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U.S. DEPARTMENT OF ENERGY

LV WORKING GROUP

NEGOTIATED RULEMAKING: DISTRIBUTION TRANSFORMERS

Volume II

National Rural Electric Cooperative Association

Conference Room C2

4501 Wilson Boulevard

Arlington, Virginia

9:00 a.m.

Friday, October 14, 2011
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1 P R O C E E D I N G S

2 (9:14 a.m.)

3 MR. PARKER: Okay. Hi. Welcome, everyone. 

4 Richard Parker. Second day of the Low Voltage Dry Type

5 Meetings. I held off a little bit to let everybody 

6 arrive on a gray gloomy day where it's easy to 

7 oversleep but I think we should probably get started 

8 now.

9 And we have a fairly light agenda. I fully 

10 expect that we will be able to adjourn early but we'll 

11 take as much time as we need to make sure that we do 

12 everything that we can do today.

13 What I thought we might do is first I looked 

14 last night at the Engineering Validation Template that 

15 DOE is sending around and I wanted to just -- I posted 

16 it on the screen now and I wanted to just have a 

17 discussion of that basically just to make sure -- and 

18 this is for our manufacturers and for John Caskey, I 

19 think -- make sure that we're comfortable saying this 

20 to members and ask them to fill it out and see if it 

21 needs to be tweaked in any way.

22 We want to -- the response rate has been low 

23 and so we discussed yesterday the idea of trying to 

24 increase the response rate and as I looked at this last
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1 night, I realized it's a bit busy and we might be able 

2 to find ways to make this a little bit more user3 friendly and I've been talking to Brian about this 

4 before the meeting.

5 So I thought that would be a good discussion 

6 to have so that we make sure that before the next 

7 meeting we have absolutely the best engineering data 

8 that we can have and design data, particularly going to

9 the issue of the requirements of monitoring and half 

10 monitoring step lapping in terms of I'm still trying to

11 get my head around as well as the role of different 

12 metals at different efficiency points. So I thought we

13 would have that conversation.

14 Secondly, Rob Carmichael from Navigant has 

15 agreed to give us a presentation on their work on our 

16 manufacturing impacts. That's a big issue for this 

17 group and so I thought it would be useful to have a 

18 somewhat more extended discussion than we had yesterday

19 about manufacturing impacts.

20 I'd also like to, you know, perhaps since we 

21 have some time, look at the charts, sort of the scatter

22 plots that have come up so far and just have a 

23 preliminary discussion about what people take away from

24 them, recognizing that this is going to change in two 

25 ways. 
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1 First, it's going to be updated with design 

2 engineering data on the basis of the questionnaire that

3 goes out and, secondly, it's going to be simplified, I 

4 understand, to present just the southeast corner of the

5 plots, but what I'd like to do is just put those slides

6 up there and have a preliminary discussion about what 

7 we take away from them just to get a feel for things 

8 because I think this might get a sense of, you know, 

9 what ballpark we're in as the preparation for the next 

10 meeting.

11 The final thing is before we wrap up we'll 

12 basically hear from both Navigant and LBL as to what 

13 they take away from the meeting so that we're all 

14 onboard in terms of action items. What are the action 

15 items that have to be done before the next meeting so 

16 that the next meeting can actually be a very fruitful 

17 and very productive negotiating session?

18 I would also propose for the next meeting 

19 that we hear from the Building Owners and Manufacturers

20 Association. They did not choose to participate in 

21 this group actively but they did say that they might be

22 able to come and attend the meeting and give us their 

23 perspective on the significance or insignificance of 

24 price and efficiency to their purchase decisions. So I

25 thought we might have propose scheduling that for the 
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1 next meeting. We can discuss that.

2 So the basic issue is just to recap to make 

3 sure we're comfortable and anybody who feels there's 

4 other business that we need to attend to, now is the 

5 time to speak up, but finalizing this Engineering 

6 Template, secondly Manufacturing Impacts, third 

7 Preliminary Discussion of sort of key takeaways from 

8 the charts from the scatter plots, and, finally, you 

9 know, Further Business. 

10 Does that seem like a reasonable way to use 

11 our morning? Okay. Great. Let's get right into it 

12 then.

13 MR. de LASKI: I think one of the things you 

14 put out yesterday was maybe towards the end being able 

15 to have an opportunity to share concepts.

16 MR. PARKER: Yes. Thank you. Would you like 

17 to do that for this group, as well? That's fine. 

18 Absolutely.

19 MR. de LASKI: It would be useful for each of 

20 us who can do so to go back between now and the next 

21 meeting to have that opportunity to think about the 

22 concepts so that we actually can talk about them.

23 MR. PARKER: Absolutely. Very helpful. 

24 Good. We'll do that. Anything else we need to add to 

25 the agenda? Okay.
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1 Let me see if I can -- I'm looking around for 

2 Brian. Brian, there you are. Sorry. Andrew is so 

3 tall, I can't see behind his head. Thanks.

4 Can you come up here and walk us through 

5 basically this template? Why don't you just take this 

6 mike here and we'll move the phone over here.

7 MR. COFFEY: So this template is something 

8 that I put together after the first negotiation session

9 where some individuals had expressed a desire to see 

10 some DOE design data in a more detailed form than we 

11 initially released it and also to provide some data to 

12 their own, of their own to DOE, and so that a 

13 comparison could be drawn.

14 So this is what I came up with. It's an 

15 Excel spreadsheet and we've got an Instructions tab 

16 here just explaining what this is and what it's used 

17 for and how to use it.

18 We've included in this the materials prices 

19 that led to our engineering curves. We think this is 

20 really important because manufacturers with different 

21 materials prices or the same manufacturers in different

22 years will build different transformers as a function 

23 of those prices.

24 MR. PARKER: Okay. So maybe we ought to just 

25 pause there because as I understand it from LBL and 
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1 from Navigant, these are pretty critical parameters. 

2 They're kind of hard to see. I'm not sure if we can 

3 enlarge them or not. But can people read those all 

4 right from where they are?

5 So I think the one thing is this can be seen 

6 at a glance with the core steel prices are and so 

7 forth. So the first thing is are there any material 

8 prices that you're seeing there that look out of line? 

9 Are there any material categories that are missing? Is

10 there going to be any particular burden in validating 

11 those prices? These prices are drawn from what year?

12 MR. COFFEY: These are 2010 prices. So 

13 presumably some of them could have moved since then. 

14 So on the leftmost column, Column B, so we have 

15 materials that we used for liquid immersed and 

16 materials that we used for dry type. So we're looking 

17 at the dry type ones right now.

18 MR. TENDULKAR: Why the prices should be 

19 different for the liquid and the dry? They should be 

20 the same prices for the copper and aluminum?

21 MR. COFFEY: They are the same.

22 MR. TENDULKAR: They don't seem to be the 

23 same in the Column C and Column A or whatever the other

24 one was.

25 MR. COFFEY: So here's an example.
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1 MR. TENDULKAR: Oh, I see. Okay. The 

2 materials are different. Okay. I'm sorry. I couldn't

3 see that. Okay.

4 MR. PARKER: The rows don't all line up.

5 MR. TENDULKAR: Okay. I'm sorry. That's why 

6 I was confused. This spreadsheet has not been 

7 distributed yet, right?

8 MR. COFFEY: This has been distributed. I 

9 sent it out a week or two ago for feedback from the 

10 group.

11 MR. PARKER: We've only heard from Federal 

12 Pacific, as I understand.

13 MR. COFFEY: So I sent -- okay. So there was 

14 a technical committee, I think, established at the 

15 first low voltage meeting and so I sent this template 

16 out to that group, thinking that it would be the most 

17 relevant to them, but certainly I'll send it out to the

18 whole committee.

19 MR. TENDULKAR: I don't believe those prices 

20 are correct but I think we are paying more than that on

21 certain things. For example, I'm looking at the 

22 impregnation per gallon price is much higher than $22 

23 and some other things I see, but I think we will 

24 comment when I go back.

25 MR. COFFEY: Great. Yeah. I think that 
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1 would be important feedback to have on this.

2 MR. PARKER: And so, John, also, if you could 

3 send, you know, your -- you'll be sending this out to 

4 your membership, as well, right, and would it be 

5 helpful to maybe add something in the -- a comment in 

6 the spreadsheet or somewhere that would just indicate 

7 the providence of these numbers? You said they're 

8 2010.

9 I wondered if it would make sense, also, to 

10 indicate what you're using for the sensitivity analysis

11 which I think is 2006 and 2008. Perhaps we could have 

12 a column that would indicate those prices because those

13 are the three critical parameters, the central tendency

14 and the sensitivity. So it's important for people to, 

15 you know, check and make sure that they're comfortable 

16 with those parameters.

17 And are these average prices or are they end18 of-the-year 2010 prices because obviously prices, you 

19 know, fluctuate during the year?

20 MR. COFFEY: These are intended to represent 

21 sort of an average over the year.

22 MR. TENDULKAR: What do you expect the 2011 

23 prices should be, based on these ones?

24 MR. COFFEY: You would know that better than 

25 we would.
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1 MR. TENDULKAR: Okay. Because I'm looking at 

2 the M12 steel over there is a $1.03 and we are paying a

3 lot more than that, I know that.

4 MR. COFFEY: Okay.

5 MR. TENDULKAR: 30 percent more. So I don't 

6 know where these prices come from, what the 2011 prices

7 look like compared to these numbers.

8 MR. COFFEY: So these come from interviews 

9 that we do with manufacturers and we travel around and 

10 ask people what do you pay for each of these materials 

11 and then we do sort of a weighted average of the 

12 feedback we get. 

13 Now, admittedly, this is -- these are 

14 probably more representative of what a medium to larger

15 manufacturer would pay. So if you feel that smaller 

16 manufacturers are at a significant disadvantage in 

17 getting the favorable rates, that would be interesting 

18 feedback to have, also.

19 MR. TENDULKAR: It will be also possible that 

20 there are transportation charges we may be paying in 

21 those which other people may not be paying in the East 

22 or Midwest.

23 MR. COFFEY: Okay. So transportation is for 

24 the materials, not for the transformer.

25 MR. TENDULKAR: Yes, exactly. Transportation 
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1 is for the materials.

2 MR. COFFEY: Yeah. So I think what we're 

3 looking for is what does it cost you to get a pound of 

4 this in your factory?

5 MR. de LASKI: And I think one thing I think 

6 just in these surveys in the past, I think people have 

7 gotten confused about some of the very points that 

8 you're raising, which is what are you trying to gather,

9 you know, because I think the first thing you would do 

10 is say what am I paying today?

11 What Brian's looking for, so we have apples 

12 to apples in here, is average price you paid in 2010.

13 MR. COFFEY: That's right.

14 MR. de LASKI: Otherwise you don't have --

15 the data's not going to be able to be combined.

16 MR. COFFEY: That's right. That's a good 

17 point.

18 MR. TENDULKAR: So it will be difficult to 

19 reconcile the thing because I'll be giving the prices 

20 of 2011, what we are paying today. I do not know what 

21 we are in 2010. It will be more difficult.

22 MR. COFFEY: Sure. I mean, the 2011 prices, 

23 as Andrew said, I mean, you can't compare directly 

24 because the prices move and the purpose of this 

25 exercise really is to determine if our modeling roughly
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1 reflects reality and so you have to hold as much as you

2 can constant if you're going to try to do that. 

3 Otherwise, if there's a discrepancy, you don't know 

4 where it came from. So what we're trying to do is get 

5 as apples to apples comparison as is possible and I 

6 think that starts with having the similar assumptions 

7 about what the materials cost. I don't know of any 

8 other way to do that.

9 MR. PARKER: Would your accounting department 

10 have records of what you paid in 2010?

11 MR. TENDULKAR: What they paid last week, 

12 they have problems.

13 MR. de LASKI: Here's a suggestion, Brian. 

14 MR. TENDULKAR: But some of the prices I 

15 know, for example, we are not paying that price, we are

16 paying more than that, I know that.

17 MR. de LASKI: If I can make a suggestion, I 

18 think one you might do to your form, I understand it 

19 could be a problem in terms of being able to provide 

20 the data you're looking for, so perhaps it would be 

21 useful would be just on the form itself, you indicate 

22 what you suggest, we're looking for your average price 

23 paid in 2010. If you can't provide that, you know, 

24 provide us your current prices but just tell us that on

25 the form so that you know what it is and then you're 
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1 able to say, well, what does that tell us about the 

2 sensitivities and how we should weight them?

3 MR. COFFEY: Right. So I think would that 

4 work? Does that sound like a good plan?

5 MR. TENDULKAR: That's a good plan. If 

6 everybody use the 2011, I think you will have lot more,

7 you know, everybody use the prices 2011 will be lot 

8 more better for us as the committee.

9 MR. de LASKI: But even for 2011, you know, 

10 is it an average price or just a spot price you paid 

11 last week? So we need to understand that.

12 MR. TENDULKAR: The prices will be about the 

13 same for the whole year kind of because they're yearly 

14 contracts, something like that. So we should be able 

15 to give you that, except some of the materials, like 

16 the installation, they go up. I think they went up 15 

17 percent higher this year than last year.

18 MR. COFFEY: That's all great feedback to 

19 have and the advantage of having so many points in our 

20 engineering cloud is that we can actually usually apply

21 new materials prices to those clouds and see the points

22 move. Now you'll have different designs that fall on 

23 to the optimum of the curve but because we have such a 

24 range of As and Bs that implies such a range of, you 

25 know, core valuation to winding valuation, if the 
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1 relative materials prices change, then you update them 

2 and the previously optimum designs might move off the 

3 curve and new ones might settle down on to the curve, 

4 but we've done this exercise before and it produces 

5 pretty good results.

6 MR. PARKER: Okay. Good. Thanks. So just 

7 to recap, we'll add first explanation of the kinds of 

8 data that we're looking for and the fact that it's an 

9 average, the fact that it's factory gate receipt and 

10 post these prices, ask for 2010 but if it's not 

11 available, 2011 clearly labeled as such, and then we'll

12 add columns for 2006 and 2008, which I guess would be 

13 even harder to check but at least people will know. 

14 They'll be able to get a gut feel for whether they seem

15 in the ballpark or not. Great.

16 Let's move on. Go ahead.

17 MR. COFFEY: So that's the materials price 

18 tab and this is really the crux of it, this Design 

19 Details tab.

20 When I first put together this spreadsheet, I 

21 had all the design lines. So I'll narrow that down to 

22 what's relevant to each group, but, you know, here's 

23 the low voltage dry design. You can see the specs. 

24 It's a three-phased 75kba, primary-secondary voltage, 

25 temporized and BIL, and then these are our different 
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1 efficiency levels that we use right now. So this is 

2 the baseline. This is where the current standard is, 

3 EL1, EL2, etcetera, all the way up to 7 or whatever we 

4 have, and that's our max tech, and so we're asking for 

5 feedback, if you can give it, at all of these 

6 efficiencies, but if you can't give some of the higher 

7 ones, that's okay. We're just asking for what can be 

8 provided.

9 The next -- so that's kind of the 

10 specification of what we're asking for. In this blue 

11 section, you sort of start by -- it's a dropdown menu. 

12 You sort of start by choosing the type of design that 

13 you're providing feedback on. So currently if your 

14 lowest cost way of providing a 98 percent efficient 

15 transformer is with, you know, an M6 butt lap three leg

16 with aluminum primary and secondaries, you'd choose 

17 that and the reason we need to know that is because, 

18 you know, if any of the design parameters vary, then 

19 that makes the comparison less useful.

20 But if you're designing the exact same way, 

21 you know, it can be telling, and then moving right, so 

22 we've -- sure.

23 MR. PARKER: Excuse me. Not to micro manage 

24 too much but I was thinking that it would be helpful to

25 have either a clear indication around the table that 
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1 there is a dropdown menu or very, very clear 

2 instructions upfront. I think that is mentioned in the

3 Instruction menu but I looked at this table last night 

4 and I didn't sort of -- I wasn't queued off to the fact

5 that there was a dropdown menu and if you click on it, 

6 it will open up.

7 So we'll try to make that as clear as 

8 possible for people. It looks like it would be hard to

9 avoid using it because there's a lot of detail that's 

10 in each of those menus. 

11 I guess the question is for people is this 

12 going to be a hard thing to fill out from existing 

13 information? Again, the goal is to get the response 

14 rate up. So we want to make sure we're not having the 

15 best enemy of the good.

16 Would it be helpful, for example, to simplify 

17 the design options to focus on, you know, things like 

18 mitering and choice of metals or is this level of 

19 detail something that you people can easily handle?

20 MR. TENDULKAR: I'm really confused. This is 

21 Vijay. I'm really confused about what we're supposed 

22 to fill out on the chart or something. What comes out 

23 on the dropdown menu?

24 MR. COFFEY: I was just getting to that. So 

25 you start by telling us what you're describing. You 
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1 know, if we just start with pounds of steel, pounds of 

2 conductor, and we don't know what the design is, then 

3 we can't compare it.

4 MR. TENDULKAR: So you want to know what the 

5 design is, whether it's butt lap, miter, whatever?

6 MR. COFFEY: That's right. So you say --

7 MR. TENDULKAR: Okay. And to meet that 

8 particular efficiency, is that what you're saying?

9 MR. COFFEY: That's right. So it's your 

10 lowest cost way of meeting that efficiency.

11 MR. PARKER: Brian, could I just ask a 

12 clarifying question? As I understand, this is a 

13 validation template, it's not a first effort at 

14 gathering data. So my understanding is that we're 

15 bringing on the template now but when it actually goes 

16 out to the membership, what went out, did that include 

17 your actual build, the build that the OSP model 

18 chooses?

19 In other words, would there be values put 

20 into all of these cells so that people could actually 

21 look at them and say yes or no, I agree or I disagree?

22 MR. COFFEY: Well, the existing cost curves 

23 show which colors of points correspond and I know there

24 are a lot of them and they're little, but that 

25 information is already in the cost curves.
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1 This template I sent out to receive feedback 

2 on whether it was put together sensibly and had the 

3 right information. It didn't have design information 

4 in it but the idea was that it would facilitate a 

5 bidirectional exchange, so DOE would populate it with 

6 its least cost designs and manufacturers would in turn 

7 populate it with their least cost designs.

8 MR. PARKER: So what you send out to 

9 manufacturers will contain values filled into those 

10 cells. So perhaps there should be two tables set, one 

11 that contains the values filled in and a second that 

12 contains blanks for the manufacturer to fill in 

13 wherever they disagree with the current values. So the

14 idea would be if you believe their build information is

15 accurate, you don't have to worry about it. If you 

16 disagree, if you feel like there's an area for any 

17 efficiency level or any row or any column where you 

18 disagree with the value that is supplied, you know, 

19 what you think is the alternative. Does that make 

20 sense?

21 MR. COFFEY: Yeah. Maybe we could have 

22 duplicate versions of these tabs and one is the DOE 

23 data and one of them is empty for the manufacturer 

24 data.

25 MR. PARKER: Right. So it could be one 
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1 spreadsheet but two workbooks. Worksheets. Excuse me.

2 MR. TENDULKAR: Could you please repeat that 

3 again one more time for me? I'm a slow learner.

4 MR. PARKER: Okay. So the idea would be 

5 there are two things going on. The first is to -- and 

6 I think this would make it easier, will make it easier 

7 for members, as well, that DOE has already gathered a 

8 lot of information from manufacturers in interviews 

9 and, based upon that, they have fed it into the OSP 

10 model -- OSP -- OPS model and that has generated the 

11 optimum design and for that optimum design, it has 

12 produced -- it has calculated the amount of steel that 

13 would be needed, the amount of copper that would be 

14 needed, etcetera, etcetera, and, as you see as we go

15 forward over here to the right, there's a lot of -- you

16 can see there's a lot of parameters to be filled in and

17 we'll discuss whether we need to fill in all those 

18 parameters or not. But there's a lot of things that 

19 affect the efficiency price tradeoff that they have put

20 there.

21 For each design option that is chosen, the 

22 computer will fill in all of those cells, right, and on

23 that basis, it will generate for the design chosen an 

24 estimated cost and an estimated efficiency at each 

25 efficiency level.
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1 So they've already done that. They have this 

2 table which is now blank filled in with values for 

3 their computer-generated hypothetical design. Okay? 

4 So the point of the validation exercise is to see if 

5 what the computer turned out matches your experience, 

6 your reality. Am I saying this right? And if it 

7 doesn't, for you to supply the alternate reality, you 

8 know, the design that you would actually do.

9 So do you really need to achieve this 

10 efficiency level? Do you really need to mine it? Do 

11 you really to use this grade of steel? What kind of 

12 grade of steel are you using? And I should specify, by

13 the way, that I think that what comes back will be 

14 treated as business confidential, right?

15 MR. COFFEY: Oh, absolutely, and we can 

16 establish a written NDA for anybody that wishes to.

17 MR. PARKER: So you're not -- your responses 

18 to this will not be shared, you know, with the group, 

19 unless you indicate that it's fine to share it with the

20 group. This will be completely with your consent. 

21 Otherwise, unless you specify otherwise, I think you 

22 can assume that it will be treated confidentially.

