UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY

PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS PROPOSED RULEMAKING FOR DISTRIBUTION TRANSFORMERS

U.S. Department of Energy 1000 Independence Ave., SW Washington, D.C. 20585 Room 8E-089 Review Center

Thursday February 23, 2012

Facilitator: Doug Brookman Public Solutions Baltimore, MDExecutive Court Reporters (301) 565-0064 2 Participants Identified:

Andrew deLaski Appliance Standards Awareness Project Charlie Stephens Northwest Energy Efficiency Alliance Timothy Ballo Earth Justice

Bruce Hirsh Baltimore Gas and Electric John Caskey National Electrical Manufacturers Association Ray Polinski ATI-Allegheny Ludlum
Bob Saint National Rural Electric Cooperative Association Michael Hyland American Public Power Association Greg Coulter Consultant for PROLEC GE International

John Phouminh Pepco Holdings, Inc. Casey Ballard ABB Inc. Jerry Corkran Cooper Power Systems Philip Hopkinson HVOLT, Inc. Robin Roy Natural Resources Defense Council Gerald Hodge Howard Industries, Inc.

Steve Rosenstock Edison Electric Institute

Eric PetersenExecutive Court Reporters (301) 565-0064 3 AK Steel Corporation

Ned Brush Consultant

Wes Patterson Consultant - Navigant

Robert Berman Berman Economics Paul Ryan Hitachi Metals America, Ltd. Jim Creevy National Electrical Manufacturers Association

Carl Bush PEMCO Corporation Jamie Bishop Allegheny Technologies

James Rakowski ATI-Allegheny Ludlum

Alex Hoffman American Public Power Association Alan McCoy AK Steel Corporation

Chuck Foster Edison Electric Institute

Donald Junta U.S. Department of Agriculture

Ned Brush BBF & Associates

Richard Parker University of Connecticut Kevin Looby Lakeview Metals, Inc. Alex Bosenberg National Electrical Manufacturers Association

Kenneth WinderExecutive Court Reporters (301) 565-0064 4 Moon Lake Electric Association, Inc. Zolaikha Strong Copper Development Association

Eric Petersen AK Steel Corporation Barry Racey AK Steel Corporation Jeffrey Petrich Ernst & Young

Ismael Leon Prolec GE International

Participants from the Department of Energy: John Cymbalsky Appliance Standards Program Ami Grace-Tardy Office of the General Counsel

James Raba Project Manager

Brenda Edwards Program Support Specialist

Participants from Consultants:

Christopher Bolduc Lawrence Berkeley National Laboratory Katie Coughlin Lawrence Berkeley National Laboratory

Matthew Nardotti Navigant Consulting

Robert Carmichael Navigant ConsultingExecutive Court Reporters (301) 565-0064 5 Brian Coffey Navigant Consulting

Michael Rivest Navigant Consulting

Pamela Costello Navigant Consulting

Caitlin Johnson Navigant Consulting

Zhimei Luo Navigant Consulting

Presenters: Brian Coffey Navigant Consulting Christopher Bolduc Lawrence Berkeley National LaboratoryExecutive Court Reporters (301) 565-0064 6

AGENDA

ITEM PAGE Welcome, Mr. Brookman 6 Welcome for DOE, Mr. Raba 6
Introductions 7 Agenda Review, Mr. Brookman 10 Introductory Remarks, Mr. Raba 13 Opening Remarks 16 Rulemaking History, Schedule, Scope Negotiated Rulemaking Process Mr. Coffey 51 EPCA Factors, Scope, Definitions, Test Procedure, Equipment Classes Mr. Coffey 61 Engineering Analysis, Mr. Coffey 79 Markups, Loading, Distribution Channels Ms. Coughlin 96 Life Cycle Cost Analysis, Payback-Period Analysis, Ms. Coughlin 108 Shipments, National Impact Analysis, Refurbishments Ms. Coughlin 113 Trial Standard Levels, Proposed Standards Mr. Bolduc 128 Discussion of Proposed Standards 155 Closing Remarks, Mr. Raba 178Executive Court Reporters (301) 565-0064 7

P R O C E E D I N G S 1 MR. BROOKMAN: Let’s get started. Please 2 take your seats. Good morning everyone and welcome. 3 This is the U.S. Department of Energy’s public 4 meeting on Energy Conservation Standards Proposed 5 Rulemaking for Distribution Transformers. Today is 6 Thursday, February 23, 2012, here in the Forrestal 7 Building in Washington, D.C. My name is Doug 8 Brookman from Public Solutions in Baltimore. So glad 9 to see you this morning. Glad you were able to make 10 it here on time for an early start on the day. 11 I’m going to turn it over first thing this 12 morning to Jim Raba for welcoming remarks. 13 Welcoming Remarks 14 MR. RABA: Good morning, and welcome to 15 the Department of Energy today. I’m Jim Raba. This 16 is our public meeting on the proposed rule for 17 distribution transformers. Today to present the 18 results of the Department of Energy’s analyses of 19 energy efficiency standards for distribution 20 transformers thus far, but mostly we want to hear 21 from you, your comments and recommendations, data, 22 and information. 23 But nevertheless we have a lot of things 24 to cover in today’s agenda, so before I go too far, 25Executive Court Reporters (301) 565-0064 8 I’ll turn it back to Doug. Welcome, thank you for 1 being here and participating right along from the 2 beginning. We’ll have more. Thank you. 3 MR. BROOKMAN: We typically start off with 4 introductions around the room. I’m going to start 5 to my left. You can get used to turning the 6 microphones on and off. For those of you seated at 7 table, the little green lights have to come on. 8 Please say your name, and organizational 9 affiliation. 10
Introductions 11 MR. HIRSCH: Bruce Hirsh, Baltimore Gas 12 and Electric. 13 MR. BROOKMAN: Thank you. 14 MR. CASKEY: John Caskey, NEMA. 15 MR. POLINSKI: Ray Polinski, ATI-Allegheny 16

Ludlum. 17 MR. SAINT: Bob Saint, National Rural 18 Electric Cooperative Association. 19 MR. HYLAND: Mike Hyland, the American 20 Public Power Association. 21 MR. COULTER: Greg Coulter, Consultant for 22

Prolec-GE. 23 MR. PHOUMINH: John Phouminh, PEPCO 24 Holding, Inc. 25 MR. BALLARD: Casey Ballard, ABB. 26 MR. CORKRAN: Jerry Corkran, Cooper Power. 27 MR. HOPINSON: Phil Hopkinson, HVOLT, Inc. 28Executive Court Reporters (301) 565-0064 9 MR. deLaski: Andrew deLaski, Appliance 1 Standards Awareness Project. 2 MR. ROY: Robin Roy, Natural Resources 3 Defense Council. 4 MR. HODGE: Jerry Hodge from Howard 5 Industry. 6 MR. ROSENSTOCK: Steve Rosenstock, Edison 7 Electric Institute. 8 MR. PETERSEN: Eric Petersen, AK Steel 9 Corporation. 10 MS. GRACE-TARDY: Ami Grace-Tardy, 11 Department of Energy, General Counsel’s office. 12 MR. CYMBALSKY: John Cymbalsky, DOE. 13 MR. RABA: Jim Raba, DOE. 14 MR. LOOBY: Kevin Looby, Lakeview Metals. 15

MR. BROOKMAN: Let’s start over here. 16 Please stand up and say your name. 17 MR. BOLDUC: Christopher Bolduc, LBL. 18 MS. COUGHLIN: Katie Coughlin, Lawrence 19 Berkeley Lab. 20 MR. NARDOTTI: Matt Nardotti, Navigant. 21 MR. CARMICHAEL: Rob Carmichael, Navigant. 22 MR. COFFEY: Brian Coffey, Navigant. 23 MS. EDWARDS: Brenda Edwards, DOE. 24

MR. BROOKMAN: Please. 25 MS. BRUSH: Ned Brush, Consultant. 26 MS. STRONG: Zolaikha Strong, Copper 27 Development Association. 28Executive Court Reporters (301) 565-0064 1 0 MR. PATTERSON: Wes Patterson, Consultant 1 for Navigant. 2 MR. BERMAN: Robert Berman, Berman 3 Economics. 4 MR. RYAN: Paul Ryan, Hitachi Metglas. 5 MR. CREEVY: Jim Creevy, NEMA. 6 MR. BOSENBERG: Alex Bosenberg, NEMA. 7 MR. BALLO: Tim Ballo, Earth Justice. 8 MR. FOSTER: Chuck Foster, Counsel for EEI 9 MR. BUSH: Carl Bush, PEMCO Corporation. 10 MS. BISHOP: Jamie Bishop, ATI. 11 MR. RAKOWSKI: Jim Rakowski, ATI. 12 MR. HOFFMAN: Alex Hoffman, American 13 Public Power Association. 14 MR. RACEY: Barry Racey, AK Steel 15 Corporation. 16 MR. McCOY: Al McCoy, representing AK 17

Steel. 18 MR. STEPHENS: Charlie Stephens, Northwest 19 Energy Efficiency Alliance. 20 MR. BROOKMAN: Thank you. Thanks again 21 for all of your for being here this morning. We 22 should also acknowledge and welcome those that have 23 joined us via the web. We have thirty-odd 24 participants via the web today, so that’s a goodly 25

number of folks. 26 All of you received a packet of 27 information as you came in the door. I’m going to 28Executive Court Reporters (301) 565-0064 1 1 refer to that packet. There’s an agenda. There are 1 some written statements. There is a slide deck 2 which will be the basis for discussion and 3 presentation as the day goes on here, and also the 4

Federal Register notice. 5 Agenda Review 6 MR. BROOKMAN: Start with the agenda 7 first. Immediately following this agenda review, 8 there’s an opportunity for anybody that wishes to do 9 so to make opening statements, brief comments, 10 hopefully fairly brief about the issues that matter 11 to you, what you’d like to see focused on today from 12 your perspective. 13 Immediately following that, we’re going to 14 talk – get a presentation and an opportunity for 15 discussion on rulemaking history, schedule, scope 16 and the negotiated rulemaking process. From there, a 17 description of the EPCA factors, scope definitions, 18 test procedure, equipment classes. Immediately 19 following that, engineering analysis. 20

We’ll take a coffee break round about 21 10:15 or so this morning, and following the coffee 22 break, a description, lots of opportunity for 23 discussion on markups, loading, distribution 24 channels, life-cycle cost and payback-period 25 analysis, national impact analysis, refurbishments. 26 Then trial standard levels and proposed standards, 27 discussion of proposed standards 28Executive Court Reporters (301) 565-0064 1 2 And the schedule as listed here in the 1 agenda is that we’re going to finish today at 12:45. 2 I think no one wishes to truncate the opportunity 3 for comment and discussion. We’ll go efficiently 4 and rapidly forward, we’ll just see how long it 5 takes for us to do this. If we get to 12 or so, or 6 12:30 and we still have a fair piece to go, we’ll 7 pause for lunch. Then we’ll return and keep at it. 8 Any questions or comments about the 9 agenda? I see none at this point. 10 I’d ask for your consideration. Many of 11 you are familiar with this process. Please speak 12 one at a time. You’re going to have to turn on the 13 microphone each time you speak. Please say your 14 name for the record each time you speak. I’m going 15 to be cuing individuals by name as best I can, so 16 you know who’s in the queue. I also wish to 17 encourage follow-on comments. The back and forth 18 between individuals is sometimes very helpful to the 19 Department as it is sorting through what to do with 20 all this commentary. 21 Please keep the focus here. Turn your 22 cell phones on silent mode if you would, please, and 23 limit the sidebar conversations. If you can try to 24 be concise, there’s certainly a lot to be said. 25 Having read the PowerPoint slides last night, 26 there’s a lot of content here. So let’s see if we 27 can keep it focused there. And I must say, if we’re 28Executive Court Reporters (301) 565-0064 1 3 disciplined in the conduct of the discussion today 1 as we were with the introductions, then that bodes 2 well for all of us, I think. 3 So I turn it back then to – do you want to 4 do opening statements first, or do you want to do 5 some additional introductory slides? 6 MR. RABA: Introductory slides. 7 MR. BROOKMAN: Introductory slides – 8 yours? 9

MR. RABA: Yeah. 10 MR. BROOKMAN: Okay. 11

12 Introductory Remarks 13 MR. RABA: Good morning again. Jim Raba, 14 Project Manager, distribution transformers proposed 15 rule and rulemaking. A lot of familiar faces. It’s 16 good. Hope these are friendly faces, as they say. 17 You’re certainly familiar and thank you for being 18 here today. 19 Today, as I said before, we’re going to 20 present the results of the Department of Energy’s 21 analyses of energy efficiency standards for 22 distribution transformers thus far as a proposed 23 rule. More so, we want to hear from you and to 24 encourage discussion of any issues surrounding this 25 rulemaking. Also we encourage your comments, 26 information and data as we look to a final rule by 27 October of this year. Wriiten comment period for 28Executive Court Reporters (301) 565-0064 1 4 this proposed-rule phase closes April 10 th

. 1 I mentioned issues. Today we’re 2 highlighting issues of interest with comment boxes 3 like these throughout today’s presentation. And 4 there are various ways to submit comments: email, 5 postal, hand delivery by courier, and the like. 6 Flashback to the Energy Policy Act of 7 2005, EPACT started all the ball rolling. October 8 2007, DOE issued a final rule establishing standards 9 for liquid-immersed and medium-voltage dry-type 10 distribution transformers. But, the Department was 11 ordered to reconsider. So, the Department agreed to 12 an expedited timeline whether to amend standards for 13 liquid-immersed and medium-voltage dry-type 14 distribution transformers, and low-voltage 15 distribution transformers were included with that. 16 So here we are today. This has been a 17 unique rulemaking and a first for DOE. Let me show 18 you. Here’s the classic timeline, and here we are 19 today. You can see it started out back in July, end 20 of July 2011, and now we’re at the NOPR stage there 21 at the beginning of this year. So in July 2011, DOE 22 issued a Notice of Intent to negotiate a proposed 23 rule. And you know the rest. The comments, data, 24 information exchanged in good faith by all 25 interested parties was awesome. 26 DOE established two subcommittees, one for 27 liquid-immersed and medium-voltage distribution 28Executive Court Reporters (301) 565-0064 1 5 transformers, and one for low-voltage distribution 1 transformers, and these included, both included 2 manufacturers of transformers, steel, utilities, 3 energy efficiency advocacy groups, trade 4 associations, and other interested parties. 5 Now the medium-voltage and liquid-immersed 6 distribution transformers committee reached 7 consensus on standards for medium-voltage dry-type, 8 but the committee was unable to reach consensus on 9 liquid-immersed and low-voltage dry-type. So 10 notwithstanding, I believe we all agree that the 11 process was the best part. Congratulations and 12 thanks to all of you that made it happen. Special 13 kudos to the experts from Lawrence Berkeley National 14 Laboratory and Navigant Consulting Incorporated, and 15 our facilitator, Richard Parker at the time, that 16 did virtually 24/7 work for all you and for today’s 17 proposed rule. So, in Doug Brookman’s style, give 18 yourselves a round of applause. Well done. 19 (Applause.) 20 So here we are. We’re looking at the, 21 again, at the essential seven: economic impact, 22 operating cost savings, projected energy savings, 23 performance, competition, national energy 24 conservation, and other factors. So, we’ll then 25 proceed then to look forward now in this proposed 26 rulemaking phase and introduce then Brian Coffey who 27 will continue from Navigant Consulting. 28Executive Court Reporters (301) 565-0064 1 6 MR. BROOKMAN: We did still want to take 1 opening remarks here at the outset. 2 MR. RABA: Okay. Still. Forgive me, 3 thank you. We invite you, we want to hear from you, 4 any opening remarks. We know there’s some people, 5 persons of interest here who like to make statements 6 for the record, so raise your hand and Doug will 7 recognize you. 8 MR. BROOKMAN: Brief opening remarks. 9 Yes, please Ray. 10 Opening Statements 11 MR. POLINSKI: Ray Polinski from ATI12 Allegheny Ludlum, and just want to read a prepared 13 statement. ATI-Allegheny Ludlum fully supports the 14 Department of Energy’s preliminary ruling regarding 15 more-stringent efficiency standards for distribution 16 transformers. The DOE fully utilized the expert 17 technical and manufacturing input from the 18 negotiated rulemaking process in arriving at this 19 decision. This results in higher standards for 20 transformers with mandated efficiencies typically 21 exceeding 99 percent, which ranks among the highest 22 in the world. At the same time, the standard 23 protects thousands of U.S. manufacturing jobs. 24 The new efficiency standards maintain a 25 competitive balance between grain-oriented 26 electrical steel transformer cores and long-standing 27 alternative materials. Grain-oriented electrical 28Executive Court Reporters (301) 565-0064 1 7 steel is an advanced, highly engineered material 1 that uses nano-scale technology to produce a steel 2 that is nearly a perfect single crystal throughout. 3 This yields excellent electrical efficiency 4 properties when properly designed into a transformer 5 core. Grain-oriented electrical steel manufacturing 6 is carried out economically on a mass-production 7 basis with global production surpassing two million 8 metric tons annually from a multitude of producers. 9 These factors ensure adequate supply for all 10 manufacturers of distribution transformers and 11 vigorous competition on price. 12 More radical increases in mandatory 13 efficiency would result in the wholesale replacement 14 of grain-oriented electrical steel with a core 15 material that is manufactured on a very limited 16 basis relative to the size of the U.S. distribution 17 transformer market, by a single foreign-owned 18 company that currently exports much of its 19 production. Regulation resulting in a monopoly 20 position for core materials is likely to result in 21 uncontrolled price increases and supply shortfalls, 22 particularly for small manufacturers of distribution 23 transformers, and is likely that transformer prices 24 will increase rapidly in such environment. This 25 cost would invariably be passed on to consumers of 26 electricity. 27 A scenario where grain-oriented electrical 28Executive Court Reporters (301) 565-0064 1 8 steel is not available as a core material option 1 would damage the dwindling manufacturing base in the 2 U.S. and could result in a long-term situation where 3 no domestically owned company would produce the 4 strategically important material for transformers 5 that are the critical link in the U.S. electrical 6 grid. 7 Ongoing investment to improve grain8 oriented electrical steel efficiencies, while 9 alternative core material options – excuse me. 10 Ongoing investment used to improve GOES [grain11 oriented electrical steel] efficiencies while 12 alternative core material options that have been 13 produced for over 30 years also remain available. 14 The DOE has arrived at a well-balanced 15 update to the distribution transformer efficiency 16 standard that results in significant additional 17 energy savings, is environmentally responsible, 18 maintains the domestic manufacturing base for core 19 materials and meets America’s current and future 20 needs for electrical energy conservation, cost 21 effective delivery, and stability of supply. 22 Thank you. 23 MR. BROOKMAN: Thank you. I think all of 24 you received a copy of that opening statement from 25 Ray in your packet. Additional, and hopefully brief, 26 opening statements. Yes, Phil. 27 MR. HOPKINSON: Phil Hopkinson, HVOLT, 28Executive Court Reporters (301) 565-0064 1 9 Inc. I’m not going to read the letter that I 1 submitted – 2 MR. BROOKMAN: Which is in the record. 3 MR. HOPKINSON: -- which is in the record, 4 but I would do something that I find that I like to 5 do, which is to compliment those who deserve it when 6 they do deserve it, and certainly to pick on those 7 when I think that they don’t deserve it. But in 8 this particular case, I have to say that I am 9 extremely pleased with the NOPR as it is submitted 10 and as we are addressing it today. I think that 11 there are benefits that come through to certainly 12 energy savings, and as some of my colleagues have 13 calculated, they’ve concluded that in liquid-filled 14 transformers, there is more than a 41 percent 15 reduction in loss over the low first-cost design as 16 a result of this NOPR, which is quite a change over 17 what it had been back before we started to regulate 18 distribution transformer energy efficiency. 19 So I think that the result of improved 20 losses is clearly there. I think also that the 21 ability to use multiple steels, including M3, which 22 has become quite a workhorse to the industry, as 23 well as amorphous core, which also is an evolving 24 technology and material and is starting to take on 25 wider use. Both materials are capable of being 26 used, and I think that that part is good as well. 27 And I think that it keeps the small manufacturers in 28Executive Court Reporters (301) 565-0064 2 0 business, which is something that I personally have 1 worked hard to try to achieve in this process, and 2 I’ve been fortunate to do work for Navigant and 3 certainly my DOE friends as well as many of the 4 manufacturers. So I have to conclude that just 5 excellent work, and of course, Richard Parker, I 6 thought, did a wonderful job also in the process. 7 So that’s heartfelt and not read, but I 8 think that’s what I believe. 9 MR. BROOKMAN: Okay. Thank you. 10 Additional comments here at the outset. It is John, 11 is it? 12 MR. CASKEY: Yes. John Caskey, NEMA. I 13 did prepare some remarks and sent them to Jim. I’m 14 not sure if you got them or not for the record. 15 MR. RABA: I’ve not received them yet, but 16 they will go into the record. 17 MR. CASKEY: Okay. So I’ll get you the 18 more official version, but I’ll just read this very 19 quickly, a part of it. NEMA would like to thank the 20 Department of Energy and its staff for providing 21 NEMA and other stakeholders the opportunity to 22 participate in the innovative negotiated rulemaking 23 process for energy conservation standards for 24 distribution transformers. From NEMA’s perspective, 25 this process has been extremely valuable in helping 26 all the stakeholders understand the interest and 27 concerns of the other stakeholders. In addition, it 28Executive Court Reporters (301) 565-0064 2 1 provided an opportunity for the transformer and 1 steel manufacturers to explain existing technologies 2 and markets, and for the Department’s consultants to 3 refine the various models and input assumptions used 4 in the analysis. 5 From NEMA’s perspective, the energy 6 efficiency levels presented in the NOPR represent 7 the highest level of energy savings that are 8 economically justified and maintain a healthy 9 transformer industry in the United States. Going 10 beyond the proposed levels will disrupt the steel 11 and transformer industries in the U.S. Further, we 12 are concerned that transformer efficiency levels 13 higher than what are contained in the NOPR could 14 lead some utilities to rebuild old transformers in 15 place of buying new, high efficient transformers, 16 which would be counter-productive to the objective 17 of greater energy efficiency. 18 In short, NEMA strongly recommends that 19 the DOE adopt the efficiency levels stated in the 20 NOPR, because we believe these are the highest 21 efficiency levels that are economically justified 22 and support a healthy utility, steel, and 23 transformer industries in the United States. Thank 24

you. 25 MR. BROOKMAN: Thank you. Other comments 26 here at the outset? Jerry. 27 MR. CORKRAN: Jerry Corkran, Cooper Power 28Executive Court Reporters (301) 565-0064 2 2 Systems. I also have a letter in the information. 1 I won’t read the whole letter, but the key sentence 2 in it is that Cooper considers the proposed ruling 3 the best choice for the distribution transformer 4 industry and for the American people who will 5 receive more efficient transformers in a cost6 justifiable manner. 7 MR. BROOKMAN: Thank you very much. Yes, 8 please. 9 MR. COULTER: Greg. Greg Coulter, Prolec10 GE. I have a short statement. Prolec-GE would like 11 to thank you for the opportunity to attend this 12 public hearing and to offer our perspective on the 13 proposed rule as it relates to medium-voltage 14 liquid-immersed distribution transformers. It would 15 also like to thank the Department for allowing us to 16 participate in the recently concluded negotiated 17 rulemaking sessions. 18 Although we were disappointed the process 19 did not result in a negotiated agreement for liquid20 immersed distribution transformers, we feel it did 21 provide a critical venue for concerned parties to 22 communicate their perspectives and positions that we 23 believe has enhanced and resulted in the proposed 24

rule. 25 In the negotiation sessions we were party 26 to and supported the NEMA proposal for liquid27 immersed distribution transformers, which we 28Executive Court Reporters (301) 565-0064 2 3 believed provided significant energy savings while 1 maintaining manufacturers’ ability to utilize a 2 range of materials and sources to achieve those 3 savings. We are pleased to see that the proposed 4 rule is consistent with the NEMA proposal for 5 improving efficiency levels while preserving the 6 flexibility in materials and designs needed to serve 7 the varied requirements of the customers. We 8 commend the work of the Department and offer our 9 support of the proposed rule. 10 However, we remind the Department that 11 NEMA position included provisions relating to 12 special handling of covered products for specialized 13 applications where physical constraints are an 14 ongoing issue. Since GE also manufactures network 15 and vault distribution transformers at our 16 Shreveport, Louisiana location, we want to emphasize 17 that many of our customers for these unique products 18 have critical size, weight, and other physical 19 performance limits that can conflict with changes in 20 efficiency standards. 21 Our written comments which will be 22 provided to the Department will support the 23 recommendations of the working group for networks 24 and vaults established as part of the negotiated 25 rulemaking activities. 26 MR. BROOKMAN: Thank you. Other comments 27 here at the outset. Andrew, do you have a comment? 28Executive Court Reporters (301) 565-0064 2 4 MR. deLASKI: (off microphone comment) So 1 actually, this is going to be a little lengthy, 2 Doug, if you’ll forbear – 3 MR. BROOKMAN: Who are you? (Laughter) 4 MR. deLASKI: My name’s Andrew deLaski and 5 I’m the Executive Director of the Appliance 6 Standards Awareness Project. ASAP is a coalition 7 project that is led by a steering committee that 8 consists of consumer organizations, energy 9 efficiency advocates, environmental organizations, a 10 major public utility, and state government 11 representatives. We are an organization that 12 advocates for cost-effective energy efficiency 13 standards across a range of products, and have been 14 involved in DOE rulemaking processes for about the 15 last 15 years. 16Executive Court Reporters (301) 565-0064 2 5 In this opening statement I want to do 1 five things: 2

