Executive Court Reporters (301) 565

- 0064 1

UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY

**LV WORKING GROUP NEGOTIATED RULEMAKING: DISTRIBUTION TRANSFORMERS** 

Volume I

National Rural Electric Cooperative Association Conference Room C2 4301 Wilson Blvd Arlington , VA

1:00 p.m. Thursday October 13, 2011

**Facilitator :** 

Richard Parker University of Connecticut Law School

**Host :** 

National Rural Electric Cooperative Association ( NRECA)Executive Court Reporters (301) 565

- 0064 2

**Participants Identified:**

Rick Anderson Fayetteville Public Work s Commission

Tim Ballo Earth Justice 1625 Massachusetts Avenue Suite 702 Washington, DC 20036

Scott Beck Lakeview Metals

John Caskey Electrical Manufacturers Association

Scott Choinski
NEMA 1300 North 17 th Suite 1752 Street

Rosslyn, VA 22209

Andrew d eLaski
ASAP 20 Belgrade Ave, Suite 1 Boston, MA 02131

Tom Eckman Northwest Power and Conservation Council

Gary Fernstrom Pacific Gas & Electric Company 13055 Parkhurst Dr Oakland, CA 94619

Chuck Foster Edison Electric Institute

Dave Millure Metglas Inc orporated 440 Allied Drive Conway, SC 29526Executive Court Reporters (301) 565

- 0064 3

Steve Nadel American Council for an Energy

- Efficient Economy

Wes Patterson ABB, Inc.

Steven Rosenstock Edison Electric Institute 701 Pennsylvania Avenue NW Washington, DC 20004

- 2696

Robin Roy Natural Resource s 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

Mahesh P. Sampat EMS Consulting 1180 Brookview Dr Athens, GA 30606

Bob Smith Federal Pacific Jim Rakowski Allegheny ATI

**Participants Identified via E** 

**- Mail**  **/Phone :** 

Thomas Patzner Schneider Electric 1010 Airpark Carrier Drive Nashville, TN 37217

**Participants from DOE:**

John Cymbalsky DOEExecutive Court Reporters (301) 565

- 0064 4

**Participants from Navigant/LBL:**

Brian Coffey Navigant

Mike Rivest Navigant

Rob Carmichael Navigant

Matt Nardotti Navigant Consulting

Chris Bolduc Lawrence Berkley National Laboratory

Katie Coughlin Lawrence Berkley National Laboratory

**Presenters:**

Brian Coffey Navigant Consulting 1801 K St. NW Suite 500
Was hington, DC 20006

Chris Bolduc Lawrence Berkley National Laboratory 1 Cyclotron Rd Ms 90

- 4000 Berkeley, CA 94720 Washington, DC 20006Executive Court Reporters (301) 565

- 0064 5

**AGENDA**

**ITEM PAGE** 

Welcome, Mr. Parker 6

Self

- Introductions 7

Agenda Review and Plan for Meeting 9

N avigant Presentation, Mr. Coffey 13

Data Requests 14

Request to Changes to Analysis 15

Review of Open Ended Questions 71

Next Steps 84

LBL Presentation, Mr. Bolduc 91

Transformer Loading 91

Transformer Lifetime 9 4

Peak load factor 97

Possible changes to the LCC subgroups 97

Equipment price trends 101

Electricity prices 103

Limited design selection

due to fixed efficiency 108

LCL and price efficiency curves 111

Review of TSLs 130Executive Court Reporters (301) 565

- 0064 6

1 : 00 p .m. 1

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

MR. PARKER: Welcome everybody to the second 4

meeting of the Low Voltage Group. We’re meeting 5

physically here at the offices of the National Rural 6

Electric Cooperative Association, which has b een 7

extraordinarily generous, not only in loaning their

-- 8

loaning us their office for the meeting on medium 9

voltage where they have an interest, but extending 10

that hospitality to this meeting where they don’t have 11

such an interest, so it’s very kind of th em to let us 12

stay over and use this conference room, so I want to 13

express our appreciation to them for that. 14

We ha ve a lot to cover today

. I think to 15

some degree we can build on the discussion that 16

occurred at the medium voltage and for those who are 17

new to the low voltage group and were not part of 18

that, we’ll make every effort to bring them up to 19

speed on what was discussed, remembering that nothing 20

that was discussed in the medium voltage in any way is 21

binding or despositive on this group. This is a 22

separate group with a separate mandate to discuss a 23

separate product line. 24

So w hy don’t we begin by just go ing around 25Executive Court Reporters (301) 565

- 0064 7

the table , since this is our first session and 1

everybody introduce themselves and their organization, 2

and we’ll go around the wall. A nd I would also ask

-- 3

I guess the set up is that we can’t hear directly from 4

the people who are joining us by phone and webinar by 5

voice, and there’s various logistical reasons for 6

that, but please feel free to e

- mail, to call in your 7

comments to Tatia na, and she will pass them on to me 8

and we’ll make sure that your question gets addressed. 9

If you could also just make sure that she 10

has a record of your attendance on the phone, that 11

would be very helpful. 12

So without further ado, let’s go around th e 13

table, starting off with you, Scott. 14

**Self**

**- I**  **ntroductions** 15

MR. BECK: Scott Beck, Lakeview Metals. 16

MR. PATTERSON: Wes Patterson, ABB. 17

MR. CASKEY: John Caskey, National 18

Electrical Manufacturers Association. 19

MR. ECKMAN: Tom Eckman, Northwest Power and 20

Conservation Council. 21

MR. NADEL: Steve Nadel, American Council for 22

an Energy

- Efficient Economy. 23

MR. BALLO: Tim Ballo, Earth Justice. 24

MR. RYAN: Paul Ryan, Hitachi Metals 25Executive Court Reporters (301) 565

- 0064 8

America, Metglas. 1

MR. MILLURE: Dave Millure, Metglas. 2

MR. ROY: Robi n Roy, National Resources 3

Defense Council. 4

MR. SMITH: Bob Smith, Federal Pacific 5

Transformer. 6

MR. SAMPAT: Mahesh Sampat, EMS Consulting. 7

MR. TENDULKAR : Vijay Tendulkar, ONYX Power. 8

MR. ROBLES: Eduardo Robles, Eaton 9

Corporation. 10

MR. DeLASKI: Andrew DeLaski, Appliance 11

Standards Awareness Project. 12

MR. FERNSTROM: Gary Fernstrom, Pacific Gas 13

and Electric Company, representing PG&E, the Southern 14

California Edison Company, and Semper Utilities. 15

MR. CYMBALSKY: John Cymbalsky, DOE. 16

MR. CH OI N SKI: Scott Choinski , with the 17

N ational E lectrical M anufacturers A ssociation. 18

MR. CARMICHAEL: Rob Carmichael with 19

Navigant Consulting, supporting DOE. 20

MR. ROSENSTOCK: Steve Rosenstock, Edison 21

Electric Institute. 22

MR. RIVEST: Michael Rivest, Navigan t 23

Consulting. 24

MR. NARDOTTI: Matt Nardotti, Navigant 25Executive Court Reporters (301) 565

- 0064 9

Consulting. 1

MS. COUGHLIN: Katie Coughlin, Lawrence 2

Berkley National Lab. 3

MR. BOLDUC: Chris Bolduc, Lawrence Berkley 4

National Lab. 5
MR. COFFEY: Brian Coffey, Navigant. 6

**Agenda Review and Plan for Meeting**  7

MR. PARKER: Okay. Thank you. So let’s get 8

right into the agenda. Basically what we hope to do 9

in this meeting is, as we did with the medium voltage, 10

is to first and foremost arrive at a

-- hear your 11

concerns with the quality and the level an d the 12

approach of the analysis and the data given for it, 13

and to make sure that there’s a comfort level in this 14

group where Navigant and LBL are going with their 15

analysis, the assumptions that they’re working with, 16

the way they’re displaying their data, th e way they’re 17

producing, and so forth. And to give them a clear, as 18

clear guidance as we can possibly give them for what 19

they need to do to get the analysis in shape and ready 20

for our next meeting, which will be a real “rubber 21

hits the road” I think as St eve put it this morning, 22

meeting where we really bargain hard about the issues 23

and the outcomes. 24

So we’ll start off with a presentation by 25Executive Court Reporters (301) 565

- 0064 10

Navigant of the issues that have been raised in the e

1

mail commentary and at the last meeting with the 2

engineering analysis and what they propose to do about 3

that. We will then

-- and I’m allocating a good bit 4

of this afternoon to that exercise. 5

We will meet tomorrow at nine o’clock, we’ll 6

reconvene. I believe that’s going to be at DOE, 7

right, to work all day tom orrow also. We’ll have a 8

discussion of the LBL analysis of life cycle cost for 9

low voltage transformers, and work through any 10

concerns with their analysis of their data, their 11

methodology as applied to low voltage. 12

We will also try to arrive, for low vo ltage, 13

as we did for medium voltage, with a conceptual 14

approach to defining a point of analysis, a TSL, if 15

you will, that reflects some kind of competitive 16

balance, and that’s going to be quite different, I 17

think, for low voltage than for medium voltage. But 18

some kind of competitive balance between the various 19

steels so that on the one hand there’s not a sole 20

steel supplier. That may not be as much of an issue 21

for low voltage, but if there is a manufacturing 22

impact concern, competitiveness concern that wo uld 23

suggest a point of analysis that would be kind of 24

salient, we need to get that on the table. We need to 25Executive Court Reporters (301) 565

- 0064 11

give them clear guidance as to what we think material 1

prices should be for this analysis. The MV group has 2

the same charge. And remembering of co urse that 3

there’s huge fluctuations in the market so there’s 4

going to be a base case and there’s going to be a 5

sensitivity analysis around that base case ranging 6

from low to high. So we’ll talk about that. 7

And the deliverable for this meeting would 8

be a set of take

- away items as we agreed to for the 9

medium voltage, which is action items that we need to 10

do between now and the next meeting to finalize the 11

analysis so we’re all working off the same sheet of 12

music, the same page in forming

-- assessing 13

barga ining positions and making our arguments on the 14

merits. We were able to do that in the medium 15

voltage, I think we should be able to draw on that and 16

do the same thing for the low voltage. 17

The third issue that

-- third agenda item, 18

rather that I would propose is that the advocates and 19

Steve Rosenstock from EEI and others around the table 20

put forward just some broad concepts to guide people’s 21

thinking going forward. We had a good discussion 22

about that in the medium voltage and it’s going to be 23

a littl e bit different again for the low voltage, but 24

I think that was a helpful discussion and we should 25Executive Court Reporters (301) 565

- 0064 12

try to have that here as well. Just things to think 1

about. 2

I believe that will take up a good bit of 3

our time and if we could accomplish that, that will 4

b e, I think, a pretty positive outcome. 5

Let me say also that we will be creating

-- 6

we do need to get work done between this meeting and 7

the next meeting, and particularly in refining 8

analysis and getting it done. We need to have the 9

analysis completed by November 2 nd so that people have 10

time to see it, distribute it to the members by 11

November 2 nd so that people have time to react to it 12

in time for our next meeting which is on the 8 th and 9 th 13

of November. And so just working backwards from the 14

Novembe r 2 nd deadline for completing the analysis, it 15

means that any request for data, any changes in the 16

analysis, any workgroups that we form are going to 17

have to basically work next week, and we’re going to 18

have to move on a pretty fast timeframe to get the 19

an alysis to them

-- the data to them so that they can 20

input it. If the data’s in great shape and they don’t 21

need to supply any more data, that’s fine, but if 22

people feel that the data they have or the analysis 23

that they have needs to be tweaked, needs to be 24

supplemented, now, literally now, is the time to do 25Executive Court Reporters (301) 565

- 0064 13

that. 1

And we’re going to create an online 2

interface, a sharepoint, that we will share

-- a web 3

page for this group that we will share, where people 4

can post their comments and threads, we’ll organize 5

t hem topically, from one thread to another so that you 6

can see at a glance what all the issues are. If you 7

feel that a new thread, a new set of issues should be 8

created, you can create it. You can respond to each 9

other’s comments. You can file attachment s. I think 10

it’s even got a poling feature on it. And it’ll be a 11

shared document repository for this group. 12

So hopefully, that will allow us to continue 13

to progress between this meeting and the next. We 14

hope to have that up early next week. And we w ill 15

post all the slides, any presentations done from this 16

meeting, we’ll post all the key documents in that same 17

site, so everything will be together in one place. 18

So without further ado, first let me ask for 19

comments on this agenda, on this game plan. Are 20

people comfortable with that as a plan for handling 21

this meeting going forward? Anything they want to 22

add, modify, tweak? Great. 23

In that case, let’s

-- I’ll turn the mike 24

over to Navigant. Who is presenting? Okay. Brian. 25Executive Court Reporters (301) 565

- 0064 14

**Presentation by Navigant** 1

MR. COFFEY: Good afternoon everyone. I’m 2

Brian Coffey of Navigant, and I think there’s a couple 3

of faces in the room that are new, so

-- and nice to 4

see the old faces. Today I’m planning to present a 5

response to several of the issues raised in the 6

pr evious low voltage meeting. My colleague, Matt 7

Nardotti, who’s sitting right over here, presented 8

then, and there was some review of the analysis that 9

we had at that point, and I think some suggestions for 10

moving forward. So we’ve thought about some of t hose 11

and today I’ll overview a couple of proposals for 12

moving forward and addressing some of those concerns. 13

So here are the four topics I’m going to 14

touch on: 15

**•** Data requests 16

**•** Request to changes to the analysis 17

**•** Sort of some open questions, and 18

**•** Next steps. 19

**Data Requests** 20

So taking it from the top . Several of these 21

concerns , as Richard noted, we have two committees 22

that have a high degree of personnel overlap but are 23

working towards different goals to come to a consensus 24

on their respective equipment classe s. And so some of 25Executive Court Reporters (301) 565

- 0064 15

these will be generally provided for both committees 1

to look at, and that includes the first two, which are 2

weight versus efficiency plots, so that people can 3

look at what are the effects of different standard 4

levels on both the core wei ght and the total weight of 5

the transformer. 6

Just to

-- several parties have requested 7

the ability to look at some of DOE’s design details 8

for different efficiency levels, and also to provide 9

some of their own to enable a direct comparison to be 10

drawn. I know there was some questions of temperature 11

rise and how that was treated by the simulation. 12

Also, a tool that will enable users to dial 13

in different steel price sensitivity cases. So to 14

answer a question like, what would happen if M3 were a 15

littl e bit cheaper or lot cheaper, what would that do 16

the shape of the cost efficiency cloud? So that’s 17

something people can do at home on their own time. 18

And then the final thing is to supply the 19

negotiators with simplified cost efficiency charts, 20

which sh ow just kind of the southeast outline of the 21

curves for different steel types. 22

So that’s what we’re planning to deliver. 23

**Request to Changes to Analysis** 24

Changes to the analysis. I think one of the 25Executive Court Reporters (301) 565

- 0064 16

-- one of the items that was called for was a TSL that 1

corresponded to this competitive point for different 2

equipment classes, so that’s maybe a point that allows 3

grain

- oriented steel to compete with amorphous in each 4

case, so I’ll overview our methodology for

-- or I’ll 5

propose a way to find where that might be. 6

The second item is to update materials, 7

prices, and look at different scenarios, and the tool 8

that I had just mentioned would be one way to do that. 9

There’s a question of scaling and how we 10

conduct that, especially as you get to the extremes of 11

t he KVA ranges that we’re looking at. You know, what 12

happens to the behavior of the scaling, are we doing 13

it the right way? I’ll touch on that too, and also 14

what should be the relationship between one and three

15

phase transformers in the low voltage dry sp ace? 16

Size and weight constraints also, is 17

something that we’ve heard about. I think most low 18

voltage transformers are on the ground, but sometimes 19

they’re in line

- ups where there’s concern about growth 20

in size or weight, getting them in buildings and 21

el evators, so we’ll talk about the different ways that 22

we can treat that. And then also ask the question, 23

are there energy savings to be gained by expanding 24

scope of coverage, both in terms of KVA and different 25Executive Court Reporters (301) 565

- 0064 17

exclusions. 1

So we’ll

-- so the kind of pri orities that 2

we have analytically are to achieve a level of comfort 3

with out existing representative units. We have three 4

design lines and three rep units. Obviously those 5

only cover a small portion of what’s sold, but our 6

first priority is to get some a greement that we’re 7

modeling those in a way that roughly reflects reality. 8

Now following that, we’ll look to agree on a 9

way to extrapolate that modeling to different 10

efficiency levels and different KVAs. 11

And then the third question, which I think 12

is le ss of a concern for this particular subcommittee, 13

is whether there needs to be any new equipment 14

classes. I haven’t heard of any suggested, but if 15

there were some suggested, that would be a third 16

priority relative to these top two. 17

So the first thing is there was a proposal 18

to use a template that would allow bi

- directional 19

exchange of engineering data, both for DOE to supply 20

information on its representative units at different 21

efficiency levels, and for manufacturers to supply DOE 22

with their data. Reall y, what this is looking to do 23

is satisfy everyone that different modeling techniques 24

are arriving at roughly the same conclusions. So, 25Executive Court Reporters (301) 565

- 0064 18

it’s important to be able to make an apples to apples 1

comparison of different design parameters. Selling 2

price, you kno w, there are a bunch of things that lead 3

to that, materials prices, engineering design 4

philosophy, mark

- ups, you know, which selling price 5

you’re using, whether it’s manufacturer’s selling 6

price or is it a downstream number. So to really

-- 7

if there ever is a discrepancy in the way two people 8

are arriving at a selling price, it doesn’t say, by 9

itself, very much about what the source of that 10

discrepancy could be. 11

So what we’re trying to do here is hold 12

materials prices roughly constant and have differen t 13

groups design to the same specification and try to 14

pinpoint, if there’s a different assumption being 15

made, what is it and how do we treat it. So again, 16

that’s something that we’ll be sending out the 17

committee for feedback on. 18

After that, we’ll look in to scaling and the 19

way that DOE has done it in the past is that it’s 20

taken its representative units and scaled to other 21

KVAs using what it calls the “.75 rule” where the 22

ratio of the losses of two transformers is set equal 23

to the ratio of their KVA ratings raised to the .75 24

power. And that’s a behavior that comes from physical 25Executive Court Reporters (301) 565

- 0064 19

first principles. We’ve gotten some feedback that 1

maybe that exponent should really be higher or lower 2

for different types of products, and so the proposal 3

is to maybe plot some dif ferent data near extreme s of 4

KVA ranges and look at what exponent it would imply. 5

So there we go, that’s the proposal is to 6

look at some of the extremes of the KVA ranges and 7

kind of back

- calculate what the appropriate scaling 8

exponent could be. Obvious ly, the benefit of that is 9

that it doesn’t tie us to a .75 slope, it permits the 10

end of the scaling ranges to be treated maybe more 11

accurately, and this is, again, a little bit less 12

relevant for the low voltage, but if there was ever a 13

desire to generalize results from one product type to 14

another, this is a pretty flexible methodology for 15

doing that. 16

Right now we cover up to 333 KVA for single 17

phase and 1000 for three phase. Here’s a list of 18

current exemptions as it reads in the 10CFR431. So we 19

had feed back that maybe some of those are worth 20

reexamining, and maybe that’s something the committee 21

can talk about today if it wishes. 22

The competitiveness of different steels. At 23

the first meeting, which was on the 15 th and 16 th of 24

September, negotiators disc ussed a standard that 25Executive Court Reporters (301) 565

