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UNITED STATES OF AMERICA

DEPARTMENT OF ENERGY 

MEETING of the LV WORKING GROUP

Volume I

American Public Power Association

1875 Connecticut Ave., NW

12th

Washington, D.C. 20009

Floor

Thursday

 December 1, 2011

Facilitator:

Richard Parker

University of Connecticut Law School

Host:

American Public Power Association

1875 Connecticut Ave., NW

12th

Washington, D.C. 20009

Floor
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Participants Identified: 

Gene Andert

REA Magnet Wire

Rick Anderson

Fayetteville Public Works Commission

Tim Ballo

Earth Justice

1625 Massachusetts Avenue

Suite 702

Washington, DC 20036

Scott Beck

Lakeview Metals

Chris Brown

Cogent Power

John Caskey 

National Electrical Manufacturers Association

Scott Choinski

National Electrical Manufacturers Association

1300 North 17th

Suite 1752

Street

Rosslyn, VA 22209

Greg Coulter

Consultant 

Prolec GE

Jim Creevy

National Electrical Manufacturers Association

1300 North 17th

Suite 1752

Street

Rosslyn, VA 22209

Andrew deLaski

ASAP

20 Belgrade Ave, Suite 1

Boston, MA 02131
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Tom Eckman

Northwest Power and Conservation Council

Gary Fernstrom

Pacific Gas & Electric Company

13055 Parkhurst Dr

Oakland, CA 94619

Chuck Foster

Edison Electric Institute

Robert Greeson

Federal Pacific Company

Michael Hyland

American Public Power Association

Don Lewis

Alconex

Dave Millure

Metglas Incorporated

440 Allied Drive

Conway, SC 29526

Wes Patterson

ABB, Inc.

Thomas Patzner 

Schneider Electric

Eric Petersen 

AK Steel

Eduardo Robles

Eaton Corporation

Steven Rosenstock

Edison Electric Institute

701 Pennsylvania Avenue NW

Washington, DC 20004-2696
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Mahesh P. Sampat

EMS Consulting

1180 Brookview Dr

Athens, GA 30606

Jerry Schoen

AK Steel Corporation

705 Curtis Street

Middletown, OH 45043

Mike Shannon

RSA Magnet Wire

Participants from DOE:

Sarah Butler (via webinar)

John Cymbalsky

Jim Raba

Participants from Navigant/LBL:

Brian Coffey

Navigant

Mike Rivest

Navigant

Matt Nardotti

Navigant Consulting

Chris Bolduc

Lawrence Berkley National Laboratory

Berkeley, CA 94720

Katie Coughlin

Lawrence Berkley National Laboratory

Luo Zhimei

Navigant Consulting
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Webinar Attendees

Jerry Allen

Metglas, Inc.

Jay Ballard

Schneider Electric

Dale Corel

NEMA

Pam Costello

Navigant Consulting

Kenneth Harden

Schneider Electric

Chad Kennedy

Schneider Electric

Philip Ling

Powersmiths International Corp

Richard Lyke

AK Steel

Dhiru Patel 

Hammond Power Solutions Inc.

Art Rosenfeld 

ERAC 

John Rosetti

Memphis Light Gas and Water

Jeff Schneider

Cooper Power Systems
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AGENDA

 ITEM PAGE

Welcome, Mr. Parker 7

Self-Introductions 7

Engineering Analysis

Mr. Coffey 11

LCC Analysis and NIA

Mr. Bolduc 15

Manufacturing Impacts

Mr. Carmichael 22

Proposals

Manufacturers: Mr. Caskey 38

Steel Makers: Mr. Petersen 52

Advocates: Mr. Delaski 53
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1 2:17 p.m.

3 MR. PARKER: Okay. Welcome everyone to 

4 our (people continue speaking.) If I can have 

5 everyone’s attention, let’s get started. We have a 

6 lot to cover today. Let’s go around first and 

7 identify who we are. 

2 P R O C E E D I N G S

8 Self-introductions

9 MR. PARKER: My name is Richard Parker, 

10 facilitator.

11 MR. PATZNER: Thomas Patzner, Schneider 

12 Electric.

13 MR. ROBLES: Eduardo Robles, Eaton 

14 Corporation.

15 MR. TENDULKAR: Vijay Tendulkar, Onyx 

16 Power.

17 MR. CASKEY: John Caskey, NEMA.

18 MR. PETERSEN: Eric Petersen, AK Steel.

19 MR. PATTERSON: Wes Patterson, ABB.

20 MR. GREESON: Rob Greeson, Federal Pacific

21 Transformer.

22 MR. DeLASKI: Andrew DeLaski, Appliance 

23 Standards Awareness Project.

24 MR. PARKER: Can we ask people on the 

25 phone to please mute their phones until you’re 
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1 giving your name, that’d be great. Thank you.

2 MR. SCHOEN: Jerry Schoen, AK Steel. 

3 MR. ROSENFELD: (phone) This is Art 

4 Rosenfeld from the ERAC.

5 MR. ALLEN: (phone) Jerry Allen, Metglas.

6 MR. PARKER: Anybody else on the phone 

7 while we’re at it?

8 MR. COULTER: John Coulter.

9 MR. LYKE: Rick Lyke, AK Steel.

10 MR. PARKER: Anybody else on the phone?

11 MR. ROSETTI: John Rosetti, Memphis Light 

12 Gas and Water.

13 MR. MILLURE: Dave Millure, Metglas. .

14 MR. FERNSTROM: Gary Fernstrom, PG&E 

15 representing PG&E, Southern California Edison and 

16 Semper Utilities. 

17 MR. ECKMAN: Tom Eckman, Northwest Power 

18 and Conservation Council.

19 MR. BECK: Scott Beck, Lakeview Metals.

20 MR. BALLO: Tim Ballo, Earth Justice.

21 MR. RIVEST: Mike Rivest, Navigant 

22 Consulting.

23 MR. CYMBALSKY: John Cymbalsky, DOE.

24 MR. CARMICHAEL: Rob Carmichael, Navigant.

25 MR. COFFEY: Brian Coffey, Navigant.
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1 MS. COUGHLIN: Katie Coughlin, Lawrence 

2 Berkley National Labs.

3 MR. BOLDUC: Chris Bolduc, LBNL.

4 MR. SAMPAT: Mahesh Sampat, EMS 

5 Consulting.

6 MR. BROWN: Chris Brown, Cogent Power.

7 MR. ANDERT: Gene Andert, Rea Magnet Wire 

8 Company.

9 MR. SHANNON: Mike Shannon, Rea Magnet 

10 Wire Company.

11 MR. ROSENSTOCK: Steve Rosenstock, Edison 

12 Electric Institute.

13 MR. FOSTER: Chuck Foster, representing 

14 Edison Electric.

15 MR. RUSH: Ned Rush, consultant.

16 MR. LEWIS: Don Lewis, Alconex. 

17 MR. CHOINSKI: Scott Choinski, National 

18 Electrical Manufacturers Association.

19 MR. CREEVY: Jim Creevy, NEMA.

20 MR. HYLAND: Mike Hyland, APPA.

21 MR. RABA: Jim Raba, Department of Energy.

22 Proposed Agenda

23 MR. PARKER: Great, thank you. What I 

24 propose to do is first we do have updated 

25 engineering analysis using 2011 materials prices 
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1 prepared by Navigant, so I propose that Navigant 

2 walk us through the latest analysis, which we 

3 received a couple of days ago. We had a chance to 

4 at least look at it briefly and digest it since 

5 then. Then we’ll ask LBNL to walk us through their 

6 life cycle cost assessment. Shift back to Navigant 

7 to talk about -- briefly about the manufacturing 

8 impacts, findings, because I know manufacturing 

9 impacts are a key part of this discussion. 

10 And at that point, we’ll see where we are 

11 in terms of the time. I hope we can keep this 

12 session brief, because we have negotiating to do at 

13 this meeting, so let’s ask only clarifying questions 

14 of the analysis and then we will turn to proposals 

15 from anybody who wants to propose a proposal. And 

16 then we will break once we have the proposals and 

17 discuss -- and let people reflect on the proposals 

18 and come back and talk about them.

19 We’ll see how the time goes, but let’s 

20 move as quickly and expeditiously as we can through 

21 that. So without further ado, I’ll turn it over to 

22 Brian Coffey of Navigant to talk about the updated 

23 engineering analysis.

24 Engineering Analysis

25 MR. COFFEY: This is Brian Coffey with 
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1 Navigant. I’ll keep this short and sweet. We 

2 really didn’t -- since the last time we talked, we 

3 didn’t implement what I’ll call technical changes to 

4 the analysis. What we did develop is a 2011 

5 materials price case. And the primary -- those are 

6 the results that are up on the screen right now.

7 The primary feature of this is that all 

8 steels have come down in price relative to our 2010 

9 case. The grain-oriented steels, well, I guess the 

10 non-grain-oriented steels too, the conventional 

11 steels, much more so than the amorphous. So that 

12 will generally have the effect of finding out the 

13 conventional product to some extent, but at the same 

14 time steepening the curve as it starts from the 

15 conventional to the amorphous so that, I suppose, 

16 the differential between the conventional steels and 

17 the amorphous steels will be higher.

18 So there should have been a design line 

19 six -- on the next slide, so here’s design line six. 

20 This is our single-phase, 25 KVA.

21 MR. DeLASKI: Brian, this is Andrew. So 

this is the presentation you gave on November 28th

23 MR. COFFEY: That’s right.

22 ?

24 MR. PARKER: Please wait until you have a 

25 mic for the people on the phone. There’s a mic --
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1 MR. DeLASKI: Thanks. I’m just confirming 

2 that he did this 11/28.

3 MR. COFFEY: This is 11/29 actually.

4 MR. DeLASKI: Okay. 11/28 on the 

5 Sharepoint is probably the same?

6 MR. COFFEY: They’re the same results, 

7 yes.

8 MR. DeLASKI: Okay. Thanks.

9 MR. COFFEY: So this is design line six. 

10 Flip forward to design line seven now. 75 KVAs. 

11 We’ve got a sparse patch in the middle that we saw 

12 last time, and that’s the result of filtering for 

13 induction. It’s not to say that the design couldn’t 

14 be built there, but we’ll get to that in response to 

15 feedback that industry induction levels are 

16 sometimes lower. Overall turn of the curve is 

17 preserved.

18 MR. PARKER: (pause while searching for 

19 slide.) It cut off at design line seven. All 

20 right. I have no idea. I’ve never seen this 

21 before. I don’t know why it doesn’t come up. Do 

22 people have this in paper, though? People have the 

23 handouts, right? It might be easier to just walk 

24 them through.

25 MR. DeLASKI: We don’t have the handouts, 
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1 Richard.

2 MR. PARKER: You don’t have the handouts?

3 MR. DeLASKI: I have it on my screen on 

4 Sharepoint.

5 MR. PARKER: Okay. (Pause.) Okay.

6 MR. COFFEY: And design line eight. It’s 

7 similar. It’s moved a little bit relative to the 

8 last result we presented. If everyone’s okay with 

9 this, I can show you the materials prices that were 

10 used to create these curves.

