From: Richard Parker [mailto:richardparkerdc@gmail.com]
Sent: Wednesday, November 16, 2011 4:26 PM
To: Meyers, Aaron
Cc: Hirsch, Bruce R; Jerry Hodge; Steve Nadel; Robert Berman; John Caskey; Eric.Petersen@aksteel.com; jerry.schoen@aksteel.com; Maxine (EMAB) Savitz; mhyland@appanet.org; Raymond.Polinski@ATImetals.com; maheshsampat @bellsouth.net; tpetrosino@carolina.rr.com; dbrender@cda.copper.org; Ja mes.Lass@cleco.com; chris.brown@cogentpowerinc.com; frank.guilbault@cogentpowerinc.com; ted.johnstone@coge ntpowerinc.com; Trujillo, Antonio; Moore, Jack C; Corkran, Jerry L; tballo@earthjustice.org; ca rlosgsiqueiros@eaton.com; eduardorobles@eaton.com; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org; DYoung@energy-solution.com; rick.anderson@ faypwc.com; bsmith@federalpacific.com; rgreeson@federalpacific.com; carlos.gay tan@ge.com; artrosenfeld@gmail.com; greg.coulter405@gmail.com; ned.efbrush@gmail.co m; Paul.Ryan@hitmet.com; Daniel Cohen; Phil Hopkinson; cabolduc@lbl.gov; gjrosenquist@lbl .gov; kcoughlin@lbl.gov; ScottB@LVMetals.com; dave.millure@metglas.com; kwinder@mleainc.com; jros setti@mlgw.org; Brian Coffey; Caitlin Johnson; Matthew Nardotti; Michael Rivest; Zhimei Luo; Jim Creevy; mwaltner@nrdc.org; rroy@nrdc.org; robert.saint@nreca.coop; Teckma n@nwcouncil.org; vijay.tendulkar@onyxpower.com; gbf1@pge.com; chuck.simmons@pgnmail.com; ahofmann@pub licpower.org; pkumar@publicpower.org; adelaski@standardsASAP.org; jmauer@stand ardsasap.org; wes.pa tterson@us.abb.com; chad.kennedy@us.schneider-electric.com; thomas.pat zner@us.schneider-electric.com; charlied@uus.org Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Colleagues,

These are important concerns and I appreciate the thought behind th em. As agreed in our prior meeting, DOE staff are consulting with industry a nd updating their data to refine and strengthen the analysis of the liquid-filled ma rket to better reflect actual mark etplace conditions. It may be helpful to withhold final udgment on these ma tters until the updated engineering and LCC analysis is released, which we hope and expect will be fairly soon, recognizing that this is a complex and difficult undertaking and it is important to get it right.

I hope you have received the updated LCC analysis for MVDT, and I look forward to talking with you all tomorrow on the conference call.

All best,
Richard

On Wed, Nov 16, 2011 at 4:07 PM, Meyers, Aaron < Aaron.Meyers@cooperindustries.com >

wrote:

Jerry,

We share the same concern regarding pandemonium in the industry. In addition, to my knowledge, no transformer manufacturer currently has enough amorphous capacity to support 100% of their DOEcompliant transformer sales. Yet the DOE analysis shows that at EL2, the core steel demand would essentially be 100% amorphous. So manufacturers are exp ected to invest in capital to support this and have all of their grain-oriented capital sit idle, or severely under-utilized while building non-DOE items only. If grain-oriented pricing would ever support moving back to grain-oriented, then the amorphous

### capital would sit idle. Raise your hand if you want to sign up for that business model. It is certainly not very attractive and may present challenges for manufacturers selling to their top management.

