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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, Octobe r 14, 2011**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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P R O C E E D I N G S 1

(9:14 a.m. ) 2

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

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

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

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

oversleep but I think we should probably get started 7

now. 8

And we have a fairly light agenda. I fully 9

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

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

everyth ing that we can do today. 12

What I thought we might do is first I looked 13

last night at the Engineering Validation Template that 14

DOE is sending around and I wanted to just

-- I posted 15

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

discussion of that basic ally just to make sure

-- and 17

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

think

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

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

needs to be tweaked in any way. 21

We want to

-- the response rate has been low 22

and so we discussed yesterday the idea of trying to 23

increase the response rate and as I looked at this last 24**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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night, I realized it's a bit busy and we might be able 1

to find ways to make this a little bit more user

2

friendly and I've been talking to Brian about this 3

before the meeting. 4

So I thought that would be a good discussion 5

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

meeting we have absolutely the best engineering data 7

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

the issue of the requirements of monitoring and half 9

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

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

metals at different efficiency points. So I thought we 12

would have that conversation. 13

Secondly, Rob Car michael from Navigant has 14

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

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

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

somewhat more extended discussion than we had yesterday 18

about manufactur ing impacts. 19

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

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

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

preliminary discussion about what people take away from 23

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

ways. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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

engineering data on the basis of the questionnaire that 2

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

understand, to present just the southeast corner of the 4

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

up there and have a preliminary discussion about what 6

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

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

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

mee ting. 10

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

basically hear from both Navigant and LBL as to what 12

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

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

items that have to be done before the next meet ing so 15

that the next meeting can actually be a very fruitful 16

and very productive negotiating session? 17

I would also propose for the next meeting 18

that we hear from the Building Owners and Manufacturers 19

Association. They did not choose to participate in 20

th is group actively but they did say that they might be 21

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

perspective on the significance or insignificance of 23

price and efficiency to their purchase decisions. So I 24

thought we might have propose schedulin g that for the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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next meeting. We can discuss that. 1

So the basic issue is just to recap to make 2

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

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

time to speak up, but finalizing this Engineering 5

Tem plate, secondly Manufacturing Impacts, third 6

Preliminary Discussion of sort of key takeaways from 7

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

know, Further Business. 9

Does that seem like a reasonable way to use 10

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

then. 12

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

put out yesterday was maybe towards the end being able 14

to have an opportunity to share concepts. 15

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

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

Absolutely. 18

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

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

meeting to have that opportunity to think about the 21

concepts so that we actually can talk about them. 22

MR. PARKER: Absolutely. V ery helpful. 23

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

the agenda? Okay. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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Let me see if I can

-- I'm looking around for 1

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

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

Can you come up here a nd walk us through 4

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

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

MR. COFFEY: So this template is something 7

that I put together after the first negotiation session 8

where some individuals had expresse d a desire to see 9

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

initially released it and also to provide some data to 11

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

comparison could be drawn. 13

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

Excel spreadsh eet and we've got an Instructions tab 15

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

for and how to use it. 17

We've included in this the materials prices 18

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

really important because manufacturers wit h different 20

materials prices or the same manufacturers in different 21

years will build different transformers as a function 22

of those prices. 23

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

pause there because as I understand it from LBL and 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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from Navigant, th ese are pretty critical parameters. 1

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

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

right from where they are? 4

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

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

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

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

Are there any material categories that are missing? Is 9

there going to be any particular burden in validating 10

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

MR. COFFEY: These are 2010 prices. So 12

presumably some of them could have moved since then. 13

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

materials that we used for liquid immersed and 15

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

at the dry type ones right now. 17

MR. TENDULKAR: Why the prices should be 18

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

the same prices for the copper and aluminum? 20

MR. COFFEY: They are the same. 21

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

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

one was. 24

MR. COFFEY: So here's an example. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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MR. TENDULKAR: Oh, I see. Okay. The 1

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

see that. Okay. 3

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

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

I was confused. This spreadsheet has not been 6

distributed yet, right? 7

MR. COFFEY: This has been distributed. I 8

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

group. 10

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

Pacific, as I understand. 12

MR. COFFEY: So I sent

-- okay. So there was 13

a technical committee, I think, established at the 14

first low voltage meeting and so I sent this template 15

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

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

whole committee. 18

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

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

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

impregnation per gallon pr ice is much higher than $22 22

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

comment when I go back. 24

MR. COFFEY: Great. Yeah. I think that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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would be important feedback to have on this. 1

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

send, you know, you r

-- you'll be sending this out to 3

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

helpful to maybe add something in the

-- a comment in 5

the spreadsheet or somewhere that would just indicate 6

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

2010. 8

I won dered if it would make sense, also, to 9

indicate what you're using for the sensitivity analysis 10

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

a column that would indicate those prices because those 12

are the three critical parameters, the central ten dency 13

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

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

with those parameters. 16

And are these average prices or are they end

17

of

- the

- year 2010 prices because obviously prices, you 18

know, fluctuate during the year? 19

MR. COFFEY: These are intended to represent 20

sort of an average over the year. 21

MR. TENDULKAR: What do you expect the 2011 22

prices should be, based on these ones? 23

MR. COFFEY: You would know that better than 24

we would. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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

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

lot more than that, I know that. 3

MR. COFFEY: Okay. 4

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

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

look like c ompared to these numbers. 7

MR. COFFEY: So these come from interviews 8

that we do with manufacturers and we travel around and 9

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

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

feedback we get. 12

Now, a dmittedly, this is

-- these are 13

probably more representative of what a medium to larger 14

manufacturer would pay. So if you feel that smaller 15

manufacturers are at a significant disadvantage in 16

getting the favorable rates, that would be interesting 17

feedback to have, also. 18

MR. TENDULKAR: It will be also possible that 19

there are transportation charges we may be paying in 20

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

or Midwest. 22

MR. COFFEY: Okay. So transportation is for 23

the materials, not for the transformer. 24

MR. TENDULKAR: Yes, exactly. Transportation 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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is for the materials. 1

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

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

this in your factory? 4

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

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

gotten confused about some of the very points that 7

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

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

is say what am I paying today? 10

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

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

MR. COFFEY: That's right. 13

MR. de LASKI: Otherwise you don't have

-- 14

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

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

po int. 17

MR. TENDULKAR: So it will be difficult to 18

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

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

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

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

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

because the prices move and the purpose of this 24

exercise really is to determine if our modeling roughly 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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reflects reality and so you have to hold as much as you 1

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

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

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

as apples to apples comparison as is possible and I 5

think that starts with having the similar assumptions 6

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

other way to do that. 8

MR. PARKER: Would your accounting department 9

have records of what you paid in 2010? 10

MR. TENDULKAR: What they paid last week, 11

they have problems. 12

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

MR. TENDULKAR: But some o f the prices I 14

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

paying more than that, I know that. 16

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

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

could be a problem in terms of being able to prov ide 19

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

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

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

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

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

the form so that you know what it is and then you're 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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able to say, well, what does that tell us about the 1

sensitivities and how we should weight them? 2

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

work? Does that sound like a good plan? 4

M R. TENDULKAR: That's a good plan. If 5

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

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

more better for us as the committee. 8

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

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

last week? So we need to understand that. 11

MR. TENDULKAR: The prices will be about the 12

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

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

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

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

percent higher this year than last year. 17

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

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

engineering cloud is that we can actua lly usually apply 20

new materials prices to those clouds and see the points 21

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

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

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

know, core valuation to winding valuation, if the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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relative materials prices change, then you update them 1

and the previously optimum designs might move off the 2

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

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

pretty good results. 5

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

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

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

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

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

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

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

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

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

in the ballpark or not. Gre at. 15

Let's move on. Go ahead. 16

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

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

Details tab. 19

When I first put together this spreadsheet, I 20

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

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

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

It's a three

- phased 75kba, primary

- secondary voltage, 24

temporized and BIL, and then these are our different 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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efficiency levels that we use right now. So this is 1

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

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

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

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

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

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

provided. 8

The next

-- so that's kind of the 9

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

section, you sort of start by

-- it's a dropdown menu. 11

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

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

lowest cost way of providing a 98 percent efficient 14

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

with aluminum primary and secondaries, you'd choose 16

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

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

that makes the comparison less useful. 19

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

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

we've

-- sure. 22

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

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

have either a clear indication around the table that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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there is a dropdown menu or very, very clear 1

instructions upfront. I think that is mentioned in the 2

Instruction menu but I l ooked at this table last night 3

and I didn't sort of

-- I wasn't queued off to the fact 4

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

it will open up. 6

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

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

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

in each of those menus. 10

I guess the question is for people is this 11

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

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

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

best enemy of the good. 15

Would it be helpful, for example, to simplify 16

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

mitering and choice of metals or is this level of 18

detail something that you people can easily handle? 19

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

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

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

on the dropdown menu? 23

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

you start by telling us what you 're describing. You 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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know, if we just start with pounds of steel, pounds of 1

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

we can't compare it. 3

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

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

MR. C OFFEY: That's right. So you say

-- 6

MR. TENDULKAR: Okay. And to meet that 7

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

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

lowest cost way of meeting that efficiency. 10

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

clarifying question? As I understand, this is a 12

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

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

bringing on the template now but when it actually goes 15

out to the membership, what went out, did that incl ude 16

your actual build, the build that the OSP model 17

chooses? 18

In other words, would there be values put 19

into all of these cells so that people could actually 20

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

MR. COFFEY: Well, the existing cost cur ves 22

show which colors of points correspond and I know there 23

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

information is already in the cost curves. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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This template I sent out to receive feedback 1

on whether it was put together sensibly and had the 2

right i nformation. It didn't have design information 3

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

bidirectional exchange, so DOE would populate it with 5

its least cost designs and manufacturers would in turn 6

populate it with their least cost designs. 7

MR. P ARKER: So what you send out to 8

manufacturers will contain values filled into those 9

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

that contains the values filled in and a second that 11

contains blanks for the manufacturer to fill in 12

wherever they di sagree with the current values. So the 13

idea would be if you believe their build information is 14

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

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

efficiency level or any row or any column where you 17

disag ree with the value that is supplied, you know, 18

what you think is the alternative. Does that make 19

sense? 20

MR. COFFEY: Yeah. Maybe we could have 21

duplicate versions of these tabs and one is the DOE 22

data and one of them is empty for the manufacturer 23

data. 24

MR. PARKER: Right. So it could be one 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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spreadsheet but two workbooks. Worksheets. Excuse me. 1

MR. TENDULKAR: Could you please repeat that 2

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

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

there are two thing s going on. The first is to

-- and 5

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

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

lot of information from manufacturers in interviews 8

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

model

- - OSP

-- OPS model and that has generated the 10

optimum design and for that optimum design, it has 11

produced

-- it has calculated the amount of steel that 12

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

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

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

-- you 15

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

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

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

affect the efficiency price tradeoff th at they have put 19

there. 20

For each design option that is chosen, the 21

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

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

estimated cost and an estimated efficiency at each 24

efficiency level. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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So th ey've already done that. They have this 1

table which is now blank filled in with values for 2

their computer

- generated hypothetical design. Okay? 3

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

what the computer turned out matches your experience, 5

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

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

know, the design that you would actually do. 8

So do you really need to achieve this 9

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

you really to us e this grade of steel? What kind of 11

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

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

treated as business confidential, right? 14

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

establish a written NDA for a nybody that wishes to. 16

MR. PARKER: So you're not

-- your responses 17

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

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

group. This will be completely with your consent. 20

Otherwise, unless you sp ecify otherwise, I think you 21

can assume that it will be treated confidentially. 22

And so basically have your people look at the 23

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

doesn't, for those areas where it doesn't, please give 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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us the

-- you know, indicate what different design you 1

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

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

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

a ground truth computer model, right? 5

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

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

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

designing to a certain efficiency and OPS says you need 9

this many pounds of steel, this many pounds of 10

conductor, that many pounds of whatever, does that 11

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

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

anything. 14

Downstream of that, the question is, okay, 15

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

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

start getting into questions of materials prices, 18

manufacturing techniques, that sort of a thing, but 19

they really are two separate considerations, and I 20

think if you try to consider everything at once, 21

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

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

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

the same design? Is it different materials prices? Is 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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it different years? 1

Once you start letting too many v ariables 2

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

finger at where the discrepancy arises from. 4

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

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

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

d ifferent design

-- eight different efficiencies and 8

there are about four different designs or something 9

like that. I don't remember. 15

- 20

- 75

- 300, I believe. 10

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

different designs. 12

MR. ROBLES: This is Edu ardo Robles from 13

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

gather the information for the current TP1 level and 15

for those of us that participate like in the NEMA 16

Premium Program that we do have designs that are more 17

efficient that are probably i n the range of CSL2 or 3 18

that gather that kind of information. 19

That's existing information but for

-- we 20

might have some customers that require greater than 21

NEMA premium efficiencies and we may have information 22

for those. 23

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

to make, we'll only have a limited amount of data that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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we can supply from existing transformers without having 1

to go in and design for all this higher efficiency 2

level. 3

MR. COFFEY: Sure. 4

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

wor ds said and this is Vijay. You said it in better 6

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

are not really in the distribution transformer 8

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

thing but mostly our customers want copper. So we 10

would not have any aluminum designs. 11

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

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

aluminum design right here, but

-- 14

MR. TENDULKAR: Yes, I understand. 15

MR. COFFEY:

-- in this dropdown menu, you 16

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

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

aluminum design but those are part of special 19

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

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

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

transformers which are limited but not for what we are 23

looking for here. 24

So we'll have very limited data but we'll see 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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what we can do and we'll supply you all that data. 1

The other problem we are runnin g into this 2

particular design we are talking about is a primary 3

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

we sell have a secondary which are not Y

- connected. 5

They're either zigzag

- connected or a double zigzag

6

connected kind of thing and they have a totally 7

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

queue them, too. 9

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

some judgment there on your part as to whether those 11

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

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

different enough that any numbers we gave would render 14

the comparison meaningless, then that would be 15

important to know. 16

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

trying to meet the TP1 efficiency with those designs 18

and we m eet those TP1 efficiencies but any higher 19

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

of different connections. 21

MR. COFFEY: Okay. 22

MR. ROBLES: Maybe to accommodate what

-- 23

this is Eduardo Robles from Eaton Corporation. Maybe 24

to accommodat e what Vijay just said on your dropdowns, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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you probably need to leave a blank option that the 1

manufacturer can kind of construct the same structure 2

of material conductor type of core and windings or 3

interconnected windings that can define actually what 4

the manufacturers are supplying. 5

On another comment regarding the

-- 6

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

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

needs to be an option. 9

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

as other but somewh ere in the spreadsheet you have a 11

column that says define for me other. Is this 12

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

give the manufacturer the ability to really define the 14

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

in the drop downs. 16

MR. COFFEY: So we can certainly provide 17

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

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

modeled. 20

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

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

you could supply design that meets those because then 23

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

still useful to

-- you know, if there's another type of 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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design, if you don't make any of these, to say, okay, 1

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

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

as we're looking at the different specifications. 4

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

all the columns but do you have somewhere the impedance 6

and the copper loss a nd all that? 7

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

loss. I could certainly add those columns. 9

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

not see the

-- 11

MR. COFFEY: So the losses are sort of 12

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

M R. TENDULKAR: Yes. 14

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

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

add those columns. 17

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

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

measure the performance c haracteristics of your

-- 20

MR. TENDULKAR: There are two kinds of 21

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

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

loss which is the winding loss which varies with the 24

load, square of the load, and at the 35 percent 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  167

efficiency, we are taking about 12 percent, 12.35 1

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

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

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

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

something like that that would be better. 6

Do you have at the same time at the Remarks 7

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

there? 9

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

at the very end so you can just th row

-- 11

MR. TENDULKAR: Okay. Thank you. 12

MR. COFFEY:

