1-i

CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 DOCUMENT PURPOSE .................................................................................... 1-1

1.2 HISTORY OF DISTRIBUTION TRANSFORMER RULEMAKINGS ............ 1-1

1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS ....... 1-6

1.3.1 Manufacturer Interviews ...................................................................................... 1-8

1.4 STRUCTURE OF THE DOCUMENT ................................................................ 1-8

LIST OF TABLES

Table 1.3.1 Analyses by Rulemaking Stage ................................................................... 1-7
1-1

CHAPTER 1. INTRODUCTION

1.1 DOCUMENT PURPOSE

This technical support document (TSD) is a standalone report that presents the technical 

analyses that the U.S. Department of Energy (DOE or Department) has conducted in preparation 

for amending energy conservation standards for liquid-immersed, low-voltage dry-type (LVDT), 

and medium-voltage dry-type (MVDT) distribution transformers. 

1.2 HISTORY OF DISTRIBUTION TRANSFORMER RULEMAKINGS

Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), 

Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation 

Program for Consumer Products Other Than Automobiles. Part C of Title III of EPCA (42 

U.S.C. 6311–6317) established a similar program for “Certain Industrial Equipment,” including 

distribution transformers.1

 EPCA, as amended by the Energy Policy Act of 1992, Pub. L. 102-

486, directs DOE to prescribe energy conservation standards for those distribution transformers 

for which the Secretary of Energy (Secretary) determines that standards “would be 

technologically feasible and economically justified, and would result in significant energy 

savings.” (42 U.S.C. 6317(a)) DOE issued a final rule in 2007 that prescribed standards for 

distribution transformers. 72 FR 58190 (October 12, 2007) (the 2007 final rule); see 10 CFR 

431.196(b)-(c).

During the course of the 2007 rulemaking for distribution transformers, the Energy 

Policy Act of 2005 (EPACT 2005), Pub. L. 109–58, amended EPCA to set standards for lowvoltage dry-type (LVDT) distribution transformers. (EPACT 2005, Section 135(c); codified at 42 

U.S.C. 6295(y)) Consequently, DOE incorporated these standards into its regulations, along with 

the standards for several other types of products and equipment, in a final rule published on 

October 18, 2005. 70 FR 60407, 60416–60417. 

After publication of the 2007 final rule, certain parties filed petitions for review in the 

United States Courts of Appeals for the Second and Ninth Circuits, challenging the final rule, 

and several additional parties were permitted to intervene in support of these petitions. (All of 

these parties are referred to below collectively as “petitioners.”) The petitioners alleged that, in 

developing energy conservation standards for distribution transformers, DOE did not comply 

with certain applicable provisions of EPCA and of the National Environmental Policy Act of 

1969 (NEPA), 42 U.S.C. 4321 et seq. DOE and the petitioners subsequently entered into a 

settlement agreement to resolve that litigation. The settlement agreement outlined an expedited 

timeline for DOE to determine whether to amend the energy conservation standards for liquidimmersed and MVDT distribution transformers. Under the original terms of the settlement 

 

1 For editorial reasons, upon codification in the U.S. Code, Parts B and C were redesignated as Parts A and A-1, 

respectively.
1-2

agreement, DOE must publish by October 1, 2011 either a determination that the standards for 

these distribution transformers do not need to be amended or a notice of public rulemaking 

(NOPR) that includes any new proposed standards and that meets all applicable requirements of 

EPCA and NEPA. However, due to an amendment to the settlement agreement, the October 1, 

2011, deadline for a DOE determination or NOPR was extended to February 1, 2012. If DOE 

finds that amended standards are warranted, DOE agreed to publish a final rule containing such 

amended standards by October 1, 2012. This document contains the technical details supporting 

today’s final rule. 