 One is I want to correct the record with 3 respect to the positions taken during the 4 negotiation process; 5

 Secondly, I want to make some overall brief 6 observations with respect to the selected 7 levels for low-voltage dry-type transformers; 8

 Third, I want to make two specific 9 recommendations for additional analysis 10 that’s needed with respect to low-voltage 11 dry-type transformers; 12

 Fourth, I’m going to shift from low-voltage 13 dries to the medium-voltage liquid-immersed, 14 and I’ll make some overall observations with 15 respect to medium-voltage medium-voltage 16 liquid-immersed transformers; 17

 And then close with three specific 18 recommendations for additional analysis 19 that’s needed with respect to medium-voltage 20 liquid-immersed transformers. 21 First of all, let me correct the record. 22 If you look at page 2292 of the NOPR, the Department 23 attempted to characterize the positions taken at the 24 end of the negotiation process. In here it states, 25 this is on the right hand side of 7292, lower right 26 hand corner, the document states, “For medium- 27Executive Court Reporters (301) 565-0064 2 6 voltage liquid-immersed distribution transformers, 1 the advocates represented by the Appliance Standards 2 Awareness Project recommended efficiency level, also 3 referred to as EL-3, for all design lines.” 4 So we made it clear during the negotiation 5 that we reserved the right to push for higher 6 efficiency levels in a contested rulemaking. We 7 also made it abundantly clear that we were very 8 prepared to accept EL-2 as a negotiated outcome. I 9 think everybody who was part of that process knows 10 that there was a set of us in that negotiation 11 process who were prepared to accept EL-2 as the 12 outcome, the transcripts from that negotiation 13 process reflect that. 14 So let me just remove any ambiguity. We 15 think EL-2 would be a good outcome as a final rule. 16 EL-2 is best represented by TSL-4. Unfortunately, 17 and this is a little shocking, the Department did 18 not set up a TSL which reflects EL-2 despite the 19 fact that a broad set of stakeholders supported that 20 as a likely or as a good outcome, but TSL-4 is the 21 closest to EL-2 as a – most closely represents EL-2 22

as a TSL. 23 So, I want to shift to correcting the 24 record with respect to low-voltage dries. On low25 voltage dries, on the following page, the document 26 states that “ASAP recommended EL-4 for all design 27 lines.” Again, this is incorrect. We recommended 28Executive Court Reporters (301) 565-0064 2 7 EL-4 for design lines seven and eight. We did not 1 make a recommendation with respect to design line 2 six. 3 MR. BROOKMAN: Will you state where you 4 are again in the record, Andrew? 5 MR. deLASKI: So I’m in the middle of page 6

7293. 7 MR. BROOKMAN: Thank you. 8 MR. deLASKI: Now I recognize that the 9 Department was under extreme time pressure in 10 preparing this NOPR, and I think we saw that during 11 the negotiation process, and again I also applaud 12

the consultants and the team for what was an 13 extraordinary amount of work last fall and working 14 under time pressure to both support a negotiation 15 and to develop a NOPR at the same time, and I 16 suspect that the NOPR, frankly, doesn’t reflect the 17 full negotiation because we were still talking in 18

December 22 nd , and you guys probably had to write 19 this earlier in December. So I think that the 20 record is, if you go back to the complete record, 21 you’ll see that some additional work needs to be 22 done to have the final rule reflect the complete 23 record of the negotiation process. 24 I also think, you know, it resulted in 25 having to rush and, in rushing, mistakes get made 26 and I understand that, but I just wanted to take the 27 time to correct that record, and there are other 28Executive Court Reporters (301) 565-0064 2 8 items within the NOPR that also will need to be 1 corrected I think, based on the negotiation record. 2 I want to then shift to low-voltage dry3 types. The choice that DOE made for low-voltage 4 dry-type transformers, which is TSL-1, in our view 5 does not adequately weight the consumer, 6 environmental, and energy saving benefits from 7 selecting higher levels. And specifically we 8 recommend TSL-3, which is the same as EL-4 as the 9 recommended standard that we think would be a better 10 balancing of the seven factors and would lead to 11 more significant energy savings. 12 Now DOE, in choosing the lower efficiency 13 level leans very hard on concerns about 14 manufacturers. In fact, if you would choose the 15 level that would maximize consumer benefits, you 16

would choose the level that we’ve recommended. In 17 leaning on impacts to manufacturers, there’s really 18 a focus on the capacity of small manufacturers to be 19 able to miter transformers or shift to wound-core 20 construction. 21 We think that the impact on small 22 manufacturers is an important factor to consider in 23 the rulemaking, but it’s not the only factor, and 24 the decision-making here seems to have turned on 25 this one critical question of what are the impacts 26 on small manufacturers. If you look at the data, 27 the Department says that about 50 percent of low 28Executive Court Reporters (301) 565-0064 2 9 voltage dry-type transformers manufactured in the 1 rulemaking. And so specialty – there are a lot of 2 specialty low-voltage dries, and this is where most 3 of the small manufacturers have the bulk of their 4 business that is outside the scope of this 5 rulemaking. 6 The Department also concludes that 75 7 percent of low-voltage dry-type transformers are 8 manufactured in Mexico. These are the commodity9 grade transformers that make up the bulk of the 10 market, and also make up the bulk of the opportunity 11 for energy savings, are being manufactured in Mexico 12 by high volume transformer manufacturers, as opposed 13 to by the small manufacturers that appear to be the 14 primary concern the Department raises with respect 15 to going to higher efficiency levels. 16 So then turning to small manufacturers, 17 the concern the Department raises is the access to 18 mitering machines. To go to EL-4, we recognize, 19 would require manufacturers to miter their cores. 20 You’ve got two options, to buy a mitering machine, 21 which the record shows is an investment of about a 22 half a million dollars for a basic mitering machine, 23 or you can source your cores. About 50 percent of 24 small manufacturers, according to DOE, already have 25 a mitering machine. Half a million dollars is a 26 significant investment, but it’s not an investment 27 that’s outside the reach of most viable businesses. 28Executive Court Reporters (301) 565-0064 3 0 Manufacturers readily acknowledge that 1 they already source their cores. Big manufacturers, 2 the biggest manufacturers to the smallest 3 manufacturers, source cores today. So the notion 4 that you can’t have a viable business that sources 5 cores is inaccurate. It is part of the business 6 today. There is no reason why it can’t be a 7 continuing part of the business in the face of a new 8 efficiency standard. 9 So we think that DOE’s rationale for not 10 selecting the higher level, EL-4, is poorly argued, 11 is not substantiated by the record, that 12 manufacturers can choose to either source cores or 13 to invest in mitering machines to get to the higher 14 efficiency level of EL-4, that DOE should reconsider 15 and reevaluate the options of small manufacturers to 16 comply with the standard. 17 Finally, I would say that it would be 18 irrational, almost silly, to deny the public 19 billions of dollars in net consumer benefits for 20 want of a few million dollars in investment capital 21 in mitering machines. We’re talking about – how 22 many mitering machines are we talking about? What’s 23 the investment? The Department’s analysis doesn’t 24 address this question. We’re talking about 25 significant benefits for consumers and for the 26 environment that are being left at the table for 27 want of a small amount of money to invest, 28Executive Court Reporters (301) 565-0064 3 1 relatively small amount of money to invest in 1 mitering equipment. 2 So, two recommendations, which are 3 somewhat related but not entirely. One is that the 4 Department needs to do additional analysis to fill 5 in the gaps in the engineering curves. This was 6 discussed during the rulemaking process. If you 7 look through the negotiation process, if you look at 8 the results of DOE’s analysis of the national impact 9 analysis and the LCC, what you’ll see is there’s not 10 a big difference between TSL-1, TSL-2, and TSL-3. 11 The Department shows, in fact, that the life-cycle 12 cost analysis is identical between TSL-1 and TSL-2. 13 That’s a shocking result. It’s a result that’s 14 inconsistent with the record, because the 15 manufacturers and everyone sitting around the table 16 said the consumers buy the low-voltage dry-type 17 transformers based on first cost. The market is 18 exactly at the DOE standard, the lion share of the 19 market. Yet the DOE analysis shows that if you go 20 from TSL-1 to TSL-2, there’s no change. And we 21 discussed this during the negotiation process, the 22 reason for that DOE has modeled a flat or virtually 23 flat curve, no change in LCC results as you move 24 from TSL-1 to TSL-2 to TSL-3. And that’s simply not 25 what’s being observed in the marketplace. 26 Purchasers are deciding to buy low cost transformers 27 because they’re focused on first price and to go up 28Executive Court Reporters (301) 565-0064 3 2 to higher efficiency levels does entail an increase 1 in first cost, and that’s not reflected in the 2 numbers. So DOE needs to do additional analysis to 3 fill in those gaps in those scatter plots so that we 4 know what the shape of that curve is. DOE’s 5 consultants during the analysis said on the record, 6 during negotiation, that the analysis for TSL-3 was 7 robust, but they were concerned that the analysis 8 for TSL-2, for EL-2 and EL-4 was inadequate, and 9 that’s the case. It’s inadequate analysis. We 10 don’t have a curve that reflects the actual changes 11 in costs as you go from TSL-1, EL-1 to 2, to 3, to 12 4. When you fill in those gaps, I think you’ll see 13 a shape that would suggest that there’s a more 14 significant change in national savings as you go up 15 from 1, to 2, to 3. 16 One of the gaps that we think needs to be 17 filled in is to look at M4 butt-lap designs for low18 voltage dry-type transformers. This is a gap that 19 we think will show that there’s a more cost20 effective standard at that level. 21 So this leads to my second recommendation 22 which is that DOE needs to more fully investigate 23 the limits of butt-lap manufacturing methods with 24 material substitution. And the Department has 25 concluded in the NOPR that TSL-1 is the highest 26 level that you can go to and still use butt-lap 27 manufacturing techniques. And says, we can’t go to 28Executive Court Reporters (301) 565-0064 3 3 TSL-2, which is the NEMA premium level, because you 1 can’t butt-lap at TSL-2. Yet during the negotiation 2 process, manufacturers said they butt-lapped at EL3 2. So here we have a decision based on an assertion 4 which is not supported by substantial evidence on 5

the record. 6 So DOE, by investigating what are the 7 limits of butt-lapping manufacturing techniques 8 using material substitution will be able to more 9 fully make a decision based on that criteria, which 10 is apparently quite important to the Department. 11 Now, don’t get me wrong, we don’t think butt-lapping 12 should be the criteria by what DOE makes its 13 decision. We think, as I said in my opening 14 remarks, that standards that can be achieved by 15 mitering or wound cores are fully justifiable based 16 on the record. But if you’re going to decide, make 17 a decision based on the limits of butt-lapping, then 18 you need to look for those limits thoroughly. 19 So let me shift to medium-voltage liquid20 immersed. For this equipment super class, the level 21 proposed by DOE is far below the point which would 22 maximize consumer benefits. As with low-voltage 23 dries, the Department has put an inordinate amount 24 of weight on the impacts on manufacturers to the 25 detriment of the potential for consumer benefits. 26 Indeed, the difference between the level the 27 Department proposed and the level that we support, 28Executive Court Reporters (301) 565-0064 3 4 which is EL-2, and EL-2 being best represented by 1 TSL-4, a difference of a multiple of four. So four 2 times the energy savings, four times the net 3 consumer benefits going from the level proposed to 4 the level that we support. 5 The Department leans, in this 6 determination, on impacts on manufacturers, clearly 7 leans on three things: impacts on the transformer 8 manufacturers, particularly small manufacturers, the 9 availability of amorphous metal, and impact on steel 10

manufacturers. These are the three concerns 11 outlined as to the reason why DOE hasn’t gone to 12 levels that would result in larger benefits for 13 consumers. And the crux of each of these points is 14 the crossover point. We all discussed at length last 15 fall, where is this magical crossover point? Where 16 is it that you find that you get robust competition 17 between manufacturers of grain-oriented electrical 18 steel and amorphous metal. We think finding that 19 crossover point is a critical part of the decision. 20 We think it’s appropriate. We want to have an 21 outcome where we have robust competition amongst 22 core steel suppliers, core material suppliers. We 23 think it’s valuable to have three domestically based 24 domestic manufacturers of core material suppliers 25 who are competing robustly in the marketplace to 26 provide core material. In the market today, the 27 grain-oriented electrical steel manufacturers have 28Executive Court Reporters (301) 565-0064 3 5 the lion’s share of the market, AK and Allegheny 1 Ludlum are the incumbent players in the core steel 2 market, so we have two – two competitors who have 3 the lion’s share of the market. Move into a market 4 where we have three competitors we think would be a 5 better competitive outcome than the status quo. 6 So the question is, where is that 7 crossover? During the negotiation – so DOE seems to 8 have concluded that sticking with the status quo 9 where we have two competitors is a good outcome. 10 That’s essentially what we have. During the 11 negotiation, two of the largest manufacturers said 12 on the record that this crossover point, where you 13 get robust competition between amorphous metal and 14 conventional electrical steel is roughly at EL-2. 15 So again, roughly TSL-4. A third major manufacturer 16 on the record said that it’s roughly at EL-1.5. 17 Steelmakers and unions endorsed EL-1 in a 18 written letter submitted to the Department shortly 19 after the new year. EEI, APPA, and NRECA also 20 endorsed EL-1 in a letter submitted to the 21 Department in January. So these positions reflect a 22 diversity of views as to where that crossover point 23 actually is. Now, incredibly, and this is really 24 shocking, the Department actually took the standard 25 below a level recommended by any of these 26 stakeholders in their written comments. Now, I’m 27 not surprised to hear backpedaling this morning, the 28Executive Court Reporters (301) 565-0064 3 6 folks say yeah, the proposal looks good, but it’s 1 actually lower than what they recommended. So for 2 the lion’s share of the transformers on the market 3 for the small single-phase transformers, liquid4 immersed transformers, the proposal was EL-point 5 four. Yet all the stakeholders I just named 6 supported a level higher, EL-1. EL-1.5, EL-2 as the 7 likely crossover point. You know, it’s almost mind8 boggling the Department would go to a level that’s 9 below that recommended by anybody. 10 So we think it’s reasonable to consider 11 going to higher levels in the final rule, as I know 12 the Department does too and has been clear about its 13 proposal. As we think about where that crossover 14 point is, we think it’s reasonable to look to the 15 data and the information from the record during the 16 negotiation by manufacturers which show that that 17 crossover point is roughly at EL-2 or EL-1.5. 18 However, the Department needs independent 19 analysis, so our recommendation is that DOE needs to 20 do a thorough, independent analysis of its own of 21 what the likely crossover points are. Now it’s 22 unlikely to be a single point. This analysis needs 23 to recognize that there’s pricing power in the 24 market for materials. These are large companies 25 that have significant market share. They aren’t 26 price takers. Financial data, financial reporting 27 indicates that grain-oriented electrical steel is a 28Executive Court Reporters (301) 565-0064 3 7 very high profit margin product. Indeed, it is the 1 profit-making center for the steel makers, and that 2 indicates a market in which these folks have some 3 pricing power. So to suggest that they’re going to 4 stand idly by and leave prices unchanged while a 5 competitor enters the market just isn’t accurate. 6 Prices are a factor that will shift in response to 7 new market entries or nearly competitive market 8 entries. 9 So DOE needs to do a new analysis, 10 independently analyzing the competitive – where are 11 these materials competitive - and recognizing that 12 you’re not going to get a single point answer 13 because the prices of the materials will shift in 14 response to the new standards. 15 And the final concern is the impact on the 16 steel manufacturers. This is, of course, a 17 legitimate and important area for the Department to 18 investigate and of concern to, I think, all of us. 19 The incumbent steel manufacturers, of course, have a 20 strong interest in the outcome. Jobs in 21 manufacturing steel, there are jobs in manufacturing 22 amorphous metal. DOE asserts their concern for 23 steel manufacturing jobs, yet has not provided any 24 analysis on what the impact on steel manufacturing 25 jobs are - simply assertions. So the rule will 26 undoubtedly affect steel manufacturers and the 27 manufacturers of amorphous metal, but how? Overall 28Executive Court Reporters (301) 565-0064 3 8 the demand for silicon steel will go up as a result 1 of the low-voltage dry- type rule. It will go up as 2 a result of the medium-voltage dry-type rule. 3 Indeed, a press release issued when the NOPR came 4 out, AK said, looks like our demand is going up 5 because of this rule. The demand for silicon steel 6 went up as a result of the 2007 rule. So the 7 conventional steel manufacturers have seen 8 significant increase in demand for high value 9 electrical steel as a result of the 2007 rule, and 10 again they will as a result of this NOPR if it’s 11 finalized as a final rule. 12 What we don’t know is, at what point does 13 the demand start to go down, because DOE hasn’t done 14 the analysis. We’re seeing increased – there will 15 be increased tonnage for more stringent standards. 16 What you don’t know is at what point does that 17 increased tonnage turn into decreases in tonnage, 18 because they start to lose market share to amorphous 19 metal. Finding that point is a critical charge for 20 the Department, as it moves to go to a final rule. 21 What’s the current tonnage? What changes would you 22 see at different standard levels? And what are the 23 overall domestic jobs at stake? What’s the current 24 employment levels in steel manufacturing for 25 electrical steel and what are the potential impacts 26 of standards on – improved standard levels – for 27 manufacturers of core material, whether those jobs 28Executive Court Reporters (301) 565-0064 3 9 are in Pennsylvania or South Carolina. This 1 analysis simply hasn’t been done, yet the Department 2 bases its decision, in part, on it. There’s no 3 substantial evidence on what the Department has 4 based its decision on when it comes to steel 5

manufacturers thus far. 6 So our second recommendation is that DOE 7 do that analysis. I’m going to close with a 8 discussion of product classes. Greg raised this in 9 his comments about NEMA’s recommendations for 10 specific treatment for transformers. We all 11 discussed this at some length last fall. In our 12 comments at the PTSD [preliminary technical support 13 document] phase, we suggested that DOE should 14 investigate separate standards for pads versus 15 poles. We still think this is a valid approach, and 16 that DOE should investigate and consider trial 17 standard levels that set different standards for 18 pads versus poles. Indeed, the whole analysis is 19 based on that. The proposed rule then combines the 20 pad and poles into a proposal, which again is not – 21 the LCC results in the document don’t even reflect 22 the actual standards proposed because the analysis 23 is based on pads versus poles. 24 So we think that looking at separate 25 standards for pads versus poles would be a way to go 26 forward that would recognize the differences between 27 pads and poles, and potentially be able to reap some 28Executive Court Reporters (301) 565-0064 4 0 of the significant savings going to higher levels 1 with pads than you do with poles. Now we heard a 2 lot about poles during the transformer negotiations, 3 particularly from the rural utilities, and we heard 4 those concerns and we think that separating these as 5 separate product classes would make good sense. 6 There also was a discussion of high BIL 7 ratings during the negotiation. We think that 8 looking at separate standards for high BIL ratings 9 and low BIL ratings make sense. The bottom line is 10 that the bulk of the market is in the low BIL 11 ratings. You don’t want the standards to be held 12 back by the high BIL transformers because of the 13 difficulties of making those more efficient than 14 making low BIL transformers reach higher efficiency 15 levels, such as EL-2 or TSL-4. 16 So our final recommendation is that DOE 17 needs to evaluate some new trial standard levels. 18 We would recommend that DOE first evaluate a trial 19

standard level that reflects EL-2 across the board. 20 We second would recommend that DOE evaluate a trial 21 standard level that evaluates EL-1.5, a level 22 identified by one of the major manufacturers as a 23 likely crossover point. We also would suggest TSL24 A1 and B1, that is for each of those then lower the 25 standard by one EL for the poles. So that would be 26 EL-2 across the board, except for EL-1 for pole27 mount transformers and EL-1.5 across the board, 28Executive Court Reporters (301) 565-0064 4 1 except for El-.5 for poles. 1 We think if DOE evaluated those TSLs and 2 did the additional analysis that we’ve described, 3 that you then would have before you a set of choices 4 that would enable you to better balance the seven 5 factors. As we stand right now, the entire 6 weighting on, you know, what is the minimum 7 disruption for manufacturers, and for steel 8 manufacturers, and the result is that consumers are 9 left with billions of dollars of net savings that 10 are not being achieved, and considerable benefits 11 for the environment that are being left on the 12 table. Thank you. 13 MR. BROOKMAN: Thank you. I want to hear 14 from someone else first, and then I’ll bring it back 15 to you, Phil. We don’t want to do the entire 16 session here based on opening remarks. We want to 17 be rather structured and go through the content 18 that’s here in the slides, but these opening remarks 19 I think are important, so we’ll keep doing this for 20 a little bit. Is it Mike? Mike. 21 MR. HYLAND: Mike Hyland, the American 22 Public Power Association. No consumers have spoken 23 yet, in my opinion. We’ve had environmentalists and 24 manufacturers, and we represent 2000 municipalities 25 that represent about 47 million consumers, and every 26 single dollar increase in cost, guess what, gets 27 passed directly to those consumers. We aren’t for 28Executive Court Reporters (301) 565-0064 4 2 profit, so costs are a big issue for us. We are 1 very happy with the way the rule came out. We can 2 stand by it. But I also worry about the rule of 3 unintended consequences. We sat here two years ago, 4 or I sent comments here two years ago in a 5 different rule and we agreed with what the agency 6 came up with, and then between this point and the 7 final rule in a certain area, we agreed, it 8 increased. 9 And now we’re sitting here in a real mess 10 where the environmentalists are not happy either 11 because this country is poised to actually have a 12 less efficient situation going on as of 2015 if we 13 don’t correct it. So when we look at unintended 14 consequences, when you look at this rule, some of 15 the reasons we’re concerned, if we did go higher at 16 this point, is the refurbish market which you did 17 not talk about in your comments. The refurbish 18 market is a concern for us. We have some utilities 19 doing that already. It’s an unintended consequence. 20 Amorphous cores – many of our members are using it. 21 They’re also showing us that they don’t last as 22 long. We’ve heard some arguments there, but we have 23 proof from one of our anecdotals that they don’t 24 last the same amount of time as the steels we’re 25 using today. And the other is the allocation of 26 resources in these small communities. Every dollar 27 you spend on an increased transformer budget is a 28Executive Court Reporters (301) 565-0064 4 3dollar you’re not spending in another energy1 efficiency manner, whether that is energy auditing, 2 or that is lighting, or whatever it may be, those 3 dollars are precious, and we’re getting whatever at 4 this point in increase, and it’s going to decrease 5 over here a lot more. So the unintended 6 consequences of going higher, at this point, are 7 actually going to hurt the communities that I 8 represent. 9 That’s all I have. We’re really happy 10 with the process, everything went great. Really 11 enjoyed the process since July. Thank you. 12

MR. BROOKMAN: Other comments here at the 13

outset? Steve Rosenstock. 14 MR. ROSENSTOCK: Steve Rosenstock, EEI. 15 Again, we were part of the process. We appreciated 16 being part of the process. Just a couple of general 17 thoughts in opening. I think DOE and the 18 consultants have done quite a bit of analysis, in 19 fact, it seemed like we were getting a new analysis 20 every week somehow from the consultants. It was 21 very amazing how they were able to put out so much 22 work product. 23 In terms of impacts on manufacturers, it 24 does show in the NOPR, Table 5.38 on page 7359, what 25 the impacts are on transformer manufacturers, based 26 on the types of – this is for liquid-immersed 27 distribution transformers. The NPVs [net present 28Executive Court Reporters (301) 565-0064 4 4 values] are all negative across all TSLs. They did 1 the analysis. They’ve already done the analysis in 2 there. I don’t know what redoing that analysis is 3 going to do, but they have shown summary results on 4

the manufacturers. 5 I heard a lot of discussion about the 6 consumers. Well, APPA, NRCEA, and EEI, we’re – EEI 7 is the largest consumer of transformers. We buy new 8 products. We operate them, we maintain them, we 9 replace them. We’re the consumers. I heard a lot 10 of things about consumer benefits. With all due 11 respect, as the actual consumer at the table, we’re 12 happy to speak for ourselves, thank you very much. 13