23 And so basically have your people look at the 

24 table. Does this square with your experience? If it 

25 doesn't, for those areas where it doesn't, please give 
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1 us the -- you know, indicate what different design you 

2 would choose or indicate, you know, how much steel 

3 you're using for that design, if it's different from 

4 the steel that they've calculated. It's basically just

5 a ground truth computer model, right?

6 MR. COFFEY: That's exactly it. I mean, 

7 really, the goal of this is to ask is what OPS is 

8 returning physically possible? You know, if we're 

9 designing to a certain efficiency and OPS says you need

10 this many pounds of steel, this many pounds of 

11 conductor, that many pounds of whatever, does that 

12 roughly reflect reality? That's the first question to 

13 ask. If we can't agree on that, then we can't agree on

14 anything.

15 Downstream of that, the question is, okay, 

16 well, now that we've agreed that that design meets that

17 efficiency, what does it cost to build, and so then we 

18 start getting into questions of materials prices, 

19 manufacturing techniques, that sort of a thing, but 

20 they really are two separate considerations, and I 

21 think if you try to consider everything at once, 

22 sometimes you end up learning nothing. You say, okay, 

23 well, we sell for this, you sell for that, but it 

24 doesn't say why. It doesn't say are we selling even 

25 the same design? Is it different materials prices? Is
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1 it different years?

2 Once you start letting too many variables 

3 come into play, then it's hard to really point your 

4 finger at where the discrepancy arises from.

5 MR. TENDULKAR: I like this. It is a good 

6 approach but at the same time looking at the volume of 

7 the work on this, each one has got about eight 

8 different design -- eight different efficiencies and 

9 there are about four different designs or something 

10 like that. I don't remember. 15-20-75-300, I believe.

11 There may be some more. I do not know. There are 

12 different designs.

13 MR. ROBLES: This is Eduardo Robles from 

14 Eaton Corporation. I guess the intent of this is to 

15 gather the information for the current TP1 level and 

16 for those of us that participate like in the NEMA 

17 Premium Program that we do have designs that are more 

18 efficient that are probably in the range of CSL2 or 3

19 that gather that kind of information.

20 That's existing information but for -- we 

21 might have some customers that require greater than 

22 NEMA premium efficiencies and we may have information 

23 for those. 

24 So I guess to the point that Vijay's trying 

25 to make, we'll only have a limited amount of data that 
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1 we can supply from existing transformers without having

2 to go in and design for all this higher efficiency 

3 level.

4 MR. COFFEY: Sure.

5 MR. TENDULKAR: Yeah. You made it in better 

6 words said and this is Vijay. You said it in better 

7 words than I did. The only other problem we have is we

8 are not really in the distribution transformer 

9 business. We make ones and twos here and there kind of

10 thing but mostly our customers want copper. So we 

11 would not have any aluminum designs.

12 MR. COFFEY: So we allow for that. So if you 

13 wish to provide feedback, I just happened to choose an 

14 aluminum design right here, but --

15 MR. TENDULKAR: Yes, I understand.

16 MR. COFFEY: -- in this dropdown menu, you 

17 know, there are a range of materials to choose from.

18 MR. TENDULKAR: Yes. Now we do have some 

19 aluminum design but those are part of special 

20 transformers, like the solar power kind of thing, and 

21 they're not totally different designs, but other than 

22 that, we do not. We have some designs for the UPS 

23 transformers which are limited but not for what we are 

24 looking for here.

25 So we'll have very limited data but we'll see 
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1 what we can do and we'll supply you all that data.

2 The other problem we are running into this 

3 particular design we are talking about is a primary 

4 data secondary Y kind of design. A lot of transformers

5 we sell have a secondary which are not Y-connected. 

6 They're either zigzag-connected or a double zigzag7 connected kind of thing and they have a totally 

8 different thing. So I don't know. We will try to 

9 queue them, too.

10 MR. COFFEY: And I think there's probably 

11 some judgment there on your part as to whether those 

12 designs could be compared. If you're looking at this 

13 and say, well, the DOE designs 208Y, my design's 

14 different enough that any numbers we gave would render 

15 the comparison meaningless, then that would be 

16 important to know.

17 MR. TENDULKAR: Yes. The problem is we are 

18 trying to meet the TP1 efficiency with those designs 

19 and we meet those TP1 efficiencies but any higher 

20 efficiencies we may not be able to meet with those kind

21 of different connections.

22 MR. COFFEY: Okay.

23 MR. ROBLES: Maybe to accommodate what --

24 this is Eduardo Robles from Eaton Corporation. Maybe 

25 to accommodate what Vijay just said on your dropdowns, 
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1 you probably need to leave a blank option that the 

2 manufacturer can kind of construct the same structure 

3 of material conductor type of core and windings or 

4 interconnected windings that can define actually what 

5 the manufacturers are supplying.

6 On another comment regarding the --

7 MR. PARKER: Yeah. Let me just say I think 

8 that would be a great idea. None of the above always 

9 needs to be an option.

10 MR. ROBLES: Yeah. Then you can only define 

11 as other but somewhere in the spreadsheet you have a 

12 column that says define for me other. Is this 

13 amorphous or is this Item 12 butt lap, whatever, but 

14 give the manufacturer the ability to really define the 

15 data that they are supplying if it's not part of what's

16 in the dropdowns.

17 MR. COFFEY: So we can certainly provide 

18 that. I do want to mention so what's in the dropdown 

19 menu right now are all the design parameters that we've

20 modeled.

21 MR. ROBLES: Yeah. And we understand that.

22 MR. COFFEY: So the best feedback would be if 

23 you could supply design that meets those because then 

24 we can make the really tight comparison. I think it's 

25 still useful to -- you know, if there's another type of
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1 design, if you don't make any of these, to say, okay, 

2 we make this type of design and it's different in these

3 ways, so that we can have that in the back of our heads

4 as we're looking at the different specifications.

5 MR. TENDULKAR: This is Vijay. I do not see 

6 all the columns but do you have somewhere the impedance

7 and the copper loss and all that?

8 MR. COFFEY: So we don't break it down by 

9 loss. I could certainly add those columns.

10 MR. TENDULKAR: I can't see there but I do 

11 not see the --

12 MR. COFFEY: So the losses are sort of 

13 implied by the efficiency, I think, at 35 percent.

14 MR. TENDULKAR: Yes.

15 MR. COFFEY: It doesn't say what comes from 

16 the windings or what come from the core but we could 

17 add those columns.

18 MR. PARKER: Do you measure it that way, 

19 Vijay? Do you measure it by losses or how do you 

20 measure the performance characteristics of your --

21 MR. TENDULKAR: There are two kinds of 

22 losses, main losses and the transformer. One is a 

23 fixed loss which is a core loss and there is a variable

24 loss which is the winding loss which varies with the 

25 load, square of the load, and at the 35 percent 
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1 efficiency, we are taking about 12 percent, 12.35 

2 percent of the load loss, winding loss, and 100 percent

3 of the fixed loss, and that's how we calculate them, 

4 but normally when we test it, we test for the full load

5 losses and that's the reason I asked if we have 

6 something like that that would be better.

7 Do you have at the same time at the Remarks 

8 column so we can put some remarks in the column over 

9 there?

10 MR. COFFEY: Yeah. We have a Comments column 

11 at the very end so you can just throw --

12 MR. TENDULKAR: Okay. Thank you.

13 MR. COFFEY: -- anything you wanted in there.

14 MR. TENDULKAR: Thank you. I didn't see it 

15 before but thank you, Brian.

16 MR. ROBLES: Yeah. Brian, this is Eduardo 

17 Robles again from Eaton Corporation. I see on the 

18 original technical data document that you only list 

19 like the core loss and the coil loss total. I see a 

20 lot more detail here but I cannot see on your quick 

21 route that you did there if you include or not what 

22 it's called by OPS, the destruction factor. That's 

23 what it's considered as part of your loss and there 

24 might be some disconnects between the data that OPS 

25 provided that give you your final load loss from what 
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1 manufacturers, different manufacturers may experience 

2 as the destruction factor.

3 And as many of us know, a critical parameter 

4 to meet the efficiency is the no-load loss. So if the 

5 incorrect considerations for the destruction factors 

6 are put into place, you're really getting a no-load 

7 loss number, an optimistic number that we as 

8 manufacturers may not experience in reality.

9 So if you could add also on this table as you 

10 are providing us the detail of the original analysis 

11 the destruction factor considered for that specific 

12 design line, that would be helpful.

13 MR. COFFEY: Yeah. I think that sounds 

14 useful. We'll add that.

15 MR. TENDULKAR: This is Vijay again.

16 MR. PARKER: Vijay, excuse me. Could I just 

17 follow up on that, though, so we pin it down? So in 

18 the efficiency, does the efficiency percentages -- two 

19 questions. First, coming back to Vijay's point 

20 earlier, does the -- is it easy for your people to 

21 translate the data that you gather, which is on core 

22 losses and load losses and total losses, to these 

23 efficiency percentages? That's very simple arithmetic?

24 MR. TENDULKAR: We could do that but normally 

25 given the proper level, the design comes out telling 
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1 you the total losses are and then the efficiency 

2 number. It calculates it that way.

3 MR. PARKER: So maybe it could be easier --

4 it could be more user-friendly if we could just recast 

5 the table into -- and then you could -- or just add a 

6 column that would indicate the corresponding losses. 

7 Does that work for you?

8 MR. COFFEY: Yeah. I mean, we could provide 

9 columns for losses. I think the manufacturers probably

10 know the efficiencies of the products that they're 

11 selling. I mean, there's the baseline. This is the 

12 current standard and then there's the NEMA premium 

13 efficiency level but, yeah, we can add the columns for 

14 no-load and load losses to make sure.

15 MR. PARKER: And then do those percentages 

16 include the destruction factor or is that a -- it's 

17 embedded?

18 MR. COFFEY: It's embedded.

19 MR. PARKER: In the no-load loss?

20 MR. ROBLES: Yeah. A 120 watts of no-load 

21 loss and the OPS Program used 1.1 destruction factor. 

22 I mean, the manufacturer may be experiencing a 150 

23 watts for that same destruction because the destruction

24 factor, the real destruction factor is different.

25 MR. PARKER: Right. Okay. So that would be 
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1 something that could be handled by just putting in a 

2 column for the assumed destruction factor.

3 The last thing that I wanted to mention is 

4 that you mentioned, Eduardo, that you only have data 

5 for the efficiency levels for the design that you 

6 produce for the efficiency levels that you produce 

7 which is perfectly logical.

8 It strikes me, though, that there's a certain 

9 amount of speculation that is going on in the model 

10 about what would happen if the standard were to be 

11 raised and you were to move to a higher efficiency and 

12 it would probably be helpful to have the benefit of 

13 your engineers' experience, their professional judgment

14 as to what they would do if the standard were raised.

15 Could they meet this? What would they do? 

16 It's a hypothetical. It's a speculation. It's not 

17 this simple reporting. What I heard you saying is 

18 that, you know, we'll furnish the data for the lines 

19 that we make but it sounds to me that for this 

20 exercise, it would be awfully helpful if your engineers

21 could or if you could provide your best professional 

22 judgment as to what the -- you know, if you had to move

23 -- and I realize for moving to some levels, it may just

24 be too far out of your experience to extrapolate, but 

25 to provide your judgment as to what you would do, how 
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1 you would approach something, if you were to -- if a 

2 higher standard were specified, what would you do?

3 Now I expect that in that context, you're not 

4 going to be able to fill in all of the columns because 

5 you're not going to have data with which to do that. 

6 It's speculation. So I think it might be useful to 

7 actually focus on what columns, you know, you would 

8 actually want to, you know, fill in.

9 Obviously the design option, would you be 

10 mitering or not? Would you be -- what kind of metal 

11 would you be using and so forth and maybe that's all 

12 one can do for the higher efficiency performance 

13 levels, but, Brian, correct me if I'm wrong, but it 

14 seems to me that's the kind of thing that you would 

15 benefit from having, right? Their judgment as to what 

16 they would do as well as their data and what they are 

17 doing.

18 MR. COFFEY: Yeah. I think something is 

19 always better than nothing and so I wanted to allow for

20 people to provide as much as they saw fit because the 

21 more points of comparison you have, the better odds you

22 have of figuring out, you know, where the source of the

23 discrepancy is, but I think some of these are bigger 

24 drivers of costs than others, right?

25 If you know your pounds of steel and 
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1 conductor, you're a good ways towards figuring out are 

2 we building the same thing, you know, and installation,

3 of course. There are -- it doesn't tell the whole 

4 story but, you know, to answer Richard's question, 

5 yeah, sure, I think if it's a burden to fill out every 

6 single column, then some are more useful than others.

7 MR. TENDULKAR: This is Vijay again. We do 

8 the designs but we do not use OPS programs and we do 

9 not use the destruction factor. There are reasons for 

10 that because the destruction factor, we do not believe 

11 there is a theoretical basis for it. So we use some 

12 different measures of calculating the losses and we 

13 have good success for data with that.

14 So what we would like to do is we probably 

15 want to give you the transformers we already build and 

16 tested and the test data and what we got there. That 

17 may be a better criteria and that way you know exactly 

18 what we got rather than something we design and 

19 predicted kind of thing and something else we got when 

20 we tested. Would you like that way?

21 MR. COFFEY: No. I think that's what we're 

22 hoping for, yes.

23 MR. TENDULKAR: Okay. So we will look at our 

24 designs already built, tested, and we'll give you that 

25 data, and the parameters for whatever copper, aluminum,
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1 or whatever we use and give you that kind of data and 

2 that will be better way so there is no copious kind of 

3 thing or destruction factor or nothing. Everybody's 

4 design may be different but I'm sure everybody has 

5 their own design programs, too, in addition to OPS. So

6 that's one thing we want to talk about.

7 The second thing we had talked about is, as I 

8 mentioned in my comments which I sent, the OPS Program 

9 has got certain shortcomings as far as the 

10 calculations. OPS Program is good for certain ways but

11 it has got certain shortcomings when predicting the 

12 details, like we mentioned about the amount for scope 

13 and what we tested and what we got from the OPS 

14 programs are two different things, the 100 percent 

15 wrong kind of thing. 

16 So those kind of things we have, plus we also 

17 have the problem with the other thing is you have only 

18 a 150 degrees temperature. We may have a different 

19 temperature for different designs and we may just put 

20 that down and give you that figure or maybe you can 

21 extrapolate from there.

22 MR. COFFEY: Yeah. I think again something 

23 is better than nothing. So, you know, the more you can

24 tell us.

25 MR. TENDULKAR: Absolutely. We like to help 
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1 you as much as we can.

2 MR. COFFEY: Absolutely. So, yeah, I mean, 

3 you mentioned that you felt that the OPS modeling 

4 wasn't accurate in some cases and the goal of this 

5 template is to discover if there are inaccuracies, how 

6 are they arising?

7 MR. TENDULKAR: Yeah. After the meeting, if 

8 you want to, we'll discuss that further and we'll say 

9 what we are doing and we'll be very happy to share 

10 those with you.

11 MR. COFFEY: Great.

12 MR. PARKER: I'm sorry. We didn't go around 

13 the table or on the phone. Is Tom Patzner on the line 

14 today?

15 MR. PATZNER: Yes, I'm here.

16 MR. PARKER: Hi, Tom. How are you?

17 MR. PATZNER: I'm doing just fine.

18 MR. PARKER: I just wanted to give you a 

19 chance. I assume you're able to see the table. Does 

20 this seem like something that you all would be 

21 comfortable filling out? Did you have any thoughts 

22 that you wanted to chime in?

23 MR. PATZNER: So we have been looking at all 

24 of the data points in the spreadsheet and we're going 

25 to complete this table, but we chose to look at it a 
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1 little bit differently.

2 We actually -- since the efficiency point is 

3 35 percent, we reduced the number of designs that were 

4 in the engineering analysis by only looking at designs 

5 that had a peak efficiency between 30 and 45 percent 

6 and that's because, as a manufacturer, my goal is to 

7 put the peak efficiency at 35 percent and not at 80.

8 So we were only going to look at designs that 

9 are in the dot plot that would align with my goal as a 

10 manufacturer which is a peak efficiency at the 35 

11 percent. So we're not going to take a look at anything

12 that falls outside of that parameter.

13 MR. COFFEY: Tom, this is Brian Coffey. I 

14 think that's useful. I mean, I would imagine that if 

15 you're looking for the lowest cost design that meets an

16 efficiency, it would probably end up somewhere in that 

17 neighborhood anyway, wouldn't it?

18 MR. PATZNER: That's correct. But we -- it's 

19 easier to sort your data by that because there's a 

20 formula with the core loss and the coil loss and you 

21 get that peak efficiency point. So we're using that 

22 formula and then we're sorting it out. So we will 

23 look. We'll be able to supply data on this table but 

24 we're only -- instead of doing it by the efficiencies, 

25 we're actually going to take the designs that actually 
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1 align with that maximizing the efficiency at 35 

2 percent.

3 MR. PARKER: That sounds fine. I wanted to 

4 ask the manufacturers here and also John. Is it 

5 feasible to expect that people could fill out at least 

6 some of the more critical columns, like the Design 

7 Options column, for higher -- some level of higher TP1 

8 cells than you're currently manufacturing or is that 

9 not in the cards? We just want to know what sort of 

10 data we'll be getting.

11 MR. TENDULKAR: We are basically making TP1 

12 transformers right now and only CA cell 3. We made 

13 some designs on that but that's about it and we made a 

14 few but not much of the transformers. So we don't have

15 much data based on CA cell 3 designs kind of thing or 

16 NEMA premium designs, very limited data.

17 The other problem I'm facing around here, 

18 most of the time we sell 4s and 5s only. We do not 

19 sell the complete enclosure kind of thing. The reason 

20 for most of our customers put these transformers in 

21 their enclosures and we may not have the data. Even if

22 we had put our transformers ourselves in the 

23 enclosures, those enclosures are not for the 

24 transformer alone. They have a lot of other things, 

25 like circuit breakers, distribution panels, and all 
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1 that. We call them power distribution units. So those

2 are totally different.

3 So we will not have any data as far as to 

4 tell you what the enclosure cost is for that.

5 MR. COFFEY: I think that's still useful for 

6 the purposes of validating an optimization if you say 

7 this core and coil goes in a transformer of this 

8 efficiency and you can say, you know, it has this many

9 pounds of steel for this conductor.

10 MR. TENDULKAR: Yeah. We will give you the 

11 core and coil information. There is no problem with 

12 that.

13 MR. COFFEY: That's great. I think that's 

14 the most important thing.

15 MR. TENDULKAR: Yes, but as far as the 

16 enclosure, we may or may not have that data.

17 MR. COFFEY: Okay.

18 MR. TENDULKAR: Some of the enclosures we 

19 make are outdoor enclosures and some are indoors. A 

20 lot of variations and a lot of things go in the 

21 enclosures kind of thing.

22 MR. PARKER: Tom, how about you? 

23 Professional judgment in basic information available on

24 higher ELs?

25 MR. PATZNER: Higher what?
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1 MR. PARKER: On higher efficiency levels. In 

2 other words, hypothetical sort of estimates as to what 

3 you would do and what you think the costs might be at 

4 higher efficiency levels?

5 MR. PATZNER: So my design engineers have 

6 already taken a look at it and due to our knowledge, 

7 we're going to be able to do it through all of the M 

8 material steels. However, it's going to be difficult 

9 for us to do it for the amorphous and wound because we 

10 currently do not have a design structure for those type

11 of materials. So for the materials that we use and the

12 similar materials we will be able to estimate the costs

13 all the way up to the highest efficiency levels that 

14 those products offer.

15 MR. PARKER: Excellent. John, does that --

16 is this something that you could ask your membership 

17 for?

18 MR. CASKEY: Sure. This is John Caskey, 

19 NEMA, and I guess I think this is a good discussion, 

20 but I guess I'm personally getting a little troubled in

21 that probably about two months ago, we sort of started 

22 going through this exercise.

23 I mean, we had developed the spreadsheet. We 

24 had sent it out to the members to ask for their input 

25 and we do that through -- within NEMA, there's a 
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1 confidential area where we have people that can analyze

2 stuff and are careful to report only stuff where you 

3 get enough data so that no one individual 

4 manufacturer's proprietary information is divulged. So

5 we go through that process.

6 So we basically sent out the spreadsheet and 

7 asked people to fill it out to the best -- something 

8 very similar to this. We asked them to fill it out to 

9 the best of their ability and basically we got two 

10 manufacturers submitted a fair amount of information. 

11 Some of the other ones submitted a little bit of 

12 information but it was such, we didn't have enough 

13 critical mass in any one cell to be able to release 

14 that information, if that makes sense to you, because 

15 you have to have -- in some cases, you have to have 

16 three or four or five manufacturers reporting in a cell

17 to be able to say the average price for that cell is X,

18 otherwise if you only got two people and one person 

19 said, you know, a $1,000 and somebody else said $2,000,

20 they both know exactly what the other guy said.

