Summary of the First Meeting of the Working Group on Low-Voltage Dry-Type Distribution Transformers of the Energy Efficiency and Renewable Energy Advisory Committee September 28, 2011

Richard W. Parker, Facilitator

Note: This meeting summary has been prepared fo r the convenience of the Working Group. It has not been approved by the Working Group and should not be construed or taken to represent the official position of the Working Group or any member as to what transpired at the meeting.

The Working Group on Low-Voltage Dry-Type Distri bution Transformers (“LV Group”) held its first meeting on Sept. 28 in DOE Conference Room 8E-089. A list of attendees is attached as Annex A.

Rules of Procedure and Meeting Schedule Agreed After a brief discussion the Group adopted substan tially the same rules of procedure as had been adopted by the Medium Voltage group on Sept. 16 (A nnex B). The group also agreed on a timetable for future meetings set forth in Annex C.

The group then heard from Mr. Nardotti of Navi gant Consulting concerning the updated preliminary results of the DOE Engineering Analysis of low-vo ltage dry-type transformers. He explained the analytical method used in crafting the Engineering Anal ysis, in terms that closely mirror the methods used in the Medium Voltage Engineering Analysis. That explanation was provided in greater detail in the Meeting Summary for the MV Working Group, Sept. 15- 16 meeting, and is incorporated by reference

here.

Data Centers One participant asked whether the engineering an alysis took account of the unique design features and constraints facing manufacturers of transformers fo r data centers. Mr. Nardotti replied that no special

allowance had been made for data cen ter transformers in the engineering analysis thus far. The facilitator explained that setting a special standard for such tran sformers would require a showing that transformers for data centers are physically and/or operationally distinct from other transformers in the same equipment class, and that these differences can be sp ecified with sufficient clarity and precision as to prevent circumvention. Other participants asked fo r more information on the volume of sales in this category. After further discussion, the Working Group agreed to form a sub-group led by Onyx Electric to develop recommendations concerning the feasibility of a separate energy-efficiency standard for data centers and, as appropriate, to make a propo sal on what such a standard should be.

Low-kVA Units Another industry participant noted that his comp any had asked for a special standard for 15 kVA three-phase transformers, and for 750 and 1000 kvA tran sformers, because these very small (or relatively large) transformers at the extreme ends of the equipment class raise difficulties and costs not captured in the .75 scaling rule, which applies well enough to the middle range. Mr. Nardotti explained that it would be difficult at this stage to create a new representative unit for these outliers. Other participants noted that it might be feasible to create a special standard for these kVA ranges if technically justified.

Temperature Rise There was an extensive discussion arising from the observation that at higher efficiencies units would operate cooler than the temperature rise built into the design specification for those units, and that an appropriate corrective factor would need to be applie d. An industry participant noted that this seemed like2

a test procedure issue rather than a standards issue. Mr. Parker asked if Mr. Patzner would explain this issue in short memo to the group.

Symmetric Core Mr. Nardotti reported that DOE had not been able to gather enough manufacturing data to model symmetric core designs. Such designs had not been formally screened out from any consideration, but due to lack of data they had not been modeled in the engineering analysis. Mr. Cymbalsky noted that symmetric core transformers are still covered products, and are still subject to efficiency standards that apply to their equipment class.

Principles of standard setting In response to industry concerns that raising e fficiency standards for a 35 percent load assumption might force consumers to choose designs that are less efficient at higher loads, a public interest advocate noted that it is intrinsic to setting nationwide standa rds that some customers do not benefit while other (presumably the large majority) do benefit. It is genera lly impossible, in practice, to find or set a standard

that makes everyone better off.

An industry participant reinforced the need for hi gher standards in the low-voltage space by pointing out that such transformers are unique in that their pur chaser typically bears the cost of the transformer, but is not the user of the product and therefore gets none of the energy-saving benefits [which accrue to users of the building/facility].

