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UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY 

MEETING of the MV WORKING GROUP

Volume I

National Rural Electric Cooperative Association

4301 Wilson Blvd, Rm. C2

Arlington, VA

Monday

November 8, 2011

Facilitator:

Richard Parker

University of Connecticut Law School

Host:

Edison Electric Institute

701 Pennsylvania Ave NW

4th

Washington, DC

Floor
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Participants Identified: 

Rick Anderson

Fayetteville Public Works Commission

Tim Ballo

Earth Justice

1625 Massachusetts Avenue

Suite 702

Washington, DC 20036

Scott Beck

Lakeview Metals

Robert Berman

Berman Economics

1915 Orchid Court

Vienna, VA 22187

John Caskey 

Electrical Manufacturers Association

Jerry Corkran

Cooper Power Systems

Greg Coulter

Consultant 

Prolec GE

Jim Creevy (Scott Lewinsky (ph))

National Electrical Manufacturers Association

1300 North 17th

Suite 1752

Street

Rosslyn, VA 22209

Andrew deLaski

ASAP

20 Belgrade Ave, Suite 1

Boston, MA 02131

Tom Eckman

Northwest Power and Conservation Council
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Gary Fernstrom

Pacific Gas & Electric Company

13055 Parkhurst Dr

Oakland, CA 94619

Chuck Foster

Edison Electric Institute

Carlos Gaytan

Prolec GE

Robert Greeson

Federal Pacific Company

Bruce Hirsch

Baltimore Gas and Electric

Gerald Hodge

Howard Industries

PO Box 1586 

Laurel, MS 39441

Alex Hoffman

American Public Power Association

Aaron Meyers

Cooper Power Systems 

Dave Millure

Metglas Incorporated

440 Allied Drive

Conway, SC 29526

Steve Nadel

American Council for an Energy-Efficient Economy

Wes Patterson

ABB, Inc.

Eric Petersen 

AK Steel

Ray Polinski 

Allegheny Ludlum - ATI
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Steven Rosenstock

Edison Electric Institute

701 Pennsylvania Avenue NW

Washington, DC 20004-2696

Robin Roy

Natural Resources Defense Council

1200 New York Avenue, NW, Suite 400

Washington, DC 20005

Paul Ryan

Hitachi Metals America

800 Grand Avenue, Suite AG-6

Carlsbad, CA 92008

Bob Saint 

National Rural Electric Cooperative Association

Mahesh P. Sampat

EMS Consulting

1180 Brookview Dr

Athens, GA 30606

Jerry Schoen

AK Steel Corporation

705 Curtis Street

Middletown, OH 45043

Chuck Simmons

Progress Energy

Bob Smith (via telephone)

Federal Pacific

Jim Rakowski 

Allegheny ATI

Ken Winder

NRECA

Participants from DOE:
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John Cymbalsky

DOE

Participants from Navigant/LBL:

Brian Coffey

Navigant

1801 K St. NW

Suite 500

Washington, DC 20006

Mike Rivest

Navigant

Rob Carmichael

Navigant

Matt Nardotti

Navigant Consulting

Chris Bolduc

Lawrence Berkley National Laboratory

1 Cyclotron Rd

Ms 90-4000

Berkeley, CA 94720

Washington, DC 20006

Katie Coughlin

Lawrence Berkley National Laboratory

Art Rosenfeld (via phone)

LBL
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AGENDA

 ITEM PAGE

Welcome, Mr. Parker 7

Self-Introductions 9

Agenda Review 14

Clarifying Questions, Liquid Immersed 18

Proposals and Presentations

Mr. Nadel 70

Mr. Caskey 90

Mr. Petersen 109

 

Review and Moving Forward 120

Discussion: Special Cases 215
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1 9:13 a.m.

3

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

4 MR. PARKER: Greetings everyone. Welcome 

5 to the rubber meets the road session of our process. 

6 We have a lot to cover today, and I hope everybody 

7 had a good trip here, for those coming from out of 

8 town and the rest. Let me just begin by thanking 

9 Steve Rosenstock and EEI for hosting us here today 

10 in his beautiful and conveniently located 

11 facilities. It’s really nice of him to do that. 

12 And I thought maybe we should begin by having Steve 

13 say a few words about the layout here and so forth

14 and then we’ll move on to the items on the agenda.

15 MR. ROSENSTOCK: Okay. Just a few 

16 logistics for the people in attendance here. Did 

17 everybody see the network password and network name 

18 and able to access internet. They’re on the table 

19 and it was on the screen earlier. The network name 

20 is mine in all caps and the password was shown on 

21 A1B2C3D4E5, and so everyone has access to internet 

22 access. A few logistical items. Restrooms, if you 

23 go out these doors the men’s room would be on the 

24 right, and then the first left. Ladies’ room you go 

25 towards the receptionist and you’ll make a left.
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1 Our food is in the meeting room out that 

2 way. I think it will make things easier if people 

3 could leave out of conference room A or conference 

4 room C, that way we won’t be necessarily disturbed, 

5 but the food, the breakfast was in Memo Park Meeting 

6 Room out past Room C over here. That’s where lunch 

7 will be set up later on today, and then -- what else 

8 was I going to say.

9 Oh, in terms of caucus rooms, basically 

10 that room over there we call it just conference room 

11 A. There’s some chairs there if people want to 

12 caucus in room A or you can caucus in Memo Park 

13 where food is going to be, it’s your choice. So 

14 basically there’s two areas where people can go and 

15 meet during certain times, or breaks, or during the 

16 day. And I think that just about covers it. If 

17 there’s any other logistical questions anyone has? 

18 Okay. Thanks.

19 MR. PARKER: Thanks, Steve. So I’m just 

20 trying to zoom in here, if this will zoom. So 

21 basically a lot to cover today. Why don’t we go 

22 around the table and everybody give your name and 

23 affiliation please, for the record and then we’ll 

24 turn to the people on the phone as well. Starting 

25 around the table, to my left.
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1 Self-introductions

2 MR. GREESON: Rob Greeson, Federal Pacific 

3 Transformer.

4 MR. GAYTAN: I’m Carlos Gaytan, Prolec GE.

5 MR. COULTER: Greg Coulter, I’m a 

6 consultant supporting Prolec GE.

7 MR. FERNSTROM: Gary Fernstrom, PG&E 

8 representing Pacific Gas and Electric Company, 

9 Southern California Edison, and Semper Utilities.

10 MR. ECKMAN: Tom Eckman, Northwest Power 

11 and Conservation Council.

12 MR. NADEL: Steve Nadel, American Council 

13 for an Energy Efficient Economy.

14 MR. DeLASKI: Andrew DeLaski, Appliance 

15 Standards Awareness Project.

16 MR. CORKRAN: Jerry Corkran, representing 

17 Cooper Power Systems, Waukesha, Wisconsin.

18 MR. CASKEY: John Caskey, National 

19 Electrical Manufacturers Association.

20 MR. BECK: Scott Beck, Lakeview Metals.

21 MR. BALLO: Tim Ballo, Earth Justice.

22 MR. HIRSCH: Bruce Hirsch, Baltimore Gas 

23 and Electric, representing EEI.

24 MR. SIMMONS: Chuck Simmons, Progress 

25 Energy, part of the EEI contingent.
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1 MR. ANDERSON: Rick Anderson, Fayetteville 

2 PWC, Fayetteville, North Carolina, representing 

3 APPA.

4 MR. SAINT: I’m Bob Saint with the 

5 National Rural Electric Cooperative Association.

6 MR. HOFFMAN: Alex Hoffman with the 

7 American Public Power Association.

8 MR. ROSENSTOCK: Steve Rosenstock, Edison 

9 Electric Institute.

10 MR. PETERSEN: Eric Petersen with AK 

11 Steel.

12 MR. POLINSKI: Ray Polinski with ATI 

13 Allegheny Ludlum.

14 MR. PATTERSON: Wes Patterson, ABB, Inc.

15 MR. RYAN: Paul Ryan, Hitachi Metglas.

16 MR. MILLURE: Dave Millure, Metglas.

17 MR. ROY: Robin Roy, Natural Resources 

18 Defense Council.

19 MR. HODGE: Gerry Hodge from Howard 

20 Industry.

21 MR. CYMBALSKY: John Cymbalsky, DOE.

22 MR. CARMICHAEL: Rob Carmichael, Navigant.

23 MR. NARDOTTI: Matt Nardotti, Navigant.

24 MR. RIVEST: Mike Rivest, Navigant 

25 Consulting.
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1 MR. LEWINSKI (PH): I’m Scott Lewinski 

2 (ph) with National Electrical Manufacturers 

3 Association.

4 MR. RUSH: (off mic)

5 (several intros not on mic 

6 MR. SAMPAT: Mahesh Sampat, EMS 

7 Consulting.

8 MR. FOSTER: Chuck Foster, representing 

9 Edison Electric Institute.

10 MR. BOLDUC: Chris Bolduc, LDL.

11 MR. MEYERS: Aaron Meyers, Cooper.

12 MS. COUGHLIN: Katie Coughlin, Lawrence 

13 Berkley National Laboratory.

14 MR. COFFEY: Brian Coffey, Navigant.

15 MR. PARKER: Great. On the phone, could 

16 you please let us know if you’re there. 

17 PARTICIPANT: (inaudible)

18 MR. PARKER: Welcome, Eric. Anyone else.

19 (Phone intros not audible)

20 MR. PARKER: Gotcha Rick, thanks. Great 

21 all right. Thank you

22 What I thought we would do was really try 

23 to focus today on the proposals I know we all came 

24 here for, which is the -- which is negotiating 

25 Energy Efficiency Standards for distribution 
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1 transformers. We’ve had an extraordinary exchange 

2 of views and information and data on both the 

3 engineering analysis and the economic analysis. I 

4 know that Mike Rivest and Brian Coffey and Matt 

5 Nardotti and many others on the Navigant team have 

6 been working with you all many hours and weeks, and 

7 as we approached this meeting, late into the night 

8 and weekends, to make sure that you are -- your data 

9 is received, your input is received, that it’s 

10 reviewed, that it’s carefully discussed, that it’s 

11 considered, that it’s brought into the analysis 

12 where it can be, and that everybody has a chance to 

13 be heard on this.

14 I think if you compare this -- the process 

15 that we’ve gone through to what happens in a normal 

16 rulemaking, you’ll appreciate the extraordinary 

17 difference between this process and what happens 

18 normally, and it’s really a great opportunity, not 

19 only for the people in this room, the stakeholders 

20 in this room, but also for the analysts to improve, 

21 to refine the analysis, to make it better, and to 

22 make it more responsive to your input.

23 Much of the input came in very recently, 

24 that’s the way it is with deadlines, that they tend 

25 to attract input at the very last minute, and some 
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1 came in after our internal deadlines in prior 

2 meetings, but we tried to do everything possible, 

3 nonetheless, to accept it and to use it.

4 There is, of course, only so much that one 

5 can do. One can’t please everybody, and one, you 

6 know, the DOE staff are constrained to write a 

7 proposal and do analysis for industry, not for any 

8 individual company. And so they have to work within 

9 that constraint. So, they have taken all this and 

10 produced their engineering analysis and they’ve 

11 produced a set of price sensitivity tools which 

12 they’ve made available to you, to help explore, in a 

13 very efficient way I think, the impact of varying 

14 certain assumptions and we can certainly have that 

15 discussion -- varying certain assumptions about 

16 materials prices on the economics of the industry.

17 But I think we, at this point, need to 

18 declare the engineering analysis pretty much in the 

19 can, pretty much done. We will review, as needed, 

20 the changes that have -- that need to be made, but 

21 we have to focus today on really working with what 

22 we have in terms of the engineering analysis and 

23 making the best possible use of it in our 

24 negotiations.

25 The life cycle cost analysis, of course, 
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1 is really tied into various assumptions. That 

2 methodology is pretty well established. I think 

3 that, again, it’s a question of doing various runs 

4 that are necessary, that are required to sort of 

5 support the negotiations. We have to realize that 

6 there are transaction costs for those runs. They 

7 are expensive and difficult -- not expensive, but 

8 difficult and time-consuming to do, and so we need 

9 to figure out the most strategic use of that time as 

10 we go forward, and think about, you know, what are 

11 the key items of the analysis that we may need that 

12 you don’t have, that are coming from the 

13 discussions.

14 Agenda Review

15 So what I thought we would do, what I 

16 propose for an agenda is simply this, that we start 

17 off with liquid immersed -- and I put an agenda up 

18 there. This is a draft agenda, so this is -- and 

19 this is a group discussion and I’m happy to 

20 entertain suggestions for change and so forth for 

21 this agenda.

22 But what I thought we would do is begin 

23 with any kind of clarifying questions you may have 

24 about the analysis on liquid immersed. There hasn’t 

25 -- there have been no changes to the engineering 
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1 analysis, so this would really be just any questions 

2 that you have about the LCC and NIA runs that have 

3 been done. And again, basically just clarifying 

4 questions at this point.

5 And then turn to a short discussion of an 

6 issue that we’ve talked about in prior meetings, 

7 which is the question of whether there is a need for 

8 a new product class for DL2, for round tanks, and we 

9 have, you know, I know that Wes Patterson has been 

10 working very closely with Navigant staff and others 

11 have as well, and we have a proposal for handling 

12 that that I want to make sure that people understand 

13 and are comfortable with, because there’s been a lot 

14 of discussion about that.

15 Then from ten to -- I’m sorry this is not 

16 fitting all on one screen -- but from ten to 

17 basically 12:30, open the floor to you all to 

18 present your take on where things -- where you’d 

19 like to see these negotiations end up, or what 

20 you’re proposing. So we’ll just open the floor to 

21 anybody who wants to step forward and present a 

22 proposal on how they see the liquid immersed now 

23 working out. And the focus on liquid immersed is 

24 simply driven by the fact that while all these 

25 products are important, there is a great amount of 
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1 shipments data forward -- items one through five 

2 indicate that, both in terms of potential energy 

3 savings and MG consumption, and also in terms of 

4 just product value, commercial value, these are 

5 very, very large categories and we’ve had a lot of 

6 discussion about them in the past, and so we would 

7 lead off with that. 

8 If we can work through that faster, than 

9 expected, and get where we want to sooner, we’ll 

10 move on to medium voltage dry sooner, but I would 

11 propose we give the morning and the early afternoon 

12 to that. Take a break, and then in mid-afternoon 

13 come back and talk about what’s been done on the 

14 analysis on the medium voltage dry and any proposals 

15 on medium voltage dry. I’m aware that the analysis 

16 on medium voltage dry has been later coming to you, 

17 and so people may need more time to take that on 

18 board. I’ve heard that said in a couple of cases.

19 Four-thirty to five, we would discuss 

20 plans for treating special cases, thoughts, 

21 networks, et cetera that are low volume but that 

22 represent unique design difficulties. So my goal 

23 there would be to just set up the process and time 

24 table for having those categories. And then wrap up 

25 for the last hour with priorities for going forward 
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1 and work plan for going forward to the next meeting.

2 So that’s just a draft, absolutely no 

3 pride of authorship. Do people feel like this is a 

4 reasonable way to proceed? By the way, I have not 

5 put out -- put in, you know, try to micromanage the 

6 process to talk about, you know, when we would want 

7 to break into work groups or caucuses and so forth. 

8 I think we’ll see that as it comes up in the 

9 discussion, and we can do that, but this is just a 

10 very rough and ready outline.

11 Comments, thoughts on the agenda?

12 Steve?.

13 MR. ROSENSTOCK: , Steve Rosenstock, EEI. 

14 Just a quick one. And again, it’s up to the group, 

15 but I was wondering if we could possibly make some 

16 time for any clarifying questions about the 

17 sensitivity analyses that were sent around by LBL 

18 and Navigant over the last few days? Just -- there 

19 might be some numerical questions. I had a couple 

20 of questions, so again, if people wanted to do that 

21 because there’s a lot of information, and I really 

22 appreciate all the work that they did, but there’s 

23 probably at least four analyses that were done over 

24 the last few days and just if people wanted to ask 

25 some clarifying questions, take some time to do 
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1 that. It’s up to the group, just in case people 

2 want --

3 MR. PARKER: Sure. I’ve allocated 15 

4 minutes, but it may be more if people feel that 

5 that’s really important to have. Other comments? 

6 Andrew.

7 MR. DeLASKI: I agree, but it’s a pretty 

8 short time for that, but we may need that. At some 

9 point, just cut it off if we -- we could get 

10 clarifying questions all day long. Let’s not do 

11 that.

12 MR. PARKER: Right.

13 MR. DeLASKI: So I would suggest we set 

14 some time limit on it. Again, I’m not sure what 

15 that’s going to be, so that we can get to where the 

16 rubber meets the road, as you said. And I think 

17 also -- I found the consultants to be generally 

18 available at breaks if we have questions we need to 

19 ask, do it at breaks -- sometimes that’s useful too.

20 MR. PARKER: Other comments on the agenda? 

21 Does it seem like an acceptable way to use the day? 

22 Okay. Agenda adopted.

23 Clarifying Questions

24 Liquid Immersed

25 Let’s move on to clarifying questions and 
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1 discuss first if we need more time, let’s try on 

2 bringing it in in 15 minutes, but if we need more 

3 time we will. Again, the focus here is on LCC and 

4 NIA analysis for liquid immersed since the 

5 engineering analysis has remained unchanged. Any 

6 questions for Katie or Chris? Steve.

7 MR. ROSENSTOCK: Okay. This is in 

8 reference to the draft life cycle cost payback 

9 period sensitivity results where ZDMH, HO, and SA-1 

10 core materials were excluded. It’s in the November 

6th

15 MR. PARKER: What are we looking for?

11 presentation. It’s 15 pages. I don’t know if 

12 you can pull that up, or I’m just going off my 

13 screen, but I don’t know if you want to pull it up 

14 or --

16 MR. ROSENSTOCK: Well, it’s a 

17 presentation, it’s dated November 6, 2011 and it’s 

18 on Page 2. The title of it is, “Draft life cycle 

19 cost payback period sensitivity results. ZDMH, HO, 

20 and SA-1 core materials exclusion.”

21 MR. PARKER: Let me see if I can get this. 

22 This is it here?

23 MR. ROSENSTOCK: Page two. No, it’s the 

24 other one. But this is where only ZDMH was 

25 excluded. It was the other one where it looked like 
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1 three materials were excluded.

2 MR. PARKER: You want the three all 

3 excluded?

4 MR. ROSENSTOCK: That analysis. That’s 

5 where I think clarifying -- that’s the one. 

6 MR. PARKER: Okay. 

7 MR. ROSENSTOCK: Okay. I’m going to Page 

8 7 of the presentation, design line five, LCC 

9 results.

10 MR. PARKER: So many people -- let me see 

11 if I can zoom in on this.

12 MR. ROSENSTOCK: Thanks. Okay. Just a 

13 quick question for that one, for efficiency level 

14 two, if you go up to the other one, basically 

15 everything kind of close to 100 percent, but it says 

16 net increase 36 percent, and then net savings, 20 

17 percent. I’m just wondering what happened to the 

18 other like 44 percent there to add that up to 100 

19 percent for EL2?

20 MR. PARKER: Katie or Chris, did you want 

21 to respond?

22 MS. COUGHLIN: They would be unaffected by 

23 the standard.

24 MR. PARKER: That was Katie. Everybody 

25 please announce your name for the court reporter 
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1 before you speak.

2 MS. COUGHLIN: Yeah, there’s always a 

3 fraction of the purchasers who are purchasing above 

4 the efficiency, the baseline efficiency, and they’re 

5 unaffected by the standard. So that presumably 

6 accounts for that remaining percentage.

7 MR. ROSENSTOCK: Okay. It was higher than 

8 the other slides when you went over -- you know, 

9 pretty much everything else was closer to 100 

10 percent, so that one was just so much lower, I just 

11 figured I’d ask that question. So thank you very 

12 much.

13 MR. PARKER: Okay. Yes, Andrew.

14 MR. DeLASKI: Really two questions, one 

15 has to do with the pole costs, so Chris, I guess 

16 this is the question for you because it affects the 

17 LCC. I think it’s a question for LBL, which is that 

18 in the summary you sent out over the weekend of 

19 changes, I’m looking at the -- I guess it’s the work 

20 point on the summary for the utility pole change21 outs. Reading point A, it says that “In the LCC 

22 calculation it is assumed that a pole change-out 

23 will only be necessary if the weighted increase is 

24 larger than 15 percent of the weight of the baseline 

25 unit.” So my question is, did you apply that 
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1 criterion regardless of the weight of the base case 

2 transformer?

3 MS. COUGHLIN: Yes.

4 MR. DeLASKI: So it could be a 13 KVA 

5 transformer, it could be a much larger transformer, 

6 and you’re using that 15 percent as a trigger for 

7 pole change-out, even if the transformer is rather 

8 small, the baseline transformer?

9 MS. COUGHLIN: Yes, it reflects the 

10 assumption that the pole and the -- the sizing of 

11 the pole and in a sense, the sizing of the 

12 transformer are linked. Because there are a variety 

13 of pole classes that are sustaining a variety of 

14 weights.

15 MR. DeLASKI: Okay. So you’re saying your 

16 assumption is that that relationship just scales 

17 perfectly? Okay. Thanks for the explanation.

18 MR. NADEL: And a question, where did that 

19 15 percent criteria come from?

20 MS. COUGHLIN: It is -- it’s based on --

21 there’s a, for wood poles, there’s a distribution 

22 strength associated with a given manufacturer23 specified median strength, and -- which is based on 

24 the fact that wood is not a perfectly homogeneous 

25 material. So it’s really kind of based on a 
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1 estimate of looking at the degree of leeway you 

2 might have in that sizing, based on the shape of 

3 that distribution. It is beyond that, somewhat of 

4 an arbitrary number.

5 MR. FERNSTROM: Gary Fernstrom from PG&E. 

6 If I could just comment on that? In the smaller 

7 sized pole-mounted transformers, pole replacement is 

8 simply not an issue, so it wouldn’t scale until you 

9 probably get above 75 KVA. Thank you.

10 MR. PARKER: Yes.

11 MR. HIRSCH: Bruce Hirsch, Baltimore Gas 

12 and Electric. I want to comment on that too. When 

13 we’ve installed a pole new, new job, that pole was 

14 sized based on the equipment that was going to go on 

15 that pole and what the load is. So the poles are 

16 sized, really, to the transformer size, so I think 

17 some of your assumptions are good. I don’t know if 

18 the 15 percent number is good or not, but I will 

19 tell you in the denser areas -- not in the denser 

20 areas, but in the urban areas where you’ve got a lot 

21 of other utilities that are jumping on that pole, 

22 Verizon, Comcast in our case, and a lot of others of 

23 those types of utilities, they will load them up 

24 pretty heavy, so I’m not sure I agree 100 percent 

25 that on the smaller poles it’s not an issue, because 
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1 in some of these heavy areas, it is, just mainly 

2 because of the fact that we size the pole, really, 

3 to the initial load.

4 MR. DeLASKI: Just a follow question for 

5 Bruce. Bruce, do you guys have a -- does BG&E have 

6 a minimum pole strength?

7 MR. HIRSCH: We have a minimum size pole. 

8 MR. DeLASKI: Is that minimum in such a 

9 place that you wouldn’t get, on a small transformer, 

10 you wouldn’t get to a change until you got to 

11 something above 15 percent?

12 MR. HIRSCH: I do agree that when other 

13 utilities are not on the pole, that minimum would be 

14 very sufficient for the smaller sized transformers, 

15 yes.

16 MR. DeLASKI: Yes. Thanks a lot.

17 MR. HOFFMAN: I --

18 MR. PARKER: Identify yourself.

19 MR. HOFFMAN: I’m Alex Hoffman from APPA, 

20 and I had a question regarding the draft life cycle 

21 cost payback period sensitivity results. It says 

22 ZHMD steel exclusion. Is there any way that you 

23 could bring that up on the screen so everyone could 

24 see?

25 MR. PARKER: What page are you?
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1 MR. HOFFMAN: Page 8. Yeah. Okay. So, 

2 you know, I was looking at this and maybe -- and 

3 this question is just if I could get just a general 

4 step through. I saw a few things here that kind of 

5 confused me. I noticed, for instance, from one to 

6 two the costs increase, but operating cost savings 

7 are higher. And I was just wondering if someone 

8 could -- and it seems like the operating cost 

9 savings drive the payback and -- but yet the 

10 efficiency -- the actual efficiency increase is sort 

11 of -- it’s a fraction of a percentage, so I was 

12 wondering if someone could just, you know, kind of 

13 break it down for me in Sesame Street language or

14 something. I need some help, that’s all.

15 MS. COUGHLIN: This is Katie Coughlin, 

16 Lawrence Berkeley Lab. So the -- let’s see, the --

17 MR. ANDERSON: He said between one and 

18 two, and two and three are flat. What happened?

19 Two and three are flat.

20 PARTICIPANT: Right.

21 MR. ANDERSON: What happened?

22 MS. COUGHLIN: No. Okay, typically when 

23 that type of thing happens, it’s because of the 

24 shape of the engineering curve. So if the 

25 engineering curve is very flat between say, EL1 and 
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1 EL4, you’re not going to see much of a distinction 

2 between EL2 and EL3, because most of the 

3 transformers are selected on first cost. So if 

4 you’re in a region where the slope is very flat, 

5 you’re not going to see much of a change due to 

6 placing the efficiency level somewhere in that flat 

7 area. I’m not sure -- it’s sort of -- if the 

8 efficiency curve goes sort of up, and then you have 

9 the EL1 here, and then it’s flat, and I have EL2 

10 here, well I’m not going to see any difference 

11 between choosing EL2 and EL3 because I’m choosing 

12 the same first cost is essentially it. 

13 So typically when you see a lack of 

14 difference going from one EL to the next, it’s 

15 because the cost efficiency curve is very flat in 

16 that region of the engineering diagram.

17 MR. BOLDUC: Chris Bolduc, LBL. Also to 

18 follow up for Alex. If you scroll down to Page 13 

19 of the presentation, the materials selection for 

20 design line 1, we can see between EL1 and 2 where we 

21 have the large drop in paybacks, the LCC has 

22 switched from picking an M3 steel to an amorphous 

23 steel, and the lower losses are a reflection of the 

24 lower payback of the higher efficiency levels.

25 MR. ROSENSTOCK: May I ask -- Steve 
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1 Rosenstock, EEI -- so in that case, going from EL2 

2 to EL3, there was no -- exactly the same costs? I 

3 think it surprises a lot of people that the numbers 

4 were exactly the same even though the efficiency 

5 changed.

6 MR. BOLDUC: To answer your question, 

7 Steve. Yes, the same units were selected in both 

8 cases from the engineering for design line one.

9 MR. ROSENSTOCK: Okay. 

10 MR. ANDERSON: Rick Anderson, Fayetteville 

11 PWC. So design line one, the base case has got M3 

12 steel. Efficiency level 1 has got 90 percent M3 and 

13 ten percent amorphous, and efficiency level 2 is 100 

14 percent amorphous?

15 MR. BOLDUC: Yes, that is what the LCC 

16 selected from the engineering based on first cost.

17 MR. PARKER: Which slide are you on, Rick?

18 MR. ANDERSON: I’m on 13.

19 MR. PARKER: Thirteen.

20 MR. HOFFMAN: If you could go back to Page 

21 8, just one more clarifying question for me is the 

22 incremental first cost, the additional cost for 

23 purchasing the transformer at that efficiency level. 

24 Go to the estimated additional cost.

25 MS. COUGHLIN: Yes, so the incremental 
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1 first cost is the difference in cost between the 

2 base case selection and the standards case 

3 selection. So again, but because in the LCC you’re 

4 always selecting from the full range of designs, you 

5 may select the same unit under many standard levels, 

6 in which case there would be no incremental first 

7 cost.

8 MR. PARKER: Can you explain why you would 

9 use the same -- why you would select the same unit 

10 under different standard levels? Is it because of 

11 limited choices available?

12 MS. COUGHLIN: No, it is entirely driven 

13 by the shape of the price efficiency curve. So -- I 

14 don’t know if you can find that rapidly, but 

15 essentially what happens is there’s two sets of 

16 curves, one for conventional M3 steels, and one for 

17 the amorphous. And the shape of the amorphous core 

18 curve is a bit of a parabola out beyond, I guess, 

19 EL2 or 3. So the cheapest unit over several 

20 standard levels is an amorphous unit. So if you’re 

21 picking on first cost, you’re going to pick the same 

22 unit under several standard levels

23 MR. PARKER: Jerry.

24 MR. CORKRAN: Some general questions on

25 design level one.
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1 MR. PARKER: Jerry Corkran.

2 MR. CORKRAN: Yeah, my name’s Jerry 

3 Corkran, Cooper Power. The printed outputs you have 

4 there, is that based on a three percent cost of 

5 money? And if so, did you do the same thing for the 

6 seven percent cost of money?

7 MS. COUGHLIN: No, the three percent and 

8 the seven percent are used in the NIA. In the LCC 

9 we have a distribution of discount rates. I think 

10 the median is about 4.7 percent real, and then 

11 there’s a higher value and a lower value.

12 MR. CORKRAN: So the second question. The 

13 designs that you make, do they all have taps in 

14 them? Most of the products of the distribution 

15 lines do have what we call no-load taps, which are 

16 typically plus and minus five percent. Do your 

17 designs contain those taps?

18 MR. COFFEY: They would. None of the 

19 performance data would reflect operation in any of 

20 those taps.

21 MR. CORKRAN: But is the physical winding 

22 there which does increase the core losses and the 

23 size of the transformer, is a physical winding built 

24 with the tap?

25 MR. COFFEY: Yes, it is.
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1 MR. CORKRAN: And are there tolerances in 

2 the designs for a normal production variation which 

3 we always have when we produce transformers. We 

4 have a bell-shaped curve which may average out 

5 somewhere, but if we’re going with an iron-clad 

6 maximum losses, we’d have to back off from a design 

7 value.

8 MR. COFFEY: That’s not modeled in the 

9 engineering simulation, but that is addressed in the 

10 certification and compliance.

11 MR. CORKRAN: So it’s not addressed in the 

12 efficiencies that you’re showing?

13 MR. COFFEY: We just show the efficiencies 

14 just sort of in an ideal case, if you built it 

15 without manufacturing variability. When the 

16 standard is -- the test procedure, rather, is -- the 

17 current test procedure does have a mathematical 

18 allowance for statistical variation.

19 MR. PARKER: Andrew.

20 MR. DeLASKI: Andrew DeLaski. In the last 

21 meeting, ABB shared some -- Wes -- shared some pie 

22 charts that showed the transformer that ABB had 

23 shift over a year period by losses or sorted by 

24 losses and sorted by -- two sets of pie charts, one 

25 sorted by losses and one sorted by efficiency and 
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1 metals used in the core. We looked that over and 

2 the results that ABB shows comes from the 

3 transformers that they sold are different than the 

4 results that the Department shows and the material 

5 selection charts to shoot it in the reference case 

6 analysis last week. 

7 So, in general, ABB shows they’re using M3 

8 for efficiency levels in the market today that are 

9 above the levels that the DOE analysis showed as 

10 doable. So in other words, there’s a real world 

11 experience, the way I read the data that’s in 

12 conflict with the modeling. And the conflict shows 

13 that M3 is being used at higher levels in the market 

14 today than the model shows is even doable. So I 

15 guess the question to Navigant, since they did the 

16 engineering, did you corroborate, or did you compare 

17 the model results with the data that ABB provided in 

18 the last meeting?

19 MR. PARKER: I’m going to turn that over 

20 to Wes first.

21 MR. PATTERSON: Andrew, this relates back 

22 to -- Wes Patterson. This relates back to the 

23 earlier question on this analysis also where you 

24 have two points with exactly the same unit. The two 

25 questions, your question and that question are 
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1 exactly the same question. The DOE analysis was 

2 based on a family, a discrete family of AB factors. 

3 So they had so many points, A factors for no-load, 

4 so many B factors for load loss, and it’s a family 

5 of discrete points, and they ran optimized designs 

6 for those points. Those points, in reality, have 

7 nothing to do with efficiency. They are an 

8 economic, life cycle cost analysis, and not an 

9 efficiency analysis. 

10 If you’re looking at efficiency, you would 

11 have said, I want to optimize the design for this 

12 efficiency level and you would have made a family of 

13 efficiency curves. Now the results of the analysis 

14 with the way it was done is it forms a series of 

15 dots on the scatter diagram which tend to be sloped, 

16 like a parabola. But in reality, these would have 

17 been a straight line on a log-log curve that all of 

18 a sudden become asymptotic at the upper limit of 

19 that particular grade of steel.

20 So what you’re seeing is the reason why 

21 ABB has M3 at lower efficiencies is because we were 

22 designing for an efficiency and not an A/B factor. 

23 So where the DOE data curves up, our data was still 

24 running in that straight line. Does this make sense 

25 to everybody? So it’s a fallacy in the data set 
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1 that exists in the DOE data.

