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Dear Fellow Committee Members:

ATI Allegheny Ludlum felt it was important to highlight the following issues to the entire Committee in light of the fact 

that minutes or transcripts of our previous meetings have not been shared with the group. ATI Allegheny Ludlum takes 

this opportunity to again request that the meeting minutes/ transcripts be issued.

 The following issues were not properly reflected in the LBNL/NCI model based on the comments from the 

transformer experts on the Committee:

o How many transformers with efficiencies below the Jan 2010 DOE standard will now be refurbished 

versus purchased new? Refurbished transformers will not result in energy savings.

o How will the space constraints for network (vaulted transformers) be handled? It appears that no 

increase in efficiency will apply to these units and thus any energy savings in the LBNL/NCI model will 

need to be removed.

o Pole transformer weight increases were not properly analyzed thus potentially resulting in a significant 

under costing (zero cost included in the LCC) of the need for potential pole replacement. Also, the utility 

members of the Committee advised that the $2000 per pole replacement cost estimate suggested by 

LBNL/NCI was significantly understated. Please outline the pole replacement cost component of the 

revised economic analysis.

o Impact on regulation and impedance.

o The cost impact associated with numerous utility reports of higher failure rates of amorphous 

transformers as compared to grain-oriented transformers.

o Costs associated with lost manufacturing jobs for the production of GOES, small transformer producers 

who cannot afford to convert to amorphous, smaller utilities, etc.

o Has the model been adjusted to factor in stray and eddy current losses?

o What was the cost per KWHr used for the energy savings calculation?

o Why was the 3% cost of money value used for the payback period (PBP) analysis?

 In addition to the above economic analysis background and assumptions, based on my notes from our first two 

committee meetings, the issues listed below were all raised by various committee members and need to be 

considered by the Committee and the DOE when considering new efficiency standards:

o During the committee meetings or via documentation shared between meetings, every transformer

company representative stated that they support a DOE standard that maintains M-3 as a material of 

choice and indicated that mechanically scribed high perm material, which is not available today for US 

producers, should not be used as a core steel option when evaluating future transformer efficiency 

standards. 

o Transformer producers report that amorphous material is currently in short supply based on the current 

global demand and current DOE efficiency standard.

o No US owned companies produce amorphous. Hitachi Metals Ltd, a Japanese company, has an 

amorphous facility in Yasugi, Japan and Conway (near Myrtle Beach), SC. The only other amorphous 

capacity has just been developed in China with unknown levels available for export. Does it require the 

DOD and/or DOJ approval to permit a transformer standard to be established for which there are no US 

owned companies who can produce the required core material?

o The lack of diversity of production makes the amorphous supply chain vulnerable to disruption. It is 

unclear if there will be an adequate supply of material to meet the US transformer demand if the 
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amorphous factories in Japan or SC are damaged in a facility-specific event or a natural disaster such as 

an earthquake or hurricane. 

o What will happen to the price level of amorphous (and the cost of transformers) if amorphous is

mandated as the material of choice for liquid-filled transformers? Amorphous usage is projected to 

increase over fivefold (from 25,000 tons to 147,000 tons), based on the 8-23-11 LBNL/NCI stakeholders 

negotiations report, if liquid-filled transformer efficiency levels are increased to Efficiency level two (EL2)

or above. Likewise, global changes in pricing could serve to redistribute limited supply to other regions.

o The expansion of amorphous production capacity cannot be predicted. The technical barriers to entry 

are high, particularly for traditional steelmakers unfamiliar with the specialized production methods 

inherent to amorphous.

Finally, I wish to document an alternate option offered for consideration by a committee member during our October 

13th meeting to increase the efficiency of transformers. It was proposed that utility tax incentives be put in place to 

encourage the replacement of the most inefficient transformers on the grid (a transformer “cash for clunkers” type 

program which is pro-environment and pro-jobs at a time when the US is in the midst of one of our most prolonged 

periods for high unemployment and our worst housing crisis on record). Should the Committee request a study to 

determine the energy savings associated with this alternative program? This program has the added benefit of 

improving grid reliability. What are the hidden costs in lost productivity when the grid fails due to very old transformers 

that fail while still in use?

Hopefully, the entire Committee will consider all of these issues during our next meeting on November 8, 2011.

Raymond Polinski

General Manager of Grain-oriented Electrical Steels

ATI Allegheny Ludlum

11-4-11