Best Regards,

Aaron

From: Hirsch, Bruce R [mailto: Bruce.R.Hirsch@bge.com ] Sent: Wednesday, November 16, 2011 11:09 AM
To: 'Jerry Hodge'; Steve Nadel; Robert Berman; John Caskey
Cc: Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Meyers, Aaron; Trujillo, Antonio; Moore, Jack C; Corkran, Jerry L; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; Daniel Cohen; Phil Hopkinson; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Jim Creevy; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.schneider-electric.com ; charlied@uus.org



### Subject: RE: Negotiated Rulemaking - Distri bution Transformers Teleconference

Jerry,

I agree with you. While I support seeing the amorphous s uppliers get an opportunity to participate more in the market, I would like to see their share grow gradually and be driven by competition. To reward them a large share of the market on day 1 would, in my perspective, create pandemonium in the Industry - and not just with the steel suppliers but also in th e transformer manufacturing part of the process. This sounds more and more like a phased in approach is appropriate but I believe we were told we cannot
consider that.

BruceFrom: Jerry Hodge [mailto: jhodge@howard-ind.com ] Sent: Wednesday, November 16, 2011 10:23 AM
To: Steve Nadel; Hirsch, Bruce R; Robert Berman; John Caskey
Cc: Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; Daniel Cohen; Phil Hopkinson; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Jim Creevy; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.schneider-electric.com ; charlied@uus.org Subject: RE: Negotiated Rulemaking - Distribution Transformers Teleconference



### To Richard, Steve, Bruce, Ph il, Robert & John and All:

One of our biggest concerns as we try to go further up the Efficiency Curve is material availability. If we are not real careful, we may upset the critical balance of core materials to the point where there could be a s hortage of transformers. As we go to higher EL's, amorphous requirements will take off, possibly by 10 fold. It takes a good amount of effort and capital to achieve these new levels on a consistent basis, there will definitely be growing pains.
Transformer manufacturers will have to learn how to deal with th is .001" thick material. They too, will be on a learning curve.

The silicon manufacturers, who have served this industry we ll for many, many years will see a big drop in their demand and will either have to downscale or find new outlets such as exporting to sell their products. Their empl oyment could change significantly.

The point I'm trying to make is that our decisions shouldn't be ma de lightly or we'll possibly put the transformer and utility industries in a state of turmoil that might take a long time to correct.

### The charts & data presented so far seem to sugge st that the crossover point is somewhere near
EL-1.5. I would like to recommend that we look at an EL-1.5 for 95 KV BIL & below units, use
EL-1 for 125 & 150 KV BIL units and leave the 200 KV BIL units as they exist today.

I think this would help keep all the core iron players in the game, it should allow the amorphous metal industry to grow and it will provide a r easonable and common sense approach to providing highly efficient transformers for the utility industry.

Just a suggestion;

Jerry

Jerry Hodge Consulting Engineer, E.E., M.S., P.E. Retired V.P. & G.M. of Pole Type Transformer & Regulator Div.
Howard Industries Inc.
P.O.Box 1588 Laurel, Ms, 39440
601 422-1539 Bus.
484 226-6190 Cell

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-----Original Message-----
From: Steve Nadel [mailto: snadel@aceee.org ] Sent: Tuesday, November 15, 2011 5:51 PM
To: Bruce R Hirsch; Robert Berman; John Caskey
Cc: Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ;rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; Jerry Hodge; Daniel Cohen; Phil Hopkinson; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Jim Creevy; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.schneider-electric.com ; charlied@uus.org Subject: RE: Negotiated Rulemaking - Distribution Transformers Teleconference



### Bruce,

Our sense is that at EL1, M3 will dominate. We're looking to go farther up the curve.

The group agreed to have DOE calculate $/W because some people wanted that info because that's a metric they are used to. $/kW is not a decision criteria for us, nor do I expect it to be one
for DOE. Decisions need to be made on the full lif e-cycle cost analysis and not simple metrics, be they $/kW or even $/kWh.

Steve

>>> "Hirsch, Bruce R" < Bruce.R.Hirsch@bge.com > 11/15/2011 12:30 PM >>>

Steve,

From a user standpoint, I agree that having a competitive market (between M3 and amorphous) is desirable. From all the testimony I have heard, th is comes at the EL1 level. Even Wes said that the changeover is between the EL1 a nd EL2 levels so going to EL2 sways the usage to amorphous. ---And I understand ABB can meet EL3 and EL4 with M3 but it is not competitive.

