[Federal Register Volume 62, Number 204 (Wednesday, October 22, 1997)]
[Proposed Rules]
[Pages 54809-54817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27948]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 430
[Docket No. EE-DET-97-550]
RIN 1904-AA85
Energy Conservation Program for Consumer Products: Determination
Concerning the Potential for Energy Conservation Standards for Electric
Distribution Transformers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy (DOE).
ACTION: Notice of Determination.
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SUMMARY: The Department of Energy (DOE or the Department) has
[[Page 54810]]
determined, based on the best information currently available, that
energy conservation standards for electric distribution transformers
are technologically feasible, economically justified and would result
in significant energy savings. This determination initiates the process
of establishing, by notice and comment rulemaking, test procedures and
energy conservation standards for this product.
ADDRESSES: Copies of ``Guide for Determining Energy Efficiency for
Distribution Transformers'' (NEMA Standards Publication TP 1-1996),
``Determination Analysis of Energy Conservation Standards for
Distribution Transformers, ORNL-6847,'' and ``Supplement to the
Determination Analysis (ORNL-6847) and Analysis of the NEMA Efficiency
Standard for Distribution Transformers, ORNL-6925,'' are available in
the DOE Freedom of Information Reading Room, U.S. Department of Energy,
Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW,
Washington, DC, 20585, (202) 586-6020, between the hours of 9 a.m. and
4 p.m., Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT:
Kathi Epping, U.S. Department of Energy, Office of Energy Efficiency
and Renewable Energy, Mail Station EE-43, Forrestal Building, 1000
Independence Avenue, SW, Washington, DC 20585-0121, (202) 586-7425,
FAX: (202) 586-4617, email: kathi.epping@hq.doe.gov.
Edward Levy, Esq., U.S. Department of Energy, Office of General
Counsel, Mail Station GC-72, Forrestal Building, 1000 Independence
Avenue, SW, Washington, DC 20585-3410, (202) 586-9507, email:
edward.levy@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Authority
B. Rulemaking Procedures
C. Background
II. Discussion of ORNL Reports
A. Purpose and Content
B. Methodology
C. Conservation Cases
1. Base Case
2. Lowest Total Owning Cost (TOC) Case
3. Median Total Owning Cost (TOC) Case
4. Average Losses Case
5. High-Efficiency Case
D. Voluntary Programs
1. NEMA-TP-1 Guide
2. National Business Awareness Campaign
III. Conclusion
A. Determination
B. Future Proceedings
I. Introduction
A. Authority
The National Energy Conservation Policy Act of 1978, Pub. L. 95-
619, amended the Energy Policy and Conservation Act (EPCA) to add a
Part C to Title III, which established an energy conservation program
for certain industrial equipment. The most recent amendments to EPCA,
in the Energy Policy Act of 1992, Pub. L. 102-486, (EPACT) included
amendments that expanded Title III of EPCA to include certain
commercial water heaters and heating and air-conditioning equipment,
incandescent and fluorescent lamps, electric motors and electric
distribution transformers.
Among these amendments is section 124(a) of EPACT, which amended
section 346 of EPCA, 42 U.S.C. 6317, to provide that the Secretary of
Energy must prescribe testing requirements and energy conservation
standards for those distribution transformers for which the Secretary
determines that standards ``would be technologically feasible and
economically justified, and would result in significant energy
savings.'' 42 U.S.C. 6317(a). Section 346 was also amended to require
the Secretary, within six months after prescribing energy conservation
standards for distribution transformers, to prescribe labeling
requirements for such transformers.
Section 346 requires the Department to make a determination that
standards for transformers are technologically feasible and
economically justified, and would save significant amounts of energy,
before the Department initiates the process for promulgating test
procedures and specific standards. The section could be read as
providing that once this initial determination is made, there is no
further consideration of technological feasibility, economic
justification, or energy savings, and that the Department must proceed
to adopt standards. Such an interpretation, however, would be
inconsistent with the approach in other provisions of EPCA, and would
be impractical. It is inconsistent, for example, with section 325(o) of
EPCA, under which economic justification is addressed after specific
standards have been proposed, based on a detailed evaluation with
respect to one or more specific standards. It is impractical because,
even if one or more design options has the potential for achieving
energy savings, a determination that such savings could in fact be
achieved cannot be made without first having developed test procedures
to measure the energy efficiency of transformer designs, and then
conducting an in-depth analysis of each design option. Such analysis
might show that no standard meets all three of the prescribed criteria:
i.e., technologically feasible, economically justified and significant
energy savings.
For these reasons, the Department construes section 346 as
requiring it to: (1) Determine based upon the best information
available whether standards for transformers would be ``technologically
feasible and economically justified, and would result in significant
energy savings,'' and (2) if energy conservation standards appear to be
warranted under these criteria, to prescribe test procedures and
conduct a rulemaking concerning such standards. During the standards
rulemaking, the Department would describe whether and at what level(s)
to promulgate standards. This decision would be based on in-depth
consideration, with public participation, of the technological
feasibility, economic justification, and energy savings of potential
standard levels. Thus, the initial determination made today that
standards are warranted under the criteria specified in section 346(a)
would in effect be reviewed during the rulemaking process, based on
more complete information than is currently available as to whether
those criteria are met.
