From: Robert Berman [mailto:bermaneconomics@gmail.com]

Sent: Wednesday, September 21, 2011 2:05 PM

To: Richard Parker

Cc: Corkran, Jerry L; Caitlin Johnson; rick.a nderson@faypwc.com; tballo@earthjustice.org; ScottB@lvmetals.com; john.caskey@ne ma.org; john.cymba lsky@ee.doe.gov; adelaski@standardsasap.org; Teckman@nwcouncil.org; gbf1@pge.com; carlos.gaytan@ge.com; rgreeson@federalpacific.com; bruce.r. hirsch@bge.com; mhyland@appanet.org; dave.millure@metglas.com; snadel@aceee.org; wes.pa tterson@us.abb.com; Eric.Petersen@aksteel.com; Raymond.Polinski@atimetals.com; srosenstock@eei.org; rroy@nrdc.org; robert.saint@nreca.coop; chuck.simmons@pgnmail.com; mark.stoering@xcelener gy.com; cabolduc@lbl.gov; kcoughlin@lbl.gov; Brian Coffey; gjrosenquist@lbl.gov; Michae l Rivest; Jerry Hodge; jrossetti@mlgw.org; Jim.creevy@nema.org; Meyers, Aaron; Daniel.C ohen@hq.doe.gov; jmau er@standardsasap.org; greg.coulter405@gmail.com; bsmith@federalpacific.c om; pkumar@publicpower.org; Trujillo, Antonio; Phil Hopkinson; ahofmann@publicpower.org; Berman Economics@gmail.com; Paul.Ryan@hitmet.com;jerry.schoen@aksteel.com; mwaltner@nrdc.org; kwinder@mleainc.com; chad.kennedy@us.schneiderelectric.com; eduardorobles@eaton.com; vijay.tendu lkar@onyxpower.com; carlosgsiqueiros@eaton.com; thomas.patzner@us.schneider-electric.com; Marusine c, Richard M; Schneider, Jeffrey A; Loomans, Michael T; Poole, Raymond L; Moore, Jack C; Smith, Jennifer Subject: Re: Distribution Transformers Committee reques ted areas for the DOE to Investigate before

final rules are selected.

Any chance we could get the transcript of the la st meeting? It would be helpful for both ground rules questions as well as additi onal analysis questions / clarifyi ng questions. If it's already been posted I apologize for missing it. Can you please send a link?



### Regards,

Robert A. Berman, Principal

Berman Economics

www.BermanEconomics.com

1915 Grand Court
Vienna, VA 22182

703

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BermanEconomics@gmail.com

On Sep 21, 2011, at 1:39 PM, Richard Parker wrote:

Jerry (and larger group),

Thanks, Jerry, for your comments, queries and sugge stions. My apologies to all for the late notice on the Ground Rules. The compressed tim e frame for this rulemaking has us all scrambling, but we will do our best to get key docs to group well in advance of meetings in thefuture (to the extent that analytical requirement s and resource limitations allow). Most of the ground rules document is boilerplate for negot iated rulemakings. We had an extensive discussion about the parts that are not. But gi ven your concern I will re-open the groundrules for online discussion, as needed, and clearance. I will do that in a separate email thread.

Would c.o.b Monday be reasonable deadline fo r comments on groundrules in your view, with aim of taking online poll towa rds middle of next week?

As for the deadlines for talks, the Dec 22 term sheet deadline can be altered by unanimous consent of the group, but you should know that it is really a practical dead line that results from working backwards from the Jan. 30 court deadli ne (assuming court approves revised settlement agreement). So regardless of what is in our gr ound rules, that will be the de facto deadline for meeting the court deadline unless and until the plaint iffs agree to further extend that deadline.

Your substantive comments are appreciated. I will consult with DOE/Navigant/LBL staff and develop a joint preliminary response which we w ill then post online is some appropriate format

for further review and comment.