I thought we had agreed to look at the cost from a $/wa tt basis. If not then we need to determine what the comparison value should be. It appears you have suggested it should be $/kWh. I guess I am interested in what others think of using $/kWh.

BruceFrom: Steve Nadel [mailto: snadel@aceee.org ] Sent: Tuesday, November 15, 2011 8:58 AM
To: Hirsch, Bruce R; Robert Berman; John Caskey
Cc: Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; jhodge@howard.com ; Daniel Cohen; Phil Hopkinson; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Jim Creevy; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.sc hneider-electric.com ; charlied@uus.org Subject: RE: Negotiated Rulemaking - Distribution Transformers Teleconference

Two comments. First, some comments have focused on just the market for M3 and amorphous steel. The two markets are linked -- we need competition between the two to keep the price of both in check. We don't want a standard that strongly favors one over the other. The revised DOE analysis on the mix between M3 and amorphous at different standard levels should help us to address this. Second, reducing transformer losses primarily affects baseload, not peak. So talking about cost per kW is misleading. An efficient transformer is energized for more than 8000 hours per year. The average DSM measure saves for about 3000 hours per year (although there is wide variation). If you want to compare, you'd need to compare levelized cost per kWh saved over the measure lifetime.

Steve

>>> "Hirsch, Bruce R" < Bruce.R.Hirsch@bge.com > 11/15/2011 7:37 AM >>>



### John’s points are well taken. Keep in mind that the DOE numbers indicate a payback at EL4 only if amorphous steel is used. Thus, to assume that because it can be built using M3 steel, all is well, is totally untrue. In John’s auto analogy, at least the custom er has a choice of spending the extra money. In our case, the customer will have no choice.

We all also need to understand that there is not an infinite supply of money to spend on efficiency improvements. By forcing utilities to spend money on improving transformer efficiencies, we may very well be taking money out of other efficiency program s which have a much higher payback than what is being proposed here. In BGE’s case our package of e fficiency programs cost us approximately $139 per kilowatt saved. What is being proposed here is up to 100 times more costly. If BGE pulls back funds from other efficiency programs to pay the high costs for transformer efficiencies, we would see a significant decline in efficiency improvements overall.

### Bruce

From: Caskey, John [mailto: Joh_Caskey@nema.org ] Sent: Monday, November 14, 2011 3:14 PM
To: Robert Berman; Hirsch, Bruce R
Cc: 'Steve Nadel'; Phil Hopkinson; Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Je remiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; jhodge@howard.com ; Daniel Cohen; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Creevy, Jim; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.schneider-electric.com ; charlied@uus.org Subject: RE: Negotiated Rulemaking - Distribution Transformers Teleconference



### Robert

You continue to reference the A BB data presented by Wes Patterson as indicating that since a transformer was sold at the EL3 or EL4 efficiency level that this level is cost effective. Specifically, you state “Market sales data, however, is quite real. In this case it unamb iguously says that the transformers at EL4 are an economically reasonable choice -- the market has, in fact, selected that choice on multiple occasions”. This is simply NOT TRUE.

Just because a person buys as Jaguar for $100k that ge ts 25 mpg in place of a $40k Cadillac that gets 20 mpg; does NOT mean that the $60k delta will ever be “economically reasonable” for the extra 5 mpg. You seem to be assuming that all of the transformers purchased from ABB that meet the efficiency levels were purchased for efficiency reasons. This is simply not fact. The fact is that one large transformer manufacturer was able to produce distribution transf ormers at EL3 and EL4 using M3 steel. To my knowledge, Wes did not state the price for these transformers. In addition, just because one company can

### produce this product doesn’t mean that all transformer manufacturers can make this product at this level using M3 steel.