B. Rulemaking Procedures
EPCA, which provides rulemaking procedures for the promulgation of
test procedures and standards for appliances and commercial equipment,
is ambiguous as to whether these procedures apply to rulemakings on
test procedures and standards for transformers. For the reasons
discussed below, the Department will nonetheless use these procedures
in conducting the test procedure and standards rulemakings for
transformers.
In conducting rulemakings on all subjects, the Department must, at
a minimum, adhere to the procedures required by the Administrative
Procedure Act and section 501 of the Department of Energy Organization
Act (DOE Organization Act), 42 U.S.C. 7191. Section 501 in essence
requires the following: (1) Issuance of a notice of proposed rulemaking
(NOPR), (2) an opportunity for comment, (3) an opportunity for
presentation of oral comments, if there exists ``a substantial issue of
fact or law'' or if the rule will have a ``substantial impact,'' and
(4) publication of the final rule accompanied by appropriate
explanation. Pursuant to E.O. 12662, the comment period must be at
least 75 days.
With respect to test procedures for transformers, the Department
has
[[Page 54811]]
decided to use the same rulemaking procedures it uses under Part B of
EPCA, and for other equipment covered under Part C. Thus, in addition
to the generic procedural requirements described above, the Department
will provide an opportunity for oral comment (i.e., hold a hearing) on
all proposed test procedures, regardless of the ``substantial issue''
or ``substantial impact'' criteria, as is done in other EPCA test
procedure rulemakings. See, e.g., EPCA section 323(b)(2), 42 U.S.C.
6293(b)(2). Hearings have been useful in promulgating test procedures
in the appliance program, and a hearing can help to identify issues
that should be addressed and points that should be amplified in the
written comments. In addition, permitting oral as well as written
comments will maximize the opportunity for interested parties to
express their views on the proposed rule. This should give greater
assurance of the validity and feasibility of the final test procedure
that the Department adopts.
As to energy conservation standards, for most other products
covered by EPCA, EPCA requires the Department to take supplemental
steps in promulgating standards, including the following, that are not
required by the Administrative Procedural Act or the DOE Organization
Act:
1. An advance notice of proposed rulemaking (ANOPR) must be
issued, followed by a 60-day comment period;
2. The notice of proposed rulemaking (NOPR) must set forth the
maximum efficiency improvement that is technologically feasible and,
if the proposed standard does not achieve this level, an explanation
of why; and
3. A hearing must be held following issuance of the NOPR,
regardless of the ``substantial issue'' or ``substantial impact''
criteria.
EPCA sections 325(p), 336(a), and 345(a), 42 U.S.C. 6295(p), 6306(a),
and 6317(a). The Department also has a policy, in conducting
rulemakings on appliance standards, to allow 75 days for comment on the
ANOPR (rather than the 60 days required by EPCA), with at least one
public hearing or workshop during this period. Procedures for
Consideration of New or Revised Energy Conservation Standards for
Consumer Products, 61 FR 36974, (July 15, 1996) (the ``Interpretive
Rule'').
The first sentence of section 345(a) could be interpreted as
requiring the Department to employ these EPCA procedures in developing
standards on transformers. In any case, the Department has decided it
will employ the foregoing procedures set forth in EPCA and the
Interpretive Rule. It will do so in part for the same reasons it will
use EPCA procedures to promulgate transformer test procedures. These
reasons include: (1) EPCA procedures have worked well in the appliance
program, and (2) they will provide enhanced the opportunity for public
comment, thereby helping to improve the quality of the final rules. In
addition, the Department has never developed efficiency standards for a
product such as distribution transformers. Therefore, the Department
believes that the development of transformer standards will benefit
from enhanced opportunities for public participation during the
standards development process. Such participation can best be achieved
if the Department employs the full range of procedures used in its
program to set efficiency standards.
C. Background
After the passage of EPACT, the Department contracted with the Oak
Ridge National Laboratory (ORNL) to conduct a study to obtain data and
assist the Department in making a determination as to whether standards
for distribution transformers are warranted. ORNL developed and
published a report, entitled ``Determination Analysis of Energy
Conservation Standards for Distribution Transformer, ORNL-6847'' which
was based on information from annual sales data, average load data, and
surveys of existing and potential transformer efficiencies that were
obtained from several organizations.
In the ORNL analysis, transformers with a primary voltage of 480 V
to 35 kV and a secondary voltage of 120 to 480 V are defined as
distribution transformers. This definition is consistent with ANSI/IEEE
C57.12.80-1978 (subsection 2.3.1.1), which defines a distribution
transformer as ``a transformer for transferring electrical energy from
a primary distribution circuit to a secondary distribution circuit or
consumer's service circuit.'' Typical utility primary distribution
voltages in the U.S. range from 5 kV to 35 kV medium-voltage classes,
and typical primary consumers' services are 480 V or higher; thus the
total primary voltage range is 480 V to 35 kV. Typical secondary
voltages in the U.S. range from 120 to 480 V. ANSI/IEEE C57.12.80-1978
indicates that distribution transformers usually have a rated capacity
in the order of 5 -500 kVA. However, ANSI/IEEE C57.12.26-1993 defines
pad-mounted distribution transformers as transformers with a rated
capacity 2500 kVA or lower, with primary voltages of 34,500 V (35 kV
class) or lower and secondary voltages of 480 V or lower. The ORNL
analysis considered rated capacities ranging from of 10 to 2500 kVA for
liquid-immersed transformers, because most manufacturers no longer
produce units smaller than 10 kVA. For dry-type transformers a rated
capacity range of 0.25 to 2500 kVA was considered; comments from
manufacturers indicate that this range covers nearly all the U.S. dry-
type transformer market, although the bulk of that market is in the
range of 10 to 2500 kVA. The ORNL analysis did not consider
transformers which are not continuously connected to a power
distribution system as a distribution transformer. For example,
transformers that are part of machinery which are switched off from
electrical power were considered by the study as a component of the
machinery's circuit and not part of the power distribution circuit.