All best,

Richard Parker

On Tue, Sep 20, 2011 at 3:57 PM, Corkran, Jerry L < Jerry.Corkran@cooperindustries.com >

wrote:

I am submitting following items for requests fo r investigation by the DOE. Some of the questions listed below were presented before or during the first meeting, but I have not received sufficient information to answer the questions and requests listed below:

1. A good portion of the recent meetings were concerned with the review and revisions of the ground rule s for the Negotiated Rulemaking Working Group. A copy of this document was issued date d as “Final 9/15/11” during the second day of the meetings. I was concerned and puzzled about why a legal document of this type was not issued well in ad vance of the working group meetings. The document has a legal tone and applicat ion that makes its review beyond my capabilities to determine if it is suit able to govern the working group and its suitability for me to accept w/o reservatio ns. I have submitted it to a Cooper Power Systems attorney for review to determine if it requires changes before agreeing to its content. I am object ing to the Sept. 23 deadline for comments and suggestions on this item and request that we be able to submit input on suggested changes after out attorney has an opportunity to review the document. At this time I am objecting to the “4. Agreement” rule with details of the objection or withdrawal of my obj ections to be made after our attorney reviews the document. I also object to the 3 d. Deadline for Negotiations to terminate at Dec. 22, 2011. I suggest that this date be determined by the working group during the third meeting in Nov. after the working group has a knowledge of the time needed to complete the process.2. Would the DOE provide the actual de sign information for the least-cost transformer designs? Suffi cient design information should be included to allow the transformer manufacturers to compa re the same design created on their programs to the DOE created designs.

3. Would the DOE request transformer design quotations from multiple

manufacturers for the transformer efficien cy loss levels that the DOE considers buildable? This would provide the DOE with actual designs which the manufacturers are capable of building. These designs could be compared to the designs which the DOE is currently us ing to generate the efficiency data projections.

4. Would the DOE request quotations from multiple manufacturers optimized for the lowest total owning costs at evaluated loss levels that they are considering. The evaluation A and B factors would vary by a 4:1 ratio to reflect a maximum efficiency at a 50% load. Suggested A and B factors are 0/0, $4/$1, $8/$2, $12/$3, and $16/$4.

5. The DOE transformer designs show a large scale movement to amorphous

core steel due to it lower loss characteristics. Review of the DOE transformer designs indicates that there might be a 700% increase in usage of the amorphous core steel over present annual production of this material. The DOE is requested to create projections lis ting what price increases and material shortages are to be expected if the use of this material is forced by transformer efficiency rules that dictate its use.

6. Because there is only one major supp lier of amorphous core steel in the world that meets the efficiency levels us ed by the DOE in their optimizations, which is Hitachi in Japan and Metglas in the US (which is owned by Hitachi); is it legal for a law to be created at the DOE’s suggestion, forcing the exclusive use

of this material in Distribution Tr ansformers to meet the efficiency requirements chosen by the DOE?

7. The DOE is requested to show that adequate supplies of the materials produced within the United States exist to manufacture the required

transformers that will meet the transfor mer efficiency requirements chosen for the proposed changes from the existing transformer efficiency requirements. If sources of materials are required from outside the United States, the DOE is requested to estimate what jobs will be lo st and the dollar cost within the United States over the 30 year average and 60 ye ar maximum life of the transformers as compared to using materials a vailable within the United States.

8. Regarding the assumptions that the DOE made to use an average distribution transformer life of 30 years in their transformer efficiency payback calculations; the IEEE Transformer committee in the various technical standards which apply to Distribution tran sformers specifies an average life of20.5 years. We recommend that the 20.5 year average Distribution Transformer life be used by the DOE in their payback analysis. How did the DOE arrive at the 30 year anticipated life?

9. Regarding the payback times used by the DOE, the document 10 CFR Part 431 was issued on October 12, 2007 to list the required efficiency levels for distribution transformers. On page 58220 of this document, various payback intervals between 5.1 and 21.6 years are listed for the efficiencies chosen for this standard. In the Preliminary Techni cal Document (TSD):Energy Efficiency Program for Commercial and Industr ial Equiptment :Distribution Transformers dated March 2011, pay back intervals are listed on page ES-16

Table ES.2.7 for the various standard levels . The DOE is requested to explain if these pay back intervals are based on a change from the existing efficiency standard? If the change is from the existing efficiency standard, the DOE is requested to add the years of payback as listed in 19CFR Part 431 to the years

listed on the March 2011 document.

