Executive Court Reporters (301) 565-0064 1

UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY

**MEETING of the LV WORKING GROUP**

National Rural Electric Cooperative Association 4301 Wilson Blvd, Rm. C2 Arlington, VA

Thursday November 9, 2011

**Facilitator:**

Richard Parker University of Connecticut Law School

**Host:**
Edison Electric Institute 701 Pennsylvania Ave NW 4 th Floor Washington, DCExecutive Court Reporters (301) 565-0064 2

**Participants Identified:**

Rick Anderson Fayetteville Public Works Commission

Tim Ballo Earth Justice 1625 Massachusetts Avenue Suite 702 Washington, DC 20036

Scott Beck Lakeview Metals

David Brenner John Caskey Electrical Manufacturers Association Jim Creevy National Electrical Manufacturers Association.

Andrew DeLaski ASAP 20 Belgrade Ave, Suite 1 Boston, MA 02131

Tom Eckman Northwest Power and Conservation Council Gary Fernstrom Pacific Gas & Electric Company 13055 Parkhurst Dr Oakland, CA 94619 Alan Katz (via telephone) Siemens Industries Roy Key (ph) ... Manufacturers Association.Executive Court Reporters (301) 565-0064 3

Dave Millure Metglas Incorporated 440 Allied Drive Conway, SC 29526

Wes Patterson ABB, Inc. Thomas Patzner (via telephone) Schneider Electric 1010 Airpark Carrier Drive Nashville, TN 37217

Eduardo Robles Eaton Corporation Robin Roy Natural Resources Defense Council 1200 New York Avenue, NW, Suite 400 Washington, DC 20005

Ned Rush Consultant Paul Ryan Hitachi Metals America 800 Grand Avenue, Suite AG-6 Carlsbad, CA 92008 Mahesh P. Sampat EMS Consulting 1180 Brookview Dr Athens, GA 30606
Bob Smith Federal Pacific Jim Rakowski Allegheny ATIExecutive Court Reporters (301) 565-0064 4

**Participants from DOE:**

Sarah Butler

Dan Cohen DOE General Counsel John Cymbalsky Ashley General Counsel’s Office

**Participants from Navigant/LBL:**

Mike Rivest

Matt Nardotti

Chris Bolduc Lawrence Berkley National Laboratory Katie Coughlin Lawrence Berkley National Laboratory

**Presenters:**
Rob Carmichael Navigant Brian Coffey Navigant Consulting 1801 K St. NW Suite 500 Washington, DC 20006

Chris Bolduc Lawrence Berkley National Laboratory 1 Cyclotron Rd Ms 90-4000 Berkeley, CA 94720 Washington, DC 20006Executive Court Reporters (301) 565-0064 5

**AGENDA**

**ITEM PAGE** 

Welcome, Mr. Parker 6 Self-Introductions 7 Navigant Presentation, Mr. Coffey Engineering Analysis Update 10

LBL Presentation, Mr. Bolduc LCC - NIA Results 17 Navigant Presentation, Mr. Carmichael Manufacturing Impacts 72 Next Steps 95Executive Court Reporters (301) 565-0064 6

12:05 p.m. 1

P R O C E E D I N G S 2

3 MR. PARKER: Welcome everybody to the 4 meeting of the Low Voltage Group. Thank you for your 5 patience and forbearance in the delayed start, I hope 6 that our starting a bit late has given you the morning 7 to look over the analysis that you got last night. 8 The results are really the Herculean efforts, as I 9 said in my e-mail to you by DOE staff, to take both 10 early arriving and late arriving inputs and 11 incorporate them into engineering analysis and then to 12 a refined LCC analysis. It was a lot of work and I 13 appreciate their getting it together. 14 We realize you haven’t gotten it until last 15 night, and so I think perhaps the best use of our time 16 to start off with would be to just have them present 17 the analysis as it is, and have a discussion and make 18 sure that we have a comfort level of where that is 19 going. So that would be the major item that I think 20 we would focus on for today, and if we can move 21 forward and get beyond that and put forth proposals, 22 that would be helpful, but I think our focus should be 23 on getting the analysis right. 24 Before we start, why don’t we go around the 25Executive Court Reporters (301) 565-0064 7

table for the court reporter and give our names and 1 affiliations. We’ll start with people around the 2 table, and then go around the wall, and then people on 3 the phone. I would ask everybody to please speak up, 4 recognizing that we do have people on the phone and 5 the court reporter needs to be able to get your voice. 6 If you are on the wall, around the wall, you’re 7 welcome to participate, but please approach the table 8 when you do so, stand up and approach the table so 9 that your voice can be picked up by the speakerphones. 10 Please also remember to give your name when you speak 11 so that the court reporter, Wendy is here, thank you 12 Wendy, can get your name for the transcript. A 13 transcript is being made of this meeting, as with all 14 meetings, it’s a public record. Great. Thanks. 15 **Self-Introductions** 16 MR. PARKER: I’m Richard Parker, the 17 facilitator out of the University of Connecticut Law 18 School. Why don’t we just go around the table, 19 starting with Scott. 20 MR. BECK: Scott Beck, Lakeview Metals. 21 MR. CASKEY: John Caskey, National 22 Electrical Manufacturers Association. 23 MR. ROBLES: Eduardo Robles, Eaton 24 Corporation. 25Executive Court Reporters (301) 565-0064 8

MR. PATTERSON: Wes Patterson, ABB. 1 MR. GREESON: Rob Greeson, Federal Pacific 2 Transformers. 3 MR. COHEN: Dan Cohen, DOE General Counsel. 4 MS. BUTLER: Sarah Butler, DOE. 5 MR. SCHOEN: Jerry Schoen, AK Steel. 6 MR. PETERSEN: Eric Petersen, AK Steel. 7 MR. ROY: Robin Roy, National Resources 8 Defense Council. 9 MR. BALLO: Tim Ballo, Earth Justice. 10 MR. DeLASKI: Andrew DeLaski, Appliance 11 Standards Awareness Project. 12 MR. FERNSTROM: Gary Fernstrom, PG&E, 13 representing Pacific Gas and Electric Company, 14 Southern California Edison Company, and San Diego Gas 15 and Electric -- oh, pardon me, Semper Utilities. 16 MR. RIVEST: Mike Rivest, Navigant 17 Consulting. 18 MR. MILLURE: Dave Millure, Metglas. 19 MR. CYMBALSKY: John Cymbalsky, DOE. 20 MS. COUGHLIN: Katie Coughlin, Lawrence 21 Berkley National Lab. 22 MR. COFFEY: Brian Coffey, Navigant 23 Consulting. 24 MR. CREEVY: Jim Creevy, National Electrical 25Executive Court Reporters (301) 565-0064 9

Manufacturers Association. 1 MR. BRENDER: Jerry Brender, ... 2 MR. RUSH: Ned Rush, Consultant. 3 MR. BERMAN: Robert Berman, Berman 4 Economics. 5 MR. RYAN: Paul Ryan, Metglas. 6 MR. KEY: Roy Key (ph), ... Manufacturers 7 Association. 8 MS. KENNEDY: (inaudible) 9 MR. SAMPAT: Mahesh Sampat, EMS Consulting. 10 MR. CARMICHAEL: Rob Carmichael, Navigant 11 Consulting. 12 MR. BOLDUC: Chris Bolduc, Lawrence Berkley 13 National Lab. 14 MR. NARDOTTI: Matt Nardotti, Navigant 15 Consulting. 16 MR. PARKER: On the phone? 17 MR. MAY: Scott May from Siemen’s Industry 18 Incorporated. 19 MR. LIGHT: Rick Light from AK Steel. 20 MR. PATZNER: Thomas Patzner, Schneider 21 Electric. 22 MR. PARKER: Anybody else on the phone? 23 MR. ...: Ken ..., Schneider Electric. 24 MR. PARKER: Good. Anybody else on the 25Executive Court Reporters (301) 565-0064 1 0

phone? Okay, welcome. Why don’t we start off with 1 the engineering analysis. We have Brian Coffee here 2 from Navigant to walk us through what they’ve done, 3 the changes that they’ve made to the analysis and then 4 preliminary results, and then we’ll turn it over to 5 Chris Bolduc from LBL to review what he did last night 6 on the LCC analysis that draws on that. 7 I would like to ask our presenters, if they 8 could, and also anybody who’s referring, pointing to 9 the charts from the table, to please describe for 10 purposes of the transcript, and also for purposes on 11 the phone, what you’re seeing on the screen and what 12 you’re pointing to, if you’re pointing to some 13 particular part of the screen so that those people are 14 not disadvantaged as a result of their not being 15 around the table today. It will also help us with the 16 transcript of the proceedings, so I will just ask you 17 to do that as you’re walking though. 18 Without further ado, let me turn it over to 19 Brian to present the engineering results for us. 20 **Presentation: Engineering Analysis Update** 21 MR. COFFEY: Thank you. Brian Coffey with 22 Navigant. After the last negotiation meeting, we sent 23 out a template for manufacturers to provide feedback 24 on some of our designs and to populate it with their 25Executive Court Reporters (301) 565-0064 1 1

own information so that we might see how accurate our 1 modeling was or how close the alignment was with the 2 way they did things. And we got a little bit of 3 feedback and it in response made a couple of tweaks, 4 and so I’ll get to review those quickly. 5 The first thing that we did was added a new 6 design option combination in design line A. It was an 7 M6 aluminum-aluminum what we call full miter. We did 8 that because we understood that to be pretty common as 9 based on units in today’s market. Similar to the -- 10 anybody who was in the medium voltage meeting this 11 morning, we adjusted our materials prices for steels 12 and for amorphous steel, and the reason that we did 13 that is because we were showing M3 being used -- M3 14 and above being used more quickly than any of the 15 manufacturers did, and we think the reason for that 16 was that the spread between the M4 and below steels 17 and M3 and above steels was too small, so it looked 18 more favorable than it does in reality. 19 MR. DeLASKI: Brian, excuse me. This is 20 Andrew DeLaski. I’m looking at the handout and I 21 notice there’s a typo in the handout. In the handout 22 you have M6 and worse, so the adjustments were M4 and 23

worse? 24 MR. COFFEY: Yes, that’s right. That’s a 25Executive Court Reporters (301) 565-0064 1 2

typo. Thank you. I mean, really the critical 1 junction that we were saying was between M4 and M3, 2 and we understood that M3 isn’t strong in today’s 3 baseline case, and so we want our results to reflect 4 that. 5 Another thing that we did is revise our 6 estimates in response to feedback that we were a 7 little bit low in a couple of areas. We limited the 8 core construction types to -- this is one we had 9 talked about -- we limited core construction types to 10 stacks, with the exception of amorphous because, 11 again, we learned that wound is very rare or never 12 produced ... 13 MR. RIVEST: Mike Rivest, Navigant 14 Consulting. I think that in the -- the primary reason 15 why we took out some of the wound configurations -- it 16 is being used in some -- to some amount in the low 17 voltage dry, but what we were finding is there are 18 manufacturers who standardized to stack, and when we 19 were mixing and matching, we were going from wound to 20 stack, efficiency level to efficiency level, because 21 we were not capturing well the capital costs, it was 22 creating diversions in our cost-efficiency curves that 23 were ... So we thought it would be better to look at 24 the progression in the steel ... on the stack, and look 25Executive Court Reporters (301) 565-0064 1 3

at how that cost goes, rather than try to introduce 1 the wound high-efficiency design amongst those 2 designs, and then potentially creating anomalies which 3 we weren’t seeing with the manufacturers’ data. So 4 they tend to adopt it, one manufacturer approach. So 5 it’s not that we’re excluding winding by any means, as 6 a design option, it’s just that for comparison we 7 thought this would create a better cost-efficiency 8 curve. And we’re not aware that there’s a cost 9 advantage of one over the other in cost-efficiency. 10 So, just to clarify that. 11 MR. COFFEY: Another thing that we did was 12 excluded step-lapping as a design option for design 13 line six. That’s our low KV unit, and we understood 14 that step-lapping introduces a lot of stresses that 15 enable the -- 16 MR. PARKER: Excuse me, just a second. 17 We’re getting -- people on the phone were getting some 18 noise on the phone, so please mute your phones so that 19 our phone police don’t have to mute them for you. 20 Thanks so much. 21 MR. COFFEY: So there’s some benefits and 22 drawbacks to step-lapping, and our understanding was 23 that the drawbacks outweigh the benefits at the 24 smaller KVAs, and we understood that this was a 25Executive Court Reporters (301) 565-0064 1 4

relatively uncommon thing to do for these 25 KVA 1 units. 2 MR. RIVEST: So here I’d like to mention 3 that we did not get any specific detailed feedback on 4 design line six, and we did get some very good 5 feedback and information on seven and eight, and some 6 of the changes we did on six were extending what we 7 learned from seven and eight onto six. And some of 8 the things we’ve observed is that the -- the design 9 that’s been the smaller KVA ratings tended to lower 10 magnetic flux levels and we understood that just a 11 ratio of cuts to size was creating greater losses than 12 maybe we had realized, so we thought we would improve 13 the accuracy for cost-efficiency curve if we did not 14 have step-mitering in the small KVA rating. 15 MR. COFFEY: The next thing we did was 16 create a per pound cost average for ... what we call 17 form mitering and then step-lap mitering, to reflect 18 the additional process and cost per pound those 19 transformers would see. We did this after 20 conversations with you parties who do all of these -- 21 who have all these processes available and made 22 transformers all these ways. It was their opinion 23 that per pound -- when you put the finished 24 transformer and you divide the processing cost over 25Executive Court Reporters (301) 565-0064 1 5

the number of pounds of the transformer, that this is 1 a pretty reasonable thing to do. 2 And then, finally, we backed off the upper 3 bound of the induction limit in design line seven, 4 primarily ... 5 And so that’s it, and so all of these 6 changes have been incorporated into the analysis and 7 posted to the Sharepoint site, and so everyone can go 8 to it and see how it goes. As I said, next steps, we 9 have the steel price sensitivity tool up on the 10 Sharepoint, trying to train people to look there first 11 for materials. Also the simplified cost ... and this is 12 a medium voltage on the ... third bullets that doesn’t 13 apply here. And that’s all I have. 14 (much background noise.) 15 MR. PARKER: Do you want to walk through ... 16 MR. RIVEST: Again, I want to reiterate 17 that, you know, we were less confident about the 18 results of design line six than we are of the other 19 two because we didn’t have our comparison points. We 20 also, I understand, got an e-mail from Schneider just 21 mentioning that that was a low-ball area, and I don’t 22 know if there’s scaling possibilities or how we might 23 approach that, but -- 24 MR. PARKER: I passed around earlier -- 25Executive Court Reporters (301) 565-0064 1 6