-- anything you wanted in there. 13

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

before but thank you, Brian. 15

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

Robles again from Eaton Corporation. I see o n the 17

original technical data document that you only list 18

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

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

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

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

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

might be some disconnects between the data that OPS 24

provided that give you your final load loss from what 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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manufacturers, different manufacturers may experience 1

as the destruction factor. 2

And as many of us know, a critical parameter 3

to meet the efficiency is the no

- load loss. So if the 4

incorrect considerations for the destruction factors 5

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

- load 6

loss number, an optimistic number that we as 7

manufactur ers may not experience in reality. 8

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

are providing us the detail of the original analysis 10

the destruction factor considered for that specific 11

design line, that would be helpful. 12

MR. COFFEY: Yeah. I think th at sounds 13

useful. We'll add that. 14

MR. TENDULKAR: This is Vijay again. 15

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

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

the efficiency, does the efficiency percentages

-- two 18

questions. First, coming b ack to Vijay's point 19

earlier, does the

-- is it easy for your people to 20

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

losses and load losses and total losses, to these 22

efficiency percentages? That's very simple arithmetic? 23

MR. TENDULKAR: We coul d do that but normally 24

given the proper level, the design comes out telling 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  169

you the total losses are and then the efficiency 1

number. It calculates it that way. 2

MR. PARKER: So maybe it could be easier

-- 3

it could be more user

- friendly if we could just r ecast 4

the table into

-- and then you could

-- or just add a 5

column that would indicate the corresponding losses. 6

Does that work for you? 7

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

columns for losses. I think the manufacturers probably 9

know the effici encies of the products that they're 10

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

current standard and then there's the NEMA premium 12

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

no

- load and load losses to make sure. 14

MR. PARKER: And then do those percentages 15

include the destruction factor or is that a

-- it's 16

embedded? 17

MR. COFFEY: It's embedded. 18

MR. PARKER: In the no

- load loss? 19

MR. ROBLES: Yeah. A 120 watts of no

- load 20

loss and the OPS Program used 1.1 destruction factor. 21

I mean , the manufacturer may be experiencing a 150 22

watts for that same destruction because the destruction 23

factor, the real destruction factor is different. 24

MR. PARKER: Right. Okay. So that would be 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  170

something that could be handled by just putting in a 1

colum n for the assumed destruction factor. 2

The last thing that I wanted to mention is 3

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

for the efficiency levels for the design that you 5

produce for the efficiency levels that you produce 6

which is perfectly logical. 7

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

amount of speculation that is going on in the model 9

about what would happen if the standard were to be 10

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

it would probably be helpful to have the benefit of 12

your engineers' experience, their professional judgment 13

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

Could they meet this? What would they do? 15

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

this simple reporting. What I heard you saying is 17

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

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

exercise, it would be awfully helpful if your engineers 20

could or if you could provide your best professional 21

judgment as to what the

-- you kn ow, if you had to move 22

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

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

to provide your judgment as to what you would do, how 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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you would approach something, if you were to

-- if a 1

higher standard were specified, what would you do? 2

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

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

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

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

actually foc us on what columns, you know, you would 7

actually want to, you know, fill in. 8

Obviously the design option, would you be 9

mitering or not? Would you be

-- what kind of metal 10

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

one can do for the higher eff iciency performance 12

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

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

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

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

doing. 17

MR. COFFEY: Y eah. I think something is 18

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

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

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

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

discrep ancy is, but I think some of these are bigger 23

drivers of costs than others, right? 24

If you know your pounds of steel and 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  172

conductor, you're a good ways towards figuring out are 1

we building the same thing, you know, and installation

, 2

of course. There are

- - it doesn't tell the whole 3

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

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

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

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

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

not use the destruction factor. There are reasons for 9

that because the destruction factor, we do not believe 10

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

different measures of calculating the losses and we 12

have good success for data with that. 13

So what we would like to do is we probably 14

want to give you the transformers we already build and 15

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

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

what we got rather than something we design and 18

predicted kind of thing and something else we got when 19

we tested. Would you like that way? 20

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

hoping for, yes. 22

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

designs already built, t ested, and we'll give you that 24

data, and the parameters for whatever copper, aluminum, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  173

or whatever we use and give you that kind of data and 1

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

thing or destruction factor or nothing. Everybody's 3

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

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

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

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

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

has got certa in shortcomings as far as the 9

calculations. OPS Program is good for certain ways but 10

it has got certain shortcomings when predicting the 11

details, like we mentioned about the amount for scope 12

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

programs are two different things, the 100 percent 14

wrong kind of thing. 15

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

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

a 150 degrees temperature. We may have a different 18

temperature for different designs and we ma y just put 19

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

extrapolate from there. 21

MR. COFFEY: Yeah. I think again something 22

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

tell us. 24

MR. TENDULKAR: Absolutely. We like to help 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  174

you as much as we can. 1

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

you mentioned that you felt that the OPS modeling 3

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

template is to discover if there are inaccuracies, how 5

are they arising? 6

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

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

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

those with you. 10

MR. COFFEY: Great. 11

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

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

today? 14

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

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

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

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

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

this seem like something that you all would be 20

comfortable filling out? Did you have any thoughts 21

that you wanted to chime in? 22

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

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

to complete this table, but we chose to look at it a 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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little b it differently. 1

We actually

-- since the efficiency point is 2

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

in the engineering analysis by only looking at designs 4

that had a peak efficiency between 30 and 45 percent 5

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

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

So we were only going to look at designs that 8

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

manufacturer which is a peak efficiency at the 35 10

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

that falls outside of that parameter. 12

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

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

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

efficiency, it would probably end up somewhere in that 16

neighborhood anyway, wouldn't it? 17

MR. PATZNER: That's correct. But we

-- it's 18

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

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

get that peak efficiency point. So we're using t hat 21

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

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

we're only

-- instead of doing it by the efficiencies, 24

we're actually going to take the designs that actually 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  176

align with that maximizing the effici ency at 35 1

percent. 2

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

ask the manufacturers here and also John. Is it 4

feasible to expect that people could fill out at least 5

some of the more critical columns, like the Design 6

Options column, for higher

-- some level of higher T P1 7

cells than you're currently manufacturing or is that 8

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

data we'll be getting. 10

MR. TENDULKAR: We are basically making TP1 11

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

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

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

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

NEMA premium designs, very limited data. 16

The other problem I'm facing around here, 17

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

sell the complete enclosure kind of thing. The reason 19

for most of our customers put these transformers in 20

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

we had put our transformers ourselves in the 22

enclosures, those enclosures are not for the 23

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

like circuit breakers, distribution panels, and all 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  177

that. We call them power distribution units. So those 1

are totally different. 2

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

tell you what the enclosure cost is for that. 4

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

the purposes of validating an optimization if you say 6

this core and coil goes in a transformer of this 7

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

pounds of steel for this conductor. 9

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

core and coil information. There is no problem with 11

that. 12

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

the most important thing. 14

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

en closure, we may or may not have that data. 16

MR. COFFEY: Okay. 17

MR. TENDULKAR: Some of the enclosures we 18

make are outdoor enclosures and some are indoors. A 19

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

enclosures kind of thing. 21

MR. PARKER: Tom, h ow about you? 22

Professional judgment in basic information available on 23

higher ELs? 24

MR. PATZNER: Higher what? 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  178

MR. PARKER: On higher efficiency levels. In 1

other words, hypothetical sort of estimates as to what 2

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

higher efficiency levels? 4

MR. PATZNER: So my design engineers have 5

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

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

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

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

currently do not have a design structure for those type 10

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

similar materials we will be able to estimate the costs 12

all the way up to the highest efficiency level s that 13

those products offer. 14

MR. PARKER: Excellent. John, does that

-- 15

is this something that you could ask your membership 16

for? 17

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

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

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

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

going through this exercise. 22

I mean, we had developed the spreadsheet. We 23

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

and we do that through

-- within NEMA, th ere's a 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  179

confidential area where we have people that can analyze 1

stuff and are careful to report only stuff where you 2

get enough data so that no one individual 3

manufacturer's proprietary information is divulged. So 4

we go through that process. 5

So we basic ally sent out the spreadsheet and 6

asked people to fill it out to the best

-- something 7

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

the best of their ability and basically we got two 9

manufacturers submitted a fair amount of information. 10

Some of the other ones submitted a little bit of 11

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

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

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

you have to have

-- in some cases, you have to have 15

three or four or five manufacturers reporting in a cell 16

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

otherwise if you only got two people and one person 18

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

they both know exactly what the other guy said. 20

MR. PARKER: Is it possible to keep

-- to 21

simply not report who supplied the data so that

-- 22

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

supplying the average then it divulges

-- person X 24

knows what he or she provided and if you provide the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  180

averag e, then they can figure out what the other person 1

provided basically. So we have very strict portability 2

criteria. 3

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

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

responded to the questionnaire, the only person who 6

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

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

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

little bit. 10

MR. PARKER: Yeah. 11

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

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

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

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

that's the one concern. 16

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

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

wha t is the delta in energy efficiency and how much 19

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

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

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

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

into better

-- as I understand it, a better comfort 24

range, saying that those numbers are roughly in the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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right ballpark, that they can live with that. So 1

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

This is a huge amount of data to be 3

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

going to get filled in from the various manufacturers. 5

So I'm wondering is there

-- so, first of all, you 6

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

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

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

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

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

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

to be a different calculation methodol ogy. So it's 13

going to be tough to put that all together. 14

Is there any chance of at least getting to 15

basically one design level and sort of walking through 16

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

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

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

option, that design line specification, and then walk 20

through that. 21

So if you could get at least five or six 22

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

what

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

you know, 150 temperature rise. If you can get, you 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  182

know, five or six people just reporting in that one 1

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

or whatever, that might be the range. 3

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

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

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

MR. PARKER: I think those are excellent 7

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

efficiency levels or focus on one set of columns? 9

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

okay, and then focus

-- and then most likely you're 11

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

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

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

accuracy and most of the manufacturers will not have 15

designed to that level anyway. 16

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

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

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

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

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

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

professional judgment something that could be done if 23

we greatly simplified these columns, in other words? 24

MR . CASKEY: Yeah. We can ask them to do 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  183

that but you could further away from reality, you know. 1

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

before. So they really don't

-- you know, they can 3

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

final costs will be. 5

MR. PARKER: Right. 6

MR. CARMICHAEL: This is Rob Carmichael with 7

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

each other. 9

Have you seen the cost efficiency curves 10

because we have those? 11

MR. CASKEY: Yeah. 12

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

that's what you're

-- is that not something that they 14

-- 15

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

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

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

meeting to get new o nes. 19

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

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

at a minimum, could you

-- here's what the OPS model 22

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

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

that you want to surface? And that would allow them 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  184

something to work on. They wouldn't have to dig in 1

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

reasonable and that would supply a single design option 3

and single set of parameters and maybe we could 4

simplify the columns and focus on the most important 5

ones. 6

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

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

the committee but the non

- committee members that are 9

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

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

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

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

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

the OPS run s to the

-- 15

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

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

were simply asked to validate the existing information, 18

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

them in a simplified template. 20

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

point. 22

MR. PARKER: Yeah. 23

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

get the answer to that, but then

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MR. PARKER: And then if they find glaring 1

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

g laring errors. If they see something is wrong, say 3

could you please give us

-- just focus on that one line 4

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

supply information for that? Would that make sense? 6

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

think? 8

MR. PARKER: Bob? 9

MR. SMITH: Bob Smith, Federal Pacific. 10

Brian, I think you indicated that Federal Pacific had 11

turned data in to you? 12

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

of data. 14

MR. SMITH: How complete was the informatio n 15

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

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

to the conference. 18

MR. COFFEY: It was helpful. Rob gave 19

feedback when I e

- mailed this template out initially 20

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

efficiency in selling price and then make the rest of 22

the parameters optional and I think that if your 23

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

that doesn't tell you where the source of the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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discrepancy is and so, I mea n, I feel if there is a 1

discrepancy, addressing it really does require some of 2

these values in some of these columns. 3

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

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

clarification? 6

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

and we ha ve been using it to

-- Rob and Heath have been 8

in correspondence, exchanging data , and I think that 9

has been helpful already. 10

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

took Rob and his engineering group about one day per 12

d esign level to run the designs to get the information 13

that Brian is referring to. 14

I guess my thought is send out the template, 15

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

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

up the phone an d get the clarifications that you need, 18

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

get good responses. 20

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

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

prioritize among the information that we're looking fo r 23

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

in? But focus on the ones that have the maximum sort 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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of bang for the buck, so to speak, and we could look at 1

the columns probably and just eyeball which ones matter 2

the most. Does that make sense? 3

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

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

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

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

going to be

-- you could be missing some v ery important 8

information. This is not that tough. 9

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

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

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

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

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

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

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

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

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

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

rating because we make the different temperature rises 20

or different appearances kind of thing, and we will 21

look at that. 22

Okay. I want to caution you that our data 23

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

my e

- mail and the thing over there, we are getting away 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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from the grade

- oriented steel for the reasons I 1

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

with the quality grade

- oriented steel available kind of 3

thing. We a re going towards non

- oriented steel in most 4

of our designs in the last year or two. 5

Also, to reduce the interest current, we had 6

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

the non

- oriented steel. So our data will be more 8

towards the non

- orient ed steel and towards the 9

oriented. There are some CSL3 designs which are with 10

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

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

designs will be non

- oriented steel. 13

MR. PARKER: Eduardo, did you have something 14

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

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

with this approach? 17

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

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

that is present ed on the screen right now. 20

MR. PARKER: Okay. Sounds good. 21

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

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

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

recommend highly that you tell the man ufacturers what 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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prices to use for the commodities and as they return 1

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

discrepancies in their own operations because we're 3

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

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

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

So if you can hold it kind of ceteris paribus 7

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

make adjustments as we go forward with the design 9

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

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

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

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

situation. 14

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

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

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

understand it, I guess that was

-- Rob's suggestion was 18

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

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

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

that would disclose that for the manufacturers, you 22

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

cost, putting all these things together. Does this 24

look like your experience for final cost? D oes that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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make sense to people? 1

MR. TENDULKAR: This is Vijay. 2

MR. PARKER: Kind of where it all comes 3

together. Yeah? 4

MR. TENDULKAR: I do not know how the 5

comfortable company feel to give you our cost kind of 6

thing, but we will give you the materia l contained as 7

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

whatever the prices you want to provide because when 9

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

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

some other things into tha t, margins and these kind of 12

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

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

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

that. 16

The other thing I forgot to mention, there 17

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

two different designs because they're for two different 19

customers and they have to go in their enclosures and 20

because of the enclosures, the designs are completely 21

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

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

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

Comments column that this is what the dimension 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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constraints are and that's the reason the design is 1

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

do. 3

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

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

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

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

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

there are other things that you can do, other 9

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

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

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

do our comparison. 13

M R. TENDULKAR: I understand what you're 14

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

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

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

produce something to sell to our customers and if we 18

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

MR. PARKER: Vijay, another thing I pointed 20

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

established yesterday that your company produces, you 22

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

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

is receptive to that. So as you look through this, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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bear that in mind, and it may be that for your special 1

category, you know, a slightly modified template would 2

be appropriate or your information is differ ent. 3

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

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

analysis of that category, if the working group 6

concludes that a category is appropriate. Does that 7

make sense? 8

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

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

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

MR. PARKER: Great. Thank you. 12

MR. TENDULKAR: Thank you. 13

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

this before we move on? Okay. 15

As I understand it then,

-- excuse me. Yes, 16

John? 17

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

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

you going to talk about that now or later? 20

MR. PARKER: I think we should talk about 21

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

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

tell us, be very candid. When do you need

-- what is 24

your drop dead date for

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that will implicate LBL because they have to do a life 1

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

backwards, and maybe what we should do is not

-- do we 3

want to caucus about this offline for a minute before 4

we talk about timelines? That may be helpful. 5

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

timeline. I t hink perhaps people need to give this a 7

little more thought before we start making commitments, 8

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

discussion. Thank you. It's helpful. 10

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

tables. First, we will bre ak this table out into 12

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

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

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

his hand up again. So go ahead. 16

MR. TENDULKAR: On this, one oth er point. 17

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

words and turns as two separate things in that? 19

MR. COFFEY: We were asking for the ratio 20

here just as a reality check. 21

MR. TENDULKAR: So you really want the turns 22

and the primary winding, turns and the secondary 23

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

MR. COFFEY: Well, we were just asking here 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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for the volts per turn ratio but if you think it would 1

be more useful to provide the individual volts and the 2

individual turns, we can provide that, also. 3

MR. TENDULKAR: Same in the transformer, 4

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

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

taps we have. Secondary turns normally remain fixed. 7

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

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

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

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

MR. TENDULKAR: Okay. 12

MR. PARKER: Bob? 13

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

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

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

here to hear this, but

-- 17

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

turn off your mike? Vijay? 19

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

Al l right. 21

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

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

an hour. 24

MR. SMITH: What I wanted to say to the group 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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with our building both medium voltage and low voltage 1

dry type transformers, since the 201 0

- mandated 2

efficiency levels went into effect and basically very 3

shortly after that time, most of the medium voltage 4

transformers that we have been building at 208Y 5

secondaries have been converted to 480Y volt 6

secondaries. 7

This is good because this mea ns you have a 8

lot less conductor losses in your facility and I just 9

thought you might be interested in knowing that the 10

efficiency standards have had that effect, not just on 11

the transformer manufacturers but on the design and 12

building practices of the con sultants and the 13

contractors. 14

MR. NADEL: Excellent. So done properly and 15

I emphasize properly, they can have positive effects. 16

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

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

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

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

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

medium voltage and the low voltage into two separate 22

worksheets tables to that your company and your members 23

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

We will send out two separate tables to each 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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company. One will be the

-- two separate worksheets, 1

one file but two worksheets. One worksheet will 2

contain this table filled out with the OPS results and 3

the other will c ontain this table blank with an 4

instruction that if you find the OPS results credible, 5

nothing further needed. To the extent that you find 6

them errors, please indicate by filling out the 7

appropriate columns in the blank table with your own 8

design informat ion that you would use and as much 9

detail about the

-- in the remaining columns as you can 10

provide with available resources. 11

We will ask that everybody do that for the 12

designs that they produce but we will also invite 13

people to comment on what they would do in their 14

professional judgment at higher design levels should 15

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

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

stipulate, obviously distinguish between

-- in the 18

blank tables between things based o n their actual 19

experience and things that reflect their speculation, 20

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

in. 22

And we will amplify the instructions 23

worksheet to, you know, provide explanations about 24

material prices in the area and provi de, you know, more 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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detailed instructions on how to fill this out. 1