11 MR. CASKEY: Can you say -- excuse me --

12 this is John Caskey, NEMA. On this particular 

13 graph, the lines for CSL-2 and three are sort of 

14 missing. Do you know what the percentages --

15 equivalent percentage along this axis is for CSL-2 

16 and three?

17 MR. COFFEY: Not off the top of y head. 

18 They would -- I mean, those haven’t changed.

19 MR. CASKEY: I still want to know what 

20 they are.

21 MR. COFFEY: Yeah. I’ve got them on other 

22 slides.

23 MR. ROBLES: 99.02 for CSL-2 and CSL-3 is 

24 99.14. 

25 MR. COFFEY: Thank you. And so here are 
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1 the prices that were used to create those results.

2 MR. PARKER: Can everybody see them?

3 PARTICIPANT: No. Can you go to 

4 presentation mode so -- key prices?

5 MR. COFFEY: Sure. I can read through 

6 some of them if some people are having trouble 

7 seeing them. M36 is 66 cents a pound. M19 is 91. 

8 M12 is 78, and six is $1.04. And five, $1.10. 

9 Four, $1.20. Three, $1.30 and two $1.40. And H-0 

10 is $1.70. Amorphous is $2.20. So again, this is 

11 just another case that we developed for the benefit 

12 of the committee to discuss, and so if there’s 

13 feedback on it.

14 MR. PARKER: Any questions so far?

15 MR. CASKEY: John Caskey, NEMA. Did you 

16 do any of those simplified line graphs like you did 

17 for the oil filled?

18 MR. COFFEY: They should be on Sharepoint. 

19 I can try to call them up. 

20 MR. DeLASKI: They are. They’re on 

21 Sharepoint.

22 MR. COFFEY: Here, John. Here’s the 2010 

23 pricing result. Not a whole lot of difference. 

24 It’s not that, which is 2011, but there’s not much 

25 difference. (Pause.)
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1 MR. PARKER: We were trying to get the 

2 simplified plots but -- I thought they were already 

3 on the system. They seem to have disappeared. I 

4 don’t know why. But let’s walk through the LCC 

5 results and get those and the manufacturing impacts, 

6 and we can get the simplified designs a little bit 

7 later.

8 LCC Analysis and NIA

9 MR. BOLDUC: Good afternoon. My name is 

10 Christopher Bolduc and I’m from Lawrence Berkley 

11 National Lab. I’ll presenting the LCC NIA results 

12 this afternoon. In front of you we have the -- so 

13 in front of us it’s slide six for anybody who’s 

14 following on the phone. This is the design line six 

15 LCC results. You can see there’s a similar pattern 

16 of the 2010-11 data that we saw. In 2011 we have a 

17 bit of a solitude pattern of the LCC as we move from 

18 EL-1 to EL-3. EL-3 -- EL-4 is the transition point 

19 between standard steels and amorphous steels.

20 Again, the LCC results peak on the first 

21 two at $301 at EL-2, and they peak at $300 on the 

22 second two on the chart, at EL-5. Next slide, 

23 please.

24 This is design line seven LCC results. 

25 The unusual thing that we’re seeing here is that 
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1 we’re seeing the same units selected in ELs one 

2 through three. This is clearly visible in the 

3 engineering where we have a large gap in the design 

4 space from base case up to EL-3. So the LCC is 

5 picking up on lowest first cost, actually selecting 

6 way above the standard level that it would normally 

7 select at.

8 And then we see increasing LCC up to max 

9 tech and then it comes back down as we push the edge 

10 of amorphous. Next slide please.

11 DL-8, again, sort of what we saw in the 

12 2010 prices. It looks like we have two curves here, 

13 and again, it represents two transitions. EL-1 and 

14 EL-2, I can’t remember off the top of my head. 

15 Scratch that. It’s M3 through EL-4 and then we 

16 transition to SA-1, EL-5, 6 and 7. And that gives 

17 us kind of the two bumps in the curve.

18 If we move on to the payback. Again, we 

19 can almost see inverse only this is a little more 

20 exaggerated, where we have a long payback on the 

21 first two, at EL-3, close to 14 years, and then when 

22 we move into the amorphous designs, we see a bit of 

23 a dip and then it increases up to max tech at 35 

24 years. Next slide.

25 In design line seven, we have the low 
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1 paybacks from EL-1 through four, or actually, one 

2 through three, which represents the gap in 

3 engineering that I alluded to before. And we slowly 

4 transition up to amorphous at EL-5 through seven. 

5 Next slide.

6 Again, this is design line eight. The 

7 short sawtooth (ph) kind of pattern on the paybacks 

8 as we transition to amorphous around EL-5. So then 

9 at EL-5 we have a payback period around 11.2 years, 

10 and a max tech, 25 years.

11 Steel selection is going to be -- I think 

12 it’s going to be mostly M-grade steels up to EL-4, 

13 and then EL-5, 6, 7, I think the LCC starts to pick 

14 almost exclusively amorphous steels.

15 MR. DeLASKI: Chris, this is Andrew. A 

16 question for clarification. Earlier you said mostly 

17 -- you said M selects M3, and now you say selects 

18 mostly M-grade, and in our last discussion M4 versus 

19 M3 -- so could you be more specific? Can you? If 

20 you can’t, I understand, but that’s the --

21 MR. BOLDUC: It’s a little tough with the 

22 engineering. The engineering for DL-8 is very 

23 mixing of steels at ELs two through four, so if 

24 there’s a decent amount of M3 -- just the different 

25 grades of steel with different manufacturing 
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1 techniques.

2 MR. DeLASKI: At EL-2 through four you 

3 said?

4 MR. BOLDUC: Yes.

5 MR. DeLASKI: Okay. 

6 MR. BOLDUC: You can see that --

7 MR. DeLASKI: The scatter plot will show 

8 us that.

9 MR. BOLDUC: It should. So the next set 

10 of slides is the NIA, the National Impact Analysis 

11 results based on the seven TSLs that were used in a 

12 previous meeting. And this is the blend of 

13 efficiency levels for each TSL. Now for those on 

14 the phone, I’ll describe the TSLs.

15 The first TSL is minimal LCC or max MPB. 

16 TSL-2 is maximum energy savings with ... at three 

17 percent discount rate. Is there a question on the 

18 phone? Could you please mute your phones if you’re 

19 not asking questions? Thank you.

20 TSL-3 is a 30 percent reduction in 

21 operating costs. TSL-4 is the highest efficiency 

22 level where M3 steels are available. TSL-5 is the 

23 gap filled between TSL-4 and six. And TSL-7 is NEMA 

24 premium.

25 Now, you can see here the composition of 
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1 these TSLs, there’s a lot of repetition of the 

2 efficiency levels. It’s because when we mix the 

3 efficiency levels with the new equipment class to be 

4 consistent. So TSL-1 is DL-4 for design lines six, 

5 seven and eight. TSL-2 is the efficiency level 4 

6 for equipment class three, which is DL-6. And 

7 equipment class four, which is a combination of DL-7 

8 and eight. TSL-3 is again, fours across the board. 

9 TSL-4 is again fours across the board. TSL-5 is 

10 fives across the board. TSL-6, which is max tech, 

11 is EL-7. And TSL-7, which is NEMA premium is three, 

12 three, two. That’s in there as a benchmark.

13 Now, what I’d like to add is for the 

14 negotiation purposes that if the committee wishes to 

15 change these trial standard levels, we can, and we 

16 will run numbers for you. These are not carved in 

17 stone.

18 MR. PARKER: Let me also just add to 

19 clarify and that’s in the past, I think, the other 

20 groups, and I think in this group as well, we have 

21 recognized that these TSLs don’t rank very well, 

22 comport very well systematically in terms of maximum 

23 efficiency. So for purposes of fulfilling our 

24 mandate to walk down from max tech to the cause25 justified standard, we’ve agreed to really negotiate 
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1 on the basis of ELs, rather than TSLs, and I 

2 understand that that’s an acceptable way to proceed, 

3 both legally with the Department, and also for this 

4 group. So I think that might be something to keep 

5 in mind. I don’t think we need to worry overmuch 

6 about TSLs if we proceed in that way.

7 MR. BOLDUC: Chris Bolduc, LBL. Thanks, 

8 Richard. Next slide is slide 13. So here are the 

9 combined NIA shipments and National level impacts 

10 for all level dry type equipment classes. We can 

11 see here that the cumulative source savings, the 

12 quads peak at TSL-6, which is max tech, but are 

13 substantially -- we still have gains at EL-2 which 

14 is max savings with power ... near zero and PB. And 

15 we have max MPV at seven percent discount rate at --

16 again, at TSL-2. Next slide.

17 And here are the -- the next slide 

18 represents the summary results by equipment class. 

19 The equipment classes three and four. Again, it’s 

20 the same thing, wherever you see the maximum --

21 sorry, maximum energy savings at max tech, which is 

22 TSL=6, and then the max MPV at seven percent occurs 

23 at TSL-7 which is NEMA premium. And for equipment 

24 class four, maximum energy savings again at max 

25 tech, and then max MPV at seven percent occurs at 
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1 TSL-2.

2 That would conclude the presentation of 

3 results. Do people have any questions? Thank you.

4 MR. PARKER: Thank you, Chris. I think we 

5 have the simplified design lines now on the slides. 

6 The question is do people want to see those now or 

7 would you prefer to go ahead and hear the 

8 manufacturing impact analysis and then sort of go 

9 back to that?

10 MR. CASKEY: That’s fine. We don’t need 

11 to see them now.

12 MR. PARKER: Great.

13 MR. DeLASKI: I just have a comment. 

14 Andrew. So my one comment is that in our prior call 

15 the other day with this group, I think we did agree 

16 to focus on the wound core exclusion scenario, a 

17 useful scenario for discussion purposes. I think 

18 that was the point of general consensus. So this 

19 analysis does not exclude wound cores, right?

20 MR. BOLDUC: No -- Chris Bolduc, LBL. I 

21 recall in the discussion that wound core was a 

22 possible side option for the low voltage dry. 

23 That’s why I did not run the wound core exclusion. 

24 MR. DeLASKI: No, I understand that and I 

25 think for DOE purposes, for purposes of rulemaking 
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1 that we agreed, you have to look at all the 

2 engineering possibilities. As my recollection, I’m 

3 trying to get us sort of where we were, given that 

4 call. For analytic purposes, what you’ve done is 

5 correct. It is a scenario. It is what the 

6 Department has to do for its rulemaking obligation. 

7 But if we agreed amongst the committee members that 

8 we were going to focus, for discussion purposes, on 

9 the wound core exclusion scenario, manufacturers 

10 indicate that wound cores in this technology space 

11 is not something that’s happening in the timeframes 

12 we’re talking about. So I just want to make that 

13 observation. You may remember it differently than I 

14 do, but if you do, that’s how I remember it.

15 MR. CARMICHAEL: This is Rob Carmichael, 

16 Navigant. I think part of the confusion is the 

17 wound cores that are excluded from these are the M3 

18 wound core design options. What is in here is the 

19 wound core amorphous, which also could be excluded 

20 based on the discussion from your leaflet. The M3 

21 wound core option is excluded.

22 MR. DeLASKI: Okay. 

23 MR. CARMICHAEL: All but amorphous.

24 MR. DeLASKI: All right. Thanks for that 

25 clarification.
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1 MR. CARMICHAEL: Still, these numbers 

2 reflect the amorphous.