DOE initiated this rulemaking at the preliminary analysis stage rather than the framework 

document stage, as is traditionally done. In considering new or amended standards for a given 

product or type of equipment, DOE’s historic practice, generally, is to publish a framework 

document as the first step in the rulemaking process, and to subsequently issue a preliminary 

TSD that contains the Department’s preliminary analyses as to potential standards. The 

framework document generally advises interested parties of the analytical methods, data sources, 

and key assumptions DOE plans to use in considering the adoption of standards for the product 

or equipment type. Typically the document does not contain any analysis of the data.

On November 16, 2010, DOE announced a number of steps meant to streamline its 

regulatory process. Among these measures was the concept that, in appropriate circumstances, 

DOE might forego certain preliminary stages of the rulemaking process and gather data in more 

efficient ways. Because the previous rulemaking to develop standards for distribution 

transformers was completed in 2007, DOE has a set of methodologies, data sources and 

assumptions that have recently been vetted and revised according to public comments that the 

Department can use to perform the analyses needed for this rulemaking. Therefore, while DOE 

will conduct the analyses referenced by the petitioners’ complaint and required by EPCA and 

NEPA according to standard practices for energy conservation standard rulemakings, DOE is not 

issuing a framework document for this rulemaking. Rather, DOE initiated this rulemaking at the 

preliminary analysis stage and prepared a preliminary TSD about which it requested comment

and used when developing the revised TSD for the NOPR. Similarly, DOE requested comments 

on the NOPR TSD when developing this revised TSD for the final rule. 

For today’s rule, DOE is amending standards for LVDT distribution transformers, as well 

as standards for liquid-immersed and MVDT transformers. DOE is not required to consider 

LVDT distribution transformers as part of the settlement agreement but chooses to consider them 

along with liquid-immersed and MVDT distribution transformers in this final rule.

On July 29, 2011, DOE published in the Federal Register a notice of intent to establish a 

subcommittee under the Energy Efficiency and Renewable Energy Advisory Committee 

(ERAC), in accordance with the Federal Advisory Committee Act and the Negotiated 

Rulemaking Act, to negotiate proposed Federal standards for the energy efficiency of mediumvoltage dry-type and liquid immersed distribution transformers. 76 FR 45471. Stakeholders 

strongly supported a consensual rulemaking effort. DOE believed that, in this case, a negotiated 

rulemaking would result in a better informed NOPR and would minimize any potential negative 

impact of the NOPR. On August 12, 2011, DOE published in the Federal Register a similar 

notice of intent to negotiate proposed Federal standards for the energy efficiency of low-voltage 

dry-type distribution transformers. 76 FR 50148. The purpose of the subcommittee was to 
1-3

discuss and, if possible, reach consensus on a proposed rule for the energy efficiency of 

distribution transformers. 

The ERAC subcommittee for medium-voltage liquid-immersed and dry-type distribution 

transformers consisted of representatives of parties having a defined stake in the outcome of the 

proposed standards, listed below. 

• ABB Inc.

• AK Steel Corporation 

• American Council for an Energy-Efficient Economy

• American Public Power Association

• Appliance Standards Awareness Project

• ATI-Allegheny Ludlum

• Baltimore Gas and Electric 

• Cooper Power Systems 

• Earthjustice

• Edison Electric Institute

• Fayetteville Public Works Commission

• Federal Pacific Company

• Howard Industries Inc.

• LakeView Metals

• Lawrence Berkeley National Laboratory

• Metglas, Inc.

• National Electrical Manufacturers Association

• National Resources Defense Council

• National Rural Electric Cooperative Association

• Northwest Power and Conservation Council 

• Pacific Gas and Electric Company

• Progress Energy

• Prolec GE

• U.S. Department of Energy 

The ERAC subcommittee for medium-voltage liquid-immersed and dry-type distribution 

transformers held meetings on September 15 through 16, 2011, October 12 through 13, 2011, 

November 8 through 9, 2011, and November 30 through December 1, 2011; the ERAC 

subcommittee also held public webinars on November 17 and December 14. During the course 

of the September 15, 2011, meeting, the subcommittee agreed to its rules of procedure, ratified 

its schedule of the remaining meetings, and defined the procedural meaning of consensus. The 

subcommittee defined consensus as unanimous agreement from all present subcommittee 

members. Subcommittee members were allowed to abstain from voting for an efficiency level; 

their votes counted neither toward nor against the consensus. 
1-4

DOE presented its draft engineering, life-cycle cost and national impacts analysis and 

results on September 15 through 16, 2011. During the meetings of October 12 through 13, 2011, 