10. The DOE used a 50% anticipated loading factor for the 30 year anticipated average life calculations used in their tr ansformer efficiency evaluations. What is the source of the 50% loading factor used over a 30 year average and 60 year maximum expected life for the transforme rs evaluated? The DOE is requested to consult the power companies to lear n what load factors they expect for transformers in service for up to 60 years. This item is very important, because as the loading level increases, the effi ciency of an amorphous core design will decrease when compared to a silicon core design if they are both optimized to the same A and B factors. The amorphous core design may have a the higher efficiency at a 50% average loading but, this efficiency advantage will disappear as the average load increases and the silicon core steel designs become more efficient than the amorphous core steel de signs when they are both optimized to

the same A and B factors.

11. Regarding the payback intervals to be used by the DOE to select the efficiency levels to be recommended, th e level of loading is based on many assumptions that may change, a payb ack interval of 5 to 10 years is recommended to avoid forcing transform er purchases based on changeable assumptions that likely will result in the longer paybacks never happening.

12. Electric autos are expected to take an increasing percentage of the auto market. The July 2011 IEEE Power and Energy magazine estimates that in 5 years, 15% of the global new vehicle market will be electric autos. The DOE is requested to allow for the increased load factor for charging electric vehicles over the 60 year span they have chosen to consider for transformer loading.

13. The DOE is requested to get in touc h with Marketing and/or Business Development persons at the major auto manufacturers to learn what their projections are regarding the projected growth and market share for electricvehicles. What market share do these companies project for electric autos and

how will that added load to the electrica l systems affect the projected average loading over the next 60 years?

14. For pole type distribution transformers , the higher efficiency designs used by the DOE to evaluate the transformer efficiencies have a very significant increase in weight and also in tran sformer overall height. The DOE is requested to factor in the increased pole loading and related need to replace existing poles in some cases to allow the mounting of the heavier pole type transformers. Some of the higher effi ciency transformers will have a total weight of twice that of the existing transformer which is being replaced.

15. The DOE is requested to change percentage efficiency targets to a method of controlling the transformer efficiency using the lowest total owning cost (TOC) optimized designs using TOC A and B factors written into law to control transformer efficiencies. The advantage of using the TOC A and B factors to control transformer efficiency is that it allows the transformer quotations to respond to the available materials. For example if copper conductors are required to meet a specified efficiency, transformer manufacturers would not be able to quote if a flood cut off th e copper supply. Using the TOC A and B factors, each manufacturer would be allowed to quote, if they used the correct A and B factors. Another example is if the customer prefers to raise the basic insulation level (bil) of the requested transformer design, the manufacturers will optimize to the specified bil using the correct A and B factors. The end result is that the higher bil would be just slightly less efficient than a lower bil because of the added insulation required to obtain the higher basic insulation level. I raised this question during the first meet ing, but did not receive a response from the DOE about this subject , therefore I am requesting that this subject be considered and responded to by the DOE before they proceed with the final rule making. The total owning cost approach will handle the variations that occur within the industry and also result in a similar improvement in efficiency as would transformer efficiency targets. It will allow the transformer efficiencies to be increased as justified, using all the factors they are currently using to create target transformer efficiencies. The DOE approach currently uses A and

B loss evaluation factors in their evalua tions of what transformer efficiencies are justified. The A and B loss evaluation factors could be written into the law rather than specifying the transformer efficiencies. The law could require that all manufacturers only quote total owning cost optimized designs using these A and B factors for all quotations, just as they are now forced to quote target

efficiencies. The transformer manufac turers would be required to maintain files showing they met the law by only quoting designs which were optimized using the A and B factors according to the total owning cost method of reducing transformer losses. Utility companies h ave a familiarity with the Total Owning Cost approach to transformer purchases because they have routinely used the TOC method of obtaining efficient transformer designs since about 1980.Regards,

Jerry Corkran

Staff Engineer

Cooper Power Systems