Also, special-purpose control and signal transformers, as well as bulk
power transformers, were excluded from consideration because they are
not classified as distribution transformers.
In the Department's view, the term ``distribution transformer'' in
section 346 of EPCA means all transformers with a primary voltage of
480 V to 35 kV, a secondary voltage of 120 V to 480 V, and a capacity
of either 10 to 2500 kVA for liquid-immersed transformers or 0.25 kVA
to 2500 kVA for dry-type transformers, except for transformers
described in the foregoing three sentences. This definition encompasses
the transformers considered in the ORNL analysis.
ORNL collected data from the following organizations and sources:
The American National Standards Institute (ANSI), Department of
Commerce (DOC), Department of Energy (DOE), Edison Electric Institute
(EEI), Institute of Electrical and Electronics Engineers (IEEE),
National Electrical Manufacturers Association (NEMA), North American
Electric Reliability Council (NAERC), Office of Management and Budget
(OMB), various books and phone conversations with interested parties.
In addition, the ORNL report used data from a survey developed by ORNL
and circulated by NEMA to NEMA and non-NEMA manufacturers, to obtain
no-load losses, load losses and selling prices of various sizes and
types of distribution transformers. Data from these surveys and other
relevant information were used in the report to show the potential
energy savings of various conservation case studies such as: (1) Lowest
Total
[[Page 54812]]
Owning Cost (TOC)\1\ Case, (2) Median TOC Case, (3) Average Losses
Case, (4) High-Efficiency Case, and (5) Two-Year Payback Case. The last
of these, the Two-Year Payback Case, was not derived from the survey.
Rather, a manufacturer developed this case during peer review of the
report by using a combination of price and design losses, with the
objective of achieving a two-year payback based on typical transformer
operation and electricity rates. The efficiency levels used to define
the conservation cases are based on responses from surveys completed by
manufacturers.
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\1\ Total Owning Cost is a capitalized value that permits the
first cost of the transformer to be compared to the lifetime cost.
The capitalized values can be converted to the equivalent discounted
present values of the life-cycle costs by multiplying by the ratio
of the fixed charge rate over the capital recovery factor. This
information can be used to more accurately assess the tradeoffs
between transformer first costs and operating costs, and allow the
purchaser to compare the total costs of transformers with different
energy efficiency levels.
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Two peer reviews of the drafts of the report were performed by
ORNL. The ORNL peer review consisted of 22 reviewers, including
representatives of distribution transformer manufacturers, metal
manufacturers, research institutions/laboratories, private as well as
municipal electric utilities, manufacturer associations, metal
associations, and energy conservation groups. After the comments from
stakeholders were incorporated into the draft, the report (ORNL-6847)
was published in July 1996. The information contained in this report
assisted the Department in making this determination on the feasibility
and significance of energy savings for distribution transformers.
In September 1996, shortly after publication of the ORNL report,
the National Electrical Manufacturers Association (NEMA) developed and
published a voluntary guide entitled ``Guide for Determining Energy
Efficiency for Distribution Transformers'' (NEMA Standards Publication
TP 1-1996, referred to ``NEMA TP-1'') to help purchasers choose more
efficient distribution transformers. The NEMA TP-1 is intended to give
manufacturers a vehicle to promote the use of high efficiency
transformers and to assist purchasers/users in the selection of energy
efficient transformers. NEMA TP-1 offers a simplified methodology to
help users of utility (liquid-immersed) and commercial/industrial (dry-
type) transformers to understand and calculate the equivalent first
cost of core and load losses. It also offers an alternative method to
users who would rather use tables of minimum efficiencies based on
transformer kVA size, voltage considerations, and type (liquid-immersed
or dry-type).
Subsequently, the Department determined that the initial estimate,
reflected in the initial ORNL report, of the market size for dry-type
transformers was too high. In addition, it was determined that the
effective annual loads for liquid-immersed transformers were also too
high. Consequently, ORNL re-analyzed the energy savings using a more
accurate disaggregated model including data for all types and sizes of
transformers. This data had not been available for the original ORNL
study. Furthermore, the manufacturer that developed the two-year
payback case advised ORNL that the actual payback will likely be
substantially longer than 2 years due to higher than anticipated
manufacturing costs. The two-year payback case was eliminated from the
analysis because of this misestimation of cost and because this case is
no longer necessary due to the addition of the TP-1 case. A description
of the new data and model, ORNL's re-analysis, and an analysis of NEMA
TP-1 are set forth in a second report, entitled ``Supplement to the
`Determination Analysis' (ORNL-6847) and Analysis of the NEMA
Efficiency Standard for Distribution Transformers, ORNL-6925''. The
purpose of this report is to assess NEMA TP-1 along with the options
considered in the determination study, using the more accurate analysis
model and transformer market and loading data developed subsequent to
the publication of the original ORNL report.
