From: Eric.Petersen@aksteel.com [mailto:Eric.Petersen@aksteel.com]

Sent: Tuesday, December 13, 2011 1:56 PM

To: Richard Parker

Cc: Meyers, Aaron; Alex Hofmann; Andrew Delaski; Ar is Marantan; Art Rosenfeld; Bob Saint; Bob Smith; Brenda Edwards; Brian Coffey; Caitlin Johnson; Carl os Gaytan; Caskey, John; Charlie Drexler; Charlie
Stevens; Chris Bolduc; Chris Brown; Clark Silcox; Cr eevy, Jim; Dan Cohen; Daniel Young; David Flaten; Emily Marchetti; Eric Peterson; Freeman, Jeremiah; Gary Fernstrom; Greg Coulter; Greg Rosenquist;
Hirsch, Bruce R; James Lass; Jennifer Tiedeman; Cork ran, Jerry L; Jerry Hodge; Jerry Schoen; Jim Raba; Joanna Mauer; John Cymbalsky; John Rossetti; Ke n Winder; Mahesh P. Sampat; Matthew Nardotti; Maxine Savitz; Meg Waltner; Michael Hyland; Michael Rivest; Millure, Dave; Pamela Costello; Phil Harter; Phil Hopkinson; Polinski, Raymond; Puesh Kumar; Ri ck Anderson; Rob Greeson; Robert Berman; Robert van Buskirk; Robin Roy; Ryan, Paul; Scott Beck; Si mmons, Chuck; Steve Nadel; Steve Rosenstock; Ted
Johnstone; Thomas Petrosino; Tim Ballo; Tom Eckm an; Wes Patterson; Zhimei Luo; Katie Coughlin Subject: Summary of Refurbishment Industry

Mr. Parker and Committee Members,

Jerry Schoen spent some time yesterday afternoon survey ing the internet to get a feel for the transformer refurbishment industry. As you can see from t he attached summary, a service and support industry clearly exists separate from the manufacturers.

I would continue to encourage the committee to consider the very real concern of establishing an EL that pushes the industry towards refurbishment. I recognize there have been comments that we should not concern ourselves with this issue as we'll be able to identify a means of regulating a refurbishment industry; however, I am co ncerned about the viability of passing re gulations considering the impact of such regulations on the existing businesses in this industry.

Here is a summary of some 14 of these firms.

Firm Date Established OEM GE check with Mr. Edison yes Sunbelt 1981 yes

Solomon 1971 no Lakeport [unknown] no

Brandon & Clark 1987 no

T&R Electric 1961 no

Southeastern 1974 no

EMSCO 1948 no Uptegraff 1926 no Virginia 1971 yes

Garrett 1974 no Cam Tran pre-1996 [expansion project then] yes Moloney 1909 yes Jerry's Electric 1976 yes

Notable points Page 7 -- Sunbelt's comment with link to the EERE final rule stating that while its newly manufactured transformers comply with DOE efficiency standar ds, remanufactured transformers are exempt, Page 11 -- Solomon's comment on its recycling numbers (150,000 transformers per year)Page 19 -- R. E. Uptegraff statement about "why repair?: Our experience has shown that the majority of tran sformer failures can be traced to the introduction of some foreign matter (usually water) into the unit. It is imperative that the unit seal be maintained. This requires periodic inspection/maintenance of gaskets, weld integrity, paint integrity etc. - This task can be

cumbersome for the user that is not in the business of building transformers. Liquid filled transformers are generally heavy, and require heavy equipment for disa ssembly. Handling and temporary storage of the insulating fluid can also present a unique problem. Being a new transformer manufacturer, the Uptegraff factory is specifically equipped to handle units as large as 15mVA. Our familiarity with transformer component suppliers makes accessory acquisition a snap. Our intimate knowledge of national standards regarding construction and test of transformers allows us to update your unit to current standards. For a minimum cost, you can extend the life of your unit. Page 22 -- Virginia Transformer statemen t about buying a reconditioned transformer: Cost can be 30-40% less than the price of a new transformer Standard warranty is superior to i ndustry standard for new equipment Page 31 -- Moloney Electric statement a bout buying a reconditioned transformer: Minor repair is 20-40% of new [transformer] Refurbishment is 75% of new [transformer]

I do not believe we should expect that implementing regul ations on this industry is a foregone conclusion. Increasing transformer efficiency levels to a point that the economics favor refurbishment needs to be recognized as a likely outcome of our effort and expect ing that we can pass a regulation to ensure our savings remain intact should not be considered as an accomplished task.

Regards,

Eric Petersen

Director Customer Technical Services and Research AK Steel Corporation

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