- 0064 20

allowed both grain

- oriented and amorphous transformers 1

to compete in the same market. So in the interim, we 2

met with three steel suppliers, AK, Allegheny, and 3

Metglas, and we agreed that selling price is the best 4

metric for equivalen ce. The limitation of that is 5

that it’s very sensitive to materials pricing, but we 6

really couldn’t see another way to go about it. Our 7

operating hypothesis was that if two similar 8

transformers, vary significantly in price, one of them 9

doesn’t get purcha sed, so that’s what we’re working 10

from. 11

MR. PARKER: In those conversations, Brian, 12

did you

-- were you able to pin down any kind of a 13

precise, or semi

- precise quantitative way what 14

significantly means? 15

MR. COFFEY: That’s something we would 16

probably l ook to the committee to suggest. Maybe 17

there’s a percentage that’s considered to be in the 18

noise, but we think that, you know, it’s a pretty

-- 19

it’s a very materials intensive industry, and so 20

people are

-- what we’ve heard is that people are very 21

interes ted in first cost. There’s some that are 22

evaluating above the standard level, but as standards 23

increase, that number seems to be getting very, very 24

small and so first cost would seem to have a big 25Executive Court Reporters (301) 565

- 0064 21

impact on purchasing behavior. 1

MR. PARKER: Steve. 2

MR. NADEL: Steve Nadel, IEEE. When you 3

said use selling price, pulling from this morning’s 4

discussion, I assume you mean considering all inputs 5

that came out that people are not going to go with 6

amorphous if it’s exact same price per, say per watt, 7

because there are investment costs. I assume

-- in 8

order to convert over

-- so I assume you’re talking 9

about trying to have them competitive considering all 10

costs? 11

MR. COFFEY: So the charge was to try and 12

come up with an efficiency level for different 13

equipmen t classes that would produce a market where 14

consumers would be roughly indifferent to purchasing 15

an amorphous or conventional transformer. Our 16

hypothesis was that if they weren’t selling for the 17

same price, then consumers would purchase whichever 18

one was cheaper. 19

MR. NADEL: And just to clarify, I heard you 20

say it’s based on consumer cost, so whatever affects 21

the manufacturer cost gets factored in, so, good. 22

MR. COFFEY: Uh

- huh (yes.) 23

MR. PARKER: Yes, Bob. 24

MR. SMITH: Bob Smith

-- (off mic comment .) 25Executive Court Reporters (301) 565

- 0064 22

MR. COFFEY: No, that’s a good point, Bob, 1

thank you. When we talk about selling price, we’re 2

talking about as sold by the manufacturer to the first 3

purchaser. So we look at the later price mark

- ups in 4

the life cycle cost analysis, but for the purp oses of 5

this discussion, we’re talking about as the 6

manufacturer sells it. 7

MR. SMITH: (off mic) And as a follow up to 8

that question, ... situation in the low voltage dry 9

market ... discussion that goes like this ... to do about 10

that? 11

MR. COFFEY: Well, w e could talk about 12

different ways to do that. I mean, if it’s sold as 13

part of a switch gear package, then it’s not being 14

sold as a distribution transformer, so we couldn’t 15

compare that directly, of course. Is there a way to 16

look at what that transformer would have sold for, had 17

it been sold on its own? 18

MR. SMITH: (off mic) Yes, I think the same 19

way we just talked about ... 20

MR. BOLDUC: So then what you’re suggesting 21

is that the representative case is really a high 22

volume purchase, that’s where most of the business 23

gets done? 24

MR. SMITH: (off mic) In terms of ... 25Executive Court Reporters (301) 565

- 0064 23

MR. COFFEY: So then I think what we would 1

need to look at to make sure that we’re arriving at 2

the same conclusion is the mark

- up structure and see 3

if the numbers that we outline in our tech nical 4

support document roughly correspond to what 5

manufacturers see in the market. So those have been 6

made available. We e

- mailed out our technical support 7

document, Chapter 5, which is the engineering 8

analysis, so I think everybody should have that data 9

already to examine, and certainly we can receive 10

feedback on that moving forward. 11

MR. MILLURE: Dave Millure, Metglas. To 12

address what I think was Steve’s question, the 13

amorphous costs of prices do not include any burden 14

for investment or recovery of i nvestment. It’s 15

treated as if that equipment was already installed and 16

paid for. 17

MR. COFFEY: In the engineering analysis we 18

treat amorphous units as if a manufacturer is 19

purchasing a prefabricated core, because we don’t 20

understand the majority of manuf acturers to have the 21

ability to manufacture in house. So we took that as 22

the representative case. 23

MR. TENDULKAR : A question about this. I 24

just heard about packaging switch gear packet the 25Executive Court Reporters (301) 565

- 0064 24

transformer goes in, you don’t have the price 1

structure

-- 2

MR . PARKER: Excuse me, this is Vijay 3

Tendulkar, ONYX Power. 4

MR. TENDULKAR : I’m sorry, this is Vijay, 5

from ONYX. Do these package transformers

-- they do 6

have to meet the efficiency requirements, am I 7

correct? Almost 100 percent of all transformers go 8

into package called a power distribution unit, almost 9

100 percent of ... transformers, which we make for the 10

DOE efficiency requirements. 11

MR. COFFEY: So I think I would probably 12

want DOE general counsel input on the nuances of that 13

situation, if it’s bei ng sold within another product. 14

So

-- obviously, transformers sold piece

- meal would 15

have to meet the standard. If it’s embedded in 16

another product, I think I’m not in a position to give 17

a final answer on that. I would have to get back to 18

you. 19

MR. TEND ULKAR : Thank you. 20

MR. RIVEST: This is Mike Rivest. You said 21

100 percent of your products are sold within

-- within 22

switch gear or within control

-- what is it you said? 23

MR. TENDULKAR : What we make is the 24

transformers for data centers. 25Executive Court Reporters (301) 565

- 0064 25

MR. RIVEST: Data centers, okay. 1

MR. TENDULKAR : And data centers do not take 2

the transformer ... Transformer is just a cabinet. The 3

input switchboard, and also the output thing, the 4

panel board, a lot of ... and everything, and that’s the 5

whole complete package. 6

M R. RIVEST: So the question is

-- 7

MR. TENDULKAR : And there’s a transformer in 8

it, which can vary from something like a 50 KVA to 9

1500 KVA. 10

MR. RIVEST: So I would question whether 11

that is a distribution transformer. 12

MR. TENDULKAR : According to the definition 13

of whatever you had, exemptions, it did not mention 14

it. And that is what my e

- mail I just sent. I’m 15

sorry I sent it very late, a couple of days ago. I 16

mentioned that very clearly, as to these transformers 17

should be exempted, but they are not on the list. 18

MR. RIVEST: Well, let’s look at the list. 19

MR. PARKER: Well, so

-- Tim, did you want 20

to respond to that point? 21

MR. BALLO: I just had question. Is there 22

something different about the transformer itself? 23

Could you take

-- 24

MR. PARKER: Excuse me, this is Tim Ballo 25Executive Court Reporters (301) 565

- 0064 26

from EarthJustice. 1

MR. BALLO: Could you take another similar 2

transformer and put it in that same application, or is 3

the transformer itself intrinsically different? 4

MR. TENDULKAR : I mentioned a lot of details 5

in the e

- ma il, but just to give a quick answer for 6

you, yes, they are different. First of all, they need 7

very low inrush (ph) current, about 300 percent to 400 8

percent is the requirement, which is not what we do 9

when we used these sophisticated materials. We 10

normal ly push the flux density very high, something 11

like 15, 16 kilogauss or higher. We have to work with 12

very low flux densities. Our cores are bigger, and 13

that’s one of the things. 14

The other thing is this data center 15

transformers work at a constant load, 2 4 hours a day, 16

not like your garden variety distribution transformer 17

in the back of your pole or somewhere else, which is 18

morning is loaded and evening is loaded, nothing like 19

that. It is a continuously loaded transformer. They 20

have reliability issues, a nd none of these 21

transformers are in operation more than about ten 22

years. A lot of these people are not putting these 23

datacenters in the containers, because they don’t want 24

the cost of the building to be there. 25Executive Court Reporters (301) 565

- 0064 27

So if somebody is putting more money to ge t 1

a better transformer, he’s not going to recover that 2

money. Plus we have a size constraint. Some of these 3

transformers are PDUs, going to the tenth floor in a 4

Manhattan building, where the cost of the building per 5

square foot is much high, and we have to constrain 6

that. Plus, all these transformers have to be cooled 7

by air conditioning because they are in an air 8

conditioned room. So you need an efficiency higher, 9

not at 35 percent load, which DOE looks at, but at a 10

higher loading, and none of those fa ctors are 11

considered in any of these issues, and that’s the 12

reason we were thinking it should be exempted from 13

this DOE requirements and should be on that list. 14

Also one other thing I forgot to mention is 15

they also need, a lot of times, not a standard de lta

- Y 16

transformers, but they want delta zig

- zag, or a delta 17

double zig

- zag

-- there are two separate windings, and 18

the temperature rise goes from 80 degrees to anywhere 19

from 130 degrees, which is not standard in the 20

distribution transformers. So all these things make 21

the transformers a lot more difficult to make. 22

MR. COFFEY: So I think I heard two items 23

there, the first was of compliance of units that were 24

sold as part of another product, was the first, and 25Executive Court Reporters (301) 565

- 0064 28

then it sounded as though we moved into a disc ussion 1

of transformers that, even if they were sold piece

2

meal, do they maybe belong in a different product 3

class, or equipment class, rather. Is that an 4

accurate summary of your points? 5

MR. TENDULKAR : Yes, to some extent, but you 6

have the UPS transfor mer, the UPS transformers go in a 7

UPS cabinet somewhere around there. We make those, 8

but we do not put in the cabinets, somebody else puts 9

in the cabinet. Similarly, some of the data center 10

transformers we make, we do not put it in the cabinet, 11

but someb ody else puts in the cabinet, but they’re 12

specifically made for a data center use. 13

MR. COFFEY: Okay. So you’re suggesting 14

that they would be covered maybe by the spirit of this 15

exemption, but because of the way that you sell them, 16

they’re, in practice, not excluded. 17

MR. TENDULKAR : Exactly, they’re not 18

included right now. 19

MR. COFFEY: So maybe what we need to do is 20

look at the physical characteristics of these devices. 21

I don’t have the definition up on screen, 22

unfortunately, but maybe that’s someth ing we can look 23

at together as part of the technical committee and 24

come up with a plan on it. 25Executive Court Reporters (301) 565

- 0064 29

MR. TENDULKAR : Thank you. 1

MR. PARKER: I just want to pass along

-- 2

Tom Patzner of Schneider Electric e

- mailed in and Tom, 3

feel free to e

- mail back if I miss tated what you were 4

saying here, but the note says, “Power distribution

-- 5

PDU stands for power distribution unit, so the 6

transformers in them must comply since they meet the 7

full definition of a distribution unit, which I think 8

is what you were saying, ri ght, Vijay? 9

MR. TENDULKAR : Yes. 10

MR. PARKER: He also mentioned that he has 11

some data to supply in response to Bob Smith’s point. 12

So we’ll bring that on board with regard to those 13

transformer sales. Mike. 14

MR. RIVEST: So, they may

- so even if they 15

have to meet a standard, they may have characteristics 16

that make it difficult to meet the standard that 17

applies to all classes, so they may warrant a special 18

class. So if they’re not exempt and they can’t be 19

exempted, maybe we have to look at creating a class 20

for them

-- for those characteristics. 21

MR. PARKER: I should mention that we had 22

this

-- we had an analogous discussion for network and 23

vault transformers in the medium voltage group, and 24

just offer as a point of comparison, since it might be 25Executive Court Reporters (301) 565

- 0064 30

usefu l. What we agreed to do there was to form a work 1

group that would look at three things, 2

**•** first, whether prices

-- whether the ratio of 3

price increment to efficiency improvement is 4

different for this category of transformers, 5

compared to ordinary transform ers that fit into 6

this category. 7

**•** Secondly, whether one could define this category, 8

in this case, the data center transformers by 9

unique physical characteristics, because legally 10

that has to be the basis for setting efficiency 11

standards that apply to manu facturers. And I 12

think that’s what Tim Ballo was getting at when 13

he asked are there physical characteristics. 14

**•** And the third was, if a and b are true, if they 15

are distinct and you can define their 16

distinction, what different standard should apply 17

to them

. 18

And so I can easily imagine doing a similar 19

thing for data center transformer units if that were 20

useful. Does that make sense to you? 21

MR. TENDULKAR : Yes, it makes sense to me. 22

The reason we are not really looking at price, we are 23

really looking at the characteristics of the 24

transformer, the operation of the transformer, the 25Executive Court Reporters (301) 565

- 0064 31

application of the transformer. That’s what we are 1

looking at. 2

And in the similar category, I also 3

mentioned in my e

- mail where the transformers used for 4

the solar power, w hich are normally, during the day 5

when the solar energy is available kind of thing, and 6

not in the night. They are not really exempted here, 7

but they have a different requirements to meet the 8

efficiency, about 99 percent, and sometimes better 9

than that, a nd the load pattern, they are published, 10

by the

-- for example, in California, the CEC is the 11

one. And the manufacturers to meet those requirements 12

for the standards, their standard, and then try to 13

make it TP

- 1, it is mostly impossible to get the both 14

th ings meet together. 15

And the reason for it, what we are trying to 16

do, we want to have an efficient application, 17

efficient transfer for the particular application kind 18

of thing, rather than just looking the efficiency at 19

the 35 percent point. That’s what we are looking at. 20

And that is different approach for these two kinds of 21

transformers which I mentioned in my e

- mail. Thank 22

you. 23

MR. PARKER: Can that be dealt with in the 24

life cycle cost analysis by

-- because the 35 percent 25Executive Court Reporters (301) 565

- 0064 32

is a default assumption, bu t if this were created as a 1

separate category, you could put in some different 2

load factor for that in the analysis, right, in the 3

LCC analysis could take account of that? Isn’t that 4

right? No? So, sorry, I may have misunderstood the 5

point. 6

MR. TENDUL KAR : One other thing

-- we talk 7

about it

-- one other thing we make a transformers is 8

for the solar power. Solar power transformers, they 9

work from the morning to the evening, or whatever it 10

is. What we are trying to do

-- we have a 35 percent 11

efficienc y kind of thing on everything we came up 12

with, based on the load factor of the distribution 13

transformer. Which is not the case with the solar 14

power transformer. They have certain things. They 15

start with the low load in the morning and low load in 16

the ev ening, but in the midday, they’ve got a lot of 17

load. And the load cycle is different, and they are 18

not turned on during the night. They’re completely 19

turned off. So there are no load losses. 20

DR. ROSE: May I ask a quick question? 21

MR. PARKER: Sorry, I missed that connector, 22

thank you. 23

MR. ROSENSTOCK: Steve Rosenstock. To 24

follow up on the solar, are you talking about the 25Executive Court Reporters (301) 565

- 0064 33

building mounted commercial or industrial building 1

mounted ones, where it’s a step

- up transformer from 2

the 50 to the 120 or bu ilding voltage transformer? 3

MR. TENDULKAR : These are the transformers 4

that they get from the panel, something like 200 volts 5

or 300 volts, whatever it is, and then step up to the 6

utilization voltage of ... 7

MR. ROSENSTOCK: Okay. So it’s from the 8

panel into the building or back to the grid, 9

basically? 10

MR. TENDULKAR : It may be back to the grid, 11

or it may be to the building loading

-- 12

MR. ROSENSTOCK: So that’s one

-- you’re 13

talking about the customer’s side, you’re not talking 14

about utility scale

-- 15

MR. TENDULKAR : No, no. No, no. 16

MR. ROSENSTOCK: Okay. Just for

-- the 17

second issue, basically, and again maybe this is for 18

you, for other products, covered products, whether 19

it’s like a motor or a light bulb, if that covered 20

product is part of anoth er product, like the motor is 21

in an air conditioner, and the light bulb is in a 22

vending machine, that product still has to meet the 23

standard, regardless of

-- it might be enclosed or a 24

stand

- alone, it still has to meet the federal 25Executive Court Reporters (301) 565

- 0064 34

efficiency standard regar dless of what it’s being put 1

into or how it’s being applied, it still has to meet 2

the efficiency standard. 3

MR. TENDULKAR : The problem with ... we are a 4

transformer manufacturer that are involved in the 5

manufacturer . They buy our transformer, package it 6

t ogether, and there are certain efficiency 7

requirements within there. If they don’t meet that 8

efficiency, they don’t get that rebate, they don’t get 9

the incentives. So they have to meet those 10

efficiencies for the complete product in... and a 11

transformer. A nd that is based on the load cycle of 12

the transformer during the day, solar cycle, not the 13

other things. And if we tried to meet the TP

- 1 14

efficiency or whatever efficiency we’re going to come 15

up with, we may not be able to make those 16

transformers. 17

MR. R IVEST: Mike Rivest. Again, if this is 18

a transformer that is physically different from 19

others, then there could be a separate product class 20

established, and in that situation, you know, the use 21

-- the way it’s applied becomes relevant. If it is 22

not any d ifferent in terms of its electrical 23

characteristics, for example, then how it’s used 24

doesn’t matter. You can’t differentiate it from 25Executive Court Reporters (301) 565

- 0064 35

something else. 1

MR. TENDULKAR : It cannot be used as a 2

distribution transformer. 3

MR. RIVEST: Well, then, it is a diff erent 4

animal. 5

MR. TENDULKAR : Exactly. 6

MR. NADEL: A process suggestion. 7

MR. PARKER: Yes. 8

MR. NADEL: It sounds like this is an issue 9

that they wanted to get the DOE lawyers involved with 10

and we don’t have them here, so maybe we should move 11

on. 12

MR. PARKER: Well, I think that there are 13

both factual and legal issues involved. I think the 14

legal issues are pretty clear, there has to be some 15

kind of a physical distinction. And it sounds like 16

there is, but I think it’s just a matter of working 17

with Brian to find what that is and to see if there’s 18

a separate class that should be created. 19

I just want to pass on a comment from Tom 20

Patzner, Schneider Electric on the phone that, I think 21

this was in regard to the data centers, that they are 22

very clearly included. They were specifically added 23

to the standard back in 2006, 2007 after previously 24

being exempted. So he says they are exempted from the 25Executive Court Reporters (301) 565

- 0064 36

TP

- 1 standard but not from the 2005 Energy Act. That 1

just confirms Vijay’s point, I think. Thank you, Tom. 2

Tim, did you have a comment? 3

MR. BALLO: Just one quick follow up 4

question. What did you say the input voltage was for 5

the solar power transformer? 6

MR. TENDULKAR : The input voltage for the 7

solar power depend on the particular inverter, but 8

they ar e about 200 volts, 160 volts, something like 9

that as an input voltage because whatever the DC 10

voltage available, they invert it, and that’s not very 11

much. 12

MR. FERNSTROM: Excuse me, this is Gary 13

Fernstrom, from PG&E. I’d like to go back to the data 14

cent er transformer for a moment. Data centers are a 15

large, important and growing load, and I think we 16

would do ourselves a disservice if on account of the 17

way these products are classified and the regulations 18

applied, we wound up with a misapplication for tha t 19

use. Clearly, the predominant issue there is coil 20

losses, I

- square

- R losses, because these are heavily 21

loaded in contrast to building transformers which are 22

lightly loaded. So we should collectively work 23

toward trying to get the best outcome for this 24

specialized application. 25Executive Court Reporters (301) 565

- 0064 37

MR. PARKER: Okay. I think we’re in 1

agreement on that. Let’s move on to the rest of 2

Brian’s presentation. 3

MR. COFFEY: So I think we can continue some 4

of these equipment class questions off line and go 5

through what criteria w ould be required to discuss 6

setting a different equipment class, and hopefully 7

some members of the technical committee that was 8

chartered last meeting can be part of that. 9

Also I was

-- I started talking about steel 10

competitiveness, and said at the first meeting, 11

negotiators discussed looking at a TSL that would 12

allow a market where grain

- oriented and amorphous 13

transformers could compete. We met with the steel 14

suppliers and agreed that selling price was a good 15

proxy for competitiveness, if it were able t o be 16

estimated accurately. Obviously, the selling price of 17

a transformer is strongly dependent on the assumptions 18

made for materials prices, but our hypothesis was, as 19

I mentioned earlier, that if two transformers are 20

priced differently, then one of them isn’t going to 21

get purchased. 22

So here’s an example. This is design line 23

5, which is admittedly a liquid design line, but the 24

methodology is identical. What we’re trying to do is 25Executive Court Reporters (301) 565