We have looked at the numbers. We look at them 14 every day. We have our own way of analyzing them, 15 and we think that the – we have some issues with the 16 rule, especially because right now in the NOPR there 17 is no discussion about how vaults and networks are 18 going to be treated. Hopefully this session today 19 we can discuss that and hopefully there can be some 20 changes before the final rule. 21 In terms of more analysis, because of the 22 court-ordered settlement, DOE has to get this rule 23 out October 1, 2012. If they do significant more 24 analysis, they might have to do a supplemental NOPR 25 and have more public hearings, and I don’t – the way 26 the schedule is right now, which is the parties that 27 sued the Department had agreed to this schedule, and 28Executive Court Reporters (301) 565-0064 4 5 some of them are sitting in this room, the rule has 1 to get out October 1, 2012, period, end of quote. 2 So the idea of certain analysis might be nice, but I 3 don’t think the Department has time under the 4 settlement. Thank you very much. 5 MR. BROOKMAN: Other comments, before we 6 start doubling back? Okay. Jerry first. 7 MR. CORKRAN: Jerry Corkran, Cooper Power. 8 I want to speak just on the medium-voltage liquid9 filled. The DOE says in the proposed ruling that 10 the crossover is EL-1. That’s what our computer 11 programs agree with Navigant on. It’s an equal 12 playing field at EL-1 between amorphous and silicon 13 core steel, and when you go – whether you go to EL-2 14 or EL-3 it’s totally dominated by amorphous, so it’s 15 like a teeter-totter when you go past El-1, it’s not 16 a level playing field any more. I want to emphasize 17 that point. 18 MR. BROOKMAN: Okay. Thank you. I might 19 suggest pretty quickly we move towards a more 20 systematic discussion of the content that’s in the 21 record. We’ll take a few more comments. Phil, 22 please. 23 MR. HOPKINSON: Phil Hopkinson, HVOLT, 24 Inc. My good friend, Andrew deLaski, made some 25 comments and I must certainly put something on the 26 record, and having been an engineering manager for 27 both GE’s low-voltage dry-type products as well as 28Executive Court Reporters (301) 565-0064 4 6 Square D’s low-voltage dry-type products, and having 1 done a considerable amount of work on market size, 2 what I can tell you is if we take the low-voltage 3 dry product in total, that there are about 600 4 million sheets of steel that would make up a stack5 core product that covers the industry of low-voltage 6 dries in a normal year today. And as having looked 7 at the investment required to do that with mitering, 8 it would be something that takes not just half a 9 million dollars, but millions and millions of 10 dollars to be able to do that, and that has always 11 been the concern of the low-voltage dry industry, of 12 how much investment can be mustered to support that 13 industry. 14 The small manufacturers that exist in 15 Virginia, in Pennsylvania, in New Jersey, in 16 California, and a good many other states, absolutely 17 cannot afford that investment, and so the issue is 18 will we put those manufacturers out of business, or 19 will we force them to, in effect, purchase cores and 20 perhaps run out of work for them anyway? So that’s 21 low-voltage dries. 22 The other piece is in medium voltage, and 23 I could summarize everything by saying that as Jerry 24 Corkran had indicated, the cliff between M3 and 25 amorphous is at design efficiency level one. If you 26 go past that, it’s a hard move to amorphous and it 27 cuts off M3 core steel and therefore domestic grain- 28Executive Court Reporters (301) 565-0064 4 7 oriented electrical steel and moves it to a Hitachi 1 product that’s out of the country, so that it is not 2 a case of well, maybe we can negotiate a little bit. 3

It’s a hard move. That’s all I have. 4 MR. BROOKMAN: Thank you. I’d like to 5 proceed then with the presentation slides, get Brian 6 Coffey up here. I presume that most of what’s been 7 said here in these opening remarks is embedded in 8 this content, and I’d like to go through and get the 9 varying and different perspectives based on the 10 presentation material. 11 Many of you have participated in the 12 negotiation. Some of you have not participated in 13 this kind of a meeting where there’s a real 14 structured opportunity following presentations to 15 get a vigorous discussion going. So let’s do that 16 now. Brian. 17 Rulemaking History, Schedule and Scope 18 Negotiated Rulemaking Process 19 MR. COFFEY: Brian Coffey with Navigant. 20 I think because of the negotiation process many in 21 the room are more familiar than usual with some of 22 the details of how DOE does its analysis, so I’ll 23 try to move quickly through these slides. For the 24 NOPR stage of the rulemaking, DOE revises several 25 analyses first presented during the preliminary 26 analysis phase and they conduct some other specific 27 to the NOPR. For the final rule, DOE performs 28Executive Court Reporters (301) 565-0064 4 8 revisions to the NOPR analyses as needed. 1 Here’s an overview of the current 2 standards for distribution transformers. I 3 mentioned earlier that low-voltage dry-type has 4 standards set by EPACT 2005, and that both liquid5 immersed and medium-voltage dry-type were regulated 6 in the 2007 final rule. Medium-voltage dry-types 7 were unique in that they had standards that varied 8 by BIL rating, and DOE is considering extending this 9 practice to liquid-immersed units as a result of the 10 stakeholders’ discussion during the negotiated 11 rulemaking process. 12 EPACT 2005 had also presented the 13 definition of distribution transformer, which was 14 refined by the 2006 test procedure rulemaking. I’ll 15 skip reading it aloud for brevity. You can find the 16 text in your handouts. 17 Here’s the second half of that definition. 18 This is how the terms liquid-immersed, low-voltage 19 dry-type, and medium-voltage dry-type are defined. 20

MR. BROOKMAN: Pause there for a moment. 21 Any comment on these definitions? Okay. 22 MR. COFFEY: So here are two requests for 23 comment on the definitions. DOE received comment 24 that rectifier and testing transformers should 25 indicate on their nameplates that they are for such 26 purposes exclusively, and request comments on its 27 proposal to require that. 28Executive Court Reporters (301) 565-0064 4 9 Currently, underground mining transformers 1 are not subject to standards. DOE received comment 2 that transformers used in certain other underground 3 activities, but not mining per se, may face 4 constraints similar to those faced by underground 5 mining transformers. DOE has not proposed to expand 6 the definition of underground mining transformer, 7 but requests comment and information useful in 8 precisely expanding the definition to encompass any 9 activity that entails remove of material 10 underground, such as digging or tunneling. 11

12 MR. BALLO: Tim Ballo, EarthJustice. A 13 couple things on this issue. In the preamble for 14

the Federal Register NOPR there is a discussion of 15 including a nameplate on rectifier and testing 16 transformers. I think in principle that’s a good 17 idea. However, there wasn’t, at least I don’t 18 believe there was actual proposed regulatory 19 language in the proposed changes to the CFR [Code of 20 Federal Regulations]. I don’t know that’s critical, 21 but it is usually helpful to see that in case there 22 are issues with that proposed language. The only 23 question I think I have on the nameplate requirement 24 is whether that’s sufficient. I think we heard 25 during the negotiations quite a bit from the 26 manufacturers about potential loopholes, some of the 27 transformers that are defined in the regulations 28Executive Court Reporters (301) 565-0064 5 0 that are exempt from the standards for distribution 1 transformers, particularly other than the rectifier 2 and testing units, the uninterruptable power supply 3 units, and the sealed and non-ventilating 4 transformers. So, I think we had a really 5 productive couple of work groups during the 6 negotiations to arrive at some consensus definitions 7 for networks and vaults and for data center units, 8 and I am happy to continue with those discussions 9 for any of the other transformers that are of 10 concern as a potential loophole for these standards 11 and to jointly recommend with the manufacturers some 12 proposed changes to the regulatorily defined exempt 13 products. So, happy to have those discussions. 14

15 MR. BROOKMAN: Thanks, Tim. We can see the 16 two comment boxes. Comments to in response to 17 these: the issue of nameplates and precisely 18 extending the definition to encompass any activity 19 that entails the removal of material underground. 20

Steve Rosenstock. 21

22 MR. ROSENSTOCK: Steve Rosenstock,EEI. So 23 does this mean, in Issue 5, that DOE would regulate 24 these nameplates as part of the efficiency standard? 25

26 MR. COFFEY: The proposal is to expand the 27 requirement that such transformers that are for 28Executive Court Reporters (301) 565-0064 5 1 these purposes indicate that on their nameplates. 1 So, that would be part of the regulation, yes. 2

3

MR. ROSENSTOCK: So DOE would have to 4 enforce that as part of their regulations? 5

6 MR. COFFEY: Just as any other regulation, 7

sure. 8 MR. BROOKMAN: I’m not seeing anybody 9 wanting to comment on those. Nothing to be said. 10 Phil. 11 MR. HOPKINSON: Phil Hopkinson, HVOLT, 12 Inc. I’m making the presumption that if a 13 transformer is a rectifier transformer and perhaps a 14 three-phase, and perhaps it’s a delta primary with a 15 delta and a Y low voltage or some multiple low 16 voltages, that it would be pretty obvious just by 17 the way it’s configured that it’s for rectifier 18 applications. But are you suggesting that the word 19 rectifier needs to be added to the nameplate as 20 well? It just adds more congestion. 21 MR. COFFEY: So that’s helpful feedback. 22 If there’s not room on the nameplates, you could 23

comment on that. 24 MR. BROOKMAN: Okay. So with no 25 additional comments, we’re going to move on. 26 MR. COFFEY: DOE published a test 27 procedure for distribution transformers in 2006, 28Executive Court Reporters (301) 565-0064 5 2 which is used to assess compliance today. DOE is 1 considering making updates to that test procedure 2 and has requested comment on a number of test 3 procedure-related issues. Some of the issues that 4 have been raised with respect to test procedure. 5 Currently DOE requires that transformers be tested 6 in the winding configuration that produces the 7 greatest losses, but it has received comment that 8 this may significantly disadvantage certain types of 9 transformers. Allowing compliance in any 10 configuration, however, allows transformers to be 11 operated in a mode less efficient than that in which 12 they comply. 13 DOE seeks comment on winding 14 configurations as they relate to energy efficiency, 15 data on how often transformers may be operated in 16 each configuration, and on characteristic efficiency 17 differences between the two configurations, two or 18 more configurations. 19 Also, DOE requests comment on its proposal 20 to require compliance at only KVA ratings that 21 correspond to passive cooling in cases of units with 22 more than one KVA rating. 23 Okay. We’ll move on. 24 MR. BROOKMAN: Hang on, one moment. 25 MR. ROSENSTOCK: Steve Rosenstock, EEI. 26 It’s actually a bigger, kind of a general question. 27 If you’re talking about – you’re saying update the 28Executive Court Reporters (301) 565-0064 5 3 test procedures. Is there a separate rulemaking 1 going on for updating these test procedures, because 2 I thought there’s supposed to be finalized before a 3 new rule takes effect. Am I – is that – 4 MR. COFFEY: That’s right. DOE hasn’t 5 published anything yet, but is considering doing so. 6 MR. ROSENSTOCK: Steve Rosenstock, EEI. 7 Is it – but at what stage? Is it – would it be at 8 the preliminary analysis stage, the NOPR stage for 9 the test procedure? Or a final rule stage for the 10 test procedure? The reason I’m asking is because of 11 the timing. 12 MR. COFFEY: Sure. And you’re correct to 13 point out that there’s a requirement that test 14 procedure must be finalized so many days before the 15 final rule is published. So DOE would have to 16 observe that requirement. 17 MR. ROSENSTOCK: Okay. So – again, Steve 18 Rosenstock, EEI. Is there a schedule for this test 19 procedure update? 20 MR. COFFEY: None that has been publicly 21 announced yet. 22 MR. ROSENSTOCK: Okay. 23 MR. BROOKMAN: Jim Raba. 24 MR. RABA: Right now we’re just taking – 25 Jim Raba, DOE – comments from interested parties 26 about the test procedures and could they be amended, 27 could they be upgraded? Should we take a look at 28Executive Court Reporters (301) 565-0064 5 4 them? If it’s going to be scheduled, there’s time 1 yet to entertain this as a possibility for the 2

future. 3 MR. BROOKMAN: Phil. 4 MR. HOPKINSON: Phil Hopkinson, HVOLT, 5 Inc. As I sit here thinking about the implications 6 of the passive cooling, it’s close, but I don’t 7 think it quite captures everything, because some 8 transformers will have a 55/65 degrees C rise 9 rating, and there’s a different KVA that goes with 10 both ratings. So the question I would have is, does 11 it go to the base rating, which I really think is 12 probably the right answer, or does it go truly to 13 this area that makes it somewhat metaphysical? 14

MR. BROOKMAN: John. 15 MR. CASKEY: John Caskey, NEMA. Two 16 points. One is that we really didn’t intend to 17 address all of these issues in the meeting today. 18 We really intend, as NEMA, the organization, to 19 basically submit formal comments by the due date I 20 think is April 10 th or something on that order. So, 21 as an industry, will get together and try and 22 address all of these things effectively, then get a 23 written response to them by the April due date. 24 The other point dealing specifically with 25 testing, since NEMA does essentially own the testing 26 standard at this point, we would be happy to work 27 not only as the industry to try and address any 28Executive Court Reporters (301) 565-0064 5 5 concerns that DOE might have and make sure that they 1 are addressed in the next version of that standard, 2 but we’d also be happy to work directly with DOE to 3 make sure that we can – we can get the industry’s 4 view on whatever changes that they propose relative 5 to the testing standards, just to make sure they do 6 – they are sort of validated that they will work 7 effectively with the industry. 8 MR. BROOKMAN: Okay. Thank you. You can 9 see the comment boxes there. Additional comments on 10 these two issues? Okay,Brian. 11 MR. COFFEY: With respect to BIL ratings, 12 DOE proposes to maintain the requirement that 13 transformers comply with standards at the BIL rating 14 of the winding configuration that produces the 15 greatest losses. So this is currently what is 16 required today. But DOE requests comment on this 17 proposal. It’s worth noting that this is currently 18 only applicable for medium-voltage dry-type units. 19 Another issue raised during negotiations 20 was that of test procedure loading. DOE requests 21 comment on its proposal to maintain current loading 22 values for all types of distribution transformers 23 within its scope, and any data useful in considering 24

the matter. 25 MR. BROOKMAN: So let me say that it’s 26 also helpful to comment if you think the Department 27 is going in the right direction. Yes, Greg. 28Executive Court Reporters (301) 565-0064 5 6 MR. COULTER: This is Greg Coulter, 1 Prolec-GE. I guess I’d like to make some general 2 comments on what’s been said here. During the 3 negotiated rulemaking there was a lot of discussion 4 about this dual voltage issue, as well as the BIL 5 issue. Andrew mentioned it in his comments, and I 6 think these were important points, as we thought 7 that for dual voltage units either on the high side 8 or the low side, they ought to line up with IEEE 9 standards. While there’s not a big difference in 10 losses, it makes it a real complication in the whole 11 process of manufacturing transformers to have a 12 whole different methodology for DOE than exists for 13 the industry, that these ought to line up. 14 The same is true – we discussed the BIL, 15 having different levels for different BILs, and 16 maybe even for dual voltage. That doesn’t change. 17 That issue is still on the table, especially as the 18 whole issue of what final efficiency is going to 19 come out is still on the table. It’s important to 20 keep these issues on the table and we comment to 21 them. It’s tough to comment when you don’t know 22 what efficiency you’re trying to hit and a few other 23 things, but those issues remain, and we think they 24 ought to be segregated in any final rule that comes 25 out. It would require a change in the testing 26 standard. We wonder if that really could happen, 27 but we think that’s the appropriate thing to do. 28Executive Court Reporters (301) 565-0064 5 7 MR. BROOKMAN: Okay. Phil. 1 MR. HOPKINSON: Oh, I’m – Phil Hopkinson, 2 HVOLT, Inc. I would ditto what Greg just suggested, 3 that – and especially I can think in the dual 4 voltage area that sometimes we’ll have two ratings 5 that require two different BIL ratings, so the 6 transformer fundamentally gets insulated for the 7 highest BIL. But the testing, I certainly would 8 concur that if we can align that with IEEE’s 9 requirements, it makes life much better for those 10 who are manufacturing the transformers. 11 MR. BROOKMAN: Brian, is there anything 12 specific you want to get out of this that you want 13 to ask in addition to the comment boxes? 14 MR. COFFEY: No, I think just to Steve and 15 John’s points, these are in here not because the 16 matter needs to be fully discussed or decided today, 17 but because DOE wants to draw attention to these 18 issues so that people can start thinking about them, 19 and submit detailed comments so that if DOE does 20 decide to take some action on the test procedure, it 21 can be as informed as possible. 22 MR. BROOKMAN: Additional comment? Yes, 23

Bob? 24 MR. SAINT: Yes, I’m Bob Saint with 25 National – NRECA. And just an observation. I don’t 26 know that much about testing, but just remind folks 27 that the testing procedure has little relationship 28Executive Court Reporters (301) 565-0064 5 8 to the loading – actual loading and operation of the 1 transformers. And they just define the way that we 2 define the percentage, percentage of loading, of 3 efficiency. And if we go and change the testing 4 procedures, keep in mind that it’s still not going 5 to reflect the operation of the transformer. We 6 can’t, because all transformers are operated 7 differently. But they will change the way that the 8 numbers come out. So to me it will confuse the 9 issue more than help this situation. But, again, 10 I’m not the expert on testing, but it seems like 11 opening up this part of the process with the short 12 time we have is not a productive use of our time. 13 MR. BROOKMAN: Okay. 14 EPCA Factors, Scope, Definitions, 15 Test Procedures, Equipment Classes 16 MR. COFFEY: So here’s the rulemaking 17 diagram again, and we’ll start by looking at the 18 market and technology assessment. 19 Here’s a mapping of DOE’s scope of 20 coverage into equipment classes. These have not 21 changed since the preliminary analysis, by the way. 22 Each transformer type has classes for single and 23 three-phase units, and then medium-voltage dry-type 24 is further subdivided by BIL rating. So, just a 25 reminder. 26 Here’s a scope issue. DOE received 27 comment that step-up transformers which are 28Executive Court Reporters (301) 565-0064 5 9 currently not subject to standards may be used as 1 step-down transformers in certain cases to 2 circumvent standards. DOE is not currently 3 proposing to set standards for step-up transformers, 4 but does request comment on whether or not they 5 represent a potential loophole. 6

MR. BROOKMAN: Steve Rosenstock. 7 MR. ROSENSTOCK: Steve Rosenstock, EEI. 8 The second bullet, I’m just – you know, on 9 distribution network, they’re using step-down 10 transformers to serve commercial and residential 11 buildings. Can you give me an example of why you 12 would replace a step-down transformer with a step-up 13 transformer? I’m really curious. 14 MR. COFFEY: I think the question is, if 15 they’re not subject to standards and significantly 16 cheaper, will a consumer opt to use a step-up 17 running backwards? 18 MR. ROSENSTOCK: Oh, I see. 19 MR. BROOKMAN: Greg, please. 20 MR. COULTER: This is Greg Coulter, 21 Prolec-GE. We do want to make a comment here, and 22 that is we believe this is an issue, step-up 23 transformers being used for step-down transformers. 24 It’s easy for a customer to say sell me a step-up 25 transformer. For us, it’s the same thing. We don’t 26 care. We give you voltages, what it will do, it can 27 go up, it can go down. We believe somehow this 28Executive Court Reporters (301) 565-0064 6 0 needs to be recognized and we think it ought to be 1 recognized the same way that it ought to be 2 recognized for rectifier transformers, test 3 transformers, everything else. It ought to be 4 identified on the transformer. If you’re going to 5 exclude step-up transformers, it ought to be 6 specified on the transformer, this is for step-up 7 applications only. We think for rectifier 8 transformers they ought to say for that application 9 only. For test transformers, that application only. 10 For mining transformers, that application only. You 11 can find room on a nameplate someplace. I mean, 12 they don’t take a lot of space, but they ought to be 13 either specified that way or not and excluded in the 14

standard. 15 MR. BROOKMAN: Thank you. 16 MR. HOPKINSON: The only area – this is 17 Phil Hopkinson, HVOLT, Inc. The only area that I 18 think that I would have to take my good friend Greg 19 to task on is not that I would disagree that it’s a 20 good idea to do it, it’s just that if I was the 21 customer buying the transformer and I was smart 22 enough to know that it didn’t matter, I could buy 23 this so-called step-up transformer and use it in a 24 step-down application anyway. So my good friend, 25 Greg Coulter, just said he thinks it’s happened, and 26 that doesn’t surprise me. So that I guess I would 27 look at it more matter-of-factly, which is, you’re 28Executive Court Reporters (301) 565-0064 6 1 either going to regulate them or you’re not going to 1 regulate them, and the one area, of course, that we 2 think of immediately is wind farm transformers. 3 PARTICIPANT: Those are special. Yup. 4 MR. BROOKMAN: Thanks Phil. So any other 5 thoughts on this subject? Okay. 6 MR. COFFEY: So, moving on, during 7 negotiations DOE received comment that certain types 8 of liquid-immersed transformers may be especially 9 disadvantaged in terms of meeting higher standards. 10 Two of those are network transformers and vault-type 11 transformers, and because these are new, we’ll read 12 the proposed definitions. 13 Network transformer is designed for use in 14 a vault for occasional submerged operation in water, 15 and to feed a variable capacity system of 16 interconnected secondaries – secondary windings. 17 And that it’s built per the requirements of IEEE 18

C57.12.40. 19 Vault-type transformer is similar but not 20 identical. It’s designed for use in a vault and for 21 occasional submerged operation in water, and built 22 per the requirements of IEEE Standard C57.12.23 or 23

IEEE C57.12.24. 24 And so these proposed definitions came 25 directly out of the negotiation process and DOE is 26 now requesting feedback on whether this is 27 appropriate. 28Executive Court Reporters (301) 565-0064 6 2 MR. BROOKMAN: Did the committee reach 1 agreement on this? 2

MR. COFFEY: There was a smaller subset of 3 members that got together and talked about what 4 would be a sensible definition, so this is the 5 result of what they came up with. Yes. Yes. 6 MR. BROOKMAN: Not by the entire 7 committee? 8 MR. COFFEY: I think most of the committee 9 didn’t give input to this. 10 MR. BROOKMAN: Greg, please. 11 MR. COULTER: I think I would like to give 12 just a bit more emphasis to this, since I did in my 13 opening comments. 14 MR. BROOKMAN: Were you a part of that 15 working group? 16 MR. COULTER: I personally was not, GE 17 was. It was led by Wes Patterson, my colleague 18 sitting here in the audience, I’m glad to see him 19 here today. 20 MR. BROOKMAN: Let me just – your 21 impression was that the committee, the working 22 group, agreed in principle to what’s being described 23

here> 24 MR. PATTERSON: (off microphone) There was 25 unanimous agreement on the working group, but it was 26 also presented to the formal committee and there was 27 no dissension from the formal committee on either of 28Executive Court Reporters (301) 565-0064 6 3 these definitions. 1 MR. BROOKMAN: Okay. That’s an important 2 point. That wasn’t on the record. He said it was 3 formally presented and there was no decision by the 4 larger committee. 5 MR. PATTERSON: (off microphone) No, I 6 said there was no dissension. 7 MR. BROOKMAN: No dissension, thank you. 8 MR. COULTER: No dissension, and that’s my 9 point. I believe what Wes is trying in a backwards 10 way to say is there was agreement on this. We 11 charged that committee to come forth with this. I 12 think even Andrew mentioned in his comments this. 13 There was participants from the advocates as well as 14 the manufacturers and users. We thought this one 15 here was well vetted during the negotiating 16 committee, and general consensus reached. 17 Unfortunately, we did not vote finally in the total 18 committee because we could never reach agreement on 19 other issues to get to this point. But what we 20 would like to do is see that work come forward and 21 be presented again and utilized as the basis for 22 reaching what we thought was basic agreement during 23 the negotiation committee. 24 MR. BROOKMAN: Okay. So what we’re doing 25 here today is present some boundaries in what these 26 meetings are supposed to accomplish and seeking 27 consensus is not one of the things we typically do 28Executive Court Reporters (301) 565-0064 6 4 in these kinds of meetings, although – we don’t do 1 it here. So, but what we do want is full and 2 complete comment from anybody that wishes to make 3 full and complete comment. So let’s hear it – we’ve 4 heard from you, Greg, thanks for that. Let’s hear 5 from others that have comment on this subject. 6