The last thing is on material prices, we will 2

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

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

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

We will also do the same thing for material 6

prices, invite people to fill out what their experience 7

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

the extent that you can document that with invoices or 9

something, I think i t would be very, very helpful so 10

that we know what we're getting. 11

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

any way? 13

MR. COFFEY: No. That's pretty 14

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

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

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

what the cost efficiency curve roughly looks like, then 18

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

we appreciate everyone's cooperation and look forward 20

to coming to an understan ding. 21

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

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

please be thinking about what is the reasonable time 24

frame, given our time constraints, for getting all this 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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done. 1

So this has been a good discuss ion. Why 2

don't we take a five

- minute break? When we come back, 3

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

on manufacturing impacts and we will also hear from the 5

advocates about the concepts they wanted to table as 6

they did for the medium vol tage group and that should 7

probably take us up to lunch. 8

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

- minute 9

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

(Recess.) 11

MR. PARKER: Welcome. First, apologies for 12

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

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

since we've just been in the context

-- we've been 15

discussing the design template and so forth and so 16

let's just

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

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

this is the situation. 19

Okay. In order to meet our deadlines, we 20

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

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

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

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

going to be very important. You're entitled to and you 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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need to have time to, you know, take this

-- get the 1

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

answer questions about it before we meet for the next 3

m eeting which will be a very important meeting. 4

So November 2nd is a rigid deadline that we 5

have to work back from for the analysis. 6

I understand from LBL that in order for them 7

to do

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

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

the final engineering data from Navigant by close of 10

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

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

Friday. 13

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

Please rem ind people to announce themselves before 15

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

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

hard

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

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

Richard Parker. Okay. So we have to

-- so 20

the analysis has to go to LBL by Monday. 21

Now Brian and Rob and his Navigant team are 22

fantastic but they are not super human and so their 23

ability to process large amounts of information and if 24

there are any problems with the data is going to be

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you know, is limited. They need time and they're not 1

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

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

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

the best we can with what we have information 5

available. 6

So what we propose to do is send out the 7

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

and John Caskey and Jim Creevy will distribute to their 9

membership. People should feel free, to the extent 10

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

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

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

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

validation or lack thereof, for their comment on the 15

OPS model and if there are differences for their 16

explanation of why there are differences and if the 17

difference is because they belong in a separate class, 18

well, that's one explanation. 19

But if the difference is because the OPS 20

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

minimum the design line, the alternative design line 22

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

they can in the time available. 24

I think basically the rock bottom minimum to 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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allow manufacturers to reply is by next Thursday or 1

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

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

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

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

will hope that there a re not serious problems and we 6

will hope that the validation

-- you know, the things 7

have been gotten right and that the validation works. 8

We have gotten some data from some 9

manufacturers and we can be working on that now to 10

calibrate the information and certainly all the 11

information that comes in will be processed in real 12

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

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

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

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

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

the process. 18

But one of the advantages of a negotiated 19

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

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

resp onses back. 22

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

at least

-- and I will put this out there for 24

discussion, but what we propose to do is basically give 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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manufacturers till Friday to get us their data with a 1

strong encouragement to get it sooner with a commitment 2

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

soon as it comes in. 4

Whatever is the best that can be done with 5

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

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

down and t he information will go over to LBL which will 8

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

cycle cost results as well as manufacturing impacts. 10

If there are problems, we will just have to 11

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

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

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

roughly reasonable results. 15

Did I fairly reflect our discussion, LBL and 16

Navigant? Let me ask them first anything that they 17

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

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

Katie. 20

MS. COUGHLIN: This is Katie Coughlin, LBL. 21

I just want to clarify that we'll be producing not just 22

a new LCC but all of the national impacts analyses for 23

the TSLs an d then those flow into the MIA which we'll 24

also be providing by November 2nd. So you'll have 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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everything, not just the LCC and engineering. 1

MR. PARKER: Good. Thank you. Vijay? 2

MR. TENDULKAR: Who do we submit the data? 3

Any particular person or just

-- 4

MR. PARKER: Why don't we just submit it 5

directly

-- Brian, is it okay if they just send it 6

directly to you? 7

MR. COFFEY: That's perfect. 8

MR. PARKER: Great. Okay. Thank you. Just 9

send it directly to Brian Coffey and everybody should 10

have his information and you do not need to cc me on 11

it. I won't have the band width to absorb it. It can 12

go directly to Brian. Do any of the

-- this is also

-- 13

I believe this is in the business confidential 14

category, right? So it should not come to me. It 15

sho uld only go to Brian. I mean, I operate out of the 16

same confidentiality rules but the less information 17

that's floating around in e

- mails electronically the 18

better off we are. 19

MR. COFFEY: That's right. 20

MR. CARMICHAEL: Rob Carmichael. That's 21

right. If anyone feels that they need an NDA in order 22

to send data, I don't want that to be the barrier to 23

doing so. So please let us know if you would like to 24

establish that and we'll do that. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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MR. PARKER: Right. Since Brian was not 1

speaking into the mike, p eople on the phone, if anybody 2

needs and doesn't yet have a confidentiality agreement 3

with Navigant in order to feel comfortable supplying 4

information, please let us know immediately. Please 5

let Brian know immediately and we'll get that to you 6

and get it executed. 7

Anything else? Okay. We have a plan. I'd 8

like to turn now to something that I think is going to 9

be a really important aspect of this group's 10

conversations which is the Manufacturing Impact 11

Analysis and Rob Carmichael of Navigant has kindly 12

a greed to walk us through a little more detailed 13

presentation of his findings, and I think it will be 14

important as we go along to be very careful and be very 15

clear as to what kinds of impacts, you know, get 16

factored into their analysis and what kind don't g et 17

factored in in terms of profits and markups and so 18

forth. 19

So let's be attuned to that as we listen to 20

the presentation, but with that, I'll just turn it over 21

to Rob. Thanks. 22

MR. CARMICHAEL: Okay. Thanks, Richard. So 23

today, I'm just going to give an overview of the MIA, 24

really want to cover three things. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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First, I want to cover the key issues that 1

manufacturers relay to us during our manufacture 2

interviews. Then I wanted to discuss the small 3

business analysis specifically because that's, you 4

kno w, a key concern in this group, in this subclass, 5

and then I'm going to give a brief explanation of how 6

we calculate conversion costs. So, in other words, 7

what are the capital and R&D expenditures that 8

manufacturers expect to incur as a result of standard s? 9

So, you know, broadly speaking, the purpose 10

of the MIA obviously is to assess the impacts of 11

standards on manufacturers and the heart of it really 12

is determining the conversion costs. What is the 13

outlay in terms of capital that manufacturers will hav e 14

to have to spend that they would not have had to spend 15

in the base case and that's a key clause there, as 16

well. You know, what's happening anyways and what are 17

they doing now relative to what would happen in the 18

standards case? 19

The key, the core of th e methodology really 20

is the manufacture interviews and the data that we get 21

from manufacturers. There are other purposes of the 22

MIA. We also look at subgroups of manufacturers and 23

most specifically and again in this case it will be 24

important to look at s mall manufacturers. We talked 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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yesterday about how this industry tends to be a little 1

more fragmented than maybe the liquid immersed side. 2

Then we also look at impacts on employment 3

and manufacturing capacity. So the key issues, you 4

know, I don't think is any surprise, we've heard some 5

of them already, but core steel availability for grades 6

lower or greater than M3 was one concern we heard. 7

Conversion costs, as already mentioned, and potentially 8

the strain on assets. As you move up in efficiency, 9

typic ally you might

-- one design option would be to 10

use better, higher grade steel which is often thinner 11

which proportionally, you know, lowers throughput, 12

requires investments in capacity to keep the base case 13

level of output. 14

You could also move from abou t butt lap to a 15

step lap. Core construction, that's going to require 16

substantial tooling if you're not already there, and 17

then another concern with conversion costs really also 18

on the R&D side, as we heard from manufacturers, was a 19

lack of experience in u sing amorphous steel which comes 20

into play with the higher efficiency levels, as we 21

know. 22

Then small business concerns, again low 23

volume producers are concerned that they might face or 24

they do face higher material prices than their larger 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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competitors due to just economies of scale and 1

purchasing volumes, and then they have more difficulty 2

in coming up with a business case for higher tooling 3

costs. They're essentially spreading investments, 4

fixed investments over smaller volumes. 5

So the small business a nalysis. By statute 6

and by Executive Order, DOE looks at and determines 7

whether or not a given rule will have an impact on 8

small businesses. Part of that process is to find and 9

identify the number of impacted small businesses. So 10

how many small business distribution transformers in 11

the global dry type segment are there and using the 12

qualification for that, they have to draw a line 13

somewhere. What's a small business? We use the SBA's 14

definition for this industry which is employees less 15

than

-- that are

-- excuse me

-- companies with fewer 16

than 750 employees and that includes all employees of 17

the parent company and all subsidiaries. 18

And after, you know, meeting that threshold 19

judgment, DOE is required to do a regulatory 20

flexibility analysis which the ba sics of it is to see 21

if small businesses are adversely and 22

disproportionately impacted relative to larger 23

businesses by the rule and some of the things that 24

would go into play in that determination are those that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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we talked about in the previous slide, the purchasing 1

volumes having requiring

-- facing uncompetitive prices 2

and spreading investments, fixed investments due to the 3

standard over lower volumes. 4

And typically the output of this analysis is 5

to compare the cost of a standard of a typical small 6

busi ness cost to a large business. Now, you know, in 7

fixed cost basis that's often they can be the same and 8

that's not necessarily a useful measure. So DOE will 9

often look at it on a ratio basis. So a small 10

manufacturer has to spend, let's say, a million do llars 11

in capital. What's that compared to their normal 12

ordinary cap

- X budget and then what's that million 13

dollars compared to the normal large business budget? 14

The same thing on the R&D side, and then that's one of 15

the metrics that can be used in the dec ision

- making 16

process and in the normal rulemaking and then however 17

the committee decides in the negotiation. 18

This chart here is really kind of a crude 19

rendition of how we calculate conversion costs. I just 20

would point you’re attention to the top two box es there 21

right under Methodology. The key component is what's 22

going to happen to steel usage compared to the base 23

case. So in the base case, manufacturers use certain 24

types of steel and we're going to model that and then 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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under different standard levels, we're going to have 1

to, based on the design options that we hear they'll 2

use, estimate what steel and in what quantities they'll 3

have to use in the standards case. So that gives us a 4

change and based on our manufacturing interviews and 5

interviews with equ ipment suppliers, we look at

-- we 6

create understanding of their production processes, 7

where they are in the base case, and understand what 8

sort of capacities they're going to need to meet those 9

changes in steel mix and quantity and given their 10

production process, say they went from a butt lap to 11

step lap. 12

We heard yesterday Thomas say that

-- on the 13

phone, he said that reduces capacity. That's something 14

that's consistent with what we've heard in interviews 15

and so that has to be taken into account in wha t the 16

new equipment needs are and then, based on interviews 17

with equipment suppliers, we develop costs and then in 18

the end calculate conversion costs, capital conversion 19

costs. 20

Also associated with this but not on this 21

chart are product

-- well, what DOE calls product 22

conversion costs. So this is the research and 23

development. This is the testing, the marketing 24

changes manufacturers would need to make. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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MR. PARKER: So, Richard, what are the

-- 1

what things are excluded? I believe you mentioned 2

before i n the conversation with Vijay that costs of 3

purchasing new land or factory space would not be 4

included, is that right? 5

MR. CARMICHAEL: It would be included if it's 6

incremental. So just as an example, if a manufacturer 7

repurposed all of, say, all of the ir space that was 8

using conventional steel to produce transformers for 9

production of amorphous, then, you know, they'd have 10

that space, they'd still have that space, that's not 11

something that would be incremental we'd add. 12

I think Thomas made the point yesterday on 13

the phone that, look, some small manufacturers work or 14

operate in markets that are exempted. They're still 15

going to operate in markets that are exempted after the 16

rule. Therefore, they need that space. Therefore, you 17

know, anything, if the y continue to play in the 18

regulated space, they would need incremental building 19

space. That is captured. 20

One thing I'd add. I'm going to

-- and I'll 21

get to the question I'm going to add to Brian's 22

template. I understand the burden of the data 23

requests , but I'm just going to throw one more question 24

on there and my timeline isn't quite as tight, so maybe 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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we can talk about how we want to do that, but in the 1

base case, not every small manufacturer or every 2

manufacturer actually produces their cores inhouse . So 3

that's something that we have to make sure that we as 4

accurately as possible capture, so as not to overstate 5

conversion costs. They're not going to have to create 6

cores that they're not already making. 7

So low voltage dry type conversion costs. 8

Th is is a little bit

-- these are more concepts of how 9

we think about it. Higher efficiency units, generally 10

you're looking at increased core size. You're looking 11

at thinner laminations, thinner steel, both of which 12

proportionally lower throughput. Again, we're moving 13

from core example but butt lap to core construction 14

will lower throughput. 15

You know, so obviously each of those create 16

needs for more capacity and that starts with equipment 17

and tooling costs that we include in our estimates. 18

So as we spe ak, actually later today, you 19

know, we're conducting interviews with equipment 20

suppliers to try to get a handle on what those costs 21

are per se related to core cutting machines. We'll be 22

adding questions to the template. They'll be very 23

brief relative to the other ones that are on there now 24

in terms of trying to get a better handle on how 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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manufacturers expect to or what costs they expect to 1

incur and then, as I mentioned, I also want to add a 2

question on what share of the core construction is done 3

inhouse for covered products. So for those here and 4

those on the phone, that could be something that you're 5

thinking about in terms of getting that number, that 6

would be real helpful for our purposes. 7

MR. PARKER: Andrew? 8

MR. de LASKI: Andrew de Laski. Rob, do you 9

have any preliminary information on share of core work 10

done inhouse or is that work that is all ahead of you? 11

MR. CARMICHAEL: We do. We don't have enough 12

to consolidate that answer. I suppose

-- yeah. I'm 13

just not comfortable giving that righ t now. We do have 14

some numbers but it's really just one manufacturer. 15

MR. de LASKI: Okay. 16

MR. CARMICHAEL: So I'd rather not. 17

MR. de LASKI: And will your manufacturer

-- 18

this is close to the question, you know, who is the 19

manufacturer? 20

MR. CARMI CHAEL: Right. 21

MR. de LASKI: Right. So will your 22

manufacturer

-- I mean, in this market there are some 23

manufacturers who build their own cores and some who 24

buy cores from core manufacturers and my understanding 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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is that, you know, that may happen across the market 1

but that in particular the smaller manufacturers

-- the 2

smaller the manufacturer, the greater likelihood 3

they're going to their cores. 4

MR. CARMICHAEL: Yes, absolutely. 5

MR. de LASKI: That's my understanding. And, 6

you know, in response to the standard, they may do more 7

of that. So I'm wondering how do you analyze that 8

particular option or that

-- how does that option 9

figure into your

-- so they may decide to buy a miter 10

machine and they might decide I want to actually source 11

my cores. 12

MR . CARMICHAEL: Right. Typically, how we 13

handle that is qualitatively say, look, this is an 14

option, you know, to go and to source the cores, but we 15

-- I think it's incumbent upon us to calculate the 16

costs that they would have to continue doing business 17

as they've done it in the past or as they're doing it 18

now which is to price out that equipment. 19

MR. de LASKI: So then you would then

-- so 20

then if they're sourcing some cores now, so then the 21

approach would be

-- your approach then is that if they 22

source s ome cores now, say they source half their cores 23

-- 24

MR. CARMICHAEL: Right. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  214

MR. de LASKI:

-- and don't half their cores, 1

you're just going to hold that constant? 2

MR. CARMICHAEL: It's usually not that clean 3

and so if they're sourcing 90 percent, then I think 4

it's a safe assumption that they would probably go to a 5

100 percent rather than build it, buy a million dollar 6

machine. So that would be included. 7

MR. de LASKI: Right. That's kind of where I 8

was heading with this, is that it seems like that 9

h olding that constant is probably not a valid 10

assumption. 11

MR. CARMICHAEL: Yeah. That's

-- I think the 12

50 percent, I think we would say 50 percent is

-- 13

that's a business, you know. They're in that business. 14

90 percent I think requires some judgment, an alytical 15

judgment to make that. 16

MR. de LASKI: Well, they're in the business 17

of transformer manufacturing, you know, and how they 18

decide to do that is based on a whole series of 19

decisions about how they decide to do that, faced with 20

the given standards. 21

MR. CARMICHAEL: Right. For some 22

manufacturers. For others, the comment is if we're not 23

building the cores, what business are we in? It's an 24

important part of the value chain for that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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manufacturer. So I think that's

