From: Robert Berman [mailto:bermaneconomics@gmail.com]

Sent: Friday, November 04, 2011 7:10 PM

To: Roy, Robin

Cc: Greg Coulter; Richard Parker; Alex Hofmann; Andrew Delaski; Aris Marantan; Art Rosenfeld; Bob

Saint; Bob Smith; Brian Coffey; Caitlin Johnson; Carlos Gaytan; Caskey, John; charlie drexler; Charlie

Stevens; Chris Bolduc; Chris Brown; Clark Silcox; Creevy, Jim; Dan Cohen; Daniel Young ; David Flaten;

Eric Peterson; Freeman, Jeremiah; Gary Fernstrom; Greg Rosenquist; Hirsch, Bruce R; James Lass;

Jennifer Tiedeman; Jerry Corkran; Jerry Hodge; Jerry Schoen; Jim Raba; Joanna Mauer; John Cymbalsky;

John Rossetti; Katie Coughlin; Ken Winder; Mahesh P. Sampat; Matthew Nardotti; Maxine Savitz;

Waltner, Meg; Meyers, Aaron; Michael Hyland; Mi chael Rivest; Millure, Dave; Phil Harter; Phil

Hopkinson; Polinski, Raymond; Puesh Kumar; Rick Anderson; Rob Greeson; Robert Berman; Robert van

Buskirk; Ryan, Paul; Scott Beck; Simmons, Chuck; Steve Nadel; Steve Rosenstock; Thomas Petrosino; Tim

Ballo; Tom Eckman; Wes Patterson; Zhimei Luo

Subject: Re: MV Transformers Material Price Sensitivity Analysis

Robin's scenario would be an easy one to run ‐‐ simply filter our the ZDMH and SA1 "dots", unless we

what to then assume that the lack of availability of amorphous and ZDMH would result in a 50% (or

more) increase in the price of M3 and M2, which might require additional runs.

Regards,

Robert A. Berman, Princi pal

Berman Economics

www.BermanEconomics.com

1915 Grand Court

Vienna, VA 22182

703

‐ 281

‐ 0490

703

‐ 655

‐ 8398 (cell)

BermanEconomics@gmail.com

On Nov 4, 2011, at 6:36 PM, Roy, Robin wrote:

Greg, Richard et al,

That sounds sensible. I think it might also be useful to perform sensitivity analyses based on the worse

‐

than

‐ worst

‐ case assumption that neither ZDMH nor amorphous are available. That would put a floor

under the LC C savings estimates and a ceiling on the first cost impact, representing the outcome if the

amorphous and ZDMH suppliers effectively exerted extreme upward price leverage.

On a rough eyeballing of the data, it appears that for each DL, many of the ELs that M2 or M3 can

achieve would still deliver LCC savings. If tha t’s right, it would give me much more comfort with those

ELs.

Cheers,

RobinFrom: Greg Coulter [ mailto:greg.coulter405@gmail.com ]

Sent: Friday, November 04, 2011 3:18 PM

To: Richard Parker

Cc: Alex Hofmann; Andrew Delaski; Aris Marantan; Art Rosenfeld; Bob Saint; Bob Smith; Brian Coffey;

Caitlin Johnson; Carlos Gaytan; Caskey, John; charlie drexler; Charlie Stevens; Chris Bolduc; Chris Brown;

Clark Silcox; Creevy, Jim; Dan Cohen; Daniel Young; David Flaten; Eric Peterson; Free man, Jeremiah; Gary

Fernstrom; Greg Rosenquist; Hirsch, Bruce R; James Lass; Jennifer Tiedeman; Jerry Corkran; Jerry Hodge;

Jerry Schoen; Jim Raba; Joanna Mauer; John Cymbalsky; John Rossetti; Katie Coughlin; Ken Winder;

Mahesh P. Sampat; Matthew Nardotti; Maxine Savitz; Waltner, Meg; Meyers, Aaron; Michael Hyland;

