January 11, 2012 

The Honorable Steven Chu 

Secretary of Energy 

Forrestal Building 

1000 Independence Avenue, SW 

Washington, DC 20585 

Via e-mail and U.S. Mail 

Dear Secretary Chu: 

We write to you on behalf of our companies and organizations which represent thousands of U.S. 

manufacturing employees, and ultimately hundreds of millions of electricity consumers in the United 

States. We believe that the Department of Energy (DOE) could soon propose efficiency standards for 

liquid-immersed electric distribution transformers so stringent that they would have the effect of mandating 

the use of a single type of core material - amorphous metal - for the manufacture of these transformers in 

the future. The only U.S. source for such material is a single, foreign-owned company. We are also 

extremely concerned about the impact of such stringent standards on utility rates, manufacturing jobs and 

the U.S. economy in general. 

A large contingent of industry and utility representatives participated in formal Negotiated Rulemaking 

sessions with DOE and other stakeholders last fall. This contingent proposed an increase to Efficiency 

Level 1 (ELl) for most liquid-immersed transformer design lines, and offered substantial technological and 

economic justification for these efficiency standard increases. A standard of EL 1, in most cases, would 

yield transformers with efficiencies greater than 99 percent, which is among the highest in the world. 

However, if the DOE proposes standards above ELI for these transformers, it will create a monopoly for a 

foreign-owned company and essentially eliminate the jobs of thousands of Americans at U.S manufacturing 

companies who currently produce competing core materials and transformers. Distribution transformers 

utilizing electrical steel core material have been produced in the U.S. for more than 100 years and are 

among the most energy- and cost-efficient in the world. A standard no more stringent than EL 1 would 

allow for both electrical steel and amorphous metal to compete without jeopardizing thousands of jobs. 

Conversely, mandating a standard more stringent than EL 1 could increase transformer costs by more than 

40 percent for incremental efficiency gains that may not be economically justified during the entire useful 

life of the transformer. 

In addition to the negative impact on the American economy and jobs, there are other strong reasons not to 

mandate standards which would result in the exclusive use of amorphous metal for liquid-immersed electric 

distribution transformers. 

First, such standards would actually create strong financial incentives to rebuild existing transformers to 

their original specifications. Because of their long service life (many are more than 30 years old), such 

rebuilt transformers could have continued useful service for decades, forestalling the very energy efficiency 

gains sought by new standards. In addition, expert analysis indicates that amorphous metal transformers 

are actually considerably Jess efficient at high loads than electrical steel transformers. 

Second, directing the use of amorphous metal for liquid-immersed distribution transformers would violate 

Congress's statutory mandate to DOE to establish minimum efficiency standards that are technologically 

feasible and economically justified. It would create a significant market disruption for the industries and 

their employees currently serving the distribution transformer market. 
For example, thousands of American steelworkers, who produce highly efficient electrical steels could face 

the loss of their jobs. Transformer makers would be forced to re-tool their plants or be forced out of 

business. In contrast, efficiency standards that allow for the use of competing core materials, such as 

electrical steels, are technologically feasible and economically justified. 

Third, the foreign-owned manufacturer that would receive monopolistic pricing power as a result of a new 

standard requiring the use of amorphous metal acknowledges on its website that it exports more than 90 

percent of its U.S. production. Thus, it is unclear that this company could even satisfy the domestic 

demand by U.S. based transformer manufacturers for amorphous metal. 

We respectfully urge DOE to propose efficiency standards for liquid-immersed distribution transformers 

that are no greater than ELl, thereby allowing electrical steels to compete with amorphous metal, 

promoting a healthy and cost-competitive marketplace to serve the goal of improving the United States' 

electrical efficiency. 

Sincerely, 

James L. Wainscott 

Chairman, President & CEO 

AK Steel Corporation, West Chester, OH 

Richard J. Harshman 

Chairman, President & CEO 

Allegheny Technologies Incorporated 

Pittsburgh, Pennsylvania 

Mark Thurman 

President 

Cooper Power Systems 

Waukesha, Wisconsin 

CC: 

Director, Office of Management and Budget 

Leo W. Gerard 

International President 

The United Steelworkers (USW) 

Pittsburgh, Pennsylvania 

Bob King 

President 

The United Autoworkers (UA W) 

Detroit, Michigan 

R. Thomas Buffenbarger 

International President 

International Association of Machinists 

and Aerospace Workers 

Upper Marlboro, Maryland 

Dr. Kathleen Hogan, Deputy Assistant Secretary, Energy Efficiency, DOE 

Jennifer Tiedeman, Office of General Counsel, DOE 

John Cymbalsky, Office of Building Technologies, DOE 

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Background 

In October 2007, DOE finalized rules on liquid-immersed electric distribution transformers that created 

minimum energy efficiency standards which took effect on January l, 2010. In many cases, the efficiency 

levels selected were higher than those proposed by energy efficiency and electric utility experts. However, 

the standards were challenged in a federal lawsuit filed on behalf of several environmental organizations 

and other parties. In a court-ordered settlement, DOE agreed to re-evaluate the standards and determine 

whether or not more stringent standards would be justified. 

