# Energy Conservation Standards

for Distribution Transformers Notice of Proposed Rulemaking (NOPR)

Building Technologies Program Office of Energy Efficiency and Renewable Energy

September 27, 2006 1 

## Building Technologles 

## Prograrn 

# Energy Conservation Standards for Distribution Transformers Notice 

### ofProposed Rulemaking (NOPR)

Building Technologies Program Office of Energy Efficiency and Renewable Energy September

### 27, 2006 1

## Statutory Authority



## Energy Policy and Conservation Act as amended Sec. 346. Energy conservation standards for... distribution transformers [.] (a) (1) The Secretary shall, within 30 months after October 24, 1992, prescribe testing requirements for those . . . distribution transformers for which the Secretary makes a determination that energy conservation standards would be technologically feasible and economically justified, and would result in significant energy savings. (2) The Secretary shall, within 18 months after the date on which testing requirements are prescribed by the Secretary pursuant to paragraph (1), prescribe, by rule, energy conservation standards for those . . . distribution transformers for which the Secretary prescribed testing requirements under paragraph (1). (42 U.S.C. 6317) 2 

## Statutory Authority - Energy Policy and Conservation Act as amended Sec. 346. Energy conservation standards for.
.. distribution transformers [.] (a) (1) The Secretary shall, within 30 months after October 24, 1992, prescribe testing requirements for those
. . . distribution transformers for which the Secretary makes a determination that energy conservation standards would be technologically feasible and economicallyjustified, and would result in significant energy savings.

(2) The Secretary shall, within 18 months after the date on which testing requirements are prescribed by the Secretary pursuant to paragraph (1), prescribe, by rule, energy conservation standards for those
... distribution transformers for which the Secretary prescribed testing requirements under paragraph (1). (42 U.S.C. 6317) 2

## DOE Actions on Distribution Transformers

• Determination - Positive, October 22, 1997; 62 FR 54809; 

## ty Summary

• Test Procedures - Final Rule published on April 27, 2006, based on IEEE and NEMA standards (71 FR 24972); and • Energy Conservation Standards • Framework Document Workshop, November 1, 2000 • ANOPR published July 29, 2004. 69 FR 45376 • NOPR published August 4, 2006. 71 FR 44356 • Final Rule scheduled for September 2007

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## DOE Actions on Distribution Transformers

• Determination - Positive, October 22, 1997; 62 FR 54809; 

### • Test Procedures - Final Rule published on April 27, 2006, based on IEEE and NEMA standards (71 FR 24972); and 

### • Energy Conservation Standards • Framework Document Workshop, November 1, 2000 • ANOPR published July 29, 2004. 69 FR 45376 • NOPR published August 4, 2006. 71 FR 44356 • Final Rule scheduled for September 2007

314- lir+i+'iiqWhlrjl Lh';TIil i:^l'^'^1Rl The Energy Policy and Conservation Act directs DOE to take into consideration seven factors when setting energy conservation standards
1. Economic impact on Life-cycle cost analysis consumers and manufacturers Manufacturer impact analysis 2. Lifetime operating cost savings Life-cycle cost analysis 3. Total projected energy savings National impact analysis 4. Impact on utility or Engineering analysis 

### performance Screening analysis 5. Impact of any lessening of Manufacturer impact analysis competition 6. Need for national energy National impact analysis 

### conservation 7. Other factors the Secretary Environmental assessment considers relevant Utility impact analysis Employment impact analysis The Energy Policy and Conservation Act directs DOE to take into consideration seven factors when setting energy conservation standards EPCA Factors DOE Analysis 1. Economic impact on Life-cycle cost analysis consumers and manufacturers Manufacturer impact analysis 2. Lifetime operating cost savings Life-cycle cost analysis 3. Total projected energy savings National impact analysis 4. Impact on utility or Engineering analysis performance Screening analysis 5. Impact of any lessening of Manufacturer impact analysis competition 6
. Need for national energy National impact analysis conservation 7. Other factors the Secretary Environmental assessment considers relevant Utility impact analysis Employment impact analysis 4

# Standards-Setting Flow Diagram

Framework ANOPR NOPR Final Effective "k? Document Rule Date

--- --------- Revise Trial ANOPR 5tanc4ird Ai7lyses Levels Manufacturer \v utility \\ Employment Impact Impact Impact Analysis Arti7lysis Ai narl'ysis

Life-Cyvl Engineerinng\ Cost National Anaiysig PjAyb^t^-k linpac.'t

Per AC d Analysis. Ana lyres L Regulatory Irripac't Ai alysis

5 

# I Revfse ANOPR An c llv.ses 

## Standards-Setting Flow Diagram

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### Engineering Analysis

• Gathered new material prices to prepare a five-year average price and a Q1 2005 sensitivity analysis; • Improved estimates of manufacturing labor estimates and costing of hardware/components; • Established a uniform range of A and B values for optimization; and • Re-ran the OPS software for all design lines, accounting for new material prices and input adjustments such as impedance and core flux density.