Data and comments received from stakeholders during the peer review
of the initial ORNL report have been considered in preparing this
determination and will be more fully considered during all actions
taken by the Department when proceeding with the rulemaking process to
consider conservation standards for distribution transformers. Results
of the energy savings analyses of the ORNL reports will be discussed in
detail in the following sections of this determination notice.
II. Discussion of ORNL Reports
A. Purpose and Content
ORNL assisted the Department by studying the feasibility of
achieving potential energy savings that could result from energy
conservation standards for distribution transformers. The potential
energy savings presented in the ORNL reports are preliminary estimates.
Subsequent analyses will be performed after test procedures are
established. These analyses will involve more exact, detailed
information which will be developed during the standards rulemaking
process, and will cover the effects of energy conservation standards
for distribution transformers.
B. Methodology
The study methodology consisted of four major elements: (1)
Development of a database, (2) development of conservation options, (3)
assessments of the energy conservation options, and (4) incorporation
of feedback from stakeholders. The following is a brief description of
each element:
Database development. Collecting and processing data was a
major part of the study. Data on transformer designs, losses, and sales
were provided by NEMA and individual manufacturers. The Edison Electric
Institute (EEI), the American Public Power Association (APPA), and
selected utilities provided utility user information. The database
includes the results of a survey circulated by EEI and APPA to their
member utilities. User information on dry-type transformers was
provided by the American Institute of Plant Engineers. In addition, the
Federal Energy Regulatory Commission's Form 1, Energy Information
Administration data and trade journals were used. The basic information
included historical information on user purchases, and costs and losses
of new transformers for the various options considered in the study.
Information on transformer loading factors was obtained from
discussions with transformer manufacturers, utilities, and surveys of
commercial and industrial users.
Development of energy conservation options. Technically
feasible energy conservation cases for distribution transformers were
based on results of a survey circulated by NEMA, and other information
provided by non-NEMA transformer manufacturers.
Assessments. The technical analysis provided estimates of
appropriate transformer loading factors, losses, and energy savings for
the energy conservation cases.
Stakeholders input. A distribution transformer review
group consisting of manufacturers, users, material suppliers, and
public interest groups was formed to provide data, and to review the
study (see Appendix A of the initial ORNL report). Input from these
stakeholders was incorporated in the report.
Much of the data on losses associated with cost-effective
transformer designs used in this study are from a survey of
[[Page 54813]]
transformers, called the NEMA-ORNL survey, developed by ORNL and
circulated by NEMA to its members and several non-NEMA manufacturers.
Utilities usually request that manufacturers submit bids for the lowest
TOC transformer that they can design by specifying the transformer
features and their A and B factors. The NEMA-ORNL survey took this
approach. It included what were believed to be the most common features
that would be requested for each size and price for the lowest TOC
transformer they could design. The survey requested that manufacturers
reveal the transformer design that had the lowest TOC in terms of core
losses or no load losses (A factor), coil losses or load losses (B
factor), and transformer price. While both A and B factors reflect the
capitalized cost of losses, they differ in their cost per watt rates
for two reasons. First, a watt of core loss represents a continuous
loss that occurs whenever a transformer is energized, which is normally
100 percent of the time for most distribution transformers. This
continuous loss of energy increases the cost per rated watt of core
loss compared with the rated watt of coil loss, which occurs only while
power is drawn through the transformer. The second reason for the
difference in rate for A and B factors is the cost of energy associated
with the losses. Load losses are proportionally higher during peak
periods when the per unit cost of producing electricity is relatively
high.
Three combinations of A and B factors were requested in the survey.
The combinations of A/B factors requested were as follows:
1. A/B=$0/$0, which represents non-evaluated transformers. In the
$0/$0 design, only the first cost is considered, and the price of the
transformer is used as the TOC value (i.e., the value of losses is not
included in the purchase decision). This design was requested in the
survey to establish a baseline efficiency for non-evaluated
distribution transformers.
2. A/B=$3.50/$2.25, with the B factor of $2.25 per watt
representing a transformer with a relatively high average load.
3. A/B=$3.50/$0.75, with the B factor of $0.75 per watt
representing a transformer with a normal to low average load while the
A factor remains fixed at $3.50 per watt.
Twelve transformer sizes--six liquid-immersed and six dry-type--
were surveyed:
Liquid-immersed transformers
1. Single-phase 25-kVA pole-mounted
2. Single-phase 50-kVA pole-mounted
3. Single-phase 50-kVA pad-mounted
4. Three-phase 150-kVA pad-mounted
5. Three-phase 750-kVA pad-mounted
6. Three-phase 2000-kVA pad-mounted
Dry-type transformers
7. Single-phase 1-kVA
8. Single-phase 10-kVA
9. Three-phase 45-kVA
10. Three-phase 1500-kVA
11. Three-phase 2000-kVA
12. Three-phase 2500-kVA
There were 216 transformer designs submitted for the 12 different
types of transformers. Each type had at least three designs for each of
the three A and B combinations. Eight designs for each of the three A
and B combinations were submitted for the liquid-immersed 25-kVA pole,
50-kVA pole, and 50-kVA pad-mounted transformers.