Richard Parker -- I passed around earlier today a 1 little handout and I will -- if people can pass the 2 rest of them out to this group, if you’ve already got 3 one, please don’t take a copy, but if you don’t, 4 please do. But it’s basically just a breakdown of the 5 shipments by MVA capacity for the various design 6 lines, and for seven and eight combined, which are in 7 equipment class four, the shipments are 15,778 -- 8 these are 2009 estimates. But for design line six, 9 and this is all information that comes from the TSD, 10 for design line six, it’s only 647 MVA, so it’s a 11 very, very small category according to the stats, so 12 we should think about that as we prioritize, you know, 13 where to focus our discussion on. The action is 14 really on seven and eight. 15 MR. MAY: This is Scott May with ... 16 Industries. One of the last lines ... mentioned BIL 17 levels high or low, and they’re not ... transformers -- 18 what was he referring to? 19 MR. COFFEY: That was an error to include 20 that bullet point. That’s only relative to the medium 21 voltage case. 22 MR. MAY: ... respond? 23 MR. COFFEY: I’m sorry? 24 MR. MAY: I didn’t hear you respond. 25Executive Court Reporters (301) 565-0064 1 7

MR. COFFEY: This is Brian Coffee. That 1 shouldn’t have been on that slide. That’s only 2 relevant to the medium voltage case. So we treat all 3 our low voltage ... 4 MR. MAY: Thanks. 5 **Presentation: LCC NIA Results** 6 MR. BOLDUC: Good afternoon, this is Chris 7 Bolduc from Lawrence Berkeley National Lab. I’ll be 8 presenting the LCC NIA results for the low voltage dry 9 transformers. These are based on the new engineering 10 data supplied -- that you received earlier this week. 11 On slide three, we show the mean LCC savings 12 for design line six, and on -- for efficiency levels - 13 - it rises from efficiency level one and two and then 14 there’s a slight drop of $90 at efficiency level 15 three, and then it rises and drops again, peaking at 16 efficiency level five and then negative LCC savings at 17 maxtech. 18 What we’ve seen in the LCC is that there is 19 a little bit of a solitude pattern in the LCC savings, 20 usually indicates that the LCC is switching its 21 material selection at this point. So there will be 22 more on that later. 23 For design line seven, we had a little bit 24 more of a standard higher LCC savings. We show rising 25Executive Court Reporters (301) 565-0064 1 8

mean LCC savings up to efficiency level six, and then 1 declining at efficiency level seven, with a mean LCC 2 savings for all efficiency levels are positive. 3 For design line eight, similar to design 4 line seven, and show rising LCC savings up through 5 design line six (sic) and then dropping to negative at 6 Maxtech, or, sorry, efficiency level seven. And 7 there’s a little bit of a plateau or drop between 8 efficiency levels three and four, and again, I’m going 9 to get to it -- that’s probably due to a materials 10 switch in the LCC. 11 So the payback period was also, for design 12 line six, we’re on slide six for those on the phone. 13 We show very low mean payback for efficiency level 14 one, less than five years, and for efficiency level 15 two it jumps up to near ten years and increases all 16 the way up to 35 years for Maxtech. Again, there’s a 17 little dip between efficiency levels three and four, 18 which correlates to materials switching. 19 For design line seven, the payback, we show 20 at zero mean payback for efficiency levels one through 21 three, and then very -- payback below five years 22 through base level five. And then increasing 23 thereafter. 24 MR. DeLASKI: This is Andrew. So a payback 25Executive Court Reporters (301) 565-0064 1 9

of zero, what does that mean? 1 MR. BOLDUC: We can’t have a negative 2 payback. That means the savings on the unit make up 3 the initial cost. 4 MR. DeLASKI: It means the cost is lower 5 than the base case? 6 MR. BOLDUC: That’s right. Yes. 7 MR. DeLASKI: ... some payback, but that means 8 the first cost is low. 9 MR. RIVEST: You might have to look at the 10 scatter plot that gets us -- 11 MR. DeLASKI: That’s all it means to me. 12 MS. COUGHLIN: (off mic) 13 MR. PARKER: Sorry, can you speak at the 14 table. 15 (Heavy background noise) 16 MS. COUGHLIN: Katie Coughlin. It’s the 17 arithmetic. You know, the payback is first cost 18 divided by ... 19 MR. RIVEST: Is that even possible? 20 MS. COUGHLIN: The engineering curve slips 21 down -- 22 MR. BOLDUC: Design line eight, ... payback 23 over time, starting at $9.00 for efficiency level one, 24 and then decreasing through efficiency level three, 25Executive Court Reporters (301) 565-0064 2 0

and then rising. 1 So for core material selection, this is 2 slide number nine, again, we can see there’s a fairly 3 -- M5 dominates the base case in design line six by 83 4 percent, and it shows the switch. Moving through M4 5 to M3 at efficiency level two, and then there’s a 6 switch to the H0 steel, and that would represent the 7 dip. The analyses of savings has to be increased in 8 efficiency level from the previous slides, and with 9 the dip again in the payback period. 10 Design line seven, it’s 93 percent selection 11 in the LCC is M6, and then it moves rapidly to ZDMH by 12 efficiency level two. And then switching over to 100 13 percent amorphous at efficiency level five. 14 The material selection for design line 15 eight, you can see, it’s 100 percent M6 in the base 16 case, moving to M5, M3, and then ZDMH through 17 efficiency levels one, two, three, and then staying at 18 ZDMH through efficiency level five, and moves to 19 amorphous. 20 MR. RIVEST: Did you do any runs without -- 21 MR. PARKER: Mike Rivest. 22 MR. BOLDUC: Did not have time. 23 MR. PATZNER: Tom Patzner, Schneider 24 Electric. Can you go back to design line seven, 25Executive Court Reporters (301) 565-0064 2 1

please. 1

MR. BOLDUC: Sure. 2 MR. PATZNER: So the base case says that 3 we’re using a cost of from ten-six for the payback 4 period is what this is telling us? 5

MR. BOLDUC: Yes. 6 MR. PATZNER: There’s a payback in each of 7 those levels compared to the base, correct? 8 MR. BOLDUC: That’s right. 9 MR. PATZNER: So, should the industry not 10 be building it with M6? Isn’t that over-stating the 11 base case? With maybe lower payback. 12 MR. BOLDUC: When the LCC selects units from 13 the engineering sample based on lowest first cost. 14 MR. RIVEST: So I assume you’re saying that 15 you’re building your base -- 16 MR. PARKER: Mike Rivest. 17 MR. RIVEST: -- you’re building with an M12? 18 MR. PATZNER: Yes. And ... my designs are 19 really close to the lowest cost, which goes back to 20 that ... voltage where ... twelve in the white space area. 21 MR. RIVEST: Can we look at the plot for 22 design line seven? 23 MR. PARKER: So Mike Rivest has asked to 24 look at the plot for M12, seven. 25Executive Court Reporters (301) 565-0064 2 2

(Discussion off mic.) 1 MR. SMITH: Brian, Bob Smith at Federal 2 Pacific. I wonder why we are using ZDMH when that 3 steel is not being shipped to us. 4 MR. COFFEY: Hi, Bob. Brian Coffey. We 5 included that just based on feedback, you know, people 6 say, well you should look at this, you could in theory 7 build a transformer using this, so we had EMS do a run 8 using ZDMH. Similar to the medium voltage case, the 9 committee thought that they wanted to look at a 10 sensitivity case with ZDMH excluded, I think we could 11 probably do that. 12 MR. SCHOEN: Jerry Schoen, AK Steel. That’s 13 why we, you know, I was asking if we’d broaden the LCC 14 by removing all the ZDMH, basically. 15 MR. RIVEST: The reason why the ZDMH is a ... 16 trademark thing. The ZDKH is their version of H0DR, 17 which is the ... version. That’s why the ... 18 MR. SCHOEN: This was ... 19 MR. PATTERSON: And Jerry, again, if you up 20 there where it’s got the DWD beside -- 21 MR. SCHOEN: Your eyes are better than mine. 22 Okay. Thank you. 23 (Discussion off mic) 24 MR. PATZNER: So this graph shows it, I 25Executive Court Reporters (301) 565-0064 2 3

think. We have one dot within six, below all the 12s. 1 PARTICIPANT: And now it’s gone. 2 MR. PATZNER: Tom Patzner, Schneider 3 Electric. I think that graph would show what I was 4 saying. 5 MR. ROBLES: No, there’s only -- this is 6 Eduardo Robles, Eaton Corporation -- there’s only one 7 dot at around 98 point zero to two, a light blue dot 8 it is there, M6, and the rest is -- 9 MR. PATZNER: Yes, which is why -- which 10 shows that I’m not using that design. Other entities 11 have caused me to use the M12 that is above it. 12 MR. DeLASKI: So this is Andrew. I’m one of 13 the other manufacturers, is that sort of standard 14 practice, M12 is what they’re using for -- 15 MR. ROBLES: For the base. 16 MR. DeLASKI: -- for the base case -- 17 minimally compliant transformers using M12. 18 MR. CARMICHAEL: In the new plot, M12 is 19 used. 20 MR. RIVEST: It looks like this whole 21 analysis was based on the work of engineering. 22 (Discussion off mic) 23 MR. SMITH: Andrew, Bob Smith with Federal 24 Pacific. We agree with Tom Patzner. M12 is the 25Executive Court Reporters (301) 565-0064 2 4

primary core steel that we are using for the present 1 efficiency standards. 2 MR. DeLASKI: Just to be clear, my 3 recollection is at design line six is -- design line 4 six is equipment class three, for which sales are very 5 small. We really should be focusing most of our 6 conversation on design line seven and eight, that’s 7 where the lion’s share -- 8 MR. SMITH: That is correct. 9 MR. DeLASKI: That is where the sales are. 10 MR. SMITH: Bob Smith, Federal Pacific. 11 Design line six is about five percent of the market. 12 MR. DeLASKI: Okay. So seven and eight is 13 where the interesting things are going on, where we 14 really have to kind of focus. 15 MR. PARKER: Okay. So we have the 16 engineering analysis up, and we’re going to focus on 17 design lines seven and eight. 18 MR. RIVEST: And is the LCC based on this, 19 Chris? 20 MR. BOLDUC: Yeah. 21 MR. RIVEST: It is? 22

MR. BOLDUC: Yes. 23 MR. PARKER: So we’ll work on the Sharepoint 24 site and make sure it’s up. 25Executive Court Reporters (301) 565-0064 2 5

MR. RIVEST: In here it’s clearly more 1 expensive at EL1 than at the base. So why do we have 2 a negative first cost? 3 MR. BOLDUC: Negative payback. 4 MR. RIVEST: We’re saving more in one year 5 than we -- 6 (Discussion among consultants.) 7 MR. PARKER: Again, please, everybody, start 8 off with your names. 9 MR. BOLDUC: Chris Bolduc, LBL. I’m going 10 to move over to the payback results for design line 11 seven. So you can see the mean retail cost used by 12

LCC. 13 MR. RIVEST: We don’t have the baseline. 14 MR. DeLASKI: But you have your incremental 15 cost down there, right at the bottom. This is Andrew. 16 So you’re starting with a negative mean incremental 17 cost in those first three. 18 MR. RIVEST: That plot doesn’t say -- 19 MR. DeLASKI: Right here. It’s an error, 20 right, somewhere. Got to be. 21 MS. COUGHLIN: I don’t think so. I think 22 it’s just because you have a high achieving designs 23 there -- 24 MR. DeLASKI: But the plot has a positive 25Executive Court Reporters (301) 565-0064 2 6

slope, so -- the engineering plot has a positive 1 slope. 2 MR. RIVEST: I agree there’s a lot of 3 flatness in the picture, but it sort of wanders. 4 MR. PARKER: Is it possible that the slope 5 is so flat that the perturbation is accounting for 6 that? 7 MR. DeLASKI: Can you go back to the 8 engineering plot? Andrew. 9 MR. PARKER: ... below the base, and then it 10 goes up again. 11 MR. DeLASKI: Look at the scale. The scale 12 is 100, it’s a pretty good scale, so -- 13 MR. BOLDUC: I apologize for the delay. 14 MR. PARKER: It’s your fault. Next time 15 refuse. 16 MR. BOLDUC: Again, I mean this is all 17 privileged -- That’s the base. 18 MR. PARKER: Is it possible that the 19 perturbations actually -- 20

MS. COUGHLIN: No. 21 MR. MILLURE: Also, there’s another part to 22 M12 -- to the material choice in the base case. 23 MR. BOLDUC: I can’t tell. 24 (Discussion among consultants off mic) 25Executive Court Reporters (301) 565-0064 2 7

MR. PARKER: Is it possible to tell what 1 material selection is going on in the base case? 2 MR. SCHOEN: Chris, I have a question for 3 your model. 4
MR. BOLDUC: Sure. 5 MR. SCHOEN: Jerry Schoen, AK Steel. When 6 you did your model for these, on miter core, what did 7 you assume the building factor, the structure factor 8 in with the M12 would be? 9 MR. BOLDUC: I’m going to redirect that to 10 Mike. 11 MR. RIVEST: OPS, OPS with no payback. 12 MR. SCHOEN: Okay. If you assume the number 13 of grain-oriented, it will be wrong ... 14 MR. GREESON: There’s a problem with -- the 15 LPS data -- this goes back to what Wes was saying this 16 morning. They optimized on A/B factors. They did not 17 optimize on efficiency. And -- 18 MR. RIVEST: Well, one problem is -- because 19 ICM-12 has the lowest first cost. 20 MR. GREESON: I’m just saying he was saying 21 it was in the wrong position. Where are the dots for 22 the M12? Are they on the grid? 23 MR. RIVEST: The purple dots. 24 MR. GREESON: Oh I’m sorry. I’m sorry. 25Executive Court Reporters (301) 565-0064 2 8

