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

Sent: Wednesday, November 16, 2011 10:13 AM

To: Wes Patterson

Cc: Robert Berman; AaronMeyers; adelaski@standardsASAP.org; ahofmann@publicpower.org; Antonio

Trujillo; artrosenfeld@gmail.com; Brian Coffey; Hirsch, Bruce R; bsmith@federalpacific.com;

cabolduc@lbl.gov; Caitlin Johnson; carlosgsiqueiros@eaton.com; carlos.gaytan@ge.com;

chad.kennedy@us.schneider-electric.com; charlie d@uus.org; chris.brown@cogentpowerinc.com;

chuck.simmons@pgnmail.com; Daniel Cohen; dave .millure@metglas.com; dbrender@cda.copper.org;

DYoung@energy-solution.com; eduardorob les@eaton.com; Emily (CONTR) Marchetti;

Eric.Petersen@aksteel.com; frank.guilbault@cogentpowerinc.com; gbf1@pge.com; gjrosenquist@lbl.gov;

greg.coulter405@gmail.com; Jack C Moore; James.La ss@cleco.com; Jeremiah (CONTR) Freeman; Jerry L

Corkran; jerry.schoen@aksteel.com; jhod ge@howard.com; Jim Creevy; Jim Raba;

jmauer@standardsasap.org; John Cymbalsky; John Caskey; jrossetti@mlgw.org; kcoughlin@lbl.gov;

kwinder@mleainc.com; maheshsampat@bellsouth.n et; Matthew Nardotti; Maxine (EMAB) Savitz;

mhyland@appanet.org; Michael Rivest; mwal tner@nrdc.org; ned.efbrush@gmail.com;

Paul.Ryan@hitmet.com; Phil Hopkinson; pkumar@pub licpower.org; Raymond.Polinski@ATImetals.com;

rgreeson@federalpacific.com; Richard Parker; rick .anderson@faypwc.com; ro bert.saint@nreca.coop;

rroy@nrdc.org; ScottB@LVMetals.com; Steve Nadel; srosenstock@eei.org; tballo@earthjustice.org;

Teckman@nwcouncil.org; ted.johnstone@cogentp owerinc.com; thomas.patzner@us.schneiderelectric.com; tpetrosino@carolina.rr.com; vijay.tendulkar@onyxpower.com; Zhimei Luo

Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Hi Wes,

Are you saying that the base price of a 50 kVA, for example, is twice the $2150 that DOE shows

(I;m seeing $1250 on open bid) or are you saying that the factor of 2 kicks in further up the line,

due to the "bow"? If the la tter, where are you seeing it?

I'm certain that the open bid public power data ar e not representative of the market. They were

all TOC, all public power, all very small quantitie s, appeared to have A factors of around $8+,

and the prices were higher than wh at utilities that I spot-checked th em against said that they were

paying. I'm interpreting it as, at best, an upper bound on market prices, an d some indication of

what PPUs may find manageable in terms of effici encies (e.g., an efficiency resulting from TOC

design to an $8 A factor does not appear to be unreasonable).

Thank you for the most recent data dump and very useful reflections. I plan to get back to you

when I've had a chance to really go through it. I feel a bit like a ki d in a candy store with

everything you've provided. As a long-time modele r, I know that under the best of circumstances

a model is an abstraction of reality, so it's important to ti e to reality whenever we can.

Transformers are sold in a market, not in a co mputer. This is especially true of forecasts.

President Kennedy's Chief Economist, Walter Heller, is reputed to have advised on forecasting

"give the date OR the event, not both".



## 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 16, 2011, at 8:56 AM , Wes Patterson wrote:

Hi Robert

I find these discussions most inform ative and thank you for your insights.

But I disagree with your last comments regarding the DOE cost curves

My data indicates that the DOE cost curves are greatl y understated - perhaps as much as a factor of 2.

Also note that these are power relations and not linear.

Perhaps the open-bid public power data repres ents a distorted sample of the total market.

Please reference my concerns express ed at the bottom of my last email.

I would like to understand what impa ct a much steeper cost curve will have on the LCC and PBP results.

You thoughts would be most appreciated.

