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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 ....... 1-2

1.3.1 Manufacturer Interviews ...................................................................................... 1-4

1.4 STRUCTURE OF THE DOCUMENT ................................................................ 1-5

LIST OF TABLES

Table 1.3.1 Analyses by Rulemaking Stage ................................................................... 1-4
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CHAPTER 1. INTRODUCTION

1.1 DOCUMENT PURPOSE

This preliminary technical support document (TSD) is a stand-alone 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, and medium-voltage dry-type distribution transformers. The public is invited to 

comment on these analyses, either in writing or orally at a public meeting on April 5, 2011. 

Details about the public meeting and instructions for submitting written comments are contained 

in the notice of public meeting (NOPM) published in the Federal Register on March 2, 2011. 76 

FR 11396. DOE will review the comments it receives and revise and update these analyses prior 

to publishing a notice of proposed rulemaking (NOPR) in the Federal Register. 

1.2 HISTORY OF DISTRIBUTION TRANSFORMER RULEMAKINGS

Title III, Part C of the Energy Policy and Conservation Act of 1975 (EPCA), Pub. L. 94-

163 (42 U.S.C. 6311-6317, as codified), added by Pub. L. 95-619, Title IV, § 441(a), established 

the Energy Conservation Program for Certain Industrial Equipment, a program covering 

distribution transformers, the focus of this notice.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 removed these transformers from the scope of that 

rulemaking. 72 FR at 58191 (October 12, 2007). 

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 

 

1 For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1.
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timeline for the Department to determine whether to amend the energy conservation standards 

for liquid-immersed and MVDT distribution transformers. Under the terms of the settlement 

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. If DOE finds that amended standards are warranted, DOE must publish a 

final rule containing such amended standards by October 1, 2012. This document is the 

Department’s first step to satisfy the requirements of the settlement agreement.

DOE is initiating this rulemaking at the preliminary analysis stage rather than the 

framework document stage. 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 is initiating this rulemaking at 

the preliminary analysis stage and has prepared a preliminary TSD about which it is requesting 

comment.

At present, DOE plans to examine in this rulemaking amended standards for LVDT 

distribution transformers, as well as amended standards for liquid-immersed and MVDT 

transformers. DOE is not required to consider LVDT distribution transformers as part of the 

settlement agreement. As such, DOE may subsequently opt to conduct a separate rulemaking for 

LVDT transformers with a different timeline. However, the preliminary analysis considers 

LVDT distribution transformers along with liquid-immersed and MVDT distribution 

transformers.

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; 
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(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)) 

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. 6313(a)(6)(A)) To 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))

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

standards rulemaking process involves 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 

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

energy conservation standards for each product. 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 
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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.

The analytical framework presented in this NOPM 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 product class. The LCC workbook calculates the LCC and PBP at 

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

(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/commercial/distribution_transforme

rs.html. 

 

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 preliminary manufacturer impact analysis; (3) provide an 

opportunity, early in the rulemaking process, for manufacturers to express their concerns to 

DOE; and (4) foster cooperation between manufacturers and DOE.
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DOE incorporated the information gathered during these interviews into its engineering 

analysis (chapter 5) and its preliminary manufacturer impact analysis (chapter 12). Following the 

publication of the preliminary analyses and the associated public meeting, DOE intends to hold 

additional meetings with manufacturers as part of the consultative process for the manufacturer 

impact analysis conducted during the NOPR phase of the rulemaking. 

1.4 STRUCTURE OF THE DOCUMENT

The preliminary TSD describes the analytical approaches used in the preliminary analysis 

and presents preliminary results. The TSD consists of 17 chapters, an executive summary, and 

several appendices.

Executive Summary: describes the rulemaking process, identifies the key 

results of the preliminary analyses, and identifies the key issues for which 

DOE seeks public comment that resulted from the preliminary analyses.

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 methodology, the analytical tools, 

and relationships among the various analyses, summarizes issues and 

comments DOE received from its preliminary interviews with 

manufacturers, and explains DOE’s responses to those comments. 

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

distribution transformer, lists the proposed product 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.

Chapter 6 Markups for Equipment Price Determination: discusses the methods used 

for establishing markups for converting manufacturer prices to customer 

equipment prices. 
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Chapter 7 Energy Use and End-Use Load Characterization: discusses the process 

used for generating energy-use 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 Life-Cycle Cost 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 Environmental Assessment for Distribution Transformers: discusses the 

effects of standards on three pollutants – sulfur dioxide (SO2), nitrogen 

oxides (NOX), and mercury – as well as carbon emissions.

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: 

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

steel market.
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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 and Payback Period Sensitivity Results: presents the 

findings for the sensitivity analysis of design lines 1, 7 and 13 that result 

from changing key variables.

App. 8E Life-Cycle Cost and Payback Period Results for Symmetric Core 

Transformers: presents the LCC and PBP results for three-phase 

symmetric core design lines.

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. 12A Manufacturer Impact Analysis Interview Guides: Liquid-immersed, lowvoltage dry-type, and medium-voltage dry-type interview guides.
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App.16-A 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