John. 7 MR. PHOUMINH: John Phouminh, PEPCO 8 Holding Inc. I, as the utility company, we 9 certainly are behind this proposal. Basically, in 10 the District of Columbia here, where we – that’s our 11 service territory, we use a lot of network 12 transformers, and we are facing with space 13 constraints. Typically the old manhole is four and 14 a half by seven, eight. If we were to follow what 15 the proposal will be, the new transformer would not 16 fit in that manhole, and that requires retrofit of 17 course. The cost of retrofit manhole, pass it on to 18 the rate payer, and the customer will not be happy. 19 MR. BROOKMAN: Okay. So just to confirm, 20 you see the comment box, DOE requests specific 21 comment on the proposal to establish a separate 22 equipment class, so let’s here from others on this 23 point. Steve Rosenstock. 24 MR. ROSENSTOCK: Steve Rosenstock, EEI. 25 This was discussed during negotiation meetings and I 26 think this is a very key issue for any utility with 27 urban, especially in urban areas with the networks – 28Executive Court Reporters (301) 565-0064 6 5 with existing networks and vaults. And I think the 1 thought was there should be a carve-out for existing 2 vaults – not new ones, but existing ones, just 3 because, especially because of the size issue. 4 There is just – there’s no room. And if the higher 5 efficiency units need more space, or need more area 6 for cooling, et cetera, and ventilation, it’s just 7 not there. It won’t operate properly. So again, if 8 there was a way to do it in the final rule to have 9 some sort of carve-out for the efficiency levels 10 required for network and vault transformers, we 11 would be in favor of it. Thank you. 12 MR. BROOKMAN: Thank you. Final comments 13 on this? We’ve got a lot to cover here. Keep 14 going. Andrew. 15 MR. deLASKI: So – we’ve discussed this 16 and we agree that there should be – this definition 17 makes sense. I don’t know where it takes you in 18 terms of efficiency levels. Steve’s comment that 19 there’s no room, sometimes there’s no room. I mean 20

there’s often the case that there’s no room and we 21 don’t know what the incidence of that is. DOE has 22 attempted to characterize this. Table V.18 of the 23 NOPR presents the LCC results for vault 24 transformers, and these LCC results indicate that 25 there’s a range of results and if you wanted to 26 minimize the cost for utilities and utilities – 27 those costs then flow through to their customers, 28Executive Court Reporters (301) 565-0064 6 6 would indicate that you would look at TSL – you want 1 to minimize cost, you’re going to go to TSL-5. So I 2 think the question is, you know, what level would 3 you choose once you have a separate standard and the 4 notion that it would stay at zero isn’t supported by 5

the record. 6 MR. BROOKMAN: Where you started was that 7 conceptually you’re okay with this proposal. 8 MR. deLASKI: I’m okay with the definition 9 and I think – I’m not sure if levels will be 10 discussed later. I don’t want my support for 11 definition to be – to imply that I support leaving 12 the standard unchanged. 13 MR. BROOKMAN: I understand. Okay. So 14 I’ll take final comments on this and then we’re 15 moving on. For those of you that are wondering, 16 probably in the next 15 minutes or so, we’re going 17 to take a break, okay, if you’re getting antsy. 18 MR. COFFEY: So also on scope, DOE 19 received comment that a certain type of low-voltage 20 dry-type transformer, those designed for data 21 centers, may be disadvantaged in terms of meeting 22 higher standards. DOE has proposed to establish a 23 separate equipment class for data center 24 transformers and defines them as the following: 25 It’s designed for use in a data center 26 distribution system and has a nameplate identifying 27 the transformer as being for this use only. Has a 28Executive Court Reporters (301) 565-0064 6 7 maximum peak energization or inrush current less 1 than or equal to four times its rated full-load 2 content multiplied by the square root of two as 3 measured under certain conditions, and is 4 manufactured with at least two of the six additional 5 attributes, which are not on the slide, but I’ll 6

read them. 7

 It’s listed by NRTL for K factor rating greater 8 than K4; 9

 temperature rise less than 130 Celsius with 10 class 220 insulation, or less than 110 Celsius 11 with class 200 insulation. 12

 A secondary winding arrangement that is not 13 delta or Y, 14

 copper primary and secondary windings, 15

 an electrostatic shield or multiple outputs at 16 the same voltage. 17

 A minimum of 50 degrees apart, which when 18 summed together equal a transformer’s KVA 19 capacity. 20 So the definition is a little bit 21 cumbersome and not wonderfully lent to be fitting on 22 a slide, but I did want to read it since it was new, 23 and DOE requests comments on the proposal to 24 establish a separate equipment class for data center 25 transformers and on how such transformers might be 26 defined. 27Executive Court Reporters (301) 565-0064 6 8 MR. BROOKMAN: Phil. 1 MR. HOPKINSON: Phil Hopkinson, HVOLT, 2 Inc. I applaud the concept of having a data center 3 transformer. The concept of the inrush current held 4 to four times rating is not accurate, and what 5 really needs to be – the first half-cycle is likely 6 to be in the order of 15 times rated current, so 7 that you would not be able to achieve that. But if 8 it’s measured at a 1/10 th second point, and sometimes 9 these are, then perhaps that can be achieved. 10 MR. BROOKMAN: Okay. Other comments on 11 the class thing. Steve Rosenstock. 12 MR. ROSENSTOCK: Steve Rosenstock, EEI. 13 Actually, kind of a bigger issue. In terms of a 14 separate equipment class, again, maybe I didn’t read 15 that section, does that – I’m neutral on it, you 16 know, if there’s a need for it, then by all means, 17 but the issue at this stage is, I don’t know were 18 there separate efficiency levels in the NOPR for 19 these products? If the answer is no, we have an 20 equipment class that still has to meet the standards 21 that have been set for all the other low-voltage 22 dry-type transformers. If yes, then people need an 23 opportunity to see what those proposed efficiency 24

levels would be. 25 MR. COFFEY: So there are none proposed 26 right now. This is sort of a low-voltage dry-type 27 analog of the network and vaults for liquids, where 28Executive Court Reporters (301) 565-0064 6 9 the committee said, hey, these certain types of 1 transformers may be especially disadvantaged, let’s 2 get a group together and come up with the 3 definition, and then request comments on the 4 appropriateness of that, and how best to treat 5 transformers. So we’re hoping that those that have 6 knowledge and opinions on the subject will be able 7 to submit some comments to help DOE reach a 8 decision. 9 MR. BROOKMAN: Andrew deLaski. 10

MR. deLASKI: Just to follow on Steve’s 11 comments. I mean it is hard to disentangle this 12 question of these definitions and the levels. We 13 discussed these definitions in the context of the 14 negotiation. I think many of us were thinking that 15 the proposal and the final standards may ultimately 16 be higher than what are already contained in the 17 proposal. And the definition may become unnecessary 18 if the proposal ends up being as modest as the 19 initial – the final ends up being as modest as the 20 initial proposal. If we go to higher levels, such 21 as we’ve recommended, then I think some of these 22 definitions become necessary to test for the data 23

centers and the vaults. 24 MR. BROOKMAN: Okay. Thank you. Yes, 25

John. 26 MR. CASKEY: John Caskey, NEMA. I think 27 actually we’re missing a significant point here, 28Executive Court Reporters (301) 565-0064 7 0 both I think in issue nine as well as in issue ten. 1 You’re asking for comment specifically how such 2 transformers might be defined. I think the group 3 working on the network and vault transformers did a 4 good job of defining what they are as well as here, 5 what’s for data centers. But the thing that’s not 6 asked for, which I think is pretty critical, is how 7 should they be treated relative to the proposed 8 energy efficiency rating. So it’s both the 9 definition and the treatment in terms of energy 10 efficiency ratings. 11

MR. BROOKMAN: Is that covered elsewhere? 12 MR. COFFEY: No, I think that that 13 information, any opinions, or data on how these 14 transformers may be specifically affected would 15 absolutely be helpful to DOE. 16 MR. BROOKMAN: Thank you, John. 17 Okay. Let’s keep going. 18 MR. COFFEY: DOE also received comment 19 that pole- and pad-mounted transformers, and a 20 couple of folks in the room today have brought this 21 up, may face different incremental cost behavior as 22 efficiencies rise. Although not currently proposing 23 to establish separate equipment classes for pole24 and pad-mounted units, DOE does request comment on 25

whether those would be warranted. 26 MR. BROOKMAN: Yes, please, John. 27 MR. PHOUMINH: John Phouminh, PEPCO 28Executive Court Reporters (301) 565-0064 7 1 Holding Inc. PHI supports the proposal to separate 1 pole-mount versus pad-mount transformers. We have a 2 situation where pole-mount is too big, especially 3 the bigger size 333, 500 KVA. It’s just like a size 4 of a Volkswagen on top of a pole, and that is not 5 pleased with the customers, and we have to go a 6 different route, which is more expensive, and of 7 course, that cost being passed on to the customers. 8 PHI supports the issue number 11. I will write it 9 up to be sent to the DOE. 10 MR. BROOKMAN: Thank you. Additional 11 comments on pole versus pad. Bruce. 12 MR. HIRSCH: Bruce Hirsh, Baltimore Gas 13 and Electric. I’d like to reiterate that too, that 14 the conditions under which we’ve got to mount pole15 mount transformers compared to pad-mounts are a lot 16 different, and that affects – the efficiency of the 17 transformer affects the size and the weights, and 18 the size and the weights when you’ve got to hang it 19 on a wood pole becomes a major problem for the 20 utility industry and major cost to change out. And 21 so I think that falls right in line with some of the 22 other discussions that we’ve had. Andrew’s pointed 23 out a lot of times we don’t want to hold up a whole 24 class because of a certain grouping, and I think by 25 separating them out, we could handle each class 26 better that way. So we support it too. 27 MR. BROOKMAN: Okay. Any additional 28Executive Court Reporters (301) 565-0064 7 2 comments. Andrew. 1 MR. deLASKI: So we certainly would be 2 interested in seeing, as I said in my opening 3 remarks, trial levels that reflect these classes. 4 Now ultimately whether you – whether the analysis 5 would support setting different standards is, I 6 think, again a separate question. It has to be 7 looked based on analysis, and we can’t conclude that 8 until we see the separate analysis. And 9 fortunately, DOE does have this analysis because 10 they have done pads and poles separately in the 11 analysis, and they set a standard which seems to be 12 somehow an averaging of the two. So the proposed 13 standard, for example, the design line 1, is a 3.3 14 percent reduction in losses, whereas the EL-1, the 15 level that many stakeholders supported, was an 8.7 16 percent reduction in losses for that transformer. 17 So I think getting to analysis that specifically 18 addresses – or basing the standard on the analysis 19 which has been done, I think makes totally good 20 sense, and I think LBL and the Navigant team did a 21 good job of coming up with analyses for – taking 22 into account full cost, and that was something that 23 was vetted, I think, pretty thoroughly during the 24 negotiation, and that basing – coming up with 25 appropriate levels for poles and pads would make 26 good sense. And it’s also – I think one thing that 27 I’ve noticed that you know a pole versus a pad, and 28Executive Court Reporters (301) 565-0064 7 3 you’re not going to put a pad-mount transformer on a 1 pole, so I don’t see a loophole problem here in 2 defining these things and creating those classes 3 should be well within the scope of what can be 4 accomplished in the final rule. 5 MR. BROOKMAN: Okay. Thank you. 6 Additional comments on pole versus pad? I think 7 maybe we should take a break at this point. The 8 engineering analysis section has got a lot of 9 content and may take a little bit of time. 10 Looking ahead for the rest of the day, I 11 figure – it’s now almost – we’re going to return 12 here at five minutes to 11 to resume. Probably, 13 when we return we’ll continue working at least to a 14 late lunch, perhaps 12:30 or 12:45 or so, see how 15 far we can get before we start to crater, and then 16 we’ll see how far we get, but there’s a lot of 17 content yet to be covered here, so I’m thinking 18 we’re probably going to not reach the original end 19 time as stated in the agenda, and no one wants to 20 truncate your opportunity for comment. 21 So those of you that are not familiar with 22 the Forrestal Building? You need to wear this, it 23 needs to be visible above your waist. There are 24

rest rooms on both ends of the hall. There’s a 25 coffee shop down on the ground floor that’s G, 26 ground floor, just below us. So go to the elevator 27 banks, go down and get it. Please go quickly, 15 28Executive Court Reporters (301) 565-0064 7 4 minutes will fly by and they’re not very efficient 1 down there at times, and we will resume at 10:55. 2 And let me – this is a good start on the 3 day, we’re getting some really good comment here. 4 We’ll see you back here at 10:55. 5 (Whereupon, at 10:40 a.m., the meeting was 6 recessed for a 15-minute period.) 7 MR. BROOKMAN: Okay. Let’s resume. Many 8 of you have received a photocopy of the business 9 cards of everybody who’s attending here today. 10 That’s available, in the event you didn’t get hold 11 of one, Brenda Edwards has them, and she’s handing 12 them out, so that will be a copy of who all’s here. 13 We left off with the engineering analysis, 14 that’s where we’re going to resume, and back to 15 Brian Coffey. Let’s start folks. Okay, Brian. 16 Engineering Analysis 17 MR. COFFEY: Yes, thank you. So this 18 brings us to the engineering analysis wherein DOE 19 analyzes the cost efficiency behavior of different 20 types of transformers. Here are the liquid-immersed 21 equipment classes one and two. I mentioned liquid22 immersed BIL ratings earlier and DOE is requesting 23 comment on the possibility of establishing equipment 24 classes by BIL rating for liquid-immersed as it 25 currently does for medium-voltage dry-type units, 26 and if so, on an appropriate methodology for doing 27

so. 28Executive Court Reporters (301) 565-0064 7 5 MR. BROOKMAN: So you can see the classes 1 listed there. Comments on this method of rating and 2 also the methodology? Phil. 3 MR. HOPKINSON: Thank you. Phil 4 Hopkinson, HVOLT, Inc. I think that – a couple of 5 thoughts. One of them is that there is less of an 6 impact for BIL in liquid-filled than there is in 7 dry-type only because it takes a lot more separation 8 between the windings to achieve a 125 BIL or 150 KV 9 BIL in dry-types than it does to move up in liquid10 filleds from 95 to 125 to 150. So, depending on how 11 far the efficiency gets pushed, it may be an issue. 12 But if it’s a minor impact, then maybe not so 13 important. 14 MR. BROOKMAN: Okay. Comments related to 15 using BIL ratings as the differentiator? No 16 additional comments on this. Okay. 17 MR. COFFEY: During the negotiation 18 process, stakeholders discussed the appropriateness 19 of certain design option combinations for certain 20 design lines. As a result, DOE removed step-lap 21 mitering as a core construction method for design 22 line six which represents small single-phase low23 voltage dry-type units. It also added mitering cost 24 for ordinary full mitering and for step-lap mitering 25 to better reflect the added cost of manufacturing 26 transformers in this way. Finally, DOE received 27 comment that few, if any, transformers are built in 28Executive Court Reporters (301) 565-0064 7 6 the United States using ZDMH steel, and as a result, 1 DOE removed ZDMH from consideration in the base 2

case. 3 Here’s a table of – the first table of 4 materials prices DOE uses in its analysis. I would 5 point here that the economic results, so life-cycle 6 cost, payback period, national impacts are based on 7 an equal rating of the 2010 and 2011 materials price 8

cases. 9 So I won’t linger here for too long. You 10 all have the prices. Here’s the second table. And 11 DOE requests comment on these as they are in 12 continuous fluctuation. 13 MR. BROOKMAN: Yes, please, Ray. 14 MR. POLINSKI: Ray Polinski, ATI15 Allegheny. I think it’s clearly on the record. You 16 know, Brian, there was a lot of discussion about the 17 M3 price for 2011 during our meetings, and it was 18 clearly incorrect or whatever in 2011, so I just 19 want to reiterate that. I think we actually – the 20 transformer producers kind of did a little poll, the 21 prices that they were paying, and the M3 price was 22 very important price in the analysis. It was 23 understated in 2011. 24 MR. BROOKMAN: That’s in the record. 25 Okay. Thank you. Steve Rosenstock. 26

MR. ROSENSTOCK: Steve Rosenstock. A 27 couple things. At one point there was data shown, 28Executive Court Reporters (301) 565-0064 7 7 especially for transformers, I don’t know about 1 materials, showing just the fluctuations. There was 2 2006, 2008 and 2010, just kind of showing the wide 3 range of what was happening, especially on the 4 commodities market. And then later on in 5 negotiations, it was just, oh, we’re going to – now 6 we want to use 2011 prices for the analysis. I 7 never really got a clear explanation about why DOE 8 had to use 2011 prices and I did look through the 9 slides, it’s not showing up, and I asked the 10 question, well, to be analytically consistent, why 11 aren’t you using 2011 power prices? I never 12 received an answer for that either. It was like 13 we’re going to take A of 2011, and some 2008 data, 14 and we’re just going to extrapolate, then use the 15 exact, most recent power prices which based on EIA, 16 especially at the wholesale level which has an 17 impact on transformer cost savings, were 18 significantly lower in 2011 than 2010, the order of 19 18 percent in the Pacific Northwest, and in other 20 parts of the country, let me see, they show the 21 percentage – EIA shows the percentage here, at least 22 a good 10 or 15 percent. They don’t show the exact 23 numbers here, unfortunately. Much, much lower than 24 AEO 2011 would have indicated. So it’s kind of a 25 bigger picture, but it seemed like there was a rush 26 to say we have to use 2011 prices, even though you 27 had this range from 2006 to 2010 on the materials 28Executive Court Reporters (301) 565-0064 7 8 side, which affects the transformers, but in terms 1 of on the cost savings side, well, we’ll just use 2 the old projections and we’re not going to be as 3 critical to use the 2011 power prices. That’s 4 analytically inconsistent and I never received an 5 answer for it. I hope to receive an answer for it 6 at some point, but again, just very analytically 7 inconsistent to say we’re going to try to use the 8 most recent prices for one part of the analysis, 9 we’re not going to worry about it for another part 10 of the analysis. Thank you. 11 MR. BROOKMAN: Mike Rivest. 12 MR. RIVEST: Mike Rivest. I’m not going 13 to speak for the Department, but I had a similar 14 thought process going on that you just had. One 15 thing that I thought about, which might make the 16 inconsistency a little less inconsistent, is that in 17 the case of the AEO, we’re talking about an update 18 to a forecast, I believe. Whereas here we’re using 19 existing prices as a proxy for a future price. And 20 so this 2011 price is the price of steel in 2011. 21

It’s no one’s forecast. It’s no one’s 2011 forecast 22 for 2015 of the price of steel. So that’s the 23 difference, and by averaging two years, maybe it’s a 24 more robust range of pricing, if you will, of what 25 might happen in 2011. And it is consistent to what 26 was done in the previous rulemaking where it was the 27 averaging of five years. 28Executive Court Reporters (301) 565-0064 7 9 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 1 appreciate that and have just – it seemed like I 2 thought they were going to use an averaging of five 3 years, 2006, 2008, 2010, and the impression that I 4 got, and if I was wrong, please, please correct me 5 and please forgive me as well, that no, we’re going 6 to try to use the 2011 prices as the starting point 7 and then extrapolate, and then use that for the 8 future projections, the future analysis. 9 MR. RIVEST: I remember hearing that. I 10 didn’t say that, though, but I remember hearing 11

that. 12 MR. ROSENSTOCK: So, again, and my point 13 is, if you’re so intent on using 2011 material 14 prices then extrapolating it, forecasting, why not 15 use the 2011 power prices? That’s my – that was my 16 question, just in terms of just an analytical 17 consistency, because there was significant drop in 18 power prices in many parts of the country that AEO 19 2011 did not pick up, so it just seems rather 20 inconsistent to use one but not the other. 21 MR. BROOKMAN: Let’s see if we have any 22 additional comment. Mike, you have anything 23 additional to say. 24 MR. RIVEST: Well, maybe the misstatement 25 was the previous statement about consistency being 26 using 2011 prices of steel being consistent with 27 using AEO 2011 forecasts for 2015, maybe that was 28Executive Court Reporters (301) 565-0064 8 0 the inconsistency, and not what we did this time. 1 MR. BROOKMAN: Katie Coughlin. 2 MR. RIVEST: And why we didn’t use five3 year steel prices, I just don’t think we had five 4 years of steel prices. 5 MR. BROOKMAN: Katie Coughlin has joined 6

us here. Go ahead. 7 MS. COUGHLIN: Yes, this is Katie 8 Coughlin, Lawrence Berkeley Lab. I want to clarify 9 something. The reason why we need – okay, so the 10 LCC, the purchase price increase is an up-front cost 11 that occurs in the sort of first year of the LCC. 12 And then the payback occurs over the forecast 13 period, so the LCC requires essentially an 14 evaluation of the cost of the unit in one year, and 15 then a forecast of energy prices over up to 30 to 40 16 years. That’s why we need to use AEO forecast data 17 to get the LCC. And as far as updating the base 18 year electricity prices, analytically, it actually 19 doesn’t make any difference because everything has 20 to be scaled to the current version of the AEO in 21 order to give us a consistent data set across all of 22 the years of the analysis period, and all of the 23 regions that we’re using in the analysis, sort of 24 spatial breakdown. But there’s no analytical 25 inconsistency because the purchase price is just a 26 one year increase, it’s not projected over time. 27

MR. BROOKMAN: Steve. 28Executive Court Reporters (301) 565-0064 8 1 MR. ROSENSTOCK: Steve Rosenstock, EEI. 1 Well, that purchase price, though, that will have an 2 impact on incremental cost which has an impact on 3 the life-cycle cost analysis, so if it changes 4 dramatically as some of these numbers do between 5 2010 and 2011, that could have a significant impact 6 on the incremental cost which spills over into the 7 savings and the economic paybacks, as well as the 8 net present values. And in terms of some of the 9 power prices, I understand that you’re projecting 10 over 40 years, but depending on where you start, 11 that could have a huge difference. If you’re 12 starting at a level that’s 20 percent higher at the 13 beginning, that’s going to have an impact over the 14 30 years if you’re using the same projection 15 pattern. 16 MR. BROOKMAN: Okay, Steve. 17 MR. ROSENSTOCK: Thank you. 18 MR. BROOKMAN: Thank you. Greg – oh, Bob. 19 MR. SAINT: Bob Saint, NRECA. So, as a 20 result of all these numbers we’re using, we’re using 21 steel prices 2011, which are artificially low or 22 historically low because the demand for transformers 23 is down because of the economy. And in the last 24 negotiations in 2007, we were all concerned about 25 the cost of steel is going crazy, availability is 26 still six months, eight months, a year out – that’s 27 not the case in 2011. Cost of steel is down, 28Executive Court Reporters (301) 565-0064 8 2 availability is up, so yeah, we’re using the 2000 1 data for steel costs, so we use – on the other hand, 2 we’re using artificially high prices for the cost of 3 power, sometimes two, three times more than we’re 4 paying currently for wholesale power. So as a 5 result, the analysis shows the total owning cost 6 because of the cost of materials is low, the cost of 7 power is high, it shows a total owning cost, more 8 than we think it should be. So, these cost 9 analysis, total owning cost, the payback periods – 10 we’re not comfortable with the analysis, so we’re 11 taking those numbers with a grain of salt, because 12

of the method that were used for the cost of 13 materials, lower than we think they should be, cost 14 of power, higher than we think they should be, so 15 the results are – we’re not comfortable with those 16

results. 17 MR. BROOKMAN: This is the kind of 18 analysis – your analysis, everyone’s analysis that 19 the Department would really like in great detail. 20 So I’m hoping everybody understands that at the 21 table. Your opportunity to set the record straight. 22 MR. SAINT: And we have been working with 23 the consultants, and we will continue to work with 24

the consultants. 25 MR. BROOKMAN: Okay. Great. Which is not 26 to diminish the opportunity to comment as fully as 27 possible right now. Any additional comments on this 28Executive Court Reporters (301) 565-0064 8 3 subject before we move on? Okay. Okay. 1 MR. COFFEY: So now just to talk quickly 2 about scaling, DOE set standards for all KVAs by 3 analyzing 14 design lines and then scaling the 4 results from those to all KVA ratings within its 5 scope of coverage. Previously, DOE had scaled 6 losses by KVA using an exponent of .75 which is a 7 theoretically derived result and which it had heard, 8 was generally good. DOE had received a number of 9 comments, however, that depending on transformer 10 type, the true behavior can deviate slightly from 11 .75, and that fixing the scaling exponent may result 12 in a standard that is far more stringent at certain 13 KVA ratings than others. And so for the NOPR, DOE 14 allowed the exponent to float to align with the 15

selected ELs. 16 So here are the scaling exponents used for 17 the ten equipment classes. They range from, I 18 guess, a low of .67 to a high of .79, so not 19 radically different, but it’s a slight adjustment 20

that we wanted to note. 21 MR. BROOKMAN: Greg. 22 MR. COULTER: This is Greg Coulter, 23 Prolec-GE. Brian, the scaling exponent, we 24 understand why you’re using it. It’s a crude 25 methodology to come across for great variations in 26 KVA. Experience in transformer design says it only 27 works well across short distances of KVA because you 28Executive Court Reporters (301) 565-0064 8 4 get into many other design concerns. For instance, 1 high KVA, three-phase pad have to meet a 5.75 2 percent impedance. You don’t get a smooth scaling 3 like this across the higher KVAs. You may not get a 4 smooth scaling across even single-phase poles or 5 single-phase pads. This works across a small range 6 of KVAs, across small range, those differences don’t 7 mean much either. So, we think it’s important to 8 look across the bigger, broader KVA. You might be 9 able to use the high KVA three-phase, you might be 10 able to find a scaling factor that works across all 11 the high KVAs, and another one that works across the 12 low KVAs. We’re concerned that you even use a 13 technical way to come up with this versus a curved 14 fit after the fact to meet your numbers. It wasn’t 15 clear to me from your explanation. This may not be 16 the best way. That said, our company generally uses 17 stuff between .75 and .8, so I can’t argue too much 18 with the numbers, we just think it doesn’t work 19 across big KVAs swings. 20 MR. BROOKMAN: Okay. Thank you. 21 Additional comments on these scaling exponents? 22 Yes, Phil. 23 MR. HOPKINSON: Phil Hopkinson, HVOLT. 24 I’m not saying it’s wrong, but I am very curious 25 that the dry-types seem to be the ones that have 26 particularly low factors – so the .67, I really 27 don’t know what drives that. Having been a veteran 28Executive Court Reporters (301) 565-0064 8 5 of the use of the three-quarter power and even for 1 dry-types, so I don’t know. It may be correct, I 2 just haven’t looked carefully enough at it. 3 MR. COFFEY: I think that comes mostly 4 from the fact that the committee – so in medium5 voltage dry, the committee reached a consensus, and 6 the consensus that it reached had a lower EL for the 7 lower KVA models than for the higher ones, and so 8 the scaling behavior that reflects that decision is 9 going to be a little bit lower than .75. 10 MR. BROOKMAN: Thanks, Brian. 11

