1,043 2,000 2,000 ¥3160 Median PBP (Years) ...... 10 .7 10.7 14 .1 14 .1 24 .5

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 (%) ...... 6.7 7.8 18.1 18 .1 81 .1 Transformers with Net LCC Savings (%) ...... 93 .3 92 .2 81 .9 81 .9 18.9 Transformers with No Impact on LCC (%) ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 4,518 6,934 8,860 8,860 ¥12,420 Median PBP (Years) ...... 6 .3 9 .0 13 .0 13.0 25 .9

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 99 .04 99 .04 99.45 Transformers with Net Increase in LCC (%) ...... 52.2 52 .2 64 .4 64 .4 97 .1 Transformers with Net LCC Savings (%) ...... 47 .8 47 .8 35 .6 35 .6 2.9 Transformers with No Impact on LCC (%) ...... 0 .0 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 25 25 ¥846 ¥846 ¥11,077 Median PBP (Years) ...... 16 .5 16.5 21 .7 21 .7 37 .1

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 .45 99 .45 99.52 Transformers with Net Increase in LCC (%) ...... 28.5 26 .3 52 .7 52 .7 67 .2 Transformers with Net LCC Savings (%) ...... 71 .3 73 .7 47 .3 47 .3 32.8 Transformers with No Impact on LCC (%) ...... 0 .2 0 .0 0 .0 0 .0 0 .0 Mean LCC Savings ($) ...... 2,733 4,709 384 384 ¥5,407 Median PBP (Years) ...... 4 .6 12 .5 19.3 19 .3 21 .9

b. Customer Subgroup Analysis DOE included only the liquid-immersed the mean LCC savings at each TSL for design lines in this analysis, since those this customer subgroup. DOE estimated customer subgroup impacts by determining the LCC types account for more than ninety Chapter 11 of the NOPR TSD explains impacts of the distribution transformer percent of the transformers purchased DOE’s method for conducting the TSLs on purchasers of vault-installed by electric utilities. Table V.18 shows customer subgroup analysis and transformers (primarily urban utilities).

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presents the detailed results of that analysis.

TABLE V.18—COMPARISON OF MEAN LIFE-CYCLE COST SAVINGS FOR LIQUID-IMMERSED TRANSFORMERS PURCHASED BY CONSUMER SUBGROUPS [2010$]

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

Medium Vault Replacement Subgroup

4 ...... ¥422 ¥422 ¥422 106 106 113 ¥2,358 5 ...... 1,062 1,062 3,203 4,689 3,854 4,270 ¥5,996

All Customers

4 ...... 862 862 862 3,356 3,356 3,362 1,274 5 ...... 7,787 7,787 10,288 12,513 11,395 12,746 3626

c. Rebuttable-Presumption Payback 6295(o)(2)(B)(iii), 6316(a)) DOE discrete values rather than distributions calculated a rebuttable-presumption for its input values. As required by As discussed above, EPCA establishes PBP for each TSL to determine whether EPCA, DOE based the calculations on a rebuttable presumption that an energy DOE could presume that a standard at the assumptions in the DOE test conservation standard is economically that level is economically justified. procedure for distribution transformers. justified if the increased purchase cost Table V.19 shows the rebuttable- (42 U.S.C. 6295(o)(2)(B)(iii), 6316(a)) As for a product that meets the standard is presumption PBPs for the considered a result, DOE calculated a single less than three times the value of the TSLs. Because only a single, average rebuttable-presumption payback value, first-year energy savings resulting from value is necessary for establishing the and not a distribution of PBPs, for each the standard. (42 U.S.C. rebuttable-presumption PBP, DOE used TSL.

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

Trial standard level Design line Rated ca- pacity (kVA) 1 2 3 4 5 6 7

1 ...... 50 17.1 17.1 17.1 8.3 8.3 10.2 16.3 2 ...... 25 0.0 9.5 9.5 9.9 11.0 12.5 21.3 3 ...... 500 5.8 5.8 4.5 4.9 4.9 5.2 11.9 4 ...... 150 4.7 4.7 4.7 3.9 3.9 4.0 13.5 5 ...... 1500 4.3 4.3 4.2 5.9 5.5 7.5 15.2

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

Trial standard level Design line Rated ca- pacity (kVA) 1 2 3 4 5 6

6 ...... 25 0.0 15.9 13.0 15.0 15.0 26.5 7 ...... 75 4.2 4.2 4.4 6.4 6.4 14.9 8 ...... 300 6.8 6.8 10.4 9.7 20.2 20.2

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

Rated ca- Trial standard level Design line pacity (kVA) 1 2 3 4 5

9 ...... 300 1.9 1 .9 4.6 4.6 15.5 10 ...... 1,500 1.9 5 .7 5.7 5.7 21.8 11 ...... 300 9.5 9 .5 13.0 13.0 18.8 12 ...... 1,500 5.5 7 .44 12.0 12.0 20.3 13A ...... 300 11.9 11 .9 22.2 22.2 28.9 13B ...... 2,000 5.2 11 .1 19.1 19.1 19.4

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DOE believes that the rebuttable- manufacturers as well as the conversion the range of potential impacts, DOE presumption PBP criterion (i.e., a costs that DOE estimates manufacturers modeled a preservation of gross margin limited PBP) is not sufficient for would incur at each TSL. The effect of percentage markup scenario in which a determining economic justification. amended standards on INPV was uniform ‘‘gross margin percentage’’ Therefore, DOE has considered a full analyzed separately for each type of markup is applied across all efficiency range of impacts, including those to distribution transformer manufacturer: levels. In this scenario, DOE assumed customers, manufacturers, the Nation, Liquid-immersed, medium-voltage dry- that a manufacturer’s absolute dollar and the environment. Section V.C type, and low-voltage dry-type. To markup would increase as production provides a complete discussion of how evaluate the range of cash flow impacts costs increase in the standards case. DOE considered the range of impacts to on the distribution transformer industry, The set of results below shows two select its proposed standards. DOE modeled two different scenarios tables of INPV impacts for each of the using different assumptions for markups three types of distribution transformer 2. Economic Impact on Manufacturers that correspond to the range of manufacturers: The first table reflects DOE performed a MIA to estimate the anticipated market responses to new the lower bound of impacts and the impact of amended energy conservation and amended standards. A full second represents the upper bound. standards on manufacturers of description of these scenarios and their In the discussion that follows the distribution transformers. The section results can be found in chapter 12 of the tables, DOE also discusses the difference below describes the expected impacts NOPR TSD. in cash flow between the base case and on manufacturers at each TSL. Chapter To assess the lower end of the range the standards case in the year before the 12 of the TSD explains the analysis in of potential impacts, DOE modeled the compliance date for new and amended further detail. preservation of operating profit markup energy conservation standards. This scenario, which assumes that figure represents how large the required a. Industry Cash-Flow Analysis Results manufacturers would be able to earn the conversion costs are relative to the cash The tables below depict the financial same operating margin in absolute flow generated by the industry in the impacts (represented by changes in dollars in the standards case as in the absence of new and amended energy INPV) of amended energy standards on base case. To assess the higher end of conservation standards.

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 625.1 585.5 532.1 523.8 461.0 451.2 427.5 297.9 Change in INPV ...... 2011$ M ...... (39.6) (92.9) (101.2) (164.0) (173.8) (197.6) (327.2) % ...... (6.3) (14.9) (16.2) (26.2) (27.8) (31.6) (52.3) Capital Conversion Costs ...... 2011$ M ...... 26.3 64.9 67.6 98.5 100.4 105.6 128.2 Product Conversion Costs ...... 2011$ M ...... 27.6 46.8 57.5 93.7 93.7 93.7 93.7 Total Conversion Costs ...... 2011$ M ...... 53.9 111.7 125.1 192.1 194.1 199.3 221.8 * 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 625.1 614.7 583.4 577.5 551.6 537.1 547.6 673.0 Change in INPV ...... 2011$ M ...... (10.4) (41.7) (47.6) (73.5) (88.0) (77.5) 48.0 % ...... (1.7) (6.7) (7.6) (11.8) (14.1) (12.4) 7.7 Capital Conversion Costs ...... 2011$ M ...... 26.3 64.9 67.6 98.5 100.4 105.6 128.2 Product Conversion Costs ...... 2011$ M ...... 27.6 46.8 57.5 93.7 93.7 93.7 93.7 Total Conversion Costs ...... 2011$ M ...... 53.9 111.7 125.1 192.1 194.1 199.3 221.8

At TSL 1, DOE estimates impacts on While TSL 1 can be met with annealing ovens will be required. INPV for liquid-immersed distribution traditional steels, including M3, in all Additionally, a great deal of testing, transformer manufacturers to range from design lines, amorphous core prototyping, design and manufacturing ¥$39.6 million to ¥$10.4 million, transformers will be incrementally more engineering resources will be required corresponding to a change in INPV of competitive on a first cost basis, likely because most manufacturers have ¥6.3 percent to ¥1.7 percent. At this inducing some or many manufacturers relatively little experience, if any, with proposed level, industry free cash flow to gradually build amorphous steel amorphous steel transformers. These is estimated to decrease by transformer production capacity. capital and production conversion approximately 60.1 percent to $15.8 Because the production process for expenses lead to a reduction in cash million, compared to the base-case amorphous cores is entirely separate flow in the years preceding the from that of silicon steel cores, large standard. In the lower-bound scenario, value of $39.5 million in the year before investments in new capital, including DOE assumes manufacturers can only the compliance date (2015). new core cutting equipment and maintain annual operating profit in the

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standards case. Therefore, these million, compared to the base-case transformer manufacturers to range from conversion investments, and value of $39.5 million in the year before ¥$173.8 million to ¥$88 million, or a manufacturers’ higher working capital the compliance date (2015). change in INPV of ¥27.8 percent to needs associated with more expensive TSL 3 results are similar to TSL 2 ¥14.1 percent. At this proposed level, transformers, drain cash flow and lead results because the efficiency levels are industry free cash flow is estimated to to a greater reduction in INPV, when the same except for DL3 and DL5, which decrease by approximately 230.8 compared to the upper-bound scenario. each increase to EL 2 under TSL 3. The percent to ¥$51.7 million, compared to In the upper bound scenario, DOE increase in stringency makes more the base-case value of $39.5 million in assumes manufacturers will be able to amorphous core transformers slightly the year before the compliance date fully mark up and pass the higher more cost competitive in these DLs, (2015). product costs, leading to higher likely increasing amorphous transformer TSL5 would likely shift the entire operating income. This higher operating capacity needs, all other things being market to amorphous core transformers, equal, and driving more investment to income is essentially offset on a cash leading to even greater investment meet the standards. flow basis by the conversion costs and needs than TSL4, driving the adverse At TSL 4, DOE estimates impacts on the increase in working capital impacts discussed above. requirements, leading to a negligible INPV for liquid-immersed distribution change in INPV at TSL1 in the upper- transformer manufacturers to range from At TSL 6, DOE estimates impacts on bound scenario. ¥$164 million to ¥$73.5 million, INPV for liquid-immersed distribution At TSL 2, DOE estimates impacts on corresponding to a change in INPV of transformer manufacturers to range from INPV for liquid-immersed distribution ¥26.2 percent to ¥11.8 percent. At this ¥$197.6 million to ¥$77.5 million, transformer manufacturers to range from proposed level, industry free cash flow corresponding to a change in INPV of ¥$92.9 million to ¥$41.7 million, is estimated to decrease by ¥31.6 percent to ¥12.4 percent. At this corresponding to a change in INPV of approximately 202 percent to ¥$40.3 proposed level, industry free cash flow ¥14.9 percent to ¥6.7 percent. At this million, compared to the base-case is estimated to decrease by proposed level, industry free cash flow value of $39.5 million in the year before approximately 241.5 percent to ¥$55.9 is estimated to decrease by the compliance date (2015). million, compared to the base-case approximately 122.7 percent to ¥$9 During interviews, manufacturers value of $39.5 million in the year before million, compared to the base-case expressed differing views on whether the compliance date (2015). value of $39.5 million in the year before the efficiency levels embodied in TSL 4 The impacts at TSL 6 are similar to the compliance date (2015). would shift the market away from those DOE expects at TSL 5, except that TSL 2 requires the same efficiency silicon steels entirely. Because DL3 and slightly more amorphous core levels as TSL 1, except for DL 2, which DL5 must meet EL4 at this TSL, DOE production capacity will be needed is increased from baseline to EL1. EL1, expects the majority of the market because TSL 6-compliant transformers as opposed to the baseline efficiency, would shift to amorphous core will have somewhat heavier cores and could induce manufacturers to build transformers at TSL 4 and above. Even thus require more amorphous steel. This more amorphous capacity, when assuming a sufficient supply of leads to slightly greater capital compared to TSL 1, because amorphous amorphous steel were available, TSL 4 expenditures at TSL 6 compared to TSL transformers become incremental more and above would require a dramatic 5. cost competitive. Because DL2 build up in amorphous core transformer represents the largest share of core steel production capacity. DOE believes this At TSL 7, DOE estimates impacts on usage of all design lines, this has a wholesale transition away from silicon INPV for liquid-immersed distribution significant impact on investments. steels could seriously disrupt the transformer manufacturers to range from There are more severe impacts on market, drive small businesses to either -$327.2 million to $48 million, industry in the lower-bound source their cores or exit the market, corresponding to a change in INPV of profitability scenario when these greater and lead even large businesses to -52.3 percent to 7.7 percent. At this one-time cash outlays are coupled with consider moving production offshore or proposed level, industry free cash flow slight margin pressure. In the high- exiting the market altogether. The is estimated to decrease by profitability scenario, manufacturers are negative impacts are driven by the large approximately 267.2 percent to -$66 able to maintain gross margins, conversion costs associated with new million, compared to the base-case mitigating the adverse cash flow amorphous production lines and value of $39.5 million in the year before impacts of the increased investment in stranded assets of manufacturers’ the compliance date (2015). working capital (associated with more existing silicon steel transformer The impacts at TSL 7 are similar to expensive transformers). production capacity. If the higher first those DOE expects at TSL 6, except that At TSL 3, DOE estimates impacts on costs at TSL 4 drive more utilities to slightly more amorphous core INPV for liquid-immersed distribution refurbish rather than replace failed production capacity will be needed transformer manufacturers to range from transformers, a scenario many because TSL 6-compliant transformers ¥$101.2 million to ¥$47.6 million, manufacturers predicted at the will have somewhat heavier cores and corresponding to a change in INPV of efficiency levels and prices embodied in thus require more amorphous steel. This ¥16.2 percent to ¥7.6 percent. At this TSL 4, reduced transformer sales could leads to slightly greater capital proposed level, industry free cash flow cause further declines in INPV. expenditures at TSL 7 compared to TSL is estimated to decrease by At TSL 5, DOE estimates impacts on 6, incrementally reducing industry approximately 135.2 percent to ¥$13.9 INPV for liquid-immersed distribution value.

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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$M .. 219.5 202.7 199.9 192.8 173.4 164.2 136.4 Change in INPV...... 2011$M ...... (16.8) (19.6) (26.7) (46.1) (55.3) (83.1) % ...... (7.7) (8.9) (12.2) (21.0) (25.2) (37.9) Capital Conversion Costs ...... 2011$M ...... 5.1 7.4 11.4 23.8 23.8 23.8 Product Conversion Costs...... 2011$M ...... 2.9 3.8 5.0 8.0 8.0 8.0 Total Conversion Costs ...... 2011$M ...... 8.0 11.1 16.4 31.8 31.8 31.8 * 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$M .. 219.5 236.4 234.6 239.6 250.4 263.4 321.5 Change in INPV ...... 2011$M ...... 16.9 15.0 20.1 30.9 43.9 101.9 % ...... 7.7 6.8 9.1 14.1 20.0 46.4 Capital Conversion Costs ...... 2011$M ...... 5.1 7.4 11.4 23.8 23.8 23.8 Product Conversion Costs...... 2011$M ...... 2.9 3.8 5.0 8.0 8.0 8.0 Total Conversion Costs ...... 2011$M ...... 8.0 11.1 16.4 31.8 31.8 31.8 * Note: Parentheses indicate negative values.

At TSL 1, DOE estimates impacts on which will likely require advanced core TSL3 represents EL4 for DL6, DL7, INPV for low-voltage dry-type construction techniques, including and DL8. DOE’s engineering analysis distribution transformer manufacturers mitering or wound core designs. Much shows that manufacturers will be able to to range from ¥$16.8 million to $16.9 of the incremental investment needed at meet EL4 using M4 or better steels. M4, million, corresponding to a change in TSL2 is due to the increase from EL2 to however, is a thinner steel than is INPV of ¥7.7 percent to 7.7 percent. At EL3 in DL7, which represents more than currently employed, which, in this proposed level, industry free cash three-quarters of the market by core combination with larger cores, will flow is estimated to decrease by weight in this superclass. This increase dramatically slow production approximately 26.1 percent to $10.2 in stringency for DL7 drives the need for throughput, requiring the industry to million, compared to the base-case investment in mitering capacity. All expand capacity to maintain current value of $13.8 million in the year before major manufacturers already have shipments. This is the reason for the the compliance date (2015). mitering capability but moving the high- increase in conversion costs. In the TSL 1 provides many design paths for volume DL7 from butt-lap to mitered lower-bound profitability scenario, manufacturers to comply. DOE’s cores would slow throughput and when DOE assumes the industry cannot engineering analysis indicates require additional capacity. A range of fully pass on incremental costs, these manufacturers can continue to use the options are still available at TSL2 as investments and the higher working low-capital butt-lap core designs, manufacturers could use higher grade capital needs drain cash flow and lead meaning investment in mitering or steels, mitering, or wound cores. to the negative impacts shown in the wound core capability is not necessary. Additionally, at TSL2, manufacturers preservation of operating profit Manufacturers can use higher-quality will still be able to use M6, which is scenario. In the high-profitability grain oriented steels in butt-lap designs common in the current market. Some scenario, impacts are slightly positive to meet TSL1, source some or all cores, manufacturers, however, usually small because DOE assumes manufacturers are or invest in modified mitering manufacturers, indicated during able to fully recoup their conversion capability. interviews they would begin to source a expenditures through higher operating At TSL 2, DOE estimates impacts on greater share of their cores rather than cash flow. INPV for low-voltage dry-type make investments in mitering machines At TSL 4, DOE estimates impacts on distribution transformer manufacturers or wound core production lines. INPV for low-voltage dry-type to range from ¥$19.6 million to $15 At TSL 3, DOE estimates impacts on distribution transformer manufacturers million, corresponding to a change in INPV for low-voltage dry-type to range from ¥$46.1 million to $30.9 INPV of ¥8.9 percent to 6.8 percent. At distribution transformer manufacturers million, corresponding to a change in this proposed level, industry free cash to range from ¥$26.7 million to $20.1 INPV of ¥21 percent to 14.1 percent. At flow is estimated to decrease by million, corresponding to a change in this proposed level, industry free cash approximately 37.4 percent to $8.6 INPV of ¥12.2 percent to 9.1 percent. flow is estimated to decrease by million, compared to the base-case At this proposed level, industry free approximately 102.1 percent to ¥$0.3 value of $13.8 million in the year before cash flow is estimated to decrease by million, compared to the base-case the compliance date (2015). approximately 53.9 percent to $6.4 value of $13.8 million in the year before TSL2 differs from TSL1 in that DL6 million, compared to the base-case the compliance date (2015). and DL7 must meet EL3, up from value of $13.8 million in the year before TSL 4 and higher would create baseline for DL 6 and EL2 for DL 7, the compliance date (2015). significant challenges for the industry

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and likely disrupt the marketplace. At TSL 5, DOE estimates impacts on At TSL 6, DOE estimates impacts on DOE’s conversion costs at TSL 4 assume INPV for low-voltage dry-type INPV for low-voltage dry-type the industry will entirely convert to distribution transformer manufacturers distribution transformer manufacturers amorphous wound core technology to to range from ¥$55.3 million to $43.9 to range from ¥$83.1 million to $101.9 meet the efficiency standards. Few million, corresponding to a change in million, corresponding to a change in manufacturers of distribution INPV of ¥25.2 percent to 20 percent. At INPV of ¥37.9 percent to 46.4 percent. transformers in this superclass have any this proposed level, industry free cash At this proposed level, industry free experience with amorphous steel or flow is estimated to decrease by cash flow is estimated to decrease by ¥ ¥ wound core technology and would face approximately 122.6 percent to $3.1 approximately 125.7 percent to $3.5 a steep learning curve. This is reflected million, compared to the base-case million, compared to the base-case in the large conversion costs and value of $13.8 million in the year before value of $13.8 million in the year before adverse impacts on INPV in the the compliance date (2015). the compliance date (2015). The impacts at TSL 5 are similar to The impacts at TSL 6 are similar to Preservation of Operating Profit those DOE expects at TSL 4, except that those DOE expects at TSL 5, except that scenario. Most manufacturers DOE slightly more amorphous core slightly more amorphous core interviewed expected many low-volume production capacity will be needed production capacity will be needed manufacturers to exit the DOE-covered because TSL 5-compliant transformers because TSL 6-compliant transformers market altogether if amorphous steel will have somewhat heavier cores and will have somewhat heavier cores and was required to meet the standard. As thus require more amorphous steel. This thus require more amorphous steel. This such, DOE believes TSL 4 could lead to leads to slightly greater capital leads to slightly greater capital greater consolidation than the industry expenditures at TSL 5 compared expenditures at TSL 6 compared would experience at lower TSLs. to TSL 4. to TSL 5.