2 That said, the DOE data, if one recognizes 

3 the characteristics of a transformer, can be used to 

4 perform the analysis at hand. But you should not be 

5 basing these results on discrete points. You should 

6 be basing them on the indicated trend of the data 

7 that’s available. But the fallacy is the LCC 

8 reaches in and says, I’ll grab this explicit 

9 particular design, and so you end up with, for 

10 efficiency level 2 and efficiency level 3, the exact 

11 same design being selected, when in the real world, 

12 there’s actually two designs.

13 MR. RIVEST: So kind of to add on to what 

14 Wes said, the analysis is based on certain prices. 

15 So there are two issues, you know, is the -- can the 

16 design be built at all, but also at what cost can it 

17 be built, and which is the most cost-effective to --

18 at a given efficiency? 

19 The analysis can be thought of as really 

20 two curves. There’s a curve for, like Katie 

21 mentioned, for grain-oriented steels, and then 

22 there’s a curve for the amorphous steels. The --

23 we’ve already established standards whereby we are 

24 in a fairly exponential portion of the capabilities 

25 of grain-oriented steel, so small changes in 
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1 efficiency come at a larger cost. And if you 

2 suddenly are moved onto the amorphous curve, once 

3 you are on the amorphous curve, then you are on the 

4 linear portion and it’s a fairly flat curve and you 

5 have to push further in efficiency to get onto that 

6 exponential. So you have two intersecting lines 

7 here, two intersecting curves, if you will.

8 The point of intersection and efficiency 

9 depends on the relative pricing of amorphous and the 

10 conventional steels, and a lot of the sensitivity 

11 runs have been centered around that differential. 

12 So if the grain-oriented steels were less expensive 

13 than what we modeled, and amorphous was more 

14 expensive than we modeled, we would be on the grain15 oriented steel curve longer. And so, you know, 

16 depending on the design line, we seem to be hitting 

17 that intersection in different, you know, at a 

18 different point, and a different efficiency level.

19 The other thing to notice is that there 

20 isn’t consistency between the design lines and the 

21 amount of energy savings in terms of percentage of 

22 losses. They’re actually quite different. So EL1 

23 is not the same stringency equivalent across design 

24 lines. So I wanted to point that out.

25 In terms of the A and B factors, the idea 
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1 there was to have a lot of A and B factors 

2 generating different designs. Those designs are 

3 then kept in a database, and as we update material 

4 prices, we can use those designs and re-cost them. 

5 Sort of like a manufacturer would have a whole 

6 database of designs they built, and based on 

7 material prices, they would then determine which is 

8 the least cost.

9 MR. PATTERSON: Wes Patterson again. 

10 There’s also a fallacy in that because manufacturers 

11 don’t maintain a database of discrete designs and 

12 just choose the price when material cost changes. 

13 There is -- transformer design is driven very hard 

14 from the cost of the core steel and the cost of the 

15 conductor. As these commodities change, every time 

16 they change, we reoptimize the design, make a 

17 completely new design, not take a physical design 

18 and just put new prices on it.

19 MR. RIVEST: That’s true. You are in the 

20 sophisticated side of the industry, though.

21 MR. DeLASKI: So, just to follow --

22 Richard, can you pull up the reference case 

23 analysis? Slide 15.

24 MR. NADEL: And while you’re doing that, 

25 let me try to interpret what I heard Michael and Wes 
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1 said. I heard you both say that there’s going to be 

2 a flat part of the curve and then a knee and then it 

3 turns up. What I heard Michael say is he thinks 

4 they found that knee. What I heard Wes say is no, 

5 you should have continued that curve going for 

6 longer, that you weren’t at the knee. Am I 

7 interpreting this correctly?

8 MR. DeLASKI: Okay. So, and back to the 

9 same point I think I’m asking here, but can you go 

10 to slideshow so you can see it a little better? 

11 MR. PATTERSON: While they’re chasing it, 

12 Steve, just as a comment, I mean just conceptually, 

13 I mean we’re all fairly intelligent folks. It makes 

14 no sense that we would have an efficiency level to -

15 - an efficiency level 3 where the exact -- where the 

16 most optimized design was exactly the same price. 

17 This is illogical. For sure there’s some slope.

18 MR. DeLASKI: So, question for Mike, I 

19 think. So this slide, if you’re looking at, say, 

20 design line, just for simplicity, design line 1, 

21 does this tell us that at efficiency level 3 that 

22 the model picked 100 percent amorphous core 

23 transformers? A couple points -- to make sure I got 

24 the first step right here.

25 MR. RIVEST: I believe so, yes.
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1 MR. DeLASKI: But there were designs 

2 available in the database that used ZMH M2 and M3, 

3 but they weren’t being picked because they were 

4 higher cost.

5 MR. RIVEST: Exactly.

6 MR. DeLASKI: So then what they think, at 

7 EL4, that the -- so at EL4, this is saying that 

8 there are no M3 or M2 or ZDMH designs available. Is 

9 it saying that?

10 MR. RIVEST: That’s exactly right, yeah. 

11 That’s a reflection of the engineering, there’s no -

12 - only amorphous at EL4.

13 MR. DeLASKI: So what we observed is, 

14 again, I think this is consistent with what Wes just 

15 said, is what we observe is that the ABB data 

16 submitted on what they sold in the market populated 

17 some of those cells to the right. So we’re seeing 

18 in the market, transformers are being sold with M3 

19 and M2 in the various design lines as you go across, 

20 where you’re seeing M3 not just available, but

21 actually competing in the market observed today, at 

22 least as of the day submitted to this group.

23 MR. RIVEST: I mean I’ll take you on your 

24 word, but I didn’t check back to see what the 

25 efficiency level was for four and see if on the plot 
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1 it was being designed or not.

2 MR. DeLASKI: Did you check the data 

3 against the ABB submission?

4 MR. RIVEST: I -- when you say check the 

5 data, in terms of seeing if we could have come up 

6 with M2 designs to reach that level, if we had maybe 

7 changed the A and B factors or -- no, we didn’t do 

8 that.

9 MR. DeLASKI: Thanks.

10 MR. PATTERSON: So -- Wes Patterson -- so 

11 this is pointing out, as I said, we have the real 

12 world, and we have the model world and there’s a 

13 spot here in between, and given that, people should 

14 recognize that transformers are a custom-engineered 

15 product. We average about 1.2 physical units per 

16 physical design. A tremendous amount of variation. 

17 So last year I made 10,000 designs, right, and on 

18 average, I get 1.2 units per design, which is not a 

19 whole lot. What this indicates is that the design 

20 space is essentially intimately variable. And any 

21 analysis is looking at a subset of the real world, 

22 and then the trick is to leverage that subset for 

23 purpose of your analysis. And where I see this 

24 thing has a potential gap is that we are selecting 

25 discrete points and assuming that those points 
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1 reflect the trend. Given that, we can still pull 

2 knowledge out of this data.

3 MR. RIVEST: Yeah, I mean the way I’ve 

4 come to think about this is every design that we‘ve

5 done, so every design line we have a number of, 

6 quote, “design options,” if you will, combinations 

7 of steel with conductor which would be primary 

8 aluminum or secondary copper. And we’re certainly 

9 down-selecting from reality the number of possible 

10 ways of constructing a transformer. You know, even 

11 our cores, there are multiple ways of designing 

12 cores. So by down-selecting the number of options, 

13 we are creating a lumpiness in the analysis that 

14 wouldn’t exist, necessarily, in the real world where 

15 you have more design possibilities. So when you’ve 

16 incorporated more designs what you’re doing is 

17 you’re creating a more flat design space, if you 

18 will. So, in economics, it’s sort of the difference 

19 between those short run marginal cost curves and the 

20 long run marginal cost curve. One creates an 

21 envelope to the individual ones.

22 And Wes’ observation would be that we 

23 would be better off, possibly, doing a curve fit 

24 through the data and creating a smooth -- more 

25 smooth transition. It would always have positive 
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1 slope for one, so we would avoid the situation where 

2 we’re selecting the same design. But that said, I 

3 don’t think that there is anything inherently wrong 

4 here except the fact that it’s creating these all or 

5 nothing scenarios that even within design line 1 may 

6 be incorrect, but when you take into account that 

7 the representative unit is just one KVA rating and 

8 it’s just one application and in the real world 

9 you’re going to have a much greater diversity of 

10 cost effectiveness, which means you’re never going 

11 to get this complete built-over from zero steel to 

12 100 steel.

13 MR. MEYERS: Aaron Meyers, Cooper Power 

14 Systems. I just want to make a point that the 

15 design lines that we’ve chosen are one specific 

16 primary voltage, one specific secondary voltage, 

17 it’s one configuration. When you look at the 

18 variability in design, I mean the primary voltage 

19 typically can range from 2400 volts up to 34,500 

20 volts; the secondary voltage could be 120 volts; it 

21 could be up to 600 volts, so there are -- there’s 

22 this huge matrix of designs and just because there’s 

23 one design or a few designs, a handful of designs, 

24 maybe, that are built at a certain efficiency level 

25 that are achievable with M2 and 3 steel, don’t 
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1 confuse that with the fact that it’s a viable 

2 solution for that entire envelope of requirements in 

3 the marketplace. So when I look at Wes’ data, you 

4 know, I acknowledge that there is a design that can 

5 be achieved with M3, but it doesn’t say that all 

6 designs can be achieved with M3.

7 MR. NADEL: Well, I mean, I’m fine to say 

8 we’re simplifying the world and have tens of 

9 thousands of options, we’re only looking at 

10 thousands. I feel you’re filling in things. Where 

11 I’m troubled is that there appear to be some designs 

12 that go beyond your analysis, and they’re not just 

13 one or two Z’s -- Wes’ data shows 15 percent market 

14 share, significant market share for some of these. 

15 So I wonder whether you artificially truncated the 

16 analysis.

17 MR. RIVEST: There’s nothing -- there’s 

18 actually nothing to artificially truncate, and I 

19 think what’s been -- Wes’ argument about As and Bs, 

20 I haven’t explored to see if we were to increase the 

21 number of As and Bs being inputted into the design 

22 model, if we would come up with some more designs. 

23 But that said, the data that Wes has, at least that 

24 he presented, is all pads, all poles, all KVAs. And 

25 we already know, looking across design line one and 
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1 design line two or three, that the stringency of 

2 today’s standard isn’t the same. So, I mean, I 

3 think we recognize that the existing standard is 

4 more stringent on the small KVA ratings than on the 

5 large KVA ratings. So what might be achievable at 

6 one -- in one KVA rating with M3, is not achievable 

7 in another.

8 MR. PARKER: Jerry.

9 MR. CORKRAN: Jerry Corkran, Cooper. And 

10 even if it’s achievable, it may be that the dollars 

11 per wall is very much. I was looking at a 150 KVA 

12 three phase last night and comparing it to the 

13 present 2007 standard, and I calculated out $22 a 

14 watt at the 50 percent load, which is pretty high15 priced cost reduction. So you need -- the utility 

16 people need to look at the different loss levels and 

17 what their watts reductions are in dollars per watt 

18 between the different loss levels.

19 MR. RIVEST: It seems -- Mike Rivest -- it 

20 seems to me that there is far more uncertainty with 

21 regards to other things than to this, such as the 

22 relative price of amorphous to conventional steels. 

23 Whether -- as opposed to whether the outer envelope 

24 of the possibilities of these steels is half a 

25 percentage point or a quarter of a percentage point 
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1 to the left or the right, because the cost 

2 effectiveness point would have been crossed long 

3 before that.

4 MR. NADEL: We’ll get to this later, but 

5 if you have a 15 percent market share for something, 

6 it doesn’t imply you’re way past your cost7 effectiveness point. We wonder -- we’re not saying

8 that it was intentional, but somehow an artifact of 

9 this analysis is to miss some significant options.

10 MR. RIVEST: Steve, we may not have missed 

11 anything. We don’t know if that sales data was for 

12 this KVA rating. You can’t make those conclusions 

13 from the data we have.

14 MR. NADEL: And what we’re saying is that 

15 further investigation is needed. That’s why we were 

16 first trying to clarify.

17 MR. HOFFMAN: Are you saying, Mike, --

18 this is Alex -- are you saying that -- and I think I 

19 heard this correctly, but this common sense in 

20 modeling for DOE to sort of scale this back to 

21 reflect all the risks in making really wide, large 

22 assumptions and trying to include every point of 

23 data? I’m asking just to clarify, it sounds, you 

24 know, there’s some back and forth here, and I’m sort 

25 of trying to draw what I think is the key point here 
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1 and that is that not all these points can be 

2 captured, and it’s sort of common sense, you know, 

3 if you’re dealing with what is it, variability of 

4 supply of metals and what not, it makes sense to 

5 scale the model back accordingly. Stop me if I’m 

6 totally out in left field.

7 MR. PARKER: Wes, did you want to respond 

8 to that?

9 MR. PATTERSON: Yeah. It is impractical -

10 - Wes Patterson -- it is impractical and probably 

11 impossible to calculate every design option for 

12 every transformer rating in the space that we’re 

13 talking about. This cannot be done. Okay. So 

14 given that, the DOE, from my understanding, selected 

15 a design tool which had the capability to run an 

16 optimization given an A, B input. It did not have 

17 the capability to run an optimization given an 

18 efficiency input. So they have a design tool and 

19 they need to use that tool to model the problem. 

20 But the problem at hand was not coming up 

21 with the most economic design to meet an A/B factor, 

22 it was coming up with the relationship of the change 

23 in price with respect to the change in losses with 

24 an efficiency specification. These are two totally 

25 separate problems. Now the data from one can be 
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1 used for the data from the other. But it will not 

2 produce perfect data. You have to interpret the 

3 data. If a, you know, in a utopian world -- I 

4 always like to look at extremes, you know, what 

5 would it be if I took it all the way to one end, and 

6 what is it if I take it all the way to the other? 

7 In the perfect world, the DOE would have modeled 

8 every conceivable rating for distribution 

9 transformer space in North America against an 

10 optimization -- an engine that optimized on 

11 efficiency specification. That would be in a 

12 perfect world. They don’t have that. We can’t 

13 afford it. It’s too expensive.

14 So they worked with the tools that they 

15 had. The data is good, sound data. The problem is 

16 the interpretation of the results. When I jump in 

17 here and I say there’s no price change between EL2 

18 and EL3, it’s wrong. Recognize it’s wrong. May be 

19 a small price change. You might have to infer this. 

20 If you had a graphical representation rather than a 

21 numeric number representation, our minds would 

22 understand the picture better. You know, if you had 

23 a few more data points on the picture. 

24 So I think we have enough data to move 

25 forward with what our purpose is at hand. But we 
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1 have to do it, recognizing interpretations of the 

2 data.

3 MR. DeLASKI: I agree. We have enough 

4 data to move forward, and I think also the key thing 

5 I’m taking away from you, Mike, is you look at a 

6 particular design line, a particular analysis, 

7 whereas Wes is going to get data for his entire 

8 dales. So that’s a much different analysis because 

9 it’s real market data from his entire sales 

10 contingent across all KVA, poles and pads, and it’s 

11 the whole kit and caboodle. Whereas you looked at a 

12 particular transformer, so somehow we’re working 

13 apples -- comparing apples to oranges comparison, or 

14 an apple to a basket of apples.

15 MR. RIVEST: I mean, yes, and there are 

16 other factors than KVA. There are a lot of other 

17 design considerations that come into play, that’s 

18 right. But the main take-away here is the world 

19 would not toggle automatically from zero amorphous

20 to 100 amorphous at that level. People should 

21 recognize that. That’s what our models are saying 

22 based on the engineering we have, based on the 

23 selection criteria of the LCC. The world won’t --

24 that’s not how the world’s going -- is going to 

25 happen. It will be much more gradual, different 
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1 niches, we’ll turn more quickly in different parts 

2 of the country, and, you know, eventually it would 

3 have to be amorphous. I think your data shows that 

4 at 40 percent loss reduction there’s no other 

5 option. But there’s a continuum there, and that 

6 crossover point is most of all determined by the 

7 relative price of amorphous and conventional steels. 

8 And when you start filtering out steels, then you’re 

9 creating even more lumpiness.

10 MR. PARKER: Steve.

11 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

12 Again, just looking at slides 13, 14, and 15, based 

13 on the analysis that was done, the results of this 

14 analysis -- I’ll just go with what’s on here now --

15 basically says that for pretty much any design line, 

16 if you go above EL1, their analysis is based on 

17 results with the information on amorphous 

18 transformers. Is that stating it in a correct 

19 manner, Mike?

20 MR. RIVEST: Sometimes it’s EL2, I 

21 believe, right, depending -- so the transition in 

22 these models between conventional steels and 

23 amorphous steels is typically anywhere from EL0 to 

24 EL2.

25 MR. ROSENSTOCK: Okay. Thank you.
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1 MR. RIVEST: And we can change that by 

2 changing the prices, which is what a lot of these 

3 sensitivity runs have been about.

4 MR. HIRSCH: Bruce Hirsch, BG&E. Just a 

5 clarifying point on that. And that’s based on the 

6 model run with respect to cost, what was cost7 efficient. It’s not based on whether the unit -- I 

8 mean you could say at efficiency level 3, we could 

9 build it with M3, but it might not work size-wise, 

10 weight-wise, those type of issues are not taken into 

11 account in this model.

12 MR. RIVEST: I’m sorry, Bruce, could you 

13 please repeat your question?

14 MR. HIRSCH: The question was, and I think 

15 the point has been made that looking at this chart, 

16 at efficiency level 3, we could build a transformer 

17 with M3 steel. There are designs available. My 

18 question is, does the model take into account that 

19 yeah, the design is available. It might not be 

20 cost-effective, but it also might not physically 

21 work for us, such as weight, size, that type of 

22 thing.

23 MR. BOLDUC: The LCC model doesn’t take 

24 into account the physical characteristics in terms 

25 of unit selection in the LCC. We track volume and 
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1 weight, but we don’t use it as a selection criteria.

2 MR. CYMBALSKY: So we’re ready to 

3 negotiate, it sounds like.

4 MR. ANDERSON: John, Rick Anderson. Can 

5 you go to slide eight? Back up here. Okay. What I 

6 want to do -- Rick Anderson, PPA -- what I want to 

7 do is do a little bit of what Wes said, interpret 

8 the data, and what Jerry said, look at the cost per 

9 watt. Now, design line one -- now I’m going to be a 

10 user, so I’m trying to understand what I’m getting 

11 ready to buy. Design line one, this is a 50 KVA 

12 pad, a single-phase, pad-mounted transformer. If I 

13 go from the base case -- well, let me back up. If I 

14 look at the watts loss on a 50 KVA pad at the 50 

15 percent test point, this is actual data that I got, 

16 my core losses for a 50 KVA pad are like 102 watts, 

17 and my winding losses are 591 watts, so at the 50 

18 percent test point, my winding losses are 148 and my 

19 core losses are 102, so my total losses for a 50 KVA 

20 pad-mounted transformer is 250 watts. 

21 Now if I go from an efficiency level, the 

22 base case, 99.08, to efficiency level one, which is 

23 99.16, what I see at the same test point is a 

24 reduction of approximately point two watts. So if I 

25 look at efficiency level one and my incremental 
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1 first cost as a user, I’m going to pay $343 more and 

2 get point two watts? That doesn’t make any sense to 

3 me. That’s the equivalent of paying $1700 for a 

4 watt. I could give away light bulbs and save money. 

5 So I’m just trying to get clarity with the data. 

6 I’m using real 50 KVA pad-mounted --

7 single phase pad test data. I’m at 250 watts at the 

8 test point. I move up from 99.08 to 99.16, I pay 

9 $343 more and I save two-tenths of a watt. I don’t 

10 get it. See what I’m talking about?

11 MS. COUGHLIN: Yes, but the numbers in the 

12 LCC are not --

13 MR. ANDERSON: I’m talking about --

14 MS. COUGHLIN: Yeah, I know. The design 

15 that you’re referring to -- these numbers are based 

16 on the designs that are in the LCC so they have a 

17 different range of loss and no-load loss parameters.

18 MR. ANDERSON: It’s going to be 100 watts. 

19 It’s going to be around 100 watts. It’s not going 

20 to be -- you know, those designs -- what’s the range 

21 of variability on the designs for 50 KVA pad? Plus 

22 or minus ten percent, Wes? Jerry? I mean, if I’m 

23 seeing 100 watts on the core for a 50 KVA pad, 

24 what’s the spread? Even if it spreads at 50 

25 percent, I’m still not going to even save one watt.
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1 MR. COCKRAN: Well, a spread wouldn’t be 

2 50 percent because -- the steel people probably have 

3 a good number on it. I would say about ten percent 

4 is probably -- would encompass most of those 

5 production variations, ten, fifteen percent.

6 MR. PARKER: Okay. Any other comments on 

7 this before we move to proposals? Yes, Bob.

8 MR. SAINT: Yes, moving on to other areas 

9 of the analysis, the loading data -- we’re still not 

10 satisfied with that, and we’ve been talking to LBL 

11 about that and they’ve acknowledged that there’s 

12 some problems with the loading. One is the peak 

13 load of the transformers, and also the load factor 

14 of the transformer. And we think both of those are 

15 too high, they’re different numbers, but both of 

16 those are too high. And they’ve acknowledged that 

17 there’s some problems with it, but we haven’t seen 

18 the analysis yet. So, I’d like to discuss that a 

19 little bit and acknowledge that, you know, the 

20 loading of the transformer are, we think, are high 

21 as presented, so the payback costs -- that first one 

22 efficiency level, the payback of 32 years, we think 

23 will be longer than that. 

24 So, just for the record, and maybe Ken 

25 Winder can address some of the issues that we have 
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1 with those.

2 MR. PARKER: Okay. Thanks. Wes.

3 MR. PATTERSON: I’d like to come back to 

4 Rick’s analysis here. The data from the DOE design 

5 data, not what is used in the LCC, just looking at 

6 the designs. For that 50 KVA single phase pad, 

7 their lowest cost unit is a $2000 unit, 234 watts. 

8 The peak design, theoretical, just extrapolating off 

9 of it, is 108 watts for $3500, so you’re paying 

10 $1500 for 126 watts. Right. This is strictly off 

11 the DOE data. That number is consistent with ABB’s 

12 pad mount curve. But for pole mount data, the price 

13 increase is more than twice.

14 Now Mike and I have had discussions on 

15 this and I think he’s still working on trying to 

16 explain the difference between the design data and 

17 the LCC data, and Mike might shed light on it 

18 because this rate of change -- you had a chart -- it 

19 was showing how you believe they are closer in line.

20 MR. PARKER: Sorry, I’ve got to also at 

21 this point, I got a note passed to me that we need 

22 to have everybody give their names, including the 

23 DOE staff for the court reporter before they speak, 

24 so Mike did you want to respond to that?

25 MR. RIVEST: So Wes was generous enough to 
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1 provide his design information, his actual database 

2 if you will, for us to analyze the incremental cost 

3 of efficiency. And my analysis of that basically 

4 shows that when I normalize for the same set of 

5 assumptions, and there’s good agreement, the issue 

6 here is that as you pointed out, they have greater 

7 design space and more, if you will, of a continuous 

8 curve. Their incremental cost is more linear than 

9 what we’re showing here. 

10 So, you know, I feel that the differences 

11 can be explained. We had a conversation about the 

12 rate of change for poles and pads, but when we had 

13 that normalized to dollars and watts, things were 

14 coming much more in line -- and when I was looking 

15 at it -- when we were looking at it as change in --

16 percentage change in price, things were confusing 

17 because the base price was quite different. But I 

18 would say, based on my examination of your data and 

19 our costs as captured by the LCC, a regression 

20 through those would show the same trend. 

21 The problem is that we’re not using a 

22 regression. We’re using discrete points of 

23 efficiency and selecting designs at those discrete 

24 points, so it’s creating a lumpiness that wouldn’t 

25 exist if we had a regression.
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1 MR. PATTERSON: Mike, on this 50 KVA 

2 single phase unit, you do agree that we’re talking -

3 MR. PARKER: This is Wes Patterson.

4 MR. PATTERSON: Yes, Wes Patterson. You 

5 do agree we’re talking roughly a $1500 increase for 

6 126 watts? Or you could confirm that?

7 MR. RIVEST: I’m sorry, are you talking 

8 about the LCC says or --

9 MR. PATTERSON: Yes, based behind the LCC 

10 finding, which is Rick’s analysis. We’re looking at 

11 $1000 for 100 watts. So we’re paying $1000 for 100 

12 watt light bulb.

13 MR. RIVEST: Is that what -- I mean, I saw 

14 the LCC had -- it could change an operating costs, 

15 right, those are not based on a discrete design, 

16 they’re based on a selection of hundreds of designs. 

17 Actually, the efficiency of those transformers 

18 selected at that efficiency level is not at that 

19 efficiency level. It’s actually significantly 

20 higher. So that’s what the LCC’s doing, right. 

21 It’s saying if the standard is at that level, what 

22 will people buy, and how much will they save. But 

23 what they buy is not all transformers at the 

24 minimum, so that calculation you’re doing assumes 

25 that everyone buys at exactly that level. That’s 
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1 why the numbers aren’t adding up. And that’s also, 

2 as I pointed out, there’s not a whole lot of change 

3 in the price of two, and three, and four, because 

4 they’re consistently buying at higher efficiency and 

5 saving more money.

6 MR. PARKER: Richard Parker. We’re going 

7 to have to move on. Mahesh, a quick comment. Would 

8 you state your name for the record, please.

9 MR. SAMPAT: Mahesh Sampat, EMS 

10 Consulting. Did the calculation on the example that 

11 you are describing going from base level to level 

12 one for design line one, and I get 20 watt 

13 reductions. Going from -- 20 watts -- and I will 

14 compare the notes, okay, it’s not like half a watt 

15 or something like that. We’ll have that corrected, 

16 okay.

17 Question: Separate Product Class for Pole-Mounted

18 MR. PARKER: Thank you. Okay. We’re 

19 going to have to move on to the proposals. The last 

20 exchange between Wes Patterson and Mike, though, 

21 does raise our next agenda item, which is to 

22 discuss, hopefully, very briefly, and perhaps we’ve 

23 already covered it, but very briefly the question of 

24 whether there should be a separate product class for 

25 design line two, which is pole-mounted transformers. 
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1 This is different from the vault issue, I think. 

2 And if so, how that would be treated. Let’s turn to 

3 that discussion now and perhaps -- Wes, you and I 

4 had a conversation as we were walking up here, 

5 perhaps you’d just like to walk people through your 

6 sense of what you’ve been discussing, and what an 

7 approach to take care of that might be.

8 MR. PATTERSON: Wes Patterson. So, from 

9 our perspective, the poles have a lot of issues that 

10 are question marks that the pad and the substation 

11 market do not. So there’s -- the big issue with the 

12 poles is the problems with hanging them on the pole, 

13 the physical dimensional size, they’re taking more 

14 space on the pole and there’s other utilities trying 

15 to occupy that space on the pole. The question of 

16 the pole change-out. There’s a lot of other issues 

17 related. And also in the analysis of the poles A to 

18 B data, the rate of change of increase in price with 

19 reduction in losses is higher in a pole than a pad.

20 Given all these factors, it may warrant 

21 that the poles be a separate equipment class. Given 

22 that, the question is, how could we make this 

23 simple? And I believe that a simple solution would 

24 be we arrive at a standard for the core of the 

25 market, and then simply have a simple multiplier 
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1 that says if it’s this equipment class you move the 

2 losses by X amount.

3 MR. PARKER: So the proposal on the table 

4 is to basically not alter the analysis, but have a 

5 group convene to work out, on a technical level, the 

6 idea of a multiplier that would be applied to the 

7 analysis for pads that would enable a separate 

8 standard to be able to be created for poles, but 

9 that the increments, as I understand it, would be 

10 analyzed equally -- the same, in other words, the 

11 slopes would be the same, but there would be a 

12 different standard set at the end of the day for 

13 poles and pads that would presumably be somewhat 

14 more ambitious for pads and somewhat less ambitious 

15 for poles. Is that correct?

16 MR. PATTERSON: That would be my proposal.

17 MR. PARKER: Comments?

18 MR. COULTER: Yes, this is Greg Coulter, 

19 GE Prolec. I’m not sure you want to do that before 

20 we know what efficiency levels you might set. You 

21 might come up with efficiency levels that you don’t 

22 care whether they’re different between pads and 

23 poles. We agree they have a different shape. I 

24 think the data shows that, but in the end, the 

25 question is, what is the efficiency level. Some of 
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1 us build all these things in the same plant. We 

2 would prefer to not have a change between pads and 

3 poles. And if the efficiency level comes out where 

4 you can get there, why bother having a separate one 

5 for single-phase pads and single-phase poles?

6 MR. PARKER: Yeah, I think we can 

7 stipulate that we’re not going to make work. If 

8 there’s not a relevance to it, we won’t do it, but 

9 we’ve opened the option of doing that if there is a 

10 need for it. Andrew.

11 MR. DeLASKI: So this Andrew DeLaski. I 

12 think we indicated in the last meeting, or maybe 

13 even the first meeting, that we were open to the 

14 notion of separate analyses for pole and pad-type 

15 transformers. We’re certainly open to this idea. 

16 We acknowledge that there are some cost differences 

17 going on here and that -- but in the -- again, the 

18 final, we’re going to look to the cost-effectiveness 

19 analysis to help us look to what that relationship 

20 should be, I mean, what is the scaling, what is the 

21 multiplier. And if the cost-effectiveness analysis 

22 says it should be one, then that’s what we will look 

23 to. If it says it should be point nine, then we 

24 would look to that. So we’re certainly open to 

25 exploring the stats.
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1 MR. RIVEST: Mike Rivest, Navigant. 

2 Currently we do analyze a pole and a pad, and 

3 combine that analysis to arrive at a standard level. 

4 So I believe the analysis is in place that would 

5 allow us to do that. From the perspective of -- if 

6 I understand Wes, the driver here, the 

7 differentiation, has to do more with the 

8 installation costs. So those can be handled in the 

9 LCC through the pole change-outs which would be 

10 applied to that product class, but not to the pad. 

11 So, all else being equal, adding in the pole change12 outs would drive you to a lower efficiency for the 

13 poles than for the pads at equal capacity. And I 

14 don’t know what the multiplier is, but there is 

15 analysis in place that would allow us to do that.

16 MR. PARKER: Jerry.

17 MR. COCKRAN: Wes’ reasons are technical 

18 and not really opinions, it’s a technical -- correct 

19 technical stance. And another factor, the higher we 

20 push the efficiencies, the more the rebuilding 

21 market is going to boom, and the percentage of new 

22 transformers will go down. And the nation will use 

23 more energy because there’s no energy standards on 

24 the rebuilt ones.

25 MR. ANDERSON: Rick Anderson, PWC. 
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1 Jerry’s right. I did some checking on rebuilding, 

2 and you can rebuild a transformer just slightly less 

3 than what you pay for a transformer today. So if 

4 you push the efficiency levels up, you know, and 

5 charge more for a single-phase pad, the economics 

6 become pretty good to look at rebuilding 

7 transformers. And if you really think about it, 20 

8 years ago we threw away our beer cans, and look what 

9 Waste Industries did, okay, they created an enormous 

10 recycling business. So if the cost of transformers 

11 become cost-prohibitive, we’ll begin to -- the users 

12 will begin to look towards recycling or rewiring 

13 transformers. We’ll avoid purchasing a new 

14 transformer from the manufacturers at all costs. 

15 In addition to that, we can take, using 

16 the 50 KVA pad as an example, that means we can 

17 spend $350 beefing up our protection to make sure 

18 that the transformers do not fail, and extend the 

19 life. So if we do that and extend the life and it 

20 finally does blow up, we can go to the rewinding 

21 manufacturers and have it rewound cheaper than I can 

22 buy it from Cooper, ABB, or General Electric.

23 MR. PARKER: Okay. I’m going to take 

24 Steve, go ahead, and then Wade and then we’ll wind 

25 up.
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1 MR. ROSENSTOCK: Thanks. Just a quick 

2 one. In terms of the concept of separating out 

3 poles and pads from the utility side, I think we’re 

4 fine with that concept. I just wanted to mention, 

5 some of Wes’ multipliers, I think we have to look at 

6 other efficiency levels outside of the 1, 2, 3, 4, 5 

7 because if you’re using multipliers, you’re going to 

8 be in between zero and one, one and two, et cetera. 

9 So I think everybody has to be open to the idea of 

10 other numbers being on the table. Otherwise, you 

11 may not be able to break out the poles and pads 

12 because it sounds like a different analysis will 

13 lead to different results, which are different than 

14 the numbers being shown in all of these 

15 presentations. 

16 MR. PARKER: Well, I think Wes’ proposal 

17 was not to do a full new analysis, but to try to do 

18 a single analysis, right, that would -- more of a 

19 standard for poles and pads together, but then at 

20 sort of the end stage of the operation, separate 

21 them by an amount that equals whatever the agreed 

22 multiplier is, so that you would end up having a 

23 different standard for poles in the equipment class, 

24 but you wouldn’t completely redo a new analysis of 

25 those two things. I put that as your proposal, 
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1 right?

2 MR. PATTERSON: That is correct, Richard, 

3 and I would have exactly the same proposal for all 

4 difficult areas -- the network transformers, the 

5 over 200 BIL and others, to try to keep the 

6 standards as simple as possible.