DOE presented its revised analysis and heard from subcommittee members on a number of 

topics. During the meetings on November 8 through 9, 2011, DOE presented its revised analysis, 

including life-cycle cost sensitivities based on exclusion of ZDMH and amorphous steel as core 

materials. During the meetings on November 30 through December 1, 2011, DOE presented its 

revised analysis based on 2011 core-material prices. 

At the conclusion of the final meeting, subcommittee members presented their efficiency 

level recommendations. For medium-voltage liquid-immersed distribution transformers, the 

advocates, represented by the Appliance Standards Awareness Project (ASAP), recommended 

efficiency level (also referred to as “EL”) 2 for all design lines (also referred to as “DLs”). The 

National Electrical Manufacturers Association (NEMA) and AK Steel recommended EL 1 for all 

DLs except for DL 2, for which no change from the current standard was recommended. Edison 

Electric Institute (EEI) and ATI Allegheny Ludlum recommended EL1 for DLs 1, 3, and 4 and 

no change from the current standard or a proposed standard of less than EL 1 for DLs 2 and 5. 

Therefore, the subcommittee did not arrive at consensus regarding proposed standard levels for 

medium-voltage liquid-immersed distribution transformers. 

For medium-voltage dry-type distribution transformers, the subcommittee arrived at 

consensus and recommended a proposed standard of EL2 for DLs 11 and 12, from which the 

proposed standards for DLs 9, 10, 13A, 13B would be scaled. 

The ERAC subcommittee held meetings on September 28, 2011, October 13-14, 2011, 

November 9, 2011, and December 1-2, 2011, for low-voltage distribution transformers. The 

ERAC subcommittee also held webinars on November 21, 2011, and December 20, 2011. 

During the course of the September 28, 2011, meeting, the subcommittee agreed to its rules of 

procedure, finalized the schedule of the remaining meetings, and defined the procedural meaning 

of consensus. The subcommittee defined consensus as unanimous agreement from all present 

subcommittee members. Subcommittee members were allowed to abstain from voting for an 

efficiency level; their votes counted neither toward nor against the consensus. 

The ERAC subcommittee for low-voltage distribution transformers consisted of 

representatives of parties having a defined stake in the outcome of the proposed standards. 

• AK Steel Corporation 

• American Council for an Energy-Efficient Economy

• Appliance Standards Awareness Project

• ATI-Allegheny Ludlum

• EarthJustice

• Eaton Corporation 

• Federal Pacific Company

• Lakeview Metals

• Lawrence Berkeley National Laboratory

• Metglas, Inc.
1-5

• National Electrical Manufacturers Association

• Natural Resources Defense Council

• ONYX Power

• Pacific Gas and Electric Company

• Schneider Electric

• U.S. Department of Energy 

DOE presented its draft engineering, life-cycle cost and national impacts analysis and 

results on September 28, 2011. During the meetings of October 14, 2011, DOE presented its 

revised analysis and heard from subcommittee members on various topics. During the meetings 

of November 9, 2011, DOE presented its revised analysis. During the meetings of December 1, 

2011, DOE presented its revised analysis based on 2011 core-material prices. 

At the conclusion of the final meeting, subcommittee members presented their energy 

efficiency level recommendations. For low-voltage dry-type distribution transformers, the 

advocates, represented by ASAP, recommended EL4 for all DLs, NEMA recommended EL 2 for 

DLs 7 and 8, and no change from the current standard for DL 6. EEI, AK Steel and ATI 

Allegheny Ludlum recommended EL 1 for DLs 7 and 8, and no change from the current standard 

for DL 6. The subcommittee did not arrive at consensus regarding a proposed standard for lowvoltage dry-type distribution transformers. 

