Bouza, Antonio

From: Bouza, Antonio

Sent: Friday, October 12, 2007 8:51 AM

To: Bouza, Antonio

Subject: Distribution Transformers Energy Conservation Standards

Attachments: DT Final Rule Oct 12 2007.pdf

To all Distribution Transformer stakeholders:

The Department of Energy is writing to inform you that the Final Rule for the distribution transformer

energy conservation standards rulemaking was published today in the Federal Register. DOE issued

DT Final Rule

t 12 2007.pdf

this final rule on September 28, 2007. Please find the file attached below.

The Department will be updating its website and posting the Final Rule, the Technical Support

Document (TSD) and associated analytical spreadsheets on its website early next week:

http://www.eere.energy.gov/buildings/appliance standards/commercial/distribution transformers html

Sincerely,

Antonio Bouza

Building Technologies Program

U.S. Department of Energy

1000 Independence Avenue, SW

Washington DC 20585-0121

phone: 202.586.4563

antonio.bouza(aaee.doe.gov

 EE-RM/STD-00-550 COMMENT 194

Bouza. Antonio 

From: Bouza, Antonio 

Sent: Friday, October 12,20078:51 AM 

To: Bouza, Antonio 

Subject: Distribution Transformers Energy Conservation Standards 

Attachments: DT Final Rule Oct 12 2007.pdf 

To all Distribution Transformer stakeholders: 

The Department of Energy is writing to inform you that the Final Rule for the distribution transformer 

energy conservation standards rulemaking was published today in the Federal Register. DOE issued 

this final rule on September 28,2007. 

DT Final -Rule 

t 12 2007.pdf 

Please find the file attached below. 

The Department will be updating its website and posting the Final Rule, the Technical Support 

Document (TSD) and associated analytical spreadsheets on its website early next week: 

http://www.eere.energy.gov/buildings/appliancestandards/commercial/distributiontransformers.html 

Sincerely, 

Antonio Bouza 

Building Technologies Program 

U.S. Department of Energy 

1000 Independence Avenue, SVV 

VVashington DC 20585-0121 

phone: 202.586.4563 

antonio.bouza@ee.doe.gov 
Friday,

October 12, 2007

epartment of

Energy

10 CFR Part 431

Energy Conservation Program for

Commercial Equipment: Distribution

Transformers Energy Conservation

Standards; Final Rule

 EE-RM/STD-00-550 COMMENT 194

Friday, 

October 12, 2007 

Part ill 

Department of 

Energy 

10 CFR Part 431 

Energy Conservation Program for 

Commercial Equipment: Distribution 

Transformers Energy Conservation 

Standards; Final Rule 
58190 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations

DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number: EE-RM/STD-00-550]

RIN 1904-AB08

Energy Conservation Program for

Commercial Equipment: Distribution

Transformers Energy Conservation

Standards; Final Rule

AGENCY : Department of Energy.

ACTION: Final rule

SUMMARY : The Department of Energy

(DOE) has determined that energy

conservation standards for liquidimmersed and medium-voltage, drytype distribution transformers will

result in significant conservation of

energy, are technologically feasible, and

are economically justified. On this basis,

DOE is today adopting energy

conservation standards for liquidimmersed and medium-voltage, drytype distribution transformers. Today's

rule does not set energy conservation

standards for underground mining

distribution transformers.

DATES: Effective Date: The effective date

of this rule is November 13, 2007.

Standards for liquid-immersed and

medium-voltage, dry-type distribution

transformers will be applicable starting

January 1, 2010.

ADDRESSES : For access to the docket to

read background documents, the

technical support document (TSD),

transcripts of the public meetings in this

proceeding, or comments received, visit

the U.S. Department of Energy, Forrestal

Building, Room 1J-018 (Resource Room

of the Building Technologies Program),

1000 Independence Avenue, SW.,

Washington, DC, (202) 586-2945,

between 9 a.m. and 4 p.m., Monday

through Friday, except Federal holidays.

Please call Ms. Brenda Edwards-Jones at

the above telephone number for

additional information regarding

visiting the Resource Room. Please note:

DOE's Freedom of Information Reading

Room (formerly Room 1E-190 at the

Forrestal Building) no longer houses

rulemaking materials. You may also

obtain copies of certain previous

rulemaking documents from this

proceeding (i.e., Framework Document,

advance notice of proposed rulemaking

(ANOPR), notice of proposed

rulemaking (NOPR or proposed rule)),

draft analyses, public meeting materials,

and related test procedure documents

from the Office of Energy Efficiency and

Renewable Energy's Web site at http://

www. eere. en ergy.gov/buildings/

appliance_stan Bard s/commercial/

d i s tri b u ti on_ tra n s f orm ers. h tm 1.

FOR FURTHER INFORMATION CONTACT: d. Electricity Price Trends

Antonio Bouza, Project Manager, Energy e. Natural Gas Price Impacts

Conservation Standards for Distribution 3. Inputs Affecting Present Value of

Annual Operating Cost Savings Transformers, Docket No. EE-RM/STD- a. Standards Implementation Date 00-550, U.S. Department of Energy, b. Discount Rate

Energy Efficiency and Renewable c. Temperature Rise, Reliability, and

Energy, Building Technologies Program, Lifetime

EE-2J, 1000 Independence Avenue, D. National Impact Analysis-National

SW., Washington, DC 20585-0121, (202) Energy Savings and Net Present Value

586-4563, e-mail: Analysis

Antonio Bouza@ee.doe.gov 1. Discount Rate. .

a. Selection and Estimation Method

b Discounting Energy and Emissions Francine Pinto, Esq., U.S. Department .

E Commercial Consumer Subgroup of Energy, Office of General Counsel, .

Analysis

GC-72, 1000 Independence Avenue, F. Manufacturer Impact Analysis

SW., Washington, DC 20585-0121, (202) G. Employment Impact Analysis

586-7432, e-mail: H. Utility Impact Analysis

Francine.Pinto@hq.doe.gov. I. Environmental Analysis

V. Discussion of Other Comments

SUPPLEMENTARY INFORMATION: A. Information and Assumptions Used in

I. Summary of the Final Rule and Its Benefits Analyses

A. The Standard Levels 1. Engineering Analysis

B. Distribution Transformer Characteristics a. Primary Voltage Sensitivities

C. Benefits to Transformer Customers b. Increased Raw Material Prices

D. Impact on Manufacturers c. Amorphous Material Price

E National Benefits d. Material Availability.

F. Conclusion 2. Shipments/National Energy Savings

3 Manufacturer Impact Analysis II. Introduction .

B Weighing of Factors A. Authority .

1. Economic Impacts B. Background

a Economic Impacts on Consumers 1 Current Standards .

. b Economic Impacts on Manufacturers 2. History of Standards Rulemaking for .

2 Life-Cycle Costs Distribution Transformers .

3. Energy Savings

III. General Discussion 4. Lessening of Utility or Performance of

A. Test Procedures Products B. Technological Feasibility a. Transformers Installed in Vaults

1. General 5. Impact of Lessening of Competition 2. Maximum Technologically Feasible 6. Need of the Nation To Conserve Energy

Levels 7. Other Factors

C. Energy Savings a. Availability of High Primary Voltages

D. Economic justification b. Materials Price Sensitivity Analysis

1. Economic Impact on Commercial c. Materials Availability Analysis

Consumers and Manufacturers d. Consistency Between Single-Phase and

2. Life-Cycle Costs Three-Phase Designs

3. Energy Savings C. Other Comments

4. Lessening of Utility or Performance of 1. Development of Trial Standard Levels

Equipment for the Final Rule

5. Impact of Any Lessening of Competition 2. Linear Interpolation of Non-Standard

6. Need of the Nation To Conserve Energy Capacity Ratings

7. Other Factors VI. Analytical Results and Conclusions

IV. Methodology and Discussion of A. Trial Standard Levels

Comments on Methodology B. Significance of Energy Savings

A. Market and Technology Assessment C. Economic justification

1. General 1. Economic Impact on Commercial

2. Mining Transformers Consumers

a. Comments Requesting Exemption a. Life-Cycle Costs and Payback Period

b. Mining Transformer Test Procedure b. Commercial Consumer Subgroup

Comments Analysis

3. Less-Flammable, Liquid-Immersed 2. Economic Impact on Manufacturers

Transformers a. Industry Cash-Flow Analysis Results

4. Rebuilt or Refurbished Distribution b. Impacts on Employment

Transformers c. Impacts on Manufacturing Capacity

5. Uninterruptible Power System d. Impacts on Manufacturers That Are

Transformers Small Businesses

B. Engineering Analysis 3. National Net Present Value and Net

C. Life-Cycle Cost and Payback Period National Employment

Analysis 4. Impact on Utility or Performance of

1. Inputs Affecting Installed Cost Equipment

a. Installation Costs 5. Impact of Any Lessening of Competition

b. Baseline and Standard Design Selection 6. Need of the.Nation To Conserve Energy

2. Inputs Affecting Operating Costs 7. Other Factors

a. Transformer Loading D. Conclusion

b. Load Growth 1. Results for Liquid-Immersed

c. Electricity Costs Distribution Transformers

 EE-RM/STD-00-550 COMMENT 194

58190 Federal Register IVoi. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket Number: EE-RM/STD-00-550] 

RIN 1904-AB08 

Energy Conservation Program for 

Commercial Equipment: Distribution 

Transformers Energy Conservation 

Standards; Final Rule 

AGENCY: Department of Energy. 

ACTION: Final rule. 

SUMMARY: The Department of Energy 

(DOE) has determined that energy 

conservation standards for liquidimmersed and medium-voltage, drytype distribution transformers will 

result in significant conservation of 

energy, are technologically feasible, and 

are economically justified. On this basis, 

DOE is today adopting energy 

conservation standards for liquidimmersed and medium-voltage, drytype distribution transformers. Today's 

rule does not set energy conservation 

standards for underground mining 

distribution transformers. 

DATES: Effective Date: The effective date 

ofthis rule is November 13,2007. 

Standards for liquid-immersed and 

medium-voltage, dry-type distribution 

transformers will be applicable starting 

January 1, 2010. 

ADDRESSES: For access to the docket to 

read background documents, the 

technical support document (TSD), 

transcripts of the public meetings in this 

proceeding, or comments received, visit 

the U.S. Department of Energy, Forrestal 

Building, Room IJ-018 (Resource Room 

of the Building Technologies Program), 

1000 Independence Avenue, SW., 

Washington, DC, (202) 586-2945, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

Please call Ms. Brenda Edwards-Jones at 

the above telephone number for 

additional information regarding 

visiting the Resource Room. Please note: 

DOE's Freedom ofInformation Reading 

Room (formerly Room lE-190 at the 

Forrestal Building) no longer houses 

rulemaking materials. You may also 

obtain copies of certain previous 

rulemaking documents from this 

proceeding (Le., Framework Document, 

advance notice of proposed rulemaking 

(ANOPR), notice of proposed 

rulemaking (NOPR or proposed rule)), 

draft analyses, public meeting materials, 

and related test procedure documents 

from the Office of Energy Efficiency and 

Renewable Energy's Web site at http:// 

www.eere.energy.gov/buildings/ 

appliance_standards/commercial! 

distribution_transformers.html. 

FOR FURTHER INFORMATION CONTACT: 

Antonio Bouza, Project Manager, Energy 

Conservation Standards for Distribution 

Transformers, Docket No. EE-RM/STD00-550, U.S. Department of Energy, 

Energy Efficiency and Renewable 

Energy, Building Technologies Program, 

EE-2J, 1000 Independence Avenue, 

SW., Washington, DC 20585-0121, (202) 

586-4563, e-mail: 

Antonio.Bouza@ee.doe.gov. 

Francine Pinto, Esq., U.S. Department 

of Energy, Office of General Counsel, 

GC-72, 1000 Independence Avenue, 

SW., Washington, DC 20585-0121, (202) 

586-7432, e-mail: 

Francine .Pinto@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule and Its Benefits 

A. The Standard Levels 

B. Distribution Transformer Characteristics 

C. Benefits to Transformer Customers 

D. Impact on Manufacturers 

E. National Benefits 

F. Conclusion 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Distribution Transformers 

III. General Discussion 

A. Test Procedures 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

C. Energy Savings 

D. Economic Justification 

1. Economic Impact on Commercial 

Consumers and Manufacturers 

2. Life-Cycle Costs 

3. Energy Savings 

4. Lessening of Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

IV. Methodology and Discussion of 

Comments on Methodology 

A. Market and Technology Assessment 

1. General 

2. Mining Transformers 

a. Comments Requesting Exemption 

b. Mining Transformer Test Procedure 

Comments 

3. Less-Flammable, Liquid-Immersed 

Transformers 

4. Rebuilt or Refurbished Distribution 

Transformers 

5. Uninterruptible Power System 

Transformers 

B. Engineering Analysis 

C. Life-Cycle Cost and Payback Period 

Analysis 

1. Inputs Affecting Installed Cost 

a. Installation Costs 

b. Baseline and Standard Design Selection 

2. Inputs Affecting Operating Costs 

a. Transformer Loading 

b. Load Growth 

c. Electricity Costs 

d. Electricity Price Trends 

e. Natural Gas Price Impacts 

3. Inputs Affecting Present Value of 

Annual Operating Cost Savings 

a. Standards Implementation Date 

b. Discount Rate 

c. Temperature Rise, Reliability, and 

Lifetime 

D. National Impact Analysis-National 

Energy Savings and Net Present Value 

Analysis 

1. Discount Rate 

a. Selection and Estimation Method 

b. Discounting Energy and Emissions 

E. Commercial Consumer Subgroup 

AnalysiS 

F. Manufacturer Impact AnalYSis 

G. Employment Impact Analysis 

H. Utility Impact Analysis 

I. Environmental Analysis 

V. Discussion of Other Comments 

A. Information and Assumptions Used in 

Analyses 

1. Engineering Analysis 

a. Primary Voltage Sensitivities 

b. Increased Raw Material Prices 

c. Amorphous Material Price 

d. Material Availability 

2. Shipments/National Energy Savings 

3. Manufacturer Impact Analysis 

B. Weighing of Factors 

1. Economic Impacts a. Economic Impacts on Consumers 

b. Economic Impacts on Manufacturers 

2. Life-Cycle Costs 

3. Energy Savings 

4. Lessening of Utility or Performance of 

Products 

a. Transformers Installed in Vaults 

5. Impact of Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

a. Availability of High Primary Voltages 

b. Materials Price Sensitivity Analysis 

c. Materials Availability Analysis 

d. Consistency Between Single-Phase and 

Three-Phase Designs 

C. Other Comments 

1. Development of Trial Standard Levels 

for the Final Rule 

2. Linear Interpolation of Non-Standard 

Capacity Ratings 

VI. Analytical Results and Conclusions 

A. Trial Standard Levels 

B. Significance of Energy Savings 

C. Economic Justification 

1. Economic Impact on Commercial 

Consumers 

a. Life-Cycle Costs and Payback Period 

b. Commercial Consumer Subgroup 

Analysis 

2. Economic Impact on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. Impacts on Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Manufacturers That Are 

Small Businesses 

3. National Net Present Value and Net 

National Employment 

4. Impact on Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the. Nation To Conserve Energy 

7. Other Factors 

D. Conclusion 

1. Results for Liquid-Immersed 

Distribution Transformers 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 /Rules and Regulations

a. Liquid-Immersed Transformers-Trial

Standard Level 6

b. Liquid-Immersed Transformers-Trial

Standard Level 5

c. Liquid-Immersed Transformers-Trial

Standard Level A

d. Liquid-Immersed Transformers-Trial

Standard Level 4

e. Liquid-Immersed Transformers-Trial

Standard Level 3

f. Liquid-Immersed Transformers-Trial

Standard Level B

g. Liquid-Immersed Transformers-Trial

Standard Level C

2. Results for Medium-Voltage, Dry-Type

Distribution Transformers

a. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 6

b. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 5

c. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 4

d. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 3

e. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 2

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility

Act/Final Regulatory Flexibility Analysis

C. Review Under the Paperwork Reduction

Act

D. Review Under the National

Environmental Policy Act

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates

Reform Act of 1995

H. Review Under the Treasury and General

Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General

Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under Section 32 of the Federal

Energy Administration Act of 1974

M. Review Under the Information Quality

Bulletin for Peer Review

N. Congressional Notification

VIII. Approval of the Office of the Secretary

1. Summary of the Final Rule and Its

Benefits

A. The Standard Levels

The Energy Policy and Conservation

Act (EPCA), as amended, directs the

Department of Energy (DOE) to adopt

energy conservation standards for those

distribution transformers for which

standards would be technologically

feasible and economically justified, and

would result in significant energy

savings. (42 U.S.C. 6317(a)(2)) The

standards in today's final rule, which

apply to liquid-immersed and mediumvoltage, dry-type distribution

transformers, satisfy these requirements

and will achieve the maximum

improvements in energy efficiency that

are technologically feasible and

economically justified. In the advance

notice of proposed rulemaking (ANOPR)

58191

in this proceeding, DOE had also

addressed standards for low-voltage,

dry-type distribution transformers. 69

FR 45376 (July 29, 2004). However, the

Energy Policy Act of 2005, Public Law

109-58, (EPACT 2005) amended EPCA

to establish energy conservation

standards for those transformers.

(EPACT 2005, Section 135(c); 42 U.S.C.

6295(y)) Therefore, DOE removed lowvoltage, dry-type distribution

transformers from the scope of this

rulemaking.

The standards established in this final

rule are minimum efficiency levels.

Tables 1.1 and 1,2 show the standard

levels DOE is adopting today. These

standards will apply to liquid-immersed

and medium-voltage, dry-type

distribution transformers manufactured

for sale in the United States, or

imported to the United States, on or

after January 1, 2010. As discussed in

section V.C.2 of this notice, any

transformers whose kVA1 rating falls

between the kVA ratings shown in

tables 1.1 and 1.2 shall have its

minimum efficiency requirement

calculated by a linear interpolation of

the minimum efficiency requirements of

the kVA ratings immediately above and

below that rating.

TABLE 1.1.-STANDARD LEVELS FOR LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS, TABULAR FORM

Single-phase Three-phase

kVA Efficiency kVA Efficiency

10 ...................................................................................... 98.62 15 ..................................................................................... 98.36

15 ...................................................................................... 98.76 30 ..................................................................................... 98.62

25 ...................................................................................... 98.91 45 ..................................................................................... 98.76

37.5 ................................................................................... 99.01 75 ..................................................................................... 98.91

50 ...................................................................................... 99.08 112.5 ................................................................................ 99.01

75 ...................................................................................... 99.17 150 ................................................................................... 99.08

100 .................................................................................... 99.23 225 ................................................................................... 99.17

167 .................................................................................... 99.25 300 ................................................................................... 99.23

250 .................................................................................... 99.32 500 ................................................................................... 99.25

333 .................................................................................... 99.36 750 ................................................................................... 99.32

500 .................................................................................... 99.42 1000 ................................................................................. 99.36

667 .................................................................................... 99.46 1500 ................................................................................. 99.42

833 .................................................................................... 99.49 2000 ................................................................................. 99.46

2500 ................................................................................. 99.49

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A.

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORM

Single-phase Three-phase

20-45 kV 46-95 kV 296 kV 20-45 kV 46-95 kV 296 kV BIL efficiency efficiency efficiency BIL efficiency efficiency

2

efficiency kVA kVA (%) (%) (%) (%) (%) (%)

15 ......................................

25 ......................................

98.10

98.33

97.86 .................... 11 15 .....................................

98.12 .................... 30 .....................................

97.50

97.90

97.18 ....................

97.63 ....................

1 kVA is an abbreviation for kilovolt-ampere, classify transformers. A transformer's kVA rating represents its output power when it is fully loaded

which is a capacity metric used by industry to (i.e., 100%).

 EE-RM/STD-00-550 COMMENT 194

Federal Register IVoI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58191 

a. Liquid-Immersed Transformers-Trial 

Standard Level 6 

b. Liquid-Immersed Transformers-Trial 

Standard Level 5 

c. Liquid-Immersed Transformers-Trial 

Standard Level A 

d. Liquid-Immersed Transformers-Trial 

Standard Level 4 

e. Liquid-Immersed Transformers-Trial 

Standard Level 3 

f. Liquid-Immersed Transformers-Trial 

Standard Level B 

g. Liquid-Immersed Transformers-Trial 

Standard Level C 

2. Results for Medium-Voltage, Dry-Type 

Distribution Transformers 

a. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 6 

b. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 5 

c. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 4 

d. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 3 

e. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 2 

VII. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

B. Review Under tbe Regulatory Flexibility 

Act/Final Regulatory Flexibility Analysis 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

1. Review Under Section 32 of the Federal 

Energy Administration Act of 1974 

M. Review Under tbe Information Quality 

Bulletin for Peer Review 

N. Congressional Notification 

VIII. Approval oftbe Office of the Secretary 

I. Summary of the Final Rule and Its 

Benefits 

A. The Standard Levels 

The Energy Policy and Conservation 

Act (EPCA), as amended, directs the 

Department of Energy (DOE) to adopt 

energy conservation standards for those 

distribution transformers for which 

standards would be technologically 

feasible and economically justified, and 

would result in significant energy 

savings. (42 U.S.C. 6317(a)(2)) The 

standards in today's final rule, which 

apply to liquid-immersed and mediumvoltage, dry-type distribution 

transformers, satisfy these requirements 

and will achieve the maximum 

improvements in energy efficiency that 

are technologically feasible and 

economically justified. In the advance 

notice of proposed rulemaking (ANOPR) 

in this proceeding, DOE had also 

addressed standards for low-voltage, 

dry-type distribution transformers. 69 

FR 45376 (July 29, 2004). However, the 

Energy Policy Act of 2005, Public Law 

109-58, (EPACT 2005) amended EPCA 

to establish energy conservation 

standards for those transformers. 

(EPACT 2005, Section 135(c); 42 U.S.C. 

6295(y)) Therefore, DOE removed lowvoltage, dry-type distribution 

transformers from the scope of this 

rulemaking. 

The standards established in this final 

rule are minimum efficiency levels. 

Tables 1.1 and 1.2 show the standard 

levels DOE is adopting today. These 

standards will apply to liquid-immersed 

and medium-voltage, dry-type 

distribution transformers manufactured 

for sale in the United States, or 

imported to the United States, on or 

after January 1, 2010. As discussed in 

section V.C.2 of this notice, any 

transformers whose kVAl rating falls 

between the kVA ratings shown in 

tables I.1 and 1.2 shall have its 

minimum efficiency requirement 

calculated by a linear interpolation of 

the minimum efficiency requirements of 

the kVA ratings immediately above and 

below that rating. 

TABLE 1.1.-STANDARD LEVELS FOR liQUID-IMMERSED DISTRIBUTION TRANSFORMERS, TABULAR FORM 

Single-phase 

kVA 

10 ..................................................................................... . 

15 ..................................................................................... . 

25 ..................................................................................... . 

37.5 ................................................................................. .. 

50 ..................................................................................... . 

75 ..................................................................................... . 

100 .................................................................................. .. 

167 .................................................................................. .. 

250 .................................................................................. .. 

333 .................................................................................. .. 

500 .................................................................................. .. 

667 .................................................................................. .. 

833 .................................................................................. .. 

Efficiency 

(%) 

98.62 

98.76 

98.91 

99.01 

99.08 

99.17 

99.23 

99.25 

99.32 

99.36 

99.42 

99.46 

99.49 

Three-phase 

kVA 

15 .................................................................................... . 

30 .................................................................................... . 

45 .................................................................................... . 

75 .................................................................................... . 

112.5 ............................................................................... . 

150 .................................................................................. . 

225 .................................................................................. . 

300 .................................................................................. . 

500 .................................................................................. . 

750 .................................................................................. . 

1000 ................................................................................ . 

1500 ................................................................................ . 

2000 ................................................................................ . 

2500 ................................................................................ . 

Efficiency 

(%) 

98.36 

98.62 

98.76 

98.91 

99.01 

99.08 

99.17 

99.23 

99.25 

99.32 

99.36 

99.42 

99.46 

99.49 

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A. 

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORM 

BIL 

kVA 

15 ..................................... . 

25 ..................................... . 

Single-phase 

20-45 kV 

efficiency 

(%) 

98.10 

98.33 

1 kVA is an abbreviation for kilovolt-ampere, 

which is a capacity metric used by industry to 

46-95 kV 

efficiency 

(%) 

97.86 

98.12 

~96 kV 

efficiency 

(%) 

BIL 

kVA 

15 .................................... . 

30 .................................... . 

Three-phase 

20-45 kV 

efficiency 

(%) 

97.50 

97.90 

46-95 kV 

efficiency 

(%) 

97.18 

97.63 

~96 kV 

efficiency 

(%) 

classify transformers. A transformer's kVA rating represents its output power when it is fully loaded 

(Le., 100%). 
58192 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORMContinued

Single-phase Three-phase

BIL

kVA

20-45 kV

efficiency

(%)

46-95 kV

efficiency

(%)

>_96 kV

efficiency

(%)

BIL

kVA BIL

20-45 kV

efficiency

(%)

46-95 kV

efficiency

(%)

>_96 kV

efficiency

(%)

37.5 ................................... 98.49 98.30 .................... 45 ..................................... 98.10 97.86 ....................

50 ...................................... 98.60 98.42 .................... 75 ..................................... 98.33 98.12

75 ...................................... 98.73 98.57 98.53 112.5 ................................ 98.49 98.30

100 .................................... 98.82 98.67 98.63 150 ................................... 98.60 98.42 ....................

167 .................................... 98.96 98.83 98.80 225 ................................... 98.73 98.57 98.53

250 .................................... 99.07 98.95 98.91 300 ................................... 98.82 98.67 98.63

333 .................................... 99.14 99.03 98.99 500 ................................... 98.96 98.83 98.80

500 .................................... 99.22 99.12 99.09 750 ................................... 99.07 98.95 98.91

667 .................................... 99.27 99.18 99.15 1000 ................................. 99.14 99.03 98.99

833 .................................... 99.31 99.23 99.20 1500 ................................. 99.22 99.12 99.09

2000 ................................. 99.27 99.18 99.15

2500 ................................. 99.31 99.23 99.20

Note: BIL means basic impulse insulation level.

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A.

B. Distribution Transformer

Characteristics

The minimum efficiency levels in

today's standards can be met by

distribution transformer designs that

already are available in the market. DOE

expects that distribution transformer

designs that incorporate different

voltages and other design variations will

still be able to be manufactured under

the new standards, maintaining all the

features and utility found in

commercially available products today.

In analyzing the benefits and burdens

of potential standards, DOE represented

the range of possible distribution

transformer costs and features by

representative engineering design lines.

Five design lines (DL1, DL2, DL3, DL4,

and DL5) represent the range of features

and costs for liquid-immersed

transformers, while five design lines

(DL9, DL10, DL11, DL12, and DL13)

represent medium-voltage, dry-type

transformers. Three design lines (DL6,

DL7, and DL8) represented low-voltage

dry-type transformers and were

included in DOE's ANOPR analysis. But

as indicated above, DOE subsequently

removed these transformers from this

rulemaking when the Energy Policy Act

of 2005 established minimum efficiency

levels for them.

On average, liquid-immersed

transformers are already relatively

efficient. The annual operating costs for

such transformers range from

approximately 1/lo to 1/3o of the installed

cost. Medium-voltage, dry-type

transformers tend to have higher losses,

and are subject to higher electricity

costs. Their annual operating costs tend

to be approximately 1/lo of the installed

cost.

C. Benefits to Transformer Consumers

The economic impacts on transformer

consumers (i.e., the average life-cycle

cost (LCC) savings) are positive for the

new energy efficiency levels established

by this rule. For liquid-immersed

transformers, an increase in first costs of

6-12 percent is accompanied by a

decrease in operating costs of 15-23

percent, corresponding to a similar drop

in electrical losses. For medium-voltage,

dry-type transformers, an increase in

first costs of 3-13 percent is

accompanied by a decrease in losses

and operating costs of 9-26 percent. On

average, the new standards provides net

life-cycle benefits for all categories of

distribution transformers, although

some liquid-immersed transformers

with smaller loads and relatively low

electricity cost are likely to incur a net

cost from the new standards. For liquidimmersed transformers, DOE estimates

that approximately 25% of the market

incurs a net life-cycle cost from the

standard while 75% of the market is

either not affected or incurs a net

benefit. DOE also investigated how

these standards might affect municipal

utilities and rural electric cooperatives.

While the benefits are positive for

municipal utilities, a majority of

smaller, pole-mounted transformers for

rural electric cooperatives will incur a

net life-cycle cost. However, because of

a relatively large per-transformer

reduction in life-cycle cost for some

non-evaluating rural electric

cooperatives (i.e., those that do not take

into consideration the cost of

transformer losses when choosing a

transformer) rural electric cooperatives

as a whole receive an average life-cycle

cost benefit.

D. Impact on Manufacturers

Using a real corporate discount rate of

8.9 percent, DOE estimated the industry

net present values (INPV) of the liquidimmersed and medium-voltage, drytype distribution transformer industries

to be $609 million and $36 million,

respectively, in 2006$. DOE expects the

impact of today's standards on the INPV

of the liquid-immersed transformer

industry to be between an eight percent

loss and an eight percent increase

(- $47 million to $47 million). DOE

expects the impact of today's standards

on the INPV of the medium-voltage, drytype transformer industry to be between

a 15 percent loss and a 9 percent loss

(- $5.2 million to - $3.2 million). Based

on DOE's analysis and interviews with

distribution transformer manufacturers,

DOE expects minimal plant closings or

loss of employment as a result of the

standards promulgated today.

E. National Benefits

The standards will provide significant

benefits to the Nation. DOE estimates

the standards will save approximately

2.74 quads (quadrillion (1015) British

thermal units (BTU)) of energy over 29

years (2010-2038). This is equivalent to

all the energy consumed by 27 million

American households in a single year.

By 2038, DOE expects the energy

savings from the standards to eliminate

the need for approximately six new 400-

megawatt combined-cycle gas turbine

power plants. The total energy savings

from the standard will result in

cumulative greenhouse gas emission

reductions of approximately 238 million

tons (Mt) of carbon dioxide (C02) from

a variety of generation sources. This is

an amount equal to what would be

 EE-RM/STD-00-550 COMMENT 194

58192 Federal Register IVoI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORMContinued 

Single-phase Three-phase 

Bil 

kVA 

20-45 kV 

efficiency 

(%) 

46-95 kV 

efficiency 

(%) 

;::96 kV 

efficiency 

(%) 

Bil 

kVA 

20-45 kV 

efficiency 

(%) 

46-95 kV ;::96 kV 

efficiency 

(%) 

efficiency 

(%) 

37.5 .................................. . 

50 .................................... .. 

75 .................................... .. 

100 .................................. .. 

167 .................................. .. 

250 .................................. .. 

333 .................................. .. 

500 .................................. .. 

667 ................................... . 

833 .................................. .. 

98.49 

98.60 

98.73 

98.82 

98.96 

99.07 

99.14 

99.22 

99.27 

99.31 

98.30 

98.42 

98.57 

98.67 

98.83 

98.95 

99.03 

99.12 

99.18 

99.23 

98.53 

98.63 

98.80 

98.91 

98.99 

99.09 

99.15 

99.20 

45 .................................... . 

75 ................................... .. 

112.5 ............................... . 

150 .................................. . 

225 ................................. .. 

300 ................................. .. 

500 .................................. . 

750 .................................. . 

1000 ............................... .. 

1500 ................................ . 

2000 ............................... .. 

2500 ................................ . 

98.10 97.86 .................... 

98.33 98.12 .................... 

98.49 98.30 .................... 

98.60 98.42 .................... 

98.73 98.57 98.53 

98.82 98.67 98.63 

98.96 98.83 98.80 

99.07 98.95 98.91 

99.14 99.03 98.99 

99.22 99.12 99.09 

99.27 99.18 99.15 

99.31 99.23 99.20 

Note: Bil means basic impulse insulation level. 

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A. 

B. Distribution Transformer 

Characteristics 

The minimum efficiency levels in 

today's standards can be met by 

distribution transformer designs that 

already are available in the market. DOE 

expects that distribution transformer 

designs that incorporate different 

voltages and other design variations will 

still be able to be manufactured under 

the new standards, maintaining all the 

features and utility found in 

commercially available products today. 

In analyzing the benefits and burdens 

of potential standards, DOE represented 

the range of possible distribution 

transformer costs and features by 

representative engineering design lines. 

Five design lines (DL1, DL2, DL3, DL4, 

and DL5) represent the range offeatures 

and costs for liquid-immersed 

transformers, while five design lines 

(DL9, DL10, DL11, DL12, and DL13) 

represent medium-voltage, dry-type 

transformers. Three design lines (DL6, 

DL7, and DLB) represented low-voltage 

dry-type transformers and were 

included in DOE's ANOPR analysis. But 

as indicated above, DOE subsequently 

removed these transformers from this 

rulemaking when the Energy Policy Act 

of 2005 established minimum efficiency 

levels for them. 

On average, liquid-immersed 

transformers are already relatively 

efficient. The annual operating costs for 

such transformers range from 

approximately VlO to V30 ofthe installed 

cost. Medium-voltage, dry-type 

transformers tend to have higher losses, 

and are subject to higher electricity 

costs. Their annual operating costs tend 

to be approximately V,0 of the installed 

cost. 

C. Benefits to Transformer Consumers 

The economic impacts on transformer 

consumers (i.e., the average life-cycle 

cost (LCC) savings) are positive for the 

new energy efficiency levels established 

by this rule. For liquid-immersed 

transformers, an increase in first costs of 

6-12 percent is accompanied by a 

decrease in operating costs of 15-23 

percent, corresponding to a similar drop 

in electrical losses. For medium-voltage, 

dry-type transformers, an increase in 

first costs of 3-13 percent is 

accompanied by a decrease in losses 

and operating costs of 9-26 percent. On 

average, the new standards provides net 

life-cycle benefits for all categories of 

distribution transformers, although 

some liquid-immersed transformers 

with smaller loads and relatively low 

electricity cost are likely to incur a net 

cost from the new standards. For liquidimmersed transformers, DOE estimates 

that approximately 25% of the market 

incurs a net life-cycle cost from the 

standard while 75% ofthe market is 

either not affected or incurs a net 

benefit. DOE also investigated how 

these standards might affect municipal 

utilities and rural electric cooperatives. 

While the benefits are positive for 

municipal utilities, a majority of 

smaller, pole-mounted transformers for 

rural electric cooperatives will incur a 

net life-cycle cost. However, because of 

a relatively large per-transformer 

reduction in life-cycle cost for some 

non-evaluating rural electric 

cooperatives (i.e., those that do not take 

into consideration the cost of 

transformer losses when choosing a 

transformer) rural electric cooperatives 

as a whole receive an average life-cycle 

cost benefit. 

D. Impact on Manufacturers 

Using a real corporate discount rate of 

B.9 percent, DOE estimated the industry 

net present values (INPV) ofthe liquidimmersed and medium-voltage, drytype distribution transformer industries 

to be $609 million and $36 million, 

respectively, in 2006$. DOE expects the 

impact oftoday's standards on the INPV 

of the liquid-immersed transformer 

industry to be between an eight percent 

loss and an eight percent increase 

(-$47 million to $47 million). DOE 

expects the impact oftoday's standards 

on the INPV of the medium-voltage, drytype transformer industry to be between 

a 15 percent loss and a 9 percent loss 

(- $5.2 million to - $3.2 million). Based 

on DOE's analysis and interviews with 

distribution transformer manufacturers, 

DOE expects minimal plant closings or 

loss of employment as a result ofthe 

standards promulgated today. 

E. National Benefits 

The standards will provide significant 

benefits to the Nation. DOE estimates 

the standards will save approximately 

2.74 quads (quadrillion (1015) British 

thermal units (BTU)) of energy over 29 

years (2010-2038). This is equivalent to 

all the energy consumed by 27 million 

American households in a single year. 

By 2038, DOE expects the energy 

savings from the standards to eliminate 

the need for approximately six new 400-

megawatt combined-cycle gas turbine 

power plants. The total energy savings 

from the standard will result in 

cumulative greenhouse gas emission 

reductions of approximately 238 million 

tons (Mt) of carbon dioxide (C02) from 

a variety of generation sources. This is 

an amount equal to what would be 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58193

saved by removing 80 percent of all

light vehicles from U.S. roads for one

year.

The national net present value (NPV)

of the standards is $1.39 billion using a

seven percent discount rate and $7.8

billion using a three percent discount

rate, cumulative from 2010 to 2073 in

2006$. This is the estimated total value

of future energy savings minus the

estimated increased equipment costs,

discounted to the year 2007. The

benefits and costs of the standard can

also be expressed in terms of annualized

2006$ values over the forecast period

2010 through 2038.

Using a seven percent discount rate

for the annualized cost analysis, the cost

of the standard is $463 million per year

in increased equipment and installation

costs while the annualized benefits are

$602 million per year in reduced

equipment operating costs. Using a

three percent discount rate, the cost of

the standard is $460 million per year

while the benefits of today's standard

are $904 million per year.

F. Conclusion

DOE concludes that the benefits

(energy savings, transformer consumer

LCC savings, national NPV increases,

and emissions reductions) to the Nation

of the standards outweigh their costs

(loss of manufacturer INPV and

transformer consumer LCC increases for

some users of distribution transformers).

DOE concludes that today's standards

for liquid-immersed and mediumvoltage, dry-type transformers are

technologically feasible and

economically justified, and will result

in significant energy savings. At present,

both liquid-immersed and mediumvoltage, dry-type transformers that meet

the new standard levels are

commercially available.

II. Introduction

A. Authority

Title III of EPCA sets forth a variety

of provisions designed to improve

energy efficiency. Part B of Title III (42

U.S.C. 6291-6309) provides for the

Energy Conservation Program for

Consumer Products other than

Automobiles. Part C of Title III (42

U.S.C. 6311-6317) establishes a similar

program for "Certain Industrial

Equipment," and includes distribution

transformers, the subject of this

rulemaking. DOE publishes today's final

rule pursuant to Part C of Title III,

which provides for test procedures,

labeling, and energy conservation

standards for distribution transformers

and certain other products, and

authorizes DOE to require information

and reports from manufacturers. The

distribution transformer test procedure

appears in Title 10 Code of Federal

Regulations (CFR) Part 431, Subpart K,

Appendix A.

EPCA contains criteria for prescribing

new or amended energy conservation

standards. DOE must prescribe

standards only for those distribution

transformers for which DOE: (1) Has

determined that standards would be

technologically feasible and

economically justified and would result

in significant energy savings; and (2) has

prescribed test procedures. (42 U.S.C.

6317(a)(2)) Moreover, DOE analyzed

whether today's standards for

distribution transformers will achieve

the maximum improvement in energy

efficiency that is technologically

feasible and economically justified. (See

42 U.S.C. 6295(o)(2)(A), 6316(a), and

6317(a) and (c)) 2

In addition, DOE decided whether

each of today's standards for

distribution transformers is

economically justified, after receiving

comments on the proposed standards,

by determining whether the benefits of

each standard exceed its burdens by

considering, to the greatest extent

practicable, the following seven factors

that are set forth in 42 U.S.C.

6295(o)(2)(B)(i):

(1) The economic impact of the

standard on manufacturers and

consumers of the products subject to the

standard;

(2) The savings in operating costs

throughout the estimated average life of

products in the type (or class) compared

to any increase in the price, initial

charges, or maintenance expenses for

the covered products that are likely to

result from the imposition of the

standard;

(3) The total projected amount of

energy savings likely to result directly

from the imposition of the standard;

(4) Any lessening of the utility or the

performance of the products likely to

result from the imposition of the

standard;

(5) The impact of any lessening of

competition, as determined in writing

2 DOE notes that 42 U.S.C. 6317(c) requires that

DOE "take into consideration" the criteria

contained in section 325(n)." However, Section

325(n), "Petition For An Amended Standard," does

not contain the criteria for establishing new or

amended standards, rather as its title states, it

contains the criteria DOE must apply for

determining whether to grant petitions for

amending standards, filed by any person with the

Secretary of Energy. Section 325(o) entitled,

"Criteria for Prescribing New or Amended

Standards" contains the appropriate criteria that 42

U.S.C. 6317(c) apparently intends to reference. The

reference in section 42 U.S.C. 6317(c) to section

325(n) is an inadvertent error and DOE will apply

the criteria in section 325(o) instead.

by the Attorney General, that is likely to

result from the imposition of the

standard;

(6) The need for national energy

conservation; and

(7) Other factors the Secretary

considers relevant.

In developing today's energy

conservation standards, DOE also has

applied certain other provisions of 42

U.S.C. 6295. First, DOE would not

prescribe a standard for distribution

transformers if interested persons

established by a preponderance of the

evidence that the standard is likely to

result in the unavailability in the United

States of any type (or class) of this

equipment with performance

characteristics (including reliability),

features, sizes, capacities, and volumes

that are substantially the same as those

generally available at the time of the

Secretary's finding. (See 42 U.S.C.

6295(o)(4))

Second, DOE has applied 42 U.S.C.

6295(o)(2)(B)(iii), which establishes a

rebuttable presumption that a standard

is economically justified if the Secretary

finds that "the additional cost to the

consumer of purchasing a product

complying with an energy conservation

standard level will be less than three

times the value of the energy * * *

savings during the first year that the

consumer will receive as a result of the

standard, as calculated under the

applicable test procedure * * *." The

rebuttable presumption test is an

alternative path to establishing

economic justification.

Third, DOE may specify a different

standard level than that which applies

generally to a type or class of equipment

for any group of products "which have

the same function or intended use, if

* * * products within such group-(A)

consume a different kind of energy from

that consumed by other covered

products within such type (or class); or

(B) have a capacity or other

performance-related feature which other

products within such type (or class) do

not have and such feature justifies a

higher or lower standard" than applies

or will apply to the other products. (See

42 U.S.C. 6295(q)(1)) Any rule

prescribing such a standard includes an

explanation of the basis on which DOE

establishes such higher or lower level.

(See 42 U.S.C. 6295(q)(2))

Federal energy efficiency

requirements for equipment covered by

42 U.S.C. 6317 generally supersede

State laws or regulations concerning

energy conservation testing, labeling,

and standards. (42 U.S.C. 6297(a)-(c)

and 42 U.S.C. 6316(a)) DOE can,

however, grant waivers of preemption

for particular State laws or regulations,

 EE-RM/STD-00-550 COMMENT 194

Federal Register / Vol. 72, No. 197/ Friday, October 12, 2007/ Rules and Regulations 58193 

saved by removing BO percent of all 

light vehicles from U.S. roads for one 

year. 

The national net present value (NPV) 

ofthe standards is $1.39 billion using a 

seven percent discount rate and $7.B 

billion using a three percent discount 

rate, cumulative from 2010 to 2073 in 

2006$. This is the estimated total value 

of future energy savings minus the 

estimated increased equipment costs, 

discounted to the year 2007. The 

benefits and costs of the standard can 

also be expressed in terms of annualized 

2006$ values over the forecast period 

2010 through 203B. 

Using a seven percent discount rate 

for the annualized cost analysis, the cost 

of the standard is $463 million per year 

in increased equipment and installation 

costs while the annualized benefits are 

$602 million per year in reduced 

equipment operating costs. Using a 

three percent discount rate, the cost of 

the standard is $460 million per year 

while the benefits oftoday's stanp-ard 

are $904 million per year. 

F. Conclusion 

DOE concludes that the benefits 

(energy savings, transformer consumer 

LCC savings, national NPV increases, 

and emissions reductions) to the Nation 

of the standards outweigh their costs 

(loss of manufacturer INPV and 

transformer consumer LCC increases for 

some users of distribution transformers). 

DOE concludes that today's standards 

for liquid-immersed and mediumvoltage, dry-type transformers are 

technologically feasible and 

economically justified, and will result 

in significant energy savings. At present, 

both liquid-immersed and mediumvoltage, dry-type transformers that meet 

the new standard levels are 

commercially available. 

II. Introduction 

A. Authority 

Title III of EPCA sets forth a variety 

of provisions designed to improve 

energy efficiency. Part B of Title III (42 

U.S.C. 6291-6309) provides for the 

Energy Conservation Program for 

Consumer Products other than 

Automobiles. Part C of Title III (42 

U.S.c. 6311-6317) establishes a similar 

program for "Certain Industrial 

Equipment," and includes distribution 

transformers, the subject of this 

rulemaking. DOE publishes today's final 

rule pursuant to Part C of Title III, 

which provides for test procedures, 

labeling, and energy conservation 

standards for distribution transformers 

and certain other products, and 

authorizes DOE to require information 

and reports from manufacturers. The 

distribution transformer test procedure 

appears in Title 10 Code of Federal 

Regulations (CFR) Part 431, Subpart K, 

AppendixA. 

EPCA contains criteria for prescribing 

new or amended energy conservation 

standards. DOE must prescribe 

standards only for those distribution 

transformers for which DOE: (1) Has 

determined that standards would be 

technologically feasible and 

economically justified and would result 

in significant energy savings; and (2) has 

prescribed test procedures. (42 U.S.C. 

6317(a)(2)) Moreover, DOE analyzed 

whether today's standards for 

distribution transformers will achieve 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (See 

42 U.S.C. 6295(0)(2)(A), 6316(a), and 

6317(a) and (c)) 2 

In addition, DOE decided whether 

each of today's standards for 

distribution transformers is 

economically justified, after receiving 

comments on the proposed standards, 

by determining whether the benefits of 

each standard exceed its burdens by 

considering, to the greatest extent 

practicable, the following seven factors 

that are set forth in 42 U.S.C. 

6295(0)(2)(B)(i): 

(1) The economic impact ofthe 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

(2) The savings in operating costs 

throughout the estimated average life of 

products in the type (or class) compared 

to any increase in the price, initial 

charges, or maintenance expenses for 

the covered products that are likely to 

result from the imposition of the 

standard; 

(3) The total projected amount of 

energy savings likely to result directly 

from the imposition of the standard; 

(4) Any lessening of the utility or the 

performance of the products likely to 

result from the imposition of the 

standard; 

(5) The impact of any lessening of 

competition, as determined in writing 

2 DOE notes that 42 U.S.C. 6317(c) requires that 

DOE "take into consideration" the criteria 

contained in section 325(n)." However, Section 

325(n), "Petition For An Amended Standard," does 

not contain the criteria for establishing new or 

amended standards, rather as its title states, it 

contains the criteria DOE must apply for 

determining whether to grant petitions for 

amending standards, filed by any person with the 

Secretary of Energy. Section 325(0) entitled, 

"Criteria for Prescribing New or Amended 

Standards" contains the appropriate criteria that 42 

U.S.C. 6317(c) apparently intends to reference. The 

reference in section 42 U.S.C. 6317(c) to section 

325(n) is an inadvertent error and DOE will apply 

the criteria in section 325(0) instead. 

by the Attorney General, that is likely to 

result from the imposition of the 

standard; 

(6) The need for national energy 

conservation; and 

(7) Other factors the Secretary 

considers relevant. 

In developing today's energy 

conservation standards, DOE also has 

applied certain other provisions of 42 

U.S.C. 6295. First, DOE would not 

prescribe a standard for distribution 

transformers if interested persons 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any type (or class) of this 

equipment with performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available at the time of the 

Secretary's finding. (See 42 U.S.C. 

6295(0)(4)) 

Second, DOE has applied 42 U.S.C. 

6295(0)(2)(B)(iii), which establishes a 

rebuttable presumption that a standard 

is economically justified if the Secretary 

finds that "the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy * * * 

savings during the first year that the 

consumer will receive as a result of the 

standard, as calculated under the 

applicable test procedure * * *." The 

rebuttable presumption test is an 

alternative path to establishing 

economic justification. 

Third, DOE may specify a different 

standard level than that which applies 

generally to a type or class of equipment 

for any group of products "which have 

the same function or intended use, if 

* * * products within such group-fA) 

consume a different kind of energy from 

that consumed by other covered 

products within such type (or class); or 

(B) have a capacity or other 

performance-related feature which other 

products within such type (or class) do 

not have and such feature justifies a 

higher or lower standard" than applies 

or will apply to the other products. (See 

42 U.S.C. 6295(q)(1)) Any rule 

prescribing such a standard includes an 

explanation of the basis on which DOE 

establishes such higher or lower level. 

(See 42 U.S.C. 6295(q)(2)) 

Federal energy efficiency 

requirements for equipment covered by 

42 U.S.C. 6317 generally supersede 

State laws or regulations concerning 

energy conservation testing, labeling, 

and standards. (42 U.S.C. 6297(a)-(c) 

and 42 U.S.C. 6316(a)) DOE can, 

however, grant waivers of preemption 

for particular State laws or regulations, 
58194 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007/Rules and Regulations

in accordance with the procedures and

other provisions of section 327(d) of the

Act. (42 U.S.C. 6297(d) and 42 U.S.C.

6316(a))

B. Background

1. Current Standards

Presently, there are no national energy

conservation standards for the liquidimmersed and medium-voltage, drytype distribution transformers covered

by this rulemaking. However, on August

8, 2005, EPACT 2005 amended EPCA to

establish energy conservation standards

for low-voltage, dry-type distribution

transformers.3(EPACT 2005, Section

135(c); 42 U.S.C.6295(y)) The standard

levels for low-voltage dry-type

transformers appear in Table 11.1.

TABLE 11.1.-ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS

Single-phase Three-phase

kVA Eff iciency

0

kVA Efficiency

( /O) (0/O)

15 ...................................................................................... 97.7 15 ................................................................................... 97.0

25 ...................................................................................... 98.0 30 ..................................................................................... 97.5

37.5 ................................................................................... 98.2 45 .................................................................................... 97.7

50 ...................................................................................... 98.3 75 ..................................................................................... 98.0

75 ...................................................................................... 98.5 112.5 ................................................................................ 98.2

100 .................................................................................... 98.6 150 ........... ......... ............. ..............................::!................. 98.3

167 .................................................................................... 98.7 225 ................................................................................... 98.5

250 .................................................................................... 98.8 300 ................................................................................... 98.6

333 .................................................................................... 98.9 500 .......................................................::.r........................ 98.7

750 ................................................................................... 98.8

1000 ................................................................................. 98.9

Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A.

DOE incorporated these standards

into its regulations, along with the

standards for several other types of

products and equipment, in a Final Rule

published on October 18, 2005. 70 FR

60407, 60416-60417.

2. History of Standards Rulemaking for

Distribution Transformers

On October 22, 1997, the Secretary of

Energy published a notice stating that

DOE "has determined, based on the best

information currently available, that

energy conservation standards for

electric distribution transformers are

technologically feasible, economically

justified and would result in significant

energy savings." 62 FR 54809. The

Secretary based this determination, in

part, on analyses conducted by DOE's

Oak Ridge National Laboratory (ORNL).

The two reports containing these

analyses-Determination Analysis of

Energy Conservation Standards for

Distribution Transformers, ORNL-6847

(1996) and Supplement to the

"Determination Analysis," ORNL-6847

(1997)-are available on the DOE Web

site at: http://www.eere.energy.gov/

buildings/appliance-standards/

commercial/

distribution_transformers.h tml.

As a result of its positive

determination, in 2000 DOE developed

the Framework Document for

Distribution Transformer Energy

Conservation Standards Rulemaking,

which described the approaches DOE

anticipated using to develop energy

conservation standards for distribution

transformers. This document is also

available on the above-referenced DOE

website. On November 1, 2000, DOE

held a public meeting to discuss the

proposed analytical framework.

Manufacturers, trade associations,

electric utilities, energy efficiency

organizations, regulators, and other

interested parties attended this meeting.

Stakeholders also submitted written

comments on the Framework Document

addressing a range of issues.

In the first quarter of 2002, prior to

issuing its ANOPR, DOE met with

manufacturers of liquid-immersed and

dry-type distribution transformers to

solicit feedback on a draft engineering

analysis report DOE had published

containing a proposed analytical

structure for the engineering analysis

and some initial transformer designs. In

addition, DOE also posted draft

screening, engineering, and LCC

analysis reports on its website, and held

a live Webcast on the LCC analysis on

October 17, 2002.4 DOE received

comments from stakeholders on the

draft reports, and these comments

helped improve the quality of the

analyses included in the ANOPR for this

rulemaking, which was published on

July 29, 2004. 69 FR 45376. In

preparation for the September 28, 2004,

ANOPR public meeting, DOE held a

Webcast to acquaint stakeholders with

the analytical tools and with other

material DOE had published the

previous month.

On August 5, 2005, DOE posted its

draft NOPR analysis for the liquidimmersed and medium-voltage, drytype distribution transformers on its

Web site for early public review, along

with spreadsheets for several of these

analyses. This early publication of the

draft NOPR analysis included the draft

engineering analysis, LCC analysis,

national impact analysis, and

manufacturer impact analysis (MIA),

and the draft TSD chapters associated

with each of these analyses. The

purpose of publishing these four draft

analyses was to give stakeholders an

opportunity to review the analyses and

prepare recommendations for DOE as to

the appropriate standard levels.5

On April 27, 2006, DOE published its

Final Rule on Test Procedures for

3 EPACT 2005 established that the efficiency of a Transformers" published by the National Electrical 5 Copies of the four draft NOPR analyses

low-voltage dry-type distribution transformer Manufacturers Association (NEMA TP 1-2002). published in August 2005 are available on DOE's

manufactured on or after January 1, 2007 shall be 4 Copies of all the draft analyses published before Web site: http://www.eere.energy.gov/buildings/

the Class I Efficiency Levels for distribution the ANOPR are available on DOE's Web site: Y applianceStandards/commercial/distribution- transformers specified in Table 4-2 of the "Guide http://www.eere.energy.gov/buildings/ transformers-draft_analysis_nopr.html.

for Determining Energy Efficiency for Distribution appliance _standards/commercial/

distribution-transformers_draft_anal ysis.h tml.

 EE-RM/STD-00-550 COMMENT 194

58194 Federal Register IVoI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

in accordance with the procedures and 

other provisions of section 327(d) of the 

Act. (42 U.S.C. 6297(d) and 42 U.S.C. 

6316(a)) 

B. Background 

1. Current Standards 

Presently, there are no national energy 

conservation standards for the liquidimmersed and medium-voltage, drytype distribution transformers covered 

by this rulemaking. However, on August 

8,2005, EPACT 2005 amended EPCA to 

establish energy conservation standards 

for low-voltage, dry-type distribution 

transformers.3 (EPACT 2005, Section 

135(c); 42 U.S.C. 6295(y)) The standard 

levels for low-voltage dry-type 

transformers appear in Table ILl. 

TABLE 11.1.-ENERGY CONSERVATION STANDARDS FOR LOW-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS 

Single-phase 

kVA Efficiency 

(%) 

Three-phase 

kVA Efficiency 

(%) 

15 ..................................................................................... . 97.7 

98.0 

98.2 

98.3 

98.5 

98.6 

98.7 

98.8 

98.9 

15 .................................................................................... . 97.0 

97.5 

97.7 

98.0 

98.2 

98.3 

98.5 

98.6 

98.7 

98.8 

98.9 

25 ..................................................................................... . 30 .................................................................................... . 

37.5 ................................................................................. .. 45 .................................................................................... . 

50 .................................................................................... .. 75 .................................................................................... . 

75 .................................................................................... .. 112.5 .............................................................................. .. 

100 .................................................................................. .. 150 .................................................................................. . 

167 .................................................................................. .. 225 .................................................................................. . 

250 ................................................................................... . 300 .................................................................................. . 

333 .................................................................................. .. 500 .................................................................................. . 

750 .................................................................................. . 

1000 ................................................................................ . 

Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A. 

DOE incorporated these standards 

into its regulations, along with the 

standards for several other types of 

products and equipment, in a Final Rule 

published on October 18, 2005. 70 FR 

60407,60416-60417. 

2. History of Standards Rulemaking for 

Distribution Transformers 

On October 22, 1997, the Secretary of 

Energy published a notice stating that 

DOE "has determined, based on the best 

information currently available, that 

energy conservation standards for 

electric distribution transformers are 

technologically feasible, economically 

justified and would result in significant 

energy savings." 62 FR 54809. The 

Secretary based this determination, in 

part, on analyses conducted by DOE's 

Oak Ridge National Laboratory (ORNL). 

The two reports containing these 

analyses-Determination Analysis of 

Energy Conservation Standards for 

Distribution Transformers, ORNL-6847 

(1996) and Supplement to the 

"Determination Analysis," ORNL-6847 

(1997)-are available on the DOE Web 

site at: http://www.eere.energy.gov/ 

buildings/appliance_standards/ 

commercial/ 

distribution_transformers.html. 

3 EP ACT 2005 established that the efficiency of a 

low-voltage dry-type distribution transformer 

manufactured on or after January 1, 2007 shall be 

the Class I Efficiency Levels for distribution 

transformers specified in Table 4-2 of the "Guide 

for Determining Energy Efficiency for Distribution 

As a result of its positive 

determination, in 2000 DOE developed 

the Framework Document for 

Distribution Transformer Energy 

Conservation Standards Rulemaking, 

which described the approaches DOE 

anticipated using to develop energy 

conservation standards for distribution 

transformers. This document is also 

available on the above-referenced DOE 

website. On November 1, 2000, DOE 

held a public meeting to discuss the 

proposed analytical framework. 

Manufacturers, trade associations, 

electric utilities, energy efficiency 

organizations, regulators, and other 

interested parties attended this meeting. 

Stakeholders also submitted written 

comments on the Framework Document 

addressing a range of issues. 

In the first quarter of 2002, prior to 

issuing its ANOPR, DOE met with 

manufacturers of liquid-immersed and 

dry-type distribution transformers to 

solicit feedback on a draft engineering 

analysis report DOE had published 

containing a proposed analytical 

structure for the engineering analysis 

and some initial transformer designs. In 

addition, DOE also posted draft 

screening, engineering, and LCC 

analysis reports on its website, and held 

a live Web cast on the LCC analysis on 

Transformers" published by the National Electrical 

Manufacturers Association (NEMA TP 1-2002). 

4 Copies of all the draft analyses published before 

the ANOPR are available on DOE's Web site: 

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

appliance_standards/commercial/ 

distribution_transformers_draft_analysis.html. 

October 17, 2002.4 DOE received 

comments from stakeholders on the 

draft reports, and these comments 

helped improve the quality ofthe 

analyses included in the ANOPR for this 

rulemaking, which was published on 

July 29, 2004. 69 FR 45376. In 

preparation for the September 28, 2004, 

ANOPR public meeting, DOE held a 

Webcast to acquaint stakeholders with 

the analytical tools and with other 

material DOE had published the 

previous month. 

On August 5,2005, DOE posted its 

draft NOPR analysis for the liquidimmersed and medium-voltage, drytype distribution transformers on its 

Web site for early public review, along 

with spreadsheets for several of these 

analyses. This early publication of the 

draft NOPR analysis included the draft 

engineering analysis, LCC analysis, 

national impact analysis, and 

manufacturer impact analysis (MIA), 

and the draft TSD chapters associated 

with each of these analyses. The 

purpose of publishing these four draft 

analyses was to give stakeholders an 

opportunity to review the analyses and 

prepare recommendations for DOE as to 

the appropriate standard levels. 5 

On April 27, 2006, DOE published its 

Final Rule on Test Procedures for 

5 Copies of the four draft NOPR analyses 

published in August 2005 are available on DOE's 

Web site: http://www.eere.energy.gov/buildings/ 

appliance_standards/commercialldistribution_ 

transformers_draft_analysis_nopr.html. 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58195

Distribution Transformers. In addition

to establishing the procedure for

sampling and testing distribution

transformers so that manufacturers can

make representations as to their

efficiency as well as establish that they

comply with Federal standards, this

final rule also contained enforcement

provisions, outlining the procedure the

Department would follow should it

initiate an enforcement action against a

manufacturer. 71 FR 24972; 10 CFR

431.198.

On July 25, 2006, DOE published a

NOPR proposing compliance

certification procedures for a range of

consumer products and commercial and

industrial equipment, including

distribution transformers. This NOPR

included both a compliance statement

and a certification report for distribution

transformer manufacturers. 71 FR

42178. DOE is currently preparing its

final rule for that proceeding, which

will establish requirements around the

compliance statement and certification

report for distribution transformers and

other products and equipment.

On August 4, 2006, DOE published

the distribution transformer energy

conservation standards NOPR. 71 FR

44355. In conjunction with the NOPR,

DOE also published on its Web site the

complete TSD for the proposed rule,

which incorporated the final analyses

DOE conducted and technical

documentation for each analysis. The

TSD included the engineering analysis

spreadsheets, the LCC spreadsheet, the

national impact analysis spreadsheet,

and the MIA spreadsheet-all of which

are available on DOE's Web site.6 Table

II.2 presents the energy conservation

standard levels DOE proposed in the

NOPR for liquid-immersed distribution

transformers, and Table 11.3 presents the

energy conservation standard levels

DOE proposed for medium-voltage, drytype distribution transformers.

TABLE II.2.-NOPR PROPOSED ENERGY CONSERVATION STANDARD LEVELS FOR LIQUID-IMMERSED DISTRIBUTION

TRANSFORMERS

Single-phase Three-phase

kVA Efficiency kVA Efficiency

10 ..................................................................................... 98.40 15 .. ................................................................................... 98.36

15 ....................................................................................... 98.56 30 ..................................................................................... 98.62

25 ...................................................................................... 98.73 45 ..................................................................................... 98.76

37.5 ................................................................................... 98.85 75 ..................................................................................... 98.91

50 ...................................................................................... 98. 90 112.5 ....... ......................................................................... 99.01

75 ...................................................................................... 99.04 150 ................................................................................... 99.08

100 .................................................................................... 99.10 225 ................................................................................... 99.17

167 .................................................................................... 99.21 300 ................................................................................... 99.23

250 .................................................................................... 99.26 500 ................................................................................... 99.32

333 .................................................................................... 99.31 750 ................................................................................... 99.24

500 .................................................................................... 99.38 1000 ....... .......................................................................... 99.29

667 .................................................................................... 99.42 1500 ................................................................................. 99.36

833 .................................................................................... 99.45 2000 ................................................................................. 99.40

2500 .......... ....................................................................... 99.44

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A.

TABLE II.3.-NOPR PROPOSED ENERGY CONSERVATION STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE

DISTRIBUTION TRANSFORMERS

Single-phase Three-phase

BIL

kVA

20-45 kV

Efficiency

N

46-95 kV

Efficiency

(%)

?96 kV

Efficiency

(%)

BIL

kVA

20-45 kV

Efficiency (%)

46-95 kV

fficiency

(%)

?96 kV

Efficiency

(%)

15 ...................................... 98.10 97.86 .................... 15 ..................................... 97.50 97.19 ....................

25 ...................................... 98.33 98.12 .................... 30 ..................................... 97.90 97.63 ................. ...

37.5 ................................... 98.49 98.30 .................... 45 ..................................... 98.10 97.86 ....................

50 ...................................... 98.60 98.42 .................... 75 ..................................... 98.33 98.12 ....................

75 ...................................... 98.73 98.57 98.53 112.5 ................................ 98.49 98.30 ....................

100 .................................... 98.82 98.67 98.63 150 ................................... 98.60 98.42 ....................

167 .................................... 98.96 98.83 98.80 225 ................................... 98.73 98.57 98.53

250 .................................... 99.07 98.95 98.91 300 ................................... 98.82 98.67 98.63

333 .................................... 99.14 99.03 98.99 500 ................................... 98.96 98.83 98.80

500 .................................... 99.22 99.12 99.09 750 ................................... 99.07 98.95 98.91

667 .................................... 99.27 99.18 99.15 1000 ................................. 99.14 99.03 98.99

833 .................................... 99.31 99.23 99.20 1500 ................................. 99.22 99.12 99.09

2000 ................................. 99.27 99.18 99.15

2500 ................................. 99.31 99.23 99.20

Note : BIL means basic impulse insulation level.

Note : All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A.

6The Web site address for all the spreadsheets available at: http://www.eere.energy.gov/buildings/ appliancestandards/commercial/distribution- developed for this rulemaking proceeding are transformers_draft_analysis_nopr.html.

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58195 

Distribution Transformers. In addition 

to establishing the procedure for 

sampling and testing distribution 

transformers so that manufacturers can 

make representations as to their 

efficiency as well as establish that they 

comply with Federal standards, this 

final rule also contained enforcement 

provisions, outlining the procedure the 

Department would follow should it 

initiate an enforcement action against a 

manufacturer. 71 FR 24972; 10 CFR 

431.198. 

On July 25, 2006, DOE published a 

NOPR proposing compliance 

certification procedures for a range of 

consumer products and commercial and 

industrial equipment, including 

distribution transformers. This NOPR 

included both a compliance statement 

and a certification report for distribution 

transformer manufacturers. 71 FR 

42178. DOE is currently preparing its 

final rule for that proceeding, which 

will establish requirements around the 

compliance statement and certification 

report for distribution transformers and 

other products and equipment. 

On August 4, 2006, DOE published 

the distribution transformer energy 

conservation standards NOPR. 71 FR 

44355. In conjunction with the NOPR, 

DOE also published on its Web site the 

complete TSD for the proposed rule, 

which incorporated the final analyses 

DOE conducted and technical 

documentation for each analysis. The 

TSD included the engineering analysis 

spreadsheets, the LCC spreadsheet, the 

national impact analysis spreadsheet, 

and the MIA spreadsheet-all of which 

are available on DOE's Web site. 6 Table 

11.2 presents the energy conservation 

standard levels DOE proposed in the 

NOPR for liquid-immersed distribution 

transformers, and Table II.3 presents the 

energy conservation standard levels 

DOE proposed for medium-voltage, drytype distribution transformers. 

TABLE 11.2.-NOPR PROPOSED ENERGY CONSERVATION STANDARD LEVELS FOR liQUID-IMMERSED DISTRIBUTION 

TRANSFORMERS 

Single-phase 

kVA 

~~ ::::::::::::::::::::::::::::::::::::::::::::::::::::::::~::::::::::::::::::::::::::::: 25 .................................................................................... .. 

37.5 ................................................................................. .. 

50 .................................................................................... .. 

75 .................................................................................... .. 

100 ................................................................................... . 

167 ................................................................................... . 

250 ................................................................................... . 

333 ................................................................................... . 

500 ................................................................................... . 

667 ................................................................................... . 

833 ................................................................................... . 

Efficiency 

(%) 

98.40 

98.56 

98.73 

98.85 

98.90 

99.04 

99.10 

99.21 

99.26 

99.31 

99.38 

99.42 

99.45 

Three-phase 

kVA 

15 .................................................................................... . 

30 .................................................................................... . 

45 .................................................................................... . 

75 .................................................................................... . 

112.5 ............................................................................... . 

150 .................................................................................. . 

225 .................................................................................. . 

300 .................................................................................. . 

500 .................................................................................. . 

750 ................................................................................. .. 

1000 ................................................................................ . 

1500 ............................................................................... .. 

2000 ................................................................................ . 

2500 ................................................................................ . 

Efficiency 

(%) 

98.36 

98.62 

98.76 

98.91 

99.01 

99.08 

99.17 

99.23 

99.32 

99.24 

99.29 

99.36 

99.40 

99.44 

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A. 

TABLE 11.3.-NOPR PROPOSED ENERGY CONSERVATION STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE 

DISTRIBUTION TRANSFORMERS 

Bil 

kVA 

15 .................................... .. 

25 ..................................... . 

37.5 .................................. . 

50 .................................... .. 

75 .................................... .. 

100 .................................. .. 

167-.................................. .. 

250 .................................. .. 

333 .................................. .. 

500 .................................. .. 

667 .................................. .. 

833 .................................. .. 

Single-phase 

20-45 kV 

Efficiency 

(%) 

98.10 

98.33 

98.49 

98.60 

98.73 

98.82 

98.96 

99.07 

99.14 

99.22 

99.27 

99.31 

46-95 kV 

Efficiency 

(%) 

97.86 

98.12 

98.30 

98.42 

98.57 

98.67 

98.83 

98.95 

99.03 

99.12 

99.18 

99.23 

Note: Bil means basic impulse insulation level. 

2!96 kV 

Efficiency 

(%) 

98.53 

98.63 

98.80 

98.91 

98.99 

99.09 

99.15 

99.20 

Bil 

kVA 

15 .................................... . 

30 .................................... . 

45 .................................... . 

75 .................................... . 

112.5 .............................. .. 

150 .................................. . 

225 .................................. . 

300 .................................. . 

500 .................................. . 

750 .................................. . 

1000 ................................ . 

1500 ................................ . 

2000 ................................ . 

2500 ................................ . 

Three-phase 

20-45 kV 46-95 kV 2!96 kV 

Efficiency fficiency Efficiency 

(%) (%) (%) 

97.50 97.19 . ................... 

97.90 97.63 . ................... 

98.10 97.86 . ................... 

98.33 98.12 . ................... 

98.49 98.30 . ................... 

98.60 98.42 . ................... 

98.73 98.57 98.53 

98.82 98.67 98.63 

98.96 98.83 98.80 

99.07 98.95 98.91 

99.14 99.03 98.99 

99.22 99.12 99.09 

99.27 99.18 99.15 

99.31 99.23 99.20 

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE test procedure. 10 CFR Part 431, Subpart K, Appendix A. 

6 The Web site address for all the spreadsheets 

developed for this rulemaking proceeding are 

available at: http://www.eere.energy.gov/buildings/ appliance_standardslcammercial/distributian_ 

transformers_draft_analysis_nopr.html. 
58196 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 / Rules and Regulations

In the NOPR, DOE identified seven

issues on which it was particularly

interested in receiving comments and

views of interested parties. 71 FR 44406.

On February 9, 2007, DOE issued a

notice of data availability and request

for comments (NODA). 72 FR 6186. DOE

published this notice in response to

stakeholders who had commented, in

response to the NOPR, that DOE's

proposed standards might prevent or

render impractical the replacement of

distribution transformers in certain

space-constrained (e.g., vault)

installations. In the NODA, DOE sought

comment on whether it should include

in the LCC analysis potential costs

related to size constraints of

transformers installed in vaults. In the

NODA, DOE outlined different

approaches as to how it might account

for additional installation costs for these

space-constrained applications. In

addition, DOE also published the NODA

in response to certain stakeholders who

commented that DOE should address

the consistency issues for liquidimmersed transformers in the table of

efficiency standards. DOE also

requested comments on linking

efficiency levels for three-phase liquidimmersed units with those of singlephase units. Specifically, in the NODA

DOE discussed how it was inclined to

consider a final standard that is based

on efficiency levels that are based on

TSL 2 and TSL 3 for three-phase units

and TSLs 2, 3 and 4 for single-phase

units. 72 FR 6189. Based on comments

on the August 2006 proposed rule and

the February 2007, NODA, DOE created

new TSLs, including TSL B, which is,

generally speaking, a combination of

TSL 2 for three-phase units and TSL 3

for single-phase units. DOE received

more than 20 written comments in

response to this NODA on both the

space constraint issue and how to set

final efficiency ratings, which are

discussed in the following sections of

this final rule.

In response to the NODA, Cooper

Power Systems commented that they

were concerned that the NODA did not

indicate any specifics regarding the

proposed TSL levels for any design

lines. Cooper states that DOE needs to

publish a new proposed table that

represents the mix of efficiency levels

being considered in order for interested

parties to provide solid feedback on the

impact of these proposals. (Cooper, No.

175 at p. 1) 7 ABB provided a similar

7A notation in the form "Cooper, No. 175 at p.

1, 'identifies a written comment DOE received and

included in the docket for this rulemaking. This

particular notation refers to a comment (a) by

Cooper Power Systems (Cooper), (b) in document

number 175 in the docket of this rulemaking

comment, expressing that they disagree

with DOE's action of indicating that it

may adopt a new mix of TSLs derived

from a combination of TSLs 2, 3 and 4

as the final standard level without

specifying exactly which combination is

being considered. (ABB, No. 167 at p. 1)

DOE appreciates these two comments,

but does not agree with the stakeholders

criticism of DOE's actions and the

rulemaking process for the following

reasons. First, the NODA provided

notice to stakeholders that DOE would

consider a combination of TSLs for

liquid-immersed distribution

transformers for the final rule.

Accordingly, stakeholders have been

given an opportunity to review the

existing proposed standard levels and

published NOPR analysis, and provide

comments to DOE as to the combination

of efficiency values they believe are the

most justified, and why. Second, DOE

did not consider simply one new TSL in

today's final rule, but instead created

four new TSLs (TSL A, B, C, and D)

based on combinations of efficiency

values from previously proposed TSL 2,

3 and 4. These four combinations of

TSLs enabled DOE to consider several

different efficiency values for liquidimmersed transformers for the final rule,

decreasing the burdens associated with

inconsistencies between three-phase

and single-phase units and eliminating

the discontinuities of efficiency values

between design lines. In addition, the

four combinations of TSLs attempt to

maximize national and consumer

benefits and select appropriate, costjustified, efficiency levels across all the

design lines. Third, all of the actual

efficiency ratings considered in the four

new TSL combinations developed for

today's final rule were previously

published in DOE's August 2006 NOPR.

For all of these reasons, DOE believes

the NODA provides stakeholders

sufficient notice and opportunity for

comment concerning the standard level

adopted by today's final rule.

III. General Discussion

A. Test Procedures

Section 7(c) of the Process Rule

(Procedures for Consideration of New or

Revised Energy Conservation Standards

for Consumer Products, Title 10 CFR

part 430, Subpart C, Appendix A; 61 FR

36974) e indicates that DOE will issue a

final test procedure, if one is needed,

(maintained in the Resource Room of the Building

Technologies Program), and (c) appearing on page

1 of document number 175.

The Process Rule provides guidance on how

DOE conducts its energy conservation standards

rulemakings, including the analytical steps and

sequencing of rulemaking stages (such as test

procedures and energy conservation standards).

prior to issuing a proposed rule for

energy conservation standards. DOE

published its test procedure for

distribution transformers as a final rule

on April 27, 2006. 71 FR 24972.

B. Technological Feasibility

1. General

There are distribution transformers in

the market at all of the efficiency levels

prescribed in today's final rule.

Therefore, DOE believes all of the

efficiency levels adopted by today's

final rule are technologically feasible.

2. Maximum Technologically Feasible

Levels

Applying the requirements of 42

U.S.C. 6295(p)(2), and as discussed in

the proposed rule, DOE determined "the

maximum improvement in energy

efficiency or maximum reduction in

energy use that is technologically

feasible." 71 FR 44362. DOE determined

the "max-tech" efficiency levels in the

engineering analysis (see Chapter 5 in

the TSD) and then used these highest

efficiency designs to establish the maxtech levels for the LCC analysis (see

Chapter 8 in the TSD). DOE then scaled

these max-tech efficiencies to the other

kVA ratings within a given design line,

establishing max-tech efficiencies for all

the distribution transformer kVA

ratings.

C. Energy Savings

DOE forecasted energy savings in its

national energy savings (NES) analysis,

through the use of an NES spreadsheet

tool, as discussed in the proposed rule.

71 FR 44361, 44363, 44380-44381,

44384, 44393, 44401.

One of the criteria that govern DOE's

adoption of standards for distribution

transformers is that the standard must

result in "significant" energy savings.

(42 U.S.C. 6317(a)) While EPCA does

not define the term "significant," a U.S.

Court of Appeals, in Natural Resources

Defense Council v. Herrington, 768 F.2d

1355, 1373 (D.C. Cir. 1985), indicated

that Congress intended "significant"

energy savings in section 325 of EPCA

to be savings that were not "genuinely

trivial." The energy savings for the

standard levels DOE is adopting today

are nontrivial, and therefore DOE

considers them "significant" as required

by 42 U.S.C. 6317(a).

D. Economic Justification

As noted earlier, EPCA provides

seven factors for DOE to evaluate in

determining whether an energy

conservation standard for distribution

transformers is economically justified.

The following discussion explains how

DOE has addressed each of these seven

 EE-RM/STD-00-550 COMMENT 194

58196 Federal Register IVoI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

In the NOPR, DOE identified seven 

issues on which it was particularly 

interested in receiving comments and 

views of interested parties. 71 FR 44406. 

On February 9, 2007, DOE issued a 

notice of data availability and request 

for comments (NODA). 72 FR 6186. DOE 

published this notice in response to 

stakeholders who had commented, in 

response to the NOPR, that DOE's 

proposed standards might prevent or 

render impractical the replacement of 

distribution transformers in certain 

space-constrained (e.g., vault) 

installations. In the NODA, DOE sought 

comment on whether it should include 

in the LCC analysis potential costs 

related to size constraints of 

transformers installed in vaults. In the 

NODA, DOE outlined different 

approaches as to how it might account 

for additional installation costs for these 

space-constrained applications. In 

addition, DOE also published the NODA 

in response to certain stakeholders who 

commented that DOE should address 

the consistency issues for liquidimmersed transformers in the table of 

efficiency standards. DOE also 

requested comments on linking 

efficiency levels for three-phase liquidimmersed units with those of singlephase units. Specifically, in the NODA 

DOE discussed how it was inclined to 

consider a final standard that is based 

on efficiency levels that are based on 

TSL 2 and TSL 3 for three-phase units 

and TSLs 2, 3 and 4 for single-phase 

units. 72 FR 6189. Based on comments 

on the August 2006 proposed rule and 

the February 2007, NODA, DOE created 

new TSLs, including TSL B, which is, 

generally speaking, a combination of 

TSL 2 for three-phase units and TSL 3 

for single-phase units. DOE received 

more than 20 written comments in 

response to this NODA on both the 

space constraint issue and how to set 

final efficiency ratings, which are 

discussed in the following sections of 

this final rule. 