7 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 

8 understand that, but still at the end of the day, 

9 there’s still going to be different numbers.

10 MR. PATTERSON: Right. That’s right.

11 MR. ROSENSTOCK: Which some of us have 

12 proposed all along to allow other numbers.

13 MR. PARKER: That’s right, and we have 

14 taken your proposal.

15 MR. ROSENSTOCK: Yes, I appreciate that, I 

16 saw the other presentation, yes.

17 MR. PARKER: Thank you. Ray.

18 MR. POLINSKI: Ray Polinski, ATI Allegheny 

19 Ludlum, and before I ask one more question, I just 

20 want to go on record that from being relatively new 

21 to this process and sitting here now through two and 

22 a half meetings, just go on the record that I think 

23 the DOE did an excellent job in developing the 

24 current standard. I think they pushed the seven 

25 criteria that they have to meet based on Energy 
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1 Policy and Conservation Act as it relates to 

2 lessening the impact and lessening the competition, 

3 the pole weights, et cetera, I think they got it 

4 right. But again, that’s just a comment there.

5 But the one other question, we touched on 

6 it here, is the refurbished transformer issue, which 

7 I think is very real, and I hear a lot of it out 

8 there from -- dialogue when I visit transformer 

9 customers. Was there any -- is there any factoring 

10 anything in the analysis for cost analysis and 

11 energy savings? Do they factor in 20 percent, 25 

12 percent of transformers may be refurbished, is that 

13 in the analysis or not? And what the impact on 

14 manufacturing? I mean, it’s a pretty big issue and 

15 do we account for it at all or has it just been, you 

16 know, submitted?

17 MR. CYMBALSKY: This is John Cymbalsky, 

18 DOE. So how this is handled is in the shipments 

19 forecast. So, I’ll let LBL speak to the specifics, 

20 but I know for other rulemakings, that’s in fact 

21 true. So for central air conditioners, one standard 

22 goes up, people -- the life gets extended, they 

23 repair more than they buy new, and so how this is 

24 impacted is that the number of shipments of 

25 transformers will go down than what it would have 
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1 been without the standard in place. And then when 

2 you do the whole national impacts, that’s when you 

3 get the feedback there. And if I’ve misstated 

4 something, Katie can correct me, but that’s how it 

5 works.

6 MS. COUGHLIN: This is Katie Coughlin, 

7 LBL. That's correct. So the forecast of how the 

8 overall market will shift under a standard will be 

9 affected by the degree of refurbishments. And this 

10 comes out in the national impacts analysis. And we 

11 do have a -- we call it a repair/replace decision in 

12 there. The issue for us is that currently the 

13 refurbishment market is so small that we don’t have 

14 any data that will allow us to characterize those 

15 costs with any degree of accuracy. And if we had an 

16 accurate characterization of the relevant cost 

17 savings of a refurbishment versus a new purchase, 

18 then we can put that in the model.

19 MR. SCHOEN: Jerry Schoen, AK Steel. To 

20 further complicate this, was there not to be an 

21 examination of the different efficiency levels for 

22 design lines one through five at different BILs? 

23 Because that was a complicating factor.

24 MR. PARKER: Wes.

25 MR. PATTERSON: yeah, that’s still being 
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1 discussed, how to manage the liquid filled at the 

2 200 BIL level. 

3 MR. SCHOEN: Thank you. Second point I 

4 would make is we have a market analysis at this 

5 point in time, going here forward 50 percent of the 

6 distribution transformers -- somewhere between 50 

7 and 60, depending on the market -- will be 

8 replacement units. Now those are units that are 

9 currently in service that can be taken out and 

10 rewound. A distribution transformer, unlike an air 

11 conditioner, is not a mechanical device. It’s a 

12 static piece of equipment and the main replacement 

13 item is the coil assembly because the insulation 

14 fails. As you’ve made the point, rewinding them is 

15 -- well, there’s a rule of unintended consequences. 

16 It’s very easy to rewind a transformer. It’s just 

17 when transformers containing PCBs, there’s an 

18 inherent limit to doing that. People were afraid of 

19 opening the can. They typically were incinerated or 

20 we would get the incinerated stuff and we’d make new 

21 steel out of it. 

22 The second point to be made, though, is 

23 most of the equipment out there that’s failing today 

24 is PCB-free. It’s all basically mineral oil, clean, 

25 un-PCB-contaminated mineral oil, and it can be 
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1 reused.

2 PARTICIPANT: Since 1970s.

3 MR. SCHOEN: Exactly, and that’s the 

4 vintage is coming out of service today. There’s 

5 literally tens of millions of these units out there 

6 and I would submit to you that today, you know, 

7 we’ve run our model -- our model shows us that at 

8 this moment in time, 80 percent of the transformer 

9 market is replacement, when? Because the housing 

10 virtually collapsed. But that’s what -- we didn’t 

11 really ever validate this model until we hit this 

12 recession. We were using it for forward-looking, 

13 you know, what the demands and requirements of the 

14 various market segments we serve would be.

15 I would submit to you that if a refurb 

16 market has a cost advantage -- I think several 

17 meetings ago Wes said we were 10 to 15 percent close 

18 to that tipping point for that to take off. Is that 

19 -- my recollection right on that?

20 MR. PATTERSON: Pretty close. I think 

21 what I’ve said many times is that when the price 

22 differential hits 20 percent, by and large, the 

23 customer will opt to rebuild. And I’m in an 

24 industry where rebuilding is now common practice. 

25 Replacement is much more expensive than 
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1 refurbishment.

2 MR. PARKER: Bob, very quickly.

3 MR. SAINT: I can’t help but quantify in 

4 the refurb market, but another piece of anecdotal 

5 evidence is that we’ve been getting lots of pressure 

6 from our membership, the co-ops, to lobby RUS into 

7 loaning money on refurbished equipment. Currently 

8 they will not loan money on used equipment, but 

9 we’ve been under pressure, and they’re considering 

10 changing that policy so that they will be loaning 

11 money -- they could be loaning money for refurbished 

12 transformers which will increase the purchase of 

13 those types of transformers. I can’t tell you how 

14 much, but it will increase.

15 MR. PARKER: Thank you. This is helpful. 

16 At some point we have to simply say this is our 

17 analysis and we have to make a decision based on the 

18 analysis. The analysis has been out there for quite 

19 a while. There is a model for trying to -- there is 

20 an approach that John described and that Katie 

21 confirmed for trying to take this situation into 

22 account in that analysis. They have been open for 

23 comment for that, and I would expect that they have 

24 taken those comments as they have come in. 

25 At this point, I think we have to really 
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1 work with the data that we have and the analysis 

2 that we have to base a decision on, because our 

3 decision needs to be based on the analysis before 

4 us. So let’s turn to the proposals then, the people 

5 that will have -- and I’ll take a sense of the 

6 group. So people -- we’re an hour behind schedule 

7 now because of the issues raised. I think they were 

8 some important issues that needed to be raised and 

9 discussed, but do people want to take a short break 

10 now and then come back and hear proposals? Does 

11 that make sense? So why don’t we take a ten minute 

12 break, a 15 minute break, and then we’ll reconvene 

13 for the proposals.

14 (Whereupon, at 10:58 a.m., the meeting was 

15 recessed for a 32 minute period.)

16 MR. PARKER: Okay. If we could get 

17 started again, please. Okay. I let the break go on 

18 a little bit longer because I think there was some 

19 really fruitful sidebar discussions going on and I 

20 wanted to give them a chance to work their way 

21 through.

22 We’re now at the point where it’s time to 

23 take proposals and in no particular order, I will --

24 why don’t we start off -- I know the advocates have 

25 proposals that they want to put on the table, that 
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1 they’ve been working through, so why don’t I just 

2 start with them. Why don’t we plan on working 

3 through until -- does it make sense to work through 

4 until one, or people want to break at 12:30 as 

5 scheduled?

6 PARTICIPANT: When’s lunch time?

7 MR. ROSENSTOCK: 12:30.

8 MR. PARKER: 12:30.

9 PARTICIPANT: 12:30 then.

10 MR. NADEL: We should also see -- I don’t 

11 know how many proposals there are to put on the 

12 table, let the different proposals come out so 

13 people can be discussing them at lunch. We have one 

14 but I don’t know whether there is one, two, eight --

15 MR. PARKER: I know that John Caskey has a 

16 proposal, right, or at least some presentation --

17 something he’d like to put forward, and Eric, did 

18 you want to --

19 MR. PETERSEN: Yes, we’d certainly be 

20 willing to put a proposal forward.

21 MR. PARKER: Okay. So we have three. Why 

22 don’t we try to make sure that they’re all out on 

23 the table before we break for lunch. So shall we 

24 say -- how much time do you need for yours?

25 MR. NADEL: Five, ten -- call it ten 
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1 minutes.

2 MR. PARKER: Okay. Why don’t we plan on 

3 say, ten minute presentation max. We’ll get all the 

4 proposals out there and then we’ll have a discussion 

5 of them. Does that make sense? Okay, take it away.

6 Proposals

7 MR. NADEL: Okay. Thanks. I’m going to 

8 start it, and then Andrew’s going to pick it up at 

9 the end. First we think there’s been a lot of very 

10 fruitful discussions. We’ve certainly learned a 

11 lot. I think we’ve helped, collectively, improve 

12 DOE’s analysis and I think working from the analysis 

13 we have a solid foundation to go forward. So we’re 

14 trying to build on that.

15 In particular, we wanted to focus in on 

16 trial standard level four in the most recent DOE 

17 analysis, which is the analysis where M3 and the 

18 other more advanced steels can compete. However, as 

19 we noted earlier, while we like the concept of them 

20 competing, we think DOE or the analysis drew the 

21 line in the wrong place, that basically a little bit 

22 higher is actually where the M3 and the amorphous 

23 and other types of steels will compete. And we’d 

24 like to see an analysis revised on that basis. 

25 But as we look at the ABB data, look at 
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1 the DOE data, it appears that that point will be 

2 about 25 percent lower losses than the current 

3 standard, and we’d like reaction to that and we can 

4 all try to refine that.

5 The reason we selected that level is 

6 because there appear to be very substantial energy 

7 savings, substantial consumer savings as well. If 

8 you look at trial standard level four, Andrew and I 

had different versions, both dated November 3rd

21 We also believe that the analysis under22 estimates the benefits, uses prices for M3 that are 

23 significantly higher than what you find in the 

24 market today, so we are looking forward to those 

25 sensitivity analyses with scenarios where it uses 

9 , of 

10 the same analysis, so we’re not sure which was the 

11 more recent one and which is the less. One of them 

12 had $11 billion dollars of net consumer benefits at 

13 a three percent discount rate, the other had $13 

14 billion. So what’s a few billion among friends? 

15 But double-digit billions of dollars in terms of net 

16 benefits. Energy savings are -- its shows about 1.4 

17 quads at trial standard level four. It was a little 

18 bit stronger than that, meaning revising analysis it 

19 will probably go up to 1.5, 1.6 quad, something in 

20 that range. 
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1 more current prices, rather than elevated prices. 

2 We do believe that it has far too many pole 

3 replacements, an extra 15 percent increase. We 

4 think it’s calling for too many new poles. So if 

5 you call for less new poles, again, the net benefits 

6 will increase.

7 So the DOE analysis shows net benefits of 

8 $11 to $13 billion. We suspect that will grow 

9 significantly as well. So I know in the e-mail 

10 traffic people said, so why do you -- how can you 

11 justify this extra expense of these things? Well, 

12 we think, you know, 11, 13, even higher billions of 

13 net benefits is a justification as well as the 1.4 

14 or more quadrillion BTUs of savings.

15 I’d also note that all of this is based on 

16 the 50 percent loading, which is the test standard. 

17 In fact, as a lot of people discussed, probably the 

18 loading is a bit lower. Since the discussion is 

19 really focusing on what type of steel at lower 

20 loadings and the no-load losses becomes even more 

21 important as well. Don’t want to revise the 

22 analysis end, just noting that the no-load losses 

23 becomes particularly important.

24 While this is our proposal to work from 

25 but improve trial standard level four, we are open 
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1 to suggestions on ways to tweak things. We’ve 

2 already said we’re open to modifying the standards

3 for different BIL ratings, to modify standards for 

4 pole-mounted, the round transformers, although we 

5 think if you correct the pole price you don’t need 

6 as much of an adjustment as the current analysis 

7 might show. 

8 We also are open to, as we mentioned last 

9 time, the assumption is it’s a three year effective 

10 date, but we can potentially play with protective 

11 dates, or you could potentially do a two-tier 

12 standard where we do a more modest thing at first 

13 and then if people think what our proposal is a 

14 little too big to consider, that we’re open to 

15 considering these type of things, but we’d want some 

16 concrete proposals that we could react to.

17 We’re open to, is there any possibility of 

18 trying to find some type of money for incentives to 

19 help, you know, help with transitions during some 

20 type of transition period, though finding that money 

21 could be challenging, we’re more than happy -- and I 

22 know this is something that came up last time, to 

23 work with the utilities and go into NARUC and the 

24 commissioners in particular, to help make sure that 

25 the utility commissions will be supportive of cost 
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1 recovery on new higher minimum efficiency standards 

2 that have an up front cost, but have long term 

3 benefits for consumers. I know that was an issue 

4 some utilities raised last time and we’re more than 

5 happy to do it. I know our organization and a 

6 number of others regularly presents before NARUC on 

7 that, or can talk to individual commissions.

8 So, those are the outlines of our offer. 

9 I think Andrew wanted to say a little bit about how 

10 we came up using the ABB data on the 25 percent 

11 lower losses and one more point I forgot. A lot of 

12 people have been mentioning, oh, gee, should we just 

13 go up one half of a trial standard level. Really 

14 minor savings. We’ve talked about that, and 

15 frankly, we don’t see it. We’d be -- what we’d do 

16 is just say, make your argument to DOE, we’ll make 

17 our counter-argument. We don’t see going up half a 

18 standard level being a basis for a consensus 

19 agreement as opposed to positions that people would 

20 take to DOE and DOE would get to decide.

21 So, with that, Andrew.

22 MR. DeLASKI: Richard, if you can pull up 

23 the reference case analysis and go to slide 18. 

24 We’re thinking about the proposal ... at our last 

25 meeting. We’re looking at well, what do we think 
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1 the Department would do in a contested rulemaking? 

2 We think the Department has to move towards 

3 standards that maximize MPV and that’s kind of the 

4 way we’re looking at this. And that sort of to see 

5 a point five level, is that we just don’t think 

6 that’s where the Department would land in a 

7 contested rulemaking. It’s just not the history of 

8 how the Department has made their decisions in our 

9 experience. So that’s not a basis for that -- that 

10 argument.

11 So we’re looking at --

12 MR. PARKER: Sorry, I’ve been told we need 

13 to use a mic and I don’t know if we have any 

14 portable mics --

15 MR. DeLASKI: What we’re looking at here 

16 is the decision criteria in TSL-4. Okay. So this 

17 is the decision criteria that I think we put on the 

18 table in the first place, so gray, LCC was M3 design 

19 option. We’re trying to maintain options in the 

20 market place for core materials -- that’s the 

21 criteria that we think is an important one and we’re 

22 working to maintain it with this proposal.

23 TSL-4, as Steve noted, we think that 

24 corrections to the analysis would show us that 

25 slightly higher levels actually meet that criteria. 
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1 So if you would go back to slide 13, and slide 13, 

2 what I want to show people is what the ABB submitted 

3 data, and how, if you populate these tables with the 

4 ABB data -- and again, we’re comparing the ABB data 

5 for the whole market, for all their sales, whereas 

6 the -- the ABB data is for the whole market, for all 

7 their sales in a given calendar year, whereas the 

8 DOE data is for a specific design line. Okay, so we 

9 recognize that and we’re doing a bit of a comparison 

10 here that’s not a perfect comparison. But if we 

11 accept the ABB data as indicative of the design 

12 line, what you would see is that this cell and this 

13 cell would both show M3 being sold by ABB in the 

14 market today at that efficiency level. Up to 

15 efficiency level four. So we think that for design 

16 line one, efficiency level four beats that criteria 

17 of multiple materials available in the market today, 

18 based on the sales data from ABB.

19 For design line two, you populate these --

20 MR. PATTERSON: Andrew, could you wait 

21 just a second. I’m a little confused about the 

22 information being presented. This thing is coming 

23 back from April 2011?

24 MR. DeLASKI: What thing?

25 MR. PATTERSON: The document that he’s 
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1 looking at.

MR. DeLASKI: It’s November 4th 2 . November 

4th

MR. PATTERSON: This is November 4

3 document.

th

5 MR. DeLASKI: What I asked to be pulled up 

6 was that it was the reference case, the main 

7 analysis case distributed by the group last week. 

8 Distributed by the consultant, the DOE last week. 

4 ?

9 So I think the engineering data might have 

10 changed since the summer, since September analysis, 

11 so I think you’re shaking your head “yes”? It has 

12 not. It has not changed. So we see also then, that 

13 moving on, that the sales experience -- the sales 

14 data shows that there’s products that using M3 and 

15 M2 out to efficiency levels -- out to efficiency 

16 level four for design line two. All the way out to 

17 four, so three more cells at M2 all the way out to 

18 five.

19 MR. PARKER: Does it make sense to put up 

20 the slides? 

21 MR. PATTERSON: Yeah, Andrew could you --

22 MR. PARKER: I’m sorry, do we have a 

23 question on the phone?

24 MR. ROSENFELD: I can’t hear you.

25 MR. PATTERSON: Andrew, could you bring up 
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1 also the slides that show how you interpreted them 

2 to say four and five are --

3 MR. DeLASKI: Yeah, that’s on there, so 

4 I’ll show how I did that.

5 MR. PARKER: Andrew you have to -- people 

6 on the phone can’t hear, so we’re going to have to 

7 try to really hold the mic up.

8 MR. DeLASKI: I’m too tall to lean over.

9 MR. PARKER: So let me get the data up 

10 there. Is this public?

11 MR. PATTERSON: Yes, this is public.

12 MR. PARKER: Okay. Andrew, I’m all ears, 

13 what do you want me to do.

14 MR. DeLASKI: So what we did is --

15 MR. PARKER: I’m just waiting for 

16 instruction here.

17 MR. PATTERSON: This is probably the right 

18 one. Andrew on this one, if I look at this row and 

19 move over to the far right, at the top --

20 MR. DeLASKI: Yep.

21 MR. PATTERSON: Okay. So there I have a 

22 mix of grades of coarse steel.

23 MR. DeLASKI: Very good.

24 MR. PATTERSON: And the percent reduction 

25 in that bubble there is 20 to 30 percent.
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1 MR. DeLASKI: Correct.

2 MR. PATTERSON: Which matches the earlier 

3 comment, we’re talking about 25 percent.

4 MR. DeLASKI: Right.

5 MR. PATTERSON: But the energy efficiency 

6 level four and five that they have done the analysis 

7 on, I believe is in the 40 to 50 percent reduction 

8 level. It’s much higher.

9 MR. DeLASKI: So my indication that EL4 --

10 and I checked this with the Navigant team during the 

11 break to make sure my calculations were consistent -

12 - is that at EL4, 25 percent reduction in losses for 

13 -- depends on the design line at EL4, but this is a 

14 -- looking at pads here, so pads are DL1 and DL3.

15 MR. PATTERSON: I don’t think that’s 

16 correct.

17 MR. DeLASKI: That pads are --

18 MR. PATTERSON: Bring up the detail --

19 look at the numbers. I don’t think that’s correct. 

20 You’re quoting the wrong number.

21 MR. DeLASKI: DL1 and DL3 are the pads.

22 MR. NADEL: Wes, this is Steve Nadel. I 

23 think what we are both saying is 25 percent lower 

24 losses --

25 MR. DeLASKI: Is correct.
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1 MR. NADEL: -- is correct, and then we 

2 have to go back and confirm is that at level four or 

3 three or whatever.

4 MR. PATTERSON: Okay. Stop talking about 

5 the four and five because I think that’s misleading 

6 a bunch of folks.

7 MR. NADEL: Twenty-five percent lower 

8 losses.

9 MR. PATTERSON: Twenty-five percent lower 

10 losses.

11 MR. DeLASKI: Yeah. Which is the punch 

12 line, 25 percent lower losses. 

13 MR. PATTERSON: Where you at?

14 MR. DeLASKI: So if you can go back --

15 MR. PATTERSON: He’s saying this is 25, 

16 that’s not 25.

17 MR. SAMPAT: No, he’s saying four is 25.

18 MR. PARKER: Maybe over lunch we can get 

19 the actual ELs accurate --

20 MR. DeLASKI: But the principle -- we need 

21 the data - I agree we need to make sure we’re 

22 interpreting it correctly, but the principle is that 

23 we’re looking at the sales data to see where is 

24 there diversity of supply, and we’re seeing that 

25 that’s happening at ELs that are higher than what 
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1 the Department shows. Okay. And then we’re picking 

2 those levels -- those are levels that satisfy the 

3 decision rule of having multiple materials 

4 available, not that’s available, but as this slide 

5 shows, having -- competing. The fact that this 

6 supplier provides half, roughly half of their supply 

7 using the two different materials, to us indicates 

8 that the materials compete. And we can go through 

9 this exercise for each of them, but that gives you 

10 the -- that tells you the basic decision rule that 

11 we’re applying.

12 Now if you go back to the prior -- to the 

13 slides that we were on before, the DOE slides --

14 (Several speaking at once.)

15 MR. DeLASKI: If you go to the next slide, 

16 please.

17 MR. PARKER: I’m trying to get there. All 

18 right. 

19 MR. DeLASKI: So the way we saw it for 

20 design line three, that the data was the same, but 

21 there was no ABB designs, so we found this to be 

22 consistent with the sales data. For design line 

23 four, we found designs out to -- this is for four, 

24 the three-phase transformers out to EL5, so out to 

25 five we found designs. And for five, we found 
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1 designs out to five as well, but in the case of five 

2 it was a very small portion of the market, of the 

3 sales, so we’re really to four in terms of something 

4 -- like for five it was two or three percent, so I 

5 think for four it was a measurable market share, a 

6 more significant market share. So we discounted 

7 that.

8 So what that leads you to, what that leads 

9 us to is, for the design lines, the efficiency 

10 levels adjusted would be as follows:

11 • For DL1, it would be efficiency level 4

12 • For DL2, it would be efficiency level 4

13 • For DL3, it would be efficiency level 3

14 • For DL4, four, and 

15 • DL5, four.

16 That works out to be about a 25 percent 

17 reduction in losses across the board. The closest 

18 TSL to this is TSL-5. TSL-5 is a little bit lower, 

19 is a step down for some of the transformer -- for 

20 some of the design lines, but again, the DOE sets a 

21 standard for these two classes, maybe three classes, 

22 not by design line, so that’s why the 25 percent 

23 number, we think is the crucial number to focus on.

24 But to back up to the natural benefits, 

25 TSL-5 which is our closest proxy to get to the 
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1 national impact, is about one and a half quads of 

2 savings, a net present value of about eight billion 

3 dollars. 

4 And I think it’s also important to look at 

5 the consumer impacts with DOE’s analysis shows at 

6 these ELs is that for DL1 that 99 percent of 

7 consumers have a positive LCC impact, so virtually 

8 everybody’s better off according to the DOE analysis 

9 at this level. The mean payback is ten years. For 

10 DL2, the portion of consumers who are better off is 

11 74 percent, with a mean payback of 25 years. So 

12 these are the pole transformers, so that long 

13 payback and that lower percentage benefit is the 

14 pole costs kicking in and showing up in the 

15 analysis. For DL3, 99 percent are better off with a 

16 mean payback of five years. For DL4, 99 percent are 

17 better off, with a mean payback of four years. And 

18 DL5, 97 percent are better off with a mean payback 

19 of eight years. So we think those portion of 

20 consumers who benefit and the mean paybacks are 

21 slam-dunks, frankly, for -- to justify a DOE 

22 standard. 

23 So we look at those numbers, and those, to 

24 us, point to a space where you can land that 

25 benefits the purchasers of the transformers per the 
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1 analysis, with the pole type an area for discussion, 

2 and that maintains the diversity of supply of core 

3 material in the market. Is there anything else to 

4 add, Steve? 

5 MR. ROSENSTOCK: Question. Okay. I guess 

6 I’m confused here. Are you proposing TSL-4 as shown 

7 on slide 18, or a modification of TSL-5? I just got 

8 lost there.

9 MR. NADEL: We are proposing the TSL-4 

10 criteria but it needs to be modified. At this point 

11 it’s closer to TSL-5, but we really believe that the 

12 criteria in TSL-4 is what should be used, where you 

13 want real competition between M3 and the amorphous.

14 MR. DeLASKI: And I guess this is the 

15 difference between -- you know, we’re not now 

16 negotiating DOE’s analysis. We think we should 

17 negotiate standard levels, and the standard levels 

18 are a table of efficiencies that can be converted to 

19 losses. So what we’re suggesting is a 25 percent 

20 reduction in losses across the board. And the DOE 

21 can figure out -- if we were to agree to this as a 

22 consensus, then it’s up to the team to figure out 

23 how they would analyze it, but I’m not trying to 

24 negotiate what they analyze, I want to negotiate 

25 what I think the next standard should be.
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1 MR. ROSENSTOCK: Okay. Again, so you’re -

2 - because I got confused -- Steve Rosenstock, EEI --

3 so you’re proposing, based on slide 18, your 

4 proposal is TSL-4. I just want to be clear that 

5 that -- because you talked a lot about these other 

6 levels, the other efficiency levels, you were 

7 talking about the metals, so I just want to be sure 

8 to be clear.

9 MR. DeLASKI: Our proposal is the ELs that 

10 I stated. And that is, to simplify that further, is 

11 a proxy is for -- another way to put it would be 25 

12 percent reduction in losses. That’s the proposal. 

13 Now we think the connection to TSL-4 is that we’re 

14 using that decision criteria, using that decision 

15 criteria, though, we get to a different set of ELs 

16 than the Department’s analysis shows.

17 MR. ROSENSTOCK: So again -- again, just 

18 for clarification, you’re proposing -- you’re 

19 proposing basically another version of TSL-5, can I 

20 put it that way, just so -- but basically you’re 

21 saying it would be design line 1, EL4; design line 

22 2, EL4; design line 3, EL3, design line 4, EL4, and 

23 then design line 5, EL4. That’s your proposal, not 

24 TSL-3. Not TSL-4, excuse me.

25 MR. DeLASKI: That’s right. 
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1 MR. NADEL: TSL-4 concept.

2 MR. DeLASKI: We’ll call it TSL-A. Which 

3 is often what the Department’s done in their 

4 decision-making, is to pick a TSL that is based on 

5 the input of stakeholders that’s different from what 

6 was analyzed in the first place.

7 MR. NADEL: Steve Nadel, call it TSL-4R 

8 for revised. 

9 MR. PARKER: So it’s EL4 across the board 

10 except for DL3 where it’s El3 as written, right, for 

11 TSL-4.

12 MR. PETERSEN: Eric Petersen, ATI. Could 

13 you just walk through one more time, design lines 

14 and efficiency levels so we make sure we’re on the 

15 same page for one last statement please?

16 MR. DeLASKI: 

17 • DL1, is EL4

18 • DL2, efficiency level 4

19 • DL3, is efficiency level 3

20 • DL4, efficiency level four, and 

21 • DL5, efficiency level four.

22 MR. PARKER: Rick Anderson.

23 MR. ANDERSON: Okay. Andrew, one more 

24 time, I’m a little slow.

25 MR. PARKER: It’s four across the board 
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1 except for three.

2 MR. ANDERSON: I’m going to go back to my 

3 50 KVA pad. If I go to DL4, right now the 

4 standard’s at 99.08, and I’m going to go to 99.31 

5 and I’m going to pay an additional $660 for that 

6 transformer which translates to a little bit over 

7 $1100 per watt. That’s the way I see what you just 

8 said.

9 MR. DeLASKI: So Richard, your math and 

10 the Department’s math just don’t match. So I’m not 

11 sure what to do about that. Right, so the 

12 Department’s math shows simple paybacks, less than 

13 ten years, and yours isn’t, so I’m not going to --

14 we’re not going to solve that over this space right 

15 here.

16 MR. ANDERSON: So is there some way 

17 someone could quickly explain the Department’s math?

18 MR. DeLASKI: This was published as an 

19 analysis in March and we’ve had many -- stakeholders 

20 have had enormous opportunity to give feedback on 

21 the model and I think it’s been discussed 

22 extensively. I think we’ve got to move on as 

23 Richard just said.

24 MR. PARKER: Listen, I want to -- excuse 

25 me, sorry. I want to give everybody a chance to 
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1 make their presentations and make sure that 

2 everybody gets their presentations out on the table 

3 before lunch, so I don’t want to have -- we’re going 

4 to have an extensive discussion of this afterwards, 

5 but I don’t want to bog us down. Ray, do you want 

6 to say something really --

7 MR. POLINSKI: Ray Polinski, ATI 

8 Allegheny. I just have a -- we’ll talk about it 

9 further, but you can’t pick and choose. You can’t 

10 say I like the LBL analysis for this stuff because 

11 it supports my needs, but I don’t like this part 

12 where it says amorphous for these standards, 

13 amorphous goes from 25,000 tons a year to like 

14 160,000. Well, I don’t believe that part. I don’t 

15 believe this part of it, I’ll discount that, but the 

16 part that supports my thing, that’s the bible, and 

17 three percent discount -- so, I think there’s room 

18 for a lot of debate or whatever, but it was kind of 

19 strange how you’re picking and choosing. This 

20 doesn’t seem to be proper.

21 MR. DeLASKI: Richard, just to clarify. I 

22 just want to be clear. So those are the levels, and 

23 when we translate the levels, those ELs into percent 

24 reduction in losses, it ends up being 25 percent 

25 reduction in losses for DL1, 24.8 percent for DL2, 
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1 25.9 percent for DL3, 25 percent for DL4, and 25.9 

2 percent for DL5. So, although they’re different 

3 efficiency levels, they’re all about 25 percent 

4 reduction in losses. I want to be clear and that’s 

5 another easy way to wrap your mind around what we 

6 think is the -- a good answer.

7 MR. PARKER: One issue here, Andrew, is 

8 you have a different EL for DL1 and DL3, but they’re 

9 going to be in the same equipment class and so 

10 unless they’re broken out, they’re going to have the 

11 same standard, right, because standards are set by 

12 equipment class.

13 MR. DeLASKI: Yeah, and that’s when I come 

14 to the 25 percent reduction in losses, because 

15 that’s how you translate that into a standard.

16 MR. PARKER: Right, so there would have to 

17 be one -- we’d have to settle on one EL or one 

18 standard for one and three, that might come between 

19 one of those two ELs. Right?

20 MR. DeLASKI: So my point there is that 

21 those two ELs for both one and three, are the 25 

22 percent reduction in losses.

23 MR. PARKER: Right. Okay. Next 

24 presentation. John, do you want to go?

25 MR. CASKEY: Sure.
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1 Presentation

2 MR. CASKEY: John Caskey, NEMA.

3 MR. PARKER: And I have your slides if you 

4 need them.

5 MR. CASKEY: Okay. Before you get to 

6 that, can we go to slide 13 here. Scroll down just 

7 a hair. Right there is great. Okay. So, first of 

8 all, thank you guys, for making that presentation 

9 and for sort of putting your stake in the ground, if 

10 you will. I think that’s very helpful as a starting

11 point, and it takes guts for the first group to do 

12 that, from my perspective. Also want to thank LBL 

13 and Navigant and DOE and all the stakeholders for 

14 the opportunity to do this. I certainly think that, 

15 as you said, the end result will hopefully be 

16 something better than what might have occurred 

17 otherwise, so we certainly appreciate the 

18 opportunity to review the analysis and provide 

19 feedback on the analysis so far.

20 I guess one of the issues that I think 

21 still remains is the accuracy of the analysis and 

22 the life cycle cost analysis in particular. So it’s 

23 still hard to grapple with that. I think we made 

24 some progress on the technical part of it. I think 

25 on the life cycle cost analysis there’s still some 
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1 weaknesses. And sort of getting to that point, I 

2 mean, as Andrew and others have talked about, along 

3 here, I mean we agree that there are opportunities 

4 to use M3 out to at least EL4. Okay. When it was 

5 discussed whether it was cost-effective or not, or 

6 competitive, the reason customers are buying, and 

7 correct me if I’m wrong, Wes, the reason customers 

8 are buying out here is not related to energy 

9 efficiency, but it’s some other reason that 

10 coincidentally produces a higher efficiency design 

11 in a transformer. Is that correct?

12 MR. PATTERSON: Yes. In a number of 

13 cases.

14 MR. CASKEY: Okay. So thank you. So 

15 that’s -- so there is an opportunity from a 

16 technical perspective to get out here. We clearly 

17 admit that. And I certainly and we, as NEMA 

18 manufacturers, certain agree fundamentally that you 

19 want to have choices in the design so that you can 

20 use, hopefully, silicon steel as well as amorphous 

21 or something else in order to basically use two 

22 different materials to produce a design that meets 

23 an efficiency level. So we fundamentally agree with 

24 that, and maybe your perspective is that’s sort of -

25 - well, we just fundamentally agree with that as the 
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1 upper bound on the EL relationship.