As part of its review, DOE embarked upon a formal Negotiated Rulemaking process among affected 

stakeholders to see if a consensus on the standards could be reached. All parties to the Negotiated 

Rulemaking process actively negotiated in good faith. In most of the cases, unanimous consensuses on 

new efficiency standards were reached. However, the environmental and amorphous metal representatives 

rejected the higher standard of ELl for liquid-immersed transformers proposed by manufacturers and utility 

representatives. Therefore, DOE has indicated that it will propose a standard for these transformers on or 

before February 1, 2012. 

About The Signatories 

AK Steel Corporation produces flat-rolled carbon, stainless and electrical steels, primarily for 

automotive, infrastructure and manufacturing, construction and electrical power generation and distribution 

markets. The company employs about 6,200 men and women in Ohio, Pennsylvania, Kentucky and 

Indiana. Hourly production and maintenance employees are represented by the United Steelworkers, 

United Autoworkers and International Association of Machinists international unions. 

Allegheny Technologies Incorporated has approximately 11,300 full-time employees world-wide who 

use innovative technologies to offer global markets a wide range of specialty metals solutions. Our major 

markets are aerospace and defense, oil and gas/chemical process industry, electrical energy, medical, 

automotive, food equipment and appliance, machine and cutting tools, and construction and mining. Our 

products include titanium and titanium alloys, nickel-based alloys and superalloys, grain-oriented electrical 

steel, stainless and specialty steels, zirconium, hafnium, niobium, tungsten materials, forgings, castings and 

fabrication and machining capabilities. 

Cooper Power Systems is a global manufacturer of world-class power delivery and reliability solutions 

for the utility, commercial, and industrial markets. It is a leading provider of innovative Smart Grid 

technologies that optimize electrical grid performance. 

The International Association of Machinists and Aerospace Workers (lAM) represents over 700,000 

active and retired members in the United States, Canada, the Caribbean, Guam, and other locations. lAMrepresented members work in manufacturing, aerospace, transportation, electronics, shipbuilding, steel, 

woodworking, defense, government and many other sectors. lAM-represented employees produce steel 

products at AK Steel in Ohio. 

The United Autoworkers of America (UA W) is one of the largest and most diverse unions in North 

America, with members in virtually every sector of the economy. UA W-represented workplaces range 

from multinational corporations, small manufacturers and state and local governments to colleges and 

universities, hospitals and private non-profit organizations. The UA W has more than 390,000 active 

members and more than 600,000 retired members in the United States, Canada and Puerto Rico. UA Wrepresented employees produce electrical steels in AK Steel plants in Ohio and Pennsylvania. 

The United Steelworkers (USW) is the largest industrial union in North America and has 850,000 

members in the U.S., Canada, and the Caribbean. It represents workers employed in pulp, paper and 

packaging, metals, rubber, chemicals, oil refining, atomic energy, government and the service sector. 

USW-represented employees produce electrical steels in Allegheny plants in Pennsylvania. 

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Secretary Chu 

From: 

Sent: 

To: 

Cc: 

Subject: 

Attachments: 

Dear Secretary Chu, 

Alan.McCoy@aksteel.com 

Wednesday, January 11, 2012 2:50 PM 

Secretary Chu 

ombdirector@omb.eop.gov; Hogan, Kathleen; Cymbalsky, John; Tiedeman, Jennifer 

Liquid-Immersed Distribution Transformer Efficiency Standards 

Letter To Secretary Chu Concerning Distribution Transformer Efficiency Standards. pdf 

I am forwarding the enclosed letter on behalf of a coalition of industries and labor organizations who are engaged in the 

manufacture of electric distribution transformers and their core materials, in particular grain-oriented electrical steels, and 

who are concerned about new efficiency standards to be proposed by the Department of Energy on or before February 1, 

2012. 

On behalf of the signatories, I am happy to respond to any requests for additional information. 

With sincere regards, 

Alan H. McCoy 

Alan H. McCoy 

Vice President, Government & Public Relations 

AK Steel Corporation 

9227 Centre Pointe Drive 

West Chester, OH 45069 

Office: (513) 425-2826 

Cell: (513) 594-7500 

alan. mccoy@aksteel. com 

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