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

Sent: Monday, November 07, 2011 4:12 PM

To: Robert Berman

Cc: Aaron Meyers; Andrew Delaski; Alex Hofmann; Aris Marantan; Art Rosenfeld; Robert Berman; Brian

Coffey; Bruce R Hirsch; Bob Smith; Chris Bolduc; Caitlin Johnson; Carlos Gaytan; charlie drexler; Chris

Brown; Chuck Simmons; Clark Silcox; Charlie Stevens; Dan Cohen; Dave Millure; David Flaten; Daniel

Young; Eric Peterson; Gary Fernstrom; Greg Rosenquist; Greg Coulter; James Lass; Jennifer Tiedeman;

Jeremiah Freeman; Jerry Corkran; Jerry Schoen; Jerry Hodge; Jim Creevy; Jim Raba; Joanna Mauer; John

Caskey; John Cymbalsky; John Rossetti; Katie Coughlin; Ken Winder; Mahesh P. Sampat; Matthew

Nardotti; Maxine Savitz; Michael Hyland; Michael Rivest; Meg Waltner; Paul Ryan; Phil Harter; Phil

Hopkinson; Puesh Kumar; Raymond Polinski; Rob Greeson; Richard Parker; Rick Anderson; Bob Saint;

Robert van Buskirk; Robin Roy; Scott Beck; Steve Nadel; Steve Rosenstock; Tim Ballo; Tom Eckman;

Thomas Petrosino; Zhimei Luo

Subject: Re: MV Transformers Material Price Sensitivity Analysis

Hi Robert  

I do not have any price data in 111013 Distribution of Core Steel Grades.ppt.    

How did you arrive at " a 6% price spread between M3 and M2 moved the ~84% M3 to M2 with a 40%

reduction in losses"?  

The data in this ppt merely reflects what we produced in terms on core steel grade vs % reduction in

losses ‐ the final result of 12 months of trying to meet customer requirements under the current

regulation with current commodity prices and availability (june 2010 thru june 2011)  

What moves M3 to M2 is the price/performance characteristic of the materials.  Specifics on our actual

price levels for different grades are confidential ‐ sorry.  But I can confirm that the DOE material cost are

in the general ballpark.  

If the material prices are in good alignment to their w/lb characteristics, then their utilization will follow

the w/lb curves.  This is simply the result of the price and w/lb being inputs to our design and

optimization algorithms.  

However ‐ this alignment of price/performance is a very rare occurrence.  

Best regards  

Wes  

Robert Berman

<bermaneconomics@gmail.com>  

11/07/2011 11:18 AM  

To Wes Patterson/SouthBoston/USTRA/ABB@ABB  

cc Robert Berman <bermaneconomics@gmail.com>,

"Aaron Meyers"

<Aaron.Meyers@cooperindustries.com>, "Andrew

Delaski" <adelaski@standardsasap.org>, "Alex

Hofmann" <ahofmann@publicpower.org>, "Aris
Marantan" <amarantan@navigant.com>, "Art

Rosenfeld" <artrosenfeld@gmail.com>, "Brian

Coffey" <brian.coffey@navigant.com>, "Bruce R

Hirsch" <bruce.r.hirsch@bge.com>, "Bob Smith"

<bsmith@federalpacific.com>, "Chris Bolduc"

<cabolduc@lbl.gov>, "Caitlin Johnson"

<Caitlin.Johnson@navigant.com>, "Carlos Gaytan"

<carlos.gaytan@ge.com>, "charlie drexler"

<charlied@uus.org>, "Chris Brown"

<chris.brown@cogentpowerinc.com>, "Chuck

Simmons" <chuck.simmons@pgnmail.com>, "Clark

Silcox" <clark.silcox@nema.org>, "Charlie Stevens"

<cstephens@neea.org>, "Dan Cohen"

<daniel.cohen@hq.doe.gov>, "Dave Millure"

<dave.millure@metglas.com>, "David Flaten"

<david.l.flaten@xcel.energy.com>, "Daniel Young"

<DYoung@energy‐solution.com>, "Eric Peterson"

<Eric.Petersen@aksteel.com>, "Gary Fernstrom"