2 Okay. So the other thing that’s pretty 

3 critical is we’ve talked about their being technical 

4 feasible to produce transformers with M3 up in that 

5 area, fundamentally this analysis has been 

6 concluding that amorphous is the right choice for, 

7 in this case, EL2, 3 and 4 and up. And even over 

8 here for EL1, that amorphous is the right answer. 

9 And from that point forward, all the analysis is 

10 assuming the price of amorphous and the whole basis 

11 for the cost-effectiveness analysis rests on the 

12 availability and the pricing of amorphous. So we’ve 

13 sort of locked ourselves into one thing.

14 So we’re saying that technically we can 

15 use silicon steel with M3, but in reality the whole 

16 premise of the analysis is that it’s locked us into 

17 amorphous. Okay. So that’s a fundamental point.

18 Beyond that now, if you can go to the 

19 other charts. 

20 PARTICIPANT: This is from Carlos this 

21 morning. 

22 MR. CASKEY: Okay. So can you blow them 

23 up -- in a good way? Probably the one to the left 

24 first would be helpful. Okay. This is -- if you 

25 scroll down a hair, just for a second, or scroll up, 
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1 I’m sorry, give me this up here. A little bit 

2 further. 

3 So these data points are coming directly 

4 from the DOE designs, basically in September, and 

the further analysis on November 6th 5 , so these are 

6 basically -- these should jive with the DOE analysis 

7 as we know it now. So if you go down to basically -

8 - so the question is, where are there multiple cores 

9 that can be used in the design? So you need to go 

10 down a hair further. So what we’re looking at is 

11 sort of the upper boundary, and here you see that 

12 there are some room for competition, essentially, in 

13 this DEL-1, in this particular case, or over here, 

14 it’s really DEL-0. So, I mean, we need to refine 

15 that some. We agree the shape of some of these 

16 curves, like over here for M3, is probably different 

17 than what’s reflected here. I mean that’s basically 

18 what ABB has taught us. But still, we’re looking at 

19 a point where you can have, and I don’t know what 

20 this price -- reasonable price differential might 

21 be, maybe it’s ten percent different -- but 

22 fundamentally, I think the manufacturers agree that 

23 there needs to be some competitive forces at play so 

24 we’re not entirely locked in with amorphous, and 

25 that we can compete in that particular design using 
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1 other steels. And this is true for all -- design 

2 lines one through five.

3 So some of the other points that I wanted 

4 to make dealing with vault and network transformers. 

5 Typically these are, as the name implies, in vaults 

6 and there’s physical constraints in terms of 

7 changing them out. You can only do so much. So it 

8 may be appropriate, and we think it is appropriate 

9 to deal with vault and network transformers 

10 differently. 

11 Similarly, between single-phase and three12 phase, the work that’s always been done in the past 

13 is normalized single-phase and three-phase 

14 efficiency ratings, essentially. And in reality, 

15 it’s more difficult to go to higher level 

16 efficiencies on three-phase than it is on single17 phase. So we thing that it’s reasonable to have a 

18 different efficiency level, even normalized for 

19 single-phase and three-phase.

20 We talked about the BIL, that’s maybe 

21 something that we an bring in later, but we talked 

22 about the higher BILs being separated out 

23 differently, and we requested that analysis a while 

24 back, and I’m not sure that we’ve seen the final 

25 results of that. 
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1 The other point that we’ve talked about a 

2 little bit today, is just dealing with this as --

3 you know, it’s easy to talk about the delta price 

4 increase versus a delta efficiency improvement, but 

5 in reality that delta price increase still means 

6 dollars that somebody’s got to pay for along the 

7 way. And in some cases we’ve talked about that will 

8 get to the point where, instead of buying it from a 

9 newly manufactured unit, basically people will 

10 resort if they get to this 80 percent factor, 

11 whatever, where they can pay 80 percent or less for 

12 the remanufactured replacement, than they will go 

13 with that.

14 So, we’re concerned about that also, that 

15 you’ll get to some point where people will be 

16 looking at remanufactured units as opposed to new 

17 units. And then we’ll -- clearly that’s going to 

18 impact the new manufacturers, but in addition to 

19 that it’s going to impact net efficiency, and I’m 

20 not sure where that’s effectively -- or I don’t have 

21 confidence that that has effectively been integrated 

22 into the analysis.

23 And the other thing is, certainly NEMA 

24 represents 450 manufacturers, of which there are 

25 about 22 manufacturers in the transformer arena, and 
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1 we certainly want to avoid knowing ahead of time 

2 that we’re going to eliminate some of those small or 

3 medium manufacturers from the mix of manufacturers, 

4 and we feel that as you get up in higher 

5 efficiencies, certainly you risk that.

6 So I liked your idea about -- you 

7 mentioned the idea about a two-tiered approach. We 

8 would consider something like that as well as one of 

9 the fundamental things is, you know, when I take off 

10 my hat as a NEMA person and put on my hat as a 

11 citizen or a rate-payer, certainly I think there are 

12 other areas in the transformer industry to gain 

13 bigger bang for the buck in terms of improvements, 

14 and certainly we would be happy to work for the 

15 utilities and the advocates and others to go to 

16 congress and to look for opportunities to change out 

17 some of the poor efficiency transformers that are in 

18 the marketplace. They’re still functioning, but 

19 basically there are possible replacements for that

20 that would be cost-effective. I mean that’s another 

21 area where independent of this, we’d like to work 

22 with you on.

23 So with that, if I will say, to me the 

24 bottom line is really the picture up here, and 

25 whether we feel that going like to DEL-1 in this 
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1 particular case, and here it’s questionable. 

2 Certainly we agree, I mean I’m mature enough to 

3 comprehend that ending up with this whole analysis 

4 and saying we’ll zero is the right answer is, I 

5 don’t think is going to be palatable to you or to 

6 DOE or probably others. So in spite of the fact 

7 that this analysis really shows that there’s some 

8 competition around here, but that here it starts to 

9 break down a little bit. I think certainly going to 

10 this level might be something reasonable. So that’s 

11 sort of my ten minutes worth of whatever. I don’t 

12 know if any of the other -- you know, Wes or --

13 MR. PARKER: Do you have a specific --

14 MR. CASKEY: Yes, do you want to go to the 

15 other slide, further down.

16 MR. PARKER: No, that’s the end of that. 

17 It’s the second slide.

18 MR. CASKEY: Oh, sorry. Okay. So this is 

19 four -- design line 4 and design line 5, and this 

20 again shows a similar situation. Where you see a 

21 lot of competition at the DEL-1 area, maybe a little 

22 at the -- well, even here you’re getting a pretty

23 big spread between amorphous and M3 or M2. And then 

24 you see a similar situation over here. So that’s 

25 more or less where we’re starting with, where we 
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1 don’t see -- I think we’re going to have a general 

2 discussion later on -- but basically we don’t see 

3 getting to that EL4 level and still being able to 

4 provide this open competition between two different 

5 materials to be used in the design to meet a certain 

6 efficiency level. 

7 MR. PARKER: Question? Yes, Steve.

8 MR. ROSENSTOCK: Again, Mr. Caskey, I 

9 appreciate this presentation, but based on these 

10 graphs, it looks like, for I’m say the M2 and M3 

11 basically the costs really just pretty much 

12 skyrocket above level one, based on this information 

13 presented, and would you say this is a fair 

14 representation of all the manufacturers that this is 

15 what they would see for these design lines?

16 MR. CASKEY: I think the consensus among 

17 the manufacturers is that the Navigant analysis does 

18 not properly reflect the shape of the curve as you 

19 get to higher efficiencies and yes, there is a 

20 pretty radical steep increase as you go to higher 

21 efficiencies.

22 MR. ROSENSTOCK: Thank you.

23 MR. PARKER: I guess what we’re seeing 

24 here though on these slides is a pretty radical 

25 increase at pretty low efficiencies, right? At EL-
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1 zero and one. Andy, did you want to comment?

2 MR. DeLASKI: Andrew DeLaski. Thanks, 

3 John, that’s very helpful. I think you’re quite 

4 clear how your approaching this and it’s a very 

5 useful way to frame it. And I think it brought us 

6 back to our very first meeting, you talked about 

7 this, I think, economic -- where’s your economic 

8 options. You know, and I think the shape of that 

9 curve is one thing that we’re going to have to be 

10 talking about. The shape of that curve is really a 

11 critical part of this discussion over the range of 

12 efficiencies for the conventional silicon steel.

13 MR. SCHOEN: Jerry Schoen, AK Steel. To 

14 introduce more matter, as the advocates did, outside 

15 what Navigant analyzed, Jerry can you comment on the 

16 effect of loading on losses of these different types 

17 of transformers from the excellent report you put 

18 together a couple days ago? Because I think that’s 

19 significant. And one of the assumptions is, we’re 

20 not going to build power plants by having more 

21 efficiency transformers, and I think your analysis 

22 said that throws that into question as well.

23 MR. COCKRAN: What we’re talking about is 

24 the amorphous and the silicon core transformers, if 

25 they both have the same losses at 50 percent load, 
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1 which is what’s going to happen if we have an 

2 efficiency standard, the -- of course the core watts 

3 are much less on the amorphous transformer, so at 

4 full load they’re going to be that differential 

5 which -- between the amorphous and the silicon core, 

6 but there’ll be four watts higher at full load for 

7 each watt lower at 50 percent. So the utility 

8 companies will be saving watts at night when power 

9 is cheap, and then when their demand is at the peak, 

10 the amorphous transformers will have four times 

11 whatever that core watts differential is higher 

12 peaking losses at 100 percent. And distribution 

13 transformers are available for taking and start up -

14 - they take some very heavy loads. If you look at 

15 the standards, they’re supposed to be able to take a 

16 half hour at -- Wes, what is it, about 200 percent 

17 load, I can’t remember -- and so the differential 

18 when you get up there is very significant. And 

19 heating in the transformer and all, sort of wasting 

20 watts. There was a paper put out to the group which 

21 demonstrated that. I don’t know how many of you 

22 read it.

23 MR. PARKER: Again, I think I’m going to 

24 turn to Katie for just a second, but I think you’ll 

25 clarify that the analysis takes account of a lot of 
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1 this stuff already, right? Katie, do you want to 

2 talk about that, just briefly?

3 MS. COUGHLIN: Yeah, I just want to make 

4 sure that everybody understands that the loading in 

5 the LCC analysis is not the test procedure load. 

6 There’s a distribution of load factors. For the 

7 liquid immersed, the distribution is centered at 35 

8 percent, except for the subset of utilities that 

9 have -- that serve a low density of population, in 

10 that case the median of the distribution is set at 

11 25 percent. The LCC also uses fairly complicated 

12 simulation of the correlation between loads and 

13 marginal production prices that takes into account 

14 the higher production prices that occur during the 

15 times of day when loads may be high.

16 MR. PARKER: Okay. Wes.

17 MR. PATTERSON: Wes Patterson. So did 

18 you, in taking into account the load profile, 

19 separate the no-load losses from the load losses and 

20 correct the two elements appropriately?

21 MS. COUGHLIN: Yes.

22 MR. PARKER: Steve.

23 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

24 Were you able to run the sensitivity analysis with 

25 the -- because I know these were based on some of 
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1 the 2008 prices, and I had asked about a sensitivity 

2 analysis with the 2010 prices. Was that ever able 

3 to be done?

4 MS. COUGHLIN: The short answer is yes.

5 MR. ROSENSTOCK: Was it done?

6 MS. COUGHLIN: The prices are scaled using 

7 AEO historical and forecast data. The shape of the 

8 price-load correlation was verified that it hasn’t 

9 changed substantially between 2008 and 2010, and 

10 that’s what goes into this analysis.

11 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 

12 find that very hard to believe since natural gas 

13 prices were so much higher in 2008 than 2010, I find 

14 that rather extremely surprising. I’ve looked at 

15 some of the data from the wholesale, like Arcott 

16 (ph) and some of the others, and the prices in 2010 

17 were significantly lower because the gas prices were 

18 so much lower.

19 MS. COUGHLIN: The issue for this is the 

20 shape of the correlation between prices and loads, 

21 not the absolute price.

22 MR. PARKER: I think we can -- let’s have 

23 the logical discussion off line or at the break. 

24 Anybody else want to put forward a proposal?

25 MR. NADEL: Can I make one comment while 
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1 this slide is up?

2 MR. PARKER: Okay. 

3 MR. NADEL: John, if I heard you 

4 correctly, you were saying, gee, maybe a ten percent 

5 difference in costs is okay, but not a 50 percent, 

6 or something like that. You have two very 

7 interesting examples. One thing I point out is that 

8 the lower half of the left graph is missing, and the 

9 bottom five-sixths of the right graph is missing. 

10 It kind of implies it’s two and three times. I did 

11 some math based on reading things off the graph. 

12 The left graph is actually by far the steepest, 

13 where M3 ends it’s about 30 percent more expensive, 

14 but that was by far the most extreme. On the right 

15 graph, it’s just over ten percent. And a couple of 

16 the other ones are just over ten percent. So we 

17 should look at the percentage change -- and these 

18 graphs tend to exaggerate it. But definitely the 

19 one on the left is by far the most extreme.

20 MR. CASKEY: (Answer off mic)

21 MR. NADEL: So in that case, see I’m 

22 reading the amorphous price is roughly $6000 and the 

23 competition is roughly $7700, it says 1700 divided 

24 by 6000, at least when I did the math, is roughly 30 

25 percent. I think it’s 31 or something like that. 
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1 And I’m saying the left one is by far the most 

2 extreme, and many of the other cases, it’s 11, 13,

3 something like that. And again, I was reading off 

4 the graph, and now that we have the actual numbers, 

5 we can calculate it more closely. The version I had 

6 when I did this yesterday morning, didn’t have the 

7 numbers.

8 MR. PARKER: Aaron. Go ahead.

9 MR. MEYERS: Aaron Meyers, Cooper. I 

10 think what’s important to note in these graphs, and 

11 of course we agreed to exclude ZDMH, if you look at 

12 M2 and M3 and where the line stops, relative to the 

13 proposal on the table for EL4, there’s not a point 

14 out there, and I can confirm that for some of these 

15 ELs, that there is no available design using grain16 oriented silicon steel that will achieve EL4. And 

17 the design lines use very simple, single voltage 

18 requirements. They don’t represent what’s out in 

19 the market as far as dual voltage, high BIL and so 

20 forth and so on. So they’re very rudimentary 

21 designs that are common in the marketplace are not 

22 even achievable at the proposed level.

23 MR. PARKER: John, can I ask, are these 

24 simplified curves? You said they were based on DOE 

25 data. Is there -- do you take issue with the 
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1 simplified curves that have been posted and I 

2 believe sent around from the engineering analysis 

3 that DOE staff did generate previously?

4 MR. CASKEY: I’m not sure which ones -- I 

5 mean I go back to the scatter diagrams and these 

6 relate to those scatter diagrams. Beyond that, it’s 

7 been hard for me to keep up with all this stuff, so 

8 I’m not sure. If you bring it up, I can tell you 

9 whether I recognize it, but off-hand, I don’t know 

10 if I’ve seen what you’re talking about.

11 MR. PARKER: Completely understandable. 

12 MR. DeLASKI: This is Andrew. I’m not 

13 sure if I have either.

14 MR. PARKER: What’s that?

15 MR. DeLASKI: I’m not sure I’ve seen it 

16 either. These are graphs that NEMA produced?

17 MR. CASKEY: These are graphs that Prolec 

18 GE --

19 MR. DeLASKI: So could these be made 

20 available to all of us through e-mail? Maybe we 

21 already have them.

22 MR. CASKEY: They were e-mailed out there, 

23 just this morning.

24 MR. COULTER: We sent these out 

25 previously.
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1 MR. DeLASKI: I think I’ve seen them.

2 MR. COULTER: It’s the same data, the same 

3 graphs. The data hasn’t changed. We found we had 

4 an error -- because the efficiency levels are the 

5 same as --

6 MR. PARKER: Greg Coulter, excuse me. GE.

7 MR. COULTER: Okay, this is Greg Coulter. 

8 The simple answer is you have the new graphs. We 

9 sent -- you only got those today. The old graphs we 

10 sent out earlier, and you have those, and the basic 

11 difference between those two graphs is we’ve changed 

12 the definition of certain efficiency levels now 

13 versus where we were -- you know, we were at CSLs 

14 and now we’re just using draft efficiency levels. 

15 The definition of, you know, what that efficiency 

16 level was is changed, so these charts have been 

17 replotted showing the new EL levels, versus the old 

18 CSL levels, and that’s basically the only change 

19 you’re seeing between then and now.

20 We do recognize, and we didn’t point this 

21 out before, and we’ve only recently recognized 

22 ourselves on the 25 KVA, there has to be some 

23 problem with the data for the ZDMH, because it’s 

24 showing so much lower than everything else, and it 

25 shouldn’t be that way. We don’t believe it’s that 
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1 way. I believe if we had spent enough -- if we had 

2 recognized this sooner and had conversations with 

3 Navigant, we probably could have corrected it. We 

4 didn’t so maybe sometime later today we could show 

5 our own data. This is DOE data. Prolec has their 

6 own data they’d be willing to at some point, show.

7 MR. DeLASKI: This is Andrew again. 

8 That’d be great. It would be wonderful to see all 

9 that data. And just to be clear, what you’re 

10 showing here is -- you’re showing the bottom right -

11 - you’re showing the border of the DOE scatter 

12 plots.

13 MR. COULTER: Essentially. What we’re 

14 showing is the lowest price transformer that meets 

15 that efficiency level.

16 MR. DeLASKI: Got it.

17 MR. COULTER: It might not be the lower 

18 left, but it’s certainly the lower. You know those 

19 -- these bell shapes say that it’s not necessarily 

20 at the lower left, and it might not even be in that 

21 efficiency level. You may have to go up a couple of 

22 efficiency levels, that’s why the amorphous is a 

23 straight line in a lot of cases, because it’s the 

24 same thing LBL was saying, they get the same design. 

25 We agree with Wes, you know, and ourselves, you 
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1 probably wouldn’t get the same design, but the 

2 general shape of the curve is still pretty close. 

3 It’s going to have some slope to it rather than 

4 being straight. The methodology they use to find 

5 that point is not the same methodology we would use.

6 MR. PARKER: Chris did you want to? So I 

7 will over the lunch try to get the simplified curves 

8 that Navigant produced on line. If we can print 

9 them out, I’ll do that as well. I think if they’re 

10 coming from the same data they should correspond to 

11 these, but they would be graphed in a way that 

12 starts with zero at the x and y axis. 

13 Steve, did you want to --

14 MR. ROSENSTOCK: Just a quick comment on 

15 the graphs on the right, one there we’re still 

16 seeing 20, 30, 40 percent increases going up --

17 whether you’re going across or in the same design 

18 line. It’s not -- yeah, the increments are 

19 different but still on a percentage basis, you’re 

20 still seeing 30 or 40 percent. Again, just looking 

21 at the table above and the graphs below, we’re still 

22 seeing some of those deltas on both sides. Again, 

23 this is design line four and five, but again, that’s 

24 just looking at the graphs.

25 MR. PARKER: Let’s see if we can get some 
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1 copies of these made. Any other proposals. Eric?

2 MR. PETERSEN: Yes, we do.

3 Proposal

4 MR. PETERSEN: Eric Petersen, AK Steel. I 

5 guess within a negotiation it’s important to paint 

6 the full spectrum of both sides, so we’ve certainly 

7 heard one side painted, so I guess I’ll paint the 

8 other side of the perspective. Ray Polinski started 

9 this a few -- some minutes ago, made the comment 

10 that the DOE had done an excellent job associated 

11 with this current study that placed us at the base 

12 case which is where we are today. 

13 We would echo that point. As you can see, 

14 the key question continues to come up of capability 

15 versus competitiveness. That’s the point we’ve 

16 talked about all along. Although you may be able to 

17 make a grain-oriented electrical steel transformer 

18 at very high efficiency levels, the question is, 

19 will you? And associated with the competitiveness 

20 aspect, as you can see from the charts the DOE has, 

21 and from this data which is up on the board, the 

22 answer is you will not. 

23 So the perspective that we would bring to 

24 the table is a couple different points. I think 

25 one, is there have been some questions associated 
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1 with the cost associated with the watts that we’ve 

2 gained that Richard brought to the table. I know 

3 there’s questions there associated with the math, 

4 but it certainly brings, at least to my mind, points 

5 that clarification need be made associated with 

6 whether or not there’s a justification as we move 

7 forward on that cost. 

8 For us, we’re representing the steel 

9 industry. There is a significant position which is 

10 essentially whether or not US steel companies will 

11 be able to provide product for the US market. And 

12 as you can see, associated with where these 

13 efficiency levels is going, the answer is no. We 

14 would not be able to provide steel for this market 

15 here within the US.

16 Essentially we’ve talked quite a bit about 

17 the need to be able to find an efficiency level at 

18 which there is a myriad of suppliers within the best 

19 free market position, but which transformer 

20 manufacturers and the entire industry really, can 

21 best compete, is to be able to have a myriad of 

22 suppliers by which a transformer manufacturer can 

23 leverage against one another. In the last meeting 

24 we heard Dave Millure make the comment that we are 

25 already at that position in regards to 
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1 competitiveness today, that the current standard 

2 allows Metglas to be competitive. And I think that 

3 emphasizes the job that the DOE did to move us to 

4 the level that we’re at today, that we are 

5 competitive, that’s what the current baseline level 

6 shows. 

7 And as you begin stepping forward, it’s 

8 not a teeter-totter effect, it is a cliff. Right 

9 now, if you look at the data that has come forward, 

10 basically if you move into efficiency level one, you 

11 will still, on design line one, you still have an 

12 opportunity for amorphous metal and electrical steel 

13 to compete. But once you move to design lines two, 

14 three, four and five, by the data that’s presented 

15 within the chart, you essentially are at a zero 

16 percent usage of an M2 or an M3 product.

17 For US steel companies, obviously that’s 

18 not a position that we would support in regards to 

19 something that best serves the marketplace, that 

20 best serves the needs of the industry, or certainly 

21 that best serves the needs of our employees within 

22 the US steel industry.

23 Another discussion that has been brought 

24 to the table that I think bears much more 

25 investigation is the issue of recycling. There have 
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1 been some points that have been made that the size 

2 of the replacement market today or what is driving 

3 the demand is the replacement transformers is 

4 significantly high. We’ve heard today as much as 80 

5 percent could potentially be the current size. The 

6 economics of the decisions that we make to move an 

7 efficiency level forward could essentially push the 

8 decision point that rather than replace a 

9 transformer, simply to recycle the transformer, thus 

10 anything we intend to do associated with improving 

11 our efficiency, we’re not going to accomplish, we’re 

12 actually going to take a potential step backwards 

13 in improving the electrical efficiency for our 

14 country.

15 So I think it’s very important that we 

16 take that piece of consideration into this 

17 discussion topic, as what is the unintended 

18 consequences of increasing the efficiency level upon 

19 the transformer market in regards to essentially 

20 recycling. We already heard a comment by Mr. Saint 

21 today that there is advanced activity in terms of 

22 beginning to look at the financing structure, et 

23 cetera, that may go into place, associated with 

24 moving efficiency levels forward and how we would 

25 recycle transformers.
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1 So our proposal would be to recognize the 

2 work that the DOE has already done and state that 

3 the standards that we’re at accomplish the best 

4 position for a manufacturing industry that allows a 

5 multiplicity of materials that can be used to supply 

6 the US industry in transformers and utilities, while 

7 still insuring that the transformers are going to be 

8 replaced are being replaced as opposed to recycled.

9 MR. PARKER: Questions, comments, 

10 reactions? 

11 MR. PETERSEN: Ray, did you want to --

12 MR. POLINSKI: I was going to add --

13 MR. PARKER: Ray.

14 MR. POLINSKI: Ray Polinski, ATI Allegheny 

15 Ludlum. And just to add a few comments to Eric’s 

16 comments, and I think we’re certainly in agreement, 

17 fully with his comments on this. We discussed the 

18 data that’s out there says that if you go above --

19 and we can’t -- while I respect Wes’ data and if we 

20 had time and we elected to have time and get the LBL 

21 to change their analysis, but we can’t do that. We 

22 have the data, the LCC was based on the data, so you 

23 can’t say, well, here’s a savings of 11 to 13 

24 billion and 1.4 quads, but hey, we’re using M3 to

25 get there. So we believe that for competitiveness, 
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1 which is a very key item in the DOE criteria, that 

2 they have to consider that it’s very simple that 

3 we’ve been -- we’ve said this before and, you know, 

4 some of the advocates -- I don’t know, they didn’t

5 maybe hear it, but I think zero-one is where the 

6 competitiveness, in that zero-one range is where the 

7 competitiveness exists, and I agree with Mr. Berman 

8 who’s the economist here with us that when you have 

9 competition, the free market works, supply and 

10 demand. But when you mandate a standard for our 

11 country where you have no US producers that -- no US 

12 companies that produce it, and you mandate one 

13 material, then I would argue the supply and demand 

14 doesn’t -- factors don’t apply. I mean, and I know 

15 when everyone’s lived through this with us, so when 

16 we were just in a five percent shortage of geo-grain 

17 oriented steel which occurred maybe back in the 2007 

18 time frame because of a lot of growth in Asia, and 

19 things of that nature, and it took the -- the market 

20 drove the prices of grain-oriented up very high. 

21 And that was a five percent shortage and it took a 

22 long time for the market to supply and demand to get 

23 back in balance and recover.

24 So what’s going to -- when amorphous 

25 demand is going to go up based on the standards that 
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1 are being proposed by the advocates, by a factor of 

2 six or seven, I just -- it’s unreasonable. I just 

3 can’t believe we’re even considering that. But we 

4 believe that DOE did a great job, they pushed up 

5 against all these ceilings and these limits the last 

6 time. They followed their seven criteria. We’re in 

7 that zero -- we think the base case is fine. Maybe 

8 the point six between zero and one, the point six 

9 proposed, we certainly would look at that. Thank 

10 you.

11 MR. PARKER: Any other clarifying 

12 questions.

13 MR. NADEL: I have a question.

14 MR. PARKER: Steve.

15 MR. NADEL: I understood what you were 

16 saying --

17 MR. PARKER: Give your name, please.

18 MR. NADEL: Steve Nadel ACAAA. You think 

19 the current situation is adequate competition. If I 

20 understand, it’s probably more than 90 percent M3 

21 and less than ten percent amorphous. So are you 

22 basically arguing that’s plenty of competition?

23 MR. PETERSEN: I’m simply emphasizing the 

24 point that Mr. Millure made last time, which was 

25 that they can’t compete. You made the comment, then 
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1 why wasn’t it being done, and Mr. Millure made the 

2 comment that it is competitive.

3 MR. POLINSKI: Ray Polinski, ATI 

4 Allegheny. When you talk about competition, Steve, 

5 there are, you know, at last count, there are 13 

6 producers world-wide for grain-oriented electrical 

7 steel, and so it’s not one producer or two 

8 producers. It’s a global market and there’s plenty 

9 of competition at this point in time for transformer 

10 core steel, globally.

11 MR. NADEL: I wasn’t arguing about 

12 competition for M3, I was talking about competition

13 between amorphous and M3, and so I just want to 

14 understand your position. But you think we already 

15 have enough competition. Thank you.

16 MR. PARKER: Okay. Steve.

17 MR. ROSENSTOCK: Just a quick thought on 

18 the utilities side. Steve Rosenstock, Edison 

19 Electric Institute. We like the idea of competition 

20 and multiple suppliers and multiple metals, and 

21 that’s one of the reasons I said maybe we should 

22 look at a level between zero and one, based on the 

23 DOE data, but unfortunately was dismissed as a 

24 pipedream by certain parties, and said no, there’s 

25 absolutely no way to consider it, so I guess that’s 
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1 unfortunately off the table. So I’m very sorry to 

2 see that, but, you know, that’s what it seems like

3 we’re going forward that other options are just not 

4 going to be considered. I’m very sad to see that.

5 MR. PARKER: Okay. Well, I think we’ve 

6 got the presentations out there, and we have the 

7 proposals out there. During the break -- I think we 

8 should break for lunch and think your positions 

9 through. During the break I will try to get this 

10 simplified cost curves that DOE put together that 

11 have been posted on the Sharepoint site, and I 

12 thought they had been sent to people and I apologize 

13 if they haven’t. But I’ll see if we can get those 

14 not only downloaded, but if we can, print it out so 

15 you can take a look at them, because I think that 

16 would be a helpful point of reference. Steve.

17 MR. NADEL: I wanted to maybe frame what 

18 we should all be thinking about as we break for 

19 lunch and come back afterwards. Basically I’ve 

20 heard some people say kept the current standard, do 

21 between zero and one. We’ve rejected that, which is 

22 not to say you can’t make your case to DOE. We will 

23 make our case to DOE and DOE decides.

24 We put in another proposal. We’d like 

25 reactions to that proposal. We’d like suggestions 
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1 or alternatives, and basically comes down to do we 

2 feel that there’s something we can work on that we 

3 can all agree or basically if both of our 

4 flexibilities is two non-overlapping Venn diagrams 

5 and in which case we just throw it to DOE. 

6 So I ask people to think in those terms 

7 and we’ll have an interesting conversation after 

8 lunch.

9 MR. PARKER: Also, what we can do after 

10 lunch, I think is we can explore the results of 

11 doing some material price sensitivity runs, because 

12 I think what’s really going to be, I think, very 

13 important to people here is what are the possible 

14 price scenarios that might result from various 

15 efficiency standard choices. And so I think it 

16 might be instructive to actually look through some 

17 material price sensitivity runs. I know we’ve 

18 gotten requests for those and have worked very hard 

19 to accommodate those, and so let’s -- we will try to 

20 have a presentation on that right afterwards as well 

21 so we can get a perspective on what happens in a 

22 couple different scenarios.

23 MR. ROSENSTOCK: This is Steve. Room A 

24 and Room C and Memo Park are all available for 

25 caucusing or if people want to break down into 
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1 groups for lunch, that’s your choice where you’re 

2 going to eat.

3 MR. DeLASKI: This is Andrew. I just hope 

4 that we can reserve some time to discuss medium 

5 voltage dry type too. I hope the day doesn’t go by 

6 and it gets to be five o’clock and we didn’t even 

7 discuss the medium voltage dry type.

8 MR. PARKER: Yes, I think we should 

9 definitely try to do that. I agree, thanks.

10 Okay, let’s reconvene here at 1:30 if we 

11 could.

12 (Whereupon, at 12:36 p.m., the meeting in 

13 the above captioned matter was adjourned for lunch 

14 recess, to reconvene at 1:30 p.m.)

15
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2 2:05 p.m.

1 AFTERNOON SESSION

3 MR. PARKER: Hello. Okay, everyone, 

4 welcome. I hope you had a good lunch. 

5 Review and Moving Forward

6 What we did over the lunch break was download from 

7 the Sharepoint site, the simplified design curves 

8 that DOE had produced as part of the latest -- as a 

9 result of the latest engineering analysis. This is 

10 for one through five and 11 and 12. So I think what 

11 would make sense now is -- let me just brief you on 

12 sort of some of the things that are in the works. 

13 We heard a lot of talk this morning about 

14 the suddenness of the transition to amorphous, the 

15 point at which it takes place and so forth. I think 

16 there’s widespread recognition that that doesn’t 

17 exactly and accurately capture the way it would work 

18 in the market place in real life. One way that we 

19 can, I think, help deal with that concern is to 

20 explore what happens if you vary the relative price 

21 of materials, because the model sort of assumes 

22 constant relative prices and I think there’s been 

23 widespread concerns raised that if one moves towards 

24 a standard that favors amorphous over conventional 

25 steels that there will be a big ramp-up in amorphous 
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1 prices and so forth, and that the gap between 

2 amorphous prices and conventional steels will widen. 

3 And what we’ve tried to do is -- and that’s not 

4 currently reflected in the analysis -- so what we’ve 

5 tried to do is to capture some of that with regard 

6 to -- in the sensitivity runs that are now in the 

7 works, and so we will be presenting basically a 

8 couple of scenarios for what might happen if 

9 concerns are raised -- if concerns are realized, if 

10 it turns out that amorphous prices were to go up 

11 relative to silicon steel, and so I think that will 

12 be instructive. So we have that in the works.

13 And we have these simplified curves in 

14 front of us, and I think what might make sense now 

15 is just to reopen the discussion to the differing 

16 points of view -- reopen the discussion of the 

17 proposals and if there is -- by the way, the other 

18 thing is I heard over lunch a concern that we not 

19 lose track of medium voltage dry type and that we do 

20 have a discussion about that.

21 So another thing that we might want to do 

22 since we have these material price sensitivity runs 

23 that are currently being prepared now, is we could 

24 move up the discussion of medium voltage dry type at 

25 a certain point and have a basic presentation 
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1 proposals on that. And then return to liquid 

2 immersed once the runs are in. So that’s an option 

3 that we have. 