In response to the NODA, Cooper 

Power Systems commented that they 

were concerned that the NODA did not 

indicate any specifics regarding the 

proposed TSL levels for any design 

lines. Cooper states that DOE needs to 

publish a new proposed table that 

represents the mix of efficiency levels 

being considered in order for interested 

parties to provide solid feedback on the 

impact ofthese proposals. (Cooper, No. 

175 at p. 1) 7 ABB provided a similar 

7 A notation in the form "Cooper. No. 175 at p. 

1" identifies a written comment DOE received and 

included in the docket for this rulemaking. This 

particular notation refers to a comment (a) by 

Cooper Power Systems (Cooper), (b) in document 

number 175 in the docket ofthis rulemaking 

comment, expressing that they disagree 

with DOE's action of indicating that it 

may adopt a new mix of TSLs derived 

from a combination of TSLs 2, 3 and 4 

as the final standard level without 

specifying exactly which combination is 

being considered. (ABB, No. 167 at p. 1) 

DOE appreciates these two comments, 

but does not agree with the stakeholders 

criticism of DOE's actions and the 

rulemaking process for the following 

reasons. First, the NODA provided 

notice to stakeholders that DOE would 

consider a combination of TSLs for 

liquid-immersed distribution 

transformers for the final rule. 

Accordingly, stakeholders have been 

given an opportunity to review the 

existing proposed standard levels and 

published NOPR analysis, and provide 

comments to DOE as to the combination 

of efficiency values they believe are the 

most justified, and why. Second, DOE 

did not consider simply one new TSL in 

today's final rule, but instead created 

four new TSLs (TSL A, B, C, and D) 

based on combinations of efficiency 

values from previously proposed TSL 2, 

3 and 4. These four combinations of 

TSLs enabled DOE to consider several 

different efficiency values for liquidimmersed transformers for the final rule, 

decreasing the burdens associated with 

inconsistencies between three-phase 

and single-phase units and eliminating 

the discontinuities of efficiency values 

between design lines. In addition, the 

four combinations of TSLs attempt to 

maximize national and consumer 

benefits and select appropriate, costjustified, efficiency levels across all the 

design lines. Third, all ofthe actual 

efficiency ratings considered in the four 

new TSL combinations developed for 

today's final rule were previously 

published in DOE's August 2006 NOPR. 

For all ofthese reasons, DOE believes 

the NODA provides stakeholders 

sufficient notice and opportunity for 

comment concerning the standard level 

adopted by today's final rule. 

III. General Discussion 

A. Test Procedures 

Section 7(c) ofthe Process Rule 

(Procedures for Consideration of New or 

Revised Energy Conservation Standards 

for Consumer Products, Title 10 CFR 

part 430, Subpart C, Appendix A; 61 FR 

36974) 8 indicates that DOE will issue a 

final test procedure, if one is needed, 

(maintained in the Resource Room of the Building 

Technologies Program), and (c) appearing on page 

1 of document number 175. 

B The Process Rule provides guidance on how 

DOE conducts its energy conservation standards 

rulemakings. including the analytical steps and 

sequencing of rulemaking stages (such as test 

procedures and energy conservation standards). 

prior to issuing a proposed rule for 

energy conservation standards. DOE 

published its test procedure for 

distribution transformers as a final rule 

on April 27, 2006. 71 FR 24972. 

B. Technological Feasibility 

1. General 

There are distribution transformers in 

the market at all of the efficiency levels 

prescribed in today's final rule. 

Therefore, DOE believes all of the 

efficiency levels adopted by today's 

final rule are technologically feasible. 

2. MaximumTechnologically Feasible 

Levels 

Applying tlle requirements of 42 

U.S.C. 6295(p)(2), and as discussed in 

the proposed rule, DOE determined "the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use tllat is technologically 

feasible." 71 FR 44362. DOE determined 

the "max-tech" efficiency levels in the 

engineering analysis (see Chapter 5 in 

the TSD) and tllen used these highest 

efficiency designs to establish the maxtech levels for the LCC analysis (see 

Chapter 8 in the TSD). DOE then scaled 

these max-tech efficiencies to the other 

kVA ratings within a given design line, 

establishing max-tech efficiencies for all 

the distribution transformer kVA 

ratings. 

C. Energy Savings 

DOE forecasted energy savings in its 

national energy savings (NES) analysis, 

through the use of an NES spreadsheet 

tool, as discussed in tlle proposed rule. 

71 FR 44361, 44363, 44380-44381, 

44384,44393,44401. 

One of the criteria that govern DOE's 

adoption of standards for distribution 

transformers is that the standard must 

result in "significant" energy savings. 

(42 U.S.C. 6317(a)) While EPCA does 

not define the term "significant," a U.S. 

Court of Appeals, in Natural Resources 

Defense Council v. Herrington, 768 F.2d 

1355, 1373 (D.C. Cir. 1985), indicated 

that Congress intended "significant" 

energy savings in section 325 of EPCA 

to be savings that were not "genuinely 

trivial." The energy savings for the 

standard levels DOE is adopting today 

are nontrivial, and therefore DOE 

considers them "significant" as required 

by 42 U.S.C. 6317(a). 

D. Economic Justification 

As noted earlier, EPCA provides 

seven factors for DOE to evaluate in 

determining whether an energy 

conservation standard for distribution 

transformers is economically justified. 

The following discussion explains how 

DOE has addressed each of these seven 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

factors in this rulemaking. (42 U.S.C.

6295(o)(2)(B)(i))

1. Economic Impact on Commercial

Consumers and Manufacturers

DOE considered the economic impact

of the standard on commercial

consumers and manufacturers, as

discussed in the proposed rule. 71 FR

44361, 44363-44364, 44367, 44376-

44277, 44379, 44381-44384, 44385-

44389, 44390-44393, 44394, 44396-

44400, 44401-44404. DOE updated the

analyses to incorporate more recent

material price information. One

significant change to the MIA was the

inclusion of lower conversion-capital

expenditure estimates for those trial

standard levels (TSLs) which require or

otherwise trigger manufacturers to

switch to amorphous core technology.

DOE based the revised estimates on

information provided by industry

experts (see Section V.A.3 below).

2. Life-Cycle Costs

DOE considered life-cycle cost§ of

distribution transformers, as discussed

in the proposed rule. 71 FR 44362-

44363,44371-44376,44378-44379,

44385-44390,44395-44396. It

calculated the sum of the purchase price

and the operating expense-discounted

over the lifetime of the equipment-to

estimate the range in LCC benefits that

commercial consumers would expect to

achieve due to the new standards. DOE

also examined the economic

justification for its proposed standards

for distribution transformers by

applying section 325(o)(2)(B)(iii) of

EPCA (42 U.S.C. 6295(o)(2)(B)(iii)),

which provides that there is a rebuttable

presumption that an energy

conservation standard is economically

justified if the increased installed cost

for a product that meets the standard is

less than three times the value of the

first-year energy savings resulting from

the standard, as calculated under the

applicable DOE test procedure. 71 FR

44388-44389. Some of the standard

levels DOE is adopting today satisfy the

rebuttable presumption test but others

do not. However, DOE determined all of

them to be economically justified based

on the above-described analyses.

3. Energy Savings

While significant conservation of

energy is a separate statutory

requirement for imposing an energy

conservation standard, in determining

the economic justification of a standard,

DOE considers the total projected

energy savings that are expected to

result directly from the standard. (See

42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE used

the NES spreadsheet results in its

consideration of total projected savings.

71 FR 44361, 44363, 44380-44381,

44384, 44393, 44401.

4. Lessening of Utility or Performance of

Equipment

In selecting today's standard levels,

DOE avoided new standards for

distribution transformers that lessen the

utility or performance of the equipment

under consideration in this rulemaking.

(See 42 U.S.C. 6295(o)(2)(B)(i)(IV)) DOE

sought to capture in the economic

analysis the impact of any increase in

transformer size or weight associated

with efficiency improvements.

Specifically when selecting the new

standards, DOE considered the

installation costs for pole-mounted

transformers and vault transformers that

may be incurred with larger, heavier,

more efficient transformers. 71 FR

44363, 44394. In addition, DOE

recognizes that underground mining

transformers are subject to unique and

extreme dimensional constraints which

impact the efficiency and performance

of these distribution transformers.

Therefore, DOE is establishing a

separate product class for underground

mining transformers. In the future, DOE

may consider establishing energy

conservation standards for underground

mining transformers. DOE is not setting

a standard for underground mining

transformers in today's final rule, rather

it is reserving a section and intends to

develop analysis that would establish an

appropriate energy conservation

standard for underground mining

transformers in the future. Finally,

when selecting today's standard, DOE

carefully reviewed the results of an

engineering sensitivity analysis on

primary winding voltages. This

sensitivity analysis considers higher

primary voltages than those used in the

representative units studied in the

engineering analysis. This sensitivity

analysis enables DOE to evaluate the

impact on cost and efficiency associated

with the final rule TSLs. (see Section

V.A.1.a in this notice, and TSD

Appendix 5D) Thus, the analysis in

today's final rule takes into

consideration the additional costs

associated with space-constrained polemounted and vault transformers, and

ensures that higher primary voltages are

not eliminated from the market. Based

on DOE's engineering analysis, DOE

concludes that more efficient polemounted and vault transformers are

technologically feasible. However, in

some instances, DOE believes that

transformer poles and vaults may need

to be replaced to accommodate the more

efficient transformers as a result of

today's final rule. DOE included

58197

increased installation costs of such polemounted and vault transformer in its

analysis. In this way, DOE has captured

the costs and benefits of replacement

pole-mounted and vault transformers.

Details of pole and vault replacement

cost estimation methods are provided in

sections 7.3.1 and 7.3.5 of TSD Chapter

7.

5. Impact of Any Lessening of

Competition

DOE considers any lessening of

competition that is likely to result from

standards. Accordingly, as discussed in

the proposed rule, 71 FR 44363-44364,

44394, at DOE's request, the Department

of Justice (DOJ) reviewed the proposed

standard level (i.e., the NOPR) and

transmitted to the Secretary a written

determination of the impact of any

lessening of competition likely to result,

together with an analysis of the nature

and extent of such impact. (See 42

U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))

DOE addressed the issues raised in the

Attorney General's response to the

NOPR, as discussed in section VI.C.5 of

today's final rule. The letter DOJ

submitted to DOE in response to the

NOPR appears at the end of this notice

of final rulemaking.

Today's final rule, which follows

publication of the NODA, adopts a

standard level that is higher than the

standard proposed in the NOPR for

certain liquid-immersed distribution

transformers. DOJ was provided draft

copies of the notice of final rulemaking

and the final rule TSD for review. The

Attorney General did not express any

concerns about impacts associated with

today's final rule. A copy of Attorney

General's letter to DOE in response to

the final rule also appears at the end of

this notice of final rulemaking.

6. Need of the Nation To Conserve

Energy

The Secretary recognizes that energy

conservation benefits the Nation in

several important ways. The nonmonetary benefits of a standard are

likely to be reflected in improvements to

the security of the Nation's energy

system. In addition, reductions in the

overall demand for energy will result in

reduced costs for maintaining reliability

of the Nation's electricity system.

Finally, today's standards will likely

result in reductions in greenhouse gas

emissions. As discussed in the proposed

rule, DOE has considered these factors

in adopting today's standards. 71 FR

44364,44384,44394-44395,44398-

44400. (See 42 U.S.C.

6295(o)(2)(B)(i)(VI))

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58197 

factors in this rulemaking. (42 U.S.C. 

6295(0)(2)(B)(i)) 

1. Economic Impact on Commercial 

Consumers and Manufacturers 

DOE considered the economic impact 

of the standard on commercial 

consumers and manufacturers, as 

discussed in the proposed rule. 71 FR 

44361,44363-44364,44367,44376-

44277,44379,44381-44384,44385-

44389,44390-44393,44394,44396-

44400,44401-44404. DOE updated the 

analyses to incorporate more recent 

material price information. One 

significant change to the MIA was the 

inclusion of lower conversion-capital 

expenditure estimates for those trial 

standard levels (TSLs) which require or 

otherwise trigger manufacturers to 

switch to amorphous core technology. 

DOE based the revised estimates on 

information provided by industry 

experts (see Section V.A.3 below). 

2. Life-Cycle Costs 

DOE considered life-cycle costs of 

distribution transformers, as discussed 

in the proposed rule. 71 FR 44362-

44363,44371-44376,44378-44379, 

44385-44390,44395-44396. It 

calculated the sum of the purchase price 

and the operating expense-discounted 

over the lifetime of the equipment-to 

estimate the range in LCC benefits that 

commercial consumers would expect to 

achieve due to the new standards. DOE 

also examined the economic 

justification for its proposed standards 

for distribution transformers by 

applying section 325(0)(2)(B)(iii) of 

EPCA (42 U.S.C. 6295(0)(2)(B)(iii)), 

which provides that there is a rebuttable 

presumption that an energy 

conservation standard is economically 

justified if the increased installed cost 

for a product that meets the standard is 

less than three times the value ofthe 

first-year energy savings resulting from 

the standard, as calculated under the 

applicable DOE test procedure. 71 FR 

44388-44389. Some ofthe standard 

levels DOE is adopting today satisfy the 

rebuttable presumption test but others 

do not. However, DOE determined all of 

them to be economically justified based 

on the above-described analyses. 

3. Energy Savings 

While significant conservation of 

energy is a separate statutory 

requirement for imposing an energy 

conservation standard, in determining 

the economic justification of a standard, 

DOE considers the total projected 

energy savings that are expected to 

result directly from the standard. (See 

42 U.S.C. 6295(0)(2)(B)(i)(III)) DOE used 

the NES spreadsheet results in its 

consideration of total projected savings. 

71 FR 44361,44363,44380-44381, 

44384,44393,44401. 

4. Lessening of Utility or Performance of 

Equipment 

In selecting today's standard levels, 

DOE avoided new standards for 

distribution transformers that lessen the 

utility or performance of the equipment 

under consideration in this rulemaking. 

(See 42 U.S.C. 6295(0)(2)(B)(i)(IV)) DOE 

sought to capture in the economic 

analysis the impact of any increase in 

transformer size or weight associated 

with efficiency improvements. 

Specifically when selecting the new 

standards, DOE considered the 

installation costs for pole-mounted 

transformers and vault transformers that 

may be incurred with larger, heavier, 

more efficient transformers. 71 FR 

44363,44394. In addition, DOE 

recognizes that underground mining 

transformers are subject to unique and 

extreme dimensional constraints which 

impact the efficiency and performance 

of these distribution transformers. 

Therefore, DOE is establishing a 

separate product class for underground 

mining transformers. In the future, DOE 

may consider establishing energy 

conservation standards for underground 

mining transformers. DOE is not setting 

a standard for underground mining 

transformers in today's final rule, rather 

it is reserving a section and intends to 

develop analysis that would establish an 

appropriate energy conservation 

standard for underground mining 

transformers in the future. Finally, 

when selecting today's standard, DOE 

carefully reviewed the results of an 

engineering sensitivity analysis on 

primary winding voltages. This 

sensitivity analysis considers higher 

primary voltages than those used in the 

representative units studied in the 

engineering analysis. This sensitivity 

analysis enables DOE to evaluate the 

impact on cost and efficiency associated 

with the final rule TSLs. (see Section 

V.A.l.a in this notice, and TSD 

Appendix 5D) Thus, the analysis in 

today's final rule takes into 

consideration the additional costs 

associated with space-constrained polemounted and vault transformers, and 

ensures that higher primary voltages are 

not eliminated from the market. Based 

on DOE~s engineering analysis, DOE 

concludes that more efficient polemounted and vault transformers are 

technologically feasible. However, in 

some instances, DOE believes that 

transformer poles and vaults may need 

to be replaced to accommodate the more 

efficient transformers as a result of 

today's final rule. DOE included 

increased installation costs of such polemounted and vault transformer in its 

analysis. In this way, DOE has captured 

the costs and benefits of replacement 

pole-mounted and vault transformers. 

Details of pole and vault replacement 

cost estimation methods are provided in 

sections 7.3.1 and 7.3.5 ofTSD Chapter 

7. 

5. Impact of Any Lessening of 

Competition 

DOE considers any lessening of 

competition that is likely to result from 

standards. Accordingly, as discussed in 

the proposed rule, 71 FR 44363-44364, 

44394, at DOE's request, the Department 

of Justice (DOn reviewed the proposed 

standard level (Le., the NOPR) and 

transmitted to the Secretary a written 

determination of the impact of any 

lessening of competition likely to result, 

together with an analysis of the nature 

and extent of such impact. (See 42 

U.S.C. 6295(0)(2)(B)(i)(V) and (B)(ii)) 

DOE addressed the issues raised in the 

Attorney General's response to the 

NOPR, as discussed in section VLC.5 of 

today's final rule. The letter DOJ 

submitted to DOE in response to the 

NOPR appears at the end of this notice 

of final rulemaking. 

Today's final rule, which follows 

publication of the NODA, adopts a 

standard level that is higher than the 

standard proposed in the NOPR for 

certain liquid-immersed distribution 

transformers. DOJ was provided draft 

copies of the notice of final rulemaking 

and the final rule TSD for review. The 

Attorney General did not express any 

concerns about impacts associated with 

today's final rule. A copy of Attorney 

General's letter to DOE in response to 

the final rule also appears at the end of 

this notice of final rulemaking. 

6. Need of the Nation To Conserve 

Energy 

The Secretary recognizes that energy 

conservation benefits the Nation in 

several important ways. The nonmonetary benefits of a standard are 

likely to be reflected in improvements to 

the security of the Nation's energy 

system. In addition, reductions in the 

overall demand for energy will result in 

reduced costs for maintaining reliability 

of the Nation's electricity system. 

Finally, today's standards will likely 

result in reductions in greenhouse gas 

emissions. As discussed in the proposed 

rule, DOE has considered these factors 

in adopting today's standards. 71 FR 

44364,44384,44394-44395,44398-

44400. (See 42 U.S.C. 

6295(0)(2)(B)(i)(VI)) 
58198 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007/Rules and Regulations

7. Other Factors

The Secretary of Energy, in

determining whether a standard is

economically justified, considers any

other factors the Secretary deems to be

relevant. (See 42 U.S.C.

6295 (o)(2)(B)(i)(VII)) The results of the

utility impact analysis, and the analysis

of national employment impacts are

"other factors" that the Secretary took

into consideration. In addition, for this

rulemaking, the Secretary also took into

consideration stakeholder concerns

about the increasing cost of raw

materials for building transformers, the

volatility of material prices, and the

cumulative effect of material price

increases on the transformer industry, as

discussed in the proposed rule. 71 FR

44364, 44395. Since issuance of the

NOPR, DOE conducted two engineering

sensitivity evaluations-one considering

current (2006) material prices and a

second considering transformers with

alternative primary voltages that have

higher insulation requirements (and are

therefore more expensive and less

efficient to manufacture). Also, as it had

done in the proposed rule, DOE

conducted LCC sensitivities, evaluating

engineering analysis cost-efficiency

curves generated using a high material

price scenario 9 and a low material price

scenario,10 and other variable inputs in

the LCC analysis. In selecting today's

standards, DOE also took into

consideration the need to have

consistency in the efficiency

requirements between single-phase and

three-phase liquid-immersed

transformers. See section V.C.i for

discussion on development of the final

rule TSLs, including how single-phase

and three-phase consistency was

maintained between the liquidimmersed product classes.

IV. Methodology and Discussion of

Comments on Methodology

DOE used a number of analytical tools

that it previously developed and

adapted for use in this rulemaking. The

first tool is a spreadsheet that calculates

LCC and payback period (PBP). The

second tool calculates NES and national

NPV. DOE also used the Government

Regulatory Impact Model (GRIM),

among other methods, in its MIA.

Finally, DOE developed an approach

using the NationalEnergy Modeling

System (NEMS) to estimate impacts of

distribution transformer energy

conservation standards on electric

utilities and the environment.

Regarding the analytical methodology,

DOE has continued to use the

spreadsheets and approaches explained

in the proposed rule. 71 FR 44364-

44384. It revised them, and applied

them again to develop the analysis for

this final rule. The tables below

summarize all the major NOPR inputs to

the LCC and PBP analysis, the

Shipments Analysis and the National

Impact Analysis, and whether those

inputs were revised for the final rule. In

addition to these updates, DOE also

updated the material prices it used for

the engineering analysis, as discussed in

TSD Chapter 5.

TABLE IV.1.-FINAL RULE INPUTS FOR THE LCC AND PBP ANALYSES

Inputs NOPR description

Affecting Installed Costs

Equipment price .... ..........................

Installation cost ...............................

Baseline and standard design selection.

Derived by multiplying manufacturer selling price (from the engineering analysis) by distributor markup and contractor markup plus

sales tax for dry-type transformers. For liquid-immersed transformers, DOE used manufacturer selling price plus small distributor

markup plus sales tax. Shipping costs were included for both types

of transformers.

Includes a weight-specific component, derived from RS Means Electrical Cost Data 2002 and a markup to cover installation labor, pole

replacement costs for design line 2 and equipment wear and tear.

The selection of baseline and standard-compliant transformers depended on customer behavior. For liquid-immersed transformers,

the fraction of purchases evaluated was 75%, while for dry-type

transformers, the fraction of evaluated purchases was 50% for

small capacity medium voltage and 80% for large -capacity medium

voltage.

Affecting Operating Costs

Transformer loading ... ..................... Loading depended on customer and transformer characteristics .........

Changes for final rule

No change.

Added a case with vault replacement costs as a subgroup analysis.

No change in . percent of evaluators. Different values of customer choice B parameter was

estimated for small versus large

liquid-immersed transformers.*

Technical improvement was made

for liquid-immersed statistical

load model where the 1995

Commercial Building Energy

Consumption Survey data was

used for load factor estimates.

Load growth .................................... 1 % per year for liquid-immersed and 0% per year for dry-type transformers.

Power factor .................................... I Assumed to be unity ....... .......................................................................

Adjusted to 0% per year for both

liquid-immersed and dry-type.

No change.

9 The high material price scenario is based on 2006. See TSD Chapter 5 for a discussion on in the five-year sample (i.e., 2002), and then

using the year with the highest material prices in material prices. applying a uniform 15 percent discount to all the

the five-year sample (i.e., 2002 to 2006) of material 10 The low material price scenario is based on material prices from that year. See TSD Chapter 5

prices updated for the final rule . In this sample, the selecting the year with the lowest M6 material price for a discussion on material prices.

year with the highest overall material prices was

 EE-RM/STD-00-550 COMMENT 194

58198 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

7. Other Factors efficient to manufacture). Also, as it had second tool calculates NES and national 

The Secretary of Energy, in done in the proposed rule, DOE NPV. DOE also used the Government 

determining whether a standard is conducted LCC sensitivities, evaluating Regulatory Impact Model (GRIM), 

economically justified, considers any engineering analysis cost-efficiency among other methods, in its MIA. 

other factors the Secretary deems to be curves generated using a high material Finally, DOE developed an approach 

relevant. (See 42 U.S.C. price scenario 9 and a low material price using the National Energy Modeling 

6295(0)(2)(B)(i)(VII)) The results of the scenario,1-o and other variable inputs in System (NEMS) to estimate impacts of 

utility impact analysis, and the analysis the LCC analysis. In selecting today's distribution transformer energy 

of national employment impacts are standards, DOE also took into conservation standards on electric 

"other factors" that the Secretary took consideration the need to have utilities and the environment . . to consideration I dd't' :I! thO consistency in the efficiency ml k' th S· nta 1 lIon, ork · IS requirements between single-phase and Regarding the analytical methodology, ru ema mg, e ecre ary a so too mto DOE has continued to use the 

consideration stakeholder concerns three-phase liquid-immersed about the increasing cost of raw transformers. See section V.C.l for spreadsheets and approaches explained 

materials for building transformers, the discussion on development of the final in the proposed rule. 71 FR 44364-

volatility of material prices, and the rule TSLs, including how single-phase 44384. It revised them, and applied 

cumulative effect of material price and three-phase consistency was them again to develop the analysis for 

increases on the transformer industry, as maintained between the liquid- this final rule. The tables below 

discussed in the proposed rule. 71 FR immersed product classes. summarize all the major NOPR inputs to 

44364,44395. Since issuance ofthe the LCC and PBP analysis, the IV. Methodology and Discussion of hid h NOPR, DOE conducted two engineering S ipments Ana ysis an t e National Comments on Methodology d h sensitivity evaluations-one considering Impact Analysis, an wether those 

current (2006) material prices and a DOE used a number of analytical tools inputs were revised for the final rule. In 

second considering transformers with that it previously developed and addition to these updates, DOE also 

alternative primary voltages that have adapted for use in this rulemaking. The updated the material prices it used for 

higher insulation requirements (and are first tool is a spreadsheet that calculates the engineering analysis, as discussed in 

therefore more expensive and less LCC and payback period (PBP). The TSD Chapter 5. 

TABLE IV.i.-FINAL RULE INPUTS FOR THE LCC AND PBP ANALYSES 

Inputs 

Equipment price ............................ .. 

Installation cost .............................. . 

Baseline and standard design selection. 

NOPR description 

Affecting Installed Costs 

Derived by multiplying manufacturer selling price (from the engineering analysis) by distributor markup and contractor markup plus 

sales tax for dry-type transformers. For liquid-immersed transformers, DOE used manufacturer selling price plus small distributor 

markup plus sales tax. Shipping costs were included for both types 

of transformers. 

Includes a weight-specific component, derived from RS Means Electrical Cost Data 2002 and a markup to cover installation labor, pole 

replacement costs for design line 2 and equipment wear and tear. 

The selection of baseline and standard-compliant transformers depended on customer behavior. For liquid-immersed transformers, 

the fraction of purchases evaluated was 75%, while for dry-type 

transformers, the fraction of evaluated purchases was 50% for 

small capacity medium voltage and 80% for large-capacity medium 

voltage. 

Affecting Operating Costs 

Changes for final rule 

No change. 

Added a case with vault replacement costs as a subgroup analysis. 

No change in. percent of evaluators. Different values of customer choice B parameter was 

estimated for small versus large 

liquid-immersed transformers: 

Transformer loading ........................ Loading depended on customer and transformer characteristics ......... Technical improvement was made 

for liquid-immersed statistical 

load model where the 1995 

Commercial Building Energy 

Consumption Survey data was 

used for load factor estimates. 

Load growth .................................... 1 % per year for liquid-immersed and 0% per year for dry-type trans- Adjusted to 0% per year for both 

formers. liquid-immersed and dry-type. 

Power factor .................................... Assumed to be unity.................................. ............................................ No change. 

9 The high material price scenario is based on 

using the year with the highest material prices in 

the five-year sample (Le., 2002 to 2006) of material 

prices updated for the final rule. In this sample, the 

year with the highest overall material prices was 

2006. See TSD Chapter 5 for a discussion on 

material prices. 

10 The low material price scenario is based on 

selecting the year with the lowest M6 material price 

in the five-year sample (i.e., 2002), and then 

applying a uniform 15 percent discount to all the 

material prices from that year. See TSD Chapter 5 

for a discussion on material prices. 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

TABLE IV.1.-FINAL RULE INPUTS FOR THE LCC AND PBP ANALYSES-Continued

Inputs

Annual energy use and demand .....

Electricity costs ...............................

Electricity price trend . ......................

Maintenance cost ............................

Effective date ..................................

Discount rates .................................

Lifetime ............................................

NOPR description

Derived from a statistical hourly load simulation for liquid-immersed

transformers, and estimated from the 1995 Commercial Building

Energy Consumption Survey data for dry-type transformers using

factors derived from hourly load data. Load losses varied as the

square of the load and were equal to rated load losses at 100%

loading.

Derived from tariff-based and hourly based electricity prices. Capacity

costs provided extra value for reducing losses at peak.

Obtained from Annual Energy Outlook 2005 (AE02005) .....................

Annual maintenance cost did not vary as a function of efficiency ........

Affecting Present Value of Annual Operating Cost Savings

Assumed to be 2010 .............................................................................

Mean real discount rates ranged from 4 .2% for owners of polemounted, liquid-immersed transformers to 6.6% for dry-type transformer owners.

Distribution of lifetimes, with mean lifetime for both liquid and dry-type

transformers assumed to be 32 years.

Candidate Standard Levels

Trial standard levels ........................ Six efficiency levels with the minimum equal to TP 1 and the maximum from the most efficient designs from the engineering analysis. Intermediate efficiency levels for each design line selected

using a redefined set of LCC criteria..

58199

Changes for final rule

No change.

Adjusted electricity prices for inflation.

Updated to AEO2007.

No change.

No change.

Discount rate sensitivity added to

spreadsheet tool.

No change.

For liquid-immersed transformers

a set of four recombinations of

the NOPR standard levels were

formulated that have consistency between single-phase and

three-phase efficiency levels

The concept of using A and B loss evaluation combinations is discussed in TSD chapter 3, Total Owning Cost Evaluation. Within the context

of the LCC analysis, the A factor measures the value to a transformer purchaser , in $/watt, of reducing no-load losses while the B factor measures the value, in $/watt, of reducing load losses. The purchase decision model developed by the Department mimics the likely choices that consumers make given the A and B values they assign to the transformer losses.

TABLE IV.2.-FINAL RULE INPUTS FOR THE SHIPMENTS ANALYSIS

Input

Shipments data ...............................

Shipments backcast ........................

Shipments forecast . ........................

Dry-type/liquid-immersed market

shares.

Regular replacement market .. .........

Elasticities, liquid -immersed . ...........

Elasticities, dry-type ........................

NOPR description

Third-party expert (HVOLT) for the year 2001 ......................................

For years 1977-2003, used Bureau of Economic Analysis' (BEA)

manufacturing data for distribution transformers . Source: http://

www.bea.doc.gov/bea/pn/ndnO304.zip. For years 1950-1976, used

EIA's electricity sales data. Source : http://www.eia.doe.gov/emeu/

aer/txt1stb0805.xls.

Years 2002-2035: Based on AE02005 ................................................

Based on EIA's electricity sales data and AE02005 ............................

Based on a survival function constructed from a Weibull distribution

function normalized to produce a 32-year mean lifetime. Source:

ORNL 6804/Rl, The Feasibility of Replacing or Upgrading Utility

Distribution Transformers During Routine Maintenance, page D-1.

For liquid-immersed transformers ..........................................................

® Low: 0.00

® Medium: -0.04

® High: -0.20

For dry-type transformers ......................................................................

® Low: 0.00

• Medium: -0.02

® High: -0.20

Changes for final rule

No change.

No change.

Years 2010-2038: Based on

AEO2007.

Based on EIA's electricity sales

data and AE02007.

No change.

No change.

No change.

TABLE IV.3.-FINAL RULE INPUTS FOR THE NATIONAL IMPACT ANALYSIS

Input

Shipments .......................................

Implementation date of standard ....

Base case efficiencies ....................

Standards case efficiencies ............

NOPR description

Annual shipments from shipments model ... ..........................................

Assumed to be 2010 .............................................................................

Constant efficiency through 2035. Equal to weighted-average efficiency in 2010.

Constant efficiency at the specified standard level from 2007 to 2038

Changes for final rule

No change.

No change.

No change.

No change.

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58199 

TABLE IV.1.-FINAL RULE INPUTS FOR THE LCC AND PBP ANALYSES-Continued 

Inputs 

Annual energy use and demand ..... 

Electricity costs .............................. . 

Electricity price trend ...................... . 

Maintenance cost .......................... .. 

NOPR description 

Derived from a statistical hourly load simulation for liquid-immersed 

transformers, and estimated from the 1995 Commercial Building 

Energy Consumption Survey data for dry-type transformers using 

factors derived from hourly load data. Load losses varied as the 

square of the load and were equal to rated load losses at 100% 

loading. 

Derived from tariff-based and hourly based electricity prices. Capacity 

costs provided extra value for reducing losses at peak. 

Obtained from Annual Energy Outlook 2005 (AE02005) .................... . 

Annual maintenance cost did not vary as a function of efficiency ...... .. 

Affecting Present Value of Annual Operating Cost Savings 

Effective date .................................. Assumed to be 2010 ............................................................................ . 

Discount rates ................................. Mean real discount rates ranged from 4.2% for owners of polemounted, liquid-immersed transformers to 6.6% for dry-type transformer owners. 

Lifetime ............................................ Distribution of lifetimes, with mean lifetime for both liquid and dry-type 

transformers assumed to be 32 years. 

Candidate Standard Levels 

Trial standard levels ........................ Six efficiency levels with the minimum equal to TP 1 and the maximum from the most efficient designs from the engineering analysis. Intermediate efficiency levels for each design line selected 

using a redefined set of LCC criteria .. 

Changes for final rule 

No change. 

Adjusted electricity prices for inflation. 

Updated to AE02007. 

No change. 

No change. 

Discount rate sensitivity added to 

spreadsheet tool. 

No change. 

For liquid-immersed transformers 

a set of four recombinations of 

the NOPR standard levels were 

formulated that have consistency between single-phase and 

three-phase efficiency levels 

'The concept of using A and B loss evaluation combinations is discussed in TSD chapter 3, Total Owning Cost Evaluation. Within the context 

of the LCC analysis, the A factor measures the value to a transformer purchaser, in $/watt, of reducing no-load losses while the B factor meas- ures the value, in $/watt, of reducing load losses. The purchase decision model developed by the Department mimics the likely choices that con- sumers make given the A and B values they assign to the transformer losses. 

TABLE IV.2.-FINAL RULE INPUTS FOR THE SHIPMENTS ANALYSIS 

Input NOPR description Changes for final rule 

Shipments data ............................... Third-party expert (HVOL T) for the year 2001 ...................................... No change. 

Shipments backcast ........................ For years 1977-2003, used Bureau of Economic Analysis' (BEA) No change. 

manufacturing data for distribution transformers. Source: http:// 

www.bea.doc.gov/beaipn/ndn0304.zip. For years 1950-1976, used 

EIA's electricity sales data. Source: http://www.eia.doe.gov/emeu/ 

aer/txtistbOB05.xls. 

Shipments forecast ......................... Years 2002-2035: Based on AE02005 .... ............................................ Years 2010-2038: Based on 

AE02007. 

Dry-type/liquid-immersed market Based on EIA's electricity sales data and AE02005 ............................ Based on EIA's electricity sales 

shares. 

Regular replacement market .......... . 

Elasticities, liquid-immersed .......... .. 

Elasticities, dry-type ...................... .. 

Based on a survival function constructed from a Weibull distribution 

function normalized to produce a 32-year mean lifetime. Source: 

ORNL 6804/R1, The Feasibility of Replacing or Upgrading Utility 

Distribution Transformers During Routine Maintenance, page D-1. 

For liquid-immersed transformers ........................................................ .. 

" Low: 0.00 

" Medium: -0.04 

" High: -0.20 

For dry-type transformers .................................................................... .. 

" Low: 0.00 

" Medium: - 0.02 

• High: -0.20 

data and AE02007. 

No change. 

No change. 

No change. 

TABLE IV.3.-FINAL RULE INPUTS FOR THE NATIONAL IMPACT ANALYSIS 

Input NOPR description Changes for final rule 

Shipments ....................................... Annual shipments from shipments model............................................. No change. 

Implementation date of standard .... Assumed to be 2010 ................................. ............................................ No change. 

Base case efficiencies .................... Constant efficiency through 2035. Equal to weighted-average effi- No change. 

ciency in 2010. 

Standards case efficiencies ............ Constant efficiency at the specified standard level from 2007 to 2038 No change. 
58200 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

TABLE IV.3.-FINAL RULE INPUTS FOR THE NATIONAL IMPACT ANALYSIS-Continued

Input

Annual energy consumption per

unit.

Total installed cost per unit .............

Electricity expense per unit . ............

Escalation of electricity prices .........

Electricity site-to-source conversion

Discount rates .................................

Analysis year ...................................

NOPR description

Average rated transformer losses are obtained from the LCC analysis, and are then scaled for different size categories, weighted by

size market share, and adjusted for transformer loading (also obtained from the LCC analysis).

Weighted-average values as a function of efficiency level (from LCC

analysis).

Energy and capacity savings for the two types of transformer losses

are each multiplied by the corresponding average marginal costs

for capacity and energy, respectively, for the two types of losses

(marginal costs are from the LCC analysis).

AE02005 forecasts (to 2025) and extrapolation for 2038 and beyond

A time series conversion factor; includes electric generation, transmission, and distribution losses. Conversion varies yearly and is

generated by DOE/EIA's National Energy Modeling System

(NEMS) program.

3% and 7% real .....................................................................................

Equipment and operating costs are discounted to the year of equipment price data, 2004.

A. Market and Technology Assessment

1. General

The methodology DOE followed in

the market and technology assessment

was described in previous notices and is

discussed in TSD Chapter 3. This is the

section of the analysis where DOE

typically discusses issues on the scope

of coverage. DOE received a few

comments on this topic, including

comments regarding mining

transformers, less-flammable liquidimmersed transformers, refurbished

transformers, and the waiver process.

These comments are discussed in the

following sub-sections.

2. Mining Transformers

The definition of a distribution

transformer and thereby the scope of

coverage of this rulemaking was

finalized in the test procedure final rule,

published on April 27, 2006. 71 FR

24975-24982, 24995-24997. In that

notice, DOE indicated that comments

supporting an exclusion for mining

transformers did not provide sufficient

data and information on mining

transformers to warrant an exclusion or

separate treatment. 71 FR 24980-24981.

In the August 2006 NOPR, DOE

addressed the issue of mining

transformers in the preamble. DOE

decided not to exempt mining

transformers under 42 U.S.C.

6291(35)(B)(iii)(I), noting that DOE

lacked specific information and data on

whether these transformers were likely

to be used in general purpose

applications or whether significant

energy savings would result from

applying standards to them. 71 FR

44365-44366.

a. Comments Requesting Exemption

DOE received several comments

calling for mining transformers to be

exempt from any national efficiency

standard. The Alaska Miners

Association (AMA), Arch Coal, Brooks

Run Mining (BRM), Control

Transformer, Federal Pacific

Transformer (FPT), HVOLT, NEMA, the

National Mining Association (NMA), the

Ohio Valley Coal Company (OVCC),

Peabody Energy Corporation (PEC),

PEMCO Corporation (PEMCO), and

SMC Electrical Products (SMC), all

called for mining transformers to be

exempt from the national efficiency

standard. These stakeholders identified

a number of reasons for this request,

including safety, minimal impact on

energy savings, appropriateness of the

representative efficiency rating loading

point, and lack of guidance in the test

procedure for measuring the efficiency

of mining transformers that have more

than one secondary output connection.

(AMA, No. 118 at p. 1; Arch Coal, No.

115 at p. 1; BRM, No. 112 at p. 1;

Control Transformer, No. 142 at p. 1;

FPT, No. 102 at pp. 1-3; Public Meeting

Transcript, No. 108.6 at p. 131; HVOLT,

No. 141 at p. 5; NEMA, No. 125 at p. 3;

NMA, No. 116 at pp. 1-2; OVCC, No.

151 at p. 1; PEC, No. 146 at p. 1;

PEMCO, No. 130 at p. 2; SMC, No. 124

at pp. 1-2) FPT also submitted several

mining transformer designs they

prepared to support its request to

exempt mining transformers from the

standard. (FPT, No. 114 at pp. 1-33)

Howard Industries indicated that it

would agree that mining transformers

should be exempted if such

transformers are "exactly defined."

(Howard, No. 143 at p. 5)

Changes for final rule

No change.

No change.

No change.

Used AE02007 forecasts (to

2025) and extrapolation for 2038

and beyond.

Updated conversion factors from

NEMS.

Results for 4.2% reported in TSD.

Equipment and operating costs

are discounted to year 2006.

NMA and the Ohio Valley Coal

Company (OVCC) commented that

safety was a concern and a reason for

exempting mining transformers from

Federal efficiency standards. NMA

commented that size constraints and the

need to move the transformers as the

mining process advances necessitate

special designs. NMA also stated that

DOE needs to consider safety issues

raised by the need to move transformers

in mining operations. (NMA, No. 116 at

pp. 1-2) OVCC also noted the

importance of mining transformers

being as small as possible, in part to

prevent safety problems as these

transformers have to be moved

frequently. (OVCC, No. 151 at p. 1)

Stakeholders also commented on the

fact that they did not believe significant

energy savings would result from DOE

covering and regulating mining

transformers. (Arch Coal, No. 115 at p.

1) AMA commented that mining

transformers should be excluded based

on the very large impact on the cost of

equipment that will be incurred under

standards and that this exclusion of

mining transformers would have a

minimal impact on energy savings.

(AMA, No. 118 at pp. 1-2) NEMA

commented that mining transformers

account for considerably less than one

percent of all distribution transformers,

and that they are part of the mediumvoltage, dry-type group of distribution

transformers which has far less

significant energy savings opportunities

than liquid-immersed transformers.

(NEMA, No. 125 at p. 3) Federal Pacific

estimated that, annually, the total

market of mining transformers is

approximately 969.1 megavolt-amperes

(MVA), or about 1.15 percent of total

 EE-RM/STD-00-550 COMMENT 194

58200 Federal Register / Vol. 72, No. 197/ Friday, October 12, 2007/ Rules and Regulations 

TABLE IV.3.-FINAL RULE INPUTS FOR THE NATIONAL IMPACT ANALYSiS-Continued 

Input NOPR description Changes for final rule 

Annual energy consumption per Average rated transformer losses are obtained from the LCC anal- No change. 

unit. ysis, and are then scaled for different size categories, weighted by 

size market share, and adjusted for transformer loading (also obtained from the LCC analysis). 

Total installed cost per unit ............. Weighted-average values as a function of efficiency level (from LCC No change. 

No change., 

analysis). 

Electricity expense per unit ............. Energy and capacity savings for the two types of transformer losses are each multiplied by the corresponding average marginal costs 

for capacity and energy, respectively, for the two types of losses 

(marginal costs are from the LCC analysis). 

Escalation of electricity prices .. ....... AE02005 forecasts (to 2025) and extrapolation for 2038 and beyond Used AE02007 forecasts (to 

2025) and extrapolation for 2038 

and beyond. 

Electricity site-to-source conversion A time series conversion factor; includes electric generation, transmission, and distribution losses. Conversion varies yearly and is 

generated by DOE/EIA's National Energy Modeling System 

(NEMS) program. 

Updated conversion factors from 

NEMS. 

Discount rates .... ............................. 3% and 7% real .................................................................................... . Results for 4.2% reported in TSD. 

Equipment and operating costs are discounted to year 2006. 

Analysis year ................................... Equipment and operating costs are discounted to the year of equipment price data, 2004. 

A. Market and Technology Assessment 

1. General 

The methodology DOE followed in 

the market and technology assessment 

was described in previous notices and is 

discussed in TSD Chapter 3. This is the 

section of the analysis where DOE 

typically discusses issues on the scope 

of coverage. DOE received a few 

comments on this topic, including 

comments regarding mining 

transformers, less-flammable liquidimmersed transformers, refurbished 

transformers, and the waiver process. 

These comments are discussed in the 

following sub-sections. 

2. Mining Transformers 

The definition of a distribution 

transformer and thereby the scope of 

coverage of this rulemaking was 

finalized in the test procedure final rule, 

published on April 27, 2006. 71 FR 

24975-24982,24995-24997. In that 

notice, DOE indicated that comments 

supporting an exclusion for mining 

transformers did not provide sufficient 

data and information on mining 

transformers to warrant an exclusion or 

separate treatment. 71 FR 24980-24981. 

In the August 2006 NOPR, DOE 

addressed the issue of mining 

transformers in the preamble. DOE 

decided not to exempt mining 

transformers under 42 U.S.C. 

6291(35)(B)(iii)(I), noting that DOE 

lacked specific information and data on 

whether these transformers were likely 

to be used in general purpose 

applications or whether significant 

energy savings would result from 

applying standards to them. 71 FR 

44365-44366. 

a. Comments Requesting Exemption 

DOE received several comments 

calling for mining transformers to be 

exempt from any national efficiency 

standard. The Alaska Miners 

Association (AMA), Arch Coal, Brooks 

Run Mining (BRM), Control 

Transformer, Federal Pacific 

Transformer (FPT), HVOLT, NEMA, the 

National Mining Association (NMA), the 

Ohio Valley Coal Company (OVCC), 

Peabody Energy Corporation (PEC), 

PEMCO Corporation (PEMCO), and 

SMC Electrical Products (SMC)' all 

called for mining transformers to be 

exempt from the national efficiency 

standard. These stakeholders identified 

a number of reasons for this request, 

including safety, minimal impact on 

energy savings, appropriateness of the 

representative efficiency rating loading 

point, and lack of guidance in the test 

procedure for measuring the efficiency 

of mining transformers that have more 

than one secondary output connection. 

(AMA, No. 118 at p. 1; Arch Coal, No. 

115 at p. 1; BRM, No. 112 at p. 1; 

Control Transformer, No. 142 at p. 1; 

FPT, No. 102 at pp. 1-3; Public Meeting 

Transcript, No. 108.6 at p. 131; HVOLT, 

No. 141 at p. 5; NEMA, No. 125 at p. 3; 

NMA, No. 116 at pp. 1-2; OVCC, No. 

151 at p. 1; PEC, No. 146 at p. 1; 

PEMCO, No. 130 at p. 2; SMC, No. 124 

at pp. 1-2) FPT also submitted several 

mining transformer designs they 

prepared to support its request to 

exempt mining transformers from the 

standard. (FPT, No. 114 at pp. 1-33) 

Howard Industries indicated that it 

would agree that mining transformers 

should be exempted if such 

transformers are "exactly defined." 

(Howard, No. 143 at p. 5) 

NMA and the Ohio Valley Coal 

Company (OVCC) commented that 

safety was a concern and a reason for 

exempting mining transformers from 

Federal efficiency standards. NMA 

commented that size constraints and the 

need to move the transformers as the 

mining process advances necessitate 

special designs. NMA also stated that 

DOE needs to consider safety issues 

raised by the need to move transformers 

in mining operations. (NMA, No. 116 at 

pp. 1-2) OVCC also noted the 

importance of mining transformers 

being as small as possible, in part to 

prevent safety problems as these 

transformers have to be moved 

frequently. (OVCC, No. 151 at p. 1) 

Stakeholders also commented on the 

fact that they did not believe significant 

energy savings would result from DOE 

covering and regulating mining 

transformers. (Arch Coal, No. 115 at p. 

1) AMA commented that mining 

transformers should be excluded based 

on the very large impact on the cost of 

equipment that will be incurred under 

standards and that this exclusion of 

mining transformers would have a 

minimal impact on energy savings. 

(AMA, No. 118 at pp. 1-2) NEMA 

commented that mining transformers 

account for considerably less than one 

percent of all distribution transformers, 

and that they are part of the mediumvoltage, dry-type group of distribution 

transformers which has far less 

significant energy savings opportunities 

than liquid-immersed transformers. 

(NEMA, No. 125 at p. 3) Federal Pacific 

estimated that, annually, the total 

market of mining transformers is 

approximately 969.1 megavolt-amperes 

(MVA), or about 1.15 percent of total 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

distribution transformer capacity. (FPT,

No. 102 at p. 2) DOE notes that 969.1

MVA of shipped capacity represents

approximately 20 percent of the

medium-voltage, dry-type distribution

transformer market, of which mining

transformers are a subset.

Arch Coal commented that mining

transformers have large cores, and thus

higher core losses when compared to

general purpose distribution

transformers. This puts mining

transformers at a disadvantage for

achieving efficiency levels measured at

35 percent and 50 percent of rated

nameplate capacity. (Arch Coal, No. 115

at p. 1) SMC Electrical Products

commented that the smaller heights and

lower-than-typical impedance of mining

transformers mean they contain more

core steel and have increased losses

when measured at 50 percent of

nameplate load. (SMC, No. 124 at pp. 1-

2) Control Transformer commented that

mining transformers are usually size

constrained (normally in the height),

and therefore they have higher core

losses than taller (standard)

transformers. The core loss constitutes a

critical portion of the efficiency rating,

and may make the customer's

dimensional constraints difficult, if not

impossible, to achieve. Control

Transformer also commented that very

often impedance requirements are

placed on these transformers, which

adds another constraint to the design.

(Control Transformer, No. 142 at p. 1)

However, FPT commented at the

workshop that it is possible to make

mining transformers more efficient

without sacrificing size. FPT notes that

problems occur when the standard

levels become really high, but they

believe there might be some standard

level that would be appropriate for

mining transformers. (Public Meeting

Transcript, No. 108.6 at p. 253) FPT also

commented that mining transformers

have different loading requirements

than typical distribution transformers,

and their loading requirements are

dependent on the application. (Public

Meeting Transcript, No. 108.6 at pp. 245

and 255) HVOLT commented that

mining transformers are used at full

load, and therefore may not be able to

meet certain efficiency levels, when

measured at lower loading points.

(Public Meeting Transcript, No. 108.6 at

p. 255) PEMCO Corporation estimates

that mining transformers have loading

of 100 percent or better. (Public Meeting

Transcript, No. 108.6 at p. 255)

However, one mining company, OVCC,

commented that its transformers are

lightly loaded. It noted that one of its

mines has 30 mega-volt amperes (MVA)

58201

of dry-type transformer capacity transformers that are used in aboveinstalled, but only has an electrical ground mining operations to be

demand of 7 MVA-meaning its medium-voltage dry-type distribution

transformers are lightly loaded and transformers subject to the standards

therefore would receive less benefit adopted by today's rule.

from mandatory energy efficiency In the analysis for the proposed rule,

standards. (OVCC, No. 151 at p. 1) DOE did not consider underground

Finally, the Department of justice mining transformers as a separate

(DOJ), commented that it was concerned product class. Rather, they were

that the proposed standard level may considered with all other mediumadversely affect competition with voltage dry-type transformers. However,

respect to distribution transformers used based on comments received, DOE

in industries, such as underground coal recognizes that underground mining

mining. Consistent with stakeholders transformers must comply with

commenting on the proposed rule, DOJ dimensional constraints, design

highlighted the dimensional constraints requirements, and safety considerations

imposed on mining transformers due to that are different from those faced by

the operating environments into which other distribution transformers. DOE

they are installed. DOJ is concerned that concludes that underground mining

these constraints contribute to higher transformers have a distinct utility

costs than would otherwise be which limits the energy efficiency

associated with transformers not subject improvement potential possible for such

to the same dimensional constraints. distribution transformers. While more

DOJ urged DOE to create an exception efficient underground mining

for distribution transformers used in transformers are technologically

industries with space constraints. (DOJ, feasible, DOE does not have the data

No. 157 at p. 2) needed to estimate either the energy

In comments requesting that DOE efficiency improvement potential or the

provide an exemption for mining cost of more efficient designs of

transformers, some comments referred underground mining transformers. DOE

simply to `mining transformers', while reviewed the underground mining

other comments referred more transformer designs submitted (Federal

specifically to `underground mining Pacific, No. 114 at pp. 1-33) and the

transformers.' Considering the operating comments of a mining transformer

environments of these two types of design engineer at the public meeting

distribution transformers, DOE does not (Public Meeting Transcript, No. 108.6 at

believe that those transformers used in p. 253), and believes that more efficient

above-ground or open-pit mining underground mining transformer

operations are subject to the same designs are technologically feasible, but

physical constraints as those these comments didn't provide

transformers installed in underground information on the extent of

mining operations. DOE understands improvement possible. Furthermore,

that both underground and above- none of the comments requesting DOE

ground mining transformers are exempt mining transformers provided

distribution transformers,11 which serve an economic analysis demonstrating

a distribution function in the electrical that efficiency standards for such

systems of the mines in which they transformers would not be cost-justified.

operate. The critical difference between Without engineering cost and efficiency

these two types of transformers is that data, DOE was not able to perform an

underground mining transformers must analysis of the impacts of standards on

be able to fit into a tight (i.e., underground mining transformers.

dimensionally constrained) space while Thus, DOE is not able to determine

above-ground mining transformers are whether energy conservation standards

designed to operate on the surface, and for underground mining transformers

thus are not required to be are economically justified and would

manufactured to fit into a tunnel, shaft result in significant energy savings.

or other dimensionally constrained Based on the above, DOE concludes that

space. Mining transformers used in underground mining transformers are a

above-ground mining operations have class of medium-voltage dry-type

considerably greater dimensional distribution standards, and since DOE

flexibility than transformers installed in cannot determine whether standards

underground mining operations. would meet EPCA's statutory criteria,

Therefore, DOE considers medium- DOE is not setting standards for

voltage dry-type distribution underground mining transformers at

this time.

The definition of the term 'distribution In order that stakeholders understand

transformer' is discussed in TSD Chapter 3, section which mining transformers are subject

3.2. The definition in the Code of Federal

Regulations (10 CFR section 431.192) is based on to standards being promulgated today

EPCA (42 U.S.C. 6291(35)(A)). and which mining transformers would

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58201 

distribution transformer capacity. (FPT, 

No. 102 at p. 2) DOE notes that 969.1 

MV A of shipped capacity represents 

approximately 20 percent of the 

medium-voltage, dry-type distribution 

transformer market, of which mining 

transformers are a subset. 

Arch Coal commented that mining 

transformers have large cores, and thus 

higher core losses when compared to 

general purpose distribution 

transformers. This puts mining 

transformers at a disadvantage for 

achieving efficiency levels measured at 

35 percent and 50 percent of rated 

nameplate capacity. (Arch Coal, No. 115 

at p. 1) SMC Electrical Products 

commented that the smaller heights and 

lower-than-typical impedance of mining 

transformers mean they contain more 

core steel and have increased losses 

when measured at 50 percent of 

nameplate load. (SMC, No. 124 at pp. 1-

2) Control Transformer commented that 

mining transformers are usually size 

constrained (normally in the height), 

and therefore they have higher core 

losses than taller (standard) 

transformers. The core loss constitutes a 

critical portion of the efficiency rating, 

and may make the customer's 

dimensional constraints difficult, if not 

impossible, to achieve. Control 

Transformer also commented that very 

often impedance requirements are 

placed on these transformers, which 

adds another constraint to the design. 

(Control Transformer, No. 142 at p. 1) 

However, FPT commented at the 

workshop that it is possible to make 

mining transformers more efficient 

without sacrificing size. FPT notes that 

problems occur when the standard 

levels become really high, but they 

believe there might be some standard 

level that would be appropriate for 

mining transformers. (Public Meeting 

Transcript, No. 108.6 at p. 253) FPT also 

commented that mining transformers 

have different loading requirements 

than typical distribution transformers, 

and their loading requirements are 

dependent on the application. (Public 

Meeting Transcript, No. 108.6 at pp. 245 

and 255) HVOLT commented that 

mining transformers are used at full 

load, and therefore may not be able to 

meet certain efficiency levels, when 

measured at lower loading points. 

(Public Meeting Transcript, No. 108.6 at 

p. 255) PEMCO Corporation estimates 

that mining transformers have loading 

of 100 percent or better. (Public Meeting 

Transcript, No. 108.6 at p. 255) 

However, one mining company, OVCC, 

commented that its transformers are 

lightly loaded. It noted that one of its 

mines has 30 mega-volt amperes (MVA) 

of dry-type transformer capacity 

installed, but only has an electrical 

demand of 7 MV A-meaning its 

transformers are lightly loaded and 

therefore would receive less benefit 

from mandatory energy efficiency 

standards. (OVCC, No. 151 at p. 1) 

Finally, the Department of Justice 

(DOn, commented that it was concerned 

that the proposed standard level may 

adversely affect competition with 

respect to distribution transformers used 

in industries, such as underground coal 

mining. Consistent with stakeholders 

commenting on the proposed rule, DOJ 

highlighted the dimensional constraints 

imposed on mining transformers due to 

the operating environments into which 

they are installed. DOJ is concerned that 

these constraints contribute to higher 

costs than would otherwise be 

associated with transformers not subject 

to the same dimensional constraints. 

DOJ urged DOE to create an exception 

for distribution transformers used in 

industries with space constraints. (DOJ, 

No. 157 at p. 2) 

In comments requesting that DOE 

provide an exemption for mining 

transformers, some comments referred 

simply to 'mining transformers', while 

other comments referred more 

specifically to 'underground mining 

transformers.' Considering the operating 

environments of these two types of 

distribution transformers, DOE does not 

believe that those transformers used in 

above-ground or open-pit mining 

operations are subject to the same 

physical constraints as those 

transformers installed in underground 

mining operations. DOE understands 

that both underground and aboveground mining transformers are 

distribution transformers,l1 which serve 

a distribution function in the electrical 

systems of the mines in which they 

operate. The critical difference between 

these two types of transformers is that 

underground mining transformers must 

be able to fit into a tight (Le., 

dimensionally constrained) space while 

above-ground mining transformers are 

designed to operate on the surface, and 

thus are not required to be 

manufactured to fit into a tunnel, shaft 

or other dimensionally constrained 

space. Mining transformers used in 

above-ground mining operations have 

considerably greater dimensional 

flexibility than transformers installed in 

underground mining operations. 

Therefore, DOE considers mediumvoltage dry-type distribution 

11 The definition ofthe term 'distribution 

transformer' is discussed in TSD Chapter 3, section 

3.2. The definition in the Code of Federal 

Regulations (10 CFR section 431.192) is based on 

EPCA (42 U.S.C. 6291(35)(A)). 

transformers that are used in aboveground mining operations to be 

medium-voltage dry-type distribution 

transformers subject to the standards 

adopted by today's rule. 

In the analysis for the proposed rule, 

DOE did not consider underground 

mining transformers as a separate 

product class. Rather, they were 

considered with all other mediumvoltage dry-type transformers. However, 

based on comments received, DOE 

recognizes that underground mining 

transformers must comply with 

dimensional constraints, design 

requirements, and safety considerations 

that are different from those faced by 

other distribution transformers. DOE 

concludes that underground mining 

transformers have a distinct utility 

which limits the energy efficiency 

improvement potential possible for such 

distribution transformers. While more 

efficient underground mining 

transformers are technologically 

feasible, DOE does not have the data 

needed to estimate either the energy 

efficiency improvement potential or the 

cost of more efficient designs of 

underground mining transformers. DOE 

reviewed the underground mining 

transformer designs submitted (Federal 

Pacific, No. 114 at pp. 1-33) and the 

comments of a mining transformer 

design engineer at the public meeting 

(Public Meeting Transcript, No. 108.6 at 

p. 253), and believes that more efficient 

underground mining transformer 

designs are technologically feasible, but 

these comments didn't provide 

information on the extent of 

improvement possible. Furthermore, 

none of the comments requesting DOE 

exempt mining transformers provided 

an economic analysis demonstrating 

that efficiency standards for such 

transformers would not be cost-justified. 

Without engineering cost and efficiency 

data, DOE was not able to perform an 

analysis ofthe impacts of standards on 

underground mining transformers. 

Thus, DOE is not able to determine 

whether energy conservation standards 

for underground mining transformers 

are economically justified and would 

result in significant energy savings. 

Based on the above, DOE concludes that 

underground mining transformers are a 

class of medium-voltage dry-type 

distribution standards, and since DOE 

cannot determine whether standards 

would meet EPCA's statutory criteria, 

DOE is not setting standards for 

underground mining transformers at 

this time. 

In order that stakeholders understand 

which mining transformers are subject 

to standards being promulgated today 

and which mining transformers would 
58202 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

be subject to energy efficiency standards

at some future date, DOE incorporated

into today's rule a definition for

underground mining distribution

transformers. DOE received one

comment from FPT with a draft,

proposed definition which read:

"Mining transformers shall be

considered to be installed underground

in a mine, inside equipment for use in

mines or as a component of equipment

used for underground digging, tunneling

or dredging operations. The nameplate

shall identify transformer for such use

only." (FPT, No. 102 at p. 3) DOE

considered this definition, and

researched technical sources for

alternative definitions, including IEEE

and the Mine Safety and Health

Administration (MSHA), a division of

the Department of Labor. Neither the

IEEE nor MSHA have a definition for an

underground mining distribution

transformer. Based on consideration of

the above comment, DOE adopts the

following definition for an underground

mining distribution transformer:

Underground mining distribution

transformer means a medium-voltage drytype distribution transformer that is built

only for installation in an underground mine

or inside equipment for use in an

underground mine, and that has a nameplate

which identifies the transformer as being for

this use only.

DOE recognizes that this definition for

underground mining distribution

transformers could be refined if DOE

initiates a rulemaking proceeding that

evaluates energy conservation standards

for underground mining distribution

transformers.

b. Mining Transformer Test Procedure

Comments

Arch Coal commented that mining

transformers often have more than one

secondary connection, and multiple

options for secondary connections,

making it impossible to test using DOE's

test procedure, which provides no

guidance for testing of multiple

secondary transformers. (Arch Coal, No.

115 at p. 1) SMC noted that DOE's test

procedure does not indicate how

multiple winding transformers should

be loaded for the test. (SMC, No. 124 at

pp. 1-2) FPT also noted that mining

transformers are normally designed with

multiple secondary windings at

different kVA ratings. FPT indicated

that DOE would need to provide

clarification in the test procedure on the

appropriate overall kVA rating and

efficiency standard that would apply to

these transformers with multiple

secondary windings. (FPT, No. 102 at

pp. 1-2)

DOE appreciates these comments and

notes that while DOE's test procedure

contains a test method that can be used

for transformers with multiple

secondary connections, it doesn't set the

conditions for testing such units. Based

on comments received, DOE

understands that transformers with

multiple secondary connections are

used solely in underground mining

operations. Since underground mining

transformers are not subject to the

standards adopted in today's final rule,

DOE doesn't need to amend its test

procedures to address this issue at this

time. Before DOE establishes standards

for underground mining transformers,

DOE will amend the test procedures to

specify the testing conditions for these

units. DOE understands that the energy

efficiency of distribution transformers is

generally related to kVA, and that larger

kVA units generally have a higher

efficiency. DOE could, for example,

require that underground mining

transformers be tested at the secondary

connection that yields the highest kVA

value.

3. Less-Flammable, Liquid-Immersed

Transformers

In the NOPR, DOE solicited comment

on the issue of whether it should

include liquid-immersed distribution

transformers that are less flammable

than most liquid-immersed models in

the same product classes as mediumvoltage, dry-type transformers. In

developing and presenting the NOPR,

DOE placed these less flammable liquidimmersed transformers in product

classes with other liquid-immersed

models, separate from the product

classes for dry-type units (see TSD

Chapter 3 for discussion on product

classes).

Cooper Power Systems commented

that the less-flammable, liquidimmersed transformers are used in the

same applications as medium-voltage,

dry-type transformers and therefore

should be held to the same efficiency

standards. (Public Meeting Transcript,

No. 108.6 at p. 91; Cooper, No. 154 at

p. 2) Howard Industries commented that

less-flammable, liquid-immersed

transformers should not be in the same

product class as medium-voltage, drytype transformers. Howard agrees that

some less-flammable liquid-immersed

transformers are used in some of the

same applications as medium-voltage

dry-type transformers, but many are

used in applications that are not

suitable for dry-type transformers and

therefore would not be competing

against a less efficient product.

(Howard, No. 143 at p. 2)

DOE believes that the issue raised by

Cooper and Howard is essentially

whether less-flammable, liquidimmersed transformers should be

treated as a separate class,of liquidimmersed transformers and held to the

same standard as medium voltage drytype transformers.

EPCA provides DOE direction for

establishing product classes. (42 U.S.C.

6295(q)(1)) In general, when evaluating

and establishing energy efficiency

standards, DOE classifies covered

products into classes by: (a) The type of

energy used; or (b) the capacity or other

performance-related features that affect

consumer utility or efficiency. In the

July 2004 ANOPR, DOE concluded that

the design of the transformer (i.e., drytype or liquid-immersed) was a

performance-related feature which

affects the energy efficiency of the

equipment. 69 FR 45385. Accordingly,

DOE concludes that dry-type and liquidimmersed are separate classes of

transformers. Id. Furthermore, while

less-flammable, liquid-immersed

transformers may have distinct

applications apart from other liquidimmersed transformers, DOE does not

believe the less-flammable cooling fluid

affects the energy efficiency potential of

such transformers compared to liquidimmersed transformers using mineral

oil.12 DOE understands that, depending

on the cooling fluid used, lessflammable, liquid-immersed

transformers can have the same energy

efficiency potential as mineral oil

cooled liquid-immersed transformers.

(See TSD Section 5.3) Furthermore, DOE

believes that all less-flammable, liquidimmersed transformers can meet the

standards adopted today with any of the

less-flammable cooling fluids currently

used. Thus, considering the above, DOE

concludes that less-flammable, liquidimmersed transformers have efficiency

characteristics that are similar to other

liquid-immersed transformers and,

therefore, is not setting separate classes

for less-flammable liquid-immersed

transformers. As a result, lessflammable, liquid-immersed

transformers must meet the same energy

efficiency requirements as other liquidimmersed transformers.

4. Rebuilt or Refurbished Distribution

Transformers

In the August 2006 NOPR, DOE

requested comment on its treatment of

rebuilt or refurbished transformers and

the potential impact on consumers,

manufacturers., and national energy use

12 Currently, mineral oil is the standard cooling

fluid used in liquid-immersed distribution

transformers.

 EE-RM/STD-00-550 COMMENT 194

58202 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

be subject to energy efficiency standards 

at some future date, DOE incorporated 

into today's rule a definition for 

underground mining distribution 

transformers. DOE received one 

comment from FPT with a draft, 

proposed definition which read: 

"Mining transformers shall be 

considered to be installed underground 

in a mine, inside equipment for use in 

mines or as a component of equipment 

used for underground digging, tunneling 

or dredging operations. The nameplate 

shall identify transformer for such use 

only." (FPT, No. 102 at p. 3) DOE 

considered this definition, and 

researched technical sources for 

alternative definitions, including IEEE 

and the Mine Safety and Health 

Administration (MSHA), a division of 

the Department of Labor. Neither the 

IEEE nor MSHA have a definition for an 

underground mining distribution 

transformer. Based on consideration of 

the above comment, DOE adopts the 

following definition for an underground 

mining distribution transformer: 

Underground mining distribution 

transformer means a medium-voltage drytype distribution transformer that is built 

only for installation in an underground mine 

or inside equipment for use in an 

underground mine, and that has a nameplate 

which identifies the transformer as being for 

this use only. 

DOE recognizes that this definition for 

underground mining distribution 

transformers could be refined if DOE 

initiates a rulemaking proceeding that 

evaluates energy conservation standards 

for underground mining distribution 

transformers. 

b. Mining Transformer Test Procedure 

Comments 

Arch Coal commented that mining 

transformers often have more than one 

secondary connection, and multiple 

options for secondary connections, 

making it impossible to test using DOE's 

test procedure, which provides no 

guidance for testing of multiple 

secondary transformers. (Arch Coal, No. 

115 at p. 1) SMC noted that DOE's test 

procedure does not indicate how 

multiple winding transformers should 

be loaded for the test. (SMC, No. 124 at 

pp. 1-2) FPT also noted that mining 

transformers are normally designed with 

multiple secondary windings at 

different kVA ratings. FPT indicated 

that DOE would need to provide 

clarification in the test procedure on the 

appropriate overall kV A rating and 

efficiency standard that would apply to 

these transformers with multiple 

secondary windings. (FPT, No. 102 at 

pp.1-2) 

DOE appreciates these comments and 

notes that while DOE's test procedure 

contains a test method that can be used 

for transformers with multiple 

secondary connections, it doesn't set the 

conditions for testing such units. Based 

on comments received, DOE 

understands that transformers with 

multiple secondary connections are 

used solely in underground mining 

operations. Since underground mining 

transformers are not subject to the 

standards adopted in today's final rule, 

DOE doesn't need to amend its test 

procedures to address this issue at this 

time. Before DOE establishes standards 

for underground mining transformers, 

DOE will amend the test procedures to 

specify the testing conditions for these 

units. DOE understands that the energy 

efficiency of distribution transformers is 

generally related to kVA, and that larger 

kVA units generally have a higher 

efficiency. DOE could, for example, 

require that underground mining 

transformers be tested at the secondary 

connection that yields the highest kV A 

value. 

3. Less-Flammable, Liquid-Immersed 

Transformers 

In the NOPR, DOE solicited comment 

on the issue of whether it should 

include liquid-immersed distribution 

transformers that are less flammable 

than most liquid-immersed models in 

the same product classes as mediumvoltage, dry-type transformers. In 

developing and presenting the NOPR, 

DOE placed these less flammable liquidimmersed transformers in product 

classes with other liquid-immersed 

models, separate from the product 

classes for dry-type units (see TSD 

Chapter 3 for discussion on product 

classes). 

Cooper Power Systems commented 

that the less-flammable, liquidimmersed transformers are used in the 

same applications as medium-voltage, 

dry-type transformers and therefore 

should be held to the same efficiency 

standards. (Public Meeting Transcript, 

No. 108.6 at p. 91; Cooper, No. 154 at 

p. 2) Howard Industries commented that 

less-flammable, liquid-immersed 

transformers should not be in the same 

product class as medium-voltage, drytype transformers. Howard agrees that 

some less-flammable liquid-immersed 

transformers are used in some of the 

same applications as medium-voltage 

dry-type transformers, but many are 

used in applications that are not 

suitable for dry-type transformers and 

therefore would not be competing 

against a less efficient product. 

(Howard, No. 143 at p. 2) 

DOE believes that the issue raised by 

Cooper and Howard is essentially 

whether less-flammable, liquidimmersed transformers should be 

treated as a separate class of liquidimmersed transformers and held to the 

same standard as medium voltage drytype transformers. 

EPCA provides DOE direction for 

establishing product classes. (42 U.S.C. 

6295(q)(1)) In general, when evaluating 

and establishing energy efficiency 

standards. DOE classifies covered 

products into classes by: (a) The type of 

energy used; or (b) the. capacity or other 

performance-related features that affect 

consumer utility or efficiency. In the 

July 2004 ANOPR, DOE concluded that 

the design of the transformer (Le., drytype or liquid-immersed) was a 

performance-related feature which 

affects the energy efficiency of the 

equipment. 69 FR 45385. Accordingly, 

DOE concludes that dry-type and liquidimmersed are separate classes of 

transformers. [d. Furthermore, while 

less-flammable, liquid-immersed 

transformers may have distinct 

applications apart from other liquidimmersed transformers, DOE does not 

believe the less-flammable cooling fluid 

affects the energy efficiency potential of 

such transformers compared to liquidimmersed transformers using mineral 

oil.12 DOE understands that, depending 

on the cooling fluid used, lessflammable, liquid-immersed 

transformers can have the same energy 

efficiency potential as mineral oil 

cooled liquid-immersed transformers. 

(See TSD Section 5.3) Furthermore, DOE 

believes that all less-flammable, liquidimmersed transformers can meet the 

standards adopted today with any of the 

less-flammable cooling fluids currently 

used. Thus, considering the above, DOE 

concludes that less-flammable, liquidimmersed transformers have efficiency 

characteristics that are similar to other 

liquid-immersed transformers and, 

therefore, is not setting separate classes 

for less-flammable liquid-immersed 

transformers. As a result, lessflammable, liquid-immersed 

transformers must meet the same energy 

efficiency requirements as other liquidimmersed transformers. 

4. Rebuilt or Refurbished Distribution 

Transformers 

In the August 2006 NOPR, DOE 

requested comment on its treatment of 

rebuilt or refurbished transformers and 

the potential impact on consumers, 

manufacturers, and national energy use 

<2 Currently. mineral oil is the standard cooling 

fluid used in liquid-immersed distribution 

transformers. 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations 58203

if these transformers were not covered

by the standard. In the NOPR, DOE

expressed doubt that its authority under

EPCA extends to rebuilt or refurbished

products or equipment. 71 FR 44366-

44367. It also noted that throughout the

program's history, DOE has not sought

to regulate "used" products that had

been reconditioned or undergone major

repairs. 71 FR 44367. However, DOE

acknowledged that it could be argued

that rebuilt transformers are

"manufactured" again when they are

rebuilt, and, therefore, under this

argument, they could be classified as

new distribution transformers subject to

standards.

DOE received numerous comments on

the topic of rebuilt and refurbished

transformers, reflecting a diverse range

of views on this issue. The American

Council for an Energy-Efficient

Economy (ACEEE), BBF & Associates

(BBF), and the Copper Development

Association (CDA) all recommended

that DOE cover and regulate rebuilt

transformers. (ACEEE, No. 127 at p. 10;

BBF, No. 122 at p. 2; CDA, No. 111 at

p. 2) ERMCO, FPT, Howard Industries,

HVOLT, NEMA, and NRDC all

recommended that DOE cover and

regulate both rebuilt and refurbished

transformers. (ERMCO, No. 96 at p. 2;

FPT, No. 102 at p. 3; Public Meeting

Transcript, No. 108.6 at p. 90; Public

Meeting Transcript, No. 108.6 at p. 82;

Howard, No. 143 at p. 2; Public Meeting

Transcript, No. 108.6 at pp. 47, 80, and

87; HVOLT, No. 144 at p. 4; NEMA, No.

125 at p. 3; Public Meeting Transcript,

No. 108.6 at p. 81; NRDC, No. 117 at p.

12)

ACEEE suggested regulating rebuilt

transformers through a phased-in

approach where rebuilt transformers

become covered and regulated at a later

time. (ACEEE, No. 127 at p. 10) NRDC

commented that if DOE determines it

does not have the authority under the

current rule to regulate remanufactured

transformers, then it should establish a

new product class (remanufactured

transformers) to regulate. NRDC

encouraged DOE to regulate refurbished

transformers, perhaps on the basis of

organizing an informal, inclusive,

consensus-seeking process. (Public

believes if a transformer is resold into

the marketplace, then it can be

regulated. However, if it is

remanufactured internally, the standard

would not apply. (Public Meeting

Transcript, No. 108.6 at p. 82)

The Edison Electric Institute (EEI)

supported DOE's proposal not to

include used or refurbished

transformers as part of the standard. EEI

stated that EPCA does not include

products that are used, refurbished, or

rebuilt. It commented that any concern

that customers will repair a product

instead of buying a new, standardscompliant product applies to all

regulated products, not just

transformers. Furthermore, EEI noted

that rebuilt transformers are only a

small part of the market. (Public

Meeting Transcript, No. 108.6 at p. 79)

National Grid commented that it

believes national standards should not

apply to refurbished or rebuilt

transformers. (NGrid, No. 138 at p. 2)

Southern Company commented that it

agrees DOE does not have the authority

to regulate refurbished transformers.

(Public Meeting Transcript, No. 108.6 at

p. 64)

DOE has carefully considered its

authority to establish energy

conservation standards for rebuilt and

refurbished distribution transformers in

light of these comments, and, as

discussed below, concludes that its

authority does not extend to rebuilt and

refurbished products. The relevant

statutory provisions are discussed

below, as well as the agency's rationale

in reaching this conclusion.

Section 332 of EPCA provides that it

shall be unlawful for any manufacturer

or private labeler to distribute in

commerce any new covered product

which is not in conformity with an

applicable energy conservation

standard. (42 U.S.C. 6302(a)(5)

(emphasis added)) 13 Congress made

section 332 applicable to distribution

transformers in section 346(f)(1) of

EPCA. (42 U.S.C. 6317(f)(1)) Section

332(b) defines "new covered product"

to mean "a covered product the title of

which has not passed to a purchaser

who buys such product for purposes

other than (1) reselling such product, or

(2) leasing such product for a period in

excess of one year." (42 U.S.C. 6302(b))

That is, a new covered product is one

for which the title has not passed to a

consumer.14

DOE believes that the definition of

"new covered product" in section 332 is

ambiguous on the question of whether

a rebuilt or refurbished distribution

transformer is subject to DOE's authority

to set energy conservation standards. On

this point, DOE notes that section 332

does not expressly provide that "new

covered product" means a new product

the title of which is transferred by the

original manufacturer to an original

owner. Conversely, the definition of

"new covered product" does not

expressly exclude substantially

remanufactured products that are

subsequently resold (i.e., a product sold

or disposed of by the original owner that

is rebuilt or refurbished by an entity

which resells it to another person). In

order to resolve this ambiguity regarding

DOE's authority to regulate rebuilt and

refurbished distribution transformers,

DOE considered both congressional

intent and the nature of the existing

distribution transformer market.

There is no legislative history that

reflects Congress's intent. However,

DOE views the. way Congress chose to

define "new covered product" in EPCA

as the strongest indicator that the term

was not intended to apply to rebuilt or

refurbished products. Specifically, it is

unlikely that Congress would have

made transfer of "title" the test of

whether a product was "new" if it

intended to cover rebuilt or refurbished

products. The most reasonable

interpretation of the statutory definition

is that Congress intended that this

provision apply to newly manufactured

products the title of which has not

passed for the first time to a consumer

of the product. Such interpretation

provides certainty and clarity for the

regulated entities subject to these

statutory provisions.

