## Memorandum

Date: December 23, 2011

To: John Cymbalsky

Dan Cohen

From: Richard Parker

Facilitator

Subject: Transformer Reg

- Neg Status Report

This memo briefly overviews the status of the negotiated rulemaking on energy efficiency standards for

medium

- and low

- voltage distribution transformers at year’s end.

Medium

- voltage Liquid

- F illed No consensus, but near

- unanimous industry (though not adv ocate) support for the NEMA proposal of EL1 for DLs 1, 3, 4, 5 with no change for DL2. Advocates proposed EL3 across the board but signalled that they would go lower in response to industry movement upward.

There was informal consensus on special trea tment for networks and vaults due to space constraints, with no increase in standards for such transformers. There was also strong support around the table, though no formal vote, on a recommendation to DOE to consider asserting jurisdiction over refurbis hing operations

that involve the refurbisher taking title to the transformer

– a form of transaction that utilities favor because it allows them to capitalize the re

- furbished transformer in their rate base.

Although we did not reach consensus, I hope and expect that the process yielded useful information that will improve the NOPR and final rule

, while offering a useful indication of industry’s bottom line

.

Medium

- Voltage Dry Type We reached formal consensus on EL2 for Design Line 12, with appropriate sc aling adjustments off that anchor point for other design lines and kVA ratings in the MVDT space. We are very close to agreement on those adjustments.

Unfortunately, with holidays upon us, it is not possible to finish that business before year’s end, bu t NEMA believes it can caucus with its members the first week in January, so that we could have a final, formal vote on a consensus recommendation for MVDT on January 9 th or 10 th , depending on schedules.

Low

- Voltage Dry Type The parties failed to reach agreement on our last scheduled conference call on Dec. 20 . NEMA’s last written offer called for EL 2 for DL 7 and 8 (with no change for EL 6), whereas advocates demanded EL

4.

On the call, Tom Patzner, who had autho red the NEMA position, indicated th at his prior proposal had selected EL2 to reflect the NEMA premium whereas for DL 7 the NEMA premium efficiency level is actually EL 3. So he amended his proposal to EL 3 for DL 7 and EL 2 for DL 8, with special treatment

for 15 kva and 750

- 1000 kva sub

- c lasses. 1

1 My notes indicate that NEMA may have informally accepted that position, but Caitlin Johson at Navigant is reviewing the recording of the phone call to confirm. In any case, my sense has been that NEMA will support going2

However, the advocates have said that is not enough, since the LCC savings are positive and rising at higher efficiency levels and the manufacturing impacts of moving to a higher level seem minor.

After the call, Schneider Electric expressed d isappointme nt with t he outcome of the call. Tom Patzner of

Scheider Electric indicated that he thought that the industry offer could and should be improved. After consulting his engineers , he believes that the transformer industry can achieve EL 4 for DL 7 and EL 3.5 for DL 8 with either M4, M3 or H0/H1 with a variety of designs, thereby meeting the essential decisional

criterion that w e have informally applied throughout our talks: the energy efficiency level that maximizes

life

- cycle cost savings with a competitive mix of steels.

Since then

, Patzner and I have consulted with Hammond Power, Eaton, Federal Pacific, and GE. These firms, with Schneider, control the lion’s share of the LV transformer market in the United States. Although we have not yet hear d formally from GE, the remaining firms have informally indicated that they generally agree with Schneider and generally endorse his approach

, though Hammond would prefer EL 3, instead of 3.5, for the 750

- 1000 KVA portion of DL8 (which accounts for a v ery small volume of shipments).

John Caskey of NEMA, though aware of the revised draft proposal , remains concerned with the possible impact on small manufacturers and in any case needs more time to consult with his membership. Due to the holiday season , that cannot happen until early January, but he again offered to provide a firm NEMA response by the end of the first week of January.

In short, the industry may be able a nd willing to sweeten its offer, yielding a committee consensus for a

substantial a dditional cost savings for consumers and energy savings for the nation.

It is my judgment that i t would be desirable to give this process a bit more time to unfold. I understand you have deadlines to meet and that you will be sending your draft NOPR to OMB within a few days. I also understand that you are keeping OMB up to speed on our negotiating process. I hope that whatever is sent will not foreclose or pre

- judge the outcome of our negotiations on the MVDT and LVDT lines, which are not complete but h old significant promise. If we are able to reach final agreement in early January, and you need more time to amend the NOPR to reflect that agreement, the advocates have assured me that they will be happy to approach the court with a motion from them requ esting the necessary time.

Please let me know if this approach is inconsistent with your understanding or if it raises any questions or

concerns.

Cc:

Jim Raba

Maxine Savitz

Art Rosenfeld

to NEMA premium 

### for all of LVDT, except for the very small 15 kva sub

- class where a more lenient standard is

needed.