My hope is that we can all understand the facts and th e analysis results better over the next few weeks so that we can negotiate a solution that benefits th e consumers, the ratepayers, the manufacturers, the environment, etc. I plan to stay at the table till the end of the negotiation process.

Regards,

John

John F. Caskey, CEM

Assistant Vice Presiden t, Industry Operations

National Electrical Manu facturers Assoc. (NEMA)

1300 North 17th Street - Suite 1752

Rosslyn, VA 22209

john.caskey@nema.org

703-841-3233 Voice

703-841-3333 FAX

703-350-6886 Cell

From: Robert Berman [mailto: bermaneconomics@gmail.com ] Sent: Monday, November 14, 2011 1:19 PM
To: Hirsch, Bruce R
Cc: 'Steve Nadel'; Robert Berman; Phil Hopkinson; Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Je remiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energy-solution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gaytan@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; jhodge@howard.com ; Daniel Cohen; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metglas.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ;brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Creevy, Jim; Caskey, John; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.tendulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kennedy@us.schneider-electric.com ; thomas.patzner@us.schneider-electric.com ; charlied@uus.org Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Bruce,

Those upfront transformer costs ar e compared to the fuel cost savings in the LCC approach. The discounting process values fuel cost saving in the future at less than the costs in curred today. The positive LCC means that that the efficiency a dvocates are not ignoring costs, but comparing them with benefits and finding that the consumer is better off and will be paying less. One does not, however, need to rely on the LBL analysis to see this. The ABB sales data shows M3 transformers being delivered at EL4 efficiency. As a modeler, I am always skeptical of model results -- people do not live in computers and certainly not on in some of the back-of-theenvelope calculations that we have seen from others. Market sales data, however, is quite real. In this case it unambiguously says that the tran sformers at EL4 are an economically reasonable choice -- the market has, in fact, selected that choice on multiple occasions.

To the extent that there are dug-in positions, again the evidence does not support that it is the efficiency advocates that ar e dug-in. Although EL4 is achievabl e and beneficial based both on market data and LBL analyses, the proponents of greater efficiency indicated a willingness to compromise. It is certain repr esentatives of the industry who ha ve consistently said either no change, or a fractional change. It is those industry re presentatives who appear to be advancing the "my position or nothing" attitude. Although I happen to agree that substantial movement towards more efficient distribution systems, I also note that these are incredibly expensive meetings. We have a large number of very se nior people devoting s ubstantial time to the meetings, their preparation and non-trivial trav el costs. These peopl e have other things competing for their time. If you and others hone stly believe that you cannot agree to a higher standard, and place no value on regulatory certain ty, then let's not waste additional time and money. Let's just say that we gave it a good shot , cut our losses here, and make our respective cases to DOE outside the negotiation process and let DOE make it's own decision. I believe that they certainly have sufficient in formation to support their positi on in a February NOPR. I can't imagine what else they would need.



## Regards,

Robert A. Berman, Principal

## Berman Economics
www.BermanEconomics.com
1915 Grand Court Vienna, VA 22182
703-281-0490
703-655-8398 (cell) BermanEconomics@gmail.com

On Nov 14, 2011, at 11:49 AM, Hirsch, Bruce R wrote:

Steve,

I am disappointed with your approach to this assignment.

It appears that negotiation to you is defined as agr eeing with your position --- or calling it off. It is unfortunate that you believe the American public, especially in these trying economic times, should be expected to foot the (very large) bill for more efficien t transformers when it is still not certain that there is value in doing so. You have clung to one suspect cal culation that indicates there may be a payback --- in the distant future --- and only if all the assumptions being made pan out. You choose to ignore the costs, not yet factored in, on US jobs, US businesses and th e reliability of supply of an item so desperately needed for our economy to expand.

This is not a “cut and dried” economic decision but is one that needs to be taken seriously for the major impact it could have on the electric supply of the US and the financial position of the American public. If DOE makes the final decision on this, I would expect them to do “due diligence” in considering all the effects there decision would have on US businesses and the US economy.