3 MR. DeLASKI: Okay. I also, in comparing 

4 these numbers to numbers from a prior analysis, 

5 without the wound core exclusions, the 2010 pricing, 

6 without wound core exclusion, I’m struck that the 

7 results are a bit different, but not terribly 

8 different. I’m struck that in general we’re seeing 

9 similar results off by changes of ten, 15, maybe 20 

10 percent in some cases. And I went through it pretty 

11 quickly, but I don’t see any sort of big changes 

12 going from 2010 prices to 2011 prices. Just an 

13 observation.

14 MR. PARKER: Any other comments or 

15 questions on the LCC analysis before we turn to the 

16 manufacturing impact?

17 MR. DeLASKI: I’m sorry to belabor it, but 

18 then -- so the 2010 -- this is Andrew again -- the 

19 2010 scenario of last time, did that exclude wound 

20 cores other than amorphous?

21 MR. RIVEST: (off mic)

22 MR. PARKER: Mike Rivest.

23 MR. RIVEST: Mike Rivest. I think the 

24 exclusions ...

25 MR. BOLDUC: Chris Bolduc, LBL. The 
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1 exclusion scenarios for the 2010 prices excluded 

2 ZDMH and SA-1. SA-1 happened to coincide with 

3 designs that were all wound core.

4 MR. RIVEST: So I don’t think there was a 

5 decision to exclude wound cores ... (off mic)

6 MR. DeLASKI: I hear you, but what I just 

7 heard Chris say is that wound core M3 is excluded 

8 from this analysis.

9 MR. RIVEST: But that was not for the 

10 reasons that ... done. It was simply a decision that 

11 both stack and lapped were both technologies and 

12 both offered ... and that if we mixed the lapped and 

13 the stacked, that created issues on our differential 

14 capital costs. That’s not like when we decided to 

15 exclude the ... because those technologies were not ... 

16 the units were getting very big.

17 MR. DeLASKI: Okay. What I want to 

18 understand is so then that being consistent all the 

19 way along. Okay. Thank you. That was my question.

20 MR. BOLDUC: And Andrew -- Chris Bolduc, 

21 LBL. You can hear me. I can prepare that 

22 sensitivity curve tonight for tomorrow morning to 

23 help your negotiations, if you feel that will help.

24 MR. DeLASKI: No, I don’t understand where 

25 we are, what we’re looking at.
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1 MR. BOLDUC: Oh, great.

2 MR. PARKER: Okay. Let’s turn to then the 

3 manufacturing impact analysis, and Rob Carmichael.

4 Manufacturing Impact Analysis

5 MR. CARMICHAEL: So last time there were 

6 some requests to see some more detail on the 

7 manufacturing impact analysis for this space in 

8 particular. And so just as a table for that, some 

9 basic market characteristics that we found. So 

10 obviously, first cost appeared in customer base. 

11 One of the important things to keep in mind through 

12 this is about 50 percent of the volume is outside of 

13 the DOE scope. There are several exemptions that we 

14 find here, and many of those offer niche markets for 

15 small businesses to plug in. And then particularly 

16 outside of DOE’s scope, it’s a highly fragmented 

17 market, even more so than within the DOE covered 

18 area.

19 So a number of manufacturers that we found 

20 within the DOE scope, we’ve identified 25 

21 manufacturers of low voltage distribution 

22 transformers, dry types. Eighteen of those we found 

23 to be small businesses, less than 750 employees. 

24 Again, that’s on the DOE covered side, on the 

25 uncovered side, there are many more.
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1 Market shares. We estimate about five 

2 large manufacturers for 87 parts of the market. And 

3 in terms of shipments, 22 percent of all 

4 distribution transformers covered space by DOE, the 

5 local ... covered space.

6 So one of the things we’ve heard 

7 particularly in these meetings, and also in our 

8 interviews, are the concerns that small businesses 

9 play ... disproportionate to this space, compared to 

10 the others. And typically, as you move up in 

11 efficiency, one of the first things, one of the 

12 design options you have is to go to higher. Small 

13 businesses, in general, small manufacturers, low 

14 volume manufacturers don’t have higher end 

15 capability, as we’ve heard from our capital 

16 expenditure, to buy the machine, whether it be a ... 

17 or another machine to achieve that capability. 

18 And then the other key issues with small 

19 businesses come down to ... scale, when you do 

20 purchase that machine, you’re depreciating it over 

21 fewer units, fewer cuts. Same thing with 

22 engineering resources. First of all, there are 

23 fewer engineering resources, and you have to spread 

24 that cost over fewer units.

25 Small manufacturers also expressed that 
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1 they are less experienced than the larger 

2 manufacturers in dealing with the higher grade 

3 steels. Again, typically, I think it’s more 

4 difficult when you deal with thinner steels which is 

5 associated with moving to higher grades. And so 

6 both of those, as I said, have the associated 

7 scales.

8 And then lastly, the lack of person-power 

9 for the grain-oriented steels. So one of the major 

10 concerns we heard was that small businesses, and 

11 even frankly, some of the larger players in the low 

12 voltage space -- about the quality of scale that 

13 they get compared to perhaps others in distribution 

14 transformers.

15 And so some -- here are preliminary 

16 conversion cost estimates. Again, we don’t have 

17 updated shipment numbers based on some of the 

18 revisions, but I think the trend and magnitude 

19 wouldn’t change that much. One thing I noticed, 

20 these are not the TSLs that Chris showed on the 

21 final slide of his presentation. These are ordered 

22 sets, so for CSL-1 or six, seven, and eight, these 

23 are estimates of the costs. And again, the large 

24 driver is the impact that mitering thinner steels 

25 have on capacity, the need to expand capacity when 
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1 you’re dealing with better machines, because a true 

2 ... of the machinist is less and takes longer to stack 

3 them.

4 MR. PARKER: Robert, are these cumulative 

5 converging costs compared to CSL-zero as you go 

6 down?

7 MR. CARMICHAEL: No.

8 MR. PARKER: These are incremental 

9 conversion costs?

10 MR. CARMICHAEL: Oh, yes, I’m sorry. 

11 These are cumulative, so from baseline to CSL-3, 

12 which is the closest approximation to meet.

13 MR. PARKER: So eight million in the 

14 difference between CSL-0 and CSL-3?

15 MR. CARMICHAEL: That’s right. And in 

16 terms of nomenclature, capital conversion cost play 

17 a part in the equipment, whereas product conversion 

18 cost is research and development, the testing, the 

19 prototyping, engineering time. That’s --

20 MR. SCHOEN: Jerry Schoen, AK Steel. I 

21 did have one question. Are military transformers 

22 exempted in this? ... spec transformers? And the 

23 reason why I say that is there’s one company that we 

24 supply the mix, low voltage, medium voltage dries

25 for naval vessels. They have a whole different set 
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1 of specifications out there, you know, ... steels, 

2 their planes and ... systems -- are they put in this 

3 rulemaking?

4 MR. PATZNER: From Schneider Electric’s 

5 perspective, since they’re not in the patch to the 

6 US grid --

7 MR. PARKER: This is Tom Patzner.

8 MR. PATZNER: Thomas Patzner, Schneider 

9 Electric. From our perspective, since those are on 

10 a ship and they’re not actually being attached to 

11 the grid, they would not be included. DOE is 

12 worried about the US grid and energy consumption on 

13 the grid. I could be wrong, but that’s how we look 

14 at those units. A ship has its own generation 

15 point.

16 MR. PATTERSON: If I may? There was a 

17 question raised on this with the existing rolling, 

18 and we had to get legal determine to figure out what 

19 is a US power point. They traced this thing way 

20 back, and in their interpretation, if it’s a 

21 military base sitting somewhere, then it’s 

22 considered to be under the scope of this regulation. 

23 So shipboard is hooked to the scope, I believe. We 

24 need a lawyer to tell us.

25 MR. PATZNER: Is a ship considered a base?
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1 MR. DeLASKI: The sale, not the 

2 installation. It’s the sale.

3 MR. PATTERSON: But I would highly 

4 recommend that we get the DOE lawyer to make a 

5 statement on this -- a clarifying statement.

6 (Discussions off mic)

7 MR. PATZNER: Tom Patzner, Schneider 

8 Electric. In regards to the slide that’s up, where 

9 are the loss assets?

10 MR. CARMICHAEL: They are not here. 

11 That’s a good point. That is something that we did 

12 capture and they’re not here. Obviously, they were 

13 scaled as you go up. When you get to the bottom 

14 line, it’s all amorphous. Everything that you have 

15 in place is lost.

16 MR. CASKEY: This is John Caskey, NEMA. 

17 First, thank you for doing all this. Having a lot 

18 of your comments sort of support what I found. I 

19 mean I just go out to talk to our members almost 

20 randomly and what you’ve collected seems to be in 

21 line with what I had collected over the last couple 

22 of years in talking to them and meeting with some of 

23 the manufacturers. My question really relates to 

24 the numbers that are up here. In the case of going 

25 from zero to CSL or EL-1, it looks like a total of 
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1 four million dollars for that particular facility. 

2 Is that correct?

3 MR. CARMICHAEL: No, that’s for total 

4 industry, for everything.

5 MR. CASKEY: Yeah, that doesn’t jive -- I 

6 would picture it per facility, and it seemed like 

7 that was in the right ball park, but to think of 

8 that across the industry, whatever you said, 25 

9 individual manufacturers -- I mean that’s almost 

10 nothing per manufacturer when you look at it that 

11 way.

12 MR. CARMICHAEL: Yeah, John, I think you 

13 may -- one of the things that you might -- Rob 

14 Carmichael -- is that if you look at the charts 

15 where the volume is, you can get to one where the 

16 flat line starts, so you don’t have that capital 

17 investment.

18 MR. CASKEY: Okay. So the magnitude is 

19 different, but my question sort of remains similar. 

20 So whatever it is you pick, then how do you factor 

21 that back into the analysis? I mean do you put this 

22 on a per unit basis at some point, or is this in the 

23 analysis as far as you’re concerned, relative to the 

24 manufacturer’s impact.

25 MR. CARMICHAEL: So it sounds like this 
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1 might be -- if we look at the cost to convert the 

2 volume of the industry, or the cost of every 

3 manufacturer to convert their own volume. Because 

4 if we talk to manufacturers that sell five covered 

5 units a year, they’re not going to buy a ... They 

6 don’t need it. So these numbers reflect the cost to 

7 convert the volume of the industry.

8 MR. CASKEY: Okay. So that answers sort 

9 of, one of the pieces of information -- this is John 

10 Caskey from NEMA again. The other piece of 

11 information is how is this information factored into 

12 the analysis going forward? I mean, does this in 

13 any way change the selection of the designs or is it 

14 factored in in terms of -- is this factor in at all 

15 and in the cost analysis? And I think the answer to 

16 that is no, is that correct?

17 MR. CARMICHAEL: Well, we do have an 

18 appreciation factor for the capital costs in the 

19 curve themselves.

20 MR. CASKEY: Okay. For me, personally, I 

21 just need to think through this a little bit more to 

22 make sure I was comprehending what we have here.