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### Engineering Analysis
• Gathered new material prices to prepare a five-year average price and a Q1 2005 sensitivity analysis; • Improved estimates of manufacturing labor estimates and costing of hardware/components; • Established a uniform range ofA and B values for optimization; and • Re-ran the OPS software for all design lines, accounting for new material prices and input adjustments such as impedance and core flux density.

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### Life-Cycle Cost Analysis • Reduced A and B evaluation parameters and adjusted percentage of evaluators; • Reduced distributor mark-up for dry-types and added distributor mark-up for liquid immersed; • Added pole replacement cost for design line 2; • Increased loading for medium voltage dry-types by 13%; • Updated electricity prices to 2004; • Set standard year to 2010; and • Set standard levels based on LCC criteria.

7 

### Life-Cycle Cost Analysis
• Reduced A and B evaluation parameters and adjusted percentage of evaluators; • Reduced distributor mark-up for dry-types and added distributor mark-up for liquid immersed; • Added pole replacement cost for design line 2; • Increased loading for medium voltage dry-types by 13%; • Updated electricity prices to 2004; • Set standard year to 2010; and • Set standard levels based on LCC criteria.

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### National Impact Analysis

• Added more shipments data from Bureau of Economic Analysis (B EA); • Changed forecast period to 2010 - 2038 using Annual Energy Outlook (AEO) economic forecasts as input; • Changed dry-type transformer purchase price elasticity from 0 to Low/Med/High scenarios of 0.0/-0.02/-0.20; • Standard start year is now 2010; • Updated site-to-source energy conversion factors; and • Analysis year changed from 2001 to 2004.

s 

### National Impact Analysis
• Added more shipments data from Bureau of Economic Analysis (BEA); • Changed forecast period to 2010 - 2038 using Annual Energy Outlook (AEO) economic forecasts as input; • Changed dry-type transformer purchase price elasticity from 0 to Low/Med/High scenarios of 0.0/-0.02/-0.20; • Standard start year is now 2010; • Updated site-to-source energy conversion factors; and • Analysis year changed from 2001 to 2004.

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### Manufacturer Impact Analysis

• Evaluation of impacts from the energy conservation standards on Industry Net Present Value (INPV)

• 

### Assessment of direct employment impacts on distribution transformer manufacturers • Assessment of impacts on the manufacturing capacity of the distribution transformer industry • Assessment of cumulative regulatory burden on manufacturers from DOE standards and other regulatory actions • Conducted six full-length interviews, two of which were with small businesses (>70% of market interviewed in both superclasses) 

### • Conducted four additional small business interviews (subgroup analysis) • Conducted interviews with suppliers of materials and equipment 9 

### Manufacturer Impact Analysis
• Evaluation of impacts from the energy conservation standards on Industry Net Present Value (INPV) • Assessment of direct employment impacts on distribution transformer manufacturers • Assessment of impacts on the manufacturing capacity ofthe distribution transformer industry • Assessment of cumulative regulatory burden on manufacturers from DOE standards and other regulatory actions • Conducted six full-length interviews, two ofwhich were with small businesses (>70% of market interviewed in both superclasses) • Conducted four additional small business interviews (subgroup analysis) • Conducted interviews with suppliers of materials and equipment 9

### Utility Impact Analysis CPR Analysis



### • For liquid-immersed transformers, utility economic impacts are treated in the life-cycle cost analysis; • Incremental energy savings is fed into a version of the National Energy Modeling System developed by the Energy Information Administration; • Impacts in terms of power plant capacity and different fuel types are reported; and • Over the medium term, a majority of savings reduces gas generation; over the long term a majority of savings is from coal generation.

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### Utility Impact Analysis

• For liquid-immersed transformers, utility economic impacts are treated in the life-cycle cost analysis; • Incremental energy savings is fed into a version ofthe National Energy Modeling System developed by the Energy Information Administration; • Impacts in terms of power plant capacity and different fuel types are reported; and • Over the medium term, a majority of savings reduces gas generation; over the long term a majority of savings is from coal generation.