Let it be known that the Utility Industry has not pulle d out of the negotiation pr ocess and will continue to work with DOE to reach the right decision.

Bruce.From: Steve Nadel [mailto:snadel@aceee.org]
Sent: Friday, November 11, 2011 2:16 PM
To: Robert Berman; Phil Hopkinson
Cc: Eric.Petersen@aksteel.com ; jerry.schoen@aksteel.com ; Maxine (EMAB) Savitz; mhyland@appanet.org ; Raymond.Polinski@ATImetals.com ; maheshsampat@bellsouth.net ; Hirsch, Bruce R; tpetrosino@carolina.rr.com ; dbrender@cda.copper.org ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.co

m ; frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; Aaron Meyers; Antonio Trujillo; Jack C Moore; Jerry L Corkran; tballo@earthjustice.org ; carlosgsiqueiros@eaton.com ; eduardorobles@eaton.com ; Emily (CONTR) Marchetti; Jeremiah (CONTR) Freeman; Jim Raba; John Cymbalsky; srosenstock@eei.org ; DYoung@energysolution.com ; rick.anderson@faypwc.com ; bsmith@federalpacific.com ; rgreeson@federalpacific.com ; carlos.gayta n@ge.com ; artrosenfeld@gmail.com ; greg.coulter405@gmail.com ; ned.efbrush@gmail.com ; Richard Parker; Paul.Ryan@hitmet.com ; jhodge@howard.com ; Daniel Cohen; cabolduc@lbl.gov ; gjrosenquist@lbl.gov ; kcoughlin@lbl.gov ; ScottB@LVMetals.com ; dave.millure@metg
las.com ; kwinder@mleainc.com ; jrossetti@mlgw.org ; brian.coffey@navigant.com ; caitlin.johnson@navigant.com ; matthew.nardotti@navigant.com ; mrivest@navigant.com ; zhimei.luo@navigant.com ; Jim.creevy@nema.org ; john.c askey@nema.org ; mwaltner@nrdc.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; Teckman@nwcouncil.org ; vijay.te ndulkar@onyxpower.com ; gbf1@pge.com ; chuck.simmons@pgnmail.com ; ahofmann@publicpower.org ; pkumar@ publicpower.org ; adelaski@standardsASAP.org ; jmauer@standardsasap.org ; wes.patterson@us.abb.com ; chad.kenn edy@us.schneider-electric.com ; thomas.patzner@us.sc hneider-electric.com ; charlied@uus.org Subject: RE: Negotiated Rulemaking - Distribution Transformers Teleconference

Phil,

We're in the middle of negotiations and some of us have made clear that no or little change to the standard is not acceptable as the DOE analysis justifies higher standards (hi gher levels are technically feasible and cost-effective on a life-cycle cost basis). The efficien cy groups would rather leave the decision to DOE than agree to subpar standards. If you and other participants want to veto an y significant change in the standard, then we might as well save some time, break off negotiations and just make our respective arguments to DOE. Is that what you want to do? If the answer is no, then let's start talking about ho w to make higher standards acceptable rather than continue to make arguments about why low standards are needed. We're all busy and if we're going to make progress we need to break new ground and not rehash old ground.

Steve

>>> Phil Hopkinson < phopkinson@hvolt.com > 11/11/2011 1:16 PM >>>



### Hello Robert and all:

You must not have looked at Jerry Corkran’s message because he found the cost to be $17/watt, which is pretty close to my number, where both Jerry and I have used M3 core steel to deri ve the cost curve. The fact is that the cost curve is very steep with M3 and quickly hits the brick wall.