23 MR. RIVEST: This is Mike Rivest. So if 

24 you think of the total capacity of the industry if 

25 it was served by one or two players, ... so they buy 
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1 one or two pieces of equipment, and that’s why the 

2 numbers don’t seem that enormous. If all the 

3 existing 25 manufacturers invest a million dollar to 

4 go in, the number would be a lot larger. That 

5 wasn’t assumed here. 

6 When we do an actual cash flow analysis, 

7 that’s -- typically we do it for the whole industry, 

8 and then we’ll do a case for a small manufacturer. 

9 And the decision become the manufacturer’s -- the 

10 cash flow for that small manufacturer would be 

11 impacted by either their buying a piece of equipment 

12 which, again, a, poor on cash flow, or, b, couldn’t 

13 have enough hits to appreciate his pricing, or 

14 remodel that they no longer make the cores, that 

15 they purchase them. And the value added to the 

16 profit on that core that is being manufactured is 

17 lost revenue, and therefore reduces their 

18 profitability. 

19 But that’s something that we’re not ready 

20 to -- we just haven’t had a chance to do yet, that 

21 cash flow impact that we’re talking about.

22 MR. CASKEY: So this is John Caskey, NEMA, 

23 again. Again, we talk about this industry and 

24 certainly in this area, in the low voltage dry type, 

25 this is one of the most critical issues we’ve got as 
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1 far as I’m concerned, is what does this industry 

2 look like in the year 2016 or 2020 or something like 

3 that. And you said we’ve got 25 members that 

4 produce low voltage dry type transformers within the 

5 DOE scope, and of that, 18 of those are classified 

6 as small businesses. So it seems like to me that 

7 going forward, some analysis needs to look at those 

8 18 businesses. Do 50 percent of them sort of close 

9 their doors? Do 50 percent survive on prefabricated 

10 cores? Do 50 percent of them try to come up with 

11 enough capital to invest and actually make the 

12 conversion? We know there’s some pretty big issues 

13 to me and if 50 percent of them, or 20 percent of 

14 them or some percentage of them do decide to stay in 

15 the industry, and do decide to try and find the 

16 capital to make the improvement to continue their 

17 business, then these numbers are pretty far off.

18 And the industry doesn’t function -- the 

19 individual members or the individual manufacturers 

20 don’t function like one corporation, and gee, we’re 

21 just going to put in three million and we’ve got 

22 the answer fixed. Really you’re going to have five 

23 or ten, or 20 or some X number of small businesses 

24 basically deciding to make that decision or not make 

25 that decision. 
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1 That’s what I’m trying to get to. It’s 

2 realistically, what does this mean in terms of 

3 manufacturers, again, in the year 2016 or beyond.

4 MR. PARKER: Let me try putting that a 

5 slightly different way which may help sharpen the 

6 issue a bit. You said that there were 18 small 

7 businesses who are manufacturing covered product in 

8 space. But some of them only sell a miniscule 

9 number of covered products, so they were not 

10 included in your calculation of capital conversion 

11 because you estimate that they would not judge it 

12 prudent to stay in that space.

13 So do you have -- can you give us a sense 

14 of -- do you know how many companies actually make 

15 the cut in terms of your estimate that they would 

16 elect to stay in this market and basically invest 

17 the capital and converting for making major decision 

18 to leave -- to leave the major area. Do you have 

19 some sort of de minimus threshold at which point you 

20 said, below which you said these people -- these 

21 companies don’t factor into our analysis because 

22 they’re not going to choose to remain players. How 

23 many did you decide would stay in, and what share do 

24 they have?

25 MR. CARMICHAEL: Rob Carmichael. There 
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1 was no threshold so Mike’s point that we were 

2 comparing the small businesses -- what would be the 

3 impact if they did buy that machine versus what is 

4 the impact if they source their cores. That would 

5 reduce profitability. That’s something that we can 

6 do later. We haven’t done that now. 

7 What this represents is our estimation of 

8 the costs to convert -- for the industry to convert 

9 its current volume. So it predominantly reflects 

10 those costs that come from large manufacturers. And 

11 there was no -- there’s no set that qualified or 

12 that we estimated would -- is part of this.

13 MR. PARKER: Thank you.

14 MR. CYMBALSKY: Sorry, John Cymbalsky, 

15 DOE. Dan Cohen got on the phone -- he had gotten 

16 that Navy issue. If it’s sold as a transformer it 

17 doesn’t matter where it goes. It’s covered.

18 MR. CASKEY: You may need to get him back 

19 on the phone because I don’t think that can be 

20 correct, because if it’s sold as a transformer and 

21 it’s going to be installed in Italy or someplace 

22 else, then it is not covered by the DOE regulations. 

23 So only if it’s sold in the United States and US 

24 territories.

25 MR. CYMBALSKY: Okay. Of course. Sorry.
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1 MR. PARKER: And I think most naval 

2 vessels are made in the US.

3 MR. CASKEY: I know of some made in 

4 Australia, believe it or not.

5 MR. PARKER: That’s a different story. So 

6 that concludes, unless there are further questions, 

7 our presentation of the analysis, engineering, life 

8 cycle cost, and capital conversion manufacturing 

9 impacts. People who have proposals want to propose 

10 now, or do people want to take a break at this 

11 point?

12 MR. CASKEY: I think we’re close to a 

13 proposal, but we need -- this is John Caskey, NEMA, 

14 and I think we’re close to a proposal. We need to 

15 talk about it a little bit prior to we come to the 

16 table with it.

17 MR. PARKER: Let’s take a break, then.

18 (Whereupon, at 3:11 p.m., the meeting was 

19 off the record for a 39-minute period.)

20 MR. PARKER: Okay. If we can get started. 

21 Welcome everyone. We’re at the phase where we are 

22 ready to take proposals from the various 

23 stakeholders. John Caskey has kindly offered to 

24 lead us off today, so we will turn the mic over to 

25 John, and here’s the podium.
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1 Proposals

2 MR. CASKEY: This is John Caskey from 

3 NEMA, and we’re here to talk about low voltage dry 

4 type transformers, and just wanted to give you a 

5 quick proposal, hopefully a quick proposal, from 

6 NEMA, National Electrical Manufacturers Association. 

7 And basically I wanted to give a little bit of an 

8 overview related -- similar to what we did with the 

9 liquid-filled, and medium voltage dry type 

10 discussion. 

11 But first I just wanted to touch base and 

12 thank the Department of Energy and others for 

13 basically allowing this negotiated process to be 

14 considered. I think it was also a good idea to go 

15 ahead and incorporate the low voltage dry type with 

16 the other discussions on liquid filled and medium 

17 voltage dry type because, you know, once we’re into 

18 a rhythm of understanding what -- where the numbers 

19 are coming from and the work that Navigant is doing, 

20 and the work that LBL is doing, it makes sense to 

21 keep in that rhythm and go ahead and do all three of 

22 these sort of concurrent with one another.

23 I also wanted to thank all the people at 

24 then table for all of their contributions, all the 

25 way along, and also all the stakeholders that are 
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1 participating with this. And I also wanted to thank 

2 the manufacturers for all their work and all of the 

3 analysis and supporting information that they’ve 

4 provided that’s all been a big help.

5 The other thing I wanted to note is that 

6 NEMA’s certainly committed to distribution 

7 transformer efficiency standards and higher 

8 efficiencies, and that as people know in this area, 

9 in the area of low voltage dry type, we’re actually 

10 the DOE standard really keyed off of the NEMA TP-1 

11 standard, as well as in this arena we do have the 

12 premium efficiency transformer program for low 

13 voltage dry type transformers.

14 What we tried to do is be consistent with 

15 our principles in all three of the different areas, 

16 low voltage dry type, medium voltage and liquid 

17 filled. And basically our three primary principles 

18 are:

19 • One is that we support high efficiency 

20 standards, provided that they can be cost21 justified, or cost-effective. 

22 • Item two is that we feel that it’s very

23 important to have substitution of materials, 

24 particularly steels, in the transformers 

25 themselves as well as certainly it’s critical 
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1 in any industry to have a multitude of 

2 suppliers, other products, and then it’s also 

3 very important to have the -- I think the 

4 flexibility in the designs to substitute one 

5 material for another as the prices change 

6 relative to one another.

7 • And then the third area, and this is the area 

8 that comes in the strongest play in this 

9 particular area, low voltage dry type, rally 

10 deals with the impact on the small 

11 manufacturers, and the small manufacturing 

12 facilities. We’re trying to get a handle on 

13 that, and that’s exactly what Navigant has 

14 tried to do with the manufacturers impact 

15 assessment.

16 So in the other areas of medium voltage 

17 dry type and liquid filled, it seems like we really 

18 keyed a lot of -- or NEMA really keyed a lot on the 

19 sort of substitution of materials and 

20 competitiveness of that market. In this particular 

21 area I think our greatest concern deals with trying 

22 to make sure that it’s a viable market going 

23 forward, and particularly to be inclusive of the 

24 small manufacturers, which currently make up a large 

25 portion of the manufacturers in this type of 
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1 product, the low voltage dry type product. 

2 So in terms of our specific recommendation 

3 -- and this is, I should have said, like a two part 

4 presentation. I’ll do part and then Thomas Patzner 

5 is here from Schneider Electric, and then he’ll do a 

6 part also. So basically, what we are recommending 

7 is, because of the small amount of volume in the 

8 design line six, we basically have ignored design 

9 line six, so in essence our recommendation is to 

10 leave that at efficiency level-0 for design line 

11 six. And Thomas will explain a little bit more of 

12 that logic later.

13 The primary part of the presentation, or 

14 the proposal, is really for design line seven and 

15 eight, to adopt the EL-2.0 or the two energy 

16 efficiency level. And the reason we arrived at that 

17 presentation, part of it was sort of economic 

18 justification and we feel that there continues to be 

19 some uncertainty in the analysis itself, however, we 

20 feel that the EL-2 level, it’s a reasonable level to 

21 adopt and even that represents a 25 to 35 percent 

22 increase in first costs over the EL-0 level.

23 In terms of the with that, we have gone 

24 back and looked at the Navigant analysis, we 

25 continue to get reports from the manufacturers where 
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1 the curve after the EL-2 period, the curve increases 

2 more steeply than what’s reflected in the analysis 

3 that we’ve seen so far. 

4 We talked a little bit about the NEMA 

5 premium program, which is basically we have 11 

6 manufacturers now that have signed onto that 

7 program, but there’s very, very few products being 

8 sold in that category now. So part of it just means 

9 that we’re the early learning stages of that 

10 efficiency which basically has 30 percent less load 

11 loss than what -- excuse me, 30 percent less loss 

12 than what’s in the TP-1 standard. 

13 The other thing that we talked about 

14 before is the idea that the manufacturers, when, you 

15 know, the standard is set at a certain level, the 

16 manufacturers basically have to over-design above 

17 that level in order to make sure that through the 

18 testing procedures, that they can make sure that all

19 of the products actually meet the required 

20 efficiency level.

21 The other area that I wanted to bring up 

22 briefly deals with the data center transformers and 

23 that there’s been a team put together to try and 

24 investigate that more fully. I don’t know that 

25 they’re ready to report on any sort of proposal or 
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1 consensus yet, but certainly we want to hold off --

2 we want to allow for an opportunity to consider 

3 their input at a later date, to make sure that we 

4 reflect that, particularly in the low voltage dry 

5 type sector.