Conservation cases were developed to determine if efficiency
standards are warranted for distribution transformers. These cases were
based on an economic methodology that is widely used by electric
utilities in their purchase of distribution transformers: the TOC
(total owning cost) methodology which considers the life cycle cost of
owning a transformer. It finds the economically optimal tradeoff
between the transformer's capital cost and its operating cost. The TOC
methodology is neutral with respect to the technology and materials
utilized in the transformer. It is a different approach from
conservation based standards that are developed through explicitly
considering energy efficient technologies.
For transformers, the technologies applied to alter the losses, and
hence efficiencies, are very interactive and involve multiple
variables, such as operating current density, flux density, geometric
ratios and electrical insulation. For example, reducing no-load losses
by using lower loss core materials generally requires an alteration of
flux density and core/coil dimensions, which may or may not lower load
losses. Hence, the ORNL reports used the TOC approach to allow for this
interaction of design parameters in an optimal manner.
The TOC approach allows a utility to purchase the optimum
distribution transformer for the particular set of energy costs and
operating characteristics that are anticipated over the transformer's
life. The TOC approach has led to significant increases in utility
transformer efficiencies since it became widespread in the mid-1970's.
Because the methodology is neutral with respect to transformer
technologies and materials, it leads to choosing transformers that take
advantage of any opportunities to economically improve transformer
efficiencies.
The TOC approach was used in developing the conservation cases
discussed in the ORNL reports. The first step in developing these
conservation cases was selection of parameters that define the value of
energy losses over a transformer's life. As previously explained, the
TOC methodology hinges on the development of the A and B factors which
represent the expected lifetime value per watt of a transformer's rated
full load losses using the following formula:
TOC=price+(no-load losses x A)+(load losses x B)
A second key for developing these cases was selection of the low-
TOC designs for the selected A and B values. During a typical
transformer bid process, a buyer submits its required technical
specifications and A and B values to a manufacturer. The manufacturer
considers many transformer designs that meet the buyer's technical
specifications with various load losses, no-load losses, and prices.
From this large number of designs and costs, the manufacturer submits a
selection of very low TOC designs for the buyer's consideration. The
survey of manufacturers requested information on their lowest TOC
designs for the selected A and B factors.
The losses and prices for each transformer manufacturer's lowest
TOC design were used along with the utility surveys to develop the
database. The database was used to develop the conservation cases for
the determination study: The base case, the lowest TOC case, the median
TOC case, the average losses case, and the high-efficiency case. The
base case consisted of data on non-evaluated dry-type transformers and
recent utility purchases of liquid-immersed transformers. The average
losses case was developed by averaging losses from the three lowest TOC
designs for each transformer size and type. A description of the
conservation cases and their weighted efficiencies are presented in
Table 1.
Amorphous-core transformer designs were excluded from two of the
conservation cases, the lowest TOC case and the median TOC case. This
exclusion does not imply that amorphous-core transformers are not
economical for the A and B factors used in the study. Rather the
rationale for excluding the amorphous-core transformers was to develop
moderately high-efficiency cases that do not depend on a particular
technology.
[[Page 54814]]
Table 1.--The Conservation Cases, Plus the NEMA TP-1 Case, Listed in
Order of Weighted Efficiencies
------------------------------------------------------------------------
Case
efficiency
Case Description weighted by
sales a (%)
------------------------------------------------------------------------
Base.......................... Existing mix of 98.40
transformers.
NEMA TP-1..................... A voluntary efficiency 98.59
guide.
Median TOC.................... Efficiency of the 98.68
transformer with the
median TOC design
according to a survey
of manufacturers b.
Average losses................ Efficiency corresponding 98.81
to the average full-
load and no-load losses
for the three most cost-
effective transformers
according to a survey
of manufacturers b.
Lowest TOC.................... Efficiency of the most 98.88
cost-effective
transformer according
to a survey of
manufacturers b.
High-efficiency............... Efficiency corresponding 99.21
to highest efficiency
according to a survey
of manufacturers b.
------------------------------------------------------------------------
a The case efficiencies were recalculated by ORNL for this notice and
are also set forth in the supplemental ORNL report.
b Distribution transformer manufacturers were asked to submit their
lowest TOC designs corresponding to economic parameters developed to
represent the nation.
Three of the conservation cases were based on the transformer
manufacturers' minimum TOC designs. Use of different criteria to select
from among the submitted designs provides a range of cost-effective
transformer designs with different efficiencies. Estimates of the
potential energy that could be saved if distribution transformers were
more energy-efficient were developed for the conservation cases. Each
conservation case is based on maximum load and no-load losses for the
12 sizes and types that were used to represent all new transformers by
allocating each design to a range of transformer sizes. This approach
was used because NEMA reports transformer sales in categories that
include a range of transformer sizes. To estimate total annual losses
for each conservation case, the average transformer losses per
kilovolt-ampere were multiplied by the projected kilovolt-amperage of
transformer sales. The energy losses (i.e., energy consumed by the
transformer) for each conservation case were subtracted from the energy
losses for the base case to provide an estimate of annual savings. The
base case defines energy use for existing transformer purchasing
practices. Table 2 represents the possible energy savings results based
on the surveys circulated by NEMA to several NEMA and non-NEMA
transformer manufacturers.