That’s where the confusion came from. 1 MR. PATTERSON: So, Mike how is the 2 incremental first cost savings? 3 MR. RIVEST: It’s not. It’s just a math 4 error. I mean what I can tell you is when the got the 5 engineering results, you know, I think we need to do 6 some more OPS from this here. And what we’re looking 7 for guidance on is we noticed that the design line 8 seven magnetic flux levels couldn’t get any lower than 9 design line eight. And we weren’t certain why that 10 was, and we weren’t certain if that applied to all 11 steel grades. And we just didn’t have time to go back 12 and forth to you guys to figure out what was going on. 13 Rob. 14 MR. GREESON: Rob Greeson, Federal Pacific. 15 You say the flux levels -- are you talking about 16 within the same steel combinations, or are you -- 17 MR. RIVEST: So I was -- if I had a chance, 18 I would have asked you for a particular steel and a 19 particular mitering, what is the appropriate flux 20 density to be putting as a max on that design, and 21 what’s driving that? Because we were seeing designs 22 coming in at DL7 were definitely lower than ... and we 23 thought that might have to do with just the fact that 24 you’re dealing with a smaller core, and -- no? What 25Executive Court Reporters (301) 565-0064 2 9

is it? 1 MR. GREESON: No, it’s -- Rob Greeson, 2 Federal Pacific. It’s a lot of different things. If 3 you’re talking about non-oriented steel, your flux is 4 going to be extremely low because without giving you 5 more than you need to know, it’s almost like we’re 6 shooting -- I don’t know, maybe some things maybe we 7 shouldn’t talk about too much -- but I think the 8 designers in the room will understand what I’m saying, 9 I’m probably not giving away too much, but it’s a 10 function of the flux and geometry of the thing -- 11 there’s infinite parameters that you can vary with 12 these transformers. You can make them tall and thin, 13 you can make them short and fat. You can raise your 14 induction levels, you can lower them. You can add a 15 conductor, you can change the conductor sizes. And 16 all these countless different combinations really, 17 really good designer will begin to iterate into the 18 most cost-effective designs. So what happens is OPS 19 uses an optimization program that -- we don’t use 20 their optimization program all that much. I can’t 21 comment on exactly how it’s going to pick something, 22 but I do not believe that many times it converges on 23 the same design that we would have. 24 MR. RIVEST: My question is a little 25Executive Court Reporters (301) 565-0064 3 0

different. Mike Rivest. My question is a little 1 different. My question is are you placing a cap -- so 2 let’s say you have an M12 butt-lap, would you drive 3 that to as a 20.5 (ph) test line or are you going to 4 limit it for a more specific -- 5 MR. ROBLES: If you’re talking about a non6 grain-oriented -- 7 MR. RIVEST: Yeah. 8 MR. ROBLES: -- it will limit it much lower 9 the induction levels than the grain-oriented. 10 MR. RIVEST: And it’s not a optimization 11 issue, that is a physical characteristic of the steel 12 in creating sort of -- is it migrations? Is it -- 13 you’re limiting -- 14 MR. ROBLES: The nature of the curve, there 15 is a lot of migration, the direction of the curve in 16 the losses, you arrive much earlier on a non-grain 17 oriented in order to if we utilize that steel, you 18 need to work -- 19 MR. RIVEST: Okay. That would be handled by 20 the optimization. If it has the curve programmed in. 21 I thought it might have something physical. 22 MR. GREESON: Rob Greeson, Federal Pacific. 23 If you see major differences in induction levels, are 24 you referring to feedback that you got from the 25Executive Court Reporters (301) 565-0064 3 1

manufacturers? 1

MR. RIVEST: Yes. 2 MR. GREESON: Okay. What you’re seeing is a 3 fundamentally different approach to achieving the 4 efficiency. 5 MR. RIVEST: I’m talking about the 6 differences between you guys. I’m not talking about 7 the OPS. Your baseline, your own baseline might be 8 running significantly higher magnetic flux in the run 9 on eight than seven. I noticed a pattern there, and I 10 limit it because of that, not knowing why -- just 11 seeing OPS running higher, maybe there’s a physical 12 reason for that. And I didn’t know if that was -- 13 because if you look at the design parameters that we 14 have on the software, we have impedance limits, we 15 have limits on ... the curve ... so I was wondering if 16 that was a forced limit that you put -- 17 MR. GREESON: Not really -- Rob Greeson, 18 Federal Pacific. Unless you’re ... I’m going to answer 19 your question, Mike. 20 MR. RIVEST: Please, I’m trying not to give 21 away too much information. 22 MR. GREESON: There’s a maximum induction 23 level you don’t want to push beyond for an particular 24 steel. That would be something that OPS should have 25Executive Court Reporters (301) 565-0064 3 2

probably -- they probably do have it in their program, 1 but that’s not what’s causing it to go low or high. 2 What’s causing it to go low or high is their 3 combination of A/B factors converging on the design 4 and it keeps driving it up or down. And if it’s 5 different from what the manufacturers feedback is, 6 it’s because the design approach was totally 7 different. And honestly, I do not think a 8 manufacturer that converges on a more cost-effective 9 design a lot of times than what the program can 10 predict, simply because it’s not design to optimize on 11 efficiency. 12 MR. RIVEST: Right now I can assure you that 13 the M12 design is, in terms of core weight and 14 winding, is perfectly aligned with what we received. 15 MR. GREESON: That’s pretty good. 16 MR. RIVEST: It wasn’t before. But now it’s 17 in perfect agreement with yours. But I did put a 18 limit, having seen those lines, I put a limit on some 19 of the oriented steels levels, and that filtered out 20 some of the dots. So you’re seeing that the cloud is 21 simpler. That’s a limit I put on the upper value, 22 because I thought that that would -- that lower 23 inductance level was for these other optimizations. 24 MR. GREESON: Rob Greeson, Federal Pacific. 25Executive Court Reporters (301) 565-0064 3 3

Can you tell me what the upper bound was, just out of 1 curiosity? Didn’t I hear you say it was sound level 2 related or -- 3 MR. RIVEST: Well, that’s what I thought 4 that that was why that was put in place. I think the 5 upward bound were running around 50. 6 MR. PARKER: So I think -- 7 MR. RIVEST: And this might have been 30. 8 MR. PARKER: I think we need to -- let’s 9 work on that. 10 MR. RIVEST: I was just trying to kill time 11 here. 12 (Laughter.) 13 MR. RIVEST: You didn’t see me grinning? 14 MR. PARKER: So we’re trying to figure out - 15 - we’re not going to have enough -- you can’t get 16 enough time to actually get a new run, but -- so I 17 think we need to think about another process. John. 18 MR. CASKEY: So one of the things that came 19 out from some of the meetings with the manufacturers 20 and we were trying to figure out some of the results 21 that were presented, is it would be nice if we could 22 have like the plus sensitivity, core weight conductor 23 information on the OPS run --is that available or can 24 you provide that? 25Executive Court Reporters (301) 565-0064 3 4

MR. RIVEST: We did -- we did for the ... 1 before the changes. 2 MR. CASKEY: Okay. 3 MR. RIVEST: Yeah, we didn’t revise it based 4 on the changes from the manufacturers’ feedback. 5 MR. CASKEY: So those are in the design 6 templates? 7
MR. RIVEST: Yes. 8 MR. CASKEY: Oh, the forms that you sent us 9 to fill out, in the draft that you sent to us, it was 10 already in there? 11

MR. RIVEST: Yes. 12 MR. CASKEY: Okay. 13 MR. PARKER: Now, were there planned changes 14 to the design of the template on the basis of the 15 feedback? 16 MR. RIVEST: Not the template, but the new 17 designs -- so, for example, we added -- our new M12 18 designs have been reoptimized, and that would have to 19 -- so what we were able to get good alignment with was 20 baseline and the NEMA premium levels. Because we got 21 very specific information on that, and it makes sense 22 because it’s from the manufacturers. You’re making 23 product and you optimize those products. And it’s -- 24 so we dialed into those two, and from what I could 25Executive Court Reporters (301) 565-0064 3 5

tell, we had come to very good agreement on those two 1 levels. And with the construction that you guys were 2 using. So we had the same designs to follow. So in 3 terms of correlating winding, we achieved good 4 agreement. 5 PARTICIPANT: So that’s why I was surprised 6 when I saw the LCC. 7 MR. PARKER: So we feel -- we can move on. 8 MR. BOLDUC: Yeah, I’ll move on. The NIA 9 results -- yeah, they’re going to be taken with a 10 grain of salt, please. 11 MR. DeLASKI: Is that the design line eight 12 plot? 13 MR. BOLDUC: Yeah. 14 MR. PARKER: So, Andrew, while he’s doing 15 that, since you were out of the room, we’ve been 16 working through and discovering some difficulties in 17 the LLC run for design line seven, and so we’re going 18 to have to correct that. I don’t think we’ll be able 19 to do that at this meeting, if I understand. 20 MR. RIVEST: No. I think what would be most 21 productive now that we changed our engineering would 22 be to send, like you suggested, design details back to 23 those who provided design details to us, and make sure 24 that we have acceptable designs at each of the ELs. 25Executive Court Reporters (301) 565-0064 3 6

And then if we have the right amount of core steel and 1 windings, then it’s a costing issue. And we should be 2 able to calibrate our engineering curves pretty 3 rapidly. 4 MR. DeLASKI: I’m wondering -- this is 5 Andrew -- so, we think the same error exists in design 6 line eight analysis. I’m wondering if it would be 7 useful to have some discussion on design line eight 8 analysis, because that might be indicative -- 9 MR. PARKER: That’s what he’s doing. We 10 were just -- I was using the time while he was getting 11 the slides. 12 MR. DeLASKI: Thank you. 13 MR. BOLDUC: People want to look at the 14 engineering design line eight? 15 MR. DeLASKI: Engineering, yes. 16 MR. PARKER: Maybe you can just talk us 17 through -- 18 MR. RIVEST: Well, okay. I think first 19 thing to note is whether or not we have our least cost 20 design using the same combination of materials that 21 manufacturers are using. So we have the least cost 22 design using M6 butt-lap, is that right? 23

MR. PARKER: Yes. 24 MR. RIVEST: So just want to make sure 25Executive Court Reporters (301) 565-0064 3 7

that’s calibrated correctly. I’m not seeing any 1 reactions there. 2 MR. PARKER: Does this seem reasonable? Any 3 objections? Reservations about this? 4 MR. RIVEST: Design line eight, baseline M6 5 as the low cost design. It’s not unreasonable? 6 MR. GREESON: For this design line, M6 is 7 what -- is that what you’re doing? 8 MR. RIVEST: You didn’t answer that. It 9 just depends on the factors -- cost parameters, right? 10 MR. DeLASKI: Thomas, do you want to weigh 11 in on that? This is Andrew. 12 MR. PATZNER: Thomas Patzner, Schneider 13 Electric. Or we’re using ... material against it and 14 the difference being is we’re not butt lapping it, but 15 I can tell you we’re probably getting very close to 16 the butt-lap output manufacturers sale price. So I’m 17 all right with it being the butt-lap aluminum-aluminum 18 at six. 19 MR. RIVEST: I’m looking for the CSL with 20 the NEMA premium. Like I said, we got good design 21 information on that. I’d like to make sure, at least 22 from a constructional point of view, building similar 23 transformers, but I’ve not seen the line. 24 MR. COFFEY: There’s a call pending. 25Executive Court Reporters (301) 565-0064 3 8

MR. PATZNER: So it’s 99.02, and it’s the 1 CSL-2. 2 MR. RIVEST: Okay. And what’s the design 3 there, Brian, that seems to be lowest first cost in 4

NEMA? 5 MR. COFFEY: That looks -- M5, right. 6 MR. RIVEST: An M5 wired? Is a reasonable 7 design for that level? 8

MR. COFFEY: Yes. 9 MR. ROBLES: Eduardo Robles, Eaton 10 Corporation. Yes, it is a reasonable design. 11 MR. RIVEST: Okay. 12 MR. DeLASKI: This is Andrew. Just 13 following up the question. I’m looking at EL2, is 14 this the same as EL2? 15

MR. RIVEST: Yes. 16 MR. CASKEY: So the data actually shows 98 17 percent M3. 18 MR. DeLASKI: Yeah, I’m looking at -- John 19 and I are both looking at the table -- 20 MR. CASKEY: This is John Caskey, sorry. 21 MR. DeLASKI: Looking at the table -- 22 MR. RIVEST: The LCC? 23 MR. DeLASKI: This table -- 24 MR. PARKER: Core material selection. 25Executive Court Reporters (301) 565-0064 3 9