In addition, if DOE were to interpret

"new covered product" as applying to

other than newly manufactured

products EPCA's testing and labeling

provisions would be much harder to

implement and enforce. Identifying

"manufacturers" under such an

interpretation likely would be

difficult 15 and it also likely would be

Meeting Transcript, No. 108.6 at p. 81; 13 DOE only regulates equipment that is either

NRDC, No. 117 at p. 12) specifically enumerated as "covered equipment" or

NEMA commented that it believes is equipment for which DOE has been granted

authority to regulate in another statutory provision.

DOE should establish, in its final rule, Section 346 of EPCA (42 U.S.C. 6317) grants DOE

a mechanism to monitor whether rebuilt authority to regulate distribution transformers,

or refurbished transformers are being without including the specific language designating

used as a means to circumvent the them as "covered equipment." The failure to

include the words "covered equipment" in Section

efficiency standard, and stated that DOE 346 of EPCA or to include distribution transformers

should consider covering and regulating in Section 340 of EPCA, which lists the covered

such units, if necessary. (NEMA, No. equipment in Part C, does not mean that

The California Energy distribution transformers will not be treated as

125 at P. 3) "covered equipment" for purposes of DOE

Commission (CEC) commented that it exercising its regulatory authority.

14 In the context of this discussion, the term

"consumer" is used to identify a product's end

user; e.g., "consumer" does not include a party that

takes title of a product solely for the purpose of

resale or for leasing the product for less than a year.

15 For example, a business that rebuilds or

remanufactures products, instead of reselling them

Continued

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58203 

if these transformers were not covered 

by the standard. In the NOPR, DOE 

expressed doubt that its authority under 

EPCA extends to rebuilt or refurbished 

products or equipment. 71 FR 44366-

44367. It also noted that throughout the 

program's history, DOE has not sought 

to regulate "used" products that had 

been reconditioned or undergone major 

repairs. 71 FR 44367. However, DOE 

acknowledged that it could be argued 

that rebuilt transformers are 

"manufactured" again when they are 

rebuilt, and, therefore, under this 

argument, they could be classified as 

new distribution transformers subject to 

standards. 

DOE received numerous comments on 

the topic of rebuilt and refurbished 

transformers, reflecting a diverse range 

of views on this issue. The American 

Council for an Energy-Efficient 

Economy (ACEEE), BBF & Associates 

(BBF), and the Copper Development 

Association (CDA) all recommended 

that DOE cover and regulate reb\\ilt 

transformers. (ACEEE, No. 127 at p. 10; 

BBF, No. 122 at p. 2; CDA, No. 111 at 

p. 2) ERMCO, FPT, Howard Industries, 

HVOL T, NEMA, and NRDC all 

recommended that DOE cover and 

regulate both rebuilt and refurbished 

transformers. (ERMCO, No. 96 at p. 2; 

FPT, No. 102 at p. 3; Public Meeting 

Transcript, No. 108.6 at p. 90; Public 

Meeting Transcript, No. 108.6 at p. 82; 

Howard, No. 143 at p. 2; Public Meeting 

Transcript, No. 108.6 at pp. 47, 80, and 

87; HVOLT, No. 144 at p. 4; NEMA, No. 

125 at p. 3; Public Meeting Transcript, 

No. 108.6 at p. 81; NRDC, No. 117 at p. 

12) 

ACEEE suggested regulating rebuilt 

transformers through a phased-in 

approach where rebuilt transformers 

become covered and regulated at a later 

time. (ACEEE, No. 127 at p. 10) NRDC 

commented that if DOE determines it 

does not have the authority under the 

current rule to regulate remanufactured 

transformers, then it should establish a 

new product class (remanufactured 

transformers) to regulate. NRDC 

encouraged DOE to regulate refurbished 

transformers, perhaps on the basis of 

organizing an informal, inclusive, 

consensus-seeking process. (Public 

Meeting Transcript, No. 108.6 at p. 81; 

NRDC, No. 117 at p. 12) 

NEMA commented that it believes 

DOE should establish, in its final rule, 

a mechanism to monitor whether rebuilt 

or refurbished transformers are being 

used as a means to circumvent the 

efficiency standard, and stated that DOE 

should consider covering and regulating 

such units, if necessary. (NEMA, No. 

125 at p. 3) The California Energy 

Commission (CEC) commented that it 

believes if a transformer is resold into 

the marketplace, then it can be 

regulated. However, if it is 

remanufactured internaUy, the standard 

would not apply. (Public Meeting 

Transcript, No. 108.6 at p. 82) 

The Edison Electric Institute (EEl) 

supported DOE's proposal not to 

include used or refurbished 

transformers as part of the standard. EEl 

stated that EPCA does not include 

products that are used, refurbished, or 

rebuilt. It commented that any concern 

that customers will repair a product 

instead of buying a new, standardscompliant product applies to all 

regulated products, not just 

transformers. Furthermore, EEl noted 

that rebuilt transformers are only a 

small part of the market. (Public 

Meeting Transcript, No. 108.6 at p. 79) 

National Grid commented that it 

believes national standards should not 

apply to refurbished or rebuilt 

transformers. (NGrid, No. 138 at p. 2) 

Southern Company commented that it 

agrees DOE does not have the authority 

to regulate refurbished transformers. 

(Public Meeting Transcript, No. 108.6 at 

p.64) 

DOE has carefully considered its 

authority to establish energy 

conservation standards for rebuilt and 

refurbished distribution transformers in 

light of these comments, and, as 

discussed below, concludes that its 

authority does not extend to rebuilt and 

refurbished products. The relevant 

statutory provisions are discussed 

below, as well as the agency's rationale 

in reaching this conclusion. 

Section 332 of EPCA provides that it 

shall be unlawful for any manufacturer 

or private labeler to distribute in 

commerce any new covered product 

which is not in conformity with an 

applicable energy conservation 

standard. (42 U.S.C. 6302(a)(5) 

(emphasis added)) 13 Congress made 

section 332 applicable to distribution 

transformers in section 346(f)(1) of 

EPCA. (42 U.S.C. 6317(f)(1)) Section 

332(b) defines "new covered product" 

to mean "a covered product the title of 

which has not passed to a purchaser 

who buys such product for purposes 

13 DOE only regulates equipment that is either 

specifically enumerated as "covered equipment" or 

is equipment for which DOE has been granted 

authority to regulate in another statutory provision. 

Section 346 of EPCA (42 U.S.C. 6317) grants DOE 

authority to regulate distribution transformers, 

without including the specific language designating 

them as "covered equipment." The failure to 

include the words" covered equipment" in Section 

346 of EPCA or to include distribution transformers 

in Section 340 of EPCA, which lists the covered 

equipment in Part C, does not mean that 

distribution transformers will not be treated as 

"covered equipment" for purposes of DOE 

exercising its regulatory authority. 

other than (1) reselling such product, or 

(2) leasing such product for a period in 

excess of one year." (42 U.S.C. 6302(b)) 

That is, a new covered product is one 

for which the title has not passed to a consumer.14 

DOE believes that the definition of 

"new covered product" in section 332 is 

ambiguous on the question of whether 

a rebuilt or refurbished distribution 

transformer is subject to DOE's authority 

to set energy conservation standards. On 

this point, DOE notes that section 332 

does not expressly provide that "new 

covered product" means a new product 

the title of which is transferred by the 

original manufacturer to an original 

owner. Conversely, the definition of 

"new covered product" does not 

expressly exclude substantially 

remanufactured products that are 

subsequently resold (Le., a product sold 

or disposed of by the original owner that 

is rebuilt or refurbished by an entity 

which resells it to another person). In 

order to resolve this ambiguity regarding 

DOE's authority to regulate rebuilt and 

refurbished distribution transformers, 

DOE considered both congressional 

intent and the nature of the existing 

distribution transformer market. 

There is no legislative history that 

reflects Congress's intent. However, 

DOE views the way Congress chose to 

define "new covered product" in EPCA 

as the strongest indicator that the term 

was not intended to apply to rebuilt or 

refurbished products. Specifically, it is 

unlikely that Congress would have 

made transfer of "title" the test of 

whether a product was "new" if it 

intended to cover rebuilt or refurbished 

products. The most reasonable 

interpretation of the statutory definition 

is that Congress intended that this 

provision apply to newly manufactured 

products the title of which has not 

passed for the first time to a consumer 

of the product. Such interpretation 

provides certainty and clarity for the 

regulated entities subject to these 

statutory provisions. 

In addition, if DOE were to interpret 

"new covered product" as applying to 

other than newly manufactured 

products EPCA's testing and labeling 

provisions would be much harder to 

implement and enforce. Identifying 

"manufacturers" under such an 

interpretation likely would be 

difficult 15 and it also likely would be 

14 In the context of this discussion, the term 

"consumer" is used to identify a product's end 

user; e.g., "consumer" does not include a party that 

takes title of a product solely for the purpose of 

resale or for leasing the product for less than a year. 

15 For example, a business that rebuilds or 

remanufactures products, instead of reselling them 

Continued 
58204 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007/Rules and Regulations

difficult for DOE to distinguish between

rebuilt products that are not covered

and those products that were so

extensively rebuilt as to be considered

"new", and therefore subject to these

provisions.

In terms of the existing distribution

transformer market, DOE understands

that rebuilt and refurbished

transformers typically are either: (1) A

product sold by the original

manufacturer or private labeler, which

after purchase by a consumer, is then

modified and resold by another party; or

(2) a product that following purchase by

a consumer is modified and retained by

that consumer. For the above-stated

reasons, DOE concludes that rebuilt and

refurbished distribution transformers

are not "new covered products" under

EPCA, and therefore, are not subject to

DOE's energy conservation standards or

test procedures.16 With respect to the

first scenario, upon transfer of the title

of the distribution transformer to the

consumer, the distribution transformer

is no longer a new covered product,

therefore, not subject to DOE regulations

even if it is subsequently re-sold.

Similarly, with respect to distribution

transformers that are refurbished or

rebuilt for or by the consumer (i.e., they

are not re-sold), DOE lacks authority

over those transformers because they are

neither "new" covered products nor

distributed in commerce. Furthermore,

if refurbished or rebuilt transformers

that are sold to another party were

covered but not those that are

refurbished or rebuilt for the consumer,

DOE believes this would likely create an

inequity that Congress would not have

intended since a purpose of EPCA was

to establish a single national standard,

not multiple standards for the same

product.

As discussed above, for distribution

transformers in particular, DOE

understands that at present, rebuilt

transformers are only a small part of

today's market. If conditions changefor example, if rebuilt transformers

become a larger share of the transformer

market in response to the energy

conservation standards adopted today

(e.g., there is a significant increase in

the purchase of rebuilt or refurbished

transformers), DOE would consider

appropriate action at that time.

and transferring title, could operate as a repair

facility for consumers who already own the used

products. The business would simply rebuild the

product for a fee and return it to the owner; there

would be no transfer of title.

76DOE notes that de minimis use of used or

recycled parts would not make a "new product"

into a used product.

5. Uninterruptible Power System

Transformers

The Energy Policy Act of 2005

(EPACT 2005) exempted

"Uninterruptible Power System

transformer" from the definition of

"distribution transformer." (42 U.S.C.

6291(35)(B)(ii)) DOE indicated when it

adopted the EPACT 2005 efficiency

requirements for low-voltage dry-type

distribution transformers that it believed

the name of this exemption contained a

clerical error. 70 FR 60408 (October 18,

2005). DOE stated in the October 2005

final rule notice that it intended to make

corrections where necessary to the

statutory language, and gave the

following example: "the definition of

"distribution transformer" in section

135(a)(2)(B) of EPACT 2005 uses the

term "Uninterruptible Power System

transformer" instead of

"Uninterruptible Power Supply

transformer." DOE later codified the

name change of UPS from "System" to

"Supply" in the distribution

transformer test procedure final rule,

and it noted "DOE is amending its

definition of distribution transformer to

correct use of * * * UPS transformers

[which] are commonly referred to as

"Uninterruptible Power Supply

transformers," not "Uninterruptible

Power System transformers." 71 FR

24977 (April 27, 2006).

In the April 2006 final rule notice,

DOE also adopted the following

definition of an "uninterruptible power

supply transformer": "Uninterruptible

Power Supply transformer means a

transformer that supplies power to an

uninterruptible power system, which in

turn supplies power to loads that are

sensitive to power failure, power sags,

over voltage, switching transients, line

noise, and other power quality factors."

71 FR 24997; 10 CFR section 431.192.

This definition, matches the definition

of "Uninterruptible Power Supply

transformer" as published in NEMA TP

2-2005 "Standard Test Method for

Measuring the Energy Consumption of

Distribution Transformers."

In a comment submitted to DOE in

this rulemaking, NEMA expressed its

concern that DOE's revision of the term

used for this exemption and the

definition of the term, had introduced

some confusion as to the applicability of

this exemption. (NEMA, No. 174 at p. 2)

NEMA requests that DOE change the

name of this exemption from

"Uninterruptible Power Supply

transformer" back to the original name,

as it appeared in EPACT 2005-

"Uninterruptible Power System

transformer." (NEMA, No. 174 at p. 2)

NEMA also asked that DOE revise the

definition associated with

uninterruptible power system

transformers, to clarify that the

exemption applies to transformers

incorporated into uninterruptible power

systems rather than supplying power to

them. (NEMA, No. 174 at p. 2)

In the rulemaking in which it codified

the exclusion of "Uninterruptible Power

Supply transformer" from the definition

of "distribution transformer," DOE

received no comments about either the

exclusion or use of this term or DOE's

definition of the term. In the

supplemental notice of proposed

rulemaking (SNOPR) in which it had

proposed the exclusion, DOE stated that

"an uninterruptible power supply

transformer is not a distribution

transformer" and that "[i]t is used as

part of the electric supply system for

sensitive equipment that cannot tolerate

system interruptions or distortions, and

counteracts such irregularities." 69 FR

45505, 45512 (July 29, 2004). DOE sees

no reason to modify the term

"UninterruptiblePower Supply

transformer" in its regulations, or to

completely revise its definition of this

term. Nonetheless, DOE recognizes that,

in characterizing an uninterruptible

power supply transformer as one that

"supplies power to" an uninterruptible

power system, 10 CFR 431.192, DOE's

definition may be confusing and slightly

inconsistent with its description in the

SNOPR of this type of transformer.

Therefore, to make the definition

consistent with its expressed intent in

the SNOPR, to which there was no

objection, in today's rule DOE is

clarifying its definition of

"Uninterruptible Power Supply

transformer" by replacing the phrase

"supplies power to" with "is used

within." This modification does not

expand or reduce the intended group of

Uninterruptible Power Supply

transformers that DOE wishes to exempt

from its standard. Rather, this change

provides greater clarity of the scope of

this exemption.

B. Engineering Analysis

For the engineering analysis, which

established the relationship between

cost and efficiency for certain

distribution transformer kVA ratings

considered in this rulemaking, DOE

continued to use transformer design

software developed for the rulemaking

by Optimized Program Service (OPS).

DOE verified the findings of this

software by comparing designs during

manufacturer interviews, and through a

testing and teardown analysis of six

transformers. Chapter 5 of the TSD

contains detailed discussion on the

 EE-RM/STD-00-550 COMMENT 194

58204 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

difficult for DOE to distinguish between 

rebuilt products that are not covered 

and those products that were so 

extensively rebuilt as to be considered 

"new", and therefore subject to these 

provisions. 

In terms of the existing distribution 

transformer market, DOE understands 

that rebuilt and refurbished 

transformers typically are either: (1) A 

product sold by the original 

manufacturer or private labeler, which 

after purchase by a consumer, is then 

modified and resold by another party; or 

(2) a product that following purchase by 

a consumer is modified and retained by 

that consumer. For the above-stated 

reasons, DOE concludes that rebuilt and 

refurbished distribution transformers 

are not "new covered products" under 

EPCA, and therefore, are not subject to 

DOE's energy conservation standards or 

test procedures.16 With respect to the 

first scenario, upon transfer of the title 

of the distribution transformer to the 

consumer, the distribution transformer 

is no longer a new covered product, 

therefore, not subject to DOE regulations 

even if it is subsequently re-sold. 

Similarly, with respect to distribution 

transformers that are refurbished or 

rebuilt for or by the consumer (Le., they 

are not re-sold), DOE lacks authority 

over those transformers because they are 

neither "new" covered products nor 

distributed in commerce. Furthermore, 

if refurbished or rebuilt transformers 

that are sold to another party were 

covered but not those that are 

refurbished or rebuilt for the consumer, 

DOE believes this would likely create an 

inequity that Congress would not have 

intended since a purpose of EPCA was 

to establish a single national standard, 

not multiple standards for the same 

product. 

As discussed above, for distribution 

transformers in particular, DOE 

understands that at present, rebuilt 

transformers are only a small part of 

today's market. If conditions changefor example, if rebuilt transformers 

become a larger share of the transformer 

market in response to the energy 

conservation standards adopted today 

(e.g., there is a significant increase in 

the purchase of rebuilt or refurbished 

transformers), DOE would consider 

appropriate action at that time. 

and transferring title, could operate as a repair 

facility for consumers who already own the used 

products. The business would simply rebuild the 

product for a fee and return it to the owner; there 

would be no transfer of title. 

l6DOE notes that de minimis use of used or 

recycled parts would not make a "new product" 

into a used product. 

5. Uninterruptible Power System 

Transformers 

The Energy Policy Act of 2005 

(EPACT 2005) exempted 

"Uninterruptible Power System 

transformer" from the definition of 

"distribution transformer." (42 U.S.C. 

6291(35)(B)(ii)) DOE indicated when it 

adopted the EP ACT 2005 efficiency 

requirements for low-voltage dry-type 

distribution transformers that it believed 

the name of this exemption contained a 

clerical error. 70 FR 60408 (October 18, 

2005). DOE stated in the October 2005 

final rule notice that it intended to make 

corrections where necessary to the 

statutory language, and gave the 

following example: "the definition of 

"distribution transformer" in section 

135(a)(2)(B) of EPACT 2005 uses the 

term "Uninterruptible Power System 

transformer" instead of 

"Uninterruptible Power Supply 

transformer." DOE later codified the 

name change of UPS from" System" to 

"Supply" in the distribution 

transformer test procedure final rule, 

and it noted "DOE is amending its 

definition of distribution transformer to 

correct use of * * * UPS transformers 

[whichl are commonly referred to as 

"Uninterruptible Power Supply 

transformers," not "Uninterruptible 

Power System transformers." 71 FR 

24977 (April 27, 2006). 

In the April 2006 final rule notice, 

DOE also adopted the following 

definition of an "uninterruptible power 

supply transformer": "Uninterruptible 

Power Supply transformer means a 

transformer that supplies power to an 

uninterruptible power system, which in 

turn supplies power to loads that are 

sensitive to power failure, power sags, 

over voltage, switching transients, line 

noise, and other power quality factors." 

71 FR 24997; 10 CFR section 431.192. 

This definition, matches the definition 

of "Uninterruptible Power Supply 

transformer" as published in NEMA TP 

2-2005 "Standard Test Method for 

Measuring the Energy Consumption of 

Distribution Transformers." 

In a comment submitted to DOE in 

this rulemaking, NEMA expressed its 

concern that DOE's revision of the term 

used for this exemption and the 

definition of the term, had introduced 

some confusion as to the applicability of 

this exemption. (NEMA, No. 174 at p. 2) 

NEMA requests that DOE change the 

name of this exemption from 

"Uninterruptible Power Supply 

transformer" back to the original name, 

as it appeared in EP ACT 2005-

"Uninterruptible Power System 

transformer." (NEMA, No. 174 at p. 2) 

NEMA also asked that DOE revise the 

definition associated with 

uninterruptible power system 

transformers, to clarify that the 

exemption applies to transformers 

incorporated into uninterruptible power 

systems rather than supplying power to 

them. (NEMA, No. 174 at p. 2) 

In the rulemaking in which it codified 

the exclusion of "Uninterruptible Power 

Supply transformer" from the definition 

of "distribution transformer," DOE 

received no comments about either the 

exclusion or use of this term or DOE's 

definition of the term. In the 

supplemental notice of proposed 

rulemaking (SNOPR) in which it had 

proposed the exclusion, DOE stated that 

"an uninterruptible power supply 

transformer is not a distribution 

transformer" and that "[ilt is used as 

part of the electric supply system for 

sensitive equipment that cannot tolerate 

system interruptions or distortions, and 

counteracts such irregularities." 69 FR 

45505,45512 (July 29, 2004). DOE sees 

no reason to modify the term 

"Uninterruptible Power Supply 

transformer" in its regulations, or to 

completely revise its definition of this 

term. Nonetheless, DOE recognizes that, 

in characterizing an: uninterruptible 

power supply transformer as one that 

"supplies power to" an uninterruptible 

power system, 10 CFR 431.192, DOE's 

definition may be confusing and slightly 

inconsistent with its description in the 

SNOPR of this type of transformer. 

Therefore, to make the definition 

consistent with its expressed intent in 

the SNOPR, to which there was no 

objection, in today's rule DOE is 

clarifying its definition of 

"Uninterruptible Power Supply 

transformer" by replacing the phrase 

"supplies power to" with "is used 

within." This modification does not 

expand or reduce the intended group of 

Uninterruptible Power Supply 

transformers that DOE wishes to exempt 

from its standard. Rather, this change 

provides greater clarity of the scope of 

this exemption. 

B. Engineering Analysis 

For the engineering analysis, which 

established the relationship between 

cost and efficiency for certain 

distribution transformer kV A ratings 

considered in this rulemaking, DOE 

continued to use transformer design 

software developed for the rulemaking 

by Optimized Program Service (OPS). 

DOE verified the findings of this 

software by comparing designs during 

manufacturer interviews, and through a 

testing and teardown analysis of six 

transformers. Chapter 5 of the TSD 

contains detailed discussion on the 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 / Rules and Regulations

methodology followed for the

engineering analysis.

C. Life-Cycle Cost and Payback Period

Analysis

The LCC is the total customer cost

over the life of the equipment, including

purchase expense and operating costs

(including energy expenditures and

maintenance). To compute the LCC,

DOE summed the installed price of a

transformer and the discounted annual

future operating costs over the lifetime

of the equipment. The PBP is the change

in purchase expense due to an increased

efficiency standard divided by the

change in first-year operating cost that

results from the standard. DOE'

expresses PBP in years. The data inputs

to the PBP calculation are the purchase

expense (otherwise known as the total

installed consumer cost or first cost) and

the annual operating costs for each

selected design. The inputs to the

transformer purchase expense are the

equipment price and the installation

cost, with appropriate markups to

reflect price increases as the transformer

passes through the distribution channel.

The inputs to the operating costs are the

annual energy consumption and the

electricity price. The PBP calculation

uses the same inputs as the LCC

analysis but, since it is a simple

payback, the operating cost is for the

year the standard takes effect, assumed

to be 2010.

For each efficiency level DOE

analyzed, the LCC analysis required

input data for the total installed cost of

the equipment, the operating cost, and

the discount rate. Equipment price,

installation cost, and baseline and

standard design selection affect the

installed cost of the equipment.

Transformer loading, load growth,

power factor, annual energy use and

demand, electricity costs, electricity

price trends, and maintenance costs

affect the operating cost. The effective

date of the standard, the discount rate,

and the lifetime of equipment affect the

calculation of the present value of

annual operating cost savings from a

proposed standard.

The following sections contain brief

discussions of comments on the inputs

and key assumptions of DOE's LCC

analysis and explain how DOE took

these comments into consideration.

1. Inputs Affecting Installed Cost

a. Installation Costs

Higher efficiency distribution

transformers tend to be larger and

heavier than less efficient designs. DOE

therefore included the increased cost of

installing larger, heavier transformers as

a component of the first cost of more

efficient transformers. In the NOPR,

DOE presented the installation cost

model and solicited comment from

stakeholders. For details of the

installation cost calculations, see TSD

section 7.3.1.

In response to both the NOPR and the

NODA, many stakeholders commented

that it is important for DOE to take into

consideration the costs and reliability

impacts of installing transformers in

space-constrained situations. ACEEE

recommended that DOE factor into its

calculations space-constraint costs,

based on the percentage of transformers

that will necessitate modification of the

vaults in which they are installed and

the average cost for such modifications.

(Public Meeting Transcript, No. 108.6 at

pp. 130-131) EEI noted that DOE's

analysis should include a space

occupancy factor, although it might be

hard to estimate. (Public Meeting

Transcript, No. 108.6 at p. 129) In

addition, EEI expressed concern

regarding size and weight implications

for the reliability and cost of the

transformer, especially for TSL4, noting

that, for pole-mounted transformers,

more weight will increase the stress on

poles and noting that manufacturers

doubt that they can produce all

equipment needed at TSL4. (Public

Meeting Transcript, No. 108.6 at p. 31)

HVOLT recommended that the analysis

account for volume and weight in a

mathematical equation to account for

space occupancy costs. (Public Meeting

Transcript, No. 108.6 at p. 129) NEMA

commented that, with higher standards,

manufacturers may use lower quality

steel and switch from copper to

aluminum, and that this may increase

the weight and/or size of transformers.

(Public Meeting Transcript, No. 108.6 at

p. 132) Metglas commented that

transformers are smaller and lighter

than those made 30-40 years ago, and

stated that there will not be an issue

with size and weight of amorphous core

transformers. (Metglas, No. 144 at p. 3)

DOE responded to the comments

raised regarding space-constraint

implications for installation costs by

formulating a method and a cost

equation for estimating the economic

impacts of space constraints and issuing

a NODA that solicited comments on the

method and equations proposed for

evaluating such costs. 72 FR 6186-6190.

DOE then performed a subgroup

analysis of space-constrained vault

transformers, for which DOE modeled

potential standards-induced vault

modification costs with an appropriate

equation that included both fixed and

volume-dependent variable

components. The results of this analysis

58205

are detailed in Chapter 11 of the TSD,

and DOE took these costs into

consideration in the selection of the

standard level for this rule.

b. Baseline and Standard Design

Selection

A major factor in estimating the

economic impact of a proposed standard

is the selection of transformer designs in

the base case and standards case

scenarios. A key issue in the selection

process is the degree to which

transformer purchasers take into

consideration the cost of transformer

losses (A and B factors) when choosing

a transformer (i.e., whether they

"evaluate"), both before and after the

implementation of a standard. The

purchase-decision model in the LCC

spreadsheet selects which of the

hundreds of designs in the engineering

database are likely to be selected by

transformer purchasers. The LCC

transformer selection process is

discussed in detail in TSD Chapter 8,

section 8.2.

DOE received several comments

regarding the fraction of transformer

purchasers that evaluate distribution

transformer electrical losses before

purchase and how transformer

purchasers evaluate these losses.

HVOLT estimates that 20 percent of the

market for medium-voltage, dry-type

transformers evaluates and places a

value of $3.00/watt on loss evaluation,

while the market share of transformers

meeting TP 1 levels for liquid-immersed

transformers is 75 to 80 percent. (Public

Meeting Transcript, No. 108.6 at p. 216)

NEMA commented that 10 years ago

there was a trend where customers

bought cheaper and less efficient

transformers every year due to less loss

evaluation, but that the market has

turned around and now an increasing

percentage of customers are buying the

more efficient TP 1 transformers. NEMA

also noted that the shipments data it has

submitted over the years to DOE have

shown this changing trend. (Public

Meeting Transcript, No. 108.6 at p. 220;

NEMA, No. 125 at p. 3)

In response to these comments, DOE

developed its baseline market model

using the most detailed and reliable data

available. This included data that

NEMA supplied providing TP 1

transformer market shares, in addition

to publicly available data regarding

evaluation parameters used by

distribution transformer purchasers. For

the final rule, DOE set average A and B

values of 3.85 and 1.16 $/watt

respectively for design lines 1, 2 and 4,

and average A and B values of 3.85 and

1.93 $/watt for design lines 3 and 5.

These slight adjustments to the

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58205 

methodology followed for the 

engineering analysis. 

C. Life-Cycle Cost and Payback Period 

Analysis 

The LCC is the total customer cost 

over the life of the equipment, including 

purchase expense and operating costs 

(including energy expenditures and 

maintenance). To compute the LCC, 

DOE summed the installed price of a 

transformer and the discounted annual 

future operating costs over the lifetime 

of the equipment. The PBP is the change 

in purchase expense due to an increased 

efficiency standard divided by the 

change in first-year operating cost that 

results from the standard. DOE· 

expresses PBP in years. The data inputs 

to the PBP calculation are the purchase 

expense (otherwise known as the total 

installed consumer cost or first cost) and 

the annual operating costs for each 

selected design. The inputs to the 

transformer purchase expense are the 

equipment price and the installation 

cost, with appropriate markups to 

reflect price increases as the transformer 

passes through the distribution channel. 

The inputs to the operating costs are the 

annual energy consumption and the 

electricity price. The PBP calculation 

uses the same inputs as the LCC 

analysis but, since it is a simple 

payback, the operating cost is for the 

year the standard takes effect, assumed 

to be 2010. 

For each efficiency level DOE 

analyzed, the LCC analysis required 

input data for the total installed cost of 

the equipment, the operating cost, and 

the discount rate. Equipment price, 

installation cost, and baseline and 

standard design selection affect the 

installed cost ofthe equipment. 

Transformer loading, load growth, 

power factor, annual energy use and 

demand, electricity costs, electricity 

price trends, and maintenance costs 

affect the operating cost. The effective 

date of the standard, the discount rate, 

and the lifetime of equipment affect the 

calculation of the present value of 

annual operating cost savings from a 

proposed standard. 

The following sections contain brief 

discussions of comments on the inputs 

and key assumptions of DOE's LCC 

analysis and explain how DOE took 

these comments into consideration. 

1. Inputs Affecting Installed Cost 

a. Installation Costs 

Higher efficiency distribution 

transformers tend to be larger and 

heavier than less efficient designs. DOE 

therefore included the increased cost of 

installing larger, heavier transformers as 

a component of the first cost of more 

efficient transformers. In the NOPR, 

DOE presented the installation cost 

model and solicited comment from 

stakeholders. For details of the 

installation cost calculations, see TSD 

section 7.3.1. 

In response to both the NOPR and the 

NODA, many stakeholders commented 

that it is important for DOE to take into 

consideration the costs and reliability 

impacts of installing transformers in 

space-constrained situations. ACEEE 

recommended that DOE factor into its 

calculations space-constraint costs, 

based on the percentage of transformers 

that will necessitate modification of the 

vaults in which they are installed and 

the average cost for such modifications. 

(Public Meeting Transcript, No. 108.6 at 

pp. 130-131) EEl noted that DOE's 

analysis should include a space 

occupancy factor, although it might be 

hard to estimate. (Public Meeting 

Transcript, No. 108.6 at p. 129) In 

addition, EEl expressed concern 

regarding size and weight implications 

for the reliability and cost ofthe 

transformer, especially for TSL4, noting 

that, for pole-mounted transformers, 

more weight will increase the stress on 

poles and noting that manufacturers 

doubt that they can produce all 

equipment needed at TSL4. (Public 

Meeting Transcript, No. 108.6 at p. 31) 

HVOL T recommended that the analysis 

account for volume and weight in a 

mathematical equation to account for 

space occupancy costs. (Public Meeting 

Transcript, No. 108.6 at p. 129) NEMA 

commented that, with higher standards, 

manufacturers may use lower quality 

steel and switch from copper to 

aluminum, and that this may increase 

the weight and/or size of transformers. 

(Public Meeting Transcript, No. 108.6 at 

p. 132) Metglas commented that 

transformers are smaller and lighter 

than those made 30-40 years ago, and 

stated that there will not be an issue 

with size and weight of amorphous core 

transformers. (Metglas, No. 144 at p. 3) 

DOE responded to the comments 

raised regarding space-constraint 

implications for installation costs by 

formulating a method and a cost 

equation for estimating the economic 

impacts of space constraints and issuing 

a NODA that solicited comments on the 

method and equations proposed for 

evaluating such costs. 72 FR 6186-6190. 

DOE then performed a subgroup 

analysis of space-constrained vault 

transformers, for which DOE modeled 

potential standards-induced vault 

modification costs with an appropriate 

equation that included both fixed and 

volume-dependent variable 

components. The results of this analysis 

are detailed in Chapter 11 of the TSD, 

and DOE took these costs into 

consideration in the selection of the 

standard level for this rule. 

b. Baseline and Standard Design 

Selection 

A major factor in estimating the 

economic impact of a proposed standard 

is the selection of transformer designs in 

the base case and standards case 

scenarios. A key issue in the selection 

process is the degree to which 

transformer purchasers take into 

consideration the cost of transformer 

losses (A and B factors) when choosing 

a transformer (Le., whether they 

"evaluate"), both before and after the 

implementation of a standard. The 

purchase-decision model in the LCC 

spreadsheet selects which of the 

hundreds of designs in the engineering 

database are likely to be selected by 

transformer purchasers. The LCC 

transformer selection process is 

discussed in detail in TSD Chapter 8, 

section 8.2. 

DOE received several comments 

regarding the fraction of transformer 

purchasers that evaluate distribution 

transformer electrical losses before 

purchase and how transformer 

purchasers evaluate these losses. 

HVOL T estimates that 20 percent of the 

market for medium-voltage, dry-type 

transformers evaluates and places a 

value of $3.00/watt on loss evaluation, 

while the market share oftransformers 

meeting TP 1 levels for liquid-immersed 

transformers is 75 to 80 percent. (Public 

Meeting Transcript, No. 108.6 at p. 216) 

NEMA commented that 10 years ago 

there was a trend where customers 

bought cheaper and less efficient 

transformers every year due to less loss 

evaluation, but that the market has 

turned around and now an increasing 

percentage of customers are buying the 

more efficient TP 1 transformers. NEMA 

also noted that the shipments data it has 

submitted over the years to DOE have 

shown this changing trend. (Public 

Meeting Transcript, No. 108.6 at p. 220; 

NEMA, No. 125 at p. 3) 

In response to these comments, DOE 

developed its baseline market model 

using the most detailed and reliable data 

available. This included data that 

NEMA supplied providing TP 1 

transformer market shares, in addition 

to publicly available data regarding 

evaluation parameters used by 

distribution transformer purchasers. For 

the final rule, DOE set average A and B 

values of 3.85 and 1.16 $/watt 

respectively for design lines 1, 2 and 4, 

and average A and B values of 3.85 and 

1.93 $/watt for design lines 3 and 5. 

These slight adjustments to the 
58206 Federal Register/Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

evaluation parameters for the small

transformers (i.e., design lines 1, 2, and

4) versus the large transformers (i.e.,

design lines 3 and 5) were made because

these two types of transformers have

different load profiles, which

necessitate different loss valuations.

DOE determined the loss valuation

variation for small versus large

transformers through its analysis of

publicly available data on loss

valuations which indicated differences

as a function of transformer capacity.

Estimation of the A and B values is

discussed in detail in TSD Chapter 8,

section 8.3.1.

2. Inputs Affecting Operating Costs

a. Transformer Loading

Transformer loading is an important

factor in determining which types of

transformer designs will deliver a

specified efficiency, and for calculating

transformer losses. Transformer losses

have two components: no-load losses

and load losses. No-load losses are

independent of the load on the

transformer, while load losses depend

approximately on the square of the

transformer loading. Because load losses

increase with the square of the loading,

there is a particular concern that, during

times of peak system load, load losses

can impact system capacity costs and

reliability. For the final rule, DOE made

a slight technical adjustment to the

loading model for liquid-immersed

transformers by relying on the more

comprehensive 1995 Commercial

Building Energy Consumption Survey

data for the relationship between peak

and average loads as a function of

transformer size rather than the older,

regionally specific End-Use Load and

Consumer Assessment Program data

used in the NOPR analysis. TSD Chapter

6 provides details of DOE's transformer

loading models.

Stakeholders appeared to generally

agree with DOE's technical approach to

evaluating loading, although HVOLT

commented that DOE should

mathematically evaluate the loading of

single-phase and three-phase

transformers the same way. (Public

Meeting Transcript, No. 108.6 at p. 151)

Because of greater load diversity and

based on an analysis of building load

data described in Chapter 6 of the TSD,

DOE generally estimated the loading on

larger transformers as greater than the

loading for smaller transformers,

although DOE did in this rule set

efficiency levels for single-phase and

three-phase transformers as equal when

the capacity per phase for the two

different types of transformers is equal.

b. Load Growth

The LCC takes into account the

projected operating costs for

distribution transformers many years

into the future. This projection requires

an estimate of how, if at all, the

electrical load on transformers will

change over time (i.e., load growth). In

the NOPR analysis, for dry-type

transformers, DOE assumed no load

growth, while for liquid-immersed

transformers, DOE used as the default

scenario a one-percent-per-year load

growth. It applied the load growth factor

to each transformer beginning in 2010,

the expected effective date of the

standard. To explore the LCC sensitivity

to variations in load growth, DOE

included in the model the ability to

examine scenarios with zero percent,

one percent, and two percent load

growth. Load growth is discussed in

detail in TSD Chapter 8, section 8.3.6.

DOE received substantial comment

regarding its load growth assumptions.

CDA commented that it is entirely

reasonable to deduce that peak power

per dwelling increases, and thus

transformer loading also increases over

time, as people add home theaters,

home offices, appliances, and air

conditioning to existing dwellings.

(CDA, No. 111 at p. 2) EEI commented

that load growth on transformers may be

from zero to half of a percent per year.

(Public Meeting Transcript, No. 108.6 at

pp. 147-148) HVOLT commented that

after transformers are installed in a

residential area with a complement of

houses, the load basically stagnates.

(Public Meeting Transcript, No. 108.6 at

p. 145) Pacific Gas and Electric (PG&E)

commented that it assumes three

percent growth over the total 30 year life

of a transformer corresponding to a

growth rate of one tenth of one percent

per year. (Public Meeting Transcript,

No. 108.6 at pp. 149-150) Southern

Company commented that, for the

transformer installed in the field, it sees

no significant growth once a transformer

is installed. (Public Meeting Transcript,

No. 108.6 at p. 144)

For the final rule, DOE responded to

comments by examining more recent

data relevant to customer load growth.

Since AEO forecasts indicate that energy

use per capita will be approximately

constant over time due to trends of

increasing end-use efficiency, DOE set

the load growth parameter for the main

analysis scenario as zero percent per

year for both dry-type and liquidimmersed transformers. However, DOE

retained the one-percent-per-year load

growth scenario as a sensitivity analysis.

c. Electricity Costs

DOE needed estimates of electricity

prices and costs to place a value on

transformer losses for the LCC

calculation. DOE created two sets of

electricity prices to estimate annual

energy expenses for its analysis: an

hourly-based estimate of wholesale

electricity costs for the liquid-immersed

transformer market, and a tariff-based

estimate for the dry-type transformer

market (see TSD Chapter 8).

DOE received a few comments

regarding electricity cost estimation.

HVOLT estimated that generation costs

of electricity have been in the four to six

cents per kilowatt-hour (kWh) range.

(Public Meeting Transcript, No. 108.6 at

p. 197) ACEEEcommented that roughly

half the cost of electricity is due to

generation, while the other half is

transmission and distribution and other

expenses. (Public Meeting Transcript,

No. 108.6 at p. 204) Southern Company

commented that DOE's hourly marginal

electricity price model looks

conceptually correct, but that there are

many variables and it is possible to

argue about every one of them (Public

Meeting Transcript, No. 108.6 at pp.

205-206).

DOE compared these comments with

the estimates of its electricity cost

model and determined that these

comments and suggestions were

consistent with the electricity cost

model and estimates in the NOPR

analysis. DOE therefore used the same

cost model for the final rule with minor

adjustments to take into account

inflation and more recent data.

Electricity cost estimates are discussed

in detail in TSD Chapter 8, section 8.3.5.

d. Electricity Price Trends

For the relative change in electricity

prices in future years, DOE relied on

price forecasts from the Energy

Information Administration (EIA)

Annual Energy Outlook (AEO). For the

NOPR, DOE used price forecasts from

the AEO2005. The application of

electricity price trends in the final rule

analysis is discussed in detail in TSD

Chapter 8, section 8.3.7.

In response to the NOPR, DOE

received a large number of comments

regarding electricity price forecasts.

ACEEE recommended that DOE look at

a range of forecasts, since EIA seems to

be at the low end of the range. (Public

Meeting Transcript, No. 108.6 at p. 203)

In its written comments, ACEEE asked

that, at a minimum, DOE use projections

from AEO 2007, and suggested that DOE

use the average of a basket of forecasts.

(ACEEE, No. 127 at p. 3) EMS

Consulting, the Northwest Power and

 EE-RM/STD-00-550 COMMENT 194

58206 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

evaluation parameters for the small 

transformers (Le., design lines 1, 2, and 

4) versus the large transformers (Le., 

design lines 3 and 5) were made because 

these two types of transformers have 

different load profiles, which 

necessitate different loss valuations. 

DOE determined the loss valuation 

variation for small versus large 

transformers through its analysis of 

publicly available data on loss 

valuations which indicated differences 

as a function oftransformer capacity. 

Estimation of the A and B values is 

discussed in detail in TSD Chapter B, 

section B.3.1. 

2. Inputs Affecting Operating Costs 

a. Transformer Loading 

Transformer loading is an important 

factor in determining which types of 

transformer designs will deliver a 

specified efficiency, and for calculating 

transformer losses. Transformer losses 

have two components: no-load losses 

and load losses. No-load losses are 

independent of the load on the 

transformer, while load losses depend 

approximately on the square of the 

transformer loading. Because load losses 

increase with the square of the loading, 

there is a particular concern that, during 

times of peak system load, load losses 

can impact system capacity costs and 

reliability. For the final rule, DOE made 

a slight technical adjustment to the 

loading model for liquid-immersed 

transformers by relying on the more 

comprehensive 1995 Commercial 

Building Energy Consumption Survey 

data for the relationship between peak 

and average loads as a function of 

transformer size rather than the older, 

regionally specific End-Use Load and 

Consumer Assessment Program data 

used in the NOPR analysis. TSD Chapter 

6 provides details of DOE's transformer 

loading models. 

Stakeholders appeared to generally 

agree with DOE's technical approach to 

evaluating loading, although HVOL T 

commented that DOE should 

mathematically evaluate the loading of 

single-phase and three-phase 

transformers the same way. (Public 

Meeting Transcript, No. 10B.6 at p. 151) 

Because of greater load diversity and 

based on an analysis of building load 

data described in Chapter 6 of the TSD, 

DOE generally estimated the loading on 

larger transformers as greater than the 

loading for smaller transformers, 

although DOE did in this rule set 

efficiency levels for single-phase and 

three-phase transformers as equal when 

the capacity per phase for the two 

different types of transformers is equal. 

b. Load Growth 

The LCC takes into account the 

projected operating costs for 

distribution transformers many years 

into the future. This projection requires 

an estimate of how, if at all, the 

electrical load on transformers will 

change over time (Le., load growth). In 

the NOPR analysis, for dry-type 

transformers, DOE assumed no load 

growth, while for liquid-immersed 

transformers, DOE used as the default 

scenario a one-percent-per-year load 

growth. It applied the load growth factor 

to each transformer beginning in 2010, 

the expected effective date of the 

standard. To explore the LCC sensitivity 

to variations in load growth, DOE 

included in the model the ability to 

examine scenarios with zero percent, 

one percent, and two percent load 

growth. Load growth is discussed in 

detail in TSD Chapter B, section B.3.6. 

DOE received substantial comment 

regarding its load growth assumptions. 

CDA commented that it is entirely 

reasonable to deduce that peak power 

per dwelling increases, and thus 

transformer loading also increases over 

time, as people add home theaters, 

home offices, appliances, and air 

conditioning to existing dwellings. 

(CDA, No. 111 at p. 2) EEl commented 

that load growth on transformers may be 

from zero to half of a percent per year. 

(Public Meeting Transcript, No. 10B.6 at 

pp. 147-14B) HVOLT commented that 

after transformers are installed in a 

residential area with a complement of 

houses, the load basically stagnates. 

(Public Meeting Transcript, No. 10B.6 at 

p. 145) Pacific Gas and Electric (PG&E) 

commented that it assumes three 

percent growth over the total 30 year life 

of a transformer corresponding to a 

growth rate of one tenth of one percent 

per year. (Public Meeting Transcript, 

No. 10B.6 at pp. 149-150) Southern 

Company commented that, for the 

transformer installed in the field, it sees 

no significant growth once a transformer 

is installed. (Public Meeting Transcript, 

No. 10B.6 at p. 144) 

For the final rule, DOE responded to 

comments by examining more recent 

data relevant to customer load growth. 

Since AEO forecasts indicate that energy 

use per capita will be approximately 

constant over time due to trends of 

increasing end-use efficiency, DOE set 

the load growth parameter for the main 

analysis scenario as zero percent per 

year for both dry-type and liquidimmersed transformers. However, DOE 

retained the one-percent-per-year load 

growth scenario as a sensitivity analysis. 

c. Electricity Costs 

DOE needed estimates of electricity 

prices and costs to place a value on 

transformer losses for the LCC 

calculation. DOE created two sets of 

electricity prices to estimate annual 

energy expenses for its analysis: an 

hourly-based estimate of wholesale 

electricity costs for the liquid-immersed 

transformer market, and a tariff-based 

estimate for the dry-type transformer 

market (see TSD Chapter B). 

DOE received a few comments 

regarding electricity cost estimation. 

HVOL T estimated that generation costs 

of electricity have been in the four to six 

cents per kilowatt-hour (kWh) range. 

(Public Meeting Transcript, No. 10B.6 at 

p. 197) ACEEE commented that roughly 

half the cost of electricity is due to 

generation, while the other half is 

transmission and distribution and other 

expenses. (Public Meeting Transcript, 

No. 10B.6 at p. 204) Southern Company 

commented that DOE's hourly marginal 

electricity price model looks 

conceptually correct, but that there are 

many variables and it is pOSSible to 

argue about everyone of them (Public 

Meeting Transcript, No. 10B.6 at pp. 

205-206). 

DOE compared these comments with 

the estimates of its electricity cost 

model and determined that these 

comments and suggestions were 

consistent with the electricity cost 

model and estimates in the NOPR 

analysis. DOE therefore used the same 

cost model for the final rule with minor 

adjustments to take into account 

inflation and more recent data. 

Electricity cost estimates are discussed 

in detail in TSD Chapter B, section B.3.5. 

d. Electricity Price Trends 

For the relative change in electricity 

prices in future years, DOE relied on 

price forecasts from the Energy 

Information Administration (EIA) 

Annual Energy Outlook (AEO). For the 

NOPR, DOE used price forecasts from 

the AE02005. The application of 

electricity price trends in the final rule 

analysis is discussed in detail in TSD 

Chapter B, section B.3.7. 

In response to the NOPR, DOE 

received a large number of comments 

regarding electricity price forecasts. 

ACEEE recommended that DOE look at 

a range of forecasts, since EIA seems to 

be at the low end of the range. (Public 

Meeting Transcript, No. 10B.6 at p. 203) 

In its written comments, ACEEE asked 

that, at a minimum, DOE use projections 

from AEO 2007, and suggested that DOE 

use the average of a basket of forecasts. 

(ACEEE, No. 127 at p. 3) EMS 

Consulting, the Northwest Power and 
i

Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58207

Conservation Council (NPCC), and

NRDC also recommended that DOE use

a wider range of price forecasts. (Public

Meeting Transcript, No. 108.6 at pp.

199-210) CDA commented that

electricity prices will not be declining

in future years since shortcomings in

the generation and transmission systems

will become apparent. (CDA, No. 111 at

p. 2) EEI commented that DOE did a

reasonable job, based on the information

in its NOPR TSD, and that in some years

electricity prices actually go down in

real terms. (Public Meeting Transcript,

No. 108.6 at pp. 201 and 211) HVOLT

commented that it expects prices to

increase at a stable, even keel over the

next 20 years. (Public Meeting

Transcript, No. 108.6 at p. 210)

For the final rule, DOE updated the

price forecast to AEO2007 and

examined in increased detail the

sensitivity of analysis results to changes

in electricity price trends and other

parameters. Appendix 8D of the TSD

provides an expanded sensitivity

analysis for all five liquid-immersed

transformer design lines and the

medium-voltage dry-type with the

largest volume of transformer capacity

shipments in the market, DL12. This

analysis shows that the effect of changes

in electricity price trends, compared to

changes in other analysis inputs, is

relatively small. DOE evaluated a

variety of potential sensitivities, and the

robustness of analysis results with

respect to the full range of sensitivities,

in weighing the potential benefits and

burdens of the final rule.

e. Natural Gas Price Impacts

Even though distribution transformers

use electricity rather than natural gas for

their energy supply, several comments

expressed concerns that DOE's NOPR

analyses might be neglecting indirect

energy impacts of standards on natural

gas demand and prices. The Alliance to

Save Energy (ASE) commented that the

natural gas market is extremely tight

primarily due to increased use of

natural gas to produce electricity, and

this has led to incredible volatility in

prices. (Public Meeting Transcript, No.

108.6 at p. 59) The American Chemistry

Council (ACC) asked DOE to consider

the impacts on the natural gas market in

selecting the final standard. (ACC, No.

132 at p. 2) Dow Chemical Company

commented that, if DOE considers the

impact of standards on the U.S. natural

gas market and prices, then higher

levels can be further substantiated.

(Dow Chemical, No. 129 at pp. 1-2)

NRDC commented that energy efficiency

in transformers can bring down natural

gas prices by reducing the demand on

gas as a generation fuel. It further

commented that this can have a major

benefit in reducing natural gas prices to

all users, not merely users of

transformers. (Public Meeting

Transcript, No. 108.6 at p. 57; NRDC,

No. 117 at p. 7)

DOE examined the potential size of

the impact of distribution transformer

standards on natural gas demand in its

updated utility impact analysis, and

reported the impact of the standard by

generation type in Chapter 13 of the

TSD. DOE performed the updated

analysis based on AE02006,17 which

includes a forecast of relatively high

natural gas prices compared to earlier

DOE forecasts. (See TSD Chapter 13) In

this utility impact forecast with high

natural gas prices, most of the electricity

saved from the standard comes from

coal-generated electricity. In addition,

DOE's hourly marginal price analysis

already incorporates the impact of

volatile and high marginal natural gas

prices in the marginal price of

electricity that DOE uses in its analysis.

One way that changes in demand can

impact average prices in a market as a

whole is when the marginal demand of

a commodity does not pay the full

marginal cost of supply; then prices in

the market as a whole must rise to

balance costs in the market as a whole.

In DOE's analysis of electricity prices

for distribution transformers, DOE

attempted to include the full marginal

cost of supply for electricity including

the effect of high, volatile natural gas

prices by using volatile real-time

electricity prices. Real-time electricity

prices are strongly influenced by the

real-time marginal cost of natural gas

when gas turbines are supplying

electricity to the market. Since DOE

already includes the effect of volatile

marginal natural gas prices in its

electricity price analysis through realtime electricity prices, and since a

relatively small fraction of the

electricity saved over the long term is

forecast from natural gas generation,

DOE did not give additional

consideration to the impact on natural

gas prices in this rulemaking.

"While the AE02007 electricity price forecast

data was available in time for preparation of this

final rule, the full AE02007 forecast was not

available at the time DOE performed the utility and

environmental impact analysis. DOE therefore used

AE02006 for the utility and environmental

analysis. Following completion of the utility and

environmental analysis and after the full AEO 2007

became available, DOE compared the AE02006 and

AE02007 and found the forecasts of electricity

prices, the marginal generation mix and emissions

factors in the AE02007 and AE02006 forecasts

were very similar. The two forecasts provide the

same marginal fractions of coal and natural gas

generation (within 3.5%), and have marginal C02

emission factors that differ by less than 2%.

3. Inputs Affecting Present Value of

Annual Operating Cost Savings

a. Standards Implementation Date

In the August 2006 NOPR, DOE

proposed that the standards for

distribution transformers apply to all

units manufactured on or after January

1, 2010. 71 FR 44407. DOE calculated

the LCC for customers as if each new

distribution transformer purchase

occurs in the year manufacturers must

comply with the standard.

Some stakeholders suggested that

DOE could implement a two-tier

standard with two effective dates. In

response to the NODA, a group of

stakeholders consolidated their

comments by creating a joint proposal

in this regard. ACEEE, NRDC, EEI, ASE,

the American Public Power Association

(APPA), the Appliance Standards

Awareness Project (ASAP), and the

Northeast Energy Efficiency

Partnerships (NEEP) recommended in

their joint proposal that DOE adopt

TSL2 in 2009 and TSL4 in 2013. (Joint

Comment) They recommended the

delay in implementation of TSL4 so that

technical manufacturing problems could

be addressed. (Joint Comment, No. 158

at p. 2) On July 30, 2007, DOE received

a letter from two Senators urging DOE

to adopt the joint Comment.18

(Bingaman and Domenici, No. 191 at p.

1) Howard commented that it is strongly

opposed to moving the effective date of

the standard to January 1, 2009, because

it will need to perform an enormous

amount of engineering and design work

to meet the new levels. (Howard, No.

180 at p. 4) NEMA commented that it

does not believe the proposed

compliance date of January 1, 2009 for

TSL2 is achievable because transformer

designs are already in development now

for delivery after January 1, 2009.

NEMA requests that the compliance

date be moved to January 1, 2010.

(NEMA, No. 174 at p. 2) Southern

Company commented that it supports a

two-tiered standard of TSL2 in 2009 and

TSL4 in 2013 with a technical

conference in 2010 to make any

necessary adjustments to the year 2013

level. (Southern, No. 178 at p. 1, 9)

DOE rejects the two-tiered approach

with TSL4 as the level of the second tier

for two reasons: DOE found that TSL4

is not economically justified as

described in section VI.1.d of this

notice, and therefore rejected TSL4.

Second, DOE does not have the

authority to amend standards outside a

18 Letter from Senator Jeff Bingaman and Senator

Pete Domenici, to Samuel Bodman, Secretary of

Energy (July 30, 2007).

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58207 

Conservation Council (NPCC), and 

NRDC also recommended that DOE use 

a wider range of price forecasts. (Public 

Meeting Transcript, No. 108.6 at pp. 

199-210) CDA commented that 

electricity prices will not be deClining 

in future years since shortcomings in 

the generation and transmission systems 

will become apparent. (CDA, No. 111 at 

p. 2) EEl commented that DOE did a 

reasonable job, based on the information 

in its NOPR TSD, and that in some years 

electricity prices actually go down in 

real terms. (Public Meeting Transcript, 

No. 108.6 at pp. 201 and 211) HVOLT 

commented that it expects prices to 

increase at a stable, even keel over the 

next 20 years. (Public Meeting· 

Transcript, No. 108.6 at p. 210) 

For the final rule, DOE updated the 

price forecast to AE02007 and 

examined in increased detail the 

sensitivity of analysis results to changes 

in electricity price trends and other 

parameters. Appendix 8D of the TSD 

provides an expanded sensitivit~ 

analysis for all five liquid-immersed 

transformer design lines and the 

medium-voltage dry-type with the 

largest volume of transformer capacity 

shipments in the market, DL12. This 

analysis shows that the effect of changes 

in electricity price trends, compared to 

changes in other analysis inputs, is 

relatively small. DOE evaluated a 

variety of potential sensitivities, and the 

robustness of analysis results with 

respect to the full range of sensitivities, 

in weighing the potential benefits and 

burdens ofthe final rule. 

e. Natural Gas Price Impacts 

Even though distribution transformers 

use electricity rather than natural gas for 

their energy supply, several comments 

expressed concerns that DOE's NOPR 

analyses might be neglecting indirect 

energy impacts of standards on natural 

gas demand and prices. The Alliance to 

Save Energy (ASE) commented that the 

natural gas market is extremely tight 

primarily due to increased use of 

natural gas to produce electricity, and 

this has led to incredible volatility in 

prices. (Public Meeting Transcript, No. 

108:6 at p. 59) The American Chemistry 

Council (ACC) asked DOE to consider 

the impacts on the natural gas market in 

selecting the final standard. (ACC, No. 

132 at p. 2) Dow Chemical Company 

commented that, if DOE considers the 

impact of standards on the U.S. natural 

gas market and prices, then higher 

levels can be further substantiated. 

(Dow Chemical, No. 129 at pp. 1-2) 

NRDC commented that energy efficiency 

in transformers can bring down natural 

gas prices by reducing the demand on 

gas as a generation fuel. It further 

commented that this can have a major 

benefit in reducing natural gas prices to 

all users, not merely users of 

transformers. (Public Meeting 

Transcript, No. 108.6 at p. 57; NRDC, 

No. 117 at p. 7) 

DOE examined the potential size of 

the impact of distribution transformer 

standards on natural gas demand in its 

updated utility impact analysis, and 

reported the impact of the standard by 

generation type in Chapter 13 of the 

TSD. DOE performed the updated 

analysis based on AE02006,17 which 

includes a forecast of relatively high 

natural gas prices compared to earlier 

DOE forecasts. (See TSD Chapter 13) In 

this utility impact forecast with high 

natural gas prices, most of the electricity 

saved from the standard comes from 

coal-generated electricity. In addition, 

DOE's hourly marginal price analysis 

already incorporates the impact of 

volatile and high marginal natural gas 

prices in the marginal price of 

electricity that DOE uses in its analysis. 

One way that changes in demand can 

impact average prices in a market as a 

whole is when the marginal demand of 

a commodity does not pay the full 

marginal cost of supply; then prices in 

the market as a whole must rise to 

balance costs in the market as a whole. 

In DOE's analysis of electricity prices 

for distribution transformers, DOE 

attempted to include the full marginal 

cost of supply for electricity including 

the effect of high, volatile natural gas 

prices by using volatile real-time 

electricity prices. Real-time electricity 

prices are strongly influenced by the 

real-time marginal cost of natural gas 

when gas turbines are supplying 

electricity to the market. Since DOE 

already includes the effect of volatile 

marginal natural gas prices in its 

electricity price analysis through realtime electricity prices, and since a 

relatively small fraction of the 

electricity saved over the long term is 

forecast from natural gas generation, 

DOE did not give additional 

consideration to the impact on natural 

gas prices in this rulemaking. 

17 While the AE02007 electricity price forecast 

data was available in time for preparation of this 

final rule, the full AE02007 forecast was not 

available at the time DOE performed the utility and 

environmental impact analysis. DOE therefore used 

AE02006 for the utility and environmental 

analysis. Following completion ofthe utility and 

environmental analysis and after the full AEO 2007 

became available, DOE compared the AE02006 and 

AE02007 and found the forecasts of electricity 

prices, the marginal generation mix and emissions 

factors in the AE02007 and AE02006 forecasts 

were very similar. The two forecasts provide the 

same marginal fractions of coal and natural gas 

generation (within 3.5%). and have marginal CO2 

emission factors that differ by less than 2 %. 

3. Inputs Affecting Present Value of 

Annual Operating Cost Savings 

a. Standards Implementation Date 

In the August 2006 NOPR, DOE 

proposed that the standards for 

distribution transformers apply to all 

units manufactured on or after January 

1, 2010. 71 FR 44407. DOE calculated 

the LCC for customers as if each new 

distribution transformer purchase 

occurs in the year manufacturers must 

comply with the standard. 

Some stakeholders suggested that 

DOE could implement a two-tier 

standard with two effective dates. In 

response to the NODA, a group of 

stakeholders consolidated their 

comments by creating a joint proposal 

in this regard. ACEEE, NRDC, EEl, ASE, 

the American Public Power Association 

(APPA), the Appliance Standards 

Awareness Project (ASAP), and the 

Northeast Energy Efficiency 

Partnerships (NEEP) recommended in 

their joint proposal that DOE adopt 

TSL2 in 2009 and TSL4 in 2013. (Joint 

Comment) They recommended the 

delay in implementation of TSL4 so that 

technical manufacturing problems could 

be addressed. (Joint Comment, No. 158 

at p. 2) On July 30, 2007, DOE received 

a letter from two Senators urging DOE 

to adopt the Joint Comment,18 

(Bingaman and Domenici, No. 191 at p. 

1) Howard commented that it is strongly 

opposed to moving the effective date of 

the standard to January 1, 2009, because 

it will need to perform an enormous 

amount of engineering and design work 

to meet the new levels. (Howard, No. 

180 at p. 4) NEMA commented that it 

does not believe the proposed 

compliance date of January 1, 2009 for 

TSL2 is achievable because transformer 

designs are already in development now 

for delivery after January 1, 2009. 

NEMA requests that the compliance 

date be moved to January 1, 2010. 

(NEMA, No. 174 at p. 2) Southern 

Company commented that it supports a 

two-tiered standard of TSL2 in 2009 and 

TSL4 in 2013 with a technical 

conference in 2010 to make any 

necessary adjustments to the year 2013 

level. (Southern, No. 178 at p. 1, 9) 

DOE rejects the two-tiered approach 

with TSL4 as the level ofthe second tier 

for two reasons: DOE found that TSL4 

is not economically justified as 

described in section VI.1.d ofthis 

notice, and therefore rejected TSL4. 

Second, DOE does not have the 

authority to amend standards outside a 

16 Letter from Senator Jeff Bingaman and Senator 

Pete Domenici, to Samuel Bodman, Secretary of 

Energy Guly 30, 2007). 
58208 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/ Rules and Regulations

rulemaking proceeding.19 If DOE were

to set a two-tier standard, with one tier

at TSL4, DOE would not be able to roll

it back at a later date because of the antibacksliding provision of EPCA. DOE is

expressly prohibited from lowering

standards once they have been

established. (42 U.S.C. 6295 (o)(1),

Natural Resources Defense Council v.

Abraham, 355 F. 3d 179, 195-197 (2nd

Cir. 2004)) Accordingly, DOE rejects the

proposal to adopt a two-tiered approach

with potential to amend the standard

during a technical conference and,

instead is adopting a set of energy

conservation standards with an

implementation date of January 1, 2010,

in today's final rule.

b. Discount Rate

The discount rate is the rate at which

future expenditures are discounted to

estimate their present value. It is the

factor that determines the relative

weight of first costs and operating costs

in the LCC calculation. Consumers

experience discount rates in their dayto-day lives either as interest rates on

loans or as rates of return on

investments. Another characterization

of the discount rate is the `time value of

money.' The value of a dollar today is

one plus the discount rate times the

value of a dollar a year from now. DOE

estimated a statistical distribution of

commercial consumer discount rates

that varied by transformer type by

calculating the cost of capital for the

different types of transformer owners

(see TSD Chapter 8).

In response to the NOPR, DOE

received specific comments regarding

its methods for calculating discount

rates. EEI commented that some utility

companies may have lower credit

ratings due to rate decisions that can

increase the cost of capital to between

7 and 12 percent real. (Public Meeting

Transcript, 108.6 at pp. 123-124) NRDC

made a number of specific comments

regarding the parameters DOE used in

its equation to estimate the cost of

capital, suggesting that DOE erred in

estimating the reference risk-free

discount rate, and in estimating average

values of inflation and cost of equity

capital. (NRDC, No. 117 at pp. 8-9)

DOE has a two-step approach in

calculating discount rates for analyzing

consumer economic impacts. The first

step is to assume that the actual

consumer cost of capital approximates

the appropriate consumer discount rate.

The second step is to use the use the

19DOE's authority to set standards for

distribution transformers, by rulemaking, is set

forth in 42 U.S.C. 6317(a)(2). DOE is required to

follow the procedures in 42 U.S.C. 6295(p) for this

rulemaking proceeding. (42 U.S.C. 6316(a))

capital asset pricing model (CAPM) to

calculate the equity capital component

of the consumer discount rate. Neither

stakeholder disagreed with DOE's

general approach of estimating

consumer discount rates from the cost of

capital. NRDC asserted that DOE was

using incorrect parameters when it

calculated the consumer cost of equity

capital with the CAPM. DOE uses

information from the Federal Reserve

when it determines which parameters

are correct for use in the CAPM. The

Federal Reserve solicited input in 2005

from a range of stakeholders specifically

on how to perform CAPM cost of capital

calculations and considered input from

a range of stakeholders in determining

the best parameter values to use in the

CAPM. 70 FR 29512-29526 (May 23,

2005). Specifically, DOE rejects NRDC's

assertion that the long-term average of

the rate of return on short-term Treasury

notes is the only correct way to

calculate the risk free interest rate

because this is not consistent with the

information from the Federal Reserve

which accepts long term averages of

both short-term and long-term Treasury

note rates for use in the CAPM. DOE

added a discount rate sensitivity feature

to its consumer economic impact

analysis tools to examine the sensitivity

of the analysis results to the details of

DOE's capital cost estimates. More

detail regarding DOE's estimates of

commercial consumer discount rates is

provided in section 8.3.8 of the TSD.

c. Temperature Rise, Reliability, and

Lifetime

In response to the NOPR, DOE

received many comments regarding

whether or not more efficient

distribution transformers would have

longer lifetimes and whether this would

be both a reliability and an economic

benefit that could accrue from

standards.

ACC, ASAP, CEC, Dow Chemical

Company, the North American Electric

Reliability Corporation (NERC), 23

members of the U.S. House of

Representatives, and two members of

the U.S. Senate urged DOE to take into

consideration transformer operating

temperatures and the impact that this

may have on transformer lifetime and

reliability. (ACC, No. 132 at p. 2; Public

Meeting Transcript, No. 108.6 at p. 175;

Public Meeting Transcript, No. 108.6 at

p. 60; Dow, No. 129 at p. 2; NERC, No.

133 at p. 1; U.S. Congress, No. 125 at p.

1; U.S. Senate, No. 120 at p. 1) Several

stakeholders, including EMS Consulting

and Metglas, asserted that lower

operating temperatures may double or

quadruple the life of transformers.

(Public Meeting Transcript, No. 108.6 at

pp. 172 and 186; Metglas,.No. 144 at p.

6) Others, including Central Moloney,

Inc., PG&E, HVOLT, and Southern

Company, commented that they

expected lower operating temperatures

to have potentially little or no impact on

transformer lifetimes in practice because

designs and loading practices would

adjust to maintain current operating

temperatures and lifetimes. (Public

Meeting Transcript, No. 108.6 at pp.

187, 174, 168, and 171) ACEEE, ASAP,

and an individual stakeholder all

commented that DOE can and should

calculate the impactsof a higher

efficiency standard on transformer

lifetimes and should include these

impacts in its consumer benefit

calculations. (Public Meeting

Transcript, No. 108.6 at pp. 40-41;

ASAP, No. 104 at p. 1; Zahn, No. 119

at p. 7)

DOE evaluated the possibility of

estimating the effects of efficiency on

transformer lifetime and reliability, and

the likely accuracy of such estimates.

DOE first calculated the average

temperature rise and operating

temperature of the transformer designs

at each of the TSLs considered in

today's final rule. These average

temperature rises are presented in TSD

Appendix 8G.

From its review of transformer

engineering references, DOE agrees that

if the only difference between more and

less efficient transformers is that more

efficient transformers have lower

operating temperatures, then the

lifetime of more efficient transformers

may increase because the electrical

insulation within the transformer may

last longer. But given the full range of

factors that can affect transformer life

and reliability , DOE cannot determine at

this time that decreasing temperature

due to efficiency improvements will

cause high efficiency transformers to

have increased transformer lifetimes on

average compared to lower efficiency

transformers. There are many

differences between more and less

efficient transformers in addition to

temperature rise, and there are many

failure modes for a transformer in

addition to insulation degradation. More

efficient transformers tend to be larger

and heavier , and for pole-mounted

transformers this may increase the

likelihood of weather-related and

support-structure failures. Thus , higher

efficiency transformers may at times

have lower lifetimes than lower

efficiency transformers. Many

transformers fail due to corrosion,

lightning, and animal-related short

circuits. In addition, many transformers

are replaced during distribution system

upgrades or after a certain age, not due

 EE-RM/STD-00-550 COMMENT 194

58208 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

rulemaking proceeding.19 If DOE were 

to set a two-tier standard, with one tier 

at TSL4, DOE would not be able to roll 

it back at a later date because of the antibacksliding provision of EPCA. DOE is 

expressly prohibited from lowering 

standards once they have been 

established. (42 U.S.C. 6295 (0)(1), 

Natural Resources Defense Council v. 

Abraham, 355 F. 3d 179, 195-197 (2nd 

Cir. 2004)) Accordingly, DOE rejects the 

proposal to adopt a two-tiered approach 

with potential to amend the standard 

during a technical conference and, 

instead is adopting a set of energy 

conservation standards with an 

implementation date of January 1, 2010, 

in today's final rule. 

b. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

estimate their present value. It is the 

factor that determines the relative 

weight of first costs and operating costs 

in the LCC calculation. Consumers 

experience discount rates in their dayto-day lives either as interest rates on 

loans or as rates of return on 

investments. Another characterization 

of the discount rate is the 'time value of 

money.' The value of a dollar today is 

one plus the discount rate times the 

value of a dollar a year from now. DOE 

estimated a statistical distribution of 

commercial consumer discount rates 

that varied by transformer type by 

calculating the cost of capital for the 

different types of transformer owners 

(see TSD Chapter 8). 

In response to the NOPR, DOE 

received specific comments regarding 

its methods for calculating discount 

rates. EEl commented that some utility 

companies may have lower credit 

ratings due to rate decisions that can 

increase the cost of capital to between 

7 and 12 percent real. (Public Meeting 

Transcript, 108.6 at pp. 123-124) NRDC 

made a number of specific comments 

regarding the parameters DOE used in 

its equation to estimate the cost of 

capital, suggesting that DOE erred in 

estimating the reference risk-free 

discount rate, and in estimating average 

values of inflation and cost of equity 

capital. (NRDC, No. 117 at pp. 8-9) 

DOE has a two-step approach in 

calculating discount rates for analyzing 

consumer economic impacts. The first 

step is to assume that the actual 

consumer cost of capital approximates 

the appropriate consumer discount rate. 

The second step is to use the use the 

19DOE's authority to set standards for 

distribution transformers, by rulemaking, is set 

forth in 42 U.S.C. 6317(a)(2). DOE is required to 

follow the procedures in 42 U.S.C. 6295(p) for this 

rulemaking proceeding. (42 U.S.C. 6316(a)) 

capital asset pricing model (CAPM) to 

calculate the equity capital component 

ofthe consumer discount rate. Neither 

stakeholder disagreed with DOE's 

general approach of estimating 

consumer discount rates from the cost of 

capital. NRDC asserted that DOE was 

using incorrect parameters when it 

calculated the consumer cost of equity 

capital with the CAPM. DOE uses 

information from the Federal Reserve 

when it determines which parameters 

are correct for use in the CAPM. The 

Federal Reserve solicited input in 2005 

from a range of stakeholders specifically 

on how to perform CAPM cost of capital 

calculations and considered input from 

a range of stakeholders in determining 

the best parameter values to use in the 

CAPM. 70 FR 29512-29526 (May 23, 

2005). Specifically, DOE rejects NRDC's 

assertion that the long-term average of 

the rate of return on short-term Treasury 

notes is the only correct way to 

calculate the risk free interest rate 

because this is not consistent with the 

information from the Federal Reserve 

which accepts long term averages of 

both short-term and long-term Treasury 

note rates for use in the CAPM. DOE 

added a discount rate sensitivity feature 

to its consumer economic impact 

analysis tools to examine the sensitivity 

ofthe analysis results to the details of 

DOE's capital cost estimates. More 

detail regarding DOE's estimates of 

commercial consumer discount rates is 

provided in section 8.3.8 ofthe TSD. 

C. Temperature Rise, Reliability, and 

Lifetime 

In response to the NOPR, DOE 

received many comments regarding 

whether or not more efficient 

distribution transformers would have 

longer lifetimes and whether this would 

be both a reliability and an economic 

benefit that could accrue from 

standards. 

ACC, ASAP, CEC, Dow Chemical 

Company, the North American Electric 

Reliability Corporation (NERC), 23 

members of the U.S. House of 

Representatives, and two members of 

the U.S. Senate urged DOE to take into 

consideration transformer operating 

temperatures and the impact that this 

may have on transformer lifetime and 

reliability. (ACC, No. 132 at p. 2; Public 

Meeting Transcript, No. 108.6 at p. 175; 

Public Meeting Transcript, No. 108.6 at 

p. 60; Dow, No. 129 at p. 2; NERC, No. 

133 at p. 1; U.S. Congress, No. 125 at p. 

1; U.S. Senate, No. 120 at p. 1) Several 

stakeholders, including EMS Consulting 

and Metglas, asserted that lower 

operating temperatures may double or 

quadruple the life of transformers. 

(Public Meeting Transcript, No. 108.6 at 

pp. 172 and 186; Metglas,No. 144 at p. 

6) Others, including Central Moloney, 

Inc., PG&E, HVOLT, and Southern 

Company, commented that they 

expected lower operating temperatures 

to have potentially little or no impact on 

transformer lifetimes in practice because 

designs and loading practices would 

adjust to maintain current operating 

temperatures and lifetimes. (Public 

Meeting Transcript, No. 108.6 at pp. 

187,174,168, and 171) ACEEE, ASAP, 

and an individual stakeholder all 

commented that DOE can and should 

calculate the impacts of a higher 

efficiency standard on transformer 

lifetimes and should include these 

impacts in its consumer benefit 

calculations. (Public Meeting 

Transcript, No. 108.6 at pp. 40-41; 

ASAP, No. 104 at p. 1; Zahn, No. 119 

at p. 7) 

DOE evaluated the possibility of 

estimating the effects of efficiency on 

transformer lifetime and reliability, and 

the likely accuracy of such estimates. 

DOE first calculated the average 

temperature rise and operating 

temperature of the transformer designs 

at each ofthe TSLs considered in 

today's final rule. These average 

temperature rises are presented in TSD 

Appendix 8G. 

From its review of transformer 

engineering references, DOE agrees that 

if the only difference between more and 

less efficient transformers is that more 

efficient transformers have lower 

operating temperatures, then the 

lifetime of more efficient transformers 

may increase because the electrical 

insulation within the transformer may 

last longer. But given the full range of 

factors that can affect transformer life 

and reliability, DOE cannot determine at 

this time that decreasing temperature 

due to efficiency improvements will 

cause high efficiency transformers to 

have increased transformer lifetimes on 

average compared to lower efficiency 

transformers. There are many 

differences between more and less 

efficient transformers in addition to 

temperature rise, and there are many 

failure modes for a transformer in 

addition to insulation degradation. More 

efficient transformers tend to be larger 

and heavier, and for pole-mounted 

transformers this may increase the 

likelihood of weather-related and 

support-structure failures. Thus, higher 

efficiency transformers may at times 

have lower lifetimes than lower 

efficiency transformers. Many 

transformers fail due to corrosion, 

lightning, and animal-related short 

circuits. In addition, many transformers 

are replaced during distribution system 

upgrades or after a certain age, not due 
i

Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

to insulation degradation failure.

Therefore, the fraction of transformers

that have longer service lifetimes when

insulation degradation rates are slow

may be small. Furthermore, the most

significant decrease in transformer

temperatures occurs with amorphous

core designs, with the potential lifetime

extension benefits likely to be seen after

25-35 years of service. DOE does not

have at its disposal or know of the

existence of data that demonstrate an

actual increase in the lifetime of

amorphous core transformers in this age

range.

DOE already includes in its analysis

the economic benefits of reliability from

more efficient transformers due to

decreased peak loading. It includes a

reliability margin cost in generation,

transmission and distribution capacity

costs that are included in the marginal

capacity cost estimates for both the LCC

analysis and the national impact

analysis (NIA). As such, DOE fully

includes the decreased reliability

capacity costs resulting from standards

in its benefits calculations. Electricity

cost estimates, which include capacity

and reliability costs, are discussed in

detail in TSD Chapter 8, section 8.3.5.

D. National Impact Analysis-National

Energy Savings and Net Present Value

Analysis

The NIA evaluates the impact of a

proposed standard from a national

perspective rather than from the

consumer perspective represented by

the LCC. When DOE evaluates a

proposed standard from a national

perspective, it must consider several

other factors that are different from, or

not included in, the LCC analysis. One

of the factors DOE modeled in the NIA

was the replacement of existing, less

efficient transformers with more

efficient transformers over time. DOE

estimated this rate of replacement using

an equipment shipments model that

describes the sale of transformers for

replacement and for inclusion in new

electrical distribution system

infrastructure. A second factor included

in the NIA was a discount rate. Since

the national cost of capital may differ

from the consumer cost of capital, the

discount rate used in the NIA can be

different from that used in the LCC. The

third factor DOE included in the NIA

was the difference between the energy

savings obtained by the consumer and

the energy savings obtained by the

Nation. Because of the effect of

distribution and generation losses, the

national energy savings from a proposed

standard are larger than the sum of the

individual consumers' energy savings.

The details of DOE's NIA are provided

in Chapters 9 and 10 of the TSD.

DOE received comment on two issues

related to discount rates in response to

the NOPR concerning the NIA analysis.

The first was the selection of the

discount rate that is best for evaluating

the NPV benefits to the country, and the

second was the process of applying a

discount rate to energy savings and

emissions. In addition, there were

comments regarding the need for DOE to

account for other national benefits, such

as potential decreases in natural gas

prices and increased electrical system

reliability. These natural gas price and

electrical system reliability impacts are

discussed above in the description of

the LCC methodology and comments in

section IV.C.2.e and at the end of

section IV.C.3.c, respectively.

