Lawmakers Voice Concerns About DOE Transformer Proposal

by Paul Ciampoli
APPA News Director
September 18, 2023

Lawmakers voiced concerns on Sept. 13 about a Department of Energy proposal that would require a stricter standard that changes the material used in distribution transformers from grain-oriented electrical steel to amorphous steel.

The lawmakers highlighted their concerns about the proposal at a hearing held by the House Energy and Commerce Committee’s Subcommittee on Energy, Climate, and Grid Security titled, “Keeping the Light On: Enhancing Reliability and Efficiency to Power American Homes.”

The hearing focused on three bills including a bill sponsored by Rep. Richard Hudson (R-NC) that would prohibit DOE from increasing distribution transformer conservation standards for five years (H.R. 4167, the Protecting America’s Distribution Transformer Supply Chain Act).

The American Public Power Association on Sept.13 voiced support for Hudson’s bill in a Statement for the Record submitted for the hearing.

In December 2022, APPA and other impacted organizations were dismayed when DOE announced a notice of proposed rulemaking (NOPR) seeking to increase conservation standards for distribution transformers.

The NOPR would require a stricter standard that changes the material used in distribution transformers from grain-oriented electrical steel to amorphous steel.

Amorphous steel is currently used in less than five percent of distribution transformers. “Requiring the expansion of amorphous steel in distribution transformers would halt current investment in production and materials, resulting in a complete retooling of manufacturing production lines, thereby exacerbating the severe shortage,” Desmarie Waterhouse, Senior Vice President, Advocacy and Communications & General Counsel at APPA, wrote in the Statement for the Record.

At the hearing, Rep. Bob Latta (R-Ohio) said that as he has traveled across his district and spoken with utilities and cooperatives, “a prime issue that has been raised in the supply chain crunch” for distribution transformers.”

He noted that since the Covid-19 pandemic, “the lead times for procuring new transformers have only gotten worse. This means that in the event of an emergency, utilities will have a harder time maintaining or restoring continuous power to their customers if they don’t have an adequate supply of replacement transformers.”

Latta said it was “baffling” to him as to why the DOE has proposed new standards that “would make the supply chain crisis worse.” He said that such a move would result in a distribution transformer market that relies on “one producer that doesn’t have enough capacity to meet the current demand.” Latta is a co-sponsor of H.R. 4167.

Subcommittee Chairman Jeff Duncan (R-SC) said, “DOE already mandates distribution transformers be manufactured at an incredibly high efficiency standard. They’re already at 99.53 percent efficient.”

The DOE rulemaking “will increase the efficiency by only a fraction of a percentage point, but significantly disrupt production of transformers, which utilities already have difficulty producing,” he said.

B. Robert Paulling, President and CEO of South Carolina’s Mid Carolina Electric Cooperative, said in his prepared testimony that lead times for large power transformers have grown to more than three years.

He stated that Mid-Carolina supports a delay in implementing new distribution transformer efficiency standards because “The utility industry needs manufacturers to be 100% focused on increasing output, not adapting to new, government-mandated efficiency requirements that are not technologically feasible nor economically justified.”

Most of the subcommittee members acknowledged having heard from a utility or knowing about the distribution transformer supply chain crisis. However, Republicans and Democrats split on how the efficiency NOPR would impact the supply chain crisis.

Republicans overwhelmingly said that the NOPR is negatively impacting production, while Most Democratic members did not see the NOPR as impacting the current supply chain crisis and instead claimed that Republicans just wanted to gut efficiency standards.