From: Kenneth Winder [mailto:kwinder@mleainc.com]

Sent: Thursday, September 22, 2011 7:12 PM

To: Rosenstock, Steven

Cc: Richard Parker; Corkran, Jerry L; Caitlin Johnson; rick.anderson@faypwc.com;

tballo@earthjustice.org; ScottB@lvmetals.com; john.caskey@nema.org; jo hn.cymbalsky@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; 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; chad.kennedy@us.schneider-electric.com;

eduardorobles@eaton.com; vijay.tendulkar@on yxpower.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.

Mr. Parker and others,

Below are additional thoughts for the modeling, studies and considerations to help in this negotiated

Rulemaking process.

1.The DOE/Navigant has modeled the loading on distribution transformers. However, many questions

have arisen that need to be answered concerning the accuracy of the model. Access to information and

vettin g of that information needs to be performed to have confidence in the model.

This process must take place, and it cannot be done efficiently and in the depth that is should be in a

Rulemaking Committee meeting. Some of this information gathering and vetting could be performed

through contact with Navi gant to explore th eir modeling and programming. We request that the rules

be examined to determine if a subgroup of the Ratemaking Committee is allowed to meet with Navigant

to request and receive information in an effort to understand the details of the DOE/Navigant model

and to provide additional input wher e needed. This would be par t of the effort of the subgroup to

accept and approve the accuracy of the studies and modeling that is performed as the basis to make the

decisions required by the Rulemaking Committee.

We believe that the rules governing this request should be made public. We do not exp ec t that the

discussions between subgroups of the Rulemaking Committee and DOE/Navigant would be made public.

However, results of such discussions that change the model should be made public.

2. When utilities furnish A and B factors to suppliers, the expectation is that those factors are being

used to creat e th e optimum transforme r design while meeting or exceeding minimum efficiency

Standards. The A and B factors provide lots of information about the expected loading of the

transformer. Imbedded in those factors is information about the expected marginal pricing over the lifeof the unit, peak responsibility of the transformer's load, load factor of the unit that translates into loss

factor, etc. It creates the relationship between the core losses and winding losses and gives insight to

the manufacturer how to design the transformer to optimize that relationship. We do not want to lose

the value of fu rnishing th ese A and B factors to suppliers.

As efficiency requirements have been set at specific minimum values and a specified load, purchasers

are being forced to buy transformers that do not utilize these A and B factors and thus the transformers

purchased may not be the most efficient produ c t for their intended application. We believe this should

be investigated and request that be done.

3. When transformer bids are evaluated, one of the purposes is to determine which supplier to

choose. There are many factors including price to be evaluated, but price is usually the major driver. If

efficiency le ve ls are increased, how will that affect supplier's ability to compete or will it have the effect

of driving some of them out of business. The unacceptable results would be one or two mega

‐ suppliers

that control the market. This has many negative consequences. Suppliers should be given the

opportunity to respond to questions about this situation.

4. Supp liers indicated at our first Rulemaking Committee meeting that 90% of purchases were at

minimum efficiency and 10% exceeded that. If the minimum transformer efficiency is increased, how is

the relationship of those percentages going to be affected. This r equires additional information, studies

and sensitivi t y analysis.

5. We support the request made by the suppliers and manufacturers that DOE/Navigant correctly

model the transformer designs and cost relationships. The measure of success is to match actual

current market prices for various scenarios that is acceptable to the suppliers, manufacturers and

purchasers. The modeling must also be accurate to det e rm ine realistic incremental pricing if efficiency

is increased. If this modeling is not accurate, since it is one of the cornerstones of this whole effort, we

cannot trust the conclusions drawn from the studies.

Once the modeling becomes accurate per above, more sensitivity analysis will li kely be requested.

6. The DOE/Navigant model uses distribution transformer failure rates of 0.5% per year from the first

year of installation and thereafter, due to lightning and other random causes. They also use an

additional 0.5% per year due to corrosion, starting in year 15. Survival function per DOE is in the shape

of the s t andard Weibull curve. The modeling at the rates of failure stated cause a concern about the

modeling and does that really create a realistic lifetime? Is the lifetime average number of years an

acceptable lifetime for transformers based upon actual experience? How does that differ for steel

versus Amorphous core tr ansformers?

If a transform e r fails, how does the DOE/Navigant model its replacement? How does a failure affect the

operating costs and other aspects of the modeling?

7. DOE/Navigant state that they assumed unity power factor for their calculations. They also assume

that the initial peak loading of transformers is 0.9 p. u. and the initial load on the transformer is grown at1% per year. The values used have an effect on the model and need to be accurate. What is the basis

of these assumptions? Are these assumptions acceptable to the utilities based on their experience and

operations? If they are not accurate, they will cause the misrepresentation of operating costs and

failure rates, life cycles, etc

.

8. We believe that modeling and studies should be performed for a Rural subgroup within the

DOE/Navigant model similar to the analysis done in the original Rulemaking. We know from the original

Rulemaking process that the PBP is longer for this rural subgroup than other gro ups. As a res u lt of the

original minimum efficiency standard for distribution transformers, public power subgroups were

required to purchase transformers with lengthy payback periods (at times approaching 20 years).

Now we are engaged in another effort to consider increasing the efficiency requirements. If studies

performed will separate public power as subgroups (m unici pal and ru ral cooperatives) from the

investor

‐ owned utilities, the payback periods will likely show an even more extended payback period for

public power utilities and their consumers.

The combined payback period of these Rulemakings must be considered as an impact on utilities and

their consumers.

We are concerned that these distribu ti on transformer efficiency Rulemakings are placing a heavy cost

burden for increased efficiency on rural consumers. The effect is that we are reaching unacceptable

payback periods and a declining cost/benefit ratio that does not support increasing efficiency beyond

what the present standard requires.

Kenneth A. Winder, PE

NRECA