Table 2.--Cumulative Energy Savings for Conservation Cases and NEMA TP-1
a
------------------------------------------------------------------------
Cumulative
savings,
Conservation case by transformer type 2004-2034
(quads)
------------------------------------------------------------------------
NEMA TP-1:
Liquid................................................... 0.39
Dry...................................................... 2.12
Total.................................................... 2.51
Median total owning cost (TOC):
Liquid................................................... 0.95
Dry...................................................... 2.75
Total.................................................... 3.70
Average losses:
Liquid................................................... 1.84
Dry...................................................... 3.58
Total.................................................... 5.42
Lowest TOC:
Liquid................................................... 1.26
Dry...................................................... 5.04
Total.................................................... 6.30
High-efficiency:
Liquid................................................... 5.52
Dry...................................................... 5.18
Total.................................................... 10.70
------------------------------------------------------------------------
a The energy savings were re-calculated by ORNL for this notice and are
also set forth in the supplemental ORNL report; these savings have
been revised downward from those estimated in the initial ORNL report.
The savings per kilovolt-ampere and the projections of estimated
megavolt-amperage of transformer sales have been used to estimate the
rate of savings in the first year and cumulative savings over 30 years
if a conservation standard were enacted. Table 2 assumes that both
utility and non-utility purchases of transformer capacity will grow by
1.2 percent annually, which is consistent with low-to-moderate growth
energy scenarios. Sales of liquid-immersed utility distribution
transformers depend primarily on new housing starts, while gross
private domestic investments provide a good indicator for the growth
rate of the non-utility (dry-type) transformer market. Several comments
during the peer review of the initial ORNL report indicated that higher
growth rates used in the report, such as 2.5% for the dry-type
transformer market, were not realistic for the distribution transformer
industry. The re-analysis on which Tables 1 and 2 are based essentially
accepts these comments.
C. Conservation Cases
1. Base Case
Losses for the base case were estimated from the survey of electric
utilities for evaluated liquid-immersed transformers (i.e., A and B
factors = $0), and from the survey of manufacturers for the non-
evaluated liquid-immersed and dry-type transformers (i.e., A factor =
$3.50, and B factor = $2.75 or $0.75). The percentage of evaluated
transformers was developed from information provided by transformer
manufacturers. The base case non-evaluated transformers were assumed to
have the average losses that were reported for the three lowest-priced
transformers for the $0/$0 evaluation in the NEMA-ORNL survey. It was
assumed that the evaluated transformers for the base case have the same
losses as transformers that have been recently purchased by utilities.
These losses were calculated from the average no-load and load loss
ratings reported in the EEI-ORNL survey. The weighted average
transformer efficiency for the base case was calculated at 98.40
percent.
2. Lowest Total Owning Cost (TOC) Case
The lowest TOC case measures savings resulting from the use of the
lowest TOC non-amorphous transformer design for each of the 12 types of
transformers surveyed in the NEMA-ORNL survey. The potential energy
savings for this conservation case is 6.30 quads over a period of 30
years. Liquid-immersed transformers have a potential to achieve 1.26
quads in energy savings and dry-type transformers 5.04 quads. The
weighted average transformer efficiency for this case was calculated to
be 98.88 percent. The annual energy savings of this case is equivalent
to
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constructing a large coal-fired power plant every four years. Although
the technology required to meet this conservation case is feasible,
some retooling might be required for manufacturers of dry-type
transformers to achieve 5.05 quads of savings over a 30 year period.
The actual amount and expenses required of retooling, if any, will be
determined by performing a manufacturer impact analysis during the
standards rulemaking process.
3. Median Total Owning Cost (TOC) Case
The median TOC case measures savings from the design that
represents the median TOC of all submitted designs for each of the 12
types of transformers surveyed. The potential energy savings of this
conservation case is 3.7 quads over a 30 year period. Liquid-immersed
transformers have a potential to achieve 0.95 quads in energy savings
and dry-type 2.75 quads. The weighted average transformer efficiency
estimated for this case is 98.68 percent. The technology required to
achieve savings at this level is feasible and is currently utilized by
manufacturers of liquid and dry-type transformers. Some retooling might
be required of dry-type manufacturers to meet this particular
conservation case. Further analysis will examine this issue.
4. Average Losses Case
The average losses case measures the average losses for the designs
with the three lowest TOC's for each of the 12 types of transformers
that were evaluated. If high-efficiency amorphous-core designs
qualified as one of the three lowest TOC's, they were included in these
averages. Because this case incorporates the losses from several
designs that were averaged, it better represents the diversity in cost-
effective designs than the other cases. It is more representative of
the transformer market than the cases that are based on selecting a
single design. It should be reiterated that the transformer losses used
to represent the average losses case do not represent the losses of a
specific transformer design. Rather, this case represents an average of
the losses of the three lowest TOC's for transformers submitted for
each category in the survey.