MR. COFFEY: And so here are the formal 12 request for comment for what we just talked about, 13 and also for the fact that in addition to scaling 14 within an equipment class, DOE is faced with 15 determining how single and three-phase transformers 16 – single and three-phase equipment class of the same 17 transformer type rather, should be related. And so 18 the request for comment is on how best to scale 19 across phase counts for each transformer type and 20 how standards for either single or three-phase 21 transformers may be derived from the other type. 22 And the second comment box is on the previous slide, 23 on the scaling exponents. 24 MR. BROOKMAN: Perhaps we’ve covered 14. 25 What about 13? Phil. 26 MR. HOPKINSON: Phil Hopkinson, HVOLT. I 27 think really the only way that you’ll truly know 28Executive Court Reporters (301) 565-0064 8 6 what the answer is, is to request a whole lot more 1 data and then curve-fit it, and then you’ll know, 2 but I think that you don’t have really time to do 3 it, so at this point we really cannot truly refine 4 anything, I think, logically. 5 MR. BROOKMAN: Greg. 6 MR. COULTER: Greg Coulter, Prolec-GE. I’m 7 not positive there’s any reason to scale single8 phase to three-phase. Scale them separately. There 9 is no good single- to three-phase scale. Just don’t 10 bother with it. 11

MR. BROOKMAN: ‘Cause there’s so much 12 variation? 13 MR. COULTER: Exactly. 14 MR. BROOKMAN: Additional comments on how 15 you would handle single, two-, three-phase? Okay. 16 MR. COFFEY: So there’s some additional 17 engineering design constraints that manufacturers 18

face. I’ll read these comment boxes. 19 DOE request comment on the current and 20 future availabilities of high grade steels, 21 particularly amorphous and mechanically scribed 22 steels in the United States. 23 Issue 20, DOE requests comment on its 24 steel supply availability analysis presented in 25 Appendix 3A of the technical support document. 26 MR. BROOKMAN: Ray. 27 MR. POLINSKI: Ray Polinski, ATI- 28Executive Court Reporters (301) 565-0064 8 7 Allegheny. Once again, Brian, I think it was agreed 1 by the entire committee that mechanically scribed 2 material was of very limited availability. Capacity 3 to produce, import producers, and nothing’s 4 available in the United States, so that product, I 5 think, was not going to be considered in the 6 analysis from my recollection. 7 MR. BROOKMAN: Thank you. Please say 8

your name. 9 MR. RYAN: Paul Ryan, Hitachi Metglas. 10 We, Metglas, made it a letter on record to DOE 11 regarding issue 18. So I just want to reconfirm that 12 that’s on the record. It wasn’t included in the 13 packet, but there is a letter to DOE. 14 MR. BROOKMAN: Do you want to summarize 15

that now or – 16 MR RYAN: Well, essentially it says that 17 there is enough capacity to support the marketplace 18 and depending on where the final rule ends, we would 19 accommodate the marketplace in capacity. Those 20 comments were made during the proceedings as well. 21 MR. BROOKMAN: Ami Grace-Tardy. 22 MS. GRACE-TARDY: Yes, we do have that 23

letter. 24 MR. RYAN: Okay. Thank you. 25 MS. GRACE-TARDY: It will be included in 26

the docket. 27 MR. RYAN: Thank you. 28Executive Court Reporters (301) 565-0064 8 8 MR. BROOKMAN: Thank you, Ami. Any 1 additional comment on these issues related to the 2 availability and also price, right – 3 MR. COFFEY: Availability. 4 MR. BROOKMAN: Please, Andrew. 5 MR. deLASKI: I’m having a little trouble 6 with disaggregating the conversation with respect to 7 low-voltage dries and liquid-immersed. So these 8 questions are with respect to both equipment super 9

classes? 10 MR. COFFEY: Yes, they’re general I think. 11 The high grade steels have been more of a concern in 12 the liquid-immersed phase than the low-voltage dry. 13 MR. deLASKI: I just think that one of the 14 things that we have to keep in mind in considering 15 the difference of the two is that the low-voltage 16 dries, as the Department’s analysis shows, 75 17 percent of the volume is manufactured in Mexico. 18 And some of the constraints on core materials are 19 not the same for those transformers are they are for 20 parts that are primarily manufactured in the United 21 States, so let’s be careful that we consider those 22 low-voltage dry market and liquid-immersed markets 23 should be considered separately. 24 MR. BROOKMAN: Okay. Other comments on 25 these two issue boxes? They’re referring to 26 Appendix 3A if you want to take a peek there. Okay. 27

MR. COFFEY: And here’s one last 28Executive Court Reporters (301) 565-0064 8 9 constraint, and this may have been partially if not 1 wholly addressed by the discussion on network and 2 vault transformers and on separating pads and poles 3 earlier, but as a catch-all, DOE requests comment on 4 particular applications in which transformer size 5 and weight are likely to be a constraint, and any 6 data that may be used to characterize the problem. 7 MR. BROOKMAN: We’ve had a little bit of 8 comment on this already this morning. Steve 9

Rosenstock. 10 MR. ROSENSTOCK: Steve Rosenstock, EEI. 11 Just as a reiteration that member companies of all 12 trade associations and the Association [...] have 13 submitted data to DOE on this issue and providing 14 real world examples of the actual impacts and costs, 15 and hopefully that information that we submitted 16 will be used in your – in the final rulemaking. 17 Thank you. 18 MR. BROOKMAN: Thank you. Other comments? 19 No additional comments. Okay. 20 MR. COFFEY: This brings us to markups and 21 energy use and now I’ll invite up Chris Bolduc – or 22 Katie Coughlin, actually, I’m sorry. 23 Markups, Loading, Distribution Channels 24 MS. COUGHLIN: I’m Katie Coughlin, 25 Lawrence Berkeley Lab. It’s good to see you all 26 again. So I’m going to review very briefly the 27 markets and energy use, life-cycle cost, and 28Executive Court Reporters (301) 565-0064 9 0 shipments and NIA, and we’ll be recapping only those 1 subjects where the Department has already received 2 comments which were extensively discussed during the 3 stakeholder – the negotiation, but you’re of course 4 free to comment on any aspect of the analysis, but I 5 will be highlighting a few issues. 6 So to begin with, the markups and loading 7 – for the loading analysis, the issue here is always 8 getting more data, so we have two separate load 9 models, one for the liquid-immersed and one for the 10 dry-type. The liquid-immersed we were trying to do 11 two things. We were trying to capture the 12 correlation between variable hourly prices and 13 variable loads on the transformer, and that was done 14 with a two-stage model. We used Form 714 data to 15 capture the shape of the price-load curve. Price as 16 a function of system load, and then we used a 17 statistical model based on hourly meter data to try 18 to represent the statistical relationship between 19 the transformer hourly load and the system hourly 20

load. 21 We did receive some data from the 22 stakeholders. Overall our findings of the data was 23 consistent with what we have, the biggest drawback 24 is that the transformer data that we received is 25 almost exclusively for low capacity, so units with 26 KVA of 50 or below. So it would be somewhat 27 difficult to verify or to extrapolate that to higher 28Executive Court Reporters (301) 565-0064 9 1 capacities. For dry-type transformers we used CBECS 1 building data to estimate load-factors shapes month 2 by month for the transformer population, and again, 3 we used hourly metered building data to develop a 4 model that relates the monthly load factor to the 5 parameters that determine transformer loading. 6 So DOE seeks comment on any additional 7 sources of distribution transformer load data that 8 could be used to validate the energy use and load 9 characterization analysis. And as I mentioned, we 10 are particularly in need of data for higher capacity 11 and three-phase units. 12 MR. BROOKMAN: Additional data sources. 13 Phil. 14 MR. HOPKINSON: Katie, very interesting. 15 One source of data that frankly I have, when I was 16 working for Square D, we looked at all of the low17 voltage dry-type transformers in the DOE building 18 right here, the Forrestal building, and that data is 19 public record. Be glad to send it to you if you 20 don’t have that, but that was the basis of coming up 21 with, for example, with the 35 percent equivalent 22 load for low-voltage dries. 23 MR. BROOKMAN: Okay. Thank you. So this 24 is always a quest, trying to find this data. Any 25 additional sources? 26 MS. COUGHLIN: So the next issue is the 27 markups. So these are the markups that occur after 28Executive Court Reporters (301) 565-0064 9 2 the unit leaves the manufacturer in the distribution 1 channel. So we have again, since we have two 2 broadly different types of products, we have two 3 different distribution channels. For the liquid4 immersed transformers, the Department is currently 5 using a model in which it’s assumed that the 6 majority of transformers are purchased directly from 7 the manufacturer, so that there is no distributor 8 markup. And to estimate the number of purchasers 9 who purchase directly, we used data from EIA and 10 essentially we have a cutoff on the size of the 11 utility. For smaller utilities the assumption is 12 that there may be a distributor and therefore there 13 will be a distributor markup. So the – under the 14 current parameters, about 80 percent of liquid15 immersed transformers are purchased directly from 16 the manufacturer with no distributor markup. For 17 dry-type transformers, they are primarily purchased 18 and installed by electrical contractors, and so 19 there are a variety of markups that are applied in 20 that distribution channel. 21

So the table shows the two sets of 22 markups, what are the two types of products. In the 23 dry-type the values in parentheses correspond to the 24 low voltage and the other values correspond to the 25 medium voltage. Overall the markups on liquid26 immersed is about 1.54 if it’s purchased directly 27 from a manufacturer, and 1.61 if it’s purchased 28Executive Court Reporters (301) 565-0064 9 3 through a distributor. The markups on dry-types are 1 1.96 for medium voltage, and 1.79 for low voltage.So 2

DOE – 3

MR. BROOKMAN: Steve Rosenstock. 4 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 5 know in other rulemakings you kind of carved out for 6 a commercial product where there’s a multi-site or 7 what we call a national account customer and some of 8 them are also not using distributors as well. And 9 there could be a percentage of the units, just like 10 other products, I’d say lighting products or heating 11 or cooling products, where they’re also kind of 12 going directly to the manufacturer because they have 13 a multisite account with the manufacturer. 14 MS. COUGHLIN: This is for building 15 operators. 16

MR. ROSENSTOCK: Yeah. 17 MS. COUGHLIN: Yes. Okay. 18 MR. ROSENSTOCK: It has been used in other 19 rulemakings as I recall. Off the top of my head, I 20 can’t remember exactly which one, but there might be 21 similar percentages for those type of customers and 22 that might have an impact on some of these as well. 23 Again, I can’t remember the exact specific 24 commercial rulemaking, it might have been like – 25 actually it might have been lighting actually, that 26 there was research done by DOE in terms of how many 27 of them were again direct manufacturer sales to 28Executive Court Reporters (301) 565-0064 9 4 them. 1 MS. COUGHLIN: Okay. 2 MR. BROOKMAN: So these kind or markups 3 can be difficult to disclose at times, but comment 4 from anyone surrounding what you see here? Yes, 5 please, Bruce. 6 MR. HIRSCH: Yes, Bruce Hirsch, Baltimore 7 Gas and Electric. As an investor-owned utility who 8 buys a fair amount of transformers a year, I guess I 9 would like to point out that even though we may deal 10 very closely with manufacturers, a lot of time the 11 manufacture have a local rep that takes care of all 12 the issues and problems. So when you say that most 13 are bought directly from the manufacturers, I’m not 14 sure that’s completely true. I don’t know what the 15 numbers are right now but I’ll go back and look at a 16 typical utility, like Baltimore Gas and Electric and 17 see what I can provide to you. 18 MR. BROOKMAN: There’s something of an 19 intermediary there. 20 MR. HIRSCH: Right. 21 MR. BROOKMAN: Okay. Yes, Phil. 22 MR. HOPKINSON: Phil Hopkinson, HVOLT. 23 The only question that I have, Katie, is as opposed 24 to the cost of purchasing the transformer, you 25 actually have the cost of installation, and it would 26 imply that you’re going to take a transformer out 27 and replace it with another transformer in order to 28Executive Court Reporters (301) 565-0064 9 5 make this comparison, and I wasn’t aware that you 1 were actually going to do that kind of work. 2

MS. COUGHLIN: I’m not sure I understand 3 the question. 4 MR. BROOKMAN: I didn’t either, Phil. 5 MR. HOPKINSON: Okay. Well, let me try 6 that again. So that if we look at a transformer 7 that’s already providing service to a location, and 8 we then consider what it might take to get a new 9 transformer that would be more energy efficient and 10 put it in the same spot, then it would seem to be 11 important to have all of the in and out costs it 12 would take to get the new one functionally doing the 13 work of the old one. But if we’re only looking at 14 the two representative new transformers, sold to an 15 end location, then the installation cost wouldn’t 16 seem to be important, only the purchase cost. So I 17 was scratching my head as to why you show the cost 18 of installation in this markup. Or am I incorrect? 19 Because you have the installation labor. 20 MR. ROSENSTOCK: Steve Rosenstock, EEI. 21 Even in this situation there’s still going to be 22 some sort of extra cost for the actual installation 23 and labor, isn’t there? 24 MR. HOPKINSON: Well, there is, but I’m 25 making the presumption that we are not removing a 26 transformer and replacing it with another, but 27 simply we have a new service, and we have a choice 28Executive Court Reporters (301) 565-0064 9 6 of two transformers to go into the service, one of 1 them being more energy efficient than the other. So 2 it wouldn’t matter what the installation cost in 3 that particular case was. 4 MS. COUGHLIN: You’re right. In the LCC 5 what is compared is the base case which includes 6 installation, and the standards case which includes 7 installation. So we are netting out the base case 8 installation cost. 9

MR. HOPKINSON: I see. 10 MS. COUGHLIN: So this is just a record of 11 the way the costs have been tabulated. 12 MR. HOPKINSON: Okay. Thank you. 13 MR. ROSENSTOCK: Steve Rosenstock, EEI. 14 In the analysis, they’re assuming that certain 15 percentage is replacement, in their analysis 16

17 MR. HOPKINSON: But you still, even if it 18 was replacement, then it wouldn’t – you would still 19 have the in and out cost, whether it was more 20 efficient or not. 21 MR. BROOKMAN: Mike Rivest. 22 MR. RIVEST: Mike Rivest. In some 23 situations, if it’s a heavier transformer, I assume 24 that the installation cost actually goes up. 25 MS. COUGHLIN: Yes, so – 26

MR. HOPKINSON: I see. 27 MR. RIVEST: So it doesn’t always net out. 28Executive Court Reporters (301) 565-0064 9 7 MR. HOPKINSON: So then you consider it. 1

I understand. 2 MR. BROOKMAN: Okay. Yes, we’re moving 3

on. 4 MS. COUGHLIN: Pole replacement. So 5 again, we had a good deal of discussion of this in 6 the negotiations. This issue is specific to design 7 line two which is the only representative unit that 8 is installed on poles, and the issue arises because 9 more efficient transformers can be significantly 10 heavier than the base case unit, and that may 11 necessitate early replacement of the pole. So the 12 current model assumes that the pole will be replaced 13 when either the transformer is 150 pounds or 15 14 percent heavier than the unit that would be chosen 15 in the base case. And we currently cap the pole 16 replacement at 25 percent of the population in the 17

LCC. 18 Replacement costs were developed with 19 reference to RS Means construction data that 20 includes costs of removing pole, and labor, and the 21 amount of labor will depend on the size of the 22 transformer, whether you need one-, two-, three-man 23 crews, et cetera. So we have a broad range of 24 costs, bounded by about $2-6,000. And we also use a 25 – since the poles typically have a lifetime of on 26 the order of 30 to 40 years, we actually have what 27 is essentially an early replacement cost associated 28Executive Court Reporters (301) 565-0064 9 8 with the poles. So we don’t – we assume that the 1 pole has already been in the field for some number 2 of years before it’s replaced. 3 So with this methodology, DOE continues to 4 seek comment on any data or advice that could 5 improve the implementation of this methodology. 6

MR. BROOKMAN: Steve Rosenstock. 7 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 8 like the methodology, but I remember especially from 9 PEPCO saying it wasn’t necessarily the weight 10 increase, it was just the fact if you went, I think 11 the number was over 900 pounds, that even if there 12 wasn’t a replacement, there was a whole host of 13 things that they had to do extra because of that 14 weight issue. 15 MR. PHOUMINH: John Phouminh, PEPCO 16 Holding, Inc. In certain service territory of our 17 area which is on ACE [Atlantic City Electric], we 18 have a union contract. If the pole weight is more 19 than 900 pounds – I’m sorry, if the transformer 20 weight is more than 900 pounds, we’re required to 21 have at least two-men crew, which is total, four 22 people, as well as the arrow board, the traffic 23 signal. It’s not as exactly putting your pole. 24 It’s more involved to it. Of course the pole has to 25 be big, and it’s not only one pole, it will be two 26 poles stands next to each other and put a ... the 27 rail the size of this table next to it, and that 28Executive Court Reporters (301) 565-0064 9 9 final KVA transformer pole, pole-type transformer is 1 weight about 3,000 pounds, probably give or take. 2 That will be three of them, that’s 10,000 pounds. 3 That’s a lot of weight. 4 From PHI perspective, we would like to 5 keep it the way it is, especially the larger size of 6 the pole-type transformers, because anything big – 7 it won’t be big up there and it will be a sore to 8 the eye and the public will be up in arms against 9 it. Of course, you know, and this is one of the 10 things that we’d like to separate between the pole11 type and the pad-mount, we’d like to – we want to 12 propose to DOE to consider that approach. 13 MR. BROOKMAN: Okay. Steve Rosenstock. 14 MR. ROSENSTOCK: And again, another issue 15 that Bruce brought up to me was the fact that, 16 especially in urban areas, it’s not necessarily – 17 the pole might not be replaced, but then there’s the 18 actual – the collocation of other utility equipment 19 on that pole, whether it’s cable or telephone or 20 internet or whatever, that you have to move those 21 services as well. There could be extra cost for 22 that that may or may not be represented in the 23 analysis. So again, I don’t know, Bruce, if you 24 have some thoughts about that, but again, it’s not a 25 replacement issue, it’s simply a pole issue that can 26 have an impact, especially if you’re changing the 27 size of the transformer. 28Executive Court Reporters (301) 565-0064 1 00 MR. BROOKMAN: Bruce. 1 MR. HIRSCH: Just to follow up with 2 Steve’s. It’s not just the weight, but the size 3 also becomes a problem. If we’ve got to fit it in, 4 especially in a replacement case, to an existing 5 system like Steve said, there’s other utilities 6 there, but also we have clearance issues that arise, 7 and that’s a safety problem, and that’s all covered 8 by the National Electric Safety Code. So all of 9 these things lead to issues and problems that we 10 have in the utility trying to utilize overhead 11 transformers that are heavier and larger. So those 12 are issues, and we’ve talked about them before, so I 13 suspect you’ve factored some of this in. 14

MR. BROOKMAN: Other comments on the 15 methodology described here? 16 MR. ROSENSTOCK: I guess my only other 17 comment – sorry, Mr. Brookman – the only other 18 comment is you kind of have it capped at $6,000 in 19 terms of your distribution, I don’t know if that’s 20 too low or not. It might be too low, especially for 21 some of the situations you just heard about. Again, 22 I don’t have the actual data, but there might be – 23 especially in urban areas, that $6,000 could be 24 significantly low, especially for the larger 25

transformers. 26 MR. BROOKMAN: So to receive those 27 comments from you in writing, the Department would 28Executive Court Reporters (301) 565-0064 1 01 really appreciate that. 1 MS. COUGHLIN: Let me just comment that 2 that is for design line two, which is I believe 50 3 KVA, and then we scale those costs upward for larger 4 capacity units. 5 Life Cycle Costs and Payback Period Analysis 6 Okay, so moving on to life-cycle cost. 7 The Department issue that remains open on this is 8 the number of purchasers of transformers – this is 9 really for liquid-immersed transformers, whether 10 they are evaluators as they have come to be called. 11 So the model of the LCC assumes that some fraction 12 of purchasers evaluate the losses of the transformer 13 and express to the manufacturer a preference for 14 more efficiency. So the no-load losses are valued by 15 a parameter that’s called A, and load losses are 16 valued by a parameter referred to as B. And the 17 Department has survey data for A and B values and – 18 so in the model, if a purchaser is an evaluator and 19 A and B values are selected, and then there’s the 20 possibility that the purchaser will choose in the 21 base case a high-efficiency unit. And if that’s the 22 case, then, this purchaser is essentially unaffected 23 by the standard. So these rates of evaluation will 24 affect the net benefit associated with the trial 25 standard level and the effects are carried through 26 into downstream analyses. 27 So we initially started, and I believe the 28Executive Court Reporters (301) 565-0064 1 02 2005 rule used relatively high rates of evaluation, 1 but based on comment from the negotiation process, 2 we’ve changed these evaluation rates so that they’re 3 in the table below. So for liquid-immersed, the 4 default is the ten percent of purchasers are 5 evaluating, and for the dry type, based on comment, 6 we lowered the number of evaluators. It’s not zero, 7 but it’s pretty close to zero. 8 So DOE is soliciting any further comment 9 on these evaluation rates. 10 MR. BROOKMAN: Phil. 11 MR. HOPKINSON: Phil Hopkinson, HVOLT. 12 I’m not certain that I understand what you said 13 there, Katie, and so on the default for liquid14 immersed, you show ten percent – does that mean ten 15 percent of the purchasers go to those who take the 16 default efficiency, and – 17 MS. COUGHLIN: No, the default refers to 18 the default scenario that’s in the tables. 19

MR. HOPKINSON: I see. 20 MS. COUGHLIN: At TSD, and then you have 21 an appendix of sensitivity cases, and there are 22 sensitivities for no evaluators and 100 percent 23

evaluators. 24 MR. HOPKINSON: Okay. I understand. 25

MR. BROOKMAN: Chuck. Please use the 26 microphone. 27 MR. FOSTER: Chuck Foster, EEI. Katie, 28Executive Court Reporters (301) 565-0064 1 03 I’m going to follow up on Phil’s question. I just 1 want to make sure I understand this. Is that – 2 looking at design lines one through five, the 3 assumption built into the – into your analysis then 4 is that ten percent of the purchasers actually do an 5 analysis are evaluators. 6 MS. COUGHLIN: That’s right. 7 MR. FOSTER: I think that’s too low. I 8 think that – I think that that’s too low, but we’ll 9 submit a comment on it. 10 MR. BROOKMAN: Andrew deLaski. 11 MR. deLASKI: And one thing that came out 12 in the negotiation is that just because you 13 evaluate, you can evaluate and still buy the minimum 14

transformer on the market. 15 MS. COUGHLIN: That is correct. Yes, or 16 you can evaluate and still be below the TSL. 17 MR. deLASKI: Right. 18 MS. COUGHLIN: So this may have not a 19 large impact, especially for the higher proposed 20 trial standard levels, the evaluation rate becomes 21

less and less relevant. 22 MR. deLASKI: Right. Think of utilities 23 that are using [...] equivalents to make their 24 decision, you see them defaulting to whatever is the 25 minimum cost transformer on the market. 26