### 1. I have checked Carlos Gaytan’s cost curves as we ll and he is finding about the same relationship
with M3.

2. I have checked Wes Patterson’s data as well and he is finding an M3 cost curve about the same as
mine.

3. I have checked the OPS data with M3 as well and it too is very close to $20/watt.

a. For example, for design line 1 they show an effici ency at 50% load of 99.08% which translates to 232 watts of loss and sells for $1,960.73.

b. They show another M3 design with an efficiency of 99.26% which translates to 186 watts of loss and sells for $2962.11.

c. The change in selling price is $2,962.11-$1,906.11 or +$1,001.38

d. The change in watts is 232-186 or -46 watts.

e. The OPS $/watt is therefore, $1,001.38/46 watts or $21.77

f. Hence we see that all data sources are pointing to co st per watt of ~$20 /watt saved to go from the current mandatory standard to EL1. I get $30/watt to go to EL2 and $53/watt to go to EL3

4. The fact is that M3 is about out of gas and the DOE did a good job in the last rule making.

5. The fact also is that a push to anything beyond present does not show economic value and I do not support it.

6. The fact also is that a push to higher efficiencies will kill the new transforme r market and open up the rebuild market, destroying jobs at the new transf ormer manufacturers and resulting in transformers of lower efficiency which will cost energy and not save it.

Best regards,

Phil

Philip J Hopkinson, PE
President & CEO HVOLT Inc. 3704 High Ridge Rd. Charlotte, NC 28270 phopkinson@hvolt.com
Ph 704-846-3290
Fx 704-845-2520Cell 704-236-3320
www.hvolt.com

From: Robert Berman [mailto:bermaneconomics@gmail.com]
Sent: Friday, November 11, 2011 11:16 AM
To: Phil Hopkinson
Cc: Corkran, Jerry L; Richard Parker; Freeman, Jeremiah (CONTR); rick.anderson@faypwc.com ; tballo@earthjustice.org ; ScottB@LVMetals.com ; john.caskey@nema.org ; Cymbalsky, John; adelaski@standardsASAP.org ; Teckman@nwcouncil.org ; gbf1@pge.com ; carlos.gaytan@ge.com ; rgreeson@f ederalpacific.com ; bruce.r.hirsch@bge.com ; jhodge@howard.com ; mhyland@appanet.org ; dave.millure@metglas.c

om ; snadel@aceee.org ; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ; Raymond.Polinski@ATImetals.co

m ; artrosenfeld@gmail.com ; srosenstock@eei.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; chuck.simmons@pgn
mail.com ; kwinder@mleainc.com ; mwaltner@nrdc.org ; jerry.schoen@aksteel.com ; Paul.Ryan@hitmet.com ; ahofma nn@publicpower.org ; pkumar@publicpower.org ; bsmith@federalpacific.com ; greg.coulter405@gmail.com ; jmauer @standardsasap.org ; Cohen, Daniel; Meyers, Aaron; Jim.creevy@nema.org ; jrossetti@mlgw.org ; cabolduc@lbl.gov ; kcoughlin@lbl.gov ; brian.coffey@navigant.

com ; mrivest@navigant.com ; gjrosenquist@lbl.gov ; caitlin.johnson@navigant.com ; zhimei.luo@navigant.com ; Marchetti, Emily (CONTR); charlied@uus.org ; DYoung@energysolution.com ; James.Lass@cleco.com ; maheshsampat@bellsouth.net ; matthew.nardotti@navigant.com ; Raba, Jim; Savitz, Maxine (EMAB); tpetrosino@carolina.rr.com ; chris.brown@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; fra nk.guilbault@cogentpowerinc.com ; ned.efbrush@gmail.com ; dbrender@cda.copper.org ; chad.kennedy@us.schneide
r-electric.com ; eduardorobles@eaton.com ; vijay.tendulkar@onyxpower.com ; thomas.patzner@us.schneiderelectric.com ; carlosgsiqueiros@eaton.com ; Robert Berman; Trujillo, Antonio; Moore, Jack C Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Even if it were that high (and Mr. Hopkinson is the only one I've seen who has put the number anywhere near that), the effi ciency objective is saving Watt- hours (energy) not Watts (the capacity to save energy) . One Watt saved fo r 8,760 hours per year for 30 years is 262.8 kWh (not counting leap years). Even at Mr. Hutchi nson's $20, that's just over 7¢ / kWh. If Mr. Hutchinson will examine his electric bill, as he ha s reported, he will see that even as high as 7¢ it's a good buy, and that assumes we put a ZERO valu e on any environmental benefits (which is why DOE agreed to reconsider its 2007 MEPS in the first place.