21 MR. PARKER: Is it possible to keep -- to 

22 simply not report who supplied the data so that --

23 MR. CASKEY: Well, that's the point. Even 

24 supplying the average then it divulges -- person X 

25 knows what he or she provided and if you provide the 
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1 average, then they can figure out what the other person

2 provided basically. So we have very strict portability

3 criteria.

4 MR. PARKER: If people know who's actually 

5 providing but if you don't tell people who even 

6 responded to the questionnaire, the only person who 

7 will know that it's their data is that person.

8 MR. CASKEY: Sorta, but I think inside the 

9 industry, those guys sort of know who's doing what a 

10 little bit.

11 MR. PARKER: Yeah.

12 MR. CASKEY: So, anyway, that was a problem. 

13 I mean, we made an attempt to do that. It didn't 

14 really pan out because we couldn't get enough data and 

15 it was just a huge amount of data. So, you know, 

16 that's the one concern.

17 Ultimately, as I understand it, at the end of 

18 the day, we're really trying to get to the point of 

19 what is the delta in energy efficiency and how much 

20 does that cost over, you know, EL0 or CSL0 essentially?

21 So we're trying to get to the delta cost per delta 

22 efficiency is what we're trying to get to and as we got

23 to with the oil guys, it seems like they're getting 

24 into better -- as I understand it, a better comfort 

25 range, saying that those numbers are roughly in the 
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1 right ballpark, that they can live with that. So 

2 that's where we're trying to get to here.

3 This is a huge amount of data to be 

4 collected. I'm not sure how many of these cells you're

5 going to get filled in from the various manufacturers. 

6 So I'm wondering is there -- so, first of all, you 

7 know, sort of representing the industry, if I send this

8 out to 11 people, 11 manufacturers, I'm not sure that 

9 we're going to get more than three or four on a good 

10 day providing information and some's going to be in 

11 some cells, some's going to be in other cells, some are

12 going to be comments on the OPS model, some are going 

13 to be a different calculation methodology. So it's 

14 going to be tough to put that all together.

15 Is there any chance of at least getting to 

16 basically one design level and sort of walking through 

17 that and making sure that, you know, if we can get to, 

18 you know, I don't care which one you pick but pick 

19 maybe the one that has the most sales, pick that design

20 option, that design line specification, and then walk 

21 through that.

22 So if you could get at least five or six 

23 manufacturers reporting on whatever it is, I don't know

24 what -- I guess we're on three phases, 75, 480, 120, 

25 you know, 150 temperature rise. If you can get, you 
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1 know, five or six people just reporting in that one 

2 category for 98 percent efficient to, you know, 98.93 

3 or whatever, that might be the range.

4 You know, if we focus on one area, is it more 

5 likely that we're going to get reasonable data that's 

6 going to help in the end run, in the end product?

7 MR. PARKER: I think those are excellent 

8 thoughts and maybe you're saying focus on one set of 

9 efficiency levels or focus on one set of columns?

10 MR. CASKEY: I'm saying one design level, 

11 okay, and then focus -- and then most likely you're 

12 only going to get realistic data from the EL0 to the 

13 EL3 or 4 or maybe 5, something like that, you know. 

14 Once you get beyond the premium, you're going to lose 

15 accuracy and most of the manufacturers will not have 

16 designed to that level anyway.

17 MR. PARKER: Well, I guess the question is, 

18 is it feasible to ask people to sort of consult their 

19 engineers and say, you know, if we were to design to an

20 EL4, what would we do? Would we have to move to 

21 amorphous? Would we have to start mitering? Is there 

22 a way to get there without? Is that kind of 

23 professional judgment something that could be done if 

24 we greatly simplified these columns, in other words?

25 MR. CASKEY: Yeah. We can ask them to do 
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1 that but you could further away from reality, you know.

2 It's something that they haven't necessarily built 

3 before. So they really don't -- you know, they can 

4 design it but they don't necessarily know what the 

5 final costs will be.

6 MR. PARKER: Right.

7 MR. CARMICHAEL: This is Rob Carmichael with 

8 Navigant. I get the feeling we're maybe talking past 

9 each other.

10 Have you seen the cost efficiency curves 

11 because we have those?

12 MR. CASKEY: Yeah.

13 MR. CARMICHAEL: Oh, okay, okay. I thought 

14 that's what you're -- is that not something that they

15 --

16 MR. CASKEY: Well, for me personally, I 

17 looked at them as of, you know, two or three weeks ago.

18 I don't know if anything has been done since the last 

19 meeting to get new ones.

20 MR. PARKER: So maybe what we could do to 

21 lighten the burden somewhat would be to, you know, say 

22 at a minimum, could you -- here's what the OPS model 

23 turned out. Does this, you know, past the red phase 

24 test for you? Are there any glaring problems with it 

25 that you want to surface? And that would allow them 
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1 something to work on. They wouldn't have to dig in 

2 their files. They could look at it and say this seems 

3 reasonable and that would supply a single design option

4 and single set of parameters and maybe we could 

5 simplify the columns and focus on the most important 

6 ones.

7 MR. CASKEY: So, I mean, I'm happy to send 

8 this out to everybody, you know, not only the people on

9 the committee but the non-committee members that are 

10 manufacturers within NEMA. I'm happy to send it out to

11 them but, you know, on a practical basis, I don't know 

12 that you're going to get very many manufacturers to 

13 submit data back for that, particularly when we're on a

14 time schedule and we've got to get from this data to 

15 the OPS runs to the --

16 MR. PARKER: Well, that's what I'm thinking, 

17 that maybe if they weren't asked to supply new data but

18 were simply asked to validate the existing information,

19 that they could at least do that, if we provided it to 

20 them in a simplified template.

21 MR. CASKEY: I think that's a good starting 

22 point.

23 MR. PARKER: Yeah.

24 MR. CASKEY: I mean, you're more likely to 

25 get the answer to that, but then --
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1 MR. PARKER: And then if they find glaring 

2 errors in some thing just ask them to fill in for the 

3 glaring errors. If they see something is wrong, say 

4 could you please give us -- just focus on that one line

5 or whatever ones they think are wrong, could you please

6 supply information for that? Would that make sense?

7 MR. CASKEY: Sure. I mean, what do you guys 

8 think?

9 MR. PARKER: Bob?

10 MR. SMITH: Bob Smith, Federal Pacific. 

11 Brian, I think you indicated that Federal Pacific had 

12 turned data in to you?

13 MR. COFFEY: Federal did, yes, and this type 

14 of data.

15 MR. SMITH: How complete was the information 

16 that was turned in and before you answer that, let me 

17 tell you Rob is out with customers. He's not listening

18 to the conference.

19 MR. COFFEY: It was helpful. Rob gave 

20 feedback when I e-mailed this template out initially 

21 and he said his proposal was to say, you know, ask for 

22 efficiency in selling price and then make the rest of 

23 the parameters optional and I think that if your 

24 selling prices align, that's great, but if they don't, 

25 that doesn't tell you where the source of the 
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1 discrepancy is and so, I mean, I feel if there is a 

2 discrepancy, addressing it really does require some of 

3 these values in some of these columns.

4 MR. SMITH: Could you use Rob's data as it 

5 came to you or would you have to contact him for some 

6 clarification?

7 MR. COFFEY: I mean, I think we can use it 

8 and we have been using it to -- Rob and Heath have been

9 in correspondence, exchanging data, and I think that 

10 has been helpful already.

11 MR. SMITH: For the committee's benefit, it 

12 took Rob and his engineering group about one day per 

13 design level to run the designs to get the information 

14 that Brian is referring to. 

15 I guess my thought is send out the template, 

16 tell the manufacturer to do the best they can with it, 

17 send it back to you and where you have questions, pick 

18 up the phone and get the clarifications that you need, 

19 and I think that'll go very quickly. I think you'll 

20 get good responses.

21 MR. COFFEY: I think that's a great plan.

22 MR. PARKER: Would it make sense to try to 

23 prioritize among the information that we're looking for

24 in this so they're not faced with 15 columns to fill 

25 in? But focus on the ones that have the maximum sort 
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1 of bang for the buck, so to speak, and we could look at

2 the columns probably and just eyeball which ones matter

3 the most. Does that make sense? 

4 MR. SMITH: Richard, from my perspective, I'd 

5 make it as tough on the manufacturers as you could and 

6 get as much data as you can because if you say this is 

7 not important, then they're going to skip it and you're

8 going to be -- you could be missing some very important

9 information. This is not that tough.

10 MR. PARKER: Okay. How do you feel, Vijay?

11 MR. TENDULKAR: It may be tougher to make on 

12 the manufacturer but I'm the only one working on this 

13 and I'm out of the country kind of thing. So it's 

14 going to be very, very tough. So what I'm suggesting 

15 and what I suggested before, I said before that we will

16 look at our existing design, whatever we have, get the 

17 test data, put out the design information, and get it 

18 out to you as much as we can, and there may be three or

19 four designs on the same system and if I give you a 

20 rating because we make the different temperature rises 

21 or different appearances kind of thing, and we will 

22 look at that.

23 Okay. I want to caution you that our data 

24 will be skewed kind of thing because, as I mentioned in

25 my e-mail and the thing over there, we are getting away
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1 from the grade-oriented steel for the reasons I 

2 mentioned in that. We had a lot of problems meeting 

3 with the quality grade-oriented steel available kind of

4 thing. We are going towards non-oriented steel in most

5 of our designs in the last year or two.

6 Also, to reduce the interest current, we had 

7 to use low flex density, so that helped us to get to 

8 the non-oriented steel. So our data will be more 

9 towards the non-oriented steel and towards the 

10 oriented. There are some CSL3 designs which are with 

11 the oriented steel and something like M5 or M4 kind of 

12 thing but there are very few of those but most of the 

13 designs will be non-oriented steel.

14 MR. PARKER: Eduardo, did you have something 

15 -- does this seem like a reasonable way to go for you? 

16 Would it help to simplify the columns or can you live 

17 with this approach?

18 MR. ROBLES: In case of us, I think for 

19 Eaton, we don't have a problem on supplying the format 

20 that is presented on the screen right now.

21 MR. PARKER: Okay. Sounds good. 

22 MR. SMITH: Richard and Brian, I used to 

23 think that and worry about whether we were using 2006, 

24 2008, 2010 prices or something in the future. I would 

25 recommend highly that you tell the manufacturers what 
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1 prices to use for the commodities and as they return 

2 the designs to you, indicate to you where they see 

3 discrepancies in their own operations because we're 

4 really after what we can do with the designs, and if we

5 allow the prices to vary from 2011, 2010, and so forth,

6 that's going to make the analysis much more complex.

7 So if you can hold it kind of ceteris paribus 

8 and say use the 2010 prices that I sent to you, we'll 

9 make adjustments as we go forward with the design 

10 evaluation, I think that will be very helpful to you.

11 MR. COFFEY: Bob, I agree with you, and I 

12 have included the OPS 2010 prices in this for the very 

13 reason that you said, so that we have ceteris paribus 

14 situation.

15 MR. PARKER: I'm still getting educated about 

16 this, but I was just whispering to Brian about the fact

17 that there isn't a final cost column and, as I 

18 understand it, I guess that was -- Rob's suggestion was

19 just to look at cost versus efficiency, right? But I 

20 wondered if it would be helpful to put the punchline in

21 at the end which is the final cost and have a column 

22 that would disclose that for the manufacturers, you 

23 know, here's what the OPS model estimated as the final 

24 cost, putting all these things together. Does this 

25 look like your experience for final cost? Does that 
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1 make sense to people?

2 MR. TENDULKAR: This is Vijay.

3 MR. PARKER: Kind of where it all comes 

4 together. Yeah?

5 MR. TENDULKAR: I do not know how the 

6 comfortable company feel to give you our cost kind of 

7 thing, but we will give you the material contained as 

8 such and then you can come up with the costs based on 

9 whatever the prices you want to provide because when 

10 you say costs, this is lot more thing than materials. 

11 There is also labor. There are overhead. There are 

12 some other things into that, margins and these kind of 

13 things, and I do not want to go into details of that.

14 So it may not be comfortable for a company to give you 

15 the costs. I do not know what they think, so maybe 

16 that. 

17 The other thing I forgot to mention, there 

18 may be something like a 300kb, let's say. We may have 

19 two different designs because they're for two different

20 customers and they have to go in their enclosures and 

21 because of the enclosures, the designs are completely 

22 different and that's the reason the prices may be quite

23 a bit different from one another and that, I don't know

24 how to tell you but we'll probably put it in the 

25 Comments column that this is what the dimension 
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1 constraints are and that's the reason the design is 

2 like that. I do not know, but we'll see what we can 

3 do.

4 MR. COFFEY: I think in those cases, I mean, 

5 I think the most helpful is to provide us with the 

6 lowest cost design. So the cheapest way that it can be

7 done, whatever the specifications, because we're trying

8 to validate the model is the goal of this and so always

9 there are other things that you can do, other 

10 requirements that you can impose, and those do have the

11 effect of adding costs, but we have to, you know, draw 

12 a line in the sand and say that's where we're going to 

13 do our comparison.

14 MR. TENDULKAR: I understand what you're 

15 saying, but we are in the real world and real world is 

16 different than what the model says and that's what we 

17 are to do and we have to live in the real world and 

18 produce something to sell to our customers and if we 

19 can't do that, then we are out of business.

20 MR. PARKER: Vijay, another thing I pointed 

21 out and I don't know if it's helpful, but I think we 

22 established yesterday that your company produces, you 

23 know, a specialized line for which you are seeking, you

24 know, a separate category. So, as you know, the group 

25 is receptive to that. So as you look through this, 
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1 bear that in mind, and it may be that for your special 

2 category, you know, a slightly modified template would 

3 be appropriate or your information is different.

4 So, you know, I think that could go into the 

5 Remarks column and could be, you know, fed into the 

6 analysis of that category, if the working group 

7 concludes that a category is appropriate. Does that 

8 make sense?

9 MR. TENDULKAR: That makes sense and that's 

10 the reason I said I would put down in the Remarks 

11 column, yes, these are the dimensions, whatever it is.

12 MR. PARKER: Great. Thank you.

13 MR. TENDULKAR: Thank you.

14 MR. PARKER: Anything else we need to do on 

15 this before we move on? Okay.

16 As I understand it then, -- excuse me. Yes, 

17 John?

18 MR. CASKEY: John Caskey, NEMA. How about a 

19 time schedule for trying to put all this together? Are

20 you going to talk about that now or later?

21 MR. PARKER: I think we should talk about 

22 that now. Again, the analysis has to be done by 

23 November 2nd and I guess, Brian, maybe you should just 

24 tell us, be very candid. When do you need -- what is 

25 your drop dead date for -- and this is also something 
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1 that will implicate LBL because they have to do a life 

2 cycle cost out of it, as well. So just working 

3 backwards, and maybe what we should do is not -- do we 

4 want to caucus about this offline for a minute before 

5 we talk about timelines? That may be helpful. 

6 But, yes, I think we should talk about a 

7 timeline. I think perhaps people need to give this a 

8 little more thought before we start making commitments,

9 but let's do put that on the agenda for later 

10 discussion. Thank you. It's helpful.

11 So as I understand it, then there will be two 

12 tables. First, we will break this table out into 

13 medium voltage and low voltage, so that the low voltage

14 you're seeing only the parts that are relevant to them.

15 Hold on. Before I get to my grand recap, Vijay's got 

16 his hand up again. So go ahead.

17 MR. TENDULKAR: On this, one other point. 

18 You said volts, primary and current. You want the 

19 words and turns as two separate things in that?

20 MR. COFFEY: We were asking for the ratio 

21 here just as a reality check.

22 MR. TENDULKAR: So you really want the turns 

23 and the primary winding, turns and the secondary 

24 winding? Is that what you're looking for?

25 MR. COFFEY: Well, we were just asking here 
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1 for the volts per turn ratio but if you think it would 

2 be more useful to provide the individual volts and the 

3 individual turns, we can provide that, also.

4 MR. TENDULKAR: Same in the transformer, 

5 there is a primary and secondary, but the primary turns

6 will change according to what tasks we have, how many 

7 taps we have. Secondary turns normally remain fixed. 

8 So we'd like to have maximum. Is there any column? I 

9 didn't see for the taps or anything like that.

10 MR. COFFEY: We don't have taps built in, no. 

11 So this is really asking at the nominal rated voltage.

12 MR. TENDULKAR: Okay.

13 MR. PARKER: Bob?

14 MR. SMITH: Richard, I'd like to take us off 

15 the subject, Bob Smith at Federal Pacific, for just a 

16 moment. Maybe of interest and I'm sorry Steve is not 

17 here to hear this, but --

18 MR. PARKER: Excuse me. Vijay, could you 

19 turn off your mike? Vijay?

20 MR. SMITH: Where are you hiding? I see. 

21 All right.

22 MR. NADEL: I sat next to Andrew so he can 

23 brief me on what I missed while stuck on the Metro for 

24 an hour.

25 MR. SMITH: What I wanted to say to the group 
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1 with our building both medium voltage and low voltage 

2 dry type transformers, since the 2010-mandated 

3 efficiency levels went into effect and basically very 

4 shortly after that time, most of the medium voltage 

5 transformers that we have been building at 208Y 

6 secondaries have been converted to 480Y volt 

7 secondaries. 

8 This is good because this means you have a 

9 lot less conductor losses in your facility and I just 

10 thought you might be interested in knowing that the 

11 efficiency standards have had that effect, not just on 

12 the transformer manufacturers but on the design and 

13 building practices of the consultants and the 

14 contractors.

15 MR. NADEL: Excellent. So done properly and 

16 I emphasize properly, they can have positive effects.

17 MR. PARKER: Duly noted. Okay. So my 

18 takeaways from this, and let's just make sure, I think 

19 it pays to belabor this because there's going to be a 

20 lot of work triggered by this process and we want to 

21 make sure that we get it right. We will break out the 

22 medium voltage and the low voltage into two separate 

23 worksheets tables to that your company and your members

24 will only get the table that's pertinent to you.

25 We will send out two separate tables to each 
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1 company. One will be the -- two separate worksheets, 

2 one file but two worksheets. One worksheet will 

3 contain this table filled out with the OPS results and 

4 the other will contain this table blank with an 

5 instruction that if you find the OPS results credible, 

6 nothing further needed. To the extent that you find 

7 them errors, please indicate by filling out the 

8 appropriate columns in the blank table with your own 

9 design information that you would use and as much 

10 detail about the -- in the remaining columns as you can

11 provide with available resources.

12 We will ask that everybody do that for the 

13 designs that they produce but we will also invite 

14 people to comment on what they would do in their 

15 professional judgment at higher design levels should 

16 that be chosen in the future, higher EL levels, excuse 

17 me, efficiency levels, and we will ask people to 

18 stipulate, obviously distinguish between -- in the 

19 blank tables between things based on their actual 

20 experience and things that reflect their speculation, 

21 right, so that we know what we're getting when it comes

22 in.

23 And we will amplify the instructions 

24 worksheet to, you know, provide explanations about 

25 material prices in the area and provide, you know, more
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1 detailed instructions on how to fill this out.

2 The last thing is on material prices, we will 

3 add columns for 2006 and 2008 and perhaps add a column 

4 for remarks at the end so that they can just specify on

5 the table which, you know, what their differences are.

6 We will also do the same thing for material 

7 prices, invite people to fill out what their experience

8 is, if it's different from what's in the table, and to 

9 the extent that you can document that with invoices or 

10 something, I think it would be very, very helpful so 

11 that we know what we're getting.

12 Brian, did I miss anything or get it wrong in 

13 any way?

14 MR. COFFEY: No. That's pretty 

15 comprehensive. I mean, I think this will be valuable. 

16 I mean, this is really in my mind the starting point 

17 for coming to an agreement because if we can't agree on

18 what the cost efficiency curve roughly looks like, then

19 it's tough to agree on anything downstream of that. So

20 we appreciate everyone's cooperation and look forward 

21 to coming to an understanding.

22 MR. PARKER: Great. And we'll talk later in 

23 the day after we've had a chance to caucus inhouse and 

24 please be thinking about what is the reasonable time 

25 frame, given our time constraints, for getting all this
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1 done.

2 So this has been a good discussion. Why 

3 don't we take a five-minute break? When we come back, 

4 we're going to hear from Rob Carmichael about his work 

5 on manufacturing impacts and we will also hear from the

6 advocates about the concepts they wanted to table as 

7 they did for the medium voltage group and that should 

8 probably take us up to lunch.

9 So why don't we take, let's say, a 15-minute 

10 break and we'll reconvene at 10:45 or 10:50?

11 (Recess.)

12 MR. PARKER: Welcome. First, apologies for 

13 the delays. We're having to make some hard choices 

14 about scheduling and why don't we talk about that first

15 since we've just been in the context -- we've been 

16 discussing the design template and so forth and so 

17 let's just -- I'll give you basically where we are. 

18 I'm just going to lay the cards out on the table and 

19 this is the situation.

20 Okay. In order to meet our deadlines, we 

21 have to have LBLs, LCC analysis by November 2nd, so 

22 that you can have at least a week or six days before 

23 our next meeting in order to assess it and we just made

24 the determination that, you know, the next meeting's 

25 going to be very important. You're entitled to and you
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1 need to have time to, you know, take this -- get the 

2 LCC results and really understand it and delve into it,

3 answer questions about it before we meet for the next 

4 meeting which will be a very important meeting.