MS. COUGHLIN: Correct. 27

MR. BROOKMAN: Bruce. 28Executive Court Reporters (301) 565-0064 1 04 MR. HIRSCH: Bruce Hirsh, Baltimore Gas 1 and Electric. I’ve done some surveys of utilities, 2 so I’ve got some numbers I can pass on. I think I 3 may have passed them on already to you, but I’ll get 4 them back to you. The one point I would make with 5 this, though, was that I think what you’re finding 6 is that prior to 1910 more people evaluated than 7 they are now because their evaluations may have come 8 in under the DOE required numbers, so if that’s 9 happening, then what happens is they’re not 10 necessarily evaluating. Some utilities are still 11 evaluating, but actually buying the DOE numbers 12 because they are higher than some of the evaluations 13 that are coming out, so it’s a moving number is what 14 I can say. But I’ll get you some numbers that I 15

have. 16 MR. BROOKMAN: Okay. Bob. 17 MR. SAINT: Bob Saint– I was going to say 18 almost the same thing that you were saying Bruce, in 19 that with these higher efficient transformers that 20 we’re required to purchase now, I think fewer 21 people, especially the small utilities are 22 evaluating. But that’s really a misnomer, because 23 we will encourage everybody to evaluate transformers 24 because the standard is based on 50 percent loading, 25 the testing and loading, and if you use a different 26 A and B factor, you can get a different transformer 27 that is more efficient for the way you load the 28Executive Court Reporters (301) 565-0064 1 05 transformer, and it still may meet the 50 percent 1 loading percentage, but it has a different A and B, 2 no load or load loss. So really encourage folks to 3 evaluate transformers to get the most efficient, 4 most cost-effective transformer that they could. 5 So, ten percent – it’s hard to tell how many are 6 evaluating. We do know that we think more folks 7 should be evaluating. But it’s really not an easy 8 process, especially for a small company that doesn’t 9 have the resources to do the analysis. 10 MR. BROOKMAN: Okay. Final comments. 11 Shipments, National impact analysis, Refurbishments 12 MS. COUGHLIN: So for the shipments and 13 national impacts analysis, the issue here is the 14 refurbishments. So first of all, let me make a 15 couple clarifying comments. We distinguish in our 16 language between refurbishments, which is sort of 17 general maintenance that may extend the life of the 18 unit, and a rewind which is where you actually, 19 instead of replacing a unit that’s out of service, 20 you take it apart and rebuild it using the old core. 21 And both types of extended – lifetime extending 22 repairs can be modeled in the national impacts 23 analysis. So we don’t have a problem with 24 implementing that type of model, but at the moment 25 we don’t have any data that gives us the criteria 26 that we need to put into the model. 27 So DOE is seeking comment on what are the 28Executive Court Reporters (301) 565-0064 1 06 economic criteria that a utility purchaser would use 1 in deciding to rewind a transformer rather than 2 purchase a new unit, and the second issue is, what 3 are the – what is the expected lifetime of a rewound 4 unit if it might differ from the lifetime of a new 5 unit? And would there be other types of changes to 6 maintenance practices that could extend transformer 7 lifetimes beyond the lifetime that is currently 8 typical? 9 MR. BROOKMAN: Yes, Please. 10 MR. BERMAN: Robert Berman, Berman 11 Economics. Katie has DOE done any analysis as to 12 what – how many transformers, what percentage of 13 transformers in different categories are rewound now 14 or how transformer rewinds have changed, say between 15 2007 and 2010? Do you have any data? 16

MS. COUGHLIN: We have no data. 17

MR. BERMAN: You have no data at all? 18

MS. COUGHLIN: No. 19 MR. BERMAN: Thank you. 20 MR. BROOKMAN: Phil. 21 MR. HOPKINSON: Phil Hopkinson, HVOLT. 22 What I would say about the rewinds and life is it 23 depends on the rewinder. If we have an equivalent 24 manufacturer to the original manufacturer, who is a 25 high quality transformer producer, I would expect a 26 life comparable to a brand new transformer. On the 27 other hand, if we have one made by a Joe down the 28Executive Court Reporters (301) 565-0064 1 07 street, then I would always be suspect as to what 1

Joe used. 2 MR. BROOKMAN: And would you comment on 3 maintenance practices? 4 MR. HOPKINSON: Maintenance practices, my 5 impression is certainly most small transformers 6 don’t get any maintenance other than when the 7 transformer is cleaned up. So let’s say we took a 8 transformer in to rewind it, I think in every case, 9 the casing is cleaned up and repainted, and some of 10 those repaint jobs are very nicely done and some of 11 them are very poorly done, and of course if they 12 rust out, then end of life comes before the winding 13 gets done. 14 MR. BROOKMAN: Okay. Mike. 15 MR. HYLAND: On the maintenance one, I was 16 just saying to Bob, I think it’s more about 17 protection practices than maintenance practices will 18 affect the life of transformers, such as lightning 19 arrestors and CLFs, things like that. I did hand 20 some information over to you guys, I think I may 21 have sent some in to Chris on the – what’s the 22 criteria for a utility decision to rewind. We have 23 municipals that now are rewinding 100 percent. That 24 criteria is past. And they have a great guy down in 25 Tennessee, North Carolina area that does rewinding 26

and – 27 MR. HOPKINSON: Is his name Joe? 28Executive Court Reporters (301) 565-0064 1 08 MR. HYLAND: But it does tie into to 1 Phil’s comments that we have other parts of the 2 country that they are afraid to have it rewound by 3 the gentleman who’s near them, but it goes back to 4 my original comments in the beginning, you know, a 5 utility, at least municipal, in this economy right 6 now, every dollar means something, and $50,000 means 7 they get rid of an employee. That’s the facts. 8 That’s what they’re going to do. And they’re 9 looking at eking out without passing on any costs, 10 so rewinding has become for them, a market, and 11 every time you add to that market and costs, that 12 market’s going to increase and we have an 13 engineering ops meeting where they’re starting to 14 share these success stories of refurbishing. It’s 15 not something we want to encourage. We would rather 16 them go back to A and B analysis, follow the DOE 17 standards, we’re even big proponents of amorphous 18 core, but that’s the utility decision. And the most 19 you push upward on cost, that’s what it’s going to 20

come down to for our members. 21 MR. BROOKMAN: Would you reiterate that – 22 for high quality rewind, the lifespan is about the 23

same? 24 MR. HYLAND: Well, you can’t tell until 25 you – I mean it’s only become a market in the last 26 few years for some of our members, and if the 27 typical transformer is lasting them in their 28Executive Court Reporters (301) 565-0064 1 09 analysis, 35 years, well, we’ll know in about 25 1 years, won’t we. 2 (LAUGHTER) 3

MR. BROOKMAN: Bruce. 4 MR. HIRSCH: A comment on the rewind 5 market, at least from my company’s point of view is 6 that the more valuable, the more expensive, the 7 larger the transformer is, the more inclined we are 8 to rewind it if we have problems with the windings. 9 And to answer your last question, you know, we feel 10 that a rewound transformer by a reputable company is 11 like buying a new one. So we do that. We don’t 12 rewind a lot of distribution transformers, but the 13 maintenance refurbishment standpoint, Katie, our 14 philosophy at BG&E is if the transformer is less 15 than ten years old, comes back in out of the field, 16 we’ll go over it. If we can refurbish it and maybe 17 paint it up a little bit, maybe replace a bushing or 18 something, if we had to do that, if we could do that 19 for 20 percent of the cost of a new one, we will do 20 that. We will refurbish the transformer and reuse 21 it. So as the transformer prices from an efficiency 22 standpoint, go up, that range where we would be able 23 to afford to refurbish goes up also. So, you know, 24 I would expect, with no change in philosophy, that 25 we will refurbish some more transformers, maybe not 26 a great number more, but we will refurbish more 27

transformers. 28Executive Court Reporters (301) 565-0064 1 10 MR. BROOKMAN: Bob. 1 MR. SAINT: Yeah, there’s very little real 2 evidence on this. We’ve discussed this quite a lot. 3 However, there’s quite a lot of anecdotal evidence 4 and we’ve discussed this a lot too. And just a 5 couple of comments on those anecdotal things. Today 6 our members, the electric co-ops in the U.S., mostly 7 use RUS [Rural Utilities Service] loan funds to 8 purchase transformers and other equipment. And 9 right now, RUS will not loan money on refurbished 10 transformers. However, we have been getting a lot 11 of pressure from our membership to persuade RUS to 12 change that policy. So if we are successful in 13 persuading RUS to change that policy and, like Mike, 14 personally I’m not as keen on using refurbished 15 transformers as some of our members are, but if they 16 do change their policy, then I think you’ll see a 17 lot more people using refurbished transformers for 18 their original purposes. 19 My second point is that we already – we’re 20 talking about two things here, we’re talking about 21 rewinding the transformer, a company taking down a 22 transformer that has failed, or for some reason 23 sends it to a shop to rewind that transformer, and 24 give it back to them. And that’s what Bruce was 25 talking about. The other option is for a utility to 26 go out and buy a new transformer to them that has 27 been discarded by someone else and rewound by the 28Executive Court Reporters (301) 565-0064 1 11 transformer manufacturer, and that’s the real 1 questionable one in my mind, whether Joe down the 2 street has done it or a reputable manufacturer does 3 it. Even the reputable manufacturer, we really 4 don’t know, we really don’t have a great track 5 record on how good those transformers are and have 6 they been tested and, you know, we don’t know the 7 efficiency. We can’t, before they’re rewound know 8 the efficiency until after they’re rewound and 9

measured. 10 MR. BROOKMAN: They’re not required to 11 test or anything? 12 MR. SAINT: No, not at this point, and 13 there’s no requirements, DOE requirements or 14 anything, that they be at a certain efficiency 15 because they are remanufactured transformers. 16 MR. BROOKMAN: Andrew deLaski. 17 MR. deLASKI: A couple points. Bob, you 18 said that – you started mixing up refurbished and 19 rewound in your comments. I thought Katie drew a 20 distinction between what we meant by refurbished and 21

rewound. 22

MS. COUGHLIN: Yes. 23 MR. deLASKI: And what I heard you say, is 24 that RUS, you’re dealing with RUS, and you’re 25 thinking – you’re getting pressured to ask for 26 approval to get loans to purchase refurbished 27 transformers, not rewound. Or maybe you meant 28Executive Court Reporters (301) 565-0064 1 12 rewound. 1 MR. SAINT: Well, new transformers, I 2 guess not newly manufactured transformers, but okay, 3 refurbished – 4 MR. deLASKI: I’m just trying to draw a 5 distinction between refurbished and rewound in your 6

comments. 7 MR. BROOKMAN: Refurbished is not as 8 extensive as rewound? 9

MR. SAINT: Correct. 10 MR. deLASKI: That’s what Katie said. 11

MR. BROOKMAN: In most cases? 12 MS. COUGHLIN: Yeah, at least 13 conceptually, if we are going to model this. A 14 refurbishment would be some kind of repair or 15 perhaps related to protection that would simply 16 extend the life of a given transformer without 17 changing its engineering characteristics. Whereas a 18 rewind is you actually take the unit, take it apart, 19 keep the core, and rebuild everything else. 20 MR. deLASKI: Right, so the point I want 21 to make is I think that DOE needs to consider 22 whether a rewound transformer is a covered product, 23 and the reason why is that you’ve added the value of 24 the product is, if you’re a manufacturer – who’s 25 doing the rewinding, right? It’s not the utility 26 company that’s doing the rewinding, although 27 perhaps. It’s more likely a manufacturer, someone 28Executive Court Reporters (301) 565-0064 1 13 that’s going to remanufacturer, so they’re entering 1 the market as a transformer manufacturer and instead 2 of buying steel from AK, Allegheny, or – they’re 3 buying cores, and then they’re going to wind them. 4 Sounds like transformer manufacturing to me, and I 5 think DOE ought to really consider a guidance that 6 would say those are covered products and subject to 7 the standards. So this is something that needs to 8 be considered. 9 MR. HOPKINSON: Phil Hopkinson, HVOLT. 10 Now some people have said that I disagree with 11 Andrew, and actually in this case, I 100 percent 12 agree with Andrew, so let me say that I really think 13 that if we want to improve the efficiency of 14 transformer energy efficiency across the board, then 15 we really need to look at the refurbish rebuild 16

market as well. 17

MR. BROOKMAN: Robert. 18 MR. BERMAN: Robert Berman, Berman 19 Economics. It seems to me that when you’re talking 20 about rewinding a transformer, scrapping everything, 21 say, except the core, that all you’re doing is 22 talking about sourcing the core as a used core as 23 opposed to a newly built core, and if a transformer 24 with a sourced core is considered under the 25 standards, then a transformer with a sourced core 26 regardless of that source, whether it be a new core 27 or a core from scrap, the transformer is being 28Executive Court Reporters (301) 565-0064 1 14 rebuilt. So I think the model – I think I agree 1 with Andrew that the rebuilt transformer, the 2 rewound transformer needs to be brought under the 3

standards. 4 MR. BROOKMAN: Greg, did you have a 5

comment here? 6 MR. COULTER: Yes. This is Greg Coulter, 7 Prolec-GE. I want to echo Andrew and Phil. But I 8 want to make a little clarification here. One of 9 the problems with these rebuilt refurbished 10 transformers is one is – I don’t want to pick on 11 utilities, but sometimes utility does it himself, 12 and he ought to be free to do what he wants with his 13 own transformer. However, a high percentage of 14 these are sent out to somebody else, ownership may 15 or may not change, and they do rewind transformers. 16 May or may not use the same core. That’s why I get 17 concerned about reuse of the same core. It may not 18 even be the same core in that transformer. They mix 19 and match all the parts and make something work. We 20 find another unfortunate part of this quite often 21 our nameplate goes right back on that transformer. 22 It doesn’t even get nameplated differently, or there 23 may be a sticker on there that says refurbished. 24 This is a tough area, but it’s an area that’s a 25 loophole in this thing, by the comments you heard 26 today, is growing, that’s a real concern to us, 27 especially as a new transformer manufacturer. 28Executive Court Reporters (301) 565-0064 1 15 MR. BROOKMAN: I’m going to entertain 1 comments straight down the line here, starting with 2 Ray first. Go ahead. 3 MR. POLINSKI: Ray Polinski, ATI4 Allegheny. And again, this refurbishment thing, not 5 being a transformer engineer or a utility, but it 6 was the – I think everyone got their arms around it, 7 including the advocates. This refurbish thing is a 8 bad thing because really, the transformers that are 9 failing are some that are 50 and 60 years old, and 10 they’re some of your most inefficient ones on the 11 grid. I mean so it’s kind of like an exponential 12 problem where now you’re taking the most 13 inefficient ones and you’re putting them back in 14 service as opposed to – and so again, one thing that 15 the group talked about, the DOE’s in the business of 16 incenting more efficiencies and they don’t want to 17 do the opposite here, but a program that was 18 discussed that I think everyone got their hands 19 around is another option, another thing for the DOE 20 to consider would be almost like automobiles, a cash 21 for clunkers program where you incent utilities to 22 take out the oldest 60 year old transformers that 23 are maybe 95 percent efficient and replace it with a 24 99 percent efficient transformer. Think about the 25 energy savings – and you could start doing that – 26 there’s sufficient capacity in the grain-oriented 27 supply chain and in the core steel supply chain and 28Executive Court Reporters (301) 565-0064 1 16 in the transformer industry to do that almost 1 immediately. So I just wanted to comment on that. 2 MR. BROOKMAN: I think I saw Bob, Mike and 3 John, and then I’ll go over here to Richard. 4 MR. SAINT: This is Bob Saint from NRECA, 5 and just a small comment, you know, I can’t disagree 6 with the discussion that’s been going on here, but I 7 heard from DOE that they thought it was clear to 8 them that these types of transformers were not and 9 could not be included in the rulemaking. 10 MS. COUGHLIN: Yeah, let me – 11

MR. SAINT: And so as far as DOE’s 12 concerned, this may be a moot point in deciding 13 whether or not to include them. 14 MR. BROOKMAN: Let’s hear from Katie. Go 15

ahead. 16 MS. COUGHLIN: I just wanted to clarify. 17 If the ownership of the unit is retained by the 18 original purchaser, it’s definitely not covered. I 19 think if you were to develop a new industry where 20 you were recycling transformer cores, I think that 21 would be more open. 22 MR. BROOKMAN: I think actually we’re 23 getting ground on this subject here, but let’s try 24 and keep these comments brief. 25 MR. HYLAND: My comment was very similar 26 to Bob’s. I was looking for Dan Cohen. He’s the 27 one who came to our meeting and made it quite clear 28Executive Court Reporters (301) 565-0064 1 17 that DOE has no authority in this area. 1 MR. BROOKMAN: John, final comment before 2 I go over here? Is your mic on? Thank you. 3 MR. PHOUMINH: John Phouminh, PEPCO 4 Holding Inc. I want to make comment that utility 5 like us we would not refurbish the transformers 6 because we don’t have the expertise in that field 7 and the manpower to do that. We might as well buy 8

new transformers. 9 MR. BROOKMAN: Richard. 10 MR. PARKER: Yes, Richard Parker. First, 11 my apologies for arriving late. I spent 30 minutes 12 on the Red Line waiting for a train to come. The 13 Washington denizens know that experience. Anyway 14 it’s just been a pleasure listening to this 15 discussion. Just quickly on this one point, since 16 Dan isn’t here, we did have a very significant 17 discussion about this during the rulemaking process, 18 and what I took away from it was something in 19 between Andrew and Mike, that there are significant 20 issues about where the title passes, and there are 21 opportunities for utilities to sort of game the 22 system by structuring the transaction in a certain 23 way. As a lawyer, I know that the Department also 24 has the means to put substance over form instead of 25 form over substance and perhaps recharacterize some 26 of these transactions if they turn out to be an 27 evasive tactic. 28Executive Court Reporters (301) 565-0064 1 18 So as I recall where we left it was that 1 this would be an issue that the Department would 2 look at, not one that was resolved one way or the 3 other, but an important one for people to discuss. 4

MR. BROOKMAN: Thanks for that 5 clarification. Steve, thanks for being patient. 6 (Fire alarm required exiting building.) 7 (Whereupon, the meeting in the above 8 captioned matter was adjourned for lunch recess.) 9

10

AFTERNOON SESSION 11 1:45 p.m. 12 MR. BROOKMAN: Okay, so good afternoon, 13 welcome back. It’s now 1:45 here in the Forrestal 14 Building. It’s still February 23 rd . We had a fire 15 drill. We had to empty the building out. I’m 16 pleased to see a lot of folks made it back. There’s 17 some others that will still be joining us, but in 18 the meantime, we’re going to proceed with the 19 content, provide an opportunity for each person in 20 here to talk about the things that matter to them. 21 So, we’re going to hear next from Christopher. 22 Trial Standard Levels and Proposed Standards 23 MR. BOLDUC: Hi, Chris Bolduc, LBL. Just 24 to pick up where we left off from lunch. After 25 revising the preliminary analysis we have several 26 downstream analyses, subgroup analyses, manufacturer 27 impact analysis, utility impact analysis, employment 28Executive Court Reporters (301) 565-0064 1 19 and environmental assessment and the regulatory 1 impact analysis. For the purpose of today’s 2 presentation, the Department doesn’t have any 3 comments, we’re not seeking comments on any of 4 these, but you’re free to comment if you wish after, 5 in the unstructured time. 6 I’ll move into the trial standard levels 7 and the selection of these trial standard levels for 8 the liquid-immersed transformers. TSL-1, which is 9 the proposed standard – do you have a question, 10 Andrew, sorry. 11 MR. deLASKI: On the previous slide. 12

MR. BOLDUC: Yes. 13 MR. BROOKMAN: Andrew deLaski. 14 MR. deLASKI: I just want to reiterate 15 something I said this morning, which is that it 16 strikes me that one of the key issues that has not 17 been analyzed is the impact on employment in steel 18 manufacturing. There’s a lot of emphasis put in the 19 NOPR on impact on steel manufacturers, yet we don’t 20 have an analysis on the impact on steel 21 manufacturers, and particular on the employment at 22 various TSLs. So I just want to emphasize again 23 that that’s an important issue that needs to be 24 addressed. This is an unusual rulemaking – I was 25 just talking to Ray, you know, you have a supplier 26 who represents a very large portion of the value of 27 the product, and it’s very unusual to have a 28Executive Court Reporters (301) 565-0064 1 20 supplier that plays such a big role in the 1 rulemaking, and I think in this case it could merit 2 a much more significant impact – an analysis of 3 impact on the steel manufacturers, including 4 employment. 5 MR. BROOKMAN: Okay. Steve Rosenstock. 6 We’re going to keep moving here rapidly, though. 7

Steve. 8 MR. ROSENSTOCK: Steve Rosenstock, EEI. 9 The last slide before we had to break was about 10 refurbishment issue, and again, I just wanted to say 11 that again, I just want to follow Mike in terms of, 12 yes, there’s the scoping issue. DOE has never set 13 an efficiency standard for any other commercial or 14 residential or industrial appliance or product that 15 is, quote, “being refurbished or repaired or any 16 sort of revamping.” Once – again, it’s a matter of, 17 this is only on new manufactured and newly imported 18 products, so there are people who keep repairing our 19 products, whatever they are, could be they’re 20 probably some 50-year old refrigerators out there, 21 because people keep on repairing them. That’s their 22 right. They have a right to do it. We’ve never set 23 a standard for anyone who’s doing that sort of 24 repair type of situation. So, for doing it for this 25 would set a new precedent, and DOE does not have the 26 legal authority to do such a thing. You’d have to 27 change EPCA to do something like that. Thank you. 28Executive Court Reporters (301) 565-0064 1 21 MR. BROOKMAN: Thanks, Steve. Okay. Now 1 we’re going to proceed. 2 MR. BOLDUC: So for liquid-immersed 3 transformers, there were seven TSLs were composed. 4 The first TSL represents a standard or a level where 5 a diversity of core materials are cost competitive 6 and economically feasible for all design lines, and 7 this is the proposed standard. TSL-2 is EL-1 for 8 all design lines. TSL-3 is a maximum efficiency 9 achievable with M3 steel, core steel. TSL-4 is the 10 maximum NPV with seven percent discounted. TSL-5 is 11 EL-3 across all design lines. Now with all due 12 respect to Andrew deLaski at ASAP, this is what we 13 interpreted as your position at the end of 14 negotiations, or the position that you represented 15 as opposed to EL-2 across all efficiency levels. So 16 there’s a misrepresentation here. It is what I’m 17 stating. 18 MR. deLASKI: What I said this morning is 19 that the ESL that was closest to our position is 20 TSL-4. TSL-4 is close to being EL-2 across the 21 board, though not exactly. 22 MR. BOLDUC: Right. 23 MR. BROOKMAN: Okay. Go ahead. 24 MR. deLASKI: The Department gave notice 25 that our position was EL-3 across the board – 26 MR. BOLDUC: That’s right. 27

MR. deLASKI: -- and that was not correct. 28Executive Court Reporters (301) 565-0064 1 22 MR. BOLDUC: That’s right. TSL-5 was 1 intended to be your position. 2 MR. deLASKI: Oh, was intended to be EL-3 3

across the board? 4 MR. BOLDUC: That’s right. 5 MR. deLASKI: I see, that was the intent. 6 Okay. I’ve got a few follow-up questions, but -- 7 MR. BOLDUC: Yes, please. 8

MR. BROOKMAN: Steve. 9 MR. ROSENSTOCK: Steve Rosenstock, EEI. 10 As I recall, I thought you, Andrew, that you’re 11 starting with a mix of four and three, EL-4 and EL12 3, and during the negotiations, especially during 13 the initial parts, it was – 14 MR. deLASKI: Let me just remove any 15 ambiguity. We support EL-2 across the board. 16 That’s where we are right now. Where we were at one 17 point or another, water over the dam. We don’t need 18 to go back and talk about it. 19 MR. ROSENSTOCK: Okay. No problem. 20 Understood. Steve Rosenstock, EEI. Again, there 21 are a lot of ELs put out here, and for people who 22 were part of the negotiations, there were ELs, and 23 CSLs, and now we’re into TSLs because of the NOPR, 24 because that’s what you’re supposed to do, so again, 25 I think for everybody, especially for people on the 26 webinar is that, you know, try to – when we’re 27 talking just that people should be respectful that 28Executive Court Reporters (301) 565-0064 1 23 not everybody has memorized every single EL and CSL, 1 especially since they might have changed. And that 2 these TSLs are, I’m hoping to say, are kind of 3 aligned with some of the ELs and CSLs we saw during 4 the negotiation, but this is kind of a final version 5 of the analysis. Would that be a fair assessment? 6

MR. BOLDUC: Yes. 7 MR. ROSENSTOCK: Thank you. 8 MR. BROOKMAN: Yes, Ray. 9 MR. POLINSKI: Ray Polinski, ATI10 Allegheny. And Andrew, just to be clear, you said 11 two across the board. I thought 2.1, 2.2 or 12 something was where you guys were at, as opposed to 13

two across the board. 14 MR. deLASKI: No, I said two across the 15 board, and then I suggested this morning – Okay, 16 good time for me to reiterate this point – so I’ve 17 got a couple questions about the TSLs and then I’ll 18 reiterate the TSLs we think the Department should 19 have. We think the Department should analyze four 20 additional TSLs, and one of those would be TSL-2 21 across the board, which is the position that we said 22 we were willing to accept during the negotiation 23 process, and which I reiterated again today that we 24 would support today – excuse me, EL-2. Terminology 25 is tricky. 26