6 So, with that I’d like to go ahead and 

7 turn it over to Thomas, and then he’s got some 

8 additional slides to show you.

9 MR. PARKER: Before we turn to that, just 

10 one small, I think actual verification. I believe 

11 we heard in prior meetings, or in e-mail traffic, I 

12 don’t remember exactly where, was that the test 

13 procedures are not subject to our discussions, but 

14 the factual matter, test procedures continually 

15 allow for statistical variation. So I don’t know if 

16 that means you still have to over-design or not, but 

17 ... test procedures, but that was what I recall from 

18 our prior discussions. May be wrong -- Wes.

19 MR. PATTERSON: The test procedure does 

20 have in its calculations a variance measurement, but 

21 the reality is that when you actually design for the 

22 standard, you have to accommodate in the design, a 

23 margin level because if you design right at the 

24 level, you’re going to miss the standard, there is 

25 no doubt. So at least in the medium voltage world, 
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1 we’re seeing somewheres around five percent 

2 reduction in losses, just from the design process.

3 MR. TENDULKAR: The statistical data in 

4 the analysis ... 10,000 transformers, but for one or 

5 two transformers, you have to design ... so that you 

6 can pass. If you look at the in... standards ... you’re 

7 going to market a plus ten percent, but if you’re 

8 making more units, then of course you can reduce the

9 losses and get ... So manufacturers like us, where we 

10 are not making 10,000 transformers, we have to make 

11 the losses much lower than what the standard says.

12 MR. PARKER: Thank you. Okay, Mr. 

13 Patzner.

14 MR. PATZNER: Thomas Patzner, Schneider 

15 Electric. I did not update my analysis from the 

16 2011 costs. All my data here are based on the 

17 efficiency levels and they’re using the curves 

18 without amorphous because I agree, based on our last 

19 conference call, that the committee agreed to 

20 exclude the amorphous-type core. So my analysis and 

21 my recommendation was based on that product being 

22 removed.

23 So those are the curves for the efficiency 

24 levels. The next slide, if we look at class three, 

25 which is design line six, it’s two of the 62, so 
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1 it’s only 3.2 percent of the shipments. However, if 

2 you look at the quads that would be saved at the two 

3 keys, which at this one is EL-2 and EL-1, it would 

4 only save 1.4, 1.6 percent. So it’s got a three 

5 percent volume, but it would only save half of the -

6 - it would only include the one and a half percent 

7 of the benefits. So our suggestion would be we 

8 leave class three at the base level, mostly so as 

9 manufacturers would not have to focus on three 

10 percent of the market transition.

11 So the manufacturing impact analysis would 

12 be less because we would not need to try to 

13 transition three percent of the market at the same 

14 time that we have to transition 97 percent of the 

15 market.

16 So now if we look at class four, which is 

17 96.8 percent of the shipments, there’s two peaks. 

18 There’s a peak at EL-2 and a peak at EL-4. At three 

19 percent discount rate, there’s a 6.5 percent 

20 increase for EL-4. However, at the seven percent 

21 discount rate, which is what us manufacturers use, 

22 the EL-2 is actually higher, it’s actually 1.6 

23 percent higher than EL-4. So these leads us, as a 

24 manufacturer, to want to use EL-2 instead of EL-4.

25 So we continue on. In regards to computer 
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1 model, we believe that there’s differences and the 

2 analysis is questionable. However, Schneider 

3 Electric believes we would basically be able to get 

4 to that flat curve if you gave us ten years. Or 

5 five years. But you’re not going to give me that 

6 amount of time, you’re going to require me to comply 

7 with the product starting January 1, 2016. I cannot 

8 start the process until January 1, 2016 of 

9 optimizing the design. 

10 The reason being is, is today less than 

11 five percent of the market wants higher efficiency 

12 products. So I have to support 95 percent of the 

13 market, so all of my manufacturing resources and my 

14 engineering resources cannot start focusing on cost 

15 reducing and hitting the computer model curve until 

16 after the law is actually implemented. So we will 

17 start designing towards the most cost-effective 

18 design and actually be able to hit it three to five 

19 years after the law.

20 Go to the next slide. We’ve already done 

21 this conversion once. When we did the conversion in 

22 2007, because of the state of Massachusetts, the 

23 state of California, the state of Minnesota, the 

24 city of Seattle, the state of Oregon, we had 30 

25 percent of the market already using TP-1. So we 
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1 could attain and design the TP-1 products in advance 

2 before the law. So we were a lot faster getting to 

3 the cost optimization from an earlier analysis.

4 What will impact us is our capacity, our 

5 materials and tolerances due to operation. So, 

6 those entities cannot be determined until I’m 

7 actually sending 175 KVA down my line every day. 

8 I’m not going to know the impact of operations until 

9 after we’ve actually started the law.

10 Also, on January 1, 2007, the price of the 

11 TP-1 products from where they were the day before, 

12 jumped up 60 percent. Those prices have not come 

13 down yet. They’re just starting to come down and we 

14 are now six years after the implementation. So we 

15 expect a similar product. So the analysis based on 

16 a price being very flat, and we agree that that will 

17 occur, but it’s going to be after five or six years 

18 in the analysis.

19 To lessen the impact on us manufacturers 

20 as we stated, we’d like equipment class three to not 

21 be included. However, if you did include equipment 

22 class three, which is the DL-6, it’s only three 

23 percent of the market, I am not going to optimize 

24 those designs. So all that computer modeling is not 

25 going to occur. I’m going to take however I design 
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1 DL-7 and use that material and that process. So 

2 those two curves, they’ll end up with the same 

3 material and the same process. The analysis in DL-6 

4 is actually going to be overstated.

5 We already showed it’s only 1.4 percent 

6 beneficial, and that’s an overstated value because 

7 we will not build that to the computer model. I 

8 just can’t justify resources for three percent of 

9 the business. Next slide.

10 We’ve also discussed the scaling factor, 

11 so I had my engineer do a lot of analysis on the 

12 entire range for both DL-7 and DL-8, and we compared 

13 weights, we compared total cost, we compared cost of 

14 just the winding, we compared cost of different 

15 cores, and the .75 scaling factor works for the 30 

16 through the 500 KVA. The 15 KVA, however, we would 

17 like to change the scaling factor to a .6. On the 

18 750 and the 1000, we’d like to change the 750 to a 

19 .69, and the 1000 to a .68. 

20 So we go to the next curve, we’re not 

21 actually making a recommendation for EL-2, we’re 

22 making recommendation for EL-2 for 30 KVA to 500, 

23 and then we’re modifying the scaling factor for the 

24 15 KVA and the 750 and the 1000. This is not the 

25 first time this has come up in the meeting, the 
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1 scaling factor was questioned. We actually took 

2 some time to look at it. We only believe three KVA 

3 sizes are affected, that can’t use the .75 scaling 

4 factor. 

5 MR. PARKER: Could we just go back to the 

6 prior slide just a second so I can get that down? 

7 MR. PATZNER: So we’re happy for this 

8 presentation to be posted to the Sharepoint. 

9 MR. PARKER: Just for our discussions 

10 today. Okay. Thank you.

11 MR. PATZNER: So to finalize our 

12 manufacturing impact. EL-2 compared to EL-4, which 

13 were the two peaks on the analysis, it would cost us 

14 as a manufacturer, 100 percent increase to go from 

15 EL-2 to EL-4. So EL-2 will only cost $8.3 million, 

16 EL-4 could cost us $16.4. That’s 100 percent 

17 increase. If you look at the quad of benefits, 

18 there’s only a 14 percent increase in the quads 

19 saved. So you’re putting a large burden on us 

20 manufacturers for initial out of pocket and cash 

21 flow for just a very small overall quad benefit. 

22 The small manufacturers, if we stay at EL-2, would 

23 still be able to design the butt lap, so those 18 

24 manufacturers that are just building less than 100 

25 units a year could continue to do so. They would 
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1 not be as cost-competitive as us, but they’re not as 

2 cost-competitive today. 

3 The materials which meets our request, M6, 

4 could be done both as a miter and butt lap and 

5 miter, and four miter and three miter, and most 

6 importantly, us large manufacturers would start 

7 playing with the other processes and materials. We 

8 would go to those dots in the computer model with 

9 amorphous, if that was the appropriate material, or 

10 distribute gap or so forth.

11 So by going to EL-2, in six years from now 

12 when we’re doing this again because the process 

13 requires us to look at it, the technology available, 

14 we will have a lot more information to share with 

15 everybody involved. Thank you guys for your time.

16 MR. PARKER: Thank you. Any clarifying 

17 questions? 

18 MR. SCHOEN: Jerry Schoen, AK Steel. The 

19 capital cost summary that you put up there, 8.2 and 

20 16, is that just for Schneider Electric?

21 MR. PATZNER: No, that’s from their data 

22 and adding them together.

23 MR. SCHOEN: Thank you.

24 MR. PATZNER: My biggest concern with the 

25 data was that it matched what we were seeing, so my 
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1 expenses would be -- so I took from the data they 

2 supplied -- it’s the hundred percent add, so the 

3 hundred percent add to DOE is what’s critical. So 

4 my numbers would be EL-2, let’s say would cost me a 

5 million, EL-4 would cost me two million. So the 

6 delta actually aligned with what we had.

7 MR. PARKER: Any other clarifying 

8 questions? Rob Greeson.

9 MR. GREESON: Rob Greeson, Federal 

10 Pacific. I just want to thank Tom for a good 

11 presentation --

12 MR. PARKER: Speak a little louder.

13 MR. GREESON: Okay. I just want to thank 

14 Tom for that presentation. I think he did a good 

15 job, and we share his views on pretty much 

16 everything in that slide, and I think he covered it 

17 very logically and methodically, and I would 

18 recommend to the committee to take heart when he 

19 talks about the 2:1 cost, that’s exactly what we got 

20 in our estimations too. To go from two to four is 

21 going to cost us twice as much capital to do that, 

22 and he’s 100 percent right on materials. The 

23 industry is -- it’s good for the industry to go for 

24 an incremental increase. You’re going to get 

25 significant energy savings, I think it’s -- EL-2, is 
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1 it -- I think it’s 20 -- it’s at least 20 percent. 

2 That’s pretty significant and it is going to look to 

3 the industry to start to get into these other 

4 materials as well, and then, as Tom said, the next 

5 time around, we’re going to know a whole lot more. 

6 It takes a long time to turn a big boat around, and 

7 I think the industry has shown consistent increases 

8 in efficiency and we’re still headed in that 

9 direction, and hopefully we can improve on how fast 

10 and how quickly we can go up in our efficiency.

11 MR. PARKER: Any other comments, 

12 questions? Okay. We have not heard from the steel 

13 makers yet, or the advocates, so my question would

14 be whether either wishes to propose now, or propose 

15 something at the break?

16 MR. DeLASKI: You have heard from us, last 

17 meeting.