DOE published a Notice of Proposed Rulemaking on February 10, 2012, which proposed 

amended standards for all three transformer types. 77 FR 7282. Medium-voltage, dry-type 

distribution transformers were proposed at the negotiating committee’s consensus level. Liquidimmersed distribution transformers were proposed at TSL 1. Low-voltage, dry-type distribution 

transformers were proposed at TSL 1. In the NOPR, DOE sought comment on a number of 

issues related to the rulemaking until April 10, 2012. In response to several comments suggesting 

DOE should analyze new TSLs and equipment classes, DOE published a Notice of Public 

Meeting announcing the availability of additional NOPR analysis and a public meeting to be held 

to discuss it. 77 FR 32916. 

Following publication of the NOPR, DOE received several comments expressing a desire 

to see some of the NOPR suggestions extended and analyzed for liquid-immersed distribution 

transformers. In response, DOE generated a supplementary NOPR analysis with three additional 

TSLs. The three TSLs presented were based on possible new equipment classes for polemounted distribution transformers, network/vault-based distribution transformers, and those with 

high basic impulse level (BIL) ratings. On June 4, 2012 DOE published a notice announcing the 

availability of this supplementary analysis2

 and of a public meeting to be held on June 20, 2012 

to present and receive feedback on it. DOE also generated an additional TSL in a June 18, 2012 

analysis published on DOE’s website. 

 

2 77 FR 32916
1-6

Following the public meeting, DOE received comment from a number of stakeholders on 

the supplementary NOPR analysis for liquid-immersed transformers. Although comment varied, 

DOE concluded that many stakeholders believed the new equipment classes presented within the 

supplementary analysis were not warranted at the standard levels under consideration in the 

NOPR. As a result, DOE adopted the liquid-immersed energy conservation levels of the NOPR 

in the final rule.

1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

Under EPCA, when DOE studies new or amended standards, it must consider, to the 

greatest extent practicable, the following seven factors:

(1) the economic impact of the standard on the manufacturers and consumers of the 

products subject to the standard; 

(2) the savings in operating costs throughout the estimated average life of the products 

compared to any increase in the prices, initial costs, or maintenance expenses for the 

products that are likely to result from the imposition of the standard; 

(3) the total projected amount of energy savings likely to result directly from the 

imposition of the standard; 

(4) any lessening of the utility or the performance of the covered products likely to result 

from the imposition of the standard; 

(5) the impact of any lessening of competition, as determined in writing by the Attorney 

General, that is likely to result from the imposition of the standard;

(6) the need for national energy conservation; and 

(7) other factors the secretary considers relevant. (42 U.S.C. 6295(o)(2)(B)(i), 6316(a)) 

Other statutory requirements are set forth in 42 U.S.C. 6295(o)(1)–(2)(A), (2)(B)(ii)–(iii), 

and (3)–(4).

DOE considers the participation of interested parties a very important part of the process 

for setting energy conservation standards. Through formal public notifications (i.e., Federal 

Register notices), DOE encourages the participation of all interested parties during the comment 

period in each stage of the rulemaking. Beginning with the preliminary analysis for this 

rulemaking and during subsequent comment periods, interactions among interested parties 

provide a balanced discussion of the information that is required for the standards rulemaking. 

Before DOE determines whether to adopt an amended energy conservation standard, it 

must first solicit comments on the proposed standard. (42 U.S.C. 6313(a)(6)(B)(i)) Any new or 

amended standard must be designed to achieve significant additional conservation of energy and 

be technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A), 6316(a)) To 
1-7

determine whether economic justification exists, DOE must review comments on the proposal 

and determine that the benefits of the proposed standard exceed its burdens to the greatest extent 

practicable, weighing the seven factors listed above. (42 U.S.C. 6295(o)(2)(B)(i), 6316(a)) 

