CHAPTER 1. INTRODUCTION 

TABLE OF CONTENTS 

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


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


1.3 OVERVIEW OF DISTRIBUTION TRANSFORMER STANDARDS ............ 1-2


1.3.1 Process Improvement .......................................... 1-5


1.4 STRUCTURE OF THE DOCUMENT ................................... 1-6


LIST OF TABLES 

Table 1.3.1 Distribution Transformers Analyses in Accordance with the Process Rule


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


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CHAPTER 1. INTRODUCTION


1.1	 PURPOSE OF DOCUMENT 

This technical support document (TSD) is a “stand-alone” report that provides the 

technical analyses and results in support of the information presented in the final rule for 

distribution transformer energy conservation standards. ## FR #####. This final rule TSD also 

complements the engineering, life-cycle cost (LCC) and payback period (PBP), national impacts, 

and manufacturer impact analysis (MIA) spreadsheets that are posted on the Department of 

Energy (DOE)’s web site at: 

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 Energy Policy and Conservation Act (EPCA) provides for an 

energy conservation program for certain commercial and industrial equipment. (42 U.S.C. 6311­

6317) In particular, section 346 of EPCA states that the Secretary of Energy must prescribe 

testing requirements and energy conservation 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 specifying standards for low voltage, dry-type distribution transformers. 

(42 U.S.C. 6295(v) and 6317(a)) 

DOE designs any new or amended standard to achieve the maximum 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)) If a proposed standard is not designed to 

achieve the maximum improvement in energy efficiency or the maximum reduction in energy use 

that is technologically feasible, the Secretary states the reasons for this in the proposed rule. To 

determine whether economic justification exists, DOE reviews comments that it has solicited on 

the proposed rule and determines that the benefits of the proposed standard exceed its burdens to 

the greatest extent practicable, weighing the following seven factors (42 U.S.C. 6295 (o)(2)(B)): 

1.	 The economic impact of the standard on manufacturers and consumers of products 

subject to the standard; 

2.	 The savings in operating costs throughout the estimated average life of the covered 

products in the type (or class) compared to any increase in the price, initial 

charges, or maintenance expenses for the covered 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; 

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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. 

1.3	 OVERVIEW OF DISTRIBUTION TRANSFORMER STANDARDS 

On October 22, 1997, the Secretary of Energy issued a determination that “based on its 

analysis of the information now available, DOE has determined that energy conservation 

standards for transformers appear to be technologically feasible and economically justified, and 

are likely to result in significant savings.” 62 FR 54809. 

The Secretary’s determination was based, in part, on analyses conducted by the Oak Ridge 

National Laboratory (ORNL). In July 1996, ORNL published a report entitled Determination 

Analysis of Energy Conservation Standards for Distribution Transformers, ORNL-6847, which 

assessed options for setting energy conservation standards. ORNL based its report on 

information from annual sales data, average load data, and surveys of existing and potential 

transformer efficiencies obtained from 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 

Distribution Transformers, ORNL-6925. This report assessed the suggested efficiency levels 

contained in the then-newly published National Electrical Manufacturers Association (NEMA) 

Standards Publication No. TP 1-1996, Guide for Determining Energy Efficiency for Distribution 

Transformers, along with the efficiency levels previously considered in ORNL-6847. The latest 

downloadable version of TP 1 is available at the NEMA website: 

http://www.nema.org/stds/tp1.cfm#download. In its supplemental assessment, ORNL used a 

more accurate analytical model and better transformer market and loading data developed 

following the publication of ORNL-6847. Downloadable versions of both ORNL reports are 

available on the DOE website at: 

 http://www.eere.energy.gov/buildings/appliance_standards/commercial/disttrans_support.html 

In the year 2000, as a result of the Secretary’s positive determination, DOE developed a 

Framework Document for Distribution Transformer Energy Conservation Standards 

Rulemaking, describing the procedural and analytic approaches that DOE anticipated using to 

evaluate the establishment of energy conservation standards for distribution transformers. This 

document is also available at 

http://www.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/trans_framework.pdf. 

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On November 1, 2000, DOE held a public meeting to discuss the proposed analytic framework. 