Indeed, the cost of losses per Watt (roughly the A factors that O PS has been using) are no where near the $20 claimed here. Moreover, as ABB and others have pointed out, the proper approach would have been to minimize cost subject to e fficiency, not A & B, which would have resulted in a lower, flatter curve to the asymptote. ABB's actual market data -- physical transformers produced and delivered -- shows a competitive market for M3 transformers even at EL4 efficiency. You can make all the hypothe tical claims you want to, gentlemen, the market is
the real world

.

## Regards,

Robert A. Berman, Principal
Berman Economics
www.BermanEconomics.com
1915 Grand Court Vienna, VA 22182
703-281-0490
703-655-8398 (cell) BermanEconomics@gmail.com

On Nov 10, 2011, at 6:53 PM, Phil Hopkinson wrote:

Well stated Jerry

That is also what my analysis a nd report said. If you restrict to M3 then the cost of EL1 rises to about $20/watt.

Phil

Phil Hopkinson,P.E.

HVolt Inc.

704-846-3290

F: 704-845-2520

C: 704-236-3320

phopkinson@hvolt.com

On Nov 10, 2011, at 18:04, "Corkran, Jerry L" < Jerry.Corkran@CooperIndustries.com > wrote:

To Mr. Parker and the DOE working group,

### The reason for the request for the incr emental cost of the losses is that the current DOE efficiency levels can be obtained if the design is optimized at about $4 per core watt and $1 per winding watt at full load. At the DOE 50% kVA rating, this is the same as ev aluating the losses or optimizing the design at about $4 per total watts loss.

The present DOE efficiency loss level results in tr ansformer designs about like many utilities were purchasing their transformers before 2007. The utiliti es were purchasing the efficiency levels that were justified based on the cost of losses. A few utilities were purchasing higher efficiency that the 2007 efficiency rules because of the calculated cost of energy being higher than the $4/$1 loss evaluation.

What came up in the discussion last week was even for loss level 1, the incremental cost of losses was about $17 per watt for the design checked, between th e present DOE losses an efficiency level of DEL1. The added cost of $17 per watt is so much higher than the typical cost of the energy for the utilities, that it is very questionable that the DOE payback estimates ar e accurate. A 3% interest rate may be a factor in the payback calculations.

Jerry Corkran

From: Richard Parker [mailto:richardparkerdc@gmail.com]
Sent: Thursday, November 10, 2011 3:23 PM
To: Robert Berman
Cc: Freeman, Jeremiah (CONTR); rick.anderson@faypwc.com ; tballo@earthjustice.org ; ScottB@LVMetals.com ; john.caskey@nema.org ; Corkran, Jerry L; Cymbalsky, John; adelaski@standardsASAP.org ; Teckman@nwcouncil.org ; gbf1@pge.com ; carlos.gaytan@ge.com ; rgreeson@f ederalpacific.com ; bruce.r.hirsch@bge.com ; jhodge@howard.com ; mhyland@appanet.org ; dave.millure@metglas.c

om ; snadel@aceee.org ; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ; Raymond.Polinski@ATImetals.co

m ; artrosenfeld@gmail.com ; srosenstock@eei.org ; rroy@nrdc.org ; robert.saint@nreca.coop ; chuck.simmons@pgnm
ail.com ; kwinder@mleainc.com ; mwaltner@nrdc.org ; jerry.schoen@aksteel.com ; Paul.Ryan@hitmet.com ; ahofman n@publicpower.org ; pkumar@publicpower.org ; bsmith@federalpacific.com ; greg.coulter405@gmail.com ; jmauer@ standardsasap.org ; Cohen, Daniel; Meyers, Aaron; Jim.creevy@nema.org ; jrossetti@mlgw.org ; cabolduc@lbl.gov ; kcoughlin@lbl.gov ; brian.coffey@navigant.