After the publication of the preliminary analysis NOPM, the energy conservation 

standards rulemaking process involves at least two additional public notices that DOE publishes 

in the Federal Register. This first step of the rulemaking notices is a NOPM, which is designed 

to publicly vet the models and tools used in the preliminary rulemaking and to facilitate public 

participation before the NOPR stage. The next notice is the NOPR, which presents a discussion 

of comments received in response to the NOPM and the preliminary analyses and analytical 

tools; analyses of the impacts of potential new or amended energy conservation standards on 

customer, manufacturers, and the Nation; DOE’s weighting of these impacts; and the proposed 

energy conservation standards for each equipment class. The last notice is the final rule, which 

presents a discussion of the comments received in response to the NOPR, the revised analyses, 

DOE’s weighting of these impacts, the amended energy conservation standards DOE is adopting 

for each product, and the effective dates of the amended energy conservation standards. In this 

rulemaking, as mention above, DOE published both a notice of intent to negotiate and a notice of 

public meeting and availability of the supplementary analysis. 

The analytical framework presented in this TSD presents the different analyses, such as 

the engineering analysis and the consumer economic analyses (e.g., the life-cycle cost (LCC) and 

payback period (PBP) analyses), the methods used for conducting them, and the relationships 

among the various analyses. Table 1.3.1 outlines the analyses DOE conducts for each stage of 

the rulemaking.

Table 1.3.1 Analyses by Rulemaking Stage 

Preliminary NOPR Final Rule

Market and technology assessment   

Screening analysis   

Engineering analysis   

Energy use characterization   

Product price determination   

Life-cycle cost and payback period analyses   

Life-cycle cost subgroup analysis  

Shipments analysis   

National impact analysis   

Preliminary manufacturer impact analysis 

Manufacturer impact analysis  

Utility impact analysis  

Employment impact analysis  

Environmental assessment  

Regulatory impact analysis  

DOE developed spreadsheets for the engineering, LCC, PBP, and national impact 

analyses (NIA) for each equipment class. The LCC workbook calculates the LCC and PBP at 

various energy efficiency levels. The NIA workbook does the same for national energy savings 
1-8

(NES) and national net present values (NPVs). All of these spreadsheets are available on the 

DOE website for distribution transformers: 

• http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/44, 

• http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/43. 

. 

1.3.1 Manufacturer Interviews

As part of the information gathering and sharing process, DOE interviewed distribution 

transformer manufacturers. DOE selected companies that represented production of all types of 

equipment, ranging from small to large manufacturers. DOE had four objectives for these 

interviews: (1) solicit manufacturer feedback on the draft inputs to the engineering analysis; (2) 

solicit feedback on topics related to the manufacturer impact analysis; (3) provide an opportunity 

for manufacturers to express their concerns to DOE; and (4) foster cooperation between 

manufacturers and DOE. DOE incorporated the information gathered during these interviews 

into its engineering analysis (chapter 5) and its manufacturer impact analysis (chapter 12).

1.4 STRUCTURE OF THE DOCUMENT

The TSD describes the analytical approaches and data sources used in this rulemaking. 

The TSD consists of the following chapters and several appendices.

Chapter 1 Introduction: provides an overview of the appliance standards program 

and how it applies to the distribution transformer rulemaking, and outlines 

the structure of the document. 

Chapter 2 Analytical Framework: describes the rulemaking process step by step and 

summarizes the major components of DOE’s analysis.

Chapter 3 Market and Technology Assessment: provides DOE’s definition of a 

distribution transformer, lists the proposed equipment classes, and names 

the major industry players. This chapter also provides an overview of 

distribution transformer technology, including techniques employed to 

improve transformer efficiency.

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

transformer efficiency, and determines which of these DOE evaluated and 

which DOE screened out of its analysis. 

Chapter 5 Engineering Analysis: discusses the methods used for developing the 

relationship between increased manufacturer price and increased 

efficiency. Presents detailed cost and efficiency information for the units 

of analysis.
1-9

Chapter 6 Markups and Installation Cost Analysis: discusses the methods used for 

establishing markups for converting manufacturer prices to customer 

equipment prices. 