<gbf1@pge.com>, "Greg Rosenquist"

<GJRosenquist@lbl.gov>, "Greg Coulter"

<greg.coulter405@gmail.com>, "James Lass"

<James.Lass@cleco.com>, "Jennifer Tiedeman"

<Jennifer.Tiedeman@hq.doe.gov>, "Jeremiah

Freeman" <Jeremiah.Freeman@ee.doe.gov>, "Jerry

Corkran" <jerry.corkran@cooperindustries.com>,

"Jerry Schoen" <jerry.schoen@aksteel.com>, "Jerry

Hodge" <jhodge@howard.com>, "Jim Creevy"

<Jim.Creevy@nema.org>, "Jim Raba"

<Jim.Raba@ee.doe.gov>, "Joanna Mauer"

<jmauer@standardsasap.org>, "John Caskey"

<john.caskey@nema.org>, "John Cymbalsky"

<john.cymbalsky@ee.doe.gov>, "John Rossetti"

<jrossetti@mlgw.org>, "Katie Coughlin"

<kcoughlin@lbl.gov>, "Ken Winder"

<kwinder@mleainc.com>, "Mahesh P. Sampat"

<maheshsampat@bellsouth.net>, "Matthew

Nardotti" <matthew.nardotti@navigant.com>,

"Maxine Savitz" <maxinesavitz@aol.com>, "Michael

Hyland" <mhyland@appanet.org>, "Michael Rivest"

<mrivest@navigant.com>, "Meg Waltner"

<mwaltner@nrdc.org>, "Paul Ryan"

<Paul.Ryan@hitmet.com>, "Phil Harter"

<phil@pjharter.com>, "Phil Hopkinson"

<phopkinson@hvolt.com>, "Puesh Kumar"

<pkumar@publicpower.org>, "Raymond Polinski"

<Raymond.Polinski@atimetals.com>, "Rob Greeson"

<rgreeson@federalpacific.com>, "Richard Parker"
<richardparkerdc@gmail.com>, "Rick Anderson"

<rick.anderson@faypwc.com>, "Bob Saint"

<robert.saint@nreca.coop>, "Robert van Buskirk"

<Robert.VanBuskirk@ee.doe.gov>, "Robin Roy"

<rroy@nrdc.org>, "Scott Beck"

<ScottB@lvmetals.com>, Steve Nadel

<snadel@aceee.org>, "Steve Rosenstock"

<srosenstock@eei.org>, "Tim Ballo"

<tballo@earthjustice.org>, "Tom Eckman"

<Teckman@nwcouncil.org>, "Thomas Petrosino"

<tpetrosino@carolina.rr.com>, "Zhimei Luo"

<zhimei.luo@navigant.com>  

Subject Re: MV Transformers Material Price Sensitivity

Analysis

Hi Wes,  

Based on your 111013 Distribution of Core Steel Grade.ppt it looks like a 6% price spread between M3

and M2 moved the ~84% M3 to M2 with a 40% reduction in losses. Would another 6% in the price

spread restore the M3 share relative to M2 at the 40% loss reduction? If I could get e restoration point

there or earlier I could interpolate / extrapolate from there.  

Regards,  

Bob

Robert A. Berman, Principal

Berman Economics

www.BermanEconomics.com

1915 Grand Court

Vienna, VA 22182

703‐281‐0490

703‐655‐8398 (cell)

BermanEconomics@gmail.com

On Nov 6, 2011, at 10:50 PM, Wes Patterson wrote:  

Hi Robert  

It may be crude but if you zoom the powerpoints I have forwarded recently (KVA vs Losses) you can see

where M3 has been used ‐ both by OPS calc and by ABB/PPI actual production.  You will find the actual
production exceeds the OPS levels.  

Also ‐ reference the report I shared with group on %reduction of current standard by grade (111013

Distribution of Core Steel Grade.ppt)  

I shared with Navigant recently an analysis of the incremental_price_increase per watt_reduction.  The

report as given to Navigant had much confidential information and I could not forward it to a public

distribution.  But this is the essence of cost/efficiency discussion.  

My assessment was that the rate of increase in dollars/watt were much higher than that shown by the

OPS data.  

