## Input for Steel Price Sensitivity Tool

Prolec GE offers this perspective for consideration on the range of core material price

leve ls to use for additional price sensitivity analysis by DOE and Navigant.

For our analysis, we asked the question: How much of a core material price change

($/pound) would be required for the lowest cost DOE M3 design for each dEL (draft

Efficiency Level) to match the lowest cost DOE Amorphous design for that dEL, and

vice-versa? What would these price changes be in % of the material prices used in the

DOE analyses?

Using the DOE design data from the 9/09/2011 spreadsheets and our simplified

comparisons of only the lowest cost designs for a given dEL (provided previously), we

calculated the difference in manufacturer’s price for the lowest cost M3 and Amorphous

units for a given dEL and divided those price differences by estimated core weights to

get a $/pound price differential. We had to estimate core weights since the DOE

spreadsheets do not provide that data. We then divided the resulting price changes by

the DOE 2010 material prices to get a % material price variance.

The DOE design data results in the following core material price change ranges for M3

and Amorphous Distribution Transformer prices to be at parity:

Table 1: Core material price variance ranges for

transformer price parity (by DL)

DL Material dEL1 dEL2 dEL3

1 M3 25%

- 79%

- 110%

SA1

- 21% 68% 96%

2 M3

- 41% n/a n/a

SA1 35%

--- ---

4 M3

- 32%

- 160% n/a

SA1 22% 103%

---

5 M3

- 61% n/a n/a

SA1 48%

--- ---

Table 2: Core material price variance ranges for

transformer price parity (by Material)

Material DL EL1 EL2 EL2

M3 1 25%

- 79%

- 110%

" 2

- 41% n/a n/a

" 4

- 32%

- 160% n/a

" 5

- 61% n/a n/a

SA1 1

- 21% 68% 96%

" 2 35%

--- ---

" 4 22% 103%

---

" 5 48%

--- ---

### Note: Where ‘n/a’ appears, that indicates there were no M3 designs for comparison for

that combination of dEL and DL; ‘

--- ‘ indicates there is no upper bound that can be

calculated for Amorphous since there is no comparable M3 unit in DOE’s design

database. Since there were no M3 designs for comparison for dEL4 and dEL5, these

efficiency levels were not included on the previous tables.

A positive percent variance indicates the % that the core material price can increase to

match the manufacturer’s price for the lower cost option. A negative percent variance

indicates the % that the core material price has to decrease to match the manufacturer’s

price for the lower cost option. Please note that the DOE Amorphous designs for DL2

do not appear to be optimized for lower dEL’s. The lowest price Amorphous design

available was one that meets or exceeds dEL3. Our own data suggests that lower cost

Amorphous designs are feasible if targeted at the dEL1 and dEL2 levels. We believe

that this would reduce or eliminate the Amorphous unit’s cost disadvantage versus M3

at dEL1 and would increase its advantage at dEL2. DOE may want to review their

family of Amorphous designs for DL2.

For example, at dEL2, the lowest cost M3 design would need to have a reduction in M3

material cost of 79% to match the best Amorphous unit for Design Line 1. That value

would be -160% for Design Line 5. There were no M3 designs in the DOE results at

dEL2 for Design Lines 2 and 4. Conversely, the price of Amorphous material could

increase 68% and still match the best M3 manufacturer’s price for Design Line 1 at

dEL2, and by 103% to match the best DOE M3 design for Design Line 5 at dEL2.

This simplified analysis suggests that the range of possible core material price levels

used for DOE’s next sensitivity analysis should be widened. Rather than using a

maximum material price range of +/-25%, we believe the top range should be at least

+/-50% given the above results. The price assumptions used for new dEL’s will affect

not only the positions of the design technology results, but also the fundamental LCC

results.

We recognize that our analysis is simplified. We know that as material prices change,

the optimum designs could change through redesign and reoptimization. We realize

that the manufacturer’s prices include some mark-ups that we have not reflected in our

variance calculations. However, we believe the fundamental results would hold – that a

more significant price change in core materials is possible than what DOE is currently

proposing to analyze.

We also believe that our analysis of core material price versus dEL’s provides similar

results to those presented by AK Steel during last Thursday’s session.

Recommendation: Expand the range for core material prices to at least +/-50%

for sensitivity analysis on optimum designs and LLC results.

