From: Rick Anderson [mailto:rick.anderson@faypwc.com]

Sent: Wednesday, November 16, 2011 3:10 PM

To: 'Cohen, Daniel'; 'Kenneth Winder'; 'Jerry Hodge'

Cc: 'Richard Parker'; 'Corkran, Jerry L'; Caitlin Johnson; tballo@earthjustice.org; ScottB@lvmetals.com; john.caskey@nema.org; 'Cymbalsky, John'; adelas ki@standardsasap.org; Teckman@nwcouncil.org; gbf1@pge.com; carlos.gaytan@ge.com; rgreeson@f ederalpacific.com; bruce.r.hirsch@bge.com; mhyland@appanet.org; dave.millure@metglas.com; 'Nadel, Steve'; wes.patterson@us.abb.com; Eric.Petersen@aksteel.com; Raymond.Polinski@atimetal s.com; rroy@nrdc.org; ro bert.saint@nreca.coop; chuck.simmons@pgnmail.com; mark.stoering@xcelener gy.com; cabolduc@lbl.gov; kcoughlin@lbl.gov; Brian Coffey; gjrosenquist@lbl.gov; 'Rosenstock, Steven'; Michael Rivest; jrossetti@mlgw.org; Jim.creevy@nema.org; 'Meyers, Aaron'; jmauer@s tandardsasap.org; greg.coulter405@gmail.com; bsmith@federalpacific.com; pkumar@publicpower.org; 'Trujillo, Antonio'; 'Phil Hopkinson'; ahofmann@publicpower.org; BermanEconomics@gmail.com; Paul.Ryan@hitmet.com; jerry.schoen@aksteel.com; mwaltner@nrdc.org; chad.kennedy@us.schneider-electric.com; 'Kampa,
Michael'; 'Marusinec, Richard M' Subject: RE: Used Distribution Transformer market and prices

Jerry,

Ken probably spoke to the same transformer guys that I did. They stated that they do test for

transformer losses and that based on thousands of tests, their transformers have higher losses than the

current DOE standards.

I took their price and losses and applied our standard A&B Factor Evaluation Methodology, w hich we all

have used for over 30 years. As you’ve stated earlier, Rebuilt Transformers are close in price to what a

new Howard Industries Transformer costs today. It is clear that if prices rise above the EL1 level, using a

50 kVA Pad (DL1) as an example, Consumers (Util ities) would be f oolish to purchase a new transformer.

These Transformer Rebuilding Business Owners are extremely excited about the fact that the

Department of Energy is considering raising transformer efficiencies. Now they don’t have to market

their products and services, Consumers are already approaching these Rebuilding Businesses.

Seems to me, as a Consum er, we have another “Waste Ind ustries” developing and that the general
public would embrace the fact that Consumers (Utilities) are recycling.

Rick Anderson, PE
Manager of Electrical Engineering Fayetteville PWC

PO Box 1089 Fayetteville, North Carolina 28302

Office: (910) 223

‐ 4517

Cell: (910) 263

‐ 5058

FAX: (910) 323

‐ 2990From: Cohen, Daniel [ mailto:Daniel.Cohen@hq.doe.gov ]

Sent: Wednesday, November 16, 2011 12:56 PM

To: 'Kenneth Winder'; Jerry Hodge

Cc: Richard Parker; Corkran, Jerry L; Caitlin Johnson; Rick Anderson; tballo@earthjustice.org ; ScottB@lvmetals.com ; john.caskey@nema.org ; Cymbalsky, John; adelaski@standardsasap.org ; Teckman@nwcouncil.org ; gbf1@pge.com ; carlos.gaytan@ge.com ; rgreeson@federalpacific.com ; bruce.r.hirsch@bge.com ; mhyland@appanet.org ; dave.millure@metglas.com ; Nadel, Steve; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ; Raymond.Polinski@atimetals.com ; rroy@nrdc.org ; robert.saint@nreca.coop ; chuck.simmons@pgnmail.com ; mark.stoering@xcelenergy.com ; cabolduc@lbl.gov ; kcoughlin@lbl.gov ; Brian Coffey; gjrosenquist@lbl.gov ; Rosenstock, Steven; Michael
Rivest; jrossetti@mlgw.org ; Jim.creevy@nema.org ; Meyers, Aaron; jmauer@standardsasap.org ; greg.coulter405@gmail.com ; bsmith@federalpacific.com ; pkumar@publicpower.org ; Trujillo, Antonio; Phil Hopkinson; ahofmann@publicpower.org ; BermanEconomics@gmail.com ; Paul.Ryan@hitmet.com ; jerry.schoen@aksteel.com ; mwaltner@nrdc.org ; chad.kennedy@us.schneider-electric.com ; Kampa,
Michael; Marusinec, Richard M Subject: RE: Used Distribution Transformer market and prices

That is correct. We addressed this issue in the 2007 final rule for distribution transformers. DOE carefully considered its authority to establish ener gy conservation standards for rebuilt and refurbished distribution transformers in light of comments recei ved in that rulemaking, and concluded that its authority does not extend to rebuilt and refurbished products.