Manufacturers, trade associations, electric utilities, environmental advocates, regulators, and 

other interested parties attended the Framework Document public meeting, actively participating 

in discussions and showing their willingness to work with DOE in analyzing possible efficiency 

standards. The major issues discussed were: definition of covered 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 deregulation; transformer costs versus transformer prices; appropriate 

LCC subgroups; LCC methods, e.g., total owning cost (TOC); loading levels; utility impact 

analysis vis-a-vis deregulation; scope of environmental analysis; and harmonization of standards 

with other countries. 

Stakeholder comments submitted during the Framework Document comment period 

elaborated on the issues raised at the meeting and also addressed the following issues: options for 

the screening analysis; approaches for the engineering analysis; discount rates; electricity prices; 

the number and basis for the efficiency levels to be analyzed; the national energy savings (NES) 

and net present value (NPV) analyses; the analysis of the effects of a potential standard on 

employment; the manufacturer impact analysis; and the timing of the analyses. DOE worked with 

its contractors to address these issues as well as those raised during the Framework Document 

meeting. 

As part of the information gathering and sharing process, DOE organized and held visits 

with manufacturers of liquid-immersed and dry-type distribution transformers during the first 

quarter of 2002. DOE selected companies that represented production of all types of distribution 

transformers, ranged from small to large manufacturers, and included both NEMA and nonNEMA members. DOE had four objectives for these meetings: (1) solicit feedback on the 

methodology and findings presented in the draft engineering analysis update report that DOE 

posted on its website December 17, 2001; (2) get information and comments on production costs 

and manufacturing processes presented in the December 17, 2001, draft engineering analysis 

update report; (3) provide an opportunity, early in the rulemaking process, to express specific 

concerns to DOE; and (4) foster cooperation between the manufacturers and DOE. 

There were five general issues discussed at each of these manufacturer site meetings: (1) 

company overview and product offerings; (2) the structure of the engineering analysis, including 

the engineering design lines, which represent groupings of similarly built distribution transformers; 

(3) design option combinations for each of the representative transformers from the engineering 

design lines; (4) use of Optimized Program Services (OPS) distribution transformer design 

software; and (5) the 0.75 scaling rule, which DOE used to scale the costs and efficiencies of the 

representative units within each of the engineering design lines. 

DOE incorporated the information gathered at the meetings in its engineering analysis. 

Following the publication of the advance notice of proposed rulemaking (ANOPR) on July 19, 

2004 and the ANOPR public meeting on September 28, 2004, DOE held additional meetings with 

manufacturers as part of the consultative process for the manufacturer impact analysis (Chapter 

12). During this period, DOE received numerous comments regarding the ANOPR analysis. 

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DOE developed two types of spreadsheet tools for this rulemaking. The first spreadsheet 

tool calculates LCC and payback periods. DOE developed 10 different LCC and payback period 

spreadsheets to capture variations in the distribution transformer market. The second spreadsheet 

tool calculates impacts of candidate standards at various levels on transformer shipments, and 

calculates the NES and NPV at various standard levels. These spreadsheets are posted on DOE’s 

website along with complete TSD documentation for each set of posted spreadsheets. 

The Energy Policy Act of 2005, Public Law 109-58, (EPACT 2005) amended EPCA to 

establish energy conservation standards for low-voltage, dry-type distribution transformers. 

(EPACT 2005, Section 135(c); 42 U.S.C. 6295(y)) EPACT 2005 specifies that the efficiency of 

any such transformer “manufactured on or after January 1, 2007, shall be the Class I Efficiency 

Levels for distribution transformers specified in table 4-2 of the ‘Guide for Determining Energy 

Efficiency for Distribution Transformers’ published by the National Electrical Manufacturers 

Association (NEMA TP-1-2002).” 

Because EPACT 2005 established energy efficiency standards for low-voltage, dry-type 

distribution transformers, DOE has removed from both the notice of proposed rulemaking 

(NOPR) and final rule TSD its analysis of design lines 6, 7, and 8, which comprise product class 3 

(low-voltage, dry-type, single-phase) and product class 4 (low-voltage, dry-type, three-phase). 

