Kaptur Applauds DOE’s Final Energy Conservation Standards for Distribution TransformersPress Release

Toledo, OH - Today, the United States Department of Energy (DOE) released a final rule promulgating Energy Conservation Standards for Distribution Transformers. Incorporating feedback from consumers, producers, non-governmental organizations, and industry leaders, the final rule will increase distribution transformer efficiency and lower energy costs while supporting domestic steel manufacturing, preserving distribution transformer supply chains, and avoiding impacts to national security and electrical grid resilience and reliability.

"I appreciated Secretary Granholm speaking with me about this issue when she came before the House Appropriations Committee last month and applaud DOE for hearing the concerns I and others voiced about the proposed rule's impact on domestic manufacturing and distribution transformer supply chains," said Congresswoman Marcy Kaptur (OH-09), Ranking Member of the House Appropriations Subcommittee on Energy and Water Development. "The final rule strikes the appropriate balance between lowering energy costs for consumers, protecting national security, and supporting electrical grid resiliency and reliability improvements. This decision will help protect Ohio jobs and consumers and ensure a domestic supply of transformers built in the Heartland."

In January 2023, DOE released proposed efficiency standards for distribution transformers that would have required all distribution transformers to shift from grain-oriented electrical steel (GOES) to amorphous metal cores by 2027. Cleveland-Cliffs, Inc., the country's largest flat-rolled steel producer and the sole manufacturer of both GOES and the non-oriented electrical steel (NOES) used in EV production, indicated that it would have to close its Butler, Pennsylvania, and Zanesville, Ohio, facilities if the proposed rule were finalized without significant changes. Closure of the plants would cost 1,300 UAW workers their livelihoods and undermine domestic supply chains for both GOES and NOES, raising national security risks as materials critical to the maintenance and modernization of the electrical grid and to the expansion of EV production are outsourced.

Congresswoman Kaptur and other members of Congress, including Senator Sherrod Brown (D-OH), wrote to DOE to register these concerns in June 2023. Months of work on the proposed rule followed. At the March 21st, 2024 DOE budget hearing before the House Appropriations Subcommittee on Energy and Water Development, Congresswoman Kaptur asked Secretary Granholm if she could commit to ensuring that the final rule does not adversely impact domestic production of GOES and NOES and preserves the use of GOES for distribution transformers. In response, the Secretary advised that the proposed rule had undergone significant revisions to address stakeholder concerns.

The final rule delivers on the Secretary's promise by preserving use of GOES in single-phase transformers and in 3-phase transformers with a kVA of 500 and above, and by lowering the estimated cost of compliance from $684.5 Million to $228.8 Million. While the proposed rule would likely have represented about a 90% market shift to amorphous alloy, under today's final rule about 85% of the market will be able to achieve the standards through use of GOES. The final rule also extends the compliance timeframe from three years to five years. These changes are responsive to stakeholder concerns about feasibility challenges presented by the proposed efficiency levels, including the magnitude of anticipated workforce reskilling and transformer redesigns. Today's final rule gives manufacturers more flexibility to meet modest efficiency increases as they prepare existing and develop new manufacturing lines to increase the nation's total distribution transformer manufacturing capacity. By incorporating feedback from a broad spectrum of stakeholders, this final rule will be a piece of the solution, rather than a barrier, to resolve the ongoing distribution transformer shortage while providing more American jobs.

Distribution transformers convert high-voltage electricity from power generation sources to levels safe enough to be utilized by homes and businesses. Over 50 million distribution transformers are mounted on utility poles and pads across the nation - operating 24 hours a day, 365 days a year, and remaining in use for many decades. Improvements to their efficiency will reduce energy waste in the power grid and provide significant energy savings to the nation. Over 30 years, the new standards are expected to save Americans over $14 Billion in energy costs, while also reducing nearly 85 million metric tons of dangerous carbon dioxide emissions - equivalent to the combined annual emissions of nearly 11 million homes.

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