NEMA Responds to Department of Energy’s Final Distribution Transformer Efficiency Rule

April 04, 2024

Arlington, Va.- NEMA President and CEO Debra Phillips today issued the following statement in response to the Department of Energy's (DOE) final rule on distribution transformer efficiency:

"Our nation's electrical manufacturers are leading the way toward an electrified America - deploying products and technologies that are electrifying and digitalizing our transportation systems, homes, businesses, industrial manufacturing, healthcare systems, and grid. These advancements are driving demand for secure, reliable, and affordable electricity, and distribution transformers are required to deliver it.

"DOE's initial proposed energy efficiency rule for distribution transformers was burdensome and unnecessary, exacerbating an already strained electrical grid and slowing planned grid resiliency, construction and e-mobility projects across the country.

"NEMA has thoroughly reviewed DOE's final rule through the multiple lenses of grid reliability, supply chain certainty, and energy efficiency. We appreciate that the Biden Administration and DOE have worked constructively with stakeholders in recognizing the critical role that distribution transformers play in our nation's ability to deliver electricity to all Americans.

"We are pleased that DOE has recognized our concerns that the proposed rule would have triggered needless supply chain disruptions. In response, the Department has provided a better compliance timeframe, and in some instances, flexibility to provisions that would have required transformer manufacturers to switch from using industry-standard grain oriented electrical steel (GOES) to amorphous steel.

"However, some provisions in the rule remain problematic. Certain types of transformers will now be required to be manufactured with amorphous steel, for which there is neither a reliable domestic supply nor a proven efficiency gain. We are also concerned that a five-year compliance timeline will challenge the industry's ability to retool a critical supply chain, further delaying transformer deliveries.

"While this final rule is a significant improvement over what was originally proposed, it is still expected to cause additional transformer supply chain challenges and lengthen lead-times for these necessary grid components. "We thank Congress for their attention to this issue and call on lawmakers to make reforms, such as those included in the bipartisan Distribution Transformer Efficiency and Supply Chain Resiliency Act. This practical legislation can help address these issues while maintaining high efficiency standards for distribution transformers. Additionally, this bill will remove these highly efficient products from the uncertainty of DOE's efficiency rulemaking process and lock in efficiency requirements.

"NEMA also strongly encourages Congress to provide much-needed appropriations to bolster domestic transformer manufacturing and other critical grid components.

"Electrical manufacturers value DOE's constructive engagement on this rule, and we are eager to find solutions that deliver the Administration's electrification and decarbonization efforts."

Background

For more than a year, NEMA and our broad coalition of manufacturers, utilities, homebuilders, EV suppliers, steel suppliers, and organized labor have engaged constructively with both DOE and Congress to highlight the shortcomings of the proposed rule and focus on the actions needed to deliver long-term certainty and practical efficiency gains.

NEMA's Transformer Advocacy Timeline

• January 2023: DOE releases proposed rule.NEMA forms broad stakeholder coalition including manufacturers, utilities, homebuilders, EV suppliers, steel suppliers, and organized labor.
• February 2023: NEMA-led coalition sends letter to DOE outlining concerns with the proposed rule.
  
• April 2023: Rep. Harshbarger (R-TN) leads a bipartisan letter to DOE Secretary Granholm outlining their concerns with the proposed transformer efficiency rule.
  
• June 2023: Sen. Hagerty (R-TN) leads a bipartisan letter to DOE Secretary Granholm outlining their concerns with the proposed transformer efficiency rule.
• December 2023: The Protecting America's Distribution Transformer Act, sponsored by Rep. Richard Hudson (R-NC- 9), advances out of the House Energy and Commerce Committee.
• January 2024:
  • Senators Sherrod Brown (D-OH) and Ted Cruz (R-TX) introduce new legislation, The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024.
  • Reps. Mike Kelly (R-PA) and Christopher Deluzio (D-PA) introduce the Distribution Transformer Efficiency and Supply Chain Reliability Act.
  • NEMA-led coalition requests $1.2 billion in appropriations for distribution transformer and grid components.
• March 2024: NEMA-led coalition continues adding bipartisan support in Senate.

Topics

• Utility Products & SystemsSupply Chain Energy Efficiency