-- you know, again, 1

it's an analy tical judgment you have to make. 2

MR. de LASKI: And will you look at

-- so, I 3

mean, clearly if manufacturers do choose to

-- will you 4

look at impacts on core manufacturers? Is that part of 5

your analysis or are they outside your scope? 6

MR. CARMICHAEL: Those are

-- that's 7

typically outside the scope, yeah, and that is now. 8

MR. de LASKI: Okay. 9

MR. PARKER: Just to follow up on that, Rob, 10

in your interviews with manufacturers, do you ask what 11

would you do under a hypothetical standard? 12

MR. CARMICHA EL: Oh, absolutely. 13

MR. PARKER: And does that question include 14

would you source cores or how would your ratio change 15

or is it

-- I mean, do you have that primary interview 16

data on that or are you in a position then to 17

extrapolate from the current pract ice? 18

MR. CARMICHAEL: We absolutely ask how 19

changes in the standard will affect their business 20

model. So we do have primary information on that. 21

MR. PARKER: But do you specifically ask 22

whether they would source more of their cores from

-- 23

MR. CARMI CHAEL: Yes. 24

MR. PARKER:

-- outside or not? So you 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  216

actually have primary data on

-- 1

MR. CARMICHAEL: Yes. 2

MR. PARKER:

-- what the response would be? 3

MR. CARMICHAEL: So I just don't want to 4

overstate it. We ask the question. We get responses. 5

It's not a complete survey. You know, we're not 6

getting the entire population of manufacturers and the 7

data isn't as clean, you know, as a core. You can't 8

just cut through it and say, okay, these ones 9

definitely will, these ones definitely won't. It's a 10

business decision that frankly we haven't spent a lot 11

of time thinking about. 12

MR. de LASKI: Good point, Rob. You're 13

asking them to give you a response to a business 14

decision that hasn't posed itself as a business 15

decision yet. So any company is not g oing to be in a 16

position to put the kind of resources in answering the 17

questions they would to put into it once it became

-- 18

if and when it became a real decision. 19

MR. CARMICHAEL: Right. 20

MR. de LASKI: So you can't

-- how you weigh 21

that is

-- 22

MR. CA RMICHAEL: Requires judgment, yes. 23

MR. PARKER: Better than not asking the 24

question, though, I think. Vijay? 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  217

MR. TENDULKAR: This is Vijay from Onyx. One 1

of the problems we face with this is we are not buying 2

the cores. We are buying the cores which are mitered. 3

We do not have a facility in our company to miter the 4

cores. So we're outsourcing that from the local 5

supplier and normally the turnaround time is about 6

three days to five days after we place the order kind 7

of thing because our manufacturing cycle is very short, 8

four to five days for most of the things. 9

We're also thinking about putting the machine 10

ourselves on

-- this, of course, is as we discussed 11

yesterday, half miter or whatever we want to call it, 12

but simple miter. We don't have room. We are looking 13

for it but we can't take our standard butt lap machines 14

out because those are used for making some of the other 15

transformer equipment and we need those. So that is 16

the thing and we have a faster turnaround kind of 17

thing. 18

The other probl em we face when we buy the 19

cores from outside, leave aside the amorphous core, 20

there are only a couple of manufacturers or something, 21

we know where the material is coming from and whatever 22

it is, but when you go to the non

- oriented material, 23

like the M6, M 5, M3, we don't know where that material 24

is coming from from that supplier. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  218

The ticket says it's coming from particular 1

supplier but sometimes we get

-- we process car bumpers 2

called M6 and then we don't know what it is and we have 3

to heat it up. So I don't know where we are going. I 4

mentioned that in my comments submitted to the 5

committee, but this is one of the problems we face if 6

we get it from outside, that we do not want to put the 7

facility inside and if you want to put something 8

inside, now we ar e stuck with the closed space. We do 9

not have much of room in our 60,000 facility and if 10

anybody wants to picture it, next time somebody comes 11

in for me, somebody will give you the picture and see 12

how much room. People have to move around. There is 13

not much room for the people to move. 14

MR. PARKER: Yeah. I'm not sure how easy it 15

is to model that into a nationwide model. So that was, 16

I guess, the point of my question earlier about the 17

degree to which the need for more floor space can be 18

factored into the model. Right. 19

MR. NADEL: This is Steve Nadel from ACAAA. 20

It strikes me, and I understand we have some particular 21

issues here, as Vijay pointed out, with small 22

manufacturers, that when you do your small manufacturer 23

analysis, you might need to do i t two different ways 24

and see which has the bigger or smaller impacts, you 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  219

know. 1

One, just assume, yeah, use to Vijay as an 2

example, he'll have to do an addition to his factory 3

and buy this machine, that's one route, and that has 4

advantages and disadvanta ges. Another route is to 5

increase his procurement, of course, which has 6

advantages and disadvantages and just look at it both 7

ways. 8

MR. CARMICHAEL: I think that's a great idea. 9

That's something we can do. 10

MR. PARKER: Okay. So that's helpful. Yes, 11

John? 12

MR. CASKEY: Yeah. John Caskey with NEMA. 13

Just one other thing to add. I mean, I think the 14

methodology that you laid out, you know, particularly 15

addressing some of the small manufacturing issues makes 16

sense to me. 17

One of the things that wasn't missing that 18

I've heard basically from going to some of the 19

manufacturing facilities is that when there are sort of 20

shortages of steel and I don't know if that was back in 21

2005 or 6 or somewhere around that time frame, that it 22

seemed like when I talked to the big manufacturers that 23

are part of NEMA, they didn't really express too much 24

concern with not being able to get their allotments 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  220

that they needed to manufacture their transformers, but 1

in the case of some of the small manufacturers that I 2

talked to du ring that same period of time, they were 3

basically not only saying that there is this price 4

issue which I think you've got covered in there, that 5

they're buying smaller quantities, but, in addition to 6

that, it seemed like the quality that they were getting 7

had more variation in it than the big guys were getting 8

and I don't know if that's just the nature, if that's 9

true or not, but that was an issue that was brought up 10

to me at that point. So that's another parameter to 11

think about in that small business eq uation. 12

MR. CARMICHAEL: Okay. Thank you. 13

MR. TENDULKAR: I just want to follow up on 14

what you just said, that we had lot of difficulty 15

getting the steel from the American manufacturers in 16

that time period and whatever steel we got, we had the 17

designs made years ago, tested, particular loss level, 18

same design repeated with the new batch of steel, and 19

it was horrible. We could not accept that transformer. 20

The problem we face, we have got a short 21

delivery cycle of four to five weeks. We know the 22

prob lem. There is a problem with the steel when the 23

transformers are complete in the test department and it 24

is supposed to ship next day or whatever it is and we 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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find the problem with the steel and we have got an 1

irate customer at our end and we have got that steel. 2

There is no way we can say come on, look at the steel 3

and do something. We have to do something else with 4

that. 5

This is the problem we face. I don't know 6

how we can solve that. We are not the manufacturer 7

where we make a 10,000 copies of the s ame design again 8

and again and again and we say stop the manufacturing 9

line, okay, get the manufacturer of the steel here, 10

whatever it is, and do something. That's not the way 11

we can work. 12

MR. PARKER: So that's sort of a hidden 13

conversion cost. In oth er words, the cost of expanding 14

to new suppliers whose reliability is not yet 15

determined and may in some cases prove to be not there. 16

MR. TENDULKAR: it is not necessarily with 17

the new supplier but we don't know where we are getting 18

the steel. We are ge tting from one supplier who told 19

us to get the steel and he says it came from this 20

supplier X but we don't know if it came from supplier 21

because if you look at the steel, there are no markings 22

on it telling us which supplier is making that

-- 23

manufacturer is making that steel. That's the problem. 24

MR. FERNSTROM: Gary Fernstrom, PG&E, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  222

representing the California Utilities. Like I did in 1

the medium voltage transformer discussion, I'd like to 2

emphasize the value I see in this DOE

- facilitated 3

negotiation pr ocess. I think the key stakeholders can 4

come to a much higher level of mutual understanding 5

through this process and it's really excellent 6

contrasted to the traditional more adversarial process. 7

MR. PARKER: Well, we'll see if it stays that 8

way. I hope it does. We'll know better by the end of 9

the next meeting. 10

Did you have more slides, Rob? 11

MR. CARMICHAEL: No. That's it. 12

MR. PARKER: One question that I had is 13

whether you are in a position to assess impacts on 14

profit margins either as a result

-- from higher 15

standards either as a result of modifying what used to 16

be a premium product by raising the standard or by 17

requiring the movement to outsourcing and so forth. 18

Is that already done and is that something 19

that could be done? 20

MR. CARMICHAEL: Yes. Thanks, Richard. 21

That's a good question. It's something I didn't cover. 22

I wanted to focus the attention on conversion costs 23

because I feel that's the biggest driver that should be 24

discussed and those are hard numbers. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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We do an industry cash flow analysis. We do 1

it in something called government regulatory impact 2

model and in that situation, we find

-- we determine 3

the industry value in the base case of distribution 4

transformer manufacturers and then flowing through 5

that, we have

-- obviously it' s an income statement 6

balance sheet cash flow statement for the industry as a 7

whole. So that's where the input from the shipments 8

comes to drive revenues. 9

In our interviews, we asked a series of 10

questions on financial parameters. What do you spend 11

on S G&A, what do you spend on R&D, cap

- X per year, and 12

all the key financial parameters. Then we look at how 13

that changes in the standards case by applying those

-- 14

by applying basically the outputs that come from the 15

engineering analysis. Which designs are used and sold? 16

What are the costs associated with those designs? 17

In this case, we use the LCC, as well, 18

because it selects the models that are presumed to be 19

being sold in the standards case and we include the 20

conversion costs that we talked about which again is 21

the biggest driver. 22

Then to Richard's point, there's also some 23

assumptions about how what happens to markups. In 24

certain industries, we find that products are purchased 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  224

on efficiency. You can command a much higher premium 1

on certain products. In this industry, that's not 2

something that was reflected substantially. We heard 3

that most purchases are based on first cost, but there 4

is room for first price sensitivity, so to speak. So 5

how we capture that is to, in the standards case, model 6

a scena rio in which manufacturers may not be able to 7

receive the same margins that they received in the base 8

case for all levels. 9

So what happens is

-- say, effectively at the 10

end of the day what happens he marks something up at 11

1.4 in the base case, now you're only able to receive a 12

markup of 1.

-- I'm just throwing numbers out but 1.38 13

or 1.35. That effectively lowers your operating profit 14

margin and then, in turn, lowers the industry value in 15

the standards case. Essentially, you're not able to 16

recoup those investments that were required for the 17

standard and that yields the output of this model which 18

is essentially a change in industry net present value. 19

So if the industry was, again throwing out 20

numbers, 500 million in the base case and at a standard 21

leve l, standard level 3, we determine that the 22

industry's worth 475 million, that's the change in the 23

industry value. So typically when you look at it in 24

the course of rulemakings, you'll see that the farther 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  225

out you go, the more prices increase and the more 1

perhaps shipments are reduced as a product of that or 2

margins are compressed as a product of that or the 3

higher conversion costs are relative to revenue, then 4

you see a decline in industry value as you go to higher 5

efficiency levels, not always but typical ly. 6

We have not done that analysis yet. That has 7

not been done. 8

MR. PARKER: It strikes me that the net 9

present value is a good indicator but it's a highly 10

aggregated one and I'm wondering if there's any way to 11

get this down to a level that would be s ort of more 12

accessible to the average small business person as to, 13

you know, what the prediction is for profit margins, 14

sort of representative manufacturer level, or is that 15

just not something that's possible? 16

MR. CARMICHAEL: That's just not something 17

t hat's possible and protect confidentiality. We do not 18

give that kind of

-- that level of detail for

-- 19

MR. PARKER: No. This would be something 20

that the OSP would churn out. It would be a computer 21

output. It would not be reporting of actual individua l 22

data. 23

MR. CARMICHAEL: That's more upstream. It's 24

way, way upstream. So that's not something that's 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  226

calculated. 1

MR. PARKER: Any other questions on this? 2

Move on? Comments on Manufacturing Impact? 3

So could you just recap what are the items 4

that you were going to add to the Engineering template? 5

MR. CARMICHAEL: Sure. So we're going to be 6

asking what your expected conversion costs would be at 7

each efficiency level associated with converting to the 8

designs you expect to be to make up the bulk o f your 9

production. 10

You know, I think it would be helpful for us 11

to

-- and we'll put a note in the spreadsheet to this 12

effect, but, you know, at what point do you have to 13

move

-- do you expect to move completely from butt lap 14

to, you know, step lap core c onstruction, those sorts 15

of things. And then additional

-- we'll be asking 16

about additional floor space, to Vijay's point, and 17

then we'll also be asking about what share. 18

MR. PARKER: And would you be asking about 19

outsourcing, as well? 20

MR. CARMICHAEL: Yes, yes. So then we'll be 21

asking about what share of your core construction is 22

done inhouse first covered products. 23

MR. PARKER: At various efficiency levels. 24

MR. CARMICHAEL: At various efficiency 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  227

levels. Thank you. 1

MR. PARKER: Great. Does th is seem like a 2

reasonable way to proceed? Manufacturing Impact. I 3

dwell on this because I know that it's important for 4

this market segment and as I told John during the 5

break, you know, we encourage them to send both the 6

Engineering template and suppleme nted by the 7

manufacturing input to their members, not only who are 8

on the committee but those especially who are not, so 9

that we can have a chance to hear from them. 10

Great. Well, without further ado, why don't 11

we at this point move on to our next item o n the agenda 12

and we'll just try to get people out of here by lunch 13

time, if people are okay with that. It's 10 till 12 14

now. I thought if we worked until about 12:30, I think 15

we should be pretty good. 16

What I thought was that, Steve, I know you're 17

busy or Andrew, whoever would like to throw out their 18

concepts. I thought that was a useful contribution to 19

the medium voltage and if you'd like to give us your 20

thoughts on that in this context, that would be 21

welcome. 22

MR. de LASKI: Sure. So this is Andrew de 23

Laski from ASAP again, and for those of you who are 24

here for the liquid immersed and medium voltage dry 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  228

type discussion, I mean, many of the general principles 1

that Steve outlined in that discussion certainly would 2

apply to our approach to this negotiat ion, as well, in 3

terms of the general principles. I know several of 4

you, of course, weren't here for that discussion. So 5

I'll recap them in the same level of detail and look to 6

my colleagues to fill in the gaps that I might miss. 7

As Gary said, we think there's really good 8

opportunities in this sort of negotiated rulemaking 9

process for all stakeholders to get the results that 10

ultimately are better for them than might happen 11

through a contestable rulemaking process. That's why 12

we're here. That's why we' re engaged in it. 13

We've had great success in the past with 14

negotiated rulemaking negotiations generally on a 15

private basis, that is, not in this case sponsored by 16

the U.S. Government, thanks to John and his team. In 17

some cases in the past when we've don e negotiations 18

with industry and the trade associations, we've had 19

participation from DOE and their consultants but in 20

this case the leadership from them is appreciated and a 21

different kind of approach, one that we think can work 22

equally well. 23

Based on o ur experience, we've a few things 24

that we learned through the process that sort of shape 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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our approach to this that we want to share with you. 1

One is that, you know, for negotiation to be 2

successful, you know, we find that everyone has to 3

give, be willing to give some. If everyone walked in 4

with a certain set of views that, you know, I've got to 5

have this, I've got to have that, and there's not 6

flexibility, that often then we find ourselves kind of 7

in a spot where things don't move ahead. 8

There's a disti nction between what you might 9

want as your ideal outcome going in and what you can 10

live with and we think it's important that people keep 11

those concepts in mind, that what you want in an ideal 12

world might be different than what you can live with, 13

and what you can live with often is what's necessary to 14

get to yes in negotiated rulemaking and negotiation of 15

any sort. 16

As we approach this negotiation and if 17

negotiation is not successful, it would be a contested 18

towards a normal DOE rulemaking process, you kno w, we 19

look to the DOE analysis to inform what we think are 20

the likely outcomes. 21

I think that it's important that we're all 22

realistic about what would happen if we go to a 23

contested rulemaking, that there's going to be a final 24

rule, there's going to be a new standard one way or the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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other, either through the negotiation and then a 1

recommendation to the government based on this 2

committee or, because DOE's going to set one on their 3

own with the parties taking different views and they 4

have to make decisions, a nd I think if we're all 5

realistic about what we think DOE would do in a 6

contested rulemaking that helps us to ultimately reach 7

an agreement. 8

If there's some party or set of parties who 9

have unrealistic expectations, that can stop a 10

negotiation from being successful. If I think we're 11

going to get TSL8, you know, TSL8 or bust, you know, 12

that's not realistic. It's also not going to lead to a 13

successful negotiation and I would say, on the other 14

extreme, TSL0 or bust isn't going to get us anywhere 15

either, ju st to throw out some numbers. 16

Our objective is the large cost effective 17

energy savings. What we care about is saving energy 18

that's cost effective, based on the analysis done by 19

DOE and their consultants. 20

So that speaks to, I think, some of the 21

discuss ions we've had over the last couple days that 22

we've talked in particular some of the discussions that 23

Vijay has initiated about various niche products, you 24

know. A part that has a tenth of a percent of the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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market isn't going to deliver large national ener gy 1

savings. So we generally find ourselves to have more 2

flexibility, you might say, you know, if you're going 3

to cause less disruptions to get to a tenth of a 4

percent of the savings of an overall opportunity, but 5

yet the cost to get there in terms of disr uption to 6

manufacturers or other aspects in the market, you know, 7

that's a place that we generally find ourselves to have 8

more flexibility, just to use your example, you know, 9

that you pointed out and I suspect there may be others 10

that may come to the fore as we have our discussions. 11

MR. PARKER: What Andrew says, let the record 12

reflect he's speaking to Vijay. Thank you. 13

MR. de LASKI: Yeah. So we had similar 14

discussions in the liquid immersed about different 15

types of transformers that represent a rel atively small 16

share of sales but perhaps a disproportionate share of 17

potential disruption if the standards were increased 18

significantly. 19

Timing is a important aspect of a 20

negotiation. By timing, not the timing of the

-- the 21

timing of when the rule goes into effect. When do you 22

as a manufacturer have to comply with that rule? We 23

suggested this in our very first meeting, that what 24

we've been talking about the last couple days is that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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some of the standard levels that are being evaluated by 1

