[Federal Register Volume 88, Number 7 (Wednesday, January 11, 2023)]
[Proposed Rules]
[Pages 1722-1859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28590]



[[Page 1721]]

Vol. 88

Wednesday,

No. 7

January 11, 2023

Part III





Department of Energy





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10 CFR Part 431





Energy Conservation Program: Energy Conservation Standards for 
Distribution Transformers; Proposed Rule

  Federal Register / Vol. 88, No. 7 / Wednesday, January 11, 2023 / 
Proposed Rules  

[[Page 1722]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2019-BT-STD-0018]
RIN 1904-AE12


Energy Conservation Program: Energy Conservation Standards for 
Distribution Transformers

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Notice of proposed rulemaking and announcement of public 
meeting.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''), 
prescribes energy conservation standards for various consumer products 
and certain commercial and industrial equipment, including distribution 
transformers. EPCA also requires the U.S. Department of Energy 
(``DOE'') to periodically determine whether more-stringent, standards 
would be technologically feasible and economically justified, and would 
result in significant energy savings. In this notice of proposed 
rulemaking (``NOPR''), DOE proposes amended energy conservation 
standards for distribution transformers, and also announces a public 
meeting to receive comment on these proposed standards and associated 
analyses and results.

DATES: DOE will hold a public meeting via webinar on Thursday, February 
16, 2023, from 1:00 p.m. to 4:00 p.m. See section VII, ``Public 
Participation,'' for webinar registration information, participant 
instructions and information about the capabilities available to 
webinar participants.
    Comments: DOE will accept comments, data, and information regarding 
this NOPR no later than March 13, 2023.
    Comments regarding the likely competitive impact of the proposed 
standard should be sent to the Department of Justice contact listed in 
the ADDRESSES section on or before February 10, 2023.
    Interested persons are encouraged to submit comments using the 
Federal eRulemaking Portal at www.regulations.gov. Follow the 
instructions for submitting comments. Alternatively, interested persons 
may submit comments, identified by docket number EERE-2019-BT-STD-0018, 
by any of the following methods:
    Email: [email protected]. Include the 
docket number EERE-2019-BT-STD-0018 in the subject line of the message.
    Postal Mail: Appliance and Equipment Standards Program, U.S. 
Department of Energy, Building Technologies Office, Mailstop EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: 
(202) 287-1445. If possible, please submit all items on a compact disc 
(``CD''), in which case it is not necessary to include printed copies.
    Hand Delivery/Courier: Appliance and Equipment Standards Program, 
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant 
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445. 
If possible, please submit all items on a CD, in which case it is not 
necessary to include printed copies.
    No telefacsimiles (``faxes'') will be accepted. For detailed 
instructions on submitting comments and additional information on this 
process, see section IV of this document.
    Docket: The docket for this activity, which includes Federal 
Register notices, comments, and other supporting documents/materials, 
is available for review at www.regulations.gov. All documents in the 
docket are listed in the www.regulations.gov index. However, not all 
documents listed in the index may be publicly available, such as 
information that is exempt from public disclosure.
    The docket web page can be found at www.regulations.gov/docket/EERE-2019-BT-STD-0018. The docket web page contains instructions on how 
to access all documents, including public comments, in the docket. See 
section VII of this document for information on how to submit comments 
through www.regulations.gov.
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] on or 
before the date specified in the DATES section. Please indicate in the 
``Subject'' line of your email the title and Docket Number of this 
proposed rule.

FOR FURTHER INFORMATION CONTACT: 
    Mr. Jeremy Dommu, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: 
(202) 586-9870. Email: [email protected].
    Mr. Matthew Ring, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-2555. Email: [email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact the Appliance and Equipment Standards Program staff at (202) 
287-1445 or by email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    1. Liquid-Immersed Distribution Transformers
    2. Low-Voltage Dry-Type Distribution Transformers
    3. Medium Voltage Dry-Type Distribution Transformers
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Distribution Transformers
    C. Deviation From Appendix A
III. General Discussion
    A. Equipment Classes and Scope of Coverage
    B. Test Procedure
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage
    a. Autotransformers
    b. Drive (Isolation) Transformers
    c. Special-Impedance Transformers
    d. Tap Range of 20 Percent or More
    e. Sealed and Nonventilated Transformers
    f. Step-Up Transformers
    g. Uninterruptible Power Supply Transformers
    h. Voltage Specification
    i. kVA Range
    2. Equipment Classes

[[Page 1723]]

    a. Pole- and Pad-Mounted Transformers
    b. Submersible Transformers
    c. Multi-Voltage-Capable Distribution Transformers
    d. High-Current Distribution Transformers
    e. Data Center Distribution Transformer
    f. BIL Rating
    g. Other Types of Equipment
    3. Test Procedure
    4. Technology Options
    5. Electrical Steel Technology and Market Assessment
    a. Amorphous Steel Market and Technology
    b. Grain-Oriented Electrical Steel Market and Technology
    6. Distribution Transformer Production Market Dynamics
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Representative Units
    2. Efficiency Analysis
    a. Design Option Combinations
    b. Data Validation
    c. Baseline Energy Use
    d. Higher Efficiency Levels
    e. Load Loss Scaling
    f. kVA Scaling
    3. Cost Analysis
    a. Electrical Steel Prices
    b. Scrap Factor
    c. Other Material Costs
    d. Cost Mark-Ups
    4. Cost-Efficiency Results
    D. Markups Analysis
    E. Energy Use Analysis
    1. Hourly Load Model
    a. Hourly Per-Unit Load (PUL)
    b. Joint Probability Distribution Function (JPDF)
    2. Monthly Per-Unit Load (PUL)
    3. Future Load Growth
    4. Harmonic Content/Non-Linear Loads
    F. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Cost
    2. Efficiency Levels
    3. Modeling Distribution Transformer Purchase Decision
    a. Basecase Equipment Selection
    b. Total Owning Cost (``TOC'') and Evaluators
    c. Non-Evaluators and First Cost Purchases
    4. Installation Costs
    5. Annual Energy Consumption
    6. Electricity Prices
    a. Hourly Electricity Costs
    7. Maintenance and Repair Costs
    8. Equipment Lifetime
    9. Discount Rates
    10. Energy Efficiency Distribution in the No-New-Standards Case
    11. Payback Period Analysis
    G. Shipments Analysis
    1. Equipment Switching
    2. Trends in Distribution Transformer Capacity (kVA)
    H. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    1. Utilities Serving Low Customer Populations
    2. Utility Purchasers of Vault (Underground) and Subsurface 
Installations
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model and Key Inputs
    a. Manufacturer Production Costs
    b. Shipments Projections
    c. Product and Capital Conversion Costs
    d. Manufacturer Markup Scenarios
    3. Manufacturer Interviews
    a. Material Shortages and Prices
    b. Use of Amorphous Materials
    c. Larger Distribution Transformers
    4. Discussion of MIA Comments
    a. Small Businesses
    b. Capital Equipment
    K. Emissions Analysis
    1. Air Quality Regulations Incorporated in DOE's Analysis
    L. Monetizing Emissions Impacts
    1. Monetization of Greenhouse Gas Emissions
    a. Social Cost of Carbon
    b. Social Cost of Methane and Nitrous Oxide
    2. Monetization of Other Emissions Impacts
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash Flow Analysis Results
    b. Direct Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Competition
    e. Impacts on Subgroups of Manufacturers
    f. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    8. Summary of Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Liquid-Immersed 
Distribution Transformers Standards
    2. Benefits and Burdens of TSLs Considered for Low-Voltage Dry-
Type Distribution Transformers Standards
    3. Benefits and Burdens of TSLs Considered for Medium-Voltage 
Dry-Type Distribution Transformers Standards
    4. Annualized Benefits and Costs of the Proposed Standards for 
Liquid-Immersed Distribution Transformers
    5. Annualized Benefits and Costs of the Proposed Standards for 
Low-Voltage Distribution Transformers
    6. Annualized Benefits and Costs of the Proposed Standards for 
Medium-Voltage Distribution Transformers
    7. Benefits and Costs of the Proposed Standards for All 
Considered Distribution Transformers
    D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description of Reasons Why Action Is Being Considered
    2. Objectives of, and Legal Basis for, Rule
    3. Description on Estimated Number of Small Entities Regulated
    4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    5. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    6. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Information Quality
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Webinar
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    The EPCA,\1\ (42 U.S.C. 6291-6317, as codified) authorizes DOE to 
regulate the energy efficiency of a number of consumer products and 
certain industrial equipment. Title III, Part B \2\ of EPCA (42 U.S.C. 
6291-6309, as codified), established the Energy Conservation Program 
for ``Consumer Products Other Than Automobiles.'' Title III, Part C \3\ 
of EPCA (42 U.S.C.

[[Page 1724]]

6311-6317, as codified), added by Public Law 95-619, Title IV, section 
411(a), established the Energy Conservation Program for Certain 
Industrial Equipment. The Energy Policy Act of 1992, Public Law 102-
486, amended EPCA and directed DOE to prescribe energy conservation 
standards for those distribution transformers for which DOE determines 
such standards would be technologically feasible, economically 
justified, and would result in significant energy savings. (42 U.S.C. 
6317(a)) The Energy Policy Act of 2005, Public Law 109-58, amended EPCA 
to establish energy conservation standards for low-voltage dry-type 
distribution transformers. (42 U.S.C. 6295(y))
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    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 
27, 2020), which reflect the last statutory amendments that impact 
Parts A and A-1 of EPCA.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part B was re-designated Part A.
    \3\ For editorial reasons, upon codification in the U.S. Code, 
Part C was re-designated Part A-1. While EPCA includes provisions 
regarding distribution transformers in both Part A and Part A-1, for 
administrative convenience DOE has established the test procedures 
and standards for distribution transformers in 10 CFR part 431, 
Energy Efficiency Program for Certain Commercial and Industrial 
Equipment. DOE refers to distribution transformers generally as 
``covered equipment'' in this document.
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) 
Furthermore, the new or amended standard must result in a significant 
conservation of energy. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(3)(B)) 
EPCA also provides that not later than 6 years after issuance of any 
final rule establishing or amending a standard, DOE must publish either 
a notice of determination that standards for the product do not need to 
be amended, or a notice of proposed rulemaking including new proposed 
energy conservation standards (proceeding to a final rule, as 
appropriate). (42 U.S.C. 6316(a); 42 U.S.C. 6295(m))
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes amended energy conservation standards 
for distribution transformers. The proposed standards, which are 
expressed in efficiency as a percentage, are shown in Table I.1 of this 
document. These proposed standards, if adopted, would apply to all 
distribution transformers listed in Table I.1, Table I.2, and Table I.3 
manufactured in, or imported into, the United States starting on the 
date 3 years after the publication of the final rule for this 
rulemaking.

      Table I.1--Proposed Energy Conservation Standards for Low-Voltage Dry-Type Distribution Transformers
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                         Single-phase                                              Three-phase
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                    kVA                       Efficiency (%)                 kVA                 Efficiency (%)
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15........................................              98.84   15...........................              98.72
25........................................              98.99   30...........................              98.93
37.5......................................              99.09   45...........................              99.03
50........................................              99.14   75...........................              99.16
75........................................              99.24   112.5........................              99.24
100.......................................              99.30   150..........................              99.29
167.......................................              99.35   225..........................              99.36
250.......................................              99.40   300..........................              99.41
333.......................................              99.45   500..........................              99.48
                                                                750..........................              99.54
                                                                1,000........................              99.57
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         Table I.2--Proposed Energy Conservation Standards for Liquid-Immersed Distribution Transformers
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                         Single-phase                                              Three-phase
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                    kVA                       Efficiency (%)                 kVA                 Efficiency (%)
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10........................................              98.96   15...........................              98.92
15........................................              99.05   30...........................              99.06
25........................................              99.16   45...........................              99.13
37.5......................................              99.24   75...........................              99.22
50........................................              99.29   112.5........................              99.29
75........................................              99.35   150..........................              99.33
100.......................................              99.40   225..........................              99.38
167.......................................              99.46   300..........................              99.42
250.......................................              99.51   500..........................              99.48
333.......................................              99.54   750..........................              99.52
500.......................................              99.59   1,000........................              99.54
667.......................................              99.62   1,500........................              99.58
833.......................................              99.64   2,000........................              99.61
                                                                2,500........................              99.62
                                                                3,750........................              99.66
                                                                5,000........................              99.68
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[[Page 1725]]


                         Table I.3--Proposed Energy Conservation Standards for Medium-Voltage Dry-Type Distribution Transformers
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                                   Single-phase                                                                  Three-phase
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                                                             BIL *                                                                 BIL *
                                           ----------------------------------------                               --------------------------------------
                                              20-45 kV     46-95 kV      >=96 kV                                     20-45 kV     46-95 kV     >=96 kV
                    kVA                    ----------------------------------------              kVA              --------------------------------------
                                             Efficiency   Efficiency   Efficiency                                   Efficiency   Efficiency   Efficiency
                                                (%)          (%)           (%)                                         (%)          (%)          (%)
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15........................................        98.29        98.07  ............  15...........................        97.74        97.45  ...........
25........................................        98.49        98.30  ............  30...........................        98.11        97.86  ...........
37.5......................................        98.64        98.47  ............  45...........................        98.29        98.07  ...........
50........................................        98.74        98.58  ............  75...........................        98.49        98.31  ...........
75........................................        98.86        98.71        98.68   112.5........................        98.67        98.52  ...........
100.......................................        98.94        98.80        98.77   150..........................        98.78        98.66  ...........
167.......................................        99.06        98.95        98.92   225..........................        98.94        98.82        98.71
250.......................................        99.16        99.05        99.02   300..........................        99.04        98.93        98.82
333.......................................        99.23        99.13        99.09   500..........................        99.18        99.09        99.00
500.......................................        99.30        99.21        99.18   750..........................        99.29        99.21        99.12
667.......................................        99.34        99.26        99.23   1,000........................        99.35        99.28        99.20
833.......................................        99.38        99.31        99.28   1,500........................        99.43        99.37        99.29
                                                                                    2,000........................        99.49        99.42        99.35
                                                                                    2,500........................        99.52        99.47        99.40
                                                                                    3,750........................        99.58        99.53        99.47
                                                                                    5,000........................        99.62        99.58        99.51
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* BIL means basic impulse insulation level.

A. Benefits and Costs to Consumers

    Table I.4 presents DOE's evaluation of the monetized impacts of the 
proposed standards on consumers of distribution transformers, as 
measured by the average life-cycle cost (``LCC'') savings and the 
simple payback period (``PBP'').\4\ The average LCC savings are 
positive for all equipment classes in all cases, with the exception of 
representative unit 14, and the PBP is less than the average lifetime 
of distribution transformers, which is estimated to be 32 years (see 
section IV.F.8 of this document).
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    \4\ The average LCC savings and simple PBP refer to consumers 
that are affected by a standard and are measured relative to the 
efficiency distribution in the no-new-standards case, which depicts 
the market in the compliance year in the absence of new or amended 
standards. The determination of the distribution of efficiencies in 
the no-new-standards case is a function of the units selected from 
the consumer choice model. (see section IV.F.3 of this document).
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    In the context of this NOPR, the term consumer refers to different 
populations that purchase and bear the operating costs of distribution 
transformers. Consumers vary by transformer type; for medium-voltage 
liquid-immersed distribution transformers the term consumer refers to 
electric utilities; for low- and medium-voltage dry-type distribution 
transformers the term consumer refers to commercial and industrial 
entities.

     Table I.4--Impacts of Proposed Energy Conservation Standards on Consumers of Distribution Transformers
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                                                             Representative      Average LCC     Simple payback
                      Equipment class                             unit         savings (2021$)   period (years)
----------------------------------------------------------------------------------------------------------------
1.........................................................                 1                72              16.0
1.........................................................                 2               131              10.1
1.........................................................                 3             1,029              12.2
2.........................................................                 4               511              11.9
2.........................................................                 5             1,543              13.8
2.........................................................                17             6,594              15.8
12........................................................                15            * n.a.            * n.a.
12........................................................                16            * n.a.            * n.a.
3.........................................................                 6               147              11.7
4.........................................................                 7               564               8.9
4.........................................................                 8               722              11.8
6.........................................................                 9               887               2.4
6.........................................................                10               653              11.4
8.........................................................                11               226              11.9
8.........................................................                12             3,051               1.1
8.........................................................                18            22,797               8.1
10........................................................                13               228              12.4
10........................................................                14            -2,856              26.1
10........................................................                19             8,082              11.3
----------------------------------------------------------------------------------------------------------------
* No-new standards are currently being proposed for equipment class 12, ``n.a'' indicates that there are no
  consumer savings.


[[Page 1726]]

    DOE's analysis of the impacts of the proposed standards on 
consumers is described in section IV.F of this document.

B. Impact on Manufacturers

    The industry net present value (``INPV'') is the sum of the 
discounted cash flows to the industry from the base year through the 
end of the analysis period (2022-2056). Using a real discount rate of 
7.4 percent for liquid-immersed distribution transformers, 11.1 percent 
for low-voltage dry-type (``LVDT'') distribution transformers, and 9.0 
percent for medium-voltage dry-type (``MVDT'') distribution 
transformers, DOE estimates that the INPV for manufacturers of 
distribution transformers in the case without amended standards is 
$1,384 million in 2021$ for liquid-immersed distribution transformers, 
$194 million in 2021$ for LVDT distribution transformers, and $87 
million in 2021$ for MVDT distribution transformers. Under the proposed 
standards, the change in INPV is estimated to range from -18.1 percent 
to -10.9 percent for liquid-immersed distribution transformers which 
represents a change in INPV of approximately -$251.3 million to -$151.0 
million; from -31.4 percent to -17.2 percent for LVDT distribution 
transformers, which represents a change in INPV of approximately -$61.0 
million to -$33.5 million; and -3.0 percent to -0.9 percent for MVDT 
distribution transformers, which represents a change in INPV of 
approximately -$2.7 million to -$0.8 million. In order to bring 
products into compliance with amended standards, it is estimated that 
the industry would incur total conversion costs of $270.6 million for 
liquid-immersed distribution transformer, $69.4 million for LVDT 
distribution transformers, and $3.1 million for MVDT distribution 
transformers.
    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section IV.J of this document. The 
analytic results of the manufacturer impact analysis (``MIA'') are 
presented in section V.B.2 of this document.

C. National Benefits and Costs \5\
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    \5\ All monetary values in this document are expressed in 2021 
dollars.
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1. Liquid-Immersed Distribution Transformers
    DOE's analyses indicate that the proposed energy conservation 
standards for liquid-immersed distribution transformers would save a 
significant amount of energy. Relative to the case without amended 
standards, the lifetime energy savings for liquid-immersed distribution 
transformers purchased in the 30-year period that begins in the 
anticipated year of compliance with the amended standards (2027-2056) 
amount to 8.02 quadrillion British thermal units (``Btu''), or 
quads.\6\ This represents a fleet savings of 36 percent relative to the 
energy use of these products in the case without amended standards 
(referred to as the ``no-new-standards case'').
---------------------------------------------------------------------------

    \6\ The quantity refers to full-fuel-cycle (``FFC'') energy 
savings. FFC energy savings includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and, thus, presents a more complete 
picture of the impacts of energy efficiency standards. For more 
information on the FFC metric, see section IV.H.2 of this document.
---------------------------------------------------------------------------

    The cumulative net present value (``NPV'') of total consumer 
benefits of the proposed standards for distribution transformers ranges 
from 0.26 billion (2021$) (at a 7-percent discount rate) to 5.30 
billion (2021$) (at a 3-percent discount rate). This NPV expresses the 
estimated total value of future operating-cost savings minus the 
estimated increased product costs for distribution transformers 
purchased in 2027-2056.
    In addition, the proposed standards for liquid-immersed 
distribution transformers are projected to yield significant 
environmental benefits. DOE estimates that the proposed standards would 
result in cumulative emission reductions (over the same period as for 
energy savings) of 256.27 million metric tons (``Mt'') \7\ of carbon 
dioxide (``CO2''), 99.71 thousand tons of sulfur dioxide 
(``SO2''), 403.57 thousand tons of nitrogen oxides 
(``NOX''), 1,846.56 thousand tons of methane 
(``CH4''), 2.32 thousand tons of nitrous oxide 
(``N2O''), and 0.65 tons of mercury (``Hg'').\8\
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2022 (``AEO2022''). AEO2022 represents current federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K of this document for 
further discussion of AEO2022 assumptions that effect air pollutant 
emissions.
---------------------------------------------------------------------------

    DOE estimates climate benefits from a reduction in greenhouse gases 
(GHG) using four different estimates of the social cost of 
CO2 (``SC-CO2''), the social cost of methane 
(``SC-CH4''), and the social cost of nitrous oxide (``SC-
N2O''). Together these represent the social cost of GHG (SC-
GHG). DOE used interim SC-GHG values developed by an Interagency 
Working Group on the Social Cost of Greenhouse Gases (IWG),\9\ as 
discussed in section IV.L. of this document. For presentational 
purposes, the climate benefits associated with the average SC-GHG at a 
3-percent discount rate are $8.66 billion. DOE does not have a single 
central SC-GHG point estimate and it emphasizes the importance and 
value of considering the benefits calculated using all four SC-GHG 
estimates.\10\
---------------------------------------------------------------------------

    \9\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
    \10\ On March 16, 2022, the Fifth Circuit Court of Appeals (No. 
22-30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction 
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a 
result of the Fifth Circuit's order, the preliminary injunction is 
no longer in effect, pending resolution of the federal government's 
appeal of that injunction or a further court order. Among other 
things, the preliminary injunction enjoined the defendants in that 
case from ``adopting, employing, treating as binding, or relying 
upon'' the interim estimates of the social cost of greenhouse 
gases--which were issued by the Interagency Working Group on the 
Social Cost of Greenhouse Gases on February 26, 2021--to monetize 
the benefits of reducing greenhouse gas emissions. As reflected in 
this rule, DOE has reverted to its approach prior to the injunction 
and present monetized greenhouse gas abatement benefits where 
appropriate and permissible under law.
---------------------------------------------------------------------------

    DOE also estimates health benefits from SO2 and 
NOX emissions reductions.\11\ DOE estimates the present 
value of the health benefits would be $4.69 billion using a 7-percent 
discount rate, and $15.57 billion using a 3-percent discount rate.\12\ 
DOE is currently only monetizing (for SO2 and 
NOX) PM2.5 precursor health benefits and (for 
NOX) ozone precursor health benefits, but will continue to 
assess the ability to monetize other effects such as health benefits 
from reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------

    \11\ DOE estimated the monetized value of SO2 and 
NOX emissions reductions associated with electricity 
savings using benefit per ton estimates from the EPA. e. See section 
IV.L.2 of this document for further discussion.
    \12\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table I.5 summarizes the monetized benefits and costs expected to 
result from the proposed standards for liquid-immersed distribution 
transformers. In the table, total benefits for both the 3-percent and 
7-percent cases are presented using the average GHG social costs with 
3-percent discount rate, but the Department emphasizes the importance 
and value of considering the benefits calculated using all four SC-GHG 
cases. The estimated total net benefits using each of the four cases 
are

[[Page 1727]]

presented in section V.B.8 of this document.

  Table I.5--Summary of Monetized Benefits and Costs of Proposed Energy
  Conservation Standards for Liquid-Immersed Distribution Transformers
                                 (TSL 4)
------------------------------------------------------------------------
                                                              Billion
                                                              ($2021)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           12.77
Climate Benefits *......................................            8.66
Health Benefits **......................................           15.57
Total Benefits [dagger].................................           37.01
Consumer Incremental Product Costs [Dagger].............            7.48
Net Benefits............................................           29.53
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            4.28
Climate Benefits * (3% discount rate)...................            8.66
Health Benefits **......................................            4.69
Total Benefits [dagger].................................           17.63
Consumer Incremental Product Costs [Dagger].............            4.02
Net Benefits............................................           13.61
------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution
  transformers shipped in 2027-2056. These results include benefits to
  consumers which accrue after 2056 from the products shipped in 2027-
  2056.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. As reflected in this rule, DOE has
  reverted to its approach prior to the injunction and present monetized
  greenhouse gas abatement benefits where appropriate and permissible
  under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The monetary values for the 
total annualized net benefits are (1) the reduced consumer operating 
costs, minus (2) the increase in product purchase prices and 
installation costs, plus (3) the value of the benefits of GHG and 
NOX and SO2 emission reductions, all 
annualized.\13\ The national operating savings are domestic private 
U.S. consumer monetary savings that occur as a result of purchasing the 
covered products and are measured for the lifetime of distribution 
transformers shipped in 2027-2056. The benefits associated with reduced 
emissions achieved as a result of the proposed standards are also 
calculated based on the lifetime of liquid-immersed distribution 
transformers shipped in 2027-2056.
---------------------------------------------------------------------------

    \13\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2021, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2030), and then discounted the present value from each year 
to 2021. Using the present value, DOE then calculated the fixed 
annual payment over a 30-year period, starting in the compliance 
year, that yields the same present value.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.6. The results under the primary 
estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced NOx and SO2 emissions, and the 
3-percent discount rate case for climate benefits from reduced GHG 
emissions, the estimated cost of the standards proposed in this rule is 
$424.8 million per year in increased equipment costs, while the 
estimated annual benefits are $451.9 million in reduced equipment 
operating costs, $497.4 million in climate benefits, and $495.3 million 
in health benefits. In this case. The net benefit would amount to 
$1,019.8 million per year.

[[Page 1728]]



     Table I.6--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Liquid-Immersed
                                        Distribution Transformers (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                           Million  (2021$/year)
                                                         -------------------------------------------------------
                        Category                              Primary      Low-net-benefits    High-net-benefits
                                                             estimate          estimate            estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           733.5               686.9               789.9
Climate Benefits *......................................           497.4               478.9               519.5
Health Benefits **......................................           894.3               860.5               934.8
Total Benefits [dagger].................................         2,125.3             2,026.3             2,244.2
Consumer Incremental Product Costs [Dagger].............           429.5               449.0               413.2
Net Benefits............................................         1,695.8             1,577.3             1,831.0
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           451.9               425.7               482.2
Climate Benefits * (3% discount rate)...................           497.4               478.9               519.5
Health Benefits **......................................           495.3               477.9               515.3
Total Benefits [dagger].................................         1,444.7             1,382.5             1,517.0
Consumer Incremental Product Costs [Dagger].............           424.8               442.1               409.9
Net Benefits............................................         1,019.8               940.5             1,107.2
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

2. Low-Voltage Dry-Type Distribution Transformers
    DOE's analyses indicate that the proposed energy conservation 
standards for low-voltage dry-type distribution transformers would save 
a significant amount of energy. Relative to the case without amended 
standards, the lifetime energy savings for low-voltage dry-type 
distribution transformers purchased in the 30-year period that begins 
in the anticipated year of compliance with the amended standards (2027-
2056) amount to 2.47 quadrillion British thermal units (``Btu''), or 
quads.\14\ This represents a fleet savings of 47 percent relative to 
the energy use of these products in the case without amended standards 
(referred to as the ``no-new-standards case'').
---------------------------------------------------------------------------

    \14\ The quantity refers to full-fuel-cycle (``FFC'') energy 
savings. FFC energy savings includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and, thus, presents a more complete 
picture of the impacts of energy efficiency standards. For more 
information on the FFC metric, see section IV.H.2 of this document.
---------------------------------------------------------------------------

    The cumulative net present value (``NPV'') of total consumer 
benefits of the proposed standards for low-voltage dry-type 
distribution transformers ranges from 2.63 billion (2021$) (at a 7-
percent discount rate) to 9.63 billion (2021$) (at a 3-percent discount 
rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
low-voltage dry-type distribution transformers purchased in 2027-2056.
    In addition, the proposed standards for low-voltage dry-type 
distribution transformers are projected to yield significant 
environmental benefits. DOE estimates that the proposed standards would 
result in cumulative emission reductions (over the same period as for 
energy savings) of 77.57 million metric tons (``Mt'') \15\ of carbon 
dioxide (``CO2''), 92.81 thousand tons of sulfur dioxide 
(``SO2''), 123.44 thousand tons of nitrogen oxides 
(``NOX''), 567.30 thousand tons of methane 
(``CH4''), 0.70 thousand tons of nitrous oxide 
(``N2O''), and 0.19 tons of mercury (``Hg'').\16\
---------------------------------------------------------------------------

    \15\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \16\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2022 (``AEO2022''). AEO2022 represents current federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K of this document for 
further discussion of AEO2022 assumptions that effect air pollutant 
emissions.