Mike Rivest has reviewed and responded that 1) I was looking at the OPS design data 2) when viewed

from the data in the LCC there was close alignment.  

I have not confirmed this but would greatly welcome a comparative analysis from Navigant if at all

possible  

Best regards  

Wes  

Robert Berman

<bermaneconomics@gmail.com>

11/06/2011 11:57 AM  

To Wes Patterson/SouthBoston/USTRA/ABB@ABB  

cc Robert Berman <bermaneconomics@gmail.com>, "Aaron

Meyers" <Aaron.Meyers@cooperindustries.com>, "Andrew

Delaski" <adelaski@standardsasap.org>, "Alex Hofmann"

<ahofmann@publicpower.org>, "Aris Marantan"

<amarantan@navigant.com>, "Art Rosenfeld"

<artrosenfeld@gmail.com>, "Brian Coffey"

<brian.coffey@navigant.com>, "Bruce R Hirsch"

<bruce.r.hirsch@bge.com>, "Bob Smith"

<bsmith@federalpacific.com>, "Chris Bolduc"

<cabolduc@lbl.gov>, "Caitlin Johnson"

<Caitlin.Johnson@navigant.com>, "Carlos Gaytan"

<carlos.gaytan@ge.com>, "charlie drexler"

<charlied@uus.org>, "Chris Brown"

<chris.brown@cogentpowerinc.com>, "Chuck Simmons"

<chuck.simmons@pgnmail.com>, "Clark Silcox"

<clark.silcox@nema.org>, "Charlie Stevens"

<cstephens@neea.org>, "Dan Cohen"

<daniel.cohen@hq.doe.gov>, "Dave Millure"

<dave.millure@metglas.com>, "David Flaten"

<david.l.flaten@xcel.energy.com>, "Daniel Young"

<DYoung@energy‐solution.com>, "Eric Peterson"

<Eric.Petersen@aksteel.com>, "Gary Fernstrom"

<gbf1@pge.com>, "Greg Rosenquist"
<GJRosenquist@lbl.gov>, "Greg Coulter"

<greg.coulter405@gmail.com>, "James Lass"

<James.Lass@cleco.com>, "Jennifer Tiedeman"

<Jennifer.Tiedeman@hq.doe.gov>, "Jeremiah Freeman"

<Jeremiah.Freeman@ee.doe.gov>, "Jerry Corkran"

<jerry.corkran@cooperindustries.com>, "Jerry Schoen"

<jerry.schoen@aksteel.com>, "Jerry Hodge"

<jhodge@howard.com>, "Jim Creevy"

<Jim.Creevy@nema.org>, "Jim Raba"

<Jim.Raba@ee.doe.gov>, "Joanna Mauer"

<jmauer@standardsasap.org>, "John Caskey"

<john.caskey@nema.org>, "John Cymbalsky"

<john.cymbalsky@ee.doe.gov>, "John Rossetti"

<jrossetti@mlgw.org>, "Katie Coughlin"

<kcoughlin@lbl.gov>, "Ken Winder"

<kwinder@mleainc.com>, "Mahesh P. Sampat"

<maheshsampat@bellsouth.net>, "Matthew Nardotti"

<matthew.nardotti@navigant.com>, "Maxine Savitz"

<maxinesavitz@aol.com>, "Michael Hyland"

<mhyland@appanet.org>, "Michael Rivest"

<mrivest@navigant.com>, "Meg Waltner"

<mwaltner@nrdc.org>, "Paul Ryan"

<Paul.Ryan@hitmet.com>, "Phil Harter"

<phil@pjharter.com>, "Phil Hopkinson"

<phopkinson@hvolt.com>, "Puesh Kumar"

<pkumar@publicpower.org>, "Raymond Polinski"

<Raymond.Polinski@atimetals.com>, "Rob Greeson"

<rgreeson@federalpacific.com>, "Richard Parker"

<richardparkerdc@gmail.com>, "Rick Anderson"

<rick.anderson@faypwc.com>, "Bob Saint"

<robert.saint@nreca.coop>, "Robert van Buskirk"

<Robert.VanBuskirk@ee.doe.gov>, "Robin Roy"