DOE would invol ve substantial investments on the part 2

of manufacturers. 3

Obviously if you have to do that in 12 4

months, that's very difficult. If you had to do it in 5

10 years, that's a more viable option, you know, and 6

there's a whole range of times in between that tha t 7

create different levels of challenge. If you had to 8

build a factory, you've got to increase your floor 9

space that takes more time. If you've got to, you 10

know, change how you approach your manufacturing of the 11

product, time can be an important element. 12

We have found this to be an important aspect 13

of being able to get the yes in negotiations, being 14

able to negotiate on the dates, and, too, I talked to 15

John briefly yesterday about we had posed this question 16

to DOE in the first meeting about whether DOE t hought 17

-- what's DOE's opinion on whether we have flexibility 18

on dates and we talked after the meeting yesterday, 19

maybe it was two days ago now, and Don reminded me that 20

in several recent rulemakings, we have reached 21

agreement with manufacturers on implem entation dates 22

that are different than what DOE is required to do and 23

that DOE has adopted those implementation dates through 24

a process called a direct final rule. They've done 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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that for home furnaces, for central air conditioners, 1

for dishwashers, clothes washers, refrigerators. 2

So for a whole series of products we use the 3

dates, in some cases we went sooner than DOE was 4

supposed to do, in some cases we went longer, as soon 5

as 18 months in one case and as long as

-- not in this 6

recent docket, not in this recent slew. A year, six 7

months longer. So that's been a thing

-- so that the 8

DOE has done that and John reminded me that that's an 9

option that we could certainly pursue in this. If we 10

were to negotiate a different date than what DOE is 11

supposedly mand ated to do, we could use the DFR 12

process, the direct final rule process to achieve a 13

date different than what might otherwise be the default 14

date in the contestable rulemaking. 15

In the contested rulemaking, they're going to 16

use the dates, I would suspect, that we should expect 17

the kind of lead times that would be default, and I 18

don't know what that is in this rule. 19

The final point that I'd make is that when 20

we, as a generic approach to rulemaking, we generally 21

are looking to the levels, the efficiency le vel that 22

would achieve the maximum savings that are cost 23

effective for consumers, for the consumers of the 24

equipment, based on DOE analysis. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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We also look very seriously at the level that 1

minimizes life cycle costs and those two things are 2

often

-- someti mes are the same, sometimes they're 3

slightly different. So minimizing the costs for the 4

consumers of the product over the life of the 5

equipment, those are the levels that we typically look 6

at. 7

The analysis that DOE has published thus far 8

for these produ cts indicates that for these products 9

that would take you into materials that are very rarely 10

used in low voltage dry type transformer manufacturing. 11

It would take you into the amorphous material. It 12

would take you into the highest grade of conventional 13

s teel. The HO products and the analysis thus far shows 14

that those are the levels that would minimize the 15

costs. Now this analysis still being revised. We'll 16

see what it looks like in the next rulemaking. 17

We hear you. We hear your concerns about 18

that k ind of

-- that this is manufacturers

-- these 19

products in this market using those materials has been 20

extremely rare. The most advanced materials, such as 21

amorphous, have not been, you know, used in this 22

market, except in exceptional circumstances. 23

So, on the other hand, you know, our takeaway 24

from the analysis thus far is that moving to high grade 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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silicon steel M3 looks to be sort of something that is 1

highly cost effective and highly doable, not without 2

cost to manufacturers to make those kind of change s 3

where they haven't already but it seems to be highly 4

doable and using the more advanced construction 5

techniques. 6

So that's our takeaway from what we see from 7

the analysis thus far. Again, using the principle of 8

what you want in an ideal world, in an i deal world we 9

want to go to the maximum levels that yield the most 10

savings that are cost effective but we're hearing you 11

that to do that would be extremely disruptive to the 12

industry and in some cases impossible. So we're 13

already saying there are some are as where what we can 14

live with is different than what we want in our 15

theoretical world. 16

So that gives you, I think, a flavor for sort 17

of some of the ways that we're approaching this 18

rulemaking at this point. 19

Steve or Robin or Tim? 20

MR. FERNSTROM: Gar y Fernstrom, PG&E. I have 21

a follow

- up thought. 22

In our discussion, we talked about the useful 23

life of these products and it seemed to me that some of 24

the estimates were the life of the building 50 years, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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30 years, so on. I think we'd all agree that dry type 1

transformers in buildings and industry are long

- lived 2

products. 3

We really need to recognize that when we 4

think about the economic value of these things. 5

They're going to be with us for a long, long time and 6

the consumers that buy them tend to take a first cost, 7

lowest first cost look at how they procure things. 8

The role of standards is to, in my mind 9

anyway, is to achieve some sort of balance between 10

what's good for the economy, what's good for society, 11

what's good for the environment, relative t o what's 12

good for next quarter's earnings. 13

So I think there's an important role in 14

making some progress toward a higher level of 15

efficiency with these products which I believe DOE's 16

analysis is showing is cost effective. 17

MR. de LASKI: An additional po int that Steve 18

reminded me that we discussed which is that one of the 19

areas, you know, we understand it particularly in this 20

market that there are diversity of manufacturers in 21

terms of the size of the manufacturers and their 22

capacity to make investments a nd access to capital. 23

One of the things that

-- you know, yet on 24

the benefit side of the ledger, you're looking at a 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  237

rule that I suspect will have a net present value of 1

benefits to energy consumers measured in the billions 2

of dollars. 3

So for wont of a million dollars, to use the 4

exception, to buy a mitering machine, you know, we 5

don't want wont of a million dollars to be able to buy 6

a mitering machine to be in the way of several billion 7

dollars in net present value benefit to energy 8

consumers, you know

. 9

So if I could take a million dollars from 10

this billion in benefits and buy you a mitering 11

machine, I would do it, right, but I can't, but it is a 12

question, I think, for the group and for us to wrestle 13

with which is how do we address the challenges for 14

manufacturers to make the necessary investments so that 15

the public can get the benefits of improved efficiency. 16

In the past, as parts of negotiations, now 17

this is separate from what we recommended to DOE, but 18

in some negotiations in the past, we have inc luded 19

elements to help manufacturers make investments. Those 20

have included things like tax credits, mutual support 21

for tax credits. 22

Now the environment today on Capitol Hill may 23

not be such that, you know, Jim and John would tell me 24

that we could go up there and lobby for tax credits 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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together and have success, but I think I would put that 1

on the table, that side agreements to try to find ways 2

to address the cost, the investment cost is something 3

that we see as a viable option and one that should be, 4

you know, should be actively discussed. 5

Steve, you've done a lot of work in this 6

area, so I don't know if there's something you want to 7

add to that. 8

MR. NADEL: No. You've covered it. 9

MR. de LASKI: Okay. 10

MR. PARKER: Thank you. I think that's 11

helpfu l. I don't know if anybody wants to respond, any 12

agreements, thoughts. John? 13

MR. CASKEY: Sure. John Caskey from NEMA. 14

Thanks. I think everything that you've said makes a 15

lot of sense and I think we're all here certainly to do 16

what's right for the e conomy and what's right for the 17

U.S. and things like that, sort of mom and apple pie. 18

So we do want to drive forward with that, but I guess a 19

couple different points. 20

One of the points is that I don't think we 21

have the confidence in the data yet to be a ble to say 22

what is the right level and that's one thing that very 23

much concerns me, is to get to a point where at least 24

the manufacturers, just as I've said with the oil 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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filled and the medium voltage dry type, to get to a 1

point where the manufacturers and even the users feel 2

that the relationship between the efficiency 3

improvement and the dollar cost investment is in the 4

right ballpark. So that's one of the critical things 5

that I want to get to before I can say, you know, keep 6

it the way it is or go up or whatever. I don't know 7

what the right answer is yet, until I have confidence 8

in the data that's in front of me. 9

So I think there is

-- you know, in my note 10

of last Saturday or whatever, I laid out sort of a 11

methodical process to get to that so that we c ould feel 12

that we had the right homework done so that we could 13

make an informed decision about that. 14

The other thing for me, particularly 15

personally, is that when we get to a future that 16

requires us to go to one particular type of design or 17

one particula r type of material, particularly if there 18

may be a limited supplier of that material, that very 19

much concerns me. 20

I mean, we get to just a bad business 21

decision, you know, so what I want to personally see is 22

where we've got a plot of sort of, you know, E L levels 23

where you have a variety of ways for a manufacturer to 24

substitute copper for steel or whatever it might be in 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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order to still come out with an effective cost 1

effective design. 2

You know, I don't want to see where, you 3

know, one particular, you kno w, approach amorphous is, 4

you know, $2,000 and to have a reasonable substitution 5

of design is $3,000. That's not a good point on the 6

curve from my perspective. 7

If one's 2,000 and one's 2,100, I'm sort of 8

fat, dumb, and happy, and let's move on. So I th ink 9

some of those basic things need to be taken into 10

account and certainly again, as I've said before, NEMA 11

represents a variety of manufacturers and, as Andrew 12

has stated, we want to make sure that both, you know, 13

the larger companies are successful going forward and 14

hopefully the smaller companies are successful going 15

forward and they can continue to stay

-- keep their 16

place in the marketplace going forward. 17

So I think that's important. So, you know, I 18

think there is a lot of optimism for going higher in 19

efficiencies and that hopefully can be proved cost 20

effective. To be honest, at the same time I'm reminded 21

of some what I would consider to be failures in the 22

past relative to not necessarily electrical energy 23

efficiency but some other water conservatio n and things 24

like that. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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You know, I've got a clothes washer at home 1

that's probably, I don't know, eight years old or 2

whatever and it does a relatively good job. I hear 3

people that are buying the new low water

-- the water 4

conservation devices and, you know, I go in the room 5

and five of the people in the room have already 6

purchased that and they said the thing is not 7

functioning very well. I've got to run the clothes 8

there two or three times to get them clean. 9

So that at some point you get to an ene rgy 10

conservation or a water conservation design that is not 11

working very effectively. So I want to make sure we 12

avoid that sort of thing if we go too high in 13

efficiencies. So I think that's it. 14

I don't know what the other manufacturers 15

want to add to t hat. 16

MR. TENDULKAR: The only thing I'm talking 17

about he said is correct. A lot of times we look at 18

the efficiency and not the real purpose of the 19

particular equipment we buy, like you said, a clothes 20

washer that has to wash the clothes perfectly kind o f 21

thing, and the same thing with the transformers, too. 22

What is the purpose of the transformer? 23

Different applications have different kinds of 24

transformers and different kinds of requirements and 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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the performance of the transformer and the safety of 1

the transformer are the first important criteria and 2

everything else comes later. Efficiency also comes 3

later. 4

I'm not saying efficiency is not important. 5

It is important. But it is not the first thing you 6

have to look at when you design any equipment, be it 7

transformer or any clothes dryer or anything. 8

So performance of the equipment and 9

particularly the kind of market we are in is very 10

important kind of thing. There's liability and the 11

performance. Those are the important issues. We 12

cannot ignore th ose by just looking at the efficiency. 13

MR. de LASKI: This is Andrew again. A 14

couple points in response. Thank you, John and Vijay, 15

for that. 16

John, just in response to your first point 17

about having a variety of ways to substitute, I think 18

that's part of what I was addressing with my comment 19

about materials and that, you know, one of the things 20

that we also have observed with standards is that, you 21

know, we go through

-- John and his team do lots of 22

work to come up with models for what they think the 23

m arket's going to do, what will be the most cost 24

effective way to comply with the standard, and they do 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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interviews with your manufacturers, your members, and 1

others to get great data and projections but they're 2

just that. They're projections of the future, and in 3

practice, what happens typically is that manufacturers 4

find a variety of ways to comply with standards that 5

are usually different than what Navigant and the others 6

predict because this is a different question, right? 7

When you're going to apply

-- all the 8

manufacturers are then applying all their expertise and 9

capital to figuring out how they're going to comply the 10

best they can to provide profitable products that meet 11

consumers' needs, that are safe, that perform well, and 12

those that don't, of cou rse, are going to lose market 13

share. So that's going to be

-- the market has been a 14

very powerful driver to finding ways to

-- you know, we 15

thought, for example, you know, that

-- I don't want to 16

go into examples. It just gets us into side 17

conversations that are probably not that useful. 18

But I think that it's hard for us to know, 19

for us to predict sitting here today how each and every 20

manufacturer is going to comply with a given standard 21

that goes into effect in, say, 2016 and we shouldn't 22

kid ourselves that we can predict that precisely. 23

With regard to performance, agreed, you know, 24

we also think that products

-- one of the principles of 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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being energy efficient is to provide high level service 1

at the same time. We don't think energy efficiency 2

should be associated with lower performance. That 3

said, I mean, for this particular product, I'm curious 4

if you're aware of any performance problems for 5

products meeting the efficiency levels that are being 6

discussed, that have been mapped out by DOE. Are you 7

a ware of any performance problems? 8

MR. CASKEY: John Caskey, NEMA. I'm not sure 9

if you mean existing TP1 or higher efficiency 10

standards. 11

MR. de LASKI: I mean either. 12

MR. CASKEY: The limited number of 13

performance

- related issues that I've run into re lative 14

to dry type transformers, low voltage dry type 15

transformers is sort of what Vijay had mentioned 16

earlier and it's basically noise and I don't know how 17

prevalent that is today or how prevalent that will be 18

with future designs but that's really the onl y, you 19

know, negative thing that I've ever heard about low 20

voltage dry type transformers and, well, the heat is an 21

issue but I think it's a minor thing. 22

MR. de LASKI: So noise and heat. 23

MR. SMITH: Andrew, Bob Smith, Federal 24

Pacific. I think that the two things that I see that 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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would give us

-- put us into a lower performance 1

category, so to speak, would be an increase in size and 2

weight. We may think we can minimize what Wes 3

Patterson talked about on network transformers during 4

the medium voltage mee ting of the increased size not 5

fitting into existing vaults, but I would like to point 6

out that while a network transformer may be a very 7

small portion of the overall medium voltage market, it 8

is serving the most important and critical customer 9

loads in th e country. 10

So a little perturbation of a performance 11

issue in terms of a product that will not fit, it can 12

be a very devastating thing to the people involved in 13

trying to work with that product. But I don't see 14

anything that we're talking about on the l ow voltage 15

dries except for size and weight, the increase of those 16

two attributes being a problem. 17

MR. PARKER: So as I

-- go ahead. 18

MR. de LASKI: So to follow up, John, it's my 19

understanding that, in general, as you get more 20

efficient, you have less heat. So the heat

-- so I 21

guess that's news to me, that heat's a concern as you 22

go up in efficiency. So I'd like to learn more about 23

that. 24

MR. PARKER: Vijay, do you want to respond to 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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that point in particular? 1