---------------------------------------------------------------------------

[[Page 1729]]

    DOE estimates climate benefits from a reduction in greenhouse gases 
(GHG) using four different estimates of the social cost of 
CO2 (``SC-CO2''), the social cost of methane 
(``SC-CH4''), and the social cost of nitrous oxide (``SC-
N2O''). Together these represent the social cost of GHG (SC-
GHG). DOE used interim SC-GHG values developed by an Interagency 
Working Group on the Social Cost of Greenhouse Gases (IWG),\17\ as 
discussed in section IV.L of this document. For presentational 
purposes, the climate benefits associated with the average SC-GHG at a 
3-percent discount rate are $2.77 billion. (DOE does not have a single 
central SC-GHG point estimate and it emphasizes the importance and 
value of considering the benefits calculated using all four SC-GHG 
estimates.)
---------------------------------------------------------------------------

    \17\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------

    DOE also estimates health benefits from SO2 and 
NOX emissions reductions.\18\ DOE estimates the present 
value of the health benefits would be $1.53 billion using a 7-percent 
discount rate, and $4.91 billion using a 3-percent discount rate.\19\ 
DOE is currently only monetizing (for SO2 and 
NOX) PM2.5 precursor health benefits and (for 
NOX) ozone precursor health benefits, but will continue to 
assess the ability to monetize other effects such as health benefits 
from reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------

    \18\ DOE estimated the monetized value of SO2 and 
NOX emissions reductions associated with electricity 
savings using benefit per ton estimates from the EPA. See section 
IV.L.2 of this document for further discussion.
    \19\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table I.7 summarizes the monetized benefits and costs expected to 
result from the proposed standards for low-voltage dry-type 
distribution transformers. In the table, total benefits for both the 3-
percent and 7-percent cases are presented using the average GHG social 
costs with 3-percent discount rate, but the Department emphasizes the 
importance and value of considering the benefits calculated using all 
four SC-GHG cases. The estimated total net benefits using each of the 
four cases are presented in section V.B.8 of this document.

  Table I.7--Summary of Monetized Benefits and Costs of Proposed Energy
      Conservation Standards for Low-Voltage Dry-Type Distribution
                          Transformers (TSL 5)
------------------------------------------------------------------------
                                                              Billion
                                                              ($2021)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           13.45
Climate Benefits *......................................            2.77
Health Benefits **......................................            4.91
Total Benefits [dagger].................................           21.13
Consumer Incremental Product Costs [Dagger].............            3.82
Net Benefits............................................           17.31
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            4.69
Climate Benefits * (3% discount rate)...................            2.77
Health Benefits **......................................            1.53
Total Benefits [dagger].................................            8.99
Consumer Incremental Product Costs [Dagger].............            2.05
Net Benefits............................................            6.94
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  distribution transformers shipped in 2027-2056. These results include
  benefits to consumers which accrue after 2056 from the products
  shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. As reflected in this rule, DOE has
  reverted to its approach prior to the injunction and present monetized
  greenhouse gas abatement benefits where appropriate and permissible
  under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.


[[Page 1730]]

    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The monetary values for the 
total annualized net benefits are (1) the reduced consumer operating 
costs, minus (2) the increase in product purchase prices and 
installation costs, plus (3) the value of the benefits of GHG and 
NOX and SO2 emission reductions, all 
annualized.\20\ The national operating savings are domestic private 
U.S. consumer monetary savings that occur as a result of purchasing the 
covered products and are measured for the lifetime of low-voltage dry-
type distribution transformers shipped in 2027-2056. The benefits 
associated with reduced emissions achieved as a result of the proposed 
standards are also calculated based on the lifetime of low-voltage dry-
type distribution transformers shipped in 2027-2056.
---------------------------------------------------------------------------

    \20\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2021, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2030), and then discounted the present value from each year 
to 2021. Using the present value, DOE then calculated the fixed 
annual payment over a 30-year period, starting in the compliance 
year, that yields the same present value.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.8. The results under the primary 
estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced NOX and SO2 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated cost of the standards 
proposed in this rule is $216.9 million per year in increased equipment 
costs, while the estimated annual benefits are $495.0 million in 
reduced equipment operating costs, $159.2 million in climate benefits, 
and $162.1 million in health benefits. In this case. The net benefit 
would amount to $599.4 million per year.

   Table I.8--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Low-Voltage Dry Type
                                        Distribution Transformers (TSL 5)
----------------------------------------------------------------------------------------------------------------
                                                                           Million  (2021$/year)
                                                         -------------------------------------------------------
                        Category                              Primary      Low-net-benefits    High-net-benefits
                                                             estimate          estimate            estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           772.1               716.9               831.3
Climate Benefits *......................................           159.2               151.6               165.9
Health Benefits **......................................           281.8               268.3               293.9
Total Benefits [dagger].................................         1,213.1             1,136.7             1,291.1
Consumer Incremental Product Costs [Dagger].............           219.3               228.7               208.7
Net Benefits............................................           993.8               908.0             1,082.4
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           495.0               462.8               528.7
Climate Benefits * (3% discount rate)...................           159.2               151.6               165.9
Health Benefits **......................................           162.1               154.9               168.2
Total Benefits [dagger].................................           816.3               769.3               862.8
Consumer Incremental Product Costs [Dagger].............           216.9               225.2               207.3
Net Benefits............................................           599.4               544.1               655.5
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

3. Medium Voltage Dry-Type Distribution Transformers
    DOE's analyses indicate that the proposed energy conservation 
standards for medium-voltage dry-type distribution transformers would 
save a significant amount of energy. Relative to the case without 
amended standards, the lifetime energy savings for medium-voltage dry-
type distribution transformers purchased in the 30-year period that 
begins in the anticipated

[[Page 1731]]

year of compliance with the amended standards (2027-2056) amount to 
0.12 quadrillion British thermal units (``Btu''), or quads.\21\ This 
represents a fleet savings of 24 percent relative to the energy use of 
these products in the case without amended standards (referred to as 
the ``no-new-standards case'').
---------------------------------------------------------------------------

    \21\ The quantity refers to full-fuel-cycle (``FFC'') energy 
savings. FFC energy savings includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and, thus, presents a more complete 
picture of the impacts of energy efficiency standards. For more 
information on the FFC metric, see section IV.H.2 of this document.
---------------------------------------------------------------------------

    The cumulative net present value (``NPV'') of total consumer 
benefits of the proposed standards for medium-voltage dry-type 
distribution transformers ranges from 0.04 billion (2021$) (at a 7-
percent discount rate) to 0.21 billion (2021$) (at a 3-percent discount 
rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
medium-voltage dry-type distribution transformers purchased in 2027-
2056.
    In addition, the proposed standards for medium-voltage dry-type 
distribution transformers are projected to yield significant 
environmental benefits. DOE estimates that the proposed standards would 
result in cumulative emission reductions (over the same period as for 
energy savings) of 3.71 million metric tons (``Mt'') \22\ of carbon 
dioxide (``CO2''), 1.43 thousand tons of sulfur dioxide 
(``SO2''), 5.93 thousand tons of nitrogen oxides 
(``NOX''), 27.29 thousand tons of methane 
(``CH4''), 0.03 thousand tons of nitrous oxide 
(``N2O''), and 0.01 tons of mercury (``Hg'').\23\
---------------------------------------------------------------------------

    \22\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \23\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2022 (``AEO2022''). AEO2022 represents current federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K of this document for 
further discussion of AEO2022 assumptions that effect air pollutant 
emissions.
---------------------------------------------------------------------------

    DOE estimates climate benefits from a reduction in greenhouse gases 
(GHG) using four different estimates of the social cost of 
CO2 (``SC-CO2''), the social cost of methane 
(``SC-CH4''), and the social cost of nitrous oxide (``SC-
N2O''). Together these represent the social cost of GHG (SC-
GHG). DOE used interim SC-GHG values developed by an Interagency 
Working Group on the Social Cost of Greenhouse Gases (IWG),\24\ as 
discussed in IV.L of this document. For presentational purposes, the 
climate benefits associated with the average SC-GHG at a 3-percent 
discount rate are $0.13 billion. (DOE does not have a single central 
SC-GHG point estimate and it emphasizes the importance and value of 
considering the benefits calculated using all four SC-GHG estimates.)
---------------------------------------------------------------------------

    \24\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021. https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------

    DOE also estimates health benefits from SO2 and 
NOX emissions reductions.\25\ DOE estimates the present 
value of the health benefits would be $0.07 billion using a 7-percent 
discount rate, and $0.24 billion using a 3-percent discount rate.\26\ 
DOE is currently only monetizing (for SO2 and 
NOX) PM2.5 precursor health benefits and (for 
NOX) ozone precursor health benefits, but will continue to 
assess the ability to monetize other effects such as health benefits 
from reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------

    \25\ DOE estimated the monetized value of SO2 and 
NOX emissions reductions associated with electricity 
savings using benefit per ton estimates from the EPA. See section 
IV.L.2 of this document for further discussion.
    \26\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table I.9 summarizes the monetized benefits and costs expected to 
result from the proposed standards for medium-voltage dry-type 
distribution transformers. In the table, total benefits for both the 3-
percent and 7-percent cases are presented using the average GHG social 
costs with 3-percent discount rate, but the Department emphasizes the 
importance and value of considering the benefits calculated using all 
four SC-GHG cases. The estimated total net benefits using each of the 
four cases are presented in section V.B.8 of this document.

  Table I.9--Summary of Monetized Benefits and Costs of Proposed Energy
     Conservation Standards for Medium-Voltage Dry-Type Distribution
                          Transformers (TSL 2)
------------------------------------------------------------------------
                                                              Billion
                                                              ($2021)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            0.41
Climate Benefits *......................................            0.13
Health Benefits **......................................            0.24
Total Benefits [dagger].................................            0.77
Consumer Incremental Product Costs [Dagger].............            0.19
Net Benefits............................................            0.58
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            0.14
Climate Benefits * (3% discount rate)...................            0.13
Health Benefits **......................................            0.07
Total Benefits [dagger].................................            0.35
Consumer Incremental Product Costs [Dagger].............            0.10
Net Benefits............................................            0.24
------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution
  transformers shipped in 2027-2056. These results include benefits to
  consumers which accrue after 2056 from the products shipped in 2027-
  2056.

[[Page 1732]]

 
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. As reflected in this rule, DOE has
  reverted to its approach prior to the injunction and present monetized
  greenhouse gas abatement benefits where appropriate and permissible
  under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The monetary values for the 
total annualized net benefits are (1) the reduced consumer operating 
costs, minus (2) the increase in product purchase prices and 
installation costs, plus (3) the value of the benefits of GHG and 
NOX and SO2 emission reductions, all 
annualized.\27\ The national operating savings are domestic private 
U.S. consumer monetary savings that occur as a result of purchasing the 
covered equipment and are measured for the lifetime of medium-voltage 
dry-type distribution transformers shipped in 2027-2056. The benefits 
associated with reduced emissions achieved as a result of the proposed 
standards are also calculated based on the lifetime of medium-voltage 
dry-type distribution transformers shipped in 2027-2056.
---------------------------------------------------------------------------

    \27\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2021, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2030), and then discounted the present value from each year 
to 2021. Using the present value, DOE then calculated the fixed 
annual payment over a 30-year period, starting in the compliance 
year, that yields the same present value.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.10. The results under the primary 
estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced NOX and SO2 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated cost of the standards 
proposed in this rule is $10.8 million per year in increased equipment 
costs, while the estimated annual benefits are $14.9 million in reduced 
equipment operating costs, $7.6 million in climate benefits, and $7.8 
million in health benefits. The net benefit would amount to $19.5 
million per year.

 Table I.10--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Medium-Voltage Dry-Type
                                        Distribution Transformers (TSL 2)
----------------------------------------------------------------------------------------------------------------
                                                                           Million  (2021$/year)
                                                         -------------------------------------------------------
                        Category                              Primary      Low-net-benefits    High-net-benefits
                                                             estimate          estimate            estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            23.3                22.2                25.8
Climate Benefits *......................................             7.6                 7.5                 8.2
Health Benefits **......................................            13.5                13.2                14.5
Total Benefits [dagger].................................            44.4                42.9                48.5
Consumer Incremental Product Costs [Dagger].............            11.0                11.7                10.7
Net Benefits............................................            33.5                31.1                37.7
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            14.9                14.3                16.4
Climate Benefits * (3% discount rate)...................             7.6                 7.5                 8.2
Health Benefits **......................................             7.8                 7.6                 8.3
Total Benefits [dagger].................................            30.3                29.4                32.9
Consumer Incremental Product Costs [Dagger].............            10.8                11.6                10.6
Net Benefits............................................            19.5                17.9                22.2
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.

[[Page 1733]]

 
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

    DOE's analysis of the national impacts of the proposed standards is 
described in sections IV.H, IV.K and IV.L of this document.

D. Conclusion

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. Specifically, with regards to 
technological feasibility products achieving these standard levels are 
already commercially available for all product classes covered by this 
proposal. As for economic justification, DOE's analysis shows that for 
each equipment class the benefits of the proposed standards exceed the 
burdens of the proposed standards. Using a 7-percent discount rate for 
consumer benefits and costs and NOX and SO2 
reduction benefits, and a 3-percent discount rate case for GHG social 
costs, the estimated annual cost of the proposed standards for 
distribution transformers is $652.5 million per year in increased 
distribution transformer costs, while the estimated annual benefits are 
$961.8 million in reduced distribution transformer operating costs, 
$664.2 million in climate benefits and $665.2 million in health 
benefits. The net benefit amounts to $1,638.7 million per year.

    Table I.11--Annualized Benefits and Costs of Proposed Energy Conservation Standards for All Distribution
                                    Transformers at Proposed Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                           Million  (2021$/year)
                                                         -------------------------------------------------------
                        Category                              Primary      Low-net-benefits    High-net-benefits
                                                             estimate          estimate            estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................         1,528.9             1,426.0             1,647.0
Climate Benefits *......................................           664.2               638.0               693.6
Health Benefits **......................................         1,189.6             1,142.0             1,243.2
Total Benefits [dagger].................................         3,382.8             3,205.9             3,583.8
Consumer Incremental Product Costs [Dagger].............           659.8               689.4               632.6
Net Benefits............................................         2,723.1             2,516.4             2,951.1
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           961.8               902.8             1,027.3
Climate Benefits * (3% discount rate)...................           664.2               638.0               693.6
Health Benefits **......................................           665.2               640.4               691.8
Total Benefits [dagger].................................         2,291.3             2,181.2             2,412.7
Consumer Incremental Product Costs [Dagger].............           652.5               678.9               627.8
Net Benefits............................................         1,638.7             1,502.5             1,784.9
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056.
  These results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the Federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the injunction and present monetized
  benefits where appropriate and permissible under law.

[[Page 1734]]

 
**Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the low
  estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor health
  benefits and (for NOX) ozone precursor health benefits but will continue to assess the ability to monetize
  other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of this
  document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.


 Table I.12--Summary of Monetized Benefits and Costs of Proposed Energy
  Conservation Standards for All Distribution Transformers at Proposed
                             Standard Levels
------------------------------------------------------------------------
                                                              Billion
                                                              ($2021)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................           26.63
Climate Benefits *......................................           11.56
Health Benefits **......................................           20.72
Total Benefits [dagger].................................           58.91
Consumer Incremental Product Costs [Dagger].............           11.49
Net Benefits............................................           47.42
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            9.11
Climate Benefits * (3% discount rate)...................           11.56
Health Benefits **......................................            6.29
Total Benefits [dagger].................................           26.97
Consumer Incremental Product Costs [Dagger].............            6.17
Net Benefits............................................           20.79
------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution
  transformers shipped in 2027-2056. These results include benefits to
  consumers which accrue after 2056 from the products shipped in 2027-
  2056.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  Federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the Federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and present monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\28\ For 
example, some covered products and equipment, including distribution 
transformers, have substantial energy consumption occur during periods 
of peak energy demand. The impacts of these products on the energy 
infrastructure can be more pronounced than products with relatively 
constant demand. Accordingly, DOE evaluates the significance of energy 
savings on a case-by-case basis.
---------------------------------------------------------------------------

    \28\ Procedures, Interpretations, and Policies for Consideration 
in New or Revised Energy Conservation Standards and Test Procedures 
for Consumer Products and Commercial/Industrial Equipment, 86 FR 
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

    As previously mentioned, the standards are projected to result in 
estimated national energy savings of 10.60 quad. Based on the amount of 
FFC savings, the corresponding reduction in GHG emissions, and need to 
confront the global climate crisis, DOE has initially determined the 
energy savings from the proposed standard levels are ``significant'' 
within the meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed 
discussion of the basis for these tentative conclusions is contained in 
the remainder of this document and the accompanying TSD.
    DOE also considered more-stringent energy efficiency levels as 
potential standards, and is still considering them in this rulemaking. 
However, DOE has tentatively concluded that the potential burdens of 
the more-stringent energy efficiency levels would outweigh the 
projected benefits.
    Based on consideration of the public comments DOE receives in 
response to this document and related information collected and 
analyzed during the course of this rulemaking effort, DOE may adopt 
energy efficiency levels presented in this document that are either 
higher or lower than the proposed

[[Page 1735]]

standards, or some combination of level(s) that incorporate the 
proposed standards in part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed rule, as well as some of the relevant 
historical background related to the establishment of standards for 
distribution transformers.

A. Authority

    EPCA authorizes DOE to regulate the energy efficiency of a number 
of consumer products and certain industrial equipment. Title III, Part 
B of EPCA (42 U.S.C. 6291-6309, as codified), established the Energy 
Conservation Program for ``Consumer Products Other Than Automobiles.'' 
Title III, Part C of EPCA (42 U.S.C. 6311-6317, as codified), added by 
Public Law 95-619, Title IV, section 411(a), established the Energy 
Conservation Program for Certain Industrial Equipment. The Energy 
Policy Act of 1992, Public Law 102-486, amended EPCA and directed DOE 
to prescribe energy conservation standards for those distribution 
transformers for which DOE determines such standards would be 
technologically feasible, economically justified, and would result in 
significant energy savings. (42 U.S.C. 6317(a)) The Energy Policy Act 
of 2005, Public Law 109-58, amended EPCA to establish energy 
conservation standards for low-voltage dry-type distribution 
transformers. (42 U.S.C. 6295(y))
    EPCA further provides that, not later than 6 years after the 
issuance of any final rule establishing or amending a standard, DOE 
must publish either a notice of determination that standards for the 
product do not need to be amended, or a NOPR including new proposed 
energy conservation standards (proceeding to a final rule, as 
appropriate). (42 U.S.C. 6316(e)(1); 42 U.S.C. 6295(m)(1))
    The energy conservation program under EPCA consists essentially of 
four parts: (1) testing, (2) labeling, (3) the establishment of Federal 
energy conservation standards, and (4) certification and enforcement 
procedures. Relevant provisions of EPCA specifically include 
definitions (42 U.S.C. 6311; 42 U.S.C. 6291), test procedures (42 
U.S.C. 6314; 42 U.S.C. 6293), labeling provisions (42 U.S.C. 6315; 42 
U.S.C. 6294), energy conservation standards (42 U.S.C. 6313; 42 U.S.C. 
6295), and the authority to require information and reports from 
manufacturers (42 U.S.C. 6316; 42 U.S.C. 6296).
    Federal energy efficiency requirements for covered equipment 
established under EPCA generally supersede State laws and regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6316(a) and (b); 42 U.S.C. 6297) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 
EPCA. (See 42 U.S.C. 6316(a) (applying the preemption waiver provisions 
of 42 U.S.C. 6297))
    Subject to certain criteria and conditions, DOE is required to 
develop test procedures to measure the energy efficiency, energy use, 
or estimated annual operating cost of each covered equipment. (42 
U.S.C. 6316(a), 42 U.S.C. 6295(o)(3)(A) and 42 U.S.C. 6295(r)) 
Manufacturers of covered equipment must use the Federal test procedures 
as the basis for: (1) certifying to DOE that their equipment complies 
with the applicable energy conservation standards adopted pursuant to 
EPCA (42 U.S.C. 6316(a); 42 U.S.C. 6295(s)), and (2) making 
representations about the efficiency of that equipment (42 U.S.C. 
6314(d)). Similarly, DOE must use these test procedures to determine 
whether the equipment complies with relevant standards promulgated 
under EPCA. (42 U.S.C. 6316(a); 42 U.S.C. 6295(s)) The DOE test 
procedures for distribution transformers appear at title 10 of the Code 
of Federal Regulations (``CFR'') part 431, subpart K, appendix A.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered equipment, including distribution 
transformers. Any new or amended standard for a covered product must be 
designed to achieve the maximum improvement in energy efficiency that 
the Secretary of Energy determines is technologically feasible and 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A) and 
42 U.S.C. 6295(o)(3)(B)) Furthermore, DOE may not adopt any standard 
that would not result in the significant conservation of energy. (42 
U.S.C. 6295(o)(3))
    Moreover, DOE may not prescribe a standard: (1) for certain 
products, including distribution transformers, if no test procedure has 
been established for the product, or (2) if DOE determines by rule that 
the standard is not technologically feasible or economically justified. 
(42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a 
proposed standard is economically justified, DOE must determine whether 
the benefits of the standard exceed its burdens. (42 U.S.C. 6316(a); 42 
U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after 
receiving comments on the proposed standard, and by considering, to the 
greatest extent practicable, the following seven statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (``Secretary'') considers 
relevant. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    Further, EPCA establishes a rebuttable presumption that a standard 
is economically justified if the Secretary finds that the additional 
cost to the consumer of purchasing a product complying with an energy 
conservation standard level will be less than three times the value of 
the energy savings during the first year that the consumer will receive 
as a result of the standard, as calculated under the applicable test 
procedure. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(iii))
    EPCA also contains what is known as an ``anti-backsliding'' 
provision, which prevents the Secretary from prescribing any amended 
standard that either increases the maximum allowable energy use or 
decreases the minimum required energy efficiency of a covered product. 
(42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(1)) Also, the Secretary may not 
prescribe an amended or new standard if interested persons have 
established by a preponderance of the evidence that the standard is 
likely to result in the unavailability in the United States in any 
covered product type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(4))
    Additionally, EPCA specifies requirements when promulgating an

[[Page 1736]]

energy conservation standard for a covered product that has two or more 
product classes. DOE must specify a different standard level for a type 
or class of product that has the same function or intended use, if DOE 
determines that products within such group: (A) consume a different 
kind of energy from that consumed by other covered products within such 
type (or class); or (B) have a capacity or other performance-related 
feature which other products within such type (or class) do not have 
and such feature justifies a higher or lower standard. (42 U.S.C. 
6316(a); 42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products, 
DOE must consider such factors as the utility to the consumer of the 
feature and other factors DOE deems appropriate. Id. Any rule 
prescribing such a standard must include an explanation of the basis on 
which such higher or lower level was established. (42 U.S.C. 6316(a); 
42 U.S.C. 6295(q)(2))

B. Background

1. Current Standards
    In a final rule published on April 18, 2013 (``April 2013 Standards 
Final Rule''), DOE prescribed the current energy conservation standards 
for distribution transformers manufactured on and after January 1, 
2016. 78 FR 23336, 23433. These standards are set forth in DOE's 
regulations at 10 CFR 431.196 and are repeated in Table II.1, Table 
II.2, Table II.3.

      Table II.1--Federal Energy Conservation Standards for Low-Voltage Dry-Type Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                        Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                    kVA                       Efficiency (%)                  kVA                 Efficiency (%)
----------------------------------------------------------------------------------------------------------------
15.........................................           97.70   15................................           97.89
25.........................................           98.00   30................................           98.23
37.5.......................................           98.20   45................................           98.40
50.........................................           98.30   75................................           98.60
75.........................................           98.50   112.5.............................           98.74
100........................................           98.60   150...............................           98.83
167........................................           98.70   225...............................           98.94
250........................................           98.80   300...............................           99.02
333........................................           98.90   500...............................           99.14
                                                              750...............................           99.23
                                                              1,000.............................           99.28
----------------------------------------------------------------------------------------------------------------


         Table II.2--Federal Energy Conservation Standards for Liquid-Immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                        Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                    kVA                       Efficiency (%)                  kVA                 Efficiency (%)
----------------------------------------------------------------------------------------------------------------
10.........................................           98.70   15................................           98.65
15.........................................           98.82   30................................           98.83
25.........................................           98.95   45................................           98.92
37.5.......................................           99.05   75................................           99.03
50.........................................           99.11   112.5.............................           99.11
75.........................................           99.19   150...............................           99.16
100........................................           99.25   225...............................           99.23
167........................................           99.33   300...............................           99.27
250........................................           99.39   500...............................           99.35
333........................................           99.43   750...............................           99.40
500........................................           99.49   1,000.............................           99.43
667........................................           99.52   1,500.............................           99.48
833........................................           99.55   2,000.............................           99.51
                                                              2,500.............................           99.52
----------------------------------------------------------------------------------------------------------------


                         Table II.3--Federal Energy Conservation Standards for Medium-Voltage Dry-Type Distribution Transformers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Single-phase                                                                  Three-phase
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BIL                                                                    BIL
                                  -------------------------------------------------                      -----------------------------------------------
               kVA                    20-45 kV        46-95 kV         >=96 kV               kVA             20-45 kV        46-95 kV         >=96 kV
                                  -------------------------------------------------                      -----------------------------------------------
                                   Efficiency (%)  Efficiency (%)   Efficiency (%)                        Efficiency (%)  Efficiency (%)  Efficiency (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
15...............................            98.1           97.86  ...............  15..................            97.5           97.18  ..............
25...............................           98.33           98.12  ...............  30..................            97.9           97.63  ..............
37.5.............................           98.49            98.3  ...............  45..................            98.1           97.86  ..............
50...............................            98.6           98.42  ...............  75..................           98.33           98.13  ..............
75...............................           98.73           98.57           98.53   112.5...............           98.52           98.36  ..............
100..............................           98.82           98.67           98.63   150.................           98.65           98.51  ..............