1. Discount Rate

a. Selection and Estimation Method

In response to the NOPR, DOE

received a range of comments with

respect to the discount rate to use in

evaluating national benefits. ACEEE and

Metglas recommended that DOE use a

discount rate of 4.2 percent and 4.25

percent, respectively. (ACEEE, No. 127

at p. 1; Metglas, No. 144 at p. 4) ASAP

and NRDC recommended that DOE use

the three percent discount rate in

evaluating national impacts. (Public

Meeting Transcript, No. 108.6 at p. 120;

NRDC, No. 117 at p. 9) NRDC further

commented that the long-term average

rate of return on government bonds is

1.2 percent real. (Public Meeting

Transcript, No. 108.6 at pp. 124-125)

EEI commented that commercial

customers seek a 20- or 25-percent

nominal discount rate for returns.

(Public Meeting Transcript, No 108.6 at

p. 122) Finally, Southern Company

noted that seven percent nominal is

close to their cost of capital, and

commented that excessive transformer

investments are likely to displace more

productive distribution system

investments in other parts of the

company. (Public Meeting Transcript,

No. 108.6 at pp. 120-121)

DOE follows OMB guidance in the

selection of the discount rate for

evaluating national benefits. OMB

Circular A-4 provides clear guidance to

DOE directing it to use discount rates of

seven percent and three percent in

evaluating the impacts of regulations.

To address comments, DOE also

reported results for the 4.2 percent

discount rate in Appendix 10A of the

TSD for this rulemaking. In selecting the

discount rate corresponding to a public

investment, OMB directs agencies to use

"the real Treasury borrowing rate on

58209

marketable securities of comparable

maturity to. the period of analysis."

Office of Management and Budget

(OMB) Circular No. A-94, "Guidelines

and Discount Rates for Benefit-Cost

Analysis of Federal Programs," dated

October 29, 1992, section 8.c.1.

b. Discounting Energy and Emissions

In the NOPR, DOE reported both

undiscounted and discounted energy

savings and emissions impacts and

invited comment on the appropriateness

of the discount rates used. 71 FR 44407.

CEC commented that DOE should not

use or report discounted emissions.

(Public Meeting Transcript, No. 108.6 at

p. 109) EEI commented that discounted

emissions and energy savings are an

interesting point of information, but

DOE should determine the standard

based on the absolute numbers. (Public

Meeting Transcript, No. 108.6 at p. 111)

NRDC objected to discounting emissions

and would advocate for a zero percent

discount rate for emissions. (Public

Meeting Transcript, No. 108.6 at pp.

113-114) Southern Company

commented that discounting future

sulfur dioxide (SO2) emissions would be

similar to discounting the future price

or value of gold, which would depend

on the projected price in the future,

which will almost always be larger (not

smaller) than the current price. (Public

Meeting Transcript, No. 108.6 at p. 121)

Consistent with Executive Order

12866, "Regulatory Planning and

Review," 58 FR 51737, DOE follows the

guidance of OMB regarding

methodologies and procedures for

regulatory impact analysis that affect

more than one agency. In reporting

energy and environmental benefits from

energy conservation standards, DOE

will report both discounted and

undiscounted (i.e., zero discount-rate)

values.

E. Commercial Consumer Subgroup

Analysis

In analyzing the potential impacts of

new or amended standards, DOE

evaluates impacts on identifiable groups

(i.e., subgroups) of customers, such as

different types of businesses, which may

be disproportionately affected by a

national standard. For this rulemaking,

DOE identified rural electric

cooperatives and municipal utilities as

transformer consumer subgroups that

could be disproportionately affected,

and examined the impact of proposed

standards on these groups. The

consumer subgroup analysis is

discussed in detail in TSD Chapter 11.

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58209 

to insulation degradation failure. 

Therefore, the fraction oftransformers 

that have longer service lifetimes when 

insulation degradation rates are slow 

may be small. Furthermore, the most 

significant decrease in transformer 

temperatures occurs with amorphous 

core designs, with the potential lifetime 

extension benefits likely to be seen after 

25-35 years of service. DOE does not 

have at its disposal or know of the 

existence of data that demonstrate an 

actual increase in the lifetime of 

amorphous core transformers in this age 

range. 

DOE already includes in its analysis 

the economic benefits of reliability from 

more efficient transformers due to 

decreased peak loading. It includes a 

reliability margin cost in generation, 

transmission and distribution capacity 

costs that are included in the marginal 

capacity cost estimates for both the LCC 

analysis and the national impact 

analysis (NIA). As such, DOE fully 

includes the decreased reliability 

capacity costs resulting from standards 

in its benefits calculations. Electricity 

cost estimates, which include capacity 

and reliability costs, are discussed in 

detail in TSD Chapter 8, section 8.3.5. 

D. National Impact Analysis-National 

Energy Savings and Net Present Value 

Analysis 

The NIA evaluates the impact of a 

proposed standard from a national 

perspective rather than from the 

consumer perspective represented by 

the LCC. When DOE evaluates a 

proposed standard from a national 

perspective, it must consider several 

other factors that are different from, or 

not included in, the LCC analysis. One 

of the factors DOE modeled in the NIA 

was the replacement of existing, less 

efficient transformers with more 

efficient transformers over time. DOE 

estimated this rate of replacement using 

an equipment shipments model that 

describes the sale of transformers for 

replacement and for inclusion in new 

electrical distribution system 

infrastructure. A second factor included 

in the NIA was a discount rate. Since 

the national cost of capital may differ 

from the consumer cost of capital, the 

discount rate used in the NIA can be 

different from that used in the LCC. The 

third factor DOE included in the NIA 

was the difference between the energy 

savings obtained by the consumer and 

the energy savings obtained by the 

Nation. Because of the effect of 

distribution and generation losses, the 

national energy savings from a proposed 

standard are larger than the sum of the 

individual consumers' energy savings. 

The details of DOE's NIA are provided 

in Chapters 9 and 10 ofthe TSD. 

DOE received comment on two issues 

related to discount rates lin response to 

the NOPR concerning the NIA analysis. 

The first was the selection of the 

discount rate that is best for evaluating 

the NPV benefits to the country, and the 

second was the process of applying a 

discount rate to energy savings and 

emissions. In addition, there were 

comments regarding the need for DOE to 

account for other national benefits, such 

as potential decreases in natural gas 

prices and increased electrical system 

reliability. These natural gas price and 

electrical system reliability impacts are 

discussed above in the description of 

the LCC methodology and comments in 

section IV.C.2.e and at the end of 

section IV.C.3.c, respectively. 

1. Discount Rate 

a. Selection and Estimation Method 

In response to the NOPR, DOE 

received a range of comments with 

respect to the discount rate to use in 

evaluating national benefits. ACEEE and 

Metglas recommended that DOE use a 

discount rate of 4.2 percent and 4.25 

percent, respectively. (ACEEE, No. 127 

at p. 1; Metglas, No. 144 at p. 4) ASAP 

and NRDC recommended that DOE use 

the three percent discount rate in 

evaluating national impacts. (Public 

Meeting Transcript, No. 108.6 at p. 120; 

NRDC, No. 117 at p. 9) NRDC further 

commented that the long-term average 

rate of return on government bonds is 

1.2 percent real. (Public Meeting 

Transcript, No. 108.6 at pp. 124-125) 

EEl commented that commercial 

customers seek a 20- or 25-percent 

nominal discount rate for returns. 

(Public Meeting Transcript, No 108.6 at 

p. 122) Finally, Southern Company 

noted that seven percent nominal is 

close to their cost of capital, and 

commented that excessive transformer 

investments are likely to displace more 

productive distribution system 

investments in other parts of the 

company. (Public Meeting Transcript, 

No. 108.6 at pp. 120-121) 

DOE follows OMB guidance in the 

selection of the discount rate for 

evaluating national benefits. OMB 

Circular A-4 provides clear guidance to 

DOE directing it to use discount rates of 

seven percent and three percent in 

evaluating the impacts of regulations. 

To address comments, DOE also 

reported results for the 4.2 percent 

discount rate in Appendix lOA of the 

TSD for this rulemaking. In selecting the 

discount rate corresponding to a public 

investment, OMB directs agencies to use 

"the real Treasury borrowing rate on 

marketable securities of comparable 

maturity to the period of analysis." 

Office of Management and Budget 

(OMB) Circular No. A-94, "Guidelines 

and Discount Rates for Benefit-Cost 

Analysis of Federal Programs," dated 

October 29, 1992, section 8.c.l. 

b. Discounting Energy and Emissions 

In the NOPR, DOE reported both 

undiscounted and discounted energy 

savings and emissions impacts and 

invited comment on the appropriateness 

of the discount rates used. 71 FR 44407. 

CEC commented that DOE should not 

use or report discounted emissions. 

(Public Meeting Transcript, No. 108.6 at 

p. 109) EEl commented that discounted 

emissions and energy savings are an 

interesting point of information, but 

DOE should determine the standard 

based on the absolute numbers. (Public 

Meeting Transcript, No. 108.6 at p. 111) 

NRDC objected to discounting emissions 

and would advocate for a zero percent 

discount rate for emissions. (Public 

Meeting Transcript, No. 108.6 at pp. 

113-114) Southern Company 

commented that discounting future 

sulfur dioxide (SOz) emissions would be 

similar to discounting the future price 

or value of gold, which would depend 

on the projected price in the future, 

which will almost always be larger (not 

smaller) than the current price. (Public 

Meeting Transcript, No. 108.6 at p. 121) 

Consistent with Executive Order 

12866, "Regulatory Planning and 

Review," 58 FR 51737, DOE follows the 

guidance of OMB regarding 

methodologies and procedures for 

regulatory impact analysis that affect 

more than one agency. In reporting 

energy and environmental benefits from 

energy conservation standards, DOE 

will report both discounted and 

undiscounted (Le., zero discount-rate) 

values. 

E. Commercial Consumer Subgroup 

Analysis 

In analyzing the potential impacts of 

new or amended standards, DOE 

evaluates impacts on identifiable groups 

(Le., subgroups) of customers, such as 

different types of businesses, which may 

be disproportionately affected by a 

national standard. For this rulemaking, 

DOE identified rural electric 

cooperatives and municipal utilities as 

transformer consumer subgroups that 

could be disproportionately affected, 

and examined the impact of proposed 

standards on these groups. The 

consumer subgroup analysis is 

discussed in detail in TSD Chapter 11. 
58210 Federal Register /Vol

,

72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

F. Manufacturer Impact Analysis

For the MIA, DOE introduced one

change to the methodology it described

in the NOPR. In the proposed rule, DOE

captured the costs of conversion, by

manufacturers of liquid-immersed

transformers, to production of

amorphous core transformers at TSL6

(all DLs) and TSL5 (DL3 through DL5).

For the final rule analysis and its

associated material pricing assumptions,

DOE's LCC customer choice model

indicates that manufacturers would also

produce significant volumes of

amorphous core transformers at TSL3,

TSL4, and TSLA. For TSL3 and TSL4,

the model indicates that 95 percent of

all transformers in DL4 would be

constructed from amorphous core

technology. Similarly, for TSLA, 49

percent of DL4 transformers and 84

percent of DL5 transformers would be

amorphous core transformers. For the

final rule, DOE modeled this partial

conversion to amorphous core

construction for TSL3, TSL4, and TSLA

(with no change to the proposed rule

methodology for TSL5 and TSL6).

G. Employment Impact Analysis

Indirect employment impacts from

distribution transformer standards

consist of the net jobs created or

eliminated in the national economy,

other than in the manufacturing sector

being regulated. These indirect

employment impacts are a consequence

of: (1) Reduced spending by end users

on energy (electricity, gas-including

liquefied petroleum gas-and oil); (2)

reduced spending on new energy supply

by the utility industry; (3) increased

spending on the purchase price of new

distribution transformers; and (4) the

effects of those three factors throughout

the economy. DOE expects the net

monetary savings from standards to be

redirected to other forms of economic

activity. DOE also expects these shifts in

spending and economic activity to affect

the demand for labor.

DOE did not receive stakeholder

comments on its net national

employment estimation methodology.

DOE therefore retained the same

methodology that it used in the NOPR.

For more details on the employment

impact analysis, see TSD Chapter 14.

H. Utility Impact Analysis

The utility impact analysis estimates

the impacts that the energy savings from

a standard has on the nation's energy

production and distribution

infrastructure. These impacts include

the change in fuel consumed by fuel

type, and the change in generation

capacity by generator type.

DOE analyzed the effects of standards

on electric utility industry generation

capacity and fuel consumption using a

variant of EIA's NEMS. NEMS, which is

available in the public domain, is a

large, multi-sectoral, partial-equilibrium

model of the U.S. energy sector that

estimates the economic supply and

demand balance between the energy

sector and other sectors of the U.S. and

international economies from year to

year. The EIA uses NEMS to produce

the AEO, a widely recognized baseline

energy forecast for the U.S. DOE uses a

variant known as NEMS-BT for the

appliance and equipment standards

rulemakings. (See TSD Chapter 13).

Since DOE did not receive comments on

the utility impact analysis methods in

response to the NOPR, DOE made no

adjustments to the methodology for the

final rule analysis.

For the proposed rule, DOE used

AEO2005 as input to the utility analysis,

which DOE updated to AEO2006 for

this analysis. As in the proposed rule,

the utility impact analysis was

conducted as policy deviations from the

AEO20 applying the same basic set of

assumptions. For example, the operating

characteristics (e.g., energy conversion

efficiency and emissions rates) of future

electricity generating plants are as

specified in the AE02006 Reference

Case, as are the prospects for natural gas

supply. The utility impact analysis

reports the changes in installed

generation capacity and changes in enduse electricity sales that result from

each TSL.

I. Environmental Analysis

DOE determined the environmental

impacts of the proposed standards.

Specifically, DOE calculated the

reduction in power plant emissions of

carbon dioxide (COz), SO2, NOx, and

mercury (Hg), using the NEMS-BT

computer model. The environmental

assessment published with the TSD,

however, does not include the estimated

reduction in power plant emissions of

SO2 because, as discussed below, any

such reduction resulting from an

efficiency standard would not affect the

20 While the AE02007 electricity price forecast

data was available in time for preparation of this

final rule, the full AE02007 forecast was not

available at the time DOE performed the utility and

environmental impact analysis. DOE therefore used

AE02006 for the utility and environmental

analysis. Following completion of the utility and

environmental analysis and after the full AEO 2007

became available, DOE compared the AEO2006 and

AE02007 and found the forecasts of electricity

prices, the marginal generation mix and emissions

factors in the AE02007 and AE02006 forecasts

were very similar. The two forecasts provide the

same marginal fractions of coal and natural gas

generation (within 3.5%), and have marginal CO2

emissions factors that differ by less than 2%.

overall level of SO2 emissions in the

U.S.

NEMS-BT is run similarly to the

AE02006 NEMS, except that in NEMSBT distribution transformer energy

usage is reduced by the amount of

energy (by fuel type) saved due to the

proposed TSLs. DOE obtained the input

of energy savings from the NES

spreadsheet. For the environmental

analysis, the output is the forecasted

physical emissions. The net benefit of

the standard is the difference between

emissions estimated by NEMS-BT and

the AE02006 Reference Case. While

DOE used AE02007 for electricity price

forecasts, the most recent version of

NEMS-BT available to DOE for the

environmental and utility analysis was

based on AE02006. As discussed above,

DOE found that the differences between

the marginal generation mix and

emissions factors between AE02007 and

AE02006 forecasts are very small which

implies that generation, fuel

consumption and emissions estimates

will have a similarly small relative

difference between AE02007 and

AE02006. Therefore DOE performed no

further updates to the environmental

and utility analyses for the final rule

analysis beyond the AE02006 results.

(See TSD Chapter 13)

NEMS-BT tracks CO2 emissions using

a detailed module that provides robust

results because of its broad coverage of

all sectors and inclusion of economic

interactions between sectors that can

impact emissions. DOE based the NOx

reductions on forecasts of compliance

with the Clean Air Interstate Rule

recently promulgated by EPA. 69 FR

25184 (May 5, 2004); 69 FR 32684 (June

10, 2004); and 70 FR 25162 (May 12,

2005). In the case of SO2, the Clean Air

Act Amendments of 1990 set an

emissions cap on all power generation.

The attainment of this target, however,

is flexible among generators and is

enforced by applying market forces,

through the use of emissions allowances

and tradable permits. As a result,

accurate simulation of SO2 trading tends

to imply that the effect of efficiency

standards on physical emissions will be

near zero because emissions will always

be at, or near, the ceiling. Thus, there is

virtually no real possible SO2

environmental benefit from electricity

savings as long as there is enforcement

of the emissions ceilings. See the

environmental assessment, a separate

report within the TSD, for a discussion

of these issues.

In response to the NOPR, DOE

received comments regarding the

potential economic benefits of

emissions reductions. ACEEE

commented that the EIA forecast does

 EE-RM/STD-00-550 COMMENT 194

58210 Federal Register / Vol. 72, No. 197/ Friday, October 12, 2007/ Rules and Regulations 

F. Manufacturer Impact Analysis 

For the MIA, DOE introduced one 

change to the methodology it described 

in the NOPR. In the proposed rule, DOE 

captured the costs of conversion, by 

manufacturers of liquid-immersed 

transformers, to production of 

amorphous core transformers at TSL6 

(all DLs) and TSL5 (DL3 through DL5). 

For the final rule analysis and its 

associated material pricing assumptions, 

DOE's LCC customer choice model 

indicates that manufacturers would also 

produce significant volumes of 

amorphous core transformers at TSL3, 

TSL4, and TSLA. For TSL3 and TSL4, 

the model indicates that 95 percent of 

all transformers in DL4 would be 

constructed from amorphous core 

technology. Similarly, for TSLA, 49 

percent of DL4 transformers and 84 

percent of DL5 transformers would be 

amorphous core transformers. For the 

final rule, DOE modeled this partial 

conversion to amorphous core 

construction for TSL3, TSL4, and TSLA 

(with no change to the proposed rule 

methodology for TSL5 and TSL6). 

C. Employment Impact Analysis 

Indirect employment impacts from 

distribution transformer standards 

consist of the net jobs created or 

eliminated in the national economy, 

other than in the manufacturing sector 

being regulated. These indirect 

employment impacts are a consequence 

of: (1) Reduced spending by end users 

on energy (electricity, gas-including 

liquefied petroleum gas-and oil); (2) 

reduced spending on new energy supply 

by the utility industry; (3) increased 

spending on the purchase price of new 

distribution transformers; and (4) the 

effects of those three factors throughout 

the economy. DOE expects the net 

monetary savings from standards to be 

redirected to other forms of economic 

activity. DOE also expects these shifts in 

spending and economic activity to affect 

the demand for labor. 

DOE did not receive stakeholder 

comments on its net national 

employment estimation methodology. 

DOE therefore retained the same 

methodology that it used in the NOPR. 

For more details on the employment 

impact analysis, see TSD Chapter 14. 

H. Utility Impact Analysis 

The utility impact analysis estimates 

the impacts that the energy savings from 

a standard has on the nation's energy 

production and distribution 

infrastructure. These impacts include 

the change in fuel consumed by fuel 

type, and the change in generation 

capacity by generator type. 

DOE analyzed the effects of standards 

on electric utility industry generation 

capacity and fuel consumption using a 

variant of ElA's NEMS. NEMS, which is 

available in the public domain, is a 

large, multi-sectoral, partial-equilibrium 

model of the U.S. energy sector that 

estimates the economic supply and 

demand balance between the energy 

sector and other sectors of the U.S. and 

international economies from year to 

year. The EIA uses NEMS to produce 

the AEO, a widely recognized baseline 

energy forecast for the U.S. DOE uses a 

variant known as NEMS-BT for the 

appliance and equipment standards 

rulemakings. (See TSD Chapter 13). 

Since DOE did not receive comments on 

the utility impact analysis methods in 

response to the NOPR, DOE made no 

adjustments to the methodology for the 

final rule analysis. 

For the proposed rule, DOE used 

AE02005 as input to the utility analysis, 

which DOE updated to AE02006 for 

this analysis. As in the proposed rule, 

the utility impact analysis was 

conducted as policy deviations from the 

AE020 applying the same basic set of 

assumptions. For example, the operating 

characteristics (e.g., energy conversion 

efficiency and emissions rates) of future 

electricity generating plants are as 

specified in the AE02006 Reference 

Case, as are the prospects for natural gas 

supply. The utility impact analysis 

reports the changes in installed 

generation capacity and changes in enduse electricity sales that result from 

each TSL. 

1. Environmental Analysis 

DOE determined the environmental 

impacts of the proposed standards. 

Specifically, DOE calculated the 

reduction in power plant emissions of 

carbon dioxide (C02), S02, NOx, and 

mercury (Hg), using the NEMS-BT 

computer model. The environmental 

assessment published with the TSD, 

however, does not include the estimated 

reduction in power plant emissions of 

S02 because, as discussed below, any 

such reduction resulting from an 

efficiency standard would not affect the 

20 While the AE02007 electricity price forecast 

data was available in time for preparation of this 

final rule, the full AE02007 forecast was not 

available at the time DOE performed the utility and 

environmental impact analysis. DOE therefore used 

AE02006 for the utility and environmental 

analysis. Following completion of the utility and 

environmental analysis and after the full AEO 2007 

became available, DOE compared the AE02006 and 

AE02007 and found the forecasts of electricity 

prices, the marginal generation mix and emissions 

factors in the AE02007 and AE02006 forecasts 

were very similar. The two forecasts provide the 

same marginal fractions of coal and natural gas 

generation (within 3.5%), and have marginal CO2 

emissions factors that differ by less than 2 %. 

overall level of S02 emissions in the 

U.S. 

NEMS-BT is run similarly to the 

AE02006 NEMS, except that in NEMSBT distribution transformer energy 

usage is reduced by the amount of 

energy (by fuel type) saved due to the 

proposed TSLs. DOE obtained the input 

of energy savings from the NES 

spreadsheet. For the environmental 

analysis, the output is the forecasted 

physical emissions. The net benefit of 

the standard is the difference between 

emissions estimated by NEMS-BT and 

the AE02006 Reference Case. While 

DOE used AE02007 for electricity price 

forecasts, the most recent version of 

NEMS-BT available to DOE for the 

environmental and utility analysis was 

based on AE020Q6. As discussed above, 

DOE found that the differences between 

the marginal generation mix and 

emissions factors between AE02007 and 

AE02006 forecasts are very small which 

implies that generation, fuel 

consumption and emissions estimates 

will have a similarly small relative 

difference between AE02007 and 

AE02006. Therefore DOE performed no 

further updates to the environmental 

and utility analyses for the final rule 

analysis beyond the AE02006 results. 

(See TSD Chapter 13) 

NEMS-BT tracks CO2 emissions using 

a detailed module that provides robust 

results because of its broad coverage of 

all sectors and inclusion of economic 

interactions between sectors that can 

impact emissions. DOE based the NOx reductions on forecasts of compliance 

with the Clean Air Interstate Rule 

recently promulgated by EPA. 69 FR 

25184 (May 5,2004); 69 FR 32684 (June 

10, 2004); and 70 FR 25162 (May 12, 

2005). In the case of S02, the Clean Air 

Act Amendments of 1990 set an 

emissions cap on all power generation. 

The attainment ofthis target, however, 

is flexible among generators and is 

enforced by applying market forces, 

through the use of emissions allowances 

and tradable permits. As a result, 

accurate simulation of S02 trading tends 

to imply that the effect of efficiency 

standards on physical emissions will be 

near zero because emissions will always 

be at, or near, the ceiling. Thus, there is 

virtually no real possible S02 

environmental benefit from electricity 

savings as long as there is enforcement 

of the emissions ceilings. See the 

environmental assessment, a separate 

report within the TSD, for a discussion 

of these issues. 

In response to the NOPR, DOE 

received comments regarding the 

potential economic benefits of 

emissions reductions. ACEEE 

commented that the EIA forecast does 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

not factor in any potential cost due to

addressing CO2 emissions, and that this

may lead to an underestimate of the

potential economic benefits of CO2

emissions reductions resulting from

standards. (Public Meeting Transcript,

No. 108.6 at pp. 42-43) CEC also

commented that DOE did not include

potential economic benefits and costs of

CO2 emissions in its electricity price

forecast.

DOE did not include estimates of the

economic benefits of CO2 emissions

reductions because of uncertainties in

the forecast of the economic value of

such emissions reductions. DOE instead

provides fairly detailed reporting of the

physical emissions reductions in the

environmental assessment report in the

TSD so that they can be evaluated as a

separate environmental benefit in the

selection of an energy conservation

standard. Details are provided in the

environmental assessment report in the

TSD.

V. Discussion of Other Comment

Since DOE opened the docket for this

rulemaking, it has received more than

170 comments from a diverse set of

parties, including manufacturers and

their representatives, States, energy

conservation advocates, and electric

utilities. Comments DOE received in

response to the NOPR, on the soundness

and validity of the methodologies DOE

used, are discussed in section IV. Other

stakeholder comments in response to

the NOPR addressed the burdens and

benefits associated with new energy

conservation standards, the information

DOE used in its analyses, results of and

inferences drawn from the analyses,

impacts of standards, the merits of the

different TSLs and standards options

DOE considered, other issues affecting

adoption of standards for distribution

transformers, and the DOE rulemaking

process. DOE addresses these other

stakeholder comments in response to

the NOPR below.

A. Information and Assumptions Used

in Analyses

1. Engineering Analysis

DOE received comments on the

engineering analysis in four areas:

primary voltage sensitivities, material

prices, amorphous material prices, and

material availability.

a. Primary Voltage Sensitivities

As an analysis for the final rule, DOE

considered alternative primary voltages

in its representative units designed in

the engineering analysis. ERMCO

commented that the voltages DOE used

for its NOPR analysis were reasonable

and common voltages for the

representative units from DL1-DL5.

However, ERMCO was concerned that

there are certain voltages used in

distribution networks in the U.S. today

that are unusual, and may not be

achievable at TSL4. ERMCO also stated

that there may be impedance or size

requirements, specified by utilities, that

lower efficiency. (ERMCO, No. 113 at p.

2) ERMCO provided a second written

comment, focusing on the voltage issue

and identifying dozens of voltages that

it believes may be more problematic

than others for achieving TSL4.

(ERMCO, No. 147 at pp. 3-4) ERMCO

also noted that, while primary voltages

and basic impulse insulation level

(BIL) 21 ratings have the most effect on

the ability to achieve a high efficiency

design, a low secondary voltage of, for

example, 208Y/120 volts on a large kVA

unit (1500 kVA) also can be difficult to

manufacture because of the large crosssectional area of the secondary winding.

Finally, ERMCO noted that dual-voltage

designs are more difficult to

manufacture because of complications

with how the windings are prepared.

(ERMCO, No. 147 at pp. 1-2)

In response to this comment, DOE

conducted an engineering sensitivity

analysis to understand more about the

potential impact of different voltages on

the efficiency of the resulting designs.

DOE conducted sensitivity analysis runs

on DL2 (i.e., 25 kVA pole-mount), DL4

(150 kVA three-phase), and DL5 (1500

kVA three-phase). Using all the same

inputs (including material prices), but

changing the primary and/or secondary

voltages, DOE found that some of the

transformers with the different primary

and/or secondary voltages had a higher

first cost and were less efficient. The

impact on DL4 was the most significant,

with efficiency shifts as great as 0.18

percent with certain BIL ratings. This

means that, all else being equal, a DL4

transformer designed with the reference

voltage may be 99.34 percent efficient,

while one with the higher BIL-rated

primary voltage would be 99.16 percent

efficient. This impact on the transformer

designs was one of the "other factors"

taken into consideration by the

Secretary when reviewing each of the

TSLs and selecting today's standard (see

section VI.D.1 of this final rule). The

results of the voltage sensitivity analysis

can be found in Appendix 5D of the

TSD.

21 The BIL rating represents the amount of

electrical insulation incorporated into the

transformer. The higher the BIL rating, the more

insulation and the greater the transformer's ability

to handle high voltages.

58211

b. Increased Raw Material Prices

DOE received comments expressing

concern over material prices that DOE

used in developing the proposed

standards, including prices for core steel

and conductors. ACEEE commented that

material prices are unusually high right

now, citing press articles and futures

markets which are anticipating that

materials prices may come down.

ACEEE believes electrical steel prices

will come down because of announced

capacity additions in the industry.

(ACEEE, No. 127 at p. 6) NPCC

commented that fluctuating material

prices are not a reason for concern in

setting the standard because transformer

material prices are correlated with the

materials used to construct power

plants. NPCC stated that if the standard

is set low because of high material

prices, the cost of adding electricity

generation capacity (i.e., powerplants)

will also be higher under any high

material price scenario. (NPCC, No. 141

at p. 4)

Cooper Power Systems commented

that it believes DOE should obtain

current material price data to determine

which should be used as the

benchmark. Cooper found that the 2005

material price sensitivity analysis

conducted in the NOPR was more

representative than DOE's five-year

average material price analysis. (Cooper,

No. 154 at p. 3) Howard Industries

commented that its material prices have

increased 30-40 percent in the last two

to three years, and it believes DOE

should recalculate its engineering

curves based on 2005/2006 material

prices. (Howard, No. 143 at p. 7) NEMA

expressed concern that DOE's baseline

analysis used outdated material costs,

and requested that DOE obtain 2005 and

2006 material pricing to use as the new

benchmark. NEMA stated that the

demand for electrical products in China

is very high, and this demand is driving

up the prices of commodity materials

that are used in the production of

transformers. (Public Meeting

Transcript, No. 108.6 at p. 142; NEMA,

No. 125 at pp. 1-2) The National Rural

Electric Cooperative Association

(NRECA) also expressed concern about

core steel availability and prices.

(NRECA, No. 123 at p. 3)

In response to these comments, DOE

developed a revised set of reference

material prices. The revised five-year

average material price for the final rule

spans the years 2002 through 2006, and

is based on discussion with

manufacturers and material suppliers.

This approach is consistent with a

comment from EEI, which noted that

commodity materials can fluctuate over

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58211 

not factor in any potential cost due to 

addressing CO2 emissions, and that this 

may lead to an underestimate of the 

potential economic benefits of CO2 

emissions reductions resulting from 

standards. (Public Meeting Transcript, 

No. 10B.6 at pp. 42-43) CEC also 

commented that DOE did not include 

potential economic benefits and costs of 

CO2 emissions in its electricity price 

forecast. 

DOE did not include estimates of the 

economic benefits of CO2 emissions 

reductions because of uncertainties in 

the forecast of the economic value of 

such emissions reductions. DOE instead 

provides fairly detailed reporting of the 

physical emissions reductions in the 

environmental assessment report in the 

TSD so that they can be evaluated as a 

separate environmental benefit in the 

selection of an energy conservation 

standard. Details are provided in the 

environmental assessment report in the 

TSD. 

V. Discussion of Other Comment\. 

Since DOE opened the docket for this 

rulemaking, it has received more than 

170 comments from a diverse set of 

parties, including manufacturers and 

their representatives, States, energy 

conservation advocates, and electric 

utilities. Comments DOE received in 

response to the NOPR, on the soundness 

and validity of the methodologies DOE 

used, are discussed in section IV. Other 

stakeholder comments in response to 

the NOPR addressed the burdens and 

benefits associated with new energy 

conservation standards, the information 

DOE used in its analyses, results of and 

inferences drawn from the analyses, 

impacts of standards, the merits of the 

different TSLs and standards options 

DOE considered, other issues affecting 

adoption of standards for distribution 

transformers, and the DOE rulemaking 

process. DOE addresses these other 

stakeholder comments in response to 

the NOPR below. 

A. Information and Assumptions Used 

in Analyses 

1. Engineering Analysis 

DOE received comments on the 

engineering analysis in four areas: 

primary voltage sensitivities, material 

prices, amorphous material prices, and 

material availability. 

a. Primary Voltage Sensitivities 

As an analysis for the final rule, DOE 

considered alternative primary voltages 

in its representative units designed in 

the engineering analysis. ERMCO 

commented that the voltages DOE used 

for its NOPR analysis were reasonable 

and common voltages for the 

representative units from DL1-DL5. 

However, ERMCO was concerned that 

there are certain voltages used in 

distribution networks in the U.S. today 

that are unusual, and may not be 

achievable at TSL4. ERMCO also stated 

that there may be impedance or size 

requirements, specified by utilities, that 

lower efficiency. (ERMCO, No. 113 at p. 

2) ERMCO provided a second written 

comment, focusing on the voltage issue 

and identifying dozens of voltages that 

it believes may be more problematic 

than others for achieving TSL4. 

(ERMCO, No. 147 at pp. 3-4) ERMCO 

. also noted that, while primary voltages 

and basic impulse insulation level 

(BIL) 21 ratings have the most effect on 

the ability to achieve a high efficiency 

design, a low secondary voltage of, for 

example, 20BY/120 volts on a large kVA 

unit (1500 kVA) also can be difficult to 

manufacture because of the large crosssectional area of the secondary winding. 

Finally, ERMCO noted that dual-voltage 

designs are more difficult to 

manufacture because of complications 

with how the windings are prepared. 

(ERMCO, No. 147 at pp. 1-2) 

In response to this comment, DOE 

conducted an engineering sensitivity 

analysis to understand more about the 

potential impact of different voltages on 

the efficiency of the resulting designs. 

DOE conducted sensitivity analysis runs 

on DL2 (i.e., 25 kVA pole-mount), DL4 

(150 kVA three-phase), and DL5 (1500 

kVA three-phase). Using all the same 

inputs (including material prices), but 

changing the primary and/or secondary 

voltages, DOE found that some of the 

transformers with the different primary 

and/or secondary voltages had a higher 

first cost and were less efficient. The 

impact on DL4 was the most significant, 

with efficiency shifts as great as 0.1B 

percent with certain BIL ratings. This 

means that, all else being equal, a DL4 

transformer designed with the reference 

voltage may be 99.34 percent efficient, 

while one with the higher ElL-rated 

primary voltage would be 99.16 percent 

efficient. This impact on the transformer 

designs was one of the "other factors" 

taken into consideration by the 

Secretary when reviewing each of the 

TSLs and selecting today's standard (see 

section VLD.1 ofthis final rule). The 

results of the voltage sensitivity analysis 

can be found in Appendix 5D of the 

TSD. 

21 The BIL rating represents the amount of 

electrical insulation incorporated into the 

transformer. The higher the BTL rating, the more 

insulation and the greater the transformer's ability 

to handle high voltages. 

b. Increased Raw Material Prices 

DOE received comments expressing 

concern over material prices that DOE 

used in developing the proposed 

standards, including prices for core steel 

and conductors. ACEEE commented that 

material prices are unusually high right 

now, citing press articles and futures 

markets which are anticipating that 

materials prices may come down. 

ACEEE believes electrical steel prices 

will come down because of announced 

capacity additions in the industry. 

(ACEEE, No. 127 at p. 6) NPCC 

commented that fluctuating material 

prices are not a reason for concern in 

setting the standard because transformer 

material prices are correlated with the 

materials used to construct power 

plants. NPCC stated that if the standard 

is set low because of high material 

prices, the cost of adding electricity 

generation capacity (Le., powerplants) 

will also be higher under any high 

material price scenario. (NPCC, No. 141 

at p. 4) 

Cooper Power Systems commented 

that it believes DOE should obtain 

current material price data to determine 

which should be used as the 

benchmark. Cooper found that the 2005 

material price sensitivity analysis 

conducted in the NOPR was more 

representative than DOE's five-year 

average material price analysis. (Cooper, 

No. 154 at p. 3) Howard Industries 

commented that its material prices have 

increased 30-40 percent in the last two 

to three years, and it believes DOE 

should recalculate its engineering 

curves based on 2005/2006 material 

prices. (Howard, No. 143 at p. 7) NEMA 

expressed concern that DOE's baseline 

analysis used outdated material costs, 

and requested that DOE obtain 2005 and 

2006 material pricing to use as the new 

benchmark. NEMA stated that the 

demand for electrical products in China 

is very high, and this demand is driving 

up the prices of commodity materials 

that are used in the production of 

transformers. (Public Meeting 

Transcript, No. 10B.6 at p. 142; NEMA, 

No. 125 at pp. 1-2) The National Rural 

Electric Cooperative Association 

(NRECA) also expressed concern about 

core steel availability and prices. 

(NRECA, No. 123 at p. 3) 

In response to these comments, DOE 

developed a revised set of reference 

material prices. The revised five-year 

average material price for the final rule 

spans the years 2002 through 2006, and 

is based on discussion with 

manufacturers and material suppliers. 

This approach is consistent with a 

comment from EEl, which noted that 

commodity materials can fluctuate over 
58212 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007/Rules and Regulations

time, and that EEI believed DOE was

correct to use material price averages in

its analysis. (EEI, No. 137 at p. 5)

Compared with the NOPR average

material prices, which spanned from

2000 through 2005, most of the final

rule material prices are approximately

15 to 30 percent higher, after adjusting

for inflation. Copper wire had a much

more dramatic increase in price, with as

much as a 50% increase in its cost per

pound. Cold-rolled grain-oriented core

steel increased by approximately 25%

per pound.

DOE used the new five-year average

material prices to develop new

engineering analysis cost-efficiency

curves, which it then incorporated into

the LCC spreadsheets for the final rule

analysis. The new five-year average

material prices and revised engineering

analysis cost-efficiency curves can be

found in Chapter 5 of the TSD.

c. Amorphous Material Price

DOE received several comments on

amorphous core material, questioning

primarily the pricing that DOE used in

the engineering analysis prepared as a

basis for the NOPR. ACEEE commented

that DOE should check Metglas'

assertion that DOE had overestimated

the cost of amorphous core

transformers. (ACEEE, No. 127 at p. 6)

National Grid commented that DOE

should re-evaluate the information

presented by the amorphous material

manufacturer. (NGrid, No. 138 at p. 2)

Metglas stated a concern that the DOE

analysis portrayed amorphous metal

transformers as too expensive. Metglas

commented that the software input cost

for a finished core should have been

$1.75/lb and not $2.85/lb, based on the

fact that the raw material price for

amorphous material was $0.80 to $0.90/

lb for 2000 to 2004, and $0.95/lb for the

first quarter of 2005. (Public Meeting

Transcript, No. 108.6 at p. 36; Metglas,

No. 144 at p. 2)

In response to this comment, DOE

reviewed its material pricing for

amorphous core material, as part of its

review (discussed in the previous

subsection) of all the material prices

used in its engineering analysis. DOE's

review found that the five-year average

finished amorphous core material price

was $2.14 per pound. Details on the

review of raw material and mark-up

costs associated with sourcing a

finished amorphous core can be found

in Chapter 5 of the TSD.

d. Material Availability

DOE received several comments

expressing concern over the availability

of materials-including core steel and

conductors-for building energy

efficient distribution transformers.

These issues pertain to a global scarcity

of materials as well as issues of

materials access for small

manufacturers.

NEMA expressed concern over the

effective date of the standard because of

a lack of core steel availability. (Public

Meeting Transcript, No. 108.6 at p. 220)

NRECA also expressed concern about

core steel availability. (Public Meeting

Transcript, No. 108.6 at p. 51; NRECA,

No. 123 at p. 3) Central Moloney

commented that it supports TSL2

because it is concerned about the

availability of materials needed for

higher efficiency transformers. (Public

Meeting Transcript, No. 108.6 at p. 60)

Howard Industries expressed a similar

concern, stating that it believes

suppliers of raw materials (e.g.,

aluminum magnet wire) cannot meet the

demand that will be required at TSL2,

and the situation would be much worse

at TSL4. Howard recommends TSL1.

(Howard, No. 143 at p. 6) HVOLT also

supports TSL1, because there is a wide

array of materials that could be used to

meet this level of the minimum

efficiency standard. (Public Meeting

Transcript, No. 108.6 at p. 229)

Other stakeholders, however,

emphasized the changes in the core

steel market that would increase

availability and may mitigate the impact

of potential shortages of core steel. AK

Steel stated that it is expanding its steel

production capacity to meet the demand

needs of more efficient transformers. It

indicated that it will increase steel

production by 50,000 tons per year

starting in early 2007, and that other

producers around the world are adding

capacity as well. (Public Meeting

Transcript, No. 108.6 at pp. 34 and 228)

Metglas commented that core steel will

become increasingly available, and cited

DOE's core steel report (Appendix 3A),

showing that AK Steel, POSCO, and

Wuhan are each adding significant

capacity by 2007. Therefore, Metglas

stated that core steel availability

concerns should not deter DOE from

selecting TSL4. (Metglas, No. 144 at p.

4)

DOE wanted to ensure that it did not

adopt a standard level that could only

be achieved by one type of core steel,

which might be proprietary. To better

understand and address the issue of

core steels used by selected standardscompliant designs in the LCC, DOE

evaluated the types (e.g., M6, M3, SA1)

of core steel selected by the LCC

consumer choice model at all the liquidimmersed TSLs. Knowing what

proportion of the selected designs are

built with each of the steel type for each

TSL enabled DOE to consider this

information in the standard level

selection. Details of core steel type

proportions for each TSL and each

design line are provided in Appendix

8H of the TSD.

2. Shipments/National Energy Savings

DOE received a few comments

regarding trends in transformer

efficiency and the impact that this may

have on energy savings. ACEEE

commented that average transformer

efficiencies appear to be coming down.

(ACEEE, No. 127at p. 7) NEMA

commented that 10 years ago there was

a trend where customers bought cheaper

and less efficient transformers every

year, but that the market has turned

around and now an increasing

percentage of customers are purchasing

TP 1 transformers. NEMA also noted

that the shipments data it has submitted

over the years to DOE have shown this

changing trend (Public Meeting

Transcript, No. 108.6 at p. 220; NEMA,

No. 125 at p. 3)NRECA commented that

standards may encourage some utilities

to stop evaluating transformer purchases

for efficiency because the small

differences between the energy savings

and costs of evaluated and standardcompliant transformers may no longer

justify the cost of performing

evaluations. (NRECA, No. 123 at p. 3)

DOE did not include any baseline

efficiency trends in its shipments and

national energy savings models. As

noted in comments received by DOE, it

is clear that transformer efficiencies

have dropped over the last decade.

However, current data appears to

indicate the trend towards lower

efficiencies has ended, but the data are

inconclusive as to whether efficiencies

are remaining level or increasing

slightly. Furthermore, AEO forecasts

show no long term trend in transmission

and distribution losses. Therefore, given

the variation in comments, and the data

from AEO forecasts, DOE estimates that

the probability of an increasing

efficiency trend and the probability of a

decreasing efficiency trend are

approximately equal, and therefore used

a zero trend in baseline efficiency as the

median scenario. DOE performed

sensitivity analyses for both the low and

high baseline efficiency in the LCC

analysis with results presented in

Appendix 8D of the TSD.

3. Manufacturer Impact Analysis

Metglas made two specific comments

related to the MIA. First, Metglas said

that it was "out of context" for DOE to

incorporate conversion capital

expenditures into the MIA. Since the

engineering analysis and LCC analysis

assumed that U.S. transformer

 EE-RM/STD-00-550 COMMENT 194

58212 Federal Register I VoL 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

time, and that EEl believed DOE was 

correct to use material price averages in 

its analysis. (EEl, No. 137 at p. 5) 

Compared with the NOPR average 

material prices, which spanned from 

2000 through 2005, most of the final 

rule material prices are approximately 

15 to 30 percent higher, after adjusting 

for inflation. Copper wire had a much 

more dramatic increase in price, with as 

much as a 50% increase in its cost per 

pound. Cold-rolled grain-oriented core 

steel increased by approximately 25% 

per pound. 

DOE used the new five-year average 

material prices to develop new 

engineering analysis cost-efficiency 

curves, which it then incorporated into 

the LCC spreadsheets for the final rule 

analysis. The new five-year average 

material prices and revised engineering 

analysis cost-efficiency curves can be 

found in Chapter 5 ofthe TSD. 

c. Amorphous Material Price 

DOE received several comments on 

amorphous core material, questioning 

primarily the pricing that DOE used in 

the engineering analysis prepared as a 

basis for the NOPR. ACEEE commented 

that DOE should check Metglas' 

assertion that DOE had overestimated 

the cost of amorphous core 

transformers. (ACEEE, No. 127 at p. 6) 

National Grid commented that DOE 

should re-evaluate the information 

presented by the amorphous material 

manufacturer. (NGrid, No. 138 at p. 2) 

Metglas stated a concern that the DOE 

analysis portrayed amorphous metal 

transformers as too expensive. Metglas 

commented that the software input cost 

for a finished core should have been 

$1.75/1b and not $2.85I1b, based on the 

fact that the raw material price for 

amorphous material was $0.80 to $0.90/ 

Ib for 2000 to 2004, and $0.95I1b for the 

first quarter of 2005. (Public Meeting 

Transcript, No. 108.6 at p. 36; Metglas, 

No. 144 at p. 2) 

In response to this comment, DOE 

reviewed its material pricing for 

amorphous core material, as part of its 

review (discussed in the previous 

subsection) of all the material prices 

used. in its engineering analysis. DOE's 

review found that the five-year average 

finished amorphous core material price 

was $2.14 per pound. Details on the 

review of raw material and mark-up 

costs associated with sourcing a 

finished amorphous core can be found 

in Chapter 5 of the TSD. 

d. Material Availability 

DOE received several comments 

expressing concern over the availability 

of materials-including core steel and 

conductors-for building energy 

efficient distribution transformers. 

These issues pertain to a global scarcity 

of materials as well as issues of 

materials access for small 

manufacturers. 

NEMA expressed concern over the 

effective date of the standard because of 

a lack of core steel availability. (Public 

Meeting Transcript, No. 108.6 at p. 220) 

NRECA also expressed concern about 

core steel availability. (Public Meeting 

Transcript, No. 108.6 at p. 51; NRECA, 

No. 123 at p. 3) Central Moloney 

commented that it supports TSL2 

because it is concerned about the 

availability of materials needed for 

higher efficiency transformers. (Public 

Meeting Transcript, No. 108.6 at p. 60) 

Howard Industries expressed a similar 

concern, stating that it believes 

suppliers of raw materials (e.g., 

aluminum magnet wire) cannot meet the 

demand that will be required at TSL2, 

and the situation would be much worse 

at TSL4. Howard recommends TSLl. 

(Howard, No. 143 at p. 6) HVOLT also 

supports TSL1, because there is a wide 

array of materials that could be used to 

meet this level of the minimum 

efficiency standard. (Public Meeting 

Transcript, No. 108.6 at p. 229) 

Other stakeholders, however, 

emphasized the changes in the core 

steel market that would increase 

availability and may mitigate the impact 

of potential shortages of core steel. AK 

Steel stated that it is expanding its steel 

production capacity to meet the demand 

needs of more efficient transformers. It 

indicated that it will increase steel 

production by 50,000 tons per year 

starting in early 2007, and that other 

producers around the world are adding 

capacity as well. (Public Meeting 

Transcript, No. 108.6 at pp. 34 and 228) 

Metglas commented that core steel will 

become increasingly available, and cited 

DOE's core steel report (Appendix 3A), 

showing that AK Steel, pasco, and 

Wuhan are each adding significant 

capacity by 2007. Therefore, Metglas 

stated that core steel availability 

concerns should not deter DOE from 

selecting TSL4. (Metglas, No. 144 at p. 

4) 

DOE wanted to ensure that it did not 

adopt a standard level that could only 

be achieved by one type of core steel, 

which might be proprietary. To better 

understand and address the issue of 

core steels used by selected standardscompliant designs in the LCC, DOE 

evaluated the types (e.g., M6, M3, SAl) 

of core steel selected by the LCC 

consumer choice model at all the liquidimmersed TSLs. Knowing what 

proportion of the selected designs are 

built with each of the steel type for each 

TSL enabled DOE to consider this 

information in the standard level 

selection. Details of core steel type 

proportions for each TSL and each 

design line are provided in Appendix 

8H of the TSD. 

2. Shipments/National Energy Savings 

DOE received a few comments 

regarding trends in transformer 

efficiency and the impact that this may 

have on energy savings. ACEEE 

commented that average transformer 

efficiencies appear to be coming down. 

(ACEEE, No. 127 at p. 7) NEMA 

commented that 10 years ago there was 

a trend where customers bought cheaper 

and less efficient transformers every 

year, but that the market has turned 

around and now an increasing 

percentage of customers are purchasing 

TP 1 transformers. NEMA also noted 

that the shipments data it has submitted 

over the years to DOE have shown this 

changing trend (Public Meeting 

Transcript, No. 108.6 at p. 220; NEMA, 

No. 125 at p. 3) NRECA commented that 

standards may encourage some utilities 

to stop evaluating transformer purchases 

for efficiency because the small 

differences between the energy savings 

and costs of evaluated and standardcompliant transformers may no longer 

justify the cost of performing 

evaluations. (NRECA, No. 123 at p. 3) 

DOE did not include any baseline 

efficiency trends in its shipments and 

national energy savings models. As 

noted in comments received by DOE, it 

is clear that transformer efficiencies 

have dropped over the last decade. 

However, current data appears to 

indicate the trend towards lower 

efficiencies has ended, but the data are 

inconclusive as to whether efficiencies 

are remaining level or increasing 

slightly. Furthermore, AEO forecasts 

show no long term trend in transmission 

and distribution losses. Therefore, given 

the variation in comments, and the data 

from AEO forecasts, DOE estimates that 

the probability of an increasing 

efficiency trend and the probability of a 

decreasing efficiency trend are 

approximately equal, and therefore used 

a zero trend in baseline efficiency as the 

median scenario. DOE performed 

sensitivity analyses for both the low and 

high baseline efficiency in the LCC 

analysis with results presented in 

Appendix 8D of the TSD. 

3. Manufacturer Impact Analysis 

Metglas made two specific comments 

related to the MIA. First, Metglas said 

that it was "out of context" for DOE to 

incorporate conversion capital 

expenditures into the MIA. Since the 

engineering analysis and LCC analysis 

assumed that U.S. transformer 
I

Federal Register / Vol. 72, No.. 197 / Friday, October 12, 2007 / Rules and Regulations 58213

manufacturers would purchase finished

amorphous cores, Metglas identified

DOE's inclusion of capital expenditures

associated with conversion to

amorphous core technology as

inconsistent. Second, Metglas stated

that the conversion capital expenditures

DOE estimated were two to three times

higher than actual experience has

shown in commercial production.

(Metglas, Inc., No. 144 at pp. 2-3)

Regarding Metglas's first point, DOE

recognizes that the engineering and LCC

analyses are based on a scenario where

U.S. transformer manufacturers

purchase finished amorphous cores (for

TSLs 6, 5, A, 4, and 3), while the MIA

is based on a scenario where

manufacturers would largely convert

their facilities to produce the

amorphous cores for the amorphous

core transformers. For the engineering

and LCC analyses, DOE used actual

market pricing in its analysis to develop

its production costs and transformer

price estimates. The engineering and

LCC analyses are based on the

assumption that manufacturers who

make a decision to build an amorphous

core transformer will purchase

prefabricated (i.e., cut and formed)

amorphous cores.

During the manufacturer interviews

prior to the August 2006 NOPR, DOE

learned that it was likely that many of

the U.S. manufacturers would convert

their facilities to produce amorphous

cores if the standard required or

otherwise triggered significant volumes

of amorphous core transformer

purchases-manufacturers indicated

that production of cores is an important

part of the value chain and they would

likely choose to continue to produce

them. Therefore, DOE decided to

conduct the MIA as if manufacturers

would convert their facilities to produce

amorphous core transformers for TSLs

where the DOE customer choice model

indicated selection of amorphous core

transformers in high volume. In its

assessment of manufacturer impacts,

DOE is not evaluating the assumption

made for the engineering and LCC

scenarios, namely that manufacturers

would purchase finished, prefabricated

amorphous cores. If it were modeled in

the MIA, then the employment engaged

in fabricating cores would be shifted

from domestic factories to overseas

businesses which would operate all the

equipment needed to manufacture

amorphous cores. DOE believes that

both transformer production costs and

transformer pricing would be similar

under the two scenarios. The difference

between the two scenarios would affect

only the allocation of the production

costs. In the MIA, instead of

manufacturers buying prefabricated

cores (i.e., U.S.-sourced amorphous

ribbon processed in India), paying for

trans-oceanic shipping, and lowering

their labor costs, manufacturers would

allocate costs differently by purchasing

amorphous material and employing

domestic labor to manufacture the

amorphous cores. The decision a

manufacturer makes between

outsourcing amorphous core production

and converting its facilities to produce

amorphous core transformers depends

on multiple competing factors,

including the trade-off between labor

and trans-oceanic shipping costs.

Because of these competing factors, it is

not obvious whether manufacturers

would purchase amorphous cores from

abroad or produce them on-site (and

manufacturers indicated during

interviews that they are not sure which

path they would follow today)-this is

tantamount to saying that the cost

difference between the two scenarios is

likely not major. For these reasons, DOE

concludes it is appropriate to use the

pricing information (based on

purchased cores) together with

appropriate conversion capital cost

estimates in the MIA.

With respect to Metglas's second

point about the magnitude of the

estimated conversion capital

expenditures, DOE conducted a detailed

review of its amorphous-related

conversion capital expenditure

estimates in the August 2006 NOPR.

DOE found that the conversion costs

estimates in the NOPR could be reduced

by using different core manufacturing

equipment than DOE had assumed in

the NOPR. DOE's review concluded that

the final rule conversion capital

expenditures at TSL5 and TSL6 are

about half of those presented in the

August 2006 NOPR. DOE's conclusion is

consistent with Metglas's assertion that

the investment costs in the August 2006

NOPR were two to three times too high.

See TSD Chapter 12, Section 12.4.1, for

detailed information on the capital

expenditures associated with

amorphous core conversion.

B. Weighing of Factors

1. Economic Impacts

a. Economic Impacts on Consumers

In response to the NOPR and NODA,

DOE received comments regarding the

economic impacts of the proposed

standards. The vast majority of these

comments discussed such impacts in

terms of the life-cycle costs. This

preamble discusses these comments in

section V.B.2, below.

b. Economic Impacts on Manufacturers

DOE received a comment from

Metglas that relates to the burden that

would be placed on manufacturers if

minimum efficiency standards were

implemented that required amorphous

core transformers. Metglas commented

that while it cannot replace the entire

conventional cores steel market, it is

currently making investments that will

allow it to double its production by

mid-2007, and it has a commitment to

expand as the market develops.

(Metglas, No. 144 at p. 3; Public Meeting

Transcript, No. 108.6 at p. 233) DOE

appreciates this comment, but while

Metglas may have a commitment to

expand production capacity with an

expanding market, this provides no

guarantee that severe material shortages

will not occur if demand increases faster

than Metglas' ability to expand

production. As part of DOE's weighing

the benefits and burdens of setting

standards for distribution transformers,

DOE considered whether the standard

would require amorphous core steel.

As discussed above, DOE is reluctant

to set standard levels that would require

products to be constructed of a single,

proprietary design or material. In

particular, in the case of amorphous

material, DOE is concerned because it

understands that currently there is only

one significant supplier of amorphous

ribbon to the U.S. market.22 DOE found,

for example, at TSL6, all design lines'

representative units would necessarily

be constructed of amorphous material

and at TSL5 and TSLA, design lines 3-

5 would be constructed of amorphous

material.

DOE received comments from

multiple parties about transformer

commoditization 23 and foreign

competition. Cooper Power Systems

suggested to DOE that a standard set

toward the high end of the efficiency

range that can be met by large

manufacturers would quickly lead to

commoditization and thus foreign

competition. Cooper said that it is

important for there to be efficiencies

that utilities desire and specify above

the minimum efficiency standard

because foreign manufacturers will find

it more difficult to compete in the U.S.

22 At certain very high efficiency levels, the only

core material that would enable compliant

transformers would be amorphous material.

"The term `commoditization' in this context

reflects a concern expressed by stakeholders that

the mandatory minimum efficiency standards will

simply become the most commonly requested

transformer efficiency levels in the market, and

manufacturers who currently are providing custombuild designs in a range of efficiency levels maybe

put at a disadvantage relative to manufacturers or

importers who simply focus on mass-production of

a single standards-compliant design.

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No .. 197 I Friday, October 12, 2007/Rules and Regulations 58213 

manufacturers would purchase finished 

amorphous cores, Metglas identified 

DOE's inclusion of capital expenditures 

associated with conversion to 

amorphous core technology as 

inconsistent. Second, Metglas stated 

that the conversion capital expenditures 

DOE estimated were two to three times 

higher than actual experience has 

shown in commercial production. 

(Metglas, Inc., No. 144 at pp. 2-3) 

Regarding Metglas's first point, DOE 

recognizes that the engineering and LCC 

analyses are based on a scenario where 

U.S. transformer manufacturers 

purchase finished amorphous cores (for 

TSLs 6, 5, A, 4, and 3), while the MIA 

is based on a scenario where 

manufacturers would largely convert 

their facilities to produce the 

amorphous cores for the amorphous 

core transformers. For the engineering 

and LCC analyses, DOE used actual 

market pricing in its analysis to develop 

its production costs and transformer 

price estimates. The engineering\and 

LCC analyses are based on the 

assumption that manufacturers who 

make a decision to build an amorphous 

core transformer will purchase 

prefabricated (Le., cut and formed) 

amorphous cores. During the manufacturer interviews 

prior to the August 2006 NOPR, DOE 

learned that it was likely that many of 

the U.S. manufacturers would convert 

their facilities to produce amorphous 

cores if the standard required or 

otherwise triggered significant volumes 

of amorphous core transformer 

purchases-manufacturers indicated 

that production of cores is an important 

part of the value chain and they would 

likely choose to continue to produce 

them. Therefore, DOE decided to 

conduct the MIA as if manufacturers 

would convert their facilities to produce 

amorphous core transformers for TSLs 

where the DOE customer choice model 

indicated selection of amorphous core 

transformers in high volume. In its 

assessment of manufacturer impacts, 

DOE is not evaluating the assumption 

made for the engineering and LCe 

scenarios, namely that manufacturers 

would purchase finished, prefabricated 

amorphous cores. If it were modeled in 

the MIA, then the employment engaged 

in fabricating cores would be shifted 

from domestic factories to overseas 

businesses which would operate all the 

equipment needed to manufacture 

amorphous cores. DOE believes that 

both transformer production costs and 

transformer pricing would be similar 

under the two scenarios. The difference 

between the two scenarios would affect 

only the allocation of the production 

costs. In the MIA, instead of 

manufacturers buying prefabricated 

cores (Le., U.S.-sourced amorphous 

ribbon processed in India), paying for 

trans-oceanic shipping, and lowering 

their labor costs, manufacturers would 

allocate costs differently by purchasing 

amorphous material and employing 

domestic labor to manufacture the 

amorphous cores. The decision a 

manufacturer makes between 

outsourcing amorphous core production 

and converting its facilities to produce 

amorphous core transformers depends 

on multiple competing factors, 

including the trade-off between labor 

and trans-oceanic shipping costs. 

Because of these competing factors, it is 

not obvious whether manufacturers 

would purchase amorphous cores from 

abroad or produce them on-site (and 

manufacturers indicated during 

interviews that they are not sure which 

path they would follow today)-this is 

tantamount to saying that the cost 

difference between the two scenarios is 

likely not major. For these reasons, DOE 

concludes it is appropriate to use the 

pricing information (based on 

purchased cores) together with 

appropriate conversion capital cost 

estimates in the MIA. 

With respect to Metglas's second 

point about the magnitude of the 

estimated conversion capital 

expenditures, DOE conducted a detailed 

review of its amorphous-related 

conversion capital expenditure 

estimates in the August 2006 NOPR. 

DOE found that the conversion costs 

estimates in the NOPR could be reduced 

by using different core manufacturing 

equipment than DOE had assumed in 

the NOPR. DOE's review concluded that 

the final rule conversion capital 

expenditures at TSL5 and TSL6 are 

about half of those presented in the 

August 2006 NOPR. DOE's conclusion is 

consistent with Metglas's assertion that 

the investment costs in the August 2006 

NOPR were two to three times too high. 

See TSD Chapter 12, Section 12.4.1, for 

detailed information on the capital 

expenditures associated with 

amorphous core conversion. 

B. Weighing of Factors 

1. Economic Impacts 

a. Economic Impacts on Consumers 

In response to the NOPR and NODA, 

DOE received comments regarding the 

economic impacts of the proposed 

standards. The vast majority of these 

comments discussed such impacts in 

terms of the life-cycle costs. This 

preamble discusses these comments in 

section V.B.2, below. 

b. Economic Impacts on Manufacturers 

DOE received a comment from 

Metglas that relates to the burden that 

would be placed on manufacturers if 

minimum efficiency standards were 

implemented that required amorphous 

core transformers. Metglas commented 

that while it cannot replace the entire 

conventional cores steel market, it is 

currently making investments that will 

allow it to double its production by 

mid-2007, and it has a commitment to 

expand as the market develops. 

(Metglas, No. 144 at p. 3; Public Meeting 

Transcript, No. 108.6 at p. 233) DOE 

appreciates this comment, but while 

Metglas may have a commitment to 

expand production capacity with an 

expanding market, this provides no 

guarantee that severe material shortages 

will not occur if demand increases faster 

than Metglas' ability to expand 

production. As part of DOE's weighing 

the benefits and burdens of setting 

standards for distribution transformers, 

DOE considered whether the standard 

would require amorphous core steel. 

As discussed above, DOE is reluctant 

to set standard levels that would require 

products to be constructed of a single, 

proprietary design or material. In 

particular, in the case of amorphous 

material, DOE is concerned because it 

understands that currently there is only 

one significant supplier of amorphous 

ribbon to the U.S. market. 22 DOE found, 

for example, at TSL6, all design lines' 

representative units would necessarily 

be constructed of amorphous material 

and at TSL5 and TSLA, design lines 3-

5 would be constructed of amorphous 

material. 

DOE received comments from 

multiple parties about transformer 

commoditization 23 and foreign 

competition. Cooper Power Systems 

suggested to DOE that a standard set 

toward the high end of the efficiency 

range that can be met by large 

manufacturers would quickly lead to 

commoditization and thus foreign 

competition. Cooper said that it is 

important for there to be efficiencies 

that utilities desire and specify above 

the minimum efficiency standard 

because foreign manufacturers will find 

it more difficult to compete in the U.S. 

22 At certain very high efficiency levels, the only 

core material that would enable compliant 

transformers would be amorphous material. 

23The term 'commoditization' in this context 

reflects a concern expressed by stakeholders that 

the mandatory minimum efficiency standards will 

simply become the most commonly requested 

transformer efficiency levels in the market, and 

manufacturers who currently are providing custombuild designs in a range of efficiency levels may be 

put at a disadvantage relative to manufacturers or 

importers who simply focus on mass-production of 

a single standards-compliant design. 
58214 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations

when product variety is preserved.

Cooper noted that recent trends indicate

that many utilities are again evaluating

losses when specifying transformers

because utility deregulation is

collapsing. (Cooper Power Systems, No.

154 at p. 1) Howard Industries

supported the claim that a minimum

efficiency standard will lead to offshore

production. Howard's comments did not

indicate at which TSLs it felt this effect

would become problematic. (Howard

Industries, No. 143 at p. 3)

Duke Energy stated that the risk of

increments of manufacturing capacity

being moved offshore is outweighed by

the benefits of energy savings. (Duke

Energy Corporation, No. 134 at p. 3)

ACEEE submitted comments that are

consistent with Duke Energy's. While

ACEEE agreed with manufacturers that

efficiency standards do lead to more

standardization of product designs (i.e.,

commoditization), it believes U.S.

manufacturers can still market high

efficiency products (e.g., if the final

standard were set high enough to

exclude most silicon core steel designs,

manufacturers could market amorphous

core transformers as high-efficiency

products). Furthermore, ACEEE

contended that the cost savings of

establishing offshore production are not

significant for transformers since

transformers are heavy and,

consequently, costly to ship. (ACEEE,

No. 127 at p. 8; Public Meeting

Transcript, No. 108.6 at p. 95) AK Steel

expressed disagreement with ACEEE's

view, stating that many power

transformers are shipped to the U.S.

from abroad, so it is therefore clear that

transformer weight and shipping costs

do not deter offshore transformer

manufacturing. (Public Meeting

Transcript, No. 108.6 at p. 96) ASAP

pointed out that the incentive for

manufacturers to move offshore due to

low labor costs in Asia will be present

with or without standards. (Public

Meeting Transcript, No. 108.6 at p. 102)

Finally, the Midwest Energy Efficiency

Alliance (MEEA) suggested that DOE

cannot rely on the risk of outsourcing

production to lower labor cost countries

in choosing TSL2 (instead of higher

standards) because it has not quantified

the risk of this occurrence. In contrast,

MEEA pointed out, DOE quantified the

indirect employment benefits to the

economy of higher TSLs. (MEEA, No.

126 at p. 4)

DOE appreciates the varied comments

it received on the issue of transformer

commoditization, the outsourcing of

production, and foreign competition.

While DOE understands that some

manufacturers are concerned that

today's rule could lead to some

commoditization of liquid-immersed Others commented that a standard

transformers, DOE's engineering that minimizes life-cycle costs creates

analysis indicates that many designs burdens on particular subgroups, or that

exist that are more efficient than today's the minimum life-cycle cost level, TSL4,

minimum efficiency standard. The creates inconsistencies between threedesigns available to manufacturers can phase and single-phase transformers

be constructed of either amorphous and that these burdens justify giving

material or silicon core steels. Moreover, less weight to life-cycle cost results than

today's minimum efficiency standard what was advocated by other

can be met with two or more grades of stakeholders. NRECAcommented that it

silicon core steel, depending on the does not support TSL4, because it

design line. In addition, DOE notes that believes this level would unfairly

there are many other custom design burden rural consumers who are likely

factors which are built into a at an economic disadvantage compared

distribution transformer in addition to to urban consumers. (NRECA, No. 176 at

the efficiency of the unit. Utilities can p. 3) NRECA further commented that

(and do presently) specify transformer utilities can be encouraged to minimize

designs with efficiencies that are both at life-cycle costs by being total ownership

and above (i.e., more efficient than) the cost (TOC) evaluators. (NRECA, No. 123

minimum efficiency standard being at p. 1-2) ERMCO commented that

adopted in today's final rule. Because single-phase liquid-units are commonly

today's standard preserves multiple "banked" to supply three-phase power,

design paths and a diversity of products, therefore single-phase and three-phase

DOE does not expect that today's units should have the same efficiency

standard will be a significant cause of requirements. (ERMCO, No. 165 at p. 1)

increased levels of outsourced NPCC commented that TSL4 provides

production to lower labor cost countries the maximum benefits compared to

or affect U.S. manufacturer's ability to burdens except for design line 4

compete. DOE believes this is the transformers where they recommended

situation for both liquid-immersed and adoption of TSL2. (NPCC, No. 141 at p.

medium-voltage dry-type transformer 1-4)

manufacturing. While concerns about While DOE gave substantial weight to

outsourcing and foreign competition the LCC results in selecting the standard

may be more relevant and valid for levels in today's rule, these results were

standard levels higher than those not the sole determining factor. DOE

promulgated today, DOE rejected those weighed all of the economic impacts in

standard levels based on impacts reaching its decision. DOE agrees with

associated with other EPCA criteria, and stakeholders who commented that

did not reject those higher standard differences in efficiencies between

levels based upon explicit consideration single-phase and three-phase efficiency

of outsourcing and foreign competition. levels would create burdens on both

2. Life-Cycle Costs manufacturers and consumers. The

levels selected by DOE are close to the

DOE received extensive comments minimum life-cycle cost levels that

regarding the life-cycle economic maintain consistency between singleburdens and benefits from standards, in phase and three-phase efficiency

response to both the NOPR and the requirements. (see TSD Appendix 80

NODA. A large number of stakeholders

recommended that DOE select a 3. Energy Savings

standard that minimizes life-cycle costs In response to the NOPR, DOE

and encouraged DOE to select TSL4 on received comments on the need to

the ground that it achieved that goal. maximize energy savings. Many

(ACEEE, No. 127 at p. 1-3, 9; CEC, No. stakeholders commented that the TSL2

98 at p. 1-2; NASEO, No. 131 at p. 1- level proposed by DOE in the NOPR did

2; NPCC, No. 141 at p. 1-4; Public not maximize energy savings. (ACEEE,

Meeting Transcript, No. 108.6 at p. 193; No. 127 at p. 1-3, 9; Public Meeting

U.S. Congress, No. 125 at p. 1-2; Transcript, No. 108.6 at p. 26; CEC, No.

Metglas, Incorporated, No. 144 at p. 3, 98 at p. 1-2; CDA, No. 111 at p. 5; Dow

6; NPCC, No. 141 at p. 1-4; Office of Chemical Company, No. 129 at p. 1-2;

Consumer Affairs and Business Exelon Corporation, No. 105 at p. 1;

Regulation, Division of Energy NARUC, No. 106 at p. 1-5; NASEO, No.

Resources, Commonwealth of 131 at p. 1-2; NRDC, No. 117 at p. 1-

Massachusetts, No. 152 at p. 1-2; PNM 6; NPCC, No. 141 at p. 1-4; U.S.

Resources and 9 other utilities, No. 140 Congress, No. 125 at p. 1-2; U.S. Senate,

at p. 1-2; NYSERDA, No. 136 at p. 1; No. 120 at p. 1)

Public Meeting Transcript, No. 108.6 at DOE also received comment that some

p. 39; National Grid, No. 138 at p. 1-2; levels could create unintended

Public Meeting Transcript, No. 108.6 at consequences that could reduce energy

p. 59) savings. CEA expressed concerned that

 EE-RM/STD-00-550 COMMENT 194

58214 Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

when product variety is preserved. 

Cooper noted that recent trends indicate 

that many utilities are again evaluating 

losses when specifying transformers 

because utility deregulation is 

collapsing. (Cooper Power Systems, No. 

154 at p. 1) Howard Industries 

supported the claim that a minimum 

efficiency standard will lead to offshore 

production. Howard's comments did not 

indicate at which TSLs it felt this effect 

would become problematic. (Howard 

Industries, No. 143 at p. 3) 

Duke Energy stated that the risk of 

increments of manufacturing capacity 

being moved offshore is outweighed by 

the benefits of energy savings. (Duke 

Energy Corporation, No. 134 at p. 3) 

ACEEE submitted comments that are 

consistent with Duke Energy's. While 

ACEEE agreed with manufacturers that 

efficiency standards do lead to more 

standardization of product designs (Le., 

commoditization), it believes U.S. 

manufacturers can still market high 

efficiency products (e.g., ifthe final 

standard were set high enough to 

exclude most silicon core steel designs, 

manufacturers could market amorphous 

core transformers as high-efficiency 

products). Furthermore, ACEEE 

contended that the cost savings of 

establishing offshore production are not 

significant for transformers since 

transformers are heavy and, 

consequently, costly to ship. (ACEEE, 

No. 127 at p. 8; Public Meeting 

Transcript, No. 108.6 at p. 95) AK Steel 

expressed disagreement with ACEEE's 

view, stating that many power 

transformers are shipped to the U.S. 

from abroad, so it is therefore clear that 

transformer weight and shipping costs 

do not deter offshore transformer 

manufacturing. (Public Meeting 

Transcript, No. 108.6 at p. 96) ASAP 

pointed out that the incentive for 

manufacturers to move offshore due to 

low labor costs in Asia will be present 

with or without standards. (Public 

Meeting Transcript, No. 108.6 at p. 102) 

Finally, the Midwest Energy Efficiency 

Alliance (MEEA) suggested that DOE 

cannot rely on the risk of outsourcing 

production to lower labor cost countries 

in choosing TSL2 (instead of higher 

standards) because it has not quantified 

the risk of this occurrence. In contrast, 

MEEA pointed out, DOE quantified the 

indirect employment benefits to the 

economy of higher TSLs. (MEEA, No. 

126 at p. 4) 

DOE appreciates the varied comments 

it received on the issue of transformer 

commoditization, the outsourcing of 

production, and foreign competition. 

While DOE understands that some 

manufacturers are concerned that 

today's rule could lead to some 

commoditization of liquid-immersed 

transformers, DOE's engineering 

analysis indicates that many designs 

exist that are more efficient than today's 

minimum efficiency standard. The 

designs available to manufacturers can 

be constructed of either amorphous 

material or silicon core steels. Moreover, 

today's minimum efficiency standard 

can be met with two or more grades of 

silicon core steel, depending on the 

design line. In addition, DOE notes that 

there are many other custom design 

factors which are built into a 

distribution transformer in addition to 

the efficiency ofthe unit. Utilities can 

(and do presently) specify transformer 

designs with efficiencies that are both at 

and above (Le., more efficient than) the 

minimum efficiency standard being 

adopted in today's final rule. Because 

today's standard preserves multiple 

design paths and a diversity of products, 

DOE does not expect that today's 

standard will be a significant cause of 

increased levels of outsourced 

production to lower labor cost countries 

or affect U.S. manufacturer's ability to 

compete. DOE believes this is the 

situation for both liquid-immersed and 

medium-voltage dry-type transformer 

manufacturing. While concerns about 

outsourcing and foreign competition 

may be more relevant and valid for 

standard levels higher than those 

promulgated today, DOE rejected those 

standard levels based on impacts 

associated with other EPCA criteria, and 

did not reject those higher standard 

levels based upon explicit consideration 

of outsourcing and foreign competition. 

2. Life-Cycle Costs 

DOE received extensive comments 

regarding the life-cycle economic 

burdens and benefits from standards, in 

response to both the NOPR and the 

NODA. A large number of stakeholders 

recommended that DOE select a 

standard that minimizes life-cycle costs 

and encouraged DOE to select TSL4 on 

the ground that it achieved that goal. 

(ACEEE, No. 127 at p. 1-3, 9; CEC, No. 

98 at p. 1-2; NASEO, No. 131 at p. 1-

2; NPCC, No. 141 at p. 1-4; Public 

Meeting Transcript, No. 108.6 at p. 193; 

U.S. Congress, No. 125 at p. 1-2; 

Metglas, Incorporated, No. 144 at p. 3, 

6; NPCC, No. 141 at p. 1-4; Office of 

Consumer Affairs and Business 

Regulation, Division of Energy 

Resources, Commonwealth of 

Massachusetts, No. 152 at p. 1-2; PNM 

Resources and 9 other utilities, No. 140 

at p. 1-2; NYSERDA, No. 136 at p. 1; 

Public Meeting Transcript, No. 108.6 at 

p. 39; National Grid, No. 138 at p. 1-2; 

Public Meeting Transcript, No. 108.6 at 

p.59) 

Others commented that a standard 

that minimizes life-cycle costs creates 

burdens on particular subgroups, or that 

the minimum life-cycle cost level, TSL4, 

creates inconsistencies between threephase and single"phase transformers 

and that these burdens justify giving 

less weight to life-cycle cost results than 

what was advocated by other 

stakeholders. NRECA commented that it 

does not support TSL4, because it 

believes this level would unfairly 

burden rural consumers who are likely 

at an economic disadvantage compared 

to urban consumers. (NRECA, No. 176 at 

p. 3) NRECA further commented that 

utilities can be encouraged to minimize 

life-cycle costs by being total ownership 

cost (TOC) evaluators. (NRECA, No. 123 

at p. 1-2) ERMCO commented that 

single-phase liquid-units are commonly 

"banked" to supply three-phase power, 

therefore single-phase and three-phase 

units should have the same efficiency 

requirements. (ERMeO, No. 165 at p. 1) 

NPCC commented that TSL4 provides 

the maximum benefits compared to 

burdens except for design line 4 

transformers where they recommended 

adoption ofTSL2; (NPCC, No. 141 at p. 

1-4) 

While DOE gave substantial weight to 

the LCC results in selecting the standard 

levels in today's rule, these results were 

not the sole determining factor. DOE 

weighed all ofthe economic impacts in 

reaching its decision. DOE agrees with 

stakeholders who commented that 

differences in efficiencies between 

single-phase and three-phase efficiency 

levels would create burdens on both 

manufacturers and consumers. The 

levels selected by DOE are close to the 

minimum life-cycle cost levels that 

maintain consistency between singlephase and three-phase efficiency 

requirements. (see TSD Appendix 8Il 

3. Energy Savings 

In response to the NOPR, DOE 

received comments on the need to 

maximize energy savings. Many 

stakeholders commented that the TSL2 

level proposed by DOE in the NOPR did 

not maximize energy savings. (ACEEE, 

No. 127 at p. 1-3, 9; Public Meeting 

Transcript, No. 108.6 at p. 26; CEC, No. 

98 at p. 1-2; CDA, No. 111 at p. 5; Dow 

Chemical Company, No. 129 at p. 1-2; 

Exelon Corporation, No. 105 at p. 1; 

NARUC, No. 106 at p. 1-5; NASEO, No. 

131 at p. 1-2; NRDC, No. 117 at p. 1-

6; NPCC, No. 141 at p. 1-4; U.S. 

Congress, No. 125 at p. 1-2; U.S. Senate, 

No. 120 at p. 1) 

DOE also received comment that some 

levels could create unintended 

consequences that could reduce energy 

savings. CEA expressed concerned that 
i

Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations 58215

TSL3 and TSL4 would force utilities to

use larger kVA transformers to meet

efficiency requirements because these

levels are especially hard to meet for

small transformers. The over-sizing of

transformers because of the

unavailability of moderate cost small

transformers may increase losses overall

compared to the case of no standards

(CEA, No. 171 at p. 3) Cooper

commented that higher standards for

liquid-immersed transformers compared

to dry-types could shift the market

toward increased use of less efficient

dry-type designs instead of nonflammable liquid-filled models,

negating energy savings. (Cooper, No.