18 MR. PARKER: At the last meeting, but not 

19 in response to this. And so one option would be for 

20 you to reiterate your proposal of the last meeting 

21 if that’s your choice, or you might wish to alter 

22 that, alter your choice. But -- Eric, you have the 

23 mic, you want to --

24 Proposal - industry

25 MR. PETERSEN: Sure. Eric Petersen, AK 
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1 Steel. Our position would be -- is that our 

2 interest is in being able to provide a range of 

3 products as John Caskey has identified already, that 

4 will insure the transformer manufacturers have a 

5 range of supply. The concern that we would express 

6 as the steel industry is there’s only one domestic 

7 supplier, AK Steel, behind some of these products, 

8 so we would encourage that a standard not be 

9 established that results in a single source of 

10 supply. We would encourage a position that 

11 essentially results in both of the domestic steel 

12 suppliers having a competitive position and it 

13 sounds like that’s what NEMA has proposed, so we 

14 would be in agreement with the NEMA position. 

15 MR. PARKER: Okay.

16 MR. DeLASKI: If it’s useful, we can 

17 reiterate our position, but we might have a new one.

18 MR. PARKER: Yes, why don’t you reiterate 

19 your position.

20 Proposal - Advocates

21 MR. DeLASKI: Our position, as we made it 

22 at the last meeting was EL-5. EL-5 is the maximum 

23 cost effective level under the exclusion scenario. 

24 And at the last meeting, that was the level we had 

25 our support for. And we indicated that we had some 
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1 flexibility on the scaling factors. I appreciate 

2 the detail now that NEMA has come forward with, with 

3 some detail on how that could be addressed. But 

4 that’s where we were at the last meeting.

5 MR. PETERSEN: Clarifying question.

6 MR. PARKER: Yes, Eric.

7 MR. PETERSEN: Eric Petersen, AK Steel. 

8 Andrew, I just wanted to confirm that’s EL-5 for all 

9 three design lines.

10 MR. DeLASKI: We didn’t focus on six.

11 MR. PETERSEN: Okay. 

12 MR. DeLASKI: So just for seven and eight.

13 MR. PETERSEN: Seven and eight is EL-5.

14 MR. DeLASKI: Under the exclusion 

15 analysis.

16 MR. PATZNER: Andrew, was that before or 

17 after the amorphous was removed?

18 MR. DeLASKI: After the amorphous was 

19 removed.

20 MR. PATZNER: We did have the data at the 

21 meeting, the amorphous --

22 MR. DeLASKI: We didn’t have the national 

23 impact analysis data. We had the LCC analysis. 

24 What I’m looking at is the LCC, saving, you know, 

25 where is a customer have a positive LCC result, and 
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1 that’s what I’m looking at that break. So my 

2 standing is that at that level we’ve got -- that’s 

3 it.

4 MR. FERNSTROM: Richard?

5 MR. PARKER: Yes, Gary Fernstrom.

6 MR. FERNSTROM: Gary Fernstrom, PG&E. I 

7 found Thomas’ comments to be pretty interesting 

8 because this is a business where consumer buy the 

9 lowest first cost products. So whatever the 

10 standard, you obviously have the problem of going 

11 from the present to the future in very little time. 

12 My question is how have you dealt with that in the 

13 past and is there some better way to do it so that 

14 we don’t have so much of a problem as you outlined 

15 would take place?

16 MR. PATZNER: Thomas Patzner, Schneider 

17 Electric. The last time the low voltage -- the last 

18 time the low voltage converted, there was already 30 

19 to 35 percent using the products, so we were able to 

20 leverage that.

21 MR. FERNSTROM: That was on account of --

22 MR. PATZNER: State mandates.

23 MR. FERNSTROM: Thank you. Gary 

24 Fernstrom. That was on account of state mandates?

25 MR. PATZNER: Yes. So without a market 
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1 for it, as a manufacturer, I cannot seek how we get 

2 around the fact that we can’t get to the computer 

3 model until we start physically building the 

4 product.

5 MR. FERNSTROM: Okay, so now that there’s 

6 a federal standard, the states aren’t going to be

7 able unless it’s provided for in the regulation, 

8 won’t be able to adopt it early and provide any kind 

9 of bridge at all?

10 MR. PATZNER: So the NEMA premium program 

11 -- Thomas Patzner, Schneider Electric. The NEMA 

12 premium program came out in May 2010. DOE announced 

13 in April 2011 this process and the regulation. And 

14 in October they announced it, so at this present 

15 time no states are evaluating. However, I believe 

16 wholeheartedly that the state of California would 

17 have mandated the NEMA premium if the DOE was not 

18 moving forward with the overall law.

19 So, to actually help the process, us 

20 manufacturers need to be more proactive in creating 

21 above the law efficiencies so that on January 1, 

22 2016 we already have the next level and states will 

23 then take that program and probably mandate it. 

24 That’s a whole separate problem for us 

25 manufacturers. But I’m assuming it would be the 
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1 same five states. Actually there was -- ended up 

2 being like nine states in total because Maryland, 

3 Connecticut, New Jersey all had plans in place that 

4 they put on hold. But that could be like 40 percent 

5 of the market, so it would allow us to be able to 

6 stage it moving forward, if we could end up having 

7 that same type of time line where the NEMA premium 

8 program came out at the exact same time. That’s 

9 more of a question for John than an individual 

10 manufacturer, but that would be a way to get around 

11 it, and by having it available right away, ASHRAE 

12 would be able to mandate it and it would give us the 

13 staging effect of going to the next market.

14 MR. FERNSTROM: Okay, then, I think that 

15 establishes the importance of allowing states to --

16 the few states that wish to, to adopt this 

17 regulation early to smooth the transition.

18 (Discussions off mic)

19 MR. CASKEY: This is John Caskey at NEMA. 

20 And I think, Gary, that’s a good question, and to be 

21 honest with you, when we introduced the NEMA premium 

22 program, I was in contact with a few utilities and 

23 the utility for looking at adopting the NEMA premium 

24 program, their point for providing incentives for 

25 commercial building, managers, and building 
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1 companies, and basically I think because of the 

2 economy and other things, that just really never 

3 materialized. But I was in some pretty strong 

4 discussions, I would say, with, again, some 

5 utilities adopting that and then just at the 

6 eleventh hour they chose not to, for whatever 

7 reason. But that’s the other way, that if utilities 

8 decided to say that they’re going to give rebates to 

9 commercial building developers to install premium 

10 products, whatever that might be, including 

11 transformers, then that would be an incentive to 

12 sell more products before the 2016 implementation of 

13 this standard, and get more experience with other 

14 types of ways to meet that higher efficiency.

15 MR. FERNSTROM: Gary Fernstrom. I totally 

16 agree with you, however, I think we need to 

17 recognize that utility incentive programs are not 

18 going to provide the volume that a state entity 

19 would.

20 MR. CASKEY: Right.

21 MR. FERNSTROM: So, it would help, but it 

22 wouldn’t be as effective.

23 MR. PATZNER: Thomas Patzner, Schneider 

24 Electric. Also in the work of the NEMA premium 

25 program was a couple bills in Congress. One was for 
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1 retrofitting the pre-2007 transformers with the NEMA 

2 premium transformer and you would get your labor 

3 paid for, so it was part of the Labor Act, to get 

4 electricians in the door. So I don’t believe that’s 

5 gone anywhere besides committee. But there were 

6 other entities besides just the utility work in 

7 regards to the NEMA premium program.

8 MR. CASKEY: John Caskey with NEMA again. 

9 Now that you’ve refreshed my memory, I also talked 

10 to ACEEE and they had proposed -- I saw a document 

11 that was in draft form, probably two months or so 

12 ago -- and they included the NEMA premium program as 

13 their base recommendation for efficiency, and then 

14 they had another version higher than that, but at 

15 least they talked to me and asked, you know, could 

16 they use our paperwork and adopt as their base. I 

17 don’t know if that document’s been approved yet by 

18 their organization, but that was a draft document. 

19 So, I mean, there are things being done to try and 

20 get more premium transformers out there, but it’s 

21 just slow in coming, particularly during this poor 

22 economy.

23 MR. PARKER: Andrew.

24 MR. DeLASKI: I’ve got a few points and 

25 questions. First of all, we were involved in the 
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1 various states standards and I think that the ... law 

2 may be -- the question of public reaction, so this 

3 is an argument that federal law does not preempt the 

4 states. And the presumption is that the federal law 

5 preempts the states now. The states can’t come back 

6 -- that’s sort of my working presumption. We think 

7 that there might be an argument that they could, but 

8 transformers are covered under a part of law that 

9 are tacked on the end -- there is some vagueness 

10 there that we should be pursing perhaps, but not the 

11 focus of discussion today.

12 MR. FERNSTROM: Gary Fernstrom. Well, 

13 Andrew, unless a state exemption is allowed in the 

14 regulation or in the law.

15 MR. DeLASKI: Right. That could be done 

16 by rule, I think. So the pivotal question, my 

17 working presumption is this is not ... for the states. 

18 That’s the general approach to federal standards. 

19 Unless there’s a specific exclusion in there, and 

20 there’s no specific exclusion in here, you’d be 

21 looking for something kind of general, and that’s 

22 what a lawyer would have to figure out. That’s the 

23 general feel, you get national standards.

24 The issue of -- you raised a question, 

25 Thomas -- if you could go back -- maybe if you don’t 
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1 mind sending these slides around, it may help us 

2 later in the day and this evening, to be able to do 

3 that through Sharepoint.

4 MR. PATZNER: I don’t mind, you have them 

5 to do that?

6 MR. PARKER: Yes.

7 MR. DeLASKI: And I really do appreciate 

8 the thoroughness of your presentation, and the fact 

9 that you leaned on the DOE analysis, I think will be 

10 helpful for all of us in terms of getting 

11 constructive conversations.

12 You had a slide there, we’ve already 

13 talked about five years and ten years -- I didn’t 

14 follow that discussion. So if you can go back --

15 step me back through your comment about, if I had 

16 more time I could do X.

17 MR. PATZNER: So the three to five years 

18 is for -- so all the analysis is based on the 

19 computer ... cost. As a manufacturer, we’re actually 

20 going to step to that computer model. So it’s going 

21 to take me five years from the -- it’s going to take 

22 me five years as a manufacturer to get to the low 

23 cost dot on the dot plots, because on January 1, 

24 2016, I have to be able to service my customers. I 

25 do not have the resources to service my customer 
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1 pre-law and the same product for after law. So I 

2 won’t be able to start having it run through my 

3 facility until I have volume. I’m not going to tie 

4 up cash by stocking them in advance. 

5 So we’re not going to start building this 

6 product until -- if it’s January 1, 2016, we’ll 

7 start building this product in November of 2015. 

8 Based on what we learned when we converted to TP-1 

9 product in mass production, I will be constantly 

10 reducing my cost based on how it actually flows 

11 through my facilities, and I’ll get to that computer 

12 dot, based on the TP-1 timeframe, that will take me 

13 three to five years. 

14 Now, we have a lot more resources than 

15 smaller manufacturers. So the ten years is what 

16 it’s probably going to take some other manufacturers 

17 to get to the computer low cost effective design. 

18 This includes me doing six signa (ph) projects, con 

19 button blitzes (ph) -- we will be weighing 

20 everything that goes through our facilities to make 

21 sure that our coils don’t have any extra losses in 

22 them, and so forth. But I can’t start that process 

23 until I have volume. Does that answer the question?