Section 332 of EPCA provides that it shall be unlawful for any manufacturer or private labeler to distribute in commerce any new covered product which is not in conf ormity with an applicable energy conservation standard. (42 U.S. C. 6302(a)(5) (emphasis added)) 13 Congress made section 332 applicable to distribution transformers in section 346(f)(1) of EPCA. (42 U.S.C. 6317(f)(1)) Section 332(b) defines ‘‘new covered product’’ to mean ‘‘a covered product the title of which has not passed to a purchaser who buys such product for purposes other th an (1) reselling such product, or (2) leasing such product for a period in excess of one year.’’ (42 U.S.C. 6302(b))

Regardless of the fact that the 332(b) definition may be the most poorly written sentence in the history of law, the sentence says that a new covered product is one for which the title has not passed to a consumer of that product. After a significant discussion of that statutory provision, the 2007 final rule concluded that it is unlikely that Congress would have made transfer of ‘‘title’’ the test of whether a product was

‘‘new’’ if it intended to cover rebuilt or refurbis hed products where title had already passed to the consumer. The most reasonable interpretation of the stat utory definition is that Congress intended that this provision apply to newly manufactured products the title of which has not passed for the first time to a consumer of the product.

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From: Kenneth Winder [ mailto:kwinder@mleainc.com ]

Sent: Wednesday, November 16, 2011 12:17 PM

To: Jerry Hodge

Cc: Richard Parker; Corkran, Jerry L; Caitlin Johnson; rick.anderson@faypwc.com ; tballo@earthjustice.org ; ScottB@lvmetals.com ; john.caskey@nema.org ; Cymbalsky, John; adelaski@standardsasap.org ; Teckman@nwcouncil.org ; gbf1@pge.com ; carlos.gaytan@ge.com ; rgreeson@federalpacific.com ; bruce.r.hirsch@bge.com ; mhyland@appanet.org ; dave.millure@metglas.com ; Nadel, Steve; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ; Raymond.Polinski@atimetals.com ; rroy@nrdc.org ; robert.saint@nreca.coop ; chuck.simmons@pgnmail.com ; mark.stoering@xcelenergy.com ; cabolduc@lbl.gov ; kcoughlin@lbl.gov ;Brian Coffey; gjrosenquist@lbl.gov ; Rosenstock, Steven; Michael Rivest; jrossetti@mlgw.org ; Jim.creevy@nema.org ; Meyers, Aaron; Cohen, Daniel; jmauer@standardsasap.org ; greg.coulter405@gmail.com ; bsmith@federalpacific.com ; pkumar@publicpower.org ; Trujillo, Antonio; Phil Hopkinson; ahofmann@publicpower.org ; BermanEconomics@gmail.com ; Paul.Ryan@hitmet.com ; jerry.schoen@aksteel.com ; mwaltner@nrdc.org ; chad.kennedy@us.schneider-electric.com ; Kampa,
Michael; Marusinec, Richard M Subject: Re: Used Distribution Transformer market and prices



### Jerry and Everyone:

Re-manufactured or Rebuilt distribution tran sformers are not subject to any minimum or other efficiency requirements imposed by DOE. It is my understanding that DOE's legal counsel eliminated any regulation of this used transf ormer market during the last Rule Making. The company that gave me the information a bout the used transformer market said that they improve the efficiency of transformers that they rewind in the cases where the original transformer had aluminum windings because they replace those with copper windings. They may rewind a unit that had copper original windi ngs with new copper windings that may have lower losses since they use advanced insulation that is improved and thinner than that commonly found in the original windings, and that situatio n could allow more copper in the same space and

that should decrease winding losses slightly. Of course, they can measure losses of units being sold, but it is my opinion, from the conversation, that these transformers are not so ld based upon low losses. Units are sold on the basis of first cost only, and there wo uld not be any eval uation of losses.

Ken

On 11/16/2011 9:42 AM, Jerry Hodge wrote:
Ken an All:

Your information on the used transformer market is very interesting and enlightening. It

sounds like the rebuilders are doing a booming business.

In your discussion with this rebuilding fi rm, did they say anything about transformer efficiency? When they rebuild a unit, is it upgraded to meet the DOE Efficiencies? Do they say that they need to meet the DOE ef ficiencies or do they just not worry about efficiency?