10

### Employment Impact Analysis

• The Department used IMBUILD II to estimate indirect employment impacts.

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• The Department used IMBUILD II to estimate indirect employment impacts. - "f- -= - - -**~..** " ;.:; "1'1 

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### Environmental Impact Analysis

• The Department calculated the emissions of C02, NOX, SOX, and Hg; • When there are regulatory emissions caps, reduced electricity 

### generation may not result in actual emissions reductions; and • The Department reported emissions reduction quantities for C02, NOX, SOX, and Hg based on output from the National Energy Modeling System (NEMS)

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### Environmental Impact Analysis • The Department calculated the emissions of CO2 , 

### NOx , SOx, and Hg; • When there are regulatory emissions caps, reduced electricity generation may not result in actual emissions reductions; and • The Department reported emissions reduction quantities for CO2 , 

### NOx , SOx, and Hg based on output from the National Energy Modeling System (NEMS)

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### Issues on which DOE seeks comment - NOPR issues #1-4 (1) The proposed tables of efficiency ratings, and specifically areas where the underlying analytical methods followed for developing the efficiency values resulted in discontinuities. (2) The Department's treatment of rebuilt or refurbished transformers in this rulemaking and the potential impact on consumers, manufacturers and national energy use if they were excluded. (3) Whether less-flammable, liquid-immersed distribution transformersshould be included in the same product class as medium-voltage drytype transformers. Currently the Department considers dry-type transformers and liquid-immersed transformers as members of separate product classes.(4) Whether stakeholders believe a minimum efficiency standard for liquidimmersed distribution transformers would contribute to design standardization, and encourage manufacturers to move to countries with lower labor costs. 13 

### Issues on which DOE seeks comment - NOPR issues #1-4 (1) The proposed tables of efficiency ratings, and specifically areas where the underlying analytical methods followed for developing the efficiency values resulted in discontinuities. (2) The Department's treatment of rebuilt or refurbished transformers in this rulemaking and the potential impact on consumers, manufacturers and national energy use ifthey were excluded. (3) Whether less-flammable, liquid-immersed distribution transformers should be included in the same product class as medium-voltage drytype transformers. Currently the Department considers dry-type transformers and liquid-immersed transformers as members of separate product classes. (4) Whether stakeholders believe a minimum efficiency standard for liquidimmersed distribution transformers would contribute to design standardization, and encourage manufacturers to move to countries with lower labor costs. 13

### Issues on which DOE seeks comment - NOPR issues #5-7

(5) The appropriateness of using discount rates of seven percent and three percent real to discount future energy savings and emissions reductions. (6) Whether the Department should include space occupancy costs in the cost of transformers as a means of accounting for space constraints. (7) The IRFA and the potential impacts on small businesses affected by this rulemaking. Although the Department is expressly inviting comments related to the medium-voltage, dry-type superclass, the Department also welcomes comment on its understanding that there would be no significant economic impact on a substantial number of small entities within the liquid-immersed superclass alone.

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### Issues on which DOE seeks comment - NOPR issues #5-7 (5) The appropriateness of using discount rates of seven percent and three percent real to discount future energy savings and emissions reductions. (6) Whether the Department should include space occupancy costs in the cost oftransformers as a means of accounting for space constraints. (7) The IRFA and the potential impacts on small businesses affected by this rulemaking. Although the Department is expressly inviting comments related to the medium-voltage, dry-type superclass, the Department also welcomes comment on its understanding that there would be no significant economic impact on a substantial number of small entities within the liquid-immersed superclass alone.

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### Issues raised by Stakeholders

• Proposed Trial Standard Level; • Manufacturability of higher efficiency designs; • Impact of standard on natural gas prices; • Parameter selection for the Capital Asset Pricing Model; • Emissions impacts when regulatory emissions caps are in place; • Discounting of energy savings and emissions; • Mining transformers and 

### • Raw material prices paid by transformer manufacturers.

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### Issues raised by Stakeholders

• Proposed Trial Standard Level; • Manufacturability of higher efficiency designs; • Impact of standard on natural gas prices; • Parameter selection for the Capital Asset Pricing Model; • Emissions impacts when regulatory emissions caps are in place; • Discounting of energy savings and emissions; • Mining transformers and • Raw material prices paid by transformer manufacturers.

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