(Off mic discussion.) 1 MR. PARKER: So the NEMA premium corresponds 2 to M5 mitered as indicated here? 3 MR. RIVEST: Yes. And so then we step up. 4 So this is the basis for the LCC that we had entered, 5 so how you pick the design to represent that level. 6 If this is, you know, in decent agreement with how 7 you’re designing your products, then we take those 8 pounds of steel, multiply by average pricing, and the 9 curve should be reasonable. The LCC should be 10 reasonable. But if that curve is wrong, everything is 11

wrong. 12 MR. PARKER: So what -- 13 MR. RIVEST: This is the one I’m going to 14 say we spent the most time on. I hope it’s good. But 15 that’s the feedback we’re looking for. And we could 16 provide you our designs for each of those levels. 17 MR. PARKER: Would it be worth discussing 18 those designs now? 19 MR. RIVEST: No, because I do think the 20 analysis is proprietary. 21 MR. PARKER: The LCC should -- 22 MR. RIVEST: It appears to be consistent 23 with this? 24 MR. CASKEY: This is John Caskey. So then 25Executive Court Reporters (301) 565-0064 4 0

why on the core materials selection chart that you 1 provided, the most recent one, shows for design line 2 two, 98 percent for M3? 3 MR. PARKER: You mean EL2. 4 MR. CASKEY: EL2, I’m sorry. Design line 5 eight, EL2 shows 98 percent M3. For EL3, we jump up 6 to 100 percent ZDMH. 7 MR. RIVEST: This would definitely argue for 8 Wes’ curve -- curve fits. 9 MS. COUGHLIN: It’s the same (off mic) -- 10 one of the difficulties here is the single point ... and 11 that’s a very unstable place to push the efficiency 12 boundaries. So you don’t ... that may be causing the 13 numerical problems with the switch. 14 MR. PARKER: Is there a methodological ... 15 MS. COUGHLIN: (off mic) Yes ... 16 MR. PARKER: Could we discuss what it would 17 be so we could see it? 18 MS. COUGHLIN: (off mic) ... it’s a pretty 19 well defined curve through the designs ... extend it 20 slightly beyond that line to populate ... and that would 21 get rid of the selection problem and then ... 22 MR. RIVEST: And I don’t think the M5 versus 23 M3 is the end of the world here. It’s more getting a 24 continuous function. 25Executive Court Reporters (301) 565-0064 4 1

MR. PARKER: Is there a way -- 1 MR. DeLASKI: I told you so -- 2 PARTICIPANT: See that white apace -- 3 (Laughter, overspeak) 4 MR. PARKER: So I guess the question is, can 5 we, using this engineering plot, which I think people 6 feel is reasonably accurate, make some progress today 7 in closing the gaps and narrowing the band for design 8 line eight? 9 MR. RIVEST: Do we even have a band for it? 10 MR. PARKER: What’s that, band of 11 difference? Well, so far as I understand, there’s a 12 reasonable confidence in the engineering analysis for 13 design line eight. Right. There’s no objections. 14 And so I think it might be worthwhile to just 15 exploring what materials are being selected at the 16 higher and lower levels, and seeing whether there’s a 17 fundamental problem with the LCC analysis that would 18 indicate that we need to redo that before we can at 19 least put boundaries around it. 20 For example, CSL-2, is there a sense that 21 that is a -- at a minimum, a cost-effective solution 22 for the industry as a whole as it comes to those 23 companies who desire to, for one reason or another, to 24 produce it? Is this something -- is this a discussion 25Executive Court Reporters (301) 565-0064 4 2

that we can -- I’m just asking a process question now, 1 with that as an example. Is this a discussion that 2 people feel it would be fruitful to have now or do 3 people really feel like they have to wait and see a 4 revised LCC before we can talk more about it. Rob. 5 MR. GREESON: Rob Gleeson, Federal Pacific. 6 I would like to see that. I think probably the 7 advocate groups would probably -- are more 8 disadvantaged than we are, because we’ve done a little 9 bit of analysis on our own. But their primary source 10 of information is the LCC, so it’s going to be hard 11 for them to know where they’re at. 12 MR. DeLASKI: I think that’s true, Rob. 13 This is Andrew. It is true. We do rely heavily on 14 the analysis coming out of the LCC. That said, I 15 wonder if it would be constructive to put up the -- 16 you centered on the simplified curves -- to me -- 17 MR. PARKER: Mike was saying they simplified 18 too much. Could you -- I think it would be helpful to 19 explain why, because I think there’s a lot of interest 20 in having simplified curves and so if they’re not 21 going to rely on them -- 22 MR. RIVEST: Well, I think they were 23 constructed primarily for concerns about transitions 24 between amorphous and non-amorphous. And that’s not 25Executive Court Reporters (301) 565-0064 4 3

really a key of what this rule is about. I think this 1 one’s more about proven benefit and incremental costs. 2 And -- 3 MR. DeLASKI: You need to put those curves 4 into a single curve to make them useful. 5 MR. RIVEST: I think here you’ve got a 6 single curve, because the design space is full, has no 7 white space, and -- 8 MR. DeLASKI: What I’m trying to do is look 9 at this and figure out what the inflection point is. 10 But I can’t determine the inflection point from this. 11 If we had a simplified curve -- 12 MR. RIVEST: But you can see an envelope 13 around those curves. 14 MR. DeLASKI: Definitely. 15 MR. RIVEST: And you can literally read off 16 that envelope. What you typically would see is where 17 that ... flat is where you find the minimum ... that’s 18 where you typically would look to. 19 MR. CASKEY: This is John Caskey, NEMA. I’m 20 sorry, I think the cost of the design and the life 21 cycle cost results, I think are critical to decision22 makers points in this analysis. I think the other 23 thing is in this area is that there certainly is a 24 greater diversity of manufacturers, and particularly 25Executive Court Reporters (301) 565-0064 4 4

small and medium manufacturers. I don’t know if 1 there’s like 15 or 20 or so in this space, and it 2 would probably be good, I think from our perspective, 3 for us to learn more about, you know, what does it 4 mean to ten existing manufacturers, manufacturers of 5 premium level, what’s the drawbacks of them as a 6 business and do we, as a committee, care if ten 7 companies go out of business, or 20 companies go out 8 of business? It seems that’s another factor here 9 that’s more prevalent than possibly in like the liquid 10 filled we heard about earlier. 11 MR. RIVEST: Yeah, I was also -- 12 MR. PARKER: Mike Rivest. 13 MR. RIVEST: The NEMA premium actually seems 14 like a significant improvement over the baseline. I 15 was curious how it was developed. 16 MR. CASKEY: This is John Caskey. I think 17 we basically -- to be honest with you, we started 18 working on this probably over a year and a half ago. 19 Well, we had two different NEMA -- going back even 20 further, we had two different definitions of NEMA 21 premium. So when the ruling came out relative to the 22 multiple chronic conditions dry type and liquid filled 23 that became effective on January 1, 2010, back in 24 2009, we started using the name premium to reflect 25Executive Court Reporters (301) 565-0064 4 5

those manufacturers and utilities or whatever, that 1 wanted to buy our product, that met that 2010 2 regulation prior to 2010. We started using the NEMA 3 premium name then. 4 Then as that became the rule, basically in 5 January 1, 2010, we sort of dissolved that use of the 6 word premium and then we built a low voltage dry type 7 premium program. We first analyzed both 15 percent 8 less loss and 30 percent less loss and we’re going to 9 have a NEMA premium 15 and a NEMA premium 30, and then 10 basically the manufacturers at that time, correct me 11 if I’m wrong, anybody here, basically said, well, you 12 know, the customers that are going to buy premium 13 efficiency product, really want it to go higher and 14 they would be more interested in a 30 percent product 15 as opposed to a 15 percent, so we said, let’s do away 16 with 15 percent proposal and just focus on the 30 17 percent. 18 And that, at the same time, was around -- 19 and Thomas Patzner talked about this for hours -- 20 basically that was the same time as, I think, ASHRAE 21 was adopting, back from the earlier DOE analysis, what 22 we refer to as CSL-3, that it now has nothing to do 23 with this CSL-3, but basically ASHRAE had referenced 24 that in a standard for K through 12 schools, and this 25Executive Court Reporters (301) 565-0064 4 6

-- our NEMA premium 30 is extremely close to that CSL1 3, but the NEMA premium 30 can be directly derived 2 from the TP-1 standards without going through all the 3 rigmarole. The CSL-3 was never promulgated or never 4 finally published by DOE, so we were hesitant to use 5 that terminology. NEMA premium was almost identical 6 to it. 7 MR. RIVEST: Do we know if the 12 or so 8 manufacturers in this market have all designed their 9 product to this level, to the NEMA premium? 10 MR. CASKEY: We know that 11 have signed 11 license agreements that they want to be able to market 12 this or sell this product, but so far not all 11 of 13 them have sold any of these products. And when I’ve 14 tried to inquire about that -- and I think you guys 15 have also -- I mean it’s been a very, very small 16 percentage, like two or three percent, something in 17 that range. 18 MR. RIVEST: From a manufacturing impact 19 point of view, there’s significant costs -- the R&D, 20 the prototyping, that -- they’ve already been 21 absorbed, if you will, creates a sweet spot. 22 MR. CASKEY: To my knowledge, this is John 23 Caskey, I don’t think they’ve all geared up to 24 manufacturer those transformers. 25Executive Court Reporters (301) 565-0064 4 7

MR. RIVEST: Thanks. 1 MR. PATZNER: Thomas Patzner, Schneider 2 Electric. We do sell the NEMA premium product today. 3 If the next levels of efficiencies are mandated, all 4 the -- we will not build any of the product in the 5 future the way we currently build our current NEMA 6 premium offering. It’s low volume. It’s built in a 7 low volume facility. It is not built in my high volume 8 facility. So we would be starting from scratch for 9 how to build it because of the volume shift. 10 MR. PARKER: Could I ask just for -- Richard 11 Parker. Could I ask just for understanding, many of 12 these low voltage transformers are sold to schools, 13 commercial buildings, residential developments, 14 commercial buildings mostly, right. And as I 15 understand from previous discussions and correct me if 16 I’m wrong, there’s a lot of high sensitivity for these 17 transformers. Basically, the buyers, by and large, 18 buy on lowest first cost that meets the standard, 19 mainly because they don’t absorb the costs, they don’t 20 recognize, they don’t realize any efficiencies down 21 the road because they’re not the people who are 22 actually going to be occupying those buildings, right. 23 On the other hand, if the standard were to 24 be increased as a result of the mandate, the cost 25Executive Court Reporters (301) 565-0064 4 8

might go up somewhat, but these are also not costs 1 that are very big in their overall scheme of things, 2 which is perhaps why the building owners and 3 manufacturers association didn’t care to participate 4 in our process and so forth. These are not big ticket 5 issues, and they’re not likely to decrease sales as a 6 result of an incremental price in the transformers 7 that are being sold, if they have no choice but to buy 8 them because they’re made by the standard. Is that a 9 correct statement of the market reality. 10 MR. PATZNER: Tom Patzner, Schneider 11 Electric. Yes, that is. I would add one caveat, 12 though. There’s a large number of customers that 13 value engineers for the premium or a feature-added 14 transformer to be low cost, which is why one of the 15 reasons why the low cost is the highest percent of the 16 market, and even though it’s not a large percentage, 17 it is a product that they can cost out of when they 18 value engineer the building, when they’re going over 19 budget. So I would believe that would be loss as we 20 increase the efficiency, because they will not be able 21 to switch. So that’s the only added piece. 22 MR. PARKER: Right. Andrew, sorry, yes, 23 give your name please and step up to the table. 24 Mr. Katz: Alan Katz, PDI. I think there’s 25Executive Court Reporters (301) 565-0064 4 9

some other resolution you want to add to that, and 1 that is, in our market center is data center, and 2 that’s pretty significant ... ten to 15 percent of the 3 national energy consumption. In the data center 4 market, we are finding that our competitors are 5 according themselves exemptions from the standard by 6 virtue of the fact that they are selling complete 7 packages -- transformers ... power ... So for 8 manufacturers like ourselves that just participate in 9 the end sale market, if we’re going against a larger 10 manufacturer that has ... can sneak the transformer in 11 under that guise. There’s going to be a 30 point 12 differential in cost in a lot of cases, between us and 13 them. And that assumption leaves us ... and more the 14 point is, have a big loophole in the law. So I think 15 that’s something we’ve got to talk about how -- 16 MR. PARKER: Thank you, I’m sorry. Would 17 you give me your name again? 18 MR. KATZ: It’s Alan Katz. 19 MR. PARKER: Alan Katz. Thank you. Yes, 20 that is an important point, and I think you weren’t 21 present in our previous low voltage discussion, but we 22 did hear a lot about data centers and I think there 23 was general agreement around the table that they 24 require special treatment. In the medium voltage area 25Executive Court Reporters (301) 565-0064 5 0

we also have a couple areas that require special 1 treatment, and as we discussed in the other group in 2 that other context, the criteria for providing 3 something with special treatment is that there has to 4 be some physical or performance characteristic of the 5 unit that is distinct that warrant special treatment. 6 So we can’t distinguish between products on the basis 7 of who the buyer is or any intended use is, it has to 8 be this distinct product. 9 And secondly, there’s a concern about 10 circumvention, which I think your point raises, and 11 there needs to be a specification made so that if 12 there is a lower standard for the data center 13 transformers, but it’s not purchased by people who are 14 not operating data centers and install as a way of 15 circumventing the power standard. 16 MR. DeLASKI: But that’s not what he just 17 said. I heard him say -- 18 MR. KATZ: I think you got a pretty good 19 gist of it. 20 MR. DeLASKI: What I heard you say is that 21 people are selling UPS transformers -- they’re taking 22 advantage of an exclusion in the existing law to 23 compete against your company which is not using that 24 solution because you don’t sell that package. 25Executive Court Reporters (301) 565-0064 5 1

MR. KATZ: Right. 1 MR. DeLASKI: And you’re facing a 30 to 40 2 percent cost differential, disadvantage, because you 3 don’t make that whole package in the market. 4 MR. KATZ: I’ll frame it in ... terms, this 5 is Alan Katz here again, so you have a UPS system 6 which is basically a big battery backup system that 7 comes out 280 volts, typically, and you want to get 8 down to 240 or 208, so all you do is you just stack 9 transformer onto the end of that UPS and it becomes 10 part of the power system, and therefore it’s afforded 11 the exemption. Versus what’s typically done today is 12 putting that transformer downstream somewhere as a 13 separate entity and it’s therefore classified under 14 DOE rules. So, you know, somebody can argue, 15 manufacturers can take it one step further and say, I 16 have a UPS system but it’s made to work with my 17 transformer that’s downstream and therefore, I’m 18 except because it’s all part of our volume system. So 19 that’s kind of the essence of the venture. 20 The other concept that we’re really talking 21 about covers data centers -- there are a lot of very 22 specific characteristics that are not covered in 23 distribution transformers, namely, in rush regulation 24 if the transformer may have too much in rush. 25Executive Court Reporters (301) 565-0064 5 2