4 But why don’t I, at this point, just turn 

5 back to the advocates and ask if they want to 

6 present a response, anything that happened over 

7 lunch break that you want to -- around the table? 

8 Or any other sort of thoughts that you want to add 

9 following up from industry?

10 MR. NADEL: No, we have nothing to add at 

11 this point. We’re waiting for reactions to what we 

12 put out there. Beyond -- and when I say reactions, 

13 you know, as is there some basis for moving forward? 

14 Are there any counterproposals or what not, or are 

15 we just too far apart?

16 MR. PARKER: Well, why don’t we look at 

17 these simplified curves, if we could, that are the 

18 DOE curves for the various design lines and get 

19 people’s reactions to these. Is this not what you 

20 are seeing? Is your group -- this is not something 

21 reflected -- this is not captured by the ABB data 

22 and these curves are inaccurate, or is there --

23 MR. SAINT: Just a clarification.

24 MR. PARKER: Yeah, sure.

25 MR. SAINT: This is Bob Saint from NRECA. 
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1 Just a clarification of what we’re looking at here. 

2 These are the same -- are these the same curves that 

3 DOE analysis -- the LBL analysis that we saw this 

4 morning in a more expanded view? This is a little 

5 bit harder to decipher the numbers in this view, 

6 since the grades are huge here. So is this the same 

7 chart that we looked at this morning? That’s the 

8 question.

9 MR. CASKEY: This is John Caskey from 

10 NEMA. I’m not sure if you’re -- this should be the 

11 same data that we showed you shortly before lunch, 

12 that I presented and tried to explain, so this is 

13 just a different scaling.

14 MR. SAINT: Okay. Great. Personally I 

15 like the scaling that we saw this morning better.

16 MR. CASKEY: Well, we were criticized like 

17 we were hiding part of the picture or something, but 

18 I think the numbers are the same.

19 MR. SAINT: Okay. 

20 MR. ROSENSTOCK: Mr. Parker?

21 MR. PARKER: Yes, Steve.

22 MR. ROSENSTOCK: Hi. Steve Rosenstock, 

23 EEI. And I appreciate these graphs, and I’m just 

24 kind of -- in terms of the efficiency advocates 

25 proposal, I’m just looking at the design line one, 
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1 and again, the theory was that there would be M3 

2 steel at DEL-4, but again, I’m just thinking about 

3 the life cycle cost. Suppose you extrapolate what’s 

4 there and you say DEL-4, would it be at least -- I’m 

5 going to throw it out -- at least $3000. Again, I’m 

6 not trying to make any market pricing or anything 

7 like that. Again, based on the slope that the 

8 M2/M3 would likely be above the 3000 mark, again, 

9 just extrapolating, not having any idea, I’m not a 

10 steel maker or anything. Compared to, let’s say, 

11 2400 for the amorphous at DEL-4 I’m talking about 

12 right there. So that’s probably like a 25 percent 

13 price increase. 

14 If they were to get a significant market 

15 share, wouldn’t that have a significant impact on 

16 some of the life cycle cost results? Because the 

17 life cycle cost results are based on amorphous 

18 having 100 percent market share. So if a higher 

19 priced item got a significant market share, wouldn’t 

20 -- at basically the same efficiency level, wouldn’t 

21 that have a significant impact on the eventual all 

22 the net present values and the paybacks and

23 everything?

24 MR. DeLASKI: Yes, of course it would. 

25 The point that I -- I mean I don’t think we need to 
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1 spend a lot of time hashing over this again, but 

2 it’s our view that the ABB experience, as shown by 

3 the graphs by the ABB pie charts, shows that this

4 curve is not shaped properly, that it’s flatter as 

5 we discussed this morning, and that further analysis 

6 will show that the curve is too steep, and in fact 

7 it would flatten out. That’s our view that that 

8 would be the case.

9 MR. ROSENSTOCK: Just a quick follow-up, 

10 Andrew. This is Steve Rosenstock. Andrew, flatten 

11 out between three and four?

12 MR. DeLASKI: Flatten out over the range. 

13 And the reason why is because if you look at the ABB 

14 sales, they show that for the period 2010-2011, for 

15 pad-mount transformers which is what we’re talking 

16 about here, that have 20 to 30 percent losses, which 

17 is in the range of EL4, they sold half of them were 

18 amorphous core transformers, and half of them were 

19 M3 transformers.

20 Wes, you want to correct me? Am I reading 

21 it -- I’m looking at Wes’ data, so --

22 MR. PATTERSON: What I’d like to do is

23 display something on that screen, if I may.

24 MR. RIVEST: Before you do, can I -- Mike 

25 Rivest -- I spoke earlier about how you can 
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1 characterize this as two intersecting curves, one 

2 for conventional steels and one for amorphous. What 

3 you’re looking at has locked into time pricing for 

4 each of those steels, and this is the picture based 

5 on 2010 pricing survey we got on these various 

6 materials. Over the last several days, people have 

7 asked us to run scenarios of different steel 

8 pricing.

9 Two things happen as you vary the steel 

10 prices: slopes change and absolute values --

11 absolute levels change as well. So if we were to 

12 decrease the price of all conventional steels by 30 

13 percent, that would lower the price curves of the 

14 steels, of the transformers, not by 30 percent 

15 because there’s more material in there than just the 

16 steel, obviously. The curves all come down on the 

17 conventional steels. The slopes would also become 

18 more shallow. Okay. 

19 On amorphous, if you were to increase the 

20 price of amorphous 20 percent, the curve would lift 

21 and it would become more steep. So when we say the 

22 DOE curves are different from the ABB, that doesn’t 

23 mean that the underlying modeling is any different. 

24 What it means is that what we’re inputting in terms 

25 of material prices into those designs could be 
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1 wrong, or could be simply different than the 

2 experience of ABB’s pricing over a one year period.

3 And what I would like to do is show how 

4 DOE’s curves change in appearance, both in height 

5 and in slope, looking at simply those scenarios that 

6 this group has asked to model. And you’ll find that 

7 in some situations, under some scenarios, it looks 

8 like a lot like the ABB experience, except that we 

9 don’t get DL4.

10 MR. DeLASKI: Do you have that yet?

11 MR. RIVEST: Do we have that yet? I can 

12 e-mail that to Richard if that’s the easiest way to 

13 do it, or I can throw it on a thumb drive.

14 MR. PARKER: Why don’t you bring it on a 

15 thumb drive, that will be good, thanks.

16 MR. RIVEST: Sorry, Wes, for preempting 

17 you.

18 MR. ROSENSTOCK: Mr. Rivest, based on what 

19 we have --

20 MR. RIVEST: What we have is many things, 

21 Steve. We have sensitivity scenarios that I think 

22 need to be considered in decision-making. Otherwise 

23 we did all that for nothing.

24 MR. ROSENSTOCK: But again, was my initial 

25 premise correct?
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1 MR. RIVEST: Which was?

2 MR. ROSENSTOCK: Looking at the graph 

3 that’s now not here, extrapolating the M3s up to 

4 DEL-4, which was a proposal, using that -- again, 

5 since there’s no models made I have no other way of 

6 doing that. If you extrapolate the cost of the 

7 M2/M3 from DEL-3 to DEL-4, and you say that they 

8 have a certain percentage market share, again, 

9 without changing the cost of the amorphous, wouldn’t 

10 that have a pretty significant impact on the life 

11 cycle cost results? Because the life cycle cost 

12 results are based on 100 percent market share for 

13 amorphous --

14 MR. RIVEST: Oh, I see -- absolutely. If 

15 the price of amorphous goes up relative to 

16 everything else, then the controlling line is the 

17 conventional steel line.

18 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

19 What I was also saying is if -- if you still have 

20 the conventional steel at a higher price point, but 

21 it has a 20 percent market share for example, that 

22 will have an impact on life cycle cost results at 

23 DEL-4.

24 MR. RIVEST: Yeah, we’re actually saying 

25 the same thing.
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1 MR. ROSENSTOCK: Thank you.

2 MR. RIVEST: Brian, can you come operate 

3 the slides since you put them together.

4 MR. PATTERSON: (not at mic) It’s a very 

5 good chart to show why the data is not showing an M3 

6 at that CSL-3 level, look inside there, you don’t 

7 see it.

8 MR. RIVEST: Yeah, there’s no DL-4.

9 MR. PATTERSON: Because the dots all curve 

10 up to the right.

11 MR. RIVEST: So this is the reference case 

12 for DL1, and this is with the pricing that we have 

13 in the technical support document, so you see on the 

14 left is the conventional steel line and on the right 

15 are the amorphous, one with copper windings, and the 

16 other one with aluminum. And the switchover point, 

17 the way to visually see it is, you take the least 

18 cost amorphous and you go to the left and see where 

19 it intersects the conventional steel, and that 

20 becomes the switchover for this design of 

21 competitiveness, if you will.

22 Now, changing scenarios of steel pricing 

23 to some of the scenarios that we discussed. This is 

24 a different -- very different look. What did you do 

25 to pricing to get this? 
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1 MR. COFFEY: This is using, for the 

2 conventional steels, the 2006 prices that we had,

3 minus 25 percent, and keeping the amorphous the 

4 same, so here’s the reference, and you can see that 

5 all of the designs that use conventional steel 

6 decline in price and also in steepness.

7 MR. RIVEST: So this could be a Wes curve. 

8 This is a much more gradual slope as you increase 

9 the efficiency, it’s much more gradual. And the 

10 crossover point for amorphous versus conventional is 

11 now happening at the high end of CSL-3, basically.

12 PARTICIPANT: If I may, though, I thought 

13 we were keeping pipe dreams for transformer 

14 manufacturers of 2006 minus 25 percent.

15 MR. RIVEST: This is not about pipe 

16 dreams, this is about having -- we’re just looking 

17 at scenarios of pricing and trying to explain why 

18 one set of results on the surface may seem 

19 inconsistent, but it’s just a matter of pricing.

20 PARTICIPANT: So it’s nothing we’ve 

21 actually can make a conclusion from then.

22 MR. RIVEST: Oh, I’m not asking for any 

23 conclusion. I’m simply showing how significant our 

24 assumptions about pricing are.

25 MR. POLINSKI: Ray Polinski, ATI 
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1 Allegheny. What is the -- do we have a curve, then, 

2 for when amorphous goes up by 50 percent?

3 MR. RIVEST: So do we have other scenarios 

4 there?

5 MR. COFFEY: Yes, this next scenario is 

6 keeping the same prices for conventional steel --

7 Brian Coffey, Navigant -- this next scenario is 

8 keeping the same prices for conventional steel and 

9 then taking for amorphous the 2008 price plus 25 

10 percent. So low sensitivity for conventional, high 

11 sensitivity for amorphous.

12 MR. RIVEST: So if you were to look at the 

13 LCC results for this, for CSLs 1 through 3, 

14 amorphous wouldn’t come into the mix, so it would be 

15 all the conventional steel curves that would be 

16 dictating the results of the LCC. And when I 

17 compare the 2007 analysis to the analysis today, 

18 this is actually kind of what it looked like in ’07.

19 So that’s -- no conclusions, just wanted 

20 to share with you how important those assumptions 

21 about pricing are in terms of determining the cost 

22 effectiveness of the lower standard levels and in 

23 terms of determining the switchover point of 

24 competitiveness.

25 MR. PARKER: Bob?
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1 MR. BERMAN: Robert Berman, Berman 

2 Economics. One question, Mike, are these prices --

3 are these repricings or are these reoptimizations?

4 MR. RIVEST: These are repricings, which 

5 is a good point. So we’re taking existing 

6 transformer designs, say there’s 2000 in this design 

7 line.

8 MR. BERMAN: So if we actually did 

9 reoptimization what we would expect is a flatter and 

10 lower line on the low price -- actually on both, the 

11 high and low price. If we did a reoptimization we 

12 would expect a flatter and lower line, is that 

13 right?

14 MR. RIVEST: Potentially. I mean we’re 

15 running As and Bs up to 15 or something, so I don’t 

16 -- it would change slightly. We actually did that 

17 when we took the original designs from 2007 and ran 

18 new prices for steel in it, and then we ran new 

19 optimization, we were seeing like a three percent 

20 difference on the slope.

21 MR. PARKER: Carlos.

22 MR. GAYTAN: Carlos Gaytan, Prolec GE. I 

23 would like to have the opportunity of showing our 

24 design exercise in order to provide the reference 

25 from another manufacturer on how the design 
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1 competitiveness for silicon steel and amorphous 

2 designs behaves across the different efficiency 

3 levels. If you would like to please show the charts

4 that I sent you.

5 MR. PARKER: Sure.

6 MR. GAYTAN: It will only be a few 

7 minutes. We were using design plots November 8, 

8 2011 is the name of the file.

9 MR. PARKER: Oh, it’s on a different -- is 

10 it on your --

11 MR. GAYTAN: No, I sent you in a PDF file 

12 by e-mail around lunch time. (Pause.)

13 Okay. Yes, in that view you can see in 

14 green the -- this is design line one and design line 

15 two on the right. This is the -- in green you see 

16 the best option for the silicon steel designs that 

17 we can optimize to for the different efficiency 

18 levels starting from the base line of the EL-zero, 

19 and we made the exercise all the way up to EL4, and 

20 as you can see there’s the crossover point for most 

21 of the cases is between levels 1 and 2, between -

22 this is the shaper of the amorphous metal designs, 

23 and for design line two, the 25 KVA pole, you can 

24 also see that the crossover point for the best 

25 silicon steel design, and the best amorphous design 
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1 is a little bit before level two. And we go down to 

2 the two other design lines for three-phase. This is 

3 the design line four on the left, and we have again 

4 the crossover point between levels one and two. 

5 Another relevant thing is that with 

6 silicon steel we can design all the way up to the 

7 efficiency level four, but as you can see in the 

8 relative pricing, the increasing pricing compared 

9 with the reference, 100 percent of the lowest price 

10 according to efficiency regulation designs up to the 

11 levels of 70 to 100 percent higher than the current 

12 levels. So that means that we can produce designs 

13 with silicon steel that can meet these efficiency 

14 levels, but the competitiveness level of those with 

15 current material price will be of a high concern for 

16 us. So in general we can say for any levels above 

17 level three, the gap between the best silicon steel 

18 design and the amorphous designs widens 

19 significantly.

20 MR. PARKER: Carlos, excuse me, what 

21 prices were you using for this?

22 MR. GAYTAN: We were using 2011 material 

23 prices that we have for our quotation system.

24 MR. PARKER: Okay. Bunch of hands around 

25 the table. Andrew first.
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1 MR. DeLASKI: Thanks. Help me out with 

2 the left hand axis.

3 PARTICIPANT: Relative price.

4 MR. GAYTAN: Yes, the axis is the relative 

5 price of the designs if we were to quote those 

6 designs to a customer, and we are normalizing all 

7 the charts so that the lowest current design, 

8 meaning the EL-zero level is always equal to 100 

9 percent, so we can have a sensitivity over the range 

10 of price variation for the different efficiency 

11 levels for both materials. In the silicon steel, we 

12 have a variety of silicon steel grades that we were 

13 using. The best -- the lowest price, efficiency 

14 level compliant designs, and we were comparing that 

15 to the lowest price amorphous design for that same 

16 efficiency level.

17 MR. PARKER: Aaron.

18 MR. DeLASKI: So just to make sure that 

19 I’m interpreting it right. So in this case --

20 MR. PARKER: This is Andrew DeLaski.

21 MR. DeLASKI: So DL4, for design line 4, 

22 EL3, you’re looking at something, it looks like it’s 

23 115 percent for the amorphous line and call it 135 

24 percent for the steel line. So if I’m interpreting 

25 this correctly, it means that your -- the steel line 
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1 -- to make that transformer with a steel core is 

2 costing an additional 20 percent over the base.

3 MR. GAYTAN: That is correct, an 

4 additional 20 percent over the base line at the 

5 level zero.

6 MR. DeLASKI: So the 20 percent cost, the 

7 manufacturing cost, MSP, whereas for design line 2, 

8 you’re looking at a difference of a couple percent, 

9 a couple, three -- four, five -- three percent, 

10 something in that order. For EL2, excuse me.

11 MR. GAYTAN: For EL2, yes, the differences 

12 are generally within ten percent difference compared 

13 with the current baseline.

14 MR. DeLASKI: Say that again, please.

15 MR. GAYTAN: For efficiency level 2 the 

16 differences that we found in selling prices were in 

17 the range of ten percent for the different design 

18 lines. That is true for design line 1, design line 

19 2. That is also true for design line 4, and with 

20 the only exception of design line 5 where the 

21 difference is -- that chart on the right, the 

22 difference is more in the order of a little bit more 

23 than ten percent, probably 13, 15 percent.

24 MR. DeLASKI: And then for three, do you 

25 have the range -- this is Andrew again -- do you 
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1 have the range for three?

2 MR. GAYTAN: For level three the 

3 differences are up in general, higher than 20 

4 percent --

5 MR. PARKER: Could people on the phones 

6 please mute your phones. Excuse me, whoever is on 

7 the phone, could you please mute your phone.

8 PARTICIPANT: We can all hear your other 

9 conversation.

10 MR. GAYTAN: For efficiency level 3, the 

11 difference are between 20 and 25 percent with 

12 silicone steel designs being higher than the lowest 

13 price amorphous design, with the only exception of 

14 design line 5, where -- no excuse me, -- with the 

15 only exception of design line 2, 25 KVA where the 

16 difference is lower than 20 percent. That chart on 

17 the top right. 

18 MR. MEYERS: Aaron Meyers, Cooper Power 

19 Systems. Since this data is up, I would like to 

20 point out for DL1, there isn’t a silicon design 

21 beyond EL3. This coincides with the DOE’s data, and 

22 it coincides with Cooper’s data. There is not a 

23 viable designed silicon steel that can be built. 

24 And the others are at the very extreme of what’s 

25 possible, technology --
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1 MR. PARKER: Sorry, for which DL is this?

2 MR. MEYERS: DL1, there’s not a viable 

3 design at EL4. There are no designs that are 

4 possible there with silicon steel. And for the 

5 others, you’re at the steepest part of the silicon 

6 steel curve, and you’re at the very extreme of 

7 what’s even technologically possible to build. So 

8 that’s the point that I wanted to make, thank you.

9 One further thing, sorry, Richard.

10 MR. PARKER: Yes, Aaron.

11 MR. MEYERS: With regard to the 

12 sensitivity analysis, I wasn’t really looking to see 

13 what happens when you raise amorphous and keep M3 

14 the same, but when you raise amorphous pricing to 

15 the levels which would bring the two to competitive 

16 situation, what happens to the payback periods? So 

17 is there still an economic justification for raising 

18 the efficiency levels? If we raise the efficiency 

19 levels such that amorphous could raise their price 

20 50 percent and still be competitive with silicon 

21 steel, what happens to the -- the benefit, 

22 economically, for the nation?

23 MR. PARKER: Yes, I think that LBL is 

24 actually doing that analysis. That’s part of the 

25 material price sensitivity analysis that we’re 
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1 breaking out now. Wes?

2 MR. PATTERSON: If I can get the stick --

3 MR. PARKER: Wes Patterson.

4 MR. PATTERSON: -- the thumb drive. 

5 PARTICIPANT: If I may -- could we get 

6 copies of the two presentations we just saw on here 

7 sent to us via e-mail?

8 MR. PARKER: Sure, I think we could do 

9 that.

10 PARTICIPANT: Before this goes down -- so 

11 as I’m interpreting this, Carlos is that you’re 

12 showing that something in the neighborhood of EL2 is 

13 where your data shows that the manufacturing ... price 

14 is about the same, in the same ball park? And that 

15 if you go to EL3, you start getting out of the same 

16 ballpark. Is that kind of a fair summary of it?

17 MR. GAYTAN: Carlos Gaytan. That’s a fair 

18 statement, for three out of the four design lines, 

19 EL2 is where we have the smallest difference between 

20 the two types of core materials. The only exception 

21 to that is design line 5 where we have like a ten 

22 percent difference at EL2.

23 MR. PARKER: Jerry?

24 MR. COCKRAN: Could we go back to the 

25 charts which were handed out at lunch time, design 
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1 line one, cost-effective efficiency curves and where 

2 we have the multiple core steels plotted? Can you 

3 put that on the board? The one that was handed out 

4 I can --

5 MR. PARKER: Oh, the simplified plots?

6 MR. COCKRAN: Simplified plots, yeah. 

7 Everybody has those -- handed it out right after 

8 lunch. But if we look at design line one, if we 

9 consider if we want an even playing field between 

10 silicon steel and amorphous, design line one, the 

11 crossover point is at number one efficiency level. 

12 And then if you go to design line two -- can you go 

13 down to two -- again, they’re even, or relatively 

14 even.

15 PARTICIPANT: At design line one.

16 MR. COCKRAN: At efficiency number one. 

17 Even playing field, both materials are competitive. 

18 If we go to design line three, and again it’s even, 

19 or relatively even at number one efficiency.

20 Design line four, pretty much the same 

21 thing, even at number one efficiency. Five, 

22 amorphous has a little advantage on five. So it’s 

23 not as even as some of the others.

24 So we jump up to design line 11 -- again, 

25 a little advantage for amorphous at number one 
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1 efficiency, but it’s not -- it’s there. And then we 

2 go to the last one, design line 12, and we see 

3 they’re even again. So that’s where we’re coming 

4 from that it’s an even playing field at efficiency 

5 number one. Both materials are competitive and we 

6 can make designs there. And as you go up in the 

7 efficiency levels, there may be some designs 

8 possible and some designs impossible, but they’ll 

9 probably be very expensive.

10 MR. NADEL: This is Steve Nadel. Just to 

11 react to that. I mean we actually think that the GE 

12 data is probably more realistic, and that shows it’s 

13 more at level two that they start being even, and 

14 the other thing, as we said last meeting, if M3 has 

15 a slight cost advantage, then we’re not going to get 

16 much change in the market. We were looking for a 

17 place where the amorphous may have a slight cost 

18 benefit because that would bring another 

19 manufacturer in and help bring more competition in 

20 there, as opposed to just having an overwhelmingly 

21 dominant M3. So we’re looking to push it a little 

22 bit farther, and actually comparing the DOE data and

23 the GE data, the GE data does show the crossover 

24 point happening higher.

25 MR. ROSENSTOCK: Steve Rosenstock, EEI 
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1 But I think, and I appreciate the presentations from 

2 GE and ABB, but again, they’re two of the largest 

3 players, so there might be some economies of scale 

4 with their transformer prices. Maybe this is 

5 showing all the transformer prices for all the 

6 manufacturers, so yes, the largest players might 

7 have a higher crossover point, but the smaller 

8 players might not, so there might -- some of that 

9 might be going on with this graph as well with some 

10 of their data. Again, I’m speaking just looking at 

11 the data here, and I just remember the spreadsheet 

12 of about, like 6000 prices for -- or 2000 data 

13 points for design line, but there’s big 

14 manufacturers and small manufacturers, and they 

15 might have different price points at each of the 

16 design lines. So, again, there’s that issue as 

17 well.

18 MR. PATTERSON: Wes Patterson. Richard, 

19 if you could put that PDF up, and before I start I’d 

20 like to thank General Electric, Carlos, because your 

21 presentation, I think, helps demonstrate potential 

22 error I saw in Steve and Andrew’s selection of EL4. 

23 They correctly interpreted the data that we can 

24 build at EL4, but hopefully I can illustrate how it 

25 matches. It’s a very complicated drawing.
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1 PARTICIPANT: Crystal clear.

2 MR. PATTERSON: Take it back to where you 

3 can see the whole thing. Where you can see all the 

4 dots. This is the discussion I have going on with 

5 Mike. These colored dots are the DOE data. And 

6 this is on log-log scale. These are not linear 

7 relationships, they are power relationships. And do 

8 me a favor and just toggle to the next slide. Put 

9 it in display mode and just flip.

10 This is without all my garbage clouding it 

11 up. And here you’ll see this bright spot here that 

12 exists, and this is conventional grain-oriented 

13 steel from the OPS calculations, and this is the 

14 amorphous steel from the OPS calculations. And this 

15 line represents the reduction in loss versus the 

16 change in price. So the slope of this line is the 

17 key driver to the economic analysis. 

18 My understanding is that the LCC 

19 calculation walks along this bottom curve here, so 

20 it comes up here and it says, okay, at EL3, I don’t 

21 find any conventional grain-oriented steels. The 

22 bottom -- when you select these bottom points, these 

23 bottom points have no CGO steel in them. Back to 

24 the one with the red dots.

25 Now when you look at the actual design 
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1 space that the market place drives, it’s all these 

2 red dots, and this is our DOE level and if you look 

3 at the scaling, you’ll see that the pricing is an 

4 order of 300 percent from the cheapest thing to the 

5 most expensive thing. And if you scale this thing 

6 out, you’ll see that as the losses go up, because of 

7 the market that we see today, this thing converges. 

8 It converges on the SA’s material, on the Metglas 

9 material. 

10 And if I look into this EL3 space, you see 

11 all these red dots here, right, those red dots, if 

12 you look real close, none of them are round dots. 

13 And on this red chart, every round dot is an 

14 amorphous unit and every non-round dot is a 

15 conventional grain-oriented design that we shift 

16 into the market place. And there are no round dots 

17 from ABB at this level. I don’t start using 

18 amorphous until I get close to EL5 levels. That’s 

19 where today, it is an economic benefit. Is this 

20 clear?

21 MR. ROSENFELD: Excuse me, this is Art 

22 Rosenfeld. I can’t hear whoever’s speaking, so can 

23 you speak a little closer to some microphone?

24 MR. PATTERSON: Sorry about that, Art. I 

25 am saying that when you examine this chart, the 
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1 round dots that are on this chart are amorphous 

2 material. And we do not see an economic benefit to 

3 building amorphous until I start to approach EL5. 

4 And the market place variety of orders that I have 

5 received have not really given me any design 

6 requirements to fall between the EL4 barrier and 

7 close to the EL5 barrier. It’s just a white space. 

8 There were no requirements to fit into that space.

9 However, as soon as I hit the EL4 barrier, 

10 I start producing with conventional grain-oriented. 

11 So, to me, this says we can build at this level, but 

12 it’s stretching the limit. It is reaching the upper 

13 level of what is achievable. 

14 So my position would be we should not 

15 advocate EL4 because I can build a unit that fits 

16 there, we should find the economic sweet spot, which 

17 is somewhere below EL3.

18 MR. PARKER: Below EL3 and above what?

19 MR. PATTERSON: It’s EL3 and -- well, pick 

20 your spot. Make your arguments back and forth, but 

21 from producing transformer perspective, I can go 

22 south of the EL3 line. 

23 The other thing I want to point out here, 

24 one more thing. The one concern that I have in the 

25 entire analysis that remains unresolved is the slope 
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1 of this line. And on this chart, this solid line is 

2 the line produced by the OPS designs. Mike has 

3 pointed out that they put together a Monte Carlo 

4 analysis in selecting these points and it’s not 

5 really that line, it’s some other line. But this is 

6 the critical factor in figuring out the cost benefit 

7 of our discussion. Using just the design data, the 

8 solid line here is ABB’s pad mounted line. And this 

9 dotted line is ABB’s pole mounted line. And the 

10 pole mounts increase at a much higher rate, cost 

11 versus efficiency level, than the pads. That’s the 

12 physics of it.

13 MR. PARKER: We discussed that. So from 

14 your standpoint, what would be the sweet spot? What 

15 would be your proposal?

16 MR. PATTERSON: I’d pick in here, See all 

17 these dots in here.

18 MR. PARKER: Could you say that for the 

19 record, though, because --

20 MR. PATTERSON: EL1 to EL2.

21 MR. PARKER: Between EL1 and EL2.

22 MR. PATTERSON: My perspective is where I 

23 have all these dots, which is EL1, EL2, in that 

24 space.

25 MR. PARKER: And is this for -- does this 
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1 same analysis apply to all the design lines, or are 

2 they separate? You would have a different point for 

3 each design line, right?

4 MR. PATTERSON: My slopes are changing, 

5 but the scatter spread of the points in this area 

6 are laying in the same general area. So from my 

7 perspective, I would say we’re still looking at an 

8 EL1 to an El2 split.

9 MR. PARKER: Okay. Thank you. Ray, did 

10 you have something?

11 MR. POLINSKI: Ray Polinski, ATI Allegheny 

12 Ludlum. Just to -- for Wes’ point, he’s saying that 

13 the ones in the upper -- to the left there in the 

14 three and four are exceptions to the rule and I say, 

15 again, I hate when we start -- I still don’t like 

16 when we look at different -- this part of this 

17 database, and this part of another database, because 

18 so many variables change. Wes, does your company 

19 have an inherent, maybe higher cost, associated with 

20 making an amorphous transformer than maybe the base 

21 case that was studied by LBL? I think we can never 

22 -- we can’t compare different data sets. We’ve kind 

23 of said that the LBL dataset is the one we are going 

24 to use, and it’s good looking at this stuff, and 

25 until the LBL database changes, I believe our 
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1 decisions of this committee have to be made based on 

2 the LBL data which shows the efficiencies in the 

3 zero to one.

4 MR. PATTERSON: Richard, if you could flip 

5 the next slides. If we were to discuss only LBL 

6 data, then we’re discussing this dataset. This 

7 dataset is a subset of what the market place 

8 procures. This is not something that can be argued 

9 otherwise. It’s an arbitrary subset, not selected 

10 by a consideration of efficiency, but selected by a 

11 consideration of A, B, life cycle owning cost. 

12 Given that, we have this hole here, and it’s that 

13 hole that has to be resolved in the LBL analysis if 

14 we are to base it on the DOE data, which I think we 

15 can do. I think if we -- just engineering --

16 general engineering principles, this hole can be 

17 filled in. It’s illustrated in GE’s data. It’s 

18 illustrated in ABB’s data. We can base the entire 

19 analysis on the DOE data once we confirm these 

20 slopes.

21 MR. RIVEST: Mike Rivest. I wasn’t going 

22 to say it, but I’ve got to say something about this. 

23 I think that -- so the slope that’s drawn there for 

24 the OPS modeling is essentially is the slope of the 

25 amorphous, and I think what we’ve seen all along is 
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1 that the way the modeling is done, there’s two 

2 slopes, there’s one for the grain-oriented steel, 

3 which is steeper, and sort of matches the ABB dotted 

4 line. And then there’s the amorphous line which is 

5 lower and flatter. I think it’s just a reflection 

6 of the pricing assumption we have for amorphous 

7 relative to grain-oriented to the large part.

8 MR. PATTERSON: Mike, if you recall, I 

9 sent you a chart where I have shown just the grain10 oriented dots.

11 MR. RIVEST: No, I don’t remember that --

12 it must have been really late that one.

13 MR. PATTERSON: It’s in the same deck, and 

14 when you look at just the grain-oriented, it’s 

15 filling in all these holes right in here. Following 

16 the same basic slope.

17 MR. PARKER: Chuck

18 MR. SIMMONS: Yes, Chuck Simmons, Progress 

19 Energy. Wes, is there any way that you can say what 

20 the cost difference would be, say, from the base 

21 case up through design line 3? Is this indicated on 

22 the Y axis of this chart?

23 MR. PATTERSON: The answer to that is yes. 

24 Pressing the edge of proprietary information here.

25 MR. SIMMONS: Okay. 
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1 MR. PATTERSON: And which is why I put 

2 this bar here, this gray bar, locking out the 

3 selling prices. But this does reflect it, and if I 

4 could, I would like to have DOE determine this slope 

5 and put in for efficiency level 1, from zero to one, 

6 it meant so much change in price for so much change 

7 in watts. 

8 MR. SIMMONS: We would very much like 

9 that.

10 MR. PATTERSON: From zero to two, so much 

11 change in price for so much change in watts, just 

12 simple chart for each of these E levels. And then 

13 we can confirm it. And this would be the numbers 

14 that are used in the LCL analysis, not the ones that 

15 are from the OPS designs.

16 MR. RIVEST: Which line are you talking 

17 about, Wes?

18 MR. PATTERSON: Where I’ve drawn this blue 

19 line --

20 MR. RIVEST: The ABB line?

21 MR. PATTERSON: No, the blue line for the 

22 OPS data --

23 MR. RIVEST: But that’s -- see, that’s --

24 they really are -- when you think about it, there 

25 really are two lines, so every time we do our price 
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1 sensitivity, we’re varying the slope and the height 

2 of the two lines independently, so we’d be losing 

3 that if we just did one regression.

4 MR. PATTERSON: Yes, but I believe this is 

5 a flaw in the dataset that you have selected. There 

6 is not really a line here and a line here.

7 MR. RIVEST: You mean in the real world? 

8 MR. PATTERSON: In the real world, there 

9 is a continuum that will run.

10 MR. RIVEST: That’s based on your designs 

11 on the previous slides, right?

12 MR. PATTERSON: Yes, there is a continuum. 

13 If you were to filter this data for just pads, you 

14 will find that the bottom end of the pads followed 

15 that line, and the bottom end of those pads matches 

16 this blue line. But that’s not what you used in 

17 your calc. You told me that you used a Monte Carlo 

18 analysis --

19 MR. RIVEST: Oh, no, no. Right. I mean 

20 we supplied, from the engineering, the dots, if you 

21 will, and the dots are down-selected to a lower 

22 number which hugs the bottom of the curve.