MR. BROOKMAN: Thanks for the 27 clarification. Keep going. 28Executive Court Reporters (301) 565-0064 1 24 MR. deLASKI: So having a TSL that 1 consisted of El-2 across the board is something that 2 we recommend should be included in a final analysis. 3 We also think that having a TSL that is at EL-1.5 4 across the board would be valuable for decision5 making. That is a position that some stakeholders 6 indicated during the negotiation process that they 7 thought the crossover point was likely at EL-1.5, so 8 therefore I think – let me just finish – 1.5 would 9

be valuable to have an EL at that level – TSL at 10

that level as well. 11 And then I said I also think that having 12 pads versus poles distinguished would be valuable, 13 so that having sub-one for each of these, that we 14 would have a TSL that consisted of two across the 15 board, except for a step down one level for poles. 16 And then the same thing, EL-1.5 across the board, 17 except step down one level for the poles, 18 recognizing the concerns we’ve heard about poles. 19 I’m suggesting, recommending to the Department that 20 those be considered as additional TSLs in a final 21 analysis. 22 MR. BROOKMAN: Ray. 23 MR. POLINSKI: Ray Polinski, ATI24 Allegheny. And just to – semantics, whatever, but 25 my recollection, and the record will speak for 26 itself, when some of these people threw out those 27 levels above that, they were like the outer – 28Executive Court Reporters (301) 565-0064 1 25 doable, possibly, feasible, but not practical. 1 MR. deLASKI: Yeah, I think we’re zeroing 2 in on this question of the crossover point. We all 3 agreed, I’ve agreed, that we want to be in a market 4 where we have robust competition amongst the 5 suppliers of core material. And you’re agreeing and 6 everyone – I think we all agree with this, and what 7 we have disagreement on is where is that point. And 8 that’s what we haven’t been able to nail down. And 9 I know there’s been different analyses that have 10 shown that point in different places and different 11 people have different views on where that point is. 12 I think we still need a more thorough analysis, 13 independent, by the Department, that helps us nail 14 down where is this crossover point so that consumers 15 benefit – ultimately all consumers benefit from 16 having robust competition among the suppliers. 17 MR. POLINSKI: Ray Polinski, ATI18 Allegheny. And again, we’ll move forward – and 19 you’re saying one of your other action points, you 20 want the crossover points to be reanalyzed. My 21 point is that they shouldn’t even do your other 22 studies of the 1.5s or the twos, because the 23 crossover points right now are where the – pretty 24 much where the rule ended up. I mean, so there’s no 25 sense in doing another study unless – you’re saying 26 it’s time for more analysis, but my recollection was 27 when we had our last conference call, you guys said 28Executive Court Reporters (301) 565-0064 1 26 – you the advocates, I won’t say Andrew – the 1 advocates kind of said, hey, this is done. We’re 2 done with analysis, you know, in the middle of 3 December, we even talked about should we extend this 4 a little bit, we’re done with analysis, we’re – it’s 5 time to move on. So I guess you’re changing that 6 position. 7 MR. deLASKI: No, that was for the 8 negotiation. We’re out of the negotiation, this is 9 now rulemaking and DOE has to do new analysis. They 10 ought to. This is a NOPR. You put out a NOPR for 11 comment and the Department has to respond to 12 comment. They have a legal obligation to respond to 13

comment. 14 MR. BROOKMAN: I wanted to reinforce that 15 point. We’re not in a negotiation here. We want to 16 get the best comment we can. John, you’re next. 17 MR. deLASKI: So I really want to be 18 clear, Ray. I don’t mean to be shifting on you, 19 this is a different stage of the process. 20 MR. CASKEY: John Caskey, NEMA. Just to 21 be sure we’re still talking apples and apples, when 22 you say across the board, are you meaning liquid23 immersed, or are you saying everything – 24 MR. deLASKI: No, liquid-immersed. We’re 25 talking liquid-immersed. 26 MR. CASKEY: -- from one to 13? Okay. 27

Just wanted to make sure. 28Executive Court Reporters (301) 565-0064 1 27 MR. deLASKI: Thank you, John. 1 MR. BROOKMAN: Thanks for clarifying. 2 Keep going. 3 MR. deLASKI: So I have a couple 4 clarifying – I’ll be happy to answer questions on my 5 proposal, but that’s – so there’s a few things about 6 the TSLs that continue to puzzle me, and I’ll start 7 with TSL-5. The Department contends that TSL-5 is 8 EL-3 across all design lines, but when I looked at 9 the actual efficiency levels, it’s not. In fact, 10 it’s a mix of ELs, based on the actual efficiency 11 levels. So I don’t think we want to walk through it 12 here right now, but it’s not EL-3 across the board. 13 MR. BROOKMAN: Is it significantly 14 different? 15 MR. deLASKI: One of the design lines is 16 at EL-2. I’m also puzzled by TSL-3 as being the 17 maximum achievable efficiency – maximum efficiency 18 achievable with M3 steel. The Department presented 19 an analysis at the November meeting over the 20 negotiating committee – this is the one dated 21

November 2 nd – where they showed some very famous 22 tables that got us all very excited. People who 23 were there will remember, that showed where M3 was 24 viable as a design option, and these were tables on 25 the PowerPoint what was vetted at that meeting, 26 pages 13, 14, and 15. And in that table it showed 27 that the design lines were achievable up through 28Executive Court Reporters (301) 565-0064 1 28 significantly higher efficiency levels than are 1 contained in TSL-3. 2 So my understanding is that engineering 3 analysis hasn’t changed between now and then – 4 MR. BOLDUC: I can’t see the presentation 5 you have in front of you, and I don’t have perfect 6

memory – 7 MR. deLASKI: So I’m going to ask you to 8 go back and take a look at that. 9 MR. BOLDUC: Sure. I’m just – since you 10 have that in front of you, was that for all design 11 lines? 12 MR. deLASKI: Design lines one, two – 13 yeah, what it showed was that you could use M3 up 14 through EL-3 for design line 1. It said you could 15 use it up through EL-1 for design line two. So this 16 is correct for design line two. It showed you 17 could use it up through EL-3 for design line three. 18 It showed you could use it up to EL-2 for design 19 line four – 20 MR. BROOKMAN: Andrew, maybe you could 21 write down the title of PowerPoint presentation, or 22 someone who’s got it – maybe you’ve got it, Steve, 23 and hand it off so – 24

MR. BOLDUC: Please. 25

MR. ROSENSTOCK: And Andrew -- Steve 26 Rosenstock, EEI – you’re talking about the November 27

3 rd handout, Distribution transformers energy 28Executive Court Reporters (301) 565-0064 1 29 conservation program – 1 MR. deLASKI: This is simpler, which is 2 that TSL-2 is EL-1 except – I’m sorry, TSL-3 is 3 mostly EL-1. So this is saying that you can’t go 4 above EL-1 with an M3 transformer. And that is not 5 consistent with – 6 MR. BROOKMAN: I want to keep this moving 7

ahead. Steve. 8 MR. ROSENSTOCK: Steve Rosenstock, EEI. 9 And I believe, Andrew, you’re referring to these 10 tables right here, right? Is this the table. 11 Again, this was a table called Core Material 12 selection, and it was basically, again, part of the 13 life-cycle cost analysis and basically it also 14 showed that for those higher levels that they were – 15 there might have been some, or at least one 16 particular model using M3. That could have been 17 just one dot in that efficiency level, and it showed 18 zero percent, and it showed 100 percent being shown 19 as something else because the price discrepancy was 20 so large that they chose the lowest cost issue. So 21 yes, I agree there might be some designs that were 22 at those levels, but those might have been the pure 23 outliers or, you know, I saw the scatter-plots, 24 eight million scatter-plots. They were kind of 25 blinking in my eyes later on that day. That’s not 26 necessarily – it might have been just one unit by 27 one manufacturer, and so – and it was so expensive 28Executive Court Reporters (301) 565-0064 1 30 that for the life-cycle cost analysis they didn’t 1 use it because there was a much lower cost 2 transformer to use to reduce those incremental 3

costs. 4 MR. deLASKI: That’s not what the slide 5

says. 6 MR. BOLDUC: Yeah, I hear you. 7 MR. BROOKMAN: So let’s – yeah, Phil 8 first. 9 MR. HOPKINSON: Phil Hopkinson, HVOLT. I 10 did a lot of studies of data, trying to compare 11 transformer selling price against efficiency for M3 12 material. And in fact, it is theoretically possible 13 to build transformers all the way up to what would 14 be considered EL-4 with M3 steel. Now the problem 15 was that we got into extremely low flux densities 16 and extremely high copper weights, and the selling 17 price literally tripled. So that doesn’t say that 18 just because you can build it, in theory, that it’s 19 something that you would want to do. And when you 20 then look to see what the alternative – so if you 21 allowed amorphous back into the picture, then you’d 22 see that amorphous could get there easily and the 23 selling price wouldn’t go up anywhere near that 24 much. So that whether you can theoretically build 25 it or not has nothing to do where the breakover 26 point is, and that breakover point is hard after EL27

1. 28Executive Court Reporters (301) 565-0064 1 31 MR. BROOKMAN: Jerry, you going to follow 1 on? Yes, Jerry. 2 MR. CORKRAN: I was going to say somewhat 3 the same thing as Phil said, also repeat what I said 4 this morning when Andrew was proposing higher than 5 EL-1. EL-1 is a level playing field between 6 amorphous and silicon core steel. It’s where 7 they’re both competitive, neither one has a 8 tremendous advantage. When you go above EL-1, the 9 scale tips and amorphous has a tremendous advantage. 10 So to make the family of designs that the customers 11 want, the many different dual voltages and different 12 things, it needs to be no higher than EL-1. 13 MR. BROOKMAN: Okay. Are we ready to move 14

on? 15 MR. BOLDUC: I think Andrew still has a 16 critical set of issues. 17

MR. deLASKI: So then the other set of 18 issues – the other point I want to make is again, 19 we’re not making decisions here, we’re just saying 20 what the – I’m just commenting on the TSLs, right, 21 and I think if you’re going to describe something as 22 being the maximum achievable with M3, then that’s 23 what it ought to be. 24 Now my other concern is that you said that 25 the TSL-1 is the proposed level, yet, and I 26 mentioned this earlier today, is that when I compare 27 TSL-1 to the NOPR levels, they’re actually 28Executive Court Reporters (301) 565-0064 1 32 different. And I understand there’s been some sort 1 of scaling or smoothing of the curve, so to speak, 2

but the level – 3 MR. BOLDUC: The efficiency percentages 4 are slightly different than those analyzed, yes. 5 MR. deLASKI: Slightly different, it’s 6 point – it’s point four, so it’s 40 percent of EL-1 7 for design line one, which is a 50 KVA transformer, 8 which is a bread-and-butter product. So, it’s more 9 than slightly different. The loss reduction for EL10 1 is 3.3 percent for design line one, whereas EL-1 11 was 8.7 percent reduction in losses. So I think 12 it’s an awkward spot for the Department to be in, to 13 be proposing standards that are different than those 14 analyzed. And I know you’ve got to smooth – you’ve 15 got to stiff this curve, but it’s an awkward spot. 16 You know, we’ve got folks saying they can live with 17 EL-1, but yet the level being proposed is not even 18 half way there. And we’re talking about, as people 19 have pointed out, being very efficient, we’re trying 20 to reduce losses – we’re trying to reduce those 21 losses and those five percent matters. 22

MR. BROOKMAN: Steve Rosenstock. 23 MR. ROSENSTOCK: Steve Rosenstock, EEI. 24 Since this issue came up, I did notice – Andrew was 25 talking about design line one. For design line two, 26 the value is increased over the TSL-1 value. It was 27 98.91 in the table, the TSL table, but in the 28Executive Court Reporters (301) 565-0064 1 33 proposed standard it’s 98.95, so in that case it 1 went up rather than down. Also for design line 2 three, where the TSL-1 value is 99.48, the table 3 value is 99.49, so it cuts both ways. I don’t know 4 what impact that has in terms of the national energy 5 savings, but especially since design line two is the 6 single-phase pole mount, that can be significant for 7 a lot of situations. So it went both ways, and 8 again, there is an issue that we don’t see the 9 98.95, for example, in any of the tables, so again, 10 we’re not sure of the economics. I didn’t see it in 11 the NOPR, same with 99.11, same with 99.49, so I 12 mean there’s that in terms of analytical issue, but 13 again, at the end it cut both ways. I’m not sure 14 how it impacts all of our members. I made sure that 15 they knew about it, but it was both ways. 16 MR. deLASKI: So to me it points to the 17 need for additional analysis again. We don’t have 18 an analysis of the standards proposed. And we need 19 that analysis, and we need the analysis of these 20 additional TSLs to be able to make a final decision 21 that is based on a robust, complete record. 22 MR. ROSENSTOCK: Steve Rosenstock, EEI. 23 Or just put the efficiency value the same as the TSL 24

values. 25 MR. deLASKI: Well, you can’t do that 26 because poles and pads aren’t separate classes. 27 PARTICIPANT: It’s tricky. 28Executive Court Reporters (301) 565-0064 1 34 MR. BROOKMAN: Thanks for those comments. 1 What we’re going to do is move on to the next set. 2 MR. BOLDUC: So the next set of slides, or 3 next set of TSLs are for low-voltage dry-type. 4 Again, there are six TSLs. TSL-1 is maximum 5 efficiency achievable with M6 steel. TSL-2 is the 6 NEMA premium levels. TSL-3, the maximum efficiency 7 using butt-lap core mitering for single-phase and 8 full mitering for three-phase designs. TSL-4 is max 9 NPV with seven percent discounting. TSL-5 is 10 maximum source energy savings with seven percent 11 discounting, the positive NPV, excuse me. And TSL-6 12 is max-tech. 13 Now, the Department has selected – is 14 proposing TSL-1 as the standard. 15

MR. BROOKMAN: Andrew. 16 MR. deLASKI: So as I said this morning in 17 the opening remarks, the level that we’ve been 18 supporting, and continue to support is EL-4 across 19 the board, which happens, in this case that we 20 actually do have a TSL which represents that, which 21 is TSL-3. So we don’t see a need for additional 22 TSLs here. We appreciate the Department has 23 evaluated NEMA premium levels. My understanding is 24 that the levels shown are not precisely the NEMA 25 premium levels, that’s my understanding, so we need 26

to take a look at that. 27 And then the second point I want to make 28Executive Court Reporters (301) 565-0064 1 35 is to reiterate the point I made this morning which 1 is that during the negotiation, it was said on the 2 record by multiple parties, including manufacturers, 3 that they can butt-lap up through what’s now TSL-3, 4 and the Department needs to do a more full – if 5 butt-lapping is going to be a decision criteria, 6 then the Department needs to do a more full analysis 7 of how far can you go with butt-lapping 8 manufacturing techniques. It may not be the 9 cheapest technique, but if you still can – I think 10 what may have happened is they had been removed 11 because it was perhaps cheaper for some 12 manufacturers to do mitering, but perhaps not for 13 the small guy to miter. So it may be that some 14 manufacturers choose to butt-lap up through TSL-3 15 because they don’t want to make that investment or 16 they can’t, and that may take having some additional 17 engineering options to your software, and doing an 18 additional set of runs for optimization around those 19 additional designs. But I think you’ve got to fill20 in those curves. 21 MR. BOLDUC: Right. 22 MR. BROOKMAN: Phil. 23 MR. HOPKINSON: Phil Hopkinson, HVOLT. 24 What I would say is there’s two issues from that. 25 One is can you even build a transformer and with 26 butt-lapping, I think that you probably can build 27 something pretty close to efficiency level three, 28Executive Court Reporters (301) 565-0064 1 36 but you can’t be competitive, and that’s the second 1 part of it, so that if you, in fact, impose a 2 requirement that goes so far, it still puts the 3 small guy out of business because while he could 4 theoretically build a transformer that’s butt5 lapped, he can’t actually sell that at a price where 6 he can recover his material costs, so that he is 7 still put out of business. 8 MR. BROOKMAN: Thank you. Other comments 9 on these LVDTs and these trial standard levels? 10 MR. deLASKI: To follow up on Phil’s 11 point, and that’s a point for analysis. That’s 12 something that we want to see analyzed as opposed to 13 simply a conclusionary remark by the Department 14 based on no analysis is where we are today. We’ve 15 got Phil’s expert opinion, based on a lot of 16 experience, what we don’t have is the Department 17 analysis that tells us, what is the cost penalty? 18 Is it five percent or is it 50 percent? And can 19 these guys compete? And we need the answer to that 20 question. 21 MR. HOPKINSON: I think that data could be 22 acquired. 23 MR. BROOKMAN: Thanks, Phil. 24 MR. BOLDUC: So for medium-voltage dry25 type transformers, we have five TSLs. TSL-1 is EL-1 26 for all design lines. TSL-2 represents a TSL where 27 a diversity of core materials are cost competitive 28Executive Court Reporters (301) 565-0064 1 37 and economically feasible. This was the level 1 arrived at through the negotiation process. TSL-3, 2 is maximum NPV with seven percent discounting. TSL3 4 is maximum source energy savings with positive 4 NPV. And TSL-5 is max-tech. Steve. 5 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 6 believe you received the comments from Commonwealth 7 Edison. They’re one of our member companies that 8 they purchase significant number of these because 9 they’re the ones actually installing and maintaining 10 them in their urban area at the commercial and 11 industrial facilities, so I think we all agreed to 12 it, but just take their comments into account. This 13 is another space/size constraint issue, because 14 these are inside large commercial buildings 15 sometimes. So just consider their comments, that 16 would be very helpful, thank you. 17 MR. BROOKMAN: Additional comments on 18 this? Okay. 19 MR. BOLDUC: So the next three slides 20 show the efficiency levels for the different KVA 21 ratings. For liquid-immersed, low-voltage, and 22 medium-voltage dry-type transformers. You have the 23 numbers in front of you. There’s not much I have to 24 say on these. 25 MR. BROOKMAN: I guess we have three 26 tables here and anybody that wishes to do so can 27 comment on any of these. Yes, Andrew. 28Executive Court Reporters (301) 565-0064 1 3 8 MR. deLASKI: It would have been nice in 1 the NOPR to have had a mapping of EL/TSLs. 2 MR. BOLDUC: Yes, there is one in the TSD. 3 MR. deLASKI: Can someone give us the page 4

reference? 5 MR. BOLDUC: In the TSD, I can’t give it 6 to you right now, it’s in Chapter 10. It would be 7 in the NIA chapter. 8 MR. deLASKI: Okay. Thanks a lot. 9 MR. BOLDUC: Yep So in summary, the 10 proposed rule, we have energy savings of 1.58 quads 11 over 30 years. An estimated – and this could 12 eliminate the need for 2.4 gigawatts generating 13 capacity, the need to build new capacity, new 14 generation. We have a cost savings, a cumulative 15 net present value ranging from 2.9 billion to 12.1 16 billion at three and seven discount rates – at 7-3 17 percent discount rates. And the cumulative 18 environmental benefits of 112 metric megatons of 19 CO2, NOX emissions reductions of 99.7 kilotons, and 20 mercury emissions reductions of 0.8 tons. 21 MR. BROOKMAN: Phil. 22 MR. HOPKINSON: Chris, a good set of 23 numbers. My point – my question is, the 1.58 quads, 24 is that the incremental savings from this new NOPR 25

or – 26 MR. BOLDUC: Cumulative. 27 MR. HOPKINSON: -- or is that including 28Executive Court Reporters (301) 565-0064 1 39 the 2010 rule. 1 MR. BOLDUC: Oh, no, that would be simply 2 this rule. Not including the 2010 rule. 3

MR. BROOKMAN: Steve. 4 MR. ROSENSTOCK: Steve Rosenstock, EEI. 5 I’m looking in the – oh, that’s annualized benefit. 6 Okay, I was looking in the NOPR and the NOPR has 7 quite a range of total net benefits, so it seems – 8 okay, 2.9 to – okay – that’s over the 30 – that cost 9 savings, that’s 30 years at seven and three percent. 10 I see. Quick one for you. In terms of the 11 environmental benefits, EPA just came out with their 12 mercury rule, and the emissions for power plants, 13 mercury emissions are mandated to go down 75 percent 14 within three years, and then they’re going to be 15 pretty much capped, are you going to treat mercury 16 like you treat other emissions that are capped 17 upstream, in terms of benefits? 18

MR. BOLDUC: I’ll have to look at the EPA 19

rule. 20 MR. ROSENSTOCK: Yeah, it goes into effect 21 three years before this takes effect, so that will 22 change some of these projected estimates. 23 MR. BOLDUC: Likely. 24 MR. ROSENSTOCK: Thank you. 25

MR. BROOKMAN: Andrew. 26 MR. deLASKI: I want to – just the point I 27 made this morning, which is that we think the 28Executive Court Reporters (301) 565-0064 1 40 estimates for the low voltage dry types are 1 mischaracterized because the curves are 2 mischaracterized, and this number actually reflect 3 consumers selecting transformers more efficient than 4 the minimum standard, which is not what we’re seeing 5 in the market, and not what manufacturers have said 6 they would expect. So I think the savings are being 7 over-estimated for low-voltage dries because the 8 curve isn’t filled in, and we’re selecting 9 transformers – so it shows very little difference – 10 not very little difference because it shows .2 quads 11 different between level one and level three, which 12 we think is inaccurate and not based on substantial 13 evidence. 14 I also would note that the low-voltage 15 dries, even with that inaccuracy are driving the 16 lion’s share of the savings in this docket. Just 17 .36 of the savings total is being driven by the 18 liquid-immersed market. 19

MR. BOLDUC: That’s correct. 20 MR. BROOKMAN: Other comments looking down 21 this summary slide? 22 MR. BOLDUC: So, on this slide we have the 23 annualized benefits for the proposed rule. The 24 primary estimate is the default scenario for all the 25 models, and the low net benefit is run with a high 26 equipment price and a low economic growth scenario. 27 And likewise, the high net benefit estimate is high 28Executive Court Reporters (301) 565-0064 1 41 economic growth, low equipment price. So we have a 1 primary estimate bracketed by the low and high, and 2 we have ranges for the CO2 evaluations. 3

MR. BROOKMAN: Steve. 4 MR. ROSENSTOCK: Steve Rosenstock, EEI. I 5 know you don’t have any control over it, but for the 6 record, you’re monetizing all, you know, the 7 environmental values, but you’re discounting them at 8 different rates, so analytically I think that’s 9 extremely inconsistent, extremely inconsistent. I 10 know that you’re required to do that by the 11 interagency memo, but when you’re discounting some 12 things at seven percent, and you’re discounting 13 other things at two and a half percent, you’re 14 getting a distorted number at the end, in my view. 15 MR. BOLDUC: Right. That’s why we’re 16 presenting a range. 17 MR. ROSENSTOCK: Right, but again, there’s 18 still an issue in that when you’re talking about 19 some of these net cumulative savings, and then some 20 of the annualized savings, it’s still analytically – 21 there’s still issues, because when you’re saying 22 you’re monetizing everything and you’re not 23 discounting at the same rate over the same lifetime, 24 and it’s over the same analytical period, it’s 25 distorting the result in my view. Because you’re 26 saying that something – we’re going to say, well the 27 cost, well, you know, some things, like the cost 28Executive Court Reporters (301) 565-0064 1 42 transfer we’ll discount at seven percent, but the 1 savings we’ll only discount at two and a half 2 percent because that way that’ll make the benefits 3 look a lot better. I just think it’s inconsistent. 4 I know you’re required to do that. I’m just saying 5 this for the record that in terms of doing an 6 analysis, when you’re discounting different parts of 7 the analysis at different rates, it’s distorting the 8 analysis. 9 MR. BROOKMAN: Okay. Other comments on 10 this benefits and costs slide. 11 MR. BOLDUC: Thank you all very much, that 12 concludes the main presentation for this afternoon. 13 MR. BROOKMAN: There is quite a lot of 14 supplemental information, additional slides, oh, I 15 don’t know, 30 pages or so, -- oh, they’re not in 16 the package. 17 As we said at the outset, now is another 18 opportunity for anybody that wishes to do so to make 19 additional points, emphasize things that haven’t 20 been emphasized today adequately, and perhaps 21 briefly. So who would like to go first? Please. 22 Discussion of Proposed Standards 23 MR. PETERSEN: Eric Petersen, AK Steel. 24 First off, just want to congratulate the entire 25 group that was here. I know it was quite an arduous 26 process, but as we began the outset of this path 27 that we have been down, we commented that the value 28Executive Court Reporters (301) 565-0064 1 43 of what we were bringing to the table was the 1 ability to be able to bring industry experts all to 2 the table to be able to bring a correct perspective 3 of the issues that each group represented. It’s 4 been a theme that we’ve talked about consistently 5 and I’m glad to hear that we continue to say it here 6 at the end, and we’ve actually divined TSLs to 7 directly reflect it, that the intent was to identify 8 a standard level that would provide a diversity of 9 core materials that were cost competitive and 10 economically feasible. 11 And as Mr. deLaski stated, the magic 12 question is, what is that point level. That really 13 has been what has been driving us. I would remind 14 the organization that the benefit of the negotiated 15 rulemaking was that we had the experts, the 16 transformer manufacturers, here, which really are 17 the only ones that can best help us understand where 18 that crossover point is. 19 The recommendation that the transformer 20 manufacturers brought to the table, defined an 21 efficiency level at which they see that crossover 22 point occurring. That is the point that the DOE 23 correctly reflected when they chose the TSL to be 24 set as a proposed standard. Now there’s been 25 reference to three companies who are at the table in 26 regards to a higher potential efficiency level that 27 was mentioned. I don’t recall or interpret their 28Executive Court Reporters (301) 565-0064 1 44 conversation the same way that Mr. deLaski has 1 stated here today, that they stated – the point was 2 there. I think it’s important to define that there 3 is the capability, technically, to be able to make a 4 transformer at a certain level, however, that does 5 not insure that the transformer will achieve the 6 goal of cost-competitive and economically feasible. 7

We’ve had one of those three 8 organizations, the one that made an opening 9 statement today, specifically point out that since 10 they were referenced as one of the three, that they 11 emphasize that they were party to and supported the 12 NEMA presentation. 13 So I guess I would again thank the DOE for 14 the work that you’ve done. It’s been exhaustive, 15 and thank the committee in regards to defining the 16 criteria. We’ve all agreed to that, which is the 17 diversity of core materials which is cost 18 competitive and economically feasible, and point to 19 the industry experts the value of what we brought 20 within the negotiated rulemaking session, the 21 transformer manufacturers as being really the key 22 group that can define where that crux is, and 23 they’ve done that for this efficiency level. 24 MR. BROOKMAN: Okay. Thank you. Yes, 25