24 MR. DeLASKI: It does. So, and my last 

25 question, on a whole different topic, which is, I 
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1 appreciate your thoughts on the energy savings, and 

2 looking at the delta, you chose?

3 MR. PATZNER: EL-2 and EL-4.

4 MR. DeLASKI: EL-2 and EL-4, and of course 

5 I’m looking at TSLs here, but it’s -- you said it 

6 was .14 quads was your take on that analysis?

7 MR. PATZNER: So it’s in the data, so if 

8 we go back to the slide, so just go to the slide 

9 where class four is on the top, so third slide -- so 

10 if you blow this slide up, so the quad savings are 

11 across there. So it’s one quad for EL-1, and 1.09 

12 for EL-2, 1.13 quads for EL-3, 1.24 for EL-4.

13 MR. DeLASKI: So additional point --

14 again, the additional quads, you used 2.4 for five, 

15 but you used two to four --

16 MR. PATZNER: So that was a 14 percent 

17 increase in quads, but I’d have to double my 

18 capital.

19 MR. DeLASKI: And the question I have --

20 the change in losses for that one from two, four. 

21 At two for design line seven, the loss reduction is 

22 23.5 percent, whereas at four, the loss reduction is 

23 40 percent. And then for design line eight, the 

24 loss reduction is 30 percent at two, and it’s 46.4 

25 percent loss reduction at four. So maybe this is a 
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1 question more for the consultants, which is that 

2 change in losses is significantly -- we’re talking 

3 about 50 percent additional cut in losses to get 

4 only 14 percent ... I’m wondering how that -- how 

5 those things square up. What would be -- some 

6 reason why those -- or we don’t see a more direct 

7 relationship between those two changes?

8 MS. COUGHLIN: The problem with this --

9 this is Katie Coughlin, Lawrence Berkley Labs. The 

10 biggest impact, because the test procedure load, 

11 which is what gives you the change in losses 

12 according to the LCC estimate is significantly 

13 higher than the loads in the real buildings. So the 

14 LCC is using an RMS load of about 20 -- a little 

15 over 20 percent, as opposed to 35 percent. So the 

16 energy savings is going to be lower.

17 MR. DeLASKI: But excuse me, --

18 MR. RIVEST: The baseline --

19 MR. DeLASKI: Yeah --

20 MR. RIVEST: The baseline -- this is Mike 

21 Rivest -- I have a ... hypothesis, though. It would 

22 be that some amorphous is being selected, so you’re 

23 getting benefits of designs at EL-4 showing up in 

24 the numbers for two -- this is a market mix.

25 MR. DeLASKI: But this is an exclusion 
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1 scenario, right, Thomas? 

2 MR. PATZNER: I used the exclusion 

3 scenario so there was no amorphous in the design.

4 MR. RIVEST: So there is no amorphous.

5 MR. PATZNER: These tables are amorphous 

6 being excluded.

7 MR. RIVEST: So it’s something else.

8 MR. DeLASKI: Thomas, do you have a 

9 theory?

10 MR. PATZNER: I believe it’s 100 percent 

11 due to loading. I still believe it’s 15 to 20 

12 percent is the loading factor, so what ends up 

13 happening is it’s all in core losses, so the savings 

14 is not going to -- it’s all based on the core losses 

15 and when you look at the lowest cost point on the 

16 delta, chances are those are higher core losses, so 

17 you don’t get as many deltas when you switch 

18 products. So the constant -- the only constant is 

19 the A loss, right, ... core -- so it’s the A and B 

20 based on the fact that A is constant throughout, and 

21 B is based on a 20 percent loading factor. So I’d 

22 have to know the mix on the other to be able to 

23 actually ask what the design was. So you could see 

24 the delta A and delta B.

25 MR. PARKER: So would it be fair to say 
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1 then that if the test procedure were modified to 

2 reflect the loading that is more realistic for the 

3 market, that that discrepancy would --

4 MR. PATZNER: No, I believe actually -- I 

5 believe that 20 percent is what’s going to stay. I 

6 believe the 14 percent is an accurate number, even 

7 though we’re reducing the losses on the units by 30.

8 MR. PARKER: Yes.

9 MR. SAMPAT: Mahesh Sampat, EMS 

10 Consulting. If the loss reduction is coming from 

11 core loss, it’s saying that there is zero percent 

12 load factor or 35 percent load factor? Use core 

13 loss one watt is there regardless of load, okay. So 

14 all the savings descending from reduction in core 

15 loss should be the same, irrespective of load 

16 factor. So if the losses are reduced by 40 percent, 

17 then the balance has to be due to load factor. Is 

18 that what we are saying? It’s not that big an 

19 impact.

20 MS. COUGHLIN: Again, the difference 

21 between the assumption of a 35 percent RMS in the 

22 test procedure and a field loading that is something 

23 around 20 percent, it’s very large, in terms of the 

24 energy savings.

25 MR. SAMPAT: Okay. 
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1 MS. COUGHLIN: So if -- and there are a 

2 decent number of cases in the LCC selection process 

3 where you’re picking a unit that will actually have 

4 a lot of efficiency gain through the load loss. 

5 When you put that unit in at a lower loading, you 

6 will not see the energy savings, and I think that 

7 that’s what’s giving the difference.

8 MR. SAMPAT: Yeah, that would explain if 

9 the selection at a high E level is resulting from 

10 load loss reduction rather than core loss reduction, 

11 then that could explain what we are seeing. Thank 

12 you.

13 MR. PARKER: Does that answer your 

14 question, Andrew?

15 MR. DeLASKI: I’m not sure it answers it, 

16 but it’s progress.

17 MR. GREESON: Rob Greeson, Federal 

18 Pacific. I guess another way of saying it is, at 

19 EL-4 you’ve got transformers that achieve their 

20 efficiencies by a lot more ...or, but you didn’t get 

21 the benefit because at 20 percent load ... five 

22 percent of your losses at that point. So the fact 

23 that it’s all in the no load losses, NEMA premium or 

24 the other products might have been more than -- the 

25 scatter plot data is not optimized on efficiency, 
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1 they were optimized on A,B factors. I’m looking at 

2 the scatter plots that I downloaded from Sharepoint, 

3 and another thing I’m noticing is as far as butt 

4 laps go, there’s an M12 butt lap, which you can 

5 really do much with M12 where we are now. Then 

6 there’s an M12 copper-aluminum butt lap, so you can 

7 maybe go a little higher. And then they’ve got an 

8 M6 aluminum-aluminum butt lap. And then there’s no 

9 M4 butt laps. Everything’s mitered from that point 

10 -- either a wound core or mitered from that point 

11 forward. And the manufacturers have already stated 

12 their concerns about the mitered cores. Even if you 

13 go out and buy a mitered core cutting machine, those 

14 things are enormously expensive to maintain. 

15 They’re not as fast as cutting -- the whole industry 

16 is set up on butt laps. 

17 If you pick the standard that we 

18 recommended, it allows the industry to react in a 

19 more natural way. If you can build the things butt 

20 lap, you could build a miter. You could build them 

21 -- some people might even choose to do the wound 

22 cores. But if you look at choosing EL-5, you don’t 

23 have much of a choice. You can’t even -- with butt 

24 lap technology, you’re going to be hard-pressed to 

25 even get above an EL-3, so you’re essentially 
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1 saying, we’re going to choose EL-5, and you’re going 

2 to buy step-lap miters, or core cutters, or you’re 

3 going to invest in wound core. That’s what EL-5 

4 means to us when we hear EL-5. You’re going to buy 

5 a miter core cutter because the DOE raised the 

6 efficiency beyond three and you’re going to spend 

7 one and a half to two million dollars in the next 

8 five years. That’s a big deal.

9 MR. PARKER: And you’re saying that 

10 transition occurs at EL-3?

11 MR. GREESON: Rob Greeson, Federal 

12 Pacific. I’m saying that from our design 

13 experience, anything above EL-3, you’re going to get 

14 into different types of core construction 

15 technologies by miter or wound cores. That’s been 

16 my experience. And I’d welcome anybody else’s input 

17 on that. But we like the EL-2 efficiency level 

18 because it sort of addresses a lot of concerns with 

19 the investment issues. But at the same time, there 

20 probably will be manufacturers that may do some 

21 estimates over time and then maybe the next time we 

22 come back and evaluate this, we’ll be in a better 

23 position to go higher. It’s kind of a big step 

24 forward right now.

25 MR. PARKER: Okay. Just a clarifying 
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1 question for Thomas, circling back to the compliance 

2 date issue. Would those observations part of the 

3 proposal to delay the compliance date -- is that 

4 part of your proposal? Or is it an observation 

5 about EL-2 and 2016 compliance date.

6 MR. PATZNER: So we need to be able to 

7 have volume to do it. So pushing up the date does 

8 not change the fact that we’re not going to be at 

9 the computer model designs until three to five years 

10 after it goes into effect. We will start working on 

11 the product, we will do approximately 18 designs, 

12 and we’ll figure out how cost-effective we can do 

13 that. But until they actually start going through 

14 my facilities and I actually complete the compliance 

15 testing on that, I’m not going to know if those cost 

16 targets are actually feasible to do. So because of 

17 cash flow, which have been shown, we have not been 

18 able to do. Cash flow for us is I’m not going to 

19 tie up inventory. I am not going to put two months 

20 to three months worth of product in the facility ...

21 MR. PARKER: So then your concern will 

22 arise -- that issue will arise whether the effective 

23 date is 2014 or 2018, it doesn’t matter.

24 MR. PATZNER: That’s correct.

25 MR. RIVEST: Mike Rivest. Your experience 
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1 with introductions, this is sort of cost reduction 

2 over time ... five or ten year ...

3 MR. PATZNER: So since your analysis are 

4 based on purchase price, it will be 100 percent be 

5 based on how the other manufacturers follow us. So 

6 we will, the price will not go up or down --

7 MR. RIVEST: I’m sorry, I probably phrased 

8 that improperly. So are you saying there’s a cost 

9 reduction over time, some learning process, 

10 optimizing your designs, and that means early on you 

11 have a cost penalty. Are we talking about a ten 

12 percent -- you would be cutting ten percent of the 

13 costs over time, or twenty percent cost over time?

14 MR. PATZNER: So I’m not going to be able 

15 to answer that question due to the fact that in 2008 

16 all materials spiked. So we have a huge cost 

17 reduction for 2008 until now, but a lot of that is 

18 due to the fact that M6 became our matrix. So the 

19 only experience we have with regards to this type of 

20 item where I can’t go below a certain efficiency, is 

21 from 2007 to now, and due to the huge material price 

22 doubling between 2008 and nine and today, I can’t 

23 answer how much we actually designed down. But I 

24 can tell you that we’ve done a lot of processes 

25 changes so that I can get product out of my facility 
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1 faster, which has been my number one concern, not 

2 impacting my capacity. Even as large as my company 

3 is, I cannot pour concrete.

4 MR. PARKER: Okay. Jerry Schoen had his 

5 hand up next.