- 0064 38

find the efficiency at which amorphous and 1

conventional steel transformers can sell in the same 2

market. So let’s zoom in on where the action is. And 3

you’ll note that these lime green prices here are

-- 4

well, you won’t know that because you can’t see the 5

legend

-- but they’re M3 designs. And so I’m going to 6

put a tangent on a certain part of that curve, kind of 7

where it crosses the yellow, which is ZDMH, a high

- B 8

steel, and the peach color which is amorphous. So 9

there’s that, that’s M3. 10

To do the same with ZDMH, in the dry space 11

it would probably be H0 domain

- refined that wo uld 12

serve this role, and that might have a curve like 13

that. And then the amorphous curve is flatter still, 14

and it’s about there. 15

So if I’m trying to say where does amorphous 16

and ZDMH compete, at which efficiency level? Well, 17

I’ll find where those two c urves intersect, which is 18

about right here, and then that arrow points to a 19

place on the efficiency line where, were the standard 20

to be set there, probably they would be seen as 21

substitutes to each other, and you could say well, 22

they’re pretty close in thi s region, so maybe we 23

choose EL

- 1 here as the standard. 24

If we looked at M3, that doesn’t intersect 25Executive Court Reporters (301) 565

- 0064 39

the amorphous curve until down here, so there would be 1

a question of what’s the right standard to use for 2

that equivalence point. Now, what if M3 had a 3

different price? This is the question that’s raised 4

in this type of analysis. If we assume that M3 is 5

cheaper, then those green points all come down, and 6

you end up with a curve like that, and an intersection 7

point that’s higher. 8

So the conclusion I’ m trying to get to is 9

that this type of analysis is highly sensitive to the 10

assumptions that are made about materials prices. But 11

we think that to do this exercise it’s really 12

unavoidable to presume something of amorphous prices. 13

We heard a couple of dif ferent suggestions at the 14

medium voltage meeting that just took place. AK 15

Steel, again, not everyone’s seen this, but AK Steel 16

presented a methodology that presumed materials 17

prices. Wes Patterson, who I don’t think is on this 18

committee presented some ma terial that showed 19

equivalence but that itself assumed the materials that 20

his company sees. So even though it’s a tough thing 21

to do, I think that if we decide that finding an 22

equivalence point is a worthwhile goal, we have to 23

come to an understanding of t he materials prices that 24

we’re going to use. 25Executive Court Reporters (301) 565

- 0064 40

Because there are some different ideas about 1

which prices should be used, we’ve created a tool that 2

lets

-- I mentioned this earlier

-- that lets the user 3

choose different price cases for the different steels 4

and see how the cloud shape changes under those 5

different scenarios, so we’ll be sending that out. 6

Conclusions: This exercise is sensitive to 7

materials prices. There was a proposal to use weight 8

as a metric for competitiveness, but we don’t think 9

that’ s useful because consumers don’t purchase in 10

pounds, they purchase in dollars, and moreover, it 11

requires an implicit assumption about what the 12

relative prices of the two materials used are, so it 13

doesn’t really address the problem. 14

So what we’re going to do about this is 15

provide that tool and also seek input from the 16

committee on what they believe the materials’ prices 17

are, what they are paying for these different grades 18

of steel. 19

So if there are no questions on this, I’ll 20

move on to open questions. 21

M R. PARKER: Brian, just one comment. I 22

think it would be very good to keep those slides on 23

the projector and we’ll circle those graphs. When we 24

come back

-- I’d like to come back, as I mentioned in 25Executive Court Reporters (301) 565

- 0064 41

the discussion of the agenda, come back to these 1

charts and see if perhaps this group can make a little 2

more progress than the MV group did in trying to find 3

the basis of these charts, what is the competitive 4

price point. All this presumes that there’s some 5

agreement on the material price assumptions that are 6

going into it. So we can have that discussion, but I 7

just wanted to mark that these are significant graphs 8

and we should plan on coming back to them later in the 9

discussion as we discuss steel impacts. Yes. 10

MR. MILLURE: Dave Millure, Metglas. I 11

think you’ll find a quite different landscape here 12

than you do with the liquid

- filled. I don’t think 13

amorphous become the material of choice until maybe 14

CSL

- 5 for the low voltage, so it’s a slightly 15

different conversation. 16

MR. PARKER: Right. It is a differ ent 17

conversation. It’s a similar concept, and it’s 18

similar graphs, that was my only point. It could 19

involve different steels. It could involve M3 versus 20

M5 or something like that . But I’m a little 21

disappointed that we don’t have Eric or Jerry here. 22

M R. MILLURE: M3, M5 is the same supplier, 23

so I don’t think that’s the issue. It’s the 24

amorphous or you can make a case of the ZDMH versus 25Executive Court Reporters (301) 565

- 0064 42

the M3 or the M5s. 1

MR. PARKER: And so what I’m hearing is the 2

competitiveness TSL is not as salient an issue for 3

this group, is that accurate? 4

MR. RIVEST: What I remember from the last 5

rulemaking, it was

-- there were issues around 6

tooling, the construction, mitering versus butt lap, 7

and step laps and that was

-- you got into serious 8

capital costs, thickness of st eel resulting in more 9

cuts. Those were the issues with the rule. I don’t 10

know

-- I’ll be interested in hearing what the issues 11

are. 12

MR. PARKER: So there’s not an issue about 13

metal

-- 14

MR. RIVEST: This is not about amorphous

-- 15

MR. PARKER: No, no. Not about amorphous 16

but about metals choice, generally? It’s about 17

construction technique? 18

MR. RIVEST: It’s more about construction 19

techniques. 20

MR. PARKER: Okay. 21

MR. MILLURE: Now if we go to CSL

- 6 maybe we 22

have to have those conversations. 23

MR. TENDULKAR : The question I was going to 24

-- you have the material prices by performance here. 25Executive Court Reporters (301) 565

- 0064 43

When you set a performance or whatever it is, we have 1

got a different constructions of the core as the 2

gentleman just mentioned. We did miter core and butt 3

l ap, but in the miter core also there are a half miter 4

and a full miter, the step

- lap kind of thing, and the 5

step

- lap kind of machines cost lot of money and we 6

just mentioned in the last meeting that there are only 7

one or two suppliers in the world and it c ost a lot of 8

investment kind of thing. Small manufacturer like us 9

could not afford that kind of a capital investment. 10

And then we cannot use the material to the full value 11

of whatever

-- reduce the cost of the

-- reduce the 12

losses kind of thing because

- - I don’t know how you 13

calculate the losses based on the step

- lap miter, or a 14

half ... miter, or how did you do that? 15

MR. COFFEY: We looked at a variety of 16

construction techniques for each design line. So some 17

of each. 18

MR. TENDULKAR : Okay. And the ot her thing 19

is, when we talk about

-- let’s say we have to talk 20

about the material price. Do you also allow that 21

material price to go up because of the capital 22

investment cost from that, or how do you do that? And 23

also the material prices by the region, ch ange. There 24

may be different price in the Midwest compared to the 25Executive Court Reporters (301) 565

- 0064 44

west coast where we are. Are these factors taken into 1

account in the material prices? 2

MR. COFFEY: I’ll

-- as far as the different 3

prices for different regions, absolutely not. We 4

didn’ t do that. That’s the first time I hear that. 5

In terms of the tooling costs, yes we do take that 6

into account. We do take that into account. 7

MR. TENDULKAR : And again with your small 8

manufacturers like we are, we cannot buy ten million 9

pounds of steel . So we will get a different price 10

spread than the other people can get. So which kind 11

of prices did you take into account when you made this 12

chart? 13

MR. COFFEY: What we say is the prices that 14

we use in our modeling are probably representative of 15

a med ium to large manufacturer. Although in our 16

interview process we do ask a variety of businesses 17

what they pay for different steels, and to be honest, 18

we didn’t find a huge discrepancy between some of the 19

smaller guys and some of the larger and medium ones. 20

MR. TENDULKAR : So small manufacturers like 21

us, I think you should consider and see what we are 22

paying and maybe that may change the chart or it may 23

not change the chart. I do not know. 24

MR. PARKER: Were you previously consulted? 25Executive Court Reporters (301) 565

- 0064 45

MR. COFFEY: I don ’t think you’ve told us

-- 1

I mean one of the things I had mentioned earlier is 2

that we would be providing a template to allow input 3

on what different businesses pay for their grades of 4

core steel, so there will be an opportunity to give 5

feedback on that. And also I can

-- Richard, you had 6

talked about presenting what the current prices that 7

we used to generate these results are, so I can also 8

show those. 9

MR. TENDULKAR : Yes, that would be helpful, 10

thank you. I appreciate it. 11

MR. PARKER: Is that in formation proprietary 12

that should not go up on a website but provided to 13

Navigant separately, or how would you like that 14

handled? 15

MR. TENDULKAR : I think if we give you the 16

price information, that should be proprietary and that 17

should not go to general p ublic and just stay with the 18

committee. 19

MR. PARKER: Okay. Then I think what will 20

need to happen is that you’ll need to gather this 21

information and find a way to sanitize it so that it 22

can be shared with the group as a whole without 23

disclosing confident ial information. 24

MR. TENDULKAR : Thank you. 25Executive Court Reporters (301) 565

- 0064 46

MR. PARKER: And just to a little bit of 1

note of urgency here, we need to do that very, very 2

soon. Bob. 3

MR. SMITH: Bob Smith. Brian, it would be 4

very helpful to me and probably some of the other low 5

volt age manufacturers represented here, if we could 6

see the scatter plots with our design lines rather 7

than the liquid design lines. The efficiencies are 8

much higher on the liquids for physical and 9

technological reasons and I think this is a little bit 10

confus ing when we start looking at the break

- even 11

points. 12

MR. COFFEY: So, yeah, I apologize. What I 13

was trying to show here was more a methodology to look 14

at how different steels might compete with each other, 15

rather than to conclude anything about any parti cular 16

design line. But certainly the tool that we provide, 17

it sounds like this may not actually be of great 18

concern, but the tool that we provide will have the 19

capability to look at the low voltage design lines, of 20

course. 21

MR. PARKER: Andrew. 22

MR. DeL ASKI: One of the things we heard in 23

the first meeting we had was manufacturers

-- where 24

manufacturers are concerned about the investments 25Executive Court Reporters (301) 565

- 0064 47

needed to go to more sophisticated manufacturing 1

techniques. And VJ, I heard you begin to sort of

-- 2

you sort of sai d it quickly. As a non

- expert in 3

transformer manufacturing, if you could step me 4

through the, sort of the steps up

-- what are the 5

options, steps up in manufacturing techniques that get 6

you to improved efficiency? You kind of did it 7

quickly, going from b utt lap to

-- you said it 8

quickly. Maybe you or Bob or Eduardo can give us a 9

short tutorial on what the options are as you step up 10

in efficiency to improve performance. 11

MR. TENDULKAR : How much time do I have? 12

MR. DeLASKI: A short tutorial I said. A nd 13

basic techniques. 14

MR. TENDULKAR : First of all

-- 15

MR. DeLASKI: I heard more gradations in 16

what you said than I had heard before, partially 17

mitered versus fully mitered

-- 18

MR. TENDULKAR : First of all there are 19

stacked core construction, there are three different 20

varieties. One is butt lap, which got the 90 degrees 21

thing and just put it around there. Then the miter, 22

which is

-- there is a half miter which most of the 23

people do, which is easy to do, compared to st ep lap, 24

which you need a very spec ial equipment. So these are 25Executive Court Reporters (301) 565

- 0064 48

the three different constructions in the stacked core. 1

And the stacked core steels are sometimes different 2

than the wound core steels. I think that was 3

discussed this morning a little bit. 4

Now in the stacked core you have d ifferent 5

constructions , it’s three different constructions. 6

Other than that, if you want to do something different 7

in the particular construction, then you go to the 8

better materials. And if you go to better materials, 9

you can start with the M6, or you c an start with a 10

non

- oriented steel, then you can go to M6, which is 11

oriented steel, and as you go thinner and thinner and 12

thinner, sometimes you got limitations as to whether 13

you can shear it properly, because as the steel gets 14

thinner, it is difficult to shear properly without 15

getting a burr on it kind of thing. So those are some 16

of the limitations people have who shear the thing 17

inside their factory. 18

So other than that, then you go to the wound 19

cores. When you go to the wound cores, there are 20

events going what you call, like a three

- legged coil 21

with the Y, two of the three loops of the core are 22

wound together and make the core. That core it’s very 23

efficient because there are less cardinal losses and 24

there are other things, but it has got the drawbac k. 25Executive Court Reporters (301) 565

- 0064 49

You need 15 percent more core area, because there are 1

two loops in each leg, and they are

-- the c ore fluxes 2

are 120 degrees apart from each other. And because 3

other people made mistakes in calculations, and in my 4

e

- mail I detailed that a little bit m ore in detail. 5

So you need, if you are ... cross

- section of ten square 6

inches, then it’s not ten square inches as in the 7

stack core, it is less than ten square inches. It is 8

about 85 percent or 8.5 square inches. So you need 9

more material. And one of the competent engineers in 10

our company did the design with the amorphous core, 11

nothing wrong with the amorphous core, and he goofed 12

(ph) it, and I think OPS software does not take that 13

into account either, and that was one of the points 14

that I made in my e

- ma il. And that’s the reason we 15

make the transformers and they were lousy, losses were 16

a lot more than what we predicted by OPS software. 17

And a small company like us, we have problems with 18

that kind of thing. 19

So those are the kind of things you can have 20

i n the core constructions and losses. The other way 21

to reduce the losses on the core is to make, use a 22

smaller core, and more winding, but that has got other 23

consequences also. 24

MR. DeLASKI: Thank you. 25Executive Court Reporters (301) 565

- 0064 50

MR. PARKER: I didn’t quite catch one thing 1

you ha d butt, mitered and then the third type was? 2

MR. TENDULKAR : Stapler. Stapler. But 3

that’s a miter core construction in the step

- lap (ph) 4

PARTICIPANT: In a stack core construction 5

for entry, call it, products, butt lap. 6

MR. TENDULKAR : That’s right , that’s the 7

same placement. 8

PARTICIPANT: Okay. It is an entry level .. 9

MR. TENDULKAR : And if you had non

- oriented 10

steel, it doesn’t make a difference if it is a miter 11

or a butt lap, the losses are the same. The miter 12

core and the step

- lap core are used for one reason. 13

All these oriented steels, M6 and M5 and M3 and 14

everything, they are directional material. So if your 15

core flux is going in one direction, the losses are 16

lower. The plus goes in 90 degrees to that, the 17

losses are a lot more. To co mpromise that, we make a 18

miter cut. It’s a 45 degrees cut on that one to 19

reduce the losses. In the wound core you don’t have 20

that kind of situation because the wound in the core, 21

the flux goes in the same direction all the time. 22

That’s the reason the wou nd core has the lower losses. 23

MR. NADEL: And in the stacked core, I’m 24

just looking at my notes right here, ... 25Executive Court Reporters (301) 565

- 0064 51

MR. TENDULKAR : The half miter and miter. 1

MR. NADEL: Half miter ... 2

MR. TENDULKAR : Miter and half miter are the 3

same thing. 4

MR. NADEL: The same thing. 5

MR. TENDULKAR : And the step

- lap is a miter 6

with a different construction. 7

MR. NADEL: That’s a third level ... stacked 8

construction? 9

MR. TENDULKAR : Yes. 10

MR. PARKER: But these are only used with 11

oriented

-- grain

- oriented steels. 12

MR. TENDULKAR : The miter and the step

- lap 13

are used with the oriented steels. 14

MR. PARKER: Right. 15

MR. TENDULKAR : Butt lap is used with any 16

steel. 17

MR. PARKER: And you must use them with M6 18

and up? 19

MR. TENDULKAR : We do use M6 and up, and we 20

also u se the non

- oriented steel also. And it depends 21

on the price and performance and what the particular 22

customer’s requirements are. 23

MR. PARKER: Right. So once you have the 24

technology to

-- and the know

- how to do the half

- 25Executive Court Reporters (301) 565

- 0064 52

miter, miter, or step

- lap process , then you are in a 1

mode where you could move up in terms of greater rated 2

steel. 3

MR. TENDULKAR : Greater

- rated steel, we can 4

use it, but not in all cases you can use the greater 5

rated steel. There are certain problems with the 6

grain

- oriented steel in th e certain performance, like 7

I talked about the data center transformers. We moved 8

away from the grain

- oriented steel to the non

- oriented 9

steel, which is a lower grade, mainly because when you 10

turn off the transformer, the remaining flux in the 11

grain

- orien ted steel is much higher, the leftover flux 12

is much higher. That gives us a lot of ... when you’re 13

starting the transformer again, you get a big kick of 14

the current, that’s called in... current, that may trip 15

the breaker. The non

- oriented steel have a lower 16

remaining flux density, the leftover flux is less, and 17

you get a less kick. And again, you have to go to the 18

lower flux density. 19

The problem we are talking about, and maybe 20

I am not explaining very well, in a data center 21

transformer, some of the transfo rmers are used to get 22

the power from the two different sources. Only once 23

it’s connected to the transformer and if that source 24

has a problem, the transformer is immediately 25Executive Court Reporters (301) 565

- 0064 53

switched, without any delay, to the second source, and 1

that second source may not be in sync with the first 2

source and then you get a lot of in... current. And the 3

reason for that it switches so quickly is because the 4

secondary of that transformer is connected to the 5

computer loads and you don’t want to have power 6

disruption in the compu ter load, and that’s a totally 7

different application. It has come up in the last ten 8

years or less. 9

MR. PARKER: So I didn’t follow all of that, 10

but the sense that I got was that you don’t use the 11

grain oriented steel for data centers because of these 12

t echnical limitations

-- 13

MR. TENDULKAR : Exactly. 14

MR. PARKER:

-- but you could still use them 15

for ordinary commercial buildings and other

-- 16

MR. TENDULKAR : We use the grain

- oriented 17

steel for the solar power plants where one must get a 18

high efficien cy. 19

MR. PARKER: And depending on what the level 20

was, you might use them in other, but that would 21

depend on the efficiency levels, you might use them 22

for commercial buildings. It would not be a technical 23

reason why not. 24

MR. TENDULKAR : We are even thi nking about 25Executive Court Reporters (301) 565