[[Page 1737]]

 
167..............................           98.96           98.83           98.80   225.................           98.82           98.69           98.57
250..............................           99.07           98.95           98.91   300.................           98.93           98.81           98.69
333..............................           99.14           99.03           98.99   500.................           99.09           98.99           98.89
500..............................           99.22           99.12           99.09   750.................           99.21           99.12           99.02
667..............................           99.27           99.18           99.15   1,000...............           99.28            99.2           99.11
833..............................           99.31           99.23           99.20   1,500...............           99.37            99.3           99.21
                                                                                    2,000...............           99.43           99.36           99.28
                                                                                    2,500...............           99.47           99.41           99.33
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. History of Standards Rulemaking for Distribution Transformers
    On June 18, 2019, DOE published notice that it was initiating an 
early assessment review to determine whether any new or amended 
standards would satisfy the relevant requirements of EPCA for a new or 
amended energy conservation standard for distribution transformers and 
a request for information (``RFI''). 84 FR 28239 (``June 2019 Early 
Assessment Review RFI'').
    On August 27, 2021, DOE published a notification of a webinar and 
availability of a preliminary technical support document, which 
announced the availability of its analysis for distribution 
transformers. 86 FR 48058 (``August 2021 Preliminary Analysis'') The 
purpose of the August 2021 Preliminary Analysis was to make publicly 
available the initial technical and economic analyses conducted for 
distribution transformers, and present initial results of those 
analyses. DOE did not propose new or amended standards for distribution 
transformers at that time. The initial technical support document 
(``TSD'') and accompanying analytical spreadsheets for the August 2021 
Preliminary Analysis provided the analyses DOE undertook to examine the 
potential for amending energy conservation standards for distribution 
transformers and provided preliminary discussions in response to a 
number of issues raised by comments to the June 2019 Early Assessment 
Review RFI. It described the analytical methodology that DOE used, and 
each analysis DOE had performed.
    On November 11, 2021, DOE published a notice reopening the comment 
period an additional 30 days. 86 FR 63318.
    DOE received comments in response to the August 2021 Preliminary 
Analysis from the interested parties listed in Table II.4.

                          Table II.4--August 2021 Preliminary Analysis Written Comments
----------------------------------------------------------------------------------------------------------------
              Commenter(s)                       Abbreviation           Docket No.          Commenter type
----------------------------------------------------------------------------------------------------------------
Electric Research and Manufacturing       ERMCO.....................              45  Manufacturer.
 Cooperative, Inc.
Powersmiths, Inc........................  Powersmiths...............              46  Manufacturer.
Copper Development Association..........  CDA.......................              47  Trade Organization.
Schneider Electric......................  Schneider.................              49  Manufacturer.
National Electrical Manufacturers         NEMA......................              50  Trade Organization.
 Association.
Northwest Energy Efficiency Alliance....  NEEA......................              51  Efficiency Organization.
Appliance Standards Awareness Project,    Efficiency Advocates......              52  Efficiency Organization.
 American Council for an Energy-
 Efficient Economy, Natural Resources
 Defense Council.
Metglas, Inc............................  Metglas...................              53  Steel Manufacturer.
Carte International, Inc................  Carte.....................              54  Manufacturer.
Eaton Corporation.......................  Eaton.....................              55  Manufacturer.
Edison Electric Institute...............  EEI.......................              56  Utilities.
Cleveland-Cliffs Steel Corporation......  Cliffs....................              57  Steel Manufacturer.
Greenville Electric Utility System......  GEUS......................              58  Utilities.
Howard Industries, Inc..................  Howard....................              59  Manufacturer.
----------------------------------------------------------------------------------------------------------------

    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\29\
---------------------------------------------------------------------------

    \29\ The parenthetical reference provides a reference for 
information located in the docket of DOE's rulemaking to develop 
energy conservation standards for distribution transformers. (Docket 
No. EERE-2019-BT-STD-0018, which is maintained at 
www.regulations.gov). The references are arranged as follows: 
(commenter name, comment docket ID number, page of that document).
---------------------------------------------------------------------------

C. Deviation From Appendix A

    In accordance with section 3(a) of 10 CFR part 430, subpart C, 
appendix A (``appendix A''), DOE notes that it is deviating from the 
provision in appendix A regarding the NOPR stage for an energy 
conservation standard rulemaking. Section 6(f)(2) of appendix A 
specifies that the length of the public comment period for a NOPR will 
vary depending upon the circumstances of the particular rulemaking, but 
will not be less than 75 calendar days. For this NOPR, DOE is providing 
a 60-day comment period, as required by EPCA. 42 U.S.C. 6316(a); 42 
U.S.C. 6295(p). As stated previously, DOE requested

[[Page 1738]]

comment in the June 2019 Early Assessment Review RFI on the technical 
and economic analyses and provided stakeholders a 45-day comment 
period. 84 FR 28239. Additionally, DOE provided a 75-day comment period 
for the August 2021 Preliminary Analysis. 86 FR 48058. DOE also 
reopened the comment period for the August 2021 Preliminary Analysis 
for an additional 30-days. 86 FR 63318. DOE has relied on many of the 
same analytical assumptions and approaches as used in the preliminary 
assessment presented in the TSD. Therefore, DOE believes a 60-day 
comment period is appropriate and will provide interested parties with 
a meaningful opportunity to comment on the proposed rule.

III. General Discussion

    DOE developed this proposal after considering oral and written 
comments, data, and information from interested parties that represent 
a variety of interests. The following discussion addresses issues 
raised by these commenters.

A. Equipment Classes and Scope of Coverage

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into equipment classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))
    The distribution transformer equipment classes considered in this 
proposed rule are discussed in further detail in section IV.A.2 of this 
document. This proposed rule covers distribution transformers which are 
currently defined as a transformer that (1) has an input voltage of 
34.5 kV or less; (2) has an output voltage of 600 V or less; (3) is 
rated for operation at a frequency of 60 Hz; and (4) Has a capacity of 
10 kVA to 2500 kVA for liquid-immersed units and 15 kVA to 2500 kVA for 
dry-type units; but (5) The term ``distribution transformer'' does not 
include a transformer that is an autotransformer, drive (isolation) 
transformer, grounding transformer, machine-tool (control transformer, 
nonventilated transformer, rectified transformer, regulating 
transformer, sealed transformer, special-impedance transformer, testing 
transformer, transformer with tap range of 20 percent or more; 
uninterruptible power supply transformer; or welding transformer. 10 
CFR 431.192
    The scope of coverage of this proposed rule is discussed in further 
detail in section IV.A.1 of this document.

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a)) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. DOE's 
current energy conservation standards for distribution transformers are 
expressed in terms of percentage efficiency at rated per-unit load 
(PUL). (See 10 CFR 431.193; 10 CFR part 431, subpart K, appendix A 
(``appendix A'').)
    On September 14, 2021, DOE published a test procedure final rule 
for distribution transformers that revised definitions for certain 
terms, updated provisions based on the latest versions of relevant 
industry test standards, maintained PUL for the certification of 
efficiency and added provisions for representing efficiency at 
alternative PULs and reference temperatures. 89 FR 51230 (``September 
2021 TP Final Rule''). DOE determined that the amendments to the test 
procedure adopted in the September 2021 TP Final Rule do not alter the 
measured efficiency of distribution transformers or require retesting 
or recertification solely as a result of DOE's adoption of the 
amendments to the test procedure. Id. at 89 FR 51249.

C. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially available products or in working prototypes to be 
technologically feasible. 10 CFR 431.4; 10 CFR part 430, subpart C, 
appendix A, sections 6(b)(3)(i) and 7(b)(1) (``Process Rule'').
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; (3) adverse impacts on 
health or safety, and (4) unique-pathway proprietary technologies. 10 
CFR 431.4; Sections 6(c)(3)(ii)-(v) and 7(b)(2)-(5) of the Process 
Rule. Section IV.B of this document discusses the results of the 
screening analysis for distribution transformers, particularly the 
designs DOE considered, those it screened out, and those that are the 
basis for the standards considered in this proposed rule. For further 
details on the screening analysis for this proposed rule, see chapter 4 
of the NOPR technical support document (``TSD'').
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6316(a); 42 U.S.C. 6295(p)(1)) 
Accordingly, in the engineering analysis, DOE determined the maximum 
technologically feasible (``max-tech'') improvements in energy 
efficiency for distribution transformers, using the design parameters 
for the most efficient products available on the market or in working 
prototypes. The max-tech levels that DOE determined for this rulemaking 
are described in section IV.C.2.e of this proposed rule and in chapter 
5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to distribution transformer 
purchased in the 30-year period that begins in the year of compliance 
with the proposed standards (2027-2056).\30\ The savings are measured 
over the entire lifetime of distribution transformers purchased in the 
previous 30-year period.\31\ DOE

[[Page 1739]]

quantified the energy savings attributable to each TSL as the 
difference in energy consumption between each standards case and the 
no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for a 
product would likely evolve in the absence of amended energy 
conservation standards.
---------------------------------------------------------------------------

    \30\ Each TSL is composed of specific efficiency levels for each 
product class. The TSLs considered for this NOPR are described in 
section V.A of this document. DOE conducted a sensitivity analysis 
that considers impacts for products shipped in a 9-year period.
    \31\ Savings are determined for equipment shipped over the 30-
year analysis period of 2027 through 2056. Distribution transformers 
have a maximum lifetime of 60 years; therefore savings are 
determined for equipment that survive, and accrue savings through 
2115.
---------------------------------------------------------------------------

    DOE used its national impact analysis (``NIA'') model to estimate 
national energy savings (``NES'') from potential amended or new 
standards for distribution transformers. The NIA model (described in 
section IV.H of this document) calculates energy savings in terms of 
site energy, which is the energy directly consumed by products at the 
locations where they are used. For electricity, DOE reports national 
energy savings in terms of primary energy savings, which is the savings 
in the energy that is used to generate and transmit the site 
electricity. DOE also calculates NES in terms of FFC energy savings. 
The FFC metric includes the energy consumed in extracting, processing, 
and transporting primary fuels (i.e., coal, natural gas, petroleum 
fuels), and thus presents a more complete picture of the impacts of 
energy conservation standards.\32\ DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered products or equipment. For more information on FFC energy 
savings, see section IV.H.2 of this document.
---------------------------------------------------------------------------

    \32\ The FFC metric is discussed in DOE's statement of policy 
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as 
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    To adopt any new or amended standards for a covered product, DOE 
must determine that such action would result in significant energy 
savings. (42 U.S.C. 6295(o)(3)(B))
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\33\ For 
example, some covered products and equipment have most of their energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand.
---------------------------------------------------------------------------

    \33\ The numeric threshold for determining the significance of 
energy savings established in a final rule published on February 14, 
2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule 
published on December 12, 2021 (86 FR 70892, 70906).
---------------------------------------------------------------------------

    Accordingly, DOE evaluates the significance of energy savings on a 
case-by-case basis, taking into account the significance of cumulative 
FFC national energy savings, the cumulative FFC emissions reductions, 
and the need to confront the global climate crisis, among other 
factors. Based on the amount of FFC savings, the corresponding 
reduction in emissions, and need to confront the global climate crisis, 
DOE has initially determined the energy savings from the proposed 
standard levels are ``significant'' within the meaning of 42 U.S.C. 
6316(a); 42 U.S.C. 6295(o)(3)(B).

E. Economic Justification

1. Specific Criteria
    As noted previously, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(I)-(VII))) The following sections discuss how DOE has 
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts an MIA, as discussed in section IV.J of 
this document. DOE first uses an annual cash-flow approach to determine 
the quantitative impacts. This step includes both a short-term 
assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include (1) INPV, which 
values the industry on the basis of expected future cash flows, (2) 
cash flows by year, (3) changes in revenue and income, and (4) other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the impacts on different types of manufacturers, including impacts on 
small manufacturers. Third, DOE considers the impact of standards on 
domestic manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment. Finally, DOE takes into account cumulative impacts 
of various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national net present value of 
the consumer costs and benefits expected to result from particular 
standards. DOE also evaluates the impacts of potential standards on 
identifiable subgroups of consumers that may be affected 
disproportionately by a standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 6316(a); 42 
U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC 
and PBP analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC analysis requires a variety of inputs, such as 
product prices, product energy consumption, energy prices, maintenance 
and repair costs, product lifetime, and discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more-stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analysis, DOE assumes that consumers will 
purchase the covered products in the first year of compliance with new 
or amended standards. The LCC savings for the considered efficiency 
levels are calculated relative to the case that reflects projected 
market trends in the absence of new or amended standards. DOE's LCC and 
PBP analysis is discussed in further detail in section IV.F of this 
document.

[[Page 1740]]

c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(III)) As discussed in section III.D of this document, 
DOE uses the NIA models to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards 
proposed in this document would not reduce the utility or performance 
of the products under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a proposed standard. (42 U.S.C. 6316(a); 42 
U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to 
determine the impact, if any, of any lessening of competition likely to 
result from a proposed standard and to transmit such determination to 
the Secretary within 60 days of the publication of a proposed rule, 
together with an analysis of the nature and extent of the impact. (42 
U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy 
of this proposed rule to the Attorney General with a request that the 
Department of Justice (``DOJ'') provide its determination on this 
issue. DOE will publish and respond to the Attorney General's 
determination in the final rule. DOE invites comment from the public 
regarding the competitive impacts that are likely to result from this 
proposed rule. In addition, stakeholders may also provide comments 
separately to DOJ regarding these potential impacts. See the ADDRESSES 
section for information to send comments to DOJ.
f. Need for National Energy Conservation
    DOE also considers the need for national energy and water 
conservation in determining whether a new or amended standard is 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(VI)) The energy savings from the proposed standards 
are likely to provide improvements to the security and reliability of 
the Nation's energy system. Reductions in the demand for electricity 
also may result in reduced costs for maintaining the reliability of the 
Nation's electricity system. DOE conducts a utility impact analysis to 
estimate how standards may affect the Nation's needed power generation 
capacity, as discussed in section IV.M of this document.
    DOE maintains that environmental and public health benefits 
associated with the more efficient use of energy are important to take 
into account when considering the need for national energy 
conservation. The proposed standards are likely to result in 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases (``GHGs'') associated with energy 
production and use. DOE conducts an emissions analysis to estimate how 
potential standards may affect these emissions, as discussed in section 
IV.K; the estimated emissions impacts are reported in section V.B.6 of 
this document. DOE also estimates the economic value of emissions 
reductions resulting from the considered TSLs, as discussed in section 
IV.L of this document.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant 
information regarding economic justification that does not fit into the 
other categories described previously, DOE could consider such 
information under ``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effects that proposed 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, DOE routinely conducts an economic analysis that considers 
the full range of impacts to consumers, manufacturers, the Nation, and 
the environment, as required under 42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i). The results of this analysis serve as the basis for 
DOE's evaluation of the economic justification for a potential standard 
level (thereby supporting or rebutting the results of any preliminary 
determination of economic justification). The rebuttable presumption 
payback calculation is discussed in section IV.F.11 of this proposed 
rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to distribution transformers. Separate 
subsections address each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed in this document. The first tool is a model that 
calculates the LCC savings and PBP of potential amended or new energy 
conservation standards. The national impacts analysis uses a second 
model set that provides shipments projections and calculates national 
energy savings and net present value of total consumer costs and 
savings expected to result from potential energy conservation 
standards. DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (``GRIM''), to assess manufacturer impacts of 
potential standards. These tools are available in the docket for this 
rulemaking: www.regulations.gov/docket/EERE-2019-T-STD-0018. 
Additionally, DOE used output from the latest version of the Energy 
Information Administration's (``EIA's'') Annual Energy Outlook 
(``AEO''), a widely known energy projection for the United States, for 
the emissions and utility impact analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the products 
concerned, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include (1) a determination of the scope 
of the rulemaking and

[[Page 1741]]

product classes, (2) manufacturers and industry structure, (3) existing 
efficiency programs, (4) shipments information, (5) market and industry 
trends; and (6) technologies or design options that could improve the 
energy efficiency of distribution transformers. The key findings of 
DOE's market assessment are summarized in the following sections. See 
chapter 3 of the NOPR TSD for further discussion of the market and 
technology assessment.

1. Scope of Coverage

    The current definition for a distribution transformer codified in 
10 CFR 431.192 is the following:
    Distribution transformer means a transformer that--(1) Has an input 
voltage of 34.5 kV or less; (2) Has an output voltage of 600 V or less; 
(3) Is rated for operation at a 60 Hz; and (4) Has a capacity of 10 kVA 
to 2500 kVA for liquid-immersed units and 15 kVA to 2500 kVA for dry-
type units; but (5) The term ``distribution transformer'' does not 
include a transformer that is an--(i) Autotransformer; (ii) Drive 
(isolation) transformer; (iii) Grounding transformer; (iv) Machine-tool 
(control) transformer; (v) Nonventilated transformer; (vi) Rectifier 
transformer; (vii) Regulating transformer; (viii) Sealed transformer; 
(ix) Special-impedance transformer; (x) Testing transformer; (xi) 
Transformer with tap range of 20 percent or more; (xii) Uninterruptible 
power supply transformer; or (xiii) Welding transformer.
    DOE received several comments regarding the definition of 
``distribution transformer'' and the definitions of equipment excluded 
from the definition. These detailed comments are discussed below.

a. Autotransformers

    The EPCA definition of distribution transformer excludes ``a 
transformer that is designed to be used in a special purpose 
application and is unlikely to be used in general purpose applications, 
such as . . . [an] auto-transformer . . .'' (42 U.S.C. 6291(35)(b)(ii)) 
In response to comments received as part of the June 2019 Early 
Assessment Review RFI that suggested DOE include ``low-voltage 
autotransformers'' within the scope of distribution transformers, DOE 
noted that autotransformers do not provide galvanic isolation \34\ and 
thus would be unlikely to be used in at least some general-purpose 
applications. (August 2021 Preliminary Analysis TSD at p. 2-5) In the 
August 2021 Preliminary Analysis TSD, DOE requested comment regarding 
the potential use of autotransformers as substitutes for general-
purpose distribution transformers. Id.
---------------------------------------------------------------------------

    \34\ i.e., autotransformers contain a continuous, current-
carrying electrical pathway that ``isolation'' transformers do not, 
which is perceived as a safety compromise in some applications.
---------------------------------------------------------------------------

    Schneider commented that while voltage conversion can be done with 
an autotransformer, autotransformers cannot derive a neutral, lower 
source impedance, or phase shift to remove triplen (i.e., multiples-of-
three) harmonics, meaning an autotransformer risks sacrificing power 
quality if used in place of a general-purpose distribution transformer. 
(Schneider, No. 59 at p. 2) Schneider added that because of these power 
quality concerns, autotransformers would be unlikely to be used in 
commercial buildings but could be used in some subsegments and smaller 
commercial jobs--a possibility supported by manufacturers' adding 
autotransformers to standard product catalogs. (Schneider, No. 49 at p. 
2) Schneider commented that it recommends autotransformers in 
subsegments that require wye-wye connections \35\ and that segment is 
growing and will continue to grow if autotransformers remain exempt. 
(Schneider, No. 49 at p. 2) Schneider commented that that are no 
technical limitations for autotransformer to meet standards and 
asserted that the exclusion was related to how efficiency was 
calculated and tested. Schneider recommended subjecting them to the 
current efficiency standards based on their nameplate kVA. (Schneider, 
No. 49 at pp. 2-3) Schneider commented that in typical applications 
(i.e., 480Y/277 and 208Y/120) autotransformers would be 60 percent the 
size and 20-25 percent less expensive. In non-typical applications, 
units would be 20 percent the size and 50 percent less expensive. 
(Schneider, No. 49 at p. 3)
---------------------------------------------------------------------------

    \35\ Wye connection refers to four distribution transformer 
terminals, three of which are connected to one power phase and the 
fourth connected to all three power phases.
---------------------------------------------------------------------------

    NEMA commented that it is not aware of autotransformers being used 
in place of distribution transformers. (NEMA, No. 50 at p. 3)
    Stakeholder comments suggest that there may be certain applications 
in which an autotransformer may be substitutable for an isolation 
transformer. However, the comments also suggest such substitution is 
limited to specific applications (e.g., wye-wye connections) and not 
common enough to be regarded as general practice. Further, DOE did not 
receive any feedback counter to its statement in the August 2021 
Preliminary Analysis TSD that autotransformers do not provide galvanic 
isolation and thus would be unlikely to be used in at least some 
general-purpose applications. Based on this feedback, DOE is not 
proposing to amend the exclusion of autotransformers under the 
distribution transformer definition. DOE will monitor the market and 
may reevaluate this exclusion if evidence exists to support growing use 
of autotransformers based on lower purchase price than would be 
warranted by technical considerations alone.

b. Drive (Isolation) Transformers

    In the August 2021 Preliminary Analysis TSD, DOE noted that the 
EPCA definition of distribution transformers excludes a transformer 
that is designed to be used in a special purpose application and is 
unlikely to be used in general purpose applications, such as a drive 
transformer. (42 U.S.C. 6291(35)(b)(ii)) DOE stated that it did not 
have any data indicating that ``drive isolation transformers'' were 
being widely used in generally purpose applications and as such, 
considered them statutorily excluded. DOE requested comment and data as 
to the extent to which ``drive isolation transformers'' are used in 
generally purpose applications. (August 2021 Preliminary Analysis TSD 
at p. 2-6)
    Schneider and Eaton commented that drive isolation transformers 
have historically been sold with nonstandard low-voltage ratings, 
corresponding to typical motor input voltages, and as such are unlikely 
to be used in general-purpose applications. (Schneider, No. 49 at p. 3; 
Eaton, No. 55 at p. 3) NEMA commented that drive isolation transformers 
are not sold in great quantities and not widely used in general purpose 
applications. (NEMA, No. 50 at p. 3)
    Schneider and Eaton commented that recently there has been some 
increase in drive isolation transformers specified as having either a 
``480Y/277'' or ``208Y/120'' voltage secondary, making it more 
difficult to ascertain whether these transformers are being used in 
general distribution applications. (Schneider No. 49 at p. 3; Eaton, 
No. 55 at p. 3) Schneider commented that only 6-pulse drive isolation 
transformers \36\ can serve

[[Page 1742]]

general purpose applications. (Schneider, No. 49 at p. 4) Eaton added 
that there is a minor concern that consumers will increasingly discover 
that drive isolation transformers can be used in certain general-
purpose applications, putting manufacturers in the position of 
suspecting but not being able to ascertain circumvention without being 
sure of end use. (Eaton, No. 55 at p. 3) Eaton commented that a DOE 
compliant general-purpose transformer would be 16 percent more 
expensive than a drive isolation transformer that could be used in its 
place, while the losses for the drive isolation transformer at 50 
percent PUL were 55 percent greater. (Eaton, No. 55 at p. 3)
---------------------------------------------------------------------------

    \36\ Drive-isolation transformers employ rectifier diodes to 
mitigate drive harmonics by phase shifting secondary voltages. The 
rectifier diode results in two pulses per phase. In a standard 
three-phase, drive-isolation transformer, application of a rectifier 
would result in 6-pulses, two per 120[deg] phase shift. If 
additional harmonic mitigation is needed, additional secondary 
windings are added with differing connections phase shifted from one 
another. Manufacturers' sell drive-isolation transformers as 6-
pulse, 12-pulse, or 24-pulse.
---------------------------------------------------------------------------

    Eaton commented that pulse count is somewhat hard to define as it 
is generally more a function of the rectifier that the drive isolation 
transformer is connected to than the transformer itself. (Eaton, No. 55 
at p. 4) Eaton added that 12-pulse and 24-pulse drive isolation 
transformers could, technically, be used in general purpose 
applications but that it would be less likely due to higher cost. 
(Eaton, No. 55 at p. 3-4)
    Schneider commented that 6-pulse drive isolation transformers 
should be included in the LVDT scope, as is required in Canada. 
(Schneider, No. 49 at p. 4)
    Commenters indicated that while some drive isolation transformers 
could, in theory be used in general purpose applications, no evidence 
exists suggesting this practice is common. As such, DOE has concluded 
that drive isolation transformers remain an example of a transformer 
that is designed to be used in special purpose applications and is 
unlikely to be used in general purpose applications. Given that drive 
isolation transformers are excluded by statute, including drive 
isolation transformers would first require a finding that they are 
being used in general purpose applications, which does not appear to be 
the case at this time.
    Schneider commented that drive isolation transformers should only 
be permitted at standard motor voltages and not standard distribution 
voltages. (Schneider, No. 49 at p. 3)
    DOE tentatively finds, as supported by comments from Schneider and 
Eaton, that certain distribution transformers that meet the current 
criteria of a ``drive isolation transformers'' are likely to be used in 
general-purpose applications based on their voltage rating. The 
overwhelming majority of equipment in the US is designed to operate 
using either 208Y/120 or 480Y/277 voltage, and therefore the 
overwhelming majority of general-purpose distribution transformers have 
a secondary voltage rating that is one of these standard voltage 
ratings. Drive-isolation transformers, by contrast, are not designed to 
power the majority of equipment. Rather, they are designed to work with 
a specific motor drive to output a special purpose voltage, unique to 
the application. As such, drive-isolation transformers with a rated 
secondary voltage of 208Y/120 or 480Y/277 is considerably more likely 
to be used in general purpose applications rather than special purpose 
applications.
    EPCA excludes from the definition of distribution transformer 
certain transformers designed to be used in an application other than a 
general-purpose application. Specifically, ``distribution transformer'' 
excludes a transformer that is ``designed to be used in a special 
purpose application and is unlikely to be used in general purpose 
applications, such as a drive transformer, rectifier transformer, auto-
transformer, Uninterruptible Power System transformer, impedance 
transformer, regulating transformer, sealed and nonventilating 
transformer, machine tool transformer, welding transformer, grounding 
transformer, or testing transformer[.]'' (42 U.S.C. 6291(35)(b)(ii))
    Drive (isolation) transformers are defined as ``a transformer that: 
(1) Isolates an electric motor from the line; (2) Accommodates the 
added loads of drive-created harmonics; and (3) Is designed to 
withstand the additional mechanical stresses resulting from an 
alternating current adjustable frequency motor drive or a direct 
current motor drive.'' 10 CFR 431.192. In the product catalogs reviewed 
by DOE, drive-isolation transformers are frequently listed at common 
motor voltages such as ``460Y/266'' and ``230Y/133.''. The listing at 
common motor voltages indicates that these drive-isolation transformers 
are designed for use in special purpose applications (i.e., isolating 
an electric motor from the line) and are unlikely to be used in general 
purpose distribution applications, on account of not aligning with 
general distribution voltages.
    DOE has previously stated that it intends to strictly and narrowly 
construe the exclusions from the definition of ``distribution 
transformer.'' 84 FR 24972, 24979 (April 27, 2009). To the extent that 
some transformers are marketed as drive-isolation transformers but with 
rated output voltages aligning with common distribution voltages, DOE 
is unable to similarly conclude that these transformers are used in 
special purpose applications. Comments by Eaton and Schneider confirm 
that while these transformers are not sold in great numbers, they are 
significantly more likely to be used in general purpose distribution 
applications. As such, DOE has tentatively determined that such 
distribution transformers are not drive (isolation) transformers as 
that term applies to the exclusions from the definition of 
``distribution transformer.''
    In order to limit the definition of drive isolation transformers to 
distribution transformers designed for use in special purpose 
applications and not likely to be used in general purpose applications, 
DOE proposes to amend the definition to include the criterion that 
drive isolation transformers have an output voltage other than 208Y/120 
or 480Y/277. DOE may consider additional voltage limitations in the 
definition of ``drive isolation transformer'' should DOE determine such 
voltages indicate a design for use in general purpose applications.
    DOE requests comment on the proposed amendment to the definition of 
drive (isolation) transformer. DOE requests comment on its tentative 
determination that voltage ratings of 208Y/120 and 480Y/277 indicate a 
design for use in general purpose applications. DOE also requests 
comment on other voltage ratings or other characteristics that would 
indicate a design for use in general purpose applications.