6 MR. SCHOEN: Jerry Schoen, AK Steel. 

7 Mike, I can talk in a more general way through 

8 Schneider’s point of view, but also from other 

9 customers. The kind of issues they’ve got into are 

10 thickness of material, they were changing to 

11 different types of steels that had different 

12 coatings on them, that were more abrasive. Shear 

13 knives didn’t last long, shearing tolerances 

14 changed. Forced ... productivity, the thinner the 

15 material, the more stacking core productivity, they 

16 had to do much more careful job of machine 

17 alignment. We’re talking about systems that index 

18 and miter, and index and miter. All those ... have 

19 changed and you probably end up upgrading shear 

20 material, shear blade materials on all of your 

21 mitering equipment. But that’s stuff you don’t 

22 actually need until you go into that and know what 

23 the grade of wear and tear is going to be on your 

24 equipment. 

25 Shearing thinner materials is actually 
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1 harder on your equipment than heavier gauge stuff. 

2 And a lot of people don’t appreciate that. They 

3 think it’s thinner, it should cut more easily, but 

4 all those tolerances tighten up so the rate of wear, 

5 particularly mitering, goes up drastically as you go 

6 thinner. It’s not just a linear three puts going 

7 down, but the maintenance is going up. Those are 

8 the types of things that until you are into it, you 

9 don’t know what you’re going to get into. 

10 Many of these folks will be using 

11 probably materials with thicker coatings that they 

12 used to use. Those coatings that we put on the 

13 steel are quite abrasive. And basically, they’re 

14 magnesium silicate, sand. So you’re basically 

15 grinding -- you’re cutting through a layer of 

16 glassified sand on the surface of the steel. 

17 There’s the wear and tear issue. And if you think, 

18 the thinner you are, we put the same amount of 

19 coating on a nine mm material as we put on a 14 mm 

20 material. You’re cutting more individual sheets per 

21 stack, the wear’s just going to go up. The di...s 

22 come down, that fine powder that comes off the steel 

23 is that much more abrasive. I think those are the 

24 kind of things you may end up ... They’re very 

25 tangible, but ... can’t pick them.
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1 MR. PARKER: John Caskey.

2 MR. CASKEY: John Caskey, NEMA. Can we go 

3 back to, I think it was slide number three there? I 

4 want to see if my math works out. So I’m looking at 

5 the difference between efficiency level 2 and 

6 efficiency level 3, and what I understand from 

7 looking at the equipment cost savings, which are 

8 really the costs, if you will, of the equipment, 

9 we’re going from roughly $2.5 billion to all the way 

10 up to $5.6 billion -- that’s a three billion dollar 

11 increase in cost to accomplish that, if I’m reading 

12 that correctly. And then if we go down below there 

13 in terms of operating cost savings, we’re going from 

14 $10 billion in savings, to $13 billion in savings. 

15 So basically you’re investing $3 billion of dollars 

16 to produce $3 billion of dollars in savings. And 

17 we’re going from 1.09 quads -- if you believe any of 

18 these numbers -- to 1.4. (Laughter.)

19 So you’re basically paying $3 million 

20 dollars, if you will, to get point three quads of 

21 savings, and we’ve got a lot of energy experts in 

22 this room or energy efficiency experts. Do you have 

23 any idea, compared to other things, like converting 

24 from incandescent to fluorescent or to LEDs, you 

25 know, what does that three billion dollars of 
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1 investment -- is there some factor that you guys 

2 know, like a million dollar investment normally gets 

3 you a quad or a half a quad, or anything like that 

4 over a 30 year period? Can you say whether this is 

5 looking --

6 MR. DeLASKI: You’re looking at me, John.

7 MR. CASKEY: Well, or anybody. Can 

8 anybody tell me whether this looks like a good 

9 investment or a bad investment?

10 MR. DeLASKI: I can’t off the cuff. What 

11 I can say is that we care about point three quads. 

12 Point three quads is not an insignificant number. 

13 There are many rulemakings that DOE does that are 

14 about point three quads. This is a substantial 

15 number. It’s not three quads, but it is a number 

16 that we care about.

17 MR. CASKEY: Okay. 

18 MR. DeLASKI: I think we could look at 

19 other rulemakings that say that three quad cost 

20 about three million dollars -- point three quads. 

21 I’d have to find it.

22 MR. CASKEY: Okay. 

23 MR. DeLASKI: And I also come back to the 

24 -- this isn’t about having, you know, the speech we 

25 heard from Dan Cohen yesterday, that -- some folks 
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1 didn’t get to hear that -- it may be worth redoing 

2 that, Richard, for folks who weren’t here. I know 

3 both of us were, but not everybody was. Again, he 

4 did a really nice job of explaining the Department’s 

5 process when thinking about a decision, which I 

6 thought was very instructive to all of us. To 

7 understand that this isn’t about a choice, are we 

8 going to do this or are we going to spend this three 

9 million dollars on fluorescent lights and retrofits. 

10 It doesn’t work that way.

11 MR. PARKER: ... a portfolio investment. 

12 Period, so --

13 MR. DeLASKI: And we don’t do it that way.

14 MR. CASKEY: And we, as NEMA, arrived at 

15 two, and the way we explained it to you, and we 

16 didn’t do that comparison that I’ve been talking 

17 about between two and five, but --

18 MR. DeLASKI: What I -- I’m still struck 

19 by -- and trying to wrap my mind around, is that --

20 that -- is how we get both of the savings very 

21 quickly, even though we’ve got -- so at EL-1, we’ve 

22 got a whole quad at EL-1, right. And then getting -

23 - after that getting, you know, ten percent 

24 increase, and getting the EL up, that the loss 

25 reduction at EL-1 is much lower than the loss 
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1 reduction at those higher ELs.

2 MR. CASKEY: Right. I got you.

3 MR. DeLASKI: So that’s what I’m trying to 

4 wrap my mind around is to get back to do I believe 

5 these numbers? Do I believe the increment is indeed 

6 that small and that’s what I’m trying to wrestle 

7 with. That small -- that size.

8 MR. CASKEY: That’s been a consistent 

9 issue, as I’ve said over the last two months is 

10 trying to, you know, can I go home and get out my 

11 little calculator and verify that 1.0 is in the 

12 right ball park? I really can’t do that.

13 MR. DeLASKI: Yeah. For some reason, 

14 we’re getting all those savings, the designs are 

15 being chosen, Katie, it’s a question for you --

16 what’s happened the designs that are being chosen 

17 here are getting the core savings at one and then we 

18 seem to be getting -- the coil seems to be proving -

19 - why are the savings -- the savings seem to ramp up 

20 very quickly then they kind of tail off.

21 MR. CASKEY: So I think --

22 MS. COUGHLIN: In the -- you look at the 

23 engineering, this DL-7, the engineering cost curve 

24 is also pretty flat, so if you go to EL-2, you’re 

25 actually jumping up to the higher efficiency designs 
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1 right away. So I don’t know if you got that cost 

2 curve somewhere -- we could show it --

3 MR. PATZNER: So, in other words, if you 

4 look at the life cycle cost, one, two, and three for 

5 design line-7s all the threes. 

6 PARTICIPANT: Exactly. In their analysis 

7 it’s always EL-3.

8 MR. DeLASKI: I see. So basically at EL-1 

9 you’re getting EL-3 savings.

10 MS. COUGHLIN: And EL-2, essentially, 

11 you’re seeing everything you can see at EL-4.

12 MR. DeLASKI: Because you’re using a 

13 transformer that gets --

14 MS. COUGHLIN: It’s cheaper.

15 PARTICIPANT: According to their analysis.

16 MS. COUGHLIN: According to ... that ... it’s 

17 only EL-1 ...

18 MR. DeLASKI: Right, but the problem we 

19 face is that if you believe any slope to the curve ... 

20 market, then practice -- we have to conserve ... And 

21 what can be saved -- that’s the challenge here.

22 MR. RIVEST: This is Mike Rivest. If you 

23 were to fit at a normal exponential curve there, 

24 what you would be seeing is decreasing marginal 

25 benefits. So although the savings benefit are 
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1 coming, once you get to that next plateau, it’s ... 

2 If you fit an exponential curve on the cost, which 

3 is what you’re getting on these, you’ll probably get 

4 more representative results I would think.

5 MR. DeLASKI: ... is embedded in that.

6 MR. RIVEST: It’s embedded, but I think 

7 what’s skewing it is ... one of the realms ... 

8 MR. DeLASKI: We have the EL, we have the 

9 savings by -- we don’t do we? So maybe -- we 

10 probably need to caucus, Richard, when the time’s 

11 right. 

12 MR. PARKER: Yes. Okay. It is now ten 

13 until five, so what we might -- I think it’s too 

14 late to start a new item of business. So perhaps 

15 this would be a good time to break for the day and I 

16 would encourage people to caucus with your own 

17 groups and talk to each other afterwards tonight or 

18 tomorrow morning, and we’ll take up bright and early 

19 in the morning with follow-on discussion about these 

20 proposals, and of course we still have the issue of 

21 data centers, which we did not get to today. So 

22 that is something that we definitely need to 

23 discuss. And we might, if we can, if we can come up 

24 with a specific proposal for data centers, we can 

25 refine that in some way, make as much progress as 
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1 possible, that would be a very positive. In any 

2 case, give us what you have and we will discuss it.

3 I would remind everybody that the next 

4 meeting is at DOE, in the Forrestal Building --

5 8E089 Forrestal Building. We’ll try to start bright 

6 and early at nine, so please allow time to clear in, 

7 because you will need to go through security.

8 MR. DeLASKI: Can you give the room number 

9 again?

10 MR. PARKER: 8EO89.

11 MR. DeLASKI: So will there be a table for 

12 us like at other meetings?

13 MR. PARKER: Yes. There will be a table.

14 MR. DeLASKI: How early can we get there? 

15 8:30? Eight?

16 MR. PETERSEN: I’ve been there early and 

17 they have never got there before eight o’clock.

18 MR. DeLASKI: Okay. 

19 PARTICIPANT: But our doors open before 

20 eight o’clock. I’ve been sitting in the lobby 

21 waiting for you to come in. Well, they let me sit 

22 in the lobby at a quarter to eight.

23 MR. PARKER: Okay. 

24 MR. DeLASKI: Okay. So DOE, at the 

25 building we were at the last time or --
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1 MR. GREESON: The main building?

2 MR. PARKER: The main building, not the 

3 one down the pike. It’s the main building. And 

4 we’ll have a registration type protocol. 

5 Registration should be near the security desk.

6 MR. GREESON: At nine?

7 MR. PARKER: Yes, nine o’clock, let’s 

8 start. Enjoy your evening. We’ll see you tomorrow 

9 morning.

10 (Whereupon, at 5:52 p.m., the meeting in 

11 the above captioned matter was adjourned, to 

12 reconvene the next day, Friday, December 2, 2011 at 

13 the DOE Forrestal Building at 9:00 a.m.) 

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REPORTER'S CERTIFICATE

This is to certify that the attached proceedings 

before:

U.S. DEPARTMENT OF ENERGY

In the Matter of:

MEETING of the LV WORKING GROUP

Were held as herein appears and that this is the 

original transcript thereof for the file of the 

Department, Commission, Board, Administrative Law 

Judge or the Agency.

Further, I am neither counsel for or related to 

any party to the above proceedings.

 Official Reporter

Wendy Greene 

Dated: December 9, 2011