John. 26 MR. CASKEY: John Caskey, NEMA. A couple 27 different thoughts. One is certainly I, personally, 28Executive Court Reporters (301) 565-0064 1 45 and I think NEMA, really appreciates the opportunity 1 to participate in the negotiated rulemaking process. 2 I think that was very educational. I mean I learned 3 more about the transformer industry – even though I 4 represent some of those manufacturers – and I 5 personally learned more about the transformer 6 industry that I didn’t know before, and I learned 7 about the steel industry, and I learned about some 8 of the perspectives of some of the advocates and 9 other groups that were in the room. So I think, to 10 me, it was a very constructive thing, and I think 11 that was very valuable. 12 I think the other aspect that was very 13 valuable was the idea that the various consultants 14 to DOE heard first hand how the data was being used 15 and how the manufacturers, the steel producers, or 16 other people interpreted the data, and where there 17 were weaknesses and where there were flat out, what 18 I would call, mistakes, and that they were able to 19 correct some of those deficiencies in the course of 20 doing the analysis. So I think that, in itself, 21 helps give DOE a better chance of providing some 22 rulemaking that is fairly rigorous in all the 23 analysis that has been done. 24 Speaking on behalf of NEMA, we came to the 25 table dealing with a negotiated rulemaking session – 26 sessions, and really had three things in mind. One 27 is that we supported higher efficiency standards as 28Executive Court Reporters (301) 565-0064 1 46 long as they could be proven that they were cost 1 effective; two is that we really were concerned 2 about the transformer industry in the U.S. as well 3 as steel industry in the U.S. and we wanted to find 4 some solutions where there was a balance, and we’ve 5 talked about it a lot today, where there was a 6

balance where the transformer manufacturers would 7 have the flexibility to use different types of core 8 steels, different types of designs, and different 9 manufacturing techniques to be able to meet the 10 efficiency standards. And the third thing was 11 really dealing with the small manufacturers, 12 particularly those dealing with the low voltage dry13 type transformers, and certainly we represent them 14 as well as the big guys, and certainly don’t want to 15 get into a position where we’re actually knocking 16 them out of business and losing jobs for the U.S. 17 So, from those three sort of core 18 principles that we started with, and looking at all 19 of the Navigant and LBL research, I feel that the – 20 NEMA feels that the current NOPR really represents a 21 good fit between all of those characteristics. So 22 we certainly support the proposed rulemaking as it 23 now stands with those proposed energy efficiency 24 levels, and thank you for the opportunity to 25 participate with all this. 26 MR. BROOKMAN: Thank you. Yes, Richard. 27 MR. PARKER: Yes, Richard Parker. I just 28Executive Court Reporters (301) 565-0064 1 47 wanted to say this is probably my last hurrah for 1 this process, but I wanted to say what a pleasure 2 it’s been working with everybody here at the table. 3 It was a difficult process. It was sort of a 4 perfect storm of challenges, I think that this group 5 faced, very, very complex issues, multiple 6 stakeholders with very different perspectives, and 7 combined with that some possibly radical tipping 8 points which created a lot of anxiety as you 9 approached them, and then on top of it all, of 10 course, a very compressed time schedule which made 11 it difficult to get the analysis right and then to 12 refine the analysis in time to be ready for the next 13 meeting and so forth. 14 I thought the analysts did a fantastic 15 job, dealing with the hand they were dealt, but it 16 was very hard to do things in that time frame. And 17 one lesson, I guess, the main lesson that I took 18 away from this process is that might have been less 19 work and less time for everybody had we been able to 20 space the work out that we were doing over a longer 21 time period, do more of it off-line, and less in 22 plenary and get the analysis right before we come 23 together and negotiate. 24 But we are where we and I think the 25 process did produce a lot of very useful information 26 as well as a consensus on some small areas, and I 27 think that’s in no small measure thanks to the great 28Executive Court Reporters (301) 565-0064 1 48 work of people around this table and in the 1 audience. So I just want to wish everybody the best 2 as you go forward and I have no position on how the 3 rule should come out, but I hope that we can get – 4 you can get - the analysis and the rule to an 5 outcome that is respected as legitimate and 6 hopefully supported. But thanks again for the 7 chance to work with you. 8

MR. BROOKMAN: Steve Rosenstock. 9 MR. ROSENSTOCK: Steve Rosenstock, EEI. 10 Again, I just want to thank DOE for having the 11 negotiation sessions and for Mr. Parker for his 12 patience, and he’s still smiling after leading that 13 session. I’m really surprised about that. Really 14 appreciated all his hard work involved in 15 negotiations. 16 I also wanted to say again, I think that – 17 I appreciate the nature of what DOE did for the 18 negotiation, bringing in all the stakeholders, and I 19 also want to remind people, I’m a numbers guy and I 20 just remember that because of the last rule that DOE 21 finalized in 2007 that went into effect in 2010, 22 every time a utility, commercial customers, buying a 23 new transformer, they’re going to be more efficient. 24 That’s done. That’s locked in. Every time they 25 replace an old transformer with a new transformer, 26 there’s going to be more efficiency on our system. 27 So I think we’ve already made a big 28Executive Court Reporters (301) 565-0064 1 49 stride. As you’ll recall, certain parties with the 1 advocates said, well, again, going back to the old 2 rule, well Level two in 2009, Level four in 2013, 3 and many of the levels that went into effect in 2010 4 are already well past Level four, that’s a fact. 5 That’s already in there. That’s done. So we’ve 6 made a lot of progress already and we’re willing – I 7 think all parties were willing to make some more 8 progress here within that, those certain valid 9 points, and I believe that, you know, I think all 10 the parties are going to make comments, we’re going 11 to make sure that the industries are competitive. 12 We want – we like choice as consumers, we like 13 choice, and we also like domestic manufacturing. 14 They’re our customers too. 15 So again, I appreciate all the work that 16 everybody’s done. We look forward to making 17 comments on April 10 th , and we look forward to a 18 final rule being published by October 1 st . Thank 19

you. 20

MR. BROOKMAN: Robert. 21 MR. BERMAN: Robert Berman, Berman 22 Economics. If we can take a break from thank you’s 23 for a moment, I have a technical question, trying to 24 run some numbers. Would you explain, Chris, the 25

role of tables Roman numerals I.5 and Federal 26 Register on page 7285 of the Federal Register 27

versus Roman V.1 on 7342 of the Federal Register

. 28Executive Court Reporters (301) 565-0064 1 50 MR. BOLDUC: Can you read the titles – 1

MR. BROOKMAN: 7285 and? 2 MR. BERMAN: 7285 says, “Proposed 3 electrical efficiencies for all liquid-immersed 4 distribution equipment classes, compliance starting 5 January 21, 2106.” And Table V.1 is efficiency 6 values of the trial standard levels for liquid7 immersed transformers by design line. 8 MR. BROOKMAN: What’s the second page, 9

Robert? 10 MR. BERMAN: I’m sorry, 7342. 11 MR. BROOKMAN: Okay. Thank you. 12 MR. BERMAN: I note for example, this is 13 where we had the discrepancy in one of the places 14 where we have a discrepancy in efficiency numbers. 15 The 50 KVA, which is design line one, in the first 16 table mentioned is 99.11 and the second table 17 mentioned is 99.16. Is the second table the one 18 where the efficiency analysis was done at? In other 19 words, is that saying we did the analysis at EL-1 20 and are proposing a 40 percent of standard EL-1, say 21 for design line one? Is that what that’s saying? 22

MR. ROSENSTOCK: It’s because of the 23 scaling. Steve Rosenstock, EEI. Because of the 24 smoothing, Mr. Berman, because of the smoothing. We 25 discussed that earlier. 26 MR. BOLDUC: The smoothing changed the 27 efficiencies between the analysis and putting the 28Executive Court Reporters (301) 565-0064 1 51 final editions together. 1 MR. BERMAN: So we’re using the analysis 2 at efficiency losses at 99.16 to do the savings for 3

99.11? Is that correct? 4

MR. BOLDUC: That sounds correct. 5 MR. BERMAN: Okay. Thank you. 6 MR. RIVEST: This is Mike Rivest. 7 Remember what we’re looking at here are 8 representative units. Three representative units 9 for one product class, and so what I heard Steve say 10 earlier on balance, some are going up, some are 11 going down, so really, you know, when you take into 12 account, in a typical analysis we have one 13 representative for product class. Here we’ve 14 disaggregated that into three representative units, 15 so the economics aggregated for the three rep units, 16 are representative for that product class. 17 MR. BERMAN: That’s why I asked the 18 question. 19 MR. RIVEST: Okay. I just wanted to make 20 sure that people were not making conclusions from 21 what you were saying. 22 MR. BROOKMAN: Robert, do you want to 23 respond? 24 MR. BERMAN: Robert Berman, Berman 25 Economics. I’m just trying to clarify that what 26 analysis was used on what design lines, and did we 27 use the losses that we established at 99.16 to 28Executive Court Reporters (301) 565-0064 1 52 attribute to the savings at 99.11. And I think you 1 said yes to that, and that was my question, and 2 that’s fine. 3 MR. BROOKMAN: Before – just as we 4 returned from lunch, Andrew deLaski said he had an 5 issue that took us back to something said this 6 morning. Did you want to raise that now, Andrew. 7 MR. deLASKI: Yeah, and so – actually 8 there’s two different – two – I suggested a number 9 of new analyses today that I think the Department 10 needs to conduct, and I’m not going to reiterate 11 those now. I think I’ve been clear enough earlier 12 and we’ll certainly reiterate them in our written 13 comments. But I think doing those further analyses 14 will help the Department get to a final rule that 15 better – enables it in a better way to weigh the 16

seven factors. 17 Two things came up. One is that I’m a 18 little struck that we didn’t hear anything today, 19 nothing presented by the Department on the impacts 20 on small manufacturers. We don’t have a slide on 21 it, and we haven’t had any discussion – I mean, 22 we’ve had very little discussion other than sort of 23 cursory remarks, and given the weight the Department 24 is giving to impacts on small manufacturers in its 25 decision making process, I think it’s incumbent on 26 the Department to do additional work to better 27 document, better understand, what are the scale of 28Executive Court Reporters (301) 565-0064 1 53 those impacts, and what are the – what are the 1 impacts on small manufacturers. So I know there’s 2 been some work done. It needs more. Phil and I 3 were talking about this earlier, it needs more if 4 it’s going to be the basis for decision-making. 5 MR. BROOKMAN: I think Mike would like to 6

follow on. 7 MR. HYLAND: I just want to expand this. 8 This is Mike Hyland at APPA. I’d like to expand 9 that to small businesses in general. Of the 2000 10 munis, 1950 are small businesses. The co-ops, I’m 11 not sure the number, but it’s pretty impressive. 12 It’s 500 or so. So you’re talking over 2000 small 13 businesses which are the end consumers, which will 14 be paying the freight of this with every dollar 15 being passed on. So are we hitting the magic number 16 of 100 million? Has that been evaluated yet, based 17 on the cost increase? Has there been a small 18 business analysis of how they’re affected? You 19 increase the cost of the transformer by $100,000. 20 Is that two jobs? Has that impact been analyzed? 21 So if you’re going to look at small businesses, 22 please don’t look at just manufacturing, because 23 it’s the end consumer that has to pay. 24 MR. BROOKMAN: Okay. Andrew, keep going. 25 MR. deLASKI: The other thing is that in 26 the TSD, in the engineering analysis, the Department 27 raises the possibility that it may do a 28Executive Court Reporters (301) 565-0064 1 54 reoptimization based on new pricing. It strikes us 1 that that is likely to be a useful exercise to have 2 optimization conducted based on the actual prices 3 used in the analysis. We had discussion on prices 4 during the engineering discussion. We talked about 5 the need to fill in the gaps in the analysis so that 6 – filling in those gaps is going to require doing 7 optimization on new designs. And as the Department 8 looks to fill those in, I think it needs to 9 corroborate whether re-optimization will help it get 10 to decisions based on results that reflect the 11 material choices that are being made based on those 12 prices. Might not have to do everything all over 13 again, but you maybe could do some of it over again, 14 based on the prices that you decide to use in the 15 final rule analysis. 16 So again, this is raised as a possibility 17 in the TSD engineering analysis chapter. We think 18 you’re raising the right question and we would 19 encourage you to certainly do some additional 20 reoptimization and perhaps do it soup-to-nuts, 21 depending on whether that looks like it’s going to 22 be valuable to you. 23 MR. BROOKMAN: Andrew, does this conclude 24 the other issue you wanted to raise? 25 MR. deLASKI: That’s it. 26 MR. BROOKMAN: Okay. Thank you. Yes, 27 Charlie Stephens. 28Executive Court Reporters (301) 565-0064 1 55 MR. STEPHENS: Charlie Stephens, Northwest 1 Energy Efficiency Alliance. I just wanted to speak 2 from a slightly different utility perspective, given 3 that I work for 130-some of them, ranging all the 4 way from the smallest, I imagine, of the rural ones, 5 to some of the larger investor-owned utilities. 6 There’s some confusion here it seems to me between 7 consumer or customer or whatever, and the way it 8 works where I am from is that the utilities have 9 costs and they have benefits that derive from their 10 investments, and the net of those is what flows 11 through to the real consumers, which is the people 12 who pay the bills and which is our rate payers. 13 And so we’re focused, I have to say, much 14 more on that level. You know, transformers don’t 15 just cost more, they deliver benefits. They deliver 16 efficiency savings, and those flow through the rates 17 as well. It isn’t just cost that flows through to 18 the rates. So we’re looking at, on balance, what 19 are the benefits versus the cost, and I think a lot 20 of people around the table are trying to do that. 21 But some of us, if we really focus on that, what it 22 does to our economy, and where the jobs really come 23 from, and we’re very focused on that where I live 24 right now. There are benefits that aren’t even 25 counted in this rulemaking right now. I’m not going 26 to go into them, but I think that’s a different – I 27 seem to have a different customer or consumer 28Executive Court Reporters (301) 565-0064 1 56 perspective here than some of the other utility 1 representatives sitting around the table, and I 2 don’t entirely understand that, but I just wanted to 3 put the Northwest perspective on the record. Thank 4

you. 5 MR. BROOKMAN: We’ve heard a lot already 6 today about different views of who the customer is, 7 I hope we don’t need to rehash all of that. Steve. 8

MR. ROSENSTOCK: Federal Register notice 9 7286, footnote. “For the purposes of this document, 10 the consumers of distribution transformers are 11

referred to as customers. Customers refer to 12 electric utilities, in the case of liquid-immersed 13 transformers, and to utilities and building owners 14 in the case of dry-type transformers.” I’ll just go 15 on the dry-type side. Some of those owners could be 16 retailers like WalMart and Sears and Home Depots, we 17 consider them the customers of dry-type 18 transformers. DOE has never done an analysis of 19 “gee”, how will it affect the retail prices if the 20 transformer is more efficient? It would just be an 21 impossible analysis to do, because the end use 22 customer going into that store is not the customer 23 of the product. The entity that is buying the 24 product, operating it, and maintaining it is the 25 customer. Thank you. 26 MR. BROOKMAN: Thank you. Yes, Mike. 27 MR. HYLAND: Yes, I just wanted to tap 28Executive Court Reporters (301) 565-0064 1 57 into what he said. My CEO is from the Northwest, 1 and he – they’re one of the largest utilities and 2 he’s in sync with what we’re saying here. So we do 3 have an overlap in membership. It ties into what 4 Steve had said. We’ve already come up so far from 5 2007, and you start looking at what are you going to 6 do with the next dollar. As Rick Anderson said, 7 who’s not here, but I know he’s on the phone from 8 Fayetteville, is what’s your biggest bang for your 9 buck at this point. And we’re arguing over 99.82, 10 99.84, when you can look at any municipality, or any 11 utility in this room, the end consumer, based on 12 what this says, would have a better time helping 13 Andrew’s goals by putting a dollar elsewhere at this 14 point. What are they getting per watt? How much is 15 it costing them to save a watt at this point, versus 16 putting that dollar to something else in these 17 communities? 18 MR. BROOKMAN: Okay. Thank you. I think 19 we’re at the point where we’re hearing traditional 20 and perhaps final comments. Any other issues that 21 people wish to raise? Because I think we’re 22 starting to double back on ourselves here. Closing 23 remarks. Yes, Bob. 24 MR. SAINT: I agree that we have been 25 doing closing remarks for some time, and so – 26 MR. BROOKMAN: Thank you. 27

MR. SAINT: -- and I – 28Executive Court Reporters (301) 565-0064 1 58 MR. BROOKMAN: This is the only thing 1 which I’m allowed to achieve a consensus. 2 MR. SAINT: -- and I too would like to 3 congratulate everybody in the room for the diligence 4 and hard work that we’ve all done, and DOE, and the 5 consultants, and the negotiation team, and we’ve all 6 come to, I think, a better understanding of each 7 other’s issues through this process than we all 8 realized. 9 There are some points that – and we do 10 think that DOE came to the right conclusion when 11 they did their analysis, and congratulate them for 12 their levels that they’ve chosen in this NOPR, and 13 encourage them to hold fast with those 14 recommendations. Most everybody in the room has 15 agreed with them. There are a few exceptions, but 16 the vast majority of the people in the room, and I 17 believe the vast majority of the comments that you 18 will receive agrees with your analysis and the 19 diligence that you’ve gone through to come up with 20 these efficiency levels and we hope that you will 21 hold fast with these. 22 The issues that we see that are important 23 are maintaining a robust, competitive, competition 24 among suppliers, and we’ve been talking about steel 25 manufacturers versus amorphous-core manufacturers 26 for a while, and we do think that we need to have 27 that robust competition. In addition, we feel 28Executive Court Reporters (301) 565-0064 1 59 strongly that we need to – the small transformer 1 manufacturers themselves need to remain competitive, 2 and we have a concern that if one – if amorphous3 core transformers become the only transformers that 4 are competitive to be made, then those small 5 manufacturers will go out of business, and those 6 small businesses will not be able to exist. 7 We have a couple of members that are 8 transformer manufacturers and we really feel that we 9 should support our members, small transformer 10

manufacturers. 11 Of course, the other part of the analysis 12 is the life-cycle cost and the total owning cost of 13 these transformers, and there’s where we see some 14 issues with that. There’s been a lot of analysis, a 15 lot of input given on the costs. We feel like 16 there’s still inconsistencies in the costs that are 17 used in the analysis, for example, the material 18 costs seem to be fairly low versus the power costs 19 are high, and that very much skews the results of 20 the analysis, so we really question the credibility 21 and the viability of that analysis. 22 So we’re – since we have trouble looking 23 at these life-cycle cost issues and the total owning 24 cost analysis, we go back to the competition, and 25 that seems a little more clear, at least to some, 26 that dividing point, and that’s where the DOE has 27 come on. So even though there seems to be more 28Executive Court Reporters (301) 565-0064 1 60 emphasis on this robust competition among suppliers, 1 core suppliers, and that seems to be a lot of the 2 issue, that is because we still have problems with 3 credibility of the life-cycle cost analysis, so we 4 keep going back to the robust competition. 5 And we can’t, lastly, we really can’t 6 ignore the issue of the refurbished transformers and 7 the fact that if the original cost of transformers 8 get too high – and nobody knows what too high is – 9 but at some point the market for these transformers 10 is going to become a dominant market, and no one 11 wants that, no one in this room wants that. And 12 that kind of defeats the purpose of this whole 13 rulemaking if we price these efficient transformers 14 out of the market and people find an alternative to 15 these transformers that are regulated, it really 16 defeats the purpose of the whole thing. And if we 17 want to include those transformers or not, I think 18 that’s an issue that will take a long time, and it’s 19 a tough legal decision that apparently DOE has 20 looked at several times and decided fairly clearly 21 that they can’t regulate the refurbished 22

transformers. 23 So, again, thank everybody for all our 24 diligence, and we’ll be submitting the comments and 25 encouraging our members to submit comments as well, 26 and hope for the best. Thank you very much. 27 MR. BROOKMAN: Thank you. Additional 28Executive Court Reporters (301) 565-0064 1 61 closing remarks. Phil. 1 MR. HOPKINSON: Phil Hopkinson, HVOLT, 2 Inc. One thing that I might add is that several 3 years ago I went to an IEEE ad hoc meeting and came 4 out chairman of a group that was addressed at 5 looking at issues associated with DOE energy 6 efficiency activities for distribution transformers. 7 We have a meeting coming up and I think that it is 8

March 13 th , in Nashville, for IEEE, and a good many 9 of the people who have been right here, as well as a 10 lot more – I typically have about 100 people that 11 come into the meeting and they are manufacturers, 12 most of which didn’t get a chance to sit in here, 13 but will be there, and users, many of which again, 14 didn’t get a chance to come here, but they’ll be 15 there. And they really look forward to these 16 sessions to be able to find out what’s going on in 17 the first place, and are likely to have comments 18 back that can be useful. I’ll do my best to capture 19 those and certainly send them in, and I think there 20 will be others that will do that from these 21 meetings. 22 I’m very complimentary of the process that 23 went on to get to this point, and of course Richard 24 Parker, I think, has done a wonderful job with the 25 negotiations. I’m impressed with the quads of 26 energy that actually were saved, because way back in 27 1991 I went to the first task force, Congressional 28Executive Court Reporters (301) 565-0064 1 62 task force, where energy efficiency activities were 1 kicked off, and we struggled to find even the first 2 quad of energy savings back with the group as we 3 started out, so we made a tremendous progress in the 4 rulemakings that went in in 2007 and 2010, but 5 clearly we’ve got another big jump with what the 6 proposals are here. 7 Again, I think that from all of the 8 experience that I’ve had in this industry, that it 9 is a tremendous balance between the efficiency 10 savings that we all would like to see happen, and 11 the impact on the market place and on the players in 12 the market place, and the materials and so on. I 13 really believe that – and that’s why I wrote such a 14 complimentary letter well deserved – that this is a 15 very, very excellent rule. I would certainly 16 propose that you stick at that rule. Thank you. 17 MR. BROOKMAN: Final remarks. Additional 18 final remarks? Yes, Steve Rosenstock. 19 MR. ROSENSTOCK: Steve Rosenstock, EEI. 20 Just another thing on the process, I also want to 21 thank DOE for having – doing more of these with 22 webinars. We have members from all over the 23 country, and I know that they appreciate being able 24 to listen in and see the slides, because it helps 25 them with some of their comments as well. You know, 26 budgets can be very tight, and this really allows 27 more participation, more stakeholder input, I 28Executive Court Reporters (301) 565-0064 1 63 believe, so again, thank you for making that a 1 regular part of this process. 2 MR. BROOKMAN: Thank you. Anything else. 3 Okay, then, from my part, one of our traditions is 4 to distribute evaluation forms. The Department 5 very much wants to hear what you think about these 6 proceedings and how it can be improved. And 7 speaking for myself, I’d just like to thank you 8 all. This has been a very, very productive 9 meeting. People spoke plainly and directly to the 10 issues at hand. I’d also compliment the 11 negotiators. I always think of negotiation as a 12 good thing, and so there was a lot of effort, a 13 very compressed time period. I’d also, as a 14 consultant that works all over the federal sector, 15 I’d like to acknowledge DOE’s leadership. It’s not 16 easy for them to do things differently, and they 17 deserve a lot of credit for giving this a chance 18 and so, I will turn it back then to Jim Raba for 19 closing remarks and my thanks to all of you, safe 20

travels. 21 MR. RABA: Well thank you, Doug, for being 22 our facilitator for today. It’s been a very 23 productive and challenging meeting with the fire 24 drill in between, but still you got it done, and we 25 appreciate that, and thank you who participated 26 throughout this process. Very thoughtful 27 participation, and remember at this NOPR stage 28Executive Court Reporters (301) 565-0064 1 64

we’ve just gone through, or going through now, it’s 1 a Notice of Proposed Rulemaking, not a Notice of 2 Perfect Rulemaking. You have offered many good 3 comments, very helpful comments. We’re not 4 perfect, but we all believe, I think, this has been 5 the best part of the NPR: “negotiated proposed 6 rulemaking,” and you worked in good faith 7 throughout. It’s been most worthy. Now we look 8 towards a final rule, maybe an NPR - nearly perfect 9 rulemaking, and thank you very much. 10 (Whereupon, at 3:30 p.m., the meeting in 11 the above captioned matter was adjourned.) 12

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22Executive Court Reporters (301) 565-0064 1 65 REPORTER'S CE RTIFICATE

This is to certify that the attached proceedings

before:

U.S. DEPARTMENT OF ENERGY

In the Matter of:

PUBLIC MEETING ON ENERGY CONSERVATION STANDARDS PROPOSED RULEMAKING FOR DISTRIBUTION TRANSFORMERS Were held as herein appe ars and that this is the original transcript ther eof for the file of the Department, Commiss ion, Board, Admi nistrative Law Judge or the Agency. Further, I am neither co unsel for or related to any party to the ab ove proceedings.

Debra Derr Official Reporter Dated: February 28, 2012