5 So November 2nd is a rigid deadline that we 

6 have to work back from for the analysis.

7 I understand from LBL that in order for them 

8 to do -- crank out their work, their modeling work by 

9 November 2nd, they have to have the engineering data, 

10 the final engineering data from Navigant by close of 

11 business this Friday, as in a way from today, as in a 

12 week from today. I didn't say today. I said this 

13 Friday.

14 Oh, and by the way, I've been passed a note. 

15 Please remind people to announce themselves before 

16 speaking so that people on the phone, on the webinar 

17 can follow the conversation better. Okay. So I'll be 

18 hard-nosed about that in the future. My apologies to 

19 people on the phone for that. We'll try to be careful.

20 Richard Parker. Okay. So we have to -- so 

21 the analysis has to go to LBL by Monday.

22 Now Brian and Rob and his Navigant team are 

23 fantastic but they are not super human and so their 

24 ability to process large amounts of information and if 

25 there are any problems with the data is going to be --
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1 you know, is limited. They need time and they're not 

2 really getting it and so, you know, we are where we 

3 are. Their design template went out some weeks ago. 

4 There was a limited response and now we're trying to do

5 the best we can with what we have information 

6 available.

7 So what we propose to do is send out the 

8 template, filled in, as proposed in our first meeting 

9 and John Caskey and Jim Creevy will distribute to their

10 membership. People should feel free, to the extent 

11 that there are other companies that are not in NEMA, 

12 you know, we should alert them that they are free to 

13 submit data, as well. This is an absolutely open 

14 process and we will ask, first and foremost, for their 

15 validation or lack thereof, for their comment on the 

16 OPS model and if there are differences for their 

17 explanation of why there are differences and if the 

18 difference is because they belong in a separate class, 

19 well, that's one explanation.

20 But if the difference is because the OPS 

21 model seems to be flawed, then please supply at a 

22 minimum the design line, the alternative design line 

23 that they would create and as much data about that as 

24 they can in the time available.

25 I think basically the rock bottom minimum to 
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1 allow manufacturers to reply is by next Thursday or 

2 Friday and even if they have it Monday morning, which 

3 they will. So this means that basically we are not 

4 going to be able to really take onboard in a rigorous 

5 way any problems that might arise in the data and we 

6 will hope that there are not serious problems and we 

7 will hope that the validation -- you know, the things 

8 have been gotten right and that the validation works.

9 We have gotten some data from some 

10 manufacturers and we can be working on that now to 

11 calibrate the information and certainly all the 

12 information that comes in will be processed in real 

13 time as it comes in. So the earlier it comes in, the 

14 more likely it is to be utilized and I can't emphasize 

15 that enough. If we can get it before Friday, if we can

16 get it on Monday, that would be ideal, right? The 

17 sooner we have it, the more likely it is to get into 

18 the process.

19 But one of the advantages of a negotiated 

20 rulemaking is that it gives you a chance to really put 

21 things into the process and in real time, you know, get

22 responses back.

23 So here we are. So what we're going to do, 

24 at least -- and I will put this out there for 

25 discussion, but what we propose to do is basically give
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1 manufacturers till Friday to get us their data with a 

2 strong encouragement to get it sooner with a commitment

3 to respond to data received, both in hand, you know, as

4 soon as it comes in.

5 Whatever is the best that can be done with 

6 the resources available will be concluded by, you know,

7 Monday morning. At that point, the curtain will drop 

8 down and the information will go over to LBL which will

9 do their black box magic in producing, you know, life 

10 cycle cost results as well as manufacturing impacts. 

11 If there are problems, we will just have to 

12 deal with that heuristically on a case by case basis as

13 arise and discuss what adjustments need to be made, if 

14 any, in the final results in order to come up with 

15 roughly reasonable results.

16 Did I fairly reflect our discussion, LBL and 

17 Navigant? Let me ask them first anything that they 

18 want to add or modify. Then I'll open it up to the 

19 group. Let's late Katie respond first. Go ahead, 

20 Katie.

21 MS. COUGHLIN: This is Katie Coughlin, LBL. 

22 I just want to clarify that we'll be producing not just

23 a new LCC but all of the national impacts analyses for 

24 the TSLs and then those flow into the MIA which we'll 

25 also be providing by November 2nd. So you'll have 
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1 everything, not just the LCC and engineering.

2 MR. PARKER: Good. Thank you. Vijay?

3 MR. TENDULKAR: Who do we submit the data? 

4 Any particular person or just --

5 MR. PARKER: Why don't we just submit it 

6 directly -- Brian, is it okay if they just send it 

7 directly to you?

8 MR. COFFEY: That's perfect.

9 MR. PARKER: Great. Okay. Thank you. Just 

10 send it directly to Brian Coffey and everybody should 

11 have his information and you do not need to cc me on 

12 it. I won't have the band width to absorb it. It can 

13 go directly to Brian. Do any of the -- this is also --

14 I believe this is in the business confidential 

15 category, right? So it should not come to me. It 

16 should only go to Brian. I mean, I operate out of the 

17 same confidentiality rules but the less information 

18 that's floating around in e-mails electronically the 

19 better off we are.

20 MR. COFFEY: That's right.

21 MR. CARMICHAEL: Rob Carmichael. That's 

22 right. If anyone feels that they need an NDA in order 

23 to send data, I don't want that to be the barrier to 

24 doing so. So please let us know if you would like to 

25 establish that and we'll do that.
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1 MR. PARKER: Right. Since Brian was not 

2 speaking into the mike, people on the phone, if anybody

3 needs and doesn't yet have a confidentiality agreement 

4 with Navigant in order to feel comfortable supplying 

5 information, please let us know immediately. Please 

6 let Brian know immediately and we'll get that to you 

7 and get it executed.

8 Anything else? Okay. We have a plan. I'd 

9 like to turn now to something that I think is going to 

10 be a really important aspect of this group's 

11 conversations which is the Manufacturing Impact 

12 Analysis and Rob Carmichael of Navigant has kindly 

13 agreed to walk us through a little more detailed 

14 presentation of his findings, and I think it will be 

15 important as we go along to be very careful and be very

16 clear as to what kinds of impacts, you know, get 

17 factored into their analysis and what kind don't get 

18 factored in in terms of profits and markups and so 

19 forth.

20 So let's be attuned to that as we listen to 

21 the presentation, but with that, I'll just turn it over

22 to Rob. Thanks.

23 MR. CARMICHAEL: Okay. Thanks, Richard. So 

24 today, I'm just going to give an overview of the MIA, 

25 really want to cover three things.
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1 First, I want to cover the key issues that 

2 manufacturers relay to us during our manufacture 

3 interviews. Then I wanted to discuss the small 

4 business analysis specifically because that's, you 

5 know, a key concern in this group, in this subclass, 

6 and then I'm going to give a brief explanation of how 

7 we calculate conversion costs. So, in other words, 

8 what are the capital and R&D expenditures that 

9 manufacturers expect to incur as a result of standards?

10 So, you know, broadly speaking, the purpose 

11 of the MIA obviously is to assess the impacts of 

12 standards on manufacturers and the heart of it really 

13 is determining the conversion costs. What is the 

14 outlay in terms of capital that manufacturers will have

15 to have to spend that they would not have had to spend 

16 in the base case and that's a key clause there, as 

17 well. You know, what's happening anyways and what are 

18 they doing now relative to what would happen in the 

19 standards case?

20 The key, the core of the methodology really 

21 is the manufacture interviews and the data that we get 

22 from manufacturers. There are other purposes of the 

23 MIA. We also look at subgroups of manufacturers and 

24 most specifically and again in this case it will be 

25 important to look at small manufacturers. We talked 
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1 yesterday about how this industry tends to be a little 

2 more fragmented than maybe the liquid immersed side.

3 Then we also look at impacts on employment 

4 and manufacturing capacity. So the key issues, you 

5 know, I don't think is any surprise, we've heard some 

6 of them already, but core steel availability for grades

7 lower or greater than M3 was one concern we heard. 

8 Conversion costs, as already mentioned, and potentially

9 the strain on assets. As you move up in efficiency, 

10 typically you might -- one design option would be to 

11 use better, higher grade steel which is often thinner 

12 which proportionally, you know, lowers throughput, 

13 requires investments in capacity to keep the base case 

14 level of output.

15 You could also move from about butt lap to a 

16 step lap. Core construction, that's going to require 

17 substantial tooling if you're not already there, and 

18 then another concern with conversion costs really also 

19 on the R&D side, as we heard from manufacturers, was a 

20 lack of experience in using amorphous steel which comes

21 into play with the higher efficiency levels, as we 

22 know.

23 Then small business concerns, again low 

24 volume producers are concerned that they might face or 

25 they do face higher material prices than their larger 
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1 competitors due to just economies of scale and 

2 purchasing volumes, and then they have more difficulty 

3 in coming up with a business case for higher tooling 

4 costs. They're essentially spreading investments, 

5 fixed investments over smaller volumes.

6 So the small business analysis. By statute 

7 and by Executive Order, DOE looks at and determines 

8 whether or not a given rule will have an impact on 

9 small businesses. Part of that process is to find and 

10 identify the number of impacted small businesses. So 

11 how many small business distribution transformers in 

12 the global dry type segment are there and using the 

13 qualification for that, they have to draw a line 

14 somewhere. What's a small business? We use the SBA's 

15 definition for this industry which is employees less 

16 than -- that are -- excuse me -- companies with fewer 

17 than 750 employees and that includes all employees of 

18 the parent company and all subsidiaries.

19 And after, you know, meeting that threshold 

20 judgment, DOE is required to do a regulatory 

21 flexibility analysis which the basics of it is to see 

22 if small businesses are adversely and 

23 disproportionately impacted relative to larger 

24 businesses by the rule and some of the things that 

25 would go into play in that determination are those that
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1 we talked about in the previous slide, the purchasing 

2 volumes having requiring -- facing uncompetitive prices

3 and spreading investments, fixed investments due to the

4 standard over lower volumes.

5 And typically the output of this analysis is 

6 to compare the cost of a standard of a typical small 

7 business cost to a large business. Now, you know, in 

8 fixed cost basis that's often they can be the same and 

9 that's not necessarily a useful measure. So DOE will 

10 often look at it on a ratio basis. So a small 

11 manufacturer has to spend, let's say, a million dollars

12 in capital. What's that compared to their normal 

13 ordinary cap-X budget and then what's that million 

14 dollars compared to the normal large business budget? 

15 The same thing on the R&D side, and then that's one of 

16 the metrics that can be used in the decision-making 

17 process and in the normal rulemaking and then however 

18 the committee decides in the negotiation.

19 This chart here is really kind of a crude 

20 rendition of how we calculate conversion costs. I just

21 would point you’re attention to the top two boxes there

22 right under Methodology. The key component is what's 

23 going to happen to steel usage compared to the base 

24 case. So in the base case, manufacturers use certain 

25 types of steel and we're going to model that and then 
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1 under different standard levels, we're going to have 

2 to, based on the design options that we hear they'll 

3 use, estimate what steel and in what quantities they'll

4 have to use in the standards case. So that gives us a 

5 change and based on our manufacturing interviews and 

6 interviews with equipment suppliers, we look at -- we 

7 create understanding of their production processes, 

8 where they are in the base case, and understand what 

9 sort of capacities they're going to need to meet those 

10 changes in steel mix and quantity and given their 

11 production process, say they went from a butt lap to 

12 step lap.

13 We heard yesterday Thomas say that -- on the 

14 phone, he said that reduces capacity. That's something

15 that's consistent with what we've heard in interviews 

16 and so that has to be taken into account in what the 

17 new equipment needs are and then, based on interviews 

18 with equipment suppliers, we develop costs and then in 

19 the end calculate conversion costs, capital conversion 

20 costs.

21 Also associated with this but not on this 

22 chart are product -- well, what DOE calls product 

23 conversion costs. So this is the research and 

24 development. This is the testing, the marketing 

25 changes manufacturers would need to make.
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1 MR. PARKER: So, Richard, what are the --

2 what things are excluded? I believe you mentioned 

3 before in the conversation with Vijay that costs of 

4 purchasing new land or factory space would not be 

5 included, is that right?

6 MR. CARMICHAEL: It would be included if it's 

7 incremental. So just as an example, if a manufacturer 

8 repurposed all of, say, all of their space that was 

9 using conventional steel to produce transformers for 

10 production of amorphous, then, you know, they'd have 

11 that space, they'd still have that space, that's not 

12 something that would be incremental we'd add.

13 I think Thomas made the point yesterday on 

14 the phone that, look, some small manufacturers work or 

15 operate in markets that are exempted. They're still 

16 going to operate in markets that are exempted after the

17 rule. Therefore, they need that space. Therefore, you

18 know, anything, if they continue to play in the 

19 regulated space, they would need incremental building 

20 space. That is captured.

21 One thing I'd add. I'm going to -- and I'll 

22 get to the question I'm going to add to Brian's 

23 template. I understand the burden of the data 

24 requests, but I'm just going to throw one more question

25 on there and my timeline isn't quite as tight, so maybe
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1 we can talk about how we want to do that, but in the 

2 base case, not every small manufacturer or every 

3 manufacturer actually produces their cores inhouse. So

4 that's something that we have to make sure that we as 

5 accurately as possible capture, so as not to overstate 

6 conversion costs. They're not going to have to create 

7 cores that they're not already making.

8 So low voltage dry type conversion costs. 

9 This is a little bit -- these are more concepts of how 

10 we think about it. Higher efficiency units, generally 

11 you're looking at increased core size. You're looking 

12 at thinner laminations, thinner steel, both of which 

13 proportionally lower throughput. Again, we're moving 

14 from core example but butt lap to core construction 

15 will lower throughput.

16 You know, so obviously each of those create 

17 needs for more capacity and that starts with equipment 

18 and tooling costs that we include in our estimates.

19 So as we speak, actually later today, you 

20 know, we're conducting interviews with equipment 

21 suppliers to try to get a handle on what those costs 

22 are per se related to core cutting machines. We'll be 

23 adding questions to the template. They'll be very 

24 brief relative to the other ones that are on there now 

25 in terms of trying to get a better handle on how 
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1 manufacturers expect to or what costs they expect to 

2 incur and then, as I mentioned, I also want to add a 

3 question on what share of the core construction is done

4 inhouse for covered products. So for those here and 

5 those on the phone, that could be something that you're

6 thinking about in terms of getting that number, that 

7 would be real helpful for our purposes.

8 MR. PARKER: Andrew?

9 MR. de LASKI: Andrew de Laski. Rob, do you 

10 have any preliminary information on share of core work 

11 done inhouse or is that work that is all ahead of you?

12 MR. CARMICHAEL: We do. We don't have enough 

13 to consolidate that answer. I suppose -- yeah. I'm 

14 just not comfortable giving that right now. We do have

15 some numbers but it's really just one manufacturer.

16 MR. de LASKI: Okay.

17 MR. CARMICHAEL: So I'd rather not.

18 MR. de LASKI: And will your manufacturer --

19 this is close to the question, you know, who is the 

20 manufacturer?

21 MR. CARMICHAEL: Right.

22 MR. de LASKI: Right. So will your 

23 manufacturer -- I mean, in this market there are some 

24 manufacturers who build their own cores and some who 

25 buy cores from core manufacturers and my understanding 
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1 is that, you know, that may happen across the market 

2 but that in particular the smaller manufacturers -- the

3 smaller the manufacturer, the greater likelihood 

4 they're going to their cores.

5 MR. CARMICHAEL: Yes, absolutely.

6 MR. de LASKI: That's my understanding. And, 

7 you know, in response to the standard, they may do more

8 of that. So I'm wondering how do you analyze that 

9 particular option or that -- how does that option 

10 figure into your -- so they may decide to buy a miter 

11 machine and they might decide I want to actually source

12 my cores.

13 MR. CARMICHAEL: Right. Typically, how we 

14 handle that is qualitatively say, look, this is an 

15 option, you know, to go and to source the cores, but we

16 -- I think it's incumbent upon us to calculate the 

17 costs that they would have to continue doing business 

18 as they've done it in the past or as they're doing it 

19 now which is to price out that equipment.

20 MR. de LASKI: So then you would then -- so 

21 then if they're sourcing some cores now, so then the 

22 approach would be -- your approach then is that if they

23 source some cores now, say they source half their cores

24 --

25 MR. CARMICHAEL: Right.
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1 MR. de LASKI: -- and don't half their cores, 

2 you're just going to hold that constant?

3 MR. CARMICHAEL: It's usually not that clean 

4 and so if they're sourcing 90 percent, then I think 

5 it's a safe assumption that they would probably go to a

6 100 percent rather than build it, buy a million dollar 

7 machine. So that would be included.

8 MR. de LASKI: Right. That's kind of where I 

9 was heading with this, is that it seems like that 

10 holding that constant is probably not a valid 

11 assumption.

12 MR. CARMICHAEL: Yeah. That's -- I think the 

13 50 percent, I think we would say 50 percent is --

14 that's a business, you know. They're in that business.

15 90 percent I think requires some judgment, analytical 

16 judgment to make that.

17 MR. de LASKI: Well, they're in the business 

18 of transformer manufacturing, you know, and how they 

19 decide to do that is based on a whole series of 

20 decisions about how they decide to do that, faced with 

21 the given standards.

22 MR. CARMICHAEL: Right. For some 

23 manufacturers. For others, the comment is if we're not

24 building the cores, what business are we in? It's an 

25 important part of the value chain for that 
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1 manufacturer. So I think that's -- you know, again, 

2 it's an analytical judgment you have to make.

3 MR. de LASKI: And will you look at -- so, I 

4 mean, clearly if manufacturers do choose to -- will you

5 look at impacts on core manufacturers? Is that part of

6 your analysis or are they outside your scope?

7 MR. CARMICHAEL: Those are -- that's 

8 typically outside the scope, yeah, and that is now.

9 MR. de LASKI: Okay.

10 MR. PARKER: Just to follow up on that, Rob, 

11 in your interviews with manufacturers, do you ask what 

12 would you do under a hypothetical standard?

13 MR. CARMICHAEL: Oh, absolutely.

14 MR. PARKER: And does that question include 

15 would you source cores or how would your ratio change 

16 or is it -- I mean, do you have that primary interview 

17 data on that or are you in a position then to 

18 extrapolate from the current practice?

19 MR. CARMICHAEL: We absolutely ask how 

20 changes in the standard will affect their business 

21 model. So we do have primary information on that.

22 MR. PARKER: But do you specifically ask 

23 whether they would source more of their cores from --

24 MR. CARMICHAEL: Yes.

25 MR. PARKER: -- outside or not? So you 
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1 actually have primary data on --

2 MR. CARMICHAEL: Yes.

3 MR. PARKER: -- what the response would be?

4 MR. CARMICHAEL: So I just don't want to 

5 overstate it. We ask the question. We get responses. 

6 It's not a complete survey. You know, we're not 

7 getting the entire population of manufacturers and the 

8 data isn't as clean, you know, as a core. You can't 

9 just cut through it and say, okay, these ones 

10 definitely will, these ones definitely won't. It's a

11 business decision that frankly we haven't spent a lot 

12 of time thinking about.

13 MR. de LASKI: Good point, Rob. You're 

14 asking them to give you a response to a business 

15 decision that hasn't posed itself as a business 

16 decision yet. So any company is not going to be in a 

17 position to put the kind of resources in answering the 

18 questions they would to put into it once it became --

19 if and when it became a real decision.

20 MR. CARMICHAEL: Right.

21 MR. de LASKI: So you can't -- how you weigh 

22 that is --

23 MR. CARMICHAEL: Requires judgment, yes.

24 MR. PARKER: Better than not asking the 

25 question, though, I think. Vijay?
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1 MR. TENDULKAR: This is Vijay from Onyx. One 

2 of the problems we face with this is we are not buying 

3 the cores. We are buying the cores which are mitered. 

4 We do not have a facility in our company to miter the 

5 cores. So we're outsourcing that from the local 

6 supplier and normally the turnaround time is about 

7 three days to five days after we place the order kind 

8 of thing because our manufacturing cycle is very short,

9 four to five days for most of the things.

10 We're also thinking about putting the machine 

11 ourselves on -- this, of course, is as we discussed 

12 yesterday, half miter or whatever we want to call it, 

13 but simple miter. We don't have room. We are looking 

14 for it but we can't take our standard butt lap machines

15 out because those are used for making some of the other

16 transformer equipment and we need those. So that is 

17 the thing and we have a faster turnaround kind of 

18 thing.