23 MR. PATTERSON: And if we could get the --

24 MR. RIVEST: What that looks like?

25 MR. PATTERSON: -- what the -- to go to 
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1 EL1 from EL-zero, what the change in price was for 

2 those dots. I think that --

3 MR. RIVEST: I think that’s on the LCC --

4 isn’t that on your summary table?

5 MR. COFFEY: It’s in the results.

6 MR. RIVEST: It’s in the results, right. 

7 So it’s MSPs --

8 MR. PATTERSON: We’ll take a look and see 

9 if we can find it. Anyhow, my whole point of this 

10 discussion wasn’t to get into this, was to point out 

11 that this is the critical issue, to note that we 

12 have a bunch of red dots in this area, with 

13 conventional grain-orienteds that don’t show up in 

14 the calcs from DOE, and if I was to select 

15 something, I would select something in this spot, in 

16 here with these red dots.

17 MR. RIVEST: This is Mike again. I know 

18 what I was going to say. So when, a while ago, when 

19 we sat down and picked those ELs, there was a 

20 rationale, but as the analysis gets refined, things 

21 move around. EL4 was maxed at conventional steel. 

22 That was the definition of it. So it was the line 

23 that was -- EL4 -- it was the line that represented 

24 the furthest dot. That’s why you don’t need to be 

25 off a little bit, we just reran our optimization 
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1 again and we’re just off a bit, but the idea was it 

2 was back step conventional.

3 MR. PARKER: Steve.

4 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

5 Two follow up questions. I really appreciate the 

6 data, Wes, but is this US data or international data 

7 for some of these?

8 MR. PATTERSON: Wes Patterson. This is 

9 data strictly from our factories in the US. One 

10 factory is an ABB factory, one is Power Partners, 

11 Incorporated.

12 MR. ROSENSTOCK: But are these shipped 

13 domestically or are they shipped internationally?

14 MR. PATTERSON: This has all shipments in 

15 it.

16 MR. ROSENSTOCK: So could -- so some of 

17 these -- some of the ones that you circled -- again 

18 -- Steve Rosenstock, EEI, -- could be going to 

19 international locations with much higher cost, or 

20 the very specific requirements for --

21 MR. PATTERSON: They would have a 

22 different requirement set, potentially. Most of 

23 them go to 60 cycle countries. We don’t ship much 

24 50 cycle at all.

25 MR. ROSENSTOCK: Okay. Second question 
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1 is, again, you said, again, this was a logarithmic 

2 scale, as you said, so really it’s a linear scope 

3 but really in reality you put it on a plain piece of 

4 graph paper, it would show exponential types of --

5 MR. PATTERSON: This is correct. This is 

6 a power equation and it ramps up very fast as you 

7 move to the left.

8 MR. ROSENSTOCK: Thank you very much.

9 MR. PARKER: Andrew.

10 MR. DeLASKI: I’m moving off the data.

11 MR. PARKER: Yes.

12 MR. DeLASKI: So I think this is really 

13 helpful, both from the GE data and what Wes has 

14 presented. I think it helps us understand what’s 

15 happening at EL4, so I really appreciate that.

16 I also -- Wes, you had me on the edge of 

17 my seat there for a moment, I thought you were going 

18 to say EL3. So, sorely disappointed when you said 

19 EL1. 

20 MR. PATTERSON: Andrew. To me, I believe 

21 we can build --

22 MR. DeLASKI: So where’s that sweet spot 

23 is my question.

24 MR. PATTERSON: Up in this level, in 

25 there.
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1 MR. DeLASKI: Right, so --

2 MR. PATTERSON: You can bring it up -- if 

3 I -- let’s be clear, engineering-wise, if I set the 

4 standard at EL3, means I will start to engineer at 

5 five percent better than EL3 to insure my production 

6 gets beamed. Okay. So I’m actually building, 

7 designing, down in this -- to the left side of EL3. 

8 That’s stretching the limit when you look at the red 

9 dots. If I was to draw the line here, I’ve got a 

10 whole lot more red dots to the left side of EL2.

11 MR. DeLASKI: For the record, you’re now 

12 pointing to EL2 as being -- giving you more --

13 MR. PATTERSON: For the record, we will 

14 say I would support EL2 as the preferred point.

15 MR. DeLASKI: Okay. Thank you.

16 MR. ROSENSTOCK: Didn’t you say between 

17 one and two?

18 (Laughter)

19 MR. PARKER: He speaks for himself, Steve.

20 MR. ROSENSTOCK: That’s why I was asking. 

21 MR. DeLASKI: Just to continue -- Wes, you 

22 know, I’m reminded as Wes did this process of 

23 walking down from the left to the right, I’m 

24 reminded of the process the Department has to do in 

25 making these decisions for what a rule has to be. 
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1 That’s -- your mindset here is very similar to the 

2 mindset -- your process of how you walked us back is 

3 very similar to what the government has to go 

4 through in deciding what is a justified standard, 

5 which is what we did when we looked at the data that 

6 was vented over the weekend, or last week, was to 

7 start with the higher levels and say well, where do 

8 you stop? As you go down, where do you stop? And 

9 where we stopped was TSL-4, the concept of TSL-4. 

10 And as I listen to you here, you’re suggesting that 

11 you would stop at something like two, to give you 

12 the comfort that you have multiple suppliers of core 

13 material in that market. 

14 What I don’t think this leads us to is 

15 saying that you go back to something like zero or 

16 one. The data just doesn’t support it. It doesn’t 

17 support that, and that’s what I want to be clear on 

18 is that there’s nothing in the criteria for the 

19 decision-making by DOE that says the magic thing is 

20 that the price of two steels is the same, part of 

21 the walk-down criteria for DOE. So I want to be 

22 cautious about sort of getting locked into this 

23 notion that this parity in price is somehow the 

24 magic answer.

25 Because it’s not necessarily the magic 
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1 answer for happens in a contested rulemaking.

2 There, it’s the seven criteria. It’s not something 

3 that is not -- this holy grail that we seem to be 

4 focused on this afternoon, it is not the only 

5 decision criteria. So I think we have to keep that 

6 in mind while we talk about how to move forward.

7 MR. PARKER: Yeah, I think we’re really at 

8 the point where we need to think about proposals, 

9 okay. So if you have a proposal. Bob.

10 MR. SAINT: Yes, I’d like to react to your 

11 statement, and I agree with your statement, although 

12 I think my conclusion may be a little bit different 

13 than yours. In that, what we’re talking now is the 

14 highest level of efficiency where the 

15 competitiveness of the steel is there. So, this --

16 what we’re talking about now is arguing about the 

17 highest level that -- of efficiency where there is a 

18 competitive market. We’re not talking about -- we 

19 haven’t started talking yet about the total cost and 

20 the price -- the cost for the user. We’re talking 

21 about the -- where it starts to become competitive, 

22 and so that’s the highest level that we can ever 

23 consider. We’ll go down from there with regard to 

24 the life cycle cost and the first cost, and those 

25 kind of costs.
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1 MR. DeLASKI: I guess, Bob -- Bob, right?

2 MR. SAINT: Yes.

3 MR. DeLASKI: I guess I don’t see it that 

4 way. I -- life cycle cost is certainly part of the 

5 decision, it’s a big part of the decision. It is 

6 one of the seven criteria. But when I look at the 

7 DOE data at the end of last week, I mean on 

8 something else -- on the mean LCC basis, we’re right 

9 up to EL6, according to DOE data. So, I think this 

10 is not where we start, this is where we potentially 

11 end. Where we start, where I start, is where it’s 

12 cost-effective for the user, and I know you 

13 represent users, so this is -- look at the data 

14 that’s before us, it’s cost-effective, you know, way 

15 above the levels that we’re talking about. And the 

16 mean pay-backs are less -- at EL2, I mean, the data 

17 given by the government, the mean paybacks at EL2 

18 are 7.5 years --

19 MR. SAINT: Yes, but that’s --

20 MR. DeLASKI: I could read through them. 

21 There’s 7.5 years, 4.1 years, 3.6 years, 17.3 for 

22 the poles, and 4.9 for the last one, so those 

23 paybacks look pretty good.

24 MR. SAINT: And as we said this morning, 

25 we’ve been working with LBL, Lawrence Berkeley 
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1 National Lab and we don’t agree with their analysis 

2 of the load that they’ve used.

3 MR. DeLASKI: So you have to go to the 

4 bottom -- the right-most.

5 MR. SAINT: Right. And they have 

6 acknowledged that those may be wrong, but they 

7 haven’t given us the data yet. And probably won’t, 

8 because it’s been cut off.

9 MR. DeLASKI: (not at mic) But I think the 

10 thing we have to ask ourselves, how much. ... could 

11 be wrong by ten percent -- could be wrong by 50 

12 percent, still have a payback ... unless they’ve off 

13 by a factor of more than 100 percent it’s unlikely 

14 that it will tip it to the point where the LCC’s are 

15 not going to be a payback within the Department’s 

16 life.

17 MR. PARKER: I think we have a load factor 

18 sensitivity analysis that people can look at. I’m 

19 not sure that it’s been circulated yet, but we will 

20 circulate it this evening and you can take a look at 

21 that and see how much of a difference it makes to 

22 the analysis. Jerry.

23 MR. SCHOEN: Jerry Schoen, AK Steel. Wes, 

24 I know the Y axis is proprietary, but what percent 

25 increase is it in the typical cost of going from 
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1 DEL-zero to DEL-2 as a rough percentage in the first 

2 cost of the transformer?

3 MR. PATTERSON: Some rough percentages. 

4 The interim price increase going from 99.5, which is 

5 what I take as my design point, I don’t design 100 

6 percent of the standard because of manufacturing 

7 tolerances, so I don’t go over the standard. So 

8 you’ll see that that is point four percent, and 

9 that’s point five percent, and we’re in good 

10 alignment. That’s this line back in here. At ten 

11 percent reduction in loss, I am at eight percent 

12 increase according to the DOE data, and I’m 11 

13 percent increase according to ABB data. At a 20 

14 percent reduction in loss, I’ve got 18 percent 

15 versus 25 percent.

16 Now, Mike has come back and said when he 

17 looked at this same kind of analysis, his 

18 percentages here were closer to my percentages. 

19 They were in better alignment, I think.

20 MR. DeLASKI: And what is that increase in 

21 first cost as a percent?

22 MR. PATTERSON: This is the percent --

23 MR. DeLASKI: Twenty-five percent?

24 MR. PATTERSON: This is the percent 

25 increase. If we’re looking at DOE, you’re looking 
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1 at eight percent, and if you’re looking at ABB, 

2 we’re looking at 11 percent. Increase in unit 

3 selling price.

4 MR. DeLASKI: Right. So, Wes and I have 

5 been corresponding and Wes calculated the 

6 incremental DOE based on that regression there, 

7 which is really a line through the amorphous. And I 

8 recalculated it based on the MSPs in the LCC, but 

9 it’s not the most recent LCC, it’s the LCC that was 

10 available at the time. And when I calculated it the 

11 same way, I was getting very close to the ABB 

12 numbers, which, you know, made me feel good at the 

13 time and I didn’t know you’d share this with the 

14 world. I wasn’t allowed, but it was a good sanity 

15 check on our stuff.

16 MR. PATTERSON: But I hoped that it helped 

17 you move forward the discussion.

18 MR. DeLASKI: Yes, yes, it did. And it 

19 also, you know, the way it’s prepped here, it’s 

20 improvement and percentage increase in price, so 

21 your base price assumptions -- and that’s part of 

22 the reason why the scope would be quite different 

23 for a pad than a pole, because the base price is 

24 different.

25 MR. PARKER: So I guess, Chris, do we have 
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1 that -- do you have ready the delta, the percentage 

2 price increase versus percentage -- we don’t.

3 MR. RIVEST: No, that’s not what we were 

4 doing. Chris was going -- I think he was reworking 

5 the LCC results tables for the sensitivity analyses.

6 MR. PARKER: Right. I was just wondering 

7 if it was possible to get -- do we have -- I thought 

8 you mentioned earlier that there was -- was a 

9 calculation made of the -- at each EL what the 

10 percentage -- what the incremental cost of --

11 MR. RIVEST: No, Chris has actual dollars. 

12 The has the MSP at each EL as part of the standard 

13 outputs.

14 MR. PARKER: Is it hard to convert that --

15 MR. RIVEST: You know, you don’t set up a 

16 comparison or we’re going to have to compare dollars 

17 because we can’t be sharing the dollars here.

18 MR. PARKER: Right, that’s why I was 

19 thinking about looking at it in terms of 

20 percentages.

21 MR. RIVEST: All right. But is this 

22 necessary? I mean, we’re stepping back into the 

23 engineering.

24 MR. POLINSKI: Ray Polinski, ATI 

25 Allegheny. Just again, we’re continually trying to 
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1 compare apples and oranges with these different 

2 studies, and so, Mike, I heard you saying that this 

3 here -- Wes, excuse me, is showing that the cost 

4 penalties or the increased costs are much greater 

5 than the LBL analysis. So if you would use Wes’ 

6 numbers then the savings would be less than are 

7 shown by the other.

8 MR. RIVEST: Okay. Have a look at that 

9 graph. All right. Have a look at the line that Wes 

10 bases his numbers on for DOE. It starts at the 

11 lowest first cost transformer for OPS, and it goes 

12 through the amorphous-aluminum-aluminum line. Okay. 

13 Now, truncate that and just look at the asymptote 

14 where the ... steel -- it’s a much sharper line. SO 

15 for -- so in fact, OPS predicted prices are higher, 

16 are steeper for the grain-oriented steels, and what 

17 that -- and that line, that blue line, really, is 

18 applicable only for the amorphous levels.

19 PARTICIPANT: But Mike though -- excuse 

20 me, I’m sorry if you were not finished.

21 MR. RIVEST: Okay. So the exercise I did 

22 earlier, where I was moving two curves, one is the 

23 grain-oriented, and the other one is C-amorphous. 

24 Both those have different slopes. And I talked 

25 about which was the controlling line in the LCC, so 
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1 as -- the controlling line is the one that yields 

2 the lowest first cost. So the incremental cost up 

3 to amorphous parity is the grain-oriented, and then 

4 the controlling slope is the one of the amorphous.

5 MR. PATTERSON: Mike, right here I have 

6 amorphous designs kicking up and showing that they 

7 are considerably cheaper than the grain-oriented --

8 MR. RIVEST: Right.

9 MR. PATTERSON: -- between EL2 and EL3.

10 MR. RIVEST: Right. Exactly. 

11 MR. PATTERSON: But my data says that’s 

12 not reality. Reality says that these grain-oriented 

13 designs are much closer to this line here.

14 MR. RIVEST: So what you’re saying, Wes, 

15 is that you think there’s only one slope. There 

16 isn't two slopes?

17 MR. PATTERSON: That is correct. That’s 

18 what I said.

19 MR. RIVEST: And that OPS is too sharp a 

20 slope in the grain-oriented section and too shallow 

21 in the amorphous.

22 MR. PATTERSON: This is correct.

23 MR. RIVEST: We’re agreeing.

24 MR. PATTERSON: Mike, and the reason why 

25 is because they don’t have -- OPS doesn’t have any 
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1 dots in this space.

2 MR. RIVEST: Right. But essentially if I 

3 were to run a straight line regression through 

4 those, we get the slope in between. And that’s what 

5 I get when we use the actuals.

6 MR. PARKER: So the question is what do we 

7 do about that now for purposes of arriving -- moving 

8 forward today? And the question is what, you know, 

9 would it make sense to go through and look at --

10 excuse me, could we have everybody’s attention 

11 please -- would it make sense to go through and look 

12 at what the max --

13 MR. RIVEST: I don’t think -- there’s 

14 nothing to do. You can make the OPS grain-oriented 

15 steel more shallow by reducing the price of grain16 oriented, that will make it more shallow, and you 

17 can increase the slope of the amorphous by 

18 increasing the price of amorphous. That was my --

19 how I started all this by saying that it is my sense 

20 by comparing this data to real world data, is that 

21 the incremental cost of amorphous relative to the 

22 grain-oriented that we’ve modeled, are not 

23 representative of the market. That would be, in my 

24 mind, confirmed also by the GE data.

25 MR. ECKMAN: What I take from Wes’ data 
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1 and from GE’s data is that at least EL2 and 3 are 

2 certainly, for EL2, that the grain-oriented prices 

3 that are in the LBL model are higher than they are 

4 reflecting in terms of their products. That the 

5 slope is shallower for the grain-oriented. Or 

6 amorphous is more expensive. But there’s less 

7 differential in the price of the two steels, 

8 whatever they are, whether they’re higher or lower.

9 MR. RIVEST: Yes, there’s less in the DOE 

10 analysis than there is in the real world. Which, 

11 you know, if we did that would change the overall 

12 slope to be more consistent with Wes’ because the 

13 amorphous would go up, but the grain-oriented would 

14 come down, and the slope of the grain-oriented would 

15 come down, and the slope of the amorphous would go 

16 up. And you would get that convergence I showed 

17 earlier, which becomes a straight line.

18 MR. PARKER: So, Aaron.

19 MR. MEYERS: Aaron Meyers, Cooper. I’m 

20 not fully understanding why there’s only one curve 

21 and not two. From our perspective, the grain22 oriented slope is quite steep, so the speculation 

23 that the grain-oriented slope is shallower than 

24 what’s the data showing, I have not seen anything --

25 MR. RIVEST: Well, it’s very steep right 
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1 now. Remember, this is an exponential - this is a 

2 log graph, and it’s exponential on a log graph.

3 MR. MEYERS: Yeah, on a log graph, the 

4 bell shape becomes linear. I’m just saying the 

5 slope of that linear line is not shallower than 

6 what’s shown, or I’ve not seen anything to 

7 substantiate that claim. People are speculating, 

8 and I just want to point that out. The space there 

9 in no man’s land, I’m not quite clear how or why 

10 there are ABB designs that are in there and since 

11 we’re speculating, if you had an amorphous design 

12 that you could build there, why would you sell it 

13 for the price that coincides with the purple line, 

14 when your next best alternative -- is much higher. 

15 So if you did sell an amorphous design there you 

16 could get more money for it, wouldn’t you do that?

17 MR. PATTERSON: This is OPS data, not ABB 

18 data.

19 MR. RIVEST: Right. These are not scales.

20 MR. PATTERSON: ABB data has no amorphous 

21 designs in all of this space, starting from about 

22 the middle of between EL4 and EL5, and down, 

23 amorphous is not economical for any combination of 

24 ratings that we have seen.

25 MR. MEYERS: Is it strictly economics, 
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1 Wes, or is it -- is there some other dynamic at 

2 play? And I don’t need to know what it is, but --

3 MR. PATTERSON: No, guys, we’re all in the 

4 same market place. We all compete in the same game. 

5 So you get a spec from a customer, and there’s a lot 

6 of variety of requirements in the spec. And then 

7 you run it through your engineering systems to get 

8 the lowest possible offering price to give to this 

9 guy to meet his requirement. Then you hand it to a 

10 marketing guy who either jacks it up or takes it 

11 down, depending on what he thinks the guy’s going to 

12 buy. I mean, this is the game that’s played. So 

13 the data I show is the end result of that entire 

14 process.

15 MR. PARKER: So let me just see if we can 

16 come up with an approach for narrowing the 

17 differences. We started off with the advocates 

18 proposing EL4 almost across the board. And others 

19 saying that at least for certain design lines, that 

20 is just not technologically feasible, right, that’s 

21 just -- or at least you’d have to pay people to take 

22 the transformer. 

23 So I’m wondering if we might just work 

24 through the design lines and see if we can at least 

25 agree on that upper bound, and then do the same 
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1 thing is and see if there is any light we can shed 

2 on the lower bound so that we can at least put 

3 brackets on the range of disagreement. 

4 With the analysis that we have, and I want 

5 to emphasize that I wasn’t really proposing more 

6 analysis, I got excited when I thought the analysis 

7 for the delta efficiency over delta price had 

8 already been done for each EL, but if it’s not, it’s 

9 not. Does this make sense as a way to go forward to 

10 just look at what is the sort of -- I guess there 

11 was the point that you raised in the prior meeting, 

12 Andrew, is that the point at which there really is 

13 no technological choice, or at least no practical 

14 choice of metals, and see if we can get closure on 

15 that and then do the same thing on the other end. 

16 And see if there’s any way that we can explore that 

17 there might be overlap.

18 MR. DeLASKI: I think it could be useful. 

19 I think what -- I think we had this conversation 

20 from after lunch is that, as I said before, we hear 

21 the arguments around EL4, and we hear -- what we had 

22 talked about at our very first meeting, this notion 

23 of looking at a design, looking at levels where 

24 they’re technically feasible, and then looking at a 

25 level where there is a level of competition and what 
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1 I’m hearing from ABB and from GE is that here’s a 

2 level where they see competition among the suppliers 

3 of core materials. 

4 So, now is that -- and again, the walk 

5 down from, you know, because the purpose of the law 

6 is energy savings, and as you do the walk down, so 

7 okay, so just thinking about EL3, so the question 

8 for us then in our mind for EL3 is, well, what is 

9 that price differential -- and again, we can keep 

10 feeding it all kinds of assumptions, but back to 

11 Aaron’s point, there is a point at which, you know, 

12 the speculation about prices over a very long 

13 analysis period and you’ve got to -- you’ve just got 

14 to make some assumptions. 

15 So we think that -- as I think about these 

16 price differentials that, you know, EL3 may pan out. 

17 I’m not sure, but that seems like something that may 

18 very well pan out. But what I’ve heard, there’s a 

19 pretty strong case from two manufacturers that EL2 

20 does pan out the way they see the world. So I guess 

21 I’m curious what other people around this table 

22 think about that concept of EL2. That would be 

23 helpful for me to hear.

24 MR. PARKER: Okay. This is for -- this is 

25 for one design line, this slide, right?
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1 MR. DeLASKI: I think we can go across the 

2 board.

3 MR. PARKER: It’s across the board?

4 MR. NADEL: This is Steve Nadel. I’m 

5 basically hearing everybody focusing on EL levels, 

6 rather than TSL levels which kind of mix and match 

7 across ways that I -- I didn’t hear between the 

8 lines, maybe didn’t quite make sense.

9 MR. DeLASKI: EL2 is what I believe we’re 

10 talking about, which I think EL2 works out to about 

11 15 percent cut in losses relative to the baseline. 

12 We had suggested EL4, which is a 25 percent. In 

13 rough, round terms, EL3 is about a 20 percent cut in 

14 losses. So that’s kind of what we’re talking about.

15 So, I’ve heard, you know, some pretty strong case 

16 for EL2, and I wonder what other people around the 

17 table think about it. 

18 MR. PARKER: Rob.

19 MR. GREESON: Rob Greeson, Federal 

20 Pacific. Hats off to the presentation of the data, 

21 I think that’s a pretty slick way to represent the 

22 information and I appreciate the effort that Wes has 

23 put in, and also Navigant to do all this. But, you 

24 know, as far as a dry type person looking at this, 

25 one of the concerns, and it struck me again this 
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1 morning, from the utility guys saying hey, if my 

2 prices go up 15, 20 percent, the rebuild market’s 

3 going to go through the roof. I can’t get that out 

4 of my head. And when the question was asked a 

5 minute ago, what would it take to get to the EL2 --

6 to EL1, ABB’s number was 11 percent, and to get to 

7 EL2, it was approximately 25 percent. You’re in 

8 that area of shifting an industry into the rebuild 

9 market, it seems like to me, and I’d just like -- I 

10 haven’t heard the advocates side kind of address 

11 that concern. Although I did hear the Navigant 

12 consultant say they modeled it -- I’m not sure that 

13 -- in other words, it may be a bigger effect than 

14 people realize and I think if I was a utility, I’d 

15 be looking at that pretty hard. I’d just like to 

16 hear other people’s comments on that, thank you.

17 MR. NADEL: This is Steve Nadel. We’re 

18 now talking about the liquid immersed, the utility 

19 market, basically. As someone who used to work for 

20 utility and does a lot of work with utility 

21 regulators, yes, some utilities will try to save 

22 costs, but as soon as the regulators realize that 

23 their life cycle cost savings, and we can educate 

24 them, I imagine there would be a lot of pressure 

25 from the regulators to say no, you need to minimize 
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1 consumer costs not just take the short term thing. 

2 As someone pointed out to me over lunch, 

3 you rewind something, it’s probably to decrease the 

4 efficiency, not increase it, and so there’ll be an 

5 even bigger efficiency gap there.

6 MR. GREESON: Rob Greeson, Federal 

7 Pacific. I’d like to get a rebuttal from the 

8 utility guys, but I think that they would be better 

9 equipped to answer the question, but I don’t know 

10 that the economics, from their standpoint, they can 

11 justify those long, long term savings like some of 

12 the assumptions in the analysis, but I’ll defer 

13 that. Thanks.

14 MR. ANDERSON: Bob, you’re exactly right. 

15 We’re right at that point where we’re seeing 20 to 

16 25 percent increase in the first cost, and what we 

17 talked about over lunch was that we probably would 

18 pursue the rebuilding market in that initially maybe 

19 our losses would be poorer than buying a new 

20 transformer today, but as those rebuilding guys got 

21 educated and became better at what they did, 

22 hopefully we would get rewound transformers that are 

23 closer or have maybe not exactly as well as a brand 

24 new transformer, but pretty close. And I think 

25 you’re right. You go a little bit -- at EL2, 
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1 Andrew, 20 or 25 percent, so that makes us really 

2 take a step back and say, do we really need to push 

3 for that rebuild market. And I think we’re at that 

4 edge. At EL2, it begins to make sense.

5 MR. DeLASKI: The number 25 percent, I 

6 believe, was tossed out by Wes. This is Wes’ 

7 number. A lot of these numbers are coming from you.

8 MR. ANDERSON: I was thinking of using 

9 that earlier example on a 50 KVA pad, and somebody 

10 corrected my math during lunch. But they use the 

11 same example with the corrected math at EL2, you 

12 know, we’re at -- we’re over 20 percent.

13 MR. DeLASKI: Right, so right now there’s 

14 no market to speak of in rewinding transformers. 

15 MR. ANDERSON: (off mic) There is a 

16 substantial ... in the power transformers.

17 MR. DeLASKI: In the power transformers, 

18 but in distribution transformers in the sizes 

19 covered by this rulemaking --

20 MR. ANDERSON: Not substantial. You have 

21 the indication of what will happen.

22 MR. DeLASKI: Yeah, based on power 

23 transformers, so you’re, you know, I began this 

24 conversation by saying can we move this to a 

25 discussion of trying to get to “yes.” If this group 
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1 is moving in that direction, then we can probably 

2 figure out where we’re going to go from here. So we 

3 came here to try to see if we could find a way 

4 forward, okay. Now, maybe there’s no way forward. 

5 But we’re suggesting that -- that if you look at 

6 what you’re hearing major manufacturers say can be 

7 done, and is a crossover where there is competition 

8 in the market place, that gives you a pretty good 

9 indication of where a standard is going to go, or 

10 better. Now, the notion that you’re going to come 

11 out and make a speculation that the market’s going 

12 to flip, that there’s going to be this incipient 

13 market for rewind services, doesn’t exist today and 

14 therefore convince the agency not to do a standard? 

15 It’s not going to happen. 

16 So I would suggest that either we’re going 

17 to talk about levels, or we can -- or we probably 

18 need to figure out, moving on to the medium voltage 

19 dry type. So that would be my suggestion.

20 MR. PARKER: I think that we need to talk 

21 about levels. I think we need to talk about levels 

22 for just a few minutes. We don’t want to -- it’s 

23 3:30 now, and I do want to emphasize one thing that 

24 Andrew said that is that, you know, in the absence 

25 of an agreement, the Department is going to move 
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1 forward with a rule on the basis of the analysis 

2 that they have, that I think has been greatly 

3 improved by the input of this group, but it will be 

4 on the basis of the analysis that they have. So we 

5 really need to see what we can do with this analysis 

6 to try to get to yes. So, let’s -- let’s really 

7 think now about what we can propose that would move 

8 the ball forward. Richard.

9 MR. ANDERSON: EL1, I think that’s the 

10 edge for us. I’m just going to cut right to the 

11 chase and -- but it has to do with cost and it’s 

12 EL1, and I’ll probably going to get yelled at for 

13 agreeing -- flip to that.

14 MR. PARKER: Steve.

15 MR. ROSENSTOCK: Just a quick one to 

16 follow up -- Steven Nadel talked about the TSLs and 

17 that’s on slide 18 of your number four, and I just 

18 want to point out, I think it would be much better 

19 to talk about ELs rather than TSLs, just for the 

20 fact that looking at the TSLs that are shown in the 

21 slides here, there’s TSLs one, two, three, four, 

22 five and six, and they show equipment classes for --

23 I think it’s -- well, it’s just a single phase/three 

24 phase. The fact is, all the TSLs except for TSL-4 

25 all contain an efficiency level of four or higher. 
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1 So, again, I think it would be better if we just 

2 talk about ELs because of the TSLs that are shown on 

3 this chart -- yeah, that’s the one -- the only one 

4 that shows levels below four is TSL-4. So, again, I 

5 think we’re much better off as we go forward, 

6 ignoring this TSL chart -- I’m sorry to say that, 

7 but we’ve got to ignore this TSL chart, because some 

8 of the levels in here, there’s just no way that we 

9 can get consensus on most of these TSL levels. At 

10 least one, two -- as far as I can tell -- one, two, 

11 three, five, and six contain some -- just levels 

12 that I don’t think we can get consensus on, based on 

13 the DOE analysis.

14 MR. NADEL: Steve Nadel. First, Steve 

15 Rosenstock, you and I agreed that what you just said 

16 was similar to what I said about five minutes ago. 

17 Let’s focus on ELs , not TSLs. I just did a quick 

18 little poll -- thank you Richard for suggesting EL1. 

19 We just said we’ll take our chances at DOE. We 

20 think DOE will wind up higher, and I would encourage 

21 you to think not what you’d do if you were the 

22 decision-maker, but whether you think you can do 

23 better with a contested rule versus not. And I’d be 

24 curious what other people think.

25 MR. PARKER: Eric?
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1 MR. PETERSEN: Eric Petersen, AK Steel. 

2 Not being familiar with this type of meeting, this 

3 is my first one, one of the things that I heard 

4 early on was that the benefit of this negotiating 

5 committee is you can bring a number of different 

6 perspectives to the DOE outside of what is normally 

7 considered. While I recognize that recycles is not 

8 something that’s normally considered, we have 

9 sitting at this table those people that would make 

10 the decisions associated with what they would do if 

11 an efficiency level was enacted. 

12 So I would think that we, as consumers, 

13 that want to see whatever goes into place actually 

14 be of benefit, would seriously consider the position 

15 of the people that are making the decision as to 

16 whether or not they replace, or whether or not they 

17 recycle. So I think that the position associated 

18 with the utilities choosing to tell us that this 

19 would create a market for recycling which would thus 

20 not enact any efficiency standard that we think 

21 we’re going to get, would be something that we would 

22 truly want to consider and appreciate the value of 

23 this negotiating committee, because it brought the 

24 points to the table so that we could seriously 

25 consider it. 
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1 So as opposed to throwing it out, I 

2 thought that was the benefit of why we had the 

3 negotiating committee in the first place, so that we 

4 could hear points like this. So personally, I think 

5 that those points should well be understood. 

6 Because if we’re going to make a decision that could 

7 potentially push an efficiency level beyond what we 

8 can actually get, that’s the information that we’d 

9 certainly want our Department of Energy to 

10 understand.

11 MR. ROSENSTOCK: And may I add one more 

12 point. Again, based on this analysis where, again, 

13 economically you’re pretty much -- anything about 

14 efficiency level one for most design lines, people 

15 are going to choose amorphous, again, based on this 

16 analysis, based on these slides, and if it has an 

17 impact on domestic steel makers and domestic jobs, 

18 where people are going to be thrown out of work or 

19 there’s more factories moving overseas, sorry, 

20 apologies all the NEMA members here, that, to me, is 

21 not a good result. I’m sorry. Speaking for myself, 

22 not for EEI, for myself. Seeing what’s happening to 

23 our manufacturing industry over the last 20 years, 

24 and also remembering what happened with Whirlpool 

25 last week, announcing that they’re closing a plant 
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1 in Arkansas that made refrigerators, and that the 

2 production is moving to Mexico, you know, these 

3 things are happening and these decisions do have 

4 impacts domestically. So, again, I think we all 

5 want to negotiate but we also want to think about 

6 some of the other impacts that could be happening as 

7 a result of these decisions, and again, based on 

8 this data. I’ll stop there.

9 MR. FERNSTROM: This is Gary Fernstrom 

10 from PG&E. I’d like to respond to Steve’s comments. 

11 I heard the news reports last week about the 

12 Whirlpool plant closure, and we do need to be 

13 concerned about jobs in this country. But I also 

14 heard a debate or an economic analysis from a 

15 professor of economics at a university nearby, and 

16 he made the point that we can all relate easily to 

17 the burden that these plant closures place on 

18 individual Americans who are having their jobs 

19 displaced. And those incidences are very visible 

20 and very painful.