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$M 91.0 87.1 84.5 79.7 77.1 71.0 Change in INPV ...... 2011$ M ...... (3.8) (6.5) (11.3) (13.9) (20.0) % ...... (4.2) (7.1) (12.4) (15.3) (21.9) Capital Conversion Costs ...... 2011$M ...... 2.6 4.0 7.5 10.9 11.1 Product Conversion Costs...... 2011$M ...... 1.0 3.0 4.7 4.7 8.0 Total Conversion Costs ...... 2011$M ...... 3.6 7.0 12.2 15.6 19.1 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$M 91.0 89.1 90.0 95.1 92.5 114.1 Change in INPV ...... 2011$M ...... (1.9) (0.9) 4.1 1.5 23.1 % ...... (2.0) (1.0) 4.5 1.7 25.4 Capital Conversion Costs ...... 2011$M ...... 2.6 4.0 7.5 10.9 11.1 Product Conversion Costs...... 2011$M ...... 1.0 3.0 4.7 4.7 8.0 Total Conversion Costs ...... 2011$M ...... 3.6 7.0 12.2 15.6 19.1 Note: Parentheses indicate negative values.

At TSL 1, DOE estimates impacts on the superclass, in DL12, the largest DL minor adverse changes to INPV in the INPV for medium-voltage dry-type by core steel usage. Additionally, the standards case. distribution transformer manufacturers vast majority of the market already uses At TSL 2, DOE estimates impacts on to range from ¥$3.8 million to ¥$1.9 step-lap mitering technology. Therefore, INPV for medium-voltage dry-type million, corresponding to a change in DOE anticipates only moderate distribution transformer manufacturers INPV of ¥4.2 percent to ¥2.0 percent. conversion costs for the industry, to range from ¥$6.5 million to ¥$0.9 At this proposed level, industry free mainly associated with slower million, corresponding to a change in cash flow is estimated to decrease by throughput due to larger cores. Some INPV of ¥7.1 percent to ¥1.0 percent. approximately 28.1 percent to $4.1 manufacturers may need to slightly At this proposed level, industry free million, compared to the base-case expand capacity to maintain throughput cash flow is estimated to decrease by value of $5.7 million in the year before and/or modify equipment to approximately 52.1 percent to $2.7 the compliance date (2015). manufacturer with greater precision and million, compared to the base-case TSL 1 represents EL1 for all MVDT tighter tolerances. In general, however, value of $5.7 million in the year before DLs. At TSL 1, manufacturers have a conversion expenditures should be the compliance date (2015). variety of steels available to them, relatively minor compared INPV. For Compared to TSL 1, TSL 2 requires including M4, the most common steel in this reason, TSL 1 yields relatively EL2, rather than EL1, in DLs 10, 12, and

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13B. Because M4 (as well as the consolidation and likely cause many TSL 3, due to the increased labor commonly used H1) can still be low-volume manufacturers to exit the expenses associated with the production employed to meet these levels, DOE product line or source their cores. processes required to make amorphous expects similar results at TSL 2 as at At TSL 5, DOE estimates impacts on steel cores. In summary, at TSLs 1 and TSL 1. Slightly greater conversion costs INPV for medium-voltage dry-type 2, DOE does not expect significant will be required as the compliant distribution transformer manufacturers impacts on employment, but at TSL 3 or transformers will have heavier cores, all to range from ¥$20 million to $23.1 greater, which would require more other things being equal, meaning million, corresponding to a change in investment, the impact is very additionally capacity may be necessary INPV of ¥21.9 percent to 25.4 percent. uncertain. depending on each manufacturer’s At this proposed level, industry free Low-Voltage Dry-Type. Based on current capacity utilization rate. As with cash flow is estimated to decrease by interviews with manufacturers, DOE TSL 1, TSL 2 will not require significant approximately 152.8 percent to ¥$3.0 estimates that there are approximately changes to most manufacturers million, compared to the base-case 2,200 employees associated with DOE- production processes because the value of $5.7 million in the year before covered LVDT production. thickness of the steels will not change the compliance date (2015). Approximately 75 percent of these significantly, if at all. TSL 5 represents max-tech and yields employees are located outside of the At TSL 3, DOE estimates impacts on results similar to but more severe than U.S. Typically, high volume units are INPV for medium-voltage dry-type TSL 4 results. The entire market must made in Mexico, taking advantage of distribution transformer manufacturers convert to amorphous wound cores at lower labor rates, while custom designs to range from ¥$11.3 million to $4.1 TSL 5. Because the industry has no are made closer to the manufacturer’s million, corresponding to a change in experience with wound core customer base or R&D centers. DOE does INPV of ¥12.4 percent to 4.5 percent. technology, and little, if any, experience not expect large changes in domestic At this proposed level, industry free with amorphous steel, this transition employment to occur due to a standard. cash flow is estimated to decrease by would represent a tremendous challenge Most production already occurs outside approximately 90.1 to $0.6 million, for industry. Interviews suggest most the U.S., and, by and large, compared to the base-case value of $5.7 manufacturers would exit the market manufacturers agreed that most design million in the year before the altogether or source their cores rather changes necessary to meet higher energy compliance date (2015). than make the investments in plant and conservation standards would increase At TSL 4, DOE estimates impacts on equipment and R&D required to meet labor expenditures, not decrease it. If, INPV for medium-voltage dry-type these levels. however, small manufacturers began distribution transformer manufacturers b. Impacts on Employment sourcing cores instead of manufacturing to range from ¥$13.9 million to $1.5 them in-house, there could be a small million, corresponding to a change in Liquid Immersed. Based on interviews drop in employment at these firms. This INPV of ¥15.3 percent to 1.7 percent. and industry research, DOE estimates employment would presumably transfer At this proposed level, industry free that there are roughly 5,000 employees to the core makers, some of whom are cash flow is estimated to decrease by associated with DOE-covered liquid domestic and some of whom are foreign. approximately ¥117.2 percent to ¥$1.0 immersed distribution transformer In summary, DOE does not expect million, compared to the base-case production and some three-quarters of significant changes to domestic LVDT value of $5.7 million in the year before these workers are located domestically. industry employment levels as a result the compliance date (2015). DOE does not expect large changes in of the proposed standards. Higher TSLs TSL 3 and TSL 4 require EL2 for DL9 domestic employment to occur due to may lead to small declines in domestic and DL10, but EL4 for DL11 through today’s proposed standard. employment as more firms will be DL13B, which hold the majority of the Manufacturers generally agreed that challenged with what amounts to clean- volume. Several manufacturers were amorphous production is more labor- sheet redesigns. Facing the prospect of concerned TSL 3 would require some of intensive and would require greater greenfield investments, these the high volume design lines to use labor expenditures than traditional steel manufacturers may elect to make those either H1, HO, or transition entirely to core production. So long as domestic investments in lower-labor cost amorphous wound cores. Without a cost plants are not relocated outside the countries. effective M-grade steel option, the country, DOE expects moderate Medium-Voltage Dry-Type. Based on industry could face severe disruption. increases in domestic employment at interviews with manufacturers, DOE Even assuming a sufficient supply of Hi- TSL1 and TSL2. There could be a small estimates that there are approximately B steel, a major concern of some drop in employment at small, domestic 1,850 employees associated with DOE- manufacturers because it is used and manufacturing firms if small covered MVDT production. generally priced for power transformer manufacturers began sourcing cores. Approximately 75 percent of these markets, relatively large expenditures This employment would presumably employees are located domestically. would be required in R&D and transfer to the core makers, some of With the exception of TSLs that require engineering as most manufacturers whom are domestic and some of whom amorphous cores, manufacturers agreed would have to move production to steel, are foreign. There is a risk that energy that most design changes necessary to with which they have little experience. conservation standards that largely meet higher energy conservation DOE estimates total conversion costs require the use of amorphous steel standards would increase labor would more than double at TSL 3, could cause even large manufacturers expenditures, not decrease them, but relative to TSL 2. If, based on the who are currently producing current production equipment would movement of steel prices, EL4 can be transformers in the U.S. to evaluate not be stranded, mitigating any met cost competitively only through the offshore options. Faced with the incentive to move production offshore. use of amorphous steel or an exotic prospect of wholesale changes to their Corroborating this, the largest design with little or no current place in production process, large investments manufacturer and domestic employer in scale manufacturing, manufacturers and stranded assets, some this market has indicated that the would face significant challenges that manufacturers expect to strongly standard, as proposed in this rule, will DOE believes would lead to consider shifting production offshore at not cause their company to reconsider

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production location. As such, DOE does e. Cumulative Regulatory Burden investment would create a cumulative not expect significant changes to While any one regulation may not burden for manufacturers. (PP, No. 19 at domestic MVDT industry employment impose a significant burden on p. 1) EEI also commented that DOE levels as a result of the standard manufacturers, the combined effects of standards were increased less than 14 proposed in this rule. For TSLs that recent or impending regulations may months ago, with effective dates of would require amorphous cores, DOE have serious consequences for some January 1, 2007 for low-voltage dry-type does anticipate significant changes to manufacturers, groups of manufacturers, distribution transformers and January 1, domestic MVDT industry employment or an entire industry. Assessing the 2010 for medium-voltage dry-type and levels. impact of a single regulation may liquid-immersed designs. (EEI, Pub. Mtg. Tr., No. 34 at p. 28) c. Impacts on Manufacturing Capacity overlook this cumulative regulatory burden. In addition to energy Other factors that manufacturers Based on manufacturer interviews, conservation standards, other stated may contribute to cumulative DOE believes that there is significant regulations can significantly affect regulatory burden are foreign excess capacity in the distribution manufacturers’ financial operations. regulations and Underwriters transformer market. Shipments in the Multiple regulations affecting the same Laboratories listing compliance industry are well down from their peak manufacturer can strain profits and lead requirements. Manufacturers that export in 2007, according to manufacturers. companies to abandon product lines or their products to places such as Canada, Therefore, DOE does not believe there markets with lower expected future China, Mexico, or the Middle East need would be any production capacity returns than competing products. For to comply with foreign as well as constraints at TSLs that do not require these reasons, DOE conducts an analysis domestic regulations. The Canadian dramatic transitions to amorphous of cumulative regulatory burden as part government regulates efficiency of dry- cores. For those TSLs that require of its rulemakings pertaining to type transformers through its Canadian amorphous cores in significant volumes, appliance efficiency. During previous Standards Association (CSA) standard DOE believes there is potential for stages of this rulemaking DOE identified C802.2–00 (effective January 1, 2005). capacity constraints in the near term a number of requirements in addition to China regulates transformer efficiency due to limitations on core steel amended energy conservation standards through its China Compulsory availability. However, for the levels for distribution transformers. The Certification (CCC) program (effective proposed in this rule, DOE does not following section briefly addresses May 1, 2002), which requires foresee any capacity constraints. comments DOE received with respect to manufacturers of various products d. Impacts on Subgroups of cumulative regulatory burden and including transformers to obtain the Manufacturers summarizes other key related concerns CCC Mark before exporting to or selling that manufacturers raised during in the Chinese market. In Mexico, Small manufacturers, niche interviews. liquid-immersed units are regulated equipment manufacturers, and Many interested parties have through NOM–002–SEDE–2010. manufacturers exhibiting a cost expressed concerns about the recent DOE discusses these and other structure substantially different from the implementation of previous standards requirements, and includes the full industry average could be affected for distribution transformers. For low- details of the cumulative regulatory disproportionately. As discussed in voltage dry-type distribution burden analysis, in Chapter 12 of the section V.B.2.a, using average cost transformers, the Energy Policy Act of NOPR TSD. assumptions to develop an industry 2005 required compliance with NEMA cash-flow estimate is inadequate to TP–1 standards by the beginning of 3. National Impact Analysis assess differential impacts among 2007. For liquid-immersed and a. Significance of Energy Savings manufacturer subgroups. DOE medium-voltage dry-type transformers, considered four subgroups in the MIA: DOE’s 2007 energy conservation To estimate the energy savings Liquid-immersed, dry-type medium- standards rulemaking required through 2045 attributable to potential voltage, dry-type low-voltage, and small compliance by the beginning of 2010. standards for distribution transformers, manufacturers. For a discussion of the Power Partners has stated that the last DOE compared the energy consumption impacts on the first three groups, see set of energy conservation standards for of those products under the base case to section IV.I.1. For a discussion of the distribution transformers went into their energy consumption under each impacts on the small manufacturer effect very recently and required large TSL. Table V.28 presents the forecasted subgroup, see the Regulatory Flexibility capital investments and retooling. NES for each considered TSL. The Analysis in section VI.B and chapter 12 Therefore, any new standards which savings were calculated using the of the NOPR TSD. would require additional retooling and approach described in section IV.G.

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

Trial Standard Level 1 2 3 4 5 6 7

Liquid-Immersed

Cumulative Source Savings 2045 (Quads) ...... 0.36 0.74 0.82 1.44 1.42 1.70 2.70

Low-Voltage Dry-Type

Cumulative Source Savings 2045 (Quads) ...... 1.09 1.12 1.29 1.86 1.90 2.08

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

Trial Standard Level 1 2 3 4 5 6 7

Medium-Voltage Dry-Type

Cumulative Source Savings 2045 (Quads) ...... 0.06 0.13 0.23 0.23 0.37

Chapter 10 of the NOPR TSD provides OMB’s guidelines on regulatory energy). This rate represents the rate at additional details on the NES values analysis,41 DOE calculated NPV using which society discounts future reported and also presents tables that both a 7-percent and a 3-percent real consumption flows to their present show the magnitude of the energy discount rate. The 7-percent rate is an value. This rate can be approximated by savings discounted at rates of 3 percent estimate of the average before-tax rate of the real rate of return on long-term and 7 percent. Discounted energy return on private capital in the U.S. government debt (i.e., yield on United savings represent a policy perspective in economy, and reflects the returns on States Treasury notes minus annual rate which energy savings realized farther in real estate and small business capital as of change in the Consumer Price Index), the future are less significant than well as corporate capital. DOE used this which has averaged about 3 percent on energy savings realized in the nearer discount rate to approximate the a pre-tax basis for the past 30 years. term. opportunity cost of capital in the private Table V.29 shows the customer NPV b. Net Present Value of Customer Costs sector, because recent OMB analysis has results for each TSL DOE considered for and Benefits found the average rate of return on distribution transformers, using both a DOE estimated the cumulative NPV to capital to be near this rate. DOE used 7-percent and a 3-percent discount rate. the Nation of the total costs and savings the 3-percent rate to capture the In each case, the impacts cover the for customers that would result from the potential effects of standards on private lifetime of products purchased in 2016– TSLs considered for distribution consumption (e.g., through higher prices 2045. See chapter 10 of the NOPR TSD transformers. In accordance with the for products and reduced purchases of for more detailed NPV results.

TABLE V.29—CUMULATIVE NET PRESENT VALUE OF CONSUMER 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

Liquid-Immersed

Net Present Value (billion 2010$) ...... 3 3.66 7 .39 8.24 14 .21 13 .48 13.17 ¥1 .11

...... 7 0.75 1 .51 1.73 2 .96 2.65 1.76 ¥8 .25

Low-Voltage Dry-Type

Net Present Value (billion 2010$) ...... 3 7.81 7 .79 8.51 11 .16 9.37 2 .69

...... 7 2.03 1 .97 2.03 2 .36 1.37 ¥2.41

Medium-Voltage Dry-Type

Net Present Value (billion 2010$) ...... 3 0.42 0 .67 0.90 0.90 ¥0 .38 ...... 7 0.10 0 .13 0.06 0 .06 ¥0.84

The results shown here reflect the forecast in which prices decline after c. Indirect Impacts on Employment default product price trend, which uses 2010, and one in which prices rise. The As discussed above, DOE expects constant prices. DOE conducted an NPV NPV results from the associated energy conservation standards for sensitivity analysis using alternative sensitivity cases are described in distribution transformers to reduce price trends. DOE developed one appendix 10–C of the NOPR TSD. energy costs for equipment owners, and

41 OMB Circular A–4, section E (Sept. 17, 2003). Available at: http://www.whitehouse.gov/omb/ circulars_a004_a-4. (Last accessed March 18, 2011.)

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the resulting net savings to be redirected Chapter 13 of the NOPR TSD presents provided DOJ with copies of this notice to other forms of economic activity. more detailed results. and the TSD for review. DOE will Those shifts in spending and economic consider DOJ’s comments on the 4. Impact on Utility or Performance of activity could affect the demand for proposed rule in preparing the final Equipment labor. As described in section IV.J, DOE rule, and DOE will publish and respond used an input/output model of the U.S. DOE believes that the standards it is to DOJ’s comments in that document. economy to estimate indirect proposing today will not lessen the 6. Need of the Nation to Conserve employment impacts of the TSLs that utility or performance of distribution Energy DOE considered in this rulemaking. transformers. Enhanced energy efficiency, where DOE understands that there are 5. Impact of Any Lessening of economically justified, improves the uncertainties involved in projecting Competition employment impacts, especially 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 timeframes (2015– 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 proposed standards are likely to have from a proposed standard, and transmits electricity system, particularly during negligible impact on the net demand for such determination to the Secretary, peak-load periods. As a measure of the labor in the economy. The net change in together with an analysis of the nature expected energy conservation out to jobs is so small that it would be and extent of such impact. (42 U.S.C. 2045, Table V.30 presents the estimated imperceptible in national labor statistics 6295(o)(2)(B)(i)(V) and (B)(ii)) energy savings in terms of equivalent and might be offset by other, To assist the Attorney General in generating capacity for the TSLs that unanticipated effects on employment. making such a determination, DOE has DOE considered in this rulemaking.