19 The other problem we face when we buy the 

20 cores from outside, leave aside the amorphous core, 

21 there are only a couple of manufacturers or something, 

22 we know where the material is coming from and whatever 

23 it is, but when you go to the non-oriented material, 

24 like the M6, M5, M3, we don't know where that material 

25 is coming from from that supplier. 
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1 The ticket says it's coming from particular 

2 supplier but sometimes we get -- we process car bumpers

3 called M6 and then we don't know what it is and we have

4 to heat it up. So I don't know where we are going. I 

5 mentioned that in my comments submitted to the 

6 committee, but this is one of the problems we face if 

7 we get it from outside, that we do not want to put the 

8 facility inside and if you want to put something 

9 inside, now we are stuck with the closed space. We do 

10 not have much of room in our 60,000 facility and if 

11 anybody wants to picture it, next time somebody comes 

12 in for me, somebody will give you the picture and see 

13 how much room. People have to move around. There is 

14 not much room for the people to move.

15 MR. PARKER: Yeah. I'm not sure how easy it 

16 is to model that into a nationwide model. So that was,

17 I guess, the point of my question earlier about the 

18 degree to which the need for more floor space can be 

19 factored into the model. Right.

20 MR. NADEL: This is Steve Nadel from ACAAA. 

21 It strikes me, and I understand we have some particular

22 issues here, as Vijay pointed out, with small 

23 manufacturers, that when you do your small manufacturer

24 analysis, you might need to do it two different ways 

25 and see which has the bigger or smaller impacts, you 
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1 know.

2 One, just assume, yeah, use to Vijay as an 

3 example, he'll have to do an addition to his factory 

4 and buy this machine, that's one route, and that has 

5 advantages and disadvantages. Another route is to 

6 increase his procurement, of course, which has 

7 advantages and disadvantages and just look at it both 

8 ways.

9 MR. CARMICHAEL: I think that's a great idea. 

10 That's something we can do.

11 MR. PARKER: Okay. So that's helpful. Yes, 

12 John?

13 MR. CASKEY: Yeah. John Caskey with NEMA. 

14 Just one other thing to add. I mean, I think the 

15 methodology that you laid out, you know, particularly 

16 addressing some of the small manufacturing issues makes

17 sense to me.

18 One of the things that wasn't missing that 

19 I've heard basically from going to some of the 

20 manufacturing facilities is that when there are sort of

21 shortages of steel and I don't know if that was back in

22 2005 or 6 or somewhere around that time frame, that it 

23 seemed like when I talked to the big manufacturers that

24 are part of NEMA, they didn't really express too much 

25 concern with not being able to get their allotments 
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1 that they needed to manufacture their transformers, but

2 in the case of some of the small manufacturers that I 

3 talked to during that same period of time, they were 

4 basically not only saying that there is this price 

5 issue which I think you've got covered in there, that 

6 they're buying smaller quantities, but, in addition to 

7 that, it seemed like the quality that they were getting

8 had more variation in it than the big guys were getting

9 and I don't know if that's just the nature, if that's 

10 true or not, but that was an issue that was brought up 

11 to me at that point. So that's another parameter to 

12 think about in that small business equation.

13 MR. CARMICHAEL: Okay. Thank you.

14 MR. TENDULKAR: I just want to follow up on 

15 what you just said, that we had lot of difficulty 

16 getting the steel from the American manufacturers in 

17 that time period and whatever steel we got, we had the 

18 designs made years ago, tested, particular loss level, 

19 same design repeated with the new batch of steel, and 

20 it was horrible. We could not accept that transformer.

21 The problem we face, we have got a short 

22 delivery cycle of four to five weeks. We know the 

23 problem. There is a problem with the steel when the 

24 transformers are complete in the test department and it

25 is supposed to ship next day or whatever it is and we 
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1 find the problem with the steel and we have got an 

2 irate customer at our end and we have got that steel. 

3 There is no way we can say come on, look at the steel 

4 and do something. We have to do something else with 

5 that.

6 This is the problem we face. I don't know 

7 how we can solve that. We are not the manufacturer 

8 where we make a 10,000 copies of the same design again 

9 and again and again and we say stop the manufacturing 

10 line, okay, get the manufacturer of the steel here, 

11 whatever it is, and do something. That's not the way 

12 we can work.

13 MR. PARKER: So that's sort of a hidden 

14 conversion cost. In other words, the cost of expanding

15 to new suppliers whose reliability is not yet 

16 determined and may in some cases prove to be not there.

17 MR. TENDULKAR: it is not necessarily with 

18 the new supplier but we don't know where we are getting

19 the steel. We are getting from one supplier who told 

20 us to get the steel and he says it came from this 

21 supplier X but we don't know if it came from supplier 

22 because if you look at the steel, there are no markings

23 on it telling us which supplier is making that --

24 manufacturer is making that steel. That's the problem.

25 MR. FERNSTROM: Gary Fernstrom, PG&E, 
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1 representing the California Utilities. Like I did in 

2 the medium voltage transformer discussion, I'd like to 

3 emphasize the value I see in this DOE-facilitated 

4 negotiation process. I think the key stakeholders can 

5 come to a much higher level of mutual understanding 

6 through this process and it's really excellent 

7 contrasted to the traditional more adversarial process.

8 MR. PARKER: Well, we'll see if it stays that 

9 way. I hope it does. We'll know better by the end of 

10 the next meeting.

11 Did you have more slides, Rob?

12 MR. CARMICHAEL: No. That's it.

13 MR. PARKER: One question that I had is 

14 whether you are in a position to assess impacts on 

15 profit margins either as a result -- from higher 

16 standards either as a result of modifying what used to 

17 be a premium product by raising the standard or by 

18 requiring the movement to outsourcing and so forth.

19 Is that already done and is that something 

20 that could be done?

21 MR. CARMICHAEL: Yes. Thanks, Richard. 

22 That's a good question. It's something I didn't cover.

23 I wanted to focus the attention on conversion costs 

24 because I feel that's the biggest driver that should be

25 discussed and those are hard numbers.
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1 We do an industry cash flow analysis. We do 

2 it in something called government regulatory impact 

3 model and in that situation, we find -- we determine 

4 the industry value in the base case of distribution 

5 transformer manufacturers and then flowing through 

6 that, we have -- obviously it's an income statement 

7 balance sheet cash flow statement for the industry as a

8 whole. So that's where the input from the shipments 

9 comes to drive revenues.

10 In our interviews, we asked a series of 

11 questions on financial parameters. What do you spend 

12 on SG&A, what do you spend on R&D, cap-X per year, and 

13 all the key financial parameters. Then we look at how 

14 that changes in the standards case by applying those --

15 by applying basically the outputs that come from the 

16 engineering analysis. Which designs are used and sold?

17 What are the costs associated with those designs?

18 In this case, we use the LCC, as well, 

19 because it selects the models that are presumed to be 

20 being sold in the standards case and we include the 

21 conversion costs that we talked about which again is 

22 the biggest driver.

23 Then to Richard's point, there's also some 

24 assumptions about how what happens to markups. In 

25 certain industries, we find that products are purchased
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1 on efficiency. You can command a much higher premium 

2 on certain products. In this industry, that's not 

3 something that was reflected substantially. We heard 

4 that most purchases are based on first cost, but there 

5 is room for first price sensitivity, so to speak. So 

6 how we capture that is to, in the standards case, model

7 a scenario in which manufacturers may not be able to 

8 receive the same margins that they received in the base

9 case for all levels.

10 So what happens is -- say, effectively at the 

11 end of the day what happens he marks something up at 

12 1.4 in the base case, now you're only able to receive a

13 markup of 1. -- I'm just throwing numbers out but 1.38 

14 or 1.35. That effectively lowers your operating profit

15 margin and then, in turn, lowers the industry value in 

16 the standards case. Essentially, you're not able to 

17 recoup those investments that were required for the 

18 standard and that yields the output of this model which

19 is essentially a change in industry net present value. 

20 So if the industry was, again throwing out 

21 numbers, 500 million in the base case and at a standard

22 level, standard level 3, we determine that the 

23 industry's worth 475 million, that's the change in the 

24 industry value. So typically when you look at it in 

25 the course of rulemakings, you'll see that the farther 
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1 out you go, the more prices increase and the more 

2 perhaps shipments are reduced as a product of that or 

3 margins are compressed as a product of that or the 

4 higher conversion costs are relative to revenue, then 

5 you see a decline in industry value as you go to higher

6 efficiency levels, not always but typically.

7 We have not done that analysis yet. That has 

8 not been done.

9 MR. PARKER: It strikes me that the net 

10 present value is a good indicator but it's a highly 

11 aggregated one and I'm wondering if there's any way to 

12 get this down to a level that would be sort of more 

13 accessible to the average small business person as to, 

14 you know, what the prediction is for profit margins, 

15 sort of representative manufacturer level, or is that 

16 just not something that's possible?

17 MR. CARMICHAEL: That's just not something 

18 that's possible and protect confidentiality. We do not

19 give that kind of -- that level of detail for --

20 MR. PARKER: No. This would be something 

21 that the OSP would churn out. It would be a computer 

22 output. It would not be reporting of actual individual

23 data.

24 MR. CARMICHAEL: That's more upstream. It's 

25 way, way upstream. So that's not something that's 
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1 calculated.

2 MR. PARKER: Any other questions on this? 

3 Move on? Comments on Manufacturing Impact?

4 So could you just recap what are the items 

5 that you were going to add to the Engineering template?

6 MR. CARMICHAEL: Sure. So we're going to be 

7 asking what your expected conversion costs would be at 

8 each efficiency level associated with converting to the

9 designs you expect to be to make up the bulk of your 

10 production.

11 You know, I think it would be helpful for us 

12 to -- and we'll put a note in the spreadsheet to this 

13 effect, but, you know, at what point do you have to 

14 move -- do you expect to move completely from butt lap 

15 to, you know, step lap core construction, those sorts 

16 of things. And then additional -- we'll be asking 

17 about additional floor space, to Vijay's point, and 

18 then we'll also be asking about what share.

19 MR. PARKER: And would you be asking about 

20 outsourcing, as well?

21 MR. CARMICHAEL: Yes, yes. So then we'll be 

22 asking about what share of your core construction is 

23 done inhouse first covered products.

24 MR. PARKER: At various efficiency levels.

25 MR. CARMICHAEL: At various efficiency 
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1 levels. Thank you.

2 MR. PARKER: Great. Does this seem like a 

3 reasonable way to proceed? Manufacturing Impact. I 

4 dwell on this because I know that it's important for 

5 this market segment and as I told John during the 

6 break, you know, we encourage them to send both the 

7 Engineering template and supplemented by the 

8 manufacturing input to their members, not only who are 

9 on the committee but those especially who are not, so 

10 that we can have a chance to hear from them.

11 Great. Well, without further ado, why don't 

12 we at this point move on to our next item on the agenda

13 and we'll just try to get people out of here by lunch 

14 time, if people are okay with that. It's 10 till 12 

15 now. I thought if we worked until about 12:30, I think

16 we should be pretty good. 

17 What I thought was that, Steve, I know you're 

18 busy or Andrew, whoever would like to throw out their 

19 concepts. I thought that was a useful contribution to 

20 the medium voltage and if you'd like to give us your 

21 thoughts on that in this context, that would be 

22 welcome.

23 MR. de LASKI: Sure. So this is Andrew de 

24 Laski from ASAP again, and for those of you who are 

25 here for the liquid immersed and medium voltage dry 
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1 type discussion, I mean, many of the general principles

2 that Steve outlined in that discussion certainly would 

3 apply to our approach to this negotiation, as well, in 

4 terms of the general principles. I know several of 

5 you, of course, weren't here for that discussion. So 

6 I'll recap them in the same level of detail and look to

7 my colleagues to fill in the gaps that I might miss.

8 As Gary said, we think there's really good 

9 opportunities in this sort of negotiated rulemaking 

10 process for all stakeholders to get the results that 

11 ultimately are better for them than might happen 

12 through a contestable rulemaking process. That's why 

13 we're here. That's why we're engaged in it.

14 We've had great success in the past with 

15 negotiated rulemaking negotiations generally on a 

16 private basis, that is, not in this case sponsored by 

17 the U.S. Government, thanks to John and his team. In 

18 some cases in the past when we've done negotiations 

19 with industry and the trade associations, we've had 

20 participation from DOE and their consultants but in 

21 this case the leadership from them is appreciated and a

22 different kind of approach, one that we think can work 

23 equally well.

24 Based on our experience, we've a few things 

25 that we learned through the process that sort of shape 
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1 our approach to this that we want to share with you. 

2 One is that, you know, for negotiation to be 

3 successful, you know, we find that everyone has to 

4 give, be willing to give some. If everyone walked in 

5 with a certain set of views that, you know, I've got to

6 have this, I've got to have that, and there's not 

7 flexibility, that often then we find ourselves kind of 

8 in a spot where things don't move ahead.

9 There's a distinction between what you might 

10 want as your ideal outcome going in and what you can 

11 live with and we think it's important that people keep 

12 those concepts in mind, that what you want in an ideal 

13 world might be different than what you can live with, 

14 and what you can live with often is what's necessary to

15 get to yes in negotiated rulemaking and negotiation of 

16 any sort.

17 As we approach this negotiation and if 

18 negotiation is not successful, it would be a contested 

19 towards a normal DOE rulemaking process, you know, we 

20 look to the DOE analysis to inform what we think are 

21 the likely outcomes.

22 I think that it's important that we're all 

23 realistic about what would happen if we go to a 

24 contested rulemaking, that there's going to be a final 

25 rule, there's going to be a new standard one way or the
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1 other, either through the negotiation and then a 

2 recommendation to the government based on this 

3 committee or, because DOE's going to set one on their 

4 own with the parties taking different views and they 

5 have to make decisions, and I think if we're all 

6 realistic about what we think DOE would do in a 

7 contested rulemaking that helps us to ultimately reach 

8 an agreement.

9 If there's some party or set of parties who 

10 have unrealistic expectations, that can stop a 

11 negotiation from being successful. If I think we're 

12 going to get TSL8, you know, TSL8 or bust, you know, 

13 that's not realistic. It's also not going to lead to a

14 successful negotiation and I would say, on the other 

15 extreme, TSL0 or bust isn't going to get us anywhere 

16 either, just to throw out some numbers.

17 Our objective is the large cost effective 

18 energy savings. What we care about is saving energy 

19 that's cost effective, based on the analysis done by 

20 DOE and their consultants.

21 So that speaks to, I think, some of the 

22 discussions we've had over the last couple days that 

23 we've talked in particular some of the discussions that

24 Vijay has initiated about various niche products, you 

25 know. A part that has a tenth of a percent of the 
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1 market isn't going to deliver large national energy 

2 savings. So we generally find ourselves to have more 

3 flexibility, you might say, you know, if you're going 

4 to cause less disruptions to get to a tenth of a 

5 percent of the savings of an overall opportunity, but 

6 yet the cost to get there in terms of disruption to 

7 manufacturers or other aspects in the market, you know,

8 that's a place that we generally find ourselves to have

9 more flexibility, just to use your example, you know, 

10 that you pointed out and I suspect there may be others 

11 that may come to the fore as we have our discussions.

12 MR. PARKER: What Andrew says, let the record 

13 reflect he's speaking to Vijay. Thank you.

14 MR. de LASKI: Yeah. So we had similar 

15 discussions in the liquid immersed about different 

16 types of transformers that represent a relatively small

17 share of sales but perhaps a disproportionate share of 

18 potential disruption if the standards were increased 

19 significantly.

20 Timing is a important aspect of a 

21 negotiation. By timing, not the timing of the -- the 

22 timing of when the rule goes into effect. When do you 

23 as a manufacturer have to comply with that rule? We 

24 suggested this in our very first meeting, that what 

25 we've been talking about the last couple days is that 
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1 some of the standard levels that are being evaluated by

2 DOE would involve substantial investments on the part 

3 of manufacturers.

4 Obviously if you have to do that in 12 

5 months, that's very difficult. If you had to do it in 

6 10 years, that's a more viable option, you know, and 

7 there's a whole range of times in between that that 

8 create different levels of challenge. If you had to 

9 build a factory, you've got to increase your floor 

10 space that takes more time. If you've got to, you 

11 know, change how you approach your manufacturing of the

12 product, time can be an important element.

13 We have found this to be an important aspect 

14 of being able to get the yes in negotiations, being 

15 able to negotiate on the dates, and, too, I talked to 

16 John briefly yesterday about we had posed this question

17 to DOE in the first meeting about whether DOE thought 

18 -- what's DOE's opinion on whether we have flexibility 

19 on dates and we talked after the meeting yesterday, 

20 maybe it was two days ago now, and Don reminded me that

21 in several recent rulemakings, we have reached 

22 agreement with manufacturers on implementation dates 

23 that are different than what DOE is required to do and 

24 that DOE has adopted those implementation dates through

25 a process called a direct final rule. They've done 
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1 that for home furnaces, for central air conditioners, 

2 for dishwashers, clothes washers, refrigerators.

3 So for a whole series of products we use the 

4 dates, in some cases we went sooner than DOE was 

5 supposed to do, in some cases we went longer, as soon 

6 as 18 months in one case and as long as -- not in this 

7 recent docket, not in this recent slew. A year, six 

8 months longer. So that's been a thing -- so that the 

9 DOE has done that and John reminded me that that's an 

10 option that we could certainly pursue in this. If we 

11 were to negotiate a different date than what DOE is 

12 supposedly mandated to do, we could use the DFR 

13 process, the direct final rule process to achieve a 

14 date different than what might otherwise be the default

15 date in the contestable rulemaking.

16 In the contested rulemaking, they're going to 

17 use the dates, I would suspect, that we should expect 

18 the kind of lead times that would be default, and I 

19 don't know what that is in this rule.

20 The final point that I'd make is that when 

21 we, as a generic approach to rulemaking, we generally 

22 are looking to the levels, the efficiency level that 

23 would achieve the maximum savings that are cost 

24 effective for consumers, for the consumers of the 

25 equipment, based on DOE analysis.
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1 We also look very seriously at the level that 

2 minimizes life cycle costs and those two things are 

3 often -- sometimes are the same, sometimes they're 

4 slightly different. So minimizing the costs for the 

5 consumers of the product over the life of the 

6 equipment, those are the levels that we typically look 

7 at.

8 The analysis that DOE has published thus far 

9 for these products indicates that for these products 

10 that would take you into materials that are very rarely

11 used in low voltage dry type transformer manufacturing.

12 It would take you into the amorphous material. It 

13 would take you into the highest grade of conventional 

14 steel. The HO products and the analysis thus far shows

15 that those are the levels that would minimize the 

16 costs. Now this analysis still being revised. We'll 

17 see what it looks like in the next rulemaking.

18 We hear you. We hear your concerns about 

19 that kind of -- that this is manufacturers -- these 

20 products in this market using those materials has been 

21 extremely rare. The most advanced materials, such as 

22 amorphous, have not been, you know, used in this 

23 market, except in exceptional circumstances.

24 So, on the other hand, you know, our takeaway 

25 from the analysis thus far is that moving to high grade
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1 silicon steel M3 looks to be sort of something that is 

2 highly cost effective and highly doable, not without 

3 cost to manufacturers to make those kind of changes 

4 where they haven't already but it seems to be highly 

5 doable and using the more advanced construction 

6 techniques.

7 So that's our takeaway from what we see from 

8 the analysis thus far. Again, using the principle of 

9 what you want in an ideal world, in an ideal world we 

10 want to go to the maximum levels that yield the most 

11 savings that are cost effective but we're hearing you 

12 that to do that would be extremely disruptive to the 

13 industry and in some cases impossible. So we're 

14 already saying there are some areas where what we can 

15 live with is different than what we want in our 

16 theoretical world.

17 So that gives you, I think, a flavor for sort 

18 of some of the ways that we're approaching this 

19 rulemaking at this point.

20 Steve or Robin or Tim?

21 MR. FERNSTROM: Gary Fernstrom, PG&E. I have 

22 a follow-up thought.

23 In our discussion, we talked about the useful 

24 life of these products and it seemed to me that some of

25 the estimates were the life of the building 50 years, 
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1 30 years, so on. I think we'd all agree that dry type 

2 transformers in buildings and industry are long-lived 

3 products.

4 We really need to recognize that when we 

5 think about the economic value of these things. 

6 They're going to be with us for a long, long time and 

7 the consumers that buy them tend to take a first cost, 

8 lowest first cost look at how they procure things. 

9 The role of standards is to, in my mind 

10 anyway, is to achieve some sort of balance between 

11 what's good for the economy, what's good for society, 

12 what's good for the environment, relative to what's 

13 good for next quarter's earnings.

14 So I think there's an important role in 

15 making some progress toward a higher level of 

16 efficiency with these products which I believe DOE's 

17 analysis is showing is cost effective.

18 MR. de LASKI: An additional point that Steve 

19 reminded me that we discussed which is that one of the 

20 areas, you know, we understand it particularly in this 

21 market that there are diversity of manufacturers in 

22 terms of the size of the manufacturers and their 

23 capacity to make investments and access to capital.

24 One of the things that -- you know, yet on 

25 the benefit side of the ledger, you're looking at a 
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1 rule that I suspect will have a net present value of 

2 benefits to energy consumers measured in the billions 

3 of dollars.

4 So for wont of a million dollars, to use the 

5 exception, to buy a mitering machine, you know, we 

6 don't want wont of a million dollars to be able to buy 

7 a mitering machine to be in the way of several billion 

8 dollars in net present value benefit to energy 

9 consumers, you know.