<rroy@nrdc.org>, "Scott Beck" <ScottB@lvmetals.com>,

Steve Nadel <snadel@aceee.org>, "Steve Rosenstock"

<srosenstock@eei.org>, "Tim Ballo"

<tballo@earthjustice.org>, "Tom Eckman"

<Teckman@nwcouncil.org>, "Thomas Petrosino"

<tpetrosino@carolina.rr.com>, "Zhimei Luo"

<zhimei.luo@navigant.com>  

Subject Re: MV Transformers Material Price Sensitivity Analysis

Good Morning, Wes,  
Thanks for the confirmation. Your "reality testing" is important. Based on the fact that I seen some

delivered M3 designs  with efficiencies in excess of 99.5%, I assume that, for practical purposes, the

asymptote is beyond that. Do you know where that is (assuming we change the flux density below 1.7T,

without compromising other performance characteristics)?  

From an economic perspective, I assume that some pushing of the envelope on M3 will also encourage

investment in mechanical scribing on M2 or MOH.  

I understand that the OPS model is all right for designing to a particular set of A & B factors, but not the

ideal tool for our purposes in evaluating cost/efficiency trade‐offs ‐‐ a bit like performing surgery with a

buzz saw; you have to get through a lot of mess to get to what you want. Do you have a sense, based on

the efficiency optimizations you've done, what the cost/efficiency curve looks like or how it might shift

as we change design Tesla? I like to find the region where M3 and M2 can technically compete, but

there is significant pressure on its price to provide an incentive to move towards ZDMH production.  

Look forward to seeing you Tuesday.  

Bob  

Robert A. Berman, Principal

Berman Economics

www.BermanEconomics.com

1915 Grand Court

Vienna, VA 22182

703‐281‐0490

703‐655‐8398 (cell)

BermanEconomics@gmail.com

On Nov 6, 2011, at 7:20 AM, Wes Patterson wrote:  

Hi Robert  

Your comments regarding the 'relative' price between materials is correct ‐ lower cost M3 makes it more

competitive relative to SA ‐ but there is a practical limit.  

What happens in design the that the flux density and/or number of turns is modified to get a lower

cost/higher performance M3 design.  But this can only be done so far.    

Normally M3 is designed at ~1.7T.  It can be reduced to about 1.0T before other performance

characteristics go completely crazy (like impedance).  

Thus there is an asymptotic point where no matter the cost of M3 it cannot match the performance of

SA.  To a lesser degree this is true for M6 vs M4, or M4 vs M3 etc.  

Also note that the OPS data is based on a matrix of A/B factors that are assumed the provide a modeling
of the actual market.  But this set only represents a subset of the real market.  As has been noted ‐ A/B

(life‐cycle‐cost) is not the driver of the purchase decision. More often it is lowest cost to meet specific

performance criteria (like impedance, overload capability, voltage regulation, efficiency, etc).  

As a result the OPS data points exhibit a large curvature at their lowest points (in all technologies) which

would not exist if the OPS program optimized on efficiency levels rather than A/B factors. Rather the

curves would be flatter with sharp kickup at the knee.  

This results is in more difficultly is trying the ascertain cost/efficiency results from the OPS data.  

Best regards  

Wes  

Robert Berman

<bermaneconomics@gmail.com>

11/05/2011 07:26 PM  

To Steve Nadel <snadel@aceee.org>  

cc "Robert Berman" <bermaneconomics@gmail.com>, "Robin

Roy" <rroy@nrdc.org>, "Eric Peterson"

<Eric.Petersen@aksteel.com>, "Jerry Schoen"

<jerry.schoen@aksteel.com>, "Maxine Savitz"

<maxinesavitz@aol.com>, "Michael Hyland"

<mhyland@appanet.org>, "Raymond Polinski"

<Raymond.Polinski@atimetals.com>, "Mahesh P. Sampat"

<maheshsampat@bellsouth.net>, "Bruce R Hirsch"

<bruce.r.hirsch@bge.com>, "Thomas Petrosino"

<tpetrosino@carolina.rr.com>, "James Lass"

<James.Lass@cleco.com>, "Chris Brown"

<chris.brown@cogentpowerinc.com>, "Aaron Meyers"