Best regards

Wes

Robert Berman < bermaneconomics@gmail.com >

11/16/2011 08:28 AM To "Hirsch, Bruce R" < Bruce.R.Hirsch@bge.com >

cc 'Robert Berman' < bermaneconomics@gmail.com >, Phil Hopkinson

< phopkinson@hvolt.com >, Steve Nadel < snadel@aceee.org >, John

Caskey < Joh_Caskey@Nema.org >, " Eric.Petersen@aksteel.com "

< Eric.Petersen@aksteel.com >, " jerry.schoen@aksteel.com "

< jerry.schoen@aksteel.com >, "Maxine (EMAB) Savitz"

< maxinesavitz@aol.com >, " mhyland@appanet.org "

< mhyland@appanet.org >, " Raymond.Polinski@ATImetals.com "

< Raymond.Polinski@atimetals.com >, " maheshsampat@bellsouth.net "

< maheshsampat@bellsouth.net >, " tpetrosino@carolina.rr.com "

< tpetrosino@carolina.rr.com >, " dbrender@cda.copper.org "

< dbrender@cda.copper.org >, " James.Lass@cleco.com "

< James.Lass@cleco.com >, " chris.brown@cogentpowerinc.com "

< chris.brown@cogentpowerinc.com >,

" frank.guilbault@cogentpowerinc.com "

< frank.guilbault@cogentpowerinc.com >," ted.johnstone@cogentpowerinc.com "

< ted.johnstone@cogentpowerinc.com >, AaronMeyers

< Aaron.Meyers@CooperIndustries.com >, Antonio Trujillo

< Antonio.Trujillo@CooperIndustries.com >, Jack C Moore

< Jack.Moore@CooperIndustries.com >, Jerry L Corkran

< Jerry.Corkran@CooperIndustries.com >, " tballo@earthjustice.org "

< tballo@earthjustice.org >, " carlosgsiqueiros@eaton.com "

< carlosgsiqueiros@eaton.com >, " eduardorobles@eaton.com "

< eduardorobles@eaton.com >, "Emily (CONTR) Marchetti"

< Emily.Marchetti@ee.doe.gov >, "Jeremiah (CONTR) Freeman"

< Jeremiah.Freeman@ee.doe.gov >, Jim Raba < Jim.Raba@ee.doe.gov >, John Cymbalsky < John.Cymbalsky@ee.doe.gov >,

" srosenstock@eei.org " < srosenstock@eei.org >, " DYoung@energysolution.com " < DYoung@energy-solution.com >,

" rick.anderson@faypwc.com " < rick.anderson@faypwc.com >,

" bsmith@federalpacific.com " < bsmith@federalpacific.com >,

" rgreeson@federalpacific.com " < rgreeson@federalpacific.com >,

" carlos.gaytan@ge.com " < carlos.gaytan@ge.com >,

" artrosenfeld@gmail.com " < artrosenfeld@gmail.com >,

" greg.coulter405@gmail.com " < greg.coulter405@gmail.com >,

" ned.efbrush@gmail.com " < ned.efbrush@gmail.com >, Richard Parker

< richardparkerdc@gmail.com >, " Paul.Ryan@hitmet.com "

< Paul.Ryan@hitmet.com >, " jhodge@howard.com "

< jhodge@howard.com >, Daniel Cohen < Daniel.Cohen@hq.doe.gov >,

" cabolduc@lbl.gov " < cabolduc@lbl.gov >, " gjrosenquist@lbl.gov "

< gjrosenquist@lbl.gov >, " kcoughlin@lbl.gov " < kcoughlin@lbl.gov >,

" ScottB@LVMetals.com " < ScottB@lvmetals.com >,

" dave.millure@metglas.com " < dave.millure@metglas.com >,

" kwinder@mleainc.com " < kwinder@mleainc.com >, " jrossetti@mlgw.org "

< jrossetti@mlgw.org >, " brian.coffey@navigant.com "

< brian.coffey@navigant.com >, " caitlin.johnson@navigant.com "

< caitlin.johnson@navigant.com >, " matthew.nardotti@navigant.com "

< matthew.nardotti@navigant.com >, " mrivest@navigant.com "

< mrivest@navigant.com >, " zhimei.luo@navigant.com "

< zhimei.luo@navigant.com >, Jim Creevy < Jim.Creevy@Nema.org >,

" mwaltner@nrdc.org " < mwaltner@nrdc.org >, " rroy@nrdc.org "

< rroy@nrdc.org >, " robert.saint@nreca.coop " < robert.saint@nreca.coop >,

" Teckman@nwcouncil.org " < Teckman@nwcouncil.org >,

" vijay.tendulkar@onyxpower.com " < vijay.tendulkar@onyxpower.com >,

" gbf1@pge.com " < gbf1@pge.com >, " chuck.simmons@pgnmail.com "

< chuck.simmons@pgnmail.com >, " ahofmann@publicpower.org "

< ahofmann@publicpower.org >, " pkumar@publicpower.org "

< pkumar@publicpower.org >, " adelaski@standardsASAP.org "

< adelaski@standardsasap.org >, " jmauer@standardsasap.org "

< jmauer@standardsasap.org >, Wes

Patterson/SouthBoston/USTRA/ABB@ABB,

" chad.kennedy@us.schneider-electric.com "

< chad.kennedy@us.schneider-electric.com >,

" thomas.patzner@us.schneider-electric.com "

< thomas.patzner@us.schneider-electric.com >, " charlied@uus.org "

< charlied@uus.org >

Subject Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Bruce,

I understand; but at any given point in time, a Watt saved is a Watt saved. It does nat matter

where in the transformer it is saved or if it is saved by a consumer turning off a light. It is one

less Watt. Regardless of where the Watt is saved from it has the same value. That value is the

cost of the last Watt produced (not the first, middle or average). If you save enough Watts to take

down a generating unit, you save th e money that would have been spent on that unit. The unit

you take down is the highest cost unit (unless it's a must run). That's the last unit you dispatched.