Michael Rivest; Millure, Dave; Phil Harter; Phil Hopkinson; Polinski, Raymond; Puesh Ku mar; Rick

Anderson; Rob Greeson; Robert Berman; Robert van Buskirk; Roy, Robin; Ryan, Paul; Scott Beck;

Simmons, Chuck; Steve Nadel; Steve Rosenstock; Thomas Petrosino; Tim Ballo; Tom Eckman; Wes

Patterson; Zhimei Luo

Subject: Re: MV Transformers Material Price Sensitivity Analysis

Richard,

I have talked to many of th e representatives, while not a complete survey, we are of the opinion that

the sensitivity analysis for the core materials could be simplified. Presently, the plan as I understand it is

to run sensitivity analysis at both +25% of 2008 prices and

‐ 25% of 2006 prices. Our concern is not with

the low side on these pri ces as due to the severe market depression over the last many years for these

products, we feel we have seen the low side. Our concern is more on the high side, where we are more

concerned about the effect a major technology swing could have on exis ting core materials.

Therefore, we suggest that the sensitivity analysis only be run on the high side and that only 2 levels be

run. We suggest that +25% and +50% of 2008 prices would satisfy our needs. Therefore, the price levels

used for the sensitivity analysis for amorphous me tal would be:

$2.91 x 1.25 = $3.64

$2.91 x 1.50 = $4.37

This range should provide enough insight. These should only be run for the liquid filled design lines

(DL1, DL2, DL3, DL5). The rationale for using the 1.5 times 2008 levels is the concern that if Ef ficiency

Levels are chosen that are high enough to eliminate silicon steel from competing and amorphous

becomes the prime core material, all (the) amorphous metal producers would have upward price

leverage even above the value we are proposing to use for this analysis.

For the dry type lines, it app ears your proposal on price sensitivity is fine.

If anyone has comments or opposition, please advise. I apologize for not talking to everyone.

Greg

On Fri, Nov 4, 2011 at 11:20 AM, Richard Parker < richardparkerdc@gmail.com > wrote:

Colleagues,

There have been a number of requests for additional LCC runs with various material prices reflectingconcerns with possible shortages of supply under various standards scenarios.

Attached is a sheet that summarizes the price sensitivity analysis that is currently in the pipeline: ranging

from 2006 minus 25% on the low side to 2008 plus 25% on the high side.

For amorphous that yields a range from $1.72/lb to $3.64/lb, with a base case (2010) of 2.38 /lb.

For ZDMH, the range is from $1.41 to $3.22 with a base of 2.05. (A sensitivity is already being run with

ZDMH screened entirely out of the analysis, reflecting concerns that this material may not be available

due to a reluctance to supply the North American mark et allegedly due to fear of dumping duties.)

As we discussed, each run takes several hours per design line so we obviously cannot accommodate all

requests, nor would it be instructive to do so absent some credible price scenario that is not currently

being modeled and tha t lies outside these boundaries.

So what I would propose is this: Could industry participants in the MV Group please communicate with

each other today, examine the attached sheet and

(a) try to arrive at a collective determination of whether there is reason to believe that proposed range

of prices is r eally to narrow such that additional run is warranted; and

(b) if so, propose the set of prices that you would like to see run, and a short explanation/justification

for your request.

Greg Coulter has kindly agreed to serve as the coordinator for this effort so please work with him. If for

any reason, issues of c onfidentiality prevent you from communicating with Greg and others in open

forum please let me know and I will discuss with you how to proceed.

You also will need to choose a couple of design lines to focus on. I understand that DL 1 and 2 are th e

lines with the most shipments in the liquid immersed category. If you have preferences for MVDT

please convey them with your request (perhaps DL 12?). I would expect that we could manage runs for

3 design lines.

Again, the consultants are swamped with work accommodating the in put they've gotten from the group

so far, so please do not make work for them by requesting additional runs unless there really is good

cause for doing so.

Please let us know by cob today what your preferences are.

All best,

Richard

‐‐

Greg Coulter