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

Sent: Tuesday, October 11, 2011 9:18 AM

To: Edwin Brush

Cc: Robert Berman; Phil Hopkinson; Bob Smith; Cask ey, John; Brian Coffey; Alex Hofmann; Andrew

Delaski; Aris Marantan; Art Rosenfeld; Bob Saint; Cait lin Johnson; Carlos Gaytan; Charlie Drexler; Charlie

Stevens; Chris Bolduc; Silcox, Clark; Creevy, Jim; Dan Cohen; Daniel Young; Eric Peterson; Freeman,

Jeremiah; Gary Fernstrom; Greg Coulter; Greg Rosenquist; Hirsch, Bruce R; James Lass; Jennifer

Tiedeman; Jerry Corkran; Jerry Hodge; Jerry Schoen ; Joanna Mauer; John Cymbalsky; John Rossetti;

Katie Coughlin; Ken Winder; Mahesh P. Sampat; Matt Miller; Matthew Nardotti; Meg Waltner; Meyers,

Aaron; Michael Hyland; Michael Rivest; Millure, Dave; Phil Harter; Polinski, Raymond; Puesh Kumar; Rick

Anderson; Rob Greeson; Robert van Buskirk; Robin Roy; Ryan, Paul; Scott Beck; Simmons, Chuck; Steve

Nadel; Steve Rosenstock; Tim Ballo; Tom Eckman; Wes Patterson; Zhimei Luo;

rjstahara@centralmoloneyinc.com; Ali Ghafourian; Dave Brender; jay.ballard@schneider-electric.com;

Kenneth.Harden@schneider-electric.com; Tom Patzner; Steve Nizinski; Richard Parker

Subject: Re: Distribution Transformer Loading and other Analyses



### Good Morning, Ned,

Not sure how central air play on loading. maybe wo rks in some very moderate areas (I love San

Francisco) but in Washington Dc, those August afte rnoons are brutal, and that's what the utilities

have to size for.

Electric cars are certainly the pray er on every utility's lips; but, as I've pointed out to some, I

would fully expect commercial parking garages to add the service for a fee and let you recharge

your car while at work. That would make a nice perk as well. Utilities blanche at that thought,

obviously. Point is, you could reason ably speculate in either dire ction. I'd rather focus first on

today's reality then maybe look to some sensativity to perterb that situation.



### 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 Oct 11, 2011, at 8:31 AM, Edwin Brush wrote:

Phil, Bob, et al,

### Loading levels are important, and most of this discussion appears to concentrate on current

loading.

The transformers that would/will be included in minimum efficien cy standards will be installed

and have a life in service of 30 to perhaps 40 years in the future, or longer.

Future loading appears quite important for c onsideration and thoughtful inclusion in minimum

required efficiencies.

Current loading and loading pa tterns can be a baseline, a nd further energy efficiency

gains among commercial, industrial and residential customers would be a factor in reducing their

loading. HOWEVER, average residen tial loading since the 1950's ha s increased in recent years

(one citing of DoE data has over twice the aver age consumption per household) - consider the

current additional existing appliances, activitie s, penetration of central air conditioning, etc.,

compared to earlier decades.

There are also current incentives and projections for large increases in numbers of electric and

rechargeable electric vehicles for the future, as well as trends to time-of-day electricity pricing

by utilities. (That could provide strong incentives to utilize the low rates proposed for late night

hours).

As late night usage grows, transformers have a heavier load at night - less opportunity to cool

from perhaps the heavy daytime load from summer air conditioning, and probable higher rms

load? -- consider the new system loading, not previously existing, from late-night vehicle

recharging.

My suggestion is to consider both current a nd historical loading a nd loading patterns, and

FUTURE potential loading patterns.

Then include "right-sizing" for transformers wh ere applications permit. Right-sizing can reduce

core losses (those continuous losses) - consider the 45 kva vs. 75 kva dry transformer, using the

same grain-oriented steel, or amorphous; the n, reduce conductor resistan ce appropriately to

achieve higher overall tran sformer energy efficiency.

Future loading for new transformer production may be significantly higher than current loading

(while they are in-service for the next decades).

Best regards,

NED

Dr. Edwin F. Brush, Jr.