com ; mrivest@navigant.com ; gjrosenquist@lbl.gov ; caitlin.johnson@navigant.com ; zhimei.luo@navigant.com ; Marchetti, Emily (CONTR); charlied@uus.org ; DYoung@energysolution.com ; James.Lass@cleco.com ; maheshsampat@bellsouth.net ; phopkinson@hvolt.com ; matthew.nardotti@n avigant.com ; Raba, Jim; Savitz, Maxine (EMAB); tpetrosino@carolina.rr.com ; chris.brown@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; frank.guilbault@cogentpowerinc.com ; ned.efbrush@gmail.com ; dbrender@cda.copper.org ; chad.kennedy@us.schneide
r-electric.com ; eduardorobles@eaton.com ; vijay.tendulkar@onyxpower.com ; thomas.patzner@us.schneiderelectric.com ; carlosgsiqueiros@eaton.com Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Robert,

I understand the DOE staff are working on the in cremental Watts calculations and will get that out to group as soon as it's ready.

best wishes,
Richard

On Thu, Nov 10, 2011 at 11:52 AM, Robert Berman < bermaneconomics@gmail.com > wrote:

Thank you Richard. That clarification is helpful.

In the liquid-filled meeting we were told that we would receive an analysis of incremental Watts saved by DL for all ELs, as well as the incremental cost. When will that analysis be available? For many of us, that analysis is the basis for a dditional, perhaps extensiv e analyses, so it should come with enough lead time before any additional meetings or teleconferences to that we can give it the required consideration. It would be most helpful if th e incremental cost were provided separately for transformer and installation, with any pole component of the installation identified.

For the MV Dry and LV Dry meetings, it would be most helpful if you would also circulate an agenda with objectives, hopefully this week, so that we are able to prepare for those meetings.



## Regards,

Robert A. Berman, Principal
Berman Economics
www.BermanEconomics.com
1915 Grand Court Vienna, VA 22182
703-281-0490
703-655-8398 (cell) BermanEconomics@gmail.com

### On Nov 10, 2011, at 11:14 AM, Richard Parker wrote:

Dear Colleagues:

The telcon on the 17th is currently planned for medium-voltage dry-type and the telcon on the 21st is reserved for low-voltage. There will be revised analysis circulat ed in advance of both calls per our discussion yesterday. Each call has substantia l chunks of time allocated, though I hope we won't need all that time.

It may be prudent to schedule a liquid-filled call at some point as well, but I propose that we hold off on that for day or so, until we can clarify when revised analysis for liquid-filled will be ready.

Thanks for your very constructive participation in the meetings over the last two days.

Richard Parker

On Thu, Nov 10, 2011 at 10:05 AM, Freeman, Jeremiah (CONTR)

< Jeremiah.Freeman@ee.doe.gov > wrote:

When: Thursday, November 17, 2011 1:00 PM-5:00 PM (GMT-05:00) Eastern Time (US & Canada).

Where: Webinar and Phone

Note: The GMT offset above does not reflect daylight saving time adjustments.

*~*~*~*~*~*~*~*~*~*

Dear Colleagues,

This event is to save the time slot on your calendar based on our discussion at yesterday's meeting. Later today further information will be sent regarding th e registration information for our November 17 and November 21 webinars. After registering you will ge t the link for the webinar and a toll free number.

Please call with questions or concerns.

### Very Respectfully,

Jeremiah Freeman

202-431-4243 (cell)

202-586-1867 (office)



## >>> This e-mail and any attachments ar e confidential, may contain legal, professional or other privileged informa tion, and are intended solely for the addressee. If you are not the intended r ecipient, do not use the information in this e-mail in any way, delete this e-mail and notify the sender. CEG-IP2