APPA Voices Support for Bill That Calls for Delaying DOE Plan Tied to Transformers

by Paul Ciampoli
APPA News Director
September 13, 2023

The American Public Power Association on Sept. 13 voiced support for a bill introduced by Rep. Richard Hudson (R-NC) that would prohibit the Department of Energy from increasing distribution transformer conservation standards for five years.

“A delay is urgently needed to give manufacturers the certainty to increase production to meet demand,” wrote Desmarie Waterhouse, Senior Vice President, Advocacy and Communications & General Counsel at APPA, in a Statement for the Record.

The Statement for the Record was submitted in connection with a Sept. 13 hearing before 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’s focus is on three bills: Hudson’s H.R. 4167, the Protecting America’s Distribution Transformer Supply Chain Act; the DOE Appliance and Equipment Standards Reform and Consumer Protection Act and the Guaranteeing Reliable Infrastructure Deployment (GRID) Act.

In December 2022, APPA and other impacted organizations were dismayed when DOE announced a notice of proposed rulemaking seeking to amend conservation standards for distribution transformers, Waterhouse noted.

The NOPR would require a stricter standard that changes the material used in distribution transformers from grain-oriented electrical steel (GOES) 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,” Waterhouse said.

DOE claims it was required to issue the NOPR due to court decisions resulting from energy efficiency interest groups’ legal challenges under the Energy Policy and Conservation Act.

“APPA does not believe that the proposed efficiency standards and the analyses cited to support them meet EPCA’s requirement that efficiency upgrades be technologically feasible or economically justified,” Waterhouse wrote. “More importantly, the proposed efficiency standards would worsen already critical distribution transformer supply shortages.”

 In commenting on the NOPR, APPA urged DOE to reconsider the NOPR or delay the implementation until the transformer supply base is strengthened enough to increase supply, reduce costs, and increase the number of component suppliers.

Over the last two years, the electric sector has been calling attention to a growing supply chain crisis that has hampered its ability to meet the demand for maintenance and growth of the electrical grid.

Through its participation in the Electric Sector Coordinating Council, APPA interacted with DOE to identify several underlying causes of why production levels of distribution transformers were not meeting demand. Those causes include the lack of an available or adequately trained labor force and adequate materials necessary to immediately increase production.

APPA surveys show that 80 percent of public power utilities have lower inventories of distribution transformers now than they did in 2018 and 30 percent reported a high risk they could run out of stock in a month.

Average lead times to purchase new distribution transformers have grown 429 percent, from three months in 2018 to an excess of 12 months or more today. Manufacturers have stated that a lack of skilled labor and materials are the cause of supply shortages.

Shortages of distribution transformers have caused public power utilities to defer or cancel one in five infrastructure projects that would require more resources than available.

“Additional electric capacity is needed to power new residential and commercial developments, new manufacturing facilities, and support a rapidly expanding electric vehicle fleet,” wrote Waterhouse.