TABLE V.30—EXPECTED ENERGY SAVINGS OUT TO 2045 REPRESENTED AS EQUIVALENT GENERATING CAPACITY UNDER DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS

Trial standard level 1 2 3 4 5 6 7

Liquid-Immersed (GW) ...... 0 .610 1 .23 1.33 2.24 2 .21 2.53 3 .73 Low-Voltage Dry-Type (GW) ...... 1.62 1 .66 1.90 2.70 2 .75 2.92 — Medium-Voltage Dry-Type (GW) ...... 0.091 0 .174 0 .332 0.332 0.510 — — Total ...... 2.33 3 .06 3.56 5.28 5 .47 5.46 3 .73

Energy savings from standards for TSLs considered in this rulemaking. standards on the overall level of SO2 distribution transformers could also DOE reports annual CO2, NOX, and Hg emissions in the United States. DOE produce environmental benefits in the emissions reductions for each TSL in also did not include NOX emissions form of reduced emissions of air chapter 15 of the NOPR TSD. reduction from power plants in States pollutants and greenhouse gases As discussed in section IV.M, DOE subject to CAIR because an energy associated with electricity production. did not report SO2 emissions reductions conservation standard would not affect Table V.31 provides DOE’s estimate of from power plants because, due to SO2 the overall level of NOX emissions in cumulative CO2, NOX, and Hg emissions emissions caps, there is uncertainty those States due to the emissions caps reductions projected to result from the about the effect of energy conservation mandated by CAIR.

TABLE V.31—SUMMARY OF EMISSIONS REDUCTION ESTIMATED FOR DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS (CUMULATIVE IN 2016–2045)

Trial standard level 1 2 3 4 5 6 7

Liquid-Immersed

CO2 (million metric tons) ...... 31 .2 62.7 67 .7 113 112 128 186 NOX (thousand tons) ...... 25 .5 51 .2 55.3 92.7 91 .5 104 152 Hg (tons) ...... 0 .209 0 .420 0.454 0.762 0.751 0 .857 1 .25

Low-Voltage Dry-Type

CO2 (million metric tons) ...... 82 .1 83.9 96 .0 137 139 148 — NOX (thousand tons) ...... 67 .0 68 .6 78.4 112 114 121 — Hg (tons) ...... 0 .551 0 .564 0.645 0.918 0.934 0 .992 —

Medium-Voltage Dry-Type

CO2 (million metric tons) ...... 4 .62 8.80 16 .8 16.8 25 .7 — — NOX (thousand tons) ...... 3.77 7 .19 13.7 13.7 21 .0 — —

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TABLE V.31—SUMMARY OF EMISSIONS REDUCTION ESTIMATED FOR DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS (CUMULATIVE IN 2016–2045)—Continued

Trial standard level 1 2 3 4 5 6 7

Hg (tons) ...... 0 .031 0 .059 0.113 0.113 0.173 — —

As part of the analysis for this $22.3/metric ton (the average value from Table V.32 presents the global value proposed rule, DOE estimated monetary a distribution that uses a 3-percent of CO2 emissions reductions at each benefits likely to result from the discount rate), $36.5/metric ton (the TSL. For each of the four cases, DOE reduced emissions of CO2 and NOX that average value from a distribution that calculated a present value of the stream DOE estimated for each of the TSLs uses a 2.5-percent discount rate), and of annual values using the same considered. As discussed in section $67.6/metric ton (the 95th-percentile discount rate as was used in the studies IV.M, DOE used values for the SCC value from a distribution that uses a 3- upon which the dollar-per-ton values developed by an interagency process. percent discount rate). These values are based. DOE calculated domestic The four values for CO2 emissions correspond to the value of emission values as a range from 7 percent to 23 reductions resulting from that process reductions in 2010; the values for later percent of the global values, and these (expressed in 2010$) are $4.9/metric ton years are higher due to increasing results are presented in chapter 16 of (the average value from a distribution damages as the magnitude of climate the NOPR TSD. that uses a 5-percent discount rate), change increases.

TABLE V.32—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER DISTRIBUTION TRANSFORMER TRIAL STANDARD LEVELS [Million 2010$]

5% discount rate, 3% discount rate, 2.5% discount rate, 3% discount rate, TSL average * average * average * 95th percentile *

Liquid-Immersed

1 ...... 173 1003 1747 3051 2 ...... 350 2026 3528 6160 3 ...... 382 2219 3866 6746 4 ...... 655 3831 6681 11643 5 ...... 646 3779 6591 11486 6 ...... 752 4414 7705 13414 7 ...... 1140 6754 11811 20523

Low-Voltage Dry-Type

1 ...... 481 2820 4921 8570 2 ...... 492 2884 5032 8764 3 ...... 562 3297 5753 10020 4 ...... 800 4693 8190 14264 5 ...... 814 4776 8336 14517 6 ...... 866 5076 8858 15427

Medium-Voltage Dry-Type

1 ...... 27 159 277 483 2 ...... 52 302 528 919 3 ...... 98 576 1006 1751 4 ...... 98 576 1006 1751 5 ...... 151 884 1543 2688

DOE is well aware that scientific and the monetary value of reductions in CO2 from the ongoing interagency review economic knowledge about the and other GHG emissions. This ongoing process. contribution of CO2 and other GHG review will consider the comments on DOE also estimated a range for the emissions to changes in the future this subject that are part of the public cumulative monetary value of the global climate and the potential record for this and other rulemakings, as economic benefits associated with NOX resulting damages to the world economy well as other methodological emissions reductions anticipated to continues to evolve rapidly. Thus, any assumptions and issues. However, result from amended standards for value placed on reducing CO2 emissions consistent with DOE’s legal obligations, refrigeration products. The low and high in this rulemaking is subject to change. and taking into account the uncertainty dollar-per-ton values that DOE used are DOE, together with other Federal involved with this particular issue, DOE discussed in section IV.M. Table V.33 agencies, will continue to review has included in this NOPR the most presents the cumulative present values various methodologies for estimating recent values and analyses resulting

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for each TSL calculated using 7-percent TABLE V.33—ESTIMATES OF PRESENT 7. Summary of National Economic and 3-percent discount rates. VALUE OF NOX EMISSIONS REDUC- Impacts TION UNDER DISTRIBUTION TRANS- The NPV of the monetized benefits TABLE V.33—ESTIMATES OF PRESENT FORMER TRIAL STANDARD LEVELS— associated with emissions reductions VALUE OF NOX EMISSIONS REDUC- Continued TION UNDER DISTRIBUTION TRANS- can be viewed as a complement to the FORMER TRIAL STANDARD LEVELS Million 2010$ NPV of the customer savings calculated for each TSL considered in this Million 2010$ TSL 3% discount 7% discount rulemaking. Table V.34 through Table rate rate V.36 present the NPV values that result TSL 3% discount 7% discount rate rate 2 ...... 26 to 267 ..... 8 to 87 from adding the estimates of the 3 ...... 30 to 305 ..... 10 to 99 potential economic benefits resulting Liquid-Immersed 4 ...... 42 to 434 ..... 14 to 141 from reduced CO2 and NOX emissions 5 ...... 43 to 442 ..... 14 to 143 in each of four valuation scenarios to 1 ...... 9 to 94 ...... 3 to 32 the NPV of customer savings calculated 2 ...... 19 to 191 ..... 6 to 64 6 ...... 46 to 470 ..... 15 to 152 3 ...... 20 to 208 ..... 7 to 69 for each TSL considered in this 4 ...... 35 to 356 ..... 11 to 117 Medium-Voltage Dry-Type rulemaking, at both a seven-percent and 5 ...... 34 to 351 ..... 11 to 115 three-percent discount rate. The CO2 6 ...... 40 to 408 ..... 13 to 132 1 ...... 1 to 15 ...... 0 to 5 values used in the columns of each table 7 ...... 60 to 616 ..... 19 to 194 2 ...... 3 to 28 ...... 1 to 9 correspond to the four scenarios for the 3 ...... 5 to 53 ...... 2 to 17 valuation of CO2 emission reductions Low-Voltage Dry-Type 4 ...... 5 to 53 ...... 2 to 17 presented in section IV.M. 5 ...... 8 to 82 ...... 3 to 27 1 ...... 25 to 261 ..... 8 to 85

TABLE V.34—LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH NET PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS [Billion 2010$]

Consumer NPV at 3% discount rate added with:

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

1 ...... 3.8 4.7 5.5 6.8 2 ...... 7.8 9.5 11.0 13.7 3 ...... 8.6 10.6 12.2 15.2 4 ...... 14.9 18.2 21.1 26.2 5 ...... 14.2 17.5 20.3 25.3 6 ...... 14.0 17.8 21.1 27.0 7 ...... 0.1 6.0 11.0 20.0

Consumer NPV at 7% Discount Rate added with: SCC Value of SCC Value of SCC Value of TSL SCC Value of $4.9/ metric ton CO2* $22.3/metric ton $36.5/metric ton $67.6/metric ton and Low Value for CO2* and Medium CO2* and Medium CO2* and High NOX** Value for NOX** Value for NOX** Value for NOX**

1 ...... 0.9 1.8 2.5 3.8 2 ...... 1.9 3.6 5.1 7.7 3 ...... 2.1 4.0 5.6 8.5 4 ...... 3.6 6.9 9.7 14.7 5 ...... 3.3 6.5 9.3 14.3 6 ...... 2.5 6.2 9.5 15.3 7 ...... ¥7.1 ¥1.4 3.7 12.5 * These label values represent the global SCC in 2010, in 2010$. 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 cor- responds to $4,623 per ton of NOX emissions.

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TABLE V.35—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 [Billion 2010$]

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

1 ...... 8.3 10.8 12.9 16.6 2 ...... 8.3 10.8 13.0 16.8 3 ...... 9.1 12.0 14.4 18.8 4 ...... 12.0 16.1 19.6 25.9 5 ...... 10.2 14.4 17.9 24.3 6 ...... 3.6 8.0 11.8 18.6 Consumer NPV at 7% Discount Rate added with: SCC Value of SCC Value of SCC Value of TSL SCC Value of $4.9/ metric ton CO2* $22.3/metric ton $36.5/metric ton $67.6/metric ton and Low Value for CO2* and Medium CO2* and Medium CO2* and High NOX** Value for NOX** Value for NOX** Value for NOX**

1 ...... 2.5 4.9 7.0 10.7 2 ...... 2.5 4.9 7.1 10.8 3 ...... 2.6 5.4 7.8 12.1 4 ...... 3.2 7.1 10.6 16.8 5 ...... 2.2 6.2 9.8 16.0 6 ...... ¥1.5 2.7 6.5 13.2

TABLE V.36—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 [Billion 2010$]

Consumer NPV at 3% Discount Rate added with:

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

1 ...... 0.5 0.6 0.7 0.9 2 ...... 0.7 1.0 1.2 1.6 3 ...... 1.0 1.5 1.9 2.7 4 ...... 1.0 1.5 1.9 2.7 5 ...... ¥0.2 0.6 1.2 2.4 Consumer NPV at 7% Discount Rate added with: SCC Value of SCC Value of TSL SCC Value of $4.9/ SCC Value of metric ton CO2* $22.3/metric ton $36.5/metric ton $67.6/metric ton and Low Value for CO2* and Medium CO2* and Medium CO2* and High NOX** Value for NOX** Value for NOX** Value for NOX**

1 ...... 0.1 0.3 0.4 0.6 2 ...... 0.2 0.4 0.7 1.1 3 ...... 0.2 0.6 1.1 1.8 4 ...... 0.2 0.6 1.1 1.8 5 ...... ¥0.7 0.1 0.7 1.9

Although adding the value of performed with different methods that 8. Other Factors customer savings to the values of use quite different time frames for emission reductions provides a valuable analysis. The national operating cost The Secretary of Energy, in perspective, two issues should be savings is measured for the lifetime of determining whether a standard is considered. First, the national operating products shipped in 2016–2045. The economically justified, may consider cost savings are domestic U.S. customer SCC values, on the other hand, reflect any other factors that the Secretary monetary savings that occur as a result the present value of future climate- deems to be relevant. (42 U.S.C. of market transactions, while the value related impacts resulting from the 6295(o)(2)(B)(i)(VI)) of CO2 reductions is based on a global emission of one metric ton of CO2 in value. Second, the assessments of each year. These impacts continue well operating cost savings and the SCC are beyond 2100.

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Electrical steel is a critical standard that either technologically or tech level was not justified, DOE then consideration in the design and economically required amorphous considered the next most efficient level manufacture of distribution material would both eliminate a large and undertook the same evaluation until transformers, amounting for more than amount of design flexibility and expose it reached the highest efficiency level 60 percent of the distribution the industry to enormous risk with that is both technologically feasible and transformers mass in some designs. respect to supply and pricing of core economically justified and saves a Rapid changes in the supply or pricing steel. For both reasons, DOE considered significant amount of energy. of certain grades can seriously hinder electrical steel availability to be a major To aid the reader in understanding manufacturers’ abilities to meet the factor in determining which TSLs were the benefits and/or burdens of each TSL, market demand and, as a result, this economically justified. tables in this section summarize the rulemaking has given an uncommon quantitative analytical results for each C. Proposed Standards level of attention to effects of electrical TSL, based on the assumptions and steel supply and availability. When considering proposed methodology discussed herein. The The most important point to note is standards, the new or amended energy efficiency levels contained in each TSL that several energy efficiency levels in conservation standard that DOE adopts are described in section V.A. In addition each design line are reachable only by for any type (or class) of covered to the quantitative results presented in using amorphous steel, which is product shall be designed to achieve the the tables, DOE also considers other available in the United States from a maximum improvement in energy burdens and benefits that affect single supplier that does not have efficiency that the Secretary determines economic justification. These include enough present capacity to supply the is technologically feasible and the impacts on identifiable subgroups of industry at all-amorphous standard economically justified. (42 U.S.C. customers who may be levels. Several more energy efficiency 6295(o)(2)(A)) In determining whether a disproportionately affected by a national levels are reachable with the top grades standard is economically justified, the standard, and impacts on employment. of conventional electrical steels (‘‘grain- Secretary must determine whether the Section V.B.1 presents the estimated oriented’’) but result in distribution benefits of the standard exceed its impacts of each TSL for these transformers that are unlikely to be cost- burdens to the greatest extent subgroups. DOE discusses the impacts competitive with the often more- practicable, in light of the seven on employment in transformer efficient amorphous units. As stated statutory factors discussed previously. manufacturing in section V.B.2.b, and above, switching to amorphous steel is (42 U.S.C. 6295(o)(2)(B)(i)) The new or discusses the indirect employment not practicable as there are availability amended standard must also ‘‘result in impacts in section V.B.3.c. concerns with amorphous steel. significant conservation of energy.’’ (42 Distribution transformers are also U.S.C. 6295(o)(3)(B)) 1. Benefits and Burdens of Trial highly customized products; For today’s NOPR, DOE considered Standard Levels Considered for Liquid- manufacturers routinely build only one the impacts of standards at each TSL, Immersed Distribution Transformers or a handful of units of a particular beginning with the maximum Table V.37 and Table V.38 summarize design and require flexibility with technologically feasible level, to the quantitative impacts estimated for respect to construction materials in determine whether that level was each TSL for liquid-immersed order to do this competitively. Setting a economically justified. Where the max- distribution transformers.

TABLE V.37—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 0.36 ...... 0.74 ...... 0.82 ...... 1.44 ...... 1.42 ...... 1.70 ...... 2.70 Savings (quads).

NPV of Consumer Benefits (2010$ billion)

3% discount rate 3.66 ...... 7.39 ...... 8.24 ...... 14.21 ...... 13.48 ...... 13.17 ...... ¥1.11 7% discount rate 0.75 ...... 1.51 ...... 1.73 ...... 2.96 ...... 2.65 ...... 1.76 ...... ¥8.25

Cumulative Emissions Reduction

CO2 (million 31.2 ...... 62.7 ...... 67.7 ...... 113 ...... 112 ...... 128 ...... 186 metric tons). NOX (thousand 25.5 ...... 51.2 ...... 55.3 ...... 92.7 ...... 91.5 ...... 104 ...... 152 tons). Hg (tons) ...... 0.209 ...... 0.420 ...... 0.454 ...... 0.762 ...... 0.751 ...... 0.857 ...... 1.25

Value of Emissions Reduction

CO2 (2010$ mil- 173 to 3051 ..... 350 to 6,160 .... 382 to 6,746 .... 655 to 11,643 .. 646 to 11,486 .. 752 to 13,414 .. 1140 to 20,523 lion)*. NOX—3% dis- 9 to 94 ...... 19 to 191 ...... 20 to 208 ...... 35 to 356 ...... 34 to 351 ...... 40 to 408 ...... 60 to 616 count rate (2010$ million).

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TABLE V.37—SUMMARY OF ANALYTICAL RESULTS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS: NATIONAL IMPACTS—Continued

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

NOX—7% dis- 3 to 32 ...... 6 to 64 ...... 7 to 69 ...... 11 to 117 ...... 11 to 115 ...... 13 to 132 ...... 19 to 194 count rate (2010$ million).

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

TABLE V.38—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 586 to 615 ...... 532 to 583 ...... 524 to 578 ...... 461 to 552 ...... 451 to 537 ...... 428 to 548 ...... 298 to 673 (2011$ million). Industry NPV (% (6.3) to (1.7) .... (14.9) to (6.7) .. (16.2) to (7.6) .. (26.2) to (11.8) (27.8) to (14.1) (31.6) to (12.4) (52.3) to 7.7 change).

Consumer Mean LCC Savings (2010$)

Design line 1 ..... 36 ...... 36 ...... 36 ...... 641 ...... 641 ...... 532 ...... 50 Design line 2 ..... 0 ...... 309 ...... 309 ...... 338 ...... 300 ...... 250 ...... ¥736 Design line 3 ..... 2413 ...... 2413 ...... 3831 ...... 5591 ...... 5245 ...... 6531 ...... 4135 Design line 4 ..... 862 ...... 862 ...... 862 ...... 3356 ...... 3356 ...... 3362 ...... 1274 Design line 5 ..... 7787 ...... 7787 ...... 10288 ...... 12513 ...... 11395 ...... 12746 ...... 3626

Consumer Median PBP (years)

Design line 1 ..... 20.2 ...... 20.2 ...... 20.2 ...... 7.9 ...... 7.9 ...... 10.0 ...... 19.2 Design line 2 ..... 0.0 ...... 6.9 ...... 6.9 ...... 8.0 ...... 9.5 ...... 11.5 ...... 24.3 Design line 3 ..... 6.3 ...... 6.3 ...... 4.0 ...... 4.7 ...... 4.6 ...... 5.2 ...... 13.3 Design line 4 ..... 5.0 ...... 5.0 ...... 5.0 ...... 4.1 ...... 4.1 ...... 4.1 ...... 14.6 Design line 5 ..... 4.0 ...... 4.0 ...... 4.2 ...... 6.3 ...... 5.7 ...... 8.3 ...... 16.9

Distribution of Consumer LCC Impacts

Design line 1 Net Cost 57.9 ...... 57.9 ...... 57.9 ...... 4.8 ...... 4.8 ...... 8.0 ...... 55.4 (%). Net Benefit 41.8 ...... 41.8 ...... 41.8 ...... 95.0 ...... 95.0 ...... 92.0 ...... 44.6 (%). No Impact 0.2 ...... 0.2 ...... 0.2 ...... 0.2 ...... 0.2 ...... 0.0 ...... 0.0 (%).