<Aaron.Meyers@cooperindustries.com>, "Jerry Corkran"

<jerry.corkran@cooperindustries.com>, "Tim Ballo"

<tballo@earthjustice.org>, "Jeremiah Freeman"

<Jeremiah.Freeman@ee.doe.gov>, "Jim Raba"

<Jim.Raba@ee.doe.gov>, "John Cymbalsky"

<john.cymbalsky@ee.doe.gov>, "Robert van Buskirk"

<Robert.VanBuskirk@ee.doe.gov>, "Steve Rosenstock"

<srosenstock@eei.org>, "Daniel Young" <DYoung@energy‐

solution.com>, "Rick Anderson"

<rick.anderson@faypwc.com>, "Bob Smith"

<bsmith@federalpacific.com>, "Rob Greeson"

<rgreeson@federalpacific.com>, "Carlos Gaytan"

<carlos.gaytan@ge.com>, "Art Rosenfeld"

<artrosenfeld@gmail.com>, "Greg Coulter"

<greg.coulter405@gmail.com>, "Richard Parker"

<richardparkerdc@gmail.com>, "Paul Ryan"

<Paul.Ryan@hitmet.com>, "Jerry Hodge"

<jhodge@howard.com>, "Dan Cohen"

<daniel.cohen@hq.doe.gov>, "Jennifer Tiedeman"
<Jennifer.Tiedeman@hq.doe.gov>, "Phil Hopkinson"

<phopkinson@hvolt.com>, "Chris Bolduc"

<cabolduc@lbl.gov>, "Greg Rosenquist"

<GJRosenquist@lbl.gov>, "Katie Coughlin"

<kcoughlin@lbl.gov>, "Scott Beck" <ScottB@lvmetals.com>,

"Dave Millure" <dave.millure@metglas.com>, "Ken Winder"

<kwinder@mleainc.com>, "John Rossetti"

<jrossetti@mlgw.org>, "Aris Marantan"

<amarantan@navigant.com>, "Brian Coffey"

<brian.coffey@navigant.com>, "Caitlin Johnson"

<Caitlin.Johnson@navigant.com>, "Matthew Nardotti"

<matthew.nardotti@navigant.com>, "Michael Rivest"

<mrivest@navigant.com>, "Zhimei Luo"

<zhimei.luo@navigant.com>, "Charlie Stevens"

<cstephens@neea.org>, "Clark Silcox"

<clark.silcox@nema.org>, "Jim Creevy"

<Jim.Creevy@nema.org>, "John Caskey"

<john.caskey@nema.org>, "Meg Waltner"

<mwaltner@nrdc.org>, "Bob Saint"

<robert.saint@nreca.coop>, "Tom Eckman"

<Teckman@nwcouncil.org>, "Gary Fernstrom"

<gbf1@pge.com>, "Chuck Simmons"

<chuck.simmons@pgnmail.com>, "Phil Harter"

<phil@pjharter.com>, "Alex Hofmann"

<ahofmann@publicpower.org>, "Puesh Kumar"

<pkumar@publicpower.org>, "Andrew Delaski"

<adelaski@standardsasap.org>, "Joanna Mauer"

<jmauer@standardsasap.org>, Wes

Patterson/SouthBoston/USTRA/ABB@ABB, "charlie drexler"

<charlied@uus.org>, "David Flaten"

<david.l.flaten@xcel.energy.com>  

Subject Re: MV Transformers Material Price Sensitivity Analysis

The ‐25% case (for M3 and M2) is particularly important. What the LBNL's assessment of material

market shares actually shows is that relative prices of GOES and SA1 are (1) tied very closely to relative

material performance at various efficiency levels; and (2) those relative prices will change, as it is highly

unlikely that a small change in minimum efficiency will result in both AK and ATI abandoning the market.

Rather the result will more likely be a lowering of the price of M3 and M2. The close relationship of

material prices to performance at various efficiency levels is underscored by how quickly the share

results went to what economists call a "corner solution".  I would anticipate that rerunning the OPS

model for M3 and M2 at a 25% lower price would significantly (1) flatten the M3 and M2 LCC  values
over the various ELs, and (2) "return" market share to the GOES materials.  

