1-i CHAPTER

1. INTRODU CTION
TABLE OF CO NTENTS
1.1 PURPOSE OF DOCUMENT

............................................ 1-1 1.2 OVERVIEW OF APPLIANCE STANDARDS

.............................. 1-1 1.3 OVERVIEW OF DI STRIBUTI ON TRANSFORMER STANDARDS

............ 1-2 1.3.1 Process Improvement

............................................. 1-4 1.4 STRUCTURE OF THE DOCUMENT

..................................... 1-5

LIST OF TABLE S Table 1.3.1 Distributi on Trans formers Analyses in Acc ordance

with the Pr

ocess Rule

... 1-51-1 CHAPTER

1. INTRODU CTION

1.1 PURPOSE OF DOCUMENT This technical support document (TSD) is a “stand-alone” re port that provides the technical analy ses and results in support of the information presented in the notice of proposed rulemak ing (NO PR) for dis tribution t ransfor mers. ## FR #####. This NOPR TS D also complements the engineering, life- cycle c ost (LCC) and pay back period (PBP), national impacts, and manufacturer impact analy sis spreadsheets that are posted on the Department of Ene rgy ’s web site a t: http://www.eere.energy .gov/buildings/appliance_standards/commercial/distribution_transformers .html

1.2 OVERVIEW OF APPLIANCE STANDARDS Part C of Title III of the Energ y Policy and Conservation Act (EPCA) provides for an energy conservation program for ce rtain commercial and industrial equipment. (42 U.S.C. 6311- 6317) In particular, sec

tion 346 of EPCA states that the Secretary of Energy

must prescribe testing requirements and energ y conserva

tion standards for those distribution transformers for which the Secretary

determines that standards would be technologically feasible and economically justified, and would result in significant energy savings, although section 325(v) of EPCA in effect modifies this provision by specify ing standards for low voltage dry -type distribution transformers. (42 U.S.C. 6295(v) and 6317(a)) The Department designs any new or amended standard to achieve the ma ximum improvement in energy

efficiency

that is technologically

feasible and economically justified. ( See 42 U.S.C. 6295 (o)(2)(A) , 6313(a), and 42 U.S.C. 6317 (a) and (c)) I f a propo sed stand ard is not designed to achieve the maximum improvement in energy efficiency

or the maximum reducti on in ener

gy use that is

technolo gicall

y f easible , the Secr

etary states the reasons for this in the proposed rule. To determine whether ec onomic justification exists, the Department reviews comments that it has solicited on the proposed rule and determines that the benefits of the proposed standard exceed its burdens to the grea test extent practicable, weighing the following seven factors (42 U.S.C. 6295 (o)(2)(B)) : 1. The economic impact of the standard on manufactur ers and consumers of products subject to the standard;
2. The savings in operating costs throughout the e stimated average life of the covered products in the ty pe (or class) compared to any increase in the price, initial ch arges , or mainte

nance expenses for the cov ered pr oducts tha

t are like ly to result from the imposition of the standard;1-2

3. The total projected amount of energy savings likely to re sult directly from the imposition of the standard;
4. Any

lessenin g of the utility or the pe rforman ce of the covere d produc ts likely

to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in writing by the Attorney Gene

ral, that is likely to result from the imposition of the standard;
6. The need for national energ y conserva

tion; and
7. Other fa

ctors the Secreta ry considers releva

nt.

1.3 OVERVIEW OF DISTRIBUTION TRANSFORMER STANDARDS On Octobe

r 22, 1997 , the Secr

etary of Energ y is sued a de

terminat ion that “ based on its analysis of the infor mati on now avail able, the De partm ent ha s dete rmine d that energy conserv ation stan

dards for transf

ormers a ppear to be techn ologica lly f easible and eco nomically justified, and are likely to r esult in significant savings.” 62 FR 54809. The Secretary ’s determination was based, in part, on analy ses conducted by

the Oak Ridge National Labora

tory (ORNL

). In July 1996, ORNL published a report entitled Determi nation Ana lysis of En ergy Cons ervationStandards f or Distribu tion Transfo rmers , ORNL-6847, which assessed options for setting energy conservation standards. That report was based on information from annual sales data, avera ge load data, and survey

s of existing and potential transformer efficiencies obtained fr om several organizations. In September 1997, ORNL published a second report entitled Supplement to the ‘Determination Analysis’ (ORNL-6847) and Analysis of the NEMA Efficiency Standard for Distributio n Transform ers , ORNL -6925. Th is repor t assesse d the sug gested

efficie ncy levels contained in the then-newly published National Electrical Manufacturers Associa tion (NEMA) Standards Publication No. TP 1-1996, Guide for Determining Energy Efficiency for Distribution Transforme