BBF & Associates, Consultants

PS: Appliances currently available have delayed start, that can shift operating to late night

further increasing late night load ing; however, that is shifting load, where intent is to smooth

loading patterns - and is not "n ew" loading such as the cited a bove electric and rechargeable

### electric vehicles being introdu ced and promoted. In addition, I have electric hot-water (at

5,000KW/year - my Boston price is $0.22 ! - how much higher might it be in future?) - time of

day pricing could lead many to use late night loading, and, if that KW pricing is low enough,

perhaps to have electric hot water heating increase in market pene tration in future years?? (using

even more KW's per household)

On Mon, Oct 10, 2011 at 10:49 PM, Robert Berman < bermaneconomics@gmail.com > wrote:

Thanks for you response, Bob.

I don't take issue with any analys is of how a transformer manages a load, or the technical aspects

of how a transformer is designed to manage that load. The nature of that load, though, I accept as

a given. In the LV meeting at the end of September, I was surprised to learn that the LV dry load

was a low as it was. Couldn't imagine why anyone would deliberately overs ize a transformer so

inefficiently. A near-by engineer simply said "fire codes" and that immediately made sense. I

was also directed to ASHRAE and related K-12 studies that assessed th e likelihood of further

falling loads due to increased efforts for energy c onservation, and the need, for safety reasons, to

maintain the capability for a full load on every outlet. I view that load as a reality -- a fact of life

-- something as an analyst I cannot choose to disregard. I also see the load for measurement of

efficiency, for manufacturer compliance purpos es, as a separate and separable question.

Although my own predilection is that the load for measurement "ought " to be the "real" load, I'm

certainly prepared to hear arguments for doing ot herwise; recognizing that they are not the same.

What I am unwilling to accept is an argument th at asserts a reality based on the regulatory

measurement decision. That's at best backwards. I ndeed, I would insist that the impact evaluation

be done at the real load; possibly even consider ing some alternative measurement points on cost

and efficiency given the real load.

As far as a payback period is concerned, my own pr eference is for an incremental rate of return

given my orientation to economics. However, since one is simply the reciprocal of the other, I

have no objection if someone is more comfor table having gone to a different school. Some

recognition of the cost of money, productivity of capital, and business risk is absolutely

necessary, whether a hospital or c ookie factory. The question, then, is the appropriate hurdle rate

(or payback period) for the investment. In the case of energy conservation, a 3-year payback

period seems inappropriate. Th at would correspond to a 33% return on investment, and is

consistent with substantially higher costs of capital than we see in the current economy, and

substantially greater risks than is present in an energy savings inve stment, whose only real

### private risk is a substantial fall in energy pr ices. Moreover, there are public benefits (e.g.,

environmental costs, impact on energy prices, etc) that is a fundamental part of the reason for

Federal intervention in the market in this case. Those considerations would obviate for a criteria

that may be different from the one some comp anies may use in their private, more risky

investments. At this point, I would not recommend a particular PBP, but support one based on an

appropriate assessment of the additional risk to consumer, with appropriate recognition for the

additional, social return.

With respect to an "economically justifiable" investment: genera lly speaking, it is one consistent

with the opportunity costs -- with what you give up in order to have it. Similar to the reason for a

hurdle rate, it is what a purchaser give up in order to have it (or not have it). If users (electricity

consumes) made the investment decision, and there were no third-party be nefits or costs, the

decision would be rather straight forward. Ener gy Star appliances are a great example. The

consumer looks at the difference in cost and effi ciency, evaluates the effi ciency at current energy

prices, and decides whether it's a good buy.Nothing lik e that is available here: the consumer does

not get to direct the utility's purchase, and there are other, non-market costs. The situation was

beautifully illustrated by a conversation I had with the transformer purchasing manager at a

major IOU. I pointed out that the energy savings associated with the incremental cost of an

efficient transformer in a particular situation resu lted in a return on invest ment of more than 80%

annually (PBP= about 15 months), based on current energy prices alone. He agreed, but properly

noted that his company and stockholders did not get it. Except for a very small return on the

incremental investment, it all went to the ratepaye r. And that doesn't even begin to address the

environmental and other social costs. That's the reason for the Federa l action. Cookie factories

can figure out how to run their businesse s w/o any Federal help or direction.

Hope that helps. Look forward to seeing you Wednesday.