21 But he went on to say we may not see the 

22 benefit that reduced prices bring to all Americans 

23 in household appliances. All Americans are less 

24 organized and less visible than the unfortunate ones 

25 that become the victims of these closures. So I’d 
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1 like to make the point that pretty much every 

2 American family is a purchaser of electricity for 

3 their home and it’s important that we make the right 

4 investment decisions in terms of standards for the 

5 country so that we can have the lowest price for our 

6 electricity. I think the --

7 MR. PARKER: Gary, we’re going to have to 

8 -- finished? Okay. First, I think, you know, DOE 

9 is going to have to think about an array of factors, 

10 right. One of them is energy efficiency and 

11 consumer costs, and one of them is manufacturing 

12 impacts as well. Those are all criteria that will 

13 be considered. And I think what we should focus on 

14 is the things that we have in common, which I think 

15 I’ve heard around the table that there is a 

16 consensus that we do want to preserve competition in 

17 the steel industry, that this is not something that 

18 the advocates are insisting not happen. They’re not 

19 insisting on pushing towards a monopoly for 

20 amorphous. 

21 And the question is, how can we find that 

22 sweet spot. And it’s not a question of, you know, 

23 just of LCCs. If you look at the LCCs, you see it, 

24 it pushes you -- at least if you take those numbers, 

25 it pushes you to very high ELs. But I think there’s 
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1 a recognition, a realistic recognition that there 

2 has to be a concern with manufacturing impacts, so I 

3 think that is stipulated. And the question is, how 

4 can we find what that spot is? That’s where we were 

5 in September when we were talking about this, and 

6 we’re still struggling with that, but I think that 

7 we should really focus on trying to find what that 

8 spot is and see if -- if the data can get us there, 

9 or horse trading can get you there. But what I 

10 understand is that so far today we have concluded 

11 that there are some models where EL4 is definitely 

12 not viable. And there are some levels where moving 

13 beyond EL1 might be possible. That’s what I’m 

14 hearing so far. And I guess the -- what I would 

15 like to throw out there is -- is there a way that we 

16 can just work in a workman like way through these 

17 design lines and bracket the range of disagreement, 

18 bracket the range of possibilities, not by focusing 

19 on what the DOE analysis ought to be, but on what it 

20 is. Because if this group dissolves, it will be 

21 what it is.

22 MR. CYMBALSKY: John Cymbalsky, DOE. So 

23 obviously I can’t presuppose an outcome here, and I 

24 won’t do that. But everyone should know that 

25 everything that was said here is a matter of public 
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1 record, and if this process does break down, this is 

2 the public record on this rulemaking and that is --

3 we know a couple companies came out and said, this 

4 is what happens at number two, this is what happens 

5 at number four, whatever the numbers are. But just 

6 so that you know, if this does break down, we don’t 

7 get a yes, everything that was said here goes into 

8 our NOPR, into our proposed rulemaking. So, from 

9 what I’ve heard today, I’ve got a good running start 

10 on my analysis, if we don’t get it here in the room. 

11 So I would encourage everyone to try to get to a yes 

12 before we get off this product. Because I think me 

13 and my group have a good head start on what we need 

14 to do.

15 MR. POLINSKI: Ray Polinski, ATI 

16 Allegheny. John, again, the point is, you know, 

17 Steve makes his comments over there and he kind of 

18 suggests he knows what the DOE’s going to determine, 

19 and again, based on the data, it’s -- one’s max. I 

20 mean based on the data, my experience, and Richard 

21 used the terminology -- not my words, Richard used 

22 the terminology monopoly or whatever, but I’m 

23 familiar usually where the government is working to 

24 try to bring down non-competition and saying AT&T 

25 and T-Mobile, you guys you can’t join together. And 
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1 so I’m not used to the government mandating a 

2 monopoly or whatever. So it’s in the charter, 

3 impact of lessening the competition. So again, we -

4 - it seems that zero -- we should vote on 

5 negotiating between zero and one, where I think a 

6 lot of people have been, based on the data. Now if 

7 the data changes and if it says based on the data --

8 you know, based on the data, my interpretation, 

9 we’re set between zero and one.

10 MR. DeLASKI: Our interpretation of data 

11 is totally different as you know. We can keep going 

12 back and forth, but I’m not sure --

13 MR. POLINSKI: But we’re --

14 MR. DeLASKI: But see, you -- but the data 

15 suggests that there is competition, that there is 

16 multiple steel beyond level zero and one. So we can 

17 keep -- you can keep asserting it, but that’s not 

18 what we’re seeing on the screen and on the record.

19 MR. PETERSEN: But we’re talking about the 

20 DOE data. Eric Petersen, AK Steel. DOE data on 

21 pages 13, 14 and 15 shows that the efficiency level 

22 1 is the only efficiency level at which a grain23 oriented electrical steel would still compete. So 

24 we agree, we’re talking about the data. All the 

25 data says on design line one it’s the only one 85 
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1 percent M3; at design line 2 for efficiency level 1, 

2 100 percent amorphous. And design line 3, 19 

3 percent ZDMH, 80 percent amorphous. That’s the 

4 information we’re looking at in regards to this 

5 data. As Mr. Saint emphasized, we’re looking at the 

6 upper range at which you could potentially compete. 

7 But when it comes down to it, what was actually 

8 used, and the DOE did a very good job of laying that 

9 out on pages 13, 14, and 15.

10 MR. DeLASKI: Yeah, I think what we heard 

11 earlier today, what I heard is that that cliff is 

12 not accurate and that the -- like I showed you what 

13 is the model we’re showing as the least cost option 

14 based on the prices that were input and that that’s 

15 not observed in the market today. So, frankly, what 

16 that data shows you is that M3 has the market at 

17 zero and one. That’s all it shows you is that the 

18 M3, the M3 suppliers have the market, and there’s 

19 not competition from the advanced materials. We 

20 would think a market in which the advanced materials 

21 compete is what’s achieved by the higher levels. We 

22 can keep arguing back and forth, but that’s -- we 

23 see the world differently on this score.

24 MR. PETERSEN: I’m just simply looking at 

25 the data.
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1 MR. NADEL: It comes down to do you want 

2 to believe the DOE analysis which is set up where as 

3 long as there’s a $2.00 difference in the cost of 

4 $1000 transformer, it kicks it over and it kicks 

5 over. Or do you believe the market data which shows 

6 that people are selling at these different levels, 

7 many different designs at efficiency level 2, 

8 there’s lots of M3 being sold. It’s not all 

9 amorphous. In fact, very little of it is amorphous. 

10 Do you go with the model? Do you go with the 

11 market? But it comes down to, do we each have faith 

12 enough in what our views are that we just leave it 

13 to DOE, or do we each say, no, don’t want to leave 

14 it at DOE and therefore there’s going to need to be 

15 some open.

16 MR. PARKER: Eric.

17 MR. PETERSEN: Yesterday transformer 

18 manufacturers met with NEMA in an effort to get a 

19 consistent agreement on how to go forward, and I 

20 think that what we were attempting to determine was 

21 to determine what the maximum efficiency level was 

22 that could be built. And we were leaving the 

23 economics up to the DOE. So Wes, earlier you were 

24 commenting about efficiency level 2, and we concur 

25 that you can build a transformer there, but as 
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1 evidenced by the slope of the grain-oriented cost 

2 curves, there would have to be some significant 

3 economics that come into play in order to make that 

4 a competitive landscape with amorphous. And we’ll 

5 leave that -- I’ve heard some testimony here from 

6 the steel guys, and my reaction from those guys is 

7 they can’t get there at those efficiency levels. 

8 So, I think you need to consider the slope of the 

9 grain-oriented cost curve in determining where you 

10 can get.

11 My next point regarding efficiency levels 

12 two and the data that Wes shows, and Wes said it a 

13 couple times, that it’s all of ABB’s data. It’s not 

14 limited to DOE-compliant units. So you could have a 

15 unit in there that’s 14,400 volts, dropping to 7200 

16 volts, and that might be way more efficient than a 

17 DOE-compliant design, and you might build it out of 

18 M3. You can’t tell from that data whether it fits 

19 within the scope of the DOE context or not. So use 

20 caution in evaluating the ABB data. I’m not saying 

21 that it is or it isn’t, but reverting back to the 

22 DOE’s data which limits the scope to units that 

23 comply, I’m seeing evidence that supports an 

24 efficiency level more in the zero to one range as 

25 well.
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1 MR. PARKER: Ray.

2 MR. POLINSKI: Ray Polinski, ATI 

3 Allegheny. And again, the group recognizes this, 

4 but we’re developing as standard that has to stand

5 the test of time of 30 years. You know what I mean? 

6 So I’m not saying that -- but the data that we have 

7 in the study, the LBL data was actual data for a 

8 period of time that occurred in the past and will 

9 occur again in the future. And so, you know, not to 

10 say that in the next 30 years there might not be one 

11 year where the dynamics change a little bit, but for 

12 -- this has got to -- if we make this change it’s 

13 got to apply 30 out of 30 years, and we’re saying 

14 that that’s why zero to one is the only choice.

15 MR. PARKER: I wonder whether it would be 

16 useful to take a break and think about our 

17 positions. One thing that I will throw out is that 

18 it may be helpful to actually look at the results of 

19 some of the material/price sensitivity runs and just 

20 explore a few price scenarios and see what might 

21 happen under various scenarios that people might be 

22 worried about. Particularly, prices in the --

23 differences in the relative prices between amorphous 

24 and silicon steel. If the concern of course is 

25 just you can’t accept any -- more than ten percent 
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1 increase in the transformer, and that’s the end of 

2 the story, or 20 percent increase, that’s one thing 

3 we should know, but even there I’m not sure that 

4 we’ve really in this data looked at what those 

5 deltas are and looked at whether -- whether going 

6 beyond EL1 would produce a more than 20 percent 

7 increase in every point. 

8 PARTICIPANT: (off mic)

9 MR. PARKER: Increase in price. Under 

10 every material/price scenario? Those levels? And 

11 so if that’s the case, you know, we just have to 

12 have that discussion. I mean, why don’t we take a 

13 five minute, ten minute break and come back and talk 

14 about medium voltage, I guess, dry type and see if 

15 this helps. Is that going to make it worse? 

16 (Whereupon, At 3:49 the meeting was 

17 recessed for a 49 minute period.)

18 MR. PARKER: Real quick.

19 MR. ROSENSTOCK: This is Steve Rosenstock, 

20 Edison Electric Institute. And just wanted to kind 

21 of where we left off, and I guess kind of following 

22 up. We don’t want negotiations to end today, and it 

23 sounded like it almost seemed like -- the impression 

24 that maybe I’m being the one, if I’m mistaken please 

25 forgive me, it seemed like DOE was ready to start 
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1 the NOPR if we didn’t decide something today. I 

2 hope that’s not true. So I’d kind of like it 

3 clarified that we do have another meeting set up for 

November 30th and December 1st

8 MR. PARKER: Would you like to address 

9 that?

4 , and I’m hoping that 

5 we don’t have to be decided today, because I don’t 

6 know if we can because we’re still looking over all 

7 this stuff.

10 MR. CYMBALSKY: John Cymbalsky, DOE. So 

11 I’m on the hook to have a NOPR out and published by 

February 1st

20 MR. ROSENSTOCK: So you’re okay with us 

21 keeping the talking going, right?

12 . So whether I write one one way and 

13 write one another way, I could still write a NOPR, 

14 and we can still negotiate. Having said that, I 

15 think given all the information we’ve heard today, I 

16 think there’s lots of good information on the public 

17 record for us to hopefully to come to some sort of a 

18 negotiation quickly. And I say that as a member of 

19 the group, certainly, and DOE.

22 MR. CYMBALSKY: As a member of this 

23 committee, I think we can vote now, really.

24 MR. ROSENSTOCK: You say vote now?

25 MR. CYMBALSKY: Why don’t we try?
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1 MR. ROSENSTOCK: You mean like straw 

2 polls? 

3 MR. CYMBALSKY: Sure.

4 MR. PARKER: So, we could vote now. I had 

5 been talking to people during the break, and I 

6 apologize, Steve, I think I buttoned up everybody 

7 but you, but let’s -- actually I did not buttonhole 

8 anywhere near everybody but you, but I managed to 

9 talk to a few people and what was discussed was 

10 simply this. And I just throw this out there for 

11 the group as a possible way of going forward to 

12 another meeting. And possibly getting to yes. And 

13 when we get the whole package out there and we can 

14 just sort of discuss it. 

15 But the idea would be to first recognize 

16 that today, despite the fact that we are nowhere 

17 near an actual agreement, we have made progress. 

18 The advocates put forward a proposal that came in at 

19 EL4, and they’ve been willing to show some 

20 flexibility on that, and at least consider, although 

21 I emphasize nothing is agreed until everything is 

22 agreed in a negotiation, but for purposes of 

23 discussion, consider moving forward -- moving to 

24 EL3.

25 On the other side, we’ve heard that there 
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1 is reason to believe that at least some distribution 

2 transformer makers can achieve EL1 and some may be 

3 even able to achieve EL2, and that that could be 

4 something that would be within their sweet spot, but 

5 not everybody who’s at this table has been heard 

6 from. Not all the transformer makers have been 

7 heard from, and therefore going from one to two is 

8 distinctly problematic, particularly for them.

9 So, what we discussed was saying, let’s 

10 provisionally bracket a range from EL1 to EL3, and 

11 then the various parties will take this back to 

12 themselves, to their own groups and to the people 

13 that they represent in the industry -- remember 

14 you’re here in sort of a representative capacity, 

15 and NEMA in particular, and see what movement is 

16 possible. And there are -- during that time there 

17 are a couple of things that could happen. One is 

18 that we can explore a range of material prices that 

19 allow amorphous and silicon steels to diverge in 

20 price, and we can talk about that in a second, but 

21 explore a range of material sensitivity scenarios 

22 that may enable you to see what would happen under 

23 various pricing scenarios.

24 And for the distribution transformer 

25 makers, what I’m hearing is that for them it’s 
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1 really the question of at what -- what is the 

2 highest EL that you can reach and still maintain 

3 leverage over your suppliers, so that you’re not a 

4 captive of amorphous and you’re not a captive of M3, 

5 but what is the highest sensitivity range that you 

6 can achieve that gives you sort of leverage vis-à7 vis your suppliers.

8 And I heard during the discussions, during 

9 the break, a reasonable amount of support for that 

10 as a question for transformer makers, that they need 

11 to address. We’ve heard from one or two at the 

12 table today. We need to hear more broadly on that.

13 For the utilities, the question would be, 

14 you know, what his the most efficient level that you 

15 could reach that would enable you to convince your 

16 customers and your regulators that they are getting 

17 a good deal from replacing a transformer as opposed 

18 to refurbishing it. We cannot, unfortunately, and I 

19 stressed on this, we do not have the data to sort of 

20 model refurbishment rates because it’s been such a 

21 small tiny phenomenon in the past. So we don’t have 

22 a lot of empirical data on this. But we have to 

23 think about them in more the real world scenario 

24 that, you know, how do you persuade your regulators 

25 and your customers that they’re getting a good deal 
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1 by paying a little more -- paying more for a new 

2 transformer as opposed to refurbishing, and at what 

3 point is that actually reached. We just need to 

4 have that discussion, and we’d like to hear more, 

5 you know, particularly in writing on that if we can. 

6 Because, as the advocates have pointed out, it’s not 

7 just a first cost thing, there are also other costs 

8 to consider -- operating costs to consider. So two 

9 separate questions for utilities and for the 

10 industry.

11 And the last thing I would say is to 

12 facilitate that, a number of people have expressed 

13 an interest in having more analysis of a couple of 

14 issues, one would be sort of the incremental prices 

15 -- excuse me, the delta in price as a -- the dollars 

16 per watt saved, if you would. There’s been a lot of 

17 talk about that at the table today, you know, the 

18 dollar per watt savings may be too high. Without 

19 much difficulty at all, we can generate and will, 

20 very early on, a chart that will give people under 

21 the curve analysis of what those would be, for each 

22 -- the incremental cost of going to each efficiency 

23 level as -- in the numerator, and the incremental 

24 watts saved in the denominator. So it’s a fairly 

25 simple calculation, not hard to produce. 
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1 There may be some other ways that we can 

2 refine the analysis. We’ve heard a lot of talk 

3 today about how it doesn’t model the real world 

4 accurately, and so I think the staff will be looking 

5 at ways to just, in a general way, to see if there’s 

6 ways we can improve on the analysis to make it more 

7 reflective of the reality.

8 So the combination of the material price 

9 sensitivity runs, the improvements the method, if we 

10 can come up with that, and the charts on the dollars 

11 per watt are three analytical things that I think 

12 might enrich the discussion between now and the next 

13 meeting and we can take it up at the last meeting.

14 So that’s the proposal that was discussed, 

15 and I welcome any reactions to it. Steve.

16 MR. ROSENSTOCK: Steve Rosenstock, EEI. 

17 What about Mr. Petersen’s proposals?

18 MR. PARKER: Excuse me?

19 MR. PETERSEN: Do you have that -- we gave 

20 you a -- Eric Petersen -- we gave you a thumb drive 

21 with a graph on it.

22 MR. PARKER: So you see it up there?

23 MR. PETERSEN: Which one is it, Jerry?

24 MR. SCHOEN: It’s a PDF -- can you widen 

25 the column out -- the name? I mean make it wider.
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1 MR. PETERSEN: Okay. Eric Peterson, AK 

2 Steel. We’ve had some discussions here -- Richard, 

3 you made the comment about what is the sweet spot, 

4 so to speak. This was the analysis by which we took 

5 a look at defining a DEL-0.6, and really what you’ll 

6 see here is a number of curves from $4.00 a watt in 

7 red, $5.00 a watt in green, $6.00 a watt, and $7.00 

8 a watt. So we’re looking at different dollars per 

9 watt ratings and a comparison of price parity of M3 

10 RGO versus amorphous metal in design line one, 

11 distribution transformers. And the intent here is 

12 to show at what point is there equivalence between 

13 cost on an M3 versus an amorphous metal for a 

14 transformer manufacturer.

15 So if you look at the red line, it 

16 essentially shows that the red line crosses the zero 

17 line which is the amorphous metal at roughly about a 

18 0.8, so essentially at a point eight, and this was 

19 based off of the data that came out of the DOE. 

20 That at roughly point eight, the amorphous metal and 

21 M3 was at the same price.

22 For $5.00 a watt, the green line, you can 

23 see it roughly falls off at about a point three, and 

24 at six and seven dollars a watt, the preferred 

25 design is amorphous metal. So the intent there was 
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1 to try to find the, quote, “sweet spot” as you said. 

2 Where could you get this place of essentially trying 

3 to find a transformer design that from a cost 

4 perspective would be equivalent between an amorphous 

5 metal or M3, and as you can see, kind of right in 

6 between that $4.00 and $5.00 a watt was the 0.6. 

7 So our attempt at doing this was utilizing 

8 the model that we held for design line one, 

9 utilizing the DOE data of essentially trying to find 

10 where is the, quote, “sweet spot” where you can 

11 build a transformer with either M3 or amorphous 

12 metal. This was our attempt at that in trying to 

13 find where that sweet spot is and how we came up 

14 with those numbers. 

15 I don’t know, Jerry, if you want to make 

16 any other comments on that?

17 MR. SCHOEN: Jerry Schoen, AK Steel. The 

18 thing that you notice is that if you have a range of 

19 A factors going up to $7.00 a watt, when you really 

20 get out to six or seven, the choice right now is for 

21 amorphous metal, irrespective of the efficiency 

22 level. As you raise the efficiency standard, you’ll 

23 notice all these lines converge, and then really to 

24 amorphous metal at DEL-2.

25 MR. POLINSKI: Ray Polinski, ATI 
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1 Allegheny. And I thought that maybe what Steve was 

2 talking -- I don’t want to speak for Steve, but I 

3 think when you said -- I was going to say the same 

4 thing, when you said that one to three were at just 

5 for talking points, and I think we’re like, more 

6 like zero to three or point six to three, just to be 

7 clear. But, I mean, with one to three -- the good 

8 news is appears the range -- the gap has narrowed to 

9 your point.

10 MR. SCHOEN: Jerry Schoen, AK Steel. One 

11 other comment I should make was that this is only 

12 for design line one. It’s a single phase design. 

13 When you talk about a price differences and price 

14 parity, this is the discount that you would have to 

15 have to maintain M3 as an equivalent cost final 

16 design. Our model doesn’t capture everything. Ours 

17 is a core coil model primarily. It doesn’t have all 

18 the sophistication that the ABB models would have, 

19 for example.

20 MR. PARKER: So that raises a good point, 

21 which is I think that from the standpoint of 

22 competitiveness between steel and amorphous, I think 

23 what I heard during the break that it made sense to 

24 really hear from the transformer manufacturers at 

25 what point they fell they would be competitive from 
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1 the standpoint of their cost curves, because they’re 

2 the actual customers. And I thought I heard that 

3 that would be an acceptable way of proceeding, is 

4 that right?

5 MR. PETERSEN: Yes, if I may, yes. Eric 

6 Peterson, AK Steel. We’re using, to attempt to 

7 project our position is our ability to model and 

8 what was in the DOE data in front of us. So 

9 obviously an important point for us, as we try to 

10 find that sweet spot, is where can a transformer 

11 manufacturer design the transformer and for the same 

12 cost, utilize either M3 or amorphous metal. That 

13 seems to be the quote, “sweet spot.” At least it 

14 gives us some framework of understanding where the, 

15 quote, “real competitiveness” would be on pure peer16 to-peer level. It is a frame of reference, not 

17 meant to be a decision point, simply a frame of 

18 reference.

19 MR. PARKER: Thank you. Steve.

20 MR. NADEL: Yes. I mean, yes, we’re 

21 looking for a sweet spot. We define the sweet spot 

22 slightly differently where there may be a little bit 

23 of a price difference, but something that’s within 

24 range. I’m just pointing that out. One other 

25 thing, I think, that would be useful and I talked to 
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1 someone about this at the break, is currently the 

2 DOE analysis is very sensitive to very small 

3 differences in prices, and it basically shows you go 

4 -- at a certain point is all M3, then all of a 

5 sudden you make a slight improvement and boom, it’s 

6 all amorphous. And everybody I’ve talked to, no one 

7 really believes that, but there may be ways for DOE 

8 to check its models, and particularly if I 

9 understand, DOE assumes that every manufacturer 

10 always gets the exact same price for copper, steel, 

11 as opposed to, I assume you have some volume 

12 pricing, for example, or prices vary over time. We 

13 may not be capturing that. So if DOE could look at 

14 its model and say is there really a cliff or is it 

15 more of a variability, and if so, how would we model 

16 it. That may be helpful because a number of people 

17 keep pointing to the fact, oh, we see a cliff.

18 MR. SCHOEN: Jerry Schoen, AK Steel. The 

19 prices that were used in here for the M3 is about 

20 $3700 a ton. You move to DEL-2, that price drop is 

21 about $2000 a ton. That’s pretty precipitous 

22 because, again, we want to make a profit at this 

23 business too. 

24 MR. PARKER: Dollar per pound, right. 

25 John.
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1 MR. CASKEY: Hi. John Caskey, NEMA. Got 

2 three points. One is that in the past we’ve had 

3 meetings, you sort of summarize stuff, but I don’t 

4 remember seeing the document itself. So are you 

5 publishing anything like minutes of these meetings 

6 and where are they that I can go to and find them?

7 MR. PARKER: Yes, my apologies. I have 

8 not gotten them all drafted yet, but I will get them 

9 up very soon after the meeting.

10 MR. CASKEY: So is there some -- I hate to 

11 put you on the spot, but I can’t help but do it. So 

12 for this meeting, do you have any idea when you’ll 

13 have some summary available that we can then share 

14 with some people who may not be at the table?

15 MR. PARKER: Yes. The transcripts will 

16 come in within three days.

17 MR. CASKEY: Okay. 

18 MR. PARKER: And I will commit, this time, 

19 meet the commitment, and my apologies again, I’ll 

20 have it to you within five days.

21 MR. CASKEY: Okay. Great. I’ve got two 

22 other points. One of them is that when I met with 

23 the manufacturers that are NEMA members, of liquid 

24 filled distribution transformers, basically the 

25 general attitude of that group was that they could 
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1 go to like EL1, but they really didn’t feel that 

2 they could go cost-effectivenessly and still stay in 

3 business at EL2. So I’m willing to take the action 

4 item -- I mean we’ve heard from Wes and from Prolec 

5 that they’ve done a great job of sharing information 

6 with us, which I think has been extremely valuable 

7 for the education of everybody at the table, but I’d 

8 like to go contact some of those other members, 

9 inherently are smaller members, and see if there is 

10 something fundamentally different about those other 

11 five or six manufacturer that aren’t at the table, 

12 to see if they have a different perspective that 

13 they could bring, or I could summarize and bring to 

14 the table. So I’ll take that action item to contact 

15 them and find out if I can learn more about that 

16 process relative to, say, EL1 versus EL2.

17 MR. PARKER: I assume since these slides 

18 are presented at this meeting on the record that 

19 they are something that he could share with his 

20 members. Wes, is that the case?

21 MR. PATTERSON: Sure, he’s already done 

22 that.

23 MR. PARKER: Okay. 

24 MR. CASKEY: If I can, the final point is 

25 one of the things that I’ve been thinking about 
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1 relative to what we’ve discussed between this -- and 

2 I’m really not negotiating, I’m offering an idea --

3 is that we talked about being somewhere between 0.6 

4 or one and three, and it seems like even when I gave 

5 my earlier remarks, the issue was that going to high 

6 BILs is sort of difficult and expensive to do, to go 

7 to three -- to increase efficiency in three-phase 

8 transformers is more difficult and roughly more 

9 expensive to do than single phase. So I’m wondering 

10 if there is, at least for people to think about the 

11 concept, for the high BILs and for the three phase, 

12 to consider EL1, and for the single phase, if I’ve 

13 said this all correctly, for the single phase and 

14 for the load below 95 BILs, to remain, or to be at 

15 EL1 -- excuse me, to be at EL2. So high BILs and 

16 three-phase at the easier EL1, and the low BILs and 

17 the single phase at EL2. Just as a way to start 

18 thinking about that.

19 MR. ANDERSON: John, Rick Anderson --

20 MR. PARKER: Any reactions.

21 MR. ANDERSON: Yes, John -- Rick Anderson, 

22 APPA. I want to make sure I understood what you 

23 said. On three phase you’re saying EL1 and 95 KV 

24 BIL, is that what you said?

25 MR. CASKEY: There’s high BILs and low.
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1 MR. ANDERSON: Right.

2 MR. CASKEY: So 95 BILs being the 

3 crossover point between, quote, “high and low” BILs.

4 MR. ANDERSON: Okay, so EL1 for three 

5 phase, so what we’d have to do then, Steve and Bob, 

6 is order a 95 KV BIL and then just beef up our 

7 lining protection, and we can get an EL1.

8 MR. CASKEY: In essence, yes.

9 (Discussion off mic)

10 MR. ANDERSON: Well, since I also 

11 represent lightning arrester manufacturers, I would 

12 argue that you should be doing that today to protect 

13 your high dollar transformers.

14 MR. CASKEY: Richard, excuse me. A good 

15 point, though. The point is this, you know, when 

16 prices really get out of hand, we can invest money 

17 in other distribution products like enhanced 

18 lightning protection, and current limiting fuses, 

19 that completely protect the transformer from ever 

20 being hurt, and extend the life indefinitely and 

21 totally avoid new transformer purchases. So there’s 

22 other things we can do rather than spending money on 

23 -- like right now, to go back to what Wes said 

24 earlier in the day, we’re looking at $12.00 per 

25 watt. Our mentality is, our A factor is in the 
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1 order of $4.00. Why would I pay $12? That doesn’t 

2 make any sense for us to do that.

3 Anyway, there are other ways to skin the 

4 cat, right?

5 MR. PARKER: Gerry.

6 MR. HODGE: Yes, Gerry Hodge from Howard 

7 Industry. Well, first of all let me just say that 

8 we hope, from Howard Industry point of view, we hope 

9 we can find a solution in this committee. We really 

10 don’t want it to end without a decision, without an 

11 agreement. So we hope very much that this group of 

12 people right here at this table can come together 

13 and find a solution that’s reasonable for everybody 

14 and uses a lot of common sense.

15 Now we’re a major manufacturer of 

16 distribution transformers. We buy a lot of silicon 

17 core. We buy a lot of amorphous core. We think 

18 that’s good for the industry. We think that the 

19 industry should have a combination of both. We’re 

20 not here to eliminate one or the other. We think 

21 they can both work together, and we can work 

22 together for them. 

23 And so I think it’s important that we come 

24 to an agreement where we don’t make it so high that 

25 the silicon people can go home and start selling on 
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1 their product out of the country, instead of in the 

2 country. That’s silly. And on the other side of 

3 the coin, amorphous is a growing product. It’s a 

4 good product, and we need to make more use of it. 

5 And so we’ve got to come together, and it looks to 

6 me from what I’ve seen all these charts here today, 

7 that somewhere around going up one level or maybe 

8 slightly more than one level, we can make it active 

9 for all the steel people to participate. And I 

10 think that’s where we need to be is somewhere right 

11 in that area.

12 And the other side of it too, is you’ve 

13 got a lot of little manufacturers out there that are 

14 not going to be able to afford to get into this 

15 amorphous. We got into it. We’re getting into it. 

16 We’re on the learning curve. We’ve spent a lot of 

17 money. I won’t say how much, but we spent a lot and 

18 we’ve got a lot of money to spend, So if you’re 

19 going to go into amorphous -- these little guys are 

20 not going to be able to have the capital to do that. 

21 You’re going to eliminate them, and I don’t think 

22 that’s good for the industry. 

23 So we need to look out and see, you know, 

24 this is a very critical industry - transformer --

25 the utility industry is, and transformers are a 
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1 major component of that. And we owe it to the 

2 people who are going to use these things to do this 

3 right. And so I, you know, I just don’t see going 

4 in with a TSL-4 or something and driving this thing 

5 strictly to an amorphous side, and I don’t see 

6 eliminating the silicon people. I just don’t see 

7 that. And so somehow, we’ve got to come together 

8 and keep everybody in the game, and I thought we 

9 agreed to that early in -- maybe it was the first 

10 meeting where we said -- I think it’s important we 

11 keep all the major players in the game. Well, I 

12 think it is very important we do that. And so I 

13 recommend somehow we come together and reach that 

14 type of conclusion.

15 MR. PARKER: I think we’re agreed in 

16 concept. The question is how to implement the 

17 concept. Yes.

18 MR. HIRSCH: Bruce Hirsch, Baltimore Gas 

19 and Electric. I just wanted to add from the utility 

20 standpoint, and I’m doing a lot of talking to 

21 utilities about this team and what we’re working on 

22 here. And the idea of going to amorphous steel is 

23 not a problem with the utility industry in general. 

24 There are a few people that had some bad run-ins 

25 with some of the amorphous -- early designs of 
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1 amorphous and whatever, and you’re going to have 

2 that in any industry, but I think it also points out 

3 that there is some learning curves with respect to 

4 the use of amorphous steel. Gerry just mentioned 

5 it, they’re still learning about how to utilize it 

6 and build good transformers with it.

7 So from the utility standpoint, I think 

8 our position is we don’t want to go cold turkey to 

9 100 percent amorphous. We don’t want to turn off 

10 silicon three years from now and go 100 percent 

11 amorphous. We would like to work into it gradually, 

12 in other words, build up the use of amorphous so 

13 that we get some more experience with it, the 

14 manufacturers get some better experience with 

15 building amorphous core transformers, and hopefully 

16 then we can eliminate some major problems downstream 

17 that may occur if they’re not built properly. I 

18 think I just wanted to get on the record with that.

19 MR. PARKER: Okay -- yeah.

20 MR. MILLURE: Dave Millure, Metglas. 

21 Gerry, you said one thing about the small guys out 

22 of business. The DOE’s analysis was based on 

23 purchased cores, and I know you know this, but you 

24 don’t have to make the capital investment to get 

25 into amorphous. We have your Lake-E (ph) Metals and 
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1 there’s some other core makers, and NAFTA (ph) that 

2 will make you cores and you can be competitive, so 

3 just because you can’t make the capital investment 

4 doesn’t mean you can’t go amorphous. Thank you.

5 MR. HOFFMAN: Alex, Alex Hoffman, APPA. 

6 I’d just like to say that I do appreciate the 

7 discussion, the tone of discussion, the idea of a 

8 negotiation in general. But also, Richard, your 

9 idea of producing documents that have these dollars 

10 per watts saved, some sort of relative metric, 

11 really helps us, especially small utilities who are 

12 looking at this kind of decision and trying to 

13 figure out how does a decision that’s made here 

14 impact our operations. 

15 MR. PARKER: Great. We should have that 

16 in a day or so. We should have that very soon, at 

17 least based on the current analysis. Now, if it 

18 gets refined that may change also.