10 So if I could take a million dollars from 

11 this billion in benefits and buy you a mitering 

12 machine, I would do it, right, but I can't, but it is a

13 question, I think, for the group and for us to wrestle 

14 with which is how do we address the challenges for 

15 manufacturers to make the necessary investments so that

16 the public can get the benefits of improved efficiency.

17 In the past, as parts of negotiations, now 

18 this is separate from what we recommended to DOE, but 

19 in some negotiations in the past, we have included 

20 elements to help manufacturers make investments. Those

21 have included things like tax credits, mutual support 

22 for tax credits.

23 Now the environment today on Capitol Hill may 

24 not be such that, you know, Jim and John would tell me 

25 that we could go up there and lobby for tax credits 
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1 together and have success, but I think I would put that

2 on the table, that side agreements to try to find ways 

3 to address the cost, the investment cost is something 

4 that we see as a viable option and one that should be, 

5 you know, should be actively discussed.

6 Steve, you've done a lot of work in this 

7 area, so I don't know if there's something you want to 

8 add to that.

9 MR. NADEL: No. You've covered it.

10 MR. de LASKI: Okay.

11 MR. PARKER: Thank you. I think that's 

12 helpful. I don't know if anybody wants to respond, any

13 agreements, thoughts. John?

14 MR. CASKEY: Sure. John Caskey from NEMA. 

15 Thanks. I think everything that you've said makes a 

16 lot of sense and I think we're all here certainly to do

17 what's right for the economy and what's right for the 

18 U.S. and things like that, sort of mom and apple pie. 

19 So we do want to drive forward with that, but I guess a

20 couple different points.

21 One of the points is that I don't think we 

22 have the confidence in the data yet to be able to say 

23 what is the right level and that's one thing that very 

24 much concerns me, is to get to a point where at least 

25 the manufacturers, just as I've said with the oil 
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1 filled and the medium voltage dry type, to get to a 

2 point where the manufacturers and even the users feel 

3 that the relationship between the efficiency 

4 improvement and the dollar cost investment is in the 

5 right ballpark. So that's one of the critical things 

6 that I want to get to before I can say, you know, keep 

7 it the way it is or go up or whatever. I don't know 

8 what the right answer is yet, until I have confidence 

9 in the data that's in front of me.

10 So I think there is -- you know, in my note 

11 of last Saturday or whatever, I laid out sort of a 

12 methodical process to get to that so that we could feel

13 that we had the right homework done so that we could 

14 make an informed decision about that.

15 The other thing for me, particularly 

16 personally, is that when we get to a future that 

17 requires us to go to one particular type of design or 

18 one particular type of material, particularly if there 

19 may be a limited supplier of that material, that very 

20 much concerns me.

21 I mean, we get to just a bad business 

22 decision, you know, so what I want to personally see is

23 where we've got a plot of sort of, you know, EL levels 

24 where you have a variety of ways for a manufacturer to 

25 substitute copper for steel or whatever it might be in 
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1 order to still come out with an effective cost 

2 effective design.

3 You know, I don't want to see where, you 

4 know, one particular, you know, approach amorphous is, 

5 you know, $2,000 and to have a reasonable substitution 

6 of design is $3,000. That's not a good point on the 

7 curve from my perspective.

8 If one's 2,000 and one's 2,100, I'm sort of 

9 fat, dumb, and happy, and let's move on. So I think 

10 some of those basic things need to be taken into 

11 account and certainly again, as I've said before, NEMA 

12 represents a variety of manufacturers and, as Andrew 

13 has stated, we want to make sure that both, you know, 

14 the larger companies are successful going forward and 

15 hopefully the smaller companies are successful going 

16 forward and they can continue to stay -- keep their 

17 place in the marketplace going forward.

18 So I think that's important. So, you know, I 

19 think there is a lot of optimism for going higher in 

20 efficiencies and that hopefully can be proved cost 

21 effective. To be honest, at the same time I'm reminded

22 of some what I would consider to be failures in the 

23 past relative to not necessarily electrical energy 

24 efficiency but some other water conservation and things

25 like that.
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1 You know, I've got a clothes washer at home 

2 that's probably, I don't know, eight years old or 

3 whatever and it does a relatively good job. I hear 

4 people that are buying the new low water -- the water 

5 conservation devices and, you know, I go in the room 

6 and five of the people in the room have already 

7 purchased that and they said the thing is not 

8 functioning very well. I've got to run the clothes 

9 there two or three times to get them clean. 

10 So that at some point you get to an energy 

11 conservation or a water conservation design that is not

12 working very effectively. So I want to make sure we 

13 avoid that sort of thing if we go too high in 

14 efficiencies. So I think that's it.

15 I don't know what the other manufacturers 

16 want to add to that.

17 MR. TENDULKAR: The only thing I'm talking 

18 about he said is correct. A lot of times we look at 

19 the efficiency and not the real purpose of the 

20 particular equipment we buy, like you said, a clothes 

21 washer that has to wash the clothes perfectly kind of 

22 thing, and the same thing with the transformers, too.

23 What is the purpose of the transformer? 

24 Different applications have different kinds of 

25 transformers and different kinds of requirements and 
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1 the performance of the transformer and the safety of 

2 the transformer are the first important criteria and 

3 everything else comes later. Efficiency also comes 

4 later.

5 I'm not saying efficiency is not important. 

6 It is important. But it is not the first thing you 

7 have to look at when you design any equipment, be it 

8 transformer or any clothes dryer or anything.

9 So performance of the equipment and 

10 particularly the kind of market we are in is very 

11 important kind of thing. There's liability and the 

12 performance. Those are the important issues. We 

13 cannot ignore those by just looking at the efficiency.

14 MR. de LASKI: This is Andrew again. A 

15 couple points in response. Thank you, John and Vijay, 

16 for that.

17 John, just in response to your first point 

18 about having a variety of ways to substitute, I think 

19 that's part of what I was addressing with my comment 

20 about materials and that, you know, one of the things 

21 that we also have observed with standards is that, you 

22 know, we go through -- John and his team do lots of 

23 work to come up with models for what they think the 

24 market's going to do, what will be the most cost 

25 effective way to comply with the standard, and they do 
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1 interviews with your manufacturers, your members, and 

2 others to get great data and projections but they're 

3 just that. They're projections of the future, and in 

4 practice, what happens typically is that manufacturers 

5 find a variety of ways to comply with standards that 

6 are usually different than what Navigant and the others

7 predict because this is a different question, right?

8 When you're going to apply -- all the 

9 manufacturers are then applying all their expertise and

10 capital to figuring out how they're going to comply the

11 best they can to provide profitable products that meet 

12 consumers' needs, that are safe, that perform well, and

13 those that don't, of course, are going to lose market 

14 share. So that's going to be -- the market has been a 

15 very powerful driver to finding ways to -- you know, we

16 thought, for example, you know, that -- I don't want to

17 go into examples. It just gets us into side 

18 conversations that are probably not that useful.

19 But I think that it's hard for us to know, 

20 for us to predict sitting here today how each and every

21 manufacturer is going to comply with a given standard 

22 that goes into effect in, say, 2016 and we shouldn't 

23 kid ourselves that we can predict that precisely.

24 With regard to performance, agreed, you know, 

25 we also think that products -- one of the principles of
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1 being energy efficient is to provide high level service

2 at the same time. We don't think energy efficiency 

3 should be associated with lower performance. That 

4 said, I mean, for this particular product, I'm curious 

5 if you're aware of any performance problems for 

6 products meeting the efficiency levels that are being 

7 discussed, that have been mapped out by DOE. Are you 

8 aware of any performance problems?

9 MR. CASKEY: John Caskey, NEMA. I'm not sure 

10 if you mean existing TP1 or higher efficiency 

11 standards.

12 MR. de LASKI: I mean either.

13 MR. CASKEY: The limited number of 

14 performance-related issues that I've run into relative 

15 to dry type transformers, low voltage dry type 

16 transformers is sort of what Vijay had mentioned 

17 earlier and it's basically noise and I don't know how 

18 prevalent that is today or how prevalent that will be 

19 with future designs but that's really the only, you 

20 know, negative thing that I've ever heard about low 

21 voltage dry type transformers and, well, the heat is an

22 issue but I think it's a minor thing.

23 MR. de LASKI: So noise and heat.

24 MR. SMITH: Andrew, Bob Smith, Federal 

25 Pacific. I think that the two things that I see that 
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1 would give us -- put us into a lower performance 

2 category, so to speak, would be an increase in size and

3 weight. We may think we can minimize what Wes 

4 Patterson talked about on network transformers during 

5 the medium voltage meeting of the increased size not 

6 fitting into existing vaults, but I would like to point

7 out that while a network transformer may be a very 

8 small portion of the overall medium voltage market, it 

9 is serving the most important and critical customer 

10 loads in the country.

11 So a little perturbation of a performance 

12 issue in terms of a product that will not fit, it can 

13 be a very devastating thing to the people involved in 

14 trying to work with that product. But I don't see 

15 anything that we're talking about on the low voltage 

16 dries except for size and weight, the increase of those

17 two attributes being a problem.

18 MR. PARKER: So as I -- go ahead.

19 MR. de LASKI: So to follow up, John, it's my 

20 understanding that, in general, as you get more 

21 efficient, you have less heat. So the heat -- so I 

22 guess that's news to me, that heat's a concern as you 

23 go up in efficiency. So I'd like to learn more about 

24 that.

25 MR. PARKER: Vijay, do you want to respond to 
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1 that point in particular?

2 MR. TENDULKAR: Yes. If I want to make an 

3 energy efficient transformer, let's say, and I'm not a 

4 person who really cares much about the life of the 

5 transformer, say for example, what I have to do, I have

6 to make a smaller coil. So I will reduce the face to 

7 face clearances or I will reduce the winding to the 

8 ground of the core top and bottom clearances. The 

9 transformer may not fit today. It may fit five years 

10 from now but by then it is out of warranty. You follow

11 what I'm saying? But I met the efficiency requirements

12 in the lifetime of the transformer. The transformer 

13 was efficient as you mentioned.

14 So there are ways to cut the corners and some 

15 of the -- for example, the heat issue. If the heat 

16 issue is there, the heat issue may not surface 

17 immediately. It may surface five years from now, 10 

18 years from now, but we are here talking about 40 years'

19 lifetime and one of the things we forget about the dry 

20 type transformers compared to liquid-filled 

21 transformers, and I design a lot of liquid-filled 

22 transformers in my lifetime, first 20 years of my 

23 professional life was designing liquid-filled, if my 

24 winding temperature rises high, I can reduce it by 

25 adding more radiators. There is nothing I can do on 
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1 the dry type transformer. There is no way to add 

2 radiators. I do something else to cool it.

3 So I'm stuck with whatever the temperature 

4 rise I get. How do customer know whether it is a right

5 temperature rise or not? He will not. And those are 

6 the kind of things I'm saying. I'm not saying that 

7 every manufacturer wants to do it on a proposal or 

8 something but this can happen and those are the kind of

9 things we talked about.

10 The other thing I just mentioned in my notes 

11 the other day and the issue that we noticed another 

12 problem with the core losses. The core losses 

13 occurring to everybody says, they don't change 

14 according to the temperature. We noticed they do in 

15 certain batches of the steel, not necessarily in all 

16 batches of steel, and that has gone up quite a bit, the

17 losses in the core. 

18 Losses in the core went up. Of course, the 

19 temperature and everything is going to go up and the 

20 transformer is going to fail prematurely. How do we 

21 account for all these kind of things? So I'm just 

22 trying to tell you is just not look at the efficiency. 

23 There are a lot of other parameters in the performance.

24 MR. PARKER: Does that phenomenon, that 

25 problem of temperatures increasing over -- with the 
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1 delay after 10 years, does that -- you said that 

2 becomes worse as it becomes more efficient as a problem

3 or is that a constant complaint?

4 MR. TENDULKAR: When you have the higher 

5 temperature on an installation, the general rule is 

6 every 10 degrees rise in the temperature, it reduces 

7 the life of the transformer by half. So if your 

8 transformer design is supposed to work for 30 years, 

9 the temperature goes 10 degrees high, it will last 15 

10 years or if it's 20 degrees high, it will last about 

11 seven and a half years. But it will not last as we 

12 predicted according to what DOE thinks, what they call,

13 investment, return on the investment. That is not 

14 going to happen.

15 So there are a lot of other factors. When we 

16 say performance, performance is not one factor, like a 

17 sound level or the loss of -- there are so many factors

18 in the performance and those all have to be talked 

19 about and most of the engineers think about it when 

20 they design it and not all those factors can be found 

21 in the design of something else. Some of those are by 

22 experience, by particular knowledge, whatever it is.

23 MR. de LASKI: So if I could respond? I 

24 mean, I think the thing that's helpful for us to 

25 understand, a manufacturer can cut corners on a low 
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1 efficiency transformer or a high efficiency 

2 transformer. So the thing that we need to understand 

3 is what is it about going to higher efficiency that 

4 leads to performance problems? You know, that's the 

5 kind of thing that we need to understand as we go 

6 forward. 

7 I understand the size and weight. That I 

8 understand. My question then for Navigant is will we 

9 -- does your data or will your data give us size and 

10 weight?

11 MR. CARMICHAEL: I'm going to back into that.

12 MR. de LASKI: I'm sorry. Brian, I looked at 

13 you.

14 MR. COFFEY: We look alike, unfortunately for 

15 him. Andrew, I think you've requested this in writing 

16 already and it's something that we've committed to 

17 providing, these plots of weight versus efficiency and 

18 core weight versus efficiency. So everyone can see 

19 what the effect of increased efficiency could be on the

20 transformer dimensions.

21 MR. de LASKI: On the transformer, not just 

22 the core, is that right?

23 MR. COFFEY: Both, both items.

24 MR. de LASKI: Because I think Bob's point is 

25 that they have to fit in the same closet or it's got to
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1 fit in the same --

2 MR. PARKER: Is that also included in the 

3 Engineering Validation template?

4 MR. COFFEY: No, that's not part of that 

5 package. That's something that we would provide 

6 scatter plots similar to what we've done in the past 

7 but instead of cost and efficiency, it would be, for 

8 example, core weight over efficiency. There's also 

9 been a request for cost over losses. So there are a 

10 couple of these items that I've said in my presentation

11 that we'll be sending out electronically.

12 MR. de LASKI: So just a follow-up, Brian. 

13 You know, there's the low cost design at a given 

14 efficiency level that may have a certain size and 

15 weight. There may be a design that costs you five 

16 percent more that has a smaller size and weight. We're

17 going to be able to tell that from your analysis or are

18 we just going to see the size and weight and the lost 

19 cost design?

20 MR. COFFEY: We'll present that data for all 

21 of our designs, so you'll be able to look at the point 

22 cloud and see. Generally how it works is if you stay 

23 within a steel grade, moving up in efficiency will make

24 the transformer bigger. One way to mitigate that is to

25 jump to higher steel grades and fancier construction 
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1 techniques.

2 So you can go up -- you know, if you start 

3 with an M12, if you want a more efficient M12 unit, 

4 it's probably going to be bigger. If you are willing 

5 to jump to M6, step lap miter, M3, that sort of a 

6 thing, then you can probably keep the size and weight 

7 within a given range. So it's about what assumptions 

8 you're making as far as the materials and methods that 

9 you're using.

10 MR. de LASKI: Thanks a lot.

11 MR. PARKER: So this is --

12 MR. PATZNER: Richard, Thomas Patzner. Can I 

13 comment on the performance question?

14 MR. PARKER: Yes, please do, and could I ask 

15 people around the table to please turn off their mikes?

16 MR. PATZNER: The conversation so far has 

17 gone with historical concerns with transformers which 

18 are heat and sound being the Number 1 concerns. As we 

19 move forward and we move up in efficiencies, there's 

20 another concern that is just starting to occur in the 

21 industry and that's the inrush of the devices and the 

22 industry is starting to do selective coronation and do 

23 analysis and the biggest concern as we move up in 

24 efficiency is how the transformer industry can design 

25 the product to keep the inrush at the levels they have 
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1 today.

2 MR. PARKER: So can you just give me one 

3 sentence on what inrush is, just so I'm not completely 

4 clueless?

5 MR. PATZNER: So there's a magnetic field in 

6 the core and when you turn the transformer on, the 

7 electrical current has to match up with the magnetic 

8 field that's in the core, so the transformer pulls a 

9 lot higher amount of current than it does when it 

10 normally operates.

11 So that is going to be a new area that is 

12 going to be potentially an issue moving forward. The 

13 industry found out it was an issue with some of the 

14 designs they did with TP1 designs that were launched 

15 when the law went into effect in January 2007. In 

16 fact, we wrote a paper on it and published it. Ethan 

17 wrote a white paper on it and published it trying to 

18 educate the industry that they could not use their 

19 historical ways of sizing over-current devices for the 

20 transformers. So that is one of our major concerns 

21 moving forward as we go up this curve, how the entire 

22 electrical system will work together.

23 MR. PARKER: So what is the specific 

24 consequence of that and at what efficiency level does 

25 it kick in or does that vary depending upon --
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1 MR. PATZNER: It varies, due to the 

2 electrical steel and other parameters that actually 

3 cause the inrush, and one of those parameters is the 

4 mean length turn of the coils. So as we use higher 

5 grade steel, the inrush goes up, but also since we're 

6 making the core smaller, we also reduce the mean length

7 turn of the winding which also has the inrush go up.

8 So two of the entities as we change materials 

9 and the way we design them to find the lowest cost 

10 which us manufacturers are going to do, both impact the

11 inrush.

12 MR. PARKER: So I wanted to ask just Brian 

13 Coffey real quick. Brian, does the OPS model take into

14 account this problem in the design and incorporate a 

15 design that deals with this -- acknowledges and deals 

16 with this problem as you go up so that at any given 

17 design level, that's taken into account?

18 MR. COFFEY: So Paul Gothey, who is the owner 

19 of the OPS business, creates designs that meet certain 

20 specifications and then iterates over a wide variety of

21 A and B values to come up with different costs and 

22 efficiencies that meet those design specifications and 

23 the idea is to filter out, if at the end of it we see 

24 what are all the characteristics and to filter out any 

25 designs that didn't hit the target.
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1 So inrush current could be one of those. 

2 It's not something that I have paid a great degree of 

3 attention to in the past but I think that the technical

4 committee would be a great vehicle for sort of 

5 discussing how big of an issue it is, what causes it, 

6 and what are our options for folding it into the 

7 engineering analysis so that we don't -- you know, 

8 we're not under-representing the cost of limiting this 

9 characteristic.

10 MR. PARKER: Okay. Bob, thank you.

11 MR. SMITH: Bob Smith, Federal Pacific. Tom, 

12 regarding your comments on inrush current, may I offer 

13 these experiences that we have had at Federal Pacific?

14 Number 1. When we went to the TP1 in 2007, 

15 we lowered our induction levels significantly in the 

16 transformers and at the end we did that, the inrush

17 currents were also lowered.

18 Secondly. Most of the inrush current 

19 problems are when you turn the low voltage transformer 

20 on and usually it remains on for long periods of time. 

21 It's not turned off on a daily basis.

22 The switching on and off of the loading on 

23 the transformer is done by breakers or switches on the 

24 load side of the transformer. So I think the inrush

25 problem is not a -- should not be of great concern 
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1 because of the way people are operating with the low 

2 voltage distribution transformers.

3 If you do trip a breaker on the inrush, 

4 usually you can reset the breaker and the breaker will 

5 hold, but you certainly can control the inrush by going

6 to lower induction levels and that’s one way that we do

7 increase the efficiency of the transformer.

8 MR. PARKER: Does that make sense to you, 

9 Tom?

10 MR. PATZNER: Thomas Patzner, Schneider

11 Electric. I agree that there's ways to reduce the 

12 inrush but as we are trying to -- and as yourself as a 

13 manufacturer, we're always trying to strive for the 

14 lowest cost and those options for reducing it are not 

15 always available once you pick your manufacturing 

16 techniques and your materials and so forth.

17 In regards to the market, the market is 

18 changing. For example, a gas station today in the 

19 state of Florida has an emergency generator attached to

20 it because they need to stay operating during a 

21 hurricane. That transformer now has to switch over and

22 they test it monthly. So transformers that were turned

23 on and never turned off are now being turned off at 

24 least once a month and that is growing in the market as

25 people buy generators and they actually use their 
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1 systems and test their systems.

2 So the historical point of view that the 

3 transformer's never turned off is going away and that's

4 why it's actually a concern in the industry because 

5 since 2007 till today, more and more people are seeing 

6 the nooses tripping on transformers and that's why it's

7 an issue.

8 MR. PARKER: Bob, did you have any response 

9 to that?

10 MR. SMITH: Bob Smith, Federal Pacific. I 

11 think Tom is exactly right. If you are switching a 

12 transformer on and off, inrush would be a concern and 

13 in Florida, they are using more portable generators 

14 because of the threat of hurricanes but that's one 

15 state and one point on the curve, and I think, in 

16 general, the inrush issue is not going to be a problem 

17 as we go to higher efficiencies.

18 MR. PARKER: Thank you. Vijay, you've been 

19 patiently waiting.