Unfortunately, in rush and efficiency work in opposite 1 directions. There’s a whole host of other things such 2 as customer of the data center will be fiddling with 3 their distribution system daily, and doesn’t want to 4 expose their technicians to a lot of arc flash, and 5 therefore they have a higher impedance. So 6 essentially the data center transformer, they’re not 7 wholly buy off the shelf transformers for a data 8 center, they’re buying a very specialized devise, and 9 unfortunately a lot of those characteristics were 10 combined in that engineering suit, so to speak, it 11 comes out extremely difficult and extremely costly to 12 try to do something. I don’t think the answer is to 13 give these data centers a wholesale exemption, but 14 maybe just a separate subcategory, that we’re talking 15 point two or point three percent differentially on a 16 data center transformer would allow you to maintain 17 these unique characteristics. So we’re saying slow 18 heat bar very high that allows the dispensation for 19 characteristics that are necessary. 20 MR. DeLASKI: To me, this is Andrew again, I 21 hear you on that, and what I’m also hearing, though, 22 is that that doesn’t address the UPS exemptions. 23 There’s still some circumvention going on that I think 24 also should be thinking about and to address. That 25Executive Court Reporters (301) 565-0064 5 3

circumvention issue, we didn’t really flag last 1 meeting, and to me it’s a new issue that I hadn’t 2 quite wrestled with yet. 3 MR. KATZ: It’s certainly legal, but then on 4 the engineering standpoint for defining other issues 5 with the data centers’ specialized device. 6 MR. DeLASKI: My eyes kind of popped when 7 you said ten to 15 percent are using the exemption. 8 MR. KATZ: I could cite a DOE estimate that 9 said ten to 12 , but it’s also one of the fastest10 growing consumers. 11 MR. DeLASKI: So you’re talking about the 12 transformers that serve this, that means you’re 13 talking about the transformers that serve kind of 14 hooks up to an energy load, that’s a big chunk. 15 That’s something that we care about. 16 MR. KATZ: And it’s also unique insofar as a 17 data center transformer will be at a specific load 18 level seven by 24, versus the typical utilization, 19 which is less. 20

MR. DeLASKI: Sure. 21 MR. PARKER: Rob. 22 MR. GREESON: Rob Greeson, Federal Pacific. 23 And I don’t know a great deal about these data center 24 transformers but from discussing just briefly with 25Executive Court Reporters (301) 565-0064 5 4

Alan before the meeting, I think it’s a pretty unique 1 product that probably needs to be broken out. That’s 2 just my own opinion, and something should definitely 3 be done there, but I mean the loading is a big thing, 4 it’s not for size or anything else. You don’t want to 5 enforce a 35 percent peak efficiency when it’s running 6 at 80. So if you break it out and you customize it to 7 that data center, you’re really going to get more 8 efficiency by doing that. It’s going to be for the 9 overall good of saving energy. 10 But you guys in your data center market may 11 have to take the lead on that and tune in to defining 12 it, and working to fix that loop hole. 13 You’re saying that there’s companies that 14 have a transformer in the UPS that essentially does 15 the same thing that yours does, but they load it 16 inside the box and call it a UPS system. 17 MR. KATZ: They don’t put it inside the box, 18 they put it next to the box and bolt it to the box. 19 MR. GREESON: Well, why don’t you put it 20 next to the box and bolt it to the box and call it a 21 UPS transformer. 22 MR. KATZ: Because that’s skirting the law. 23 (Overspeaking with discussion on data center 24 transformers) 25Executive Court Reporters (301) 565-0064 5 5

MR. KATZ: What the trend is right now ... for 1 data center distribution, there’s a slow ... of 400 2 volts, Y and what are you supposed to do, wait ... And 3 as a result it’s actually doing away with a lot of 4 transformers for distribution and centralizing them. 5 Instead of 150s or 125s, you’ll have a centralized 750 6 and 400 ... and that’s actually saving a lot of energy. 7 As a result, you now have boxes slapped next to the 8 UPS system and ... 9 MR. GREESON: Rob Greeson, Federal Pacific. 10 I just hearing the discussion, I’d be curious what 11 Andrew, what do you think about the break out cost of 12 building that product? 13 MR. DeLASKI: Well, I -- I heard two things 14 that I think are important. One is that just -- you 15 get responding on the fly here -- that Alan’s 16 suggesting that a four to “small change” is the word 17 you said, of point two or point three, so I’m not sure 18 what a small change is, but I understand what that 19 could be. I also understand -- and I think the other 20 thing that we need to understand is what are the 21 engineering differences that drive that. Okay. And 22 then to the point that Richard made, is how do we 23 define these widgets in a way that it’s very clear 24 what they are so you don’t end up with the same 25Executive Court Reporters (301) 565-0064 5 6

problem that you’re facing now in the UPS transformers 1 that causes them to be used in other applications. 2 You can’t -- we are talking here about 3 equipment standards, not application standards. So I 4 think that’s the thing that we would look to you two - 5 - we created a committee or a subgroup in the other 6 meeting to work on coming up with the definitions so 7 that people can put it around and test and see that it 8 can be definitive. So the savings impact that I’m 9 interested in, but also that definitional impact so 10 that the thing can be enforceable. 11 MR. KATZ: This is Alan Katz again. This ... 12 substitution, somebody taking our product out, a 500 13 KVA transformer for us ... our transformer, that’s about 14 $54,000 ... if you go ... somebody 500 KVA distribution 15 transformers about 12 to 14. 16 MR. DeLASKI: That’s when definition comes 17 in, right. The thing is -- because you make it that 18 way today doesn’t mean that some day in the future you 19 can’t make something that meets the letter of that 20 definition more cheaply. That’s why we’re looking to 21 give a definition careful consideration. I think you 22 have the same interest. We share interest in that. 23 And then the other thing that occurs to me - 24 - I see you raising your hand, this is something we 25Executive Court Reporters (301) 565-0064 5 7

discussed the other day, is that these things are 1 running at 85 percent load, I mean part of the point 2 that you just made is that the load -- this last load, 3 I’m listening to 35 percent, whereas in the field 4 they’re running at 85 percent, or whatever it is. So 5 I don’t know if there’s a way for us to address that, 6 but that’s something else that I think -- 7 MR. KATZ: ... enforces the 35 percent set 8 standard, ... higher losses than you would have had you 9 optimized it to the 85. 10 MR. DeLASKI: It’s something that we’ve been 11 trying to stay away from. I think the general rule is 12 you can make test method recommendations, but it does 13 suggest that the thing should be -- be tested at 95 14 percent load. 15 MR. RIVEST: It’s Mike Rivest. So if it was 16 coming off a production line, I wouldn’t know that 17 your transformer is any different from his, just by 18 looking at it. 19 MR. KATZ: There would be some telltale 20 signs, yeah. For instance, different busing -- our 21 transformer busing is ... 22 MR. RIVEST: Physical characteristics -- 23 then it would be an entirely different product that 24 would have its own test procedure, and this procedure 25Executive Court Reporters (301) 565-0064 5 8

loading would have to be prefaced in its use. 1 MR. BRENNER: This is David Brenner, ... we 2 encountered the very same situation with motors prior 3 to the energy policy of 2005. If a motor was part of 4 a piece of equipment and bolted to it or within it, it 5 came under the regulation of that piece of equipment. 6 Whereas, if the very same motor was sold independently 7 by the manufacturer, it came under the motor 8 standards. And so until 2005, this was a conflict 9 that was addressed by the addition of the language in 10 the 2005 EPAC that said if a motor is an integral part 11 of a piece of equipment, it falls under the motor 12 standard. So you might consider this the very same 13 situations with the transformer. If it’s bolted to 14 the device, then that’s, I think, the distinction -- 15 if it’s bolted to it, it’s part of it. Whereas if 16 it’s added later, and not come out of the factory 17 bolted to it, then it’s separate -- issue is a 18 separate transformer. 19 MR. PARKER: Tim. 20 MR. BALLO: Tim Ballo, Earth Justice. Yes, 21 the uninterruptible power supply transformer is not 22 defined in the statute, it’s only defined in the 23 regulations. So we do have, I think, the wherewithal 24 to change that here. 25Executive Court Reporters (301) 565-0064 5 9

MR. PATZNER: Thomas Patzner, Schneider 1 Electric. If I could, I’d like to make a couple 2 comments on this discussion. First of all, I do not 3 believe there’s a current loop hole in the law, it’s 4 how people are interpreting the law that’s the issue. 5 The definition for the distribution transformer is 6 very clear. The manufacturer of that device, that 7 core and coil is building a distribution transformer, 8 so people are doing what is being said. I think it’s 9 in the best interest for the companies that are 10 getting negative impact to make the DOE aware of it. 11 Because the law is very clear on what a distribution 12 transformer is and those units fall into that 13 definition. So there is -- to me, there is no loop 14 hole. 15 Second of all, in regards to the ability to 16 define these, I’ve scratched my head for two weeks now 17 trying to see how these products cannot be sold to 18 somebody else. And I understand today it’s a 5000 to 19 1000 price delta, but if there’s an exclusion for data 20 centers products, I’m going to see it in K to 12, I’m 21 going to see it in Walmart, I’m going to see it in 22 Target. I do not see how the product is not going to 23 end up in the entire market. 24

25Executive Court Reporters (301) 565-0064 6 0

ASHLEY: Just to clarify something, and I 1 just want to jump in. I’m actually do enforcement for 2 the DOE. Irrespective of whether the transformer is 3 included in another piece of equipment or if it’s a 4 separate, just transformer that stands alone, whether 5 it was manufactured in the US or imported into the US, 6 the DOE definition of transformer is covered and it 7 has to meet the standards, regardless of whether it’s 8 in a larger piece of equipment. I don’t know if that 9 helps to clarify things, but it would be covered 10 either way, if it’s by itself or in a larger -- unless 11 it’s exclusively excluded from the regulation, either 12 definitionally or by statute. 13 MR. DeLASKI: But what he’s also doing is 14 that they’re calling -- there is the universal power 15 supply transformers are excluded, so they’re saying, 16 this is a universal power supply. 17 ASHLEY: It would have to be very clear what 18 you got -- 19 MR. DeLASKI: And that’s defined in 20 regulation. 21 MR. KATZ: Uninterruptible power supply 22 means a transformer that is used with an 23 uninterruptible power system. And I think that’s the 24 problem. It’s used -- you buy this transformer, you 25Executive Court Reporters (301) 565-0064 6 1

bolt it on there, it’s then used with the system. 1 MR. DeLASKI: We’ve got to fix that 2 definition. 3 MR. BALLO: Change that to integrated into, 4 would that solve the problem? 5 MR. DeLASKI: Tom, that strikes me that that 6 definition isn’t going -- Tom you were saying that 7 you thought that definition was sufficient? 8 MR. PATZNER: Thomas Patzner, Schneider 9 Electric. Transformers are being sold as core coil at 10 some point, they have to comply with the law as core 11 coil because at that point they’re a distribution. If 12 some company is then integrating it, and they 13 integrate it into UPS, it now becomes a UPS, but for 14 the first company to sell it to the second company, it 15 had to comply with the -- it’s not excluded from the 16 law. And the Federal Register goes back to the first 17 manufacturer, not the guy who’s integrating it. So 18 the 431 and 429 clearly says that this product has to 19 comply. 20 ASHLEY: If there’s ambiguity as to whether 21 it is covered versus, you know, -- so from the point 22 of view of the manufacturer, it looks exactly the same 23 as a power transformer, I mean I can’t say this with 24 100 percent certainty, but the odds are we’re going to 25Executive Court Reporters (301) 565-0064 6 2

go that it’s covered if there’s ambiguity there. 1 Because if there’s no way to distinguish it from -- 2 MR. PATZNER: Yes, Tom Patzner, Schneider 3 Electric. Every one of these devices will be delta Y, 4 they’re going to be 480 to 2 AY (ph) or 480 to 400, 5 which is the going voltage as stated earlier, and 6 those units look exactly like, when you look at the 7 core and coil, look exactly like all the rest of the 8 distribution transformers. 9 MR. PARKER: Okay. So I think we have a 10 factual issue here that we obviously need to resolve, 11 but probably can’t resolve here today around this 12 table. So, what I would suggest, and what I hear 13 other people suggesting, is that we form a working 14 group to actively pursue this. We have a little rule 15 here Alan, for this group, that no good deed goes 16 unpunished. So, I was wondering if you would be 17 willing to chair that group and work with whomever is 18 interested in joining that group to develop a 19 proposal, if you can, a consensus proposal, on how to 20 treat data centers. And I think you’ve gotten pretty 21 good guidance from the group as to what is -- what are 22 the necessary elements of the showing. There is some 23 disagreement about whether those elements can be met 24 or not, that’s just something that has to be worked 25Executive Court Reporters (301) 565-0064 6 3

out in the group. There are -- sounds like two 1 circumvention issues to be addressed, one is the 2 generic one that I mentioned, and the other is the 3 unique one that you posed, and there the question is 4 whether it’s an enforcement problem or whether there 5 really is an ambiguity in the law. And so we’ll need 6 some advice on that as well. And I’m sure that -- at 7 least I hope that the Agency Counsel will be helpful 8 in advising on that as well. So we need to come up 9 with that group. Do we have -- is that agreeable to 10 everybody. All in favor? Agreed? Aye? Any opposed. 11 Opposed? Which were you voting -- 12 MR. SCHOEN: I had my hand up -- 13 MR. PARKER: Okay. So it’s -- a four man 14 working group, that doesn’t mean there will be an 15 exclusion or a special treatment for data centers, but 16 we are forming this group that is authorized to 17 explore the issue. Do we have volunteers at this 18 point to work on the group? Tim Ballo. 19 MR. PATZNER: Thomas Patzner, Schneider 20 Electric, I would like to participate in the group. 21 MR. PARKER: Thomas Patzner, okay. Anybody 22 else. 23 MR. FERNSTROM: I would. 24 MR. PARKER: Gary Fernstrom. Anyone else? 25Executive Court Reporters (301) 565-0064 6 4