- 0064 54

using amorphous core for the solar power, so it’s not 1

that

-- there is no application for the grain

- oriented 2

or amorphous in our particular company because of 3

different applications demand different kinds of 4

steels. 5

MR. PARKER: So it sounds like there is room 6

for a conversation about metals in this marketplace, 7

it’s just that there are these other things overlaid 8

on top of it which involve construction techniques. 9

MR. TENDULKAR : Exactly. 10

MR. NADEL: Steve Nadel, IEEE. Again, just 11

trying to understand, the current standard is 12

basically based on the old TP

- 1. 13

MR. TENDULKAR : Yes. 14

MR. NADEL: Can you generally, and I’m not 15

saying in every case, meet that standard at a minimum 16

level with the non

- grain

- oriented butt lapped, or do 17

you have to start employing either butt lapped or 18

grain

- oriented to start meeting that in your typical 19

application, recognizing there is thousands of 20

products out there. 21

MR. TENDULKAR : I didn’t want to take too 22

much time on this, but let me give you one simple 23

example. Over the weekend I was working on a design 24

for a 300 KV TR, I believe it is for the government, 25Executive Court Reporters (301) 565

- 0064 55

and a lot of transformers is working on that. And it 1

is for a data center. It needs the TP

- 1, of course. 2

And it needs the temperature rise of 80 de grees, and 3

it also needs the K factor of 20. And I’m sorry to 4

say I could not make it. I had to make it K

- 7, that’s 5

the best I can do for the thing because of the TP

- 1 6

requirement. If I did not have TP

- 1 requirement, I 7

would have made the K20 transforme r with 80 degrees 8

rise, and it would have fit in that PDU we were trying 9

to make. I cannot make it. So there are limitations 10

as to what you can in, and in particular applications 11

you need to have transformers which are different. 12

Then you say because we don’t have any 13

exemption there, we had to make a TP

- 1. 14

MR. PATZNER: Richard, Thomas Patzner from 15

Schneider Electric. I would like to make a couple 16

comments, please. 17

MR. PARKER: Go ahead, Thomas. 18

MR. PATZNER: The first of all, I agree 19

with Vi jay’s comment with regards to the technical 20

applications, but Schneider Electric’s a systems 21

supplier, we’re going to ignore those concerns or 22

we’re going handle those inrush (ph) concerns in 23

another way. So I do not believe we should take it 24

into account with our efficiency levels, the change in 25Executive Court Reporters (301) 565

- 0064 56

inrush (ph) because there are other ways to handle the 1

inrush (ph) in the system, than having it be a 2

constraint on what efficiency levels we go to. 3

Second of all, in regards to the initial 4

question and regards to the manufacturing techniques 5

or processes, the main concern Schneider Electric’s 6

going to have is being able to switch to a new process 7

and continue to build at the same capacity we build at 8

today. So yes, we can switch from a butt lap to a 9

miter, but the miter cut’s going to take us twice as 10

long to accomplish, which means my capacity’s actually 11

going to be cut in half. So it’s more of a capacity 12

concern with the different processes , than it is a 13

capital expenditure to get to those processes. 14

MR. De LASKI: Thanks, Thomas, that’s really 15

helpful to understand, and also a question for you, 16

Vijay

-- 17

MR. PARKER: This is Andrew DeLaski. 18

MR. DeLASKI: Onyx, your company, is

-- you 19

keep coming back to the example of the data center, 20

and that’s because t hat’s what your company does, am I 21

right? Are you in a larger market, or is that sort of 22

your particular beat? 23

MR. TENDULKAR : Our market is about 40 24

percent of all transformers are UPS and related to 25Executive Court Reporters (301) 565

- 0064 57

UPS. 1

MR. DeLASKI: So they’re exempted. 2

MR. TEND ULKAR : They’re exempted. About 40 3

percent of our transformers are data center, then 4

there are some solar powered transformers and very 5

rarely we make distribution transformers just the 6

cabinet and distribution transformers, which is not 7

going to be used in a data center. 8

MR. PARKER: Tom, could you give us a sense 9

of your company’s product line and customer base, 10

along the lines of what Vijay did with regard to Onyx? 11

MR. PATZNER: Schneider Electric is in the 12

entire energy management business of elect ricity, so 13

we sell the first device that connects to the utility 14

grid, all the way down to the cameras that are going 15

to monitor your security inside your building. So we 16

have our hands in every single element in a commercial 17

building as it’s being built. 18

MR. PARKER: Well, focusing on the 19

transformers. 20

MR. PATZNER: Yes, which includes the device 21

that’s going to energize the transformer, so as we 22

move up in efficiencies, I agree 100 percent with 23

Vijay that the inrush (ph) is going to go up with it, 24

wh ich means it’s going to be difficult to energize, 25Executive Court Reporters (301) 565

- 0064 58

but we’re going to drudge that because we sell the 1

entire system, so we actually can work with our 2

correspondents team that makes the devices that turns 3

the transformers on, to make sure that our transforme r 4

works with our other device. 5

MR. PARKER: Could you describe

-- you were 6

talking just now about devices for data centers, is 7

that

-- 8

MR. PATZNER: Schneider Electric is in the 9

data center market as well. 10

MR. PARKER: Are you also in the commercial 11

building market? 12

MR. PATZNER: We’re also in the commercial 13

building market. We’re in the industrial building 14

market. We’re in the energy business as well. 15

MR. PARKER: Do you have data off

- hand on 16

the number of

-- I’m sorry. 17

MR. PATZNER: Schneid er Electric controls 18

and monitors more energy than any other company in the 19

world. 20

MR. PARKER: So you’re not exactly a small 21

company. (laughter.) We’ve got the two extremes 22

here, yes. 23

MR. FERNSTROM: Well, this is Gary Fernstrom 24

from PG&E. Wouldn’t you agree that utilities probably 25Executive Court Reporters (301) 565

- 0064 59

monitor and control more power than Schneider 1

Electric? 2

MR. TENDULKAR : This is Vijay Tendulkar, 3

ONYX Power. Tom just mentioned about a few things 4

about the ... those kinds of things. There are several 5

ways to do that. We used to do some of those, but I 6

was part of a standard electric one time and I also 7

worked on the static transfer switch, an algorithm to 8

reduce the inrush (ph) current of the transformers, 9

and I know about those parts. But I’m basically 10

talking about transformers connected to the output 11

side of the static transfer switch, and these are the 12

ones basically used in the data centers. I’m not 13

talking about the transformers which are connected to 14

the grid or something else, and they have a low inrush 15

(ph) current. To stop the breakers from tripping, 16

there are a lot of other ways to do it with the 17

relays. But these are the plans which are switched 18

from one source to another source within a cycle, 19

where the two sources may not be in the sync with each 20

other , and that’s when we have to reduce the inrush 21

(ph) current. We have tried with the gaps, they got a 22

lot of mind (ph) and a lot of losses, we will never 23

make TP

- 1 efficiency requirement with the gapped core. 24

We have done that also. The only way to meet these 25Executive Court Reporters (301) 565

- 0064 60

requirements for the TP

- 1 is to go to the lower flux 1

density and probably non

- oriented steel. And that’s 2

the only way we can make this particular requirement 3

at this present time. That is at least based on my 4

transformer experience. Maybe somebody else has a 5

different one. 6

MR. PARKER: So it sounds like we have a 7

clear case for, at least for working groups to look at 8

data centers as a possibly separate category. So 9

we’ll do that. I do want us to keep our eye on the 10

ball, which I think is where the bulk of the sales 11

are, and the bulk of the losses are, which is for 12

commercial and industrial buildings that are not data 13

centers. So let’s focus our attention on that. 14

I realize we may be a bit limited by the 15

people we have around the table or on the phone, in 16

our capacity to do that through first hand anecdotal 17

experience, but let’s put

-- offer the data where we 18

an on that, and think about, you know, what are the 19

options, what are the sweet spots, if you will, the 20

efficiency levels that would gi ve cause for concern, 21

and/or on the other hand, that would be doable in 22

those markets. In particular, I think at this point 23

we should focus on the quality of the analysis and 24

whether the LCC analysis, and in this case, since 25Executive Court Reporters (301) 565

- 0064 61

Brian is at the mic now, the e ngineering analysis has 1

accurate data for making that assessment. 2

So let’s focus on that market segment if we 3

could and see if there are issues with that aspect of 4

the analysis that need to be addressed. Bob. 5

MR. SMITH: Bob Smith. Richard, if you 6

wo uld like, I have a thumb drive with some pictures of 7

mitered cores and the Gihor (ph) core cutter that may 8

be of interest to the committee. 9

MR. PARKER: It’ll take us some time to put 10

that on the system. Is it valuable to have it now, or 11

would it be som ething that we could share with them 12

after the meeting? 13

MR. SMITH: Whenever anyone would like to 14

see it. 15

MR. PARKER: Why don’t we post that on the 16

website, if we can, for people to look at as they form 17

their working groups and so forth. Thank you. John. 18

MR. CASKEY: John Caskey, NEMA. I guess I 19

have two or three thoughts as we were going through 20

this process. One is that you

-- it seems like you’re 21

trying to wrap up the discussion, particularly about 22

this one slide that’s up there now, and talki ng in 23

general terms about the substitution of different 24

materials in the construction of the transformer, and 25Executive Court Reporters (301) 565

- 0064 62

the way we left the meeting, whenever that was, two 1

weeks or so ago, we basically had sort of the scatter 2

diagram of price versus efficiency, and it basically 3

showed that the preliminary analysis at the lowest 4

cost, prices for a particular design of transformers 5

was relatively flat over four different, if I’m not 6

mistaken, four different energy efficiency levels, or 7

four different ELs I think we wer e calling them at 8

that point. So anyway, that’s an important 9

characteristic. We really need to get to the point of 10

validating the basic price versus efficiency curves 11

that we saw at the last meeting that we haven’t yet 12

seen in this meeting. 13

So before w e get into any generalities of 14

material substitution and things like that, I think we 15

need to get back to the basics of the price versus 16

efficiency relationship that we left with at the last 17

meeting. So that’s sort of one point. 18

The other point deals wi th, you know, some 19

of the discussion we’ve had so far with the small or 20

medium sized manufacturers, and if there is a working 21

group that’s going to do some special emphasis on 22

trying to make sure that we do the best job we can in 23

coming out with sort of fa ir answers once we do sort 24

of negotiate some point here, would be that we may 25Executive Court Reporters (301) 565

- 0064 63

want to look at what does the industry look like for 1

the small and medium manufacturers and how does the 2

availability of materials and the price of materials 3

and other things lik e that impact them, and the cost, 4

the capital cost for changing their line out to using 5

amorphous or things like that, which is to have some 6

sensitivity to what their industry or their part of 7

the industry is like to make sure that we’re 8

representing them also as we come up with some answer, 9

whatever that answer might be. Thanks. 10

MR. PARKER: Great. I think that’s helpful. 11

And I think as I take it away, the first thing is to 12

basically validate the scatter plots, make sure that 13

people are comfortable wi th the methodology and the 14

analysis. And I think that’s a

-- and then the second 15

ting is to look at the competitiveness impacts on 16

steel, particularly in this case, on small 17

manufacturers and the distribution transformer 18

business, right. And that’s got t o be a particularly 19

salient aspect of this because of the prevalence of 20

small manufacturers. 21

MR. RIVEST: This is Mike Rivest. I think, 22

again, my information is one rulemaking old, but I 23

don’t suppose things have changed a whole lot. If you 24

contrast th is industry to the medium

-- the liquid 25Executive Court Reporters (301) 565

- 0064 64

industry, if you would, this industry is less 1

concentrated so there are a lot more manufacturers. A 2

lot of them manufacture in small volumes, and this is 3

not a highly customized industry in the sense that the 4

ABBs o f the world have sophisticated design software 5

and are used to have different designs based on 6

material prices and vary those for every order as need 7

be. 8

The small manufacturers that work in this 9

industry tend to have less tooling and back before the 10

p revious standard I know the TP

- 1 had been designed 11

around an M6 butt lap. So to minimize the tooling, 12

just basically try to

-- although, using a grain

13

oriented with a butt lap was not an efficient way of 14

using a grain

- oriented. It’s something that could be 15

done. So I think that was the philosophy behind the 16

TP

- 1 at the time. It wasn’t the best way to get 17

there, but it was a way to get there. 18

Now, clearly some manufacturers that have 19

the volume, can invest in the equipment and do it with 20

a seven step m iter, for example, and do it more cost

21

effectively. So here I think what you’ll find is that 22

it might be flat because the difference between one 23

design option and the other one is how you cut the 24

steel, and that is a one million dollar piece of 25Executive Court Reporters (301) 565

- 0064 65

equipment that you amortize over a million cuts. So 1

it shows up as two cents a cut. That’s great when you 2

can afford the million dollar piece of equipment and 3

when you can actually use it a million times. 4

So that’s what’s embedded in these cost 5

curves, it’s th is depreciation, if you will, over 6

many, many cuts. So what you’re seeing is a flatness. 7

You may not even be changing steels. You’re going 8

from a butt lap to a miter to multi

- step miter and 9

you’re seeing gains in efficiency. You’re not seeing 10

big chang e in price because it’s the price of the cut. 11

MR. PARKER: Mike, just to follow up on 12

that, does the Navigant analysis have the ability to 13

differentiate impacts on small manufacturers versus 14

large and assess based upon, you know, whatever 15

defines a small manufacturer and their capital 16

situation? 17

MR. RIVEST: We could create a cost 18

efficiency curve for a small manufacturer where, so 19

for example, the cost of the cut would go up because 20

the tooling would not be used as many times, so you’re 21

not

-- think of it as, if it’s a million dollar piece 22

of equipment being

-- slicing the steel a million 23

times a year, gives you a price per cut. Well, if 24

you’re only using it a fraction of that, the cost per 25Executive Court Reporters (301) 565

- 0064 66

cut is a lot higher. But then there comes a time when 1

they’re not even going to make their cores, they’re 2

going to source their cores. But that’s sort of

-- 3

that’s the backstop. So that’s the backstop. But 4

then, what business are they in if they’re buying 5

cores? You know, they’re in the winding business. 6

MR. P ARKER: Which is okay with some. 7

MR. RIVEST: It’s a whole different set of 8

issues here than with the liquid industry. 9

MR. TENDULKAR : (comment off mic) 10

MR. PARKER: You need to speak into the mic. 11

MR. TENDULKAR : I’m sorry. When you use a 12

gap cor e, there is a gap between the legs laminations 13

and the yoke laminations. You cannot have any joint 14

between the yoke and the legs, and then it is not a 15

butt lap or miter core, it is just two pieces of 16

separate pieces, and those are 90 degree pieces. So 17

we make a lot of that material for the UPS 18

transformer, or when we make reactors. And that’s the 19

reason we have a lot of machines to cut the butt lap 20

kind of lamination. If we want to put a miter cut 21

machine, we have to find the space. I don’t have 22

space for my office right now. 23

MR. PARKER: Do you have a sense of whether 24

that’s a general issue for small manufacturers or is 25Executive Court Reporters (301) 565

- 0064 67

that a particular issue because of where Onyx plant is 1

located? 2

MR. TENDULKAR : No, it is a general issue 3

for small manufacturers because they have a lot less 4

square footage than the other one. We can’t just go 5

and rent another building, that’s a lot of expense. 6

And that is what we mentioned in the last meeting too. 7

It is not only these costs, the capital costs, but 8

also the inves tment for the space of something. 9

MR. PARKER: Is there in the template an 10

input

-- was data gathered on the impact of moving to 11

larger facilities to accommodate larger or more 12

machinery. 13

MR. PATZNER: Richard, Thomas Patzner here 14

for Schneider Electr ic. I do not believe the 15

manufacturing impact portion has been done yet, and if 16

somebody from Navigant can correct me or not. These 17

type of questions will be covered when we get to that 18

portion, and we can’t get there until we get through 19

the analysis, i sn’t that

-- am I correct? 20

MR. COFFEY: That's correct, Thomas, we look 21

at these impacts in an analysis that’s separate from 22

the engineering, but related, called the manufacturer 23

impact analysis, and it does look at for different 24

efficiency levels, what types of investments would be 25Executive Court Reporters (301) 565

- 0064 68

required, you know, capital, core cutting machines, 1

engineering time to retrain people on designing these 2

entire efficiency units, and potentially new floor 3

space. So to answer your question, yes, we do look at 4

this, but it’s in the MIA, which is downstream of 5

what’ s up on the screen right now. 6

MR. PARKER: Yes, but the fact that it’s 7

downstream

-- 8

MR. PATZNER: If I could expand from the 9

answer, then? Thomas Patzner, Schneider Electric. In 10

regards to the smaller manufa cturers like Vijay and 11

his comment that they’re building gap type cores and 12

so forth, that is going to be almost all the smaller 13

manufacturers, because they do play in the niche 14

markets and the exempt market. So we need to make 15

sure when we do that manufa cturing analysis, we look 16

at the impact that they’re not only to

-- they’re 17

going to have to keep their old equipment to build the 18

market that’s not covered by the standard. Where a 19

large company like myself, we choose not to build 20

those type of products, so we’re not going to be 21

impacted by having to keep old equipment. 22

MR. PARKER: Well, fair point. And I think 23

what I’m taking away from this, at least, is that even 24

though the manufacturing impact analysis is downstream 25Executive Court Reporters (301) 565

- 0064 69

conceptually from the LCC analys is, it still needs to 1

go forward at the same time in terms of our process 2

because we’re on a fast process, or at least we need 3

to make sure that the template for it and that the 4

data for it is gathered so that once we have the 5

inputs from the LCC process t hat that can be just put 6

into something, to a grid that’s ready to go. 7

So I think it behooves us, just as there was 8

a bi

- directional data exchange for other issues, for 9

the engineering analysis, I think it would be very 10

helpful to set up

-- to share your template for 11

looking at manufacturing impacts with the group, share 12

any assumptions, parameters, whatever, as much of the 13

methodology as you can. And then the group just needs 14

to look at it and, for the trade associations, get 15

your members to look at thi s and make sure that they 16

are comfortable with the data that’s going in and with 17

the template that’s being followed, the categories of 18

data that are being gathered, so that things like 19

floor plan expansion and the costs are being counted. 20

Because I think everybody wants the cost to be counted 21

fairly, if they’re there. 22

We can’t do things on a sort of an anecdotal 23

basis with one

-- I mean, it’s very helpful to have 24

it, because it identifies issues, but when you come 25Executive Court Reporters (301) 565

- 0064 70

down to actually creating a record tha t we can use for 1

recommending a proposal, we’re going to have to have a 2

more systematic approach. So we need to get that 3

data, get the template validated as quickly as 4

possible so that when we get to that point in the 5

analysis, we’re ready to do the manuf acturing analysis 6

judiciously. Does that make sense? 7

MR. COFFEY: So, yeah, I think that’s 8

important. There are two areas we’re asking for 9

feedback on. The first is this engineering template 10

that I mentioned, so manufacturers can tell us what 11

are the different cost curves look like for building a 12

transformer butt lap versus step

- lapped, if any. And 13

also, separate from that, what types of investments 14

would you need to make to build those different types 15

of transformers. So we’ll really be looking to 16

m anufacturers for input on that. 17

MR. PARKER: Yeah, and this is really 18

something where, you know, I’m looking at John because 19

if NEMA could help with reaching out on a short 20

timeframe to your members for information, the more 21

information we have the bette r off the quality of the 22

analysis will be. 23

MR. TENDULKAR : Just to say on behalf of 24

Onyx, I have a standing invitation to anybody who 25Executive Court Reporters (301) 565