175 at p. 2)

DOE recognizes that inconsistencies

between the stringency of efficiency

levels between small and large

transformers can lead to market shifts

that may decrease energy savings. DOE

did not quantitatively estimate such

potential market shifts because of a lack

of data on such market shift elasticities.

But DOE did solicit stakeholder

comment in the NODA regarding the

possibility of recombining the efficiency

levels proposed in the NOPR. 72 FR

6189-6190. In section V.C below, DOE

addressed the burden of potential

market shifts described in stakeholder

comments by recombining the proposed

efficiency levels to create more

consistency between small, large, singlephase, and three-phase liquid-immersed

transformers. By recombining efficiency

levels into combinations that have fewer

economic burdens, DOE increases the

energy savings that are economically

justified.

4. Lessening of Utility or Performance of

Products

a. Transformers Installed in Vaults

DOE received comments that energy

conservation standards may lessen the

utility and performance of transformers

by resulting in transformers that are

heavier and larger, thus creating size

and space constraint issues. DOE

quantified these effects in its analysis

and estimated the impacts in terms of

increased installations costs. This

rulemaking describes the comments and

DOE's response to these issues in

section IV.C.1.b above.

5. Impact of Lessening of Competition

DOE received comment from the

Department of justice, which indicated

that the proposed levels in the NOPR

may adversely affect competition with

respect to distribution transformers used

in industries, such as underground coal

mining, where physical conditions limit

the size of the equipment that can be

effectively utilized. (DOJ, No. 157 at p.

2) DOE considered this input from DOJ,

along with comments from several

stakeholders, and as discussed above in

section IV.A.2 of today's notice, decided

to treat space-constrained underground

mining transformers as a separate

product class in this final rule.

6. Need of the Nation To Conserve

Energy

DOE received extensive comment

from stakeholders on the need of the

Nation to conserve energy. NRDC

commented that the need for the Nation

to conserve energy was urgent from both

an environmental and public benefit

perspective. (NRDC, No. 117 at p. 1-6)

NERC commented that the energy

savings may be important for helping

maintain electric system reliability.

(NERC, No. 133 at p. 1) PNM Resources

and nine other utilities commented that

energy savings from a standard can

improve the security and reduce

reliability costs for the Nation's energy

system, can provide national economic

benefits, reduce generation capacity

requirements, and reduce generationrelated emissions. (PNM Resources and

nine other utilities, No. 140 at p. 1) And

many stakeholders commented on the

need of the Nation to conserve energy

when they commented that the TSL2

level proposed in the NOPR did not

maximize energy savings. (ACEEE, No.

127 at p. 1-3, 9; Public Meeting

Transcript, No. 108.6 at p. 26; CEC, No.

98 at p. 1-2; CDA, No. 111 at p. 5; Dow

Chemical Company, No. 129 at p. 1-2;

Exelon Corporation, No. 105 at p. 1;

NARUC, No. 106 at p. 1-5; NASEO, No.

131 at p. 1-2; NRDC, No. 117 at p. 1-

6; NPCC, No. 141 at p. 1-4; U.S.

Congress, No. 125 at p. 1-2; U.S. Senate,

No. 120 at p. 1)

DOE recognizes the need of the

Nation to save energy. Enhanced energy

efficiency improves the Nation's energy

security, strengthens the economy, and

reduces the environmental impacts or

reduces the costs of energy production.

In recognition of this national need,

DOE recombined the levels proposed in

the NOPR to create a new combination

of levels that could increase energy

savings while maintaining economic

justification. The recombined levels

considered by DOE are described in

more detail in section V.C below.

7. Other Factors

DOE received comments from

analysis using current material prices

(in addition to the reference scenario of

the five-year average material prices); (c)

a materials availability analysis to

ensure a diverse mix of core steels in the

LCC-selected designs; and (d)

consistency between single-phase

efficiency levels and their three-phase

equivalents. Each of these comments is

discussed in this rulemaking, in

sections that more closely relate to the

specific analysis involved.

a. Availability of High Primary Voltages

Another consideration for DOE under

the "Other Factors" EPCA criterion was

whether the standard level selected

would impact the availability of

transformer designs that have voltages

with BIL ratings greater than the designs

used in the engineering analysis (see

footnote on BIL ratings in section

V.A.1.a above). DOE conducted

supplementary engineering analyses for

selected design option combinations in

four liquid-immersed design lines.

Relative to the basecase (reference)

transformers designed by the software,

DOE found that changing the primary

voltages to have a higher BIL ratings

would reduce the efficiency and

increase the cost of the cost-optimized

transformer designs. For certain design

lines, this impact was particularly

significant. The results can be found in

TSD Appendix 5D.

b. Materials Price Sensitivity Analysis

DOE is concerned about how material

prices might change and impact the

market relative to the five-year average

material price scenario used for the

reference analysis for the final rule. DOE

therefore conducted a separate

engineering analysis and LCC using the

2006 24 annual average material prices

in addition to the five-year average price

scenario. Relative to the five-year

average price scenario (used by DOE as

the `reference' material price scenario),

DOE found that the LCC savings were

generally lower and the payback periods

were generally longer under the 2006

(high) material price sensitivity

analysis. Material prices and the

methodology followed to gather material

prices can be found in TSD Chapter 5.

The engineering analysis results of the

material price sensitivity analysis can be

found in TSD Appendix 5C and the LCC

results can be found in TSD Appendix

8F.

stakeholders on certain other topics that

were considered by the Secretary in

arriving at the standard published

today. These factors included: (a)

Availability of higher BIL rated primary

voltages; (b) a materials price sensitivity

24 For this final rule , DOE used annual average

material prices representative of a medium to largesized transformer manufacturer. Since this analysis

was performed in early 2007, the most recent data

in calculating average annual material prices was

data from 2006.

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58215 

TSL3 and TSL4 would force utilities to 

use larger kVA transformers to meet 

efficiency requirements because these 

levels are especially hard to meet for 

small transformers. The over-sizing of 

transformers because of the 

unavailability of moderate cost small 

transformers may increase losses overall 

compared to the case of no standards 

(CEA, No. 171 at p. 3) Cooper 

commented that higher standards for 

liquid-immersed transformers compared 

to dry-types could shift the market 

toward increased use of less efficient 

dry-type designs instead of nonflammable liquid-filled models, 

negating energy savings. (Cooper, No. 

175 at p. 2) 

DOE recognizes that inconsistencies 

between the stringency of efficiency 

levels between small and large 

transformers can lead to market shifts 

that may decrease energy savings. DOE 

did not quantitatively estimate such 

potential market shifts because of a lack 

of data on such market shift elas1\icities. 

But DOE did solicit stakeholder 

comment in the NODA regarding the 

possibility of recombining the efficiency 

levels proposed in the NOPR. 72 FR 

6189-6190. In section V.C below, DOE 

addressed the burden of potential 

market shifts described in stakeholder 

comments by recombining the proposed 

efficiency levels to create more 

consistency between small, large, singlephase, and three-phase liquid-immersed 

transformers. By recombining efficiency 

levels into combinations that have fewer 

economic burdens, DOE increases the 

energy savings that are economically 

justified. 

4. Lessening of Utility or Performance of 

Products 

a. Transformers Installed in Vaults 

DOE received comments that energy 

conservation standards may lessen the 

utility and performance of transformers 

by resulting in transformers that are 

heavier and larger, thus creating size 

and space constraint issues. DOE 

quantified these effects in its analysis 

and estimated the impacts in terms of 

increased installations costs. This 

rulemaking describes the comments and 

DOE's response to these issues in 

section IV.C.l.b above. 

5. Impact of Lessening of Competition 

DOE received comment from the 

Department of Justice, which indicated 

that the proposed levels in the NOPR 

may adversely affect competition with 

respect to distribution transformers used 

in industries, such as underground coal 

mining, where physical conditions limit 

the size of the equipment that can be 

effectively utilized. (DOJ, No. 157 at p. 

2) DOE considered this input from DOJ, 

along with comments from several 

stakeholders, and as disoussed above in 

section IV.A.2 of today's notice, decided 

to treat space-constrained underground 

mining transformers as a separate 

product class in this final rule. 

6. Need of the Nation To Conserve 

Energy 

DOE received extensive comment 

from stakeholders on the need of the 

Nation to conserve energy. NRDC 

commented that the need for the Nation 

to conserve energy was urgent from both 

an environmental and public benefit 

perspective. (NRDC, No. 117 at p. 1-6) 

NERC commented that the energy 

savings may be important for helping 

maintain electric system reliability. 

(NERC, No. 133 at p. 1) PNM Resources 

and nine other utilities commented that 

energy savings from a standard can 

improve the security and reduce 

reliability costs for the Nation's energy 

system, can provide national economic 

benefits, reduce generation capacity 

requirements, and reduce generationrelated emissions. (PNM Resources and 

nine other utilities, No. 140 at p. 1) And 

many stakeholders commented on the 

need of the Nation to conserve energy 

when they commented that the TSL2 

level proposed in the NOPR did not 

maximize energy savings. (ACEEE, No. 

127 at p. 1-3,9; Public Meeting 

Transcript, No. 108.6 at p. 26; CEC, No. 

98 at p. 1-2; CDA, No. 111 at p. 5; Dow 

Chemical Company, No. 129 at p. 1-2; 

Exelon Corporation, No. 105 at p. 1; 

NARUC, No. 106 at p. 1-5; NASEO, No. 

131 at p. 1-2; NRDC, No. 117 at p. 1-

6; NPCC, No. 141 at p. 1-4; U.S. 

Congress, No. 125 at p. 1-2; U.S. Senate, 

No. 120 at p. 1) 

DOE recognizes the need of the 

Nation to save energy. Enhanced energy 

efficiency improves the Nation's energy 

security, strengthens the economy, and 

reduces the environmental impacts or 

reduces the costs of energy production. 

In recognition of this national need, 

DOE recombined the levels proposed in 

the NOPR to create a new combination 

of levels that could increase energy 

savings while maintaining economic 

justification. The recombined levels 

considered by DOE are described in 

more detail in section V.C below. 

7. Other Factors 

DOE received comments from 

stakeholders on certain other topics that 

were considered by the Secretary in 

arriving at the standard published 

today. These factors included: (a) 

Availability of higher BIL rated primary 

voltages; (b) a materials price sensitivity 

analysis using current material prices 

(in addition to the reference scenario of 

the five-year average material prices); (c) 

a materials availability analysis to 

ensure a diverse mix of core steels in the 

LCC-selected designs; and (d) 

consistency between single-phase 

efficiency levels and their three-phase 

equivalents. Each of these comments is 

discussed in this rulemaking, in 

sections that more closely relate to the 

specific analysis involved. 

a. Availability of High Primary Voltages 

Another consideration for DOE under 

the "Other Factors" EPCA criterion was 

whether the standard level selected 

would impact the availability of 

transformer designs that have voltages 

with BIL ratings greater than the designs 

used in the engineering analysis (see 

footnote on BIL ratings in section 

V.A.l.a above). DOE conducted 

supplementary engineering analyses for 

selected design option combinations in 

four liquid-immersed design lines. 

Relative to the basecase (reference) 

transformers designed by the software, 

DOE found that changing the primary 

voltages to have a higher BIL ratings 

would reduce the efficiency and 

increase the cost of the cost-optimized 

transformer designs. For certain design 

lines, this impact was particularly 

significant. The results can be found in 

TSD Appendix 5D. 

b. Materials Price Sensitivity Analysis 

DOE is concerned about how material 

prices might change and impact the 

market relative to the five-year average 

material price scenario used for the 

reference analysis for the final rule. DOE 

therefore conducted a separate 

engineering analysis and LCC using the 

2006 24 annual average material prices 

in addition to the five-year average price 

scenario. Relative to the five-year 

average price scenario (used by DOE as 

the 'reference' material price scenario), 

DOE found that the LCC savings were 

generally lower and the payback periods 

were generally longer under the 2006 

(high) material price sensitivity 

analysis. Material prices and the 

methodology followed to gather material 

prices can be found in TSD Chapter 5. 

The engineering analysis results of the 

material price sensitivity analysis can be 

found in TSD Appendix 5C and the LCC 

results can be found in TSD Appendix 

SF. 

24 For this final rule. DOE used annual average 

material prices representative of a medium to largesized transformer manufacturer. Since this analysis 

was performed in early 2007, the most recent data 

in calculating average annual material prices was 

data from 2006. 
58216 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulat

c. Materials Availability Analysis

DOE considered the availability of a

variety of core steels that could be used

to meet the standard in order to address

stakeholder concerns about sources and

availability of specific types of core

steel. This issue is particularly

significant at the higher standard levels

where amorphous steel would be

required. DOE wishes to ensure a

diversity of core steels in the LCCselected designs, avoiding overly

constraining certain grades of steel. DOE

found in its review of the core steels

selected by the LCC model that certain

standard levels had transformer designs

based on a disproportionately large

percentages of a particular steel grade

due to the minimum efficiency

standard. The analysis of the core steels

selected by the LCC consumer choice

model can be found in TSD Appendix

8H.

d. Consistency Between Single-Phase

and Three-Phase Designs

DOE is concerned about the

consistency between the efficiency

values required for single-phase

transformers and their three-phase

equivalents (per phase). DOE

understands from comments submitted

that having different standards for

single-phase and three-phase liquidimmersed distribution transformers will

cause disturbances or distortions in the

market if the efficiency requirements

promulgated by DOE are inconsistent

between single-phase transformers and

their three-phase equivalents (see

section V.C below).25 Thus, unless the

efficiency of the two per-phase

equivalent transformers is equal,

distortions may be introduced into the

market due to the minimum efficiency

standard. In DOE's analysis, this is an

issue that only affects liquid-immersed

distribution transformers because

liquid-immersed single-phase and threephase units were analyzed separately.

For medium-voltage dry-type

distribution transformers, the threephase units were analyzed and the same

standard level is being adopted for both

three-phase and single-phase units.

DOE's evaluation of the consistency of

the TSLs considered in the proposed

rule and the new TSLs developed for

the final rule which address this

consistency issue, can be found in TSD

Appendix 81.

25 For example, if the standard level were lower

for single-phase transformers than their three-phase

equivalents, transformer consumers may stop

purchasing three-phase transformers, and instead

purchase three single-phase transformers, and

connect them to function as a three-phase

transformer.

C. Other Comments

1. Development of Trial Standard Levels

for the Final Rule

DOE received comments on three

interrelated topics that led DOE to

create additional TSLs for liquidimmersed transformers for

consideration in deciding what

standards to adopt: (1) Consistency of

minimum efficiency values for single

and three-phase transformers; (2)

continuity across capacities (or kVA

ratings) at the interfaces between design

lines; and (3) reasons for not setting

standards for design line 4 at TSL3 or

higher. These topics are interrelated

because, taken together, they produce a

rationale for DOE's construction of

additional TSLs: TSLs A, B, C and D.

First, several manufacturers of liquidimmersed distribution transformers

recommended that DOE establish

minimum efficiency standards that

equally treat a single-phase transformer

with its corresponding three-phase

analog. (Cooper Power Systems, No. 154

at p. 2; Howard Industries, No. 143 at

p. 2; Public Meeting Transcript, No.

108.6 at p. 65) For example, a 100 kVA

single-phase transformer should be held

to the same standard as a 300 kVA

three-phase transformer. (Public

Meeting Transcript, No. 108.6 at p. 46)

(In this example, the 300 kVA threephase transformer is the analog to the

100 kVA single-phase transformer, that

is, the per-phase capacities of the two

transformers are identical.) While

expressing concern about the

inconsistent treatment of single-phase

and three-phase transformers in the

proposed rule, ERMCO suggested that

there may be some rationale for more

stringent regulation of the three-phase

transformers. (ERMCO, No. 96 at p. 2)

NRDC also commented in support of

the construction of a new TSL that

achieves consistency between singlephase and three-phase transformers.

(Public Meeting Transcript, No. 108.6 at

pp. 162-163) ACEEE supported

averaging the efficiency values for the

single-phase and three-phase

transformers to achieve the consistency

requested by manufacturers. ACEEE

expressed opposition to a simple

reduction in the three-phase efficiency

levels to match the single-phase levels.

(ACEEE, No. 127 at p. 8) DOE analyzed

the consistency of its existing TSLs and

presents those findings in TSD

Appendix 81.

Second, stakeholders commented on

the separate but related issue

concerning alleged inconsistent

treatment of design lines in the

proposed rule. This related issue has to

do with smoothing the interfaces

ons

between small and large three-phase

transformers (i.e., smoothing the

interface between design lines 4 and 5).

Stakeholders asserted that where the

small and large kVA design lines

intersect, DOE's proposal might contain

a discontinuity, such as a lower

efficiency requirement for a higher kVA

rating or a significant change in the

incremental step increases in efficiency

with kVA. Stakeholders suggested that

DOE address these discontinuities in the

final rule through the use of a

smoothing function. ERMCO, Howard

Industries, HVOLT, and NEMA are the

stakeholders who commented on the

discontinuities between small and large

three-phase transformers. (Public

Meeting Transcript, No. 108.6 at pp. 72,

76, 77, and 78; ERMCO, No. 96 at p. 1;

Howard Industries, No. 143 at pp. 1-2)

Third, DOE received comments which

called to its attention the problems

associated with setting the standard for

design line 4 at TSL3 or TSL4 (TSL3

and TSL4 are the same for this design

line). NPCC suggested that DOE regulate

design line 4 at the TSL2 level. (NPCC,

No. 141 at p. 4) Similarly, ERMCO

commented that while designs based on

silicon core steel can meet TSL3 and

TSL4 for DOE's chosen representative

units, there are examples of primary

voltages that are specified and

purchased by utilities today which

would not be able to meet levels higher

than TSL2 using conventional silicon

core steel. (ERMCO, No. 113 at pp. 1-

2) In response, DOE conducted a voltage

sensitivity analysis considering higher

primary voltages and BIL ratings on

design lines 2, 3, 4 and 5, and

determined that the greatest impact of

the higher primary voltages was

experienced by design line 4. (See TSD

Appendix 5D) DOE agrees with

ERMCO's assertion that certain primary

voltages, when specified for design line

4, cannot meet TSL4 (or TSL3) using

conventional silicon core steel.

Furthermore, the DOE customer choice

model (in the LCC analysis) indicates

that, for the design line 4 representative

unit, approximately 95 percent of the

transformers selected would be

constructed with amorphous cores at

TSL3 and TSL4. While TSL3 and TSL4

could be met for all voltage classes

using amorphous material, DOE has

decided not to regulate to a level that

would require amorphous material, for

reasons having to do with material

availability and the limited number of

ribbon suppliers. (see Section V.A.7.c

above and Section V.B.i.b below)

In response to the above comments,

DOE created TSLs A, B, C and D. Each

of these additional TSLs assures the

following: (1) Consistency between

 EE-RM/STD-00-550 COMMENT 194

58216 Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

c. Materials Availability Analysis 

DOE considered the availability of a 

variety of core steels that could be used 

to meet the standard in order to address 

stakeholder concerns about sources and 

availability of specific types of core 

steel. This issue is particularly 

significant at the higher standard levels 

where amorphous steel would be 

required. DOE wishes to ensure a 

diversity of core steels in the LCCselected designs, avoiding overly 

constraining certain grades of steel. DOE 

found in its review of the core steels 

selected by the LCC model that certain 

standard levels had transformer designs 

based on a disproportionately large 

percentages of a particular steel grade 

due to the minimum efficiency 

standard. The analysis of the core steels 

selected by the LCC consumer choice 

model can be found in TSD Appendix 

8H. 

d. Consistency Between Single-Phase 

and Three-Phase Designs 

DOE is concerned about the 

consistency between the efficiency 

values required for single-phase 

transformers and their three-phase 

equivalents (per phase). DOE 

understands from comments submitted 

that having different standards for 

single-phase and three-phase liquidimmersed distribution transformers will 

cause disturbances or distortions in the 

market if the efficiency requirements 

promulgated by DOE are inconsistent 

between single-phase transformers and 

their three-phase equivalents (see 

section V.C below).25 Thus, unless the 

efficiency of the two per-phase 

equivalent transformers is equal, 

distortions may be introduced into the 

market due to the minimum efficiency 

standard. In DOE's analysis, this is an 

issue that only affects liquid-immersed 

distribution transformers because 

liquid-immersed single-phase and threephase units were analyzed separately. 

For medium-voltage dry-type 

distribution transformers, the threephase units were analyzed and the same 

standard level is being adopted for both 

three-phase and single-phase units. 

DOE's evaluation ofthe consistency of 

the TSLs considered in the proposed 

rule and the new TSLs developed for 

the final rule which address this 

consistency issue, can be found in TSD 

Appendix 81. 

25 For example. if the standard level were lower 

for single-phase transformers than their three-phase 

equivalents. transformer consumers may stop 

purchasing three-phase transformers. and instead 

purchase three single-phase transformers. and 

connect them to function as a three-phase 

transformer. 

C. Other Comments 

1. Development of Trial Standard Levels 

for the Final Rule 

DOE received comments on three 

interrelated topics that led DOE to 

create additional TSLs for liquidimmersed transformers for 

consideration in deciding what 

standards to adopt: (1) Consistency of 

minimum efficiency values for single 

and three-phase transformers; (2) 

continuity across capacities (or kVA 

ratings) at the interfaces between design 

lines; and (3) reasons for not setting 

standards for design line 4 at TSL3 or 

higher. These topics are interrelated 

because, taken together, they produce a 

rationale for DOE's construction of 

additional TSLs: TSLs A, B, C and D. 

First, several manufacturers of liquidimmersed distribution transformers 

recommended that DOE establish 

minimum efficiency standards that 

equally treat a single-phase transformer 

with its corresponding three-phase 

analog. (Cooper Power Systems, No. 154 

at p. 2; Howard Industries, No. 143 at 

p. 2; Public Meeting Transcript, No. 

108.6 at p. 65) For example, a 100 kVA 

single-phase transformer should be held 

to the same standard as a 300 kV A 

three-phase transformer. (Public 

Meeting Transcript, No. 108.6 at p. 46) 

(In this example, the 300 kVA threephase transformer is the analog to the 

100 kVA single-phase transformer, that 

is, the per-phase capacities of the two 

transformers are identical.) While 

expressing concern about the 

inconsistent treatment of single-phase 

and three-phase transformers in the 

proposed rule, ERMCO suggested that 

there may be some rationale for more 

stringent regulation of the three-phase 

transformers. (ERMCO, No. 96 at p. 2) 

NRDC also commented in support of 

the construction of a new TSL that 

achieves consistency between singlephase and three-phase transformers. 

(Public Meeting Transcript, No. 108.6 at 

pp. 162-163) ACEEE supported 

averaging the efficiency values for the 

single-phase and three-phase 

transformers to achieve the consistency 

requested by manufacturers. ACEEE 

expressed opposition to a simple 

reduction in the three-phase efficiency 

levels to match the single-phase levels. 

(ACEEE, No. 127 at p. 8) DOE analyzed 

the consistency of its existing TSLs and 

presents those findings in TSD 

Appendix 81. 

Second, stakeholders commented on 

the separate but related issue 

concerning alleged inconsistent 

treatment of design lines in the 

proposed rule. This related issue has to 

do with smoothing the interfaces 

between small and large three-phase 

transformers (Le., smoothing the 

interface between design lines 4 and 5). 

Stakeholders asserted that where the 

small and largekVA design lines 

intersect, DOE's proposal might contain 

a discontinuity, such as a lower 

efficiency requirement for a higher kVA 

rating or a significant change in the 

incremental step increases in efficiency 

with kVA. Stakeholders suggested that 

DOE address these discontinuities in the 

final rule through the use of a 

smoothing function. ERMCO, Howard 

Industries, HVOLT, and NEMA are the 

stakeholders who commented on the 

discontinuities between small and large 

three-phase transformers. (Public 

Meeting Transcript, No. 108.6 at pp. 72, 

76,77, and 78; ERMCO, No. 96 at p. 1; 

Howard Industries, No. 143 at pp. 1-2) 

Third, DOE received comments which 

called to its attention the problems 

associated with setting the standard for 

design line 4 at TSL3 or TSL4 (TSL3 

and TSL4 are the same for this design 

line). NPCC suggested that DOE regulate 

design line 4 at the TSL2 level. (NPCC, 

No. 141 at p. 4) Similarly, ERMCO 

commented that while designs based on 

silicon core steel can meet TSL3 and 

TSL4 for DOE's chosen representative 

units, there are examples of primary 

voltages that are specified and 

purchased by utilities today which 

would not be able to meet levels higher 

than TSL2 using conventional silicon 

core steel. (ERMCO, No. 113 at pp. 1-

2) In response, DOE conducted a voltage 

sensitivity analysis considering higher 

primary voltages and ElL ratings on 

design lines 2, 3, 4 and 5, and 

determined that the greatest impact of 

the higher primary voltages was 

experienced by design line 4. (See TSD 

Appendix 5D) DOE agrees with 

ERMCO's assertion that certain primary 

voltages, when specified for design line 

4, cannot meet TSL4 (or TSL3) using 

conventional silicon core steel. 

Furthermore, the DOE customer choice 

model (in the LCC analysis) indicates 

that, for the design line 4 representative 

unit, approximately 95 percent of the 

transformers selected would be 

constructed with amorphous cores at 

TSL3 and TSL4. While TSL3 and TSL4 

could be met for all voltage classes 

using amorphous material, DOE has 

decided not to regulate to a level that 

would require amorphous material, for 

reasons having to do with material 

availability and the limited number of 

ribbon suppliers. (see Section V.A.7.c 

above and Section V.B.l.b below) 

In response to the above comments, 

DOE created TSLs A, B, C and D. Each 

of these additional TSLs assures the 

following: (1) Consistency between 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58217

single-phase and three-phase analogs;

(2) that there are no discontinuities

between adjacent design lines of the

same phase as kVA increases; and (3)

that the level for design line 4 is not at

TSL3 or higher (i.e., not at 99.26 percent

or higher).

TSLA ensures single-phase versus

three-phrase consistency by mapping

from the single-phase transformers to

the three-phase transformers. DOE

constructed TSLA based on first

selecting the highest design line 1

efficiency level considered in the

proposed rule that does not exceed

99.26 percent, which is 99.19 percent

(to ensure that the level for design line

4 is not at TSL3 or higher). DOE then

chose this same level of 99.19 percent

for the three-phase analog, design line 4

(to achieve single-phase versus threephase consistency). For design line 2,

DOE chose the level of 99.04 percent by

implementing 0.75 scaling based on

design line 1 (to achieve continuity

between adjacent design lines). or the

last single-phase design line, design line

3, DOE chose the highest efficiency

level considered in the proposed rule

that yields positive mean LCC savings

and does not create a significant

discontinuity with design line 1, that is,

99.54 percent efficient. It used this same

level for the three-phase analog, design

line 5 (to achieve single-phase versus

three-phase consistency).

TSLB ensures single-phase versus

three-phrase consistency by mapping

from the three-phase transformers to the

single-phase transformers (i.e., the

mapping direction is reversed). DOE

constructed TSLB by choosing the

highest design line 4 efficiency level

considered in the proposed rule that

does not exceed 99.26 percent, which is

99.08 percent (to ensure that the level

for design line 4 is not at TSL3 or

higher). DOE chose this same level of

99.08 percent for the single-phase

analog, design line 1 (to achieve singlephase versus three-phase consistency).

For design line 2, DOE chose the level

of 98.91 percent by implementing 0.75

scaling based off on design line 1 (to

achieve continuity between adjacent

design lines). For the other three-phase

design line, design line 5, DOE chose

the highest efficiency level considered

in the proposed rule that yields positive

mean LCC savings, 99.47 percent. It

used this same level for the single-phase

analog, design line 3 (to achieve singlephase versus three-phase consistency).

TSLC is similar to TSLB; the only

difference is in the treatment of the large

kVA transformers (design line 3 and

design line 5). For TSLC, instead of

choosing the highest NOPR efficiency

level for design line 5 that yields

positive mean LCC savings (99.47

percent), DOE chose the next lower

level of 99.42 percent. DOE used this

same level for the single}phase analog,

design line 3 (to achieve single-phase

versus three-phase consistency).

TSLD is based on TSLC except it

rounds down the single-phase levels to

TSLs evaluated in the proposed rule.

This reduces the single-phase versus

three-phase consistency established in

TSLC, but results in the creation of a

TSL-similar to TSLC-that is based on

purely NOPR levels. The resulting levels

are 99.04 percent, 98.79 percent, 99.38

percent, 99.08 percent, and 99.42

percent for design lines 1-5,

respectively. These correspond to the

NOPR TSLs 4, 4, 2, 2, and 3 for design

lines 1 through 5, respectively. While

TSLD has better consistency between

single and three-phase transformers

than other TSLs that were considered in

the NOPR, as shown in Appendix 81,

this standard level is not perfectly

consistent between single and threephase transformers (as are TSLA, TSLB

and TSLC). In particular, at TSLD, the

three-phase standard is higher (more

stringent) than the single-phase

standard at all kVA ratings.

2. Linear Interpolation of Non-Standard

Capacity Ratings

NEMA and GE Energy both

commented on the issue of nonstandard capacity (i.e., kVA) ratings. GE

Energy requested clarification on how it

should derive the efficiency

requirement for transformers which are

covered within the scope of this

rulemaking, but have a kVA rating that

does not appear in the table of efficiency

values-for example, 458 kVA. (GE

Energy, No. 145 at p. 1) NEMA

commented that they believe it would

be problematic if DOE were to hold

efficiency standards for any kVA ratings

not appearing in the tables to the next

higher efficiency standard. (NEMA, No.

174 at pp. 3-4) GE Energy and NEMA

both recommend that DOE adopt a

linear interpolation to scale the

efficiency values of the kVA ratings in

the table that are immediately above and

below the rating that isn't shown in the

table. (GE Energy, No. 145 at p. 1;

NEMA, No. 174 at p. 4) DOE discussed

this issue with its technical experts and

reviewed industry practice for the

treatment of transformers that have nonstandard kVA values. DOE is today

adopting this stakeholder

recommendation, namely that

transformers with kVA ratings not

appearing in the standards tables would

be subject to standard levels that are

calculated by means of linear

interpolation from the efficiency

requirements of the two kVA ratings

immediately above and below. For

clarity, DOE is providing an example of

the linear interpolation equation for a

458 kVA three-phase medium-voltage

dry-type distribution transformer with a

60 kV BIL rating. As shown in Table 1.2,

the kVA ratings and efficiency

requirements immediately above and

below 458 kVA are 500 kVA at 98.83%

and 300 kVA at 98.67%. This data

enables the user to prepare a table with

the five known values (i.e., x1, x2, x3, yi,

and y3) and the one value to solve for,

Y2•

TABLE V.1.-EXAMPLE CALCULATION

FOR LINEAR INTERPOLATION To DETERMINE EFFICIENCY REQUIREMENT

FOR KVA RATINGS NOT APPEARING

IN STANDARDS TABLES

kVA Rating

300 WA (xi) .....................

458 kVA (x2) .....................

500 kVA (x3) .....................

Efficiency

98.67% (Yi)

? (Y2)

98.83% (y3)

The kVA and efficiency values (i.e.,

xl, x2, x3, yi, and y3) should then be

plugged into the linear interpolation

equation shown below, with the result

being rounded off to the hundredths

decimal place:

Y2 = (x2-x.)(Y3-y1)+y

(x3 -x1)

For this example, the resultant

efficiency requirement (i.e., y2)

calculated for a 458 kVA mediumvoltage dry-type distribution

transformer with a 60 kV BIL is 98.80%.

VI. Analytical Results and Conclusions

A. Trial Standard Levels

For today's final rule, DOE examined

10 TSLs for liquid-immersed .

distribution transformers (consisting of

the six TSLs DOE considered in the

NOPR plus the four new TSLs discussed

in section V.C. of this Notice) and six

TSLs for medium-voltage, dry-type

distribution transformers (the same

TSLs that DOE considered in the NOPR

since these levels had no single-phase/

three-phase consistency issues). Table

VI.1 presents the TSLs analyzed and the

efficiency level within each TSL for

each transformer design line. DOE used

the specific transformers from the

design lines to represent a range of

distribution transformers within the

each product class. This table presents

the efficiency values of TSLs A, B, C,

and D, in the context of the other

efficiency values considered in TSL1

through TSL6. TSL6 is the maximum

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 1971Friday, October 12, 2007/Rules and Regulations 58217 

single-phase and three-phase analogs; 

(2) that there are no discontinuities 

between adjacent design lines of the 

same phase as kVA increases; and (3) 

that the level for design line 4 is not at 

TSL3 or higher (Le., not at 99.26 percent 

or higher). 

TSLA ensures single-phase versus 

three-phrase consistency by mapping 

from the single-phase transformers to 

the three-phase transformers. DOE 

constructed TSLA based on first 

selecting the highest design line 1 

efficiency level considered in the 

proposed rule that does not exceed 

99.26 percent, which is 99.19 percent 

(to ensure that the level for design line 

4 is not at TSL3 or higher). DOE then 

chose this same level of 99.19 percent 

for the three-phase analog, design line 4 

(to achieve single-phase versus threephase consistency). For design line 2, 

DOE chose the level of 99.04 percent by 

implementing 0.75 scaling based on 

design line 1 (to achieve continuity 

between adjacent design lines). ~or the 

last single-phase design line, design line 

3, DOE chose the highest efficiency 

level considered in the proposed rule 

that yields positive mean LCC savings 

and does not create a significant 

discontinuity with design line 1, that is, 

99.54 percent efficient. It used this same 

level for the three-phase analog, design 

line 5 (to achieve single-phase versus 

three-phase consistency). 

TSLB ensures single-phase versus 

three-phrase consistency by mapping 

from the three-phase transformers to the 

single-phase transformers (Le., the 

mapping direction is reversed). DOE 

constructed TSLB by choosing the 

highest design line 4 efficiency level 

considered in the proposed rule that 

does not exceed 99.26 percent, which is 

99.08 percent (to ensure that the level 

for design line 4 is not at TSL3 or 

higher). DOE chose this same level of 

99.08 percent for the single-phase 

analog, design line 1 (to achieve singlephase versus three-phase consistency). 

For design line 2, DOE chose the level 

of 98.91 percent by implementing 0.75 

scaling based off on design line 1 (to 

achieve continuity between adjacent 

design lines). For the other three-phase 

design line, design line 5, DOE chose 

the highest efficiency level considered 

in the proposed rule that yields positive 

mean LCC savings, 99.47 percent. It 

used this same level for the single-phase 

analog, design line 3 (to achieve singlephase versus three-phase consistency). 

TSLC is similar to TSLB; the only 

difference is in the treatment of the large 

kVA transformers (design line 3 and 

design line 5). For TSLC, instead of 

choosing the highest NOPR efficiency 

level for design line 5 that yields 

positive mean LCC savings (99.47 

percent), DOE chose the next lower 

level of 99.42 percent. DOE used this 

same level for the single-phase analog, 

design line 3 (to achieve single-phase 

versus three-phase consistency). 

TSLD is based on TSLC except it 

rounds down the single-phase levels to 

TSLs evaluated in the proposed rule. 

This reduces the single-phase versus 

three-phase consistency established in 

TSLC, but results in the creation of a 

TSL-similar to TSLC-that is based on 

purely NOPR levels. The resulting levels 

are 99.04 percent, 98.79 percent, 99.38 

percent, 99.08 percent, and 99.42 

percent for design lines 1-5, 

respectively. These correspond to the 

NOPR TSLs 4, 4, 2, 2, and 3 for design 

lines 1 through 5, respectively. While 

TSLD has better consistency between 

single and three-phase transformers 

than other TSLs that were considered in 

the NOPR, as shown in Appendix 81, 

this standard level is not perfectly 

consistent between single and threephase transformers (as are TSLA, TSLB 

and TSLC). In particular, at TSLD, the 

three-phase standard is higher (more 

stringent) than the single-phase 

standard at all kVA ratings. 

2. Linear Interpolation of Non-Standard 

Capacity Ratings 

NEMA and GE Energy both 

commented on the issue of nonstandard capacity (Le., kVA) ratings. GE 

Energy requested clarification on how it 

should derive the efficiency 

requirement for transformers which are 

covered within the scope of this 

rulemaking, but have a kVA rating that 

does not appear in the table of efficiency 

values-for example, 458 kVA. (GE 

Energy, No. 145 at p. 1) NEMA 

commented that they believe it would 

be problematic if DOE were to hold 

efficiency standards for any kVA ratings 

not appearing in the tables to the next 

higher efficiency standard. (NEMA, No. 

174 at pp. 3-4) GE Energy and NEMA 

both recommend that DOE adopt a 

linear interpolation to scale the 

efficiency values of the kVA ratings in 

the table that are immediately above and 

below the rating that isn't shown in the 

table. (GE Energy, No. 145 at p. 1; 

NEMA, No. 174 at p. 4) DOE discussed 

this issue with its technical experts and 

reviewed industry practice for the 

treatment of transformers that have nonstandard kV A values. DOE is today 

adopting this stakeholder 

recommendation, namely that 

transformers with kVA ratings not 

appearing in the standards tables would 

be subject to standard levels that are 

calculated by means of linear 

interpolation from the efficiency 

requirements of the two kV A ratings 

immediately above and below. For 

clarity, DOE is providing an example of 

the linear interpolation equation for a 

458 kVA three-phase medium-voltage 

dry-type distribution transformer with a 

60 kV BIL rating. As shown in Table I.2, 

the kVA ratings and efficiency 

requirements immediately above and 

below 458 kVA are 500 kVA at 98.83% 

and 300 kVA at 98.67%. This data 

enables the user to prepare a table with 

the five known values (Le., XI, X2, X3, Yl, 

and Y3) and the one value to solve for, 

Y2. 

TABLE V.1.-ExAMPLE CALCULATION 

FOR LINEAR INTERPOLATION To DETERMINE EFFICIENCY REQUIREMENT 

FOR KVA RATINGS NOT ApPEARING 

IN STANDARDS TABLES 

kVA Rating 

300 kVA (Xl) .................... . 

458 kV A (xz) .................... . 500 kVA (X3) .................... . 

Efficiency 

98.67% (Yl) 

? (Yz) 

98.83% (Y3) 

The kVA and efficiency values (Le., 

Xl, X2, X3, Yl, and Y3) should then be 

plugged into the linear interpolation 

equation shown below, with the result 

being rounded off to the hundredths 

decimal place: 

_ (X2 -XI)(Y3 -YI) + 

Y2 - ( ) YI X3 -Xl 

For this example, the resultant 

efficiency requirement (Le., Y2) 

calculated for a 458 kVA mediumvoltage dry-type distribution 

transformer with a 60 kV BIL is 98.80%. 

VI. Analytical Results and Conclusions 

A. Trial Standard Levels 

For today's final rule, DOE examined 

10 TSLs for liquid-immersed 

distribution transformers (consisting of 

the six TSLs DOE considered in the 

NOPR plus the four new TSLs discussed 

in section V.C. ofthis Notice) and six 

TSLs for medium-voltage, dry-type 

distribution transformers (the same 

TSLs that DOE considered in the NOPR 

since these levels had no single-phase/ 

three-phase consistency issues). Table 

VI.1 presents the TSLs analyzed and the 

efficiency level within each TSL for 

each transformer design line. DOE used 

the specific transformers from the 

design lines to represent a range of 

distribution transformers within the 

each product class. This table presents 

the efficiency values of TSLs A, B, C, 

and D, in the context ofthe other 

efficiency values considered in TSL1 

through TSL6. TSL6 is the maximum 
58218 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

technologically feasible level (max tech)

for each class of product.

TABLE VIA.-EFFICIENCY VALUES (%) OF THE TRIAL STANDARD LEVELS BY DESIGN LINE

T

Design kVA Ph

Trial standard level

ype lines ase

1 2 D C B 3 4 A 5 6

Liquid-Immersed ................................ DL1 50 1 98.90 98.90 99.04 99.08 99. 08 98.90 99.04 99. 19 99.19 99.59

DL2 25 1 98.70 98.73 98.79 98.91 98.91 98.76 98.79 99.04 98.96 99.46

DL3 500 1 99.30 99.38 99.38 99.42 99.47 99.46 99.54 99.54 99.74 99.75

DL4 150 3 98.90 99. 08 99.08 99.08 99. 08 99.26 99.26 99.19 99.58 99.61

DL5 1500 3 99.30 99.36 99.42 99.42 99.47 99.42 99.47 99.54 99.71 99.71

Medium-Voltage Dry-Type* ............... DL9 300 3 98.60 98. 82 ........... ............ 99.04 99.26 99.41 99.41

DL10 1500 3 99.10 99.22 ........... ............ 99.30 99.39 99.51 99.51

DL11 300 3 98.50 98.67

.

........... ............ 98.84 99.01 99.09 99.09

DL12 1500 3 99.00 99. 12 ........... ............ 99.23 99.35 99.51 99.51

DL13 2000 3 99.00 99.15 ............ ........... 99.30 99.45 ............ 99.55 99.55

*Design Lines 9 through 13 represent medium-voltage dry-type distribution transformers , and there were no corresponding trial standard levels set for TSLA

through TSLD because their efficiency levels are consistent between single-phase and three-phase designs.

Table VIA illustrates how the

recombined TSLs A, B, C, and D have

much greater consistency between the

single-phase efficiency levels and the

levels for the three-phase counterparts.

For example, design line 4 is the threephase design line that is equivalent to

using three design line 1 transformers,

while design line 5 is the three-phase

design line that is equivalent to three

transformers from design line 3. For

TSLs A, B, and C, the efficiency levels

for DL4 and DL1, and for DL5 and DL3

are equal.

DOE presents the tables of efficiency

values for all the preferred kVA ratings

(i.e., not only the representative kVA

ratings that were analyzed) at each of

the various TSLs in the Environmental

Assessment report, which is included in

the Technical Support Document.

B. Significance of Energy Savings

To estimate the energy savings

through 2038 due to new standards,

DOE compared the energy consumption

of distribution transformers under the

base case (no new standards) to energy

consumption of distribution

transformers under the standards. Table

VI.2 summarizes DOE's NES estimates.

DOE based these estimates on the

results of the revised NIA, which uses

energy price forecasts from AE02007.

These estimates are described in more

detail in TSD Chapter 10.

TABLE VI.2.-NATIONAL ENERGY SAVINGS (QUADS) OF THE TRIAL STANDARD LEVELS

Liquid-Immersed .........................

Type Discount

rate

Trial standard level

1 2 D C B 3 4 A 5 6

1.38 1.94 2.18 2.61 2.75 2.76 3.00 4.07 5.07 7.37

0.77 1.08 1.21 1.45 1.53 1.53 1.67 2.27 2.82 4.10

0.39 0.55 0.62 0.74 0.78 0.78 0.85 1.15 1.44 2.09

0.06 0.13 0.19 0.27 0.40 0.40

0.03 0.07 0.10 0.20 0.22 0.22

0.02 0.04 0.05 0.10 0.11 0.11

Medium-Voltage Dry-Type * .......

* Medium-voltage dry-type distribution transformers did not have any trial standard levels set for TSLA through TSLD.

C. Economic justification

1. Economic Impact on Commercial

Consumers

a. Life-Cycle Costs and Payback Period

Commercial consumers will be

affected by the standards since they will

experience higher purchase prices and

lower operating costs. To estimate these

impacts, DOE calculated the LCC and

PBP for the ten trial standards levels

considered in this proceeding. DOE's

LCC and PBP analyses provided five

outputs for each TSL, which are

reported in Tables VI.3 through VI.12

below. The first three outputs are the

proportion of transformer purchases

where the purchase of a design that

complies with the TSL would create a

net life-cycle cost, no impact, or a net

life-cycle savings for the consumer,

respectively. The fourth output is the

average net life-cycle savings from

purchase of a design complying with the

standard.

Finally, the fifth output is the PBP for

the average consumer purchase of a

design that complies with the TSL. The

PBP is the number of years it would take

for the customer to recover, as a result

of energy savings, the increased costs of

higher efficiency equipment, based on

the operating cost savings from the first

year of ownership. The PBP is an

economic benefit-cost measure that uses

benefits and costs without discounting.

However, DOE based the PBP analysis

for distribution transformers on energy

consumption under actual in-service

loading conditions, whereas, in

accordance with EPCA , the rebuttable

presumption test is based on

consumption as determined using

loading levels prescribed by the DOE

test procedure . As discussed above,

while DOE examined the rebuttable

presumption criteria (see TSD section

8.7), it determined today's standard

levels to be economically justified

through an analysis of the economic

impacts of increased efficiency levels

pursuant to section 325(o )(2)(B)(i) of

EPCA. (42 U.S.C. 6295 (o)(2)(B)(i))

Detailed information on the LCC and

PBP analyses can be found in TSD

Chapter 8.

 EE-RM/STD-00-550 COMMENT 194

58218 Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

technologically feasible level (max tech) 

for each class of product. 

TABLE VI.1.-EFFICIENCY VALUES (%) OF THE TRIAL STANDARD LEVELS BY DESIGN LINE 

Design Trial standard level 

Type kVA Phase lines 1 2 D C B 3 4 A 5 6 

Liquid-Immersed ................................ DL1 50 1 98.90 98.90 99.04 99.08 99.08 98.90 99.04 99.19 99.19 99.59 

DL2 25 1 98.70 98.73 98.79 98.91 98.91 98.76 98.79 99.04 98.96 99.46 

DL3 500 1 99.30 99.38 99.38 99.42 99.47 99.46 99.54 99.54 99.74 99.75 

DL4 150 3 98.90 99.08 99.08 99.08 99.08 99.26 99.26 99.19 99.58 99.61 

DL5 1500 3 99.30 99.36 99.42 99.42 99.47 99.42 99.47 99.54 99.71 99.71 

Medium-Voltage Dry-Type* ............... DL9 300 3 98.60 98.82 ............ ............ ............ 99.04 99.26 ............ 99.41 99.41 

DL10 1500 3 99.10 99.22 ............ ............ ............ 99.30 99.39 ............ 99.51 99.51 

DL11 300 3 98.50 98.67 ............ ............ . ........... 98.84 99.01 ............ 99.09 99.09 

DL12 1500 3 99.00 99.12 ............ ............ . ........... 99.23 99.35 ............ 99.51 99.51 

DL13 2000 3 99.00 99.15 ............ ............ ............ 99.30 99.45 . ........... 99.55 99.55 

* Design Lines 9 through 13 represent medium-voltage dry-type distribution transformers, and there were no corresponding trial standard levels set for TSLA 

through TSLD because their efficiency levels are consistent between single-phase and three-phase designs. 

Table VI.1 illustrates how the 

recombined TSLs A, B, C, and D have 

much greater consistency between the 

single-phase efficiency levels and the 

levels for the three-phase counterparts. 

For example, design line 4 is the threephase design line that is equivalent to 

using three design line 1 transformers, 

while design line 5 is the three-phase 

design line that is equivalent to three 

transformers from design line 3. For 

TSLs A, B, and C, the efficiency levels 

for DL4 and DLl, and for DL5 and DL3 

are equal. 

DOE presents the tables of efficiency 

values for all the preferred kVA ratings 

(Le., not only the representative kVA 

ratings that were analyzed) at each of 

the various TSLs in the Environmental 

Assessment report, which is included in 

the Technical Support Document. 

B. Significance of Energy Savings 

To estimate the energy savings 

through 2038 due to new standards, 

DOE compared the energy consumption 

of distribution transformers under the 

base case (no new standards) to energy 

consumption of distribution 

transformers under the standards. Table 

VI,2 summarizes DOE's NES estimates. 

DOE based these estimates on the 

results of the revised NIA, which uses 

energy price forecasts from AE02007. 

These estimates are described in more 

detail in TSD Chapter 10. 

TABLE VI.2.-NATIONAL ENERGY SAVINGS (QUADS) OF THE TRIAL STANDARD LEVELS 

Discount Trial standard level 

Type rate 1 2 D C B 3 4 A 5 6 

Liquid-Immersed ......................... none ........ 1.38 1.94 2.18 2.61 2.75 2.76 3.00 4.07 5.07 7.37 

3% ........... 0.77 1.08 1.21 1045 1.53 1.53 1.67 2.27 2.82 4.10 

7% ........... 0.39 0.55 0.62 0.74 0.78 0.78 0.85 1.15 1044 2.09 

Medium-Voltage Dry-Type * ....... none ........ 0.06 0.13 ............ ............ . ........... 0.19 0.27 ............ 0040 0040 

3% ........... 0.03 0.07 ............ ............ .. .......... 0.10 0.20 ............ 0.22 0.22 

7% ........... 0.02 0.04 .. .......... ............ .. .......... 0.05 0.10 ............ 0.11 0.11 

• Medium-voltage dry-type distribution transformers did not have any trial standard levels set for TSLA through TSLD. 

C. Economic Justification 

1. Economic Impact on Commercial 

Consumers 

a. Life-Cycle Costs and Payback Period 

Commercial consumers will be 

affected by the standards since they will 

experience higher purchase prices and 

lower operating costs. To estimate these 

impacts, DOE calculated the LCC and 

PBP for the ten trial standards levels 

considered in this proceeding. DOE's 

LCC and PBP analyses provided five 

outputs for each TSL, which are 

reported in Tables VI.3 through VI.12 

below. The first three outputs are the 

proportion of transformer purchases 

where the purchase of a design that 

complies with the TSL would create a 

net life-cycle cost, no impact, or a net 

life-cycle savings for the consumer, 

respectively. The fourth output is the 

average net life-cycle savings from 

purchase of a design complying with the 

standard. 

Finally, the fifth output is the PBP for 

the average consumer purchase of a 

design that complies with the TSL. The 

PBP is the number of years it would take 

for the customer to recover, as a result 

of energy savings, the increased costs of 

higher efficiency equipment, based on 

the operating cost savings from the first 

year of ownership. The PBP is an 

economic benefit-cost measure that uses 

benefits and costs without discounting. 

However, DOE based the PEP analysis 

for distribution transformers on energy 

consumption under actual in-service 

loading conditions, whereas, in 

accordance with EPCA, the rebuttable 

presumption test is based on 

consumption as determined using 

loading levels prescribed by the DOE 

test procedure. As discussed above, 

while DOE examined the rebuttable 

presumption criteria (see TSD section 

8.7), it determined today's standard 

levels to be economically justified 

through an analysis of the economic 

impacts of increased efficiency levels 

pursuant to section 325(0)(2)(B)(i) of 

EPCA. (42 U.S.C. 6295(0)(2)(B)(i)) 

Detailed information on the LCC and 

PEP analyses can be found in TSD 

Chapter 8. 
Efficiency (%) .............................

Transformers with Net Increase

in LCC (%) ..............................

Transformers with No Change in

LCC (%) ..................................

Transformers with Net Savings

in LCC (%) ..............................

Mean LCC Savings ($) ..............

Payback of Average Transformer (years) .........................

Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations 58219

TABLE VI.3.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 1 REPRESENTATIVE UNIT

98.90

2.0

66.1

31.9

124

2.4

2

98.90

2.0

66.1

31.9

124

2.4

D

99.04

16.9

50.0

33.2

98

9.7

C

99.08

24.8

38.8

36.5

90

11.4

Trial standard level

B

99.08

24.8

38.8

36.5

90

11.4

3

98.90

2.0

66.1

31.9

124

2.4

4

99.04

16.9

50.0

33.2

98

9.7

99.19

63.3

7.0

29.7

(62)

20.9

5

99.19

63.3

7.0

29.7

(62)

20.9

6

99.59

96.7

0.0

3.3

(1074)

37.9

TABLE VI.4.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 2 REPRESENTATIVE UNIT

1 D C

Trial standard level

B 3 4 A 5

98.70 98.73 98.79 98.91 98.91 98.76 98.79 99.04 98.96

12.1 10.5 12.4 42.5 42.5 9.6 12.4 79.6 57.7

42.0 38.4 34.1 16.5 16.5 36.3 34.1 0.1 10.0

45.9 51.1 53.5 41.0 41.0 54.2 53.5 20.3 32.3

59 65 76 22 22 76 76 (113) (24)

7.6 7.8 8.0 15.6 15.6 7.1 8.0 24.0 19.7

Efficiency (%) .............................

Transformers with Net Increase

in LCC (%) ..............................

Transformers with No Change in

LCC (%) ..................................

Transformers with Net Savings

in LCC (%) ..............................

Mean LCC Savings ($) ..............

Payback of Average Transformer (years) .........................

Efficiency (%) .............................

Transformers with Net Increase

in LCC (%) ..............................

Transformers with No Change in

LCC (%) ..................................

Transformers with Net Savings

in LCC (%) ..............................

Mean LCC Savings ($) ..............

Payback of Average Transformer (years) .........................

Efficiency (%) .............................

Transformers with Net Increase

in LCC (%) ..............................

Transformers with No Change in

LCC (%) ..................................

Transformers with Net Savings

in LCC (%) ..............................

Mean LCC Savings ($) ..............

Payback of Average Transformer (years) .........................

6

99.46

99.5

0.0

0.5

(1094)

52.1

TABLE V1.5.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 3 REPRESENTATIVE UNIT

1

99.30

1.4

66.6

32.0

1132

2.3

2

99.38

1.4

59.0

39.6

1464

3.6

D

99.38

1.4

59.0

39.6

1464

3.6

C

99.42

2.5

56.5

41.0

1555

4.3

Trial standard level

B

99.47

8.1

47.1

44.8

1597

6.1

3

99.46

7.7

49.1

43.2

1560

6.2

4

99.54

44.3

2.1

53.6

1308

10.6

A

99.54

44.3

2.1

53.6

1308

10.6

5

99.74

83.7

0.2

16.2

(2341)

23.5

6

99.75

87.3

0.0

12.7

(3460)

26.2

TABLE V1.6.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 4 REPRESENTATIVE UNIT

98.90

9.6

54.4

36.0

368

7.8

2

99.08

20.7

20.6

58.7

503

10.4

D

99.08

20.7

20.6

58.7

503

10.4

C

99.08

20.7

20.6

58.7

503

10.4

Trial standard level

B

99.08

20.7

20.6

58.7

503

10.4

3

99.26

18.9

13.0

68.2

737

11.3

4

99.26

18.9

13.0

68.2

737

11.3

A

99.19

32.4

13.0

54.6

397

13.6

5

99.58

78.0

0.1

21.9

(780)

22.0

6

99.61

86.9

0.0

13.1

(1586)

26.0

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58219 

TABLE VI.3.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 1 REPRESENTATIVE UNIT 

Trial standard level 

1 2 0 C B 3 4 A 5 6 

Efficiency (%) ............................. 98.90 98.90 99.04 99.08 99.08 98.90 99.04 99.19 99.19 99.59 

Transformers with Net Increase 

in LCC (%) .............................. 2.0 2.0 16.9 24.8 24.8 2.0 16.9 63.3 63.3 96.7 

Transformers with No Change in 

LCC(%) .................................. 66.1 66.1 50.0 38.8 38.8 66.1 50.0 7.0 7.0 0.0 

Transformers with Net Savings 

in LCC (%) .............................. 31.9 31.9 33.2 36.5 36.5 31.9 33.2 29.7 29.7 3.3 

Mean LCC Savings ($) .............. 124 124 98 90 90 124 98 (62) (62) (1074) 

Payback of Average Transformer (years) ......................... 2.4 2.4 9.7 11.4 11.4 2.4 9.7 20.9 20.9 37.9 

TABLE VI.4.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 2 REPRESENTATIVE UNIT 

Trial standard level 

1 2 0 C B 3 4 A 5 6 

Efficiency (%) ............................. 98.70 98.73 98.79 98.91 98.91 98.76 98.79 99.04 98.96 99.46 

Transformers with Net Increase 

in LCC (%) .............................. 12.1 10.5 12.4 42.5 42.5 9.6 12.4 79.6 57.7 99.5 

Transformers with No Change in \ LCC(%) .................................. 42.0 38.4 34.1 16.5 16.5 36.3 34.1 0.1 10.0 0.0 

Transformers with Net Savings 

in LCC (%) .............................. 45.9 51.1 53.5 41.0 41.0 54.2 53.5 20.3 32.3 0.5 

Mean LCC Savings ($) .............. 59 65 76 22 22 76 76 (113) (24) (1094) 

Payback of Average Transformer (years) ......................... 7.6 7.8 8.0 15.6 15.6 7.1 8.0 24.0 19.7 52.1 

TABLE VI.5.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 3 REPRESENTATIVE UNIT 

Trial standard level 

1 2 0 C B 3 4 A 5 6 

Efficiency (%) ............................. 99.30 99.38 99.38 99.42 99.47 99.46 99.54 99.54 99.74 99.75 

Transformers with Net Increase 

in LCC (%) .............................. 1.4 1.4 1.4 2.5 8.1 7.7 44.3 44.3 83.7 87.3 

Transformers with No Change in 

LCC (%) .................................. 66.6 59.0 59.0 56.5 47.1 49.1 2.1 2.1 0.2 0.0 

Transformers with Net Savings 

in LCC (%) .............................. 32.0 39.6 39.6 41.0 44.8 43.2 53.6 53.6 16.2 12.7 

Mean LCC Savings ($) .............. 1132 1464 1464 1555 1597 1560 1308 1308 (2341) (3460) 

Payback of Average Transformer (years) ......................... 2.3 3.6 3.6 4.3 6.1 6.2 10.6 10.6 23.5 26.2 

TABLE VI.6.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 4 REPRESENTATIVE UNIT 

Trial standard level 

1 2 0 C B 3 4 A 5 6 

Efficiency (%) ............................. 98.90 99.08 99.08 99.08 99.08 99.26 99.26 99.19 99.58 99.61 

Transformers with Net Increase 

in LCC (%) .............................. 9.6 20.7 20.7 20.7 20.7 18.9 18.9 32.4 78.0 86.9 

Transformers with No Change in 

LCC(%) .................................. 54.4 20.6 20.6 20.6 20.6 13.0 13.0 13.0 0.1 0.0 

Transformers with Net Savings 

in LCC (%) .............................. 36.0 58.7 58.7 58.7 58.7 68.2 68.2 54.6 21.9 13.1 

Mean LCC Savings ($) .............. 368 503 503 503 503 737 737 397 (780) (1586) 

Payback of Average Transformer (years) ......................... 7.8 10.4 10.4 10.4 10.4 11.3 11.3 13.6 22.0 26.0 
58220 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

TABLE VI.7.- SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 5 REPRESENTATIVE UNIT

Trial standard level

Efficiency (%) ...........................

Transformers with Net Increase

in LCC (%) ............................

Transformers with No Change

in LCC (%) ............................

Transformers with Net Savings

in LCC (%) ............................

Mean LCC Savings ($) ............

Payback of Average Transformer (years) .......................

1

99.30

5.1

66.7

28.2

1597

5.1

2

99.36

4.8

61.7

33.5

2168

6.0

D

99.42

12.6

45.5

41.9

2480

7.4

C

99.42

12.6

45.5

41.9

2480

7.4

B

99.47

21.4

33.0

45.6

2626

8.9

3

99.42

12.6

45.5

41.9

2480

7.4

4

99.47

21.4

33.0

45.6

2626

8.9

99.54

52.3

4.7

43.1

1193

99.71

84.8

0.0

15.2

(5905)

13.8 21.6

6

99.71

84.8

0.0

15.2

(5905)

21.6

TABLE VI.8.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 9 REPRESENTATIVE UNIT

Trial standard level

1

Efficiency (%) .......................................................................................................

Transformers with Net Increase in LCC (%) .......................................................

Transformers with No Change in LCC (%) .........................................................

Transformers with Net Savings in LCC (%) ........................................................

Mean LCC Savings ($) ........................................................................................

Payback of Average Transformer (years) ...........................................................

98.60

0.3

61.0

38.7

1032

0.7

2

98.82

2.3

41.4

56.3

1863

1.8

3

99.04 99.26

8.6 31.9

22.0 0.0

69.4 68.1

3114 3223

3.4 7.2

5

99.41

62.1

0.0

37.9

186

13.8

6

99.41

62.1

0.0

37.9

186

13.8

TABLE V1.9.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 10 REPRESENTATIVE UNIT

Trial standard level

1

Efficiency (%) ...................................................................................................

Transformers with Net Increase in LCC (%) ...................................................

Transformers with No Change in LCC (%) .....................................................

Transformers with Net Savings in LCC (%) ....................................................

Mean LCC Savings ($) ....................................................................................

Payback of Average Transformer (years) .......................................................

99.10

14.3

44.8

41.0

4370

5.0

2

99.20

16.6

31.6

51.7

5719

6.4

3

99.30

18.5

24.1

57.4

7408

7.0

4

99.39

31.1

9.5

59.5

7774

8.3

5

99.51

69.4

0.0

30.7

(2116)

15.2

6

99.51

69.4

0.0

30.7

(2116)

15.2

TABLE VI.10.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 11 REPRESENTATIVE UNIT

Trial standard level

1

Efficiency (%) .......................................................................................................

Transformers with Net Increase in LCC (%) .......................................................

Transformers with No Change in LCC (%) .........................................................

Transformers with Net Savings in LCC (%) ........................................................

Mean LCC Savings ($) ........................................................................................

Payback of Average Transformer (years) ...........................................................

98.50

3.4

36.4

60.3

3110

2.4

2

98.67

5.1

27.7

67.2

4280

3.0

98.84

13.1

10.8

76.1

5057

4.3

4 I 5

99.01 99.09

24.9 36.5

0.7 0.0

74.4 63.5

5365 4472

5.9 7.8

6

99.09

36.5

0.0

63.5

4472

7.8

TABLE VIA 1.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 12 REPRESENTATIVE UNIT

Trial standard level

1 2 3 4

Efficiency (%) ................................................................................................... 99.00 99.12 99.23 99.35

Transformers with Net Increase in LCC (%) ................................................... 5.0 4.0 8.6 24.2

Transformers with No Change in LCC (%) ..................................................... 66.8 56.5 43.8 16.7

Transformers with Net Savings in LCC (%) .................................................... 28.2 39.5 47.6 59.1

Mean LCC Savings ($) .................................................................................... 2790 4863 6471 7904

Payback of Average Transformer (years) ....................................................... 3.4 3.9 4.9 6.7

5

99.51

71.9

0.0

28.1

(3417)

16.0

6

99.51

71.9

0.0

28.1

(3417)

16.0

 EE-RM/STD-00-550 COMMENT 194

58220 Federal Register I Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

TABLE VI.7.- SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 5 REPRESENTATIVE UNIT 

Trial standard level 

1 2 0 C B 3 4 A 5 6 

Efficiency (%) ........................... 99.30 99.36 99.42 99.42 99.47 99.42 99.47 99.54 99.71 99.71 

Transformers with Net Increase 

in LCC (%) ............................ 5.1 4.8 12.6 12.6 21.4 12.6 21.4 52.3 84.8 84.8 

Transformers with No Change 

in LCC (%) ............................ 66.7 61.7 45.5 45.5 33.0 45.5 33.0 4.7 0.0 0.0 

Transformers with Net Savings 

in LCC (%) ............................ 28.2 33.5 41.9 41.9 45.6 41.9 45.6 43.1 15.2 15.2 

Mean LCC Savings ($) ............ 1597 2168 2480 2480 2626 2480 2626 1193 (5905) (5905) 

Payback of Average Transformer (years) ....................... 5.1 6.0 7.4 7.4 8.9 7.4 8.9 13.8 21.6 21.6 

TABLE VI.8.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 9 REPRESENTATIVE UNIT 

Trial standard level 

2 3 4 5 6 

Efficiency (%) ...................................................................................................... . 98.60 98.82 99.04 99.26 99.41 99.41 

Transformers with Net Increase in LCC (%) ...................................................... . 0.3 2.3 8.6 31.9 62.1 62.1 

Transformers with No Change in LCC (%) ........................................................ . 61.0 41.4 22.0 0.0 0.0 0.0 

Transformers with Net Savings in LCC (%) ...................................................... .. 38.7 56.3 69.4 68.1 37.9 37.9 

Mean LCC Savings ($) ....................................................................................... . 1032 1863 3114 3223 186 186 

Payback of Average Transformer (years) .......................................................... . 0.7 1.8 3.4 7.2 13.8 13.8 

TABLE VI.9.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 10 REPRESENTATIVE UNIT 

Trial standard level 

2 3 4 5 6 

Efficiency (%) .................................................................................................. . 99.10 99.20 99.30 99.39 99.51 99.51 

Transformers with Net Increase in LCC (%) ................................................. .. 14.3 16.6 18.5 31.1 69.4 69.4 

Transformers with No Change in LCC (%) .................................................... . 44.8 31.6 24.1 9.5 0.0 0.0 

Transformers with Net Savings in LCC (%) ................................................... . 41.0 51.7 57.4 59.5 30.7 30.7 

Mean LCC Savings ($) ................................................................................... . 4370 5719 7408 7774 (2116) (2116) 

Payback of Average Transformer (years) ...................................................... . 5.0 6.4 7.0 8.3 15.2 15.2 

TABLE VI.10.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 11 REPRESENTATIVE UNIT 

Trial standard level 

2 3 4 5 6 

Efficiency (%) ...................................................................................................... . 98.50 98.67 98.84 99.01 99.09 99.09 

Transformers with Net Increase in LCC (%) ..................................................... .. 3.4 5.1 13.1 24.9 36.5 36.5 

Transformers with No Change in LCC (%) ....................................................... .. 36.4 27.7 10.8 0.7 0.0 0.0 

Transformers with Net Savings in LCC (%) ....................................................... . 60.3 67.2 76.1 74.4 63.5 63.5 

Mean LCC Savings ($) ....................................................................................... . 3110 4280 5057 5365 4472 4472 

Payback of Average Transformer (years) ......................................................... .. 2.4 3.0 4.3 5.9 7.8 7.8 

TABLE VI.11.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 12 REPRESENTATIVE UNIT 

Trial standard level 

2 3 4 5 6 

Efficiency (%) ................................................................................................. .. 99.00 99.12 99.23 99.35 99.51 99.51 

Transformers with Net Increase in LCC (%) ................................................. .. 5.0 4.0 8.6 24.2 71.9 71.9 

Transformers with No Change in LCC (%) ................................................... .. 66.8 56.5 43.8 16.7 0.0 0.0 

Transformers with Net Savings in LCC (%) ................................................... . 28.2 39.5 47.6 59.1 28.1 28.1 

Mean LCC Savings ($) ................................................................................... . 2790 4863 6471 7904 (3417) (3417) 

Payback of Average Transformer (years) ..................................................... .. 3.4 3.9 4.9 6.7 16.0 16.0 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 / Rules and Regulations

99.30

7.4

45.4

47.2

6950

5.6

TABLE VI.12.-SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN LINE 13 REPRESENTATIVE UNIT

Trial standard level

3

Efficiency (%) ...................................................................................................

Transformers with Net Increase in LCC (%) ...................................................

Transformers with No Change in LCC (%) .....................................................

Transformers with Net Savings in LCC (%) ....................................................

Mean LCC Savings ($) ....................................................................................

Payback of Average Transformer (years) .......................................................

b. Commercial Consumer Subgroup

Analysis

DOE estimated commercial consumer

subgroup impacts by determining the

LCC impacts of the TSLs on rural

electric cooperatives and municipal

utilities. DOE's analysis indicated that,

for municipal utilities, the economics

are similar to those of the national

sample of utilities, but that rural

cooperatives will achieve smaller

99.00

5.6

71.4

23.1

827

4.4

99.15

7.2

55.2

37.6

3658

5.6

operating cost savings from higher

standards than will the average utility.

Consequently, rural cooperatives, but

not municipal utilities, will generally

have a longer payback period for any

given standard level than will the

average utility. 71 FR 44389-90. (See

TSD Chapter 11 for information on the

LCC Subgroup Analysis) Thus, on

average, rural cooperatives will benefit

less per affected transformer from

4

99.45

46.0

1.5

52.6

6832

9.6

5

99.55

78.1

0.0

21.9

( 9886)

18.7

58221

6

99.55

78.1

0.0

21.9

(9886)

18.7

efficiency improvements than either the

average utility or municipal utilities.

For each of the two commercial

consumer subgroups, Table VI.13 shows

the mean LCC savings at each TSL, and

Table VI.14 shows the mean PBP (in

years). DOE included only the liquidimmersed design lines in this analysis

since those types are more than ninety

percent of the transformers purchased

by electric utilities.

TABLE V1.13.-MEAN LIFE-CYCLE COST SAVINGS FOR LIQUID-IMMERSED TRANSFORMERS PURCHASED BY CERTAIN

CONSUMER SUBGROUPS ($)

Design line

1

Trial standard level

2 D C

Municipal Utility Subgroup

B 3 4 A 5 6

1 ............................................................... 118 118 116 109 109 118 116 (23) (23) (1003)

2 ............................................................... 55 59 75 21 21 74 75 (106) (19) (1073)

3 ............................................................... 1357 1691 1690 1798 1920 1885 1674 1674 (1779) (2837)

4 ............................................................... 435 577 577 577 577 661 661 442 (563) (1338)

5 ............................................................... 2370 3154 3708 3708 4094 3708 4094 2096 (3192) (3192)

Rural Cooperative Subgroup

1 ............................................................... 120 120 61 49 49 120 61 (131) (131) (1218)

2 ............................................................... 54 61 67 4 4 71 67 (148) (51) (1174)

3 ............................................................... 835 1151 1151 1215 1155 1114 786 786 (3324) (4518)

4 ............................................................... 247 353 353 353 353 653 653 173 (1216) (2064)

5 ............................................................... 945 1371 1537 1537 1505 1537 1505 292 (8122) (8122)

TABLE VI.14.- PAYBACK PERIOD FOR AVERAGE LIQUID-IMMERSED TRANSFORMERS PURCHASED BY CERTAIN CONSUMER

SUBGROUPS (YEARS)

Design line

1

Trial standard level

2 D C

Municipal Utility Subgroup

B 3 4 5 6

1 ............................................................... 2.5 2.5 9.0 10.6 10.6 2.5 9.0 18.5 18.5 35.4

2 ............................................................... 8.4 8.6 8.0 15.6 15.6 7.1 8.0 24.0 18.5 50.6

3 ............................................................... 2.0 3.3 3.3 3.9 5.5 5.5 9.7 9.7 21.8 24.2

4 ............................................................... 7.0 9.8 9.8 9.8 9.8 11.8 11.8 13.3 20.5 24.2

5 ............................................................... 4.3 5.3 6.6 6.6 8.0 6.6 8.0 14.1 20.5 20.5

Rural Cooperative Subgroup

1 ............................................................... 2.5 2.5 11.9 13.4 13.4 2.5 11.9 24.8 24.8 44.6

2 ............................................................... 8.4 8.6 8.8 16.9 16.9 7.8 8.8 26.7 21.5 58.1

3 ............................................................... 3.3 4.7 4.7 5.5 7.8 7.9 12.7 12.7 27.6 31.0

4 ............................................................... 9.6 11.8 11.8 11.8 11.8 12.0 12.0 15.6 25.1 30.0

5 ............................................................... 7.9 8.8 10.5 10.5 12.2 10.5 12.2 16.9 27.6 27.6

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58221 

TABLE VI.12.-SUMMARY liFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR DESIGN liNE 13 REPRESENTATIVE UNIT 

Trial standard level 

2 3 4 5 6 

Efficiency ('Yo) ................................................................................................. .. 99.00 99.15 99.30 99.45 99.55 99.55 

Transformers with Net Increase in LCe ('Yo) ................................................. .. 5.6 7.2 7.4 46.0 78.1 78.1 

Transformers with No Change in LCC ('Yo) ................................................... .. 71.4 55.2 45.4 1.5 0.0 0.0 

Transformers with Net Savings in LCC ('Yo) ................................................... . 23.1 37.6 47.2 52.6 21.9 21.9 

Mean LCC Savings ($) ................................................................................... . 827 3658 6950 6832 (9886) (9886) 

Payback of Average Transformer (years) ..................................................... .. 4.4 5.6 5.6 9.6 18.7 18.7 

b. Commercial Consumer Subgroup 

Analysis 

DOE estimated commercial consumer 

subgroup impacts by determining the 

LCC impacts of the TSLs on rural 

electric cooperatives and municipal 

utilities. DOE's analysis indicated that, 

for municipal utilities, the economics 

are similar to those of the national 

sample of utilities, but that rural 

cooperatives will achieve smaller 

operating cost savings from higher 

standards than will the average utility. 

Consequently, rural cooperatives, but 

not municipal utilities, will generally 

have a longer payback period for any 

given standard level than will the 

average utility. 71 FR 44389-90. (See 

TSD Chapter 11 for information on the 

LCC Subgroup Analysis) Thus, on 

average, rural cooperatives will benefit 

less per affected transformer from 

efficiency improvements than either the 

average utility or municipal utilities. 

For each of the two commercial 

consumer subgroups, Table Vl,13 shows 

the mean LCC savings at each TSL, and 

Table VI.14 shows the mean PBP (in 

years). DOE included only the liquidimmersed design lines in this analysis 

since those types are more than ninety 

percent of the transformers purchased 

by electric utilities. 

TABLE VI.13.-MEAN liFE-~YCLE COST SAVINGS FOR liQUID-IMMERSED TRANSFORMERS PURCHASED BY CERTAIN 

CONSUMER SUBGROUPS ($) 

Trial standard level 

Design line 

Municipal Utility Subgroup 

1 .............................................................. . 118 118 116 109 109 118 

2 .............................................................. . 55 59 75 21 21 74 

3 .............................................................. . 1357 1691 1690 1798 1920 1885 

4 .............................................................. . 435 577 577 577 577 661 

5 .............................................................. . 2370 3154 3708 3708 4094 3708 

Rural Cooperative Subgroup 

1 ............................................................... 120 120 61 49 49 120 

2 ............................................................... 54 61 67 4 4 71 

3 ............................................................... 835 1151 1151 1215 1155 1114 

4 ............................................................... 247 353 353 353 353 653 

5 ............................................................... 945 1371 1537 1537 1505 1537 

116 (23) 

75 (106) 

1674 1674 

661 442 

4094 2096 

61 (131) 

67 (148) 

786 786 

653 173 

1505 292 

(23) 

(19) 

(1779) 

(563) 

(3192) 

(131) 

(51) 

(3324) 

(1216) 

(8122) 

6 

(1003) 

(1073) 

(2837) 

(1338) 

(3192) 

(1218) 

(1174) 

(4518) 

(2064) 

(8122) 

TABLE VI.14.- PAYBACK PERIOD FOR AVERAGE liQUID-IMMERSED TRANSFORMERS PURCHASED BY CERTAIN CONSUMER 

SUBGROUPS (YEARS) 

Trial standard level 

DeSign line 

6 

Municipal Utility Subgroup 

1 ............................................................. .. 2.5 2.5 9.0 10.6 10.6 2.5 9.0 18.5 18.5 35.4 

2 .............................................................. . 8.4 8.6 8.0 15.6 15.6 7.1 8.0 24.0 18.5 50.6 

3 .............................................................. . 2.0 3.3 3.3 3.9 5.5 5.5 9.7 9.7 21.8 24.2 

4 .............................................................. . 7.0 9.8 9.8 9.8 9.8 11.8 11.8 13.3 20.5 24.2 

5 .............................................................. . 4.3 5.3 6.6 6.6 8.0 6.6 8.0 14.1 20.5 20.5 

Rural Cooperative Subgroup 

1 .............................................................. . 2.5 2.5 11.9 13.4 13.4 2.5 11.9 24.8 24.8 44.6 

2 .............................................................. . 8.4 8.6 8.8 16.9 16.9 7.8 8.8 26.7 21.5 58.1 

3 .............................................................. . 3.3 4.7 4.7 5.5 7.8 7.9 12.7 12.7 27.6 31.0 

4 .............................................................. . 9.6 11.8 11.8 11.8 11.8 12.0 12.0 15.6 25.1 30.0 

5 .............................................................. . 7.9 8.8 10.5 10.5 12.2 10.5 12.2 16.9 27.6 27.6 
58222 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

Chapter 11 of the TSD explains DOE's

method for conducting the commercial

consumer subgroup analysis and

presents the detailed results of that

analysis.

2. Economic Impact on Manufacturers

DOE determined the economic

impacts of today's standard on

manufacturers, as described in the

proposed rule. 71 FR 44363, 44376,

44381-44383,44390-44393. As

described in Section IV.F above, for this

final rule DOE modeled the partial

conversion to amorphous core

construction for TSL3, TSL4, and TSLA

(with no change in the methodology for

TSL5 and TSL6). DOE analyzed

manufacturer impacts under two

scenarios-the `preservation-of-grossmargin-percentage' scenario and the

'preservation-of-operating-profit'

scenario. Under the preservation-ofgross-margin-percentage scenario, DOE

applied a single uniform "gross margin

percentage" markup across all efficiency

levels. As production costs increase

with efficiency, this scenario implies

that the absolute dollar markup will

increase. Under the preservation-ofoperating-profit scenario, operating

profit is defined as earnings before

interest and taxes. The implicit

assumption behind this markup

scenario is that the industry can

maintain its operating profit (in absolute

dollars) after the standard. The industry

would do so by passing through its

increased costs to customers without

increasing its operating profits in

absolute dollars. DOE fully describes

these two scenarios and the complete

manufacturer impact analysis in

Chapter 12 of the TSD.

a. Industry Cash-Flow Analysis Results

Using the two markup scenarios,

Tables VI.15 and VI.16 show the

estimated impacts for the liquidimmersed and medium-voltage, drytype transformer industries,

respectively. These tables show the

TABLE V1.15.-MANUFACTURER IMPACT ANALYSIS FOR

change in INPV, which is the primary

metric from the MIA. DOE calculated

the INPV in the base and standards

cases by discounting the projected free

cash flows at the real corporate discount

rate of 8.9 percent. This method of

calculating INPV provides one measure

of the value of the industry in present

value terms. The impact of new

standards on INPV is then the difference

between the INPV in the base case and

the INPV in the standards case (with

new standards). The tables also present

the product conversion expenses and

capital investments that the industry

would incur at each TSL. Product

conversion expenses include

engineering, prototyping, testing, and

marketing expenses incurred by a

manufacturer as it prepares to come into

compliance with a standard. Capital

investments are the one-time outlays for

equipment and buildings required for

the industry to come into compliance

(i.e., conversion capital expenditures).