c. Special-Impedance Transformers

    Impedance is an electrical property that relates voltage across and 
current through a distribution transformer. It may be selected to 
balance voltage drop, overvoltage tolerance, and compatibility with 
other elements of the local electrical distribution system. A 
transformer built to operate outside of the normal impedance range for 
that transformer's kVA rating, as specified in Tables 1 and 2 of 10 CFR 
431.192 under the definition of ``special-impedance transformer,'' is 
excluded from the definition of ``distribution transformer.'' 10 CFR 
431.192.
    In the August 2021 Preliminary Analysis TSD, DOE requested feedback 
as to the number of nonstandard kVA transformers sold and how 
manufacturers are currently interpreting the normal impedance range for 
nonstandard kVA values. (August 2021 Preliminary Analysis TSD at p. 2-
8)
    NEMA and Eaton recommended that the impedance values in Tables 1 
and 2 of 10 CFR 431.192 under the definition of ``special-impedance 
transformer'' be

[[Page 1743]]

listed as a kVA range, to remove what they stated is an ambiguity as to 
the normal impedance of non-standard transformer capacities (i.e., 
capacities not explicitly included in the tables). (Eaton, No. 55 at p. 
4; NEMA, No. 50 at p. 3-4) Eaton commented that there were very few 
nonstandard kVA ratings for single-phase transformers and just under 
one percent of three-phase transformers are rated for non-standard 
kVAs. (Eaton, No. 55 at p. 4) Eaton added that nonstandard kVAs are 
quite common in the currently exempted step-up transformers, making up 
27 percent of three-phase step-up transformers. (Eaton, No. 55 at p. 4) 
Eaton stated that it currently uses the impedance values of the 
adjacent standard kVA ratings that result in the largest normal 
impedance range and, equivalently, the narrowest excluded impedance 
range. (Eaton, No. 55 at p. 5)
    NEMA commented that many, but not all, customers specify the middle 
of the normal impedance range. NEMA stated that some customers specify 
a particular impedance to compliment an application, such as for 
protection equipment or to match better with sensitive loads. (NEMA, 
No. 50 at p. 4)
    Schneider commented that it receives few requests for distribution 
transformers outside the normal impedance range and few requests for 
distribution transformers with nonstandard kVAs and therefore applied 
energy efficiency regulations to special impedance transformers without 
pursuing exemptions. (Schneider, No. 49 at p. 4) Schneider added that 
the special impedance exemption could potentially be removed, and thus 
reduce potential abuse or the normal range could be expanded for all 
distribution transformers, regardless of kVA to be from 0.5 percent to 
15 percent. (Schneider, No. 49 at p. 4) As another alternative, 
Schneider recommended either setting the mid-range impedance as a 
threshold or using a linear interpolation of the impedance values 
immediately above and below that kVA rating, similar to how efficiency 
standards are applied for non-standard kVA ratings. (Schneider, No. 49 
at p. 4-5)
    As DOE noted in the August 2021 Preliminary Analysis TSD, its 
current values for normal impedance are based on NEMA TP 2-2005. 
(August 2021 Preliminary Analysis TSD at p. 2-8) The current tables in 
the ``special-impedance transformer'' definition do not explicitly 
address how to treat nonstandard kVA values.
    DOE is proposing to amend the definition of ``special-impedance 
transformer'' to specify that ``distribution transformers with kVA 
ratings not appearing in the tables shall have their minimum normal 
impedance and maximum normal impedance determined by linear 
interpolation of the kVA and minimum and maximum impedances, 
respectively, of the values immediately above and below that kVA 
rating.''. This proposed approach is consistent with the recommendation 
from Schneider. Moreover, this approach is consistent with the approach 
specified for determining the required efficiency requirements of 
distribution transformers of nonstandard kVA rating (i.e., using a 
linear interpolation from the nearest bounding kVA values listed in the 
table). See 10 CFR 431.196.
    DOE requests comment on its proposed amendment to the definition of 
``special-impedance transformer'' and whether it provides sufficient 
clarity as to how to treat the normal impedance ranges for non-standard 
kVA distribution transformers.
    Carte commented that one of its customers requires higher impedance 
pole transformers, within the ``normal'' range, but in general the 
larger coils and higher core losses associated with a higher impedance 
can be disadvantaged in meeting efficiency standards. (Carte, No. 54 at 
p. 1)
    DOE relies on the current definition of ``special-impedance 
transformer'' in its engineering analysis. DOE does not further 
consider impedance aside from ensuring selectable models in the 
analysis are within the ``normal impedance'' range as currently 
defined. DOE's analyzed higher efficiency levels, including those using 
amorphous steel, span a range of impedance values and therefore DOE has 
not considered further separating distribution transformers based on 
impedance.
d. Tap Range of 20 Percent or More
    Transformers with multiple voltage taps, the highest of which 
equals at least 20 percent more than the lowest, computed based on the 
sum of the deviations of the voltages of these taps from the 
transformer's nominal voltage, are excluded from the definition of 
distribution transformers. 10 CFR 431.192. (See also, 42 U.S.C. 
6291(35)(B)(i)) In the August 2021 Preliminary Analysis TSD, DOE 
requested comment as to whether only full-power taps should count 
toward the exclusion and how the choice of nominal voltage would impact 
the exclusion. (August 2021 Preliminary Analysis TSD at p. 2-9)
    In response, Schneider, NEMA and Eaton commented that only full-
power taps should be permitted for tap range calculations. (Eaton, No. 
55 at pp. 5-6; Schneider, No. 49 at pp. 5-6; NEMA, No. 50 at p. 4)
    Eaton commented that nominal voltage is selected by the consumer 
but selecting one such that it excludes a product can result in 17 
percent lower costs and 73 percent higher losses at 50 percent PUL. 
(Eaton, No. 55 at p. 6) Schneider provided an example of how the 
nominal voltage can impact whether a product is subject to standards. 
(Schneider, No. 49 at p. 6) Eaton commented that of the three-phase 
units it has built, only one unit was built as having a tap range of 20 
percent or more while 112 units were built as DOE compliant but could 
be moved out of scope based on the choice of nominal voltage. (Eaton, 
No. 55 at pp. 6-7) Schneider added that another complication to using 
nominal voltage is a new type of distribution transformer that has 
multiple-nominal voltages. (Schneider, No. 49 at p. 6-8)
    Eaton supported changing how the tap range is calculated to remove 
potential incentives to circumvent standards. (Eaton, No. 55 at p. 6) 
NEMA commented that it did not reach consensus as to how to calculate 
tap range. (NEMA, No. 50 at p. 4) Schneider recommended DOE establish 
all common system voltages as nominal and have manufacturers justify 
tap ranges according to the relative function of each to the associated 
nominal in the case of multiple nominals. (Schneider, No. 49 at p. 8) 
Schneider added that if it is too difficult to establish what nominal 
should be, the 20 percent tap range exclusion could be removed. 
(Schneider, No. 49 at p. 8)
    While the traditional industry understanding of tap range is in 
percentages relative to the nominal voltage, stakeholder comments 
suggest that such a calculation can be applied differently by different 
manufacturers such that two physically identical distribution 
transformers can be inside or outside of scope depending on the choice 
of nominal voltage. To have a consistent standard for physically 
identical distribution transformers, DOE proposes to modify the 
calculation of tap range to only include full-power capacity taps and 
calculate tap range based on the transformer's maximum voltage rather 
than nominal voltage. The amended definition would classify 
transformers with tap ranges of 20 percent or more as ``a transformer 
with multiple full-power voltage taps, the highest of which equals at 
least 20 percent more than the lowest, computed based on the sum of the 
deviations of these taps from the transformer's maximum full-power 
voltage.''. Such a

[[Page 1744]]

modification would ensure that all distribution transformers capable of 
operating across a similar voltage range, regardless of what voltage is 
considered nominal, are treated equally. Further, the proposed 
modification removes ambiguity as to what customers are using as a 
nominal voltage and removes incentives to change the nominal voltage to 
move equipment into or out of scope of the standards.
    DOE requests comment on its proposed definition for transformers 
with a tap range of 20 percent or more.
e. Sealed and Nonventilated Transformers
    As discussed, the statutory definition of distribution transformer 
excludes transformers that are designed to be used in a special purpose 
application and are unlikely to be used in general purpose 
applications, such as a ``sealed and nonventilating transformers.'' (42 
U.S.C. 6291(35)(b)(ii)) In the August 2021 Preliminary Analysis TSD, 
DOE noted that the definition of sealed and nonventilating transformers 
is applicable only to dry-type transformers. While liquid-immersed 
transformers are technically also sealed, DOE has explicitly included 
them in the definition of a distribution transformer. 10 CFR 431.92. 
(August 2021 Preliminary Analysis TSD at p. 2-7)
    In response, NEMA recommended DOE add the words ``dry-type'' to the 
definition of sealed and nonventilated transformers. (NEMA, No. 50 at 
p. 3)
    DOE agrees that the proposed clarification would help clarify the 
scope of the sealed and nonventilated transformer exclusion and has 
proposed to amend the definition as such.
    DOE requests comment on its proposed amendments to the definitions 
of sealed and nonventilated transformers.
f. Step-Up Transformers
    For transformers generally, the term ``step-up'' refers to the 
function of a transformer providing greater output voltage than input 
voltage. Step-up transformers primarily service energy producing 
applications, such as solar or wind electricity generation, and input 
source voltage, step-up the voltage in the transformer, and output 
higher voltages that feed into the electric grid. The definition of 
``distribution transformer'' does not explicitly exclude transformers 
designed for step-up operation.
    However, most step-up transformers have an output voltage larger 
than the 600 V limit specified in the distribution transformer 
definition. See 10 CFR 431.192. (See also 42 U.S.C. 6291(35)(A)(ii))
    DOE has acknowledged it is technically possible to operate a step-
up transformer in a reverse manner, by connecting the high-voltage to 
the ``output'' winding of a step-up transformer and the low-voltage to 
the ``input'' winding of a step-up transformer, such that it functions 
as a distribution transformer. 78 FR 2336, 23354. However, DOE 
previously had not identified this as a widespread practice. Id. In the 
August 2021 Preliminary Analysis TSD, DOE requested feedback as to what 
the typical efficiency is of step-up transformers, what fraction are 
being used in traditional distribution transformer applications, and 
what are the typical input and output voltages of step-up transformers. 
(August 2021 Preliminary Analysis TSD at p. 2-18)
    NEMA commented that efficiency of step-up transformers is dictated 
by customers and is sometimes above and sometimes below DOE efficiency 
levels for distribution transformers. NEMA added that they are not 
aware of step-up transformers being used in distribution applications 
and they are concerned that subjecting step-up transformers to 
regulation may negatively constrain design flexibility. (NEMA, No. 50 
at p. 5)
    Eaton commented that step-up transformers are almost exclusively 
used in renewable energy applications where low-voltages (typically 
less than 700 volts) are stepped up to medium-voltage distribution 
applications (typically up to 34.5 kV). Eaton added that virtually all 
step-up transformers are three-phase and there are maybe a dozen 
single-phase step-up transformers per year which may or may not be 
possible circumvention scenarios. (Eaton, No. 55 at p. 9) Eaton 
commented that some step-up transformer customers specify total owning 
cost, maximum losses, or efficiency and provided a table of average 
efficiency of three-phase liquid-immersed step-up transformers which 
showed the average efficiency of step-up transformers tended to be 
below DOE efficiency standards. (Eaton, No. 55 at p. 9) Eaton noted 
that many solar photovoltaic inverter manufacturers have been using 
higher input voltages that often require non-standard voltages or 
winding configurations and may decrease likelihood of a step-up 
transformer being used in a distribution application. (Eaton, No. 55 at 
p. 9) Eaton stated that 31 percent of their three-phase step-up 
transformers had common distribution low-voltages, that could more 
easily be used in distribution applications, but Eaton had no knowledge 
that step-up transformers were being used in traditional distribution 
applications. (Eaton, No. 55 at p. 9) Eaton stated that step-up 
voltages with common distribution high and low-voltages could possibly 
be operated in reverse in distribution transformer applications. 
(Eaton, No. 55 at p. 9)
    The comments received support DOE's prior statements. While step-up 
transformers could, in theory, be used in distribution applications, 
DOE does not have any data to indicate that this is a common or 
widespread practice. Eaton's comments underscore that step-up 
transformers serve a separate and unique application, often in the 
renewable energy field where transformers designs may not be optimized 
for the distribution market but rather are optimized for integration 
with other equipment, such as inverters. Therefore, DOE is not 
proposing to amend the definition of ``distribution transformer'' to 
account for step-up transformers. DOE may reevaluate this conclusion in 
a future action if evidence arises to suggest step-up transformers are 
being used in distribution functions.
g. Uninterruptible Power Supply Transformers
    ``Uninterruptible power supply transformer'' is defined as a 
transformer that is used within an uninterruptible power system, which 
in turn supplies power to loads that are sensitive to power failure, 
power sags, over voltage, switching transients, line noise, and other 
power quality factors. 10 CFR 431.192. An uninterruptable power supply 
transformer is excluded from the definition of distribution 
transformer. 42 U.S.C. 6291(35)(B)(ii); 10 CFR 431.192. Such a system 
does not step-down voltage, but rather it is a component of a power 
conditioning device and it is used as part of the electric supply 
system for sensitive equipment that cannot tolerate system 
interruptions or distortions, and counteracts such irregularities. 69 
FR 45376, 45383. DOE has clarified that uninterruptable power supply 
transformers do not ``supply power to'' an uninterruptible power 
system, rather they are ``used within'' the uninterruptible power 
system. 72 FR 58190, 58204. This is consistent with the reference in 
the definition to transformers that are ``within'' the uninterruptible 
power system. 10 CFR 431.192. Distribution transformers at the input, 
output or bypass that are supplying power to the uninterruptible power 
system are not uninterruptable power supply transformers.

[[Page 1745]]

    In the August 2021 Preliminary Analysis TSD, DOE requested comment 
regarding how manufacturers are applying the definition of 
uninterruptable power supply transformer and whether amendments are 
needed. (August 2021 Preliminary Analysis TSD at p. 2-10)
    In response, NEMA commented that manufacturers are applying the 
definition appropriately and clarification is not needed. (NEMA, No. 50 
at p. 4) Schneider recommended DOE explicitly state that transformers 
at the input, output, or by-pass of an uninterruptible power system are 
not part of the uninterruptible power system and as such are not 
excluded. (Schneider, No. 49 at p. 8).
    DOE agrees that explicitly stating that transformers at the input, 
output, or bypass of a distribution transformer are not a part of the 
uninterruptable power system would further clarify the definition. As 
such, DOE is proposing to amend the definition to make these 
clarifications.
    DOE requests comment on its proposed amendment to the definition of 
uninterruptable power supply transformers.
    Carte asked if network transformers are considered uninterruptible 
power supply transformers as the network grid cannot go down. (Carte, 
No. 54 at p. 2) DOE notes that the need for a reliable operation does 
not make a distribution transformer an uninterruptible power supply 
transformer. As stated, uninterruptible power supply transformers are 
used within uninterruptable power systems as a power conditioning 
device, not as a distribution transformer.
h. Voltage Specification
    As stated, the definition of ``distribution transformer'' is based, 
in part, on the voltage capacity of equipment, i.e., has an input 
voltage of 34.5 kV or less; and has an output voltage of 600 V or less. 
10 CFR 431.192. (42 U.S.C. 6291(35)(A)) Three-phase distribution 
transformer voltage may be described as either ``line'', i.e., measured 
across two lines, or ``phase'', i.e., measured across one line and the 
neutral conductor. For delta-connected \37\ distribution transformers, 
line and phase voltages are equal. For wye-connected distribution 
transformers, line voltage is equal to phase voltage multiplied by the 
square root of three.
---------------------------------------------------------------------------

    \37\ Delta connection refers to three distribution transformer 
terminals, each one connected to two power phases.
---------------------------------------------------------------------------

    DOE notes that it has previously stated that the definition of 
distribution transformer applies to transformers having an output 
voltage of 600 volts or less, not having only an output voltage of less 
than 600 volts. 78 FR 23336, 23353. For example, a three-phase 
transformer for which the wye connection is at or below 600 volts, but 
the delta connection is above 600 volts would satisfy the output 
criteria of the distribution transformer definition. DOE's test 
procedure requires that the measured efficiency for the purpose of 
determining compliance be based on testing in the configuration that 
produces the greatest losses, regardless of whether that configuration 
alone would have placed the transformer at-large within the scope of 
coverage. Id. Similarly with input voltages, a transformer is subject 
to standards if either the ``line'' or ``phase'' voltages fall within 
the voltage limits in the definition of distribution transformers, so 
long as the other requirements of the definition are also met. Id.
    Eaton commented that DOE flipped the usage of wye and delta in its 
example where one voltage complies and the other does not because wye 
voltage should be less than delta voltage. (Eaton, No. 55 at p. 8) DOE 
has updated its language above to correct this.
    Schneider commented that the industry interpretation of input and 
output voltage is likely line voltage but using phase encompasses a 
larger scope and DOE should clarify in the regulatory text. (Schneider, 
No. 49 at p. 8) NEMA commented that DOE should clarify the 
interpretation of voltage in the regulatory text. (NEMA, No. 50 at p. 
4) Eaton commented that using phase voltage would deviate from industry 
convention, but if DOE is choosing to interpret language this way, it 
should explicitly say so in the regulatory text. (Eaton, No. 55 at pp. 
7-8)
    DOE notes that the voltage limits in the definition of distribution 
transformer established in EPCA do not specify whether line or phase 
voltage is to be used. 42 U.S.C. 6291(35). DOE has previously stated 
that a distribution transformer is required to comply if either line or 
phase voltage is within the scope of the distribution transformer 
definition. 78 FR 23336, 23353. Upon further evaluation, DOE notes that 
the distribution transformer input voltage limitation aligns with the 
common maximum distribution circuit voltage of 34.5 kV.38 39 
This common distribution voltage aligns with the distribution line 
voltage and implies that the intended definition of distribution 
transformer in EPCA was to specify the input and output voltages based 
on the line voltage. DOE has tentatively determined that applying the 
phase voltage, as DOE cited in the April 2013 Standards Final Rule, 
would cover products not traditionally understood to be distribution 
transformers and not intended to be within the scope of distribution 
transformer as defined by EPCA. For example, a transformer with a line 
voltage of 46 kV, which is commonly considered in industry to be a 
subtransmission voltage (i.e., higher than a distribution voltage), 
would have a phase voltage less than 34.5 kV if sold in a wye-
connection. Despite this transformer not being considered a 
distribution transformer by industry, interpreting DOE's definition as 
either a line or phase voltage would mean that a 46 kV wye-connection 
is considered a distribution transformer. As noted by stakeholders, 
such an interpretation would be out of step with common industry 
practice and out of step with the intended coverage of EPCA.
---------------------------------------------------------------------------

    \38\ Pacific Northwest National Lab and U.S. Department of 
Energy (2016), ``Electricity Distribution System Baseline Report.'', 
p. 27. Available at www.energy.gov/sites/prod/files/2017/01/f34/Electricity%20Distribution%20System%20Baseline%20Report.pdf.
    \39\ U.S. Department of Energy (2015), ``United States 
Electricity Industry Primer.'' Available at www.energy.gov/sites/prod/files/2015/12/f28/united-states-electricity-industry-primer.pdf.
---------------------------------------------------------------------------

    DOE notes that the common distribution transformer voltages have 
both line and phase voltages that are within DOE's scope, and therefore 
the proposed change is not expected to impact the scope of this 
rulemaking aside from select, unique transformers with uncommon 
voltages. In this NOPR, DOE is proposing to modify the definition of 
distribution transformer to state explicitly that the input and output 
voltage limits are based on the ``line'' voltage and not the phase 
voltage. This amendment, while a slight reinterpretation relative to 
the April 2013 Standards Final Rule, better aligns with industry 
practice, minimizes confusion, and does not impact any of the commonly 
built distribution transformer designs.
    DOE requests comment as to whether its proposed definition better 
aligns with industries understanding on input and output voltages.
    Further, DOE requests comment and data on whether the proposed 
amendment would impact products that are serving distribution 
applications, and if so, the number of distribution transformers 
impacted by the proposed amendment.

[[Page 1746]]

i. kVA Range
    The EPCA definition for distribution transformers does not include 
any capacity range. In codifying the current distribution transformer 
capacity ranges in 10 CFR 431.192, DOE noted that distribution 
transformers outside of these ranges are not typically used for 
electricity distribution. 71 FR 24972, 24975-24976. Further, DOE noted 
that transformer capacity is to some extent tied to its primary and 
secondary voltages, meaning that the EPCA definitions has the practical 
effect of limiting the maximum capacity of transformers that meet those 
voltage limitations to approximately 3,750 to 5,000 kVA, or possibly 
slightly higher. Id. However, DOE further stated the inclusion of 
capacity limitations in the definition of ``distribution transformers'' 
in 10 CFR 431.192 does not mean that DOE has concluded that the EPCA 
definition of ``distribution transformer'' includes such limitations 
and stated that DOE intends to evaluate larger and smaller capacities 
than those included in the definition. Id.
    DOE's current definition of distribution transformer specifies a 
capacity of 10 kVA to 2,500 kVA for liquid-immersed units and 15 kVA to 
2,500 kVA for dry-type units. 10 CFR 431.192. The kVA ranges are 
consistent with NEMA publications in place at the time DOE adopted the 
range, specifically NEMA TP-1 standard. 78 FR 23336, 23352. DOE cited 
these documents as evidence that its kVA scope is consistent with 
industry understanding (i.e., NEMA TP-1 and NEMA TP-2), but noted that 
it may revise its understanding in the future as the market evolves. 78 
FR 23336, 23352. Subsequent to the April 2013 Standards Final Rule, 
establishing the current energy conservation standards, NEMA TP-1 
standard was rescinded.
    As noted above, the voltage limitations included in EPCA 
practically limit the size of distribution transformers. However, 
several industry sources suggest that those limitations may be greater 
than the current 2,500 kVA limit included in DOE's definition in 10 CFR 
431.192. For example, Natural Resources Canada (``NRCAN'') regulations 
include three-phase dry-type distribution transformers with a nominal 
power of 15 to 7,500 kVA.\40\ The European Union (``EU'') Ecodesign 
requirements specify maximum load losses and maximum no-load losses for 
three-phase liquid-immersed distribution transformers up to 3,150 
kVA.\41\ IEEE C57.12.90 and C57.12.91 cite similar short circuit tests 
for three-phase distribution transformers up to 5,000 kVA.
---------------------------------------------------------------------------

    \40\ See NRCAN dry-type transformer energy efficiency 
regulations at www.nrcan.gc.ca/energy-efficiency/energy-efficiency-regulations/guide-canadas-energy-efficiency-regulations/dry-type-transformers/6875.
    \41\ Official Journal of the European Union, Commission 
Regulation (EU) No. 548/2014, May 21, 2014, Available online at: 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2014.152.01.0001.01.ENG.
---------------------------------------------------------------------------

    In the August 2021 Preliminary Analysis TSD, DOE requested comment 
regarding the quantity and efficiency of distribution transformers 
outside of the kVA range of the definition of distribution transformer 
but with input and output voltages that meet the voltage criteria in 
said definition. (August 2021 Preliminary Analysis TSD at p. 2-11)
    Regarding dry-type distribution transformers, Schneider commented 
that units below 15 kVA are typically sealed or non-ventilated and as 
such would be excluded from the definition of distribution 
transformers. (Schneider, No. 49 at p. 9) Eaton commented that single-
phase liquid immersed distribution transformers less than 10 kVA were 
less than 1 percent of shipments. (Eaton, No. 55 at p. 8)
    DOE has not received any data or information suggesting that 
expanding the scope of the standards below 10 kVA for liquid-immersed 
distribution transformers or below 15 kVA for dry-type distribution 
transformers would lead to significant energy savings. As such, DOE is 
not proposing any changes to the lower capacity limit in the 
distribution transformer definition.
    Regarding sales of distribution transformers beyond the 2,500 kVA 
scope, NEMA commented that while there are sales of models over 2,500 
kVA, they are not sold in significant numbers as compared to in-scope 
products and energy savings would be limited. (NEMA, No. 50 at p. 5) 
Eaton commented that 19.6 percent of their three-phase liquid-immersed 
transformers have input and output voltage in-scope, but kVAs above 
2500 kVA. (Eaton, No. 55 at p. 8) Eaton provided average efficiencies 
for these larger kVA distribution transformers. (Eaton, No. 55 at p. 8) 
In interviews, manufacturers commented that many of the larger 
distribution transformers are serving renewable applications as step-up 
transformers and would therefore be outside the scope of the standards 
regardless of the upper capacity of the definition of distribution 
transformer.
    However, while many larger transformers may be step-up 
transformers, stakeholder comments suggest that there are also general 
purpose distribution transformers sold above 2,500 kVA with primary and 
secondary voltages that would still be within the criteria of the 
definition of distribution transformer. While NEMA suggested sales of 
models above 2,500 kVA are small, Eaton's comments suggest that at 
least for some manufacturers or markets they could be notable. Further, 
some manufacturers in interviews expressed concern that in the presence 
of amended energy conservation standards, there may be increased 
incentive to build distribution transformers that are just above the 
existing scope (e.g., 2,501 kVA).
    As such, it is appropriate for DOE to consider all distribution 
transformers that are serving general purpose distribution 
applications, even if the capacity of those distribution transformers 
is larger than the common unit. DOE is considering multiple possible 
upper limits for distribution transformer capacity. IEEE C57.12.00-2015 
lists the next three preferred continuous kVA ratings above 2,500 kVA 
as 3,750 kVA, 5,000 kVA, and 7,500 kVA. Eaton's comments suggest that 
the upper end of their distribution capacity is 3,750 kVA. In a prior 
rulemaking, stakeholders commented that their product lines include 
medium voltage dry-type models up to around 5,000 kVA.\42\ Further, 
NRCAN regulations cover dry-type distribution transformers up to 7,500 
kVA but exclude distribution transformers with low-voltage line 
currents of 4,000 amps or more.
---------------------------------------------------------------------------