The potential energy savings for this conservation case is 5.42
quads over a 30 year period. Liquid-immersed transformers have a
potential energy savings of 1.84 quads and dry-type transformers 3.58
quads. The weighted average efficiency level of this conservation case
is 98.81 percent. Although the technology required to meet this
conservation case is feasible, retooling might be required for
manufacturers of dry-type transformers to meet 3.58 quads of energy
savings over a 30 year period. The actual amount and expense required
of retooling, if any, will be determined by performing a manufacturer
impact analysis during the standards rulemaking process.
5. High-Efficiency Case
This case included both amorphous and non-amorphous core
transformer designs and is represented by the highest-efficiency design
that was submitted for each of the 12 transformer types surveyed,
regardless of the technology used to achieve that efficiency and
independent of any economic evaluation criteria such as TOC. The
weighted average transformer efficiency for this case is 99.21 percent.
For transformer categories where no amorphous-core designs were
submitted, the most efficient of the non-amorphous designs was
selected.
Although production of amorphous-core transformers may be less
process-intensive (i.e., manufacturing involves a smaller number of
steps) than that of oriented silicon steel transformers, it is very
labor-and materials-intensive. The lack of cost-effective access to
this technology by all manufacturers may present an economic hardship
to both the transformer manufacturers and end users.
Electric Power Research Institute (EPRI), General Electric (GE),
and Allied Signal Amorphous Metals hold most of the U.S. patents for
amorphous metal and amorphous technology. The EPRI patents are
available under licensing terms and conditions to U.S. manufacturers.
An important patent on amorphous ribbon manufacturing held solely by
Allied Signal Amorphous Metals will expire this year. However, a
critical patent on magnetic field annealing used during transformer
core manufacturing is held by GE and will not expire until early in the
next century. At present, GE has licensed Allied Signal Amorphous
Metals to sublicense transformer manufacturers to use this patent.
If a standard were set at this conservation case level, the impacts
on existing liquid-immersed transformer manufacturers that do not
produce amorphous core transformers would depend on (1) the ease of
access to the technology, (2) the availability of amorphous core
material, (3) the level of necessary investments, and (4) the higher
transformer selling price. Because the quantity as well as the cost of
raw materials in this case is higher than that of oriented silicon
steel, the price of these transformers is typically 20 to 40 percent
higher than the price of silicon steel transformers. The cost of raw
material for amorphous core transformers is twice that of oriented
silicon steel. These higher costs are due to the use of ferro-boron,
most of which is imported from Japan, China, and the United Kingdom.
The cost of this material has decreased during the past two decades
from $140 per pound in 1978 to about $1.50 per pound now. By
comparison, however, the cost of materials for a non-amorphous core
transformer is considerably lower, ranging from $0.70 to $1.15 per
pound, depending on the grade of the silicon steel. Although this
conservation case is technologically feasible, the increased costs of
retooling and of purchasing amorphous core material as opposed to less
expensive silicon steel appear to be a potential burden to most
manufacturers. Further analysis during the rulemaking process will be
performed to determine the potential costs for manufacturers to meet
this energy conservation level.
This conservation case includes proprietary amorphous-core
technology. Some comments received during the peer review expressed
concern regarding the limited access to amorphous core technology. The
Department recognizes that standards which effectively limit
transformer designs to a particular technology, especially if that
particular technology is proprietary, may have adverse competitive and
consumer impacts, and that such impacts must be carefully considered in
assessing economic justification.
D. Voluntary Programs
1. NEMA TP-1 Guide
In September 1996, NEMA published voluntary guidelines, ``Guide for
Determining Energy Efficiency for Distribution Transformers'' (NEMA TP-
1), to help purchasers choose energy efficient distribution
transformers. Developed by NEMA's Transformer Committee and approved by
participating manufacturers as a means to promote the purchase of high
efficiency transformers, the guide recommends the use of the TOC
methodology to select the most desirable transformer designs and
provides a table of recommended efficiency levels for buyers that do
not wish to use the TOC methodology.
NEMA TP-1 is a significant purchase decision tool. It offers
utility transformer and commercial/industrial transformer users a
simplified method
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for determining the equivalent first cost of transformers with
different efficiency characteristics. This information can be used by
prospective purchasers to more accurately assess the tradeoffs between
transformer first costs and operating costs. For those who choose not
to use this method for analyzing the total operating costs of
transformers, NEMA TP-1 also provides tables of minimum efficiencies
based on transformer kVA size and voltage.
NEMA TP-1's impact on energy savings will depend largely on two
variables: (1) Manufacturer participation and (2) actual buyer/user
purchase decisions. In the supplemental ORNL report, the possible
energy impacts of NEMA TP-1 program were analyzed. ORNL has advised the
Department that the upper bound of energy savings, with full
manufacturer participation and universal acceptance by transformer
purchasers of the minimum efficiency levels recommended in the NEMA TP-
1 tables, would approach 2.51 quads over a 30-year period.
The ORNL analysis concluded that the efficiency levels recommended
in the NEMA TP-1 tables would produce roughly a three year payback. The
Department believes that such efficiency levels would capture the most
cost-effective energy savings, but may not capture substantial energy
savings that appear to be economically justified and technologically
feasible.