Industry concerns with DOE analysis One industry noted that he had done a comparison of his own engineering analysis with the DOE analysis for both medium-voltage dry type and low- voltage (DL 8) and had found “fairly broad” (on the order of 60 to 70 percent) and unexplained discrep ancies in both cases. He thought the analysis was pretty well thought out, but that there might be some discrepancies in assumptions made about such things as markups. Another observer likewise noted certain discrepancies between his results and DOE’s and opined that the difference might be explained by th e “destruction factor.” Mr. Parker suggested that interested industry participants form a working group to work with Na vigant on reconciling their analysis

with DOE’s, with the caveat that the focus should be on identifying any major discrepancies that might significantly bias the final results. An industry par ticipant noted that because much of the data is proprietary, industry participants woul d be more inclined to share that information with DOE than with each other. So it was agreed that the sub-group woul d establish their own internal procedures for sharing information and protecting confidentiality while a ttempting to reconcile the DOE price-efficiency analysis with their own company-specific analysis.



### Lunch Break

After lunch, Mr. Gordon of the DOE General Counsel’s office gave a presentation on the responsibilities of the group under th e Federal Advisory Committee Act.

There was extensive discussion about how to deal with the fact that a number of smaller manufacturers of low-voltage transformers may not have had time or staff to participate in the negotiating group though their interests are significantly affected. Mr. Caskey of NEMA offered to poll his members so as to ascertain whether there was interest among his members in either presenting to the Working Group or providing independent feedback on DOE analysis for the group’s consideration.

Ms. Coughlin of LBNL led the participants thro ugh the methodology underlying the Life-Cycle Cost (LCC) and National Impacts Analysis (NIA). With certain differences noted below, the methodology for Low Voltage transformer LCC/NIA analysis is substa ntially the same as with Medium-Voltage Dry Type3

Transformers and is summarized in the meeting su mmary for the Sept. 15-16 meeting of the MV Group. The same is true of Mr. Gordon’s presentation. Bo th these explanations are incorporated by reference

herein.

Evaluation Rates One factor unique to LV transformers, as noted by Ms. Coughlin, is that very few LV purchasers evaluate losses or customize design. Nearly all pu rchase transformers “off the shelf” on the basis of lowest first cost and/or some other design parameter such as noise, heat or space.

Load Factors Ms Coughlin reported that the assumed load factor is determined by calculating the average load factor associated with the range of buildings and building types in which LV transformers will be installed. Ms Coughlin emphasized that the calculated average load factor is not necessarily the load factor specified in the test procedure. The test procedure load is 35%, whereas the average observed RMS load in the field is about 22 percent. One industry participant cited a study by the Cadmus Group which reported that the average loading of LV transfor mers in commercial buildings is about 16.6 percent and that his own company’s data suggested a loading f actor closer to 12 percent, that most transformers for commercial buildings are over-sized due to fire cod es, and that the load factors are likely to further decline over time as lights, appliances and electronic equipment become more energy efficient.

Another industry observer pointed out that buildin g codes require over-sized transformers because they are based on square footage, number of outlets , and assumptions about power use per outlet that are very conservative because they are desi gned to reduce risk of fires. Yet appliances, lights, etc. are getting steadily more efficient. So median load factors are unlikely to increase in the lo w-voltage market. On the other hand, as a government participant observed, more people are using computers, which tends to increase energy use. In any case, the DOE policy is to rely on EIA or AEO data for forecasts about electricity demand and load growth.

Material Prices Ms. Coughlin also explained that material pr ices are drawn from 2006, 2 008 and 2010 data, with 2010 being the base case, and 2006 and 2008 providing the lower and upper bound, respectively. OPS calculates an optimal set of designs at each efficiency level for a wide range of A and B factors, and that due to the complexity of the optimization algorithm, there is a “limit as to how much we can do to investigate the sensitivity of this part of the analysis to changes in materials prices.”

Key Result: Flat Curves Ms. Coughlin observed that one key conclusion from the Engineering and LCC Analysis is that the price-efficiency curve appears fairly flat throug h about CSL 4, meaning that significant gains in efficiency appear achievable with small increases to first cost of low-voltage transformers.

An industry participant observed that his company is making and selling transf ormers at substantially higher prices than reflected in the southeast boundary of the price-efficiency scatterplots, even though most purchasers are assumed not to evaluate on the basis of A and B factors. One industry observer opined that the likely reason was that building ow ners are buying higher-cos t units for other nonefficiency attributes, such as lowering air conditioni ng costs by reducing heat, or because the unit is serving an LEED building, or the buyer (such as a K-12 school) is voluntarily buying to a higher

standard.