20 MR. TENDULKAR: Vijay from Onyx. What Tom 

21 just mentioned is true and again we had talked about 

22 that yesterday and now again people say that during the

23 committee and other things, that it's very simple to 

24 excluding some of these transformers we are talking 

25 about.
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1 Inrush has become and more problems in the 

2 application which are very sensitive to the power loss 

3 kind of thing. Normal distribution transformer is 

4 turned on and its breaker trips, you can just wait and 

5 turn the breaker on again. That's not a problem. But 

6 the transformers which are used to supply critical 

7 loads, you cannot have high inrush current because you 

8 switch from one source to another source, within 

9 milliseconds you're not turning off and waiting for 

10 something.

11 It is done by static transfer switches. It 

12 is not done by circuit breakers and that is a different

13 application and that is becoming more prevalent in 

14 certain sectors of the business and not necessarily all

15 distribution transformers and the data is not --

16 MR. PARKER: Is this the data center issue 

17 again?

18 MR. TENDULKAR: This is the data center but 

19 the data center is one of the things. There's also 

20 some other things which are looking for this kind of 

21 thing that they should not have lot of inrush current 

22 because of the breaker tripping. People don't like 

23 breakers to be tripped when they're turned on kind of 

24 thing.

25 And this is getting more -- as Tom said, when 
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1 you have this kind of issue, then, of course, you make 

2 a bigger core. You have a bigger winding and that 

3 reduces the inrush current and those kind of things a 

4 lot of people try but that may affect the efficiency we

5 want to get higher than TP1. TP2 may be possible but 

6 not higher than that. That's what he was trying to 

7 make.

8 Correct me, Tom, if I'm wrong but this is 

9 what I think you said and this is what is I think, too.

10 MR. PATZNER: Tom Patzner, Schneider

11 Electric. Thank you, Vijay. 

12 MR. PARKER: So what is the best way -- go 

13 ahead, Tom. Sorry.

14 MR. PATZNER: I'm sorry. I also wanted to 

15 comment in regards to the heat and the sound. Those 

16 historical -- those two historical issues in the 

17 marketplace should actually go away as the efficiency 

18 goes up.

19 As we have built a NEMA premium product, we 

20 have found not only that the BTUs and the temperature 

21 of the enclosure has gone down, we also have found that

22 the sound level of our devices have gone down. So the 

23 two historical issues that transformers have seen 

24 should both go away moving forward as we move up on the

25 efficiency curves because both the sound and the heat 
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1 end up being reduced as we go higher.

2 MR. MILLURE: Dave Millure, Metglas. Just a 

3 note of caution. I don't think there's a lot of 

4 experience with the amorphous metal with low voltage 

5 dry type in traditional three-leg designs. Sound needs

6 to be evaluated in the amorphous realm. I believe Tom 

7 was just talking about going to higher grades of 

8 traditional steel.

9 MR. PATZNER: That is correct. I was only 

10 talking about higher grades, like M5, M4, and M3.

11 MR. SMITH: Bob Smith, Federal Pacific. 

12 Dave, we have a noise chamber and we would be very glad

13 to build an amorphous core transformer and do the sound

14 level testing that you are suggesting.

15 MR. MILLURE: We would love to work with you.

16 MR. PARKER: Good. A little networking. So 

17 what is the best way, I guess, to proceed from here. 

18 Is this something that needs to be an action item, 

19 given the shortness of time not only for this 

20 conversation but for the next week? I'm a little bit 

21 unclear still as to what degree the OPS model already 

22 takes this into account and maybe one way of handling 

23 this would be just to ask people just to table this as 

24 an issue in the instructions for the design template 

25 and say if you believe there would be size issues for 
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1 the applications you have in mind or heat rush issues 

2 raised by this proposed design, let us know and flag 

3 that. Would that make sense? Bob?

4 MR. SMITH: Richard, I strongly believe that 

5 trying to focus on the inrush current issue is going to

6 be a distraction and will slow the process down. I 

7 know that Schneider does an excellent job of educating 

8 the market on technical issues. It's something that we

9 like to do, also, and so do many other manufacturers, 

10 and I think that we can make the consulting engineering

11 firms aware of if we have an inrush problem, that they 

12 need to specify a lower inrush or a lower induction 

13 level so that they don't have that problem for their 

14 special applications, like data centers.

15 I believe strongly that if we put any time 

16 into worrying about the inrush current, it's going to 

17 slow your process down quite a bit.

18 MR. PARKER: Any dissent from that proposal? 

19 I think the proposal is basically to focus on education

20 as opposed to revamping the design parameters at this 

21 point.

22 MR. PATZNER: Thomas Patzner from Schneider

23 Electric. I didn't want us to put the inrush in as a 

24 limited factor. I just wanted to point out that as we 

25 move up on the curve, that something that is going to 
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1 potentially become a concern in the industry, sort of 

2 like the example with the washing machines where people

3 have to run it twice. It doesn’t occur today and it 

4 could in the future.

5 MR. PARKER: Great. Well, why don't we see 

6 where we end up in the design curve in our discussions 

7 and just keep this in mind as a potential issue out 

8 there. I'm glad you've surfaced it now. That's very 

9 helpful. Thank you.

10 Anything else that you wanted to add in the 

11 concepts category or to this, Andrew?

12 MR. de LASKI: No. My only comment just is 

13 it seems like the size and the weight issue is the 

14 issue that we're going to have to also keep our eye on 

15 but I think that we're going to have the data that will

16 enable us to do that. So I think there's no additional

17 action item because I think we're going to have the 

18 data.

19 MR. PARKER: Well, I just wonder if it would 

20 be useful to add a column in the design template on 

21 what the final size and weight would be. Does that 

22 make sense, Brian, or is that information that you have

23 readily available or not?

24 MR. COFFEY: This is Brian Coffey. Sure. I 

25 think we can add that column. It's one more point of 
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1 comparison. It's always helpful.

2 MR. PARKER: Okay. Done.

3 MR. ROY: Robin Roy, NRDC. I know we came up 

4 with quite an interesting list of additional 

5 performance or product attributes in the last few 

6 minutes, you know. Inrush which may or may not be an 

7 issue in some circumstances really is, size, weight, 

8 heat, reliability, things like that. Maybe it would be

9 helpful if you could give us a sense of what do 

10 consumers specify. What are the attributes that they 

11 find important when they're making an order from you to

12 make sure that we're kind of covering the list that's 

13 useful and see if there's something that really is off 

14 our radar. I suspect there isn't anything off our 

15 radar but if there is, it would be good to know.

16 MR. PARKER: Great. Thank you. Vijay, did 

17 you want to respond?

18 MR. TENDULKAR: Yes. When a transformer is 

19 normally ordered, the first thing is the KVA, the 

20 voltages, three-phasing, frequency. These are the 

21 basic things which are ordered and which is always 

22 taken care in the OPS Program. You also take care in 

23 the OPS Program is the temperature rise and we normally

24 what we looked in the chart today was a 150 degrees is 

25 the standard temperature rise in there, but there are 
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1 people who are asking for 130, 115, 80 degrees, those 

2 kind of rises people are also asking to reduce the 

3 total losses in the transformers. Other transformers 

4 are going in a restricted area where the temperatures 

5 are high. What are the reasons? So those are the 

6 other things customers specify as to what temperature 

7 rise they want.

8 They also specify the impedances in certain 

9 cases and they require because they want to meet the

10 charge of the current on the secondary side of the 

11 transformer because there's some breakers and other 

12 things. So they specify that and I had seen the 

13 impedances on something like a two to three percent on 

14 the lower side as has eight percent on the higher side.

15 Okay? So there are wide variations of the impedances.

16 Then also they specify most of the time is 

17 the K factor and the K factor, all the performance is 

18 calculated by OPS and a temperature rise is calculated 

19 by OPS which is what I have seen is on the K1. This is

20 thinking that the load is on the side which is not the 

21 case in most of the transformers we use, that we make 

22 or some other people make, and those loads are non-side

23 current have a different K factor. The higher the K 

24 factor, more losses in the windings and more 

25 temperature on the winding. So the K factor normally 
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1 we have seen from 13 to 20. On the bigger units 

2 something somewhere around between 7 to 30. So that's 

3 another thing.

4 A lot of times we get some of the customers 

5 because we make the equipment for other customers that 

6 specify the size as to what is the maximum depth, 

7 width, and height can be. So all those constraints are

8 there. This is basically we get into.

9 MR. ROY: That's very helpful. Robin Roy 

10 again. So I heard a couple things to add to the list, 

11 mainly the K factor which came up yesterday but hadn't 

12 come up in this last couple of minutes.

13 Presumably that's not going to be a problem 

14 but I think it should be something we're aware of as 

15 we're figuring out what sorts of designs are attractive

16 for constraining.

17 MR. TENDULKAR: Yeah. The K factor also 

18 increases the size of the transformer. The higher the 

19 K factor the size is going to be bigger and it is 

20 difficult to meet the TP1 or whatever the efficiency 

21 levels you're talking about because the core gets 

22 bigger. The core remains what efficiency level we are 

23 going to get at the 35 percent load. That's the 

24 important factor. The core gets bigger, we are in 

25 trouble.
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1 MR. PATZNER: Thomas Patzner, Schneider 

2 Electric. I think we could answer the question and 

3 enhance what Vijay just said if you pulled up the slide

4 that I sent this morning because it would answer what 

5 they specify very quickly for all of us.

6 MR. PARKER: We're working on that.

7 MR. PATZNER: No problem. So basically when 

8 you get the slide up there, I sent DL7 and DL8. If you

9 look at DL7, the majority of the time they're not 

10 specifying anything but the voltage in the KVA. So 65 

11 to 80 percent of the time, all they care about is the 

12 change of voltage.

13 In the 15 to 25 percent of the time, that's 

14 where they're telling us they want low temperature, 

15 they want low sound, they have it K rated, they want 

16 harmonic mitigating device or so forth.

17 When you go to Design Line 8, it switches. 

18 So 30 to 35 percent of the time all they want to do is 

19 change the voltage. They don't specify anything but 55

20 to 65 percent of the time is when they're going to do 

21 the special specification with low temperature rise and

22 so forth, the list of product that Vijay gave us.

23 So Design Line 7, the majority of the time 

24 they're just buying the catalog item and on Design Line

25 8 and the rest of that family, that's where we would 
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1 see more needs for the specifications.

2 MR. PARKER: Great. Thank you, Tom. Thank 

3 you for reminding me of this slide. Is there anything 

4 else that we should take away from this that you'd like

5 to bring our attention to while we have on the screen?

6 MR. PATZNER: So at the end of yesterday's 

7 conversation, we were discussing mix and then we were 

8 discussing efficiencies that were being offered. So we

9 actually published our losses A and B in our inrush in 

10 a document. So the items in blue is the calculated 

11 efficiency of 35 percent, 75 degrees C for the product 

12 that we're selling in each of the pies.

13 So if you look at the Design Line 7, we're 

14 selling product that just meets TP1 all the way up to 

15 98.12. In the 15 to 25, our lowest efficiency is 98.12

16 when we have to comply with those features that 

17 customers ask for, but we have product all the way up 

18 to 98.46 and we're getting those efficiencies depending

19 on what has been specified by the end customer.

20 So, then, of course, the five to 10 percent 

21 which is the NEMA premium, we're at the 98.64 which is 

22 what the industry's asking for when they ask for CSL3 

23 all the way to 98.77 and that we would just call our 

24 NEMA premium family on Design Line 7.

25 MR. PARKER: So the white pie slice five to 
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1 10 percent corresponds to CSL3?

2 MR. PATZNER: Yes, and that is a unit 

3 estimate, not a dollar, because yesterday the question 

4 was asked if it was in -- the percentage was in units 

5 and so I did these estimates and the reason I got a 

6 range there is I didn't want to share market 

7 intelligence. So I put a range of it instead of what 

8 my actual numbers were.

9 MR. PARKER: Gotcha. Thank you, Tom. Brian?

10 MR. COFFEY: Brian Coffey. I would like to 

11 make one clarification and, Thomas, you can correct me 

12 if I'm wrong here, but I think when Thomas is saying 

13 CSL3, that's a Legacy term from the previous rulemaking

14 that the industry adopted. It does not refer to our 

15 current analysis, is that correct, Thomas?

16 MR. PATZNER: So the CSL3 that the 

17 marketplace is using is the July 2004 Advanced Notice 

18 of Public Ruling and the Engineering Analysis pre-2007.

19 MR. COFFEY: thank you.

20 MR. PATZNER: If we use the 2011 data, it 

21 would be 98.6. So all you did was truncate this 

22 before.

23 MR. PARKER: So, Brian, what would be the 

24 corresponding CSL for our current analysis for this?

25 MR. COFFEY: I would have to look but the 
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1 point I wanted to make -- I didn't want people to get 

2 confused that this was corresponded to the current -- I

3 wanted to draw that distinction.

4 MR. PARKER: Okay. I gotcha. Thank you.

5 MR. de LASKI: I'm sorry but now I am 

6 confused. So which way did he -- so this tells us --

7 okay. It's just referred to in that bottom -- just 

8 that one reference in the bottom that you're concerned 

9 about, the reference to the white/yellow?

10 MR. SMITH: Tom, Bob Smith.

11 MR. de LASKI: But just to be clear, so I'm 

12 not confused anymore, it is correct that that's the 

13 NEMA premium level. What's not correct is that it's 

14 not CSL3 for the current analysis.

15 MR. PATZNER: Thomas Patzner, Schneider 

16 Electric. I'll try to clarify the yellow pies. The 

17 ASHRAE standard for K through 12 recommends the 

18 manufacturer buys 2004 July Advance Notice of Public 

19 Ruling CSL3 level to obtain 30 percent less losses. So

20 since that is in a document, customers ask for 

21 manufacturers to comply with CSL3.

22 The NEMA Premium Program meets or exceeds 

23 that with most manufacturers. So it's a transition in 

24 the marketplace from people expecting CSL3 to expecting

25 NEMA premium and since not all manufacturers, only 11 
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1 manufacturers out of the 90+ that are in this industry 

2 are registered in the NEMA Premium Program, I want to 

3 show that this estimated market also includes the 

4 product that they're just calling CSL3 data. So it's 

5 just a reference to an ASHRAE document that references 

6 a DOE document that's in history.

7 MR. PARKER: So I'm looking at the 

8 Engineering template for Design Line 7 and it looks to 

9 me like -- is the first number, Brian, is that the 

10 98.0? Would that be CSL0 or 1?

11 MR. COFFEY: 0.

12 MR. PARKER: 0. 

13 MR. COFFEY: It's now EL0.

14 MR. PARKER: EL0, right. So this is 0123. 

15 EL3 is 98.6. EL4 is 98.8. So it looks like the pie 

16 chart would basically span the range between CSL3 and 4

17 in the current -- EL3 and 4. Excuse me. In the 

18 current nomenclature. All right.

19 MR. de LASKI: So I have a question for 

20 Thomas, if this is the right -- so a follow-up 

21 question, Thomas. This is Andrew de Laski from ASAP 

22 again.

23 So for the black portion of your pie chart, I 

24 think it's black, the darker -- the darkest portion, so

25 those customers are getting that efficiency which is 
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1 above the minimum not because there's -- I want to make

2 sure this is right. They're getting that efficiency 

3 because they're specifying some set of features and the

4 efficiency comes along for the ride. Is that a good 

5 way to characterize it?

6 MR. PATZNER: Thomas Patzner, Schneider 

7 Electric. That is correct. So when we design in the 

8 other features that was requested on certain products, 

9 the end user gets the efficiency higher than TP1 by 

10 default.

11 MR. de LASKI: Thanks a lot.

12 MR. PARKER: Great. The only other 

13 contextual thing that might be worth bearing in mind is

14 that this, of course, indicates the propensity of 

15 people to purchase, you know, above current legal 

16 standards and doesn't necessarily reflect what would 

17 happen if the legal standard moved and so that's a 

18 whole other category.

19 If people are interested, I thought it would 

20 be useful, as I mentioned earlier in the meeting, 

21 having somebody from BOMA, see if we can get them to 

22 come to the meeting, to our next meeting and address 

23 this at the outset, to just indicate how big of a 

24 factor, you know, price is, you know, in their overall 

25 calculation. I mean, obviously it's very big if they 
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1 have a choice, but if the standard moves up, you know, 

2 what fraction of their total costs are accounted for by

3 transformer installation costs and so forth and what 

4 their, you know, position would be in response to 

5 higher standards, what their response would be, because

6 that certainly affects the market dynamic.

7 So are there any other comments on this slide 

8 or on anything that we've discussed so far?

9 MR. de LASKI: So just a question about BOMA. 

10 I think that would be valuable. I don't know what our 

11 agenda is for next time, what our time constraints are.

12 I'm a little concerned about that.

13 MR. PARKER: Yeah. I was talking about a 

14 five-minute presentation but it's --

15 MR. de LASKI: Okay. Five minutes sounds 

16 great. I mean, if it's over lunch, we could do it over

17 lunch or something like that, I just don't want to take

18 out of our time to work towards an agreement.

19 MR. PARKER: Great.

20 MR. de LASKI: We have some tied some 

21 speeches that have gone a little long in some cases and

22 we need to kind of move it along.

23 MR. PARKER: Yeah.

24 MR. de LASKI: My other thought is so BOMA is 

25 the building --
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1 MR. PARKER: If there's not an interest in 

2 hearing from them, we don't have to do this.

3 MR. de LASKI: So these are the guys who --

4 right. So it's not the guys who put up the buildings. 

5 So these aren't the guys who buy transformers. These 

6 are the guys who incur the operating costs.

7 MR. PARKER: These are the guys who pay the 

8 electrical contractors. Now we could also see about 

9 getting the electrical contractors in here to see --

10 MR. de LASKI: I don't know how they feel 

11 about transformers.

12 MR. PARKER: But the electrical contractors 

13 are going to want the cheapest thing, right? The idea,

14 the suggestion is only that, would be to try to put the

15 whole thing in perspective. You know, what -- how 

16 significant are transformer costs, first costs, to 

17 these group of buyers. If the standard moves up and 

18 their prices increase by X degree, what will their 

19 response likely be? Will they not build the building? 

20 Will they refurbish an existing transformer? Will they

21 -- you know, what will they do?

22 It may not be something that you, you know --

23 there's been a lot of discussion about this being a 

24 very, very price-sensitive issue and that's certainly 

25 true if there's an existing standard that you're 
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1 talking about exceeding. The question is what is the 

2 market dynamic if you move the standard, but we don't 

3 have to have that presentation if there's not interest 

4 in it. It's totally your call.

5 MR. NADEL: This is Steve Nadel from ACAAA. 

6 It strikes me you want an electrical engineer because 

7 they're the people who do these designs, work with the 

8 owners of the new buildings as opposed to the operators

9 and, yes, there's overlap and kind of has a handle on 

10 the trade-offs because they're doing transformers, 

11 they're doing lighting, they're working with the 

12 architect in the overall project design, but they may 

13 be the -- if that's the perspective, you know, it would

14 be more of an IEEE-type.

15 MR. PATZNER: Richard, Thomas Patzner, 

16 Schneider Electric.

17 MR. PARKER: Yes.

18 MR. PATZNER: In regards to the price 

19 sensitivity, there is the concern that I mentioned in 

20 the meeting we had 10 days ago in regards to people 

21 shifting to non-ventilated and the sealed product, if 

22 those two product lines become less expensive. So we

23 also need to include product shipped. Also what could 

24 occur is if product shipped does not allow them to do 

25 it because of KVA sizes, we could see them actually 
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1 starting to buy two transformers at 30 KVA instead of a

2 75. We could see them buying two 75s instead of a 150 

3 and so forth. So there's also the potential of 

4 downsizing KVAs and that, as well, which actually would

5 be a default to the building because it would increase 

6 the -- it would also decrease the amount of I squared R

7 because they would be distributing 480 instead of 208, 

8 but those things need to be addressed in probably more 

9 detail.

10 MR. PARKER: I think that's very interesting 

11 and that probably corroborates Steve's point that we 

12 need to get an engineering-type in here, somebody from 

13 the Electrical Contractors Trade Association or 

14 somebody that they would recommend to address, so I'll 

15 work on that and see, and we certainly want to keep --

16 I mean, these performance issues are critical and I 

17 think it's important that we have their perspective on 

18 the table as we discussed this stuff.

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

20 think it would have been wonderful if BOMA had agreed 

21 to participate with the whole activity and the whole 

22 process but they've, for whatever reason, chose not to.

23 I mean, I was actually a BOMA member at some point in 

24 the past and I'm not sure how fruitful that's going to 

25 be, to be honest with you, that these are -- I think 
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1 this kind of decision relative to dry type transformers

2 sort of lost the noise relative to what they get 

3 involved with and really dealing with commercial 

4 industry, it's pretty simple. If you've got -- if 

5 you're building a building for lease space, you get the

6 cheapest thing you can find that meets any sort of 

7 federal regulation out there, state regulation. If 

8 you're owner-occupied, you try and make some common 

9 sense economic decisions on if you're going to be in 

10 the building for 10 years, you might think about buying

11 things that are going to have, you know, four or five12 six-year payback. Otherwise, it's the cheapest thing 

13 you can buy unless it's brass or marble or something 

14 like that that somebody's going to look at and say it 

15 looks good and I'll lease your building because it's a 

16 Class A building.

17 MR. PARKER: There you go.

18 MR. NADEL: Steve Nadel.

19 MR. PARKER: So is it worthwhile hearing from 

20 Steve's alternative person, an engineer who -- the 

21 electrical contractors, or we would rather just save 

22 the time for negotiations?