Design line 2 Net Cost 0.0 ...... 14.2 ...... 14.2 ...... 9.8 ...... 11.2 ...... 15.8 ...... 80.2 (%). Net Benefit 0.0 ...... 85.8 ...... 85.8 ...... 90.2 ...... 88.8 ...... 84.3 ...... 19.8 (%). No Impact 100.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 (%).

Design line 3 Net Cost 15.7 ...... 15.7 ...... 11.2 ...... 4.0 ...... 5.3 ...... 3.9 ...... 25.1 (%). Net Benefit 83.0 ...... 83.0 ...... 87.7 ...... 96.0 ...... 94.6 ...... 96.1 ...... 74.9 (%). No Impact 1.4 ...... 1.4 ...... 1.2 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 (%).

Design line 4 Net Cost 6.0 ...... 6.0 ...... 6.0 ...... 1.9 ...... 1.9 ...... 1.9 ...... 31.1 (%). Net Benefit 93.5 ...... 93.5 ...... 93.5 ...... 97.5 ...... 97.5 ...... 97.6 ...... 63.9 (%). No Impact 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.6 ...... 0.0 (%).

Design line 5 Net Cost 19.1 ...... 19.1 ...... 13.2 ...... 7.8 ...... 10.4 ...... 7.9 ...... 39.9 (%).

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TABLE V.38—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

Net Benefit 80.6 ...... 80.6 ...... 86.8 ...... 92.2 ...... 89.6 ...... 92.1 ...... 60.1 (%). No Impact 0.4 ...... 0.4 ...... 0.1 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 (%).

First, DOE considered TSL 7, the most as only one proven supplier of DOE recognizes the risk of very large efficient level (max tech), which would amorphous ribbon currently serves the negative impacts on manufacturers due save an estimated total of 2.70 quads of U.S. market. to the large capital and engineering energy through 2045, an amount DOE The Secretary tentatively concludes costs and the market disruption considers significant. TSL 7 has an that, at TSL 7 for liquid-immersed associated with the likely transition to estimated NPV of customer benefit of distribution transformers, the benefits of a market entirely served by amorphous ¥$8.25 billion using a 7 percent energy savings, positive average steel. Additionally, if manufacturers’ discount rate, and ¥$1.11 billion using customer LCC savings, emission concerns about their customers a 3 percent discount rate. reductions, and the estimated monetary rebuilding rather than replacing their The cumulative emissions reductions value of the emissions reductions would transformers at the price points at TSL 7 are 186 million metric tons of be outweighed by the potential multi- projected for TSL 6 are realized, new CO2, 152 thousand tons of NOX, and billion dollar negative net economic transformer sales would suffer and make 1.25 tons of Hg. The estimated monetary cost, the economic burden on customers it even more difficult to recoup value of the CO2 emissions reductions at as indicated by large PBPs, significant investments in amorphous transformer TSL 7 ranges from $1,140 million to increases in installed cost, and the large production capacity. $20,523 million. percentage of customers who would The energy savings under TSL 6 are At TSL 7, the average LCC impact experience LCC increases, the capital achievable only by using amorphous ranges from ¥$736 for design line 2 to and engineering costs that could result steel, which is currently available from $4,135 for design line 3. The median in a large reduction in INPV for a single supplier that has annual PBP ranges from 24.3 years for design manufacturers, and the risk that production capacity of approximately line 2 to 13.3 years for design line 3. manufacturers may not be able to obtain 100,000 tons, the vast majority of which The share of customers experiencing a the quantities of amorphous steel serves global demand. Thus, current net LCC benefit ranges from 19.8 required to meet standards at TSL 7. availability is far below the amount that percent for design line 2 to 74.9 percent Consequently, DOE has tentatively would be required to meet the U.S. for design line 3. concluded that TSL 7 is not liquid-immersed transformer market At TSL 7, the projected change in economically justified. demand of approximately 250,000 tons. INPV ranges from a decrease of $327 Next, DOE considered TSL 6, which Electrical steel is a critical consideration million to an increase of $48 million. If would save an estimated total of 1.70 in the manufacture of distribution the decrease of $327 million were to quads of energy through 2045, an transformers, accounting for more than occur, TSL 7 could result in a net loss amount DOE considers significant. TSL 60 percent of the transformer’s mass in of 52.3 percent in INPV to 6 has an estimated NPV of customer some designs. DOE is concerned that the manufacturers of liquid-immersed benefit of $1.76 billion using a 7 percent current supplier, together with others distribution transformers. At TSL 7, discount rate, and $13.17 billion using that might enter the market, would not there is a risk of very large negative a 3 percent discount rate. be able to increase production of impacts on manufacturers due to the The cumulative emissions reductions amorphous steel rapidly enough to substantial capital and engineering costs at TSL 6 are 128 million metric tons of supply the amounts that would be they would incur and the market CO2, 104 thousand tons of NOX, and needed by transformer manufacturers disruption associated with the likely 0.857 tons of Hg. The estimated before 2015. Therefore, setting a transition to a market entirely served by monetary value of the CO2 emissions standard that requires amorphous amorphous steel. Additionally, if reductions at TSL 6 ranges from $752 material would expose the industry to manufacturers’ concerns about their million to $13,414 million. enormous risk with respect to core steel customers rebuilding rather than At TSL 6, the average LCC impact supply. DOE also has concerns about replacing transformers at the price ranges from $250 for design line 2 to the competitive impact of TSL 6 on the points projected for TSL 7 are realized, $12,746 for design line 5. The median electrical steel industry. TSL 6 could new transformer sales would suffer and PBP ranges from 11.5 years for design jeopardize the ability of silicon steels to make it even more difficult to recoup line 2 to 4.1 years for design line 4. The compete with amorphous metal, which investments in amorphous transformer share of customers experiencing a net risks upsetting competitive balance production capacity. Additionally, if LCC benefit ranges from 84.3 percent for among steel suppliers and between manufacturers’ concerns about their design line 2 to 97.6 percent for design them and their customers. customers rebuilding rather than line 4. The Secretary tentatively concludes replacing transformers at the price At TSL 6, the projected change in that, at TSL 6 for liquid-immersed points projected for TSL 7 are realized, INPV ranges from a decrease of $198 distribution transformers, the benefits of new transformer sales would suffer and million to a decrease of $78 million. If energy savings, positive NPV of make it even more difficult to recoup the decrease of $198 million were to customer benefit, positive average investments in amorphous transformer occur, TSL 6 could result in a net loss customer LCC savings, emission production capacity. DOE also has of 31.6 percent in INPV to reductions, and the estimated monetary concerns about the competitive impact manufacturers of liquid-immersed value of the CO2 emissions reductions of TSL 7 on the electrical steel industry, distribution transformers. At TSL 6, would be outweighed by the capital and

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engineering costs that could result in a enough to supply the amounts that Additionally, if manufacturers’ concerns large reduction in INPV for would be needed by transformer about their customers rebuilding rather manufacturers, and the risk that manufacturers before 2015. Therefore, than replacing transformers at the price manufacturers may not be able to obtain setting a standard that requires points projected for TSL 4 are realized, the quantities of amorphous steel amorphous material would expose the new transformer sales would suffer and required to meet standards at TSL 6. industry to enormous risk with respect make it even more difficult to recoup Consequently, DOE has tentatively to core steel supply. As with higher investments in amorphous transformer concluded that TSL 6 is not TSLs, DOE also has concerns about the production capacity. economically justified. competitive impact of TSL 5 on the DOE is also concerned that TSL 4, like Next, DOE considered TSL 5, which electrical steel manufacturing industry. the higher TSLs, will require amorphous would save an estimated total of 1.42 TSL 5 could jeopardize the ability of steel to be competitive in many quads of energy through 2045, an silicon steels to compete with applications and at least a few design amount DOE considers significant. TSL amorphous metal, which risks upsetting lines. As stated previously, the available 5 has an estimated NPV of customer competitive balance among steel supply of amorphous steel is well below benefit of $2.65 billion using a 7 percent suppliers and between them and their the amount that would likely be discount rate, and $13.48 billion using customers. required to meet the U.S. liquid- a 3 percent discount rate. The Secretary tentatively concludes immersed transformer market demand. The cumulative emissions reductions that, at TSL 5 for liquid-immersed DOE is concerned that the current at TSL 5 are 112 million metric tons of distribution transformers, the benefits of supplier, together with others that might CO2, 104 thousand tons of NOX, and energy savings, positive NPV of enter the market, would not be able to 0.751 tons of Hg. The estimated customer benefit, positive average increase production of amorphous steel monetary value of the CO2 emissions customer LCC savings, emission rapidly enough to supply the amounts reductions at TSL 5 ranges from $646 reductions, and the estimated monetary that would be needed by transformer million to $11,486 million. value of the CO2 emissions reductions manufacturers before 2015. Therefore, At TSL 5, the average LCC impact would be outweighed by the capital and setting a standard that requires ranges from $300 for design line 2 to engineering costs that could result in a amorphous material would expose the $11,395 for design line 5. The median large reduction in INPV for industry to enormous risk with respect PBP ranges from 9.5 years for design manufacturers, and the risk that to core steel supply. line 2 to 4.1 years for design line 4. The manufacturers may not be able to obtain In addition, depending on how steel share of customers experiencing a net the quantities of amorphous steel prices react to a standard, DOE believes LCC benefit ranges from 88.8 percent for required to meet standards at TSL 5. TSL 4 could threaten the viability of a design line 2 to 97.5 percent for design Consequently, DOE has concluded that place in the market for conventional line 4. TSL 5 is not economically justified. steel. Therefore, as with higher TSLs, At TSL 5, the projected change in Next, DOE considered TSL 4, which DOE has concerns about the competitive INPV ranges from a decrease of $174 would save an estimated total of 1.44 impact of TSL 4 on the electrical steel million to a decrease of $88 million. If quads of energy through 2045, an manufacturing industry. the decrease of $174 million were to amount DOE considers significant. TSL The Secretary tentatively concludes occur, TSL 5 could result in a net loss 4 has an estimated NPV of customer that, at TSL 4 for liquid-immersed of 27.8 percent in INPV to benefit of $2.96 billion using a 7 percent distribution transformers, the benefits of manufacturers of liquid-immersed discount rate, and $14.21 billion using energy savings, positive NPV of distribution transformers. At TSL 5, a 3 percent discount rate. customer benefit, positive average DOE recognizes the risk of very large The cumulative emissions reductions customer LCC savings, emission negative impacts on manufacturers due at TSL 4 are 113 million metric tons of reductions, and the estimated monetary to the large capital and engineering CO2, 92.7 thousand tons of NOX, and value of the CO2 emissions reductions costs they would incur and the market 0.762 tons of Hg. The estimated would be outweighed by the capital and disruption associated with the likely monetary value of the CO2 emissions engineering costs that could result in a transition to a market almost entirely reductions at TSL 4 ranges from $655 large reduction in INPV for served by amorphous steel. million to $11,643 million. manufacturers, and the risk that Additionally, if manufacturers’ concerns At TSL 4, the average LCC impact manufacturers may not be able to obtain about their customers rebuilding rather ranges from $338 for design line 2 to the quantities of amorphous steel than replacing transformers at the price $12,513 for design line 5. The median required to meet standards at TSL 4. points projected for TSL 5 are realized, PBP ranges from 8.0 years for design Consequently, DOE has tentatively new transformer sales would suffer and line 2 to 4.1 years for design line 4. The concluded that TSL 4 is not make it even more difficult to recoup share of customers experiencing a net economically justified. investments in amorphous transformer LCC benefit ranges from 90.2 percent for Next, DOE considered TSL 3, which production capacity. design line 2 to 97.5 percent for design would save an estimated total of 0.82 The energy savings under TSL 5 are line 4. quads of energy through 2045, an achievable only by using amorphous At TSL 4, the projected change in amount DOE considers significant. TSL steel, which is currently available from INPV ranges from a decrease of $164 3 has an estimated NPV of customer a single supplier that has annual million to a decrease of $74 million. If benefit of $1.73 billion using a 7 percent production capacity of 100,000 tons, far the decrease of $164 million were to discount rate, and $8.24 billion using a below the amount that would be occur, TSL 4 could result in a net loss 3 percent discount rate. required to meet the U.S. liquid- of 26.2 percent in INPV to The cumulative emissions reductions immersed transformer market demand manufacturers of liquid-immersed at TSL 3 are 67.7 million metric tons of of approximately 250,000 tons. DOE is distribution transformers. At TSL 4, CO2, 55.3 thousand tons of NOX, and concerned that the current supplier, DOE recognizes the risk of large 0.454 tons of Hg. The estimated together with others that might enter the negative impacts on manufacturers due monetary value of the CO2 emissions market, would not be able to increase to the substantial capital and reductions at TSL 3 ranges from $382 production of amorphous steel rapidly engineering costs they would incur. million to $6,746 million.

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At TSL 3, the average LCC impact discount rate, and $7.39 billion using a amorphous steel required to meet ranges from $36 for design line 1 to 3 percent discount rate. standards at TSL 2 in a cost-effective $10,288 for design line 5. The median The cumulative emissions reductions manner. Consequently, DOE has PBP ranges from 20.2 years for design at TSL 2 are 62.7 million metric tons of tentatively concluded that TSL 2 is not line 1 to 4.0 years for design line 3. The CO2, 51.2 thousand tons of NOX, and economically justified. share of customers experiencing a net 0.42 tons of Hg. The estimated monetary Next, DOE considered TSL 1, which LCC benefit ranges from 41.8 percent for value of the CO2 emissions reductions at would save an estimated total of 0.36 design line 1 to 93.5 percent for design TSL 2 ranges from $350 million to quads of energy through 2045, an line 4. $6,160 million. amount DOE considers significant. TSL At TSL 3, the projected change in At TSL 2, the average LCC impact 1 has an estimated NPV of customer INPV ranges from a decrease of $101 ranges from $0 for design line 2 to benefit of $0.75 billion using a 7 percent million to a decrease of $48 million. If $7,787 for design line 5. The median discount rate, and $3.66 billion using a the decrease of $101 million were to PBP ranges from 20.2 years for design 3 percent discount rate. occur, TSL 3 could result in a net loss line 1 to 4.0 years for design line 5. The The cumulative emissions reductions of 16.2 percent in INPV to share of customers experiencing a net at TSL 1 are 31.2 million metric tons of manufacturers. At TSL 3, DOE LCC benefit ranges from 41.8 percent for CO2, 25.5 thousand tons of NOX, and recognizes the risk of large negative design line 1 to 93.5 percent for design 0.209 tons of Hg. The estimated impacts on manufacturers due to the line 4. monetary value of the CO2 emissions large capital and engineering costs they At TSL 2, the projected change in reductions at TSL 1 ranges from $173 would incur. INPV ranges from a decrease of $93 million to $3,051 million. Although the industry can million to a decrease of $42 million. If At TSL 1, the average LCC impact manufacture liquid-immersed the decrease of $93 million were to ranges from $0 for design line 2 to transformers at TSL 3 from M3 or lower occur, TSL 2 could result in a net loss $7,787 for design line 5. The median grade steels, the positive LCC and of 14.9 percent in INPV to PBP ranges from 20.2 years for design national impacts results described above manufacturers of liquid-immersed line 1 to 4.0 years for design line 5. The are based on lowest first-cost designs, distribution transformers. At TSL 2, share of customers experiencing a net which include amorphous steel for all DOE recognizes the risk of negative LCC benefit ranges from 41.8 percent for the design lines analyzed. As is the case impacts on manufacturers due to the design line 1 to 93.5 percent for design with higher TSLs, DOE is concerned significant capital and engineering costs line 4. At TSL 1, the projected change in that the current supplier, together with they would incur. Although the industry can INPV ranges from a decrease of $40 others that might enter the market, manufacture liquid-immersed million to a decrease of $10 million. If would not be able to increase transformers at TSL 2 from M3 or lower the decrease of $40 million were to production of amorphous steel rapidly grade steels, the positive LCC and occur, TSL 1 could result in a net loss enough to supply the amounts that national impacts results described above of 6.3 percent in INPV to manufacturers would be needed by transformer are based on lowest first-cost designs, of liquid-immersed distribution manufacturers before 2015. If which include amorphous steel for transformers. manufacturers were to meet standards at design line 2. This design line The energy savings under TSL 1 are TSL 3 using M3 or lower grade steels, represents approximately 44 percent of achievable without using amorphous DOE’s analysis shows that the LCC steel. Therefore, the aforementioned 42 all liquid-immersed transformer impacts are negative. shipments by MVA. Amorphous steel is risks that manufacturers may not be able The Secretary tentatively concludes available from a single supplier whose to obtain the quantities of amorphous that, at TSL 3 for liquid-immersed annual production capacity is below the steel required to meet standards, or that distribution transformers, the benefits of amount that would be required to meet manufacturers may be exposed to energy savings, positive NPV of the demand for design line 2 under TSL increased material prices due to the customer benefit, positive average 2. DOE is concerned that the current concentration of core material to a customer LCC savings, emission supplier, together with others that might single supplier are not present under reductions, and the estimated monetary enter the market, would not be able to TSL 1. value of the CO2 emissions reductions increase production of amorphous steel After considering the analysis and would be outweighed by the capital and rapidly enough to supply the amounts weighing the benefits and the burdens, engineering costs that could result in a that would be needed by transformer DOE has tentatively concluded that at large reduction in INPV for manufacturers before 2015. If TSL 1 for liquid-immersed distribution manufacturers, and the risk that manufacturers were to meet standards at transformers, the benefits of energy manufacturers may not be able to obtain TSL 2 using M3 or lower grade steels, savings, positive NPV of customer the quantities of amorphous steel DOE’s analysis shows that the LCC benefit, positive average customer LCC required to meet standards at TSL 3 in impacts would be negative. savings, emission reductions, and the a cost-effective manner. Consequently, The Secretary tentatively concludes estimated monetary value of the DOE has tentatively concluded that TSL that, at TSL 2 for liquid-immersed emissions reductions would outweigh 3 is not economically justified. distribution transformers, the benefits of the potential reduction in INPV for Next, DOE considered TSL 2, which energy savings, positive NPV of manufacturers. The Secretary of Energy would save an estimated total of 0.74 customer benefit, positive average has concluded that TSL 1 would save a quads of energy through 2045, an customer LCC savings, emission significant amount of energy and is amount DOE considers significant. TSL reductions, and the estimated monetary technologically feasible and 2 has an estimated NPV of customer value of the CO2 emissions reductions economically justified. In addition, benefit of $1.51 billion using a 7 percent would be outweighed by the capital and during the negotiated rulemaking, engineering costs that could result in a NEMA and AK Steel recommended TSL 42 DOE conducted a sensitivity analysis where LCC results are presented for liquid-immersed reduction in INPV for manufacturers, 1. For the above considerations, DOE transformers without amorphous steel; see in and the risk that manufacturers may not today proposes to adopt the energy appendix 8–C in the NOPR TSD. be able to obtain the quantities of conservation standards for liquid-

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immersed distribution transformers at liquid-immersed distribution TSL 1. Table V.39 presents the proposed transformers. energy conservation standards for

TABLE V.39—PROPOSED ENERGY CONSERVATION STANDARDS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS

Electrical efficiency by kVA and equipment class Equipment class 1 Equipment class 2 kVA Percent kVA Percent

