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

 EE-RM/STD-00-550 COMMENT 108.3

Building Technologles Prograrn 

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 
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

 EE-RM/STD-00-550 COMMENT 108.3

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 
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

3

 EE-RM/STD-00-550 COMMENT 108.3

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 

3 
14-

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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

 EE-RM/STD-00-550 COMMENT 108.3

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

 EE-RM/STD-00-550 COMMENT 108.3

I 

Revfse 

ANOPR 

Ancllv.ses 

Standards-Setting Flow Diagram 

\. 

Framework \- ANOPR 

Document / 

/ 

T~ial ' . MamlIaCI ~ " IUfllity-· 

StanclarCJ] ' -' Impact : Jrnpcu.:l 

l,j!lIeis, t " , An<llysls I A" '1lysis 

, " E:ffectiv~ , Date_I 

R~Ula:=> . Ilmpac't Iry \ 

Analysis 

5 
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.

6

 EE-RM/STD-00-550 COMMENT 108.3

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. 

6 
'' ' =} Energy' EnluLwlu al

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

 EE-RM/STD-00-550 COMMENT 108.3

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 
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

 EE-RM/STD-00-550 COMMENT 108.3

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. 

8 
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

 EE-RM/STD-00-550 COMMENT 108.3

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 
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.

10

 EE-RM/STD-00-550 COMMENT 108.3

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 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. 

10 
Employment Impact Analysis

• The Department used IMBUILD II to estimate indirect

employment impacts.

11

 EE-RM/STD-00-550 COMMENT 108.3

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Employment Impact Analysis 

• The Department used IMBUILD II to estimate indirect 

employment impacts. 

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11 
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)

12

 EE-RM/STD-00-550 COMMENT 108.3

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) 

12 
17^:: 11131 {I i :^E,;; +^

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 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

 EE-RM/STD-00-550 COMMENT 108.3

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 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.

14

 EE-RM/STD-00-550 COMMENT 108.3

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. 

14 
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.

15

 EE-RM/STD-00-550 COMMENT 108.3

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. 

15