LIQUID-IMMERSED TRANSFORMER INDUSTRY

i Base Trial standard level

Un ts case 1 2 D C B 3 4 A 5 6

Product Conversion ($M)* ........ *n/a 0 0 0 0 0 87 89 103 120 176

Expenses.

Capital Investments ... ($M) ......... n/a 5.2 2.8 2.8 8.0 5.4 17 17 18 41 178

Total Investment Re- ($M) ......... n/a 5.2 2.8 2.8 8. 0 5.4 104 106 121 161 354

quired.

Preservation-of-Gross-Margin-Percentage Scenario

INPV ........................... ($M) ......... 609 622 637 646 656 662 598 606 657 703 809

Change in INPV ......... ($M) ......... n/a 13 28 37 47 53 (11) (2.9) 48 94 200

(%) ........... n/a 2.1 4.6 6.0 7.7 8.8 ( 1.9) (0.5) 7.9 16 33

Preservation-of-Operating-Profit Scenario

INPV ...........................

Change in INPV .........

($M) .........

($M) .........

(%) ...........

609

n/a

n/a

"($M) = millions of dollars; n/a = not applicable.

590

(19)

(3.2)

587

(22)

(3.7)

577

(32)

(5.2)

562

(47)

(7.7)

558

(51)

(8.3)

509

(100)

(17)

497

(112)

(18)

440

(169)

(28)

357

(252)

(41)

TABLE V1.16.-MANUFACTURER IMPACT ANALYSIS FOR MEDIUM-VOLTAGE, DRY-TYPE TRANSFORMER INDUSTRY

33.3

(576)

(95)

U i Base Trial standard level

n ts case 1 2 3 4 5 6

Product Conversion Expenses ..................... ($M)* ......................... *n/a 0 0 3.7 4.1 5.8 5.8

Capital Investments ...................................... ($M) ........................... n/a 2.1 5. 5 6.8 7.1 15 15

Total Investment Required ........................... ($M) ........................... n/a 2.1 5.5 10.5 11.2 20.8 20.8

Preservation-of-Gross-Margin-Percentage Scenario

INPV ............................................................. ($M) ........................... 36 35 33 31 33 37 37

Change in INPV ............................................ ($M) ........................... n/a (1.1 ) (3.2) (5.2) (3.2) 0.9 0.9

(%) ............................ n/a (3.1 ) (8.9) (15) (8.9) 2.5 2.5

Preservation-of-Operating-Profit Scenario

INPV ............................................................. ($M) ........................... 36 .............. .............. .............. .............. .............. ..............

 EE-RM/STD-00-550 COMMENT 194

58222 Federal Register I VoL 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

Chapter 11 of the TSD explains DOE's 

method for conducting the commercial 

consumer subgroup analysis and 

presents the detailed results of that 

analysis. 

2. Economic Impact on Manufacturers 

DOE determined the economic 

impacts oftoday's standard on 

manufacturers, as described in the 

proposed rule. 71 FR 44363,44376, 

44381-44383,44390-44393. As 

described in Section IV.F above, for this 

final rule DOE modeled the partial 

conversion to amorphous core 

construction for TSL3, TSL4, and TSLA 

(with no change in the methodology for 

TSL5 and TSL6). DOE analyzed 

manufacturer impacts under two 

scenarios-the 'preservation-of-grossmargin-percentage' scenario and the 

'preservation-of-operating-profit' 

scenario. Under the preservation-ofgross-margin-percentage scenario, DOE 

applied a single uniform "gross margin 

percentage" markup across all efficiency 

levels. As production costs increase 

with efficiency, this scenario implies 

that the absolute dollar markup will 

increase. Under the preservation-ofoperating-profit scenario, operating 

profit is defined as earnings before 

interest and taxes. The implicit 

assumption behind this markup 

scenario is that the industry can 

maintain its operating profit (in absolute 

dollars) after the standard. The industry 

would do so by passing through its 

increased costs to customers without 

increasing its operating profits in 

absolute dollars. DOE fully describes 

these two scenarios and the complete 

manufacturer impact analysis in 

Chapter 12 of the TSD. 

a. Industry Cash-Flow Analysis Results 

Using the two markup scenarios, 

Tables VI.15 and VI.16 show the 

estimated impacts for the liquidimmersed and medium-voltage, drytype transformer industries, 

respectively. These tables show the 

change in INPV, which is the primary 

metric from the MIA. DOE calculated 

the INPV in the base and standards 

cases by discounting the projected free 

cash flows at the real corporate discount 

rate of 8.9 percent. This method of 

calculating INPV provides one measure 

of the value of the industry in present 

value terms. The impact of new 

standards on INPV is then the difference 

between the INPV in the base case and 

the INPV in the standards case (with 

new standards). The tables also present 

the product conversion expenses and 

capital investments that the industry 

would incur at each TSL. Product 

conversion expenses include 

engineering, prototyping, testing, and 

marketing expenses incurred by a 

manufacturer as it prepares to come into 

compliance with a standard. Capital 

investments are the one-time outlays for 

equipment and buildings required for 

the industry to come into compliance 

(Le., conversion capital expenditures). 

TABLE VI.15.-MANUFACTURER IMPACT ANALYSIS FOR LIQUID-IMMERSED TRANSFORMER INDUSTRY 

Base Trial standard level 

Units case 1 2 D C B 3 4 A 5 

Product Conversion ($M)* ........ *n/a 0 0 0 0 0 87 89 103 120 

Expenses. 

Capital Investments ... ($M) . ........ n/a 5.2 2.8 2.8 8.0 5.4 17 17 18 41 

Total Investment Re- ($M) ......... n/a 5.2 2.8 2.8 8.0 5.4 104 106 121 161 

quired. 

Preservation-of-Gross-Margin-Percentage Scenario 

INPV ........................... ($M) ......... 609 622 637 646 656 662 598 606 657 703 

Change in INPV ......... ($M) ......... n/a 13 28 37 47 53 (11) (2.9) 48 94 

(%) ........... n/a 2.1 4.6 6.0 7.7 8.8 (1.9) (0.5) 7.9 16 

Preservation-of-Operating-Profit Scenario 

INPV ........................... ($M) ......... 609 590 587 577 562 558 509 497 440 357 

Change in INPV ......... ($M) ......... n/a (19) (22) (32) (47) (51) (100) (112) (169) (252) 

(%) ........... n/a (3.2) (3.7) (5.2) (7.7) (8.3) (17) (18) (28) (41) 

* ($M) = millions of dollars; n/a = not applicable. 

TABLE VI.16.-MANUFACTURER IMPACT ANALYSIS FOR MEDIUM-VOLTAGE, DRY-TYPE TRANSFORMER INDUSTRY 

Base Units case 1 2 

Product Conversion Expenses ..................... ($M)* ......................... *n/a 0 0 

Capital Investments ...................................... ($M) ........................... n/a 2.1 5.5 

Total Investment Required ........................... ($M) ........................... n/a 2.1 5.5 

Preservation-of-Gross-Margin-Percentage Scenario 

INPV ............................................................. ($M) .......................... . 

Change in INPV ............................................ ($M) .......................... . 

(%) .......................... .. 

36 

n/a 

n/a 

35 

(1.1 ) 

(3.1) 

Preservation-of-Operating-Profit Scenario 

33 

(3.2) 

(8.9) 

Trial standard level 

3 

3.7 

6.8 

10.5 

31 

(5.2) 

(15) 

4 

4.1 

7.1 

11.2 

33 

(3.2) 

(8.9) 

5 

5.8 

15 

20.8 

37 

0.9 

2.5 

6 

176 

178 

354 

809 

200 

33 

33.3 

(576) 

(95) 

6 

5.8 

15 

20.8 

37 

0.9 

2.5 

INPV ............................................................. I ($M) ........................... I 36 I .............. I .............. I .............. I .............. I .............. I ............. . 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58223

TABLE VI.16.-MANUFACTURER IMPACT ANALYSIS FOR MEDIUM-VOLTAGE, DRY-TYPE TRANSFORMER INDUSTRYContinued

U its Base ' Trial standard leveln

case 1 2 3 4 5 6

Change in INPV ............................................ ($M) ........................... n/a (2.1) (5.2) (8.8) (11) (24) (24)

(%) ............................ n/a (5.9) (15) (25) (29) (67) (67)

* ($M) = millions of dollars; n/a = not applicable.

The proposed rule provides

additional information on the

methodology, assumptions, and results

of this analysis. 71 FR 44382, 44390,

44399-44400, 44403. Chapter 12 of the

TSD explains DOE's method for

conducting the manufacturer impact

analysis and presents the detailed

results of that analysis.

b. Impacts on Employment

For liquid-immersed transformers,

DOE expects no significant, discernable

direct employment impacts among

transformer manufacturers for TSLs 1, 2,

D, C, B, 3, and 4, but potentially

significant changes in employment for

TSLA (44 percent increase), TSL5 (18

percent increase), and TSL6 (38 percent

increase). Employment impacts are

changes in the numbers of employees

involved with transformer production at

the manufacturing facilities. These

estimated changes are due to the

increased labor time needed to construct

the cores and assemble the transformers.

At these higher TSLs, the cores tend to

be larger and the processing time per

pound of amorphous material is higher

than that of silicon steel-both of these

effects lead to the need for more labor.

Thus, the larger cores would increase

the direct employment at transformer

manufacturing facilities.

These conclusions-which are

separate from any conclusions regarding

employment impacts on the broader

U.S. economy-are based on modeling

results that address neither the possible

relocation of domestic transformer

manufacturing employment to lower

labor-cost countries, nor the possibility

of outsourcing amorphous core

production under TSLs 3, 4, A, 5 and 6

to companies in other countries. The

reported modeling results simply

capture the changes in direct labor

needed to produce transformers at each

TSL. DOE discussed this scenario of

outsourcing amorphous core production

to other countries during several

interviews with manufacturers of liquidimmersed transformers, and it appears

that outsourcing would be a serious

consideration for some liquid-immersed

transformer manufacturers under TSLs

3, 4, A, 5, and 6.

In addition, as discussed in the

proposed rule, DOE expects today's

standard to have a relatively minor

differential impact on small

manufacturers of liquid-immersed

distribution transformers. 71 FR 44382,

44392-44393,44401-44403. For

medium-voltage, dry-type

manufacturers, however, all

manufacturers would have to develop

designs to enable compliance with TSL3

or higher, and small businesses would

be at a relative disadvantage.

DOE expects no significant,

discernable employment impacts among

medium-voltage, dry-type transformer

manufacturers for any TSL compared to

the base case. DOE's conclusion

regarding employment impacts in the

medium-voltage, dry-type transformer

industry is separate from any

conclusions regarding employment

impacts on the broader U.S. economy.

Increased employment levels are not

expected at higher TSLs because the

core-cutting equipment typically

purchased by the medium-voltage, drytype industry is highly automated and

includes core-stacking equipment.

Another concern conveyed by some

manufacturers of medium-voltage, drytype transformers during the interviews

is the potential impact stemming from

cast-coil transformer competitiveness at

higher TSLs. These manufacturers

claimed that setting a standard above a

certain threshold may trigger a market

switch from open-wound ventilated

transformers to cast-coil transformers.

Manufacturers suggest that this

crossover point likely occurs at TSL3

and higher. If the market does shift to

cast-coil transformers, there is a risk of

imported, pre-fabricated cast coils

dominating the market in the long term.

This would have a significant impact on

domestic industry value and domestic

employment in the medium-voltage,

dry-type industry.

The basis for the conclusions

presented above is set forth in Chapter

12 of the TSD, Sections 12.4.4.1 and

12.5.4.1 for liquid-immersed and

medium-voltage, dry-type transformers,

respectively.

c. Impacts on Manufacturing Capacity

For the liquid-immersed distribution

transformer industry, DOE believes that

there are only minor production

capacity implications for a standard at

TSLs 1, 2, D, C, and B. At TSL6, all

liquid-immersed design lines would

have to convert to amorphous

technology, the most energy efficient

core material. At TSL5, three design

lines would have to convert to

amorphous core designs. For TSLs A, 4,

and 3, there would likely be partial

conversion to amorphous core designs

for one or two design lines. Conversion

to amorphous core designs would

render obsolete a large portion of the

equipment used today for the affected

design lines (e.g., annealing furnaces,

core-cutting and winding equipment).

Based on the manufacturer interviews,

DOE believes that TSLs 3, 4, A, 5, and

6 would cause liquid-immersed

transformer manufacturers to decide

whether they would need to invest in

retooling their production equipment

for amorphous technology or attempt to

purchase pre-fabricated amorphous

cores (for the affected design lines). For

TSL6, some manufacturers indicated

that they would close their companies,

rather than attempt to manufacturer

transformers at that standard level.

Manufacturers also indicated that, if

they were to choose to produce

amorphous cores themselves, they

would face a critical decision about

whether or not to relocate outside of the

U.S., since much of their equipment

would become obsolete. As mentioned

above, if manufacturers choose to

purchase pre-fabricated amorphous

cores, they might purchase them from

foreign manufacturers.

Energy conservation standards will

affect the medium-voltage, dry-type

industry's manufacturing capacity

because the core stack heights (or core

steel piece length) will increase and

laminations will become thinner.

Thinner laminations require more cuts

and are more cumbersome to handle.

Therefore, manufacturers would have to

invest in additional core-mitering

machinery or modifications and

improvements to recover any losses in

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58223 

TABLE VI.16.-MANUFACTURER IMPACT ANALYSIS FOR MEDIUM-VOLTAGE, DRY-TYPE TRANSFORMER INDUSTRYContinued 

Base I 

Units case 1 

Change in INPV ............................................ ($M) ........................... n/a (2.1) 

(%) ............................ n/a (5.9) 

. . * ($M) = millions of dollars; n/a = not applicable . 

The proposed rule provides 

additional information on the 

methodology, assumptions, and results 

of this analysis. 71 FR 44382, 44390, 

44399-44400,44403. Chapter 12 ofthe 

TSD explains DOE's method for 

conducting the manufacturer impact 

analysis and presents the detailed 

results of that analysis. 

b. Impacts on Employment 

For liquid-immersed transformers, 

DOE expects no significant, discernable 

direct employment impacts among 

transformer manufacturers for TSLs 1, 2, 

D, C, B, 3, and 4, but potentially 

significant changes in employment for 

TSLA (44 percent increase), TSL5 (18 

percent increase), and TSL6 (38 percent 

increase). Employment impacts are 

changes in the numbers of employees 

involved with transformer production at 

the manufacturing facilities. These 

estimated changes are due to the 

increased labor time needed to construct 

the cores and assemble the transformers. 

At these higher TSLs, the cores tend to 

be larger and the processing time per 

pound of amorphous material is higher 

than that of silicon steel-both of these 

effects lead to the need for more labor. 

Thus, the larger cores would increase 

the direct employment at transformer 

manufacturing facilities. 

These conclusions-which are 

separate from any conclusions regarding 

employment impacts on the broader 

U.S. economy-are based on modeling 

results that address neither the possible 

relocation of domestic transformer 

manufacturing employment to lower 

labor-cost countries, nor the possibility 

of outsourcing amorphous core 

production under TSLs 3, 4, A, 5 and 6 

to companies in other countries. The 

reported modeling results simply 

capture the changes in direct labor 

needed to produce transformers at each 

TSL. DOE discussed this scenario of 

outsourcing amorphous core production 

to other countries during several 

interviews with manufacturers of liquidimmersed transformers, and it appears 

that outsourcing would be a serious 

consideration for some liquid-immersed 

transformer manufacturers under TSLs 

3,4, A, 5, and 6. 

In addition, as discussed in the 

proposed rule, DOE expects today's 

standard to have a relatively minor 

differential impact on small 

manufacturers of liquid-immersed 

distribution transformers. 71 FR 44382, 

44392-44393, 44401-44403. For 

medium-voltage, dry-type 

manufacturers, however, all 

manufacturers would have to develop 

designs to enable compliance with TSL3 

or higher, and small businesses would 

be at a relative disadvantage. 

DOE expects no significant, 

discernable employment impacts among 

medium-voltage, dry-type transformer 

manufacturers for any TSL compared to 

the base case. DOE's conclusion 

regarding employment impacts in the 

medium-voltage, dry-type transformer 

industry is separate from any 

conclusions regarding employment 

impacts on the broader U.S. economy. 

Increased employment levels are not 

expected at higher TSLs because the 

core-cutting equipment typically 

purchased by the medium-voltage, drytype industry is highly automated and 

includes core-stacking equipment. 

Another concern conveyed by some 

manufacturers of medium-voltage, drytype transformers during the interviews 

is the potential impact stemming from 

cast-coil transformer competitiveness at 

higher TSLs. These manufacturers 

claimed that setting a standard above a 

certain threshold may trigger a market 

switch from open-wound ventilated 

transformers to cast-coil transformers. 

Manufacturers suggest that this 

crossover point likely occurs at TSL3 

and higher. If the market does shift to 

cast-coil transformers, there is a risk of 

imported, pre-fabricated cast coils 

dominating the market in the long term. 

This would have a significant impact on 

domestic industry value and domestic 

employment in the medium-voltage, 

dry-type industry. 

The basis for the conclusions 

presented above is set forth in Chapter 

12 ofthe TSD, Sections 12.4.4.1 and 

12.5.4.1 for liquid-immersed and 

medium-voltage, dry-type transformers, 

respectively. 

Trial standard level 

2 3 4 5 6 

(5.2) (8.8) (11) (24) (24) 

(15) (25) (29) (67) (67) 

c. Impacts on Manufacturing Capacity 

For the liquid-immersed distribution 

transformer industry, DOE believes that 

there are only minor production 

capacity implications for a standard at 

TSLs 1, 2, D, C, and B. At TSL6, all 

liquid-immersed design lines would 

have to convert to amorphous 

technology, the most energy efficient 

core material. At TSL5, three design 

lines would have to convert to 

amorphous core designs. For TSLs A, 4, 

and 3, there would likely be partial 

conversion to amorphous core designs 

for one or two design lines. Conversion 

to amorphous core designs would 

render obsolete a large portion of the 

equipment used today for the affected 

design lines (e.g., annealing furnaces, 

core-cutting and winding equipment). 

Based on the manufacturer interviews, 

DOE believes that TSLs 3, 4, A, 5, and 

6 would cause liquid-immersed 

transformer manufacturers to decide 

whether they would need to invest in 

retooling their production equipment 

for amorphous technology or attempt to 

purchase pre-fabricated amorphous 

cores (for the affected design lines). For 

TSL6, some manufacturers indicated 

that they would close their companies, 

rather than attempt to manufacturer 

transformers at that standard level. 

Manufacturers also indicated that, if 

they were to choose to produce 

amorphous cores themselves, they 

would face a critical decision about 

whether or not to relocate outside of the 

U.S., since much oftheir equipment 

would become obsolete. As mentioned 

above, if manufacturers choose to 

purchase pre-fabricated amorphous 

cores, they might purchase them from 

foreign manufacturers. 

Energy conservation standards will 

affect the medium-voltage, dry-type 

industry's manufacturing capacity 

because the core stack heights (or core 

steel piece length) will increase and 

laminations will become thinner. 

Thinner laminations require more cuts 

and are more cumbersome to handle. 

Therefore, manufacturers would have to 

invest in additional core-mitering 

machinery or modifications and 

improvements to recover any losses in 
58224 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 / Rules and Regulations

productivity, and these factors might

also contribute to a need for more plant

floor space. Because more efficient

transformers tend to be larger, this could

also contribute to the need for

additional manufacturing floor space.

d. Impacts on Manufacturers That Are

Small Businesses

Converting from a company's current

basic product line involves designing,

prototyping, testing, and manufacturing

a new product. These tasks have

associated capital investments and

product conversion expenses. Small

businesses, because of their limited

access to capital and their need to

spread conversion costs over smaller

production volumes, may be affected

more negatively than major

manufacturers by an energy

conservation standard. For these

reasons, DOE specifically evaluated the

impacts on small businesses of an

energy conservation standard.

The Small Business Administration

defines a small business, for the

distribution transformer industry, as a

business that has 750 or fewer

employees. DOE estimates that, of the

approximately 25 U.S. manufacturers

that make liquid-immersed distribution

transformers, about 15 of them are small

businesses. About five of the smallliquid-immersed-transformer businesses

have fewer than 100 employees. DOE

estimates that, of the 25 U.S.

manufacturers that make mediumvoltage, dry-type distribution

transformers, about 20 of them are small

businesses. About one-half of the

medium-voltage, dry-type small

businesses have fewer than 100

employees. Medium-voltage, dry-type

transformer manufacturing is more

concentrated than liquid-immersed

transformer manufacturing; the top

three companies manufacture over 75

percent of all transformers in this

category.

As discussed in the proposed rule,

DOE expects minimum efficiency

standards to have a relatively minor

differential impact on small

manufacturers of liquid-immersed

distribution transformers. 71 FR 44401-

44402. Although DOE proposed to adopt

TSL2, and is today promulgating a

standard higher than that for all liquidimmersed design lines other than design

line 4, DOE believes that the reasoning

presented in the proposed rule is still

relevant and valid: DOE does not expect

today's standard to have a significant

economic impact on a substantial

number of small manufacturers of

liquid-immersed transformers. Since the

standard does not require manufacturers

to change manufacturing equipment,

DOE concludes that the standards

adopted today will have minor

differential impact on small

manufacturers of liquid-immersed

transformers. This is based on the fact

that manufacturing equipment and

materials that are currently available

will be used to meet the standard which

will provide manufacturers flexibility in

meeting the standards, and

manufacturers will not be required to retool in order to meet the standards. (See

Section VII.B.4). For medium-voltage,

dry-type manufacturers, DOE stated in

the proposed rule that it would

anticipate some small business impacts

at all TSLs. However, DOE believes that

the incremental impact on small

businesses in moving from TSL2 to

TSL3 is greater than that in moving from

TSL1 to TSL2 (see Section VII.B.4 for a

more detailed discussion). DOE

explicitly considered impacts on small

businesses in selecting TSL2 and

rejecting higher levels for mediumvoltage, dry-type transformers. 71 FR

44382, 44392-44393, 44401-44403. See

section VII.B on the Regulatory

Flexibility Act for more discussion on

this point.

3. National Net Present Value and Net

National Employment

The NPV analysis estimates the

cumulative benefits or costs to the

Nation that would result from particular

standard levels. While the NES analysis

estimates the energy savings from a

proposed energy conservation standard,

the NPV analysis provides estimates of

the national economic impacts of a

proposed standard relative to a base

case of no new standard. Tables VI.17

and VI.18 provide an overview of the

NPV results, using both a seven percent

and a three percent real discount rate.

See TSD Chapter 10 for more detailed

NPV results.

TABLE VI.17.-OVERVIEW OF NATIONAL NET PRESENT VALUE ($, BILLION) FOR LIQUID-IMMERSED TRANSFORMERS

Type

Liquid-Immersed SinglePhase .... ......................

Liquid-Immersed ThreePhase . .........................

Discount

rate

(%)

3

7

3

7

1

3.15

0.98

2.42

0.71

Trial standard level

2

3.42

1.04

3.64

0.91

3.58

0.94

3.98

0.96

C

2.97

0.14

3.98

0.96

B

2.98

0.14

4.28

0.97

3

3.74

1.17

5.42

1.20

4

3.60

0.93

(0.31)

(2.28)

1.02

(1.33)

5.72

1.21

4.78

0.38

0.38

(3.56)

TABLE V1.18.-OVERVIEW OF NATIONAL NET PRESENT VALUE ($, BILLION) FOR MEDIUM-VOLTAGE, DRY-TYPE

TRANSFORMERS

Type

Medium-Voltage Dry-Type Single-Phase ..............................

Medium-Voltage Dry-Type Three- Phase ...... .........................

Discount

rate

(%)

3

7

3

7

0.005

0.002

0.461

0.157

2

0.008

0.003

0.843

0.280

Trial standard level

3

0.011

0.004

1.170

0.375

4

0.015

0.004

1.531

0.441

0.010

0.001

1.008

(0.086)

6

(24.5)

(18.5)

(1.58)

(4.75)

6

0.010

0.001

1.008

(0.086)

DOE also estimated the national the proposed rule, 71 FR 44383-44384, to other forms of economic activity.

employment impacts that would result 44394, DOE expects the net monetary DOE also expects these shifts in

from each of the TSLs. As discussed in savings from standards to be redirected spending and economic activity to affect

 EE-RM/STD-00-550 COMMENT 194

58224 Federal Register I Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

productivity, and these factors might 

also contribute to a need for more plant 

floor space. Because more efficient 

transformers tend to be larger, this could 

also contribute to the need for 

additional manufacturing floor space. 

d. Impacts on Manufacturers That Are 

Small Businesses 

Converting from a company's current 

basic product line involves designing, 

prototyping, testing, and manufacturing 

a new product. These tasks have 

associated capital investments and 

product conversion expenses. Small 

businesses, because of their limited 

access to capital and their need to 

spread conversion costs over smaller 

production volumes, may be affected 

more negatively than major 

manufacturers by an energy 

conservation standard. For these 

reasons, DOE specifically evaluated the 

impacts on small businesses of an 

energy conservation standard. 

The Small Business Administration 

defines a small business, for the 

distribution transformer industry, as a 

business that has 750 or fewer 

employees. DOE estimates that, of the 

approximately 25 U.S. manufacturers 

that make liquid-immersed distribution 

transformers, about 15 of them are small 

businesses. About five of the smallliquid-immersed-transformer businesses 

have fewer than 100 employees. DOE 

estimates that, of the 25 U.S. 

manufacturers that make mediumvoltage, dry-type distribution 

transformers, about 20 ofthem are small 

businesses. About one-half of the 

medium-voltage, dry-type small 

businesses have fewer than 100 

employees. Medium-voltage, dry-type 

transformer manufacturing is more 

concentrated than liquid-immersed 

transformer manufacturing; the top 

three companies manufacture over 75 

percent of all transformers in this 

category. 

As discussed in the proposed rule, 

DOE expects minimum efficiency 

standards to have a relatively minor 

differential impact on small 

manufacturers of liquid-immersed 

distribution transformers. 71 FR 44401-

44402. Although DOE proposed to adopt 

TSL2, and is today promulgating a 

standard higher than that for all liquidimmersed design lines other than design 

line 4, DOE believes that the reasoning 

presented in the proposed rule is still 

relevant and valid: DOE does not expect 

today's standard to have a significant 

economic impact on a substantial 

number of small manufacturers of 

liquid-immersed transformers. Since the 

standard does not require manufacturers 

to change manufacturing equipment, 

DOE concludes that the standards 

adopted today will have minor 

differential impact on small 

manufacturers of liquid-immersed 

transformers. This is based on the fact 

that manufacturing equipment and 

materials that are currently available 

will be used to meet the standard which 

will provide manufacturers flexibility in 

meeting the standards, and 

manufacturers will not be required to retool in order to meet the standards. (See 

Section VII.B.4). For medium-voltage, 

dry-type manufacturers, DOE stated in 

the proposed rule that it would 

anticipate some small business impacts 

at all TSLs. However, DOE believes that 

the incremental impact on small 

businesses in moving from TSL2 to 

TSL3 is greater than that in moving from 

TSLl to TSL2 (see Section VII.B.4 for a 

more detailed discussion). DOE 

explicitly considered impacts on small 

businesses in selecting TSL2 and 

rejecting higher levels for mediumvoltage, dry-type transformers. 71 FR 

44382,44392-44393,44401-44403. See 

section VILB on the Regulatory 

Flexibility Act for more discussion on 

this point. 

3. National Net Present Value and Net 

National Employment 

The NPV analysis estimates the 

cumulative benefits or costs to the 

Nation that would result from particular 

standard levels. While the NES analysis 

estimates the energy savings from a 

proposed energy conservation standard, 

the NPV analysis provides estimates of 

the national economic impacts of a 

proposed standard relative to a base 

case of no new standard. Tables VI.17 

and VI.18 provide an overview ofthe 

NPV results, using both a seven percent 

and a three percent real discount rate. 

See TSD Chapter 10 for more detailed 

NPV results. 

TABLE VI.17.-0VERVIEW OF NATIONAL NET PRESENT VALUE ($, BILLION) FOR LIQUID-IMMERSED TRANSFORMERS 

Discount Trial standard level 

Type rate 

(%) 1 2 D C B 3 4 A 5 6 

Liquid-Immersed SinglePhase .......................... 3 3.15 3.42 3.58 2.97 2.98 3.74 3.60 (0.31) 1.02 (24.5) 

7 0.98 1.04 0.94 0.14 0.14 1.17 0.93 (2.28) (1.33) (18.5) 

Liquid-Immersed ThreePhase .......................... 3 2.42 3.64 3.98 3.98 4.28 5.42 5.72 4.78 0.38 (1.58) 

7 0.71 0.91 0.96 0.96 0.97 1.20 1.21 0.38 (3.56) (4.75) 

TABLE VI.18.-0VERVIEW OF NATIONAL NET PRESENT VALUE ($, BILLION) FOR MEDIUM-VOLTAGE, DRY-TYPE 

TRANSFORMERS 

Discount 

Type rate 

(%) 1 2 

Medium-Voltage Dry-Type Single-Phase .............................. 3 0.005 0.008 

7 0.002 0.003 

Medium-Voltage Dry-Type Three-Phase ............................... 3 0.461 0.843 

DOE also estimated the national 

employment impacts that would result 

from each of the TSLs. As discussed in 

7 0.157 0.280 

the proposed rule, 71 FR 44383-44384, 

44394, DOE expects the net monetary 

savings from standards to be redirected 

Trial standard level 

3 4 5 6 

0.011 0.D15 0.010 0.010 

0.004 0.004 0.001 0.001 

1.170 1.531 1.008 1.008 

0.375 0.441 (0.086) (0.086) 

to other forms of economic activity. 

DOE also expects these shifts in 

spending and economic activity to affect 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/ Rules and Regulations 58225

the demand for labor as spending shifts

from less labor-intensive to more laborintensive sectors of the economy.

As shown in Tables VI.19 and VI.20,

DOE estimated net indirect employment

impacts (i.e., those changes of

employment in the larger economy,

other than in the manufacturing sector

being regulated) from today's

distribution transformer energy

conservation standards to be positive.

According to DOE's analysis, the

number of jobs that may be generated by

2038 through indirect impacts ranged

from 4,000 to 14,000 for liquidimmersed transformers, and from 400 to

1,500 for medium voltage, dry-type

transformers for the range of TSLs

considered in this rulemaking. While

DOE's analysis suggests that the

distribution transformer standards could

result in a very small increase in the net

demand for labor in the economy,

relative to total national employment,

this increase would likely be sufficient

to offset fully any adverse impacts on

employment that might occur in the

distribution transformer or energy

industries. For details on the

employment impact analysis methods

and results, see TSD Chapter 14.

TABLE V1.19.-NET NATIONAL CHANGE IN JOBS (THOUSANDS): LIQUID-IMMERSED TRANSFORMER STANDARDS

Year

2010 .........................

2020 .........................

2030 .........................

2038 ............. ............

1

1.7

1.5

2.8

4

2

2.3

2

3.9

5.4

D

2.5

2.2

4.4

6.2

C

2.8

2.4

4.9

7.0

Trial standard level

B

2.9

2.5

5.2

7.4

0.2

0.2

0.3

0.5

A

3.7

3.0

6.8

10

5

4.5

4.1

9.5

14

3.3

1.5

8.0

13.4

TABLE V1.20.-NET NATIONAL CHANGE IN JOBS (THOUSANDS): DRY-TYPE, MEDIUM-VOLTAGE TRANSFORMER STANDARDS

Year

2010 .....................................................................................................................

2020 .....................................................................................................................

2030 .....................................................................................................................

2038 ...... ...............................................................................................................

4. Impact on Utility or Performance of

Equipment

As discussed in section V.A.4 of the

proposed rule, DOE believes that,

because of the steps it had taken in

establishing classes of products and in

evaluating design options and the

impact of potential standard levels (71

FR 44394), as well as the additional

steps taken in today's final rule,

including the consideration of design

constraints for vault-transformers (see

section V.B.4.a) and the evaluation of

higher BIL voltages (see section

V.A.1.a), the new standards it is

adopting today will not lessen the

utility or performance of distribution

transformers. (See also TSD, Chapters 4

and 5)

5. Impact of Any Lessening of

Competition

As previously discussed in the NOPR,

71 FR 44363-44364, 44394, and in

section III.D.5 of this preamble, DOE

considers any lessening of competition

that is likely to result from standards.

The Attorney General determines the

impact, if any, of any such lessening of

competition.

DOJ concluded that the distribution

transformer standards contained in the

proposed rule may adversely affect

competition with respect to distribution

transformers used in industries, such as

2

3

3.2

2.7

5.3

7.4

0.1

0.1

0.2

0.3

underground coal mining, where

physical conditions limit the size of the

equipment that may be effectively

utilized. DOJ understands that

manufacturers would not be able to

satisfy the proposed standard without

increasing the size (or decreasing the

power) of each class of distribution

transformer. Mining companies facing

space constraints would incur

significantly increased costs due to

enlarging the required installation space

(which, for example, could involve

removal of solid rock around coal seams

in underground mines) or reconfiguring

the size and number of each class of

distribution transformer at each site.

The resulting cost increases could

constitute production inefficiencies that

could make certain products less

competitive. For example, the rule

could, by raising the costs of certain

coal mines, adversely affect production

decisions at those mines and potentially

result in increased use of less efficient

energy alternatives. DOJ urged the DOE

to consider these concerns carefully in

its analysis, and to consider creating an

exception for distribution transformers

used in industries with space

constraints. (DOJ, No. 157 at p.2) DOE

considered this input from DOJ, along

with comments from several

stakeholders, and as discussed in

section IV.A.2 of this preamble, decided

4

3.4

2.9

5.7

8.1

Trial standard level

3

0.2

0.3

0.4

0.8

4

0.3

0.4

0.6

1.1

5

0.4

0.5

0.8

1.5

6

0.4

0.5

0.8

1.5

to treat space-constrained underground

mining transformers as a separate

product class in this final rule, and not

to apply today's standards to these

transformers. DOE is also reserving a

subsection in section 431.196 for

underground mining transformer

efficiency standards. Energy

conservation standards for underground

mining transformers are not included as

part of today's final rule and will be

determined at a later date.

6. Need of the Nation to Conserve

Energy

The Secretary of Energy recognizes

the need of the Nation to save energy.

Enhanced energy efficiency, where

economically justified, improves the

Nation's energy security, strengthens the

economy, and reduces the

environmental impacts or costs of

energy production. The energy savings

from distribution transformer standards

result in reduced emissions of C02-

Reduced electricity demand from

today's energy conservation standards is

also likely to reduce the cost of

maintaining the reliability of the

electricity system, particularly during

peak-load periods. As a measure of this

reduced demand, DOE expects today's

standards to eliminate the need for the

construction of approximately six new

400-megawatt combined-cycle gas

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58225 

the demand for labor as spending shifts 

from less labor-intensive to more laborintensive sectors ofthe economy. 

As shown in Tables VI.19 and VL20, 

DOE estimated net indirect employment 

impacts (Le., those changes of 

employment in the larger economy, 

other than in the manufacturing sector 

being regulated) from today's 

distribution transformer energy 

conservation standards to be positive. 

According to DOE's analysis, the 

number of jobs that may be generated by 

2038 through indirect impacts ranged 

from 4,000 to 14,000 for liquidimmersed transformers, and from 400 to 

1,500 for medium voltage, dry-type 

transformers for the range of TSLs 

considered in this rulemaking. While 

DOE's analysis suggests that the 

distribution transformer standards could 

result in a very small increase in the net 

demand for labor in the economy, 

relative to total national employment, 

this increase would likely be sufficient 

to offset fully any adverse impacts on 

employment that might occur in the 

distribution transformer or energy 

industries. For details on the 

employment impact analysis methods 

and results, see TSD Chapter 14. 

TABLE VI.19.-NET NATIONAL CHANGE IN JOBS (THOUSANDS): LIQUID-IMMERSED TRANSFORMER STANDARDS 

Trial standard level 

Year 

1 2 D C B 3 4 A 5 6 

2010 ......................... 1.7 2.3 2.5 2.8 2.9 3.2 3.4 3.7 4.5 3.3 

2020 ......................... 1.5 2 2.2 2.4 2.5 2.7 2.9 3.0 4.1 1.5 

2030 ......................... 2.8 3.9 4.4 4.9 5.2 5.3 5.7 6.8 9.5 8.0 

2038 ......................... 4 5.4 6.2 7.0 7.4 7.4 8.1 10 14 13.4 

TABLE VI.20.-NET NATIONAL CHANGE IN JOBS (THOUSANDS): DRY-TYPE, MEDIUM-VOLTAGE TRANSFORMER STANDARDS 

2010 .................................................................................................................... . 0.1 

2020 .................................................................................................................... . 0.1 

2030 .................................................................................................................... . 0.2 

2038 .................................................................................................................... . 0.3 

4. Impact on Utility or Performance of 

Equipment 

As discussed in section V.A.4 ofthe 

proposed rule, DOE believes that, 

because of the steps it had taken in 

establishing classes of products and in 

evaluating design options and the 

impact of potential standard levels (71 

FR 44394), as well as the additional 

steps taken in today's final rule, 

including the consideration of design 

constraints for vault-transformers (see 

section V.B.4.a) and the evaluation of 

higher BIL voltages (see section 

V.A.l.a), the new standards it is 

adopting today will not lessen the 

utility or performance of distribution 

transformers. (See also TSD, Chapters 4 

and 5) 

5. Impact of Any Lessening of 

Competition 

As previously discussed in the NOPR, 

71 FR 44363-44364, 44394, and in 

section IILD.5 of this preamble, DOE 

considers any lessening of competition 

that is likely to result from standards. 

The Attorney General determines the 

impact, if any, of any such lessening of 

competition. 

DOJ concluded that the distribution 

transformer standards contained in the 

proposed rule may adversely affect 

competition with respect to distribution 

transformers used in industries, such as 

underground coal mining, where 

physical conditions limit the size of the 

equipment that may be effectively 

utilized. DOJ understands that 

manufacturers would not be able to 

satisfy the proposed standard without 

increasing the size (or decreasing the 

power) of each class of distribution 

transformer. Mining companies facing 

space constraints would incur 

significantly increased costs due to 

enlarging the required installation space 

(which, for example, could involve 

removal of solid rock around coal seams 

in underground mines) or reconfiguring 

the size and number of each class of 

distribution transformer at each site. 

The resulting cost increases could 

constitute production inefficiencies that 

could make certain products less 

competitive. For example, the rule 

could, by raising the costs of certain 

coal mines, adversely affect production 

decisions at those mines and potentially 

result in increased use of less efficient 

energy alternatives. DOJ urged the DOE 

to consider these concerns carefully in 

its analysis, and to consider creating an 

exception for distribution transformers 

used in industries with space 

constraints. (DOJ, No. 157 at p.2) DOE 

considered this input from DOJ, along 

with comments from several 

stakeholders, and as discussed in 

section IV.A.2 of this preamble, decided 

2 

Trial standard level 

3 4 5 6 

0.2 0.2 0.3 0.4 0.4 

0.2 0.3 0.4 0.5 0.5 

0.3 0.4 0.6 0.8 0.8 

0.5 0.8 1.1 1.5 1.5 

to treat space-constrained underground 

mining transformers as a separate 

product class in this final rule, and not 

to apply today's standards to these 

transformers. DOE is also reserving a 

subsection in section 431.196 for 

underground mining transformer 

efficiency standards. Energy 

conservation standards for underground 

mining transformers are not included as 

part of today's final rule and will be 

determined at a later date. 

6. Need ofthe Nation to Conserve 

Energy 

The Secretary of Energy recognizes 

the need of the Nation to save energy. 

Enhanced energy efficiency, where 

economically justified, improves the 

Nation's energy security, strengthens the 

economy, and reduces the 

environmental impacts or costs of 

energy production. The energy savings 

from distribution transformer standards 

result in reduced emissions of CO2• 

Reduced electricity demand from 

today's energy conservation standards is 

also likely to reduce the cost of 

maintaining the reliability of the 

electricity system, particularly during 

peak-load periods. As a measure of this 

reduced demand, DOE expects today's 

standards to eliminate the need for the 

construction of approximately six new 

400-megawatt combined-cycle gas 
58226 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

turbine power plants by 2038 and to

save 2.74 quads of electricity

(cumulative, 2010-2038). The energy

savings are higher in the final rule

analysis compared to DOE's NOPR

savings of 2.4 quads of electricity over

the same period. Table VI.21 provides

DOE's estimate of cumulative power

sector CO2 reductions for an uncapped

emissions scenario for the TSLs

considered in this rulemaking.

As discussed in the NOPR, the Clean

Air Interstate Rule (CAIR), which the

U.S. Environmental Protection Agency

(EPA) issued on March 10, 2005, will

permanently cap emissions of NOx in

28 eastern states and the District of

Columbia. 70 FR 25162 (May 12, 2005).

As with SO2 emissions, for which a cap

was previously in place, a cap on NOx

emissions means that equipment

efficiency standards may have no

physical effect on these emissions.

Similarly, emissions of Hg for the power

sector are also subject to emissions caps

during the evaluation period, so that

distribution transformer standards may

similarly result in no physical effect on

these emissions. DOE evaluated the

emissions forecasts from AE02006 and

AE02007 and found that, because these

new regulations capped most power

sector NOx and Hg emissions,

decreasing energy use from the

proposed standard would not have any

net physical emissions reduction. The

economic effects of emissions

reductions are included in the

forecasted projection of electricity

prices and thus are included in DOE's

NPV analysis, but are not reported

separately. For details of the emissions

reduction calculations and discussion,

see the environmental analysis report in

the TSD.

DOE also calculated discounted

values for future emissions, using the

same seven percent and three percent

real discount rates that it used in

calculating the NPV. Table VI.21 also

shows the discounted cumulative

emissions impacts for both liquidimmersed and dry-type, mediumvoltage transformers.

TABLE VI.21.-C02 EMISSION REDUCTIONS OF THE TRIAL STANDARD LEVELS,

[In millions of metric tons]

Type

Liquid-Immersed ...........................

Medium-Voltage Dry-Type* ..........

Discount rate

none ... ...........................................

3% .................................................

7% .................................................

none ..............................................

3% .................................................

7% .................................................

Trial standard level

1 2 D I C 5 6

125 176 199 238 251 248 272 369 464 674

62 87 99 118 124 123 135 183 230 334

27 38 43 51 54 53 59 80 100 145

5.8 11.8 17.1 24.8 36.9 36.9

2.9 5.8 8.5 12.3 18.3 18.3

1.2 2.5 3.7 5.3 8.0 8.0

* Medium-voltage dry-type distribution transformers did not have any trial standard levels set for TSLA through TS

Emissions are roughly proportional to

energy savings. The emissions

reductions are slightly higher in the

final rule analysis compared to DOE's

NOPR analysis because of the slightly

greater amount of coal-generated

electricity in the updated AE02006 and

AEO2007 forecasts that DOE used for

the utility and environmental analysis

(See TSD Chapter 13 and the

Environmental Impact Analysis Report

in the TSD).

7. Other Factors

In developing today's standard, the

Secretary took into consideration four

`Other Factors': (1) Availability of high

BIL primary voltages (see TSD

Appendix 5D); (2) materials price

sensitivity analysis (see TSD

Appendices 5C and 8F); (3) materials

availability analysis (see TSD Appendix

8H); and (4) consistency between singlephase and three-phase designs (for

liquid-immersed distribution

transformers only, see TSD Appendix

81). Each of these factors is described

briefly in section V.7 of today's rule and

discussed in some detail in other parts

of today's rule. Specifically section

V.A.1.a discusses voltage issues, section

V.A.1.b discusses materials price issues,

in section V.A.1.d describes materials

availability issues, and section V.B.7.d

describes single-phase and three-phase

consistency issues.

D. Conclusion

EPCA contains criteria for prescribing

new or amended energy conservation

standards. DOE must prescribe

standards only for those distribution

transformers for which DOE: (1) has

determined that standards would be

technologically feasible and

economically justified and would result

in significant energy savings, and (2) has

prescribed test procedures. (42 U.S.C.

6317(a)) Moreover, DOE has analyzed

whether today's standards for

distribution transformers will achieve

the maximum improvement in energy

efficiency that is technologically

feasible and economically justified. (See

42 U.S.C. 6295(o)(2)(A), 6316(a), and

6317(a) and (c)) Today's final rule will

not result in the unavailability in the

U.S. of any covered product type (or

class) of transformer with performance

characteristics (i.e., reliability, features,

sizes, capacities and voltages) that are

substantively the same as those

generally available in the U.S. prior to

these new standards.

In determining whether a standard is

economically justified, DOE determines

whether the benefits of the standard

exceed its costs. (See 42 U.S.C.

D.

6295(o)(2)(B)(i)) Any new or amended

standard for distribution transformers

must result in significant energy

savings. (42 U.S.C. 6317(a); 42 U.S.C.

6295 (o)(3)(B); see 42 U.S.C.

6295(o)(2)(B))

In selecting energy conservation

standards for distribution transformers,

DOE started by comparing the

maximum technologically feasible

levels with the base case, and

determined whether those levels were

economically justified. Upon finding the

maximum technologically feasible

levels not to be justified, DOE analyzed

the next lower TSL to determine

whether that level was economically

justified. DOE repeated this procedure

until it identified a TSL that was

economically justified.

Tables VI.22 and VI.23 summarize

DOE's quantitative analysis results for

each TSL. Each table presents the

results or, in some cases, a range of

results, for the underlying design lines

for liquid-immersed transformers (Table

VI.22), and medium-voltage, dry-type

transformers for (Table VI.23). The range

of values reported in these tables for

LCC, payback, and average increase in

consumer equipment cost before

installation encompasses the range of

results DOE calculated for either the

liquid-immersed or medium-voltage,

 EE-RM/STD-00-550 COMMENT 194

58226 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

turbine power plants by 2038 and to As with S02 emissions, for which a cap economic effects of emissions 

save 2.74 quads of electricity was previously in place, a cap on NOx reductions are included in the 

(cumulative, 2010-2038). The energy emissions means that equipment forecasted projection of electricity 

savings are higher in the final rule efficiency standards may have no prices and thus are included in DOE's 

analysis compared to DOE's NOPR physical effect on these emissions. NPV analysis, but are not reported 

savings of 2.4 quads of electricity over Similarly, emissions of Hg for the power separately. For details of the emissions 

the same period. Table VI,21 provides sector are also subject to emissions caps reduction calculations and discussion, 

DOE's estimate of cumulative power during the evaluation period, so that see the environmental analysis report in 

sector CO2 reductions for an uncapped distribution transformer standards may the TSD. 

emissions scenario for the TSLs similarly result in no physical effect on DOE also calculated discounted 

considered in this rulemaking. these emissions. DOE evaluated the values for future emissions, using the 

As discussed in the NOPR, the Clean emissions forecasts from AE02006 and same seven percent and three percent 

Air Interstate Rule (CAIR), which the AE02007 and found that, because these real discount rates that it used in 

U.S. Environmental Protection Agency new regulations capped most power calculating the NPV. Table VI,21 also 

(EPA) issued on March 10, 2005, will sector NOx and Hg emissions, shows the discounted cumulative 

permanently cap emissions of NOx in decreasing energy use from the emissions impacts for both liquid28 eastern states and the District of proposed standard would not have any immersed and dry-type, mediumColumbia. 70 FR 25162 (May 12, 2005). net physical emissions reduction. The voltage transformers. 

TABLE VI.21.-C02 EMISSION REDUCTIONS OF THE TRIAL STANDARD LEVELS 

[In millions of metric tons] 

Trial standard level 

Type Discount rate 

2 D C B 3 4 A 5 6 

Liquid-Immersed ........................... none . ............................................. 125 176 199 238 251 248 272 369 464 674 

3% ................................................. 62 87 99 118 124 123 135 183 230 334 

7% ................................................. 27 38 43 51 54 53 59 80 100 145 

Medium-Voltage Dry-Type' .......... none . ............................................. 5.8 11.8 17.1 24.8 36.9 36.9 

3% ................................................. 2.9 5.8 8.5 12.3 18.3 18.3 

7% ................................................. 1.2 2.5 3.7 5.3 8.0 8.0 

, Medium-voltage dry-type distribution transformers did not have any trial standard levels set for TSLA through TSLD. 

Emissions are roughly proportional to 

energy savings. The emissions 

reductions are slightly higher in the 

final rule analysis compared to DOE's 

NOPR analysis because of the slightly 

greater amount of coal-generated 

electricity in the updated AE02006 and 

AE02007 forecasts that DOE used for 

the utility and environmental analysis 

(See TSD Chapter 13 and the 

Environmental Impact Analysis Report 

in the TSD). 

7. Other Factors 

In developing today's standard, the 

Secretary took into consideration four 

'Other Factors': (1) Availability of high 

BIL primary voltages (see TSD 

Appendix 5D); (2) materials price 

sensitivity analysis (see TSD 

Appendices 5C and 8F); (3) materials 

availability analysis (see TSD Appendix 

8H); and (4) consistency between singlephase and three-phase designs (for 

liquid-immersed distribution 

transformers only, see TSD Appendix 

8I). Each of these factors is described 

briefly in section V.7 oftoday's rule and 

discussed in some detail in other parts 

of today's rule. Specifically section 

V.A.1.a discusses voltage issues, section 

V.A.1.b discusses materials price issues, 

in section V.A.1.d describes materials 

availability issues, and section V.B.7.d 

describes single-phase and three-phase 

consistency issues. 

D. Conclusion 

EPCA contains criteria for prescribing 

new or amended energy conservation 

standards. DOE must prescribe 

standards only for those distribution 

transformers for which DOE: (1) has 

determined that standards would be 

technologically feasible and 

economically justified and would result 

in significant energy savings, and (2) has 

prescribed test procedures. (42 U.S.C. 

6317(a)) Moreover, DOE has analyzed 

whether today's standards for 

distribution transformers will achieve 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (See 

42 U.S.C. 6295(0)(2)(A), 6316(a), and 

6317(a) and (c)) Today's final rule will 

not result in the unavailability in the 

U.S. of any covered product type (or 

class) of transformer with performance 

characteristics (Le., reliability, features, 

sizes, capacities and voltages) that are 

substantively the same as those 

generally available in the U.S. prior to 

these new standards. 

In determining whether a standard is 

economically justified, DOE determines 

whether the benefits of the standard 

exceed its costs. (See 42 U.S.C. 

6295(0)(2)(B)(i)) Any new or amended 

standard for distribution transformers 

must result in significant energy 

savings. (42 U.S.C. 6317(a); 42 U.S.C. 

6295 (0)(3)(B); see 42 U.S.C. 

6295(0)(2)(B)) 

In selecting energy conservation 

standards for distribution transformers, 

DOE started by comparing the 

maximum technologically feasible 

levels with the base case, and 

determined whether those levels were 

economically justified. Upon finding the 

maximum technologically feasible 

levels not to be justified, DOE analyzed 

the next lower TSL to determine 

whether that level was economically 

justified. DOE repeated this procedure 

until it identified a TSL that was 

economically justified. 

Tables VI.22 and VI,23 summarize 

DOE's quantitative analysis results for 

each TSL. Each table presents the 

results or, in some cases, a range of 

results, for the underlying design lines 

for liquid-immersed transformers (Table 

VI.22), and medium-voltage, dry-type 

transformers for (Table VI,23). The range 

of values reported in these tables for 

LCC, payback, and average increase in 

consumer equipment cost before 

installation encompasses the range of 

results DOE calculated for either the 

liquid-immersed or medium-voltage, 
I

Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58227

dry-type representative units. The range preservation-of-operating-profit scenario immersed and medium-voltage, dryof values for manufacturer impact and preservation-of-gross-margin type transformers.

represents the results for the scenario at each TSL for liquidTABLE V1.22.-SUMMARY OF LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTS

C i i

Trial standard level

r ter a

TSL1 TSL2 TSLD TSLC TSLB TSL3 TSL4 TSLA TSL5 TSL6

Energy saved (quads) ......... 1.38 1.94 2 . 18 2.61 2.75 2.76 3. 00 4.07 5.07 7.37

Generation capacity offset

(GW) ................................ 1.4 1.9 2.1 2.5 2.7 2.7 2.9 3.9 5.0 7.2

NPV ($ billions)

@ 7% discount ............. 1.68 1.95 1 . 91 1.11 1.11 2.37 2. 13 (1.89) (4.89) (23.3)

@ 3% discount ............. 5.57 7. 06 7.56 6 .95 7.26 9. 17 9.33 4.47 1.40 (26.1)

Emission reductions, CO2

(Mt) .................................. 125 176 199 238 251 248 272 369 464 674

Life-cycle cost *

Net increase in LCC

(%) ............................ 1.4-12.1 1.4-20.7 1.4-20.7 2.5-42.5 8.1-42. 5 2.0-18. 9 12.4-44 . 3 32.4-79.6 57.7-84.8 84.8-99.5

No change in LCC (%) 42.0-66. 7 20.6-66.1 20 .6-59.0 16. 5-56.5 16. 5-47.1 13.0-66.1 2 . 1-50.0 0. 1-13.0 0.0-10.0 0.0-0.0

Net savings in LCC (%) 28.2-45. 9 31.9-58 . 7 33.2-58.7 36. 5-58.7 36.5-58.7 31 . 9-68.2 33. 2-68.2 20.3-54.6 15 .2-32.3 0. 5-15.2

Payback for average transformer (years) * ............... 2.3-7.8 2.4-10.4 3 .6-10.4 4.3-15.7 8.9-15.7 2. 4-11.4 7.8-11.4 10.6-24. 7 19.3-23 . 4 21.6-52.1

Life-cycle cost, 2006 Material Price *

Net increase in LCC

(%) ............................ 6.8-48.2 15.9-54 . 4 16.4-45. 3 13.4-53 .8 17.7-53.8 11.1-48.3 11.1-65.2 11.4-88.5 56 . 4-91.4 91.4-99.8

No change in LCC (%) 17.2-54.9 12.3-46. 8 8.9-32. 2 1.8-32 .2 1.8-23.5 9.2-46.8 0.4-29.7 0.1-14.7 0.0-1.7 0.0-0.0

Net savings in LCC (%) 29.6-39. 5 33.4-59.0 25.0-59.0 25.1-62.4 25. 1-58.8 36.2-74.2 25.0-74.2 11 .4-73.9 8. 6-41.9 0.3-8.6

Payback for average transformer, 2006 Material

Price (years) * .................. 4.7-17.8 8.4-19.5 8.4-19.4 8.7-20.8 10.2-20.8 9. 8-17.8 10.7-19.4 10.7-29.1 18.8-26.7 26.7-58.3

Average increase in consumer equipment cost before installation (%) *, ,

t ....................................... 3.2-7.1 2.7-20.7 8. 1-20.7 10.0-21.1 10. 0-22.1 2.7-45.9 8.0-45.9 20.0-60.6 24.7-138.6 132 .9-161.3

Manufacturer impact ***

INPV ($ millions ) .......... (19)-13 (22)-28 (32)-37 (47)-47 (51)-53 (100)-(11) (112)-(2.9) (169)-48 (252)-94 (576)-200

INPV change (%) ......... (3.2)-2.1 (3.7)-4.6 (5.2)-6.0 (7.7)-7.7 (8.3)-8.8 (17)-( 1.9) (18)-(0. 5) (28)-7.9 (41)-16 (95)-33

LCC selected designs with

amorphous (%) * ............. 0-13 0-14 0-14 0-14 0-14 0-95 0-95 0-84 0-100 100-100

LCC selected designs with

core steel better than M3

(i.e., M2, ZDMH, SAi)

(%) * ................................. 1-54 2-79 2-100 2-84 2-100 2-99 2-100 4-100 4-100 100-100

Voltage sensitivity-achieve

standard with silicon core

steel ................................. Yes Yes Yes Yes Yes No No No No No

Single-phase, three-phase

consistency ...................... Yes No Yes Yes Yes No No Yes No No

Range represents the results for each of the five representative units derived from the individual design lines analyzed in the LCC.

** Percent increase in consumer equipment cost before installation, five-year average material pricing.

t DOE recognizes that these cost changes are the average changes for the Nation , and that some individual customers will experience larger changes , particularly

if these customers are not evaluating losses when purchasing transformers.

*** Range represents the results of the 'preservation-of-operating-profit' and 'preservation-of-gross-margin-percentage' scenarios in the MIA.

TABLE V1.23.-SUMMARY OF MEDIUM-VOLTAGE , DRY-TYPE DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTS

C it i

Trial standard level

r er a

TSL1 TSL2 TSL3 TSL4 TSL5 TSL6

Energy saved (quads) ...................................................... 0.06 0.13 0. 19 0.27 0.40 0.40

Generation capacity offset (GW) ..................................... 0.1 0.1 0.2 0.4 0.6 0.6

Discounted energy saved , 7% (quads) ........................... 0.02 0.04 0.05 0.10 0.11 0.11

NPV ($ billions):

@ 7% discount .. ....................................................... 0.16 0.28 0.38 0.45 (0.08) (0.08)

* 3% discount ......................................................... 0.47 0.85 1 . 18 1.55 1.02 1.02

Emission reductions CO2 (Mt) ......................................... 5.8 11.8 17. 1 24.8 36.9 36.9

Life-cycle cost: *

Net increase in LCC (%) .......................................... 0.3-14.3 2.3-16.6 7.4-18.5 24.2-46.0 36.5-78.1 36.5-78.1

No change in LCC (%) ............................................. 36.4-71.4 27.2-56.5 10.8-45.4 0.0-16.7 0 0

Net savings in LCC (%) ............................................ 23.1-60.3 36.6-67.2 47.2-76.1 52.6-74.4 21.9-63.5 21.9-63.5

Payback for average transformer (years) * ..................... 0.7-5.0 1.8-6.4 3.4-7.0 5.9-9.6 7.8-18. 7 7.8-18.7

Average increase in consumer equipment cost before

installation (%) ' ** t .................................................. 0.6-7.4 3.4-15.1 9.7-24.2 20.4-39.6 43.6-95.1 43.6-95.1

Life-cycle cost, 2006 Material Price:*

Net increase in LCC (%) .......................................... 0.7-23.8 4.2-61.3 18.7-54.5 33.7-62.7 49.7-88.3 49.7-88.3

No change in LCC (%) ............................................. 10.8-66.2 1.7-33. 2 0.9-11.1 0-3.1 0-0 0-0

Net savings in LCC (/°°) ............................................ 26.5-75.3 37-78.1 44.6-76.8 37.2-66.2 11.7-50.3 11.7-50.3

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58227 

dry-type representative units. The range 

of values for manufacturer impact 

represents the results for the 

preservation-of-operating-profit scenario 

and preservation-of-gross-margin 

scenario at each TSL for liquidimmersed and medium-voltage, drytype transformers. 

I 

TABLE VI.22.-SUMMARY OF LIQUID-IMMERSED DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTS 

Trial standard level 

Criteria 

TSL1 TSL2 TSLD TSLC TSLB TSL3 TSL4 TSLA TSL5 TSL6 

Energy saved (quads) ......... 1.38 1.94 2.18 2.61 2.75 2.76 3.00 4.07 5.07 7.37 

Generation capacity offset 

(GW) ................................ 1.4 1.9 2.1 2.5 2.7 2.7 2.9 3.9 5.0 7.2 

NPV ($ billions) 

@ 7% discount ............. 1.68 1.95 1.91 1.11 1.11 2.37 2.13 (1.89) (4.89) (23.3) 

@ 3% discount ............. 5.57 7.06 7.56 6.95 7.26 9.17 9.33 4.47 1.40 (26.1) 

Emission reductions, CO2 

(Mt) .................................. 125 176 199 238 251 248 272 369 464 674 

Life-cycle cost * 

Net increase in LCC 

(%) ............................ 1.4-12.1 1.4-20.7 1.4-20.7 2.5-42.5 8.1-42.5 2.0-18.9 12.4-44.3 32.4-79.6 57.7-84.8 84.8-99.5 

No change in LCC (%) 42.0-66:7 20.6-66.1 20.6-59.0 16.5-56.5 16.5-47.1 13.0-66.1 2.1-50.0 0.1-13.0 0.0-10.0 0.0-0.0 

Net savings in LCC (%) 28.2-45.9 31.9-58.7 33.2-58.7 36.5-58.7 36.5-58.7 31.9-68.2 33.2-68.2 20.3-54.6 15.2-32.3 0.5-15.2 

Payback for average transformer (years) * ............... 2.3-7.8 2.4-10.4 3.6-10.4 4.3-15.7 8.9-15.7 2.4-11.4 7.8-11.4 10.6-24.7 19.3-23.4 21.6-52.1 

Life-cycle cost, 2006 Material Price * 

Net increase in LCC 

(%) ............................ 6.8-48.2 15.9-54.4 16.4-45.3 13.4-53.8 17.7-53.8 11.1-48.3 11.1-65.2 11.4-88.5 56.4-91.4 91.4-99.8 

No change in LeC (%) 17.2-54.9 12.3-46.8 8.9-32.2 1.8-32.2 1.8-23.5 9.2-46.8 0.4-29.7 0.1-14.7 0.0-1.7 0.0-0.0 

Net savings in LCC (%) 29.6-39.5 33.4-59.0 25.0-59.0 25.1-62.4 25.1-58.8 36.2-74.2 25.0-74.2 11.4-73.9 8.6-41.9 0.3-8.6 

Payback for average transformer, 2006 Material 

Price (years) * .................. 4.7-17.8 8.4-19.5 8.4-19.4 8.7-20.8 10.2-20.8 9.8-17.8 10.7-19.4 10.7-29.1 18.8-26.7 26.7-58.3 

Average increase in consumer equipment cost before installation (%) *, **, 

t ....................................... 3.2-7.1 2.7-20.7 8.1-20.7 10.0-21.1 10.0-22.1 2.7-45.9 8.0-45.9 20.0-60.6 24.7-138.6 132.9-161.3 

Manufacturer impact *** 

INPV ($ millions) .......... (19)-13 (22)-28 (32)-37 (47}-47 (51)-53 (100)-(11) (112)-(2.9) (169)-48 (252)-94 (576)-200 

INPV change (%) ......... (3.2)-2.1 (3.7}-4.6 (5.2)-6.0 (7.7)-7.7 (8.3)-8.8 (17)-(1.9) (18)-(0.5) (28)-7.9 (41)-16 (95)-33 

LCC selected designs with 

amorphous (%) * ............. 0-13 0-14 0-14 0-14 0-14 0-95 0-95 0-84 0-100 100-100 

LCC selected designs with 

core steel better than M3 

(i.e., M2, ZDMH, SA1) 

(%) * ................................. 1-54 2-79 2-100 2-84 2-100 2-99 2-100 4-100 4-100 100-100 

Voltage sensitivity-achieve 

standard with silicon core 

steel ................................. Yes Yes Yes Yes Yes No No No No No 

Single-phase, three-phase 

consistency ...................... Yes No Yes Yes Yes No No Yes No No 

* Range represents the results for each of the five representative units derived from the individual design lines analyzed in the LCC. 

** Percent increase in consumer equipment cost before installation, five-year average material pricinQ. 

t DOE recognizes that these cost changes are the average changes for the Nation, and that some mdividual customers will experience larger changes, particularly 

if these customers are not evaluating losses when purchasing transformers. 

*** Range represents the results 01 the 'preservation-of-operating-profit' and 'preservation-of-gross-margin-percentage' scenarios in the MIA. 

TABLE VI.23.-SUMMARY OF MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTS 

Criteria 

Energy saved (quads) .................................................... .. 

Generation capacity offset (GW) ................................... .. 

Discounted energy saved, 7% (quads) .......................... . 

NPV ($ billions): 

@ 7% discount ....................................................... .. 

@ 3% discount ....................................................... .. 

Emission reductions CO2 (Mt) ....................................... .. 

Life-cycle cost: * 

Net increase in LCC (%) ........................................ .. 

No change in LCC (%) ............................................ . 

Net savings in LCC (%) .......................................... .. 

Payback for average transformer (years)' .................... . 

Average increase in consumer equipment cost before 

installation (%) *, *', t ................................................. . Life-cycle cost, 2006 Material Price:* 

Net increase in LCC (%) ........................................ .. 

No change in LCC (%) ........................................... .. 

Net savings in LCC (%) .......................................... .. 

TSL1 

0.06 

0.1 

0.02 

0.16 

0.47 

5.8 

0.3-14.3 

36.4-71.4 

23.1-60.3 

0.7-5.0 

0.6-7.4 

0.7-23.8 

10.8-66.2 

26.5-75.3 

TSL2 

0.13 

0.1 

0.04 

0.28 

0.85 

11.8 

2.3-16.6 

27.2-56.5 

36.6-67.2 

1.8-6.4 

3.4-15.1 

4.2-61.3 

1.7-33.2 

37-78.1 

Trial standard level 

TSL3 

0.19 

0.2 

0.05 

0.38 

1.18 

17.1 

7.4-18.5 

10.8-45.4 

47.2-76.1 

3.4-7.0 

9.7-24.2 

18.7-54.5 

0.9-11.1 

44.6-76.8 

TSL4 

0.27 

0.4 

0.10 

0.45 

1.55 

24.8 

24.2-46.0 

0.0-16.7 

52.6-74.4 

5.9-9.6 

20.4-39.6 

33.7-62.7 

0-3.1 

37.2-66.2 

TSL5 

0.40 

0.6 

0.11 

(0.08) 

1.02 

36.9 

36.5-78.1 

o 

21.9-63.5 

7.8-18.7 

43.6-95.1 

49.7-88.3 

0-0 

11.7-50.3 

TSL6 

0.40 

0.6 

0.11 

(0.08) 

1.02 

36.9 

36.5-78.1 

o 

21.9-63.5 

7.8-18.7 

43.6-95.1 

49.7-88.3 

0-0 

11.7-50.3 
58228 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 / Rules and Regulations

TABLE V1.23.-SUMMARY OF MEDIUM-VOLTAGE , DRY-TYPE DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTSContinued

Criteria

Payback for average transformer, 2006 Material Price

(years) *

Manufacturer impact:***

INPV ($ millions) .......................................................

INPV change (%) ......................................................

LCC designs with thin laminations of core steel (i.e.,

M3, HO) (%) * ..............................................................

TSL1

0.7-5.9

(2.1)-(1.1)

(5.9)-(3.1)

30-69

TSL2

2.1-12.9

(5.2)-(3.2)

(15)-(8.9)

40-88

Trial standard level

TSL3

6.3-12.2

(8.8)-(5.2)

(25)-(15)

92-100

TSL4

8.5-14.0

(11)-(3.2)

(29)-(8.9)

100-100

TSL5

11.4-24.3

(24)-0.9

(67)-2.5

100-100

TSL6

11.4-24.3

(24)-0.9

(67)-2.5

100-100

Range represents the results for each of the five representative units derived from the individual design lines analyzed in the LCC.

** Percent increase in consumer equipment cost before installation, five-year average material pricing.

1-DOE recognizes that these cost changes are the average changes for the Nation, and that some individual customers will experience larger

changes, particularly if these customers are not evaluating losses when purchasing transformers.

*** Range represents the results of the 'preservation-of-operating-profit' and 'preservation-of-gross-margin-percentage' scenarios in the MIA.

1. Results for Liquid-Immersed

Distribution Transformers

a. Liquid-Immersed Transformers-Trial

Standard Level 6

First, DOE considered the most

efficient level (max tech), which would

save an estimated total of 7.37 quads of

energy through 2038, a significant

amount of energy. For the Nation as a

whole, TSL6 would have a net cost of

$23.3 billion and $26.1 billion at seven

percent and three percent discount

rates, respectively. At this level, the

majority of customers would experience

an increase in life-cycle costs. As shown

in Table VI.22, only 0.5-15.2 percent of

customers would experience lower lifecycle costs, depending on the design

line. Under the 2006 materials price

sensitivity analysis, this percentage

reduces to 0.3 to 8.6 percent of

customers. The payback periods for the

five-year average materials price

scenario at this standard level are

between 21.6 and 52.1 years, some of

which exceed the anticipated operating

life of the transformer (i.e., 32 years).

Under the 2006 materials price

sensitivity analysis, the paybacks

periods are longer, ranging from 26.7 to

58.3 years. The consumer equipment

cost before installation would more than

double for all design lines, a significant

increase for consumers. The impacts on

manufacturers would be very significant

because TSL6 would require a complete

conversion to amorphous core

technology. These conversion costs

would reduce the INPV by as much as

95 percent under the preservation-ofoperating-profit scenario. DOE estimates

that $49 million of existing assets would

be stranded (i.e., rendered useless) and

$178 million of conversion capital

expenditures would be required to

enable the industry to manufacture

compliant distribution transformers.

Additionally, TSL6 would be disruptive

for manufacturers because it does not

achieve the consistent treatment of

single-phase and three-phase

transformers (see Appendix 81). This

lack of consistency may cause large

market distortions (i.e., shifts between

single-phase and three-phase

transformers) and impact manufacturers

or plants that specialize in either singlephase or three-phase construction.

Furthermore, DOE is concerned that

TSL6 requires all distribution

transformers to be constructed of

amorphous material, and there isn't

sufficient amorphous-ribbon production

capacity to replace silicon core steel.

Moreover, DOE's primary voltage

sensitivity analysis found that TSL6

cannot be achieved using even the most

efficient conventional silicon steels for

any of the four design lines studied (see

TSD Appendix 5D), and thus TSL6

could eliminate certain voltages from

the marketplace unless amorphous core

transformers were constructed.

The energy savings at TSL6 would

reduce the installed generating capacity

by 7.2 gigawatts (GW), or roughly 18

large, 400 MW power plants. The

estimated emissions reductions through

this same time period are 674 Mt of C02-

DOE concludes that at this TSL, the

benefits of energy savings, generating

capacity reductions, and emission

reductions would be outweighed by the

potential multi-billion dollar negative

net economic cost to the Nation, the

economic burden on customers as

indicated by large payback periods,

significant increases in installed cost,

and the large percentage of customers

who would experience life-cycle cost

increases, the stranded asset and

conversion capital costs that could

result in a large reduction in INPV for

manufacturers, the requirement of

amorphous material construction, and

the inconsistency between single-phase

and three-phase efficiency

requirements. Consequently, DOE

concludes that TSL6, the max tech level,

is not economically justified.

b. Liquid-Immersed Transformers-Trial

Standard Level 5

Next, DOE considered TSL5, which

would save an estimated total of 5.07

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSL5 would have a

net cost of $4.89 billion at a seven

percent discount rate or a net saving of

$1.40 billion at a three percent discount

rate. Under the five-year average

materials price scenario, between 15.2

to 32.3 percent of customers would

experience lower life-cycle costs, and

57.7 to 84.8 percent of customers would

have increased life-cycle costs,

depending on the design line. Under the

2006 materials price sensitivity analysis,

the percentage of customers with

increased life-cycle costs ranges

between 56.4 and 91.4 percent. The

payback periods for the five-year

average material price at this standard

level are between 19.3 and 23.4 years.

Under the 2006 materials price

sensitivity analysis, these payback

periods range between 18.8 and 26.7

years. The consumer equipment cost

before installation would increase by as

much as 138.6 percent for one of the

design lines analyzed, a significant

increase for consumers. The impacts on

manufacturers would be very significant

because TSL5 would require partial

conversion to amorphous core

technology. The conversion costs would

contribute to as much as a 41 percent

reduction in the INPV under the

preservation-of-operating-profit

scenario. DOE estimates that $13

million of existing assets would be

stranded and approximately $41 million

in conversion capital expenditures

would be required to enable the

industry to manufacture compliant

 EE-RM/STD-00-550 COMMENT 194

58228 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

TABLE VI.23.-SUMMARY OF MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS ANALYTICAL RESULTSContinued 

Trial standard level 

Criteria 

TSL1 TSL2 TSL3 TSL4 TSL5 TSL6 

Payback for average transformer, 2006 Material Price 

(years) * ........................................................................ 0.7-5.9 2.1-12.9 6.3-12.2 8.5-14.0 11.4-24.3 11.4-24.3 

Manufacturer impact*'* 

INPV ($ millions) ....................................................... (2.1)-(1.1) (5.2)-(3.2) (8.8)-(5.2) (11)-(3.2) (24)-0.9 (24)-0.9 

INPV change (%) ...................................................... (5.9)-(3.1 ) (15)-(8.9) (25)-(15) (29)-(8.9) (67)-2.5 (67)-2.5 

LCe deSigns with thin laminations of core steel (i.e., 

M3, HO) (%) * .............................................................. 30-69 40-68 92-100 100-100 100-100 100-100 

* Range represents the results for each of the five representative units derived from the individual design lines analyzed in the Lee. 

** Percent increase in consumer equipment cost before installation, five-year average material pricing. ' 

tDOE recognizes that these cost changes are the average changes for the Nation, and that some individual customers will experience larger 

changes, particularly if these customers are not evaluating losses when purchasing transformers. 

*** Range represents the results of the 'preservation-of-operating-profit' and 'preservation-of-gross-margin-percentage' scenarios in the MIA. 

1. Results for Liquid-Immersed 

Distribution Transformers 

a. Liquid-Immersed Transformers-Trial 

Standard Level 6 

First, DOE considered the most 

efficient level (max tech), which would 

save an estimated total of 7.37 quads of 

energy through 2038, a significant 

amount of energy. For the Nation as a 

whole, TSL6 would have a net cost of 

$23.3 billion and $26.1 billion at seven 

percent and three percent discount 

rates, respectively. At this level, the 

majority of customers would experience 

an increase in life-cycle costs. As shown 

in Table VI.22, only 0.5-15.2 percent of 

customers would experience lower lifecycle costs, depending on the design 

line. Under the 2006 materials price 

sensitivity analysis, this percentage 

reduces to 0.3 to 8.6 percent of 

customers. The payback periods for the 

five-year average materials price 

scenario at this standard level are 

between 21.6 and 52.1 years, some of 

which exceed the anticipated operating 

life ofthe transformer (Le., 32 years). 

Under the 2006 materials price 

sensitivity analysis, the paybacks 

periods are longer, ranging from 26.7 to 

58.3 years. The consumer equipment 

cost before installation would more than 

double for all design lines, a significant 

increase for consumers. The impacts on 

mariufacturers would be very significant 

because TSL6 would require a complete 

conversion to amorphous core 

technology. These conversion costs 

would reduce the INPV by as much as 

95 percent under the preservation-ofoperating-profit scenario. DOE estimates 

that $49 million of existing assets would 

be stranded (Le., rendered useless) and 

$178 million of conversion capital 

expenditures would be required to 

enable the industry to manufacture 

compliant distribution transformers. 

Additionally, TSL6 would be disruptive 

for manufacturers because it does not 

achieve the consistent treatment of 

single-phase and three-phase 

transformers (see Appendix 8I). This 

lack of consistency may cause large 

market distortions (Le., shifts between 

single-phase and three-phase 

transformers) and impact manufacturers 

or plants that specialize in either singlephase or three-phase construction. 

Furthermore, DOE is concerned that 

TSL6 requires all distribution 

transformers to be constructed of 

amorphous material, and there isn't 

sufficient amorphous-ribbon production 

capacity to replace silicon core steel. 

Moreover, DOE's primary voltage 

sensitivity analysis found that TSL6 

cannot be achieved using even the most 

efficient conventional silicon steels for 

any of the four design lines studied (see 

TSD Appendix 5D), and thus TSL6 

could eliminate certain voltages from 

the marketplace unless amorphous core 

transformers were constructed. 