If you don't save that Watt, you charge your custom er for it or, if a loss, you charge it off to

### losses for ratemaking purposes. If BGE is willing to bill its TOD customers taking power at peak

at the cost of generating from a baseload unit because it's for power that they take 24x7 I'll

concede your point. If BGE, in it' s next rate case, values it's lo sses at peak differently depending

upon whether they are coil or core losses, I'll concede your point. But has long as you charge

TOD customers and peak load losses based on marg inal costs, your argument is not consistent.

I agree 100% with you position on co rrecting the DOE cost curves. They need to be lowered and

flattened.They are predicting costs that are high er than small quantity open-bid public power

sales reported on the internet.

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 16, 2011, at 7:58 AM, Hirsch, Bruce R wrote:

Robert,

This happens all the time in “time of day” rates. The fact is that it is cheaper to produce electricity at a core

generating station than at the peaking plants. It also is cost effective to keep core stations running. With that said, I

think the issue is that you and Phil are looking at this from a different point of view. Phil is looking at the cost to

generate and he is correct. You are looking at the value of avoiding generation altogether and you are also correct.

It is important to understand that our (or DOE’s) decision cannot be made on any one factor. All of the issues put

on the table are important issues that must be factored into the final decision. My main concern at this time is that

the Advocate’s case is based on the DOE calculated pay back periods that utilize a projected cost that is much less

than that seen by the only manufacturer who has experience building higher efficiency units with M3 steel. Robert,

you have pushed us to consider historical experience over models. Thus, I believe we need to step back and look at

what the ABB data is really telling us and correct the DOE calculations as appropriate.

Bruce

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

Sent: Tuesday, November 15, 2011 7:57 PM

To: Phil Hopkinson

Cc: Robert Berman; Steve Nadel; Hirsch, Bruce R; 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 ; James.Lass@cleco.com ; chris.brown@cogentpowerinc.com ;

frank.guilbault@cogentpowerinc.com ; ted.johnstone@cogentpowerinc.com ; AaronMeyers; AntonioTrujillo; 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; 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



### Sorry that you disagree. A loss is a loss no matte r where it comes from. It's the VALUE that

changes. The core loss still exis ts at peak. Why in the world would you put a lower value on the

core loss at peak just because it ALSO exists at off-peak times as well?

Regards,

Robert A. Berman, Principal

Berman Economics

1915 Grand Court

Vienna, VA 22182

703.281.0490

703.655.8398 (cell)

Berman.Economics@gmail.com

www.BermanEconomics.com

Sent from my iPhone

On Nov 15, 2011, at 5:30 PM, Phil Hopkinson < phopkinson@hvolt.com > wrote:

Good afternoon Robert and all:

I must disagree fundamentally with the way you have characterized the loss values. At night when the load is light

everywhere then the energy cost is also low and those who have time of day metering can attest to it. If the load

is as low as 10% then what is left is largely core loss and the generation is only base generation at very low cost per

kWH.

During the day when the load is high the peak generators are all fired up and that is expensive energy. There the

winding losses are the big contribution to total transformer losses. Unfortunately when one has an amorphous

transformer that meets the same efficiency as an M3 transformer it has higher winding losses than the M3. In the

modeling that Jerry Corkran and I did we found that the amorphous transformer had higher day time losses than

the M3 which looks like it takes away from the enthusiasm for amorphous cores as a National standard.

The bottom line is that core loss is not as valuable as winding loss on a watt for watt tradeoff.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 704-845-2520

Cell 704-236-3320

www.hvolt.com

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

Sent: Tuesday, November 15, 2011 1:23 PM

To: Steve Nadel

Cc: Bruce R Hirsch; 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 ; 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.schneider-electric.com ; charlied@uus.org

Subject: Re: Negotiated Rulemaking - Distribution Transformers Teleconference



### Steve,

The statement that "reducing transformer losses pr imarily affects baseload, not peak" is a bit of

an over simplification. Reducing tr ansformer losses affects both base and peak. The value of the

loss at any point in time is then marginal cost or system lambda. That is, the value of reducing

transformer losses is the greater of the cost of the next unit that would have been dispatched, but

for the reduced load attributable to the transforme r, or the cost of gene ration from the last unit

actually dispatched, but used less due to the more efficient transformer. Because generation is

brought on line least-cost first, lo sses are evaluated in reverse order -- highest cost first. As Katie