    \42\ See Federal Pacific comment on Docket No. EERE-2006-STD-
0099-0105. Available at www.regulations.gov/comment/EERE-2006-STD-0099-0105.
---------------------------------------------------------------------------

    Taken together, these points suggest there are some sales of 
general purpose distribution transformers above 2,500 kVA, such as at 
3,750 kVA and 5,000kVA. DOE does not have any data or evidence that 
general purpose distribution transformers are being sold above 5,000 
kVA and does have prior public comment of 5,000 kVA transformers with 
distribution voltages being sold. Therefore, DOE is proposing to expand 
the scope of the definition of ``distribution transformer'' in 10 CFR 
431.192 for both liquid-immersed distribution transformers and dry-type 
distribution transformers to include distribution transformers up to 
5,000 kVA. DOE is also considering other upper limits on the scope of 
distribution transformer, including 3,750 kVA and 7,500 kVA.
    DOE requests comment and data as to whether 5,000 kVA represents 
the upper end of what is considered distribution

[[Page 1747]]

transformers or if another value should be used.
    DOE has also estimated potential energy savings associated with 
expanding coverage of distribution transformers between 2,500 and 5,000 
kVA within scope. DOE relied on public comments and confidential data 
sources to estimate shipments between 2,500 kVA and 5,000 kVA. Further, 
DOE has scaled its engineering analysis to encompass these larger 
units. Although the number of units shipped is estimated to represent a 
fraction of a percentage of total covered shipments, DOE has designed 
these scaled models as new representative units on account of starting 
from an unregulated baseline, as compared to the rest of the market, 
for which the baseline transformer complies with existing energy 
conservation standards. For liquid-immersed distribution transformers, 
representative unit 17 corresponds to a three-phase 3,750 kVA unit. For 
medium-voltage dry-type distribution transformers, representative units 
18 and 19 correspond to a three-phase 3,750 kVA unit with a BIL of 46-
95 kV and greater than 96 kV, respectively.
    DOE has estimated the distribution transformer efficiency by 
assuming these out-of-scope units are purchased based on lowest first 
cost and would rely on similar grades of electrical steel as the 
distribution transformers that are currently in-scope units but would 
not currently be meeting any efficiency standard.
    DOE requests comment and data as to the number of shipments of 
three-phase, liquid-immersed, distribution transformers greater than 
2,500 kVA that would meet the in-scope voltage limitations and the 
distribution of efficiencies of those units.
    DOE requests comment and data as to the number of shipments of 
three-phase, dry-type, distribution transformers greater than 2,500 kVA 
that would meet the in-scope voltage limitations and the distribution 
of efficiencies of those units.
2. Equipment Classes
    DOE must specify a different standard level for a type or class of 
product that has the same function or intended use, if DOE determines 
that products within such group: (A) consume a different kind of energy 
from that consumed by other covered products within such type (or 
class); or (B) have a capacity or other performance-related feature 
which other products within such type (or class) do not have and such 
feature justifies a higher or lower standard. (42 U.S.C. 6316(a); 42 
U.S.C. 6295(q)(1)) In determining whether a performance-related feature 
justifies a different standard for a group of products, DOE must 
consider such factors as the utility to the consumer of the feature and 
other factors DOE deems appropriate. Id. Any rule prescribing such a 
standard must include an explanation of the basis on which such higher 
or lower level was established. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(q)(2))
    Eleven equipment classes are established under the existing 
standards for distribution transformers, one of which (mining 
transformers \43\) is not subject to energy conservation standards. 10 
CFR 431.196. The remaining ten equipment classes are delineated 
according to the following characteristics: (1) Type of transformer 
insulation: Liquid-immersed or dry-type, (2) Number of phases: single 
or three, (3) Voltage class: low or medium (for dry-type only), and (4) 
Basic impulse insulation level (BIL) (for MVDT only).
---------------------------------------------------------------------------

    \43\ A mining distribution transformer is a medium-voltage dry-
type distribution transformer that is built only for installation in 
an underground mine or surface mine, inside equipment for use in an 
underground mine or surface mine, on-board equipment for use in an 
underground mine or surface mine, or for equipment used for digging, 
drilling, or tunneling underground or above ground, and that has a 
nameplate which identifies the transformer as being for this use 
only. 10 CFR 431.192.
---------------------------------------------------------------------------

    Table II.1 presents the eleven equipment classes that exist in the 
current energy conservation standards and provides the kVA range 
associated with each.

                       Table IV.1--Current Equipment Classes for Distribution Transformers
----------------------------------------------------------------------------------------------------------------
      EC * #            Insulation          Voltage             Phase            BIL rating         kVA range
----------------------------------------------------------------------------------------------------------------
EC1...............  Liquid-Immersed..  Medium...........  Single...........  .................  10-833 kVA
EC2...............  Liquid-Immersed..  Medium...........  Three............  .................  15-2500 kVA
EC3...............  Dry-Type.........  Low..............  Single...........  .................  15-333 kVA
EC4...............  Dry-Type.........  Low..............  Three............  .................  15-1000 kVA
EC5...............  Dry-Type.........  Medium...........  Single...........  20-45 kV BIL.....  15-833 kVA
EC6...............  Dry-Type.........  Medium...........  Three............  20-45 kV BIL.....  15-2500 kVA
EC7...............  Dry-Type.........  Medium...........  Single...........  46-95 kV BIL.....  15-833 kVA
EC8...............  Dry-Type.........  Medium...........  Three............  46-95 kV BIL.....  15-2500 kVA
EC9...............  Dry-Type.........  Medium...........  Single...........  >=96 kV BIL......  75-833 kVA
EC10..............  Dry-Type.........  Medium...........  Three............  >=96 kV BIL......  225-2500 kVA
                   ---------------------------------------------------------------------------------------------
EC11..............                                       Mining Transformers
----------------------------------------------------------------------------------------------------------------
* EC = Equipment Class.

    In the August 2021 Preliminary Analysis TSD, DOE requested comment 
on a variety of other potential equipment setting factors. (August 2021 
Preliminary Analysis TSD at p. 2-16-22) These comments are discussed in 
detail below.

a. Pole- and Pad-Mounted Transformers

    DOE currently does not divide pole- and pad-mounted distribution 
transformers into separate equipment classes. In the August 2021 
Preliminary Analysis TSD, DOE requested comment and data to 
characterize the effect of mounting configuration on distribution 
transformer efficiency, weight, volume, and likelihood of introducing 
ferroresonace.\44\ (August 2021 Preliminary Analysis TSD at p. 2-19)
---------------------------------------------------------------------------

    \44\ Ferroresonance refers to the nonlinear resonance resulting 
from the interaction of system capacitive and inductive elements 
which can lead to damaging high voltages in distribution 
transformers. Pad-mounted distribution transformers that are delta-
connected are particularly susceptible to ferroresonance effects.
---------------------------------------------------------------------------

    Eaton commented that ferroresonance is rare and only occurs in pad 
mounted transformers. (Eaton, No. 55 at pp. 9-10) Eaton added that 
ferroresonance is more likely to occur in low no-load loss cores, and 
commented that these effects can be mitigated with certain core designs 
that are slightly less efficient. (Eaton, No. 55

[[Page 1748]]

at pp. 9-10) Eaton added that it has produced thousands of low-loss 5-
leg distribution transformers and is unaware of a single occurrence of 
ferroresonace. (Eaton, No. 55 at pp. 9-10)
    DOE did not receive any data suggesting that pole- and pad-mounted 
distribution transformers warrant separate equipment classes. As such, 
DOE has not proposed to amend the current equipment class structure for 
pole- and pad-mounted distribution transformers. Further, DOE includes 
both pole- and pad-mounted representative units in its engineering 
analysis.
b. Submersible Transformers
    Certain distribution transformers are installed underground and, 
accordingly, may endure partial or total immersion in water. This 
scenario commonly arises for distribution transformers installed in 
chambers called ``vaults'', which are commonly made of concrete. Access 
is typically, but not always, through an opening in the top 
(``ceiling'') face of the vault, through which the distribution 
transformer can be lowered for installation or replacement.
    ``Submersible'', ``network'' and ``vault-based'' are three 
attributes that often all apply to a particular distribution 
transformer unit, but which carry distinct meanings. Informally, 
``submersible'' refers to ability to operate while submerged, 
``network'' refers to ability to operate as part of a network of 
interconnected secondary windings as most typically occurs in urban 
environments, and ``vault-based'' refers to siting within a vault, 
which may be but is not necessarily below grade. A given distribution 
transformer, for example, may be installed within an above-grade vault 
but not rated as submersible. Similarly, a particular network 
distribution transformer may happen to be installed within a vault, but 
able to operate as well outside of a vault.
    In the April 2013 Standards Final Rule, DOE included additional 
costs for vault replacements in the LCC analysis but noted there was no 
technical barrier that prevents network, vault-based and submersible 
distribution transformers from achieving the same efficiency levels as 
other liquid-immersed distribution transformers. 78 FR 23336, 23356-
23357. In the August 2021 Preliminary Analysis TSD, DOE preliminarily 
stated that it would take a similar approach in applying the costs of 
vault enlargement as a function of increased distribution transformer 
volume for RU4 and RU5. (August 2021 Preliminary Analysis TSD at p. 2-
89) DOE requested comment on some of the options a customer is likely 
to explore before incurring the cost of vault expansion, such as using 
a lower-loss core steel, copper windings, or a less-flammable 
insulating fluid. (August 2021 Preliminary Analysis TSD at p. 2-20)
    NEMA commented that when trying to fit into a given space, copper 
windings may allow for a 20 percent size reduction relative to aluminum 
and higher-grade core steels can help, but it is still sometimes very 
difficult to reduce footprint while meeting standards. (NEMA, No. 50 at 
p. 6) Carte requested an exclusion for retro fit designs. (Carte, No. 
54 at p. 2)
    Carte commented that most network transformers are lightly loaded 
but redundancy is quite important and as such many customers require 
high overload capabilities. (Carte, No. 54 at p. 1) Carte added that in 
certain applications, with limited space, there is reduced cooling 
which forces manufacturers to lower load loss at the expense of core 
loss to maintain reliable operation. (Carte, No. 54 at pp. 1-2) EEI 
recommended DOE include a separate product class for vault 
transformers. (EEI, No. 56 at p. 3)
    As discussed, EPCA requires that a rule prescribing an energy 
conservation standard for a type of covered equipment specify a level 
of energy use or efficiency higher or lower than that which applies (or 
would apply) to any group of covered equipment that has the same 
function or intended use, if the Secretary determines that covered 
equipment within such group:
    (A) Consume a different kind of energy from that consumed by other 
covered products within such type (or class); or
    (B) Have a capacity or other performance-related feature that other 
products within such type (or class) do not have and such feature 
justifies a higher or lower standard from that which applies (or will 
apply) to other products within such type (or class).

(42 U.S.C. 6313(a); 42 U.S.C. 6295(q)(1))

    In making a determination of whether a performance-related feature 
justifies the establishment of a higher or lower standard, the 
Secretary must consider such factors as the utility to the consumer of 
such a feature, and such other factors as the Secretary deems 
appropriate. Id.
    As noted, DOE previously determined there was no technical barrier 
to vault distribution transformers achieving similar efficiency 
standards as other similar distribution transformers. To the extent 
significant costs arise for more-efficient units, they are generally 
installation costs (i.e., expanding the size of the vault in which the 
distribution transformer is installed). Installation costs are 
addressed in the LCC and PBP analyses, as well as in consumer subgroup-
specific analyses. These analyses account for the cost of difficult 
(i.e., unusually costly) installations, including those subgroups of 
the population that may be differentially impacted by DOE's 
consideration of amended energy conservation standards (see section 
IV.I.2 of this document).
    Review of comments and the equipment market indicates that certain 
vault-based distribution transformers also are designed to operate in 
submersible applications. Because many vaults are subterranean, 
distribution transformers installed in such locations often require 
ability to operate while submerged. Installation below grade makes more 
likely that distribution transformers may operate while submerged in 
water and with other run-off debris. Distribution transformers for 
installation in such environments are designed to withstand harsh 
conditions, including corrosion.
    The subterranean installation of submersible distribution 
transformers means that there is less circulation of ambient air for 
shedding heat. Operation while submerged in water and in contact with 
run-off debris, further impacts the ability of a distribution 
transformer to transfer heat to the environment and limits the 
alternative approaches in the external environment that can be used to 
increase cooling.
    With respect to heat transfer, the industry standards governing 
submersible distribution transformers, i.e., IEEE C57.12.23-2018 and 
C57.12.24-2016, specify that submersible distribution transformers, 
amongst other requirements, have their capacity rated for a maximum 
temperature rise of 55[deg]C but have their insulation be rated for 
65[deg]C. IEEE C57.12.80-2010 defines submersible distribution 
transformer as ``a transformer so constructed as to be successfully 
operable when submerged in water under predetermined conditions of 
pressure and time.''
    Distribution transformer temperature rise tends to be governed by 
load losses. Often, design options that reduce load losses, increase 
no-load losses. While no-load losses make up a relatively small portion 
of losses at full load, no-load losses contribute approximately equally 
to load losses at 50 percent PUL, at which manufacturers must certify 
efficiency. The potentially reduced heat transfer of the subterranean

[[Page 1749]]

environment, combined with the possibility of operating while 
submerged, limits customers from meeting the temperature rise 
limitations through any choice other than reducing load losses. 
Therefore, the design choices needed to meet a lower temperature rise, 
may tend to lead manufacturers to increase no-load losses and may make 
it more difficult to meet a given efficiency standard at 50 percent 
PUL.
    DOE recognizes that distribution transformers other than those 
designed for submersible operation may be derated (rated for a lower 
temperature rise) for other reasons, such as installation in ambient 
temperatures over 40[deg]C, greater harmonic currents, or installation 
at altitudes above 1000 meters. However, the ability to improve the 
efficiency of such distribution transformers is not similarly limited 
as submersible distribution transformers because other options exist 
for distribution transformers above grade that would not be feasible in 
submerged environments, namely the ability to increase heat transfer, 
often with some additional cost, as opposed to only options that 
increase a distribution transformer's no-load losses. For example, 
distribution transformers installed above grade may be able to have 
more air circulation through radiators, improving the efficiency of 
radiators to shed heat, or adding external forced air cooling on a 
distribution transformer radiator, whereas such a measure would not be 
able to function as intended in a submerged environment.
    Based on the foregoing discussion, DOE has tentatively determined 
that distribution transformers designed to operate while submerged and 
in contact with run-off debris have a performance-related feature which 
other types of distribution transformers do not have. While at max-tech 
efficiency levels both no-load and load losses are so low that 
distribution transformers generally do not meet their rated temperature 
rise, at intermediate efficiency levels, trading load losses for no-
load losses allows distribution transformers to be rated for a lower 
temperature rise, however, it also may make it more difficult to meet 
any amended efficiency standard as no-load losses contribute 
proportionally more to efficiency at the test procedure PUL as compared 
to rated temperature rise. Therefore, DOE is proposing that providing 
for operation in installation locations at which the units are 
partially or wholly submerged in water justifies a different standard 
on account of the additional constraint which forces manufacturers to 
trade load losses for no-load losses. DOE has modeled the derating of 
these distribution transformers and the associated costs associated 
with these submersible distribution transformers, as described in 
section IV.C.1 of this document.
    In proposing separate equipment classes, DOE relies on physical 
features to distinguish one product class from another. While the IEEE 
definition of ``submersible transformer'' described how a submersible 
distribution transformer should perform, it does not include specific 
physical features that would allow DOE to identify submersible 
transformers from other general purpose distribution transformers. In 
reviewing industry standards, DOE notes that submersible distribution 
transformers are rated for a temperature rise of 55[deg]C, have 
insulation rated for 65[deg]C, have sealed-tank construction, and have 
the tank, cover, and all external appurtenances be made of corrosion-
resistant material. Consistent with industry practice, DOE is proposing 
to define submersible distribution transformer as ``a liquid-immersed 
distribution transformer so constructed as to be successfully operable 
when submerged in water including the following features: (1) is rated 
for a temperature rise of 55[deg]C; (2) has insulation rated for a 
temperature rise of 65[deg]C; (3) has sealed-tank construction; and (4) 
has the tank, cover, and all external appurtenances made of corrosion-
resistant material.''
    DOE notes that IEEE C57.12.80-2010 defines several other types of 
distribution transformers that would potentially also meet the proposed 
definition of ``submersible distribution transformer.'' IEEE C57.12.80-
2010 defines ``vault-type transformer'' as ``a transformer that is so 
constructed as to be suitable for occasional submerged operation in 
water under specified conditions of time and external pressure.'' 
Similarly, IEEE C57.12.80-2010 defines ``network transformer'' as ``a 
transformer designed for use in a vault to feed a variable capacity 
system of interconnected secondaries,'' and states that ``a network 
transformer may be of the submersible or of the vault type.'' To the 
extent network and vault-type distribution transformers were to meet 
the proposed definition of submersible distribution transformer, they 
would be included in the submersible distribution transformer equipment 
class.
    DOE requests comment on its understanding and proposed definition 
of ``submersible'' distribution transformer. Specifically, DOE requests 
information on specific design characteristics of distribution 
transformers that allow them to operate while submerged in water, as 
well as data on the impact to efficiency resulting from such 
characteristics.
    DOE requests comment and data as to the impact that submersible 
characteristics have on distribution transformer efficiency.
c. Multi-Voltage-Capable Distribution Transformers
    DOE's test procedure section 5.0 of appendix A requires determining 
the efficiency of multi-voltage-capable distribution transformers in 
the configuration in which the highest losses occur. In the August 2021 
Preliminary Analysis TSD, DOE acknowledged that certain multi-voltage 
distribution transformers, particularly non-integer ratio \45\ 
distribution transformers could have a harder time meeting an amended 
efficiency standard as it results in an unused portion of a winding 
when testing in the highest losses configuration and therefore reduces 
the measured efficiency. (August 2021 Preliminary Analysis TSD at p. 2-
21) DOE requested comment on the difference in losses associated with 
multi-voltage distribution transformers. (August 2021 Preliminary 
Analysis TSD at p. 2-21)
---------------------------------------------------------------------------

    \45\ For example, a primary winding low voltage configuration of 
7200 V and a primary winding high voltage configuration of 14400 V 
represents a 2 times increase in voltage. Whereas a primary winding 
low voltage configuration of 7200 V and a primary winding high 
voltage configuration of 13200 V represents a non-integer increase 
in voltage leaving some portion of the coil unused.
---------------------------------------------------------------------------

    Schneider commented that the higher nominal voltage tends to be 
more efficient, but the degree of increased losses depends on the kVA 
and difference between nominal voltages. (Schneider, No. 49 at p. 9) 
Schneider commented that the challenge for DOE is ensuring 
manufacturers are testing in worst case conditions and recommended DOE 
require manufacturers to identify these transformers and/or requiring 
on the distribution transformer nameplate. (Schneider, No. 49 at pp. 
10-12) Schneider recommended DOE audit these multi-voltage designs to 
ensure they are testing under proper conditions. (Schneider No. 49 at 
pp. 12-13) Schneider expanded that these products should not have a 
separate equipment class but should be audited by DOE. (Schneider, No. 
49 at p. 13)
    Schneider's data indicates that the degree of coil loss increase 
associated with multi-voltage secondary distribution transformers 
ranges from 3.7 percent to 10.8 percent of full-load coil losses. 
(Schneider No. 49 at p. 10)

[[Page 1750]]

DOE notes that each efficiency level considered offers a range of no-
load and load loss combinations for meeting efficiency levels. While a 
multi-voltage transformer may require manufacturers to invest more in 
reducing no-load loss relative to a similar single voltage transformer, 
it would generally still be able to serve those customers' needs that 
request a multi-voltage distribution transformer.
    ERMCO and NEMA acknowledged that some multi-voltage units may have 
a harder time achieving efficiency standards but did not provide a 
recommendation as to how to treat them. (ERMCO, No. 45 at p. 1; NEMA, 
No. 50 at p. 6) Eaton commented that transformers with multiple voltage 
rating and non-whole integer ratings have unused turns and require 
additional space in the core window leading to higher losses. (Eaton, 
No. 55 at p. 12) Carte identified emergency use distribution 
transformers which have multiple high voltages and low voltages and can 
be used anywhere in a system until a proper replacement is added, and 
asked how standards apply to them. (Carte, No. 54 at p. 2)
    As discussed, EPCA requires that a rule prescribing an energy 
conservation standard for a type of covered equipment specify a level 
of energy use or efficiency higher or lower than that which applies (or 
would apply) to any group of covered equipment that has the same 
function or intended use, if the Secretary determines that covered 
equipment within such group:
    (A) Consume a different kind of energy from that consumed by other 
covered products within such type (or class); or
    (B) Have a capacity or other performance-related feature that other 
products within such type (or class) do not have and such feature 
justifies a higher or lower standard from that which applies (or will 
apply) to other products within such type (or class).

(42 U.S.C. 6313(a); 42 U.S.C. 6295(q)(1))

    In making a determination of whether a performance-related feature 
justifies the establishment of a higher or lower standard, the 
Secretary must consider such factors as the utility to the consumer of 
such a feature, and such other factors as the Secretary deems 
appropriate. Id.
    DOE acknowledges that multi-voltage distribution transformers, 
specifically those with non-integer ratios, offer the performance 
feature of being able to be installed in multiple locations within the 
grid (such as in emergency applications) and easily upgrade grid 
voltages without replacing a distribution transformer. These 
transformers are often used in upgrading distribution line voltages and 
as such when the distribution line voltage is upgraded, these 
distribution transformers would have greater efficiency than their 
certified efficiency. These distribution transformers have additional, 
unused winding turns when operated at their lower voltage which 
increase losses. However, once the distribution grid has been increased 
to the higher voltage, the entire winding will be used, increasing the 
efficiency of the product. However, DOE lacks data as to the degree of 
no-load loss and load loss increase associated with transitioning from 
a single primary and secondary voltage distribution transformer to a 
multi-voltage distribution transformer.
    DOE notes that the NRCAN regulations specify that ``For a three-
phase transformer having multiple high-voltage windings and a voltage 
ratio other than 2:1, the minimum energy efficiency standard from the 
table or interpolated is reduced by 0.11.'' Similarly, EU regulations 
permit between a 10 to 20 percent increase in load losses for dual 
voltage transformers and between 15 and 20 percent increase in no-load 
losses, depending on the type of dual voltage.
    Schneider commented that multi-voltage transformers do not need a 
lesser standard as it is a manufacturers choice to produce them. 
(Schneider, No. 49 at p. 10) Schneider added that they have many non-
integer multi-voltage ratios offered and do not believe it is necessary 
to create a new class for these products. (Schneider, No. 49 at p. 10)
    Stakeholder comments suggest that the difference in voltages 
associated with multi-voltage distribution transformers is relatively 
small. Further, technologies that increase the efficiency of single-
voltage distribution transformers also increase the efficiency of 
multi-voltage distribution transformers. For these reasons, DOE has not 
proposed a separate equipment class for multi-voltage-capable 
distribution transformers with a voltage ratio other than 2:1.
    However, DOE may consider a separate product class if sufficient 
data is provided to demonstrate that these distribution transformers 
justify a different energy conservation standard. DOE notes that these 
distribution transformers would not be permitted to have a lesser 
standard than currently applicable to them on account of EPCA's anti-
backsliding provisions at 42 U.S.C. 6295(o).
    DOE requests data on the difference in load loss by kVA for 
distribution transformers with multiple-voltage ratings and a voltage 
ratio other than 2:1.
    DOE request data on the number of shipments for each equipment 
class of distribution transformers with multi-voltage ratios other than 
2:1.
d. High-Current Distribution Transformers
    Carte commented that low secondary voltages with high currents can 
increase the cost and weight of a distribution transformer and may 
require switching to copper. (Carte, No. 54 at p. 1) NEMA commented 
that new production machines may be needed for certain winding 
configurations near technical limits, such as large kVA distribution 
transformers with 208 voltage secondaries. (NEMA, No. 50 at p. 10) 
Eaton commented that lower voltage windings have higher currents which 
may require rectangular conductors and can make winding more 
complicated. (Eaton, No. 55 at p. 12) Eaton added that at some sizes, 
the conductor becomes too thick to be used in a transformer. (Eaton, 
No. 55 at p. 12) NEMA commented that these designs are on the cusp of 
max-tech today. (NEMA, No. 50 at p. 10)
    Distribution transformers with high currents tend to have increased 
stray losses which can impact the efficiency of distribution 
transformers. NEMA cited a 2,000 kVA design with a 208V secondary where 
buss losses contribute approximately 12 percent to the full load losses 
of the transformer. (NEMA, No. 50 at p. 5) DOE notes that NRCAN 
regulations exclude transformers with a nominal low-voltage line 
current of 4000 A or more. In general, this amperage limitation would 
impact large distribution transformers with low-voltage secondary 
windings.
    DOE notes that in high-current applications, while stray losses may 
be slightly higher, manufacturers have the option to use copper 
secondaries to decrease load losses or a copper buss bar. Technologies 
that increase the efficiency of lower-current distribution transformers 
also increase the efficiency of high-current distribution transformers. 
To the extent new production machines would be needed to accommodate 
the increased strip widths associated with high-current distribution 
transformers, those would be accounted for in the manufacturer impact 
analysis. For these reasons, DOE has not proposed a separate equipment 
class for high-current distribution transformers.
    However, DOE may consider a separate product class if sufficient 
data is provided to demonstrate that high-current distribution 
transformers justify

[[Page 1751]]

a different energy conservation standard. DOE notes that these 
distribution transformers would not be permitted to have a lesser 
standard than currently applicable to them on account of EPCA's anti-
backsliding provisions at 42 U.S.C. 6295(o).
    DOE requests data on the difference in load loss by kVA for 
distribution transformers with higher currents and at what current it 
becomes more difficult to meet energy conservation standards.
    DOE requests data as to the number of shipments of distribution 
transformers with the higher currents that would have a more difficult 
time meeting energy conservation standards.
e. Data Center Distribution Transformer
    In the April 2013 Standard Final Rule, DOE considered a separate 
equipment class for data center distribution transformers, defined as 
the following:
    ``i. Data center transformer means a three-phase low-voltage dry-
type distribution transformer that--
    (i) Is designed for use in a data center distribution system and 
has a nameplate identifying the transformer as being for this use only;
    (ii) Has a maximum peak energizing current (or in-rush current) 
less than or equal to four times its rated full load current multiplied 
by the square root of 2, as measured under the following conditions--
    1. During energizing of the transformer without external devices 
attached to the transformer that can reduce inrush current;
    2. The transformer shall be energized at zero +/-3 degrees voltage 
crossing of a phase. Five consecutive energizing tests shall be 
performed with peak inrush current magnitudes of all phases recorded in 
every test. The maximum peak inrush current recorded in any test shall 
be used;
    3. The previously energized and then de-energized transformer shall 
be energized from a source having available short circuit current not 
less than 20 times the rated full load current of the winding connected 
to the source; and
    4. The source voltage shall not be less than 5 percent of the rated 
voltage of the winding energized; and
    (vii) Is manufactured with at least two of the following other 
attributes:
    1. Listed as a Nationally Recognized Testing Laboratory (NRTL), 
under the Occupational Safety and Health Administration, U.S. 
Department of Labor, for a K-factor rating greater than K-4, as defined 
in Underwriters Laboratories (UL) Standard 1561: 2011 Fourth Edition, 
Dry-Type General Purpose and Power Transformers;
    2. Temperature rise less than 130 [deg]C with class 220 \(25)\ 
insulation or temperature rise less than 110 [deg]C with class 200 
\(26)\ insulation;
    3. A secondary winding arrangement that is not delta or wye (star);
    4. Copper primary and secondary windings;
    5. An electrostatic shield; or
    6. Multiple outputs at the same voltage a minimum of 15[deg] apart, 
which when summed together equal the transformer's input kVA 
capacity.'' \46\
---------------------------------------------------------------------------