MR. TENDULKAR: Yes. If I want to make an 2

energy efficient transformer, let's say, and I'm not a 3

person who really cares much about the life of the 4

transformer, say for example, what I have to do, I have 5

to make a smaller coil. So I will reduce the face to 6

face clearances or I will reduce the winding to the 7

ground of the core top and bottom clearances. The 8

transformer may not fit today. It may fit five years 9

from now but by then it is out of warranty. You follow 10

what I'm saying? But I met the efficiency requirements 11

in the lifetime of the transformer. The transformer 12

was efficient as you mentioned. 13

So there are ways to cut the corners and some 14

of the

-- for example, the heat issue. If the heat 15

issue is there, the heat issue may not surface 16

immediately. It may surface five years from no w, 10 17

years from now, but we are here talking about 40 years' 18

lifetime and one of the things we forget about the dry 19

type transformers compared to liquid

- filled 20

transformers, and I design a lot of liquid

- filled 21

transformers in my lifetime, first 20 years o f my 22

professional life was designing liquid

- filled, if my 23

winding temperature rises high, I can reduce it by 24

adding more radiators. There is nothing I can do on 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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the dry type transformer. There is no way to add 1

radiators. I do something else to cool it. 2

So I'm stuck with whatever the temperature 3

rise I get. How do customer know whether it is a right 4

temperature rise or not? He will not. And those are 5

the kind of things I'm saying. I'm not saying that 6

every manufacturer wants to do it on a proposal o r 7

something but this can happen and those are the kind of 8

things we talked about. 9

The other thing I just mentioned in my notes 10

the other day and the issue that we noticed another 11

problem with the core losses. The core losses 12

occurring to everybody says, they don't change 13

according to the temperature. We noticed they do in 14

certain batches of the steel, not nece ssarily in all 15

batches of steel, and that has gone up quite a bit, the 16

losses in the core. 17

Losses in the core went up. Of course, the 18

temperat ure and everything is going to go up and the 19

transformer is going to fail prematurely. How do we 20

account for all these kind of things? So I'm just 21

trying to tell you is just not look at the efficiency. 22

There are a lot of other parameters in the performan ce. 23

MR. PARKER: Does that phenomenon, that 24

problem of temperatures increasing over

-- with the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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delay after 10 years, does that

-- you said that 1

becomes worse as it becomes more efficient as a problem 2

or is that a constant complaint? 3

MR. TENDULKAR: Wh en you have the higher 4

temperature on an installation, the general rule is 5

every 10 degrees rise in the temperature, it reduces 6

the life of the transformer by half. So if your 7

transformer design is supposed to work for 30 years, 8

the temperature goes 10 de grees high, it will last 15 9

years or if it's 20 degrees high, it will last about 10

seven and a half years. But it will not last as we 11

predicted according to what DOE thinks, what they call, 12

investment, return on the investment. That is not 13

going to happen. 14

So there are a lot of other factors. When we 15

say performance, performance is not one factor, like a 16

sound level or the loss of

-- there are so many factors 17

in the performance and those all have to be talked 18

about and most of the engineers think about i t when 19

they design it and not all those factors can be found 20

in the design of something else. Some of those are by 21

experience, by particular knowledge, whatever it is. 22

MR. de LASKI: So if I could respond? I 23

mean, I think the thing that's helpful for u s to 24

understand, a manufacturer can cut corners on a low 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  249

efficiency transformer or a high efficiency 1

transformer. So the thing that we need to understand 2

is what is it about going to higher efficiency that 3

leads to performance problems? You know, that's the 4

kind of thing that we need to understand as we go 5

forward. 6

I understand the size and weight. That I 7

understand. My question then for Navigant is will we 8

-- does your data or will your data give us size and 9

weight? 10

MR. CARMICHAEL: I'm going to back into that. 11

MR. de LASKI: I'm sorry. Brian, I looked at 12

you. 13

MR. COFFEY: We look alike, unfortunately for 14

him. Andrew, I think you've requested this in writing 15

already and it's something that we've committed to 16

providing, these plots of weight versus efficiency and 17

core weight versus efficiency. So everyone can see 18

what the effect of increased efficiency could be on the 19

transformer dimensions. 20

MR. de LASKI: On the transformer, not just 21

the core, is that right? 22

MR. COFFEY: Both, both item s. 23

MR. de LASKI: Because I think Bob's point is 24

that they have to fit in the same closet or it's got to 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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fit in the same

-- 1

MR. PARKER: Is that also included in the 2

Engineering Validation template? 3

MR. COFFEY: No, that's not part of that 4

package. That's something that we would provide 5

scatter plots similar to what we've done in the past 6

but instead of cost and efficiency, it would be, for 7

example, core weight over efficiency. There's also 8

been a request for cost over losses. So there are a 9

couple of these items that I've said in my presentation 10

that we'll be sending out electronically. 11

MR. de LASKI: So just a follow

- up , Brian. 12

You know, there's the low cost design at a given 13

efficiency level that may have a certain size and 14

weight. There may be a design that costs you five 15

percent more that has a smaller size and weight. We're 16

going to be able to tell that from your analysis or are 17

we just going to see the size and weight and the lost 18

cost design? 19

MR. COFFEY: We'll present that data for al l 20

of our designs, so you'll be able to look at the point 21

cloud and see. Generally how it works is if you stay 22

within a steel grade, moving up in efficiency will make 23

the transformer bigger. One way to mitigate that is to 24

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techniques. 1

So you can go up

-- you know, if you start 2

with an M12, if you want a more efficient M12 unit, 3

it's probably going to be bigger. If you are willing 4

to jump to M6, step lap miter, M3, that sort of a 5

thing, then you can pro bably keep the size and weight 6

within a given range. So it's about what assumptions 7

you're making as far as the materials and methods that 8

you're using. 9

MR. de LASKI: Thanks a lot. 10

MR. PARKER: So this is

-- 11

MR. PATZNER: Richard, Thomas Patzner. Can I 12

comment on the performance question? 13

MR. PARKER: Yes, please do, and could I ask 14

people around the table to please turn off their mikes? 15

MR. PATZNER: The conversation so far has 16

gone with historical concerns with transformers which 17

are heat and sound being the Number 1 concerns. As we 18

move forward and we move up in efficiencies, there's 19

another concern that is just starting to occur in the 20

industry and that's the inrush of the devices and the 21

industry is starting to do selective coronation and do 22

analysis and the biggest concern as we move up in 23

efficiency is how the transformer industry can design 24

the product to keep the inrush at the levels they have 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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today. 1

MR. PARKER: So can you just give me one 2

sentence on what inrush is, just so I'm not completely 3

clueless? 4

MR. PATZNER: So there's a magnetic field in 5

the core and when you turn the transformer on, the 6

electrical current has to match up with the magnetic 7

field that's in the core, so the transformer pulls a 8

lot higher amount of current th an it does when it 9

normally operates. 10

So that is going to be a new area that is 11

going to be potentially an issue moving forward. The 12

industry found out it was an issue with some of the 13

designs they did with TP1 designs that were launched 14

when the law we nt into effect in January 2007. In 15

fact, we wrote a paper on it and published it. Ethan 16

wrote a white paper on it and published it trying to 17

educate the industry that they could not use their 18

historical ways of sizing over

- current devices for the 19

transfo rmers. So that is one of our major concerns 20

moving forward as we go up this curve, how the entire 21

electrical system will work together. 22

MR. PARKER: So what is the specific 23

consequence of that and at what efficiency level does 24

it kick in or does that va ry depending upon

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MR. PATZNER: It varies, due to the 1

electrical steel and other parameters that actually 2

cause the inrush , and one of those parameters is the 3

mean length turn of the coils. So as we use higher 4

grade steel, the inrush goes up, but als o since we're 5

making the core smaller, we also reduce the mean length 6

turn of the winding which also has the inrush go up. 7

So two of the entities as we change materials 8

and the way we design them to find the lowest cost 9

which us manufacturers are going t o do, both impact the 10

inrush

. 11

MR. PARKER: So I wanted to ask just Brian 12

Coffey real quick. Brian, does the OPS model take into 13

account this problem in the design and incorporate a 14

design that deals with this

-- acknowledges and deals 15

with this problem as you go up so that at any given 16

design level, that's taken into account? 17

MR. COFFEY: So Paul Gothey, who is the owner 18

of the OPS business, creates designs that meet certain 19

specifications and then iterates over a wide variety of 20

A and B values to come up with different costs and 21

efficiencies that meet those design specifications and 22

the idea is to filter out, if at the end of it we see 23

what are all the characteristics and to filter out any 24

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So inrush current could b e one of those. 1

It's not something that I have paid a great degree of 2

attention to in the past but I think that the technical 3

committee would be a great vehicle for sort of 4

discussing how big of an issue it is, what causes it, 5

and what are our options for folding it into the 6

engineering analysis so that we don't

-- you know, 7

we're not under

- representing the cost of limiting this 8

characteristic. 9

MR. PARKER: Okay. Bob, thank you. 10

MR. SMITH: Bob Smith, Federal Pacific. Tom, 11

regarding your comments on inrush current, may I offer 12

these experiences that we have had at Federal Pacific? 13

Number 1. When we went to the TP1 in 2007, 14

we lowered our induction levels significantly in the 15

transformers and at the end we did that, the inrush 16

currents were also low ered. 17

Secondly. Most of the inrush current 18

problems are when you turn the low voltage transformer 19

on and usually it remains on for long periods of time. 20

It's not turned off on a daily basis. 21

The switching on and off of the loading on 22

the transformer i s done by breakers or switches on the 23

load side of the transformer. So I think the inrush 24

problem is not a

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because of the way people are operating with the low 1

voltage distribution transformers. 2

If you do trip a breaker on the inrush

, 3

usually you can reset the breaker and the breaker will 4

hold, but you certainly can control the inrush by going 5

to lower induction levels and that’s one way that we do 6

increase the efficiency of the transformer. 7

MR. PARKER: Does that make sense to you, 8

Tom? 9

MR. PATZNER: Thomas Patzner, Schneider 10

Electric. I agree that there's ways to reduce the 11

inrush but as we are trying to

-- and as yourself as a 12

manufacturer, we're always trying to strive for the 13

lowest cost and those options for re ducing it are not 14

always available once you pick your manufacturing 15

techniques and your materials and so forth. 16

In regards to the market, the market is 17

changing. For example, a gas station today in the 18

state of Florida has an emergency generator attache d to 19

it because they need to stay operating during a 20

hurricane. That transformer now has to switch over and 21

they test it monthly. So transformers that were turned 22

on and never turned off are now being turned off at 23

least once a month and that is growing in the market as 24

people buy generators and they actually use their 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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systems and test their systems. 1

So the historical point of view that the 2

transformer's never turned off is going away and that's 3

why it's act ually a concern in the industry because 4

since 2007 till today, more and more people are seeing 5

the nooses tripping on transformers and that's why it's 6

an issue. 7

MR. PARKER: Bob, did you have any response 8

to that? 9

MR. SMITH: Bob Smith, Federal Pacific. I 10

think Tom is exactly right. If you are s witching a 11

transformer on and off, inrush would be a concern and 12

in Florida, they are using more portable generators 13

because of the threat of hurricanes but that's one 14

state and one point on the curve, and I think, in 15

general, the inrush issue is not going to be a problem 16

as we go to higher efficiencies. 17

MR. PARKER: Thank you. Vijay, you've been 18

patiently waiting. 19

MR. TENDULKAR: Vijay from Onyx. What Tom 20

just mentioned is true and again we had talked about 21

that yesterday and now again people say tha t during the 22

committee and other things, that it's very simple to 23

excluding some of these transformers we are talking 24

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Inrush has become and more problems in the 1

application which are very sensitive to the power loss 2

kind of thing. Normal distribu tion transformer is 3

turned on and its breaker trips, you can just wait and 4

turn the breaker on again. That's not a problem. But 5

the transformers which are used to supply critical 6

loads, you cannot have high inrush current because you 7

switch from one sour ce to another source, within 8

milliseconds you're not turning off and waiting for 9

something. 10

It is done by static transfer switches. It 11

is not done by circuit breakers and that is a different 12

application and that is becoming more prevalent in 13

certain sec tors of the business and not necessarily all 14

distribution transformers and the data is not

-- 15

MR. PARKER: Is this the data center issue 16

again? 17

MR. TENDULKAR: This is the data center but 18

the data center is one of the things. There's also 19

some other t hings which are looking for this kind of 20

thing that they should not have lot of inrush current 21

because of the breaker tripping. People don't like 22

breakers to be tripped when they're turned on kind of 23

thing. 24

And this is getting more

-- as Tom said, when 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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you have this kind of issue, then, of course, you make 1

a bigger core. You have a bigger winding and that 2

reduces the inrush current and those kind of things a 3

lot of people try but that may affect the efficiency we 4

want to get higher than TP1. TP2 may be possible but 5

not higher than that. That's what he was trying to 6

make. 7

Correct me, Tom, if I'm wrong but this is 8

what I think you said and this is what is I think, too. 9

MR. PATZNER: Tom Patzner, Schneider 10

Electric. Thank you, Vijay. 11

MR. PARKER: So what is the best way

-- go 12

ahead, Tom. Sorry. 13

MR. PATZNER: I'm sorry. I also wanted to 14

comment in regards to the heat and the sound. Those 15

historical

-- those two historical issues in the 16

marketplace should actually go away as the efficiency 17

goes up. 18

As we have built a NEMA premium product, we 19

have found not only that the BTUs and the temperature 20

of the enclosure has gone down, we also have found that 21

the sound level of our devices have gone down. So the 22

two historical issues that transformers have seen 23

should both go away moving forward as we move up on the 24

efficiency curves because both the sound and the heat 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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end up being reduced as we go higher. 1

MR. MILLURE: Dave Millure, Metglas . Just a 2

note of caution. I don't think there's a lot of 3

ex perience with the amorphous metal with low voltage 4

dry type in traditional three

- leg designs. Sound needs 5

to be evaluated in the amorphous realm. I believe Tom 6

was just talking about going to higher grades of 7

traditional steel. 8

MR. PATZNER: That is co rrect. I was only 9

talking about higher grades, like M5, M4, and M3. 10

MR. SMITH: Bob Smith, Federal Pacific. 11

Dave, we have a noise chamber and we would be very glad 12

to build an amorphous core transformer and do the sound 13

level testing that you are sugge sting. 14

MR. MILLURE: We would love to work with you. 15

MR. PARKER: Good. A little networking. So 16

what is the best way, I guess, to proceed from here. 17

Is this something that needs to be an action item, 18

given the shortness of time not only for this 19

con versation but for the next week? I'm a little bit 20

unclear still as to what degree the OPS model already 21

takes this into account and maybe one way of handling 22

this would be just to ask people just to table this as 23

an issue in the instructions for the desig n template 24

and say if you believe there would be size issues for 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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the applications you have in mind or heat rush issues 1

raised by this proposed design, let us know and flag 2

that. Would that make sense? Bob? 3

MR. SMITH: Richard, I strongly believe that 4

t rying to focus on the inrush current issue is going to 5

be a distraction and will slow the process down. I 6

know that Schneider does an excellent job of educating 7

the market on technical issues. It's something that we 8

like to do, also, and so do many other manufacturers, 9

and I think that we can make the consulting engineering 10

firms aware of if we have an inrush problem, that they 11

need to specify a lower inrush or a lower induction 12

level so that they don't have that problem for their 13

special applications, li ke data centers. 14

I believe strongly that if we put any time 15

into worrying about the inrush current, it's going to 16

slow your process down quite a bit. 17

MR. PARKER: Any dissent from that proposal? 18

I think the proposal is basically to focus on education 19

a s opposed to revamping the design parameters at this 20

point. 21

MR. PATZNER: Thomas Patzner from Schneider 22

Electric. I didn't want us to put the inrush in as a 23

limited factor. I just wanted to point out that as we 24

move up on the curve, that something that is going to 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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potentially become a concern in the industry, sort of 1

like the example with the washing machines where people 2

have to run it twice. It doesn’t occur today and it 3

could in the future. 4

MR. PARKER: Great. Well, why don't we see 5

where we end up in the design curve in our discussions 6

and just keep this in mind as a potential issue out 7

there. I'm glad you've surfaced it now. That's very 8

helpful. Thank you. 9

Anything else that you wanted to add in the 10

concepts category or to this, Andrew? 11

M R. de LASKI: No. My only comment just is 12

it seems like the size and the weight issue is the 13

issue that we're going to have to also keep our eye on 14

but I think that we're going to have the data that will 15

enable us to do that. So I think there's no additi onal 16

action item because I think we're going to have the 17

data. 18

MR. PARKER: Well, I just wonder if it would 19

be useful to add a column in the design template on 20

what the final size and weight would be. Does that 21

make sense, Brian, or is that information that you have 22

readily available or not? 23

MR. COFFEY: This is Brian Coffey. Sure. I 24

think we can add that column. It's one more point of 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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comparison. It's always helpful. 1