Great. We will work with the group separately for a 1 time table for working and so forth and reporting back 2 to us with their results. 3 Great. A point was made before the data 4 center point came up, and I’m glad the data center 5 point did come up, but I wanted to return to the 6 question ... impacts, and just put out for discussion, 7 you know, a process for raising those. Obviously, the 8 manufacturing impact analysis isn’t done now because 9 that requires engineering, and as I understand it, 10 even LCC is upstream of that, right, so the 11 manufacturing impact analysis is the last analysis, 12 but I think from what I’ve heard around the table, 13 there’s some pretty strong sense that that’s going to 14 be a pretty fundamental piece of the puzzle. 15 So I thought it might be useful -- I don’t 16 want to put people on the spot, but if we could just 17 refresh our minds on what the manufacturing analysis 18 entails, what kind of outputs you’re planning on 19 generating, and make sure that people are comfortable 20 with what they are getting, because we’re not going to 21 have time to renew -- give new instructions on 22 analysis, we just want to make sure that people 23 understand what the manufacturing impact analysis is 24 that they’ll be getting, and able to get the right 25Executive Court Reporters (301) 565-0064 6 5

feedback to us on that. 1 MR. DeLASKI: Richard, before you go on to 2 that, before we go off the LCC that we have, I have a 3 couple questions. 4 MR. PARKER: Absolutely. Go ahead. Andrew 5 DeLaski. 6 MR. DeLASKI: There was discussion about the 7 NEMA premium levels, and I’m trying to understand how 8 the NEMA premium levels map to what we have in front 9 of us. So, the NEMA premium levels -- and I don’t 10 know who’s got them, do you have them, John? 11 MR. CASKEY: We had a separate one just to 12 correspond to NEMA premium. 13 MR. DeLASKI: Right, but I want to make sure 14 I’ve got it right. What I see, for design line six, I 15 think it’s EL3, 98.6 percent. 16 MR. CASKEY: It’s roughly three. 17 MR. DeLASKI: But it’s only roughly three. 18 So, I want to -- 19 MR. PATZNER: Thomas Patzner, Schneider 20 Electric. I can answer this question. 21 MR. DeLASKI: Thanks, Tom. 22 MR. PATZNER: The NEMA premiums in design 23 line six, it’s CSL-3; design line seven, it’s CSL-3; 24 design line eight, it’s CSL-2. 25Executive Court Reporters (301) 565-0064 6 6

MR. DeLASKI: See, that’s what had me 1 trumped -- for eight it’s two, right? 2 MR. PATZNER: Yes, and that occurred with 3 the late analysis in design line eight it went to CSL4 2. 5 MR. DeLASKI: Why did that happen? Is that 6 an anomaly of some sort that NEMA had to work 7 through? 8 MR. GREESON: I’m not sure I agree. Say it 9 again, Tom? This is Rob Greeson, Federal Pacific. 10 You say design line seven was CSL-6? 11 MR. DeLASKI: No, he said CSL-3. 12 MR. PATZNER: CSL-3. 13 MR. DeLASKI: Three. 14 MR. GREESON: Oh, okay. I don’t know where 15 I heard CSL-6. 16 MR. ROBLES: Eduardo Robles, Eaton 17 Corporation. On the original work done on the three 18 design lines, six, seven, and eight, there was a 19 perfect match almost with CSL-3. On the latest 20 revision of the standard, on design line eight, it 21 jumped considerably, so that’s why now it lines up 22 with CSL-2. 23 MR. DeLASKI: Okay. So I’ve got that now. 24 What confused me then, is that I looked to the trials 25Executive Court Reporters (301) 565-0064 6 7

data levels that were selected, so I’m going now to 1 page 14 of the slide show, and there’s a scenario, I 2 think the one that Tom asked for, that was the 3 scenario that was based on, I think, the ASHRAE code - 4 - I think it was our first meeting, Tom, where you -- 5 MR. PATZNER: That is correct. 6 MR. DeLASKI: -- where you got the 30 7 percent reduction in operating costs. So to me that 8 sounds like NEMA premium. Thirty percent reduction in 9 losses, thirty percent reduction in operating costs -- 10 that’s the same thing, right? 11 MR. PATZNER: So what happens, though -- 12 Thomas Patzner, Schneider Electric -- what occurs is 13 when we put in the duty cycle, which I‘ve argued to be 14 Between 15 to 20 percent, the NEMA premium actually 15 give a 40 percent reduction in energy. So when you 16 add the duty cycle in the commercial buildings, you 17 actually get more because of the fact that you’re -- 18 the loading impacts the overall reduction. 19 MR. DeLASKI: So you’re saying NEMA premium 20 actually delivers 40 percent in the field? Savings? 21 MR. PATZNER: Well, I ought to restate this. 22 For the product I offer, because I have a maximum core 23 loss besides just the efficiency, the end users get a 24 40 percent reduction in their utility bills when they 25Executive Court Reporters (301) 565-0064 6 8

buy my product. 1 MR. DeLASKI: All right, so what I -- then 2 what I’m puzzled by is that in the draft trial 3 standard levels then, so go back to page 13, DSL-3 is 4 supposed to be -- I think DSL-3, the way it’s 5 constructed, should be the same as NEMA premium, and 6 it’s not. Because DSL-3 shows me an EL4, EL5 and EL5. 7 So either 30 percent reduction in operating cost is 8 not linked to 30 percent reduction in losses or else 9 there’s something else odd going on there. So it 10 looked to me that if DSL-3 is supposed to be the NEMA 11 premium, then that should be EL3, El3, EL2. 12 MS. COUGHLIN: Yes, this is Katie. On that, 13 we’ve been told that for his transformers, the actual 14 loading is around 15 to 20 percent, rather than the 15 test procedure value of 35 percent. What that means 16 is that, because the designs are optimized to a test 17 procedure level, when they see smaller indices when 18 you put in the lower ... So you achieve higher energy 19 savings, you may have to go to a higher standard 20 level. 21 MR. DeLASKI: Got it. 22 MS. COUGHLIN: Because currently in this -- 23 MR. DeLASKI: Okay. I’ve got you. 24 MR. RIVEST: It’s also the difference 25Executive Court Reporters (301) 565-0064 6 9

between percentage improvement. 1 MR. DeLASKI: I think the thing there is the 2 percent reduction in losses represent what you are 3 aiming for with that DSL-3 was percent reduction 4 operating costs, which is just not the same as percent 5 reduction in losses. 6 MS. COUGHLIN: No, they’re the same. What 7 I’m saying is that if the standard -- NEMA is more 8 efficient than the test procedure, it may not be more 9 efficient when it’s installed because the efficiency 10 is a function of RMS level. 11

MR. DeLASKI: Yes. 12 MS. COUGHLIN: So depending on how you’re 13 achieving your efficiency -- if you’re achieving 14 efficiency by reducing the core losses, and you put 15 that unit in the field at a smaller RMS level, you 16 won’t get the energy savings. Some of the designs are 17 actually -- core losses are going up at higher 18 efficiencies because the test procedure efficiency is 19 being reduced purely on the core losses. And when 20 those designs are selected and go into the LCC at 21 lower RMS loads, you don’t get the energy savings. 22 MR. PARKER: So you’re saying there’s a big 23 disparity then between the typical loading on these 24 units in the field, and the test procedures. 25Executive Court Reporters (301) 565-0064 7 0

MS. COUGHLIN: We’ve been told that the 1 loadings in the field are 15 to 20 percent because of 2 the building codes. 3 MR. PARKER: So would it make sense for this 4 group to recommend a different ratio on the test 5 procedures so that it’s more realistic. Mike, you’re 6 shaking your head. 7 MR. RIVEST: We went around that -- we kind 8 of went around that earlier. 9 MS. COUGHLIN: Yeah, there’s a variety -- 10 again, if it is the case that when these units are 11 actually bought that people get the lower efficiency ... 12 we could modify the ... We haven’t done that at this 13 point, so really the LCC is blind to variations in 14 efficiency at particular RMS loads, but ... It’s just 15 that, you know, we didn’t design these ... again because 16 we’ve got the A/B parameters that we used to fill in 17 the design space. And getting a variety of 18 strategies, either reducing load losses -- 19 MR. FERNSTROM: So, this is Gary Fernstrom 20 from PG&E. When these products are selected for 21 commercial buildings, they’re selected based on 22 National Electrical Code requirements. And building 23 standards in pursuit of efficiency has been driving 24 the watts per square foot in commercial buildings 25Executive Court Reporters (301) 565-0064 7 1

down, so the dry type transformers are underloaded, 1 and they’re predominantly affected by core losses. 2 On the other hand, as has been pointed out 3 by some folks, data centers are just the other way 4 around. They’re very highly loaded, close to their 5 maximum. 6 MR. PARKER: So I gather then there’s no 7 need to tinker with the test procedure? You feel 8 comfortable with leaving it as it is? 9 MS. COUGHLIN: If there is a standard -- 10 when designs are selected by purchasers and 11 accommodate lower load levels, then that’s 12 (inaudible.) 13 MR. PARKER: Right, they’re not going to do 14 that, they’re going to buy whatever is available on 15 the market. What’s available on the market has been 16 designed for a test procedure which isn’t an accurate 17 reflection of how it’s going to be used in the field. 18 So what that means is that you’re giving up -- if it’s 19 a systematic known bias, you’re just giving up energy 20 efficiency. 21 MR. CASKEY: The test procedure is what it 22 is, is what it is. 23 MR. PARKER: Okay. I understood that for 24 the other design lines, for the data centers, that 25Executive Court Reporters (301) 565-0064 7 2

there’s totally different test procedure. 1 MR. FERNSTROM: Gary from PG&E. A further 2 opinion on this. The test procedure is probably 3 conducted at a higher than realistic loading on the 4 transformer, however, it seems like it’s off the table 5 for this discussion and it’s reasonably close, so 6 let’s just let it be as it is. 7 MS. COUGHLIN: But the LCC takes into 8 account the lower levels, so energy savings in the LCC 9 are more realistic. 10 MR. PARKER: Okay. Andrew, does that get to 11 your concerns? 12 MR. DeLASKI: Yes. That’s fine for now. 13 MR. PARKER: Okay. Manufacturing impacts. 14 **Manufacturing Impacts** 15 MR. CARMICHAEL: Sure. Rob Carmichael, 16 Navigant. So just a brief introduction, just go over 17 again what some of the outputs are from the 18 manufacturing impact analysis. You know, I think the 19 key thing to focus on of what comes out of that are 20 the conversion cost estimates that are industry-wide. 21 So what’s it going to cost the industry to convert 22 their current facilities to produce in high volumes 23 whatever the new standard is? And so part of the 24 reason that we don’t have that is don’t know -- we’re 25Executive Court Reporters (301) 565-0064 7 3

still working on the curve and where those come out. 1 One of the things that we’ve heard in 2 talking with manufacturers is concern over the capital 3 requirements, particularly when it comes to small 4 businesses, associated with the mitering machine. So 5 we talked earlier about the design, we said NEMA 6 premium, I think we heard in design line eight was an 7 M5 -- a mitered M5 might be a reasonable design there, 8 and that’s something that you see in the marketplace. 9 Well, for the large volume manufacturers have that 10 capability, although as Thomas mentioned, he’s going 11 to start from scratch -- he would start from scratch 12 at that level. So you start to get into the different 13 paths you could take to meet these standards, and 14 that’s something we try to capture as it comes to 15 conversion costs. 16 Another thing that would come into that 17 would be looking at groups of manufacturers that may 18 be differentially impacted. We all it the subgroup 19 analysis. And I think in this case, the clear 20 subgroup is small businesses and maybe a better way to 21 put that would be low volume players. 22 So looking at the industry through our 23 research we’ve found -- I think John, you mentioned a 24 similar number -- we found about 25 businesses in the 25Executive Court Reporters (301) 565-0064 7 4

space, maybe 15 or 20 are relatively low volume 1 players, and maybe ten to 15 are technically, by the 2 letter of the law, small businesses. 3 So each standard requires -- 4 MR. PARKER: When you say in this space, 5 Rob, you mean in the covered products ... 6 MR. CARMICHAEL: Yes. Yes. Now does that 7 mean that they’re 100 percent in the covered product 8 space, no. So probably a large portion of their 9 current business is in the exempted space, which, you 10 know, I think is about 50 percent of the low voltage 11 space. Thomas, you can correct me if I’m wrong, but - 12 - so there’s a significant area that I think a lot -- 13 and many niches, that I think small businesses or low 14 volume players are currently producing in this area. 15 So those would be the key outputs you look 16 for -- conversion costs, a discussion of low volume or 17 small business impacts relative to larger players. 18 And then, you know, just talking about this industry 19 in general so far -- 20 MR. PARKER: Rob, a quick clarifying 21 question, do you have any sense of the market share of 22 covered products that is supplied by these low volume 23 businesses in an average year? 24 MR. CARMICHAEL: Of the covered products? 25Executive Court Reporters (301) 565-0064 7 5