The energy savings at TSL6 would 

reduce the installed generating capacity 

by 7.2 gigawatts (GW), or roughly 18 

large, 400 MW power plants. The 

estimated emissions reductions through 

this same time period are 674 Mt of CO2 • 

DOE concludes that at this TSL, the 

benefits of energy savings, generating 

capacity reductions, and emission 

reductions would be outweighed by the 

potential multi-billion dollar negative 

net economic cost to the Nation, the 

economic burden on customers as 

indicated by large payback periods, 

significant increases in installed cost, 

and the large percentage of customers 

who would experience life-cycle cost 

increases, the stranded asset and 

conversion capital costs that could 

result in a large reduction in INPV for 

manufacturers, the requirement of 

amorphous material construction, and 

the inconsistency between single-phase 

and three-phase efficiency 

requirements. Consequently, DOE 

concludes that TSL6, the max tech level, 

is not economically justified. 

b. Liquid-Immersed Transformers-Trial 

Standard Level 5 

Next, DOE considered TSL5, which 

would save an estimated total of 5.07 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSL5 would have a 

net cost of $4.89 billion at a seven 

percent discount rate or a net saving of 

$1.40 billion at a three percent discount 

rate. Under the five-year average 

materials price scenario, between 15.2 

to 32.3 percent of customers would 

experience lower life-cycle costs, and 

57.7 to 84.8 percent of customers would 

have increased life-cycle costs, 

depending on the design line. Under the 

2006 materials price sensitivity analysis, 

the percentage of customers with 

increased life-cycle costs ranges 

between 56.4 and 91.4 percent. The 

payback periods for the five-year 

average material price at this standard 

level are between 19.3 and 23.4 years. 

Under the 2006 materials price 

sensitivity analysis, these payback 

periods range between 18.8 and 26.7 

years. The consumer equipment cost 

before installation would increase by as 

much as 138.6 percent for one of the 

design lines analyzed, a significant 

increase for consumers. The impacts on 

manufacturers would be very significant 

because TSL5 would require partial 

conversion to amorphous core 

technology. The conversion costs would 

contribute to as much as a 41 percent 

reduction in the INPV under the 

preservation-of-operating-profit 

scenario. DOE estimates that $13 

million of existing assets would be 

stranded and approximately $41 million 

in conversion capital expenditures 

would be required to enable the 

industry to manufacture compliant 
i

Federal Register / Vol. 72, No. 197 / Friday, October 12, 2007 / Rules and Regulations 58229

transformers. Additionally, TSL5 would

be disruptive for manufacturers because

it does not achieve the consistent

treatment of single-phase and threephase transformers (see Appendix 81).

This lack of consistency may cause large

market distortions (i.e., shifts between

single-phase and three-phase

transformers) and impact manufacturers

or plants that specialize in either singlephase or three-phase construction.

Furthermore, DOE is concerned that

TSL5 requires three design lines to be

constructed of amorphous material, and

there may not be sufficient amorphousribbon production capacity to replace

silicon core steel for these design lines.

Moreover, DOE's primary voltage

sensitivity analysis found that TSL5

cannot be achieved using even the most

efficient conventional silicon steels for

three of the four design lines studied

(see TSD Appendix 5D), and thus TSL5

could eliminate certain voltages from

the marketplace unless amorphous core

transformers were constructed. A\s

explained above, DOE has decided not

to set a standard that requires the use of

amorphous material, even if the

requirement would affect only a small

portion of the market.

The energy savings at TSL5 would

reduce the installed generating capacity

by 5.0 GW, or roughly 13 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 464 Mt of CO2. DOE

concludes that at this TSL, the benefits

of energy savings, generating capacity

reductions, and emission reductions

would be outweighed by the potential

negative net economic cost to the

Nation, the economic burden on

customers as indicated by long payback

periods, significant increases in

installed cost, and the large percentage

of customers who would experience

life-cycle cost increases, the stranded

asset and conversion capital costs that

could result in a large reduction in INPV

for manufacturers, the requirement of

amorphous material construction for

certain design lines, and the

inconsistency between single-phase and

three-phase efficiency requirements.

Consequently, DOE concludes that TSL5

is not economically justified.

c. Liquid-Immersed Transformers-Trial

Standard Level A

Next, DOE considered TSLA, which

would save an estimated total of 4.07

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSLA would have a

net cost of $1.89 billion at a seven

percent discount rate or a net saving of

$4.47 billion at three percent discount

rate. Under the five-year average

materials price scenario, 20.3 to 54.6

percent of customers would experience

lower life-cycle costs, while between

32.4 to 79.6 percent of customers would

have increased life-cycle costs. Under

the 2006 materials price sensitivity

analysis, 88.5 percent of consumers

would experience a net increase in lifecycle costs for one design line. Under

the five-year average materials price

scenario, the payback periods at this

standard level are between 10.6 and

24.7 years. Under the 2006 materials

price sensitivity analysis, the payback

periods are longer, ranging between 10.7

and 29.1 years. The consumer

equipment cost before installation

would increase by as much as 60.6

percent for one of the design lines

analyzed, a significant increase for

consumers. The impacts on

manufacturers would be significant

because TSLA would likely trigger

partial conversion to amorphous core

technology (design lines 4 and 5). The

conversion costs would contribute to as

much as a 28 percent reduction in the

INPV under the preservation-ofoperating-profit scenario. DOE estimates

that $3.5 million of existing assets

would be stranded and approximately

$18 million in conversion capital

expenditures would be required to

enable the industry to manufacture

compliant transformers. Furthermore,

DOE is concerned that TSLA requires 84

percent of one design line to be

constructed of amorphous material, and

there may not be sufficient amorphousribbon production capacity to replace

silicon core steel for that design line and

others that use amorphous material.

Moreover, DOE's primary voltage

sensitivity analysis found that TSLA

cannot be achieved using even the most

efficient conventional silicon steels for

two of the four design lines studied (see

TSD Appendix 5D), and thus TSLA

could eliminate certain voltages from

the marketplace unless amorphous core

transformers were constructed. As

explained above, DOE has decided not

to set a standard that requires the use of

amorphous material, even if the

requirement would affect only a small

portion of the market.

The energy savings at TSLA would

reduce the installed generating capacity

by 3.9 GW, or roughly 10 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 369 Mt of CO2. DOE

concludes that at this TSL, the benefits

of energy savings, generating capacity

reductions, and emission reductions

would be outweighed by the potential

negative net economic cost to the

Nation, the economic burden on

customers as indicated by large payback

periods, significant increases in

installed cost for certain design lines,

and the large percentage of customers

who would experience life-cycle cost

increases, the stranded asset and

conversion capital costs that could

result in a significant reduction in INPV

for manufacturers, and the high

proportion of amorphous material for

certain design lines. Consequently, DOE

concludes that TSLA is not

economically justified.

d. Liquid-Immersed TransformersTrial Standard Level 4

Next, DOE considered TSL4, which

would save an estimated total of 3.00

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSL4 would result in

a net savings of $2.13 billion and $9.33

billion at seven percent and three

percent discount rates, respectively.

Under the five-year average materials

price scenario, lower life-cycle costs

would be experienced by between 33.2

and 68.2 percent of customers,

depending on the design line. Under

this same materials price scenario, 12.4

to 44.3 percent of customers would have

increased life-cycle costs. Under the

2006 materials price sensitivity analysis,

increased life-cycle costs are

experienced by up to 65.2 percent of

customers for one design line. Under the

five-year average materials price

scenario, the payback periods are

between 7.8 and 11.4 years. Under the

2006 materials price sensitivity analysis,

the payback periods increase to between

10.7 and 19.4 years. The consumer

equipment cost before installation

would increase by 45.9 percent for one

design line, a significant increase for

transformer consumers. The LCC

consumer choice model estimates that

for one design line, approximately 95

percent of the transformers sold would

have amorphous cores. The impacts on

manufacturers would be significant

because TSL4 would therefore likely

trigger partial conversion to amorphous

core technology (design line 4). The

manufacturer conversion costs would

contribute to as much as an 18 percent

reduction in the INPV under the

preservation-of-operating-profit

scenario. DOE estimates that $8.2

million of existing assets would be

stranded and approximately $17 million

in conversion capital expenditures

would be required to enable the

industry to manufacture compliant

transformers. Additionally, TSL4 would

be disruptive for manufacturers because

it does not achieve the consistent

treatment of single-phase and threephase transformers (see Appendix 81).

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58229 

transformers. Additionally, TSL5 would 

be disruptive for manufacturers because 

it does not achieve the consistent 

treatment of single-phase and threephase transformers (see Appendix 8I). 

This lack of consistency may cause large 

market distortions (Le., shifts between 

single-phase and three-phase 

transformers) and impact manufacturers 

or plants that specialize in either singlephase or three-phase construction. 

Furthermore, DOE is concerned that 

TSL5 requires three design lines to be 

constructed of amorphous material, and 

there may not be sufficient amorphousribbon production capacity to replace 

silicon core steel for these design lines. 

Moreover, DOE's primary voltage 

sensitivity analysis found that TSL5 

cannot be achieved using even the most 

efficient conventional silicon steels for 

three of the four design lines studied 

(see TSD Appendix 5D), and thus TSL5 

could eliminate certain voltages from 

the marketplace unless amorphous core 

transformers were constructed. !\s 

explained above, DOE has decided not 

to set a standard that requires the use of 

amorphous material, even if the 

requirement would affect only a small 

portion of the market. 

The energy savings at TSL5 would 

reduce the installed generating capacity 

by 5.0 GW, or roughly 13 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 464 Mt of CO2• DOE 

concludes that at this TSL, the benefits 

of energy savings, generating capacity 

reductions, and emission reductions 

would be outweighed by the potential 

negative net economic cost to the 

Nation, the economic burden on 

customers as indicated by long payback 

periods, significant increases in 

installed cost, and the large percentage 

of customers who would experience 

life-cycle cost increases, the stranded 

asset and conversion capital costs that 

could result in a large reduction in INPV 

for manufacturers, the requirement of 

amorphous material construction for 

certain design lines, and the 

inconsistency between single-phase and 

three-phase efficiency requirements. 

Consequently, DOE concludes that TSL5 

is not economically justified. 

c. Liquid-Immersed Transformers-Trial 

Standard Level A 

Next, DOE considered TSLA, which 

would save an estimated total of 4.07 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSLA would have a 

net cost of $1.89 billion at a seven 

percent discount rate or a net saving of 

$4.47 billion at three percent discount 

rate. Under the five-year average 

materials price scenario, 20.3 to 54.6 

percent of customers would experience 

lower life-cycle costs, while between 

32.4 to 79.6 percent of customers would 

have increased life-cycle costs. Under 

the 2006 materials price sensitivity 

analysis, 88.5 percent of consumers 

would experience a net increase in lifecycle costs for one design line. Under 

the five-year average materials price 

scenario, the payback periods at this 

standard level are between 10.6 and 

24.7 years. Under the 2006 materials 

price sensitivity analysis, the payback 

periods are longer, ranging between 10.7 

and 29.1 years. The consumer 

equipment cost before installation 

would increase by as much as 60.6 

percent for one of the design lines 

analyzed, a significant increase for 

consumers. The impacts on 

manufacturers would be significant 

because TSLA would likely trigger 

partial conversion to amorphous core 

technology (design lines 4 and 5). The 

conversion costs would contribute to as 

much as a 28 percent reduction in the 

INPV under the preservation-ofoperating-profit scenario. DOE estimates 

that $3.5 million of existing assets 

would be stranded and approximately 

$18 million in conversion capital 

expenditures would be required to 

enable the industry to manufacture 

compliant transformers. Furthermore, 

DOE is concerned that TSLA requires 84 

percent of one design line to be 

constructed of amorphous material, and 

there may not be sufficient amorphousribbon production capacity to replace 

silicon core steel for that design line and 

others that use amorphous material. 

Moreover, DOE's primary voltage 

sensitivity analysis found that TSLA 

cannot be achieved using even the most 

efficient conventional silicon steels for 

two of the four design lines studied (see 

TSD Appendix 5D), and thus TSLA 

could eliminate certain voltages from 

the marketplace unless amorphous core 

transformers were constructed. As 

explained above, DOE has decided not 

to set a standard that requires the use of 

amorphous material, even if the 

requirement would affect only a small 

portion ofthe market. 

The energy savings at TSLA would 

reduce the installed generating capacity 

by 3.9 GW, or roughly 10 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 369 Mt of CO2• DOE 

concludes that at this TSL, the benefits 

of energy savings, generating capacity 

reductions, and emission reductions 

would be outweighed by the potential 

negative net economic cost to the 

Nation, the economic burden on 

customers as indicated by large payback 

periods, significant increases in 

installed cost for certain design lines, 

and the large percentage of customers 

who would experience life-cycle cost 

increases, the stranded asset and 

conversion capital costs that could 

result in a significant reduction in INPV 

for manufacturers, and the high 

proportion of amorphous material for 

certain design lines. Consequently, DOE 

concludes that TSLA is not 

economically justified. 

d. Liquid-Immersed TransformersTrial Standard Level 4 

Next, DOE considered TSL4, which 

would save an estimated total of 3.00 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSL4 would result in 

a net savings of $2.13 billion and $9.33 

billion at seven percent and three 

percent discount rates, respectively. 

Under the five-year average materials 

price scenario, lower life-cycle costs 

would be experienced by between 33.2 

and 68.2 percent of customers, 

depending on the design line. Under 

this same materials price scenario, 12.4 

to 44.3 percent of customers would have 

increased life-cycle costs. Under the 

2006 materials price sensitivity analysis, 

increased life-cycle costs are 

experienced by up to 65.2 percent of 

customers for one design line. Under the 

five-year average materials price 

scenario, the payback periods are 

between 7.8 and 11.4 years. Under the 

2006 materials price sensitivity analysis, 

the payback periods increase to between 

10.7 and 19.4 years. The consumer 

equipment cost before installation 

would increase by 45.9 percent for one 

design line, a significant increase for 

transformer consumers. The LCC 

consumer choice model estimates that 

for one design line, approximately 95 

percent of the transformers sold would 

have amorphous cores. The impacts on 

manufacturers would be significant 

because TSL4 would therefore likely 

trigger partial conversion to amorphous 

core technology (design line 4). The 

manufacturer conversion costs would 

contribute to as much as an 18 percent 

reduction in the INPV under the 

preservation-of-operating-profit 

scenario. DOE estimates that $8.2 

million of existing assets would be 

stranded and approximately $17 million 

in conversion capital expenditures 

would be required to enable the 

industry to manufacture compliant 

transformers. Additionally, TSL4 would 

be disruptive for manufacturers because· 

it does not achieve the consistent 

treatment of single-phase and threephase transformers (see Appendix 8I). 
58230 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

This lack of consistency may cause large

market distortions (i.e., shifts between

single-phase and three-phase

transformers) and impact manufacturers

or plants that specialize in either singlephase or three-phase construction.

Moreover, DOE's primary voltage

sensitivity analysis found that TSL4

cannot be achieved using even the most

efficient conventional silicon steels for

one of the four design lines studied (see

TSD Appendix 5D), and thus TSL4

could eliminate certain voltages from

the marketplace unless amorphous core

transformers were constructed. As

explained above, DOE has decided not

to set a standard that requires the use of

amorphous material, even if the

requirement would affect only a small

portion of the market.

The energy savings at TSL4 would

reduce the installed generating capacity

by 2.9 GW, or roughly 7 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 272 Mt of CO2. DOE

concludes that at this TSL, the benefits

of energy savings, generating capacity

reductions, emission reductions, and

national NPV would be outweighed by

the economic burden on customers as

indicated by the increased life-cycle

costs for certain design lines under the

2006 materials price sensitivity analysis

and large increases in installed

equipment cost for some transformers,

the stranded asset and conversion

capital costs that could result in a

significant reduction in INPV for

manufacturers, the inconsistent

treatment of single-phase and threephase transformers, and the partial

conversion to amorphous core material

for at least one design line.

Consequently, DOE concludes that TSL4

is not economically justified.

e. Liquid-Immersed Transformers-Trial

Standard Level 3

Next, DOE considered TSL3, which

would save an estimated total of 2.76

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSL3 would result in

a net savings of $2.37 billion and $9.17

billion at seven percent and three

percent discount rates, respectively.

Under the five-year average materials

price scenario, lower life-cycle costs

would be experienced by between 31.9

and 68.2 percent of customers, while

between 2.0 to 18.9 percent of

customers would have increased lifecycle costs. Under the 2006 materials

price sensitivity analysis, increased lifecycle costs are experienced by between

11.1 and 48.3 percent of customers.

Under this five-year average materials

price scenario, the payback periods are

between 2.4 and 11.4 years. Under the

2006 materials price sensitivity analysis,

the payback periods are between 9.8 and

17.8 years. The consumer equipment

cost before installation would increase

by 45.9 percent for one design line, a

significant increase for transformer

consumers. The LCC consumer choice

model estimates that for one design line,

approximately 95 percent of the

transformers sold would have

amorphous cores. The impacts on

manufacturers would be significant

because TSL3 would therefore likely

trigger partial conversion to amorphous

core technology; partial conversion is

disruptive in and of itself (but cannot be

quantified). The manufacturer

conversion costs would contribute to as

much as a 17 percent reduction in the

INPV under the preservation-ofoperating-profit scenario. DOE estimates

that $8.2 million of existing assets

would be stranded and approximately

$17 million in conversion capital

expenditures would be required to

enable the industry to manufacture

compliant transformers. Additionally,

TSL3 would be disruptive for

manufacturers because it does not

achieve the consistent treatment of

single-phase and three-phase

transformers (see Appendix 81). This

lack of consistency may cause large

market distortions (i.e., shifts between

single-phase and three-phase

transformers) and impact manufacturers

or plants that specialize in either singlephase or three-phase construction.

Moreover, DOE's primary voltage

sensitivity analysis found that TSL3

cannot be achieved using even the most

efficient conventional silicon steels for

one of the four design lines studied (see

TSD Appendix 5D), and thus TSL3

could eliminate certain voltages from

the marketplace unless amorphous core

transformers were constructed. As

explained above, DOE has decided not

to set a standard that requires the use of

amorphous material, even if the

requirement would affect only a small

portion of the market.

The energy savings at TSL3 would

reduce the installed generating capacity

by 2.7 GW, or roughly 7 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 248 Mt of CO2. DOE

concludes that at this TSL, the benefits

of energy savings, generating capacity

reductions, emission reductions, and

national NPV would be outweighed by

the economic burden on customers as

indicated by large increases in installed

equipment cost for some transformers,

the stranded asset and conversion

capital costs that could result in a

significant reduction in INPV for

manufacturers, the inconsistent

treatment of single-phase and threephase transformers, and the partial

conversion to amorphous core material

for at least one design line.

Consequently, DOE concludes that TSL3

is not economically justified.

f. Liquid-Immersed Transformers-Trial

Standard Level B

Next, DOE considered TSLB, which

would save an estimated total of 2.75

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSLB would result

in a net savings of $1.11 billion and

$7.26 billion at seven percent and three

percent discount rates, respectively.

Under the five-year average materials

price scenario, lower life-cycle costs

would be experienced by between 36.5

and 58.7 percent of customers, while 8.1

to 42.5 percent of customers would have

increased life-cycle costs. Under the

2006 materials price sensitivity analysis,

increased life-cycle costs are

experienced by between 17.7 and 53.8

percent of customers. Under the fiveyear average materials price scenario,

the payback periods are between 8.9 and

15.7 years, which at most is

approximately half the anticipated

operating life of the transformer. Under

the 2006 materials price sensitivity

analysis, the payback periods are

slightly longer, ranging from 10.2 to 20.8

years. The manufacturer conversion

costs would contribute to an 8 percent

reduction in the INPV under the

preservation-of-operating-profit

scenario. TSLB concerns DOE because

most (i.e., 87 percent) of the

transformers manufactured for design

line 5 at this level would require the

most efficient conventional silicon core

steel, M2. The LCC consumer choice

model shows that no transformers in

design line 5 would be built with M3 (or

lower grade) core steel. DOE is

uncertain whether there would be

adequate supplies of M2 steel and

whether this steel would be available to

all manufacturers. These factors may

force manufacturers to more expensive

options, including amorphous core

material.

The energy savings at TSLB would

reduce the installed generating capacity

by 2.7 GW, or roughly 7 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 251 Mt of CO2. DOE

concludes that at this TSL, the benefits

of energy savings, generating capacity

reductions, emission reductions, and

national NPV would be outweighed by

the economic burden placed on

manufacturers as the vast majority

 EE-RM/STD-00-550 COMMENT 194

58230 Federal Register I VoL 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

This lack of consistency may cause large 

market distortions (Le., shifts between 

single-phase and three-phase 

transformers) and impact manufacturers 

or plants that specialize in either singlephase or three-phase construction. 

Moreover, DOE's primary voltage 

sensitivity analysis found that TSL4 

cannot be achieved using even the most 

efficient conventional silicon steels for 

one of the four design lines studied (see 

TSD Appendix 5D), and thus TSL4 

could eliminate certain voltages from 

the marketplace unless amorphous core 

transformers were constructed. As 

explained above, DOE has decided not 

to set a standard that requires the use of 

amorphous material, even if the 

requirement would affect only a small 

portion of the market. 

The energy savings at TSL4 would 

reduce the installed generating capacity 

by 2.9 GW, or roughly 7 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 272 Mt of C02. DOE 

concludes that at this TSL, the benefits 

of energy savings, generating capacity 

reductions, emission reductions, and 

national NPV would be outweighed by 

the economic burden on customers as 

indicated by the increased life-cycle 

costs for certain design lines under the 

2006 materials price sensitivity analysis 

and large increases in installed 

equipment cost for some transformers, 

the stranded asset and conversion 

capital costs that could result in a 

significant reduction in INPV for 

manufacturers, the inconsistent 

treatment of single-phase and threephase transformers, and the partial 

conversion to amorphous core material 

for at least one design line. 

Consequently, DOE concludes that TSL4 

is not economically justified. 

e. Liquid-Immersed Transformers-Trial 

Standard Level 3 

Next, DOE considered TSL3, which 

would save an estimated total of 2.76 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSL3 would result in 

a net savings of $2.37 billion and $9.17 

billion at seven percent and three 

percent discount rates, respectively. 

Under the five-year average materials 

price scenario, lower life-cycle costs 

would be experienced by between 31.9 

and 68.2 percent of customers, while 

between 2.0 to 18.9 percent of 

customers would have increased lifecycle costs. Under the 2006 materials 

price sensitivity analysis, increased lifecycle costs are experienced by between 

11.1 and 48.3 percent of customers. 

Under this five-year average materials 

price scenario, the payback periods are 

between 2.4 and 11.4 years. Under the 

2006 materials price sensitivity analysis, 

the payback periods are between 9.8 and 

17.8 years. The consumer equipment 

cost before installation would increase 

by 45.9 percent for one design line, a 

significant increase for transformer 

consumers. The LCC consumer choice 

model estimates that for one design line, 

approximately 95 percent of the 

transformers sold would have 

amorphous cores. The impacts on 

manufacturers would be significant 

because TSL3 would therefore likely 

trigger partial conversion to amorphous 

core technology; partial conversion is 

disruptive in and of itself (but cannot be 

quantified). The manufacturer 

conversion costs would contribute to as 

much as a 17 percent reduction in the 

INPV under the preservation-ofoperating-profit scenario. DOE estimates 

that $8.2 million of existing assets 

would be stranded and approximately 

$17 million in conversion capital 

expenditures would be required to 

enable the industry to manufacture 

compliant transformers. Additionally, 

TSL3 would be disruptive for 

manufacturers because it does not 

achieve the consistent treatment of 

single-phase and three-phase 

transformers (see Appendix 8I). This 

lack of consistency may cause large 

market distortions (Le., shifts between 

single-phase and three-phase 

transformers) and impact manufacturers 

or plants that specialize in either singlephase or three-phase construction. 

Moreover, DOE's primary voltage 

sensitivity analysis found that TSL3 

cannot be achieved using even the most 

efficient conventional silicon steels for 

one of the four design lines studied (see 

TSD Appendix 5D), and thus TSL3 

could eliminate certain voltages from 

the marketplace unless amorphous core 

transformers were constructed. As 

explained above, DOE has decided not 

to set a standard that requires the use of 

amorphous material, even if the 

requirement would affect only a small 

portion of the market. 

The energy savings at TSL3 would 

reduce the installed generating capacity 

by 2.7 GW, or roughly 7 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 248 Mt of C02. DOE 

concludes that at this TSL, the benefits 

of energy savings, generating capacity 

reductions, emission reductions, and 

national NPV would be outweighed by 

the economic burden on customers as 

indicated by large increases in installed 

equipment cost for some transformers, 

the stranded asset and conversion 

capital costs that could result in a 

significant reduction in INPV for 

manufacturers, the inconsistent 

treatment of single-phase and threephase transformers, and the partial 

conversion to amorphous core material 

for at least one design line. 

Consequently, DOE concludes that TSL3 

is not economically justified. 

£. Liquid-Immersed Transformers-Trial 

Standard Level B 

Next, DOE considered TSLB, which 

would save an estimated total of 2.75 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSLB would result 

in a net savings of $1.11 billion and 

$7.26 billion at seven percent and three 

percent discount rates, respectively. 

Under the five-year average materials 

price scenario, lower life-cycle costs 

would be experienced by between 36.5 

and 58.7 percent of customers, while 8.1 

to 42.5 percent of customers would have 

increased life-cycle costs. Under the 

2006 materials price sensitivity analysis, 

increased life-cycle costs are 

experienced by between 17.7 and 53.8 

percent of customers. Under the fiveyear average materials price scenario, 

the payback periods are between 8.9 and 

15.7 years, which at most is 

approximately half the anticipated 

operating life of the transformer. Under 

the 2006 materials price sensitivity 

analysis, the payback periods are 

slightly longer, ranging from 10.2 to 20.8 

years. The manufacturer conversion 

costs would contribute to an 8 percent 

reduction in the INPV under the 

preservation-of-operating-profit 

scenario. TSLB concerns DOE because 

most (I.e., 87 percent) of the 

transformers manufactured for design 

line 5 at this level would require the 

most efficient conventional silicon core 

steel, M2. The LCC consumer choice 

model shows that no transformers in 

design line 5 would be built with M3 (or 

lower grade) core steel. DOE is 

uncertain whether there would be 

adequate supplies of M2 steel and 

whether this steel would be available to 

all manufacturers. These factors may 

force manufacturers to more expensive 

options, including amorphous core 

material. 

The energy savings at TSLB would 

reduce the installed generating capacity 

by 2.7 GW, or roughly 7 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 251 Mt of CO2• DOE 

concludes that at this TSL, the benefits 

of energy savings, generating capacity 

reductions, emission reductions, and 

national NPV would be outweighed by 

the economic burden placed on 

manufacturers as the vast majority 
Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

would have to rely on the most efficient

conventional silicon core steel for one

design line. A clear cost disadvantage

would be imposed on those

manufacturers who could not secure

sufficient or consistent M2 core steel

supplies, potentially necessitating the

use of amorphous material.

Consequently, DOE concludes that

TSLB is not economically justified.

g. Liquid-Immersed Transformers-Trial

Standard Level C

Next, DOE considered TSLC, which

would save an estimated total of 2.61

quads of energy through 2038, a

significant amount of energy. For the

Nation as a whole, TSLC would result

in a net savings of $1.11 billion and

$6.95 billion at seven percent and three

percent discount rates, respectively.

Under the five-year average materials

price scenario, lower life-cycle costs

would be experienced by between 36.5

and 58.7 percent of customers,

depending on the design line. At this

level, 2.5 to 42.5 percent of customers

would have increased life-cycle costs,

depending on the design line. Under the

2006 materials price sensitivity analysis,

increased life-cycle costs will be

experienced by between 13.4 and 53.8

percent of customers. Under the fiveyear average materials price scenario,

the payback periods are between 4.3 and

15.7 years, which at most is

approximately half the anticipated

operating life of the transformer. Under

the 2006 materials price sensitivity

analysis, the payback periods range

between 8.7 and 20.8 years. The

conversion costs of manufacturers

would contribute to an 8 percent

reduction in the INPV under the

preservation-of-operating-profit

scenario. The quantified impact on

manufacturers is not prohibitive. In

comparison to TSLB, TSLC does not

raise the same material availability

concerns for design line 5. At TSLC, the

LCC consumer choice model shows that

63% of designs would be constructed

with M2 core steel, and 27% would be

constructed with M3. DOE is satisfied

that this provides reasonable diversity

of core steel construction options for

manufacturers. Additionally, the voltage

sensitivity analysis found that even the

highest BIL ratings do not eliminate the

use of M3 or M2 core steel for any of

the four liquid-immersed design lines

analyzed.

The energy savings at TSLC would

reduce the installed generating capacity

by 2.5 GW, or roughly 6 large, 400 MW

powerplants. The estimated emissions

reductions through this same time

period are 238 Mt of CO2. After

considering the benefits and burdens of

TSLC, DOE finds that this trial standard

level will offer the maximum

improvement in efficiency that is

technologically feasible and

economically justified, and will result

in significant energy savings. Therefore,

DOE today is adopting TSLC as the

energy conservation standard for liquidimmersed distribution transformers.

2. Results for Medium-Voltage, DryType Distribution Transformers

a. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 6

First, DOE considered the most

efficient level (max tech), which would

save an estimated total of 0.40 quads of

energy through 2038. For the Nation as

a whole, TSL6 would have a net cost of

$80 million at a seven percent discount

rate and a net benefit of $1.02 billion at

three percent discount rate. At this

level, the percentage of customers

experiencing lower life-cycle costs

would be less than 37.9 percent for the

majority of the units analyzed, with one

representative unit as low as 21.9

percent. More than three-quarters of

transformer customers making

purchases in that design line would

experience increases in life-cycle cost.

Customer payback periods at this

standard level for the majority of units

analyzed are 13.8 years or greater, with

one representative unit as high as 18.7

years. The consumer equipment cost

before installation would increase by as

much as 95.1 percent for one design

line, a significant increase for

customers. At TSL6, the impacts on

manufacturers would be significant,

with this level contributing to a 67

percent reduction in the INPV under the

preservation-of-operating-profit

scenario. DOE projects that

manufacturers would experience

negative net annual cash flows during

the time period between the final rule

and the effective date of the standard,

irrespective of the markup scenario. The

magnitude of the peak, negative, net

annual cash flow would be

approximately twice that of the positivebase-case cash flow. DOE is also

concerned that, at TSL6, the thin core

steels (i.e., M3, HO) selected by the LCC

(see TSD Appendix 8H) pose

operational difficulties for the type of

core-mitering equipment typically

purchased by small manufacturers.

58231

have the majority of transformer

customers experiencing higher life-cycle

costs. Payback periods also increase

under the 2006 material price scenario,

to between 11.4 and 24.3 years, with

four of the five design lines having

average payback periods in excess of 20

years.

The energy savings at TSL6 would

reduce installed generating capacity by

0.6 GW, or roughly 1.5 large, 400 MW

powerplants. DOE estimates the

associated emissions reductions through

2038 of 36.9 Mt of CO2. DOE concludes

that at this TSL, the benefits of energy

savings, generating capacity reductions,

emission reductions, and national NPV

would be outweighed by the economic

burdens on customers as indicated by

long payback periods and significantly

greater first costs under both the average

materials price and 2006 materials price

sensitivity scenario, the economic

impacts on manufacturers who may

experience a drop in INPV of up to 67

percent, and the materials handling

issue for small manufacturers.

Consequently, DOE concludes that

TSL6, the max tech level, is not

economically justified.

b. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 5

Since TSL5 is identical to TSL6 26

(i.e., for all the representative units,

TSL5 and TSL6 have the efficiency

values), DOE found that TSL5 was not

economically justified for the same

reasons as TSL6, as described above in

section VI.D.2.a.

c. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 4

Next, DOE considered TSL4, which

would save a total of 0.27 quads of

energy through 2038. For the Nation as

a whole, TSL4 would have a net savings

of $0.45 billion and $1.55 billion at a

seven percent and three percent

discount rate, respectively. For both

discount rates, this TSL represents the

maximum NPV for medium-voltage,

dry-type distribution transformers. The

percentage of customers experiencing

lower life-cycle costs would range

between 52.6 and 74.4 percent,

depending on the design line. Payback

periods at this standard level range from

5.9 to 9.6 years. The consumer

equipment cost before installation

Under the 2006 materials price 26 DOE's criteria for establishing TSLs were

sensitivity analysis, the percentage of discussed in the NOPR. 71 FR 44378. TSL6

represents the maximum technologically feasible

transformer customers who would standard level. TSL5 represents the standard level

experience higher life-cycle costs that has maximum energy savings with

increases relative to their life-cycle costs approximately no net increase in LCC. For mediumunder the average materials price voltage dry-type distribution transformers, the

efficiency point values selected under these two

scenario. For the 2006 materials price criteria for TSL6 and TSL5 are the same, therefore

sensitivity, four of the five design lines the results are the same.

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58231 

would have to rely on the most efficient 

conventional silicon core steel for one 

design line. A clear cost disadvantage 

would be imposed on those 

manufacturers who could not secure 

sufficient or consistent M2 core steel 

supplies, potentially necessitating the 

use of amorphous material. 

Consequently, DOE concludes that 

TSLB is not economically justified. 

g. Liquid-Immersed Transformers-Trial 

Standard Level C 

Next, DOE considered TSLC, which 

would save an estimated total of 2.61 

quads of energy through 2038, a 

significant amount of energy. For the 

Nation as a whole, TSLC would result 

in a net savings of $1.11 billion and 

$6.95 billion at seven percent and three 

percent discount rates, respectively. 

Under the five-year average materials 

price scenario, lower life-cycle costs 

would be experienced by between 36.5 

and 58.7 percent of customers, 

depending on the design line. At this 

level, 2.5 to 42.5 percent of custolners 

would have increased life-cycle costs, 

depending on the design line. Under the 

2006 materials price sensitivity analysis, 

increased life-cycle costs will be 

experienced by between 13.4 and 53.8 

percent of customers. Under the fiveyear average materials price scenario, 

the payback periods are between 4.3 and 

15.7 years, which at most is 

approximately half the anticipated 

operating life of the transformer. Under 

the 2006 materials price sensitivity 

analysis, the payback periods range 

between 8.7 and 20.8 years. The 

conversion costs of manufacturers 

would contribute to an 8 percent 

reduction in the INPV under the 

preservation-of-operating-profit 

scenario. The quantified impact on 

manufacturers is not prohibitive. In 

comparison to TSLB, TSLC does not 

raise the same material availability 

concerns for design line 5. At TSLC, the 

LCC consumer choice model shows that 

63% of designs would be constructed 

with M2 core steel, and 27% would be 

constructed with M3. DOE is satisfied 

that this provides reasonable diversity 

of core steel construction options for 

manufacturers. Additionally, the voltage 

sensitivity analysis found that even the 

highest BIL ratings do not eliminate the 

use of M3 or M2 core steel for any of 

the four liquid-immersed design lines 

analyzed. 

The energy savings at TSLC would 

reduce the installed generating capacity 

by 2.5 GW, or roughly 6 large, 400 MW 

powerplants. The estimated emissions 

reductions through this same time 

period are 238 Mt of CO2• After 

considering the benefits and burdens of 

TSLC, DOE finds that this trial standard 

level will offer the maximum 

improvement in efficiency that is 

technologically feasible and 

economically justified, and will result 

in significant energy savings. Therefore, 

DOE today is adopting TSLC as the 

energy conservation standard for liquidimmersed distribution transformers. 

2. Results for Medium-Voltage, DryType Distribution Transformers 

a. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 6 

First, DOE considered the most 

efficient level (max tech), which would 

save an estimated total of 0.40 quads of 

energy through 2038. For the Nation as 

a whole, TSL6 would have a net cost of 

$80 million at a seven percent discount 

rate and a net benefit of $1.02 billion at 

three percent discount rate. At this 

level, the percentage of customers 

experiencing lower life-cycle costs 

would be less than 37.9 percent for the 

majority of the units analyzed, with one 

representative unit as low as 21.9 

percent. More than three-quarters of 

transformer customers making 

purchases in that design line would 

experience increases in life-cycle cost. 

Customer payback periods at this 

standard level for the majority of units 

analyzed are 13.8 years or greater, with 

one representative unit as high as 18.7 

years. The consumer equipment cost 

before installation would increase by as 

much as 95.1 percent for one design 

line, a significant increase for 

customers. At TSL6, the impacts on 

manufacturers would be significant, 

with this level contributing to a 67 

percent reduction in the INPV under the 

preservation-of-operating-profit 

scenario. DOE projects that 

manufacturers would experience 

negative net annual cash flows during 

the time period between the final rule 

and the effective date of the standard, 

irrespective of the markup scenario. The 

magnitude ofthe peak, negative, net 

annual cash flow would be 

approximately twice that of the positivebase-case cash flow. DOE is also 

concerned that, at TSL6, the thin core 

steels (Le., M3, HO) selected by the LCC 

(see TSD Appendix 8H) pose 

operational difficulties for the type of 

core-mitering equipment typically 

purchased by small manufacturers. 

Under the 2006 materials price 

sensitivity analysis, the percentage of 

transformer customers who would 

experience higher life-cycle costs 

increases relative to their life-cycle costs 

under the average materials price 

scenario. For the 2006 materials price 

sensitivity, four ofthe five design lines 

have the majority of transformer 

customers experiencing higher life-cycle 

costs. Payback periods also increase 

under the 2006 material price scenario, 

to between 11.4 and 24.3 years, with 

four of the five design lines having 

average payback periods in excess of 20 

years. 

The energy savings at TSL6 would 

reduce installed generating capacity by 

0.6 GW, or roughly 1.5 large, 400 MW 

powerplants. DOE estimates the 

associated emissions reductions through 

2038 of 36.9 Mt of CO2• DOE concludes 

that at this TSL, the benefits of energy 

savings, generating capacity reductions, 

emission reductions, and national NPV 

would be outweighed by the economic 

burdens on customers as indicated by 

long payback periods and significantly 

greater first costs under both the average 

materials price and 2006 materials price 

sensitivity scenario, the economic 

impacts on manufacturers who may 

experience a drop in INPV of up to 67 

percent, and the materials handling 

issue for small manufacturers. 

Consequently, DOE concludes that 

TSL6, the max tech level, is not 

economically justified. 

b. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 5 

Since TSL5 is identical to TSL6 26 

(Le., for all the representative units, 

TSL5 and TSL6 have the efficiency 

values), DOE found that TSL5 was not 

economically justified for the same 

reasons as TSL6, as described above in 

section VLD.2.a. 

c. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 4 

Next, DOE considered TSL4, which 

would save a total of 0.27 quads of 

energy through 2038. For the Nation as 

a whole, TSL4 would have a net savings 

of $0.45 billion and $1.55 billion at a 

seven percent and three percent 

discount rate, respectively. For both 

discount rates, this TSL represents the 

maximum NPV for medium-voltage, 

dry-type distribution transformers. The 

percentage of customers experiencing 

lower life-cycle costs would range 

between 52.6 and 74.4 percent, 

depending on the design line. Payback 

periods at this standard level range from 

5.9 to 9.6 years. The consumer 

equipment cost before installation 

26 DOE's criteria for establishing TSLs were 

discussed in the NOPR. 71 FR 44378. TSL6 

represents the maximum technologically feasible 

standard level. TSL5 represents the standard level 

that has maximum energy savings with 

approximately no net increase in Lee. For mediumvoltage dry-type distribution transformers, the 

efficiency point values selected under these two 

criteria for TSL6 and TSL5 are the same, therefore 

the results are the same. 
58232 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

would increase by as much as 39.6

percent for one design line, a significant

increase for customers. Furthermore, the

impacts of TSL4 on manufacturers

would be significant, contributing to as

much as a 29 percent reduction in the

INPV under the preservation-ofoperating-profit scenario. Additionally,

DOE projects that manufacturers would

experience negative net annual cash

flows during the time period between

the final rule and the effective date of

the standard, irrespective of the markup

scenario. The magnitude of the peak,

negative, net annual cash flow would be

approximately half of the positive-basecase cash flow. Under the 2006

materials price sensitivity analysis, the

percentage of transformer customers

who would experience higher life-cycle

costs increases relative to their life-cycle

costs under the average materials price

scenario. For the 2006 materials price

sensitivity, three of the five design lines

have the majority of transformer

customers experiencing higher life-cycle

costs. Payback periods also increase

under the 2006 material price scenario,

to between 8.5 and 14.0 years.

The energy savings at TSL4 would

reduce the installed generating capacity

by 0.4 GW, or roughly one large, 400

MW powerplant. DOE estimates

associated emissions reductions through

2038 of 24.8 Mt of CO2. DOE concludes

that at this TSL, the benefits of energy

savings, generating capacity reductions,

positive national NPV, and emission

reductions would be outweighed by the

long payback periods and significantly

greater first costs for some transformer

customers, the economic impacts

associated with the 2006 materials price

sensitivity and the economic impacts on

manufacturers, including materials

handling for small manufacturers.

Consequently, DOE concludes that TSL4

is not economically justified.

d. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 3

Next, DOE considered TSL3, which

would save an estimated 0.19 quads of

energy through 2038. For the Nation as

a whole, TSL3 would have a net savings

of $0.38 billion and $1.18 billion at a

seven percent and three percent

discount rate, respectively. The

percentage of transformer customers

who would experience lower life-cycle

costs ranges between 47.2 and 76.1

percent, depending on the design line,

with payback periods of 7.0 years or

less. The impacts on manufacturers at

TSL3 would be significant, contributing

to as much as a 25 percent reduction in

the INPV under the preservation-ofoperating-profit scenario. In addition,

DOE projects the net annual cash flows

to be negative during the time period

between the final rule and the effective

date of the standard, irrespective of the

markup scenario. The magnitude of the

peak negative net annual cash flow

would be approximately one-third of the

positive-base-case cash flow. DOE is

also concerned that, at TSL3, the thin

core steels (i.e., M3, HO) selected by the

LCC (see TSD Appendix 8H) pose

operational difficulties for the type of

core-mitering equipment typically

purchased by small manufacturers.

Under the 2006 materials price

sensitivity analysis, the percentage of

transformer customers who would

experience higher life-cycle costs

increases relative to their life-cycle costs

under the average materials price

scenario. For the 2006 materials price

sensitivity, one design line has the

majority of transformer customers

experiencing higher life-cycle costs.

Payback periods also increase under the

2006 material price scenario, nearly

doubling with respect to payback

periods for the five-year average

material price.

The energy savings at TSL3 would

reduce the installed generating capacity

by 0.2 GW, or roughly 0.5 of a large, 400

MW powerplant. DOE estimates the

associated emissions reductions through

2038 of 17.1 Mt of CO2. DOE concludes

that at this TSL, the benefits of energy

savings, generating capacity reductions,

positive national NPV, LCC savings, and

emission reductions would be

outweighed by the economic impacts on

manufacturers, the materials handling

for small manufacturers and the

economic impacts associated with the

2006 materials price sensitivity.

Consequently, DOE concludes that TSL3

is not economically justified.

e. Medium-Voltage, Dry-Type

Transformers-Trial Standard Level 2

Next, DOE considered TSL2, which

would save an estimated total of 0.13

quads of energy through 2038. For the

Nation as a whole, TSL2 would have a

net savings of $0.28 billion and $0.85

billion at a seven percent and three

percent discount rate, respectively. The

percentage of transformer customers

experiencing lower life-cycle costs

ranges between 37 and 67 percent,

depending on the design line, with

payback periods of six years or less.

DOE considers impacts on

manufacturers at this standard level (at

most a 15 percent reduction in the INPV

under the preservation-of-operatingprofit scenario) to be reasonable. At

TSL2, DOE is satisfied that there is a

sufficiently diverse variety of core steels

selected by the LCC (see TSD Appendix

8H), including M5 and M4, so that there

will not be operational difficulties for

the type of core-mitering equipment

typically purchased by small

manufacturers.

The energy savings atTSL2 would

reduce the installed generating capacity

by 0.1 GW, or roughly one-quarter of a

large, 400 MW powerplant. DOE

estimates associated emissions

reductions through 2037 of 11.8 Mt of

CO2. DOE concludes that this TSL has

positive energy savings, generating

capacity reductions, emission

reductions, national NPV, benefits to

transformer customers, and reasonable

impacts on transformer manufacturers.

After considering the costs and benefits

of TSL2, DOE finds that this trial

standard level will offer the maximum

improvement in efficiency that is

technologically feasible and

economically justified, and will result

in significant conservation of energy.

Therefore, DOE today adopts the energy

conservation standards for mediumvoltage, dry-type distribution

transformers at TSL2.

VII. Procedural Issues and Regulatory

Review

A. Review Under Executive Order 12866

Today's regulatory action is a

"significant regulatory action" under

section 3(f)(1) of Executive Order 12866,

"Regulatory Planning and Review." 58

FR 51735 (October 4, 1993).

Accordingly, DOE has prepared and

submitted to the Office of Management

and Budget (OMB) for review the

assessment of costs and benefits

required under section 6(a)(3) of the

Executive Order. The Executive Order

requires agencies to identify the specific

market failure or other specific problem

that it intends to address that warrants

new agency action, as well as assess the

significance of that problem, to enable

assessment of whether any new

regulations is warranted. (Executive

Order 12866, § 1(b)(1)).

The specific problem that the energy

conservation standard addresses for

distribution transformers is that a

substantial portion of distribution

transformer purchasers are not

evaluating the cost of transformer losses

when they make distribution

transformer purchase decisions.

Therefore, distribution transformers are

being purchased that do not provide the

minimum life-cycle cost service to

equipment owners. DOE requested and

received data on, and suggestions for

evaluating the existence and extent of

the problem, which DOE used to

complete an assessment in the NOPR of

the significance of the problem and the

net benefits of regulation.

 EE-RM/STD-00-550 COMMENT 194

58232 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

would increase by as much as 39.6 

percent for one design line, a significant 

increase for customers. Furthermore, the 

impacts of TSL4 on manufacturers 

would be significant, contributing to as 

much as a 29 percent reduction in the 

INPV under the preservation-ofoperating-profit scenario. Additionally, 

DOE projects that manufacturers would 

experience negative net annual cash 

flows during the time period between 

the final rule and the effective date of 

the standard, irrespective of the markup 

scenario. The magnitude of the peak, 

negative, net annual cash flow would be 

approximately half of the positive-basecase cash flow. Under the 2006 

materials price sensitivity analysis, the 

percentage of transformer customers 

who would experience higher life-cycle 

costs increases relative to their life-cycle 

costs under the aVerage materials price 

scenario. For the 2006 materials price 

sensitivity, three of the five design lines 

have the majority of transformer 

customers experiencing higher life-cycle 

costs. Payback periods also increase 

under the 2006 material price scenario, 

to between 8.5 and 14.0 years. 

The energy savings at TSL4 would 

reduce the installed generating capacity 

by 0.4 GW, or roughly one large, 400 

MW powerplant. DOE estimates 

associated emissions reductions through 

2038 of 24.8 Mt of CO2. DOE concludes 

that at this TSL, the benefits of energy 

savings, generating capacity reductions, 

positive national NPV, and emission 

reductions would be outweighed by the 

long payback periods and significantly 

greater first costs for some transformer 

customers, the economic impacts 

associated with the 2006 materials price 

sensitivity and the economic impacts on 

manufacturers, including materials 

handling for small manufacturers. 

Consequently, DOE concludes that TSL4 

is not economically justified. 

d. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 3 

Next, DOE considered TSL3, which 

would save an estimated 0.19 quads of 

energy through 2038. For the Nation as 

a whole, TSL3 would have a net savings 

of $0.38 billion and $1.18 billion at a 

seven percent and three percent 

discount rate, respectively. The 

percentage of transformer customers 

who would experience lower life-cycle 

costs ranges between 47.2 and 76.1 

percent, depending on the design line, 

with payback periods of 7.0 years or 

less. The impacts on manufacturers at 

TSL3 would be significant, contributing 

to as much as a 25 percent reduction in 

the INPV under the preservation-ofoperating-profit scenario. In addition, 

DOE projects the net annual cash flows 

to be negative during the time period 

between the final rule and the effective 

date of the standard, irrespective of the 

markup scenario. The magnitude of the 

peak negative net annual cash flow 

would be approximately one-third of the 

positive-base-case cash flow. DOE is 

also concerned that, at TSL3, the thin 

core steels (Le., M3, HO) selected by the 

LCC (see TSD Appendix 8H) pose 

operational difficulties for the type of 

core-mitering equipment typically 

purchased by small manufacturers. 

Under the 2006 materials price 

sensitivity analysis, the percentage of 

transformer customers who would 

experience higher life-cycle costs 

increases relative to their life-cycle costs 

under the average materials price 

scenario. For the 2006 materials price 

sensitivity, one design line has the 

majority of transformer customers 

experiencing higher life-cycle costs. 

Payback periods also increase under the 

2006 material price scenario, nearly 

doubling with respect to payback 

periods for the five-year average 

material price. 

The energy savings at TSL3 would 

reduce the installed generating capacity 

by 0.2 GW, or roughly 0.5 of a large, 400 

MW powerplant. DOE estimates the 

associated emissions reductions through 

2038 of 17.1 Mt of C02. DOE concludes 

that at this TSL, the benefits of energy 

savings, generating capacity reductions, 

positive national NPV, LCC savings, and 

emission reductions would be 

outweighed by the economic impacts on 

manufacturers, the materials handling 

for small manufacturers and the 

economic impacts associated with the 

2006 materials price sensitivity. 

Consequently, DOE concludes that TSL3 

is not economically justified. 

e. Medium-Voltage, Dry-Type 

Transformers-Trial Standard Level 2 

Next, DOE considered TSL2, which 

would save an estimated total of 0.13 

quads of energy through 2038. For the 

Nation as a whole, TSL2 would have a 

net savings of $0.28 billion and $0.85 

billion at a seven percent and three 

percent discount rate, respectively. The 

percentage of transformer customers 

experiencing lower life-cycle costs 

ranges between 37 and 67 percent, 

depending on the design line, with 

payback periods of six years or less. 

DOE considers impacts on 

manufacturers at this standard level (at 

most a 15 percent reduction in the INPV 

under the preservation-of-operatingprofit scenario) to be reasonable. At 

TSL2, DOE is satisfied that there is a 

sufficiently diverse variety of core steels 

selected by the LCC (see TSD Appendix 

8H), including M5 and M4, so that there 

will not be operational difficulties for 

the type of core-mitering equipment 

typically purchased by small 

manufacturers. 

The energy savings at TSL2 would 

reduce the installed generating capacity 

by 0.1 GW, or roughly one-quarter of a 

large, 400 MW powerplant. DOE 

estimates associated emissions 

reductions through.2037 of 11.8 Mt of 

C02. DOE concludes that this TSL has 

positive energy savings, generating 

capacity reductions, emission 

reductions, national NPV, benefits to 

transformer customers, and reasonable 

impacts on transformer manufacturers. 

After considering the costs and benefits 

of TSL2, DOE finds that this trial 

standard level will offer the maximum 

improvement in efficiency that is 

technologically feasible and 

economically justified, and will result 

in significant conservation of energy. 

Therefore, DOE today adopts the energy 

conservation standards for mediumvoltage, dry-type distribution 

transformers at TSL2. 

VII. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

Today's regulatory action is a 

"significant regulatory action" under 

section 3(f)(1) of Executive Order 12866, 

"Regulatory Planning and Review." 58 

FR 51735 (October 4,1993). 

Accordingly, DOE has prepared and 

submitted to the Office of Management 

and Budget (OMB) for review the 

assessment of costs and benefits 

required under section 6(a)(3) of the 

Executive Order. The Executive Order 

requires agencies to identify the specific 

market failure or other specific problem 

that it intends to address that warrants 

new agency action, as well as assess the 

significance of that problem, to enable 

assessment of whether any new 

regulations is warranted. (Executive 

Order 12866, § l(b)(l)). 

The specific problem that the energy 

conservation standard addresses for 

distribution transformers is that a 

substantial portion of distribution 

transformer purchasers are not 

evaluating the cost of transformer losses 

when they make distribution 

transformer purchase decisions. 

Therefore, distribution transformers are 

being purchased that do not provide the 

minimum life-cycle cost service to 

equipment owners. DOE requested and 

received data on, and suggestions for 

evaluating the existence and extent of 

the problem, which DOE used to 

complete an assessment in the NOPR of 

the significance ofthe problem and the 

net benefits of regulation. 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

For distribution transformers, the

Institute of Electrical and Electronics

Engineers, Inc. (IEEE) has voluntary

guidelines for the economic evaluation

of distribution transformer losses, IEEE

PC57.12.33/D8. These guidelines

document economic evaluation methods

for distribution transformers that are

common practice in the utility industry.

But while economic evaluation of

transformer losses is common, it is not

a universal practice. DOE collected

information during the course of the

conservation standards rulemaking to

estimate the extent to which

distribution transformer purchases are

evaluated. Data received from the

National Electrical Manufacturers

Association indicated that these

guidelines or similar criteria are applied

to approximately 75 percent of liquidimmersed transformer purchases, 50

percent of small capacity mediumvoltage dry-type transformer purchases,

and 80 percent of large capacity

medium-voltage dry-type transformer

purchases. Therefore, 25 percent, 50

percent, and 20 percent of distribution

transformer purchases do not have

economic evaluation of transformer

losses. The benefits from the energy

conservation standards result from

eliminating those distribution

transformers designs from the market

that are purchased on a purely

minimum first cost basis and which are

unlikely to be purchased by equipment

buyers when the economic value of

equipment losses are properly

evaluated. Detailed specifications of

DOE's consumer purchase behavior

model, and the consumer impact

estimates are provided in Chapter 8 of

the TSD.

Of course, there are likely to be

certain "external" benefits resulting

from the improved efficiency of units

that are not captured by the users of

such equipment. These include both

environmental and energy securityrelated externalities that are not already

reflected in energy prices such as

reduced emissions of greenhouse gases

and reduced use of natural gas (and oil)

for electricity generation. DOE invited

comments on the weight that should be

given to these factors in DOE's

determination of the maximum

efficiency level at which the total

benefits are likely to exceed the total

burdens resulting from a DOE standard.

Discussion of the comments regarding

these externalities is provided in

sections IV.D.2.e and IV.I.

DOE presented to OIRA for review the

draft final rule and other documents

prepared for this rulemaking, including

the RIA, and has included these

documents in the rulemaking record.

They are available for public review in

the Resource Room of DOE's Building

Technologies Program, 1000

Independence Avenue, SW.,

Washington, DC, (202) 586-9127,

between 9 a.m. and 4 p.m., Monday

through Friday, except Federal holidays.

The proposed rule contained a

summary of the RIA, which evaluated

the extent to which the major

alternatives to standards for distribution

transformers could achieve significant

energy savings at reasonable cost, as

compared to the effectiveness of the

proposed rule. 71 FR 44400-44401. The

complete RIA, formally entitled,

"Regulatory Impact Analysis for

Proposed Energy Conservation

Standards for Electrical Distribution

Transformers," is contained in the TSD

prepared for today's rule. The RIA

consists of: (1) A statement of the

problem addressed by this regulation,

and the mandate for government action;

(2) a description and analysis of the

feasible policy alternatives to this

regulation; (3) a quantitative comparison

of the impacts of the alternatives; and

(4) the national economic impacts of the

proposed standards.

As explained in the NOPR, DOE

determined that none of the alternatives

it examined would save as much energy

or have an NPV as high as the proposed

standards. That same conclusion applies

to the standards in today's rule. Also,

several of the alternatives would require

new enabling legislation, since authority

to carry out those alternatives does not

presently exist. Additional detail on the

regulatory alternatives is found in the

RIA report in the TSD.

B. Review Under the Regulatory

Flexibility Act/Final Regulatory

Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 601 et seq.) requires preparation

of an initial regulatory flexibility

analysis (IRFA) for any rule that by law

must be proposed for public comment,

and a final regulatory flexibility analysis

(FRFA) for any such rule that an agency

adopts as a final rule, unless the agency

certifies that the rule, if promulgated,

will not have a significant economic

impact on a substantial number of small

entities. A regulatory flexibility analysis

examines the impact of the rule on

small entities and considers alternative

ways of reducing negative impacts.

Also, as required by Executive Order

13272, "Proper Consideration of Small

Entities in Agency Rulemaking," 67 FR

53461 (August 16, 2002), DOE

published procedures and policies on

February 19, 2003, to ensure that the

potential impacts of its rules on small

entities are properly considered during

58233

the rulemaking process. 68 FR 7990.

DOE has made its procedures and

policies available on the Office of

General Counsel's Web site: http://

www.gc.doe.gov.

Small businesses, as defined by the

Small Business Administration (SBA)

for the distribution transformer

manufacturing industry, are

manufacturing enterprises with 750

employees or fewer. Prior to issuing the

proposed rule in this rulemaking, DOE

interviewed six small businesses

affected by the rulemaking. DOE also

obtained information about small

business impacts while interviewing

manufacturers that exceed the small

business size threshold of 750

employees.

DOE reviewed the proposed rule

under the provisions of the Regulatory

Flexibility Act and the procedures and

policies published on February 19,

2003. 71 FR 44401. On the basis of this

review, DOE determined that it could

not certify that the proposed rule

(TSL2), if promulgated, would have no

significant economic impact on a

substantial number of small entities. Id.

DOE made this determination because

of the potential impacts that the

proposed standard levels for mediumvoltage, dry-type distribution

transformers would have on the small

businesses that manufacture them.

However, DOE noted that it had

explicitly considered the impacts on

small businesses that manufacture

medium-voltage, dry-type transformers

in proposing to adopt TSL2 rather than

a higher trial standard level. Id. In the

proposed rule, DOE also stated and

explained its belief that the proposed

standards would not have significant

economic impacts on a substantial

number of small manufacturers of

liquid-immersed transformers. 71 FR

44401-02.

Because of the potential impacts of

the proposed standards on small

manufacturers of medium-voltage, drytype transformers, DOE prepared an

IRFA during the NOPR stage of this

rulemaking. DOE provided the IRFA in

its entirety in the NOPR, 71 FR 44401-

03, and also transmitted a copy to the

Chief Counsel for Advocacy of the SBA

for review. In addition, DOE gave a

presentation concerning the key

portions of the IRFA to the Chief

Counsel for Advocacy of the SBA. DOE

did not receive any indication that the

IRFA was insufficient either in writing

or during the aforementioned

presentation to the SBA. Chapter 12 of

the TSD contains more information

about the impact of this rulemaking on

manufacturers.

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58233 

For distribution transformers, the 

Institute of Electrical and Electronics 

Engineers, Inc. (IEEE) has voluntary 

guidelines for the economic evaluation 

of distribution transformer losses, IEEE 

PC57.12.33/D8. These guidelines 

document economic evaluation methods 

for distribution transformers that are 

common practice in the utility industry. 

But while economic evaluation of 

transformer losses is common, it is not 

a universal practice. DOE collected 

information during the course of the 

conservation standards rulemaking to 

estimate the extent to which 

distribution transformer purchases are 

evaluated. Data received from the 

National Electrical Manufacturers 

Association indicated that these 

guidelines or similar criteria are applied 

to approximately 75 percent of liquidimmersed transformer purchases, 50 

percent of small capacity mediumvoltage dry-type transformer purchases, 

and 80 percent of large capacity 

medium-voltage dry-type transfofmer 

purchases. Therefore, 25 percent, 50 

percent, and 20 percent of distribution 

transformer purchases do not have 

economic evaluation of transformer 

losses. The benefits from the energy 

conservation standards result from 

eliminating those distribution 

transformers designs from the market 

that are purchased on a purely 

minimum first cost basis and which are 

unlikely to be purchased by equipment 

buyers when the economic value of 

equipment losses are properly 

evaluated. Detailed specifications of 

DOE's consumer purchase behavior 

model, and the consumer impact 

estimates are provided in Chapter 8 of 

the TSD. 

Of course, there are likely to be 

certain "external" benefits resulting 

from the improved efficiency of units 

that are not captured by the users of 

such equipment. These include both 

environmental and energy securityrelated externalities that are not already 

reflected in energy prices such as 

reduced emissions of greenhouse gases 

and reduced use of natural gas (and oil) 

for electricity generation. DOE invited 

comments on the weight that should be 

given to these factors in DOE's 

determination of the maximum 

efficiency level at which the total 

benefits are likely to exceed the total 

burdens resulting from a DOE standard. 

Discussion of the comments regarding 

these externalities is provided in 

sections IV.D.2.e and IV.I. 

DOE presented to OIRA for review the 

draft final rule and other documents 

prepared for this rulemaking, including 

the RIA, and has included these 

documents in the rulemaking record. 

They are available for public review in 

the Resource Room of DOE's Building 

Technologies Program, 1000 

Independence Avenue, SW., 

Washington, DC, (202) 586-9127, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

The proposed rule contained a 

summary of the RIA, which evaluated 

the extent to which the major 

alternatives to standards for distribution 

transformers could achieve significant 

energy savings at reasonable cost, as 

compared to the effectiveness of the 

proposed rule. 71 FR 44400-44401. The 

complete RIA, formally entitled, 

"Regulatory Impact Analysis for 

Proposed Energy Conservation 

Standards for Electrical Distribution 

Transformers," is contained in the TSD 

prepared for today's rule. The RIA 

consists of: (1) A statement ofthe 

problem addressed by this regulation, 

and the mandate for government action; 

(2) a description and analysis of the 

feasible policy alternatives to this 

regulation; (3) a quantitative comparison 

ofthe impacts of the alternatives; and 

(4) the national economic impacts of the 

proposed standards. 

As explained in the NOPR, DOE 

determined that none ofthe alternatives 

it examined would save as much energy 

or have an NPV as high as the proposed 

standards. That same conclusion applies 

to the standards in today's rule. Also, 

several of the alternatives would require 

new enabling legislation, since authority 

to carry out those alternatives does not 

presently exist. Additional detail on the 

regulatory alternatives is found in the 

RIA report in the TSD. 

B. Review Under the Regulatory 

Flexibility Act/Final Regulatory 

Flexibility Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

and a final regulatory flexibility analysis 

(FRFA) for any such rule that an agency 

adopts as a final rule, unless the agency 

certifies that the rule, if promulgated, 

will not have a significant economic 

impact on a substantial number of small 

entities. A regulatory flexibility analysis 

examines the impact of the rule on 

small entities and considers alternative 

ways of reducing negative impacts. 

Also, as required by Executive Order 

13272, "Proper Consideration of Small 

Entities in Agency Rulemaking," 67 FR 

53461 (August 16, 2002), DOE 

published procedures and policies on 

February 19, 2003, to ensure that the 

potential impacts of its rules on small 

entities are properly considered during 

the rulemaking process. 68 FR 7990. 

DOE has made its procedures and 

policies available on the Office of 

General Counsel's Web site: http:// 

www.gc.doe.gov. 

Small businesses, as defined by the 

Small Business Administration (SBA) 

for the distribution transformer 

manufacturing industry, are 

manufacturing enterprises with 750 

employees or fewer. Prior to issuing the 

proposed rule in this rulemaking, DOE 

interviewed six small businesses 

affected by the rulemaking. DOE also 

obtained information about small 

business impacts while interviewing 

manufacturers that exceed the small 

business size threshold of 750 

employees. 

DOE reviewed the proposed rule 

under the provisions of the Regulatory 

Flexibility Act and the procedures and 

policies published on February 19, 

2003.71 FR 44401. On the basis of this 

review, DOE determined that it could 

not certify that the proposed rule 

(TSL2), if promulgated, would have no 

significant economic impact on a 

substantial number of small entities. [d. 

DOE made this determination because 

of the potential impacts that the 

proposed standard levels for mediumvoltage, dry-type distribution 

transformers would have on the small 

businesses that manufacture them. 

However, DOE noted that it had 

explicitly considered the impacts on 

small businesses that manufacture 

medium-voltage, dry-type transformers 

in proposing to adopt TSL2 rather than 

a higher trial standard level. [d. In the 

proposed rule, DOE also stated and 

explained its belief that the proposed 

standards would not have significant 

economic impacts on a substantial 

number of small manufacturers of 

liquid-immersed transformers. 71 FR 

44401-02. 

Because of the potential impacts of 

the proposed standards on small 

manufacturers of medium-voltage, drytype transformers, DOE prepared an 

IRF A during the NOPR stage of this 

rulemaking. DOE provided the IRF A in 

its entirety in the NOPR, 71 FR 44401-

03, and also transmitted a copy to the 

Chief Counsel for Advocacy of the SBA 

for review. In addition, DOE gave a 

presentation concerning the key 

portions of the IRF A to the Chief 

Counsel for Advocacy of the SBA. DOE 

did not receive any indication that the 

IRFA was insufficient either in writing 

or during the aforementioned 

presentation to the SBA. Chapter 12 of 

the TSD contains more information 

about the impact of this rulemaking on 

manufacturers. 
58234 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

The IRFA divided potential impacts

on small businesses into two broad

categories: (1) Impacts associated with

transformer design and manufacturing;

and (2) impacts associated with

demonstrating compliance with the

standard using DOE's test procedure.

DOE's test procedure rule does not

require manufacturers to take any action

in the absence of final energy

conservation standards for distribution

transformers, and thus any impact of

that rule on small businesses would be

triggered by the promulgation of today's

standards. Thus, the IRFA discussed the

potential impacts of the proposed

standards on small manufacturers of

medium-voltage, dry-type transformers,

and of the compliance demonstration

costs on all small manufacturers of

distribution transformers.

DOE has prepared a FRFA for this

rulemaking, and it is presented in the

following discussion. DOE has

transmitted a copy of this FRFA to the

Chief Counsel for Advocacy of the SBA

for review. The FRFA below is written

in accordance with the requirements of

the Regulatory Flexibility Act, and

addresses the stakeholder comments

received in response to the IRFA.

1. Need for and Objectives of the Rule

Today's rule is needed to satisfy the

requirement in EPCA that DOE

prescribe energy conservation standards

for those distribution transformers for

which DOE determines that standards

would be technologically feasible and

economically justified, and would result

in significant energy savings. (42 U.S.C.

6317(a)) DOE had previously

determined that standards for

distribution transformers appear to be

technologically feasible and

economically justified, and are likely to

result in significant savings. 62 FR

54809 (October 22, 1997).

In accordance with EPCA, the

objective of today's final rule is to set

energy conservation standards that

achieve the maximum improvement in

the energy efficiency of distribution

transformers that are technologically

feasible and economically justified. (See

42 U.S.C. 6295(o)(2)(A), 6313(a), and 42

U.S.C. 6317(a) and (c)) After DOE

reviewed the comments received on the

proposed rule and conducted further

analyses, DOE determined that the

economic benefits of today's standards

exceed the costs to the greatest extent

practicable, taking into consideration

the seven factors set forth in 42 U.S.C.

6295(o)(2)(B)(i) (see Section II.A of this

notice of final rulemaking). DOE

concluded, therefore, that today's

standards are economically justified.

Further information concerning the

background of this rulemaking is

provided in Chapter 1 of the TSD.

2. Description and Estimated Number of

Small Entities Regulated

By researching the distribution

transformer market, developing a

database of manufacturers, and

conducting interviews with

manufacturers (both large and small),

DOE was able to estimate the number of

small entities that would be regulated

under an energy conservation standard.

See chapter 12 of the TSD for further

discussion about the methodology used

in DOE's manufacturer impact analysis

and its analysis of small business

impacts.

Liquid-immersed transformers

account for about $1.3 billion in annual

sales and employment of about 4,230

production employees in the United

States. DOE estimates that, of the

approximately 25 U.S. manufacturers

that make liquid-immersed distribution

transformers, about 15 of them are small

businesses. About five of the small

businesses have fewer than 100

employees.

Medium-voltage, dry-type

transformers account for about $84

million in annual sales and employment

of about 250-330 production employees

in the United States. The mediumvoltage, dry-type market is relatively

small compared to that of liquidimmersed transformers. The revenue

attributable to the medium-voltage, drytype transformers represents only about

six percent of the total revenue of the

industry affected by this rulemaking

(i.e., the sum of revenues from the

liquid-immersed and the mediumvoltage, dry-type transformers). DOE

estimates that, of the 25 U.S.

manufacturers that make mediumvoltage, dry-type distribution

transformers, about 20 of them are small

businesses. About ten of these small

businesses have fewer than 100

employees. Thus, in relative terms,

small businesses play a more dominant

role in the market for medium-voltage,

dry-type transformers than for liquidimmersed transformers.

3. Description and Estimate of

Compliance Requirements

Potential impacts on small businesses

come from two broad categories of

compliance requirements: (1) Impacts

associated with transformer design and

manufacturing, and (2) impacts

associated with demonstrating

compliance with the standard using the

DOE test procedure.

With respect to impacts associated

with transformer design and

manufacturing, the margins and/or

market share of small businesses in the

medium-voltage, dry-type transformers

could be hurt in the long term by

today's promulgated level, TSL2. At

TSL2, as opposed to TSLI , small

manufacturers would have less

flexibility in choosing a design path.

However, as explained in part 6 of the

IRFA, "Significant Alternatives to the

Rule," DOE explicitly considered the

impacts on small manufacturers of

medium-voltage, dry-type transformers

in selecting TSL2,rather than selecting

a higher trial standard level. 71 FR

44403. DOE expects that the differential

impact on small manufacturers of

medium-voltage, dry-type transformers

(versus large businesses) would be

smaller in moving from TSL1 to TSL2

than it would be in moving from TSL2

to TSL3.

With respect to compliance

demonstration, DOE's test procedure for

distribution transformers allows

manufacturers to use an Alternative

Efficiency Determination Method

(AEDM) which would ease the burden

on manufacturers. 10 CFR Part 431,

Subpart K, Appendix A; 71 FR 24972.

The AEDM involves a sampling

procedure to compare manufactured

products' efficiencies with those

predicted by computer design software.

Where the manufacturer uses an AEDM

for a basic model, it would not be

required to test units of the basic model

to determine its efficiency for purposes

of establishing compliance with DOE

requirements. The professional skills

necessary to execute the AEDM include

the following: (1) Transformer design

software expertise (or access to such

expertise possessed by a third party);

and (2) electrical testing expertise and

moderate expertise with experimental

statistics (or access to such expertise

possessed by a third party). DOE's test

procedure would require periodic

verification of the AEDM.

DOE's test procedure also requires

manufacturers to calibrate equipment

used for testing the efficiency of

transformers. Calibration records will

need to be maintained as a result of

today's standard.

The testing, reporting, and

recordkeeping requirements associated

with an energy conservation standard

and its related test procedure would be

identical, irrespective of the trial

standard level chosen. Therefore, for

both liquid-immersed and mediumvoltage, dry-type transformers, the

testing, reporting, and recordkeeping

requirements have not entered into

DOE's choice of trial standard level for

today's final rule.

 EE-RM/STD-00-550 COMMENT 194

58234 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

The IRFA divided potential impacts 

on small businesses into two broad 

categories: (1) Impacts associated with 

transformer design and manufacturing; 

and (2) impacts associated with 

demonstrating compliance with the 

standard using DOE's test procedure. 

DOE's test procedure rule does not 

require manufacturers to take any action 

in the absence of final energy 

conservation standards for distribution 

transformers, and thus any impact of 

that rule on small businesses would be 

triggered by the promulgation oftoday's 

standards. Thus, the IRFA discussed the 

potential impacts of the proposed 

standards on small manufacturers of 

medium-voltage, dry-type transformers, 

and of the compliance demonstration 

costs on all small manufacturers of 

distribution transformers. 

DOE has prepared a FRF A for this 

rulemaking, and it is presented in the 

following discussion. DOE has 

transmitted a copy ofthis FRF A to the 

Chief Counsel for Advocacy of the SBA 

for review. The FRFA below is written 

in accordance with the requirements of 

the Regulatory Flexibility Act, and 

addresses the stakeholder comments 

received in response to the IRF A. 

1. Need for and Objectives of the Rule 

Today's rule is needed to satisfy the 

requirement in EPCA that DOE 

prescribe energy conservation standards 

for those distribution transformers for 

which DOE determines that standards 

would be technologically feasible and 

economically justified, and would result 

in significant energy savings. (42 U.S.C. 

6317(a)) DOE had previously 

determined that standards for 

distribution transformers appear to be 

technologically feasible and 

economically justified, and are likely to 

result in significant savings. 62 FR 

54809 (October 22,1997). 

In accordance with EPCA, the 

objective oftoday's final rule is to set 

energy conservation standards that 

achieve the maximum improvement in 

the energy efficiency of distribution 

transformers that are technologically 

feasible and economically justified. (See 

42 U.S.C. 6295(0)(2)(A), 6313(a), and 42 

U.S.C. 6317(a) and (c)) After DOE 

reviewed the comments received on the 

proposed rule and conducted further 

analyses, DOE determined that the 

economic benefits oftoday's standards 

exceed the costs to the greatest extent 

practicable, taking into consideration 

the seven factors set forth in 42 U.S.C. 

6295(0)(2)(B)(i) (see Section ILA ofthis 

notice of final rulemaking). DOE 

concluded, therefore, that today's 

standards are economically justified. 

Further information concerning the 

background of this rulemaking is 

provided in Chapter 1 of the TSD. 

2. Description and Estimated Number of 

Small Entities Regulated 

By researching the distribution 

transformer market, developing a 

database of manufacturers, and 

conducting interviews with 

manufacturers (both large and small), 

DOE was able to estimate the number of 

small entities that would be regulated 

under an energy conservation standard. 

See chapter 12 of the TSD for further 

discussion about the methodology used 

in DOE's manufacturer impact analysis 

and its analysis of small business 

impacts. 

Liquid-immersed transformers 

account for about $1.3 billion in annual 

sales and employment of about 4,230 

production employees in the United 

States. DOE estimates that, of the 

approximately 25 U.S. manufacturers 

that make liquid-immersed distribution 

transformers, about 15 of them are small 

businesses. About five of the small 

businesses have fewer than 100 

employees. 

Medium-voltage, dry-type 

transformers account for about $84 

million in annual sales and employment 

of about 250-330 production employees 

in the United States. The mediumvoltage, dry-type market is relatively 

small compared to that of liquidimmersed transformers. The revenue 

attributable to the medium-voltage, drytype transformers represents only about 

six percent of the total revenue of the 

industry affected by this rulemaking 

(Le., the sum of revenues from the 

liquid-immersed and the mediumvoltage, dry-type transformers). DOE 

estimates that, of the 25 U.S. 

manufacturers that make mediumvoltage, dry-type distribution 

transformers, about 20 of them are small 

businesses. About ten of these small 

businesses have fewer than 100 

employees. Thus, in relative terms, 

small businesses playa more dominant 

role in the market for medium-voltage, 

dry-type transformers than for liquidimmersed transformers. 

3. Description and Estimate of 

Compliance Requirements 

Potential impacts on small businesses 

come from two broad categories of 

compliance requirements: (1) Impacts 

associated with transformer design and 

manufacturing, and (2) impacts 

associated with demonstrating 

compliance with the standard using the 

DOE test procedure. 

With respect to impacts associated 

with transformer design and 

manufacturing, the margins and/or 

market share of small businesses in the 

medium-voltage, dry-type transformers 

could be hurt in the long term by 

today's promulgated level, TSL2. At 

TSL2, as opposed to TSL1, small 

manufacturers would have less 

flexibility in choosing a design path. 

However, as explained in part 6 ofthe 

IRF A, "Significant Alternatives to the 

Rule," DOE explicitly considered the 

impacts on small manufacturers of 

medium-voltage, dry-type transformers 

in selecting TSL2, rather than selecting 

a higher trial standard level. 71 FR 

44403. DOE expects that the differential 

impact on small manufacturers of 

medium-voltage, dry-type transformers 

(versus large businesses) would be 

smaller in moving from TSLl to TSL2 

than it would be in moving from TSL2 

to TSL3. 

With respect to compliance 

demonstration, DOE's test procedure for 

distribution transformers allows 

manufacturers to use an Alternative 

Efficiency Determination Method 

(AEDM) which would ease the burden 

on manufacturers. 10 CFR Part 431, 

Subpart K, Appendix A; 71 FR 24972. 

The AEDM involves a sampling 

procedure to compare manufactured 

products' efficiencies with those 

predicted by computer design software. 

Where the manufacturer uses an AEDM 

for a basic model, it would not be 

required to test units of the basic model 

to determine its efficiency for purposes 

of establishing compliance with DOE 

requirements. The professional skills 

necessary to execute the AEDM include 

the following: (1) Transformer design 

software expertise (or access to such 

expertise possessed by a third party); 

and (2) electrical testing expertise and 

moderate expertise with experimental 

statistics (or access to such expertise 

possessed by a third party). DOE's test 

procedure would require periodic 

verification of the AEDM. 

DOE's test procedure also requires 

manufacturers to calibrate equipment 

used for testing the efficiency of 

transformers. Calibration records will 

need to be maintained as a result of 

today's standard. 

The testing, reporting, and 

recordkeeping requirements associated 

with an energy conservation standard 

and its related test procedure would be 

identical, irrespective of the trial 

standard level chosen. Therefore, for 

both liquid-immersed and mediumvoltage, dry-type transformers, the 

testing, reporting, and recordkeeping 

requirements have not entered into 

DOE's choice of trial standard level for 

today's final rule. 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58235

4. Significant Issues Raised by Public

Comments

NEMA submitted a comment that

supports DOE's assessment that TSLs

higher than TSL2 would have serious

impacts on small manufacturers of

medium-voltage dry-type transformers

and would lead to further industry

consolidation. (NEMA, No. 156 at p. 1)

NEMA also commented that TSL2

would disproportionately affect small

manufacturers and greatly limit the

range of ratings that they could produce.