MR. PARKER: Okay. Done. 2

MR. ROY: Robin Roy, NRDC. I know we came up 3

with quite an interesting list of additional 4

performance or product attributes in the last few 5

minutes, you know. Inrush which may or may not be an 6

issue in some circumstances really is, size, weight, 7

heat, reliability, things like that. Maybe it would be 8

hel pful if you could give us a sense of what do 9

consumers specify. What are the attributes that they 10

find important when they're making an order from you to 11

make sure that we're kind of covering the list that's 12

useful and see if there's something that really is off 13

our radar. I suspect there isn't anything off our 14

radar but if there is, it would be good to know. 15

MR. PARKER: Great. Thank you. Vijay, did 16

you want to respond? 17

MR. TENDULKAR: Yes. When a transformer is 18

normally ordered, the first thing i s the KVA , the 19

voltages, three

- phasing, frequency. These are the 20

basic things which are ordered and which is always 21

taken care in the OPS Program. You also take care in 22

the OPS Program is the temperature rise and we normally 23

what we looked in the chart t oday was a 150 degrees is 24

the standard temperature rise in there, but there are 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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people who are asking for 130, 115, 80 degrees, those 1

kind of rises people are also asking to reduce the 2

total losses in the transformers. Other transformers 3

are going in a re stricted area where the temperatures 4

are high. What are the reasons? So those are the 5

other things customers specify as to what temperature 6

rise they want. 7

They also specify the impedances in certain 8

cases and they require because they want to meet the 9

charge of the current on the secondary side of the 10

transformer because there's some breakers and other 11

things. So they specify that and I had seen the 12

impedances on something like a two to three percent on 13

the lower side as has eight percent on the highe r side. 14

Okay? So there are wide variations of the impedances. 15

Then also they specify most of the time is 16

the K factor and the K factor, all the performance is 17

calculated by OPS and a temperature rise is calculated 18

by OPS which is what I have seen is on the K1. This is 19

thinking that the load is on the side which is not the 20

case in most of the transformers we use, that we make 21

or some other people make, and those loads are non

- side 22

current have a different K factor. The higher the K 23

factor, more losses i n the windings and more 24

temperature on the winding. So the K factor normally 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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we have seen from 13 to 20. On the bigger units 1

something somewhere around between 7 to 30. So that's 2

another thing. 3

A lot of times we get some of the customers 4

because we ma ke the equipment for other customers that 5

specify the size as to what is the maximum depth, 6

width, and height can be. So all those constraints are 7

there. This is basically we get into. 8

MR. ROY: That's very helpful. Robin Roy 9

again. So I heard a coup le things to add to the list, 10

mainly the K factor which came up yesterday but hadn't 11

come up in this last couple of minutes. 12

Presumably that's not going to be a problem 13

but I think it should be something we're aware of as 14

we're figuring out what sorts of designs are attractive 15

for constraining. 16

MR. TENDULKAR: Yeah. The K factor also 17

increases the size of the transformer. The higher the 18

K factor the size is going to be bigger and it is 19

difficult to meet the TP1 or whatever the efficiency 20

levels you're talking about because the core gets 21

bigger. The core remains what efficiency level we are 22

going to get at the 35 percent load. That's the 23

important factor. The core gets bigger, we are in 24

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MR. PATZNER: Thomas Patzner, Schneider 1

Electric. I think we could answer the question and 2

enhance what Vijay just said if you pulled up the slide 3

that I sent this morning because it would answer what 4

they specify very quickly for all of us. 5

MR. PARKER: We're working on that. 6

MR. PATZNER: No problem. So basically when 7

you get the slide up there, I sent DL7 and DL8. If you 8

look at DL7, the majority of the time they're not 9

specifying anything but the voltage in the KVA. So 65 10

to 80 percent of the time, all they care about is the 11

change of voltage. 12

I n the 15 to 25 percent of the time, that's 13

where they're telling us they want low temperature, 14

they want low sound, they have it K rated, they want 15

harmonic mitigating device or so forth. 16

When you go to Design Line 8, it switches. 17

So 30 to 35 percent of the time all they want to do is 18

change the voltage. They don't specify anything but 55 19

to 65 percent of the time is when they're going to do 20

the special specification with low temperature rise and 21

so forth, the list of product that Vijay gave us. 22

So De sign Line 7, the majority of the time 23

they're just buying the catalog item and on Design Line 24

8 and the rest of that family, that's where we would 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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see more needs for the specifications. 1

MR. PARKER: Great. Thank you, Tom. Thank 2

you for reminding me of this slide. Is there anything 3

else that we should take away from this that you'd like 4

to bring our attention to while we have on the screen? 5

MR. PATZNER: So at the end of yesterday's 6

conversation, we were discussing mix and then we were 7

discussing effi ciencies that were being offered. So we 8

actually published our losses A and B in our inrush in 9

a document. So the items in blue is the calculated 10

efficiency of 35 percent, 75 degrees C for the product 11

that we're selling in each of the pies. 12

So if you l ook at the Design Line 7, we're 13

selling product that just meets TP1 all the way up to 14

98.12. In the 15 to 25, our lowest efficiency is 98.12 15

when we have to comply with those features that 16

customers ask for, but we have product all the way up 17

to 98.46 and we're getting those efficiencies depending 18

on what has been specified by the end customer. 19

So, then, of course, the five to 10 percent 20

which is the NEMA premium, we're at the 98.64 which is 21

what the industry's asking for when they ask for CSL3 22

all the w ay to 98.77 and that we would just call our 23

NEMA premium family on Design Line 7. 24

MR. PARKER: So the white pie slice five to 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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10 percent corresponds to CSL3? 1

MR. PATZNER: Yes, and that is a unit 2

estimate, not a dollar, because yesterday the question 3

w as asked if it was in

-- the percentage was in units 4

and so I did these estimates and the reason I got a 5

range there is I didn't want to share market 6

intelligence. So I put a range of it instead of what 7

my actual numbers were. 8

MR. PARKER: Gotcha. Than k you, Tom. Brian? 9

MR. COFFEY: Brian Coffey. I would like to 10

make one clarification and, Thomas, you can correct me 11

if I'm wrong here, but I think when Thomas is saying 12

CSL3, that's a Legacy term from the previous rulemaking 13

that the industry adopted. It does not refer to our 14

current analysis, is that correct, Thomas? 15

MR. PATZNER: So the CSL3 that the 16

marketplace is using is the July 2004 Advanced Notice 17

of Public Ruling and the Engineering Analysis pre

- 2007. 18

MR. COFFEY: thank you. 19

MR. PATZNER : If we use the 2011 data, it 20

would be 98.6. So all you did was truncate this 21

before. 22

MR. PARKER: So, Brian, what would be the 23

corresponding CSL for our current analysis for this? 24

MR. COFFEY: I would have to look but the 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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point I wanted to make

-- I didn't want people to get 1

confused that this was corresponded to the current

-- I 2

wanted to draw that distinction. 3

MR. PARKER: Okay. I gotcha. Thank you. 4

MR. de LASKI: I'm sorry but now I am 5

confused. So which way did he

-- so this tells us

-- 6

ok ay. It's just referred to in that bottom

-- just 7

that one reference in the bottom that you're concerned 8

about, the reference to the white/yellow? 9

MR. SMITH: Tom, Bob Smith. 10

MR. de LASKI: But just to be clear, so I'm 11

not confused anymore, it is corre ct that that's the 12

NEMA premium level. What's not correct is that it's 13

not CSL3 for the current analysis. 14

MR. PATZNER: Thomas Patzner, Schneider 15

Electric. I'll try to clarify the yellow pies. The 16

ASHRAE standard for K through 12 recommends the 17

manufa cturer buys 2004 July Advance Notice of Public 18

Ruling CSL3 level to obtain 30 percent less losses. So 19

since that is in a document, customers ask for 20

manufacturers to comply with CSL3. 21

The NEMA Premium Program meets or exceeds 22

that with most manufacturer s. So it's a transition in 23

the marketplace from people expecting CSL3 to expecting 24

NEMA premium and since not all manufacturers, only 11 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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manufacturers out of the 90+ that are in this industry 1

are registered in the NEMA Premium Program, I want to 2

show that this estimated market also includes the 3

product that they're just calling CSL3 data. So it's 4

just a reference to an ASHRAE document that references 5

a DOE document that's in history. 6

MR. PARKER: So I'm looking at the 7

Engineering template for Design Lin e 7 and it looks to 8

me like

-- is the first number, Brian, is that the 9

98.0? Would that be CSL0 or 1? 10

MR. COFFEY: 0. 11

MR. PARKER: 0. 12

MR. COFFEY: It's now EL0. 13

MR. PARKER: EL0, right. So this is 0123. 14

EL3 is 98.6. EL4 is 98.8. So it looks like the pie 15

chart would basically span the range between CSL3 and 4 16

in the current

-- EL3 and 4. Excuse me. In the 17

current nomenclature. All right. 18

MR. de LASKI: So I have a question for 19

Thomas, if this is the right

-- so a follow

- up 20

question, Thoma s. This is Andrew de Laski from ASAP 21

again. 22

So for the black portion of your pie chart, I 23

think it's black, the darker

-- the darkest portion, so 24

those customers are getting that efficiency which is 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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above the minimum not because there's

-- I want to mak e 1

sure this is right. They're getting that efficiency 2

because they're specifying some set of features and the 3

efficiency comes along for the ride. Is that a good 4

way to characterize it? 5

MR. PATZNER: Thomas Patzner, Schneider 6

Electric. That is correct . So when we design in the 7

other features that was requested on certain products, 8

the end user gets the efficiency higher than TP1 by 9

default. 10

MR. de LASKI: Thanks a lot. 11

MR. PARKER: Great. The only other 12

contextual thing that might be wor th bearin g in mind is 13

that this, of course, indicates the propensity of 14

people to purchase, you know, above current legal 15

standards and doesn't necessarily reflect what would 16

happen if the legal standard moved and so that's a 17

whole other category. 18

If people are i nterested, I thought it would 19

be useful, as I mentioned earlier in the meeting, 20

having somebody from BOMA, see if we can get them to 21

come to the meeting, to our next meeting and address 22

this at the outset, to just indicate how big of a 23

factor, you know, pr ice is, you know, in their overall 24

calculation. I mean, obviously it's very big if they 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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have a choice, but if the standard moves up, you know, 1

what fraction of their total costs are accounted for by 2

transformer installation costs and so forth and what 3

the ir, you know, position would be in response to 4

higher standards, what their response would be, because 5

that certainly affects the market dynamic. 6

So are there any other comments on this slide 7

or on anything that we've discussed so far? 8

MR. de LASKI: S o just a question about BOMA. 9

I think that would be valuable. I don't know what our 10

agenda is for next time, what our time constraints are. 11

I'm a little concerned about that. 12

MR. PARKER: Yeah. I was talking about a 13

five

- minute presentation but it's

-- 14

MR. de LASKI: Okay. Five minutes sounds 15

great. I mean, if it's over lunch, we could do it over 16

lunch or something like that, I just don't want to take 17

out of our time to work towards an agreement. 18

MR. PARKER: Great. 19

MR. de LASKI: We have some t ied some 20

speeches that have gone a little long in some cases and 21

we need to kind of move it along. 22

MR. PARKER: Yeah. 23

MR. de LASKI: My other thought is so BOMA is 24

the building

-- 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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MR. PARKER: If there's not an interest in 1

hearing from them, we don't have to do this. 2

MR. de LASKI: So these are the guys who

-- 3

right. So it's not the guys who put up the buildings. 4

So these aren't the guys who buy transformers. These 5

are the guys who incur the operating costs. 6

MR. PARKER: These are the guys who p ay the 7

electrical contractors. Now we could also see about 8

getting the electrical contractors in here to see

-- 9

MR. de LASKI: I don't know how they feel 10

about transformers. 11

MR. PARKER: But the electrical contractors 12

are going to want the cheapest th ing, right? The idea, 13

the suggestion is only that, would be to try to put the 14

whole thing in perspective. You know, what

-- how 15

significant are transformer costs, first costs, to 16

these group of buyers. If the standard moves up and 17

their prices increase by X degree, what will their 18

response likely be? Will they not build the building? 19

Will they refurbish an existing transformer? Will they 20

-- you know, what will they do? 21

It may not be something that you, you know

-- 22

there's been a lot of discussion abo ut this being a 23

very, very price

- sensitive issue and that's certainly 24

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talking about exceeding. The question is what is the 1

market dynamic if you move the standard, but we don't 2

have to have that presentatio n if there's not interest 3

in it. It's totally your call. 4

MR. NADEL: This is Steve Nadel from ACAAA. 5

It strikes me you want an electrical engineer because 6

they're the people who do these designs, work with the 7

owners of the new buildings as opposed to the operators 8

and, yes, there's overlap and kind of has a handle on 9

the trade

- offs because they're doing transformers, 10

they're doing lighting, they're working with the 11

architect in the overall project design, but they may 12

be the

-- if that's the perspectiv e, you know, it would 13

be more of an IEEE

- type. 14

MR. PATZNER: Richard, Thomas Patzner, 15

Schneider Electric. 16

MR. PARKER: Yes. 17

MR. PATZNER: In regards to the price 18

sensitivity, there is the concern that I mentioned in 19

the meeting we had 10 days ago in regards to people 20

shifting to non

- ventilated and the sealed product, if 21

those two product lines become less expensive. So we 22

also need to include product shipped. Also what could 23

occur is if product shipped does not allow them to do 24

it because of KVA siz es, we could see them actually 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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starting to buy two transformers at 30 KVA instead of a 1

75. We could see them buying two 75s instead of a 150 2

and so forth. So there's also the potential of 3

downsizing KVA s and that, as well, which actually would 4

be a defau lt to the building because it would increase 5

the

-- it would also decrease the amount of I squared R 6

because they would be distributing 480 instead of 208, 7

but those things need to be addressed in probably more 8

detail. 9

MR. PARKER: I think that's very in teresting 10

and that probably corroborates Steve's point that we 11

need to get an engineering

- type in here, somebody from 12

the Electrical Contractors Trade Association or 13

somebody that they would recommend to address, so I'll 14

work on that and see, and we certai nly want to keep

-- 15

I mean, these performance issues are critical and I 16

think it's important that we have their perspective on 17

the table as we discussed this stuff. 18

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

think it would have been wonderful if BOMA had agreed 20

to participate with the whole activity and the whole 21

process but they've, for whatever reason, chose not to. 22

I mean, I was actually a BOMA member at some point in 23

the past and I'm not sure how fruitful that's going to 24

be, to be honest with you, tha t these are

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this kind of decision relative to dry type transformers 1

sort of lost the noise relative to what they get 2

involved with and really dealing with commercial 3

industry, it's pretty simple. If you've got

-- if 4

you're building a building f or lease space, you get the 5

cheapest thing you can find that meets any sort of 6

federal regulation out there, state regulation. If 7

you're owner

- occupied, you try and make some common 8

sense economic decisions on if you're going to be in 9

the building for 10 years, you might think about buying 10

things that are going to have, you know, four or five

11

six

- year payback. Otherwise, it's the cheapest thing 12

you can buy unless it's brass or marble or something 13

like that that somebody's going to look at and say it 14

looks good and I'll lease your building because it's a 15

Class A building. 16

MR. PARKER: There you go. 17

MR. NADEL: Steve Nadel. 18

MR. PARKER: So is it worthwhile hearing from 19

Steve's alternative person, an engineer who

-- the 20

electrical contractors, or we wou ld rather just save 21

the time for negotiations? 22

MR. de LASKI: The challenge, I think, if you 23

could get a good focused presentation that's relevant 24

to this group, you know, go for it. The problem is 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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that it's going to be hard to get someone who's going 1

t o come in and give us something that's going to be 2

helpful to this group. That's my concern. 3

MR. PARKER: Okay. In that case, let's not 4

take the time. We just spent the time deciding not to 5

spend the time. So that's useful. Anything else? If 6

not, l et's take a five

- minute break while we load 7

slides. Do we want to

-- we need to agree on 8

takeaways, action items. We just need to recap 9

basically where we're going from here. 10

I think there's

-- you know, I had talked 11

earlier about the idea of putting u p the scatter clouds 12

and getting sort of preliminary reactions about what 13

people take away just as a way of sort of, you know, 14

teasing things out but it may be more useful just to 15

table that until the next meeting and let people see 16

the data that actually comes in, the final data that 17

comes in and respond. 18

Any thoughts on which you'd prefer as a 19

group? Sounds to me like people are eager to get to 20

lunch. So why don't we just take a

-- this will be, I 21

promise, no more than a five

- minute break while we get 22

the slides posted, consultants will review their 23

takeaways, the action items just to make sure that 24

we're all onboard with what we're going to be doing, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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and then we'll just adjourn for the day. We'll try to 1

keep it to that in terms of the break. 2

(Reces s.) 3

MR. PARKER: Andrew de Laski. 4

MR. de LASKI: Yeah. I had an interesting 5

sidebar with Bob about compliance with standards and 6

this is a topic that we've wrestled with on several 7

products and notably with NEMA on motors. It's been an 8

issue of a lot of concern and it occurred to me, Bob 9

raised the concern about importers and compliance by 10

importers, that as part of a negotiated outcome we can 11

make recommendations to DOE about what the 12

certification requirements are for what

-- revised 13

certification r equirements might be. So this could be 14

another dimension for our discussions to address 15

compliance and what actions are we recommending DOE do. 16

How should DOE adjust the certification 17

requirements for transformers in order to achieve the 18

kind of complia nce

-- achieve good compliance with 19

standards so that we

-- particularly in light of any 20

concerns about imported transformers. 21

MR. CYMBALSKY: John Cymbalsky, DOE. So 22

you're talking about tolerance level and things like 23

that in the testing? 24

MR. de LAS KI: Well, the specific thing was, 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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Bob, maybe you can describe for us but the Canadians 1