rs , along with the e fficien

cy levels pr eviously consider ed in ORNL -6847. Th e latest download able version of TP 1 is availa ble at the NEMA web site: http://www.nema.org/stds/tp1.cfm#download. In its supplemental assessment, ORNL used a more accurate analy

tical model and better transformer market and loading data developed following the publication of ORNL-6847. Dow nloadable versions of both ORNL repor ts are availab le on the D OE websit e at: http://www .eere. energ

y.gov/buildin

gs/appl iance_s tandard s/commer cial/dist trans_su pport.htm l In the y ear 2000, as a result of the Secretary ’s positive determination, the Department developed a Framework Document for Distribution Transformer Energy Conservation Standards Rulemaking , describing the procedural and a nalytic approa

ches that the Department1-3

anticipated using to evaluate the establishment of energ y conserva

tion standards for distribution transformers. This document is also available at http://www.eere.energy .gov/buildings/appliance_standards/commercial/pdfs/trans_f ramework.pd f. On Nov ember 1, 2000, the Department held a

public me eting to

discuss th e propose d analy tic framew ork. Manu

factur ers, tra de assoc iations, e lectric

utilities, e

nvironme ntal advo cates, regulat ors, a nd ot her in teres ted pa rties atten ded th e Framew ork Do cumen t pub lic m eetin g, actively particip ating in

discussio ns and sho wing the ir willing ness to wo rk with DO E in analyzing possible ef

ficiency sta

ndards. The major issues discussed were: definition of covere d transformer products; definition of product classes; possible proprietary (patent) issues regarding amorphous metal; ties between efficiency improvements and installation costs; baseline and possible efficiency

levels; base case trends under dereg ulation; transformer costs versus transformer prices; appropriate LCC subgroups; LCC methods, e.g., total owning c ost (TOC); loading levels; ut ility impact an

aly sis vis-a- vis dere gulation; scope o f environmental a naly sis; and harm onization o f standa

rds with ot

her coun tries. Stakeholder comments submitted during the Framework Doc ument comment period elaborated on the issues raised at the meeting a nd also addressed the following issues: options for the s creeni

ng ana lys is; appro aches f

or the en gineer ing ana lys is; discoun

t rates; e lectric ity prices ; the n umber and ba sis fo r the ef ficie ncy level s to b e analyze d; th e nati onal e nergy savi ngs (NES) and net present value (NPV) analy ses; the analysis of the e ffects of a potential standard on employment; the manufac turer impact analy sis; and the timing of the analy ses. The Department worked with its contractors to address these issues as well as those ra ised during the Framework Docum ent me eting. As part of the information gathering a nd sharing process, the Department org anized and held visits with manufacturers of liquid-immersed and dry -type distribution transformers during the first quarter of 2002. T

he Depa rtment se lected c ompanies that represente d produc tion of all typ es of distr

ibution tra

nsforme rs, rang ed from s mall to lar ge manu factur ers, and included both NEMA and non-NEMA members. The Department had f our objectives for these meetings: (1) solicit fe edback

on the met

hodolog y a nd finding s presen

ted in the draft e nginee ring analy sis update report that the Department posted on its website Dece mber 17, 2001; (2) get information and comments on production costs and manufacturing proce sses presented in the December 17, 2001, draft engineering a

nalysis update repor

t; (3) provide an opportunity, e arly in the rulemaking process, to express specific conce rns to the Department; and (4) foster coopera tion betwee n the manufactur

ers and t he Depa rtment. There were five ge

neral issues discussed at each of these manufa cturer site meetings: (1) company over

view and product offerings; (2) the struc ture of the engineering a

nalysis, including the engineering desig

n lines, which represent groupings of similarly built distribution transformers; (3) design option combinations for eac h of the representative transformers fr om the engineering desig

n lines; (4) use of Optimized Program Services (OPS) distribution transformer design software; and (5) the 0.75 scaling rule, used to scale the costs and efficiencies of the repres entative

units within

each of the eng ineerin

g desig n lines.1-4

The Department incorporated the information g athered at the meetings in its engineer ing analysis. Following

the publication of the advance notice of proposed rulema king (ANOPR) on July 1 9, 2004 an

d the ANO PR public me eting on Septembe

r 28, 2004 , the Dep artment held additional meetings with manufacturers as part of the consultative process for the manufacturer impact an aly sis (Chapt

er 12). D uring th is period , the Dep artment r eceive d numerou s comments regarding the ANOPR analy sis. The Depa rtment de veloped t wo ty pes of spr eadshee t tools for this rulemaking. The firs t spreadsheet tool calculates L CC and payback pe riods. The Department developed 10 different LCC and pay