On August 4, 2006, DOE published in the Federal Register a NOPR for distribution 

transformer energy conservation standards. 71 FR 44355. In conjunction with the NOPR, DOE 

also published on its website the complete NOPR TSD for the proposed rule, which incorporated 

the final analyses DOE conducted and technical documentation of each analysis. The NOPR TSD 

included the engineering analysis spreadsheets, the LCC spreadsheet, the national impact analysis 

spreadsheet, and the MIA spreadsheet – all of which are available at 

http://www.eere.energy.gov/buildings/appliance_standards/commercial/ 

distribution_transformers_draft_analysis_nopr.html. 

The NOPR also included additional background information on the history of this 

rulemaking and on DOE’s use in the rulemaking of the procedures, interpretations, and policies 

that guide DOE in developing new standards. DOE held a public meeting in Washington, DC on 

September 27, 2006, to hear oral comments on and solicit information relevant to the proposed 

rule. 

On February 9, 2007, DOE issued a notice of data availability and request for comments 

(NODA). 72 FR 6186. This notice was prompted by stakeholders who had commented in the 

NOPR that DOE's standard might prevent or render impractical the replacement of distribution 

transformers in certain space-constrained (e.g., vault) installations. DOE sought comment on 

whether it should include in the LCC analysis potential costs related to size constraints of 

transformers installed in vaults. DOE also requested comment on an additional option of 

selecting final efficiency levels for liquid-immersed distribution transformers by design line. DOE 

received more than 20 written comments in response to the NODA, which are discussed in the 

following sections of this Final Rule. 

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The Final Rule TSD documents in detail the revised analyses that incorporate the changes 

DOE made in response to comments and information received in response to the NOPR and the 

NODA. 

1.3.1 Process Improvement 

Although the Procedures, Interpretations and Policies for Consideration of New or 

Revised Energy Conservation Standards for Consumer Products (the “Process Rule”), 10 CFR 

430, Subpart C, Appendix A, applies to consumer (residential) products, in its Notice of 

Determination for Distribution Transformers, DOE stated its intent to adhere in this rulemaking to 

the provisions of the Process Rule, where applicable. 62 FR 54817. Table 1.3.1 presents the 

analyses DOE conducted in its evaluation of standards for distribution transformers. 

Table 1.3.1 Distribution Transformers Analyses in Accordance with the Process Rule 

ANOPR NOPR Final Rule 

Market and technology assessment Revised ANOPR analyses Revised NOPR analyses 

Screening analysis Life-cycle cost subgroup analysis 

Engineering analysis Manufacturer impact analysis 

Energy use and end-use load 

characterization 

Utility impact analysis 

Markups for equipment price 

determination 

Employment impact analysis 

Life-cycle cost and payback period 

analyses 

Environmental assessment 

Shipments analysis Regulatory impact analysis 

National impact analysis 

The analyses in Table 1.3.1 reflect methodological improvements made in accordance with 

the Process Rule, including the development of economic models and analytical tools. For 

example, this rulemaking uses the full range of consumer marginal electricity costs, which are the 

energy costs that correspond to incremental changes in energy use. The LCC analysis also defines 

a range of electricity price forecasts used in the economic analyses, and defines a range of primary 

energy conversion factors and associated emissions reductions based on the generation displaced 

by energy efficiency standards. 

1.4 STRUCTURE OF THE DOCUMENT 

This TSD consists of 14 chapters, 2 reports, and 21 appendices. 

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Chapter 1 Introduction: Provides an overview of the appliance standards program and how it 

applies to the distribution transformer rulemaking, provides a history of DOE’s 

actions to date, and outlines the structure of this document. 

Chapter 2 Analytic Framework: Describes the rulemaking process. 

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. 

Chapter 5 Engineering Analysis: Presents detailed cost and efficiency information for the 

units of analysis. This chapter describes DOE’s approach for determining 

manufacturer costs, including the markups used for converting material costs to 

manufacturer sales prices. 

Chapter 6 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 7 Markups for Equipment Price Determination: Discusses the methods DOE used 

for establishing markups for converting manufacturer selling prices to installed 

customer equipment prices. 

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

candidate standards on consumers of transformers. This chapter compares the lifecycle cost of transformers and other measures of consumer impact with and 

without candidate efficiency standards. 

Chapter 9 Shipments Analysis: Uses historical data to provide a shipments estimate for 

future years and describes the methods used for forecasting shipments with and 

without candidate efficiency standards. 