It's not clear to me if DOE r equires any efficiency levels from a rebuilt transformer. I am trying to find out if there are any DOE efficiency requirem ents on rebuilt transformers. Navigant is trying to find out, what if any, are the efficiency requirements for a rebuilder.

It's also interesting to note t hat their prices are close to our new units that do require meeting DOE efficiencies.

Thanks for the informati on, I appreciate it.

Jerry

Jerry Hodge Consulting Engineer, E.E., M.S., P.E.

### Retired V.P. & G.M. of Pole Type Transformer & Regulator Div.

Howard Industries Inc.
P.O.Box 1588 Laurel, Ms, 39440

601 422-1539 Bus.
484 226-6190 Cell

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-----Original Message-----

From: Kenneth Winder [ mailto:kwinder@mleainc.com ]

Sent: Tuesday, November 15, 2011 5:31 PM

To: Richard Parker

Cc: Corkran, Jerry L; Caitlin Johnson; rick.anderson@faypwc.com ; tballo@earthjustice.org ; ScottB@lvmetals.com ; john.caskey@nema.org ; john.cymbalsky@ee.doe.gov ; adelaski@standardsasap.org ; Teckman@nwcouncil.org ; gbf1@pge.com ; carlos.gaytan@ge.com ; rgreeson@federalpacific.com ; bruce.r.hirsch@bge.com ; mhyland@appanet.org ; dave.millure@metglas.com ; Nadel, Steve; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ; Raymond.Polinski@atimetals.com ; rroy@nrdc.org ; robert.saint@nreca.coop ; chuck.simmons@pgnmail.com ; mark.stoering@xcelenergy.com ; cabolduc@lbl.gov ; kcoughlin@lbl.gov ; Brian Coffey; gjrosenquist@lbl.gov ; Rosenstock, Steven; Michael Rivest; Jerry Hodge; jrossetti@mlgw.org ; Jim.creevy@nema.org ; Meyers, Aaron; Daniel.Cohen@hq.doe.gov ; jmauer@standardsasap.org ; greg.coulter405@gmail.com ; bsmith@federalpacific.com ; pkumar@publicpower.org ; Trujillo, Antonio; Phil Hopkinson; ahofmann@publicpower.org ; BermanEconomics@gmail.com ; Paul.Ryan@hitmet.com ; jerry.schoen@aksteel.com ; mwaltner@nrdc.org ; chad.kennedy@us.schneider-electric.com ; Kampa, Michael; Marusinec, Richard M Subject: Re: Used Distribution Transformer market and prices



### Richard and Colleagues:

Discussion with a national firm involved w ith the used-distribution transformer market has provided a look into what is pres ently happening there. Accordi ng to them, the used transformer market has certainly been impacted by the Ru le making on efficiency effective on January 1, 2010. The demand for used transformers has escalated rapidly.

There are basically three (3) categories for used distributio n transformers described as follows per discussion with them: Category I: Distribution transformers that have been purchased as used equipment from industry and utilities that have cores in operating condition. The original primary and secondary windings are both removed and are replaced with new windings of copper. Insulating fluid is replaced, original tank is re-use d but is re-painted, bushings ar e replaced, new gaskets installed,

etc. This rebuilt transformer is tested and sold at approximately the same cost (maybe slightly higher) than newly manufactured tr ansformer prices available at large-quantity purchases at the present minimum efficiency standards. Category II: Distribution transformers that have been purchase d as used equipment from industry and utilities that are wo rking properly and do not require un-tanking. Insulating fluid is replaced, re-gasketed, original ta nk used but is re-painted, bush ings are replaced, etc. This

rebuilt transformer is tested and sold at be tween 60 and 75% of new transformer cost. Category III: Owners of distribu tion transformers send their used transformers to

### maintenance shops for minor repairs, fluid repl acement, re-painting, replacement of bushings, gaskets, etc. Cost for such repairs and transpor tation costs to and from shop are acceptable up to a set level (not to exceed 50% of new cost as an example). If transformer maintenance and improvements are estimated to ex ceed that value, the maintenan ce shop buys the unit and it may end up in Category I above or be scrapped and salvaged depending upon its condition.

The owner's of this nation-wide business expressed their excitement about the prospective business that will be created for them as pri ces increase for newly manufactured distribution

transformers.

Ken

--



### Kenneth A. Winder, P.E.

Manager-Engineering

Moon Lake Electric Association 800 W Hwy 40

PO Box 278

Roosevelt UT 84066

435.722.5406 Office

435.724.1539 Cell

435.722.5466 Fax

E-Mail: kwinder@mleainc.com

Web Site: www.mleainc.com

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