back period spreadsheets to capture va riations in the distribution transformer market. The sec ond sprea dsheet to ol calcu

lates impa

cts of ca ndidate s tandard s at vario us levels on transf ormer sh ipments, a

nd calcu lates the NES and NPV

at vario us standa rd level s. These spreadsheets are posted on the Department’ s website along with the complete TSD documenting the analyses suppor

ting this NOPR. The Ener gy Policy Act of 20 05 (EPACT 2 005), enacted in August 2 005, amen

ded EPCA to prescribe standards for low-voltage , dry-ty pe distribution transformers. EPACT 2005 specifies that the efficiency of any such tra

nsformer “manufactured on or af ter January 1, 2007, shall be the Class I Efficiency Levels for distribution transformers spec ified in table 4-2 of the ‘Guide for Determining Energ y Efficienc

y for Distribution Transfor mers’ published by the National Electrical Manufacturers Associa tion (NEMA TP-1-2002).” Because EPACT 2005 established energ y-eff iciency standa

rds for low-voltage, dry

-type distribution transformers, the Department has removed from this NOPR TSD its analy sis of design lines 6, 7, and 8, which comprise product class 3 (low-voltag e, dry-ty pe, single-phase) and product class 4 (low-voltage, dry -type, three -phase).
1.3.1 Proce ss Impro vemen t Although the Procedures, Interpretations and Policies for Consideration of New or Revised Energy Co nservati

on Standar

ds for Consu mer Produ cts (the “Process Rule”), 10 C FR 430, Subpart C, Appendix A, applies to consumer (residential) products, in its Notice of Determi nation for Distribu

tion Tran sformers, the De partmen t stated it s intent to a

dhere in this rulemak ing to the provision s of the Pr

ocess Rule , where

applica ble. 62 F R 54817. I

n Table 1.3.1, the Department presents the analy ses conducted in its evaluation of standards for distribution transformers.a

Because EPACT 2005 establ ish ed ener gy- eff ici ency st andards for

low- volt age, dry- ty pe dis tri buti on transformers, the Dep artment remo ved this type of transforme r from the N OP R stage of its analysis.
1-5 Table 1.3.1 Distribut

ion Transfor mers Analyses in A ccordanc e with the P rocess R ule ANOPR NOPR a Fina l Ru le Market and technology assessment Revised ANOPR analyses Revised NOPR analyses Scre ening a nalysis Life-cycle cost sub grou p ana lysis Eng ineerin g analysis M anufac turer im pac t analysis Energy us e and end-us e load chara cter izat ion Utility imp act ana lysis
Markups for equi pment pric e deter minat ion Em ploym ent imp act ana lysis

Lif e-cy cle cost

and pay back per iod analy ses Environmental assessment
Ship men ts analysis Reg ulatory im pac t analysis Na tional im pac t analysis The analyse s in Table 1.3.1 reflect methodological improvements made in ac cordance with the Process Rule, including the development of economic models and ana lytical tools. For example, this NOPR uses the full range of consumer margina l electricity costs, which a re the energ y c osts that c orrespond to incr emental c hange s in ener

gy use. The LCC analy sis also defines a range of ele ctricity price forecasts used in the economic analy ses, and defines a range of primary ene

rgy conversion factors and associated emissions reductions based on the generation displaced by ene

rgy -efficiency

standards.

1.4 STRUCTURE OF THE DOCUMENT This TSD consists of 14 chapters, 2 reports, and 16 appendices. Chapter 1 Introduction: provides an overview of the appliance standards program a nd how it applies to the distribution transformer rulemaking, provides a history of the Department’s actions to da te, and ou tlines the structur e of this d ocument. Chapter 2 Analytic Fr amework: describes the rulemaking proc ess. Chapter 3 Market and Technology Assessment: provides the Department’s definition of a distribution transformer, lists the proposed product classes, and names the major industry play

ers. This chapter also provides an overview of distribution transformer technology, including techniques employ ed to improve transformer ef fi ci en cy.1-6