### 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 Oct 10, 2011, at 4:51 PM, Bob Smith wrote:

Dear Robert:Phil’s paper utilizes a lot of good and diverse loading situations. I believe his analysis is going to be as

accurate as we’ll find anywhere. Tom Paztner wrote an interesting follow

‐ up (attached) to his

comments during the last meeting. His comments started me thinking about another source for loading

on 600 volt dry transformers. That source, which ha s not been fully utilized, includes the many

consulting engineers (Fluor, Black & Veatch, Kiewit, Burns & McDonald, O’Neal, CH2MHill, etc.) that are

specifying the power ratings of the LV Drys based on their connected loads. I’d encourage those doing

the technical loading analysis for this committee to utilize this source. Phil’s da ta; however, may still be

much more valuable, because it is empirical by measurements actually made at installations.

Robert, in the area of economics I would value greatly your listing of attributes that fall into the category

of “economically justifiable”. For instance, in the attached note that I sent last week I expressed great

concern that the “A” and “B” values were not appropriate for our ICI customers. What do you th ink?

How do you feel about the appropriate payback period for an incremental investment by a hospital,

paper mill, or a tire plant? I would greatly value your input on these subjects. For I am also searching

for the right answer to the equipment efficiency question, whether it be a gasoline en gine, steam

turbine or a transformer.

Going back for a moment on your concern for the loading on transformers, I think I can say with almost

perfect accuracy, that if we establish efficiency levels another 1⁄2 percentage point higher for the Low

Voltage Transformers, the consultants and end users, as they are faced with substantially increased

pricing, will definitely start buyin g smaller size KVA ratings with the effect that the loading as a

percentage of nameplate rating will exceed the assumed 35% that we are now using. For the sake of

energy conservation I don’t think this is a good outcome.

Sincerely,

Bob Smith, PE

Product Manager

Federal Pacific

601 Old Airport Road

Bristol, VA 24201

TEL: (276) 645-8836

FAX: (276) 645-8212

CELL: (276) 591-6143

Email: bsmith@federalpacific.com

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the original message from your system.From: Robert Berman [mailto:bermaneconomics@gmail.com]

Sent: Monday, October 10, 2011 2:40 PM

To: Richard Parker

Cc: Phil Hopkinson; Caskey, John; Brian Coffey; Alex Hofmann; Andrew Delaski; Aris Marantan; Art

Rosenfeld; Bob Saint; Bruce Smith; Caitlin Johnson; Ca rlos Gaytan; Charlie Drexler; Charlie Stevens; Chris

Bolduc; Silcox, Clark; Creevy, Jim; Dan Cohen; Daniel Young; Eric Peterson; Freeman, Jeremiah; Gary

Fernstrom; Greg Coulter; Greg Rosenquist; Hirsch, Bruce R; James Lass; Jennifer Tiedeman; Jerry

Corkran; Jerry Hodge; Jerry Schoen; Joanna Mauer; John Cymbalsky; John Rosse tti; Katie Coughlin; Ken

Winder; Mahesh P. Sampat; Matt Miller; Matthew Nard otti; Meg Waltner; Meyers, Aaron; Michael Hyland;

Michael Rivest; Millure, Dave; Phil Harter; Polinski, Raymond; Puesh Kumar; Rick Anderson; Rob Greeson;

Robert Berman; Robert van Buskirk; Robin Roy; Ryan, Paul; Scott Beck; Simmons, Chuck; Steve Nadel;

Steve Rosenstock; Tim Ballo; Tom Eckman; Wes Patterson; Zhimei Luo;

( rjstahara@centralmoloneyinc.com ); Ali Ghafourian ( aghafourian@ermco-eci.com ); Ned Brush

( Ned.efbrush@gmail.com ); Dave Brender ( dbrender@cda.copper.org ); jay.ballard@schneiderelectric.com ; Kenneth.Harden@schneider-electric.com ; Tom Patzner ( thomas.patzner@us.schneiderelectric.com ); Steve Nizinski

Subject: Re: Distribution Transformer Loading and other Analyses



### Richard,

I have carefully reviewed the HVOLT analysis . Although I am not an engineer, and will not

comment on particular engineeri ng designs, I am concerned about a number of the assumptions

made regarding electricity utility system economics as well as th e transformer prices. The latter

appear at odds with published market data and appear to misquote the DOE PTSD. As the

analytical conclusions appear to be riven by the assumptions, it is important to put the

assumptions in their proper context. Attached are my detailed comments.



### <Patzner.doc><October 6.doc>