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 ...... 1500 ...... 99.48

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.40 and Table V.41 summarize the quantitative impacts estimated for

TABLE V.40—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) ...... 1.09 ...... 1.12 ...... 1.29 ...... 1.86 ...... 1.90 ...... 2.08

NPV of Consumer Benefits (2010$ billion)

3% discount rate ...... 7.81 ...... 7.79 ...... 8.51 ...... 11.16 ...... 9.37 ...... 2.69 7% discount rate ...... 2.03 ...... 1.97 ...... 2.03 ...... 2.36 ...... 1.37 ...... ¥2.41

Cumulative Emissions Reduction

CO2 (million metric tons) ...... 82.1 ...... 83.9 ...... 96.0 ...... 137 ...... 139 ...... 148 NOX (thousand tons) ...... 67.0 ...... 68.6 ...... 78.4 ...... 112 ...... 114 ...... 121 Hg (tons) ...... 0.551 ...... 0.564 ...... 0.645 ...... 0.918 ...... 0.934 ...... 0.992

Value of Emissions Reduction

CO2 (2010$ million)* ...... 481 to 8570 .. 492 to 8764 .. 562 to 10020 800 to 14264 814 to 14517 866 to 15427 NOX—3% discount rate (2010$ million) ...... 25 to 261 ...... 26 to 267 ...... 30 to 305 ...... 42 to 434 ...... 43 to 442 ...... 46 to 470 NOX—7% discount rate (2010$ million) ...... 8 to 85 ...... 8 to 87 ...... 10 to 99 ...... 14 to 141 ...... 14 to 143 ...... 15 to 152

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

TABLE V.41—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) ...... 203 to 236 .... 200 to 235 .... 193 to 240 .... 173 to 250 .... 164 to 263 .... 136 to 322 Industry NPV (% change) ...... (7.7) to 7.7 ... (8.9) to 6.8 ... (12.2) to 9.1 (21.0) to 14.1 (25.2) to 20.0 (37.9) to 46.4

Consumer Mean LCC Savings (2010$)

Design line 6 ...... 0 ...... ¥125 ...... 335 ...... 187 ...... 187 ...... ¥881 Design line 7 ...... 1714 ...... 1714 ...... 1793 ...... 2270 ...... 2270 ...... 270

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TABLE V.41—SUMMARY OF ANALYTICAL RESULTS FOR LOW-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS: MANUFACTURER AND CONSUMER IMPACTS—Continued

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

Design line 8 ...... 2476 ...... 2476 ...... 2625 ...... 4145 ...... ¥2812 ...... ¥2812

Consumer Median PBP (years)

Design line 6 ...... 0.0 ...... 24.7 ...... 13.0 ...... 16.3 ...... 16.3 ...... 32.4 Design line 7 ...... 4.5 ...... 4.5 ...... 4.7 ...... 6.9 ...... 6.9 ...... 18.1 Design line 8 ...... 8.4 ...... 8.4 ...... 12.3 ...... 11.0 ...... 24.5 ...... 24.5

Distribution of Consumer LCC Impacts

Design line 6 Net Cost (%) ...... 0.0 ...... 71.5 ...... 17.6 ...... 36.2 ...... 36.2 ...... 93.4 Net Benefit (%) ...... 0.0 ...... 28.5 ...... 82.4 ...... 63.8 ...... 63.8 ...... 6.6 No Impact (%) ...... 100.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 7 Net Cost (%) ...... 1.8 ...... 1.8 ...... 2.0 ...... 3.7 ...... 3.7 ...... 46.4 Net Benefit (%) ...... 98.2 ...... 98.2 ...... 98.0 ...... 96.3 ...... 96.3 ...... 53.6 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 8 Net Cost (%) ...... 5.2 ...... 5.2 ...... 15.3 ...... 10.5 ...... 78.5 ...... 78.5 Net Benefit (%) ...... 94.8 ...... 94.8 ...... 84.7 ...... 89.5 ...... 21.5 ...... 21.5 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

First, DOE considered TSL 6, the most procure sufficient volume of amorphous design line 8 to 96.3 percent for design efficient level (max tech), which would steel at competitive prices, if at all. line 7. save an estimated total of 2.08 quads of The Secretary tentatively concludes At TSL 5, the projected change in energy through 2045, an amount DOE that, at TSL 6 for low-voltage dry-type INPV ranges from a decrease of $55 considers significant. TSL 6 has an distribution transformers, the benefits of million to an increase of $44 million. If estimated NPV of customer benefit of energy savings, emission reductions, the decrease of $55 million occurs, TSL ¥$2.41 billion using a 7 percent and the estimated monetary value of the 5 could result in a net loss of 25.2 discount rate, and $2.69 billion using a CO2 emissions reductions would be percent in INPV to manufacturers of 3 percent discount rate. outweighed by the economic burden on low-voltage dry-type distribution The cumulative emissions reductions customers (as indicated by negative transformers. At TSL 5, DOE recognizes at TSL 6 are 148 million metric tons of average LCC savings, large PBPs, and the risk of very large negative impacts the large percentage of customers who on the industry. TSL 5 would require CO2, 121 thousand tons of NOX, and 0.992 tons of Hg. The estimated would experience LCC increases at manufacturers to scrap nearly all design line 6 and design line 8), the production assets and create transformer monetary value of the CO2 emissions reductions at TSL 6 ranges from $866 potential for very large negative impacts designs with which most, if not all, have million to $15,427 million. on the manufacturers, and the potential no experience. DOE is concerned, in burden on small manufacturers. particular, about large impacts on small At TSL 6, the average LCC impact Consequently, DOE has tentatively businesses, which may not be able to ranges from ¥$2,812 for design line 8 concluded that TSL 6 is not procure sufficient volume of amorphous to $270 for design line 7. The median economically justified. steel at competitive prices, if at all. PBP ranges from 32.4 years for design Next, DOE considered TSL 5, which The Secretary tentatively concludes line 6 to 18.1 years for design line 7. would save an estimated total of 1.90 that, at TSL 5 for low-voltage dry-type The share of customers experiencing a quads of energy through 2045, an distribution transformers, the benefits of net LCC benefit ranges from 6.6 percent amount DOE considers significant. TSL energy savings, emission reductions, for design line 6 to 53.6 percent for 5 has an estimated NPV of customer and the estimated monetary value of the design line 7. benefit of $1.37 billion using a 7 percent CO2 emissions reductions would be At TSL 6, the projected change in discount rate, and $9.37 billion using a outweighed by the economic burden on INPV ranges from a decrease of $83 3 percent discount rate. customers at design line 8 (as indicated million to an increase of $102 million. The cumulative emissions reductions by negative average LCC savings, large If the decrease of $83 million occurs, at TSL 5 are 139 million metric tons of PBPs, and the large percentage of TSL 6 could result in a net loss of 37.9 CO2, 114 thousand tons of NOX, and customers who would experience LCC percent in INPV to manufacturers of 0.934 tons of Hg. The estimated increases), the potential for very large low-voltage dry-type distribution monetary value of the CO2 emissions negative impacts on the manufacturers, transformers. At TSL 6, DOE recognizes reductions at TSL 5 ranges from $814 and the potential burden on small the risk of very large negative impacts million to $14,517 million. manufacturers. Consequently, DOE has on the industry. TSL 6 would require At TSL 5, the average LCC impact tentatively concluded that TSL 5 is not manufacturers to scrap nearly all ranges from ¥$2,812 for design line 8 economically justified. production assets and create transformer to $2,270 for design line 7. The median Next, DOE considered TSL 4, which designs with which most, if not all, have PBP ranges from 24.5 years for design would save an estimated total of 1.86 no experience. DOE is concerned, in line 8 to 6.9 years for design line 7. The quads of energy through 2045, an particular, about large impacts on small share of customers experiencing a net amount DOE considers significant. TSL businesses, which may not be able to LCC benefit ranges from 21.5 percent for 4 has an estimated NPV of customer

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benefit of $2.36 billion using a 7 percent PBP ranges from 13.0 years for design reductions at TSL 2 ranges from $492 discount rate, and $11.16 billion using line 6 to 4.7 years for design line 7. The million to $8,764 million. a 3 percent discount rate. share of customers experiencing a net At TSL 2, the average LCC impact The cumulative emissions reductions LCC benefit ranges from 82.4 percent for ranges from ¥$125 for design line 6 to at TSL 4 are 137 million metric tons of design line 6 to 98.0 percent for design $2,476 for design line 8. The median CO2, 112 thousand tons of NOX, and line 7. PBP ranges from 24.7 years for design 0.918 tons of Hg. The estimated At TSL 3, the projected change in line 6 to 4.5 years for design line 7. The monetary value of the CO2 emissions INPV ranges from a decrease of $27 share of customers experiencing a net reductions at TSL 4 ranges from $800 million to an increase of $20 million. If LCC benefit ranges from 28.5 percent for million to $14,264 million. the decrease of $27 million occurs, TSL design line 6 to 98.2 percent for design At TSL 4, the average LCC impact 3 could result in a net loss of 12.2 line 7. ranges from $187 for design line 6 to percent in INPV to manufacturers of At TSL 2, the projected change in $4,145 for design line 8. The median low-voltage dry-type distribution INPV ranges from a decrease of $20 PBP ranges from 16.3 years for design transformers. At TSL 3, DOE recognizes million to an increase of $15 million. If line 6 to 6.9 years for design line 7. The the risk of negative impacts on the the decrease of $20 million occurs, TSL share of customers experiencing a net industry, particularly the small 2 could result in a net loss of 8.9 percent LCC benefit ranges from 63.8 percent for manufacturers. While TSL 3 could in INPV to manufacturers of low-voltage design line 6 to 96.3 percent for design likely be met with M4 steel, DOE’s dry-type distribution transformers. At line 7. analysis shows that this design option is TSL 2, DOE recognizes the risk of At TSL 4, the projected change in at the edge of its technical feasibility at negative impacts on the industry, INPV ranges from a decrease of $46 the efficiency levels comprised by TSL particularly small manufacturers. TSL 2 million to an increase of $31 million. If 3. Although these levels could be met would likely require mitering or wound the decrease of $46 million occurs, TSL with M3 or better steels, DOE is core technology, which many small 4 could result in a net loss of 21 percent concerned that a significant number of businesses do not have in-house. Given in INPV to manufacturers of low-voltage small manufacturers would be unable to their more limited engineering resources dry-type distribution transformers. At acquire these steels in sufficient supply and capital, small businesses may find TSL 4, DOE recognizes the risk of very and quality to compete. Additionally, it difficult to make these designs at large negative impacts on the industry. TSL 3 requires significant investment in competitive prices and may have to exit As with the higher TSLs, TSL 4 would advanced core construction equipment the market. At the same time, however, require manufacturers to scrap nearly all such are step-lap mitering machines or those small manufacturers may be able production assets and create transformer wound core production lines, as butt lap to source their cores—and many are designs with which most, if not all, have designs, even with high-grade designs, doing so to a significant extent no experience. DOE is concerned, in are unlikely to comply. Given their currently—which could mitigate particular, about large impacts on small more limited engineering resources and impacts. businesses, which may not be able to capital, small businesses may find it The Secretary tentatively concludes procure sufficient volume of amorphous difficult to make these designs at that, at TSL 2 for low-voltage dry-type steel at competitive prices, if at all. competitive prices and may have to exit distribution transformers, the benefits of The Secretary tentatively concludes the market. At the same time, however, energy savings, positive NPV of that, at TSL 4 for low-voltage dry-type those small manufacturers may be able customer benefit, positive average LCC distribution transformers, the benefits of to source their cores—and many are savings, emission reductions, and the energy savings, positive NPV of doing so to a significant extent estimated monetary value of the CO2 customer benefit, positive average LCC currently—which could mitigate emissions reductions would be savings, emission reductions, and the impacts. outweighed by the risk of negative estimated monetary value of the CO2 The Secretary tentatively concludes impacts on the industry, particularly emissions reductions would be that, at TSL 3 for low-voltage dry-type regarding the uncertainty over how outweighed by the potential for very distribution transformers, the benefits of small businesses would be impacted. large negative impacts on the energy savings, positive NPV of Consequently, DOE has tentatively manufacturers, and the potential burden customer benefit, positive average LCC concluded that TSL 2 is not on small manufacturers. Consequently, savings, emission reductions, and the economically justified. DOE has tentatively concluded that TSL estimated monetary value of the CO2 Next, DOE considered TSL 1, which 4 is not economically justified. emissions reductions would be would save an estimated total of 1.09 Next, DOE considered TSL 3, which outweighed by the risk of negative quads of energy through 2045, an would save an estimated total of 1.29 impacts on the industry, particularly the amount DOE considers significant. TSL quads of energy through 2045, an small manufacturers. Consequently, 1 has an estimated NPV of customer amount DOE considers significant. TSL DOE has tentatively concluded that TSL benefit of $2.03 billion using a 7 percent 3 has an estimated NPV of customer 3 is not economically justified. discount rate, and $7.81 billion using a benefit of $2.03 billion using a 7 percent Next, DOE considered TSL 2, which 3 percent discount rate. discount rate, and $8.51 billion using a would save an estimated total of 1.12 The cumulative emissions reductions 3 percent discount rate. quads of energy through 2045, an at TSL 1 are 82.1 million metric tons of The cumulative emissions reductions amount DOE considers significant. TSL CO2, 67.0 thousand tons of NOX, and at TSL 3 are 96.0 million metric tons of 2 has an estimated NPV of customer 0.551 tons of Hg. The estimated CO2, 78.4 thousand tons of NOX, and benefit of $1.97 billion using a 7 percent monetary value of the CO2 emissions 0.645 tons of Hg. The estimated discount rate, and $7.79 billion using a reductions at TSL 1 ranges from $481 monetary value of the CO2 emissions 3 percent discount rate. million to $8,570 million. reductions at TSL 3 ranges from $562 The cumulative emissions reductions At TSL 1, the average LCC impact million to $10,020 million. at TSL 2 are 83.9 million metric tons of ranges from $1,714 for design line 7 to At TSL 3, the average LCC impact CO2, 68.6 thousand tons of NOX, and $2,476 for design line 8. The median ranges from $335 for design line 6 to 0.564 tons of Hg. The estimated PBP ranges from 8.4 years for design $2,625 for design line 8. The median monetary value of the CO2 emissions line 8 to 4.5 years for design line 7. The

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share of customers experiencing a net small manufacturers can still use butt- Secretary has concluded that TSL 1 LCC benefit ranges from 94.8 percent for lap construction and steels with which would save a significant amount of design line 8 to 98.2 percent for design they generally have experience. energy and is technologically feasible line 7. After considering the analysis and and economically justified. NEMA also At TSL 1, the projected change in weighing the benefits and the burdens, recommended TSL 1 for low-voltage, INPV ranges from a decrease of $17 DOE has tentatively concluded that at dry-type distribution transformers million to an increase of $17 million. If TSL 1 for low-voltage, dry-type during the negotiated rulemaking. For the decrease of $17 million occurs, TSL distribution transformers, the benefits of the reasons given above, DOE today 1 could result in a net loss of 7.7 percent energy savings, NPV of customer proposes to adopt the energy in INPV to manufacturers of low-voltage benefit, positive customer LCC impacts, conservation standards for low-voltage dry-type distribution transformers. At emissions reductions and the estimated dry-type distribution transformers at TSL 1, DOE recognizes the risk of small monetary value of the emissions TSL 1. Table V.42 presents the proposed negative impacts on the industry if reductions would outweigh the risk of energy conservation standards for low- manufacturers are not able to recoup small negative impacts on the voltage, dry-type distribution their investment costs. At this level, manufacturers. In particular, the transformers.

TABLE V.42—PROPOSED 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 ...... 97.73 15 ...... 97.44 25 ...... 98.00 30 ...... 97.95 37.5 ...... 98.20 45 ...... 98.20 50 ...... 98.31 75 ...... 98.47 75 ...... 98.50 112.5 ...... 98.66 100 ...... 98.60 150 ...... 98.78 167 ...... 98.75 225 ...... 98.92 250 ...... 98.87 300 ...... 99.02 333 ...... 98.94 500 ...... 99.17 750 ...... 99.27 1000 ...... 99.34

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.43 and Table V.44 summarize the quantitative impacts estimated for

TABLE V.43—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) ...... 0.06 ...... 0.13 ...... 0.23 ...... 0.23 ...... 0.37

NPV of Consumer Benefits (2010$ billion)

3% discount rate ...... 0.42 ...... 0.67 ...... 0.90 ...... 0.90 ...... ¥0.38 7% discount rate ...... 0.10 ...... 0.13 ...... 0.06 ...... 0.06 ...... ¥0.84

Cumulative Emissions Reduction

CO2 (million metric tons) ...... 4.62 ...... 8.80 ...... 16.8 ...... 16.8 ...... 25.7 NOX (thousand tons) ...... 3.77 ...... 7.19 ...... 13.7 ...... 13.7 ...... 21.0 Hg (tons) ...... 0.031 ...... 0.059 ...... 0.113 ...... 0.113 ...... 0.173

Value of Emissions Reduction

CO2 (2010$ million)* ...... 27 to 483 ...... 52 to 919 ...... 98 to 1751 .... 98 to 1751 .... 151 to 2688 NOX—3% discount rate (2010$ million) ...... 1 to 15 ...... 3 to 28 ...... 5 to 53 ...... 5 to 53 ...... 8 to 82 NOX—7% discount rate (2010$ million) ...... 0 to 5 ...... 1 to 9 ...... 2 to 17 ...... 2 to 17 ...... 3 to 27

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

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TABLE V.44—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) ...... 87 to 89 ...... 85 to 90 ...... 80 to 95 ...... 77 to 93 ...... 71 to 114 Industry NPV (% change) ...... (4.2) to (2.0) (7.1) to (1.0) (12.4) to 4.5 (15.3) to 1.7 (21.9) to 25.4

Consumer Mean LCC Savings (2010$)

Design line 9 ...... 849 ...... 1659 ...... 1659 ...... 1659 ...... 237 Design line 10 ...... 4509 ...... 4791 ...... 4791 ...... 4791 ...... ¥12756 Design line 11 ...... 1043 ...... 202 ...... 2000 ...... 2000 ...... ¥3160 Design line 12 ...... 4518 ...... 6332 ...... 8860 ...... 8860 ...... ¥12420 Design line 13A ...... 25 ...... 447 ...... ¥846 ...... ¥846 ...... ¥11077 Design line 13B ...... 2734 ...... ¥961 ...... 384 ...... 384 ...... ¥5403

Consumer Median PBP (years)

Design line 9 ...... 2.6 ...... 6.2 ...... 6.2 ...... 6.2 ...... 19.1 Design line 10 ...... 1.1 ...... 8.8 ...... 8.8 ...... 8.8 ...... 28.4 Design line 11 ...... 10.7 ...... 17.6 ...... 14.1 ...... 14.1 ...... 24.5 Design line 12 ...... 6.3 ...... 13.5 ...... 13.0 ...... 13.0 ...... 25.9 Design line 13A ...... 16.5 ...... 16.6 ...... 21.7 ...... 21.7 ...... 37.1 Design line 13B ...... 4.6 ...... 20.4 ...... 19.3 ...... 19.3 ...... 21.9