    \46\ 78 FR 23336, 23358.
---------------------------------------------------------------------------

    DOE did not adopt this definition of ``data center distribution 
transformers'' or establish a separate class for such equipment for the 
following reasons: (1) the considered definition listed several factors 
unrelated to efficiency; (2) the potential risk of circumvention of 
standards and that a transformer may be built to satisfy the data 
center definition without significant added expense; (3) operators of 
data centers are generally interested in equipment with high 
efficiencies because they often face large electricity costs, and 
therefore may be purchasing at or above the standard established and 
unaffected by the rule; and (4) data center operator can take steps to 
limit in-rush current external to the data center transformer. 78 FR 
23336, 23358.
    In the August 2021 Preliminary Analysis TSD, DOE stated that data 
center distribution transformers could represent a potential equipment 
class setting factor and requested additional data about the data 
center distribution transformer market, performance characteristics, 
and any physical features that could distinguish data center 
distribution transformers from general purpose distribution 
transformers. (August 2021 Preliminary Analysis TSD at p. 2-22)
    DOE did not receive any comments as to physical features that could 
distinguish a data center distribution transformer from a general-
purpose distribution transformer.
    DOE requests comment as to what modifications could be made to the 
April 2013 Standard Final Rule data center definition such that the 
identifying features are related to efficiency and would prevent a data 
center transformer from being used in a general purpose application.
    NEMA commented that most data center transformers are outside the 
scope due to kVA range, but those still within scope would likely have 
high loading and would not be favored for amorphous transformers. 
(NEMA, No. 50 at p. 6)
    Eaton commented that liquid-immersed distribution transformers are 
increasingly being used in data center applications. (Eaton, No. 55 at 
p. 10) Eaton added that the quantity and overall energy consumed in 
data center applications has increased significantly. (Eaton, No. 55 at 
p. 10) Eaton commented that the lifespan of a data center transformer 
would vary depending on loading. (Eaton, No. 55 at p. 11)
    Eaton commented that liquid-immersed data center transformers are 
designed to operate between 50-75 percent PUL and are typically 
specified to meet DOE efficiency standards. (Eaton, No. 55 at pp. 10-
11)
    DOE did not receive any comments suggesting that data center 
distribution transformers warrant a separate product class. As such, 
DOE has not proposed a definition for data center distribution 
transformers and has not evaluated them as a separate product class. 
However, DOE may consider a separate product class if sufficient data 
is provided to demonstrate that data center transformers warrant a 
different efficiency level and can appropriately be defined. 
Distribution transformers used in data centers may sometimes, but not 
necessarily, be subject to different operating conditions and 
requirements which carry greater concern surrounding inrush current.
    DOE requests comment regarding its proposal not to establish a 
separate equipment class for data center distribution transformers. In 
particular, DOE seeks comment regarding whether data center 
distribution transformers are able to reach the same efficiency levels 
as distribution transformers generally and the specific reasons why 
that may be the case.
    DOE requests comment regarding any challenges that would exist if 
designing a distribution transformer which uses amorphous electrical 
steel in its core for data center applications and whether data center 
transformers have been built which use amorphous electrical steel in 
their cores.
    DOE requests comment on the interaction of inrush current and data 
center distribution transformer design. Specifically, DOE seeks 
information regarding: (1) the range of inrush current limit values in 
use in data center distribution transformers; (2) any challenges in 
meeting such inrush current limit values when using amorphous 
electrical steel in the core; (3) whether using amorphous electrical 
steel inherently increases inrush current, and why; (4) how the 
(magnetic) remanence of grain-oriented electrical steel compares to 
that of

[[Page 1752]]

amorphous steel; and (5) other strategies or technologies than 
distribution transformer design which could be used to limit inrush 
current and the respective costs of those measures.
f. BIL Rating
    Distribution transformers are built to carry different basic 
impulse level (``BIL'') ratings. BIL ratings offer increased resistance 
to large voltage transients, for example, from lightning strikes. Due 
to the additional winding clearances required to achieve a higher BIL 
rating, high BIL distribution transformers tend to be less efficient, 
leading to higher costs and be less able to achieve higher 
efficiencies. DOE separates medium-voltage dry-type distribution 
transformers into equipment classes based on BIL ratings. 10 CFR 
431.196(c).
    In the August 2021 Preliminary Analysis TSD, DOE noted stakeholder 
comments that evaluating additional liquid-immersed distribution 
transformers based on BIL rating would add additional complications for 
minor differences in losses. As such, DOE did not consider BIL in its 
evaluation of liquid-immersed distribution transformers.
    In response, Howard commented that 150 kV and 200 kV BIL units 
should not have their efficiency standards increased as these units are 
already too large. (Howard, No. 59 at pp. 1-2) Carte commented that 200 
kV BIL transformers have more insulation that increases the size of the 
transformer and therefore the losses of the transformer. (Carte, No. 54 
at p. 1) Eaton commented that high BIL transformers can have a harder 
time meeting efficiency standards. (Eaton, No. 55 at p. 12) Neither 
Eaton, Howard nor Carte provided any data suggesting the degree of 
efficiency difference as BIL is increased. Based on the discussion in 
the preceding paragraphs, DOE is not proposing a separate equipment 
class based on BIL rating for liquid-immersed units but may consider it 
if sufficient data is provided.
    DOE requests data as to how a liquid-immersed distribution 
transformer losses vary with BIL across the range of kVA values within 
scope.
    Regarding MVDTs, NEMA commented that MVDT with BIL levels above 150 
kV are essentially non-existent and would not represent a significant 
amount of energy savings if regulated. (NEMA, No. 50 at p. 7)
    DOE notes that MVDTs above 150 kV BIL are currently regulated. In 
the August 2021 Preliminary Analysis TSD, DOE requested data on the 
change in efficiency associated with higher BIL ratings for 
distribution transformers and the volume of dry-type distribution 
transformers sold with BIL ratings above 199 kV. DOE did not receive 
any data and therefore has maintained its current equipment class 
separation of MVDTs.
g. Other Types of Equipment
    Stakeholders identified several other distribution transformer 
types that they noted may have a harder time meeting efficiency 
standards. NEMA commented that MVDTs at high altitude may require more 
air clearance and therefore must accommodate higher core loss, and as 
such, may warrant a separate equipment class. (NEMA, No. 50 at p. 5) 
Carte asked DOE to analyze main and teaser and Scott connected 
transformers which it stated are unique to certain industrial grids and 
can be very difficult or impossible to replace.\47\ (Carte, No. 54 at 
p. 2)
---------------------------------------------------------------------------

    \47\ Main and Teaser and Scott connected transformers are a 
special type of transformer which converts from three-phase energy 
to two phase energy or vice versa using two electrically-connected 
single-phase transformers
---------------------------------------------------------------------------

    Carte asked how efficiency standards apply to duplex transformers 
which have two kVA ratings on one transformer.\48\ (Carte, No. 54 at p. 
2) Carte asked if three winding simultaneous loading transformers used 
in solar applications to isolate the low-voltage qualify for an 
exemption. (Carte, No. 54 at p. 2)
---------------------------------------------------------------------------

    \48\ Duplex transformers consist of two single-phase 
transformers assembled in a single enclosure. They are generally 
used to provide a large single-phase output in tandem with a smaller 
three-phase output
---------------------------------------------------------------------------

    DOE did not receive any data as to the degree of difference in 
efficiency associated with these distribution transformers. DOE has not 
considered any of the noted products as separate equipment classes in 
this NOPR analysis due to lack of data as to the shipments and 
reduction in efficiency associated with certain designs. Regarding how 
standards are applied to certain equipment, DOE notes that equipment 
that meets the definition of distribution transformer is subject to 
energy conservation standards at 10 CFR 431.196.
    DOE requests comments and data on any other types of equipment that 
may have a harder time meeting energy conservation standards. 
Specifically, DOE requests comments as to how these other equipment are 
identified based on physical features from general purpose distribution 
transformers, the number of shipments of each unit, and the possibility 
of these equipment being used in place of generally purpose 
distribution transformers.
3. Test Procedure
    The current test procedure for measuring the energy consumption of 
distribution transformers is established at appendix A to subpart K of 
10 CFR part 431. In a September 2021 TP Final Rule, DOE maintained that 
energy efficiency be evaluated at 50 percent PUL for liquid-immersed 
distribution transformers and medium-voltage dry-type distribution 
transformers and 35 percent PUL for low-voltage dry-type distribution 
transformers. 86 FR 51230. In the August 2021 Preliminary Analysis TSD, 
DOE acknowledged that its estimates for current root-mean-square 
(``RMS'') in-service loading is less than the test procedure PUL but 
noted there was uncertainty which makes it preferential to overestimate 
PUL rather than underestimate PUL. DOE noted that any potential energy 
savings that could be achieved by changing the standard PUL could also 
be achieved by increasing the stringency of the energy conservation 
standards. As such, DOE only considered distribution transformers that 
would meet energy conservation standards at DOE's test procedure 
loading, but evaluated energy saving potential using in-service data 
and load growth estimates.
    In response, CDA agreed with the test procedure loading and stated 
that they believe the loading will match future forecasts. (CDA, No. 47 
at p. 2)
    NEEA and the Efficiency Advocates commented that the test procedure 
PUL is too high and leads to designs that over-invest in load losses, 
and as such, DOE should reduce the test procedure PUL. (Efficiency 
Advocates, No. 52 at pp. 1-2; NEEA, No. 51 at pp. 7-8) The Efficiency 
Advocates commented that DOE's preliminary analysis shows that 
intermediate energy savings can be achieved with small price increases 
if transformer designs are optimized for more realistic PULs and urged 
DOE to consider revising its test procedure PUL, given the preliminary 
analysis load growth estimates. (Efficiency Advocates, No. 52 at p. 2) 
The Efficiency Advocates commented that the negative savings at certain 
ELs reflect the fact that certain ELs would be met by decreasing load 
losses rather than no-load losses. (Efficiency Advocates, No. 52 at pp. 
2-3) The Efficiency Advocates further referenced DOE's hourly load 
model which they claim demonstrated a small percentage of hours above 
50 percent PUL and indicates savings available at lower PULs. 
(Efficiency Advocates, No. 52 at p. 4) The Efficiency Advocates 
commented that a lower PUL permits greater savings for less costs, 
claiming that DOE's data shows better optimizing

[[Page 1753]]

a transformer could yield 23 percent energy savings for only a 4 
percent increase in costs. (Efficiency Advocates, No. 52 at pp. 4-5)
    DOE notes that the potential energy savings cited by the Efficiency 
Advocates are based on a distribution transformer that is optimized at 
35 percent PUL and is meeting current efficiency standards at 50 
percent PUL. In the scenario where an alternative test procedure PUL is 
used, distribution transformers would not have to meet the current 
standard at 50 percent PUL, they would only have to meet a new standard 
at 35 percent PUL. DOE's analysis of energy conservation standards 
assumes consumers select a range of distribution transformers and 
applies a range of unique customer loading profiles to evaluate the 
impacts of amended energy conservation standards. In a theoretical 
evaluation of energy conservation standards at 35 percent PUL, the 
whole analysis would change as new distribution transformers would be 
able to be purchased by consumers that do not meet current standards at 
50 percent PUL but may meet a standard at 35 percent PUL. Without doing 
a much more detailed analysis, it is a vast oversimplification to cite 
energy savings from a single distribution transformer. Further, DOE 
notes that many of the distribution transformers optimized for low PULs 
use amorphous cores and represent the design options with the highest 
efficiency at 50 percent PUL.
    Powersmiths commented that measuring LVDT efficiency at a single 
load point is insufficient since the efficiency varies dramatically 
over the loading. (Powersmiths, No. 46 at p. 1) Powersmiths added that 
35 percent PUL is not representative for LVDTs. (Powersmiths, No. 46 at 
p. 1) Powersmiths added that evaluating at 35 percent PUL enables 
manufacturers to publish peak efficiency rather than how their 
transformers perform in the real world. (Powersmiths, No. 46 at p. 2) 
Powersmiths commented that this practice misleads customers into 
thinking DOE compliant transformers save them the most money, when 
transformers optimized for lower loading could save more energy and 
money. (Powersmiths, No. 46 at p. 2)
    Metglas commented that actual data shows current loading is low and 
as such, the liquid-immersed distribution transformers should be 
evaluated at 35 percent load and LVDTs should be evaluated at 20 
percent load. (Metglas, No. 53 at p. 1; Metglas, No. 53 at p. 6)
    Powersmiths added that the 35 percent PUL for LVDTs produces 
deceptively high savings estimates and pushing up efficiency at that 
point is counterproductive. (Powersmiths, No. 46 at p. 2) Powersmiths 
recommended DOE work with organizations to reduce oversizing of 
distribution transformers. (Powersmiths, No. 46 at p. 2)
    DOE agrees with stakeholders that current loading is lesser than 
the test procedure PUL. As such, DOE relies on the most accurate in-
service PUL and load growth estimates to calculate energy savings 
potential. However, DOE evaluates the efficiency of distribution 
transformers and only includes distribution transformer models that 
would meet amended energy conservation standards at the test procedure 
PUL. The efficiency of distribution transformers over the duration of 
its lifetime and across all installations cannot be fully represented 
by a single PUL. A given transformer may be highly loaded or lightly 
loaded depending on its application or variation in electrical demand 
throughout the day. In the September 2021 TP Final Rule, DOE was unable 
to conclude that any singular PUL would be more representative than the 
current test procedure PUL because of (1) significant long-term 
uncertainty regarding what standard PUL would correspond to a 
representative average use cycle for a distribution transformer given 
their long lifetimes; and (2) given the uncertainty of future loading, 
there may be greater risk associated with selecting a test procedure 
PUL that is too low than a test procedure PUL that is too high. 86 FR 
51230, 51240. Therefore, for purposes of evaluating the proposed 
standards in this document, DOE used the test procedure PUL. More 
discussion of the test procedure PUL may be found in the September 2021 
TP Final Rule.
    DOE disagrees with commenters' assertion that there is an inherent 
benefit associated with distribution transformers certified at an 
alternative PUL as no energy conservation standard exist at any 
alternative PUL. Further, DOE believes any benefits associated with a 
lower PUL are also achieved via amended energy conservation standards. 
DOE has presented plots in chapter 3 of the TSD to demonstrate how the 
design space of possible load loss and no-load loss combinations would 
change in the presence of amended energy conservation standards and if 
energy conservation standards were evaluated at an alternative PUL 
which helps demonstrate this conclusion.
    Powersmiths commented that the current reporting system is flawed 
as factors like sub-standard batches of steel may result in 
noncompliant distribution transformers being shipped, and recommended 
DOE should require third party testing of distribution transformers. 
(Powersmiths, No. 46 at pp. 6-7) DOE notes that it has no data 
suggesting manufacturers are shipping non-compliant distribution 
transformers. DOE notes that in the case of sub-standard steel batches, 
its certification requirements permit some degree of variability in 
equipment performance, as described at 10 CFR 429.47.
    Powersmiths commented that high volume manufacturers optimize costs 
by using higher loss core steel and lower loss conductor material to 
meet the 35 percent legal limit. (Powersmiths, No. 46 at p. 2) 
Powersmiths recommended lowering the LVDT test procedure PUL or adding 
a core loss limit to secure real world energy savings. (Powersmiths, 
No. 46 at p. 2)
    In the September 2021 TP Final Rule, DOE noted that on account of 
uncertainty associated with future distribution transformer loading, 
DOE is unable to conclude that any alternative single-PUL efficiency 
metric is more representative than the current standard PUL. 86 FR 
51230, 51240. Therefore, DOE only evaluated distribution transformers 
that would meet amended efficiency standards at the current test 
procedure PUL. In its evaluation of energy savings, DOE used data 
representative of current in-service loading, as described in section 
IV.E. DOE does not make assumptions as to the maximum no-load or load 
losses of a transformer and instead relies on the consumer choice 
model, described in section IV.F.3 of this document, to evaluate the 
distribution transformers that consumers are likely to purchase.
4. Technology Options
    In the preliminary market analysis and technology assessment, DOE 
identified several technology options that would be expected to improve 
the efficiency of distribution transformers, as measured by the DOE 
test procedure.
    Increases in distribution transformer efficiency are based on a 
reduction of distribution transformer losses. There are two primary 
varieties of loss in distribution transformers: no-load losses and load 
losses. No-load losses are roughly constant with PUL and exist whenever 
the distribution transformer is energized (i.e., connected to 
electrical power). Load losses, by contrast, are zero at 0 percent PUL 
but grow quadratically with PUL.
    No-load losses occur primarily in the transformer core, and for 
that reason the terms ``no-load loss'' and ``core loss'' are sometimes 
interchanged. Analogously, ``winding loss'' or ``coil loss'' is

[[Page 1754]]

sometimes used in place of ``load loss'' because load loss arises 
chiefly in the windings. For consistency and clarity, DOE will use 
``no-load loss'' and ``load loss'' generally and reserve ``core loss'' 
and ``coil loss'' for when those quantities expressly are meant.
    CDA commented that copper is the best conductor of electricity and 
enables a more compact and economical distribution transformer with a 
smaller tank, less core, and reduced oil. (CDA, No. 47 at p. 1) DOE 
notes that it has included some copper windings in its engineering 
analysis and recognizes that while copper may be more expensive than 
aluminum conductors, it represents a technology option that allows 
manufacturers to achieve smaller footprints or higher efficiencies in 
designs that are uniquely difficult to meet energy conservation 
standards.
    EEI commented that many technologies that decrease no-load losses, 
increase load losses and therefore DOE should utilize accurate 
projections of loading and recognize lower-loss core materials can have 
significantly higher load losses. (EEI, No. 56 at p. 3)
    Regarding amended energy conservation standards generally, Howard 
commented that no new technology options have come onto the market that 
would impact distribution transformer efficiency since the April 2013 
Standards Final Rule. (Howard, No. 59 at p. 1) CDA commented that there 
should be no new standards and recommended DOE continue to evaluate the 
inputs to its analysis and new technologies. (CDA, No. 47 at p. 2) 
Powermiths noted that the market is in flux currently and recommended 
DOE delay the rulemaking while the market settles, require third party 
compliance enforcement, and invite stakeholder into DOE's revision 
process. (Powersmiths, No. 46 at p. 7)
    With respect to analyzed inputs, in the engineering analysis, DOE 
considered various combinations of the following technology options to 
improve efficiency: (1) Higher grade electrical core steels, (2) 
different conductor types and materials, and (3) adjustments to core 
and coil configurations. With respect to commenters' suggestions that 
DOE delay standards or not issue amended standards, as noted 
previously, EPCA requires DOE to periodically determine whether more-
stringent standards would be technologically feasible and economically 
justified, and would result in significant energy savings. 42 U.S.C. 
6316(a); 42 U.S.C. 6295(m). DOE has tentatively concluded that the 
proposed standards represent the maximum improvement in energy 
efficiency that is technologically feasible and economically justified, 
and would result in the significant conservation of energy. 
Specifically, with regards to technological feasibility, products 
achieving these standard levels are already commercially available for 
all product classes covered by this proposal. Accordingly, DOE has 
proceeded with the proposed standards.
5. Electrical Steel Technology and Market Assessment
    Distribution transformer cores are constructed from a specialty 
kind of steel known as electrical steel. Electrical steel is an iron 
alloy which incorporates small percentages of silicon to enhance its 
magnetic properties, including increasing its magnetic permeability and 
reducing the iron losses associated with magnetizing that steel. 
Electrical steel is produced in thin laminations and either wound or 
stacked into a distribution transformer core shape.
    Electrical steel used in distribution transformer applications can 
broadly be categorized as amorphous steel and grain-oriented electrical 
steel (``GOES''). There are many subcategories of steel within both 
amorphous steel and grain-oriented electrical steel. In the August 2021 
Preliminary Analysis TSD, DOE assigned designated names to identify the 
various permutations of electrical steel. (August 2021 Preliminary 
Analysis TSD at pp. 2-31-36) DOE requested comment on its proposed 
naming convention. In response, Schneider and NEMA commented that the 
proposed naming convention used by DOE in the preliminary analysis is 
adequate. (Schneider, No. 49 at p. 13; NEMA No. 50 at p. 8)
    The various markets, technologies, and naming conventions for 
amorphous and GOES are discussed in the following sections.
a. Amorphous Steel Market and Technology
    Amorphous steel is a type of electrical steel that is produced by 
rapidly cooling molten alloy such that crystals do not form. The 
resulting product is thinner than GOES and has lower core losses, but 
it reaches magnetic saturation at a lower flux density.
    DOE has identified three sub-categories of amorphous steel as 
possible technology options. These technology options and their DOE 
naming shorthand are shown in Table IV.2.

             Table IV.2--Amorphous Steel Technology Options
------------------------------------------------------------------------
     DOE designator in design options                Technology
------------------------------------------------------------------------
am........................................  Traditional Amorphous Steel.
hibam.....................................  High-Permeability Amorphous
                                             Steel.
hibam-dr..................................  High-Permeability, Domain-
                                             Refined, Amorphous Steel.
------------------------------------------------------------------------

    In the August 2021 Preliminary Analysis TSD, DOE requested comment 
and data on the quality and differences between the various amorphous 
steels on the market. (August 2021 Preliminary Analysis TSD at p. 2-31)
    In response, Metglas commented that since amorphous steel was 
introduced, the core loss and stacking factor of the product has 
continually improved. (Metglas, No. 53 at pp. 2-3) Metglas stated that 
the current stacking factors are between 88-90 percent, which allows 
amorphous cores to be smaller than they have historically been. 
(Metglas, No. 53 at pp. 2-3) Eaton commented that the hibam material 
uses an 89 percent stacking factor and max flux of 1.40-1.42 tesla (T), 
as compared to traditional amorphous material which uses 88 percent 
stacking factor and a flux of 1.35-1.37 T. (Eaton, No. 55 at p.11) NEMA 
commented that the stacking factor of amorphous steel will never be as 
high as grain-oriented electrical steel. (NEMA, No. 50 at p. 8)
    In the August 2021 Preliminary Analysis TSD, DOE noted that it did 
not include any designs specifically using the high-permeability 
amorphous steel. (August 2021 Preliminary Analysis TSD, at p. 2-45) DOE 
stated while there are some design flexibility advantages associated 
with using the high-permeability amorphous steel, it is only available 
from a single supplier. Id. In interviews, manufacturers noted they 
would be hesitant to rely on a single supplier of amorphous material 
for any higher volume unit. Id. DOE further stated that high-
permeability amorphous steel can be integrated in manufacturer existing 
amorphous designs with minimal changes and therefore, DOE's amorphous 
designs represent efficiencies that can be met with any amorphous 
steel. Id. DOE requested comment on its assumption that high-
permeability amorphous steel could be used in existing amorphous 
designs with minimal changes. Id.
    In response, Metglas commented that hibam can be used 
interchangeably with the standard am designs. (Metglas, No. 53 at p. 4) 
Metglas added that many transformers will maintain existing am design 
and operate the hibam material at the lower induction levels during

[[Page 1755]]

initial conversion, however, once designs are optimized for the hibam 
material, they cannot substitute standard am because standard am cannot 
reach the higher induction levels. (Metglas, No. 53 at p. 4) Metglas 
added that there is not a reduction in core losses when operating hibam 
at the same induction levels as standard am. (Metglas, No. 53 at p. 4)
    NEMA and Eaton commented that hibam does not necessarily have 
higher efficiency than standard am at certain flux densities, and it is 
not universally true that hibam could be used in place of standard am 
without other design changes because at some flux densities, standard 
am can have lower no-load losses. (Eaton, No. 55 at p. 12-13; NEMA, No. 
50 at p. 10)
    Stakeholder comments confirm DOE's assumption that hibam material 
can be used in place of standard am designs, generally, although some 
specific applications may require redesigning. As such, including only 
standard am designs in the NOPR analysis is appropriate to avoid 
setting efficiency standards based on a steel type, hibam, that is only 
available from a single supplier. Under this approach, manufacturers 
have the option to achieve efficiency levels that require am steel 
using either the standard am material or the hibam material depending 
on their sourcing practices and preferences.
    In the August 2021 Preliminary Analysis TSD, DOE noted that it was 
aware of a hibam material that uses domain refinement (``hibam-dr'') to 
further reduce core losses but did not have sufficient data or details 
as to whether it is commercially available. (August 2021 Preliminary 
Analysis TSD, at p. 2-31) In response, Metglas commented that they have 
introduced a mechanically domain refined hibam material that lowers 
core losses by an additional 20-30 percent in a finished core at a 
constant operating induction and there is a laser domain refined hibam 
product in the Asian market that Metglas is working to bring online in 
the domestic market. (Metglas, No. 53 at p. 3) Metglas commented that 
hibam-dr allows manufacturers to increase operating induction, relative 
to standard am, while reducing core losses by approximately 14 percent 
relative to the standard am operating induction. (Metglas, No. 53 at p. 
4)
    DOE further investigated this product in manufacturer interviews 
conducted for this NOPR analysis. In these interviews, DOE learned that 
the hibam-dr product is not yet widely available commercially. DOE has 
not included the hibam-dr product in its analysis because this product 
has not been widely used in commercial applications at this point, DOE 
has not been able to verify that the core loss reduction of this 
product is maintained throughout the core production process, and it is 
only produced by one supplier.
    In the April 2013 Standard Final Rule, one concern DOE noted with 
efficiency levels that would use amorphous steel was that there was 
only one global supplier of amorphous steel. 78 FR 23336, 23383. In the 
June 2019 Early Assessment RFI, DOE estimated global amorphous capacity 
of 190,000 metric tons and noted that the capacity and number of 
producers of amorphous steel has grown since the April 2013 Standards 
Final Rule. 84 FR 28239, 28247
    Metglas commented that it is the only current producer of amorphous 
steel in the United States, however, there is current production in 
Japan and China along with amorphous capacity in Germany and South 
Korea. (Metglas, No. 11 at p. 2) Eaton pointed out that one barrier to 
steel manufacturers producing amorphous is that it would 
``cannibalize'' conventional electrical steel manufacturers existing 
product offering and reduce the equipment utilization of existing 
equipment. (Eaton, No. 12 at p. 6)
    In the August 2021 Preliminary Analysis TSD, DOE noted that it had 
identified numerous companies capable of producing amorphous material 
(of standard am quality or better). DOE stated that it did not apply 
any capacity constraints on the number of amorphous distribution 
transformers that could be selected because amorphous capacity is much 
greater than amorphous demand.
    The Efficiency Advocates commented that the preliminary analysis 
shows a transition to amorphous material is cost justified and would 
bring U.S. standards in-line with other parts of the world. (Efficiency 
Advocates, No. 52 at p. 1) The Efficiency Advocates added that if 
amorphous core availability is a concern, DOE could require amorphous 
cores for certain transformer types that offer large savings. 
(Efficiency Advocates, No. 52 at p. 8)
    Metglas estimated global amorphous capacity to be 150,000 metric 
tons annually with domestic capacity of 45,000 metric tons and ready 
ability to add another 75,000 metric tons within 18-24 months. 
(Metglas, No. 53 at p. 3) Metglas commented that the high-permeability 
amorphous grades (hibam) has been widely adopted by the North American 
market, making up 80 percent of their production, and allows for higher 
operating inductions which reduces amorphous core sizes. (Metglas, No. 
53 at p. 3) NEMA commented that amorphous steel sourced from China is 
more variable in its stacking factor and consistency. (NEMA, No. 50 at 
p. 8)
    Stakeholder comments verify that global amorphous capacity is much 
greater than current demand and amorphous is produced by a variety of 
sources, although the quality may not be as consistent from everybody. 
Through manufacturer interviews, DOE learned that amorphous production 
capacity increased in response to the April 2013 Standards Final Rule, 
resulting in excess capacity because demand for amorphous steel did not 
correspondingly increase. While amorphous capacity today is currently 
less than the total distribution transformer total electrical steel 
usage, amorphous producers' response to the April 2013 Standards Final 
Rule demonstrates that if there was expected to be a market demand for 
amorphous steel, capacity would increase to meet that demand.
    In interviews, several manufacturers noted that recent increases in 
prices, and foreign produced GOES prices, in particular, have led 
amorphous to be far more cost competitive. However, the industry has 
not necessarily seen an increase in amorphous transformer purchasing 
reflective of this pricing situation. Manufacturers noted that many of 
their processes are set-up to produce and process GOES steel and as 
such there is some degree of bias against amorphous transformers, 
regardless of what the first cost of a product is. In the August 2021 
Preliminary Analysis TSD, DOE requested comment and data on the current 
amorphous core making capacity and the cost and time frame to add 
amorphous core production capacity. (August 2021 Preliminary Analysis 
TSD at p. 2-33)
    In response, Metglas estimated amorphous core making capacity to be 
approximately 20,000 to 25,000 metric tons and noted that bringing on 
additional amorphous core manufacturing is relatively straightforward 
and inexpensive. (Metglas, No. 53 at p. 4) Metglas commented that there 
are conversion costs and capital costs associated with producing an 
amorphous core from amorphous steel laminations. (Metglas, No. 53 at p. 
5) Eaton commented that the timeframe to add additional amorphous 
transformer capacity is dependent on whether additional design 
qualification testing is needed versus strictly capacity expansion and 
estimated one years for the former and one year for the latter. (Eaton, 
No. 55 at p. 11)