19 MR. NADEL: Steve Nadel. A couple of 

20 comments on some things that have been said. John, 

21 you asked about BIL levels. We had previously said 

22 we’re open to considering that. Frankly, I prefer 

23 Wes’ proposal of first trying to agree on the basic 

24 standard and saying what deviation, what percentage 

25 deviation may be appropriate rather than stick with 
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1 these hard five percent. I’d be surprised if we 

2 need as much as a five percent difference in losses, 

3 but let’s do an analysis on those BIL levels to 

4 determine that. Let’s first try to see if we can 

5 reach agreement, span this chasm, if you will, on 

6 the basic standard.

7 In terms of three phase, that would 

8 probably be more problematic for us. I took at look 

9 at this data on shipments, and there’s more 

10 shipments in the three phase than there are in the 

11 one phase, so that would cut the savings down 

12 dramatically. So, you know, again, we’re open to 

13 data, but we haven’t seen the data thus far, whether 

14 it’s GE data, the ABB data, or the DOE data that 

15 shows a big difference on those. So those are a 

16 couple of responses.

17 MR. PARKER: Steve, quick one.

18 MR. ROSENSTOCK: Answer to the three phase 

19 or single phase, are you talking MVA shipments or 

20 numerical shipments? You’re talking MVA?

21 MR. HOFFMAN: MVA. Yeah.

22 MR. ROSENSTOCK: Thank you.

23 MR. HOFFMAN: Yes, and numerical is far 

24 less.

25 MR. PARKER: Okay. So, I think we have a 
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1 path forward for this area and we will continue this 

2 discussion either on line between now and then, 

3 hopefully. Please, particularly for the transformer 

4 makers, get us your input on this, on your sort of 

5 crossover point, if you can, as soon as possible, 

6 and we can do it either confidentially if you want, 

7 or otherwise, but we just need to hear from you, and 

8 any supporting information you can give to 

9 substantiate that would be very helpful. Jerry.

10 MR. CORKRAN: Jerry Corkran, Cooper. Mr. 

11 Anderson reported a few minutes ago that looking at 

12 charges, incremental charges for the watts saved 

13 from the basic DOE 2007 version was $17.00 a watt. 

14 My question, I guess, would be to the people, both 

15 the DOE and the environmentalists, how much a watt 

16 are they willing to charge the public to go to this 

17 more efficient transformer? Richard said something 

18 about $4.00, $1.00 is the present A/B factor, and 

19 $17.00 sounds astronomical. So even though the 

20 manufacturers have said we could build certain 

21 designs, are we doing anybody a favor? That’s my 

22 question.

23 MR. PARKER: Well, do you want to respond?

24 MR. DeLASKI: I don’t have the dollar per 

25 watt figure. I hope the DOE LCC analysis will show 
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1 this, mean paybacks under ten years. And I look to 

2 an LCC analysis that shows 99 percent of the 

3 customers are better off. And that gives me good 

4 comfort. We’re going to see what that translates 

5 into in dollars per watt is what they’re going to 

6 produce for us. But I see 99 percent of customers 

7 better off, and that gives me comfort that that’s a 

8 good deal for the consumer in paybacks under, in 

9 this case, 17.5 years is the longest on a 35 year 

10 product. Most of them are under ten years, and 

11 those are numbers that are acceptable to us. Not 

12 acceptable, but I think well within the norm of DOE 

13 rulemakings.

14 MR. NADEL: Richard.

15 MR. DeLASKI: And we’re going to see the 

16 dollars per watt numbers.

17 MR. PARKER: We’ll see the dollars per 

18 watt because it’s been -- there’s been a lot of 

19 requests for it, so we’ll see it. Absolutely. And 

20 yes, the LCC is also relevant. We need to really --

21 we’re at 5:20, 5:15 now, so why don’t we wrap up 

22 this discussion and reserve the rest of our time for 

23 discussion of medium voltage. Do we have time or do 

24 we not want to do that?

25 MR. NADEL: This is Steve Nadel. We have, 
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1 actually, a discussion tomorrow with a group that 

2 about half overlaps with this, that deals with low 

3 voltage dry type. I don’t know if the analysis for 

4 that has been completed yet. I know those of us on 

5 e-mail haven’t gotten it yet. But I was wondering, 

6 since I think many of the people who do the medium 

7 voltage dry type will be there, can we pick up that 

8 discussion then? But that was just one thought. 

9 But John, or someone, can you make sure that that 

10 analysis has been sent down, because we haven’t 

11 received it, and it’s going to be very hard to have 

12 a discussion tomorrow if at six o’clock tonight we 

13 haven’t gotten anything.

14 MR. CYMBALSKY: So you’ll be up late 

15 tonight with the rest of us, I guess. But -- I’ll 

16 just be at the hockey game, though. Chris actually 

17 has shared the analysis with me. He’s going to 

18 review it, scrub it tonight and send it out tonight, 

19 so yes, you will have it.

20 MR. PARKER: I should say, by the way, 

21 that the consultants got the data very recently, and 

22 they’re really, really been working very hard to 

23 deal with it when they got it. It came in long 

24 after it was asked for, and better late than never, 

25 but it’s very useful and they’re working valiantly 
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1 to try to process it and get it out. So, sorry 

2 about the delay, but we’ll give people time also 

3 tomorrow morning to just look at it. I’m not sure 

4 about discussing medium voltage tomorrow. Do you 

5 have a thought?

6 MR. RIVEST: Can you show some summary 

7 slides in case people -- I don’t know, there’s some 

8 people here today who might not be here tomorrow, so 

9 for them, I don’t know.

10 MR. PARKER: Right. It sounds like the 

11 committee members will be here, right, Wes and Rob, 

12 so that might be something we could do, if that’s 

13 acceptable to people. Does that make sense? Take 

14 this up tomorrow?

15 MR. DeLASKI: It makes good sense to me, 

16 personally. I think starting a new topic, whole new 

17 technology at 5:15 is a bit --

18 MR. PARKER: I agree with you. ... talks 

19 until midnight, and we’re not going to do that here.

20 MR. SAINT: So let me get a clarification. 

21 So we’re shifting the dry type discussion to -- the 

22 medium voltage dry type discussion to low voltage 

23 dry type group -- is that what we’re doing? Either 

24 way, that’s fine with me, because I’m not a dry type 

25 user at all.
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1 MR. PARKER: Is there anybody who has a 

2 problem with that course of action -- around the 

3 table? So let’s do that, then. That sounds good. 

4 Somebody on the phone?

5 (Pause.)

6 MR. PARKER: Okay. Well, I think we’re 

7 committed to doing that, but I think there’s just a 

8 sense around the table that we can’t take that on 

9 this evening. So I think we should, with apologies 

10 to our exclusive low voltage members who will be 

11 here tomorrow, reserve some time for that at the 

12 meeting tomorrow, even if it means starting the 

13 formal low voltage talks a little bit later.

14 Our pattern, by the way, in the past has 

15 been that the low voltage is a much smaller group 

16 and ends up not using all the time that it’s been

17 allocated to them, or not needing it at that point, 

18 in part because the analysis hasn’t been as far 

19 along and so we’ll make the progress that we can 

20 tomorrow on the low voltage, but people will need 

21 time to review that in any case, so the discussion 

22 on medium voltage may help them with that.

23 Discussion of Special Cases

24 Okay, why don’t we spend a few minutes 

25 then talking about the issue, just developing a plan 
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1 for the subgroup analysis, whatever you want to call 

2 it, for vaults, networks, and I think we can discuss 

3 how to handle the BIL issue as well as part of that 

4 discussion. But basically, these are the -- this is 

5 the special cases category.

6 We discussed in earlier meetings that 

7 vault transformers faced certain constraints that 

8 others don’t and therefore face not only higher cost 

9 but higher increases in cost per unit of efficiency 

10 gain than other transformers. And I think there was 

11 an agreement that it should be possible to specify 

12 distinct product characteristics of vault 

13 transformers, or performance characteristics, that 

14 would justify legally and practically separating --

15 setting a new level for them. 

16 So what we haven’t done is actually get a 

17 working group going to define that class, and 

18 establish, come to agreement on how it will be 

19 defined and what the delta would be, what the 

20 differential would be between that class and the 

21 other. It might just be a carve-out, if people are 

22 comfortable with that, or if might be a differential 

23 standard. But it would have to be defined and 

24 specified.

25 So why don’t we -- I’m open to suggestions 
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1 on how to handle that issue now. Greg.

2 MR. COULTER: I know -- this is Greg 

3 Coulter from Prolec GE. I know Wes has done a lot 

4 of work on this, and we’ve supplied a lot of 

5 information to him -- down in Shreveport -- which we 

6 thought, because we thought Wes was leading it out 

7 of the last meeting. And he has sent it out. I 

8 mean I’m not too sure with the massive data 

9 anybody’s even had time to look at it or not. 

10 But it would seem to me that the key issue 

11 is, is this a big enough pie that we care about? 

12 You know, the volume is so small, it ought to be 

13 easy to carve it out, I would think, and that’s one 

14 of the key things that Wes did. We have some data 

15 on what GE’s side of that is, between GE and ABB, 

16 that’s got to be 90 percent of the market. That 

17 would be really easy to do. So if it’s just a GE18 ABB issue, we’d be willing to do this if we had 

19 somebody else who knew like we had a repository. 

20 Some of this data we can’t share back and forth, you 

21 know, we’ve got to share it in a different 

22 direction.

23 MR. PARKER: Well, I’m sure Navigant would 

24 be willing to serve as a repository for that and to 

25 sort of midwife those discussions. What we need 
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1 from the group is a recommendation, not data, but a 

2 recommendation, a proposal, for how to treat this 

3 category, which would include, as I understand it, 

4 • first, how to define it in terms of physical 

5 and performance characteristics so that you can 

6 distinguish it;

7 • any information that you can give on what its 

8 market share would be, if that’s possible, so 

9 you get a sense of the magnitude of the carve 

10 out; and

11 • third, why it would make sense, you know, what 

12 the proposal is for the special treatment of 

13 it.

14 There may be other elements of the 

15 proposal that it would need to have also, but I can 

16 think of those three obviously, and we just need to 

17 have a group of people who are designated to work on 

18 that. We need a timetable for producing that 

19 proposal and a process for dealing with it 

20 afterwards. So first, do we agree that those are 

21 the basic elements of what the proposal, what the 

22 charge to the group would be, and secondly, who 

23 would like to be on the group?

24 PARTICIPANT: (off mic)

25 MR. PARKER: You need to announce yourself 
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1 and speak into the mic, please. Sorry.

2 MR. PATTERSON: Wes Patterson. As Greg 

3 had indicated, most of this market, I believe, is 

4 jointly shared between ABB and General Electric, at 

5 least on the networks. There’s more players, I 

6 think, on submersibles which fell into the same 

7 problem. So --

8 MR. COULTER: Wes, I’m not too sure what a 

9 submersible is, but, you know, if it isn’t in a 

10 vault, I think we ought to exclude it, just because 

11 it’s submersed. The issue is vaults.

12 MR. PATTERSON: It’s in a vault. Any 

13 constricted area.

14 MR. COULTER: Okay. 

15 MR. PATTERSON: So you’ve got vaults and 

16 networks. But I think that joint activity between 

17 GE and ABB can put it all together.

18 MR. COULTER: And a third party.

19 MR. PATTERSON: A third party?

20 MR. PARKER: Okay. This is --

21 MR. NADEL: This is Steve Nadel.

22 MR. PARKER: A third party, great.

23 MR. NADEL: We have to figure out who, but 

24 we can probably find someone to join the group so 

25 you have a third person. From our point of view, 
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1 the key thing is to define -- if this is a very 

2 small niched product class, the key thing will be 

3 defining it tightly enough so you don’t have people 

4 who buy these transformers to take advantage of a 

5 lower efficiency level and use them in other types 

6 of classes. We don’t get the BIL with lightning 

7 protection issue. That’s going to be our key thing, 

8 but we’ll find someone. I’m not sure who yet, to 

9 join that group.

10 MR. PARKER: So if we could -- is it 

11 agreed that the proposal will address that issue in 

12 terms of the specification of the new product class, 

13 whatever it’s going to be? What would be the anti14 circumvention measures? Yes, Steve.

15 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 

16 think, from our perspective, I think we would like 

17 kind of a carve-out for these types of transformers, 

18 especially for utilities that have urban areas who 

19 are going to face this a lot more. Again, hopefully 

20 someone from -- with expertise -- I’ll definitely 

21 send an e-mail out. Of course the problem is we’ve 

22 got three weeks before the next meeting, but I think 

23 we are interested in doing things. And again, maybe 

24 think out of the box a little bit, kind of what they 

25 did with fluorescent lamp ballast, maybe do one for 
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1 new versus one for replacements. I don’t know. 

2 Again, just throwing it out there. But again, just 

3 wanted to say that we think it’s important and there 

4 are some very specific issues that should be 

5 addressed for these, for the vaults and the 

6 networks. I’m not going to talk about the BIL 

7 issue. I’m not as familiar. But I think we 

8 definitely get one utility rep to serve on this --

9 hopefully serve on this subgroup so to provide some 

10 input and then feedback.

11 MR. PARKER: Just let us know as soon as 

12 possible who you’ll put forward, okay.

13 MR. HOFFMAN: Yeah, we’d like to do the 

14 same thing -- Alex, APPA. We’ve had a number of 

15 utilities approach us regarding vault transformers, 

16 space constraints and other things.

17 MR. ROSENSTOCK: I think Rick just 

18 volunteered us. We just volunteered Rick. Bruce, 

19 if you want to be in on it -- that’s a yes. Okay. 

20 MR. SMITH: Richard, this is Bob Smith at 

21 Federal Pacific.

22 MR. PARKER: Yes, Bob

23 MR. SMITH: (discontinuous phone) One of 

24 the ... and I hope that ... 

25 MR. PARKER: Well, that’s exactly the kind 
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1 of analysis that needs to go into the report, so 

2 does that mean that you’re volunteering to work in

3 that committee? Don’t mean to put you on the spot 

4 or anything. 

5 MR. SMITH: ... I’ll do that.

6 MR. PARKER: Great. Wes, could I ask you 

7 if you would chair that committee for us and 

8 coordinate the report?

9 MR. PATTERSON: Yeah, I’ll take it.

10 MR. PARKER: Thank you so much. I know 

11 you have nothing else to do with your time. I 

12 appreciate that. And what would be a reasonable 

13 timeframe for getting a report from you, assuming I 

14 come through and get the minutes out to you.

15 MR. PATTERSON: Next meeting.

16 MR. PARKER: Oooo. Okay. I’m trying to 

17 build in as much time for the next meeting as we 

18 can, but -- Tim.

19 MR. BALLO: Tim Ballo, Earth Justice. I’m 

20 happy to be involved to the extent we’re searching 

21 for a regulatory definition for those products. I

22 think I volunteered earlier and Phil Hopkinson, I 

23 believe after the last meeting sent around an ANSI 

24 specification for subway and vault transformers. I 

25 looked at it and didn’t see something that I thought 
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1 we could use as a regulatory definition, but if 

2 there’s a switching issue that’s specific to those 

3 transformers, you just need some way to define them 

4 so that it’s specific to those transformers.

5 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 

6 think that’s a good starting point, that using ANSI 

7 and IEEE definitions as a starting point, because 

8 there’s been an industry consensus around what the 

9 definition is, so start there at least and see if 

10 you need to tweak it a little bit for DOE’s 

11 regulations. I think we’re all okay with that.

12 MR. PATTERSON: Tim, just so I understand, 

13 you did say that you had difficulty with the IEEE 

14 standard definition?

15 MR. BALLO: I don’t have the specific page 

16 in front of me right now, but I think it actually 

17 just -- in discussing the scope of the ANSI 

18 standard, it talked about the standard would apply 

19 to subway and vault transformers, but it didn’t 

20 actually provide any more specific language to 

21 identify what is a subway or vault transformer. 

22 What makes it a subway transformer? What makes it a 

23 vault transformer?

24 MR. PARKER: I think we can delegate to 

25 the group a charge to work through those details. 
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1 So please, if you’re interested, if you volunteered 

2 to be on this group, please let me know by e-mail, 

3 just confirm by e-mail by the end of the week, and 

4 hopefully within the next day or so, so that we can 

5 get the group formed and then I will be in touch 

6 with the group about a schedule for delivering your 

7 report and so forth for the next meeting. Remember 

8 the next meeting is our last scheduled meeting, so 

9 we’re going to have to have things done farther in 

10 advance of that meeting than we did in this case. 

11 Richard, any other issues -- yes.

12 MR. CASKEY: For some reason in my 

13 calendar I think I have like somewhere around 

December 12th or 13th

16 PARTICIPANT: That was cancelled.

14 , like the fifth meeting. Was 

15 that --

17 MR. CASKEY: Okay, so those dates were 

18 cancelled. 

PARTICIPANT: November 30th

21 MR. CASKEY: And those two are the last 

22 ones, basically.

19 at APPA is the 

20 next one.

PARTICIPANT: November 30th 23 and December 

1st

25 MR. CASKEY: Is that right?

24 . Yes.
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1 MR. PARKER: The next meeting is the last 

2 currently scheduled meeting. If people are open to 

3 it, if there seems a point, a need for it, I think 

4 we can look at additional meetings, but they’re hard 

5 to schedule and so we would need to decide that 

6 fairly soon. It’s much easier for low voltage than 

7 for medium voltage. There are some options if we 

8 need to do that that we might be able to explore. 

9 Eric.

10 MR. PETERSEN: Just want to make a final 

11 comment just in regards to -- I appreciate the 

12 position that Mr. Hodge made the comment that our 

13 interests, obviously, are associated with defining 

14 an efficiency level that we could live with as a 

15 steel industry, is an efficiency level at which we 

16 participate with in supplying. So as we look at how 

17 we would base that decision, we’re going to come 

18 back to something like this -- it doesn’t have to be 

19 this data, but there’s got to be something that 

20 gives us a confidence level at the different design 

21 lines that we can participate. I only have the 

22 ability to be able to put something like this up on 

23 the board so whatever can be given to be able to 

24 help define an assurance that there is an efficiency 

25 level at which it accomplishes transformer 
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1 manufacturers use a range of supply that includes 

2 grain-oriented electrical steel, is going to be a 

3 key component for us to make a decision on whether 

4 or not we would move past the zero to the one, the 

5 0.6 range essentially, that we’ve done. We are 

6 simply trying to find where does steel continue to 

7 be a viable supplied product for the transformer 

8 industry. So we need help in understanding where 

9 that would be. So I would not want to go past 

10 emphasizing that point because that’s the only 

11 position that we’re obviously going to be making a 

12 decision is based upon is what protects the interest 

13 of the steel industry so that we participate. So 

14 again, I just want to emphasize, whether it’s an 

15 analysis like this, however it might be, please make 

16 sure that is available to help us understand where 

17 we can participate.

18 MR. PARKER: Great. Anything else we need 

19 to cover before we wrap up? All right. 

20 MR. ROSENSTOCK: Real quick, Steve 

21 Rosenstock, EEI. We’ve had our discussions at our 

22 utility caucus and John Caskey through out 

23 something. I think we’re okay with -- again, at 

24 least right now, as a starting point, for EL1. I 

25 forget, which year did we say -- four years -- four 
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1 years after the announcement of the final rule. Not 

2 sure about the step after that, but again, you know, 

3 DOE has to look at -- relook at rules every six 

4 years, so again, based on all the data that we’ve 

5 seen and the charts like this, I think we were --

6 unless we see some other data that really convinces 

7 us, we’re a little bit queasy about going beyond 

8 level one at least for now. Maybe in a few years, 

9 maybe after we see a lot more market share of 

10 amorphous core, lot more suppliers, but at this 

11 point with all the data that we’ve seen to date, 

12 we’re a little -- very worried about going beyond 

13 level one for a lot of reasons in terms of 

14 competitiveness and suppliers. But again, if 

15 there’s other data that shows that we can, we’re 

16 open to it. But at least as of right now, as of 

17 today, after all the things we’ve seen, and all the 

18 presentations, we’re a little worried about going 

19 beyond -- again, without all the breakouts and 

20 everything, obviously, before all the breakouts and 

21 any carve outs or BIL stuff, based on all the data 

22 and all the things that we’ve seen going above a 

23 level EL1 we’re right now a little concerned with. 

24 Again, just as an information point, just to give 

25 you an idea kind of where we are. point, just to 
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1 give you an idea kind of where we are.

2 MR. PARKER: And that’s because your view 

3 is that the shift to amorphous would be too 

4 pronounced if you go beyond that and that you’ll be 

5 hostage to the amorphous suppliers?

6 MR. ROSENSTOCK: I don’t want to say 

7 hostage, you know, we’re in DC, we don’t like that 

8 word. 

9 MR. PARKER: But is that the nature of 

10 your concern just so we know what underlies your 

11 nervousness?

12 MR. ROSENSTOCK: Well, it’s not -- it’s 

13 the cost and the potential, you know, what happens 

14 to, you know, are we going to have fewer transformer 

15 manufacturers to choose from? So it’s a little of 

16 both. Yes, that’s underneath it, but on the bigger 

17 picture is like are we going to have as many 

18 suppliers, yes or no? Are we going to have as much 

19 choice, yes or no? What happens to the prices? And 

20 based on this, where is the asymptote really start 

21 to skyrocket for us? So that’s --

22 MR. PARKER: Okay. Thank you. 

23 MR. MEYERS: Aaron Meyers, Cooper Power 

24 Systems. So, for example, I have the same concern 

25 beyond EL1, and it’s really primarily driven by the 
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1 fact that EL1 -- well any of the design lines, 

2 actually, are just a single design configuration 

3 that’s supposed to represent an entire family of 

4 designs. And it was an unintended consequence, I 

5 think, of the DOE efficiency standard that took 

6 effect in 2010, but it essentially killed off 2000 

7 KVA three-phase transformers with a 120 secondary. 

8 So the current in the secondary is too high, you 

9 can’t make the efficiency. It essentially killed 

10 off that product from the product scope. 

11 And so in reference to Steve’s comments, 

12 if we take too big of a step, there might be 

13 unintended consequences that shake out that were 

14 never considered going into it. And to add to what 

15 Steve’s list of current concerns are, we’re also 

16 concerned about the viability of the rebuilding 

17 market and by taking a small step, we’ll be able to 

18 feel that out and potentially model it more 

19 accurately in considering a higher level beyond EL1. 

20 But at this point in time, I think we stand with EEI 

21 on that conclusion.

22 MR. NADEL: This is Steve Nadel. I mean, 

23 we previously stated our position that we’re 

24 rejecting EL1. We’re open to considering another 

25 level, so I think it’s going to be critical to come 
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1 up with some analyses that help things move. If we 

2 get to we’re not moving off of EL1, period, I’m not 

3 sure it’s worth getting together, so we need to get 

4 the analyses out and enough time, and people need to 

5 come here to this next meeting knowing that we’re 

6 going to need flexibility or else we can all save 

7 ourselves some time.

8 MR. PARKER: And I think, you know, and I 

9 think the principle of this group has to be that you 

10 support your positions with arguments and that we 

11 explore the arguments through further refinements. 

12 So I’m hoping that the work that we’re doing on 

13 material price sensitivities explores what happens 

14 when prices between amorphous and other metals start 

15 diverging. I hoping that will shed light on things, 

16 and we’ll try to get that out as soon as we can.

17 MR. ROSENSTOCK: And there’s this 

18 information right here as well. Steve Rosenstock, 

19 EEI.

20 MR. PARKER: What’s that?

21 MR. ROSENSTOCK: The information that was 

22 presented by AK Steel that --

23 MR. PARKER: Yes.

24 MR. ROSENSTOCK: -- it’s out there and I’m 

25 not in a position, you know, whether that’s 
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1 specially -- again --

2 MR. PARKER: Again, we need this kind of 

3 input from the transformer makers. We’ve gotten it 

4 now on the record from two major makers, and that’s 

5 now part of the record. And we just need to know 

6 how it looks for others and why. And hopefully 

7 we’ll get some analysis of that. Rick.

8 MR. ANDERSON: Steve, we really do want to 

9 reach a consensus, we really do. We consider what 

10 you guys said earlier about the tiered approach, and 

11 we kind of discussed it amongst ourselves. To 

12 Steve’s point, one of the bigger concerns is the 

13 cost, you know, to implement. And we had discussed 

14 internally about, you know, moving -- starting at 

15 EL1 in the future and then reaching for EL2 later on 

16 in that second tier. And in the meantime, between 

17 EL1 and two, we do a sanity check. Because we just 

18 don’t want to jump off that cliff and have things 

19 change and regret that we’ve done that.

20 So we’ve kind of tabled the notion of the 

21 tier because we know that John you’ll relook at this 

22 in six years, is that right? This transformer 

23 efficiencies, DOE will?

24 MR. CYMBALSKY: Yes, we --

25 MR. ANDERSON: Is that true?
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1 MR. COHEN: This is Dan Cohen, DOE. Yeah, 

2 we have an obligation, a legal obligation to look 

3 back at every one of our standards within six years 

4 of issuance, so this would be no different from any 

5 other standard.

6 But if I could, just on one other point, 

7 which is you were talking about the tiered standard. 

8 That came up in the ’07 rulemaking, and we said we 

9 didn’t have legal authority to do that. So I just 

10 want to put that out there, that was a statement we 

11 made in the ’07 rule.

12 MR. ROSENSTOCK: Quick response? Then how 

13 did the clothes washer rule become a two-tier 

14 standard in 2001?

15 MR. COHEN: So there are -- if you look 

16 in the statute --

17 MR. ROSENSTOCK: Is that illegal?

18 MR. COHEN: No. The opinion -- we would 

19 never do anything illegal, Steve. So our opinion is 

20 if you look -- the reason for that is if you look 

21 through the statute at various different products, 

22 there are certain places where Congress authorized a 

23 tiered standard, and in those instances, we have the 

24 authority to do that. But the flip of that is, 

25 since Congress knows how to authorize a tiered 
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1 standard, and did in certain instances, our view is 

2 that where they didn’t, we don’t have the authority.

3 MR. DeLASKI: And just to follow up on 

4 that. I asked you at our first meeting and you got 

5 back to us later about the notion of, I think just 

6 flexible effective dates. Are we committed to the 

7 three year lead time? And what I think the response 

8 back was, you know, that the Department has been 

9 flexible in recent rulemakings where there have been 

10 a joint recommendation by stakeholders using the 

11 direct final rule authority, and that’s new 

12 authority that’s given to you since 2007 that you 

13 didn’t have when you issued the transformer rule in 

14 2007, because it was enacted late in the year. So 

15 I’d ask you to think about that, whether that

16 authority, under the DFR provision, gives you the 

17 flexibility to consider tiered standards.

18 MR. COHEN: So we’ll be happy to take it 

19 back and look at it. There are two different 

20 questions you’re asking there. One is about the 

21 flexibility on the compliance date itself, and the 

22 second is whether you can have essentially two 

23 compliance dates.

24 MR. DeLASKI: Which is a new question for 

25 you.
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1 MR. COHEN: Yes.

2 MR. DeLASKI: I recognize it’s a new 

3 question.

4 MR. COHEN: But in this case, as I said, 

5 this was asked and answered in the ‘07 rule, so it’s 

6 a little harder to move off of that.

7 MR. DeLASKI: Again -- right.

8 MR. COHEN: So we have a public statement 

9 out there on this very issue.

10 MR. DeLASKI: Except that Congress changed 

11 the law in the interim on this --

12 MR. COHEN: In a generic provision as 

13 opposed to -- so.

14 MR. DeLASKI: And you can maybe use that.

15 MR. ROSENSTOCK: Mr. Cohen, for clothes 

16 washers, which -- which federal law allowed tiered 

17 standards for the clothes washers?

18 MR. COHEN: It would have been under REPCA 

19 (ph), I just -- I will claim the I wasn’t here at 

20 the time --

21 MR. ROSENSTOCK: 1975?

22 MR. COHEN: It’s basically, yes, the 

23 Energy Policy and Conservation Act, which gives the 

24 authority for this rulemaking as well. It’s the 

25 same statute, just different -- so there are 
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1 different -- the way it’s set up, there’s one whole 

2 section that deals with residential products; one 

3 whole section that deals with commercial products, 

4 clothes washers is under both, actually, because 

5 there are both residential and commercial clothes 

6 washers. They have separate provisions that govern 

7 those and those are regulated.

8 PARTICIPANT: So John, for clarity, you 

9 will -- let’s just say for laughs we decide, we come 

10 to agreement on EL1. Six years from now you can 

11 come back and say, okay, time to take a second look 

12 at this. And six years from now you could say, 

13 well, you settled on EL1. The manufacturers have 

14 figured out how many EL2 designs, so six years from 

15 now you could say, EL2, is that right? Okay. 

16 MR. DeLASKI: Just to be clear, so that’s 

17 different than a tiered standard.

18 MR. COHEN: Yeah.

19 MR. DeLASKI: That’s just a right -- they 

20 have a look back -- a provision to look every six 

21 years. On the tiered standard we took the view with 

22 Steve in 2007, with EEI and APPA, that DOE could do 

23 a tiered standard in 2007. As Dan said, DOE 

24 considered that view, rejected it. Doesn’t mean 

25 that DOE would reject it again. We think that they 
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1 could do it again and we think they have a new 

2 provision authority to do it.

3 MR. COHEN: The point, Andrew, is that we 

4 listened to what you said, and then we do want to 

5 reach consensus. That was the point.

6 MR. DeLASKI: And I guess the thing is 

7 that we look at tiers -- so keeping the time frame 

8 in mind, that they’re going to look back in six 

9 years whether we agree to it or not.

10 MR. COHEN: Right.

11 MR. DeLASKI: So, let’s -- in thinking 

12 about tiers, we would want to try to keep them 

13 within a relatively -- a time frame in which we’re 

14 getting to the savings happening within, you know, 

15 our working lives.

16 MR. PARKER: Bob.

17 MR. SAINT: Yeah, this is Bob Saint from 

18 NRECA. What always comes -- is coming to my mind is 

19 I recollect in 2007 when we, you know, the original 

20 standard, and we were, when the efficiency levels 

21 were raised higher than DOE recommended, we were 

22 afraid that by now that the predictions of steel not 

23 being available, at a very high price, we’d be here 

24 today with transformers, like we have seen before, 

25 lead times, six, eight months, a year, prices going 
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1 sky high. 

2 That didn’t happen because the economy 

3 tanked, and the demand for transformers went down 

4 worldwide. The demand for steel went down 

5 worldwide, so the manufacturers were able to produce 

6 enough steel so we could buy transformers on a 

7 timely basis at a very effective cost. 

8 If we raise the efficiency level too much 

9 too fast, I’m just afraid that we’re going to go 

10 back to what we saw in 2005, 2006, where 

11 transformers were not available, they were sky-high, 

12 and so assuming -- I have to assume that some day 

13 the economy will recover and we’ll get back to some 

14 kind of a growth and some kind of a demand. I hope 

15 that happens.

16 But I also hope that we’ll be able to buy 

17 transformers when we need them at that point. So 

18 that’s one of the things we need to think about when 

19 we look at the cost, the future cost, is the steel 

20 going to be available, this -- at the levels that we 

21 predict may happen, not the demand today.

22 MR. PARKER: Great. So I think that’s a 

23 good place to stop for today. One thing that we did 

24 not cover in depth is the break-out, the sub25 division of one of the product classes into 
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1 different BIL ratings. That again is a technical 

2 issue, so we’ll be in touch with you by e-mail after 

3 this meeting to discuss how to resolve that and 

4 nominations to work on that group to come up with a 

5 proposal. We discussed that at previous meetings 

6 and also summarize that discussion and let that be 

7 the basis for the working group. So just please not 

8 that that will be going forward as well on a fairly 

9 fast time track now, since we only have a few weeks 

10 left.

11 Well, nobody thought this would be easy, 

12 and it hasn’t been easy, and it won’t be easy. But 

13 I think we actually made some progress today and I 

14 just appreciate the frankness, the candor, and the 

15 civility and the good will that was evidenced around 

16 the table. 

17 We’ll see some of you tomorrow and for 

18 everyone, we look forward to seeing you in a few 

19 weeks and we will definitely be in touch sooner than 

20 that by e-mail. 

21 Are people, by the way, able to get out of 

22 the Sharepoint site? Have there been problems 

23 logging on? I have not tried. So, we’ll be in 

24 touch. We’ll try to put everything together there, 

25 so if you get a chance, explore it, because you’ll 
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1 find kind of a one-stop shopping. And if you’re 

2 having trouble getting on, please let us know. It 

3 should be used as a resource going forward.

4 Take care.

5 MR. CYMBALSKY: Thank you.

6 (Whereupon, at 5:49 p.m., the meeting in 

7 the above captioned matter was adjourned.) 

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REPORTER'S CERTIFICATE

This is to certify that the attached proceedings 

before:

U.S. DEPARTMENT OF ENERGY

VOLUME II

In the Matter of:

MEETING OF THE MV WORKING GROUP

Were held as herein appears and that this is the 

original transcript thereof for the file of the 

Department, Commission, Board, Administrative Law 

Judge or the Agency.

Further, I am neither counsel for or related to 

any party to the above proceedings.

 Official Reporter

Wendy Greene 

Dated: November 14, 2011