have a certain approach for ensuring that imported 2

transformers are compliant. Bob, you want to describe 3

the Canadian approach? 4

MR. SMITH: Give me just a second to get the 5

reference and I'll do that. I'm looking at the 6

reference. 7

Bob Smith, Federal Pacific. The equivalent 8

of our DOE in Canada has a requirement that every 9

transformer that is imported into Canada have a CSA 10

certificate. This is not for a CSA lab el. This is an 11

efficiency certificate that they comply with the 12

Canadian efficiency standards. 13

In the United States, we do not have such a 14

regulation in place and the only way to monitor a 15

supplier who might attempt to bring a transformer in 16

that does n ot comply with the efficiency requirements 17

would be a whistle

- blower routine that somebody would 18

have to go through that was being hurt by that 19

particular type of transaction. 20

But I would encourage you to look at what the 21

Canadians are doing to control t he transformers that 22

cross the borders from the U.S. into Canada or from

-- 23

or into Canada from any other point of entry. I think 24

they've done it very well and it makes it very 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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difficult for the manufacturers to have the EEV 1

certification. They have a re gulation that is called 2

-- just a moment. It's a C800.02.06 and that is a 3

standard that will give you a guide as to how they are 4

controlling the efficiency or monitoring the efficiency 5

of the transformers going into their country. 6

MR. PATZNER: Thomas Patzner from Schneider 7

Electric. That policy that Canada is doing is not just 8

for imports. It's for everybody and it actually 9

increased the costs even further because it required 10

third party testing. So since we already are in a 11

price

- sensitive item, I would highly discourage we go 12

down the path that Canada chose because it actually 13

increases the cost even higher on this product line 14

because of the added testing that the third party 15

charges. 16

MR. CYMBALSKY: This is John Cymbalsky, DOE. 17

DOE is not going down the path of third party 18

certification in its standards process. 19

MR. PARKER: I think there are two issues 20

raised here. One is do you have third party 21

certification or certain test methods and the other is 22

do you expect, do you have some process in place to 23

ensure that imports meet the same standards as 24

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I think we can all agree that there should be 1

some process for making sure that imports meet the same 2

standards that domestic manufacturers make, right? So 3

if we don't have that process in place, we need to have 4

one. 5

MR. CYMBALSKY: So the person who imports the 6

product into the United States for commerce has to 7

certify compliance just like domestic manufacturers. 8

It's self

- certification and it is policed and enforced 9

by the departmen t. 10

MR. PARKER: Okay. Does that take care of 11

it? Andrew, Bob? Okay. 12

Let's move on to our wrap

- up then. We have 13

Chris Balduc here from LBL who I think you're going to 14

present for all the takeaway items or just the LBL 15

items? Split it up? Okay. We 're starting off with 16

Chris from LBL on the action items that he sees going 17

forward for his work. 18

MR. BALDUC: Chris Balduc, LBL. Good 19

afternoon. At the end of the MB Session yesterday, we 20

did a quick presentation on takeaway items and asked 21

people fro m the committee to put their names to data 22

that they would submit to help us complete the analysis 23

in time. 24

I should stress that we are in a time crunch. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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We would like the data by the 21st and that's next 1

Friday. I'll continue. 2

This is a little bit ou tdated. The three 3

categories that LBL sees where it needs inputs to its 4

LCC Analysis are evaluation rates and changes to the 5

LCC Subgroups. The distribution transfer price trend 6

is a line item for us or for me to send you an update 7

of our appendix where we describe the methodology. 8

Evaluation rates, we're going to adjust the LV 9

evaluation rates based on data received from committee 10

members to reflect the volume of sales that are at or 11

above the baseline. 12

Tom Patzner's already sent us some data. 13

We're looking for more volunteers to corroborate his 14

input. 15

Show of hands? Eduardo Robles. 16

MR. ROBLES: Eduardo Robles, Eaton 17

Corporation. 18

MR. BALDUC: Thank you. Anybody else? 19

MR. CASKEY: John Caskey, NEMA. I'm not 20

volunteering but there is

-- I mea n, I'm not sure why 21

we're talking about evaluation rates and the 22

percentages of transformers above the standard one in 23

the same breath, but to me they're two different 24

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MR. BALDUC: You're exactly right. To be 1

clear, we use an evaluation rate in the model to (1) 2

evaluate transformers but it also impacts how 3

transformers are selected above the current standard 4

and so in terms of the data that we are going to get, 5

we receive, we're going to use it to calibrate our 6

model. That's the purpose of it. 7

Evaluation rates might be a bit of a 8

misnomer. Thank you. 9

The next point is we spoke briefly yesterday 10

about adding data centers as a subgroup. This is 11

highly dependent on the appropriateness of the existing 12

Design Line 8 to be analyzed in this way. We 13

understand that there are serious

-- there are 14

different physical properties for transformers in this 15

market and it just may not be appropriate to use Design 16

Line 8. 17

We probably will not have time, like I say, 18

most likely not have time to do a full ne w engineering 19

on an appropriate design line and so we would like to 20

explore this, if we can. We'd like any type of 21

information regarding loading parameters, sizes, 22

weight, material types, construction techniques, size 23

of the market would be nice, looking for participating 24

committee members. Vijay, I have your name. I 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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understand you're traveling a bit and so your 1

alternate, if possible, when you've figured that out. 2

Thank you. 3

Gary, do you mind if I call you? 4

MR. FERNSTROM: Gary Fernstrom, PG&E. Th at 5

would be fine. I think we've got two areas around 6

which we can contribute. We know a little bit about 7

our server form load and we've also been operating a 8

server virtualization program to try and reduce loads 9

in server forms. So we might have some in formation on 10

how that's affected loads in the market. 11

MR. BALDUC: Great. Thank you very much. If 12

necessary, we can have an NDA for you. 13

The last slide is we will again, just to 14

reiterate, we will send you the appendix on the price 15

trends for transfo rmers and at this point, I'm going to 16

pass off to Brian Coffey. 17

MR. COFFEY: I think we've

-- Brian Coffey. 18

I think we've talked a little bit today about this 19

template that we're going to use to facilitate a 20

bidirectional exchange of engineering data. 21

I think some things have been added to that 22

template with the thought that if we are already 23

engaging in dialogue and giving feedback, that there 24

are some other items that we would like to include in 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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that package. 1

First among those materials prices and also 2

some manufacture impact analysis questions and I may 3

not have them all listed here but I think two of them 4

were expected conversion costs and fraction of cores 5

built and sourced. 6

Rob Carmichael and I will collaborate and 7

make sure that all the relev ant questions get included. 8

But to return to the original spirit of the 9

template, the goal is to allow manufacturers to examine 10

DOE engineering data for the low voltage design lines 11

and efficiency levels and also DOE's material price 12

assumptions for both the 2010 reference case and our 13

sensitivity cases which are 2008 plus 25 percent on the 14

high end and 2006 minus 25 percent on the low end. 15

That's a typo. It should be 25, not 26, percent. 16

MR. MILLURE: Dave Millure, Metg las. That's 17

both for medium vo ltage and low voltage, those 25 18

percents? 19

MR. COFFEY: Right. Same sensitivity cases 20

for both groups. 21

It would also allow

-- this template would 22

allow manufacturers to provide their own engineering 23

data to the extent that they wish to do so for the same 24

efficiency levels, if they are able and willing, and 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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also feedback on the material prices that they see for 1

the 2010 case and/or the present case. The more the 2

better and so then, right, the responses to 3

manufacturer, impact analysis questions, and I think 4

we've identified a couple of small changes that we 5

could make to the template, maybe including a column 6

for losses, sort of an other box so that you could

-- 7

if you wish to describe another design, you could make 8

note of that, and then a section for additional 9

comments. 10

We'll recap and make sure that we've got 11

everything. These are just the ones off the top of my 12

head. Any comments on that? Questions? 13

The second item that we will take is

-- sure. 14

John? 15

MR. CASKEY: John Caskey, NEMA. I agre ed to 16

get that out this weekend but that means I need to get 17

it from you at some point. So when do you think you'll 18

have like the minor modifications we talked about and 19

get that to me for getting out to the members? 20

MR. COFFEY: I can have you that by Monday. 21

MR. CASKEY: Okay. If you get it to me by 22

Monday, then I can't get it out this weekend. 23

MR. COFFEY: Okay. 24

MR. PARKER: Why don't you guys talk offline 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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and work something out? 1

MR. COFFEY: Sure. Great. So the other 2

thing that we're goi ng to come back with are some 3

revisions to our scaling process, based on commentary 4

that maybe towards the end of the scaling ranges, the 5

accuracy breaks down. So what we've done is done some 6

supplementary modeling at the high and low KVA ends and 7

we'll c ome up with a new scaling proposal based on 8

that. Of course, that's going to have the result that 9

the scaling characteristic exponent could vary from 10

.75. 11

Simplified cost curves. Navigant will 12

provide manufacturers with simplified curves so that 13

that m eans that for each steel type or design, it will 14

only be showing the optimum southeast frontier of the 15

cloud. There's been a couple of requests for that. 16

MR. PARKER: Brian, my sense is that that 17

would be something that there would be a lot of 18

interest in and perhaps we could get that. That 19

doesn't need to wait anything that LBL does, right? 20

That could be sent out pretty soon. 21

MR. COFFEY: No. Absolutely. Technical 22

Committee. We've discussed establishing a committee to 23

dig into some of these tech nical questions that maybe 24

we could deepen our understanding of, you know, whether 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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there are some types of low voltage transformers that 1

warrant a separate equipment class and so we'll talk 2

about, you know, what's needed to do that, if it makes 3

sense, what would the benefits be. So that's a 4

discussion we'll have offline. Of course, anybody's 5

welcome to participate but my sense is that some will 6

be more interested in it than others. 7

MR. PARKER: Is there a time frame for 8

reporting back to the group about the results of your 9

conversations? 10

MR. COFFEY: I think that will depend on the 11

nature of the conversation and what the committee 12

decides. 13

MR. PARKER: I mean, my sense is from the 14

time frame that LBL has for the LCC Analysis we're not 15

going to be abl e to incorporate subclasses into that 16

analysis anyway. We're going to have to deal with them 17

on kind of an ad hoc basis, right, as they come up? 18

MR. COFFEY: Yeah. I think if we decide that 19

we can't do without another equipment class, then it's 20

not goi ng to be reflected in the analysis for the next 21

meeting. There's no way. 22

MR. PARKER: So that what would happen then 23

would be some kind of a carve

- out of that category from 24

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perhaps on a slower time frame to get the engineering 1

data for that and the LCC for that? Is that what I'm 2

hearing? 3

MR. de LASKI: I think it's kind of similar 4

to the discussion we had on the medium voltage type 5

which is that, you know, you can approach these two 6

things sequentially which is that we can have 7

discussion about whether certain product types should 8

be given separate treatment and what we're interested 9

in knowing is, you know, what are the sales of those 10

units, what's their market size, and what are their 11

characteristics s o they can be defined in a way that if 12

they're going to have a different treatment in the 13

standards, they can be defined by DOE in regulation in 14

a way that is bullet

- proof, you know, that is, that we 15

can actually

-- you know what it is and so if there's 16

go ing to be a committee to look into this, I'd like to 17

participate. If there's going to be a committee 18

talking about potential separate groups, call them 19

potential

-- let's call them potential product classes, 20

then I want to participate in that discussion. 21

MR. COFFEY: Yeah. This is Brian Coffey. I 22

think you're making a great point. The point of the 23

committee is to decide whether it's worth spending our 24

time looking at these things. So that's the first 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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question. And then if the answer is yes, then we talk 1

about how we're going to do it. 2

MR. de LASKI: Yeah. And how you're going to 3

do it is something that ultimately we'll need for a 4

proposed rule but the committee may not need it for our 5

negotiation purposes is my point. 6

MR. PATZNER: Thomas Patzne r, Schneider 7

Electric. I was reading through the statute yesterday 8

and in regards to this topic, I have two concerns. The 9

statute says the transformer is unlikely to be used in 10

general purpose applications and the application of the 11

standard of the trans former will not result in 12

significant energy savings. 13

So if we're going to be going down this path, 14

I think those are the two questions that need to be 15

asked

-- answered. Sorry. Not asked but answered. 16

My main concern is, is we keep talking about 17

the data centers. I do not know, see how we get around 18

Question Number 2 because every single one of those 19

products can be used for general purpose. 20

MR. COFFEY: So, I mean, that's the type of 21

thing that

-- that's the type of question we'll be 22

asking. You know, to create a different equipment 23

class, you need to link it to some physical 24

characteristic of the device. That would mean that it 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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would be unlikely to be used as a substitute for 1

another application but we'll go through those details. 2

MR. NADEL: Steve Nadel from ACAAA. Tom and 3

others, what this typically has meant

-- is this a 4

special product class or premium price class? So while 5

technically you could use it, you spend a lot more 6

money in which case sometimes you can allow it. If 7

it's potenti ally a cheaper product, I absolutely agree, 8

yes, people will use it that way. So a price tends to 9

be a key characteristic of whether it is likely to be 10

used in general purpose applications. 11

MR. TENDULKAR: This is Vijay from Onyx. 12

This data center tran sformer, at least I was referring 13

to from our company point of view, were not sold itself 14

as a product kind of thing. It is going into some 15

other product kind of thing with the breakers and the 16

panel boards and the metering and all that kind of 17

thing. So it is not just like a general purpose 18

transformer. There's primary and a secondary 19

connections and nothing else kind of thing. So it is 20

not cheaper than the general purpose transformer. The 21

whole equipment costs a lot more than the general 22

purpose tran sformer equipment. So maybe in that case, 23

it can be completely excluded from the scope of this 24

efficiency regulation. 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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MR. COFFEY: I mean, I think right now we're 1

not so much trying to have the discussion as just 2

identify the need to have the discussion . So I think 3

we can continue this in our Technical Committee. 4

MR. PARKER: Right. But I think we do need 5

to, you know, surface whether

-- at least whether this 6

is a big category or not. In the medium voltage, if 7

you recall, the issue was sort of margi nalized by the 8

perception which I think was accurate that we're 9

talking about a very, very low volume of sales for that 10

category of transformers. 11

If that's the case here, as well, then, you 12

know, perhaps a simple carve

- out is possible, but, you 13

know, tha t's

-- I think you guys had concerns about 14

loopholes and other things. So we just need to gather 15

the information reasonably soon so that certainly by 16

the next meeting we can at least have a discussion 17

about whether they're in or out. 18

Anything else? 19

MR . de LASKI: Sorry. This is Andrew again. 20

Do you plan to gather that information for this 21

particular

-- 22

MR. COFFEY: I mean, I think this is the 23

discussion I'm trying to describe. We'll start with 24

what are these products? Are they large in sales 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

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volum e? Where are they used? What are their physical 1

characteristics? I don't know the answer to all these 2

questions but

-- 3

MR. de LASKI: You're going to talk to 4

manufacturers one on one and try to get that 5

information, is that the plan? 6

MR. COFFEY: On e on one or in a group, yeah. 7

I will be looking to manufacturers for that 8

information. 9

MR. PARKER: So can we add that to the list 10

that you send out to your membership, also, John? 11

We'll add a separate document that can go out on the 12

same package perhap s that will ask for information 13

about data centers and we need to, I think even at a 14

very early stage then, caucus about what sort of 15

information we need to gather from manufacturers to 16

make the assessment as to whether these are included or 17

not. 18

MR. CAS KEY: I'm happy to send out whatever 19

you want to send out but we're sort of talking about 20

two different schedules now. One is that we need to 21

get the feedback on the data templates as soon as 22

possible, by next Thursday or Friday, and this 23

discussion can r eally go on over the next three or four 24

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MR. PARKER: Okay. Anything else? 1

MR. COFFEY: Yes. There was calls for 2

additional presentation of data that I've listed here, 3

some different plots, and so we'll be providing t hose 4

to the committee electronically. That's it. 5

MR. PARKER: Well, we have a lot to do going 6

forward but I think this has been a helpful discussion, 7

both in terms of giving very clear guidance as to what 8

sort of information we need, a time frame for ge tting 9

it, a priority for accessing it, and a plan for 10

preparing for the next meeting which I think everybody 11

agrees will be a very important meeting. 12

As I mentioned earlier, we'll try to have 13

early next week, on my to

- do list, working with 14

Navigant staff is to create an online interface for the 15

group to post documents of a non

- confidential nature 16

and to have a discussion organized in threads and so 17

forth through SharePoint. So we'll have that up and 18

running to facilitate work of the group before the next 19

meeting. 20

Just to recall, we will be meeting November 21

8th and 9th, 8th for the medium voltage, 9th for the 22

low voltage. That will be held

-- Jeremiah, where is 23

that going to be? Held at EEI. Okay. So for the 8th 24

it's at Edison Electric and for the 9t h at L'Enfant 25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  294

Plaza, on the 6th Floor of L'Enfant Plaza. One

- day 1

meeting. 2

Great. Thank you, all. We are then 3

adjourned. We will see you in November. 4

(Whereupon, at 1:28 p.m., the meeting was 5

adjourned.) 6

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25**EXECUTIVE COURT REPORTERS, INC. (301) 565** 

**- 0064**  295

**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

D epartment, 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