Distribution of Consumer LCC Impacts

Design line 9 Net Cost (%) ...... 3.4 ...... 5.7 ...... 5.7 ...... 5.7 ...... 53.4 Net Benefit (%) ...... 83.4 ...... 94.3 ...... 94.3 ...... 94.3 ...... 46.6 No Impact (%) ...... 13.3 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 10 Net Cost (%) ...... 0.7 ...... 16.7 ...... 16.7 ...... 16.7 ...... 84.8 Net Benefit (%) ...... 98.8 ...... 83.3 ...... 83.3 ...... 83.3 ...... 15.2 No Impact (%) ...... 0.5 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 11 Net Cost (%) ...... 20.6 ...... 49.5 ...... 25.7 ...... 25.7 ...... 76.1 Net Benefit (%) ...... 79.4 ...... 50.5 ...... 74.3 ...... 74.3 ...... 23.9 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 12 Net Cost (%) ...... 6.7 ...... 23.5 ...... 18.1 ...... 18.1 ...... 81.1 Net Benefit (%) ...... 93.3 ...... 76.5 ...... 81.9 ...... 81.9 ...... 18.9 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 13A Net Cost (%) ...... 52.2 ...... 42.3 ...... 64.4 ...... 64.4 ...... 97.1 Net Benefit (%) ...... 47.8 ...... 57.7 ...... 35.6 ...... 35.6 ...... 2.9 No Impact (%) ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0 Design line 13B Net Cost (%) ...... 28.5 ...... 59.6 ...... 52.7 ...... 52.7 ...... 67.2 Net Benefit (%) ...... 71.3 ...... 40.4 ...... 47.3 ...... 47.3 ...... 32.8 No Impact (%) ...... 0.2 ...... 0.0 ...... 0.0 ...... 0.0 ...... 0.0

First, DOE considered TSL 5, the most At TSL 5, the average LCC impact the risk of very large negative impacts efficient level (max tech), which would ranges from ¥$12,756 for design line 10 on industry because they would likely save an estimated total of 0.37 quads of to ¥$237 for design line 9. The median be forced to move to amorphous energy through 2045, an amount DOE PBP ranges from 37.1 years for design technology, with which there is no considers significant. TSL 5 has an line 13A to 19.1 years for design line 9. experience in this market. estimated NPV of customer benefit of The share of customers experiencing a The Secretary tentatively concludes ¥$0.84 billion using a 7 percent net LCC benefit ranges from 2.9 percent that, at TSL 5 for medium-voltage dry- discount rate, and ¥$0.38 billion using for design line 13A to 46.6 percent for type distribution transformers, the a 3 percent discount rate. design line 9. benefits of energy savings, emission The cumulative emissions reductions At TSL 5, the projected change in reductions, and the estimated monetary at TSL 5 are 25.7 million metric tons of INPV ranges from a decrease of $20 value of the emissions reductions would million to an increase of $23 million. If be outweighed by the negative NPV of CO2, 21.0 thousand tons of NOX, and the decrease of $20 million occurs, TSL customer benefit, the economic burden 0.173 tons of Hg. The estimated 5 could result in a net loss of 21.9 on customers (as indicated by negative monetary value of the CO emissions 2 percent in INPV to manufacturers of average LCC savings, large PBPs, and reductions at TSL 5 ranges from $151 medium-voltage dry-type distribution the large percentage of customers who million to $2,688 million. transformers. At TSL 5, DOE recognizes would experience LCC increases), and

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the risk of very large negative impacts quads of energy through 2045, an discount rate, and $0.42 billion using a on the manufacturers. Consequently, amount DOE considers significant. TSL 3 percent discount rate. DOE has tentatively concluded that TSL 3 has an estimated NPV of customer The cumulative emissions reductions 5 is not economically justified. benefit of $0.06 billion using a 7 percent at TSL 2 are 8.80 million metric tons of Next, DOE considered TSL 4, which discount rate, and $0.90 billion using a CO2, 7.19 thousand tons of NOX, and would save an estimated total of 0.23 3 percent discount rate. 0.059 tons of Hg. The estimated quads of energy through 2045, an The cumulative emissions reductions monetary value of the CO2 emissions amount DOE considers significant. TSL at TSL 3 are 16.8 million metric tons of reductions at TSL 2 ranges from $52 4 has an estimated NPV of customer CO2, 13.7 thousand tons of NOX, and million to $919 million. benefit of $0.06 billion using a 7 percent 0.113 tons of Hg. The estimated discount rate, and $0.90 billion using a At TSL 2, the average LCC impact monetary value of the CO2 emissions ranges from ¥$961 for design line 13B 3 percent discount rate. reductions at TSL 3 ranges from $98 The cumulative emissions reductions to $6,332 for design line 12. The median million to $1,751 million. at TSL 4 are 16.8 million metric tons of PBP ranges from 20.4 years for design At TSL 3, the average LCC impact line 13B to 6.2 years for design line 9. CO2, 13.7 thousand tons of NOX, and ¥ 0.113 tons of Hg. The estimated ranges from $846 for design line 13A The share of customers experiencing a to $8,860 for design line 12. The median monetary value of the CO2 emissions net LCC benefit ranges from 40.4 reductions at TSL 4 ranges from $98 PBP ranges from 21.7 years for design percent for design line 13B to 94.3 million to $1,751 million. line 13A to 6.2 years for design line 9. percent for design line 9. At TSL 4, the average LCC impact The share of customers experiencing a At TSL 2, the projected change in ranges from ¥$846 for design line 13A net LCC benefit ranges from 35.6 INPV ranges from a decrease of $7 to $8,860 for design line 12. The median percent for design line 13A to 94.3 million to a decrease of $1 million. If PBP ranges from 21.7 years for design percent for design line 9. the decrease of $7 million occurs, TSL line 13A to 6.2 years for design line 9. At TSL 3, the projected change in 2 could result in a net loss of 7.1 percent The share of customers experiencing a INPV ranges from a decrease of $11 in INPV to manufacturers of medium- net LCC benefit ranges from 35.6 million to an increase of $4 million. If voltage dry-type distribution percent for design line 13A to 94.3 the decrease of $11 million occurs, TSL transformers. At TSL 2, DOE recognizes percent for design line 9. 3 could result in a net loss of 12.4 the risk of small negative impacts if At TSL 4, the projected change in percent in INPV to manufacturers of manufacturers are unable to recoup INPV ranges from a decrease of $14 medium-voltage dry-type transformers. investments made to meet the standard. million to an increase of $2 million. If At TSL 3, DOE recognizes the risk of After considering the analysis and the decrease of $14 million occurs, TSL large negative impacts on most weighing the benefits and the burdens, 4 could result in a net loss of 15.3 manufacturers in the industry who have percent in INPV to manufacturers of DOE has tentatively concluded that at little experience with the steels that TSL 2 for medium-voltage, dry-type medium-voltage dry-type distribution would be required. As with TSL 4, small transformers. At TSL 4, DOE recognizes distribution transformers, the benefits of businesses, in particular, with limited energy savings, positive NPV of the risk of very large negative impacts engineering resources, may not be able on most manufacturers in the industry customer benefit, positive impacts on to convert their lines to employ thinner consumers (as indicated by positive who have little experience with the steels and may be disadvantaged with steels that would be required. Small average LCC savings for five of the six respect to access to key materials, design lines, favorable PBPs, and the businesses, in particular, with limited including Hi-B steels. engineering resources, may not be able large percentage of customers who The Secretary tentatively concludes to convert their lines to employ thinner would experience LCC benefits), that, at TSL 3 for medium-voltage dry- steels and may be disadvantaged with emission reductions, and the estimated type distribution transformers, the respect to access to key materials, monetary value of the emissions benefits of energy savings, positive NPV including Hi-B steels. reductions would outweigh the risk of The Secretary tentatively concludes of customer benefit, positive impacts on small negative impacts if manufacturers that, at TSL 4 for medium-voltage dry- consumers (as indicated by positive are unable to recoup investments made type distribution transformers, the average LCC savings, favorable PBPs, to meet the standard. In particular, the benefits of energy savings, positive NPV and the large percentage of customers Secretary of Energy has concluded that of customer benefit, positive impacts on who would experience LCC benefits), TSL 2 would save a significant amount consumers (as indicated by positive emission reductions, and the estimated of energy and is technologically feasible average LCC savings, favorable PBPs, monetary value of the emissions and economically justified. In addition, and the large percentage of customers reductions would be outweighed by the DOE notes that TSL 2 corresponds to the who would experience LCC benefits), risk of large negative impacts on the standards that were agreed to by the emission reductions, and the estimated manufacturers, particularly small ERAC subcommittee, as described in monetary value of the emissions businesses. Consequently, DOE has section II.B.2. Based on the above reductions would be outweighed by the tentatively concluded that TSL 3 is not considerations, DOE today proposes to risk of very large negative impacts on economically justified. adopt the energy conservation standards the manufacturers, particularly small Next, DOE considered TSL 2, which for medium-voltage, dry-type businesses. Consequently, DOE has would save an estimated total of 0.13 distribution transformers at TSL 2. tentatively concluded that TSL 4 is not quads of energy through 2045, an Table V.45 presents the proposed energy economically justified. amount DOE considers significant. TSL conservation standards for medium- Next, DOE considered TSL 3, which 2 has an estimated NPV of customer voltage, dry-type distribution would save an estimated total of 0.23 benefit of $0.10 billion using a 7 percent transformers.

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TABLE V.45—PROPOSED ENERGY CONSERVATION STANDARDS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS

Electrical efficiency by kVA and equipment class Equipment class Equipment Equipment class 5 Equipment class 6 Equipment class 7 Equipment class 8 9 class 10 kVA % kVA % kVA % kVA % kVA % kVA %

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 1000 99.28 667 99.18 1000 99.20 667 99.15 1000 99.11 833 ...... 99.31 1500 99.37 833 99.23 1500 99.30 833 99.20 1500 99.21 2000 99.43 ...... 2000 99.36 ...... 2000 99.28 2500 99.47 ...... 2500 99.41 ...... 2500 99.33

4. Summary of Benefits and Costs issues should be considered. First, the reductions, for which DOE used a 3- (Annualized) of the Proposed Standards national operating savings are domestic percent discount rate along with the The benefits and costs of today’s U.S. customer monetary savings that SCC series corresponding to a value of proposed standards can also be occur as a result of market transactions $22.3/metric ton in 2010, the cost of the expressed in terms of annualized values. while the value of CO2 reductions is standards proposed in today’s rule is The annualized monetary values are the based on a global value. Second, the $302 million per year in increased sum of (1) the annualized national assessments of operating cost savings product costs, while the annualized economic value of the benefits from and SCC are performed with different benefits are $631 million in reduced operating products that meet the methods that use different time frames product operating costs, $244 million in proposed standards (consisting for analysis. The national operating cost CO2 reductions, and $7.78 million in primarily of operating cost savings from savings is measured for the lifetime of reduced NOX emissions. In this case, the using less energy, minus increases in products shipped in 2016–2045. The net benefit amounts to $581 million per equipment purchase costs, which is SCC values, on the other hand, reflect year. Using a 3-percent discount rate for another way of representing customer the present value of future climate- all benefits and costs and the SCC series NPV), and (2) the monetary value of the related impacts resulting from the corresponding to a value of $22.3/metric benefits of emission reductions, emission of one metric ton of CO2 in ton in 2010, the cost of the standards 43 including CO2 emission reductions. each year. These impacts continue well proposed in today’s rule is $308 million The value of the CO2 reductions is beyond 2100. per year in increased product costs, calculated using a range of values per Table V.46 shows the annualized while the annualized benefits are $1,026 metric ton of CO2 developed by a recent values for the proposed standards for million in reduced operating costs, $244 interagency process. distribution transformers. The results million in CO2 reductions, and $12.4 Although combining the values of for the primary estimate are as follows. million in reduced NOX emissions. In operating savings and CO2 reductions Using a 7-percent discount rate for this case, the net benefit amounts to provides a useful perspective, two benefits and costs other than CO2 $975 million per year.

TABLE V.46—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR DISTRIBUTION TRANSFORMERS SOLD IN 2016–2045

Monetized (million 2010$/year) Discount rate Low net High net Primary benefits benefits estimate* estimate* estimate*

Benefits Operating Cost Savings ...... 7% ...... 631 ...... 594 ...... 659 3% ...... 1,026 ...... 950 ...... 1,075 CO2 Reduction at $4.9/t** ...... 5% ...... 58.6 ...... 58.6 ...... 58.6

43 DOE used a two-step calculation process to rates of 3 and 7 percent for all costs and benefits value. The fixed annual payment is the annualized convert the time-series of costs and benefits into except for the value of CO2 reductions. For the value. Although DOE calculated annualized values, annualized values. First, DOE calculated a present latter, DOE used a range of discount rates, as shown this does not imply that the time-series of cost and value in 2011, the year used for discounting the in Table V.46. From the present value, DOE then benefits from which the annualized values were NPV of total consumer costs and savings, for the calculated the fixed annual payment over a 30-year determined would be a steady stream of payments. time-series of costs and benefits using discount period, starting in 2011 that yields the same present

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TABLE V.46—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR DISTRIBUTION TRANSFORMERS SOLD IN 2016–2045—Continued

Monetized (million 2010$/year) Discount rate Low net High net Primary benefits benefits estimate* estimate* estimate*

CO2 Reduction at $22.3/t** ...... 3% ...... 244 ...... 244 ...... 244 CO2 Reduction at $36.5/t** ...... 2.5% ...... 389 ...... 389 ...... 389 CO2 Reduction at $67.6/t** ...... 3% ...... 742 ...... 742 ...... 742 NOX Reduction at $2,537/ton** ...... 7% ...... 7.78 ...... 7.78 ...... 7.78 3% ...... 12.4 ...... 12.4 ...... 12.4 Total † ...... 7% plus CO2 range ...... 697 to 1380 .. 660 to 1343 .. 726 to 1409 7% ...... 883 ...... 846 ...... 911 3% plus CO2 range ...... 1097 to 1780 1021 to 1704 1146 to 1829 3% ...... 1,283 ...... 1,207 ...... 1,331 Costs Incremental Product Costs ...... 7% ...... 302 ...... 338 ...... 285 3% ...... 308 ...... 351 ...... 289 Total Net Benefits Total † ...... 7% plus CO2 range ...... 400 to 1083 .. 327 to 1010 .. 445 to 1128 7% ...... 581 ...... 507 ...... 626 3% plus CO2 range ...... 789 to 1472 .. 670 to 1353 .. 857 to 1540 3% ...... 975 ...... 855 ...... 1,043 * The Primary, Low Net Benefits, and High Net Benefits Estimates utilize forecasts of energy prices from the AEO 2011 reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect no change in the Primary estimate, rising product prices in the Low Net Benefits estimate, and declining product prices in the High Net Benefits estimate. ** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 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 $67.6 per metric ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2010$) 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 SCC value calculated at a 3% discount rate, which is $22.3/metric ton in 2010 (in 2010$). In the rows labeled as ‘‘7% plus CO2 range’’ and ‘‘3% plus NOX 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.

VI. Procedural Issues and Regulatory not reflected in energy prices, such as guidelines or similar criteria are applied Review reduced emissions of greenhouse gases. to approximately 75 percent of liquid- immersed transformer purchases, 50 A. Review Under Executive Orders The specific market failure that the 12866 and 13563 energy conservation standard addresses percent of small capacity medium- for distribution transformers is that a voltage dry-type transformer purchases, Section 1(b)(1) of Executive Order substantial portion of distribution and 80 percent of large capacity 12866, ‘‘Regulatory Planning and transformer purchasers are not medium-voltage dry-type transformer Review,’’ 58 FR 51735 (Oct 4, 1993), evaluating the cost of transformer losses purchases. Therefore, 25 percent, 50 requires each agency to identify the when they make distribution percent, and 20 percent of distribution problem that it intends to address, transformer purchase decisions. transformer purchases do not have including, where applicable, the failures Therefore, distribution transformers are economic evaluation of transformer of private markets or public institutions being purchased that do not provide the losses. These are the portions of the that warrant new agency action, as well minimum LCC service to equipment distribution transformer market in as to assess the significance of that owners. which there is market failure. Today’s problem. The problems that today’s For distribution transformers, the proposed energy conservation standards proposed standards address are as would eliminate from the market those follows: Institute of Electronic and Electrical Engineers Inc. (IEEE) has documented distribution transformers designs that (1) There is a lack of consumer are purchased on a purely minimum information and/or information voluntary guidelines for the economic first cost basis, but which would not processing capability about energy evaluation of distribution transformer likely be purchased by equipment efficiency opportunities in the losses, IEEE PC57.12.33/D8. These buyers when the economic value of commercial equipment market. guidelines document economic (2) There is asymmetric information evaluation methods for distribution equipment losses are properly (one party to a transaction has more and transformers that are common practice evaluated. better information than the other) and/ in the utility industry. But while In addition, DOE has determined that or high transactions costs (costs of economic evaluation of transformer today’s regulatory action is an gathering information and effecting losses is common, it is not a universal ‘‘economically significant regulatory exchanges of goods and services). practice. DOE collected information action’’ under section 3(f)(1) of (3) There are external benefits during the course of the previous energy Executive Order 12866. Accordingly, resulting from improved energy conservation standard rulemaking to section 6(a)(3) of the Executive Order efficiency of distribution transformers estimate the extent to which requires that DOE prepare a regulatory that are not captured by the users of distribution transformer purchases are impact analysis (RIA) on today’s such equipment. These benefits include evaluated. Data received from the proposed rule and that the Office of externalities related to environmental National Electrical Manufacturers Information and Regulatory Affairs protection and energy security that are Association indicated that these (OIRA) in the Office of Management and