Chapter 4 Screening Analysis: identifies all the design options that improve transformer

efficiency , and determines which of these are eva luated and which are screened out. Chapter 5 Engineering Analy sis: presents detailed cost and efficiency information for the units of analysis. This chapter de scribes the Department’s approach for determining manufacturer costs, including the markups used for converting materia l costs to ma

nufactu rer sale s prices

. Chapter 6 Energy

Use and End-Use Loa

d Characterization: discusses the process used for generating ener

gy use estimates and end-use load profiles for distribution transfo rmers. Chapter 7 Markups for Equipment Price Determination: discusses the methods used for

establishing markups for converting manufa cturer selling prices to installed customer equipmen

t prices. Chapter 8 Life-Cy

cle Cost and Paybac

k Period Analyses: desc

ribes the impact of potential candidate standards on consumers of transformer s. This chapter compares the life-cyc le cost of transformers and other measures of consumer impact with and without ca

ndidate e fficien

cy standar ds. Chapter 9 Shipments Analysis: uses historical data to provide a shipments estimate for

future ye ars and describes the methods used for forec asting shipments with and without ca

ndidate e fficien

cy standar ds. Chapter 10 National Impact Analy sis: describes the national forecast of energ y consumption, efficiency of new units, and annual equipment sales in the absence (or pr esence) of new r egulat ions. This c

hapter a lso evalu ates indir ect employme

nt impacts

. Chapter 11 Life-Cy

cle Cost Subgroup Analy sis: evaluates impacts on any ide ntifiable groups or customers who may

be disproportionately af

fected by any proposed na

tional energ y- efficie ncy standar d level. Chapter 12 Manufacturer I mpact Analysis: assesses the impac ts on transformer manufacturers o f any

proposed energ y- efficie ncy standar d. In addition to financial impacts, a wide range of quantitative and qualitative effects may occur following adoption of a standard that may require changes to the manufa cturing practices for these products. Chapter 13 Utility I

mpact Analysis: analy

zes the effects of proposed distribution transformer standar d levels on the ele ctric uti lity industry . The utili

ty im pact ana lys is consists of a comp arison be

tween mod

el result s for the

base ca se and for policy

cases in which proposed standards are in place.1-7

Chapter 14 Employment I mpact Analysis: estimates national job cre ation or elimination (direct and indirect effects) re sulting from possible standards, due to reallocation of the associated commercial expenditures for purcha sing and operating equipment. Environmental Assessment Report: assesses the impacts of proposed distribution transformer standard levels on certain environmental indicators. Regula tory Impa ct Analy sis Report : examines a

nd evalua tes major alterna tives to sta

ndards, analyzing the c osts and benefits of each. An appendix describes the use of implementation curves. Appendix 3A Core Steel Market Analy sis: presents the Department’s research into the

global c ore stee l market a nd impact s on price s of core steel. Appendix 5A Supplementary Engineering Analy sis Results: presents scatter plots for

each of the 10 design lines, illustrating no-load losses versus selling price; lo ad lo ss es ve rs us se ll in g p ri ce ; a nd tr an sf or me r w ei gh t v er su s e ff

ic ie nc y. Appendix 5B Scaling Relationships in Transformer Manufacturing : discusses the

technical basis of the 0.75 scaling rule. Appendix 5C Q1 2005 Material Pricing Analysis: presents the material prices developed

by t he Depa rtment for study

ing rec ent trends in mater ial price s (first quarter of 2005). This includes the material prices themselves, the engine ering a

naly sis plots, a

nd summar

y LCC analy

tical re sults on this pricing scenario. Appendix 8-A Life-Cycle Cost and Payback Perio d Results : presents LCC an d PBP

results f or all 10 d

esign li nes. Appendix 8B Uncertainty a nd Variability: provides an ove rview of the treatment of uncerta inty and vari ability

in the ana

lys is. Appendix 8C Sample Uti lities: details the s pecific electri c utilities

for whic h electr icity tariffs were c ollected

for use i n the ana lys is. Appendix 8D Life-Cy cle Cost Sensitivity Results: presents the findings for the sensitivity analy

sis of design lines 1 and 12 that result from changing key variabl es. Appendix 8E Averag e Transf ormer De sign Prop erties f rom L ife-Cy

cle Cost Mo del: provides the average manufa cturer’s selling price, the aver age installed cost (consumer equipment cost plus installation) and other important attributes for each of the thirteen distribution transformers ana lyzed.1-8

Appendix 10A User I nstructions for Shipments and National Impa cts Analy sis Spreadsheet Model Appendix 10B National Energ y Sa vings an d Net Nat ional Pre sent Valu

e Results: present s NES and N

PV results

for all e ight pro duct cla sses. Appendix 11A Life -Cycle Cost Sub group Re sults Appendix 12A Manufacturer I mpact Analysis I

nterview Guides: Liquid-I mmersed and Medium-Voltage, Dry

-Type Appendix 12B Manufacturer I mpact Analysis Small Business I nterview Guide Appendix 12C Government Regulatory Impact Model (GRI

M) Supporting Documentation Appendix 13A NEMS-BT Extension Modeling Bey ond 2025