Coughlin explained at the last meeting, this is the way LBNL evaluates benefits. Thus in the

early years, the more efficient transformer may ac tually save substantially more money than in

later years, when the older, higher cost units ha ve been retired. I don't believe this benefit is

picked up by the LBNL modeling, as it requires more detailed information -- at least hourly

### marginal costs for each power pool.



## Regards,

Bob

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 15, 2011, at 8:57 AM, Steve Nadel wrote:

Two comments. First, some comments have focused on just the market for M3 and amorphous steel.

The two markets are linked -- we need competition be tween 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 base load, not peak. So talking about cost per kW is

misleading. An efficient transformer is energized fo r more than 8000 hours per year. The average DSM

measure saves for about 3000 hours pe r year (although there is wide variation). If you want to compare,

you'd need to compare levelized cost pe r 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 customer 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 programs which have a much higher payback than what is being proposed here. In BGE’s case our

package of efficiency programs cost us approximately $139 per kilowatt saved. What is being proposed here is upto 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; 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; 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 ABB 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 unambiguously 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 gets 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 transformers 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 the analysis results better over the next few weeks so that we

can negotiate a solution that benefits the 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, CEMAssistant Vice President, Industry Operations

National Electrical Manufacturers 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; 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; 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.schneiderelectric.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, Hi rsch, Bruce R wrote:

Steve,

I am disappointed with your approach to this assignment.

It appears that negotiation to you is defined as agreeing 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 efficient transformers when it is still not certain that there is value in doing so. You have clung

to one suspect calculation 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 the 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 pulled out of the negotiation process 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.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; 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@nema.org ;

john.caskey@nema.org ; 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

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 justifie s higher standards (higher levels are technically

feasible and cost-effective on a life-cy cle cost basis). The efficiency groups would rather leave the

decision to DOE than agree to subpar standards. If you and other participants want to veto any

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 how 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 derive 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 well 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 efficiency 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 cost 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 transformer market and open up the rebuild

market, destroying jobs at the new transformer 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 704-845-2520

Cell 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@federalpacific.com ; bruce.r.hirsch@bge.com ; jhodge@howard.com ; mhyland@appanet.org ;

dave.millure@metglas.com ; snadel@aceee.org ; wes.patterso n@us.abb.com ; Eric.Petersen@aksteel.com ;

Raymond.Polinski@ATImetals.com ; artrosenfeld@gmail.com ; srosenstock@eei.org ; rroy@nrdc.org ;

robert.saint@nreca.coop ; chuck.simmons@pgnmail.com ; kwinder@mleainc.com ; mwaltner@nrdc.org ;

jerry.schoen@aksteel.com ; Paul.Ryan@hitmet.com ; ahofmann@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@energy-solution.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 ; frank.guilbault@cogentpowerinc.com ; ned.efbrush@gmail.com ;

dbrender@cda.copper.org ; chad.kennedy@us.schneider-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 incremental 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 evaluating the losses or optimizing the design at about $4 per total watts loss.

The present DOE efficiency loss level results in transformer designs about like many utilities were purchasing their

transformers before 2007. The utilities 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 the 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 are 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@federalpacific.com ; bruce.r.hirsch@bge.com ; jhodge@howard.com ; mhyland@appanet.org ;

dave.millure@metglas.com ; snadel@aceee.org ; wes.patterson@us.abb.com ; Eric.Petersen@aksteel.com ;

Raymond.Polinski@ATImetals.com ; artrosenfeld@gmail.com ; srosenstock@eei.org ; rroy@nrdc.org ;

robert.saint@nreca.coop ; chuck.simmons@pgnmail.com ; kwinder@mleainc.com ; mwaltner@nrdc.org ;

jerry.schoen@aksteel.com ; Paul.Ryan@hitmet.com ; ahofmann@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@energy-solution.com ; James.Lass@cleco.com ;

maheshsampat@bellsouth.net ; phopkinson@hvolt.com ; matthew.nardotti@navigant.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.schneider-electric.com ; eduardorobles@eaton.com ;

vijay.tendulkar@onyxpower.com ; thomas.patzner@us.schneider-electric.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 in stallation, 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 th is 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, Ri chard 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 the registration information for our November 17 and November 21

webinars. After registering you will get 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 are confidential, may contain legal,

professional or other privileged information, and are intended solely for the

addressee. If you are not the intended recipient, do not use the information

in this e

‐ mail in any way, delete this e

‐ mail and notify the sender. CEG

‐ IP2