- 0064 71

wants to visit our plant and look at it, including our 1

competitors, come in and look at it, and you’ll 2

understand what the small manufacturer face. 3

MR. PARKER: Thank you, VJ. Brian. 4

MR. COFFEY: So I think that lets us move 5

forward, I think I’ve been through this slide, 6

actually, and now we’re into open questions. 7

**Review of Open Ended Questions** 8

I’ve just got a coup le here. Folks asked 9

about how are CSLs and ELs chosen? These are the same 10

thing, it’s just CSL is the term in the preliminary 11

analysis, and EL is the term for the NOPR. Initially, 12

they had been sort of evenly distributed across the 13

efficiency range for each design line. As we got into 14

the NOPR, we nudged some of them in different 15

directions to make them align with non... materials 16

which we thought would be of interest to the 17

stakeholders. 18

There are a couple more issues and I’m not 19

sure to what

-- hopef ully I can hear a little bit 20

about whether they apply at all to the low voltage 21

business, but it’s compliance of different types of 22

transformers, ones with active cooling, which I think 23

are not a factor in the low voltage space, but I’d 24

like to hear confir mation of that, and also 25Executive Court Reporters (301) 565

- 0064 72

transformers with multiple primaries and secondaries. 1

MR. TENDULKAR : Can you define what a cooled 2

transformer means? 3

MR. COFFEY: So it’s a transformer with a 4

fan or a pump to help it remove heat. I suppose if 5

any of these ar e of concern to this business, then 6

we’d be interested in hearing about it, and otherwise 7

we’ll assume that they’re not. 8

MR. PATZNER: Thomas Patzner from Schneider 9

Electric. The actively cooled transformer s need to be 10

included. It’s extremely likely t hat, because of the 11

price pressure, certain manufacturers might 12

incorporate that. If the efficiency is only measured 13

at 35 percent, the fans don’t come on until you get to 14

75 or 80 percent, that that’s how the cost target for 15

the market might be met, and the efficiency levels 16

might be met because you can build a smaller device 17

and add fans to the device and keep your cost down. 18

So we’re going to need to make sure we cover actively 19

cooled transformer for low voltage because it’s very 20

likely the future will have people building those type 21

of products for low voltage. 22

MR. COFFEY: So they’re absolutely covered. 23

The question is, how is compliance assessed? Is it 24

assessed when the fans and pumps are off, or is it 25Executive Court Reporters (301) 565

- 0064 73

assessed when the fans and pumps are on and would it 1

be proper to say that if those actively cooled 2

transformers were built, that they would have to meet 3

standards at their base actively cooled nameplate 4

rating? 5

MR. PATZNER: So since we

-- if we’re going 6

to cover the compliance portion in this wo rking group, 7

we will need to address fan cooled for low voltage. 8

And your questions are valid in how the working group 9

ends up summarizing them. I have an opinion on how I 10

would like it done, but it’s just an opinion. 11

MR. TENDULKAR : This is Vijay. I would just 12

add one more comment on what you just said. If we are 13

going to have a look at forced air

- cooled 14

transformers, normally use the forced air cooling, 15

normally, it is going over the normal 100 percent load 16

or whatever the forced cooling load is bey ond its 17

maximum air natural cooled rating. And that means the 18

transformer winding losses have to be lower so that 19

when it is overloaded and gone beyond the air natural 20

cooling rating, it is not overheating too much even 21

with the forced cooling. And that means you may have 22

to shift the efficiency point of maximum efficiency 23

from 35 percent to somewhere else, higher than 35 24

percent. That’s what I think about it. 25Executive Court Reporters (301) 565

- 0064 74

MR. PATZNER: Thomas Patzner from Schneider 1

Electric again. Since the efficiencies are set a t 35 2

percent, this is a way for manufacturers to actually 3

have different techniques of complying with the law 4

and meeting it, and I don’t think we should take that 5

away from us manufacturers. It’s going to meet the 6

market need by having it in the law as i s. And I 7

agree that we’re going to have to define it in the 8

compliance documents. But if you read the compliance 9

documents today, I can physically build a unit and I 10

can sell it so that it is in compliance. 11

And, another very large manufacturer, since 12

I am representing all the manufacturers, they do sell 13

them in the low voltage market today, starting at 225 14

KVA. So they’re already readily available in the 15

marketplace. 16

MR. PARKER: Do you concur with that, Vijay? 17

MR. TENDULKAR : Yes, I do. 18

MR. COFF EY: I think the question is not so 19

much with these have to meet standards, they would. 20

The question is, would it be adequate to mandate that 21

they assess

-- that they are assessed to be compliant 22

in their passively cooled state. In other words, you 23

would n’t test them with fans and pumps running, you 24

would test them at their base load rating. 25Executive Court Reporters (301) 565

- 0064 75

MR. TENDULKAR : My comment on that one is 1

the fans or other components which are generating 2

extra losses should not be considered because they are 3

not part of our c ontinuous loss, like a core loss kind 4

of thing, so they should be excluded from the TP

- 1 5

efficiency requirement, or whatever type of efficiency 6

requirement we are talking about. They should be 7

separate and they should be considered a part of the 8

load loss es. 9

MR. PATZNER: Thomas Patzner here from 10

Schneider Electric. The reason the product is being 11

looked at by, not only Schneider Electric, but the 12

other manufacturer that is actually selling them in 13

the marketplace today, we do not believe the fans will 14

ever be on. So we can include them in the analysis if 15

you like, but for low voltage transformers, the way 16

these products are loaded, the fans will never, ever 17

be turned on. 18

MR. COFFEY: Okay. I think that’s what we 19

were looking to hear, thank you. 20

MR . PARKER: Vijay, did you want to come 21

back on that? 22

MR. TENDULKAR : Yes, what Tom just said is 23

exactly what I said but in a better words than my 24

words. The fan losses should be excluded from the 25Executive Court Reporters (301) 565

- 0064 76

efficiency requirement because fans will never come 1

on, s o fan losses should not be there at all in the 2

efficiency calculation. 3

MR. PARKER: All right. Thank you. Steve. 4

MR. ROSENSTOCK: Steve Rosenstock, Edison 5

Electric Institute. I was just wondering, we’re 6

talking about compliance, is this almost like going 7

over into test procedure? 8

MR. COFFEY: No, I don’t think we’re looking 9

to examine the test procedure. I think that this is 10

maybe a gray area in the current standard that a 11

number of parties have asked about, and so, you know, 12

DOE will give some gu idance on it, but I wanted to 13

float the idea which many had proposed, to specify 14

that transformers be tested in their passively cooled 15

mode, because that was the mode in which they would be 16

used the overwhelming majority of the time. And so I 17

was mentionin g it to receive feedback on that proposal 18

and so far haven’t heard anything to the contrary. 19

MR. PARKER: I guess I’m a little confused 20

now. If that’s not test procedure, what is it? 21

MR. COFFEY: This is how the test procedure 22

is interpreted and right now this is a point on which 23

it isn’t particularly clear. 24

MR. PARKER: Okay. Gary. 25Executive Court Reporters (301) 565

- 0064 77

MR. FERNSTROM: Gary Fernstrom, PG&E. So, I 1

have a question about this. The issue of parasitic or 2

auxiliary loads often comes up in energy efficiency 3

discussions. W e always want to make sure that the 4

energy use of equipment is properly represented. If 5

fans aren’t ever going to be used, why would they be 6

installed? It seems to me that if there is some 7

auxiliary feature contributing to energy use, like 8

fans, their us e ought to be included in the analysis 9

to the extent they think, or we think they’re going to 10

be operating. 11

And I heard discussion here suggesting that 12

if there were fans, they’d be operating all the time. 13

So what is the resolve of this? 14

MR. PARKER: Did you want to address that, 15

Steve? 16

MR. ROSENSTOCK: Well, I just want to give a 17

little

-- other appliances, just because I’m familiar 18

with it, DOE is actually looking at, in a furnace, 19

doing separate efficiency standards for the furnace 20

fans. The fan is a component of the furnace, but 21

they’re looking at a stand

- alone standard, just solely 22

on the fan in that furnace. 23

MR. PARKER: Sound like they exclude the 24

fan’s energy consumption from the efficiency of the 25Executive Court Reporters (301) 565

- 0064 78

furnace, then, is that right? 1

MR. ROSENST OCK: Well, they’re incorporating 2

it now. They used to exclude it because you’re 3

talking about gas furnace and electric motor, so they 4

do want to mix and match, but they’re looking at kind 5

of combining them a little bit, but they’re actually 6

now looking a t a separate standard for the fan in the 7

furnace as a stand

- alone. And there’s also, in other 8

products, what they call stand

- by mode that DOE is 9

required to look at the stand

- by mode to see if there 10

should be a separate standard for the, quote, “stand

11

by” mode of new appliances. Again, just to give a 12

little bit more background in terms of what’s going on 13

with other appliances dealing with some of this. 14

MR. PARKER: Is the issue of the fan use 15

going to make a significant difference to the

-- are 16

we talki ng about a real issue here with regard to the 17

ability of units to comply? 18

MR. ROSENSTOCK: Well, it gets to the test 19

procedure. 20

MR. PATZNER: Tom Patzner from Schneider 21

Electric here. The fans would come on at the 50 to 60 22

percent loading point, they’ d actually come on at 23

somewhere between 65 and 70. So at the 35 percent, 24

the fan’s electrical usage would not be in that power 25Executive Court Reporters (301) 565

- 0064 79

loss. The reason manufacturers are looking at it, and 1

one manufacturer currently sells it, it allows us to 2

build a much smaller unit and reduce our core loss. 3

And reducing core loss is the best thing overall for 4

the energy consumption, since the core loss is always 5

present. So yes, the fans might get turned on. I’m 6

going to state they’re never going to be turned on 7

based on my analysis of loading, but if they do come 8

on, the benefits of the lesser core loss being there 9

24/7, it’s going to outweigh any losses that the fans 10

might add if they were turned on. 11

MR. FERNSTROM: This is Gary from PG&E 12

again. Let me address Steve Rose nstock’s comparison 13

with the furnace. The fan is essential to the furnace 14

operation, whenever the furnace is running, the fan is 15

running. In the case of the transformer, the fan 16

isn’t essential. It’s been suggested it comes on when 17

the transformer load exceeds a certain level. Others 18

have suggested that it might run continuously so, so I 19

don’t think

-- 20

MR. PARKER: Was that suggested in the low 21

voltage context or the medium voltage? 22

MR. FERNSTROM: Either. 23

MR. PARKER: Who said this? 24

PARTICIPAN T: (Comment off mic) 25Executive Court Reporters (301) 565

- 0064 80

MR. TENDULKAR : Let me clarify something. 1

This is Vijay from Onyx. According to the standard, 2

this gentleman from utilities say, we used to have a 3

standard with 6000 KVA transformer, with 1000 KV air 4

natural cooling, just air coo ling and no fans at all. 5

You add fans and you get 33 percent more loading on 6

that and you go to 133 KVA. Then another state of the 7

fan and you get 67 percent more rating on the 8

transformer. That’s the way the people use the thing 9

and that’s the way th e utility use the fan cooling. 10

They call it post

- failure (ph) fan cooling and second 11

stage .. 12

Now, I’ve seen in the past, one of the 13

manufacturer had the fans on all the time on a dry 14

prep transformer, which is not a normal thing. It was 15

not covered in any of the standards. If we had the 16

fans all the time on, then they should be considered 17

just like a core loss because it’s a continuous loss 18

on the transformer. It doesn’t change with the load, 19

it is continuous. If the fans are coming on only at 20

the very high loads, then they should not be 21

considered as a continuous load. That’s what I would 22

suggest. 23

MR. PARKER: Can you tell, though , from the 24

design of the transformer whether it’s designed so 25Executive Court Reporters (301) 565

- 0064 81

that the fans will come on frequently or not? It 1

soun ds to me like that will really depend on the 2

installation, and so there’s no way to actually tell 3

from ex ante how to do that, but you have to come up 4

with an ex ante specification in order to be useful 5

for our purposes. 6

MR. TENDULKAR : This is Vijay aga in. The 7

manufacturer has to declare on his nameplate, on the 8

rating plate, when the fans have to come on, what is 9

the rating without the fans, and with the fans what is 10

the rating. And that has to be

-- that is required by 11

the standards, and if that is t here, then of course 12

the transformer should be evaluated on those ratings. 13

MR. FERNSTROM: But that doesn’t address 14

Richard’s concern about how do we determine, in order 15

to evaluate this, what the application is going to be, 16

and consequently, when you’re above the rating when 17

the fan comes on. 18

MR. PARKER: This takes us to the old 19

problem that this group perennially struggles with, 20

which is that as a matter of law and policy, we cannot 21

differentiate based upon the application otherwise 22

identical units. So unless there’s a physical 23

difference in the unit, you can’t vary the standard. 24

So that’s the issue, and I guess I wondered, is there 25Executive Court Reporters (301) 565

- 0064 82

-- do we have data on manufacturer practices with 1

regard to this. Do you have any data like that? 2

MR. TENDULKAR : T he information I’m telling 3

you is what are we ... the transformers ... liquid filled, 4

something 20 years ago, I used to do those kind of 5

things. But nowadays what I do is mainly only the 6

specialty transformers which do not need the fans. In 7

our equipment the y’re provided by some

-- by the air 8

in the UPS or something, but those are not the 9

transformers we are talking about. We are talking 10

about the low voltage distribution transformers. 11

Generally, low voltage distribution transformers were 12

not provided with the fans for the cooling. Now this 13

is a new monkey wrench in all of our discussion. If 14

we are going to use the fans for continuously on for 15

getting the cooling rating of the transformer, that is 16

something else. 17

MR. PARKER: Okay. Bob, okay. 18

MR. SMIT H: Bob Smith, Federal Pacific. I 19

guess I would start by answering Wes’ question. This 20

is an entirely different subject on the low voltage 21

than it is for medium voltage where you have a fan 22

cooled rating that gives you roughly 33 percent more 23

capacity. The product that we’re talking about in low 24

voltage was developed just as Tom Patzner described. 25Executive Court Reporters (301) 565

- 0064 83

It is to give you more power output using a smaller 1

core, which would reduce the core losses. Without 2

calling the name of the manufacturer, and I’m saying 3

th is because I believe we’re spending way too much 4

time on this particular product, if you want to know 5

what it is, it’s called a Transformeror (ph) and the 6

manufacturer will be listed when you find it on the 7

internet, and I think you’ll have a better idea o f 8

whether you should evaluate it with the fans on or 9

with the fans off. Thank you. 10

MR. PARKER: Okay. 11

MR. PATTERSON: Wes Patterson, ABB. When we 12

talk about dry type transformers, whether it’s low 13

voltage or medium voltage, and we talk about forced 14

ratings, the life expectancy of the fan motor is 15

dramatically different than the life expectancy of the 16

transformer. So the fan motor will burn out in about 17

five to seven years, and it could take out the power 18

transformer itself. So most knowledgeable us ers will 19

not run a dry type 24/7 and try to get 20 years life 20

with the fans running. It’s never heard of in the 21

industry. 22

MR. TENDULKAR : I concur with that, and most 23

of our customers do not want fans on their 24

transformers. 25Executive Court Reporters (301) 565

- 0064 84

MR. PARKER: Okay. So you’ re saying this is 1

a fairly low sales volume issue anyway. If that’s the 2

case , then we should, at the threshold of every 3

conversation, establish a sales volume criteria for 4

the length of our discussion. We’ll be better off. 5

Go ahead and finish. 6

**Next Step s**  7

MR. COFFEY: That brings me to the wrap

- up 8

here, and it’s next steps. We’ve talked about a 9

couple of forms that we’re going to send out to the 10

group, and some of those will be asking for feedback 11

from the group on. We’ll open dialogue on whether 12

ther e are any areas in which it makes sense to talk 13

about possibly establishing another equipment class, 14

determine if the criteria that DOE has for doing that 15

are met in this case, and then we’ll take it from 16

there. So I’ll take any last questions. Thank you

. 17

MR. PARKER: Since we’re moving along well, 18

can we agree on a timeframe for manufacturers in the 19

industry getting their data to Navigant, and for 20

Navigant turning it around? Remembering that the 21

report, the analysis, the full analysis has to be 22

comple te by November 2 nd , which is not very far away. 23

So

-- what’s a reasonable timeframe for the various 24

items that we’ve discussed for getting the analysis, 25Executive Court Reporters (301) 565

- 0064 85

because I think without a deadline, things will slip. 1

John, did you want to

-- you probably have the hardest 2

thing because you can’t just go to your

-- you have to 3

go to your membership and get their input. 4

MR. CASKEY: Right, that’s why it’s good to 5

have a cross

- section of those members here. You know, 6

it’s harder to get the smaller manufacturers here to 7

the table to sort of work with these issues. So I 8

don’t really know the answer to your question because 9

I would

-- 10

MR. PARKER: For the record, we wanted more 11

of them here. 12

MR. CASKEY:

-- be doing more of a serial 13

process where we really want to get to the point of 14

again, this issue of price versus efficiency, and then 15

from there, some of these issues are more going on 16

into the manufacturing input analysis, or impact 17

analysis. So, I’m not sure what it is additional 18

details you need relative to t he first phase of the 19

technical analysis. 20

MR. COFFEY: I think we wanted to provide an 21

opportunity for manufacturers to send in some of their 22

own design data and see whether it agreed well with 23

the OPS data. If we don’t get anything, I think our 24

operati ng assumption will be that we’re close enough 25Executive Court Reporters (301) 565

- 0064 86

to reality to move forward. 1

MR. PARKER: What specifically is the design 2

data that you would want at this moment? 3

MR. COFFEY: Well, we’re asking for the 4

three liquid design lines, different efficiency 5

leve ls, how would manufacturer sell a transformer at 6

that efficiency, and what would be sort of some of the 7

design details. 8

MR. CASKEY: You said the liquid? 9

MR. COFFEY: I’m sorry, low voltage dry. 10

The three low voltage design lines, and every 11

efficiency level, how would a manufacturer construct a 12

cost

- effective transformer to be sold, and so what 13

would be some of the design parameters there, type of 14

steel, construction method, pounds of conductor, that 15

sort of thing. 16

MR. PARKER: Can you give them a te mplate 17

that they could

-- a little questionnaire that they 18

could put out that would structure the input? Would 19

that help, John? If they supplied a questionnaire 20

that you could send to your membership? 21

MR. CASKEY: I’m sorry, but I feel like I’m 22

a littl e bit out of phase here. But I was thinking of 23

it the other way around. I don’t know if Vijay or 24

other manufacturers here want to change that, but I 25Executive Court Reporters (301) 565