[[Page 1756]]

    In the NOPR analysis, DOE has not applied any constraints to 
standard am steel purchasing in its evaluation of higher efficiency 
levels. DOE did constrain the selection of amorphous steel under the 
no-new-standards scenario to better match the current market share of 
amorphous distribution transformers, as discussed in section IV.F.2 of 
this document. DOE notes that any conversion costs associated with a 
transition from GOES production to amorphous distribution transformer 
production would be accounted for in the manufacturer impact analysis 
in section IV.J.
b. Grain-Oriented Electrical Steel Market and Technology
    GOES is a type of electrical steel that is processed with tight 
control over its crystal orientation such that its magnetic flux 
density is increased in the direction of the grain-orientation. The 
single-directional flow is well suited for distribution transformer 
applications and GOES is the dominant technology in the manufacturing 
of distribution transformer cores. GOES is produced in a variety of 
thickness and with a variety of loss characteristics and magnetic 
saturation levels. In certain cases, steel manufacturers may further 
enhance the performance of electrical steel by introducing local strain 
on the surface of the steel, through a process known as domain-
refinement, such that core losses are reduced. This can be done via 
different methods, some of which survive the distribution transformer 
core annealing process.
    In the August 2021 Preliminary Analysis TSD, DOE identified four 
sub-categories of GOES as possible technology options. (August 2021 
Preliminary Analysis TSD at p. 2-35) These technology options and their 
DOE naming short-hand are shown in Table IV.3.

                Table IV.3--GOES Steel Technology Options
------------------------------------------------------------------------
     DOE designator in design options                Technology
------------------------------------------------------------------------
M-Grades..................................  Conventional (not high-
                                             permeability) GOES.
hib.......................................  High-Permeability GOES.
dr........................................  Non-Heat Proof, Laser Domain-
                                             Refined, High-Permeability
                                             GOES.
pdr.......................................  Heat-Proof, Permanently
                                             Domain-Refined, High-
                                             Permeability GOES.
------------------------------------------------------------------------

    DOE noted that for high-permeability steels, steel manufacturers 
have largely adopted a naming convention that includes the steel's 
thickness, a brand specific designator, followed by the guaranteed core 
loss of that steel in W/kg at 1.7 Tesla (``T'') and 50 Hz. Power in the 
U.S. is delivered at 60 Hz and the flux density can vary based on 
distribution transformer design, therefore the core losses reported in 
the steel name are not identical to their performance in the 
distribution transformer. However, the naming convention is generally a 
good indicator of the relative performance of different steels.
    In the August 2021 Preliminary Analysis TSD, DOE identified several 
grades of GOES as potential technology options for distribution 
transformers. DOE requested comment and data on the availability of 
those steels, the ability to substitute various GOES grades for one 
another, any potential competition for steel supply for the large power 
transformer market, and the costs for steelmakers to add or convert 
capacity to higher performing GOES. (August 2021 Preliminary Analysis 
TSD at pp. 2-36-37)
    Regarding potential competition for steel supply with the large 
power transformer industry, Schneider commented that power transformers 
and medium-voltage distribution transformers tend to be prioritized 
over the needs of the LVDT market and therefore supply issues can exist 
if LVDT manufacturers need to purchase the same core steel as medium-
voltage distribution transformers. (Schneider, No. 49 at p. 14) Cliffs 
added that while high-permeability GOES works well in distribution 
transformers, it has historically been sold as a laser DR product to 
the power transformer market. (Cliffs, No. 57 at p. 1)
    Conversely, NEMA suggested that electrical steels used in the large 
power transformer industry cannot be used in distribution applications, 
stating that the packaging and coating of steels targeting the large 
power transformer industry are not compatible with distribution 
transformer designs but added that large power transformers do compete 
for steel demand. (NEMA, No. 50 at p. 9)
    Steel manufacturer literature generally markets GOES, and in 
particular hib and dr GOES, as suitable for use in either power or 
distribution transformers. Generally, a steel that is suitable for use 
in a power transformer may be suitable for use in a distribution 
transformer. As Schneider noted, and DOE confirmed in manufacturer 
interviews, power transformers tend to have priority and get the 
highest performing GOES. The industry also is volume driven and as 
such, the larger volume of the liquid-immersed market tends to be 
served before the dry-type distribution market.
    Regarding availability of GOES more generally, NEMA recommended DOE 
review the DOC study for perspective on steel availability. (NEMA, No. 
50 at p. 8) NEMA and Powersmiths commented that recently there has been 
a notable increase in competition from the auto industry for electrical 
steel to produce electric motors in EVs. (NEMA, No. 50 at p. 9; 
Powersmiths, No. 46 at p. 5) NEMA and Powersmiths stated that some 
steel suppliers are shifting part of their grain-oriented electrical 
steel production capacity to non-oriented electrical steel production--
limiting the availability and increasing prices of transformer-grade 
steels. (NEMA, No. 50 at p. 9; Powersmiths, No. 46 at p. 5) At the 
Public meeting, a representative from Carte commented that one major 
foreign steel manufacturer transitioned 50 percent of their grain-
oriented production lines to non-oriented. (Zarnowski, Public Meeting 
Transcript, No. 40 at p. 36) A representative from LakeView Metals, 
commented that the non-oriented market is skyrocketing and there is an 
estimated global shortfall of 13 silicon production lines. (Looby, 
Public Meeting Transcript, No. 40 at p. 37)
    Powersmiths commented they are currently experiencing diminished 
availability of several grades of steel and increased costs as steel 
suppliers are shifting to serving the EV market without plans to bring 
transformer-grade steel capacity back. (Powersmiths, No. 46 at p. 5) 
ERMCO agreed that supply of steel is currently limited and they have 
been able to obtain M3 steel, some hib, and am steel. (ERMCO, No. 45 at 
p. 1)
    Recent supply issues and increases in costs are likely associated 
with a combination of general commodity related supply chain issues and 
competition from electric vehicles. DOE notes that variability in 
electrical steel prices and supply is not new and historically, DOE 
averages prices to come up with a representative value. As part of the 
August 2021 Preliminary Analysis TSD, DOE did evaluate alternative 
price scenarios. DOE has applied a 5-year average price in its base 
case analysis and conducted sensitivities for various other pricing 
scenarios, as discussed in section IV.C.3. DOE has also screened-out 
some of the highest performing GOES, where steel manufacturers are not 
able to mass produce GOES of similar quality, as discussed in section 
IV.B.
    NEMA previously noted that there is currently only one domestic 
producer of GOES and that the sole domestic

[[Page 1757]]

producer does not have the capacity of high-grade electrical steel to 
serve the entire U.S. market, meaning the U.S. would be dependent on 
foreign electrical steel producers. (NEMA, No. 13 at p. 6-7)
    Powersmiths commented that many of the high performing grades are 
only available from overseas suppliers and recent shipping and port 
access challenges have increased market uncertainty and availability to 
those grades. (Powersmiths, No. 46 at p. 6) Powersmiths stated that 
increased domestic capacity for GOES would require significant 
investment from industry and take years to come on. (Powersmiths, No. 
46 at p. 6) Cliffs added that high-permeability GOES is a unique 
production line that would take years of planning, installation, and 
commissioning to convert existing M3 lines to high-permeability. 
(Cliffs, No. 57 at pp. 1-2) Cliffs stated that domestic steel is 
currently well-suited to serve distribution applications and higher 
standards would negatively impact the ability of domestic steel 
manufacturers to serve the distribution transformer market. (Cliffs, 
No. 57 at p. 2) Cliffs commented that higher efficiency levels would 
drastically hurt M3, and correspondingly domestic manufacturing, 
leaving the only domestic products as M2 and some high-permeability 
GOES grades. (Cliffs, No. 57 at p. 1) Cliffs commented that its 
electrical steel is produced with recycled steel scrap in an electric 
arc furnace, making it some of the greenest steel in the world. 
(Cliffs, No. 57 at p. 1)
    DOE did constrain the selection of electrical steel under the no-
new-standards scenario to better match the current market share of 
electrical steel, as discussed in section IV.F.2. In its evaluation of 
future standards, DOE assumed that steel manufacturers would provide 
the electrical steel qualities required by the market. In cases where 
fewer steel suppliers offer a grade of GOES, this is reflected by 
higher prices in DOE's analysis.
6. Distribution Transformer Production Market Dynamics
    Distribution transformer manufacturers either make or buy 
transformer cores; some do both. Further, distribution transformer 
manufacturers may choose to produce transformers domestically or 
produce them in a foreign country and import them to the United States. 
This creates three unique pathways for producing distribution 
transformers: (1) producing both the distribution transformer core and 
finished transformer domestically; (2) producing the distribution 
transformer core and finished transformer in a foreign country and 
importing into the United States; (3) purchasing distribution 
transformer cores and producing only the finished transformer 
domestically. Each of these pathways has unique advantages and 
disadvantages which manufacturers have employed to maintain a 
competitive position.
    First, manufacturers who produce distribution transformer cores and 
finished transformers domestically are able to maintain greater control 
of their lead times, potentially offering shorter lead times to their 
customers. This is particularly advantageous in servicing emergency 
applications with unique characteristics. This manufacturing approach 
is more common in certain liquid-immersed and medium-voltage dry-type 
applications, where customers may have unique voltage specifications 
that may not be routinely produced by all manufacturers but may be 
required on short notice.
    As discussed, however, there is currently only one domestic 
manufacturer of grain-oriented electrical steel and one domestic 
manufacturer of amorphous steel. Under the current market dynamics with 
tariffs applied to all, raw imported electrical steel, these 
manufacturers are limited in where they can source their raw steel. As 
such, they may not have access to all of the types of steels available 
in the global market and may have different material prices from 
foreign core producers. While in theory, these manufacturers have the 
option to purchase electrical steel from foreign producers, they would 
be subject to the 25-percent tariff. Similarly, in theory, they have 
the option to purchase either grain-oriented electrical steel or 
amorphous electrical steel domestically.
    DOE assumes that in the presence of amended standards, those 
manufacturers currently producing both cores and finished transformers 
domestically would still value the advantages of in-house domestic core 
production and would change their in-house production processes to 
accommodate the required core production equipment or required 
electrical steel grades.
    Second, for manufacturers producing both the distribution 
transformer core and finished transformer in a foreign country and 
importing into the United States, they are able to control the in-house 
core production and therefore have similar advantages to those 
producing cores domestically. Further, because finished transformer 
imports are not currently subject to tariffs, they have access to the 
entire global market of electrical steel types and prices without the 
additional 25 percent tariff. However, these manufacturers may require 
increased management of electrical steel supply chains, as they are 
often purchasing electrical steel from overseas producers which may 
have longer lead times than sourcing electrical steel from domestic 
sources.
    Similar to domestic manufacturers, DOE assumes that in the presence 
of amended standards, those manufacturers producing both cores and 
transformers outside the United States would still value the advantages 
of in-house core production and would change their in-house production 
processes to accommodate the required core production equipment or 
required electrical steel grades.
    Third, manufacturers who purchase cores to manufacture distribution 
transformers are able to avoid the labor and capital equipment 
associated with producing transformer cores. In part for this reason, 
it is increasingly common among small businesses. Further, because 
distribution transformer cores are not subject to tariffs, purchasing 
cores also allows manufacturers to more easily transition between 
various steel grades and various steel suppliers, both international 
and domestic. Similarly, it is easier for manufacturers who outsource 
cores to transition between GOES and amorphous steel grades since it 
eliminates the need to use different core production equipment for each 
steel type as the process of converting a core into a transformer is 
relatively similar for both GOES and amorphous steels.
    The primary disadvantages of outsourcing cores are that (1) 
transformer manufacturers may have less control over core, and 
therefore transformer, delivery lead times and (2) transformer 
manufacturers will pay a higher cost per pound of steel because they 
are purchasing partially processed products as compared to 
manufacturers who are producing their own cores.
    DOE assumes that in the presence of amended standards, these 
manufacturers would switch from purchasing one grade of electrical 
steel core to a higher grade of electrical steel core.
    In summary, DOE does not view any one of these core and transformer 
production pathways as necessarily becoming more advantaged or 
disadvantaged in light of the standards proposed in this notice 
relative to the present. In the current market, all three pathways act 
as viable options for manufacturers to find and maintain a competitive 
position. DOE does not

[[Page 1758]]

have a reason to believe that the proposed standards would alter the 
ways in which distribution transformer manufacturers approach 
manufacturing or their current sourcing decisions given all three 
productions options continue to be available. DOE seeks comment on the 
distribution transformer market and whether the standards proposed will 
alter the current production pathways.

B. Screening Analysis

    DOE uses the following five screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on product utility or product availability. If it is 
determined that a technology would have a significant adverse impact on 
the utility of the product for significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.
    (5) Unique-Pathway Proprietary Technologies. If a design option 
utilizes proprietary technology that represents a unique pathway to 
achieving a given efficiency level, that technology will not be 
considered further due to the potential for monopolistic concerns.

10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 6(b)(3) 
and 7(b) (``Process Rule'').

    In summary, if DOE determines that a technology, or a combination 
of technologies, fails to meet one or more of the listed five criteria, 
it will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed in 
the following sections.
    The subsequent sections include comments from interested parties 
pertinent to the screening criteria, DOE's evaluation of each 
technology option against the screening analysis criteria, and whether 
DOE determined that a technology option should be excluded (``screened 
out'') based on the screening criteria.
1. Screened-Out Technologies
    In the August 2021 Preliminary Analysis TSD, DOE identified core 
deactivation as a potential technology option to improve efficiency but 
noted that it was not a generally accepted practice and would be 
associated with system wide savings, not savings as measured by DOE's 
test procedure.
    In response, NEMA commented that core deactivation would only be 
beneficial in certain settings and there are questions of reliability 
associated with shifting load which could lead to shorter lifetimes. 
(NEMA, No. 50 at p. 7) NEEA commented that core deactivation may impact 
maintenance of switchgear and other connected equipment. (NEEA, No. 51 
at p. 5)
    Due to the concerns cited by NEMA and NEEA regarding impacts on 
product lifetime and servicing of equipment, along with the fact that 
core deactivation would not impact the efficiency as measured by the 
DOE test procedure, DOE has screened-out core deactivation as a 
potential technology option.
    DOE also identified less-flammable insulating liquid-immersed 
distribution transformer (``LFLI'') as a potential technology by which 
manufacturers could increase the capacity of a distribution transformer 
without increasing the size, potentially leading to energy savings. In 
response, NEMA commented that while LFLI is used by some customers to 
reduce unit size, particularly for pad mounts but rarely for pole 
mounts, it is generally pursued for greater reliability and not greater 
efficiency. (NEMA, No. 50 at pp. 7-8)
    DOE notes that while there may be opportunity for a customer to 
maintain distribution transformer lifespan while increasing the loading 
on a transformer with LFLI technology, this would not impact the 
efficiency as measured by DOE's test procedure. Further, DOE 
understands that there are potential consumer safety concerns with 
distribution transformers operating notably hotter, namely that the 
touch temperature could be too high for consumers to safely interact 
with. Therefore, DOE has screened out LFLI as a potential technology 
option.
    Regarding evaluating efficiency improvements associated with 
certain high-performing GOES grades, Powersmiths commented that the 
stability of availability, cost, and batch quality of some new steel 
grades is unproven. (Powersmiths, No. 46 at p. 5) Schneider expanded 
that steel mills are not perfectly consistent and only a portion of 
their production may meet a target loss performance. As such, it may 
not be feasible to set efficiency levels based on premium grades, for 
example an 075 or 070 grade steel, as steel manufacturers may not be 
able to consistently achieve the premium performance. (Schneider, No. 
49 at p. 14) Schneider added that some higher performance steels are 
published in steel maker catalogs but are not widely available for 
commercial use. (Schneider, No. 49 at p. 13)
    In GOES production, the product steel losses can vary somewhat 
between and within batches. Because of this variability in electrical 
steel, producers typically offer two loss specifications for their 
steels, a guaranteed core loss and a typical core loss. While some of 
the premium products identified in the August 2021 Preliminary Analysis 
TSD generally exist and are used in the market, they represent the 
upper end of the distribution of product performance. As commenters 
suggested, without further improvements in consistency of batch 
quality, it may not be reasonable to assume these products could be 
widely used in industry. Therefore, DOE has screened out certain high-
performing GOES products. Specifically, DOE removed 23pdr075 and 
20dr070 electrical steels from its engineering modeling due to concerns 
with its practicability to manufacture. DOE notes that these electrical 
steels could be used in certain applications but DOE has screened them 
out because of concerns that mass production of these products could 
not be achieved on the scale necessary to serve the distribution 
transformer market.
    DOE listed several other technology options in the August 2021 
Preliminary Analysis TSD for which it did not receive any comment. As 
such, DOE has retained those technology options as screened out.
    Technology options screened out are listed in Table IV.4 with their 
bases for screening.

[[Page 1759]]



                  Table IV.4--Screened-Out Technologies
------------------------------------------------------------------------
         Technology option                   Basis for screening
------------------------------------------------------------------------
Core Deactivation.................  Practicability to manufacture,
                                     install, and service; Adverse
                                     Impacts on Product Utility or
                                     Product Availability.
Less-Flammable Insulating Liquids.  Adverse Impacts on Health or Safety.
Symmetric Core Design.............  Practicability to manufacture,
                                     install, and service.
23pdr075 and 23dr070 GOES Steel...  Practicability to manufacture,
                                     install, and service.
Silver as a Conductor Material....  Practicability to manufacture,
                                     install, and service.
High-Temperature Superconductors..  Technological feasibility;
                                     Practicability to manufacture,
                                     install and service.
Amorphous Core Material in Stacked  Technological feasibility;
 Core Configuration.                 Practicability to manufacture,
                                     install, and service.
Carbon Composite Materials for      Technological feasibility.
 Heat Removal.
High-Temperature Insulating         Technological feasibility.
 Material.
Solid-State (Power Electronics)     Technological feasibility;
 Technology.                         Practicability to manufacture,
                                     install, and service.
Nanotechnology Composites.........  Technological feasibility.
------------------------------------------------------------------------

2. Remaining Technologies
    Through a review of each technology, DOE tentatively concludes that 
the remaining combinations of core steels, windings materials and core 
configurations as combinations of ``design options'' for improving 
distribution transformer efficiency met all five screening criteria to 
be examined further as design options in DOE's NOPR analysis.
    DOE has initially determined that these technology options are 
technologically feasible because they are being used or have previously 
been used in commercially-available products or working prototypes. DOE 
also finds that all of the remaining technology options meet the other 
screening criteria (i.e., practicable to manufacture, install, and 
service and do not result in adverse impacts on consumer utility, 
product availability, health, or safety, unique-pathway proprietary 
technologies). For additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of distribution 
transformers. There are two elements to consider in the engineering 
analysis; the selection of efficiency levels to analyze (i.e., the 
``efficiency analysis'') and the determination of product cost at each 
efficiency level (i.e., the ``cost analysis''). In determining the 
performance of higher-efficiency equipment, DOE considers technologies 
and design option combinations not eliminated by the screening 
analysis. For each equipment class, DOE estimates the baseline cost, as 
well as the incremental cost for the equipment at efficiency levels 
above the baseline. The output of the engineering analysis is a set of 
cost-efficiency ``curves'' that are used in downstream analyses (i.e., 
the LCC and PBP analyses and the NIA).
1. Representative Units
    Distribution transformers are divided into different equipment 
classes, categorized by the physical characteristics that affect 
equipment efficiency. DOE's current energy conservation standards at 10 
CFR 431.196 divide distribution transformers based on the following 
characteristics: (1) capacity (kVA rating), (2) voltage rating, (3) 
phase count, (4) insulation category (e.g., ``liquid-immersed''), and 
(5) BIL rating.
    Because it is impractical to conduct detailed engineering analysis 
at every kVA rating, DOE conducts detailed modeling on ``representative 
units'' (``RUs''). These RUs are selected both to represent the more 
common designs found in the market and to include a variety of design 
specification to enable generalization of the results. In the August 
2021 Preliminary TSD, DOE presented 14 representative units and noted 
they were unchanged from the April 2013 Standards Final Rule. (August 
2021 Preliminary TSD at p. 2-41)
    In response to the August 2021 Preliminary TSD, Howard commented 
that RU3 is not a very good representative unit because it is not 
common and should be replaced with a more common unit. (Howard, No. 59 
at p. 2) DOE agrees that RU3, corresponding to a 500 kVA, single-phase, 
liquid-immersed distribution transformer, is generally larger than the 
more common capacities included in equipment class 1. However, as 
noted, DOE's RUs are designed to include both common units and units 
included to improve generalization. RU3 is included to improve scaling 
of results to the larger units within the scope of equipment class 1. 
Therefore, RU3 has been retained in this NOPR.
    Carte commented that the representative units used by DOE are 
representative of common/typical sizes but the extremes were not 
analyzed, where meeting efficiency standards tend to be the hardest. 
(Carte, No. 54 at p. 1) Carte added that certain designs are forced to 
use high-end grain-oriented electrical steel and copper windings or in 
certain cases are unable to be met by Carte. (Carte, No. 54 at p. 1)
    Eaton commented that the representative units are good choices for 
the highest volume transformers, however, as efficiency standards 
increase, efficiency standards may not be achievable at the scope 
extremes. (Eaton, No. 55 at p. 12)
    It is true that certain extreme designs may have more difficulty 
achieving efficiency standards while still being requested by 
consumers. Most applications would generally be able to use amorphous 
steel to achieve higher efficiencies, including at efficiency levels 
beyond DOE's max-tech. DOE selected design units to include both large 
and small distribution transformers across the various representative 
units and DOE's modeling of the selected representative units includes 
amorphous designs which achieve efficiencies above DOE's max-tech for 
all RUs. This indicates that there is room for even extreme designs to 
meet efficiency standards using technologies modeled by DOE.
    DOE requests data demonstrating any specific distribution 
transformer designs that would have significantly different cost-
efficiency curves than those representative units modeled by DOE.
    To assess the impact of expanding the scope of the definition of 
``distribution transformer'' in 10 CFR 431.192 to include distribution 
transformers up to 5,000 kVA, DOE is evaluating three new

[[Page 1760]]

RUs. DOE scaled the results for RU5, RU12, and RU14 to represent RU17, 
RU18, and RU19, respectively, each of which are rated at 3,750 kVA. 
Results were generated for RU17, RU18, and RU19 using the scaling rules 
for dimensions, transformer weight, no-load losses, load losses, etc., 
as described in Appendix 5C of the TSD.
    DOE notes that it only includes distribution transformers in the 
downstream analysis that would meet or exceed current energy 
conservation standards. Because RU17, RU18, and RU19 represent an 
expansion in scope, they are not currently subject to energy 
conservation standards. As such, all modeled designs are included in 
the downstream analysis, regardless of efficiency and DOE relies on the 
consumer choice model to determine the efficiency of distribution 
transformers selected at baseline. DOE has described these results and 
shown the cost-efficiency curves for these scaled units in Chapter 5 of 
the TSD.
    DOE requests comment on its methodology for scaling RU5, RU12, and 
RU14 to represent the efficiency of units above 3,750 kVA.
    Distribution transformers designed for submersible applications may 
be disadvantaged in meeting efficiency standards on account of having 
to meet efficiency standards with reduced cooling ratings. To explore 
this specification limitation, DOE has proposed a definition for 
submersible distribution transformers. In this NOPR, DOE is evaluating 
those submersible distribution transformers as a separate equipment 
class. DOE has modified the engineering results for RU4 and RU5 to 
represent two new RUs, RU15 and RU16. RU15 and RU16 represent common 
three-phase submersible distribution transformers. To account for the 
thermal derating that is associated with submersible distribution 
transformers, DOE evaluated RU15 and RU16 as having their nameplates 
derated by one standard kVA size relative to the efficiency of RU4 and 
RU5. That is, while RU4 is a 150 kVA three-phase, liquid-immersed 
distribution transformer, RU15 is a 112.5 kVA three-phase, liquid-
immersed, submersible distribution transformer. Similarly, while RU5 is 
a 1,500 kVA three-phase, liquid-immersed distribution transformer, RU16 
is a 1,000 kVA three-phase, liquid-immersed distribution transformer. 
DOE calculated the efficiency of RU15 and RU16 based on their new 
nameplate and assuming no-load losses are the same and load losses 
scale with the quadratic of load. DOE also modified the cost of the 
tank material from carbon steel to stainless steel to represent the 
corrosion resistant properties of submersible distribution 
transformers. All other physical properties of the distribution 
transformer are the same.
    DOE requests comment on its methodology for modifying the results 
of RU4 and RU5 to represent the efficiency of submersible liquid-
immersed units. For other potentially disadvantaged designs, DOE has 
considered establishing equipment classes to separate out those that 
would have the most difficulty achieving amended efficiency standards, 
as discussed in section IV.A.2, but ultimately has determined not to 
include such separate equipment classes in the proposed standards. 
However, DOE requests data as to the degree of reduction in efficiency 
associated with various features.
2. Efficiency Analysis
    DOE typically uses one of two approaches to develop energy 
efficiency levels for the engineering analysis: (1) relying on observed 
efficiency levels in the market (i.e., the efficiency-level approach), 
or (2) determining the incremental efficiency improvements associated 
with incorporating specific design options to a baseline model (i.e., 
the design-option approach). Using the efficiency-level approach, the 
efficiency levels established for the analysis are determined based on 
the market distribution of existing products (in other words, based on 
the range of efficiencies and efficiency level ``clusters'' that 
already exist on the market). Using the design option approach, the 
efficiency levels established for the analysis are determined through 
detailed engineering calculations and/or computer simulations of the 
efficiency improvements from implementing specific design options that 
have been identified in the technology assessment. DOE may also rely on 
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended 
using the design option approach to ``gap fill'' levels (to bridge 
large gaps between other identified efficiency levels) and/or to 
extrapolate to the max-tech level (particularly in cases where the max-
tech level exceeds the maximum efficiency level currently available on 
the market).
    Howard commented that there were inconsistencies in the efficiency 
levels presented in the webinar and the August 2021 Preliminary 
Analysis TSD. (Howard, No. 59 at p. 2) DOE notes that corrected values 
are presented in this analysis.
    In this rulemaking, DOE relies on an incremental efficiency 
(design-option) approach. This approach allows DOE to investigate the 
wide range of design option combinations, including varying the 
quantity of materials, the core steel material, primary winding 
material, secondary winding material, and core manufacturing technique.
    For each representative unit analyzed, DOE generated hundreds of 
unique designs by contracting with Optimized Program Services, Inc. 
(``OPS''), a software company specializing in distribution transformer 
design. The OPS software used two primary inputs: (1) a design option 
combination, which includes core steel grade, primary and secondary 
conductor material, and core configuration, and (2) a loss valuation.
    DOE examined numerous design option combinations for each 
representative unit. The OPS software generated 518 designs for each 
design option combination based on unique loss valuation combinations. 
Taking the loss value combinations, known in the industry as A and B 
values and representing the commercial consumer's present value of 
future no-load and load losses in a distribution transformer, 
respectively, the OPS software sought to generate the minimum total 
ownership cost (``TOC''). TOC can be calculated using the equation 
below.