Details of our analysis are summarized on the next two pages.

### Details on Core Material Price Ranges for DT Price Parity Analysis

- M3 and SA1

Analysis based on d esign data from DOE 9/09/2011 Engineering Data file

DL1

- 50 kVA

dEL0 dEL1 dEL2 dEL3

DT Price

- M3 $1,960 $2,156 $2,715 $2,924

DT Price

- SA1 $2,284 $2,284 $2,284 $2,284

DT Price Var

- SA1

- M3 $324 $128 ($431) ($640)

DT Price Var % 17% 6%

- 16%

- 22%

Est Core Wt

- M3 215 275 290 310

Est Cor e Wt

- SA1 240 255 265 280

Price Chge Parity

- $/lb

- M3 $1.51 $0.47 ($1.49) ($2.06)

Price Chge Parity

- $/lb

- SA1 ($1.35) ($0.50) $1.63 $2.29

DOE Base $/lb

- M3 $1.88 $1.88 $1.88 $1.88

DOE Base $/lb

- SA1 (core) $2.38 $2.38 $2.38 $2.38

Parity Matl Chge %

- M3 80% 25%

- 79%

- 110%

Parity Matl Chge %

- SA1

- 57%

- 21% 68% 96%



### DL2

- 25 kVA

dEL0 dEL1 dEL2 dEL3

DT Price

- M3 $1,314 $1,472 n/a n/a

DT Price

- SA1 $1,277 $1,342 $1,381 $1,434

DT Price Var

- SA1

- M3 ($37) ($130)

--- ---

DT Price Var %

- 3%

- 9%

--- ---

Est Core Wt

- M3 140 170

--- ---

Est Core Wt

- SA1 155 155

--- ---

Price Chge Parity

- $/lb

- M3 ($0.26) ($0.76)

--- ---

Price Chge Parity

- $/lb

- SA1 $0.24 $0.84

--- ---

DOE Base $/lb

- M3 $1.88 $1.88

--- ---

DOE Base $/lb

- SA1 (core) $ 2.38 $2.38

--- ---

Parity Matl Chge %

- M3

- 14%

- 41%

--- ---

Parity Matl Chge %

- SA1 10% 35%

--- ---

### DL4

– 150 kVA

dEL0 dEL1 dEL2 dEL3

DT Price

- M3 $5,362 $6,422 $7,854 n/a

DT Price

- SA1 $6,033 $6,033 $6,033 $6,033

D T Price Var

- SA1

- M3 $671 ($389) ($1,821)

---

DT Price Var % 13%

- 6%

- 23%

---

Est Core Wt

- M3 565 650 605

---

Est Core Wt

- SA1 740 740 740

---

Price Chge Parity

- $/lb

- M3 $1.19 ($0.60) ($3.01)

---

Price Chge Parity

- $/lb

- SA1 ($0.91) $0.53 $2.46

---

DOE Base $/lb

- M3 $1.88 $1.88 $1.88

---

DOE Base $/lb

- SA1 (core) $2.38 $2.38 $2.38

---

Parity Matl Chge %

- M3 63%

- 32%

- 160%

---

Parity Matl Chge %

- SA1

- 38% 22% 103%

---

DL5

- 1500 kVA

dEL0 dEL1 dEL2 dEL3

DT Price

- M3 $24,853 $30,33 2 n/a n/a

DT Price

- SA1 $25,555 $26,557 $27,128 $28,862

DT Price Var

- SA1

- M3 $702 ($3,775)

--- ---

DT Price Var % 3%

- 12%

--- ---

Est Core Wt

- M3 2860 3300

--- ---

Est Core Wt

- SA1 3045 3300

--- ---

Price Chge Parity

- $/lb

- M3 $0.25 ($1.14)

--- ---

Price Chge Parity

- $/lb

- SA1 ($0.23) $1.14

--- ---

DOE Base $/lb

- M3 $1.88 $1.88

--- ---

DOE Base $/lb

- SA1 (core) $2.38 $2.38

--- ---

Parity Matl Chge %

- M3 13%

- 61%

--- ---

Parity Matl Chge %

- SA1

- 10% 48%

--- ---

dEL4 and dEL5 design datab ases have no M3 designs for comparison.