- 0064 87

was expecting Navigant to basically give us what they 1

had following the previous meeting where we express ed 2

some concerns about the relationships, and we were 3

hoping you would give us back basically the delta cost 4

per delta efficiency. And then have the manufacturers 5

basically validate that and raise their hands saying, 6

yeah, I can live with it, or no, it’s not in the right 7

ballpark. 8

MR. COFFEY: No, I think the answer is yes, 9

we were hoping to do both things, so we would provide 10

some design data and also allow

-- I’ve actually 11

already sent out the template, but have manufacturers 12

use that template to provi de data to DOE if they wish 13

to do so. 14

MR. PARKER: Were those sent to low voltage 15

people as well? 16

MR. COFFEY: It was sent to everybody. 17

MR. PARKER: So I got the sequence 18

backwards. So John’s point is very well taken. It 19

sounds like the template i s out there, he can resend 20

it if necessary, but hopefully that will give them 21

something to shoot at, not only the template but your 22

-- is the delta

-- are the deltas, the increments that 23

you calculated also out there? 24

MR. COFFEY: Those can be seen from the 25Executive Court Reporters (301) 565

- 0064 88

curves that we posted and our Excel spreadsheets. 1

We’d had a request to send out simplified versions of 2

those, so it was very obvious at a glance what the 3

deltas were for each material type. We’ll be sending 4

those out as well. 5

MR. PARKER: It would probably help the 6

manufacturers quite a bit. Right? 7

MR. CASKEY: Yes, so for me, if you could 8

proactively send out what you’ve got, and then I think 9

it’s then fair to put the burden on the manufacturers 10

to say, get back to me within seven days or five, 11

whatever the right answer is, with any comments or 12

corrections that you have, or concerns with this 13

analysis, and then that sort of puts the burden on 14

them to respond to you. 15

MR. COFFEY: Okay. Great, that sounds like 16

a good plan. 17

MR. CASKEY: Is that reasonable for the 18

manufacturers that are here? 19

MR. TENDULKAR : Yeah, maybe, but I have to 20

apologize because I’m in the office next week only two 21

days, and then not back until November 13 th . I’m out 22

of country and I don’t have any access to anything. 23

So I’ll see if I can do something, but I’m sorry I 24

can’t do much on this. 25Executive Court Reporters (301) 565

- 0064 89

MR. COFFEY: And nobody’s under any 1

obligation, it’s just if a manufacturer wishes to 2

provide something, this is a vehicle for that. 3

MR. PARKER: So John, you’re the man of the 4

hour. I think that’s good, so the two things then are 5

the template and the preliminary results that you’ve 6

got for the price increments per unit of efficiency. 7

And the simplified curves, three things, right. 8

Sounds like the curves, the simplified curve s will 9

actually make the increments clear. That will just be 10

a way of displaying them, right. So you can either do 11

it in tabular form and graphical, or just one or the 12

other. Probably both would be good. 13

MR. COFFEY: We’ll give both. 14

MR. PARKER: Go od, and the other take

- aways, 15

then, the other action items are the exchange of 16

information on the two subcategories

-- potential 17

subcategories, that Vijay raised, data centers and 18

solar, and I guess, Vijay, if you are gone in two 19

days, how are we going to do that? Do you have an 20

alternate that

-- 21

MR. TENDULKAR : I don’t have an alternate at 22

the moment, but I think I mentioned all the reasons in 23

my e

- mail which is detail kind of thing, so if you can 24

go on that and see if somebody can answer my 25Executive Court Reporters (301) 565

- 0064 90

something, but I don’t think so. 1

MR. PARKER: Will you be accessible by

-- 2

hate to put you on the spot, but are you going to be 3

able

-- 4

MR. TENDULKAR : Unfortunately not, because 5

we’ll send an e

- mail or something if somebody can be 6

available to you and maybe some body can address the 7

questions. 8

MR. PARKER: Okay. Great, so we’ll work 9

with you on that. Anything else on this issue? 10

Great, well we are

-- you guys must just be brighter 11

than the other group, we’re just making progress so 12

much faster. Just kidding. Particularly since many 13

of the people around the table are the same people. 14

Thanks. Why don’t we take a five minute break, get 15

some coffee, stretch, and we will come back and look 16

at the LBL LCC analysis. 17

(Whereupon, at 3:22 p.m., the meeting was 18

rec essed for a 29 minute period.) 19

MR. PARKER: Hi everyone. I don’t want to 20

interrupt what are probably a lot of good side 21

meetings, but we’ve had a very long break, and I think 22

we do need to get started, so if we could come back to 23

our tables. Brian. Vi jay, can we get started? 24

Great. 25Executive Court Reporters (301) 565

- 0064 91

Thanks. We had a good discussion on the 1

engineering analysis. We have some follow

- up to do on 2

that. What I want to turn now to is the life cycle 3

cost analysis, and Chris Bolduc from LBL, who will 4

walk us through that as it applies to low voltage. 5

Thanks. 6

**LBL Presentation** 7

MR. BOLDUC: Thanks, Richard. Good 8

afternoon. My name’s Chris Bolduc, I’m from Lawrence 9

Berkeley National Lab, and I’ll be going over some of 10

the inputs to the LCC analysis that were of issue in 11

the medium voltage and we just think it would be good 12

procedure to get buy

- in from the LV team as well, just 13

in terms of modeling. So we’re going to start with

-- 14

many of you have probably seen a lot of these slides, 15

but the variables that we will be goin g over are: 16

**•** Transformer loading 17

**•** Transformer lifetime 18

**•** Peak load factor 19

**•** Possible changes to the LCC subgroups 20

**•** Equipment price trends 21

**•** Electricity prices, and then 22

**•** Limited design selection due to fixed efficiency 23

**Transformer Loading** 24

So, transformer loading, the RMS loading of 25Executive Court Reporters (301) 565

- 0064 92

our liquid immersed

-- low voltage dry type 1

transformers, excuse me, we try to keep the mean 2

around 21, 22 percent, the target is around 25. I 3

believe last week there was a comment that we should 4

lower it a little bit. I just want to p ut this out 5

there for comment, if anybody has any questions about 6

this or comments. 7

MR. PATZNER: Tom Patzner, Schneider 8

Electric. Can you send me the actual data points, 9

because I actually have an argument on why we should 10

lower it, but if I could get the datapoints, I could 11

add my

-- my rationale on why it needs to be lowered. 12

MR. BOLDUC: Yes, we can, Tom. Just for the 13

record, this is output from our model. If you’d like 14

a more detailed explanation, Katie can go into how 15

it’s derived, but this is model output. We use it as 16

a diagnostic. It’s just a good indicator of how the 17

transformer is loaded for illustrative purposes. But 18

definitely, I can send you data. If you have data 19

that you can send us to improve our model, we would 20

appreciate it. 21

M R. PATZNER: So, yes I have data that says 22

that you are

-- that the loading is probably more 23

likely to be 50 to 60 percent of these values instead 24

of these values. 25Executive Court Reporters (301) 565

- 0064 93

MR. BOLDUC: If you can provide it, that 1

would be fantastic. Thank you. 2

MR. FERNSTROM: Gary Fernstrom, PG&E. I 3

have a question. In this distribution it looks like 4

it tops out around, what, 40 percent or so. That’s my 5

feeling too about how these transformers work, they’re 6

pretty lightly loaded. However, we were talking 7

earlier this after noon about data centers, and I don’t 8

see anything in here that would indicate there’s a 9

segment of the market where maybe these transformers 10

are systematically highly loaded? 11

MR. BOLDUC: I’ll speak to data centers in a 12

couple slides. 13

MR. FERNSTROM: O kay. Thank you. 14

MR. TENDULKAR : Just a comment here. If the 15

transformer is maximum loaded about 40 percent, that’s 16

what you are saying, that your transformers? A lot of 17

people are buying the big transformers. 18

MR. BOLDUC: I believe low voltage dry t ype 19

transformers are often oversized due to fire codes. 20

And that would be the story

-- let me complete this

-- 21

that would be not the maximum load on the transformer, 22

that would be the maximum

-- our max load on the 23

transformer, the peak load factor is som ething 24

significantly higher than 43 percent. 25Executive Court Reporters (301) 565

- 0064 94

MR. TENDULKAR : Would you know what the 1

maximum load would be, approximately? 2

MR. BOLDUC: There’ll be a slide in a couple 3

slides will go over the peak load factor, and I’ll 4

show you the distribution that we use. 5

MR. TENDULKAR : Okay. Thanks. 6

MR. PATZNER: Tom Patzner here from 7

Schneider Electric. I sent to the committee the 8

actual ..EC code that causes these products to be so 9

lightly loaded. 10

MR. BOLDUC: Great. Thanks, Tom. 11

MR. PARKER: Can you gi ve us a sense, Chris, 12

as to how sensitive or not the LCC analysis is to 13

variations in assumptions about the mean of RMS 14

loading, within a reasonable range? Is this a high 15

impact variable or a low impact variable? 16

MR. BOLDUC: It’s significant. Dropping it 17

five percent will

-- you will see difference in the 18

LCC savings, in the LCC overall. 19

MR. PARKER: Thank you. 20

**Transformer Lifetime** 21

MR. BOLDUC: The next slide is service 22

lifetime. There was a bit of a discussion on the e

23

mailing list about using a 21 year lifetime for 24

transformers, based on IEEE document that was written 25Executive Court Reporters (301) 565

- 0064 95

for insulation lifetimes. We believe that’s 1

inappropriate. We’ve heard from numerous 2

manufacturers and utility experts that an average 3

lifetime of 32 years is fairly normal in the medium 4

voltage transformer world, if not longer. Again, this 5

is just out there for the low voltage people to 6

comment on, if they have any data otherwise, we’d be 7

interested to read it. 8

MR. PATZNER: Tom Patzner here for Schneider 9

Electric. From my perspective, and I’ve been in this 10

industry since 1990, you could actually use the life 11

of the building data you have instead of 32 years. 12

(laughter) So that would change it from 32 to 70, so 13

what I’m saying is is when they build the building, 14

they put th e low voltage transformer in the closet. 15

It is not removed until they tear the building down. 16

MR. BOLDUC: Okay. 17

MR. PARKER: How many buildings in America 18

last 70 years? But anyway

-- 19

MR. TENDULKAR : That may be true for certain 20

transformers, th is is Vijay from Onyx again, but may 21

not be true for something mounted in the containers or 22

something like that. 23

MR. BOLDUC: Okay. Thank you. On the next 24

-- sorry. 25Executive Court Reporters (301) 565

- 0064 96

MR. DeLASKI: Could I just suggest that you 1

should change the life? 2

MR. BOLDUC: Yo u know, with all due respect 3

to Tom, I like your analogy, but it’s anecdotal. 4

Right now we have an ORNL document for that sources 5

and cite

-- we can cite the lifetime from. 6

MR. DeLASKI: What’s the source in the ORNL 7

... or something? 8

MR. BOLDUC: They didn’t

-- well, 6870

- 47 9

where they went out and did a survey of transformer 10

lifetimes. 11

MR. DeLASKI: I see. Not that it matters 12

that much, right? I mean we’re talking about so far 13

out

-- 14

MR. BOLDUC: And it gets a little gray when 15

you start projectin g that far out. Steve. 16

MR. ROSENSTOCK: Steve Rosenstock, EEI. But 17

that’s one set of anecdotes. Another set of anecdotes 18

is sometimes in a commercial building with retail 19

tenants on the first floor, there might be more often 20

change

- out if you go from, say, a retail store to a 21

restaurant, they might have to take out the old one 22

and put in a new one. So there might be a little bit 23

of fluctuation on the other side as well, just because 24

of economic turnover of that space. Again, just 25Executive Court Reporters (301) 565

- 0064 97

anecdotal, but I kno w it’s happened. 1

MR. BOLDUC: Thank you. The next slide is 2

just the distribution of lifetime. 3

MR. PARKER: So I get the sense there’s not 4

any need for further work on lifetimes. We’re 5

comfortable with the numbers? Thank you. 6

**Peak load factor** 7

MR. B OLDUC: So the next slide here is the 8

peak load factor that we use for low voltage dry. 9

This is actually a model input. The

-- it’s a 10

square distribution between 70 and 90 percent of the 11

nameplate capacity of the transformer. The model 12

does not

-- there ’s a randomness attached to the 13

distribution when we run it through the Monte Carlo, 14

but it’s essentially the shape we get. Does anybody 15

have any questions or comments? 16

MR. PARKER: Any disagreement with this as a 17

parameter to use in the LCC? Okay. Mo ving on. 18

**Possible changes to the LCC subgroups** 19

MR. BOLDUC: Something that has come up from 20

this meeting is the possibility of introducing data 21

centers as an LCC subgroup. And this would I think, 22

help a lot in modeling the concerns of some of the 23

memb ers here. What we’d need to do this effectively 24

is we’d need a list of material limitations. So I 25Executive Court Reporters (301) 565

- 0064 98

understood that, you know, amorphous isn’t really 1

the best material for building these transformers. 2

Manufacturing technique limitations. With these, we 3

c an filter designs of these types out of the LCC

-- 4

out of the engineering data using the LCC. We’d 5

also need an average load factor, average lifetime

- 6

- I believe these are also look very different. We 7

would also need real data to back up things like 8

lif etime and load factor, and those might be 9

difficult to get, but they would help a lot. 10

MR. TENDULKAR : One other factor which is 11

not there is the performance requirement of the data 12

center, the requirements put by the customers on the 13

application of the transformer. Materials, 14

manufacturing techniques, load factor and lifetime

- 15

- these are other factors, but what if

-- for 16

example, when they say 100 KV class one, there is a 17

performance requirement as being 100 KV transformer, 18

and that is the thing where to look. Here we’re 19

talking about an inrush (ph) current of 300 to 400 20

percent, that is a performance requirement, and to 21

meet that performance requirement, what we have to 22

do in that design. And then we have to look at the 23

materials and the manufacturin g practices and 24

everything. But we have to meet the performance 25Executive Court Reporters (301) 565

- 0064 99

first, and the reliability requirement

-- those are 1

the first. Just like anything else, like safety is 2

the first thing, then other things come up. The 3

performance requirement has to be ther e before we 4

start anything else. 5

MR. BOLDUC: Thank you, Vijay. I’ll come 6

back to you. Steve. 7

MR. ROSENSTOCK: Steve Rosenstock, Edison 8

Electric Institute. Again, anecdotal history. 9

We’ve seen that, you know, EEI used to work with our 10

member compan ies in terms of ten, 12 years ago 11

during the data center, first data center boom, when 12

we had end use customers asking for 4

- 500 watts of 13

transformer capacity, from the utility side, on the 14

utility side of the transformer, and they wanted it 15

yesterday. An d then when there was metering done, 16

the actual loading from those data centers was about 17

20 or 25 watts per square foot, and the ones that 18

collapsed went down to about two watts per square 19

foot. So there might have been some very, very 20

underused transfor mers. 21

However, on the ones that were probably 22

right

- sized, we have seen a lot of data centers, 23

they start at 25 and they’re gradually moving up. 24

So year one it might be 25, but as they get more and 25Executive Court Reporters (301) 565

- 0064 100

more occupied with more servers, the load does 1

gradua lly increase. It’s not exactly

-- not as flat 2

as maybe in other commercial buildings where the 3

loads don’t really vary from year to year. So, 4

again, just a couple anecdote. Uptime Institute 5

does have information. I know LBL has a data center 6

area. I t hink Bill Shude (ph) has done a ton of 7

research in terms of actual loading at data centers, 8

and I think they’ve done use metering. I don’t know 9

they’ve done any research on the transformers 10

serving those data centers, but, you know, again, 11

anecdotes, but just hopefully some reference points 12

that might help you out with some of this research. 13

MR. BOLDUC: Thanks, Steve. VJ can we speak 14

after the meeting about some of the performance 15

metrics, unless anybody else would like to air them 16

out here? Great, th ank you. 17

MR. PARKER: And it sounds like from Steve 18

that LBL might actually have some of the data 19

internally, you might be able to get. 20

MR. BOLDUC: I don’t happen to know Bill 21

Shude (ph) personally, so

-- we can check. We might 22

be able to share some data with him. 23

MR. PARKER: Great. Thank you. 24

25Executive Court Reporters (301) 565

- 0064 101

**Equipment price trends** 1

MR. BOLDUC: Okay. Moving on, equipment 2

price trends. This was shown yesterday. This is as 3

sensitivity to the NIA, where we look at the user 4

price index for transformer equipment from 1967 to 5

2010, and we try to derive a future price trend from 6

this data. This data is first normalized to 2010 7

and then we apply a changing EDP deflator to it to 8

normalize the data. From this we have three price 9

cases: a flat price over time is the default case, 10

so we assume no rise in future transformer cost from 11

today. A low price case which is modeled on the 12

entire trend from 1967 to 2010, and then a high 13

price trend which we capture from ’91 to 2010, so 14

the past 20 years of data. 15

The next slid e shows the price data. The 16

red is the high price case, the dotted green is the 17

low price case. As you can see, the red line is 18

quite significant. We will be sharing our draft 19

appendix of the methodology and results later next 20

week. John. 21

MR. CASKEY: Hi, John Caskey from NEMA. Can 22

you go back to the previous slide just for a second? 23

MR. BOLDUC: Sure. 24

MR. CASKEY: So in this case you’re saying 25Executive Court Reporters (301) 565

- 0064 102

the high price case is modeled on the historic price 1

increase

-- index

-- from ’91 to 2010. But when y ou 2

go to the current

-- so if I was going to literally 3

interpret what you just told me, I would expect that 4

red line to go almost straight up from, you know, 5

where we’re looking at

-- you’re saying

-- 6

MR. BOLDUC: ’91, 20 years. 7

MR. CASKEY: ’91. Not from 2000 up to 2010? 8

MR. BOLDUC: The big jump is

-- and I’ve got 9

seven years, that’s not really enough data to 10

predict a trend off of. We’r e trying to project 60 11

years into the future , so we figure 20 years. 12

MR. CASKEY: Okay. Thanks. 13

MR. BOLDUC: Due to volatility in the 14

market. 15

MR. CASKEY: Okay. 16

MR. BOLDUC: Electricity prices, we use a 17

monthly load model, based on tariff data and for the 18

level to strike

-- 19

MR. PARKER: Excuse me, not to slow things 20

down, but is there any disagreement w ith these? Is 21

this an area where we need further work or are 22

people

-- going back to the equipment price trends, 23

are people comfortable living with these parameters? 24

Yes. 25Executive Court Reporters (301) 565

- 0064 103

MR. SAMPAT: Mahesh Sampat, EMS Consulting. 1

Just clarification, is the same char t that you 2

showed for medium voltage

-- 3

MR. BOLDUC: That’s right. 4

MR. SAMPAT:

-- so is it

-- 5

MR. BOLDUC: There’s limited PPI data 6

available for distribution transformers that doesn’t 7

disaggregate the low voltage from medium voltage. 8

There’s only one data set available. 9

MR. SAMPAT: Okay. This is a combination or 10

an aggregation of

-- 11

MR. BOLDUC: It’s

-- Producer Price Index is 12

set up by manufacturer interviews by the Bureau of 13

Labor and Statistics. So, and yes, it’s both medium 14

voltage and l ow voltage. 15

**Electricity prices** 16

Electricity price trends, so in the model we 17

scale electricity price over time, using AEO’s 18

electricity price trend. We use the base case. In 19

the model there are high and low growth scenarios so 20

you can modify the price o ver time. 21

MR. DeLASKI: Excuse me, Chris. Go back to 22

the price slide for a moment, if you don’t mind. 23

MR. BOLDUC: Sure. 24

MR. DeLASKI: So we’ve got some 25Executive Court Reporters (301) 565

- 0064 104

manufacturers on the committee and I wonder

-- we 1

didn’t get much reaction to this in terms of y our 2

experience. I mean does the

-- I guess Chris 3

described the PPI data that aggregates a number of 4

types of products, so I’m wondering how does this 5

data, historic data, comport with the manufacturers’ 6

experience over that last ten year time frame? Tom, 7

you’re on the phone, the guys who are here in 8

person, any reaction to that? 9

MR. PATZNER: I didn’t quite hear that. 10

MR. BOLDUC: I’m sorry Tom, you didn’t come 11

through. 12

MR. PATZNER: I didn’t quite hear what the 13

question was, I’m sorry. 14

MR. DeLASK I: The data that’s on the screen, 15

the historic data purports to represent price of 16

distribution transformers over this period including 17

as Chris described, it’s a lot more product than 18

simply low voltage dry type transformers, and we’re 19

applying that data from the PPI and the Bureau of 20

Labor Statistics to your particular set of products. 21

And I’m wondering how does that comport with your 22

experience. 23

MR. PATZNER: So one of the reasons this 24

product was actually mandated in the 2005 Energy Act 25Executive Court Reporters (301) 565