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Budget (OMB) review this rule. DOE must be proposed for public comment, an entity to be considered as a small presented to OIRA for review the draft unless the agency certifies that the rule, business for this category. rule and other documents prepared for if promulgated, will not have a To estimate the number of companies this rulemaking, including the RIA, and significant economic impact on a that could be small business has included these documents in the substantial number of small entities. As manufacturers of products covered by rulemaking record. The assessments required by Executive Order 13272, this rulemaking, DOE conducted a prepared pursuant to Executive Order ‘‘Proper Consideration of Small Entities market survey using available public 12866 can be found in the technical in Agency Rulemaking,’’ 67 FR 53461 support document for this rulemaking. (Aug. 16, 2002), DOE published information to identify potential small DOE has also reviewed this regulation procedures and policies on February 19, manufacturers. DOE’s research involved pursuant to Executive Order 13563. 76 2003, to ensure that the potential industry trade association membership FR 3281 (Jan. 21, 2011). EO 13563 is impacts of its rules on small entities are directories (including NEMA), supplemental to and explicitly reaffirms properly considered during the information from previous rulemakings, the principles, structures, and rulemaking process. 68 FR 7990. DOE UL qualification directories, individual definitions governing regulatory review has made its procedures and policies company Web sites, and market established in Executive Order 12866. available on the Office of the General research tools (e.g., Hoover’s reports) to To the extent permitted by law, agencies Counsel’s Web site (www.gc.doe.gov). create a list of companies that are required by Executive Order 13563 Based on the number of small potentially manufacture distribution to: (1) Propose or adopt a regulation distribution transformer manufacturers transformers covered by this only upon a reasoned determination and the potential scope of the impact, rulemaking. DOE also asked that its benefits justify its costs DOE could not certify that the proposed stakeholders and industry (recognizing that some benefits and standards would not have a significant representatives if they were aware of costs are difficult to quantify); (2) tailor impact on a significant number of small any other small manufacturers during regulations to impose the least burden businesses in the distribution manufacturer interviews and at previous on society, consistent with obtaining transformer industry. Therefore, DOE DOE public meetings. As necessary, regulatory objectives, taking into has prepared an IRFA for this DOE contacted companies on its list to account, among other things, and to the rulemaking, a copy of which DOE will extent practicable, the costs of determine whether they met the SBA’s transmit to the Chief Counsel for definition of a small business cumulative regulations; (3) select, in Advocacy of the SBA for review under choosing among alternative regulatory manufacturer. DOE screened out 5 U.S.C 605(b). As presented and companies that do not offer products approaches, those approaches that discussed below, the IFRA describes covered by this rulemaking, do not meet maximize net benefits (including potential impacts on small transformer the definition of a ‘‘small business,’’ or potential economic, environmental, manufacturers associated with capital public health and safety, and other and product conversion costs and are foreign owned and operated. advantages; distributive impacts; and discusses alternatives that could DOE initially identified at least 63 equity); (4) to the extent feasible, specify minimize these impacts. potential manufacturers of distribution performance objectives, rather than A statement of the objectives of, and transformers sold in the U.S. DOE specifying the behavior or manner of reasons and legal basis for, the proposed reviewed publicly available information compliance that regulated entities must rule are set forth elsewhere in the on these potential manufacturers and adopt; and (5) identify and assess preamble and not repeated here. contacted many to determine whether available alternatives to direct regulation, including providing 1. Description and Estimated Number of they qualified as small businesses. economic incentives to encourage the Small Entities Regulated Based on these efforts, DOE estimates desired behavior, such as user fees or there are 10 liquid immersed small a. Methodology for Estimating the business manufacturers, 14 LVDT small marketable permits, or providing Number of Small Entities information upon which choices can be business manufacturers, and 17 small made by the public. For manufacturers of distribution business manufacturers of MVDT. Some DOE emphasizes as well that transformers, the Small Business small businesses compete in more than Executive Order 13563 requires agencies Administration (SBA) has set a size one of these markets. to use the best available techniques to threshold, which defines those entities b. Manufacturer Participation quantify anticipated present and future classified as ‘‘small businesses’’ for the purposes of the statute. DOE used the benefits and costs as accurately as Of the LVDT manufacturers, DOE was SBA’s small business size standards to possible. In its guidance, the Office of able to reach and discuss potential determine whether any small entities Information and Regulatory Affairs has standards with eight of the 14 small emphasized that such techniques may would be subject to the requirements of the rule. 65 FR 30836, 30850 (May 15, business manufacturers. Of the MVDT include identifying changing future manufacturers, DOE was able to reach compliance costs that might result from 2000), as amended at 65 FR 53533, and discuss potential standards with technological innovation or anticipated 53545 (Sept. 5, 2000) and codified at 13 five of the 17 small business behavioral changes. For the reasons CFR part 121. The size standards are manufacturers. Of the liquid-immersed stated in the preamble, DOE believes listed by North American Industry that today’s NOPR is consistent with Classification System (NAICS) code and small business manufacturers, DOE was these principles. industry description and are available at able to reach and discuss potential http://www.sba.gov/content/table-small- standards with three of the 10 small B. Review Under the Regulatory business-size-standards. Distribution business manufacturers. DOE also Flexibility Act transformer manufacturing is classified obtained information about small The Regulatory Flexibility Act (5 under NAICS 335311, ‘‘Power, business impacts while interviewing U.S.C. 601 et seq.) requires preparation Distribution and Specialty Transformer large manufacturers. of an initial regulatory flexibility Manufacturing.’’ The SBA sets a analysis (IRFA) for any rule that by law threshold of 750 employees or less for

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c. Distribution Transformer Industry design of transformers and source the of the same equipment would need to be Structure and Nature of Competition production of the cores or even the purchased by both large and small Liquid Immersed whole transformer, while other small manufacturers in order to produce firms focus on just production and transformers (in-house) at higher TSLs, Six major manufacturers supply more rebrand for companies that offer broader undifferentiated small manufacturers than 80 percent of the market for liquid- solutions through their own sales and would face a greater variable cost immersed transformers. None of the distribution networks. penalty because they must depreciate major manufacturers of distribution In terms of market focus, many small the one-time conversion expenditures transformers covered in this rulemaking firms simply compete entirely in the over fewer units. are considered to be small businesses. DOE-exempted markets. DOE did not Smaller companies are also more The vast majority of shipments are attempt to contact companies operating likely to have more limited engineering manufactured domestically. Electric entirely in this very fragmented market. resources and they often operate with utilities compose the customer base and Of those that do compete in the DOE- lower levels of design and typically buy on first-cost. Many small covered market, a few small businesses manufacturing sophistication. Smaller manufacturers position themselves reported a focus on the high-end of the companies typically also have less towards the higher end of the market or market, often selling NEMA Premium or experience and expertise in working in particular product niches, such as better transformers as retrofit with more advanced technologies, such network transformers or harmonic opportunities. Others focus on as amorphous core construction in the mitigating transformers, but, in general, particular applications or other niches, liquid immersed market or step-lap competition is based on price after a like data centers, and become well- mitering in the dry-type markets. given unit’s specs are prescribed by a versed in the unique needs of a Standards that required these customer. particular customer base. technologies could strain the engineering resources of these small Low-Voltage Dry-Type Medium-Voltage Dry-Type manufacturers if they chose to maintain Four major manufacturers supply The medium-voltage dry-type a vertically integrated business model. more than 80 percent of the market for transformer market is relatively Small distribution transformer low-voltage dry-type transformers. None consolidated with one large company manufacturers can also be at a of the major LVDT manufacturers of holding a substantial share of the disadvantage due to their lack of distribution transformers covered in this market. Electric utilities and industrial purchasing power for high performance rulemaking are small businesses. The users make up most of the customer materials. If more expensive steels are customer base rarely purchases on base and typically buy on first-cost or needed to meet standards and steel cost efficiency and is very first-cost features other than efficiency. DOE grows as a percentage of the overall conscious, which, in turn, places a estimates that at least 75 percent of product cost, small manufacturers who premium on economies of scale in production occurs domestically. Several pay higher per pound prices would be manufacturing. DOE estimates manufacturers also compete in the disproportionately impacted. approximately 80 percent of the market power transformer market. Like the Lastly, small manufacturers typically is served by imports, mostly from LVDT industry, most small business have less access to capital, which may Canada and Mexico. Many of the small manufacturers often produce be needed by some to cover the businesses that compete in the low- transformers exempted from DOE conversion costs associated with new voltage dry-type market produce standards. DOE estimates 10 percent of technologies. specialized transformers that are the market is exempt from standards. 2. Description and Estimate of exempted from standards. Roughly 50 Compliance Requirements percent of the market by revenue is d. Comparison Between Large and Small exempted from DOE standards. This Entities Liquid Immersed. Based on interviews market is much more fragmented than Small distribution transformer with manufacturers in the liquid- the one serving DOE-covered LVDT manufacturers differ from large immersed market, DOE does not believe transformers. manufacturers in several ways that small manufacturers will face In the DOE-covered LVDT market, affect the extent to which they would be significant capital conversion costs at low-volume manufacturers typically do impacted by the proposed standards. the levels proposed in today’s not compete directly with large Characteristics of small manufacturers rulemaking. DOE expects small manufacturers using business models include: lower production volumes, manufacturers of liquid-immersed similar to those of their bigger rivals fewer engineering resources, less distribution transformers to continue to because scale disadvantages in technical expertise, lack of purchasing produce silicon steel cores, rather than purchasing and production are usually power for high performance steels, and invest in amorphous technology. While too great a barrier in this portion of the less access to capital. silicon steel designs capable of market. The exceptions to this rule are Lower production volumes lie at the achieving TSL 1 would get larger, and those companies that also compete in heart of most small business thus reduce throughput, most the medium-voltage market and, to disadvantages, particularly for a small manufacturers said the industry in some extent, are able to leverage that manufacturer that is vertically general has substantial excess capacity experience and production economies. integrated. A lower-volume due to the recent economic downturn. More typically, low-volume manufacturer’s conversion costs would Therefore, DOE believes TSL 1 would manufacturers have focused their need to be spread over fewer units than not require the typical small operations on one or two parts of the a larger competitor. Thus, unless the manufacturer to invest in additional value chain—rather than all of it—and small business can differentiate its capital equipment. However, small trained their sights on market segments product in some way that earns a price manufacturers may incur some outside of the high-volume baseline premium, the small business is a ‘price engineering and product design costs efficiency market. taker’ and experiences a reduction in associated with re-optimizing their In terms of operations, some small profit per unit relative to the large production processes around new firms focus on the engineering and manufacturer. Therefore, because much baseline products. DOE estimates TSL 1

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would require industry production types. Because these costs are relatively illustrates this effect by comparing the development costs of only one-half of fixed per manufacturer, these one-time conversion costs to a typical small one year’s annual industry R&D costs impact smaller manufacturers company’s and a typical large expenses, as the levels do not require disproportionately compared to larger manufacturer’s annual R&D expenses. any changes in technology or steel manufacturers. The table below

TABLE VI.1—ESTIMATED PRODUCT CONVERSION COSTS AS A PERCENTAGE OF ANNUAL R&D EXPENSE

Product conversion Product conversion cost as a percent- cost age of annual R&D expense

Typical Large Manufacturer ...... $1.4 M 20 Typical Small Manufacturer ...... $1.4 M 222

While the costs disproportionately Low-Voltage Dry-Type. For the low- would incur as a result of standards, impact small manufactures, the voltage dry-type market, at TSL 1, the small manufacturers who choose to standard levels, as stated above, do not level proposed in today’s notice, DOE invest to maintain in-house production require small manufacturers to invest in estimates, capital conversion costs of will likely be disproportionately entirely different production processes $0.75 million and product conversion impacted compared to large nor do they require steels or core costs of $0.2 million for a typical small manufacturers. As Table VI.2 indicates, construction techniques with which and large manufacturer, based on small manufacturers face a greater these manufacturers are not familiar. A manufacturer interviews. Because of the relative hurdle in complying with range of design options would still be largely fixed nature of these one-time standards should they opt to continue to conversion expenditures that available. maintain core production in-house. distribution transformer manufacturers

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 ...... 40 11 17 Small Manufacturer ...... 152 49 77

As demonstrated in the table above, grain oriented steels in butt-lap designs easier to employ in the stacked-core the investments required to meet TSL 1, to meet these proposed efficiency levels, production process that dominates the disproportionately impact small source some or all cores, or invest in medium-voltage market. However, some businesses. However, DOE’s capital mitering capability. DOE notes that investment will be required to maintain conversion costs estimates in the table roughly half of the small business LVDT capacity as some manufacturers will above assume that small businesses are manufacturers DOE interviewed already likely migrate to more M4 and H1 steel currently producing their cores in-house have mitering capability. For all of the from the slightly thicker M5, which is and will choose to do so in the future, reasons discussed, DOE believes the also common. Additionally, design rather than source them from third-party capital expenditures it assumed for options at TSL 2 typically have larger core manufactures who often have small businesses are likely conservative cores, also slowing throughput. significant cost advantages through bulk and that small businesses have a variety Therefore, some manufacturers may steel purchasing power and greater of technical and strategic paths to need to invest in additional production production efficiencies due to higher continue to compete in the market at equipment. Alternatively, depending on volumes. As such, many small TSL 1. each company’s availability capacity, businesses DOE interviewed already Medium-Voltage Dry-Type. Based on manufacturers could employ addition source a large percentage of their cores its engineering analysis and interviews, production shifts, rather than invest in and many indicated they expected such DOE expects relatively minor capital additional capacity. a strategy would be the low-cost option expenditures for the industry to meet For the medium-voltage dry-type under higher standards. TSL 2. DOE understands that the market market, at TSL 2, the level proposed in Compared to higher TSLs, TSL 1 is already standardized on step-lap today’s notice, DOE estimates capital provides many more design paths for mitering, so manufacturers will not conversion costs of $1.0 million and small manufacturers to comply. DOE’s need to make major investments for product conversion costs of $0.2 million engineering analysis indicates more advanced core construction. for a typical small and large manufacturers can continue to use the Furthermore, TSL 2 does not require a manufacturer that would need to low-capital butt-lap core designs, change to much thinner steels such as expand mitering capacity to meet TSL 2. meaning investment in mitering M3 or HO. The industry can use M4 and Table VI.3 illustrates the relative capability is not necessary to comply. H1, thicker steels with which it has impacts on small and large Manufacturers can use higher-quality much more experience and which are manufacturers.

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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 ...... 43 7 14 Small Manufacturer ...... 327 65 124

a. Summary of Compliance Impacts comments received in the development immersed and low-voltage dry-type The compliance impacts on small of any final rule. transformers and TSL2 is the highest level that can be justified for medium- businesses are discussed above for low- 5. Significant Issues Raised by Public voltage, dry-type transformers. As voltage dry-type, medium-voltage dry- Comments type, and liquid-filled distribution explained in part 6 of the IRFA, transformer manufacturers. Although DOE’s MIA suggests that, while TSL1, ‘‘Significant Alternatives to the Rule,’’ the conversion costs required can be TSL1, and TSL 2 presents greater DOE explicitly considered the impacts considered substantial for all difficulties for small businesses than on small manufacturers of liquid companies, the impacts could be lower levels in the liquid-immersed, immersed and dry-type transformers in relatively greater for a typical small LVDT, and MVDT superclasses, selecting the TSLs proposed in today’s manufacturer because of much lower respectively, the impacts at higher TSLs rulemaking, rather than selecting a production volumes and the relatively would be greater. DOE expects that higher trial standard level. It is DOE’s belief that levels at TSL3 or higher fixed nature of the R&D and capital small businesses will generally be able would place excessive burdens on small investments required. to profitably compete at the TSL DOE seeks comment on the potential proposed in today’s rulemaking. DOE’s manufacturers of medium-voltage, dry- impacts of amended standards on small MIA is based on its interviews of both type transformers, as would TSL 2 or distribution transformer manufacturers. small and large manufacturers, and higher for liquid immersed and low- consideration of small business impacts voltage dry-type transformers. Such 3. Duplication, Overlap, and Conflict explicitly enters into DOE’s choice of burdens would include large product With Other Rules and Regulations the TSLs proposed in this NOPR. redesign costs and also operational DOE is not aware of any rules or DOE also notes that today’s proposed problems associated with the extremely regulations that duplicate, overlap, or standards can be met with a variety of thin laminations of core steel that would conflict with the rule being considered materials, including multiple core steels be needed to meet these levels and today. and both copper and aluminum advanced core construction equipment windings. Because the proposed TSLs and tooling. For low-voltage dry-type 4. Significant Alternatives to the can be met with a variety of materials, specifically, TSL2 essentially eliminates Proposed Rule DOE does not expect that material butt-lap core designs and will therefore The discussion above analyzes availability issues will be a problem for put more burden on small impacts on small businesses that would the industry that results from this manufacturers than would TSL1. result from the other TSLs DOE rulemaking. However, the differential impact on considered. Though TSLs lower than ACEEE submitted a comment stating small businesses (versus large the proposed TSLs are expected to that small, medium-voltage dry-type businesses) is expected to be lower in reduce the impacts on small entities, manufacturers would not be forced out moving to TSL1 than in moving from DOE is required by EPCA to establish of business at higher standard levels TSL2 to TSL3 because of the likely need standards that achieve the maximum because they could either install the to employ step lap mitering or wound improvement in energy efficiency that necessary mitering equipment or core designs. Similarly, for medium are technically feasible and purchase finished cores. (ACEEE, No. voltage dry-type, the steels and economically justified, and result in a 127 at p. 9) DOE recognizes both of construction techniques likely to be significant conservation of energy. these possibilities. While DOE agrees used at TSL 2 are already commonplace Therefore, DOE rejected the lower TSLs. that standard levels higher than TSL2 in the market, whereas TSL 3 would In addition to the other TSLs being would not necessarily drivel small likely trigger a more dramatic shift to considered, the NOPR TSD includes a businesses from the market, there is thinner and more exotic steels, to which regulatory impact analysis in chapter much more uncertainty about whether many small businesses have limited 17. For distribution transformers, this traditional M-grade steels can be used at access. Lastly, DOE is confident that report discusses the following policy higher TSLs, which could TSL1 for the liquid immersed market alternatives: (1) Consumer rebates, (2) disproportionately jeopardize many would not require small manufacturers consumer tax credits, and (3) small manufacturers who have limited to invest in amorphous technology, manufacturer tax credits. DOE does not access to domain refined steels. which could put them at a significant intend to consider these alternatives disadvantage. 6. Steps DOE Has Taken to Minimize further because they either are not Section VI.B above discusses how the Economic Impact on Small feasible to implement or are not small business impacts entered into Manufacturers expected to result in energy savings as DOE’s selection of today’s proposed large as those that would be achieved by In consideration of the benefits and standards for distribution transformers. the standard levels under consideration. burdens of standards, including the DOE made its decision regarding DOE continues to seek input from burdens posed to small manufacturers, standards by beginning with the highest businesses that would be affected by DOE concluded TSL1 is the highest level considered and successively this rulemaking and will consider level that can be justified for liquid eliminating TSLs until it found a TSL