Chapter 10 National Impact Analysis: Describes the national forecast of energy consumption, 

efficiency of new units, and annual equipment sales in the absence (or presence) of 

new regulations. This chapter also evaluates indirect employment impacts. 

Chapter 11 Life-Cycle Cost Subgroup Analysis: Evaluates impacts on any identifiable groups 

or customers who may be disproportionately affected by any proposed national 

energy efficiency standard level. 

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Chapter 12	 Manufacturer Impact Analysis: Assesses the impacts on transformer 

manufacturers of any proposed energy efficiency standard. 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 manufacturing practices for 

these products. 

Chapter 13	 Utility Impact Analysis: Analyzes the effects of proposed distribution transformer 

standard levels on the electric utility industry. The utility impact analysis consists 

of a comparison between model results for the base case and for policy cases in 

which proposed standards are in place. 

Chapter 14	 Employment Impact Analysis: Estimates national job creation or elimination 

(direct and indirect effects) resulting from possible standards, due to reallocation 

of the associated commercial expenditures for purchasing and operating 

equipment. 

Environmental Assessment Report: Assesses the impacts of proposed distribution transformer 

standard levels on certain environmental indicators. 

Regulatory Impact Analysis Report: Examines and evaluates major alternatives to standards, 

analyzing the costs and benefits of each. An appendix describes the use of implementation curves. 

Appendix 3A	 Core Steel Market Analysis: Presents DOE’s research into the global core 

steel market and impacts on prices of core steel. 

Appendix 5A	 Supplementary Engineering Analysis Results: Presents scatter plots for 

each of the 10 design lines, illustrating no-load losses versus selling price; 

load losses versus selling price; and transformer weight versus efficiency. 

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 DOE 

developed for studying recent trends in material prices (first quarter of 

2005). This includes the material prices themselves, the engineering 

analysis plots, and summary LCC analytical results on this pricing scenario. 

Appendix 5D	 Voltage Sensitivity Analysis: Presents the results of the DOE voltage 

sensitivity analysis, where voltages with BIL ratings higher than the 

baseline models were analyzed. 

Appendix 8A	 Life-Cycle Cost and Payback Period Results: Presents LCC and PBP 

results for all 10 design lines. 

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Appendix 8B Uncertainty and Variability: Provides an overview of the treatment of 

uncertainty and variability in the analysis. 

Appendix 8C Sample Utilities: Details the specific electric utilities for which DOE 

collected electricity tariffs for use in the analysis. 

Appendix 8D Life-Cycle Cost Sensitivity Results: Presents the findings for the sensitivity 

analysis of design lines 1 and 12 that result from changing key variables. 

Appendix 8E Average Transformer Design Properties from Life-Cycle Cost Model: 

Provides the average manufacturer’s selling price, the average installed cost 

(consumer equipment cost plus installation), and other important attributes 

for each of the 13 distribution transformers analyzed. 

Appendix 8F Summary of High Material Price Sensitivity Results: Provides a summary 

of the LCC and PBP results of the high (2006) material price sensitivity 

analysis. 

Appendix 8G Average Temperature Rise of LCC Consumer Choice Model Selected 

Transformers: presents the average temperature rise of the LCC-selected 

transformers from the engineering database by design line and TSL. 

Appendix 8H Core Steel Percentages of LCC Consumer Choice Model Selected 

Transformers: presents the proportion of core steel in the LCC-selected 

transformers from the engineering database by design line and TSL. 

Appendix 8I Trial Standard Level Consistency of Single-Phase and Three-Phase 

Transformers: presents a review of the consistency issues within the singlephase and three-phase kVA groupings and between single-phase and threephase. 

Appendix 10A User Instructions for Shipments and National Impacts Analysis 

Spreadsheet Model 

Appendix 10B National Energy Savings and Net National Present Value Results: 

Presents NES and NPV results for all eight product classes. 

Appendix 11A Life-Cycle Cost Subgroup Results 

Appendix 12A Manufacturer Impact Analysis Interview Guides: Liquid-Immersed 

and Medium-Voltage, Dry-Type 

Appendix 12B Manufacturer Impact Analysis Small Business Interview Guide 

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Appendix 12C Government Regulatory Impact Model (GRIM) Supporting 

Documentation 

Appendix 13A NEMS-BT Extension Modeling Beyond 2030 

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