- 0064 105

is because o f the exact thing that occurred from 1

1990 to 2005, See how the price continuously went 2

down? As that went down, we increased the losses, 3

increased the losses, increased the losses, 4

increased the losses. That sharp curve up is due to 5

the fact that we now have to build a product to meet 6

the efficiencies. So this is exactly what we think 7

-- the historical data is exactly what we saw in the 8

marketplace backwards, and that real sharp up in 9

2005 is because of the Energy Act, so we would 10

assume a similar type of curve up if there’s a next 11

level for low voltage products. 12

MR. BOLDUC: Okay. In the process of this 13

analysis, we actually looked at the

-- the index of 14

transformer prices against commodity prices for 15

steel , aluminum, copper

-- and we noticed that th e 16

price for transformers loosely tracked the 17

volatility in these commodity prices. In the 18

appendix that I’ll release next week, we show an 19

overlay of these. So we’re of the opinion that the 20

steep rise in prices is due to a number of factors, 21

but mostly d riven by commodity prices, global 22

commodity prices. 23

MR. DeLASKI: Thanks Chris, and thanks, 24

Thomas

-- and Thomas, it’s helpful to have you 25Executive Court Reporters (301) 565

- 0064 106

corroborate that that sort of comports with your 1

experience. We looked at the same graph, exactly 2

the same graph i n the liquid immersed conversation 3

and of course there were no standards for liquid 4

immersed in 2005, they didn’t kick in until 2010, so 5

I take Chris’ point well. I wanted the other 6

manufacturers, does that feel about right to you 7

guys as well? Bob’s nod ding his head I see. 8

MR. ROBLES: Eduardo Robles, Eaton 9

Corporation. Yeah, we also saw the same trend as 10

Tom described when legislation took effect. We also 11

saw that increase in price, and it’s going to come a 12

point in time, and I don’t know if you agr ee, Tom, 13

or not, but we are starting to see also a price 14

decline right now, as manufacturers find techniques 15

to lower costs, the market is actually demanding a 16

lower price of product. 17

MR. BOLDUC: Electricity prices, again. 18

Anybody have any comments? 19

MR. FERNSTROM: Gary Fernstrom, PG&E. I 20

keep being surprised in these proceedings, it’s not 21

just this one, where the price increase for 22

electricity is modest, and my experience as a 23

consumer has been that it’s gone up a lot. So, is 24

this

-- 25Executive Court Reporters (301) 565

- 0064 107

MR. BOLDUC: Point taken. Good. 1

MR. FERNSTROM: Well, is it adjusted for

-- 2

MR. BOLDUC: It’s an index. It’s an 3

inflation adjusted index. 4

MR. FERNSTROM: Oh, okay. Okay. 5

MR. BOLDUC: The EIA price forecast for 6

natural gas, it essentially assumes that the ma rket 7

will build to natural gas, natural gas prices are 8

falling and we get that. 9

MR. FERNSTROM: Well, maybe my perspective 10

is biased coming from California where there is

-- 11

(laughter)

-- there’s a big emphasis on renewable 12

procurement, so, you know, the re are other things 13

than the cost of fuel that are driving the price, 14

like what type of fuel you may or may not be using. 15

MR. PARKER: FER Commissioner LaFleur just 16

gave a speech at my law school in which he said that 17

fracking

-- fragged natural gas is a game changing 18

development

-- basically her words

-- which will so 19

vastly increase the supply of natural gas if 20

original promise is accurate, that it will keep 21

energy prices down. 22

MR. FERNSTROM: Well, it’s

-- I mean, 23

watching television, I’d be led to b elieve that that 24

also vastly increases the business opportunity for 25Executive Court Reporters (301) 565

- 0064 108

attorneys. 1

MR. DeLASKI: So this is an interesting 2

conversation, I guess my

-- DOE is, I think, 3

compelled to use EIA reference case. 4

MR. BOLDUC: Right. 5

MR. DeLASKI: So I’m not sure we want a lot 6

of time talking about ... prices. 7

MR. PARKER: Right. Steve. 8

MR. ROSENSTOCK: I’m finally using this 9

forecast they show around. Again, it’s a matter of 10

-- we’ve seen electricity prices cycle over time. 11

There have been times when it’s go ne up nationally, 12

and then for example, in the late ‘70s, early ‘80s, 13

it went up pretty fast, and then in the ‘90s 14

electricity prices went down nominally, on an after

15

inflation basis it went down even further, so again, 16

they cycle up and down it seems, esp ecially with the 17

supply of gas, because is a lot of times a marginal 18

fuel. That seems reasonable to me. 19

MR. PARKER: Okay. 20

MR. BOLDUC: Thank you. 21

**Limited design selection due to fixed efficiency** 22

So it has been asserted in some of the 23

online dis cussion that a fixed efficiency ratings 24

will impact the selection of transformer 25Executive Court Reporters (301) 565

- 0064 109

availability with the diversity of A and B values. 1

The next slides, we have the As and Bs. In the next 2

slide the As and Bs are calculated from the customer 3

marginal price fo r energy. The following slides 4

show that it is still a range of A

-- range of 5

transformers of load, no load, and low load

-- 6

sorry, NL and LL selected. 7

So we can see this is design line seven that 8

we have load losses on the vertical axis, no load 9

loss es on the horizontal. The green dots represent 10

the base case. Many of them are covered up by the 11

red dots which represent the standards case units. 12

This is in design line seven, efficiency level one. 13

And we can scroll through them and we can watch the 14

red dots kind of crawl across this field of 15

available designs, which are the blue dots. 16

So this is efficiency level three, then at 17

maximum technology, Maxtech, the red dots are way 18

down in the bottom left corner. 19

If there’s no comment on this, this i s just 20

for illustrative purposes. 21

From this point, thank you very much. 22

People have any questions, happy to try and answer 23

them. Thank you. 24

MR. PARKER: John? Bob? 25Executive Court Reporters (301) 565

- 0064 110

MR. SMITH: Chris, Bob Smith. I think we 1

need to remember that the A and B values are really 2

not relevant to the low voltage transformer market. 3

Those transformers are basically evaluated on a 4

first initial cost basis, and very seldom on a long 5

term performance basis. 6

MR. BOLDUC: Thanks, Bob. What I really 7

wanted to show was that t he diversity of designs 8

could be built to meet the standard. 9

MR. PARKER: Not necessarily in all standard 10

levels, but at a number of them. 11

MR. BOLDUC: For most standard levels, until 12

we get to Maxtech where it’s extremely stringent. 13

Thank you very mu ch. 14

MR. PARKER: Any other comments? Thank you. 15

Okay. We are making rapid progress and I don’t know 16

that we necessarily need to

-- we can decide

-- we 17

have 40 minutes before we have a hard stop and have 18

to vacate the premises. So we could adjourn now and 19

reconvene tomorrow, or we could press onward and see 20

if we can

-- if there is a question on, you know, 21

the competitiveness TSL. My sense is that we really 22

need to work on the data before we can assess that, 23

though. And it might make sense to review the TSLs 24

that were agreed in the last meeting, as we did in 25Executive Court Reporters (301) 565

- 0064 111

the medium voltage group. Katie, would you be able 1

to do that, to just walk people through? Would that 2

be helpful to the people who didn’t

-- Eduardo and 3

Vijay

-- to look at the TSLs that are al ready being 4

examined, or do you have those in mind from before? 5

Because we did this in the medium voltage group and 6

I’m not sure if it would be helpful. Would that be 7

useful to spend five or ten minutes on that? And 8

just so you’re on the same page. 9

An d then a discussion, as a matter of 10

process, about whether it’s relevant to talk about a 11

competitive or technology or economic competition 12

TSL, and if so, how we would define it. 13

So here’s what we have so far. 14

**LCC and the Price Efficiency Curve** 15

MS. C OUGHLIN: Actually, before I get into 16

this discussion, I did want to bring up another 17

issue because it’s something that I’ve discussed 18

individually with the various people and I think 19

it’s an important aspect of the calculation for

-- 20

of the LCC analysis f or the low voltage dry type. 21

And this is the issue where we see in the 22

engineering analysis that the bottom boundary of 23

this price efficiency curve is fairly flat. And so 24

the way the LCC is currently constructed, it’s two 25Executive Court Reporters (301) 565

- 0064 112

percent of the population is eva luating. So 1

everybody is relying on those first costs. But the 2

algorithm just picks out the lowest first cost 3

randomly across that bottom boundary. So the LCC 4

baseline is showing a significant number of 5

purchases that are higher efficiency than the DOE 6

minimum. 7

So the question of whether that reflects 8

actual purchase practices is something that we are 9

not

-- we don’t really have a good indication yet 10

from what we’ve heard. So there are some people 11

that think that even though in this technical 12

analy sis you have a range of efficiencies that are 13

all equivalent in first cost basis, there may be 14

other reasons why, in the real markets, people only 15

purchase at the DOE minimum. 16

So this will have an effect, because if 17

we’re over

- estimating the efficiency in the 18

baseline, we will underestimate the energy savings 19

DOE standard. So I just wanted to reiterate that 20

that’s something that essentially any kind of 21

marketshare data or anything with the experience of 22

what types of products are being sold would be ve ry 23

useful to us in knowing whether we should be adding 24

an additional screening criteria to the baseline. 25Executive Court Reporters (301) 565

- 0064 113

And so I just wanted to mention that since 1

we have extra time and it is a pretty significant 2

issue compared to some of the other stuff that we 3

have d iscussed. I guess, as part of the data 4

collection that Navigant is doing to validate those 5

price efficiency curves, I assume that they can also 6

take care of collecting any data on marketshare or 7

whatever other purchase criteria people might be 8

using besid es first cost. 9

MR. PARKER: John. 10

MR. CASKEY: I’m not sure I want to get into 11

this, but this may be a time to do it. So within 12

NEMA, again, we have got a variety of manufacturers 13

in all different classes of transformers, and in the 14

low voltage dry ty pe area we do have a premium 15

program which is built

-- and I don’t know if Thomas 16

is still on the phone, but is built around 30 17

percent less loss than the TP

- 1 standard of whenever 18

that was created. There are 11 companies of which 19

they’re primarily, I wou ld say lean towards smaller 20

manufacturers, that are participants in

-- no that’s 21

not true, because there are both small and big 22

manufacturers now that I think about it. There are 23

11 companies that have signed up for that program, 24

that premium program lice nse agreement. 25Executive Court Reporters (301) 565

- 0064 114

I think it is valuable for them from a 1

marketing perspective to say that they offer that 2

product in the marketplace, and it’s certainly good 3

for energy efficiency and things like that. But 4

just the nature of the program is such that I don ’t 5

have

-- for me being an objective sort of bystander, 6

if you will, in the industry, I can’t ask 7

manufacturers, you know, how many products do you 8

sell or what your total sales are or things like 9

that, it’s inappropriate for me, as a NEMA person, 10

to get i n the middle of that. But it would be 11

interesting to know if any of those people have 12

information to share in an open forum as to what the 13

market share of those premium transformers might be. 14

So that would be helpful in trying to set 15

that baseline, to s ee if people are paying, I 16

assume, extra money to get a higher efficiency 17

premium transformer. 18

MR. TENDULKAR : This is Vijay Tend u lkar. We 19

signed on that program and since then we have sold 20

zero percent. Not a single one of our customers 21

wanted it, and as I talked to some of the industry 22

people, ten percent or less. 23

MR. PATZNER: Thomas Patzner from Schneider 24

Electric. The market exists, there is demand for 25Executive Court Reporters (301) 565

- 0064 115

it. The market is pretty much in a subset of two 1

specific end type users, the lead building u sers and 2

kindergarten through twelfth grade, so K through 12. 3

So those are the two subsets, based on Vijay’s 4

comment, which I don’t believe he chooses to play in 5

either of those two markets, that’s why he probably 6

wouldn’t have any sales. So it’s really just two 7

submarkets inside the overall market that is 8

currently buying the NEMA premium product. Oh, 9

there is a third market, the government is also 10

buying the product as well. So, the government, K 11

through 12, and lead buildings. 12

MR. DeLASKI: Thomas, this is Andrew 13

DeLaski. Just a follow

- on question. So what’s your 14

sense of the portion, given that it’s just these 15

three segments that are purchasing transformers at 16

the NEMA premium levels, what’s your assessment of

- 17

- what’s your sense of what the mar ket share

-- so 18

it strikes me that it’s likely that the vast 19

majority of sales are right at the current standard. 20

Is that a fair characterization? 21

MR. PATZNER: If we just take a snapshot of 22

the market and we assume it’s $500 million, which is 23

probably really close to what it is, the premium

-- 24

NEMA premium program type devices would be 25Executive Court Reporters (301) 565

- 0064 116

approximately $40 million dollars of the $500 1

million. Now, they are sold at a premium, so unit

2

wise it’s a lower mix than dollar

- wise. 3

MR. DeLASKI: And is there a sp read of 4

efficiency being sold between NEMA

-- between the 5

minimum standard and NEMA premium, or is this sort 6

of a bimodal distribution? 7

MR. PATZNER: No, us manufacturers, because 8

we tend to be conservative, almost all of us are 9

building a little bit hig her than the law, so 10

everybody’s getting a little

-- so we look at design 11

line seven, everybody’s getting better than 98. 12

Because we, as manufacturers do not want to fall 13

into having any one product ever not comply. So 14

most give a little bit more. There are certain 15

items that people specify that ends up having 16

efficiencies be a little bit better and worse, I 17

could try to do a mix matrix in a pie chart for this 18

working group on it and put it together. I can 19

actually try to do that before tomorrow. 20

And in regards to the NEMA premium, that’s 21

actually the lowest level of better than TP

- 1 that 22

is being specified. There’s also a consortium of 23

energy efficiency tier II that’s also in the 24

marketplace. The tier II efficiencies that are in 25Executive Court Reporters (301) 565

- 0064 117

the marketplace are pretty much those levels. The 1

NEMA premium, most manufacturers are actually 2

exceeding it, but that is the set table and that’s 3

the program they’re complying to, and each 4

manufacturer’s marketing team chooses how to 5

leverage their differences from the tabl e with what 6

they’re actually supplying. 7

MR. PARKER: Bob. 8

MR. SMITH: Bob Smith, F ederal Pacific. 9

Tom, I would be very interested in seeing your data 10

tomorrow and I hope you can get it before we leave. 11

I have to say that I have never seen a low volta ge 12

transformer evaluated for losses. I do see 13

customers buying higher efficiency transformers for 14

exactly the reason you cited, and that’s to be part 15

of a lead program and to get certification in a 16

building, but I’ve never seen them buy because of 17

lower l osses. 18

The reason customers do buy low voltage dry 19

transformers with special features include: 20

**•** number one, they want low sound, lower than the 21

ANSI levels, or IEEE levels; 22

**•** they want copper windings; 23

**•** they want a lower temperature rise than the 24

standard 1 50 degree rise; 25Executive Court Reporters (301) 565

- 0064 118

**•** or they want a K factor. 1

Those are the reasons that people are buying 2

the low voltage dry transformers that would be 3

different from our standard catalog product 4

offering. 5

MR. PATZNER: Bob, I agree, but if we look 6

at the schematics of l ow temperature rise, they’re 7

actually speci fyi ng lower BTUs at 80 percent 8

loading, so they’re actually doing an A and B losses 9

when they ask for low temperature rise. So we’ve 10

been selling them in the marketplace since 1972 as 11

low temperature rise, so we forgot the reason 12

they’re asking for the low temperature rise is 13

actually to lower their I

- square

- R losses. 14

MR. SMITH: For cooling reasons or 15

something. 16

MR. TENDULKAR : But it is the air 17

conditioning load, that’s what it is. 18

MR. DeLASKI: So I want to come back to 19

Katie’s question and it sounds like, I think I saw 20

Katie nodding when Thomas was suggesting that he could 21

share some data tomorrow. So Thomas, I think they’re 22

taking you up on that offer. 23

So I guess my question to you, Bob, is so 24

then do es that

-- do those dynamics, or do those 25Executive Court Reporters (301) 565

- 0064 119

pressures in the market to meet those needs for low 1

sound and temperature rise, does that result in any 2

distribution of efficiency above the minimum allowed? 3

MR. SMITH: Usually it will. Low sound 4

basically mean s that we are lowering the induction 5

level in the core, or we are going to a step

- lap 6

mitered core, which gives us a

-- intrinsically lower 7

sound transformer. The lower temperature rise does 8

not necessarily mean it’s lower I

- square

- R losses. 9

Lower temper ature rise can come from a better cooling 10

method, more duct spacing, et cetera. So that’s not 11

necessarily lower losses or lower I

- square

- R losses. 12

But in general, when the customer takes the time to 13

specify some of these things, like copper windings, 14

low er temperature, they are indeed going to get a more 15

efficient transformer. 16

MR. DeLASKI: And

-- this is Andrew again

-- 17

would you hazard an estimate as to the portion of 18

sales that are above the minimum standard today for 19

the low voltage dry type market? 20

MR. SMITH: It would only be a guess, but I 21

would say for us it’s probably somewhere in the 22

neighborhood of ten percent of the total low voltage 23

units that we sell would be above the present 27 TP

- 1 24

standards. 25Executive Court Reporters (301) 565

- 0064 120

MR. DeLASKI: By units or by MVA or

-- 1

MR. SMITH: Truly, I don’t have a clue, but 2

I would say we could use it by units to make the 3

answer simple. 4

MR. DeLASKI: Yeah. Thank you. 5

MR. ROBLES: This is Eduardo Robles from 6

Eaton Corporation. We also are participants of the 7

NEMA premium progra m, and we are looking presently at 8

a low single digit volumes compared to the full range 9

of product that we sell. 10

MR. PARKER: So I guess, as a layman, what I 11

take away from this is that there’s this sense that 12

there’s very little actual economic valuati on going 13

on, although there is in the marketplace, it’s mostly 14

low first cost except among a well

- defined, reasonably 15

well

- defined segment of users who are either trying to 16

achieve something else, like lowering their 17

refrigerant losses or else participatin g in some kind 18

of a program, like Leads, or they’re a government 19

agency making

-- establishing certain standards, 20

making a statement. 21

I guess one

-- I would just raise a 22

question, and pose it as a question to see if it’s

-- 23

if it’s helpful. Does this lack of evaluation 24

indicate a preoccupation with first cost, or is the 25Executive Court Reporters (301) 565

- 0064 121

transformer choice and the economics of the 1

transformer choice just not salient to them compared 2

to all the other things that go into the cost of 3

building a building? I guess what I’m getting at is, 4

is there a relevant variable the sort of elasticity of 5

demand in this area with regard to price? Is there a 6

concern that if you went to a higher efficiency unit 7

that there would be fewer transformers bought? I 8

mean, if you stipulated, in o ther words, they’re going 9

to meet

-- they’re going to buy the cheapest

-- absent 10

some program, absent some special design feature, 11

they’re going to buy the thing that is the lowest 12

first cost that meets federal standards, right? 13

So it seems to me a rel evant question then 14

is well, if you raise the standard, what will that do 15

to profit margins

-- what will that do to sales of

-- 16

volume of sales and so forth? Would there be an 17

impact on that way. Is that a useful

-- is that the 18

kind of thing that you can

-- first, is it a relevant 19

question to ask, and secondly, is it a

-- is it kind 20

of something where we have data? Bob? 21

MR. SMITH: Bob Smith, Federal Pacific. 22

Like to address your comment about customers buying on 23

first cost at the beginning of my answ er. When we 24

converted, or when we were mandated in January 2007 to 25Executive Court Reporters (301) 565