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that is both technologically feasible and meets the requirements for application 12988 specifically requires that economically justified, taking into of a CX. (See 10 CFR 1021.410(b) and Executive agencies make every account other EPCA criteria. Because Appendix B to Subpart D) The proposed reasonable effort to ensure that the DOE believes that the TSLs proposed rule fits within this category of actions regulation: (1) Clearly specifies the are economically justified (including because it is a rulemaking that preemptive effect, if any; (2) clearly consideration of small business establishes energy conservation specifies any effect on existing Federal impacts), the reduced impact on small standards for consumer products or law or regulation; (3) provides a clear businesses that would have been industrial equipment, and for which legal standard for affected conduct realized in moving down to lower none of the exceptions identified in CX while promoting simplification and efficiency levels was not considered in B5.1(b) apply. Therefore, DOE has made burden reduction; (4) specifies the DOE’s decision (but the reduced impact a CX determination for this rulemaking, retroactive effect, if any; (5) adequately on small businesses that is realized in and DOE does not need to prepare an defines key terms; and (6) addresses moving down to TSL2 from TSL3 (in the Environmental Assessment or other important issues affecting clarity case of medium-voltage dry-type) and Environmental Impact Statement for and general draftsmanship under any TSL2 to TSL1 (in the case of liquid this proposed rule. DOE’s CX guidelines issued by the Attorney immersed and low-voltage dry-type) determination for this proposed rule is General. Section 3(c) of Executive Order was explicitly considered in the available at http://cxnepa.energy.gov. 12988 requires Executive agencies to weighing of benefits and burdens). review regulations in light of applicable E. Review Under Executive Order 13132 standards in section 3(a) and section C. Review Under the Paperwork Executive Order 13132, ‘‘Federalism,’’ 3(b) to determine whether they are met Reduction Act 64 FR 43255 (Aug. 10, 1999) imposes or it is unreasonable to meet one or Manufacturers of distribution certain requirements on Federal more of them. DOE has completed the transformers must certify to DOE that agencies formulating and implementing required review and determined that, to their products comply with any policies or regulations that preempt the extent permitted by law, this applicable energy conservation State law or that have Federalism proposed rule meets the relevant standards. In certifying compliance, implications. The Executive Order standards of Executive Order 12988. manufacturers must test their products requires agencies to examine the according to the DOE test procedures for constitutional and statutory authority G. Review Under the Unfunded distribution transformers, including any supporting any action that would limit Mandates Reform Act of 1995 amendments adopted for those test the policymaking discretion of the Title II of the Unfunded Mandates procedures. DOE has established States and to carefully assess the Reform Act of 1995 (UMRA) requires regulations for the certification and necessity for such actions. The each Federal agency to assess the effects recordkeeping requirements for all Executive Order also requires agencies of Federal regulatory actions on State, covered consumer products and to have an accountable process to local, and Tribal governments and the commercial equipment, including ensure meaningful and timely input by private sector. Public Law 104–4, sec. distribution transformers. (76 FR 12422 State and local officials in the 201 (codified at 2 U.S.C. 1531). For a (March 7, 2011). The collection-of- development of regulatory policies that proposed regulatory action likely to information requirement for the have Federalism implications. On result in a rule that may cause the certification and recordkeeping is March 14, 2000, DOE published a expenditure by State, local, and Tribal subject to review and approval by OMB statement of policy describing the governments, in the aggregate, or by the under the Paperwork Reduction Act intergovernmental consultation process private sector of $100 million or more (PRA). This requirement has been it will follow in the development of in any one year (adjusted annually for approved by OMB under OMB control such regulations. 65 FR 13735. EPCA inflation), section 202 of UMRA requires number 1910–1400. Public reporting governs and prescribes Federal a Federal agency to publish a written burden for the certification is estimated preemption of State regulations as to statement that estimates the resulting to average 20 hours per response, energy conservation for the products costs, benefits, and other effects on the including the time for reviewing that are the subject of today’s proposed national economy. (2 U.S.C. 1532(a), (b)) instructions, searching existing data rule. States can petition DOE for The UMRA also requires a Federal sources, gathering and maintaining the exemption from such preemption to the agency to develop an effective process data needed, and completing and extent, and based on criteria, set forth in to permit timely input by elected reviewing the collection of information. EPCA. (42 U.S.C. 6297) No further officers of State, local, and Tribal Notwithstanding any other provision action is required by Executive Order governments on a proposed ‘‘significant of the law, no person is required to 13132. intergovernmental mandate,’’ and respond to, nor shall any person be requires an agency plan for giving notice F. Review Under Executive Order 12988 subject to a penalty for failure to comply and opportunity for timely input to with, a collection of information subject With respect to the review of existing potentially affected small governments to the requirements of the PRA, unless regulations and the promulgation of before establishing any requirements that collection of information displays a new regulations, section 3(a) of that might significantly or uniquely currently valid OMB Control Number. Executive Order 12988, ‘‘Civil Justice affect small governments. On March 18, Reform,’’ imposes on Federal agencies 1997, DOE published a statement of D. Review Under the National the general duty to adhere to the policy on its process for Environmental Policy Act of 1969 following requirements: (1) Eliminate intergovernmental consultation under Pursuant to the National drafting errors and ambiguity; (2) write UMRA. 62 FR 12820. DOE’s policy Environmental Policy Act (NEPA) of regulations to minimize litigation; and statement is also available at 1969, as amended (42 U.S.C. 4321 et (3) provide a clear legal standard for www.gc.doe.gov. seq.), DOE has determined that the affected conduct rather than a general Although today’s proposed rule does proposed rule fits within the category of standard and promote simplification not contain a Federal intergovernmental actions included in Categorical and burden reduction. 61 FR 4729 (Feb. mandate, it may require expenditures of Exclusion (CX) B5.1 and otherwise 7, 1996). Section 3(b) of Executive Order $100 million or more on the private

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sector. Specifically, the proposed rule an institution. Accordingly, DOE has because the proposed standards are not will likely result in a final rule that concluded that it is not necessary to likely to have a significant adverse effect could require expenditures of $100 prepare a Family Policymaking on the supply, distribution, or use of million or more. Such expenditures may Assessment. energy, nor has it been designated as include: (1) Investment in R&D and in such by the Administrator at OIRA. I. Review Under Executive Order 12630 capital expenditures by distribution Accordingly, DOE has not prepared a transformer manufacturers in the years DOE has determined that under Statement of Energy Effects on the between the final rule and the Executive Order 12630, ‘‘Governmental proposed rule. compliance date for the new standards, Actions and Interference with and (2) incremental additional Constitutionally Protected Property L. Review Under the Information expenditures by consumers to purchase Rights’’ 53 FR 8859 (March 18, 1988), Quality Bulletin for Peer Review higher-efficiency distribution this regulation would not result in any On December 16, 2004, OMB, in transformers, starting at the compliance takings that might require compensation consultation with the Office of Science date for the applicable standard. under the Fifth Amendment to the U.S. and Technology Policy (OSTP), issued Section 202 of UMRA authorizes a Constitution. its Final Information Quality Bulletin Federal agency to respond to the content J. Review Under the Treasury and for Peer Review (the Bulletin). 70 FR requirements of UMRA in any other General Government Appropriations 2664 (January 14, 2005). The Bulletin statement or analysis that accompanies Act, 2001 establishes that certain scientific the proposed rule. (2 U.S.C. 1532(c)) information shall be peer reviewed by The content requirements of section Section 515 of the Treasury and qualified specialists before it is 202(b) of UMRA relevant to a private General Government Appropriations disseminated by the Federal sector mandate substantially overlap the Act, 2001 (44 U.S.C. 3516, note) Government, including influential economic analysis requirements that provides for Federal agencies to review scientific information related to agency apply under section 325(o) of EPCA and most disseminations of information to regulatory actions. The purpose of the Executive Order 12866. The the public under guidelines established bulletin is to enhance the quality and SUPPLEMENTARY INFORMATION section of by each agency pursuant to general credibility of the Government’s this NOPR and the ‘‘Regulatory Impact guidelines issued by OMB. OMB’s scientific information. Under the Analysis’’ chapter of the TSD for this guidelines were published at 67 FR Bulletin, the energy conservation proposed rule respond to those 8452 (February 22, 2002), and DOE’s standards rulemaking analyses are requirements. guidelines were published at 67 FR ‘‘influential scientific information,’’ Under section 205 of UMRA, the 62446 (October 7, 2002). DOE has which the Bulletin defines as scientific Department is obligated to identify and reviewed today’s NOPR under the OMB information the agency reasonably can consider a reasonable number of and DOE guidelines and has concluded determine will have, or does have, a regulatory alternatives before that it is consistent with applicable clear and substantial impact on promulgating a rule for which a written policies in those guidelines. important public policies or private statement under section 202 is required. K. Review Under Executive Order 13211 sector decisions. 70 FR 2667. 2 U.S.C. 1535(a). DOE is required to In response to OMB’s Bulletin, DOE Executive Order 13211, ‘‘Actions select from those alternatives the most conducted formal in-progress peer Concerning Regulations That cost-effective and least burdensome reviews of the energy conservation Significantly Affect Energy Supply, alternative that achieves the objectives standards development process and Distribution, or Use’’ (66 FR 28355 (May of the proposed rule unless DOE analyses and has prepared a Peer 22, 2001)), requires Federal agencies to publishes an explanation for doing Review Report pertaining to the energy prepare and submit to OIRA at OMB, a otherwise, or the selection of such an conservation standards rulemaking Statement of Energy Effects for any alternative is inconsistent with law. As analyses. Generation of this report proposed significant energy action. A required by 42 U.S.C. 6295(d), (f), and involved a rigorous, formal, and ‘‘significant energy action’’ is defined as (o), 6313(e), and 6316(a), today’s documented evaluation using objective any action by an agency that proposed rule would establish energy criteria and qualified and independent promulgates or is expected to lead to conservation standards for distribution reviewers to make a judgment as to the promulgation of a final rule, and that: transformers that are designed to technical/scientific/business merit, the (1) Is a significant regulatory action achieve the maximum improvement in actual or anticipated results, and the under Executive Order 12866, or any energy efficiency that DOE has productivity and management successor order; and (2) is likely to have determined to be both technologically effectiveness of programs and/or a significant adverse effect on the feasible and economically justified. A projects. The ‘‘Energy Conservation supply, distribution, or use of energy, or full discussion of the alternatives Standards Rulemaking Peer Review (3) is designated by the Administrator of considered by DOE is presented in the Report’’ dated February 2007 has been OIRA as a significant energy action. For ‘‘Regulatory Impact Analysis’’ section of disseminated and is available at the any proposed significant energy action, the TSD for today’s proposed rule. following Web site: the agency must give a detailed www1.eere.energy.gov/buildings/ H. Review Under the Treasury and statement of any adverse effects on appliance_standards/peer_review.html. General Government Appropriations energy supply, distribution, or use Act, 1999 should the proposal be implemented, VII. Public Participation Section 654 of the Treasury and and of reasonable alternatives to the A. Attendance at the Public Meeting General Government Appropriations action and their expected benefits on Act, 1999 (Pub. L. 105–277) requires energy supply, distribution, and use. The time, date, and location of the Federal agencies to issue a Family DOE has tentatively concluded that public meeting are listed in the DATES Policymaking Assessment for any rule today’s regulatory action, which sets and ADDRESSES sections at the beginning that may affect family well-being. This forth proposed energy conservation of this notice. If you plan to attend the rule would not have any impact on the standards for distribution transformers, public meeting, please notify Ms. autonomy or integrity of the family as is not a significant energy action Brenda Edwards at (202) 586–2945 or

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Submission of Comments documents submitted via email, hand public meeting and may be emailed, DOE will accept comments, data, and delivery, or mail also will be posted to hand-delivered, or sent by mail. DOE information regarding this proposed regulations.gov. If you do not want your prefers to receive requests and advance rule before or after the public meeting, personal contact information to be copies via email. Please include a but no later than the date provided in publicly viewable, do not include it in telephone number to enable DOE staff to the DATES section at the beginning of your comment or any accompanying make follow-up contact, if needed. this proposed rule. Interested parties documents. Instead, provide your may submit comments, data, and other contact information in a cover letter. C. Conduct of the Public Meeting information using any of the methods Include your first and last names, email DOE will designate a DOE official to described in the ADDRESSES section at address, telephone number, and preside at the public meeting and may the beginning of this notice. optional mailing address. The cover also use a professional facilitator to aid Submitting comments via letter will not be publicly viewable as discussion. The meeting will not be a regulations.gov. The regulations.gov long as it does not include any judicial or evidentiary-type public web page will require you to provide comments. hearing, but DOE will conduct it in your name and contact information. Include contact information each time accordance with section 336 of EPCA Your contact information will be you submit comments, data, documents,

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and other information to DOE. If you information deemed to be exempt from mounted, or other types of liquid- submit via mail or hand delivery/ public disclosure). immersed transformers. courier, please provide all items on a 13. DOE requests comment on setting E. Issues on Which DOE Seeks Comment CD, if feasible. It is not necessary to standards by BIL rating for liquid- submit printed copies. No facsimiles Although DOE welcomes comments immersed distribution transformers as it (faxes) will be accepted. on any aspect of this proposal, DOE is currently does for medium-voltage, dry- Comments, data, and other particularly interested in receiving type units. information submitted to DOE comments and views of interested 14. DOE requests comment on how electronically should be provided in parties concerning the following issues: best to scale across phase counts for PDF (preferred), Microsoft Word or 1. DOE requests comment on primary each transformer type and how Excel, WordPerfect, or text (ASCII) file and secondary winding configurations, standards for either single- or three- format. Provide documents that are not on how testing should be required, on phase transformers may be derived from secured, that are written in English, and efficiency differences related to different the other type. that are free of any defects or viruses. winding configurations, and on how 15. DOE requests comment on its Documents should not contain special frequently transformers are operated in proposal to scale standards to characters or any form of encryption various winding configurations. unanalyzed kVA ratings by fitting a and, if possible, they should carry the 2. DOE requests comment on its straight line in logarithmic space to electronic signature of the author. proposal to require transformers with selected efficiency levels (ELs) with the Campaign form letters. Please submit multiple nameplate kVA ratings to understanding that the resulting line campaign form letters by the originating comply only at those ratings may not have a slope equal to 0.75. organization in batches of between 50 to corresponding to passive cooling. 16. DOE seeks comment on symmetric 500 form letters per PDF or as one form 3. DOE requests comment on its core designs. letter with a list of supporters’ names proposal to maintain the requirement 17. DOE seeks comment on compiled into one or more PDFs. This that transformers comply with standards nanotechnology composites and their reduces comment processing and for the BIL rating of the configuration potential for use in distribution posting time. that produces the highest losses. transformers. Confidential Business Information. 4. DOE requests comment on its 18. DOE requests comment on its According to 10 CFR 1004.11, any proposal to maintain the current test materials prices for both 2010 and 2011 person submitting information that he loading value requirements for all types cases. or she believes to be confidential and 19. DOE requests comment on the of distribution transformers. exempt by law from public disclosure current and future availabilities of high- 5. DOE requests comment on its should submit via email, postal mail, or grade steels, particularly amorphous proposal to require rectifier and testing hand delivery/courier two well-marked and mechanically-scribed steel in the transformers to indicate on their copies: one copy of the document United States. marked confidential including all the nameplates that they are for such 20. DOE requests comment on information believed to be confidential, purposes exclusively. particular applications in which and one copy of the document marked 6. DOE requests comment on its transformer size and weight are likely to non-confidential with the information proposal to maintain the definition of be a constraint and any data that may believed to be confidential deleted. mining transformer but also requests be used to characterize the problem. Submit these documents via email or on information useful in precisely 21. DOE requests comment on its steel a CD, if feasible. DOE will make its own expanding the definition to encompass supply availability analysis, presented determination about the confidential any activity that entails the removal of in appendix 3A of the TSD. status of the information and treat it material underground, such as digging 22. DOE seeks comment on its according to its determination. or tunneling. proposed additional distribution Factors of interest to DOE when 7. DOE requests comment on its channel for liquid-immersed evaluating requests to treat submitted proposal to maintain the current kVA transformers that estimates that information as confidential include: (1) scope of coverage. approximately 80 percent of A description of the items; (2) whether 8. DOE requests comment on its transformers are sold by manufacturers and why such items are customarily proposal to continue not to set directly to utilities. treated as confidential within the standards for step-up transformers. 23. DOE seeks comment on any industry; (3) whether the information is 9. DOE requests comment on the additional sources of distribution generally known by or available from negotiating committee’s proposal to transformer load data that could be used other sources; (4) whether the establish a separate equipment class for to validate the Energy Use and End-Use information has previously been made network/vault transformers and on how Load Characterization analysis. DOE is available to others without obligation such transformers might be defined. specifically interested in additional load concerning its confidentiality; (5) an 10. DOE requests comment on the data for higher capacity three phase explanation of the competitive injury to negotiating committee’s proposal to distribution transformers. the submitting person which would establish a separate equipment class for 24. DOE seeks comment on its pole result from public disclosure; (6) when data center transformers and on how replacement methodology that is used such information might lose its such transformers might be defined. estimate increased installation costs confidential character due to the 11. DOE seeks comment on the resulting from increased transformer passage of time; and (7) why disclosure operating characteristics for data center weight due the proposed standard. The of the information would be contrary to transformers. Specifically DOE seeks pole replacement methodology is the public interest. comment on appropriate load factors, presented in chapter 6, section 6.3.1 of It is DOE’s policy that all comments and peak responsibility factors of data the TSD. may be included in the public docket, center transformers. 25. DOE seeks comment on recent without change and as received, 12. DOE requests comment on changes to utility distribution including any personal information whether separate equipment classes are transformer purchase practices that provided in the comments (except warranted for pole-mounted, pad- would lead to the purchase of a

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refurbished, specifically re-wound, and on the magnitude of the additional 431 of chapter II, of title 10 of the Code distribution transformer over the losses in less efficient configurations. of Federal Regulations, to read as set purchase of new distribution 30. DOE requests comment on forth below: transformer. impedance values and on any related 26. DOE seeks comment on the parameters (e.g., inrush current, X/R PART 431—ENERGY EFFICIENCY equipment lifetimes of refurbished, ratio) that may be used in evaluation of PROGRAM FOR CERTAIN specifically re-wound distribution distribution transformers. DOE requests COMMERCIAL AND INDUSTRIAL transformers and how it compares to particular comment on how any of those EQUIPMENT that of a new distribution transformer. parameters may be affected by energy conservation standards of today’s 1. The authority citation for part 431 27. DOE seeks comment on recent proposed levels or higher. continues to read as follows: changes in distribution transformer sizing practices. In particular, DOE Approval of the Office of the Secretary Authority: 42 U.S.C. 6291–6317. would like comments on any additional The Secretary of Energy has approved 2. Revise § 431.196 to read as follows: sources of data regarding trends in publication of today’s proposed rule. market share across equipment classes § 431.196 Energy conservation standards for either liquid-immersed or dry-type List of Subjects in 10 CFR Part 431 and their effective dates. transformers that should be considered Administrative practice and (a) Low-Voltage Dry-Type Distribution in the analysis. procedure, Confidential business Transformers. (1) The efficiency of a information, Energy conservation, 28. DOE requests comment on the low-voltage dry-type distribution Household appliances, Imports, possibility of reduced equipment utility transformer manufactured on or after Intergovernmental relations, Reporting or performance resulting from today’s January 1, 2007, but before January 1, and recordkeeping requirements, and proposed standards, particularly the risk 2016, shall be no less than that required Small businesses. of reducing the ability to perform for their kVA rating in the table below. periodic maintenance and the risk of Issued in Washington, DC, on January 31, Low-voltage dry-type distribution increasing vibration and acoustic noise. 2012. transformers with kVA ratings not 29. DOE requests comment and Henry Kelly, appearing in the table shall have their corroborating data on how often Acting Assistant Secretary of Energy, Energy minimum efficiency level determined distribution transformers are operated Efficiency and Renewable Energy. by linear interpolation of the kVA and with their primary and secondary For the reasons set forth in the efficiency values immediately above windings in different configurations, preamble, DOE proposes to amend part and below that kVA rating.

Single-phase Three-phase kVA % kVA %

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 1000 ...... 98.9 Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test-Procedure. 10 CFR part 431, Subpart K, Appendix A.

(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 kVA % kVA %

15 ...... 97.73 15 ...... 97.44 25 ...... 98.00 30 ...... 97.95 37.5 ...... 98.20 45 ...... 98.20 50 ...... 98.31 75 ...... 98.47 75 ...... 98.50 112.5 ...... 98.66 100 ...... 98.60 150 ...... 98.78 167 ...... 98.75 225 ...... 98.92 250 ...... 98.87 300 ...... 99.02 333 ...... 98.94 500 ...... 99.17 750 ...... 99.27

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Single-phase Three-phase kVA % kVA %

1000 ...... 99.34 Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test-Procedure. 10 CFR part 431, Subpart K, Appendix A.

(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 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 1500 ...... 99.48 Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test-Procedure. 10 CFR part 431, Subpart K, Appendix A.

(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 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 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. 10 CFR part 431, Subpart K, Appendix A.

(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.

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Single-Phase Three-Phase BIL* 20–45 kV 46–95 kV ≥96 kV BIL* 20–45 kV 46–95 kV ≥96 kV kVA Efficiency Efficiency Efficiency kVA 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-Procedure. 10 CFR part 431, Subpart K, Appendix A.

(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

Single-Phase Three-Phase BIL* 20–45 kV 46–95 kV ≥96 kV BIL* 20–45 kV 46–95 kV ≥96 kV kVA Efficiency Efficiency Efficiency kVA 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-Procedure. 10 CFR part 431, Subpart K, Appendix A.

(d) Underground Mining Distribution Transformers. [Reserved] [FR Doc. 2012–2642 Filed 2–9–12; 8:45 am] BILLING CODE 6450–01–P

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