From: Wes Patterson [mailto:wes.patterson@us.abb.com] 

Sent: Tuesday, November 15, 2011 3:18 PM 

To: Robert Berman 

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Subject: ABB data may be misinterpreted 

Hi Robert 

Over the past several days you have referenced the ABB data several times and I have a concern that it 

may be misinterpreted. I will attempt to clarify, but in doing so I hope I do not add to the confusion. 

The data was shared during extended discussions regarding what grades of steel could be used to 

achieve certain levels of efficiency. At the time we did not have a concrete specification on the draft 

efficiency levels so I presented what grades ABB had used to produce units within a certain band. I 

believe most folks now refer to the 20%-30% reduction band for Pads (where dEL4 landed) 

What it showed was the distribution (% of MVA) produced by grade within the band 
It did not show the total distribution if the standard was moved to a particular level - which is a different 

question. 

Here one must consider all MVA shipped with an efficiency greater than of equal to the standard. 

This results in a distribution of the steel grades that will exist if one were to peg the standard at a 

particular level. 
In this analysis you will see the following for MVLF 

 for Networks it will be extremely difficult to raise the standard above the current level 

 for Substations we use only stacked-core construction and here dEL1 forces us into a solesource situation with laser-scribed material. But we can build such units up to dEL3. 

 for Poles - my data does not reflect production with amorphous and shows that dEL1 and dEL2 

will have roughly the same impact and would result in a greater demand for M2 than M3 at this 

level. As M2 availability is dependent on M3 production this may not be sustainable 

 for Pads 

- dEL1 maintains a mix of M3 that may sustain the availability of M2 but increases the demand for 

SA 

- dEL2 would theoretically result in about equal volumes of M2, M3 and SA being required. But 

 the issue of M2 being tied to M3 may result in a supply disruption 

- dEL3 theoretically moves the demand for SA to more than 50% of the total and I suspect would 

more than likely result supply issues with M2 and M3. 

From a supply-side perspective I see dEL2 approaching an upper limit. 

===================================== 

As you have referenced my data several times I would like to bring your attention to another presentation 

I shared - that of the difference I see between the rate of increase of price versus reduction in losses 

between the ABB data and the OPS data. 

My understanding is that the relation (rate of change in price with decrease in loss) is the primary input to 

the LCC and PBP calculations. 

At the last meeting I presented data that indicates ABB rate of price increase to be at least twice that 

shown by the OPS calculations. 
This issue appears more evident with the poles than the pads. This may be a result of the price of the 

pole being more closely tied to the core and coil assembly. 

As you have commented - actual commercial data may have more value than modeling - I would be 

interested on your assessment. 

What is the impact on the LCC and PBP calculations if the rate of increase in price doubles? Would it 

substantially alter the results indicated the LCC and PBP? 

Best regards Wes