MR. PARKER: Yes, of the covered products? 1 MR. CARMICHAEL: Sewing together some of 2 their responses we’ve received, I would say it’s less 3 than 20 percent. 4 MR. PARKER: So 80 percent of the covered 5 products market is supplied by large volume 6 manufacturers. 7 MR. CARMICHAEL: And so the few things I 8 look for in the MIA are conversion costs, a discussion 9 of the impacts on subgroups, and a discussion of some 10 of the options they might pursue to begin meeting the 11 standard. I think clearly what you have is a decision 12 to source the core, or to buy the machine that’s 13 necessary to say, meet the new standard. Of course 14 another option might be to use a better steel, which 15 may not be the lowest cost point. 16 So those are some of the concerns we’ve 17 heard. Those are the outputs of the analysis. Is 18 there any questions on that or any comments? 19 MR. CASKEY: John Caskey, NEMA. So did you 20 interview some experts of those 15 to 20 like low 21 volume producers? 22 MR. CARMICHAEL: We spoke with a few, yes. 23 MR. CASKEY: So is there any way to factor 24 in the issues that I’ve learned when I’ve gone to talk 25Executive Court Reporters (301) 565-0064 7 6

to them, dealing with the availability of steel, and 1 potentially the quality of the steel that they do 2 receive? 3 MR. CARMICHAEL: Certainly, if you’re a huge 4 manufacturer buying x amount of steel, I would think 5 they’d be treated differently in the market place than 6 somebody who’s producing a very small volume. 7 MR. CASKEY: But is there -- is that -- did 8 you verify there is a price differential in steel that 9 they buy versus the large manufacturer? 10 MR. CARMICHAEL: Yeah, there’s going to be - 11 - there’s going to be a price differential. But, you 12 know, a lot of them are not -- are going to be 13 sourcing cores, so that is not as much of an issue. 14 MR. PARKER: Can you step up to the table, 15 Alan. 16 MR. KATZ: Sure. It’s Alan Katz. It’s a 17 very difficult thing to prove, because nobody really 18 is open about what they buy steel at. But 19 unfortunately the information I have is only tribal, 20 so it can’t be used as evidentiary, but there is a 21 huge discrepancy, comparing what we buy grain-oriented 22 at as a $150 million dollar company, compared to what 23 the big guys buy, in the order of 20 percent. 24 MR. CARMICHAEL: The other thing I can say 25Executive Court Reporters (301) 565-0064 7 7

is it depends on what the particular company is 1 standardized on. So we’ll get quotes for maybe a 2 couple different steels, and comparing them it’s 3 really apples and oranges, because it’s not just the 4 nature of their volume, but what they’re standardized 5 on, versus what someone else is standardized on. 6 MR. PARKER: So is there a process to take 7 into account the engineering manufacturing analysis 8 these price differentials? We talked earlier about 9 some perturbated material prices and so forth, I’m 10 assuming you’re not putting one set of prices for all 11 manufacturers in the space. Is that an option for -- 12 MR. CARMICHAEL: So essentially you’re 13 asking if we can create a small business cost curve. 14 And I think what we would do is say, is you compare 15 here, if you don’t make three options you can buy the 16 machine and try to compete along this curve with low 17 volumes, which is probably not a realistic option for 18 some. The other one would be to use a better steel 19 and maybe not be at the lowest cost position. The 20 other one would be to source cores. 21 And that’s why I mentioned a comparison of 22 how small businesses may react to a different 23 standard. 24 MR. CASKEY: John Caskey again. So is 25Executive Court Reporters (301) 565-0064 7 8

employment factored in here, is there some cost 1 associated with that? Do you have any table that will 2 indicate the potential number of jobs lost if the move 3 is to CSL-6 or seven? 4 MR. CARMICHAEL: Yes, there is an employment 5 analysis. A lot of these are made in -- it’s only US 6 jobs, so a lot of these are already made in Mexico, 7 including some small businesses. So it would be -- 8 you’re looking at domestic jobs, that’s your base. 9 What is it now and then what does it look like at 10 various levels. And some processes may require more 11 labor than others to meet some of these designs, but 12 again, if you go from making your own cores to 13 sourcing cores, there may be some transition -- it may 14 be a point of going from one small business to 15 another. 16 MR. CASKEY: John Caskey again. So is there 17 some time schedule for us to get some of the 18 intricacies and so on of design line seven and eight 19 to see the results of -- 20 MR. CARMICHAEL: I don’t see -- yeah, I 21 think we can have that for the next meeting, that’s 22 assuming -- 23 MR. PARKER: You mean in advance of the next 24 meeting. 25Executive Court Reporters (301) 565-0064 7 9

MR. CARMICHAEL: In advance of the next 1 meeting. 2 MR. CASKEY: Okay, great. 3 MR. CARMICHAEL: Can I take Wes’ and just 4 say it’ll be before the next meeting. 5 MR. PARKER: You may get some push back. 6 MR. CASKEY: Just remember, sending it at 7 midnight produces errors. 8 MR. CARMICHAEL: Right. 9 MR. MAY: Hey, John? 10 MR. PARKER: Yes, on the phone. 11 MR. MAY: This is Scott May with Siemens 12 Industries. I just wanted to jump in a minute and 13 just make a few comments if I may. 14 MR. PARKER: Go ahead. 15 MR. MAY: Okay. First off I wanted to know 16 if we have any representation on the phone or in the 17 room from Jefferson Electric or Hammond Power 18 Solutions (ph). 19 MR. PARKER: We don’t. 20 MR. MAY: I’ll take that as a no. 21 MR. DeLASKI: Are they even members? 22 MR. PATZNER: Both members are from the -- 23 both companies are members -- 24 MR. PARKER: Hammond is. 25Executive Court Reporters (301) 565-0064 8 0

MR. MAY: Okay. Well, since we’re not being 1 represented by the manufacturers and they are main 2 link buyers for my company, I think we fall in that 3 category of the 20 percent of the smaller companies, 4 so I’m just a little bit concerned that you’re not 5 considering all the factors of the smaller operations. 6 So I just wanted to stress that it’s important to get 7 feedback, not only from necessarily NEMA-participating 8 members, but all impacted companies. 9 MR. DeLASKI: So this is Andrew DeLaski, 10 just following up with a question. Are you saying 11 that Siemens does not manufacture global ... 12 distribution yourself, but that you source them from 13 those two companies? 14

MR. MAY: Correct. 15 MR. DeLASKI: Okay. Thank you. 16 MR. PARKER: Are there other companies that 17 you know of that you don’t necessarily source from 18 that we ought to think about, know of, reach out to? 19 MR. MAY: Yes. Scott May from Siemens 20 again. Yes, there’s numerous companies across the 21 United States that make low voltage distribution 22 transformers. And one other comment that I wanted to 23 throw in for all the advocates and all the people not 24 familiar with this category of equipment is that it’s 25Executive Court Reporters (301) 565-0064 8 1

extremely ... sensitive category of transformers is they 1 become a commodity and even the Navigant 2 representatives mentioned that most of these 3 transformers are made in the US, that’s true. Most of 4 the low voltage manufacturers have been forced to move 5 their productions to Mexico to take advantage and 6 benefits of labor, but they still maintain large 7 staffs of people in the US so to manage the product 8 and design it. So that’s just one of the comments 9 that I wanted to throw in there. 10 MR. PARKER: Thank you, Scott. And of 11 course, even though we may not have a lot of those 12 smaller operations around the table, Navigant staff 13 has as it indicated, been reaching out to them and has 14 been talking to them quite extensively, gathering 15 their information and so forth, and presumably their 16 feedback is reflected in the analysis, although for 17 proprietary reasons, not by name. Rob. 18 MR. GREESON: Rob Gleeson, Federal Pacific. 19 Bob Smith knows these numbers better than I do, but I 20 think we probably qualify as a smaller player for low 21 voltage dries. We’re not a giant share market holder 22 by any means, and we do have the issues with staff 23 that run operations in Mexican manufacturing facility. 24 And Scott, we have shared our concerns with the DOE 25Executive Court Reporters (301) 565-0064 8 2

and tried -- they sent out a low voltage dry type 1 template, design template. I would encourage you to 2 get Hammond and Jefferson to fill that template out 3 and get it to DOE ASAP. The very last tab on the 4 template has basically trying to predict what’s going 5 to happen at each CSL with regards to your capital 6 investments. It’s kind of hard to predict, and when 7 we did ours, I had to think about it, and it may not 8 even be perfect, but that gives them an idea of what’s 9 going to happen as the level goes up. And so I would 10 encourage you to fill this out. We can say we’re 11 concerned about it, but if they don’t have any facts 12 or kind of what’s going to happen -- you’ve got to 13 give them an idea, and that would be greatly helpful 14 to them. Otherwise, we may get lost in the -- may not 15 be able to capture all the realities if we don’t try 16 to help them understand is what I’m trying to say. 17 MR. SCHOEN: Jerry Schoen, AK Steel. We’ve 18 got -- 19 MR. MAY: I’ll try to get that information. 20 MR. SCHOEN: We’ve got two customers I know 21 of right off the top of my head who changed their low 22 voltage dry types in Ohio. Norlec (ph) Manufacturing 23 and Elderia (ph) of Ohio, and Donegan (ph) 24 Transformer, Donegan manufacturing which is 25Executive Court Reporters (301) 565-0064 8 3

engineering ... out of Toledo, Ohio. They’re very small 1 players, but they’re very -- to your point. 2 MR. GREESON: ... Vermont, right. 3 MR. SCHOEN: Yes, Vermont Trans Power -- 4

MR. MAY: MGM. 5 MR. SCHOEN: MGM, tiny companies. 6 MR. KATZ: Alan Katz, just to throw in some 7 meat to that argument. You know, if we have to go 8 miter cut, I think there’s only two miter cut machine 9 companies that I know of. Their lead time is up to 10 about six, eight months to a year. Medium size to 11 small operation about a half a million dollar 12 investment. So all the -- you can outsource your 13 miter affects your operations, so I think you have to 14 be sensitive to the phase-in time here. That’s the 15 key because there are huge expenditures, and, you 16 know, we’re not discouraging this, but we want to say 17 give us time to absorb. 18 MR. MAY: Excuse me, Scott May again from 19 Siemens. Even though, you know, I deal mostly with 20 the smaller suppliers that provide us, I encourage 21 them to pursue the technology and the means and 22 methods required to achieve the NEMA premium levels, 23 but they’ve not all been able to do that. That’s just 24 a word of encouragement. 25Executive Court Reporters (301) 565-0064 8 4

MR. PARKER: Well, again, I think we’re 1 looking at a nominal compliance date of 2016, I think 2 there is room for maneuver with regard to that, if 3 necessary, but in no case would it be really, really 4 early compliance. So I think it’s helpful to know 5 compliance date is a major factor that will help 6 facilitate getting to yes, that’s very good to know. 7 MR. CARMICHAEL: Just two things. The 8 concern about the time frame and lead times is 9 something we’ve heard so that is -- will certainly be 10 considered. We also do something called an impact on 11 capacity, the ability to reach a standard at full 12 volume in a time. And that is something we’ve heard a 13 lot of. 14 Secondly, talking to a lot of small 15 manufacturers, but we’re also aware that larger 16 manufacturers are more automated than small 17 manufacturers and therefore they have their own 18 capital costs to deal with, because you can’t just -- 19 you’re not as flexible. So that hasn’t gone unnoticed 20 as well in the analysis. 21 MR. PARKER: I’m just thinking out loud 22 here. I don’t want to put you on the spot or 23 anything, but does it make sense to look like at a 24 small volume cost curve that would be defined as such, 25Executive Court Reporters (301) 565-0064 8 5

small business cost curve? Is that analytically 1 feasible in our time frame, or is that -- I’d also 2 like thoughts from the group whether that’s something 3 that would be useful. 4 MR. CARMICHAEL: I don’t know how you’d 5 really draw the line. I think that’s why the small 6 business impacts analysis is in there, to look at the 7 different ways of reaching that standard. I don’t 8 think that’s a -- it would take a while. I don’t know 9 how the information would be -- we’d be making a lot 10 of judgment calls. 11 MR. PARKER: Okay. Rob. 12 MR. GREESON: Rob Greeson, Federal Pacific. 13 We support -- we will support a standard that doesn’t 14 leave the little guys sitting in the dust, and I think 15 it’s important when we look at the final LCC and all 16 that, is the constraint kind of is -- because I think 17 part of this whole process, you don’t want to hurt a 18 certain segment of the industry and we might see data 19 on the screen that says, hey, we can go to three or 20 whatever, but the reality is those guys can’t compete 21 there, and it’s sort of a subjective thing that has to 22 be carefully considered from the start. 23 Now looking at this, we have some thoughts 24 on that and will bring them out a little bit better 25Executive Court Reporters (301) 565-0064 8 6

later when the results come in. I hope that the 1 committee will recognize that the larger manufacturers 2 can do things with regards to efficiencies that the 3 smaller guys can’t, and unfortunately it’s kind of 4 like -- it constrains against what the advocates 5 really want, unfortunately, but I think it’s a reality 6 that we need to recognize. 7 MR. PARKER: Okay. Thank you. Bob. 8 MR. BERMAN: Robert Berman, Berman 9 Economics. There are other alternatives in doing 10 that. 11 MR. PARKER: Can you come up to the table 12 please? 13 MR. BERMAN: Sure. There are other -- any 14 particular spot -- 15

MR. PARKER: Center. 16 MR. BERMAN: There are other alternatives to 17 doing that, that if you will -- subsidizing a higher 18 cost or avoiding economies of scale. If you allow 19 sufficient time on the implementation, you allow for 20 firms to comply. It’s slightly less competition, you 21 get larger firms, you allow them to take advantage of 22 economies of scale in the new environment, which is 23 what you want for -- both for efficiency on the 24 transformers as well as a healthy economy. 25Executive Court Reporters (301) 565-0064 8 7