LCC Analysis Ms. Coughlin noted that although the engineering char ts often display a range of prices for units sold at any given efficiency level, the DOE Life-Cycle Cost (LCC) model would select only the most efficient4

units (units on the lower boundary of the price-effi ciency curve at each EL) for purposes of calculating Life Cycle Cost and National Impact Analysis.

She then reviewed the method for deriving Na tional Energy Savings and Net Present Value.

Sensitivity Analysis (done by participants)

Some participants expressed an interest in being ab le to do their own analysis using the DOE models. Ms. Coughlin replied that they could do this by downloading the spreadsheets from the DOE website, inputting the relevant assumptions, and running the “Crystal Ball” Monte Carlo analysis, which they could purchase from Crystal Ball (or use on trial for tw o weeks without charge). However, an advocate responded that in his experience Crystal Ball is not something they can run, so the Working Group might have to come up with some scenarios that th ey would ask the consultants to run.

Ms Coughlin offered to circulate a list of sensitiviti es that are done as part of the standard analysis, but noted that they are also listed in Chapter 8 of the TSD.

The Problem of Low kVA units One industry participant noted that for covered pr oducts at the low kVA end of DL 7 (15, 30, 45 kVA), manufacturers have a technical option of build ing either ventilated tran sformers (covered) or sealed transformers (statutorily exempt). If the st andard for ventilated transformers in these kVA ranges is made too high, the market may simply shift to seal ed transformers. Another industry participant noted that the statutory term “sealed transformers” referred to sealed gas-filled transformers, not encapsulated transformers (see Sec. 35(b) in EPACT 2005). The f acilitator suggested that the industry participants work with DOE counsel to investigate that i ssue and report back to the working group.

The perverse consequence of current test procedures Ms. Coughlin noted that actual loadings are typical ly much lower than test procedure loading, which means that transformers designed to meet the test pr ocedure will be geared to significantly reducing load losses, which will mean higher no-load losses than is optimal for the actual loading profile on that transformer, and less efficiency in the field than would be the case if test procedures more accurately

reflected actual load conditions.

Trial Standard Levels (TSLs) After some discussion, the Working Group agr eed on the following TSLs: (1) max tech, (2) maximum net present value (which is usually associ ated with minimum life cycle cost; (3) maximum energy savings with a non-negative LCC. There was general conceptual agreement that an interesting point of inflection might be the most efficient unit which preserves a capability to meet the standard using more than one type of core steel, and perhaps a sep arate TSL set at the level that preserves significant competition among steel suppliers in the market. Defining these points proved difficult, in practice,

however.

Participants concluded that it would not be advisable on anti-trus t grounds for steel suppliers and

transformer manufacturers to talk among themselves about where such TSLs might be established, but that suppliers might work separately with Navigant to inform that decision. 1 There was discussion of possibly examining how weight would increase with effici ency at different ELs with the idea of deriving

1 This notwithstanding that the facilitator reported the results of his conversation with an official in the Anti-trust Division of the Department of Justice, which clarified that the Justice Department does not have an objection with private parties discussing efficiency levels and likely impacts of such levels on prices if the purpose is to avoidanticompetitive outcomes from standard-setting.5

a TSL from that, but the analysts concluded that this would not be practical. An industry participant proposed a TSL set at the level of minimum, but non-zero, job impact. However, a DOE representative noted that job impacts are calculated in DOE analyses, but are not normally used to define TSLs. There was agreement on allowing DOE staff to define “gap-f illing” TSLs to ensure analysis of points along the spectrum of ELs where there are no previously-defined TSLs.

The meeting concluded with agreement in principl e on the following TSLs, understanding that further consultations would be required to clarify the 4 th and 5 th TSLs.

 Max Tech, (Complete)

 Max Net Present Value, (Complete)

 Maximum Energy Savings With Positive Life Cy cle Cost, Baseline (No Standard Standard), (Complete)

 Highest Energy Savings With Mu ltiple Core Material Suppliers,

 Highest Energy Savings With Multiple Competitive Core Material Suppliers,

 Some Aspect Of Annual Electricity Bill Savings (E.g., 30% Or 50%)

 Gap Fill As Necessary.

Conclusion

Participants concluded by agreeing to work with DOE consultants in validating the data, refining the analysis, and proposing the diversit y of supply and competitiveness in flection points for the various Design Lines. The meeting adjourned at 4:44 pm.