2. National Business Awareness Campaign
The National Business Awareness Campaign was developed by NEMA to
increase awareness of the benefits of more energy efficient electrical
products, and to promote purchases of such products. This $1.5 million
campaign, which has been under development for three years, will be
directed at chief executive officers and chief financial officers of
companies that purchase or make electrical products. NEMA is seeking
support for the campaign from energy interest groups, distributors,
energy service companies, and utilities. NEMA is also seeking
partnerships with governmental agencies, such as the Environmental
Protection Agency and the Department of Energy. NEMA plans to launch
its campaign in the June/July time frame of 1997.
The Department seeks to support NEMA's campaign and intends to
monitor its effectiveness in increasing the manufacture and purchase of
more energy efficient electrical products.
III. Conclusion
A. Determination
Based on its analysis of the information now available, the
Department has determined that energy efficiency standards for
transformers appear to be technologically feasible and economically
justified, and are likely to result in significant savings.
Consequently, the Department will initiate the development of energy
efficiency test procedures and standards for electric distribution
transformers.
All energy conservation cases discussed in today's determination
notice are technologically feasible. Data from the ORNL reports clearly
show that current technologies used in the transformer market are
available to all manufacturers. These technologies include increased
use of higher grade silicon steels, copper, aluminum, and amorphous
core materials. The machinery and tools used to produce more energy
efficient transformers also appear to be generally available to
manufacturers.
The cases analyzed in the determination report show that there is a
large potential for energy savings, especially over a 30-year period:
the Lowest TOC case has the potential to save 6.30 quads over a 30-year
period; the Median TOC case could save 3.70 quads; and the High-
Efficiency case could save 10.70 quads. The Lowest and Median TOC cases
also demonstrate that increased efficiency could reduce significantly
the total operating costs incurred by users of transformers, which is a
strong indication that such efficiency levels would be economically
justified. It also appears that these efficiency levels can be achieved
without imposing substantial costs on manufacturers, thus providing
further indication that they are economically justified.
Although all of the cases analyzed are technologically feasible and
have significant energy savings, and at least two of these cases appear
to be economically justified, it is still uncertain whether further
analyses will reconfirm these findings. For example, the Department has
not assessed the potential adverse impacts of a national standard on
manufacturers or individual categories of users. During the course of
the standards rulemaking process, the Department will perform an
analysis of the impact of possible standards on manufacturers, as well
as a more disaggregated assessment of their possible impacts on users.
The Department supports and commends NEMA's initiative to develop
voluntary programs that will promote the manufacture and purchase of
energy efficient distribution transformers. Industry-wide support for
voluntary programs, such as NEMA's TP-1 guide and the National Business
Awareness Campaign, could result in significant energy savings that
might obviate the need for Federal regulatory intervention.
Based on the results of the analyses that have been completed,
however, the Department believes it would be inappropriate to conclude
now that either NEMA TP-1 or the National Business Awareness Campaign
are likely to result in savings sufficient to eliminate the potential
of technologically-feasible and economically-justified national
standards to achieve significant additional energy savings. At this
time, the Department does not share NEMA's view that the NEMA TP-1
program will result in efficiency levels that approach the maximum
technologically feasible and economically justified levels. The
supplemental ORNL report indicated that the potential energy savings of
NEMA's TP-1 program is 2.51 quads over a 30-year period, while the
potential savings from a higher efficiency level that appears to be
both technologically feasible and economically justified exceeds 6
quads over 30 years. Furthermore, based on ORNL's analysis of NEMA TP-
1, it appears that many buyers of electric distribution transformers,
especially in the commercial market (dry-type transformers), are not
likely to participate in NEMA's voluntary TP-1 program, so the actual
savings are likely to be below the 2.51 quads estimated. The Department
will reassess the impact of these voluntary programs during the
rulemaking on standards.
B. Future Proceedings
The Department will begin, therefore, the process of establishing
testing requirements for distribution transformers, which it expects
will result in the publication of a Notice of Proposed Rulemaking in
1998. During this rulemaking process, the Department will consider the
draft test procedure currently being developed through a joint effort
of NEMA and the National Institute of Standards and Technology (NIST).
The Department will schedule a public hearing and may also hold
workshops to receive comments in reference to the test procedures.
Publication of a Final Rule containing test procedures is anticipated
during 1999.
The Department will also begin a proceeding to consider
establishment of conservation standards for distribution transformers.
Throughout the
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rulemaking process, the Department intends to adhere to the provisions
of the Interpretive Rule, where applicable. The Department will
continue its review and analysis of the likely effects of NEMA TP-1 and
National Business Awareness Campaign programs during the standards
rulemaking. There will be workshops early in the standards development
process to obtain the views of interested parties on design options,
the conduct of the engineering and life-cycle cost analyses, and the
expertise needed by the Department to perform such analyses. During the
rulemaking process, the Department also intends to reevaluate its
determination that mandatory standards are technologically feasible and
economically justified, and are likely to result in significant energy
savings. For example, the Department anticipates that NEMA will
strengthen its efforts to promote voluntary standards for distribution
transformers and will submit additional data for the Department's
review and analysis. The Department welcomes data demonstrating the
successful market penetration of NEMA TP-1 and/or the National Business
Campaign. If further analyses reveal that standards are not warranted,
DOE will revise this determination and will not proceed to promulgate
standards.
Issued in Washington, D.C., on September 5, 1997.
Joseph J. Romm,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. 97-27948 Filed 10-21-97; 8:45 am]
BILLING CODE 6450-01-P