Chapter 7 Energy Use Analysis: discusses the process used for generating energyuse estimates and end-use load profiles for distribution transformers. 

Chapter 8 Life-Cycle Cost and Payback Period Analyses: describes the impact of 

potential candidate standards on customers of transformers. This chapter 

compares the life-cycle cost of transformers and other measures of 

consumer impact with and without candidate efficiency standards 

Chapter 9 Shipments Analysis: discusses the methods used for forecasting the total 

number of distribution transformers that would be affected by standards. 

Chapter 10 National Impact Analysis: discusses the methods used for forecasting 

national energy consumption and national consumer economic impacts in 

the absence and presence of standards. 

Chapter 11 Customer Subgroup Analysis: discusses the effects of standards on any 

identifiable subgroups of consumers who may be disproportionately 

affected by any proposed standard level. This chapter compares the LCC 

and PBP of products with and without higher energy conservation 

standards for these consumers.

Chapter 12 Manufacturer Impact Analysis: discusses the effects of standards on the 

finances and profitability of transformer manufacturers.

Chapter 13 Employment Impact Analysis: discusses the effects of standards on 

national employment. 

Chapter 14 Utility Impact Analysis: discusses the effects of standards on the electric 

utility industry.

Chapter 15 Emissions Analysis: discusses the effects of standards on air-borne 

emissions of electric utilities.

Chapter 16 Monetization of Emission Reductions Benefits: discusses the effects of 

standards on the monetary benefits likely to result from the reduced 

emissions of carbon dioxide (CO2) and nitrogen oxides (NOX). 

Chapter 17 Regulatory Impact Analysis for Distribution Transformers: discusses the 

impact of non-regulatory alternatives to efficiency standards.

Appendices: 
1-10

App. 3A Core Steel Market Analysis: presents DOE’s research into the global core 

steel market.

App. 5A Additional Engineering Analysis Results: presents scatter plots for each of 

the 13 design lines, illustrating no-load losses versus manufacturer selling 

price (MSP); load losses versus MSP; and transformer weight versus 

efficiency.

App. 5B Scaling Relationships in Transformer Manufacturing: discusses the 

technical basis of the 0.75 scaling rule.

App. 5C 2008 Material Pricing Analysis: presents the material prices DOE 

developed for studying sensitivities in material prices. This includes the 

material prices themselves and the engineering analysis plots.

App. 7A Technical Aspects of Energy Use and End-Use Load Characterization: 

Details the methodology used to estimate transformer energy use and load 

simulation. 

App. 7B Sample Utilities: details the specific electric utilities for which DOE 

collected electricity marginal price and electric system loads. 

App. 8A User Instructions for Life-Cycle Cost and Payback Period Spreadsheet 

Model. 

App. 8B Uncertainty and Variability: provides an overview of the treatment of 

uncertainty and variability in the analysis. 

App. 8C Life-Cycle Cost and Payback Period Results: presents LCC and PBP 

results for all 13 design lines. 

App. 8D Life-Cycle Cost Sensitivity Results: presents the findings for the 

sensitivity analysis of design lines 1, 7 and 12 that result from changing 

key variables.

App. 10A User Instructions for Shipments and National Impacts Analysis 

Spreadsheet Model

App. 10B National Energy Savings and Net National Present Value Results: presents 

NES and NPV results for all product classes. 

App 10C National Impacts Analysis Sensitivity Analysis for Alternative Product 

Price Trends Scenarios: presents the results and analytic methodology 

used to estimate long-term distribution transformer pricing trends. 
1-11

App. 12A Manufacturer Impact Analysis Interview Guides: Liquid-immersed, lowvoltage dry-type, and medium-voltage dry-type interview guides.

App. 16A Social Cost of Carbon for Regulatory Impact Analysis Under Executive 

Order 12866: Estimates the social benefits of reducing carbon dioxide 

(CO2) emissions into cost-benefit analyses

App. 17A Regulatory Impact Analysis Supporting Material: provided background 

information on the market penetration curves and utility rebated programs 

analyzed in the Regulatory Impact Analysis.