NEMA stated that small manufacturers

do not have the investment capital to

procure the equipment necessary to

produce the most efficient designs, and

that small manufacturers' current

designs cannot meet TSL4 for many

ratings (it was unclear in this specific

comment whether NEMA was referring

to medium-voltage dry-type

transformers, liquid-immersed

transformers, or both types). (NEMA,

No. 125 at p. 2) NEMA also indicated

that material availability and quota

issues (for core steel, copper, and

aluminum) impact small manufacturers

more severely than large manufacturers,

since small manufacturers have less

leverage over suppliers and typically

have less diverse businesses. (NEMA,

No. 156 at pp. 2-3) HVOLT supported

NEMA's view that small manufacturers

are affected more than large

manufacturers by material availability

issues. (HVOLT, Inc., No. 144 at p. 2)

HVOLT adds that the material

availability problems that would arise at

TSL2 or higher would drive small

manufacturers out of business. (HVOLT,

Inc., No. 155 at p. 3; Public Meeting

Transcript, No. 108.6 at p. 138)

The PEMCO Corporation, a small

manufacturer of medium-voltage drytype transformers, submitted a comment

that conflicts with NEMA and HVOLT

and supports the information that DOE

received during the manufacturer

interview process prior to the IRFA and

the NOPR. During the interviews, DOE

learned that small manufacturers of

medium-voltage dry-type transformers

can still choose to produce their own

cores at TSL2 (although some will

purchase cores) and can profitably

compete at TSL2. 71 FR 44403. In its

comment in response to the IRFA,

PEMCO stated that, with additional

capital expenditures and major changes

in manufacturing practices, it can meet

TSL2. PEMCO further stated that levels

above TSL2 would make it impossible

for PEMCO to compete. (PEMCO

Corporation, No. 130 at p. 1) The

PEMCO comment is consistent with

DOE's understanding of the potential

impacts on small, medium-voltage drytype manufacturers. DOE's MIA suggests

that while TSL2 presents greater

difficulties for small businesses than

TSL1, the impacts at TSL3 would be

much greater. DOE expects that small

businesses will generally be able to

profitably compete at TSL2. DOE's MIA

is based on its interviews of both small

and large manufacturers, and

consideration of small business impacts

explicitly enters into DOE's choice of

TSL2 in promulgating minimum

efficiency standards for medium-voltage

dry-type transformers.

DOE also notes that today's

promulgated standard of TSL2 can be

met with a variety of materials,

including multiple core steels and both

copper and aluminum windings.

Because TSL2 can be met with a variety

of materials, DOE does not expect that

material availability issues will

represent a substantial problem in the

long-term.

ACEEE submitted a comment stating

that small, medium-voltage dry-type

manufacturers would not be forced out

of business at higher standard levels

because they could either install the

necessary mitering equipment or

purchase finished cores. (ACEEE, No.

127 at p. 9) DOE recognizes both of

these possibilities. While DOE agrees

that standard levels higher than TSL2

would not necessarily cause all small

businesses to exit, there is a risk that a

significant number of small businesses

would exit the market at TSL3 or higher.

As reported in the IRFA, the thin steels

required at TSL3 and higher (M3 or

better) pose operational difficulties for

the type of core-mitering equipment

typically purchased by small

manufacturers. In addition, small

businesses would be at a relative

disadvantage at TSL3 and higher

because research and development

efforts would be on the same scale as

those for larger companies, but these

expenses would be recouped over much

smaller sales volumes. These research

and development efforts would be

required by all manufacturers (not just

small manufacturers) at TSL3 and

higher because these designs are

demanded only in very low volumes

today. 71 FR 44403.

As a separate matter, DOE also

received comments pertaining to small

manufacturers in the liquid-immersed

distribution transformer industry (the

IRFA did not pertain to liquid-immersed

transformers). In the NOPR, DOE

concluded that there will be no

significant economic impact on a

substantial number of small liquidimmersed manufacturers. DOE's

conclusion in the proposed rule was

based on DOE's understanding of the

strategy followed by (and role played

by) small liquid-immersed transformer

manufacturers in the market. Since

liquid-immersed distribution

transformers are largely customized,

small businesses can compete because

many of these transformers are unique

designs produced in relatively small

quantities by a given customer's order.

Small manufacturers of liquid-immersed

transformers tend not to compete on the

higher-volume products and often

produce transformers for highly specific

applications. This strategy allows small

manufacturers of liquid-immersed units

to be competitive in certain liquidimmersed product markets. In the

NOPR, DOE stated that implementation

of an energy conservation standard

would have a relatively minor

differential impact on small

manufacturers of liquid-immersed

distribution transformers. Disadvantages

to small businesses, such as having little

leverage over suppliers (e.g., core steel

suppliers), are present with or without

an energy conservation standard. Due to

the purchasing characteristics of their

customers, small manufacturers of

liquid-immersed transformers currently

produce transformers at TSL2, the

proposed level. Thus, DOE expected

that conversion costs (i.e., research and

development costs and capital

investments) and the associated

manufacturer impacts on small

businesses would be insignificant at the

proposed level, TSL2. 71 FR 44401-

44402. Below, DOE revisits this

expectation in light of the standards

promulgated today, which are higher

than TSL2.

Cooper Power Systems stated that

TSL1 would help U.S. manufacturers

while TSL2 would greatly limit the

range of designs that small

manufacturers of liquid-immersed

transformers could produce. Cooper also

stated that TSL4 would eliminate small

manufacturers. (Cooper Power Systems,

No. 154 at p. 2)

NEMA commented that DOE

underestimated the impacts on small

manufacturers of liquid-immersed

transformers because DOE failed to

consider materials availability issues

and the quotas typically placed on small

manufacturers. NEMA pointed to quotas

on both core steel and winding

materials and also the need to outsource

core production. (NEMA, No. 156 at pp.

1, 3) NEMA asserted that small

manufacturers lack the sophistication to

create the most efficient designs and

that high efficiency requirements would

lead to the outsourcing of core

production (especially distributed gap

wound cores). (NEMA, No. 156 at p. 3)

HVOLT submitted similar comments,

 EE-RM/STD-00-550 COMMENT 194

Federal Register / Vol. 72, No. 197/ Friday, October 12, 2007/ Rules and Regulations 58235 

4. Significant Issues Raised by Public 

Comments 

NEMA submitted a comment that 

supports DOE's assessment that TSLs 

higher than TSL2 would have serious 

impacts on small manufacturers of 

medium-voltage dry-type transformers 

and would lead to further industry 

consolidation. (NEMA, No. 156 at p. 1) 

NEMA also commented that TSL2 

would disproportionately affect small 

manufacturers and greatly limit the 

range of ratings that they could produce. 

NEMA stated that small manufacturers 

do not have the investment capital to 

procure the equipment necessary to 

produce the most efficient designs, and 

that small manufacturers' current 

designs cannot meet TSL4 for many 

ratings (it was unclear in this specific 

comment whether NEMA was referring 

to medium-voltage dry-type 

transformers, liquid-immersed 

transformers, or both types). (NEMA, 

No. 125 at p. 2) NEMA also indicated 

that material availability and quOta 

issues (for core steel, copper, and 

aluminum) impact small manufacturers 

more severely than large manufacturers, 

since small manufacturers have less 

leverage over suppliers and typically 

have less diverse businesses. (NEMA, 

No. 156 at pp. 2-3) HVOLT supported 

NEMA's view that small manufacturers 

are affected more than large 

manufacturers by material availability 

issues. (HVOLT, Inc., No. 144 at p. 2) 

HVOL T adds that the material 

availability problems that would arise at 

TSL2 or higher would drive small 

manufacturers out of business. (HVOL T, 

Inc., No. 155 at p. 3; Public Meeting 

Transcript, No. 108.6 at p. 138) 

The PEMCO Corporation, a small 

manufacturer of medium-voltage drytype transformers, submitted a comment 

that conflicts with NEMA and HVOL T 

and supports the information that DOE 

received during the manufacturer 

interview process prior to the IRF A and 

the NOPR. During the interviews, DOE 

learned that small manufacturers of 

medium-voltage dry-type transformers 

can still choose to produce their own 

cores at TSL2 (although some will 

purchase cores) and can profitably 

compete at TSL2. 71 FR 44403. In its 

comment in response to the IRF A, 

PEMCO stated that, with additional 

capital expenditures and major changes 

in manufacturing practices, it can meet 

TSL2. PEMCO further stated that levels 

above TSL2 would make it impossible 

for PEMCO to compete. (PEMCO 

Corporation, No. 130 at p. 1) The 

PEMCO comment is consistent with 

DOE's understanding of the potential 

impacts on small, medium-voltage drytype manufacturers. DOE's MIA suggests 

that while TSL2 presents greater 

difficulties for small businesses than 

TSL1, the impacts at TSli..3 would be 

much greater. DOE expects that small 

businesses will generally be able to 

profitably compete at TSL2. DOE's MIA 

is based on its interviews of both small 

and large manufacturers, and 

consideration of small business impacts 

explicitly enters into DOE's choice of 

TSL2 in promulgating minimum 

efficiency standards for medium-voltage 

dry-type transformers. 

DOE also notes that today's 

promulgated standard of TSL2 can be 

met with a variety of materials, 

including multiple core steels and both 

copper and aluminum windings. 

Because TSL2 can be met with a variety 

of materials, DOE does not expect that 

material availability issues will 

represent a substantial problem in the 

long-term. 

ACEEE submitted a comment stating 

that small, medium-voltage dry-type 

manufacturers would not be forced out 

of business at higher standard levels 

because they could either install the 

necessary mitering equipment or 

purchase finished cores. (ACEEE, No. 

127 at p. 9) DOE recognizes both of 

these possibilities. While DOE agrees 

that standard levels higher than TSL2 

would not necessarily cause all small 

businesses to exit, there is a risk that a 

significant number of small businesses 

would exit the market at TSL3 or higher. 

As reported in the IRF A, the thin steels 

required at TSL3 and higher (M3 or 

better) pose operational difficulties for 

the type of core-mitering equipment 

typically purchased by small 

manufacturers. In addition, small 

businesses would be at a relative 

disadvantage at TSL3 and higher 

because research and development 

efforts would be on the same scale as 

those for larger companies, but these 

expenses would be recouped over much 

smaller sales volumes. These research 

and development efforts would be 

required by all manufacturers (not just 

small manufacturers) at TSL3 and 

higher because these designs are 

demanded only in very low volumes 

today. 71 FR 44403. 

As a separate matter, DOE also 

received comments pertaining to small 

manufacturers in the liquid-immersed 

distribution transformer industry (the 

IRFA did not pertain to liquid-immersed 

transformers). In the NOPR, DOE 

concluded that there will be no 

significant economic impact on a 

substantial number of small liquidimmersed manufacturers. DOE's 

conclusion in the proposed rule was 

based on DOE's understanding ofthe 

strategy followed by (and role played 

by) small liquid-immersed transformer 

manufacturers in the market. Since 

liquid-immersed distribution 

transformers are largely customized, 

small businesses can compete because 

many of these transformers are unique 

designs produced in relatively small 

quantities by a given customer's order. 

Small manufacturers of liquid-immersed 

transformers tend not to compete on the 

higher-volume products and often 

produce transformers for highly specific 

applications. This strategy allows small 

manufacturers of liquid-immersed units 

to be competitive in certain liquidimmersed product markets. In the 

NOPR, DOE stated that implementation 

of an energy conservation standard 

would have a relatively minor 

differential impact on small 

manufacturers of liquid-immersed 

distribution transformers. Disadvantages 

to small businesses, such as having little 

leverage over suppliers (e.g., core steel 

suppliers), are present with or without 

an energy conservation standard. Due to 

the purchasing characteristics of their 

customers, small manufacturers of 

liquid-immersed transformers currently 

produce transformers at TSL2, the 

proposed level. Thus, DOE expected 

that conversion costs (Le., research and 

development costs and capital 

investments) and the associated 

manufacturer impacts on small 

businesses would be insignificant at the 

proposed level, TSL2. 71 FR 44401-

44402. Below, DOE revisits this 

expectation in light of the standards 

promulgated today, which are higher 

than TSL2. 

Cooper Power Systems stated that 

TSL1 would help U.S. manufacturers 

while TSL2 would greatly limit the 

range of designs that small 

manufacturers of liquid-immersed 

transformers could produce. Cooper also 

stated that TSL4 would eliminate small 

manufacturers. (Cooper Power Systems, 

No. 154 at p. 2) 

NEMA commented that DOE 

underestimated the impacts on small 

manufacturers of liquid-immersed 

transformers because DOE failed to 

consider materials availability issues 

and the quotas typically placed on small 

manufacturers. NEMA pointed to quotas 

on both core steel and winding 

materials and also the need to outsource 

core production. (NEMA, No. 156 at pp. 

1,3) NEMA asserted that small 

manufacturers lack the sophistication to 

create the most efficient designs and 

that high efficiency requirements would 

lead to the outsourcing of core 

production (especially distributed gap 

wound cores). (NEMA, No. 156 at p. 3) 

HVOL T submitted similar comments, 
58236 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007 /Rules and Regulations

adding that small manufacturers often become constrained because the

do not have the requisite relationships equipment's processing time is

with material suppliers to enable them proportional to the mass of steel

to purchase scarce or highly sought after processed (and does not increase

materials such as aluminum wire. significantly as thinner core steels are

(HVOLT, No. 155 at pp. 1-2) processed). In addition, unlike some

Another manufacturer, Howard core steel processing equipment

Industries notes that if size and weight presently used for stacked core

increases are reasonable then most of construction, distributed gap wound

the existing manufacturing equipment core machines are readily able to handle

should still be usable (if fundamental steel laminations as thin as M2 without

technology changes are not required). modification. See Section 12.4.1 of the

(Howard Industries, No. 143 at p. 4) TSD for further discussion.

DOE infers that Howard's reference to HVOLT believes that TSL4 would

"fundamental technology changes" hurt small manufacturers. To make this

concerns a requirement for amorphous point, HVOLT and ERMCO pointed out

core technology. The information at the public meeting that ERMCO

provided by Howard is relevant to cannot generate three-phase liquidtoday's promulgated standard because immersed designs which meet TSL4.

TSLC will not require fundamental HVOLT added that small businesses

technology changes and therefore would have even greater difficulty than

existing manufacturing facilities will a sophisticated manufacturer such as

not have to undergo substantial ERMCO. (Public Meeting Transcript,

upgrades. No. 108.6 at p. 153 and pp. 163-164)

DOE appreciates the comments ERMCO later submitted a comment

pertaining to the potential impacts on which implied that TSL4 is a feasible

small liquid-immersed transformer standard level for all design lines except

manufacturers. DOE believes that its for design line 4. (ERMCO, No. 182 at

conclusion as stated in the IRFA is still p. 1) Since today's final rule requires

valid, despite promulgating a standard design line 4 to meet the lower level in

today that is higher than the proposed the proposed rule (TSL2), DOE believes

level of TSL2 for all liquid-immersed that HVOLT's concern expressed at the

design lines, except design line 4. The public meeting about the feasibility of

comments received on the August 2006 TSL4 and its implications for small

NOPR that were suggestive of businesses have been addressed.

prohibitive small business impacts that Today's standard is below TSL4 for the

fall into two categories-those three-phase designs, and in particular,

concerning materials availability and regulates design line 4 to the proposed

pricing and those pertaining to the level of TSL2.

outsourcing of distributed gap wound 5. Steps DOE Has Taken To Minimize

cores. In regard to the first category- the Economic Impact on Small Mediummaterials availability and pricing-DOE Voltage Dry-Type Manufacturers

recognizes that there are materials

availability issues in the market today In consideration of the benefits and

and that they are more serious for small burdens of standards, including the

businesses. DOE believes that such burdens posed to small manufacturers,

disadvantages for small businesses exist DOE concluded TSL2 is the highest

with or without an energy conservation level that can be justified for mediumstandard. DOE does not expect that the voltage, dry-type transformers. As

standards promulgated today will explained in part 6 of the IRFA,

exacerbate the problem. The standard "Significant Alternatives to the Rule,"

promulgated today can be met through DOE explicitly considered the impacts

a variety of design paths including the on small manufacturers of mediumuse of more than one type of silicon core voltage, dry-type transformers in

steel; in addition, the possibility of selecting TSL2, rather than selecting a

using multiple core steels may serve to higher trial standard level. It is DOE's

alleviate material availability concerns belief that levels at TSL3 or higher

in the long-term. With respect to the would place excessive burdens on small

need of small manufacturers of liquid- manufacturers of medium-voltage, dryimmersed transformers to outsource type transformers. Such burdens would

distributed gap wound cores, evidence include large product redesign costs and

has not been presented by small also operational problems associated

businesses or their representatives to with the extremely thin laminations of

support the claim that this practice will core steel that would be needed to meet

be widespread. The equipment used in these levels. TSL2 essentially eliminates

the liquid-immersed transformer butt-lap core designs and will therefore

industry to produce distributed gap put more burden on small

wound cores is relatively inexpensive, manufacturers than would TSL1.

and existing capacity is unlikely to However, the differential impact on

small businesses (versus large

businesses) is expected to be lower in

moving from TSL1 to TSL2 than in

moving from TSL2 to TSL3. Today, the

market already demands significant

quantities of medium-voltage, dry-type

transformers that meet TSL2. 71 FR

44403.

Section VI.D above discusses how

small business impacts entered into

DOE's selection of today's standards for

medium-voltage, dry-type transformers.

DOE made its decision regarding

standards by beginning with the highest

level considered (TSL6) and

successively eliminating TSLs until it

finds a TSL that is both technologically

feasible and economically justified

(TSL2 in this case), taking into account

other EPCA criteria. Because DOE

believes that TSL2 is economically

justified (including consideration of

small business impacts), the reduced

impact on small businesses that would

have been realized in moving down to

TSL1 was not considered in DOE's

decision (but the reduced impact on

small businesses that is realized in

moving down to TSL2 from TSL3 was

explicitly considered in the weighing of

benefits and burdens).

Finally, DOE notes that it received no

comments in reference to any undue

burden placed on small manufacturers

by the DOE test procedure and

associated compliance requirements. In

the IRFA, DOE requested feedback

concerning the need to abbreviate test

procedure requirements. 71 FR 44403.

DOE received no comments on this

issue from small businesses and is

therefore not considering abbreviated

test procedure requirements for small

businesses at this time. DOE notes that

the AEDM feature of the test procedure

reduces the testing burden significantly

for all manufacturers. Where

manufacturers use an AEDM for a basic

model, they would not be required to

test units of the basic model to

determine its efficiency for purposes of

establishing compliance with DOE

requirements. 71 FR 24990 and 24997-

24998.

C. Review Under the Paperwork

Reduction Act

Adoption of today's final rule will

have the effect of requiring that

manufacturers follow DOE's test

procedure for distribution transformers,

not just for purposes of making

representations, but also to determine

compliance even in the absence of any

representation. Thus, manufacturers

will become subject to the recordkeeping requirements contained in the

test procedure when today's energy

conservation standards for distribution

 EE-RM/STD-00-550 COMMENT 194

58236 Federal Register/Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

adding that small manufacturers often 

do not have the requisite relationships 

with material suppliers to enable them 

to purchase scarce or highly sought after 

materials such as aluminum wire. 

(HVOLT, No. 155 at pp. 1-2) 

Another manufacturer, Howard 

Industries notes that if size and weight 

increases are reasonable then most of 

the existing manufacturing equipment 

should still be usable (if fundamental 

technology changes are not required). 

(Howard Industries, No. 143 at p. 4) 

DOE infers that Howard's reference to 

"fundamental technology changes" 

concerns a requirement for amorphous 

core technology. The information 

provided by Howard is relevant to 

today's promulgated standard because 

TSLC will not require fundamental 

technology changes and therefore 

existing manufacturing facilities will 

not have to undergo substantial 

upgrades. 

DOE appreciates the comments 

pertaining to the potential impacts on 

small liquid-immersed transformer 

manufacturers. DOE believes that its 

conclusion as stated in the IRFA is still 

valid, despite promulgating a standard 

today that is higher than the proposed 

level of TSL2 for all liquid-immersed 

design lines, except design line 4. The 

comments received on the August 2006 

NOPR that were suggestive of 

prohibitive small business impacts that 

fall into two categories-those 

concerning materials availability and 

pricing and those pertaining to the 

outsourcing of distributed gap wound 

cores. In regard to the first categorymaterials availability and pricing-DOE 

recognizes that there are materials 

availability issues in the market today 

and that they are more serious for small 

businesses. DOE believes that such 

disadvantages for small businesses exist 

with or withciut an energy conservation 

standard. DOE does not expect that the 

standards promulgated today will 

exacerbate the problem. The standard 

promulgated today can be met through 

a variety of design paths including the 

use of more than one type of silicon core 

steeJ; in addition, the possibility of 

using multiple core steels may serve to 

alleviate material availability concerns 

in the long-term. With respect to the 

need of small manufacturers of liquidimmersed transformers to outsource 

distributed gap wound cores, evidence 

has not been presented by small 

businesses or their representatives to 

support the claim that this practice will 

be widespread. The equipment used in 

the liquid-immersed transformer 

industry to produce distributed gap 

wound cores is relatively inexpensive, 

and existing capacity is unlikely to 

become constrained because the 

equipment's processing time is 

proportional to the mass of steel 

processed (and does not increase 

significantly as thinner core steels are 

processed). In addition, unlike some 

core steel processing equipment 

presently used for stacked core 

construction, distributed gap wound 

core machines are readily able to handle 

steel laminations as thin as M2 without 

modification. See Section 12.4.1 of the 

TSD for further discussion. 

HVOL T believes that TSL4 would 

hurt small manufacturers. To make this 

point, HVOL T and ERMCO pointed out 

at the public meeting that ERMCO 

cannot generate three-phase liquidimmersed designs which meet TSL4. 

HVOL T added that small businesses 

would have even greater difficulty than 

a sophisticated manufacturer such as 

ERMCO. (Public Meeting Transcript, 

No. 108.6 at p. 153 and pp. 163-164) 

ERMCO later submitted a comment 

which implied that TSL4 is a feasible 

standard level for all design lines except 

for design line 4. (ERMCO, No. 182 at 

p. 1) Since today's final rule requires 

design line 4 to meet the lower level in 

the proposed rule (TSL2), DOE believes 

that HVOLT's concern expressed at the 

public meeting about the feasibility of 

TSL4 and its implications for small 

businesses have been addressed. 

Today's standard is below TSL4 for the 

three-phase designs, and in particular, 

regulates design line 4 to the proposed 

level of TSL2. 

5. Steps DOE Has Taken To Minimize 

the Economic Impact on Small MediumVoltage Dry-Type Manufacturers 

In consideration ofthe benefits and 

burdens of standards, including the 

burdens posed to small manufacturers, 

DOE concluded TSL2 is the highest 

level that can be justified for mediumvoltage, dry-type transformers. As 

explained in part 6 ofthe IRF A, 

"Significant Alternatives to the Rule," 

DOE explicitly considered the impacts 

on small manufacturers of mediumvoltage, dry-type transformers in 

selecting TSL2, rather than selecting a 

higher trial standard level. It is DOE's 

belief that levels at TSL3 or higher 

would place excessive burdens on small 

manufacturers of medium-voltage, drytype transformers. Such burdens would 

include large product redesign costs and 

also operational problems associated 

with the extremely thin laminations of 

core steel that would be needed to meet 

these levels. TSL2 essentially eliminates 

butt-lap core designs and will therefore 

put more burden on small 

manufacturers than would TSL1. 

However, the differential impact on 

small businesses (versus large 

businesses) is expected to be lower in 

moving from TSL1 to TSL2 than in 

moving from TSL2 to TSL3. Today, the 

market already demands significant 

quantities of medium-voltage, dry-type 

transformers that meet TSL2. 71 FR 

44403. 

Section VLD above discusses how 

small business impacts entered into 

DOE's selection oftoday's standards for 

medium-voltage, dry-type transformers. 

DOE made its decision regarding 

standards by beginning with the highest 

level considered (TSL6) and 

successively eliminating TSLs until it 

finds a TSL that is both technologically 

feasible and economically justified 

(TSL2 in this case), taking into account 

other EPCA criteria. Because DOE 

believes that TSL2 is economically 

justified (including consideration of 

small business impacts), the reduced 

impact on small businesses that would 

have been realized in moving down to 

TSL1 was not considered in DOE's 

decision (but the reduced impact on 

small businesses that is realized in 

moving down to TSL2 from TSL3 was 

explicitly considered in the weighing of 

benefits and burdens). 

Finally, DOE notes that it received no 

comments in reference to any undue 

burden placed on small manufacturers 

by the DOE test procedure and 

associated compliance requirements. In 

the IRF A, DOE requested feedback 

concerning the need to abbreviate test 

procedure requirements. 71 FR 44403. 

DOE received no comments on this 

issue from small businesses and is 

therefore not considering abbreviated 

test procedure requirements for small 

businesses at this time. DOE notes that 

the AEDM feature of the test procedure 

reduces the testing burden significantly 

for all manufacturers. Where 

manufacturers use an AEDM for a basic 

model, they would not be required to 

test units of the basic model to 

determine its efficiency for purposes of 

establishing compliance with DOE 

requirements. 71 FR 24990 and 24997-

24998. 

C. Review Under the Paperwork 

Reduction Act 

Adoption oftoday's final rule will 

have the effect of requiring that 

manufacturers follow DOE's test 

procedure for distribution transformers, 

not just for purposes of making 

representations, but also to determine 

compliance even in the absence of any 

representation. Thus, manufacturers 

will become subject to the recordkeeping requirements contained in the 

test procedure when today's energy 

conservation standards for distribution 
Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations 58237

transformers take effect. 10 CFR Part

431, Subpart K, Appendix A; 71 FR

24972, 24998, 25007-08. As described

in the Notice and Request for Comments

published on April 27, 2006, these

record-keeping requirements concern

documentation of (1) the calibration of

equipment that manufacturers use in

performing testing and (2) the use by

manufacturers of methods other than

testing to determine the efficiency of

their distribution transformers. 71 FR

24844-24845. Because adoption of

today's standard will have the effect of

imposing new information or recordkeeping requirements on liquidimmersed and medium-voltage dry-type

transformer manufacturers, DOE is

seeking OMB clearance for these test

procedure requirements under the

Paperwork Reduction Act (44 U.S,C.

3501 et seq.). 71 FR 24844. When

today's standards become operative on

January 1, 2010, manufacturers of those

products also will be required to comply

with the record-keeping provisio1s in

today's rule. Section 431.197(a)(4)(i)

requires manufacturers of distribution

transformers to have records as to

alternative efficiency determination

methods available for DOE inspection;

section 6.2 of Appendix A requires

maintenance of calibration records. As a

result, concurrent with or shortly after

publication of today's rule, the

Department will publish a notice

seeking public comment under the

Paperwork Reduction Act, with respect

to manufacturers of liquid-immersed

and medium-voltage dry-type

distribution transformers, on the recordkeeping requirements in today's rule.

After considering any public comments

received in response to that notice, DOE

will submit the proposed collection of

information to OMB for approval

pursuant to 44 U.S.C. 3507.

An agency may not conduct or

sponsor, and a person is not required to

respond to a collection of information

unless it displays a currently valid OMB

control number. The information

collection requirements in section

431.197(a)(4)(i) and section 6.2 of

Appendix A will not become effective

until OMB approves them. The

Department will publish a document in

the Federal Register advising liquidimmersed and medium-voltage dry-type

manufacturers of their effective date.

That document also will display the

OMB control number.

D. Review Under the National

Environmental Policy Act

DOE prepared an environmental

assessment of the impacts of today's

standards (DOE/EA-1565), which is

available from: U.S. Department of

Energy, Office of Energy Efficiency and

Renewable Energy, Forrestal building,

Mail Station EE-41, 1000 Independence

Avenue, SW., Washington, DC 20585-

0121, (202) 586-0854. DOE found the

environmental effects associated with

various standard efficiency levels for

distribution transformers to be not

significant, and therefore it is

publishing, elsewhere in this issue of

the Federal Register, a Finding of No

Significant Impact pursuant to the

National Environmental Policy Act of

1969 (42 U.S.C. 4321 et seq.), the

regulations of the Council on

Environmental Quality (40 CFR parts

1500-1508), and DOE's regulations for

compliance with the National

Environmental Policy Act (10 CFR part

1021).

E. Review Under Executive Order 13132

DOE reviewed this rule pursuant to

Executive Order 13132, "Federalism,"

64 FR 43255 (August 4, 1999), which

imposes certain requirements on

agencies formulating and implementing

policies or regulations that preempt

State law or that have federalism

implications. The Executive Order

requires agencies to examine the

constitutional and statutory authority

supporting any action that would limit

the policymaking discretion of the

States and to carefully assess the

necessity for such actions. The

Executive Order also requires agencies

to have an accountable process to

ensure meaningful and timely input by

State and local officials in the

development of regulatory policies that

have federalism implications. On March

14, 2000, DOE published a statement of

policy describing the intergovernmental

consultation process it will follow in the

development of such regulations. 65 FR

13735. The Department has examined

today's final rule and has determined

that it would not have a substantial

direct effect on the States, on the

relationship between the national

government and the States, or on the

distribution of power and

responsibilities among the various

levels of government. EPCA governs and

prescribes Federal preemption of State

regulations as to energy conservation for

the equipment that is the subject of

today's final rule. States can petition the

Department for exemption from such

preemption to the extent, and based on

criteria, set forth in EPCA. (42 U.S.C.

6297) No further action is required by

Executive Order 13132.

F. Review Under Executive Order 12988

With respect to the review of existing

regulations and the promulgation of

new regulations, section 3(a) of

Executive Order 12988, "Civil Justice

Reform" 61 FR 4729 (February 7, 1996)

imposes on Federal agencies the general

duty to adhere to the following

requirements: (1) Eliminate drafting

errors and ambiguity; (2) write

regulations to minimize litigation; and

(3) provide a clear legal standard for

affected conduct rather than a general

standard and promote simplification

and burden reduction. Section 3(b) of

Executive Order 12988 specifically

requires that Executive agencies make

every reasonable effort to ensure that the

regulation: (1) Clearly specifies the

preemptive effect, if any; (2) clearly

specifies any effect on existing Federal

law or regulation; (3) provides a clear

legal standard for affected conduct

while promoting simplification and

burden reduction; (4) specifies the

retroactive effect, if any; (5) adequately

defines key terms; and (6) addresses

other important issues affecting clarity

and general draftsmanship under any

guidelines issued by the Attorney

General. Section 3(c) of Executive Order

12988 requires Executive agencies to

review regulations in light of applicable

standards in section 3(a) and section

3(b) to determine whether they are met

or it is unreasonable to meet one or

more of them. DOE has completed the

required review and determined that, to

the extent permitted by law, this final

rule meets the relevant standards of

Executive Order 12988.

G. Review Under the Unfunded

Mandates Reform Act of 1995

DOE reviewed this regulatory action

under Title II of the Unfunded Mandates

Reform Act of 1995 (Pub. L. 104-4)

(UMRA), which requires each Federal

agency to assess the effects of Federal

regulatory actions on State, local and

Tribal governments and the private

sector. Today's final rule may impose

expenditures of $100 million or more on

the private sector. It does not contain a

Federal intergovernmental mandate.

Section 202 of UMRA authorizes an

agency to respond to the content

requirements of UMRA in any other

statement or analysis that accompanies

the proposed rule. 2 U.S.C. 1532(c). The

content requirements of section 202(b)

of UMRA relevant to a private sector

mandate substantially overlap the

economic analysis requirements that

apply under section 325(o) of EPCA and

Executive Order 12866. The

SUPPLEMENTARY INFORMATION section of

the notice of final rulemaking and the

"Regulatory Impact Analysis" section of

the TSD for this final rule respond to

those requirements.

Under section 205 of UMRA, the

Department is obligated to identify and

 EE-RM/STD-00-550 COMMENT 194

Federal Register IVoI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58237 

transformers take effect. 10 CFR Part 

431, Subpart K, Appendix A; 71 FR 

24972, 24998, 25007-08. As described 

in the Notice and Request for Comments 

published on April 27, 2006, these 

record-keeping requirements concern 

documentation of (1) the calibration of 

equipment that manufacturers use in 

performing testing and (2) the use by 

manufacturers of methods other than 

testing to determine the efficiency of 

their distribution transformers. 71 FR 

24844-24845. Because adoption of 

today's standard will have the effect of 

imposing new information or recordkeeping requirements on liquidimmersed and medium-voltage dry-type 

transformer manufacturers, DOE is 

seeking OMB clearance for these test 

procedure requirements under the 

Paperwork Reduction Act (44 U.S,C. 

3501 et seq.). 71 FR 24844. When 

today's standards become operative on 

January 1, 2010, manufacturers ofthose 

products also will be required to comply 

with the record-keeping provisioes in 

today's rule. Section 431.197(a)(4)(i) 

requires manufacturers of distribution 

transformers to have records as to 

alternative efficiency determination 

methods available for DOE inspection; 

section 6.2 of Appendix A requires 

maintenance of calibration records. As a 

result, concurrent with or shortly after 

publication oftoday's rule, the 

Department will publish a notice 

seeking public comment under the 

Paperwork Reduction Act, with respect 

to manufacturers of liquid-immersed 

and medium-voltage dry-type 

distribution transformers, on the recordkeeping requirements in today's rule. 

After considering any public comments 

received in response to that notice, DOE 

will submit the proposed collection of 

information to OMB for approval 

pursuant to 44 U.S.C. 3507. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to a collection of information 

unless it displays a currently valid OMB 

control number. The information 

collection requirements in section 

431.197(a)(4)(i) and section 6.2 of 

Appendix A will not become effective 

until OMB approves them. The 

Department will publish a document in 

the Federal Register advising liquidimmersed and medium-voltage dry-type 

manufacturers of their effective date. 

That document also will display the 

OMB control number. 

D. Review Under the National 

Environmental Policy Act 

DOE prepared an environmental 

assessment of the impacts of today's 

standards (DOE/EA-1565), which is 

available from: U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Forrestal building, 

Mail Station EE-41 , 1000 Independence 

Avenue, SW., Washington, DC 20585-

0121, (202) 586-0854. DOE found the 

environmental effects associated with 

various standard efficiency levels for 

distribution transformers to be not 

significant, and therefore it is 

publishing, elsewhere in this issue of 

the Federal Register, a Finding of No 

Significant Impact pursuant to the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.), the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500-1508)' and DOE's regulations for 

compliance with the National 

Environmental Policy Act (10 CFR part 

1021). 

E. Review Under Executive Order 13132 

DOE reviewed this rule pursuant to 

Executive Order 13132, "Federalism," 

64 FR 43255 (August 4, 1999), which 

imposes certain requirements on 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have federalism implications. On March 

14, 2000, DOE published a statement of 

policy describing the intergovernmental 

consultation process it will follow in the 

development of such regulations. 65 FR 

13735. The Department has examined 

today's final rule and has determined 

that it would not have a substantial 

direct effect on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. EPCA governs and 

prescribes Federal preemption of State 

regulations as to energy conservation for 

the equipment that is the subject of 

today's final rule. States can petition the 

Department for exemption from such 

preemption to the extent, and based on 

criteria, set forth in EPCA. (42 U.S.C. 

6297) No further action is required by 

Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, "Civil Justice 

Reform" 61 FR 4729 (February 7, 1996) 

imposes on Federal agencies the general 

duty to adhere to the following 

requirements: (1) Eliminate drafting 

errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. Section 3(b) of 

Executive Order 12988 specifically 

requires that Executive agencies make 

every reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more ofthem. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this final 

rule meets the relevant standards of 

Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

DOE reviewed this regulatory action 

under Title II ofthe Unfunded Mandates 

Reform Act of 1995 (Pub. 1. 104-4) 

(UMRA), which requires each Federal 

agency to assess the effects of Federal 

regulatory actions on State, local and 

Tribal governments and the private 

sector. Today's final rule may impose 

expenditures of $100 million or more on 

the private sector. It does not contain a 

Federal intergovernmental mandate. 

Section 202 of UMRA authorizes an 

agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(0) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the notice of final rule making and the 

"Regulatory Impact Analysis" section of 

the TSD for this final rule respond to 

those requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 
58238 Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

consider a reasonable number of

regulatory alternatives before

promulgating a rule for which a written

statement under section 202 is required.

DOE is required to select from those

alternatives the most cost-effective and

least burdensome alternative that

achieves the objectives of the rule

unless DOE publishes an explanation

for doing otherwise or the selection of

such an alternative is inconsistent with

law. As required by sections 325(o),

345(a) and 346(a) of EPCA (42 U.S.C.

6295(o), 6316(a) and 6317(a)), today's

final rule establishes energy

conservation standards for distribution

transformers that are designed to

achieve the maximum improvement in

energy efficiency that DOE has

determined to be both technologically

feasible and economically justified. A

full discussion of the alternatives

considered by DOE is presented in the

"Regulatory Impact Analysis" section of

the TSD for today's final rule.

H. Review Under the Treasury and

General Government Appropriations

Act, 1999

DOE determined that, for this

rulemaking, it need not prepare a

Family Policymaking Assessment under

section 654 of the Treasury and General

Government Appropriations Act, 1999

(Pub. L. 105-277). 71 FR 44405. DOE

received no comments concerning

section 654 in response to the NOPR,

and, therefore, is taking no further

action in today's final rule with respect

to this provision.

I. Review Under Executive Order 12630

DOE determined, under Executive

Order 12630, "Governmental Actions

and Interference with Constitutionally

Protected Property Rights," 53 FR 8859

(March 18, 1988), that today's rule

would not result in any takings which

might require compensation under the

Fifth Amendment to the United States

Constitution. 71 FR 44405. DOE

received no comments concerning

Executive Order 12630 in response to

the NOPR, and, therefore, is taking no

further action in today's final rule with

respect to this Executive Order.

J. Review Under the Treasury and

General Government Appropriations

Act, 2001

Section 515 of the Treasury and

General Government Appropriations

Act, 2001 (44 U.S.C. 3516 note) provides

for agencies to review most

disseminations of information to the

public under guidelines established by

each agency pursuant to general

guidelines issued by OMB. OMB's

guidelines were published at 67 FR

8452 (February 22, 2002), and DOE's including influential scientific

guidelines were published at 67 FR information related to agency regulatory

62446 (October 7, 2002). DOE has actions. The purpose of the Bulletin is

reviewed today's final rule under the to enhance the quality and credibility of

OMB and DOE guidelines and has the Government's scientific information.

concluded that it is consistent with Under the Bulletin, the energy

applicable policies in those guidelines. conservation standards rulemakings

K. Review Under Executive Order 13211 analyses are "influential scientific

information." The Bulletin defines

Executive Order 13211, "Actions "influential scientific information" as

Concerning Regulations That "scientific information the agency

Significantly Affect Energy Supply, reasonably can determine will have, or

Distribution, or Use," 66 FR 28355 (May does have, a clear and substantial

22, 2001) requires Federal agencies to impact on important public policies or

prepare and submit to the Office of private sector decisions." 70 FR 2667

Information and Regulatory Affairs of (January 14, 2005).

the OMB a Statement of Energy Effects In response to OMB's Bulletin, DOE

for any significant energy action. DOE conducted formal in-progress peer

determined that the proposed rule was reviews of the energy conservation

not a "significant energy action" within standards development process and

the meaning of Executive Order 13211. analyses and has prepared a Peer

71 FR 44405. Accordingly, it did not Review Report pertaining to the energy prepare a Statement of Energy Effects on

the proposed rule. DOE received no conservation standards rulemaking

comments on this issue in response to analyses. The "Energy Conservation

the NOPR. As with the proposed rule, Standards king Peer Review

DOE has concluded that today's final Report" dateded February 2007 has been

rule is not a significant energy action disseminated and is available at the

within the meaning of Executive Order following Web site: http://

13211, and has not prepared a www.eere.energygov/buildings/

Statement of Energy Effects on the rule. appliance standards/peer review.html.

L. Review Under Section 32 of the N. Congressional Notification

Federal Energy Administration Act of As required by 5 U.S.C. 801, DOE will

1974 submit to Congress a report regarding

Section 32 of the Federal Energy the issuance of today's final rule prior

Administration Act (FEAA) of 1974 to the effective date set forth at the

precludes DOE from adopting by rule outset of this notice. The report will

any commercial standard unless the state that it has been determined that

agency has consulted with the Attorney the rule is a "major rule" as defined by

General and the Chairman of the Federal 5 U.S.C. 804(2). DOE also will submit

Trade Commission, and neither the supporting analyses to the

recommends against such requirement. Comptroller General in the U.S.

(15 U.S.C. 788) DOE indicated in the Government Accountability Office

proposed rule, in a slightly different (GAO) and make them available to each

context, that it was not proposing in this House of Congress.

rulemaking to require use of a VIII. Approval of the Office of the

commercial standard, and it concluded Secretary

that section 32 of the FEAA did not

apply. DOE received no comments on The Secretary of Energy has approved

this issue. As with the proposed rule, publication of today's final rule.

today's rule neither incorporates nor List of Subjects in 10 CFR Part 431

requires compliance with a voluntary

commercial standard. Therefore, section Administrative practice and

32 of the FEAA does not apply to this procedure, Confidential business

rule.

M. Review Under the Information

Quality Bulletin for Peer Review

On December 16, 2004, OMB, in

consultation with the Office of Science

and Technology (OSTP), issued its

"Final Information Quality Bulletin for

Peer Review" (Bulletin). 70 FR 2664

(January 14, 2005). The Bulletin

establishes that certain scientific

information shall be peer reviewed by Federal Regulations, Subpart K of Part

qualified specialists before it is 431 is amended to read as set forth

disseminated by the federal government, below.

information, Energy conservation,

Reporting and recordkeeping

requirements.

Issued in Washington, DC, on September

28, 2007.

Alexander A. Karsner,

Assistant Secretary, Energy Efficiency and

Renewable Energy.

For the reasons set forth in the

preamble, Chapter II of Title 10, Code of

 EE-RM/STD-00-550 COMMENT 194

58238 Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

DOE is required to select from those 

alternatives the most cost-effective and 

least burdensome alternative that 

achieves the objectives of the rule 

unless DOE publishes an explanation 

for doing otherwise or the selection of 

such an alternative is inconsistent with 

law. As required by sections 325(0), 

345(a) and 346(a) of EPCA (42 U.S.C. 

6295(0), 6316(a) and 6317(a)), today's 

final rule establishes energy 

conservation standards for distribution 

transformers that are designed to 

achieve the maximum improvement in 

energy efficiency that DOE has 

determined to be both technologically 

feasible and economically justified. A 

full discussion of the alternatives 

considered by DOE is presented in the 

"Regulatory Impact Analysis" section of 

the TSD for today's final rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

DOE determined that, for this 

rulemaking, it need not prepare a 

Family Policymaking Assessment under 

section 654 of the Treasury and General 

Government Appropriations Act, 1999 

(Pub. 1. 105-277). 71 FR 44405. DOE 

received no comments concerning 

section 654 in response to the NOPR, 

and, therefore, is taking no further 

action in today's final rule with respect 

to this provision. 

I. Review Under Executive Order 12630 

DOE determined, under Executive 

Order 12630, "Governmental Actions 

and Interference with Constitutionally 

Protected Property Rights," 53 FR 8859 

(March 18, 1988), that today's rule 

would not result in any takings which 

might require compensation under the 

Fifth Amendment to the United States 

Constitution. 71 FR 44405. DOE 

received no comments concerning 

Executive Order 12630 in response to 

the NOPR, and, therefore, is taking no 

further action in today's final rule with 

respect to this Executive Order. 

]. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for agencies to review most 

disseminations of information to the 

public under guidelines established by 

each agency pursuant to general 

guidelines issued by OMB. OMB's 

guidelines were published at 67 FR 

8452 (February 22, 2002), and DOE's 

guidelines were published at 67 FR 

62446 (October 7, 2002). DOE has 

reviewed today's final rule under the 

OMB and DOE guidelines and has 

concluded that it is consistent with 

applicable policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, "Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use," 66 FR 28355 (May 

22,2001) requires Federal agencies to 

prepare and submit to the Office of 

Information and Regulatory Affairs of 

the OMB a Statement of Energy Effects 

for any significant energy action. DOE 

determined that the proposed rule was 

not a "significant energy action" within 

the meaning of Executive Order 13211. 

71 FR 44405. Accordingly, it did not 

prepare a Statement of Energy Effects on 

the proposed rule. DOE received no 

comments on this issue in response to 

the NOPR. As with the proposed rule, 

DOE has concluded that today's final 

rule is not a significant energy action 

within the meaning of Executive Order 

13211, and has not prepared a 

Statement of Energy Effects on the rule. 

L. Review Under Section 32 of the 

Federal Energy Administration Act of 

1974 

Section 32 of the Federal Energy 

Administration Act (FEAA) of 1974 

precludes DOE from adopting by rule 

any commercial standard unless the 

agency has consulted with the Attorney 

General and the Chairman of the Federal 

Trade Commission, and neither 

recommends against such requirement. 

(15 U.S.C. 788) DOE indicated in the 

proposed rule, in a slightly different 

context, that it was not proposing in this 

rulemaking to require use of a 

commercial standard, and it concluded 

that section 32 of the FEAA did not 

apply. DOE received no comments on 

this issue. As with the proposed rule, 

today's rule neither incorporates nor 

requires compliance with a voluntary 

commercial standard. Therefore, section 

32 ofthe FEAA does not apply to this 

rule. 

M. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology (OSTP), issued its 

"Final Information Quality Bulletin for 

Peer Review" (Bulletin). 70 FR 2664 

(January 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the federal government, 

including influential scientific 

information related to agency regulatory 

actions. The purpose of the Bulletin is 

to enhance the quality and credibility of 

the Government's scientific information. 

Under the Bulletin, the energy 

conservation standards rulemakings 

analyses are "influential scientific 

information." The Bulletin defines 

"influential scientific information" as 

"scientific information the agency 

reasonably can determine will have, or 

does have, a clear and substantial 

impact on important public policies or 

private sector decisions." 70 FR 2667 

(January 14, 2005). 

In response to OMB's Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. The "Energy Conservation 

Standards Rulemaking Peer Review 

Report" dated February 2007 has been 

disseminated and is available at the 

following Web site: http:// 

www.eere.energy.govlbuildingsl 

appliance_standardslpeerJeview.html. 

N. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

submit to Congress a report regarding 

the issuance of today's final rule prior 

to the effective date set forth at the 

outset of this notice. The report will 

state that it has been determined that 

the rule is a "major rule" as defined by 

5 U.S.C. 804(2). DOE also will submit 

the supporting analyses to the 

Comptroller General in the U.S. 

Government Accountability Office 

(GAO) and make them available to each 

House of Congress. 

VIII. Approval ofthe Office ofthe 

Secretary 

The Secretary of Energy has approved 

publication oftoday's final rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Reporting and recordkeeping 

requirements. 

Issued in Washington, DC, on September 

28,2007. 

Alexander A. Karsner, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

III For the reasons set forth in the 

preamble, Chapter II of Title 10, Code of 

Federal Regulations, Subpart K of Part 

431 is amended to read as set forth 

below. 
i

Federal Register /Vol. 72, No. 197 /Friday, October 12, 2007 /Rules and Regulations

PART 431-ENERGY EFFICIENCY

PROGRAM FOR CERTAIN

COMMERCIAL AND INDUSTRIAL

EQUIPMENT

® 1. The authority citation for part 431

continues to read as follows:

Authority: 42 U.S.C. 6291-6317.

2. Section 431.192 is amended by

adding in alphabetical order the

definition of "underground mining

distribution transformer" and by

revising the definition of an

"uninterruptible power supply

transformer."

§ 431.192 Definitions.

* * * * *

Underground mining distribution

transformer means a medium-voltage

dry-type distribution transformer that is

built only for installation in an

underground mine or inside equipment

for use in an underground mine, and

58239

that required for their kVA rating in the

table below. Low-voltage dry-type

distribution transformers with kVA

ratings not appearing in the table shall

have their minimum efficiency level

determined by linear interpolation of

the kVA and efficiency values

immediately above and below that kVA

rating.

*

(b) Liquid-Immersed Distribution

Transformers. The efficiency of a liquidimmersed distribution transformer

manufactured on or after January 1,

2010, shall be no less than that required

for their kVA rating in the table below.

Liquid-immersed distribution

transformers with kVA ratings not

appearing in the table shall have their

minimum efficiency level determined

by linear interpolation of the kVA and

efficiency values immediately above

and below that kVA rating.

Single-phase Three-phase

kVA Efficiency kVA Efficiency

10 ...................................................................................... 98.62 15 ..................................................................................... 98.36

15 ...................................................................................... 98.76 30 ..................................................................................... 98.62

25 ...................................................................................... 98.91 45 ..................................................................................... 98.76

37.5 ................................................................................... 99.01 75 ..................................................................................... 98.91

50 ...................................................................................... 99.08 112.5 ................................................................................ 99.01

75 ...................................................................................... 99.17 150 ................................................................................... 99.08

100 .................................................................................... 99.23 225 ................................................................................... 99.17

167 .................................................................................... 99.25 300 ................................................................................... 99.23

250 .................................................................................... 99.32 500 ................................................................................... 99.25

333 .................................................................................... 99.36 750 ................................................................................... 99.32

500 .................................................................................... 99.42 1000 ................................................................................. 99.36

667 .................................................................................... 99.46 1500 ................................................................................. 99.42

833 .................................................................................... 99.49 2000 ................................................................................. 99.46

.................... 2500 ................................................................................. 99.49

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test-Procedure. 10 CFR Part 431,

Subpart K, Appendix A.

(c) Medium-Voltage Dry-Type

Distribution Transformers. The

efficiency of a medium-voltage dry-type

distribution transformer manufactured

on or after January 1, 2010, shall be no

minimum efficiency level determined

by linear interpolation of the kVA and

efficiency values immediately above

and below that kVA rating.

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORM

that has a nameplate which identifies

the transformer as being for this use

only.

Uninterruptible power'supply

transformer means a transformer that is

used within an uninterruptible power

system, which in turn supplies power to

loads that are sensitive to power failure,

power sags, over voltage, switching

transients, line noise, and other power

quality factors.

3. Section 431.196 is amended by

revising the introductory text in

paragraph (a), revising paragraphs (b)

and (c), and by adding paragraph (d) to

read as follows:

§ 431.196 Energy conservation standards

and their effective dates.

(a) Low-Voltage Dry-Type Distribution

Transformers. The efficiency of a lowvoltage dry-type distribution

transformer manufactured on or after

January 1, 2007, shall be no less than

less than that required for their kVA and

BIL rating in the table below. Mediumvoltage dry-type distribution

transformers with kVA ratings not

appearing in the table shall have their

Single-phase

BIL

kVA

20-45 kV

efficiency

(%)

46-95 kV

efficiency

(%)

15 ...................................... 98.10

25 ...................................... 98.33

37.5 ................................... 98.49

50 ...................................... 98.60

75 ...................................... 98.73

100 .................................... 98.82

167 .................................... 98.96

250 .................................... 99.07

333 .................................... 99.14

500 .................................... 99.22

97.86

98.12

98.30

98.42

98.57

98.67

98.83

98.95

99.03

99.12

>_96 kV

efficiency

(%)

98.53

98.63

98.80

98.91

98.99

99.09

BIL

kVA

15 .....................................

30 .....................................

45 .....................................

75 .....................................

112.5 ................................

150 ...................................

225 ...................................

300 ...................................

500 ...................................

750 ...................................

Three-phase

20-45 kV

efficiency

(%)

97.50

97.90

98.10

98.33

98.49

98.60

98.73

98.82

98.96

99.07

46-95 kV

efficiency

(%)

97.18

97.63

97.86

98.12

98.30

98.42

98.57

98.67

98.83

98.95

?96 kV

efficiency

(%)

98.53

98.63

98.80

98.91

 EE-RM/STD-00-550 COMMENT 194

Federal Register I Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations 58239 

PART 431-ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

II 1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291-6317. 

II 2. Section 431.192 is amended by 

adding in alphabetical order the 

definition of "underground mining 

distribution transformer" and by 

revising the definition of an 

"uninterruptible power supply 

transformer." 

§ 431.192 Definitions. 

* * * * * 

Underground mining distribution 

transformer means a medium-voltage 

dry-type distribution transformer that is 

built only for installation in an 

underground mine or inside equipment 

for use in an underground mine, and 

Single-phase 

kVA 

that has a nameplate which identifies 

the transformer as being for this use 

only. 

Uninterruptible power'supply 

transformer means a transformer that is 

used within an uninterruptible power 

system, which in turn supplies power to 

loads that are sensitive to power failure, 

power sags, over voltage, switching 

transients, line noise, and other power 

quality factors. 

II 3. Section 431.196 is amended by 

revising the introductory text in 

paragraph (a), revising paragraphs (b) 

and (c), and by adding paragraph (d) to 

read as follows: 

§ 431.196 Energy conservation standards 

and their effective dates. 

(a) Low-Voltage Dry-Type Distribution 

Transformers. The efficiency of a lowvoltage dry-type distribution 

transformer manufactured on or after 

January 1, 2007, shall be no less than 

Efficiency 

(%) 

that required for their kVA rating in the 

table below. Low-voltage dry-type 

distribution transformers with kVA 

ratings not appearing in the table shall 

have their minimum efficiency level 

determined by linear interpolation of 

the kVA and efficiency values 

immediately above and below that kVA 

rating. 

* * * * * 

(b) Liquid-Immersed Distribution 

Transformers. The efficiency of a liquidimmersed distribution transformer 

manufactured on or after January 1, 

2010, shall be no less than that required 

for their kVA rating in the table below. 

Liquid-immersed distribution 

transformers with kVA ratings not 

appearing in the table shall have their 

minimum efficiency level determined 

by linear interpolation of the kVA and 

efficiency values immediately above 

and below that kVA rating. 

Three-phase 

kVA Efficiency 

(%) 

10 ..................................................................................... . 98.62 

98.76 

98.91 

99.01 

99.08 

99.17 

99.23 

99.25 

99.32 

99.36 

99.42 

99.46 

99.49 

15 .................................................................................... . 98.36 

98.62 

98.76 

98.91 

99.01 

99.08 

99.17 

99.23 

99.25 

99.32 

99.36 

99.42 

99.46 

99.49 

15 ..................................................................................... . 30 .................................................................................... . 

25 ..................................................................................... . 45 .................................................................................... . 

37.5 ................................................................................. .. 75 .................................................................................... . 

50 ..................................................................................... . 112.5 ............................................................................... . 

75 ..................................................................................... . 150 .................................................................................. . 

100 .................................................................................. .. 225 .................................................................................. . 

167 .................................................................................. .. 300 .................................................................................. . 

250 .................................................................................. .. 500 .................................................................................. . 

333 ................................................................................... . 750 .................................................................................. . 

500 .................................................................................. .. 1000 ................................................................................ . 

667 .................................................................................. .. 1500 ................................................................................ . 

833 ................................................................................... . 2000 ................................................................................ . 

2500 ................................................................................ . 

Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test-Procedure. 10 CFR Part 431, 

Subpart K, Appendix A. 

(c) Medium-Voltage Dry-Type 

Distribution Transformers. The 

efficiency of a medium-voltage dry-type 

distribution transformer manufactured 

on or after January 1, 2010, shall be no 

less than that required for their kVA and 

BIL rating in the table below. Mediumvoltage dry-type distribution 

transformers with kVA ratings not 

appearing in the table shall have their 

minimum efficiency level determined 

by linear interpolation of the kVA and 

efficiency values immediately above 

and below that kV A rating. 

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORM 

BIL 

kVA 

15 ..................................... . 

25 .................................... .. 

37.5 .................................. . 

50 ..................................... . 

75 ..................................... . 

100 ................................... . 

167 .................................. .. 

250 .................................. .. 

333 ................................... . 

500 .................................. .. 

Single-phase 

20-45 kV 

efficiency 

(%) 

98.10 

98.33 

98.49 

98.60 

98.73 

98.82 

98.96 

99.07 

99.14 

99.22 

46-95 kV 

efficiency 

(%) 

97.86 

98.12 

98.30 

98.42 

98.57 

98.67 

98.83 

98.95 

99.03 

99.12 

~96 kV 

efficiency 

(%) 

98.53 

98.63 

98.80 

98.91 

98.99 

99.09 

BIL 

kVA 

15 .................................... . 

30 ................................... .. 

45 .................................... . 

75 .................................... . 

112.5 ............................... . 

150 .................................. . 

225 .................................. . 

300 ................................. .. 

500 .................................. . 

750 .................................. . 

Three-phase 

20-45 kV 

efficiency 

(%) 

97.50 

97.90 

98.10 

98.33 

98.49 

98.60 

98.73 

98.82 

98.96 

99.07 

46-95 kV 

efficiency 

(%) 

97.18 

97.63 

97.86 

98.12 

98.30 

98.42 

98.57 

98.67 

98.83 

98.95 

~96 kV 

efficiency 

(%) 

98.53 

98.63 

98.80 

98.91 
58240 Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/ Rules and Regulations

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORMContinued

Single-phase Three-phase

BIL 20-45 kV 46-95 kV ?96 kV BIL 20-45 kV 46-95 kV ?96 kV

kVA efficiency efficiency efficiency kVA efficiency efficiency efficiency

(%) (%) (%) (%) (%) (%)

667 .................................... 99.27 99.18 99.15 1000 ................................. 99.14 99.03 98.99

833 .................................... 99.31 99.23 99.20 1500 ................................. 99.22 99.12 99.09

2000 ................................. 99.27 99.18 99.15

2500 ................................. 99.31 99.23 99.20

Note : BIL means basic impulse insulation level.

Note : All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE TestProcedure. 10 CFR Part 431, Subpart K, Appendix A.

(d) Underground Mining Distribution

Transformers. [RESERVED]

*

Appendix

[The following letters from the Department of

Justice will not appear in the Code of Federal

Regulations.]

Department of Justice

Antitrust Division, Main Justice Building,

950 Pennsylvania Avenue, NW.,

Washington, DC 20530-0001, (202) 514-

2401/(202) 616-2645 (Fax), E-mail:

antitrust@usdoj.gov, Web site: http://

www.usdoj.gov/atr.

January 16, 2007.

Warren Belmar, Esq.,

Deputy General Counsel for Energy Policy,

U.S. Department of Energy, Washington,

DC 20585.

Dear Deputy General Counsel Belmar: I am

responding to your November 14, 2006 letters

seeking the views of the Attorney General

about the potential impact on competition of

proposed energy efficiency standards relating

to (1) liquid-immersed and medium-voltage,

dry-type distribution transformers

("distribution transformers"), and (2)

residential furnaces and boilers ("furnaces

and boilers"). The Energy Policy and

Conservation Act ("EPCA") authorizes the

Department of Energy ("DOE") to establish

energy conservation standards for a number

of appliances where DOE determines that

those standards would be technologically

feasible, economically justified, and result in

significant energy savings.

Your requests were submitted pursuant to

Section 325(o)(2)(B)(I) of the Energy Policy

and Conservation Act, 42 U.S.C. 6291. 6295

("EPCA"), which states that, before the

Secretary of Energy may prescribe a new or

amended energy conservation standard, the

Secretary shall ask the Attorney General to

make a determination of "the impact of any

lessening of competition * * * that is likely

to result from the imposition of the

standard." The Attorney General's

responsibility for responding to requests from

other departments about the effect of a

program on competition has been delegated

to the Assistant Attorney General for the

Antitrust Division in 28 CFR 0.40(g). In

conducting its analysis the Antitrust Division

examines whether a standard may lessen

competition, for example, by placing certain

manufacturers of a product at an unjustified

competitive disadvantage compared to other

manufacturers, or by inducing avoidable

inefficiencies in production or distribution of

particular products. In addition to harming

consumers directly through higher prices,

these effects could undercut the ultimate

goals of the legislation.

Your requests included the Notices of

Proposed Rulemaking ("NOPR") that were

published in the Federal Register and

transcripts of public hearings relating to the

proposed standards. The NOPR relating to

distribution transformers proposed Trial

Standard Level 2 and explained why DOE

had decided not to propose higher trial

standard levels. The NOPR relating to

furnaces and boilers proposed the following

standards: 80% annual fuel utilization

efficiency ("AFUE") for non-weatherized gas

furnaces and mobile home gas furnaces; 82%

AFUE for oil-fired furnaces; 83% AFUE for

weatherized gas furnaces and oil-fired

boilers; and 84% AFUE for gas boilers. Our

review regarding distribution transformers

and furnaces and boilers has focused upon

the standards DOE has proposed adopting;

we have not determined the impact on

competition of more stringent standards than

those set forth in the NOPRs.

In addition to the NOPRs and transcripts,

your staff provided us comments that had

been submitted to DOE regarding the

proposed standards. (We understand that the

docket has not closed with respect to

furnaces and that more comments may be

forthcoming.) We have reviewed these

materials and additionally conducted

interviews with members of the industries.

Based on this inquiry, the Division is

concerned that the distribution transformer

Trial Standard Level 2 may adversely affect

competition with respect to distribution

transformers used in industries, such as

underground coal mining, where physical

conditions limit the size of equipment that

can be effectively utilized. We understand

manufacturers would not be able to satisfy

the proposed standard without increasing the

size (or decreasing the power) of each class

of distribution transformer. Firms facing

space constraints would incur significantly

increased costs due to enlarging the required

installation space (which, for example, could

involve removal of solid rock around coal

seams in underground mines) or

reconfiguring the size and number of each

class of distribution transformers at each site.

The resulting cost increases could constitute

production inefficiencies that could make

certain products less competitive. For

example, the rule could, by raising the costs

of certain coal mines, adversely affect

production decisions at those mines and

potentially result in increased use of less

efficient energy alternatives. We urge the

DOE to consider these concerns carefully in

its analysis, and to consider creating an

exception for distribution transformers used

in industries with space constraints.

The Division is also concerned that the

standards for weatherized gas furnaces and

gas boilers could adversely affect

competition. We understand that

manufacturers would have difficulty

designing products that safely meet the

proposed standards. For weatherized gas

furnaces, meeting the standard would like

result in increased condensation, potentially

resulting in significant deterioration that

would jeopardize the safety of the product,

and, for weatherized gas-fired water boilers,

meeting the standard would make effective

carbon dioxide venting more difficult. Any

resulting costs incurred to solve these issues

could adversely affect the competitiveness of

these products in relation to electric heat

pumps and water heaters. We urge the DOE

to carefully consider its proposed standards

in light of these concerns.

Aside from the discussion above, the

Division does not otherwise believe the

proposed standards would adversely impact

competition.

Yours sincerely,

J. Bruce McDonald,

Acting Assistant Attorney General.

Department of Justice

Antitrust Division, Main Justice Building,

950 Pennsylvania Avenue, NW.,

Washington, DC 20530-0001, (202) 514-

2401 / (202) 616-2645 (Fax), E-mail:

antitrust@usdoj.gov, Web site: http:

//www. u sd o j.gov/atr.

September 6, 2007.

Warren Belmar, Esq.,

Deputy General Counsel for Energy Policy,

U.S. Department of Energy, Washington,

DC 20585.

Dear Deputy General Counsel Belmar: I am

responding to your August 7, 2007 letter

seeking the views of the Attorney General

about the potential impact on competition of

the proposed final rule regarding energy

 EE-RM/STD-00-550 COMMENT 194

58240 Federal Register IVaI. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 

TABLE 1.2.-STANDARD LEVELS FOR MEDIUM-VOLTAGE, DRY-TYPE DISTRIBUTION TRANSFORMERS, TABULAR FORMContinued 

Single-phase Three-phase 

BIL 20-45 kV 46-95 kV ~96 kV BIL 20-45 kV 46-95 kV ~96 kV 

kVA efficiency efficiency efficiency kVA efficiency efficiency efficiency 

(%) (%) (%) (%) (%) (%) 

667 .................................... 99.27 99.18 99.15 1000 ................................. 99.14 99.03 98.99 

833 .................................... 99.31 99.23 99.20 1500 ................................. 99.22 99.12 99.09 

2000 ................................. 99.27 99.18 99.15 

2500 ................................. 99.31 99.23 99.20 

Note: BIL means basic impulse insulation level. 

Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE TestProcedure. 10 CFR Part 431, Subpart K, Appendix A. 

(d) Underground Mining Distribution 

Transformers. [RESERVED] 

* * * * * 

Appendix 

[The following letters from the Department of 

Justice will not appear in the Code of Federal 

Regulations.] 

Department ofJustice 

Antitrust Division, Main Justice Building, 

950 Pennsylvania Avenue, NW., 

Washington, DC 20530-0001, (202) 514-

2401/(202) 616-2645 (Fax), E-mail: 

antitrust@usdoj.gov, Web site: http:// 

www.usdoj.govlatr. 

January 16, 2007. 

Warren Belmar, Esq., 

Deputy General Counsel for Energy Policy, 

U.S. Department of Energy. Washington. 

DC 20585. 

Dear Deputy General Counsel Belmar: I am 

responding to your November 14, 2006 letters 

seeking the views of the Attorney General 

about the potential impact on competition of 

proposed energy efficiency standards relating 

to (1) liquid-immersed and medium-voltage, 

dry-type distribution transformers 

("distribution transformers")' and (2) 

residential furnaces and boilers ("furnaces 

and boilers"). The Energy Policy and 

Conservation Act ("EPCA") authorizes the 

Department of Energy ("DOE") to establish 

energy conservation standards for a number 

of appliances where DOE determines that 

those standards would be technologically 

feasible, economically justified, and result in 

significant energy savings. 

Your requests were submitted pursuant to 

Section 325(0)(2)(B)(I) of the Energy Policy 

and Conservation Act, 42 U.S.C. 6291. 6295 

("EPCA"), which states that, before the 

Secretary of Energy may prescribe a new or 

amended energy conservation standard, the 

Secretary shall ask the Attorney General to 

make a determination of "the impact of any 

lessening of competition * * * that is likely 

to result from the imposition of the 

standard." The Attorney General's 

responsibility for responding to requests from 

other departments about the effect of a 

program on competition has been delegated 

to the Assistant Attorney General for the 

Antitrust Division in 28 CFR 0.40(g). In 

conducting its analysis the Antitrust Division 

examines whether a standard may lessen 

competition, for example, by placing certain 

manufacturers of a product at an unjustified 

competitive disadvantage compared to other 

manufacturers, or by inducing avoidable 

inefficiencies in production or distribution of 

particular products. In addition to harming 

consumers directly through higher prices, 

these effects could undercut the ultimate 

goals of the legislation. 

Your requests included the Notices of 

Proposed Rulemaking ("NOPR") that were 

published in the Federal Register and 

transcripts of public hearings relating to the 

proposed standards. The NOPR relating to 

distribution transformers proposed Trial 

Standard Level 2 and explained why DOE 

had decided not to propose higher trial 

standard levels. The NOPR relating to 

furnaces and boilers proposed the following 

standards: 80% annual fuel utilization 

efficiency ("AFUE") for non-weatherized gas 

furnaces and mobile home gas furnaces; 82% 

AFUE for oil-fired furnaces; 83% AFUE for 

weatherized gas furnaces and oil-fired 

boilers; and 84% AFUE for gas boilers. Our 

review regarding distribution transformers 

and furnaces and boilers has focused upon 

the standards DOE has proposed adopting; 

we have not determined the impact on 

competition of more stringent standards than 

those set forth in the NOPRs. 

In addition to the NOPRs and transcripts, 

your staff provided us comments that had 

been submitted to DOE regarding the 

proposed standards. (We understand that the 

docket has not closed with respect to 

furnaces and that more comments may be 

forthcoming.) We have reviewed these 

materials and additionally conducted 

interviews with members of the industries. 

Based on this inquiry, the Division is 

concerned that the distribution transformer 

Trial Standard Level 2 may adversely affect 

competition with respect to distribution 

transformers used in industries, such as 

underground coal mining, where physical 

conditions limit the size of equipment that 

can be effectively utilized. We understand 

manufacturers would not be able to satisfy 

the proposed standard without increasing the 

size (or decreasing the power) of each class 

of distribution transformer. Firms facing 

space constraints would incur significantly 

increased costs due to enlarging the required 

installation space (which, for example, could 

involve removal of solid rock around coal 

seams in underground mines) or 

reconfiguring the size and number of each 

class of distribution transformers at each site. 

The resulting cost increases could constitute 

production inefficiencies that could make 

certain products less competitive. For 

example, the rule could, by raising the costs 

of certain coal mines, adversely affect 

production decisions at those mines and 

potentially result in increased use of less 

efficient energy alternatives. We urge the 

DOE to consider these concerns carefully in 

its analysis, and to consider creating an 

exception for distribution transformers used 

in industries with space constraints. 

The Division is also concerned that the 

standards for weatherized gas furnaces and 

gas boilers could adversely affect 

competition. We understand that 

manufacturers would have difficulty 

designing products that safely meet the 

proposed standards. For weatherized gas 

furnaces, meeting the standard would like 

result in increased condensation, potentially 

resulting in significant deterioration that 

would jeopardize the safety of the product, 

and, for weatherized gas-fired water boilers, 

meeting the standard would make effective 

carbon dioxide venting more difficult. Any 

resulting costs incurred to solve these issues 

could adversely affect the competitiveness of 

these products in relation to electric heat 

pumps and water heaters. We urge the DOE 

to carefully consider its proposed standards 

in light of these concerns. 

Aside from the discussion above, the 

Division does not otherwise believe the 

proposed standards would adversely impact 

competition. 

Yours sincerely, 

J. Bruce McDonald, 

Acting Assistant Attorney General. 

Department of Justice 

Antitrust Division, Main Justice Building, 

950 Pennsylvania Avenue;NW., 

Washington, DC 20530-0001, (202) 514-

2401 1 (202) 616-2645 (Fax), E-mail: 

antitrust@usdoj.gov, Web site: http: 

Ilwww.usdoj.govlatr. 

September 6,2007. 

Warren Belmar, Esq., 

Deputy General Counsel for Energy Policy, 

U.S. Department of Energy, Washington, 

DC 20585. 

Dear Deputy General Counsel Belmar: I am 

responding to your August 7, 2007 letter 

seeking the views of the Attorney General 

about the potential impact on competition of 

the proposed final rule regarding energy 
i

Federal Register /Vol. 72, No. 197/Friday, October 12, 2007/Rules and Regulations

conservation standards for liquid-immersed

and medium-voltage, dry-type distribution

transformers ("distribution transformers").

The Energy Policy and Conservation Act

("EPCA") authorizes the Department of

Energy ("DOE") to establish energy

conservation standards for a number of

appliances where DOE determines that those

standards would be technologically feasible,

economically justified, and result in

significant energy savings.

Your request was submitted pursuant to

Section 325(o)(2)(B)(I) of the Energy Policy

and Conservation Act, 42 U.S.C. 6291.6295

("EPCA"), which states that before the

Secretary of Energy may prescribe a new or

amended energy conservation standard, the

Secretary shall ask the Attorney General to

make a determination of "the impact of any

lessening of competition * * * that is likely

to result from the imposition of the

standard." The Attorney General's

responsibility for responding to requests from

other departments about the effect of a

program on competition has been delegated

to the Assistant Attorney General for the

Antitrust Division in 28 CFR 0.40(g). In

conducting its analysis the Antitrust Division

examines whether a standard may lessen

competition, for example, by placing certain

manufacturers of a product at an unjustified

competitive disadvantage compared to other

manufacturers, or by inducing avoidable

inefficiencies in production or distribution of

particular products. In addition to harming

consumers directly through higher prices,

these effects could undercut the ultimate

goals of the legislation.

Along with your request, you sent us the

draft final rule and a number of other

documents relating to distribution

transformers, including the comments that

had been submitted to DOE in response to

the Notice of Proposed Rulemaking

("NOPR"), the Notice of Data Availability

("NODA") issued by DOE earlier this year

that discussed standards DOE was

considering, and comments DOE received

regarding the NODA.

In November of 2006, you requested DOJ's

views regarding the NOPR, which proposed

Trial Standard Level 2. By letter dated

January 16, 2007, we responded that, based

on our inquiry, we were concerned that the

distribution transformer standard might

adversely affect competition with respect to

distribution transformers used in industries,

such as underground coal mining, where

physical conditions limit the size of

equipment that can be effectively utilized.

We urged DOE to consider creating an

exception for distribution transformers used

in industries with space constraints.

You have addressed our concern by

establishing a separate product class for

underground mining transformers and

excluding that class from the proposed final

rule. Although our January 16, 2007 letter did

not limit our concern to underground mining

transformers, we believe DOE's decision to

exclude underground mining transformers

from the proposed final rule adequately

addresses our concern.

58241

Our review of the NOPR was limited to the

impact of Trial Standard Level 2 on

competition. The proposed final rule would

establish a more stringent standard than Trial

Standard Level 2 for certain distribution

transformers. Specifically, it establishes Trial

Standard Level 3 as the standard for certain

three phase liquid-immersed distribution

transformers, with a commensurate standard

for certain single phase liquid-immersed

distribution transformers. To ascertain

whether the more stringent standard would

adversely impact competition, we have

evaluated the comments DOE received in

response to the NODA, which had stated

DOE was contemplating Trial Standard Level

2 or 3 for three phase liquid-immersed

distribution transformers. We have also

conducted industry interviews. Based on this

review, we have concluded that the proposed

final rule's application of Trial Standard

Level 3 to certain three phase liquid-filled

distribution transformers and the comparable

standard to certain single phase liquid-filled

distribution transformers would not

adversely affect competition.

In conclusion, the Antitrust Division does

not believe the proposed final rule would

adversely affect competition.

Yours sincerely,

Deborah A. Garza,

Acting Assistant Attorney General.

[FR Doc. E7-19582 Filed 10-11-07; 8:45 am]

BILLING CODE 6450-01-P

 EE-RM/STD-00-550 COMMENT 194

Federal Register/Vol. 72, No. 197 I Friday, October 12, 2007/Rules and Regulations 58241 

conservation standards for liquid-immersed 

and medium-voltage, dry-type distribution 

transformers ("distribution transformers"). 

The Energy Policy and Conservation Act 

("EPCA") authorizes the Department of 

Energy ("DOE") to establish energy 

conservation standards for a number of 

appliances where DOE determines that those 

standards would be technologically feasible, 

economically justified, and result in 

significant energy savings. 

Your request was submitted pursuant to 

Section 325(0)(2)(B)(I) of the Energy Policy 

and Conservation Act, 42 U.S.C. 6291.6295 

("EPCA"), which states that before the 

Secretary of Energy may prescribe a new or 

amended energy conservation standard, the 

Secretary shall ask the Attorney General to 

make a determination of "the impact of any 

lessening of competition * * * that is likely 

to result from the imposition of the 

standard." The Attorney General's 

responsibility for responding to requests from 

other departments about the effect of a 

program on competition has been delegated 

to the Assistant Attorney General for the 

Antitrust Division in 28 CFR 0.40(g). In 

conducting its analysis the Antitrust Division 

examines whether a standard may leSsen 

competition, for example, by placing certain 

manufacturers of a product at an unjustified 

competitive disadvantage compared to other 

manufacturers, or by inducing avoidable 

inefficiencies in production or distribution of 

particular products. In addition to harming 

consumers directly through higher prices, 

these effects could undercut the ultimate 

goals of the legislation. 

Along with your request, you sent us the 

draft final rule and a number of other 

documents relating to distribution 

transformers, including the comments that 

had been submitted to DOE in response to 

the Notice of Proposed Rulemaking 

("NOPR"), the Notice of Data Availability 

("NODA") issued by DOE earlier this year 

that discussed standards DOE was 

considering, and comments DOE received 

regarding the NODA. 

In November of 2006, you requested DOl's 

views regarding the NOPR, which proposed 

Trial Standard Level 2. By letter dated 

January 16, 2007, we responded that, based 

on our inquiry, we were concerned that the 

distribution transformer standard might 

adversely affect competition with respect to 

distribution transformers used in industries, 

such as underground coal mining, where 

physical conditions limit the size of 

equipment that can be effectively utilized. 

We urged DOE to consider creating an 

exception for distribution transformers used 

in industries with space constraints. 

You have addressed our concern by 

establishing a separate product class for 

underground mining transformers and 

excluding that class from the proposed final 

rule. Although our January 16, 2007 letter did 

not limit our concern to underground mining 

transformers, we believe DOE's decision to 

exclude underground mining transformers 

from the proposed final rule adequately 

addresses our concern. 

Our review of the NOPR was limited to the 

impact of Trial Standard Level 2 on 

competition. The proposed final rule would 

establish a more stringent standard than Trial 

Standard Level 2 for certain distribution 

transformers. Specifically, it establishes Trial 

Standard Level 3 as the standard for certain 

three phase liquid-immersed distribution 

transformers, with a commensurate standard 

for certain single phase liquid-immersed 

distribution transformers. To ascertain 

whether the more stringent standard would 

adversely impact competition, we have 

evaluated the comments DOE received in 

response to the NODA, which had stated 

DOE was contemplating Trial Standard Level 

2 or 3 for three phase liquid-immersed 

distribution transformers. We have also 

conducted industry interviews. Based on this 

review, we have concluded that the proposed 

final rule's application of Trial Standard 

Level 3 to certain three phase liquid-filled 

distribution transformers and the comparable 

standard to certain single phase liquid-filled 

distribution transformers would not 

adversely affect competition. 

In conclusion, the Antitrust Division does 

not believe the proposed final rule would 

adversely affect competition. 

Yours sincerely, 

Deborah A. Garza, 

Acting Assistant Attorney General. 

[FR Doc. E7-19582 Filed 10-11-07; 8:45 am] 

BILLING CODE 6450-{)1-P