23 MR. de LASKI: The challenge, I think, if you 

24 could get a good focused presentation that's relevant 

25 to this group, you know, go for it. The problem is 
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1 that it's going to be hard to get someone who's going 

2 to come in and give us something that's going to be 

3 helpful to this group. That's my concern.

4 MR. PARKER: Okay. In that case, let's not 

5 take the time. We just spent the time deciding not to 

6 spend the time. So that's useful. Anything else? If 

7 not, let's take a five-minute break while we load 

8 slides. Do we want to -- we need to agree on 

9 takeaways, action items. We just need to recap 

10 basically where we're going from here.

11 I think there's -- you know, I had talked 

12 earlier about the idea of putting up the scatter clouds

13 and getting sort of preliminary reactions about what 

14 people take away just as a way of sort of, you know, 

15 teasing things out but it may be more useful just to 

16 table that until the next meeting and let people see 

17 the data that actually comes in, the final data that 

18 comes in and respond.

19 Any thoughts on which you'd prefer as a 

20 group? Sounds to me like people are eager to get to 

21 lunch. So why don't we just take a -- this will be, I 

22 promise, no more than a five-minute break while we get

23 the slides posted, consultants will review their 

24 takeaways, the action items just to make sure that 

25 we're all onboard with what we're going to be doing, 
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1 and then we'll just adjourn for the day. We'll try to 

2 keep it to that in terms of the break.

3 (Recess.)

4 MR. PARKER: Andrew de Laski.

5 MR. de LASKI: Yeah. I had an interesting 

6 sidebar with Bob about compliance with standards and 

7 this is a topic that we've wrestled with on several 

8 products and notably with NEMA on motors. It's been an

9 issue of a lot of concern and it occurred to me, Bob 

10 raised the concern about importers and compliance by 

11 importers, that as part of a negotiated outcome we can 

12 make recommendations to DOE about what the 

13 certification requirements are for what -- revised 

14 certification requirements might be. So this could be 

15 another dimension for our discussions to address 

16 compliance and what actions are we recommending DOE do.

17 How should DOE adjust the certification 

18 requirements for transformers in order to achieve the 

19 kind of compliance -- achieve good compliance with 

20 standards so that we -- particularly in light of any 

21 concerns about imported transformers.

22 MR. CYMBALSKY: John Cymbalsky, DOE. So 

23 you're talking about tolerance level and things like 

24 that in the testing?

25 MR. de LASKI: Well, the specific thing was, 
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1 Bob, maybe you can describe for us but the Canadians 

2 have a certain approach for ensuring that imported 

3 transformers are compliant. Bob, you want to describe 

4 the Canadian approach?

5 MR. SMITH: Give me just a second to get the 

6 reference and I'll do that. I'm looking at the 

7 reference. 

8 Bob Smith, Federal Pacific. The equivalent 

9 of our DOE in Canada has a requirement that every 

10 transformer that is imported into Canada have a CSA 

11 certificate. This is not for a CSA label. This is an 

12 efficiency certificate that they comply with the 

13 Canadian efficiency standards.

14 In the United States, we do not have such a 

15 regulation in place and the only way to monitor a 

16 supplier who might attempt to bring a transformer in 

17 that does not comply with the efficiency requirements 

18 would be a whistle-blower routine that somebody would 

19 have to go through that was being hurt by that 

20 particular type of transaction.

21 But I would encourage you to look at what the 

22 Canadians are doing to control the transformers that 

23 cross the borders from the U.S. into Canada or from --

24 or into Canada from any other point of entry. I think 

25 they've done it very well and it makes it very 
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1 difficult for the manufacturers to have the EEV 

2 certification. They have a regulation that is called 

3 -- just a moment. It's a C800.02.06 and that is a 

4 standard that will give you a guide as to how they are 

5 controlling the efficiency or monitoring the efficiency

6 of the transformers going into their country.

7 MR. PATZNER: Thomas Patzner from Schneider 

8 Electric. That policy that Canada is doing is not just

9 for imports. It's for everybody and it actually 

10 increased the costs even further because it required 

11 third party testing. So since we already are in a 

12 price-sensitive item, I would highly discourage we go 

13 down the path that Canada chose because it actually 

14 increases the cost even higher on this product line 

15 because of the added testing that the third party 

16 charges.

17 MR. CYMBALSKY: This is John Cymbalsky, DOE. 

18 DOE is not going down the path of third party 

19 certification in its standards process.

20 MR. PARKER: I think there are two issues 

21 raised here. One is do you have third party 

22 certification or certain test methods and the other is 

23 do you expect, do you have some process in place to 

24 ensure that imports meet the same standards as 

25 domestics?
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1 I think we can all agree that there should be 

2 some process for making sure that imports meet the same

3 standards that domestic manufacturers make, right? So 

4 if we don't have that process in place, we need to have

5 one.

6 MR. CYMBALSKY: So the person who imports the 

7 product into the United States for commerce has to 

8 certify compliance just like domestic manufacturers. 

9 It's self-certification and it is policed and enforced 

10 by the department.

11 MR. PARKER: Okay. Does that take care of 

12 it? Andrew, Bob? Okay.

13 Let's move on to our wrap-up then. We have 

14 Chris Balduc here from LBL who I think you're going to 

15 present for all the takeaway items or just the LBL 

16 items? Split it up? Okay. We're starting off with 

17 Chris from LBL on the action items that he sees going 

18 forward for his work.

19 MR. BALDUC: Chris Balduc, LBL. Good 

20 afternoon. At the end of the MB Session yesterday, we 

21 did a quick presentation on takeaway items and asked 

22 people from the committee to put their names to data 

23 that they would submit to help us complete the analysis

24 in time.

25 I should stress that we are in a time crunch. 
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1 We would like the data by the 21st and that's next 

2 Friday. I'll continue.

3 This is a little bit outdated. The three 

4 categories that LBL sees where it needs inputs to its 

5 LCC Analysis are evaluation rates and changes to the 

6 LCC Subgroups. The distribution transfer price trend 

7 is a line item for us or for me to send you an update 

8 of our appendix where we describe the methodology. 

9 Evaluation rates, we're going to adjust the LV 

10 evaluation rates based on data received from committee 

11 members to reflect the volume of sales that are at or 

12 above the baseline.

13 Tom Patzner's already sent us some data. 

14 We're looking for more volunteers to corroborate his 

15 input.

16 Show of hands? Eduardo Robles.

17 MR. ROBLES: Eduardo Robles, Eaton 

18 Corporation.

19 MR. BALDUC: Thank you. Anybody else?

20 MR. CASKEY: John Caskey, NEMA. I'm not 

21 volunteering but there is -- I mean, I'm not sure why 

22 we're talking about evaluation rates and the 

23 percentages of transformers above the standard one in 

24 the same breath, but to me they're two different 

25 things.
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1 MR. BALDUC: You're exactly right. To be 

2 clear, we use an evaluation rate in the model to (1) 

3 evaluate transformers but it also impacts how 

4 transformers are selected above the current standard 

5 and so in terms of the data that we are going to get, 

6 we receive, we're going to use it to calibrate our 

7 model. That's the purpose of it.

8 Evaluation rates might be a bit of a 

9 misnomer. Thank you.

10 The next point is we spoke briefly yesterday 

11 about adding data centers as a subgroup. This is 

12 highly dependent on the appropriateness of the existing

13 Design Line 8 to be analyzed in this way. We 

14 understand that there are serious -- there are 

15 different physical properties for transformers in this 

16 market and it just may not be appropriate to use Design

17 Line 8.

18 We probably will not have time, like I say, 

19 most likely not have time to do a full new engineering 

20 on an appropriate design line and so we would like to 

21 explore this, if we can. We'd like any type of 

22 information regarding loading parameters, sizes, 

23 weight, material types, construction techniques, size 

24 of the market would be nice, looking for participating 

25 committee members. Vijay, I have your name. I 
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1 understand you're traveling a bit and so your 

2 alternate, if possible, when you've figured that out. 

3 Thank you.

4 Gary, do you mind if I call you?

5 MR. FERNSTROM: Gary Fernstrom, PG&E. That 

6 would be fine. I think we've got two areas around 

7 which we can contribute. We know a little bit about 

8 our server form load and we've also been operating a 

9 server virtualization program to try and reduce loads 

10 in server forms. So we might have some information on 

11 how that's affected loads in the market.

12 MR. BALDUC: Great. Thank you very much. If 

13 necessary, we can have an NDA for you.

14 The last slide is we will again, just to 

15 reiterate, we will send you the appendix on the price 

16 trends for transformers and at this point, I'm going to

17 pass off to Brian Coffey.

18 MR. COFFEY: I think we've -- Brian Coffey. 

19 I think we've talked a little bit today about this 

20 template that we're going to use to facilitate a 

21 bidirectional exchange of engineering data.

22 I think some things have been added to that 

23 template with the thought that if we are already 

24 engaging in dialogue and giving feedback, that there 

25 are some other items that we would like to include in 
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1 that package.

2 First among those materials prices and also 

3 some manufacture impact analysis questions and I may 

4 not have them all listed here but I think two of them 

5 were expected conversion costs and fraction of cores 

6 built and sourced.

7 Rob Carmichael and I will collaborate and 

8 make sure that all the relevant questions get included.

9 But to return to the original spirit of the 

10 template, the goal is to allow manufacturers to examine

11 DOE engineering data for the low voltage design lines 

12 and efficiency levels and also DOE's material price 

13 assumptions for both the 2010 reference case and our 

14 sensitivity cases which are 2008 plus 25 percent on the

15 high end and 2006 minus 25 percent on the low end. 

16 That's a typo. It should be 25, not 26, percent.

17 MR. MILLURE: Dave Millure, Metglas. That's 

18 both for medium voltage and low voltage, those 25 

19 percents?

20 MR. COFFEY: Right. Same sensitivity cases 

21 for both groups. 

22 It would also allow -- this template would 

23 allow manufacturers to provide their own engineering 

24 data to the extent that they wish to do so for the same

25 efficiency levels, if they are able and willing, and 
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1 also feedback on the material prices that they see for 

2 the 2010 case and/or the present case. The more the 

3 better and so then, right, the responses to 

4 manufacturer, impact analysis questions, and I think 

5 we've identified a couple of small changes that we 

6 could make to the template, maybe including a column 

7 for losses, sort of an other box so that you could --

8 if you wish to describe another design, you could make 

9 note of that, and then a section for additional 

10 comments.

11 We'll recap and make sure that we've got 

12 everything. These are just the ones off the top of my 

13 head. Any comments on that? Questions?

14 The second item that we will take is -- sure. 

15 John?

16 MR. CASKEY: John Caskey, NEMA. I agreed to 

17 get that out this weekend but that means I need to get 

18 it from you at some point. So when do you think you'll

19 have like the minor modifications we talked about and 

20 get that to me for getting out to the members?

21 MR. COFFEY: I can have you that by Monday.

22 MR. CASKEY: Okay. If you get it to me by 

23 Monday, then I can't get it out this weekend.

24 MR. COFFEY: Okay. 

25 MR. PARKER: Why don't you guys talk offline 
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1 and work something out?

2 MR. COFFEY: Sure. Great. So the other 

3 thing that we're going to come back with are some 

4 revisions to our scaling process, based on commentary 

5 that maybe towards the end of the scaling ranges, the 

6 accuracy breaks down. So what we've done is done some 

7 supplementary modeling at the high and low KVA ends and

8 we'll come up with a new scaling proposal based on 

9 that. Of course, that's going to have the result that 

10 the scaling characteristic exponent could vary from 

11 .75.

12 Simplified cost curves. Navigant will 

13 provide manufacturers with simplified curves so that 

14 that means that for each steel type or design, it will 

15 only be showing the optimum southeast frontier of the 

16 cloud. There's been a couple of requests for that. 

17 MR. PARKER: Brian, my sense is that that 

18 would be something that there would be a lot of 

19 interest in and perhaps we could get that. That 

20 doesn't need to wait anything that LBL does, right? 

21 That could be sent out pretty soon.

22 MR. COFFEY: No. Absolutely. Technical 

23 Committee. We've discussed establishing a committee to

24 dig into some of these technical questions that maybe 

25 we could deepen our understanding of, you know, whether
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1 there are some types of low voltage transformers that 

2 warrant a separate equipment class and so we'll talk 

3 about, you know, what's needed to do that, if it makes 

4 sense, what would the benefits be. So that's a 

5 discussion we'll have offline. Of course, anybody's 

6 welcome to participate but my sense is that some will 

7 be more interested in it than others.

8 MR. PARKER: Is there a time frame for 

9 reporting back to the group about the results of your 

10 conversations?

11 MR. COFFEY: I think that will depend on the 

12 nature of the conversation and what the committee 

13 decides.

14 MR. PARKER: I mean, my sense is from the 

15 time frame that LBL has for the LCC Analysis we're not 

16 going to be able to incorporate subclasses into that 

17 analysis anyway. We're going to have to deal with them

18 on kind of an ad hoc basis, right, as they come up?

19 MR. COFFEY: Yeah. I think if we decide that 

20 we can't do without another equipment class, then it's 

21 not going to be reflected in the analysis for the next 

22 meeting. There's no way.

23 MR. PARKER: So that what would happen then 

24 would be some kind of a carve-out of that category from

25 the overall discussions and a separate treatment 
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1 perhaps on a slower time frame to get the engineering 

2 data for that and the LCC for that? Is that what I'm 

3 hearing?

4 MR. de LASKI: I think it's kind of similar 

5 to the discussion we had on the medium voltage type 

6 which is that, you know, you can approach these two 

7 things sequentially which is that we can have 

8 discussion about whether certain product types should 

9 be given separate treatment and what we're interested 

10 in knowing is, you know, what are the sales of those 

11 units, what's their market size, and what are their 

12 characteristics so they can be defined in a way that if

13 they're going to have a different treatment in the 

14 standards, they can be defined by DOE in regulation in 

15 a way that is bullet-proof, you know, that is, that we 

16 can actually -- you know what it is and so if there's 

17 going to be a committee to look into this, I'd like to 

18 participate. If there's going to be a committee 

19 talking about potential separate groups, call them 

20 potential -- let's call them potential product classes,

21 then I want to participate in that discussion.

22 MR. COFFEY: Yeah. This is Brian Coffey. I 

23 think you're making a great point. The point of the 

24 committee is to decide whether it's worth spending our 

25 time looking at these things. So that's the first 
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1 question. And then if the answer is yes, then we talk 

2 about how we're going to do it.

3 MR. de LASKI: Yeah. And how you're going to 

4 do it is something that ultimately we'll need for a 

5 proposed rule but the committee may not need it for our

6 negotiation purposes is my point.

7 MR. PATZNER: Thomas Patzner, Schneider 

8 Electric. I was reading through the statute yesterday 

9 and in regards to this topic, I have two concerns. The

10 statute says the transformer is unlikely to be used in 

11 general purpose applications and the application of the

12 standard of the transformer will not result in 

13 significant energy savings.

14 So if we're going to be going down this path, 

15 I think those are the two questions that need to be 

16 asked -- answered. Sorry. Not asked but answered.

17 My main concern is, is we keep talking about 

18 the data centers. I do not know, see how we get around

19 Question Number 2 because every single one of those 

20 products can be used for general purpose.

21 MR. COFFEY: So, I mean, that's the type of 

22 thing that -- that's the type of question we'll be 

23 asking. You know, to create a different equipment 

24 class, you need to link it to some physical 

25 characteristic of the device. That would mean that it 
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1 would be unlikely to be used as a substitute for 

2 another application but we'll go through those details.

3 MR. NADEL: Steve Nadel from ACAAA. Tom and 

4 others, what this typically has meant -- is this a 

5 special product class or premium price class? So while

6 technically you could use it, you spend a lot more 

7 money in which case sometimes you can allow it. If 

8 it's potentially a cheaper product, I absolutely agree,

9 yes, people will use it that way. So a price tends to 

10 be a key characteristic of whether it is likely to be 

11 used in general purpose applications.

12 MR. TENDULKAR: This is Vijay from Onyx. 

13 This data center transformer, at least I was referring 

14 to from our company point of view, were not sold itself

15 as a product kind of thing. It is going into some 

16 other product kind of thing with the breakers and the 

17 panel boards and the metering and all that kind of 

18 thing. So it is not just like a general purpose 

19 transformer. There's primary and a secondary 

20 connections and nothing else kind of thing. So it is 

21 not cheaper than the general purpose transformer. The 

22 whole equipment costs a lot more than the general 

23 purpose transformer equipment. So maybe in that case, 

24 it can be completely excluded from the scope of this 

25 efficiency regulation.
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1 MR. COFFEY: I mean, I think right now we're 

2 not so much trying to have the discussion as just 

3 identify the need to have the discussion. So I think 

4 we can continue this in our Technical Committee.

5 MR. PARKER: Right. But I think we do need 

6 to, you know, surface whether -- at least whether this 

7 is a big category or not. In the medium voltage, if 

8 you recall, the issue was sort of marginalized by the 

9 perception which I think was accurate that we're 

10 talking about a very, very low volume of sales for that

11 category of transformers.

12 If that's the case here, as well, then, you 

13 know, perhaps a simple carve-out is possible, but, you 

14 know, that's -- I think you guys had concerns about 

15 loopholes and other things. So we just need to gather 

16 the information reasonably soon so that certainly by 

17 the next meeting we can at least have a discussion 

18 about whether they're in or out.

19 Anything else?

20 MR. de LASKI: Sorry. This is Andrew again. 

21 Do you plan to gather that information for this 

22 particular --

23 MR. COFFEY: I mean, I think this is the 

24 discussion I'm trying to describe. We'll start with 

25 what are these products? Are they large in sales 
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1 volume? Where are they used? What are their physical 

2 characteristics? I don't know the answer to all these 

3 questions but --

4 MR. de LASKI: You're going to talk to 

5 manufacturers one on one and try to get that 

6 information, is that the plan?

7 MR. COFFEY: One on one or in a group, yeah. 

8 I will be looking to manufacturers for that 

9 information.

10 MR. PARKER: So can we add that to the list 

11 that you send out to your membership, also, John? 

12 We'll add a separate document that can go out on the 

13 same package perhaps that will ask for information 

14 about data centers and we need to, I think even at a 

15 very early stage then, caucus about what sort of 

16 information we need to gather from manufacturers to 

17 make the assessment as to whether these are included or

18 not.

19 MR. CASKEY: I'm happy to send out whatever 

20 you want to send out but we're sort of talking about 

21 two different schedules now. One is that we need to 

22 get the feedback on the data templates as soon as 

23 possible, by next Thursday or Friday, and this 

24 discussion can really go on over the next three or four

25 weeks or something on that order.
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1 MR. PARKER: Okay. Anything else?

2 MR. COFFEY: Yes. There was calls for 

3 additional presentation of data that I've listed here, 

4 some different plots, and so we'll be providing those 

5 to the committee electronically. That's it.

6 MR. PARKER: Well, we have a lot to do going 

7 forward but I think this has been a helpful discussion,

8 both in terms of giving very clear guidance as to what 

9 sort of information we need, a time frame for getting 

10 it, a priority for accessing it, and a plan for 

11 preparing for the next meeting which I think everybody 

12 agrees will be a very important meeting.

13 As I mentioned earlier, we'll try to have 

14 early next week, on my to-do list, working with 

15 Navigant staff is to create an online interface for the

16 group to post documents of a non-confidential nature 

17 and to have a discussion organized in threads and so 

18 forth through SharePoint. So we'll have that up and 

19 running to facilitate work of the group before the next

20 meeting.

21 Just to recall, we will be meeting November 

22 8th and 9th, 8th for the medium voltage, 9th for the 

23 low voltage. That will be held -- Jeremiah, where is 

24 that going to be? Held at EEI. Okay. So for the 8th 

25 it's at Edison Electric and for the 9th at L'Enfant 
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1 Plaza, on the 6th Floor of L'Enfant Plaza. One-day 

2 meeting.

3 Great. Thank you, all. We are then 

4 adjourned. We will see you in November.

5 (Whereupon, at 1:28 p.m., the meeting was 

6 adjourned.)

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REPORTER'S CERTIFICATE

This is to certify that the attached proceedings 

before:

U.S. DEPARTMENT OF ENERGY

VOLUME II

In the Matter of:

MEETING OF THE LV WORKING GROUP

Were held as herein appears and that this is the 

original transcript thereof for the file of the 

Department, Commission, Board, Administrative Law Judge 

or the Agency.

Further, I am neither counsel for or related to 

any party to the above proceedings.

 Official Reporter

Wendy Greene 

Dated: October 20, 2011