Stated differently, all we are observing are the LCC's and market shares if relative prices do not change ‐‐ 

if material manufacturers cease competition. The ‐25% case is expected to show this. ABB, Howard and

GE, because of their experience and knowledge of the material price/performance characteristics, could

probably provide more refined price assessments of relative price change scenarios, as could LBNL with

some experimentation. Although this analysis is probably second nature to the material suppliers,

antitrust considerations would likely preclude their participation.  

It should be noted that the +25% price change scenario for ANY of the materials will not inform likely

changes in relative prices as the reality is that material requirements for M3 and M2 increase more than

proportional relative to SA1, as efficiency levels increase. Price increase scenarios would only artificially

increase estimated transformer costs relative to what one may reasonably expect to happen.

Transformer prices will increase, even at lower material prices, because of the additional material

requirements associated with more efficient units; not because material prices will increase. It is the

cost increase due to weight, not price, that is most relevant to determining the greatest efficiency

increase to benefit consumers, while maintaining or increasing industry competition.  

Regards,

Robert A. Berman, Principal

Berman Economics

www.BermanEconomics.com

1915 Grand Court

Vienna, VA 22182

703‐281‐0490

703‐655‐8398 (cell)

BermanEconomics@gmail.com

On Nov 5, 2011, at 8:16 AM, Steve Nadel wrote:  

I agree that Robin's scenario would be useful.  For now, just run with the assumptions DOE/LBL has

already made.  

Re steel price sensitivities, I would like to stick with the ‐25% and +25% originally agreed to.  My

understanding is that steel prices are now below the base prices DOE uses, so having a lower price

sensitivity would be useful.  As for a 50% higher scenario, as Robert says, that is pure speculation.  I

don't object to such pie‐in‐the‐sky scenarios if DOE/LBL have time, but this is a much lower priority.  And

if they do have time, I'd also suggest a scenario using EIA's high electricity price forecast as many people

consider the reference case forecast to be too low (this may also be on their current list as it's a

standard sensitivity DOE usually runs).  

Steve

>>> Robert Berman <bermaneconomics@gmail.com> 11/4/2011 7:09 PM >>>

Robin's scenario would be an easy one to run ‐‐ simply filter our the ZDMH and SA1 "dots", unless we
what to then assume that the lack of availability of amorphous and ZDMH would result in a 50% (or

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

Regards,

Robert A. Berman, Principal

Berman Economics

www.BermanEconomics.com

1915 Grand Court

Vienna, VA 22182

703‐281‐0490

703‐655‐8398 (cell)

BermanEconomics@gmail.com

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

Greg, Richard et al,  

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

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

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

amorphous and ZDMH suppliers effectively exerted extreme upward price leverage.  

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

achieve would still deliver LCC savings.  If that’s right, it would give me much more comfort with those

ELs.  

Cheers,  

Robin

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

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

To: Richard Parker

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

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

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

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

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

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

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

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

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

Patterson; Zhimei Luo

Subject: Re: MV Transformers Material Price Sensitivity Analysis  

Richard,  

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

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

to run sensitivity analysis at both +25% of 2008 prices and ‐25% of 2006 prices.  Our concern is not with

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

products, we feel we have seen the low side.  Our concern is more on the high side, where we are more
concerned about the effect a major technology swing could have on existing core materials.  

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

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

used for the sensitivity analysis for amorphous metal would be:  

    $2.91 x 1.25 = $3.64  

    $2.91 x 1.50 = $4.37  

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

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

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

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

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

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

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

Greg  

   

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

Colleagues,

There have been a number of requests for additional LCC runs with various material prices reflecting

concerns with possible shortages of supply under various standards scenarios.

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

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

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

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

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

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

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

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

being modeled and that lies outside these boundaries.

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

each other today, examine the attached sheet and  

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

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

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

for your request.

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

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

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

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

lines with the most shipments in the liquid immersed category.  If you have preferences for MVDT
please convey them with your request (perhaps DL 12?).  I would expect that we could manage runs for

3 design lines.  

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

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

cause for doing so.   

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

All best,

Richard  

‐‐  

Greg Coulter