- 0064 122

produce only the TP

- 1 transformers, the manufacturers 1

who had inventory of the older designed transformers 2

were able to raise their price levels almost to the 3

level of the TP

- 1 transformer s and customers would buy 4

the non

- compliant transformers, even at slightly lower 5

price levels because that’s how important the price 6

was to them. We did not have to keep the full 7

differential of the lower price of the pre

- TP

- 1 8

transformers. So price is a definite driving force 9

for the selection of the transformers. 10

The next thing I would say, the features 11

that we offer with the dry type, like lower sound, 12

means lower inrush (ph) current, and does usually mean 13

higher efficiencies and low sound were

-- th e two most 14

critical things that cause problems in the field with 15

the low voltage dry type transformers is that people 16

touched the case and say they’re too hot, or they’re 17

too noisy. So the low sound is definitely a very 18

important attribute of the low volt age dry 19

transformers, much more than the efficiency will ever 20

be. 21

MR. PARKER: Okay. I guess the idea was 22

that people

-- what I understood people to be saying 23

was they will buy the lowest price that they can get. 24

It’s very price sensitive. If there’s a substitute 25Executive Court Reporters (301) 565

- 0064 123

that also meets the federal standard that’s legal to 1

buy. If the standard is

-- 2

MR. PATZNER: Richard, Tom Patzner here. 3

MR. PARKER: Yes. 4

MR. PATZNER: Tom Patzner, Schneider 5

Electric. I’ll put the pie chart together, but I’ll 6

just su mmarize the numbers real fast. 70 percent of 7

the market buy aluminum 150 degree C rise. They’re 8

buying 100 percent on price. It’s always going to be 9

price, and the only concern they have is that the 10

product lasts 12 to 18 months. That’s 70 percent of 11

t he market. 12

The other 30 percent

-- 13

MR. SMITH: Tom, Bob Smith of Federal 14

Pacific. Ours will last 24 months. 15

MR. PATZNER: I didn’t say how long one 16

would last, I said how long the customer wanted it to 17

last. In regards to the 30 percent, which is w here 18

we’re finding people that are buying the NEMA premium 19

product, there’s where the sound falls, that’s where 20

the low temperature falls, that’s where the K rating 21

falls, that’s where the copper windings fall, and 22

those units price is not as sensitive bec ause they’re 23

actually specifying other value in the product. 24

In regards to why people do not buy the NEMA 25Executive Court Reporters (301) 565

- 0064 124

premium, if you look at the payback period and you 1

look at a company’s requirement for payback, most 2

commercial buildings is three to five years. Y ou go 3

to higher education and hospitals, it’s like five to 4

ten years. You go to the government, it can be ten to 5

20 years, based on what you’re doing. It could be 20 6

years if it’s a retrofit, it could be ten if it’s new 7

construction. So it actually come s down to, when they 8

calculate their payback, it does not fall into the 9

three to five, or the five to ten. In fact, on most 10

of my analysis, the payback is between 15 and 25 for 11

the NEMA premium product today, if you’re in the 70 12

percent part of the pie. It’s a lot less if you’re in 13

the 30 percent, which is why we’re seeing the guys who 14

are buying the 30 percent, convert over to NEMA 15

premium. But it’s the 70 percent that’s the majority 16

of the market, and they 100 percent buy on price. 17

MR. PARKER: Yes, Bob. Thank you. 18

MR. SMITH: Bob Smith. One of the other 19

things that I would like to mention is that if the 20

efficiency levels are raised on the low voltage 21

transformers, there’s a high likelihood that they will 22

cost more, the prices charged by the manuf acturers 23

will be higher, and for absolute certainty, if this 24

happens, the customers will put higher RMS loading on 25Executive Court Reporters (301) 565

- 0064 125

the transformers because they’ll buy smaller KVAs for 1

the loads that they are now serving with larger 2

ratings. 3

MR. PARKER: Is that respons e

-- is that 4

response factored into your analysis

-- that dynamic 5

kind of response? 6

MS. COUGHLIN: Well, not at the moment, no. 7

I mean, you can

-- you could factor that type of thing 8

in, but you’d have to have some slightly more solid 9

arguments about lo ad growth. Because people have 10

argued on load growth in various directions. Some 11

people argue that load growth will be lower, and 12

people have argued that the oversizing is due to codes 13

which will not change due to standards. So, you know, 14

it’s something we have the technical capability to 15

model, but we wouldn’t be

-- you’d have to 16

substantiate these things pretty

-- to keep it into 17

the analysis. 18

MR. MILLURE: Dave Millure, Metglas. When 19

you went to TP

- 1, the prices went up right? Did you 20

see the load factors go up then? 21

MR. SMITH: I have not plotted that, Dave. 22

I don’t know what the average KVA was when we started 23

and before and after. That is something that I could 24

look at, but I think it definitely will happen. 25Executive Court Reporters (301) 565

- 0064 126

You’re talking about a machine o r a product at the 1

loadings that we have, assume that will last over 300 2

years. As Tom has said, the building will come down 3

before the transformer has to come out. 4

MR. DeLASKI: Andrew again. In the last 5

meeting I did think

-- Katie helped jog my mem ory by 6

your comment

-- but there were

-- comments were made 7

that the electrical codes pretty much dictate the 8

loading, and that absent a change in the electrical 9

codes, that’s not likely to change. I see some 10

nodding. So let’s use some

-- 11

MR. PATZNER: Tom

-- sorry, Andrew. 12

MR. DeLASKI: Go ahead, Thomas. I’m just

-- 13

maybe it was you that made that point, so you can 14

probably clear it up for me. 15

MR. PATZNER: Tom Patzner, Schneider 16

Electric. I disagree that the RMS will actually go 17

up. I actually believe the RMS for low voltage 18

transformers is going to be in a continuous downward 19

trend. And you can do that by just walking into any 20

cubicle that’s in any commercial building, and you’re 21

going to see more empty outlets than you’re going to 22

see outlet s being used. So the National Electric Code 23

requires a number of outlets that are placed in a 24

building. Those number of outlets determine the size 25Executive Court Reporters (301) 565

- 0064 127

of the transformer, and as less and less of those 1

outlets are used, the RMS values is actually going to 2

be decreased as we move forward through this analysis. 3

And the analysis, I believe, is keeping it constant, 4

which is fine with our perspective, but we actually 5

believe it’s actually going to go down into the 6

future. 7

MR. PARKER: Just as a point of informat ion, 8

based on your analysis, does it appear that the 9

decisions

-- the efficiency levels that are being 10

chosen now by the marketplace are rational from the 11

standpoint of lowest

-- minimizing life cycle costs? 12

MS. COUGHLIN: Well, again, we have very 13

littl e data apart from

-- we have very little data on 14

the efficiency levels that are being purchased, so the 15

issue for the LCC for the standard is the engineering 16

curve shows a much broader range of efficiency 17

available within a few percent of the lowest cost. So 18

you could be buying on first cost, and you could still 19

buy something that’s higher efficiency than the DOE 20

standard. 21

And the question is, is that

-- is that 22

feature of the engineering analysis misrepresenting 23

reality? And so from what I’m hearing, t here’s a 24

small but not insignificant fraction of the market 25Executive Court Reporters (301) 565

- 0064 128

that will end up purchasing a more efficient 1

transformer largely driven by other design 2

considerations. But it also sounds like there’s a 3

price premium associated with that. So that doesn’t 4

real ly get

-- I mean that suggests to me that there is 5

an issue with the engineering where these price 6

efficiency curves are too flat, and there’s some other 7

criterion that’s being used that we haven’t factored 8

into our design analysis. 9

MR. DeLASKI: That’s possible, Katie, but it 10

also seems to me that what I’m hearing from the 11

manufacturers is that the first cost driver is 12

incredibly strong in this marketplace. The joke of 13

what, 18 months, make it last 18 months, I think is 14

one that’s kind of bringing the p oint home that four 15

percent price premium, they’re not going to pay it. 16

MS. COUGHLIN: Right. But we have a no 17

price premium. 18

MR. DeLASKI: So the question is

-- and I 19

think the other question is is pricing. So if you’re 20

a manufacturer, you don’t wan t

-- and I’m not a 21

manufacturer, but I’ll hazard a guess that they w a nt 22

to earn a premium on a NEMA premium product. You want 23

to have good, better, or best. I mean this is sort of 24

marketing 101. So even if your cost is zero, your 25Executive Court Reporters (301) 565

- 0064 129

cost is zero, you don’t want to sell it for a zero 1

premium, that’s your better product, so it doesn’t 2

strike me as a bizarre result. 3

MS. COUGHLIN: Yeah, that’s fine. Again, 4

but the technical point is that should we implement in 5

the LCC some kind of constraint at the base cas e that 6

people don’t buy above the DOE minimum beyond a 7

certain percentage. That’s the technical question 8

that we’re really going to have to just sort out from 9

discussion because we don’t have the data to make that 10

reconciliation between sort of what we’re seeing in 11

engineering and what’s going on in the market. 12

MR. PARKER: This is just figuring out what 13

is the impact of the standard. 14

MR. DeLASKI: How do you handle markups? 15

MS. COUGHLIN: In this particular case, 16

that’s not what’s driving the issue. There’s really

- 17

- this thing is flat. 18

(comment off mic) 19

MS. COUGHLIN: Yes, that’s true in general, 20

but in this particular case that boundary is flat. 21

And actually, the minimum price occurs at efficiency 22

significantly above the DOE minimum. 23

MR. PA RKER: Excuse me, Katie, we have ten 24

minutes. Did you just want to walk us through the 25Executive Court Reporters (301) 565

- 0064 130

TSLs and we’ll wrap that up and then we’ll convene 1

tomorrow morning. 2

MS. COUGHLIN: Okay. 3

**Review of TSLs** 4

So, yes the Trial standard levels are

-- I 5

mean we went t hrough this last time and just to 6

refresh your memories. The efficiency levels which 7

are in the current analysis are defined for each 8

individual design line, so just sort of screening at 9

each efficiency level, you screen designs out that 10

don’t meet that e fficiency level under test procedure 11

conditions. And then the trial standard levels are 12

composed of choosing an efficiency level for each 13

design line within a product class, and the product 14

classes are the low voltage, medium voltage, dry type 15

and liquid and liquid immersed. 16

And then within the analysis there are 17

certain things that can only be done at certain stages 18

so, particularly for the life cycle cost, we don’t 19

need to know trial standard levels, we only need to 20

know efficiency levels, but to mov e forward to the 21

National Impacts analyses and the manufacturer impact 22

analysis we need to actually work with the trial 23

standard levels. So until we have a selection of 24

those, we can’t produce the quantitative results for 25Executive Court Reporters (301) 565

- 0064 131

the MIA and the NIA. 1

So the nat ional impact numbers that depend 2

on the choice of TSL are national energy savings, the 3

net present economic value associated with kind of net 4

of cost and benefits, and then the emissions and 5

social cost of carbon are done in a separate 6

accounting. We coul d also produce

-- again, this may 7

be more relevant for the medium voltage. Once you 8

have a trial standard level and we can calculate the 9

impact on shipments, we can come up with rough 10

forecasts of demands for new materials. 11

So for most rulemaking proces ses, there’s 12

several trial standard levels that are standard 13

effectively. So there’s Maxtech, which is required by 14

law, which is the highest efficiency that’s considered 15

in the engineering. So in that case, for each design 16

line you would choose the highe st efficiency level. 17

The maximum MPV is the

-- it’s something we 18

get once we’ve done the NIA, but generally speaking it 19

corresponds to what you get if you use the minimum LCC 20

for each design line. 21

And then there’s the maximum energy savings 22

with non

- negative net present value, and again, 23

roughly speaking that corresponds typically to the 24

highest efficiency level that you get with sort of 25Executive Court Reporters (301) 565

- 0064 132

neutral LCC impacts. So roughly zero LCC savings. 1

And then we define additional TSLs according 2

to the product, a nd for this rulemaking, there’s these 3

technology breakpoints that may be relevant, that can 4

be based on a manufacturing technique or based on core 5

materials. 6

And at the last meeting, this group also 7

asked for trial standard levels based on reductions i n 8

the annual energy costs in buildings, because this is 9

something I guess used in building energy management. 10

So we can produce

-- I use 30 percent, or it could be 11

50 percent

-- a TSL could be selected by specifying 12

the magnitude of reduction just on the annual energy 13

costs by design line. 14

And then once the TSLs that are based on 15

these general criteria are selected, it may be 16

technically necessary to pick one or two additional 17

ones to

-- if we have gaps in the design space. 18

So essentially, part of the

-- what we hope 19

to get by the end of tomorrow is this

-- these 20

additional TSLs that correspond to different pictures 21

of how the market might function in the future. 22

MR. PARKER: Thanks, Katie. It occurred to 23

me that I wonder if doing it sequentially wou ld work. 24

I mean, once we get the engineering data QA/QC so that 25Executive Court Reporters (301) 565

- 0064 133

you have a staple set of engineering data to work 1

with, would it make sense for you to do the analysis 2

with the TSLs that are already either required by law 3

or agreed on by the group as a fir st step? See how 4

that populates the space, see what gaps there are and 5

see what we can learn from that, and then

-- and that 6

will give you a manufacturing impact assessment if you 7

plug that into your model and so forth for those 8

levels, those TSLs. That would give you a life cycle 9

cost assessment for those TSLs. 10

And then would that help us in arriving at 11

the sort of competitiveness TSL of the manufacturing 12

impact TSL? Would that make sense, or do you need to 13

do everything in a batch, in a group? 14

MS. COUGHLIN: Yeah, you need to come up 15

with the criteria. If your issue is competitiveness 16

or some other manufacturing or market thing, you have 17

to come up with the criteria before the TSL can be 18

defined. 19

MR. PARKER: Before that TSL can be defined. 20

But we have identified

-- we have already precisely 21

identified a number of other TSLs and so I guess the 22

question is, would it make sense to go ahead and do 23

the analysis for those, and see what the

-- because in 24

some sense, the competitiveness TSL is, you kn ow, it’s 25Executive Court Reporters (301) 565

- 0064 134

an endogenous variable. It’s

-- it flows from 1

downstream competitiveness impacts that you don’t 2

necessarily know until you’ve done the downstream 3

analysis. So I’m just wondering if it makes sense to 4

work iteratively that way. 5

MR. DeLASKI: I h ad a thought, which is that 6

if you have a full complement of TSLs, right, so let’s 7

say you have seven, which is going to be a pretty good 8

complement, it puts you in a position to evaluate and 9

each manufacturer will evaluate the impacts on each 10

TSL. And in a negotiation, it could be different

-- 11

different companies in different positions and they’re 12

going to have different reactions. So I think in this 13

case it may be that you’re able to have that as

-- I 14

don’t know that you’re going to create a TSL, or a cap 15

is what you say, before the fact

-- 16

MR. PARKER: Maybe not. What you’re saying 17

is maybe you won’t have to if we have seven TSLs 18

anyway, and it provides a bracket for the analysis. 19

People can interpolate

-- 20

MR. DeLASKI: I guess what I add to that is 21

that you may choose, just to use an example, it may be 22

that you decide, or that one decides that for a given 23

product class that you’re comfortable with TSL, call 24

it two, and for another product class you’re 25Executive Court Reporters (301) 565

- 0064 135

comfortable with TSL three. You can mix and match 1

your TSLs to get a call it TSL

- A. And this has been 2

done before by DOE, you know, where you end up with a 3

final TSL which is a combination for different product 4

classes. When I say seven, you actually have quite a 5

lot more there. You’ve got some m ultiple of seven as 6

possible outcomes. 7

MS. COUGHLIN: Just a practical note, we 8

don’t really have time to iterate, so I think

-- and 9

we don’t have time to do the analysis in pieces, so 10

the TSLs that we get, we will do the results for those 11

TSLs and that will have to be the basis for the 12

negotiation. 13

MR. DeLASKI: We can create our own as we 14

go, based on those seven. 15

MR. PARKER: So well this is an important 16

point, and maybe what we should do is begin with this 17

in the morning, since we only have a few minutes. But 18

think about it overnight. This is a creative 19

suggestion, the idea is to basically declare a victory 20

on the search for this chimerical competitive TSL, at 21

least in this group, work with the TSLs that we’ve 22

already defined and mix and match an d interpolate and 23

hope that we can do that once the results come in. Is 24

that a fair statement of what you were suggesting, 25Executive Court Reporters (301) 565

- 0064 136

Andrew? 1

He’s nodding yes. 2

MR. BALLO: This is Tim Ballo. I just had a 3

question, I guess for John on that. Is that going to 4

be a problem? In the past when we’ve done that, we’ve 5

done that in comments on a proposed ruling, DOE goes 6

back and does the analysis and a final rule that 7

accepts or rejects, but here we’re discussing

-- 8

you’re saying you’re not going to have time to do the 9

analysis before the proposed rule is issued, and then 10

we put you in the situation of proposing something 11

that you don’t have the analysis to justify. 12

MR. CYMBALSKY: Right I think for what 13

Katie’s saying, we want results before the next 14

meeting to base this on, so I think at this point we 15

should run with what we have, do all the analysis and 16

look at them together and then if there are very small 17

changes we think we have to make, then we’ll evaluate 18

at that time. But I don’t think over the next three 19

wee ks we want to be getting into this rope

- a

- dopey. 20

MR. PARKER: I guess one thing that I was 21

unclear about Katie, and the thing that sparked the 22

question about iteration, was that I thought the gap 23

filling TSL was by definition an iterative TSL that 24

would be done as a second stage once you see what the 25Executive Court Reporters (301) 565

- 0064 137

gaps are, but did I misunderstand that? 1

MR. CYMBALSKY: You know the gaps. 2

MR. PARKER: You know the gaps by looking at 3

them. Okay, you want to respond to that? Yeah. 4

MS. COUGHLIN: It ’s not that comp licated. 5

If you have say design line six you have TSLs at 6

efficiency level two and then TSLs at efficiency level 7

six, and nothing in between, you would just put 8

something in between. 9

MR. PARKER: And can you tell

-- do you

-- 10

have you identified areas w here there appear to be 11

these gaps where you would be using that kind of a 12

TSL? 13

MR. CYMBALSKY: Not yet. 14

MR. PARKER: But you would look at that 15

before you do it. 16

Okay. That provides, I think, a further 17

level of comfort if there are large gaps that will 18

allow

-- that will create large spaces that might not 19

be analyzed, I understand that LBL will populate those 20

with gap

- filling TSLs and that will give further 21

comfort to this strategy of working with the TSLs that 22

we have and not creating a new one. 23

Let’s not leap to that, think about it 24

overnight. We’re at five o’clock. Let’s adjourn and 25Executive Court Reporters (301) 565

- 0064 138

convene at DOE tomorrow

-- in here? Is it here? 1

Sorry. It’s great. So we have it for tomorrow 2

morning. So we’ll meet here at nine o’clock and if we 3

can get yo u guys out early on a Friday, that will be 4

absolutely fine. We’re not going to use more time 5

than we need. I would like to get us early if we can. 6

Great. Thank you all, see you all tomorrow morning. 7

(Whereupon, at 5:03 p.m., the meet ing in the 8

above captioned matter was adjourned , to reconvene 9

tomorrow morning, Friday, October 14, 2011 at 9:00 10

a.m.) 11

12

13

14

15

16

17

18

19

20

21

22

23

24 25Executive Court Reporters (301) 565

- 0064 139

**REPORTER'S CERTIFICATE**

This is to certify that the attached proceedings

before:

**U.S. DEPARTMENT OF ENERGY**

**VOLUME I**

In the Ma tter of:

**MEETING OF THE LV 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 relat ed to any

party to the above proceedings.

Official Reporter 

### Wendy Greene

Dated: October 20, 2011