MR. PARKER: Thank you. 1 MR. BALLO: Tim Ballo, Earth Justice. Just 2 wanted to point out to the manufacturers there’s a 3 couple of different statutory provisions that may 4 apply here. One there’s a waiver provision in the 5 DOE organic statute that allows manufacturers to seek 6 a waiver, temporary, or some sort of other relief from 7 DOE regulations based on financial hardship that’s 8 sort of unique to the manufacturer. That might be 9

one. 10 There’s also -- I’m not too familiar, but 11 there actually is a small manufacturer exemption in a 12 section 325T about that -- I’m not sure if that would 13 apply here, but that’s something else to look at. 14 MR. CARMICHAEL: My understanding is that 15 one -- I’m not a lawyer, but that one has a very small 16 -- a very low revenue cap, total revenue from the 17 company before that could be used. But I could be 18 wrong. So it may not be all that applicable. 19 MR. CASKEY: It’s not a mom and pop, it’s a 20

mom. 21 (Laughter) 22 MR. CASKEY: I mean, do one or two a year. 23 MR. CARMICHAEL: Tim was talking about 24 waivers or OHA -- there’s the OHA relief -- the Office 25Executive Court Reporters (301) 565-0064 8 8

of Hearing and Appeals here in DOE that manufacturers 1 can petition OHA for lots of different -- hardship is 2 the word, I guess. 3 MR. MILLURE: That’s not limited to small 4 business. 5 MR. CASKEY: No, no. That’s not limited to 6 small business. You make your case to OHA. There’s 7 certain uniqueness to what you do that grants you 8 relief. I haven’t been there in a long time, but 9 since I’ve been here there’s been no relieve 10 permitted, but that doesn’t mean you can’t seek it. 11 So there is an avenue for every standard that we 12 promulgate, for any company, any manufacturer you can 13 seek that relief. 14 MR. PARKER: So I just want to ask, because 15 again, we are reaching the end of a process here, at 16 least in terms of time, so we really need to finalize 17 the analysis, so on the manufacturing impact analysis, 18 you’ve heard what is expected, what is planned to be 19 delivered to you. Is there anything that you need 20 that you haven’t heard? Are there any changes -- 21 you’ve seen what they’ve done in the past as well, so 22 you have a record of that, it’s not a blank slate. We 23 just want to make sure that there are no fundamental 24 concerns with methodology or the scope of the analysis 25Executive Court Reporters (301) 565-0064 8 9

that actually comes out, based on what you’ve heard. 1 Andy questions? Are people comfortable with the 2 direction -- with the deliverables and the kind of 3 information that we’re getting? Obviously, we’re not 4 asking you to approve it before you see it, but is 5 this the kind of analysis that will be helpful when 6 judging these impacts? John, is this okay with you, 7 the way we’re going. I don’t want to put you on the 8 spot, but -- 9 MR. CASKEY: You seem to like doing that. 10 MR. PARKER: Do you feel comfortable that 11 it’s the kind of information that will be valuable to 12 your members. I just want to ask because you have 13 members out there. 14 MR. CASKEY: Yes, this is John Caskey, NEMA. 15 I think it makes perfect sense to me, it seems like 16 some of it depends on how many of these members you’ve 17 been able to get to, see their facility, talk to them, 18 you know, how much data he has collected. Just want 19 to flush this out a little bit. But for me, 20 personally, I would like to not only see numbers but 21 if there’s some general five paragraph description or 22 something that says this is basically what you learned 23 from these interviews and going around visiting the 24 sites, I mean I think some subjective discussion would 25Executive Court Reporters (301) 565-0064 9 0

be helpful for me, personally when we get to the point 1 of, you know, that this might make the difference 2 between deciding on design line x versus design line y 3 -- excuse me energy efficiency level x versus energy 4 efficiency level y, and I think that knowledge might 5 be helpful. 6 MR. CARMICHAEL: Yeah, I think that’s a 7 great point, John. One of the things I neglected to 8 mention that comes with each manufacturing analysis 9 that we do, the key concerns that we hear 10 manufacturers express, so we’ve heard a lot of them 11 today, and that’s something that actually is in the 12 decision-making, part of the decision-making criteria 13 that’s taken into account in the analysis. 14 MR. PARKER: Okay. In the -- 15 MR. MAY: Excuse me, Scott May from Siemens 16 Industries. I’d just like to jump in a minute and 17 address the Navigant consultants directly. In the 18 course of formulating your recommendations, I believe 19 it would be helpful to list the requirement that you 20 believe will be ultimately required with regards to 21 the cores’ construction, specifically if your analysis 22 tells you that you need a full mitered core, or you 23 can do with a butt-lap core, but in your summary 24 analysis that you would include what you believe the 25Executive Court Reporters (301) 565-0064 9 1

viable options are to meet the goals of efficiency. 1 Because then they’ll be able to quickly tell you what 2 the manufacturing impacts will be. 3 MR. CARMICHAEL: Absolutely. 4 MR. MAY: Okay. Thank you. 5 MR. PARKER: Great. Any other comments? 6 Well, then I think we can wrap up early. It sounds 7 like we have -- 8 MR. PATZNER: Richard? 9

MR. PARKER: Yes. 10 MR. PATZNER: Thomas Patzner. 11 MR. PARKER: Yes, Thomas, go ahead. 12 MR. PATZNER: Richard, Thomas Patzner, 13 Schneider Electric. One question. Will we finish our 14 manufacturing analysis, from our perspective, we’re 15 going to try to recover that capital expenditure in 16 the sale price. So today we have the sale price based 17 on the engineering analysis which would be the sale 18 price five or ten years into this conversion. It is 19 not the sales price at the launch of this -- of the 20 transition, and can we have the LCC done after we can 21 add to the manufacturer sale price the recovery of our 22 capital? Because we are going to do that. 23 MR. CARMICHAEL: So that’s an engineering 24 question. Essentially you’re saying -- your talking 25Executive Court Reporters (301) 565-0064 9 2

about markups off the actual production costs? 1 MR. PATZNER: Until today, the engineering 2 analysis is done based on cost and markups. 3 MR. CARMICHAEL: Right. 4 MR. PATZNER: And in the realistic world, 5 we’re going to add in to recover any capital we spend 6 in three years or less. So that sales price and the 7 levels is going to be increased by whatever capital I 8 have to spend. 9 MR. PARKER: So you’re saying that in the 10 engineering analysis, the cost of capital is amortized 11 over the life of the equipment? 12 MR. PATZNER: It’s not included at all, I do 13 not believe. 14 MR. CARMICHAEL: So I think that’s a care 15 point. I think that can be done. I don’t see any 16 reason why that can’t be done. 17 MR. PARKER: Can that be done? 18 MR. CARMICHAEL: I mean I don’t think we can 19 take what square D is going to do, necessarily, but I 20 think feedback, as we hear from the industry at large 21 can, in terms of capital costs, can influence the 22 prices. 23 MR. PARKER: So, Robert, did you want to -- 24 MR. BERMAN: Yes, I did. Robert Berman, 25Executive Court Reporters (301) 565-0064 9 3

Berman Economics. To the extent that the market 1 pricing will permit the inclusion of capital cost, 2 that’s one thing, but we’re looking at market3 determined prices here. We’re not looking at a cost4 plus world. If the market would permit that cost 5 recovery, it gets that cost recovery. If the market 6 is going to set a different price based on existing 7 cost, then that’s the real world, that’s the world 8 you’ve got to work in. 9 MR. PARKER: Well, I think -- 10 MR. PATZNER: Tom Patzner, Schneider 11 Electric. We’ve already converted lines -- we did 12 this in 2006 to 2007, and the industry did recover 13 their capital with the new prices on January 1, 2007. 14 So we have already shown that we’re going to be able 15 to capture back our capital. Which is why I think it 16 needs to be included. 17 (Discussion off mic) 18 MR. PARKER: Okay. Yes, we’ll discuss 19 them, this is the last thing before next steps. So, as 20 I understand it, there is openness on Navigant’s side 21 to, in principle, including capital cost in the 22 engineering analysis as a reasonable expense. There’s 23 not agreement that it should necessarily be amortized 24 over three years. They’ll work on what, in keeping 25Executive Court Reporters (301) 565-0064 9 4

with generally accepted accounting principles and so 1 forth, what is a reasonable amortization period for 2 those costs. 3 MR. CARMICHAEL: Right, and I just wonder 4 about introducing complexity. So then do we have a 5 curve that moves over time? 6 MR. PARKER: And the question is how much 7 difference does that really make to the analysis 8 anyway, particularly if you can recover it, right? 9 Smerdido (ph) is a member of the committee and so 10 we’re interested in knowing -- is this something that 11 you feel has to be included in the analysis, or is 12 your ability to recover this cost, as well as its 13 scope, sufficient for now to allow us to go forward 14 with the engineering analysis that we have, despite 15 that condition? 16 MR. PATZNER: It’s sufficient to move on 17 once the -- the other discussions with regard to 18 design line seven is done. I mean design line seven 19 is where we’re going to -- is where we’re making the 20 educated guess we’re going to spend the most amount of 21 money. So -- design line eight is going to based on, 22 from what I’ve seen, is going to be very -- it’s going 23 to be the least amount. Most of the capital 24 expenditures are going to be in design line seven. 25Executive Court Reporters (301) 565-0064 9 5

MR. PARKER: Okay. So as I understand it -- 1 go ahead, Tom. 2 MR. PATZNER: If we could figure out maybe 3 how to do it for design line seven, it would be -- it 4 would give a more realistic LCC value. 5 MR. PARKER: Okay. They’re open to that. 6 Let’s see how much difference it makes, when they do a 7 couple of trials and see how much difference it makes, 8 and if it seems to be like a game changing thing, then 9 we’ll think of a way to bring it on board. They also 10 have to see what’s involved in doing that at this 11 point. We have to remember that this is -- we’re 12 pretty late in the day here. It’s a fair point, we’ll 13 see if we can accommodate it. 14 MR. PATZNER: Thank you. 15 **Next Steps** 16 MR. PARKER: So if we could, turn to next 17 steps. In the previous group, there was -- as I 18 understand it first, I’m sure Andrew will correct me 19 if I misstate the step, so there are concerns with the 20 engineering analysis -- excuse me, with the life cycle 21 cost analysis for DL7, and we’ll work on getting 22 revised analysis out. And that will be fed into the 23 manufacturing impact analysis, which will then -- 24 which will take that as an input and will discuss. 25Executive Court Reporters (301) 565-0064 9 6

I guess one question that I have, in the 1 other group we set up a conference call for the 17 th of 2 November to discuss the results that are arising out 3 of this medium voltage group. One thing I would put 4 out there, given that we are near the end of our time, 5 is it worthwhile, once we get the revised analysis, 6 trying to have a conference call for this group? I’m 7 certainly willing to do that if there’s interest. 8 MR. CASKEY: I say yes. 9 MR. DeLASKI: It makes good sense to me. We 10 have a day and a half meeting set up for us, again, 11 three weeks from now, that means we’d be a lot more 12 productive if we got the analysis and had a chance to 13 talk about it and understand it, take it on board 14 before we actually all get to sit down. 15 MR. PARKER: Great. So what would be a good 16 time for people to -- 17 MR. DeLASKI: And part of the question goes 18 back to the team, you know, what’s the appropriate 19 time frame to give you guys the time to do this 20 justice with everything else you’re doing. 21 MR. CARMICHAEL: So it’s the engineering 22 analysis that will take more time. 23 MR. PATZNER: Thomas Patzner, Schneider 24 Electric, we did agree that it would be design line 25Executive Court Reporters (301) 565-0064 9 7

seven and design line eight, correct? Because that 1 should help with the timeline. 2 MR. PARKER: Well, I guess as a group we 3 have to set some standard for six, but it’s such a low 4 volume that I’m not sure we need to focus on that. I 5 guess at some point we’re going to need to have a very 6 short discussion on how to handle it. 7 MR. DeLASKI: I’m not sure it really adds to 8 the workload, just to get it done. I’m not sure it’s 9 constraining. 10 MR. CYMBALSKY: I would suggest we’re having 11 the phone call next Thursday, a week from tomorrow, 12 and I would suggest an additional over the weekend, so 13 maybe the following Monday, that -- 14 MR. PATZNER: The 21 st works for Schneider 15 Electric. 16 MR. PARKER: Does one o’clock work for 17 people? 18 MR. DeLASKI: I’ve got a one o’clock 19 conflict so Bob can work for me. 20 MR. PARKER: Any problems with two o’clock 21 on the Monday following the 17 th -- the 21 st . Two 22 o’clock on the 21 st for a conference call? 23 MR. PATZNER: That works for us. Schneider 24 Electric. 25Executive Court Reporters (301) 565-0064 9 8

MR. PARKER: Great. Eastern time. 1 MR. CASKEY: Are we going to do just a -- 2 you said conference call, are we going to do that or a 3 web -- 4 MR. PARKER: It’ll be a webinar. Right. 5 MR. CASKEY: Thank you. 6 MR. DeLASKI: So just to confirm it, John, 7 you guys think you can get the revisions on Thursday 8 or -- I guess I’d rather have the conference call a 9 few days later and have it for a few days, rather than 10 have the call and get the presentation that morning. 11 You know what I mean. 12 MR. CARMICHAEL: Then you’re getting into 13 Thanksgiving. 14 MR. DeLASKI: Oh, yeah. 15 MR. PATZNER: So the other option would be 16 the 28 th , which would be the following Monday. 17 MR. PARKER: That’s right before -- 18 PARTICIPANT: Travel time. 19 MR. CASKEY: Two days before the meeting. 20 MR. DeLASKI: Yeah, I hadn’t seen the 21 calendar, so we’re limited on choice. 22 MR. CYMBALSKY: We think we can get you 23 something the Friday before, Thursday close of 24 business before. 25Executive Court Reporters (301) 565-0064 9 9

MR. DeLASKI: All right. 1 MR. CYMBALSKY: I have a conflict at 2:30, 2 but if I’m the only one who does, I can move it. Is 3 3:30 or four o’clock eastern okay, or is that too 4 late? 5 MR. DeLASKI: I think that’s getting late. 6 MR. CYMBALSKY: So keep it at two, that’s 7 fine, I don’t mind missing my staff meeting at all. 8 MR. PARKER: Okay. We are wrapped up. 9 Thank you all for coming. Thanks to DOE for hosting 10 us and we’ll see you on the webinar. 11 (Whereupon, at 2:27 p.m., the meeting in the 12 above captioned matter was adjourned.) 13

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REPORTER'S CERTIFICATE

This is to certify that the attached proceedings before:

U.S. DEPARTMENT OF ENERGY In the Matter of:

**MEETING of the LV WORKING GROUP** Were held as herein appe ars and that this is the original transcript ther eof for the file of the Department, Commissio n, Board, Adminis trative Law Judge or the Agency. Further, I am neith er counsel for or related to any party to the abo ve proceedings.



### Wendy Greene Official Reporter Dated: November 14, 2011