TOC = Transformer Purchase Price + A * [No Load Losses] + B * [Load 
Losses]

    From the OPS software, DOE received thousands of different 
distribution transformer designs, including physical characteristics, 
loading and loss behavior, and bill of materials. DOE used these 
distribution transformer designs, supplemented with confidential and 
public manufacturer data, to create a manufacturer selling price 
(``MSP''). The MSP was generated by applying material costs, labor 
estimates, and various mark-ups to each design given from OPS.
    The engineering result included hundreds of unique distribution 
transformer designs, spanning a range of efficiencies and MSPs. DOE 
used this data as the cost versus efficiency relationship for each 
representative unit. DOE then extrapolated this relationship, generated 
for each representative unit, to all the other, unanalyzed, kVA ratings 
within that same equipment class.
    In the August 2021 Preliminary Analysis TSD, DOE stated that it 
maintained the existing designs from the previous rulemaking and 
updated the material prices to get an updated manufacturer selling 
price. (August

[[Page 1761]]

2021 Preliminary Analysis TSD, at p. 2-45)
    Howard commented that while updating pricing to $2020 still gives 
valid designs, reoptimizing with new pricing would have given more 
accurate results. (Howard, No. 59 at p. 2)
    DOE agrees that the most accurate results would be achieved by 
reoptimizing designs under current market practices. However, as 
commenters have attested, prices for many of the components making up 
distribution transformers are varied. Further, manufacturers may make 
different optimization decisions depending on their unique supply 
chains and manufacturing capacities. It would be impractical for DOE to 
reoptimize all designs with every change in material prices and to 
represent the specific supply chains of each manufacturer. To account 
for the variability in designs, DOE relies on a wide range of A and B 
values to initially develop designs reflective of the whole design 
space, not specific to any given day's pricing. DOE relies on 5-year 
average material pricing in its base analysis and conducts additional 
sensitivities to encompass additional pricing scenarios. Further, DOE's 
analysis of various efficiency levels includes a consumer choice model 
that selects a sub-set of designs based on the minimum MSP within a 
band-of-equivalence for a given efficiency level. As such, DOE's 
efficiency levels are not reflective of any one distribution 
transformer, but rather are designed to reflect the variety of 
distribution transformers customers would purchase at a given 
efficiency level.
    In the August 2021 Preliminary Analysis TSD, DOE noted that it 
adapted models of grain-oriented electrical steel to reflect some of 
the lower loss steels that have come onto the market since the previous 
rulemaking. Specifically, DOE stated that it estimated the core loss of 
a similar design by multiplying the no-load loss by the ratio of the 
core losses at a given flux density between two steels. DOE noted that 
while these designs would not be true optimal designs, given that lower 
loss steel allows more flexibility in the load losses, however, stated 
that because DOE's designs cover such a wide range of A and B values, 
the results would be sufficiently accurate. DOE requested feedback on 
this approach. (August 2021 Preliminary Analysis TSD at p. 2-46)
    Schneider commented that assuming the core losses of a swapped 
steel may be accurate for small reductions in core loss but bigger 
jumps could result in full redesigns. (Schneider, No. 49 at pp. 14-15) 
Powersmiths and ERMCO commented that this approach does not lead to 
optimized designs. (Powersmiths, No. 46 at p. 4; ERMCO, No. 45 at p. 1) 
NEMA commented that it is an oversimplification to assume that 
substituting of lower loss steel will lead to improved efficiency for a 
given design. (NEMA, No. 50 at p. 10) NEEA commented that DOE should 
not use this approach because new material may have different B-H 
curves and while it may be possible to use a direct swap--it generally 
isn't an acceptable practice. (NEEA, No. 51 at pp. 5-6) The Efficiency 
Advocates recommended DOE conduct new modeling as manufacturers who 
didn't optimize for new material would be at a competitive 
disadvantage. (Efficiency Advocates, No. 52 at pp. 6-7)
    In response to stakeholder feedback, DOE ran new modeling for some 
design option combinations included in the NOPR. DOE compared this new 
modeling to its models that were established by swapping core steels 
and has presented some of these comparisons in chapter 5 of the TSD. 
DOE notes that modeled designs may be slightly different at a given A 
and B value as compared to the direct swap of core steels. However, 
across the range of A and B values included in the engineering 
analysis, and specifically at the minimum MSP for a given efficiency, 
the cost-efficiency curves are very similar. While DOE intends to 
update all the engineering designs to newly modeled designs to instill 
greater confidence in the analysis, some core steel swap designs are 
still used in the NOPR in order to ensure quick publication of the 
NOPR. These designs are noted in chapter 5 of the TSD. Given the 
similarities between the modeled designs and the direct swap of steel 
designs, DOE believes the updated modeling will not notably impact 
analysis results.
a. Design Option Combinations
    As discussed, for each representative unit, DOE evaluates various 
design option combinations, which includes combinations of electrical 
steel, conductor material, and core construction techniques. In the 
August 2021 Preliminary Analysis TSD, DOE presented the various design 
option combinations it used for each representative unit. DOE noted 
that distributed gap wound cores typically need a high-temperature 
annealing process to relieve some of the stresses associated with the 
core winding process. (August 2021 Preliminary Analysis TSD at p. 2-46) 
As a result of this annealing, laser-scribed domain-refined steels lose 
the core loss benefit of the domain-refinement. As such, DOE did not 
include any laser-scribed domain-refined steels in distributed gap 
wound core design option combinations. DOE requested comment on this 
decision.
    In response, NEMA and Schneider supported DOE's decision not to 
include laser DR products in wound core constructions. (Schneider, No. 
49 at p. 15; NEMA, No. 50 at p. 11) Similarly, Eaton agreed with DOE's 
decision not to include laser-scribed domain-refined steels in wound 
cores but noted that larger, three-phase units may be able to use 
laser-scribed domain-refined steels in wound cores if an AEM Unicore 
machine is used and the products are not annealed. (Eaton, No. 55 at p. 
13)
    DOE agrees with Eaton that in certain scenarios it may be possible 
to use laser-scribed dr products in wound core. But as Eaton described, 
the dr characteristics are only maintained if the core is not annealed. 
An unannealed core is going to have greater losses associated with the 
stresses from the bending of the electrical steel. So, the loss 
reduction associated with the better performing laser dr product is 
going to be countered by increased losses associated with stresses from 
bending the steel without annealing. As such, this approach does not 
necessarily reflect a higher efficiency product, but rather a similar 
performing product to using hib steel without domain-refinement and 
annealing the core. DOE did not receive any opposition to its decision 
to not include laser-scribed dr steels in its wound core designs and 
therefore maintained that approach in the NOPR analysis.
    Regarding some of the specific design option combinations presented 
in the August 2021 Preliminary Analysis TSD, NEMA commented that GOES 
with performance lower than M4 is not used due to performance 
limitations. (NEMA, No. 50 at p. 8) Eaton commented that M5 isn't 
really used anymore and can be removed from RU4 engineering plots. 
Eaton also commented that M4 isn't really used in RU5 designs and can 
be removed from DOE's engineering plots. (Eaton, No. 55 at p. 20) Eaton 
commented that an Evans core transformer is not a valid option for wye-
wye distribution transformers but noted that it was a moot point since 
the costs are greater. (Eaton, No. 55 at p. 20)
    DOE acknowledges that some designs would be unlikely to be 
considered by many purchasers, but the engineering analysis is designed 
to explore the whole design space. The specific combinations identified 
by NEMA and

[[Page 1762]]

Eaton generally do not impact the analysis due to the first-cost of the 
product being too high and are included for completeness of the 
analysis.
    Regarding use of thinner steels, NEMA commented that thinner GOES 
is more difficult to use, but not overly burdensome, whereas amorphous 
is a different thickness and width and cannot be dropped in. (NEMA, No. 
50 at p. 9) Cliffs added that while there are specific applications 
where M2 is suitable, nearly all EOMS have stated it is not amenable to 
their manufacturing processes as it is thin and prone to folding and 
tearing in core making equipment. (Cliffs, No. 57 at p. 1)
    DOE includes additional costs associated with handling of thinner 
electrical steels, as described in chapter 5 of the TSD. While M2 is 
included in the analysis, DOE has limited its selection in the base 
case scenario as described in section IV.F.3.a to be reflective of its 
current market share. In the presence of higher standards, M2 steel (or 
similarly performing hib steel that wasn't modeled but has similar 
performance may be an option), may be a feasible design option for 
manufacturers although, it may not be the lowest first cost option.
    Regarding the burdens with using amorphous steel, DOE has 
considered those costs in the manufacturer impact analysis in section 
IV.J of this document.
    Eaton noted that while DOE's designs span the current definition 
for normal impedance range, if new designs are run in the future, a 
narrower impedance range should be used for RU4 and RU5 to align with 
IEEE C57.12.34, as too low an impedance could permit extremely high 
fault current in the event of a short circuit. (Eaton, No. 55 at p. 16)
    As Eaton noted, DOE's impedance ranges align with the current 
definition for normal impedance range. The narrower impedance range 
cited by Eaton are achievable in DOE's models by all efficiency levels. 
DOE believes aligning with the definition of normal impedance range 
remains appropriate given that a variety of impedances are included at 
each efficiency level and consumers may specify specific impedances.
b. Data Validation
    In the August 2021 Preliminary Analysis TSD, DOE stated that it had 
collected publicly available bid data for a variety of distribution 
transformers. DOE noted that the data was limited in its ability to 
compare cost and efficiency because the data was limited to liquid-
immersed distribution transformers, there was significant variability 
in primary voltages, the data didn't span the whole design space in all 
cases, much of the data was prior to implementation of the energy 
conservation standards as amended in the April 2013 Standards Final 
Rule (Effective January 1, 2016), and there was significant price 
variability at every efficiency. (August 2021 Preliminary Analysis TSD 
at p. 2-45) Rather than drawing any conclusions from this data, DOE 
relied on the reported no-load loss and full-load loss to estimate 
efficiency. DOE then presented the raw material prices and attempted to 
correct the material prices to show.
    The Efficiency Advocates commented that the bid data shows 
significant differences in MSP and indicates that the engineering 
analysis need to be updated to reflect up-to-date materials, costs, and 
designs. (Efficiency Advocates, No. 52 at p. 7) Eaton commented that 
the average selling price in the plots comparing bid data and DOE 
engineering show average selling prices being much higher than DOE's 
analysis suggests. (Eaton, No. 55 at p. 22)
    DOE is uncertain what significant difference in MSP the 
stakeholders are referring to as there is a wide range in the bid data 
and many of the points overlap between the bid data and DOE designs. 
Regardless, DOE has updated material costs in the NOPR analysis.
    In presenting the bid data, DOE noted that it only has full load 
efficiency at rated operating temperature, and therefore applied a 
quadratic scaling and estimated temperature correction to estimate the 
efficiency as measured according to DOE's test procedure.\49\
---------------------------------------------------------------------------

    \49\ See Chapter 5 of the NOPR TSD, available online at 
www.regulations.gov/document/EERE-2019-BT-STD-0018-0022.
---------------------------------------------------------------------------

    Eaton commented that DOE's estimate for correcting the load loss in 
the bid data is insufficient. (Eaton, No. 55 at p. 20) Eaton expressed 
concern that a similar method was used to calculate DOE's 50 percent 
load loss values from the 100 percent load loss values. (Eaton, No. 55 
at p. 20)
    DOE did not use the same method to calculate 50 percent load loss 
values from the 100 percent values in it modeled data, it only did this 
in the bid data because the bid data did not have specifics as to how 
the equipment temperature varies with load and temperature correction 
was simply to estimate efficiency for a general comparison. DOE's 
modeled data included estimated load performance and temperature at a 
variety of transformer load points. DOE relied on the modeled 
transformer load loss at 50 percent load and corrected from the modeled 
operating temperature to DOE's reference temperature.
    Rather than trying to estimate the rated efficiency of the public 
utility bid data from full load losses at rated temperature rises and 
make generalization as to how temperature would influence efficiency at 
rated PUL, DOE has looked at how the no-load and full load losses of 
the bid data compare to the full load losses of the DOE modeled data. 
These comparisons are shown in chapter 5 of the TSD. The comparisons 
show that DOE's modeled data aligns well with the design space of the 
public utility bid data.
    In comparing DOE's modeled results to the public utility bid data, 
DOE realized that for RU4 and RU5, DOE models overestimated GOES no-
load losses, and accordingly assumed manufacturers would need lower 
load losses in order to meet efficiency standards.
    The process of converting electrical steel from a sheet into a 
formed core shape incurs some number of additional losses, known as a 
destruction factor. Eaton commented that when comparing amorphous 
laminations to a finished core, the destruction factor can be non-
trivial and contribute an additional 40 percent to the core losses. 
(Eaton, No. 55 at p. 11) Similarly, in GOES cores, the destruction 
factor can be significant and varies by transformer type, manufacturing 
technique, and electrical steel type. In general, destruction factors 
are much more significant for three-phase distribution transformers 
than single-phase distribution transformers.
    The destruction factor for three-phase wound core designs was 
originally chosen to be conservative and assume manufacturers would 
have higher destruction factors. Through interviews, DOE learned that 
manufacturers may be able to reduce destruction factors in wound cores 
using a Unicore design, and this is more common in larger, three-phase 
designs which tend to be produced in lesser volumes. In the NOPR 
analysis, DOE modified the destruction factor of three-phase, liquid-
immersed, wound core, GOES distribution transformers to better align 
with the marketed Unicore destruction factors.\50\ The resulting 
designs better align with the actual design space observed in real 
world data, as shown in chapter 5 of the TSD. The impact of this change 
is that GOES transformers achieve higher efficiency ratings for RU4 and 
RU5 than the August 2021

[[Page 1763]]

Preliminary Analysis TSD suggested. It also introduces new transformers 
to the selectable design space which may have a lower MSP than if DOE 
had not made this change. While destruction factor does vary by 
manufacturing technique and manufactures may use different methods, DOE 
believes that absent this change, it would be overestimating the cost 
of meeting efficiency standards with a GOES core as compared to an 
amorphous core.
---------------------------------------------------------------------------

    \50\ Advertised destruction factors for Unicore available at 
www.aemcores.com.au/technology/annealing/overview-and-the-benefit-
of-unicore/.
---------------------------------------------------------------------------

    Regarding DOE's use of modeling software, Powersmiths commented 
that OPS software is used by them and many manufacturers but noted that 
the eddy and stray losses in OPS models are ``guestimates'' from the 
design engineer and can vary largely. (Powersmiths, No. 46 at pp. 4-5) 
Powersmiths commented that inadequate stray loss estimates could result 
in simulation errors and should be examined more closely relative to 
transformer capacity. (Powersmiths, No. 46 at p. 5)
    NEMA commented that its members' modeling programs account for 
stray, eddy, and other losses that appear largely absent from DOE 
models and while this was noted in the April 2013 Standards Final Rule, 
the efficiency levels in the preliminary analysis leave little 
flexibility to meet efficiency standards, making it more important now. 
(NEMA, No. 50 at p. 2) NEMA added by omitting these design factors, 
DOE's models do not represent true design feasibility and DOE should 
update models to add these losses. (NEMA, No. 50 at p. 2) NEMA 
commented specifically that in applications with a large amount of buss 
bars are required, efficiency standards are more difficult to meet. 
(NEMA, No. 50 at p. 5)
    DOE transformer models do include estimates of stray and eddy 
losses. As commenters noted, the amount that these impact designs will 
be unique to manufacturer and specific transformer designs. In DOE's 
comparison of its liquid immersed designs to the design space in public 
utility bid data, DOE notes that its designs align relatively well with 
what is being built on the market. Further, DOE includes a bus and lead 
correction factor to MVDT designs based on an understanding that 
substation-style designs are quite common in the MVDT market.
    DOE requests data as to how stray and eddy losses at rated PUL vary 
with kVA and rated voltages.
    While certain unique designs may have higher stray and eddy losses, 
the incremental costs with meeting higher efficiency standards tends to 
follow a similar relationship. Particularly to the extent that amended 
efficiency standards are met via a transition to lower-loss GOES or 
amorphous steel, the incremental cost to meet higher efficiency 
standards tends to be similar. In bid data, DOE observed that higher 
current transformers, which are more likely to have high stray losses, 
often have more amorphous bids. This suggests that transformers with 
high buss losses may have more favorable economics associated with 
meeting amended efficiency standards via amorphous steel.
    Regarding validation of DOE's engineering analysis more generally, 
NEMA commented that its members cannot validate and offer corrections 
for every RU but suggested DOE hold a series of collaborative meetings 
where models are made more accurate and representative. (NEMA, No. 50 
at p. 2) Eaton requested DOE provide more information about the 
distribution transformer design so manufacturers can confirm the 
designs align with their modeling. (Eaton, No. 55 at p. 20-22)
    DOE has included additional engineering details in chapter 5 of the 
TSD to better explain its modeling and costing. Regarding NEMA's 
suggestion to hold collaborative meetings, DOE notes that in addition 
to soliciting public comment in a written format and public interviews, 
DOE conducts confidential manufacturer interviews through which 
manufacturers are invited to offer feedback. DOE has in the past, and 
as part of this analysis, made updates to its modeling to better 
reflect manufacturer realities. DOE will continue to update its 
analysis in response to manufacturer feedback and particularly to the 
extent modeling deviates from real world design constraints.
c. Baseline Energy Use
    For each equipment class, DOE generally selects a baseline model as 
a reference point for each class, and measures changes resulting from 
potential energy conservation standards against the baseline. The 
baseline model in each product/equipment class represents the 
characteristics of a product/equipment typical of that class (e.g., 
capacity, physical size). Generally, a baseline model is one that just 
meets current energy conservation standards, or, if no standards are in 
place, the baseline is typically the most common or least efficient 
unit on the market.
    DOE's analysis for distribution transformers generally relies on a 
baseline approach. However, instead of selecting a single unit for each 
efficiency level, DOE selects a set of units to reflect that different 
distribution transformer purchasers may not choose distribution 
transformers with identical characteristics because of difference in 
applications and manufacturer practices. The mechanics of the customer 
choice model at baseline and higher efficiency levels are discussed in 
section IV.F.3 of this document.
d. Higher Efficiency Levels
    DOE relies on a similar approach to its baseline engineering in 
evaluating higher efficiency levels. DOE's modeled units span the 
design space. In evaluating a higher efficiency level up until that 
maximum efficiency level that DOE considers (``max-tech''), DOE 
evaluates the modeled units that would exceed the higher efficiency 
level. Then, rather than selecting a single unit, DOE applies a 
customer choice model to evaluate the distribution transformers that 
would be purchased if standards were amended.
    Howard commented that they looked at the various RUs and believe 
the current efficiency standards provide excellent value to consumers. 
(Howard, No. 59 at p. 2) Howard added that while they don't use OPS 
software, their internal software says to remain at the current 
efficiency levels and there is no need to have a NOPR as current 
standards are sufficient. (Howard, No. 59 at pp. 2-3) DOE appreciates 
Howard's comment but notes that they have not provided data to justify 
the results of their internal software. As noted previously, DOE has 
tentatively determined that the proposed standards are technologically 
feasible (based on models currently available in the market) and 
economically justified, and would result in significant energy savings.
    The Efficiency Advocates commented that since DOE last revised its 
energy conservation standards, major economies around the world have 
set new efficiency thresholds that exceed U.S. energy conservation 
standards. (Efficiency Advocates, No. 52 at pp. 7-8) The Efficiency 
Advocates commented that the U.S. should aim to be a world leader in 
transformer efficiency. (Efficiency Advocates, No. 52 at pp. 7-8)
    DOE notes that while it may look at foreign efficiency standards to 
get a better understanding of the global distribution transformer 
market, the U.S. has its own unique economic conditions, energy costs, 
and legal requirements. DOE has evaluated amended energy conservation 
standards based on the unique conditions of the U.S. and DOE's legal 
obligations under EPCA.

[[Page 1764]]

e. Load Loss Scaling
    DOE energy conservations standards apply only at a single PUL for a 
given distribution transformer equipment class (50 percent for liquid-
immersed distribution transformers and medium voltage dry-type 
distribution transformers and 35 percent for low-voltage dry-type 
distribution transformers). 10 CFR 431.196. However, distribution 
transformers exhibit varying efficiency with varying PUL. Distribution 
transformer no-load losses are generally constant with loading, while 
load losses vary approximately with the quadratic of the PUL. In 
practice, efficiency deviates slightly from this assumption as no-load 
losses are not perfectly constant and load losses are not perfectly 
quadratic. DOE requested comment on approximating load losses as a 
quadratic function of PUL.
    NEMA commented that the quadratic approximation for load losses is 
sufficient. (NEMA, No. 50 at p. 11)
    OPS' modeling includes details as to how a distribution 
transformer's loss and temperature vary across select load points. In 
determining the rated efficiency of a transformer model as it would be 
certified under DOE's test procedure, DOE relies on the modeled load 
losses at the PUL at which efficiency is calculated and corrects the 
load losses from the modeled temperature to the reference temperature. 
This value is used to calculate the rated efficiency of a distribution 
transformer model.
    In the downstream analysis of a distribution transformer energy use 
and costs, DOE relies on the calculated full-load loss values and 
applies a quadratic approximation for what the load losses would be 
under real world loading conditions. Commenters have generally agreed 
that this approach is sufficient.
    DOE noted that the full-load loss value DOE uses in its downstream 
analysis is the full-load loss estimate at the modeled transformer 
temperature. Full-load loss in industry is often reported at the rated 
temperature rise. Lower loss distribution transformers generally 
operate at lower temperatures, as they have less losses of heat to 
dissipate. Some transformers may operate well below their rated 
temperature even at full load. Therefore, the full-load losses used in 
the downstream analysis may be lower than the reported full-load losses 
at rated temperature rise.
    NEEA commented that a quadratic scaling of load losses would not 
apply with harmonic frequencies and DOE should include a harmonic 
dependent factor in its scaling model. (NEEA, No. 51 at p. 6) DOE notes 
that section 4.1 of appendix A specifies testing using a sinusoidal 
waveform. Therefore, harmonics would not impact the rated efficiency of 
a distribution transformer.
    In DOE's downstream analyses, harmonics would generally lead to 
greater losses. While nonlinear loads exist, the impact of them is 
small and DOE does not have data suggesting they meaningfully impact 
system wide savings to the point that a quadratic approximation is 
inaccurate. Further, while harmonics may increase losses, relative to 
what a quadratic approximation would estimate, lower operating 
temperatures at low-loading, where most distribution transformers 
operate, would decrease losses relative to the quadratic approximation.
    While other factors may cause the loss behavior of individual 
transformers in specific applications to deviate slightly from a true 
quadratic of the full-load losses, stakeholders have generally 
supported approximating load losses a quadratic of PUL and have not 
provided an alternative, more accurate method for approximating losses. 
As such, DOE has retained a quadratic load loss scaling in its 
analysis.
f. kVA Scaling
    NEMA commented that the 0.75 power scaling rule is overly 
simplistic and has resulted in smaller kVA MVDTs having a hard time 
meeting efficiency standards. (NEMA, No. 50 at p. 9) Eaton commented 
that DOE's scaling rule as it applied to height, width, and depth of 
the core/coil assembly would not always be accurate due to certain 
bushing space requirements and design trade-offs pertaining to bushing 
heights relative to core/coil assembly heights. (Eaton, No. 55 at p. 
16)
    DOE has not received any comment or data suggesting an alternative 
method for scaling kVA and therefore has retained its scaling methods.
3. Cost Analysis
    The cost analysis portion of the engineering analysis is conducted 
using one or a combination of cost approaches. The selection of cost 
approach depends on a suite of factors, including the availability and 
reliability of public information, characteristics of the regulated 
product, the availability and timeliness of purchasing the equipment on 
the market. The cost approaches are summarized as follows:
     Physical teardowns: Under this approach, DOE physically 
dismantles a commercially available product, component-by-component, to 
develop a detailed bill of materials for the product.
     Catalog teardowns: In lieu of physically deconstructing a 
product, DOE identifies each component using parts diagrams (available 
from manufacturer websites or appliance repair websites, for example) 
to develop the bill of materials for the product.
     Price surveys: If neither a physical nor catalog teardown 
is feasible (for example, for tightly integrated products such as 
fluorescent lamps, which are infeasible to disassemble and for which 
parts diagrams are unavailable) or cost-prohibitive and otherwise 
impractical (e.g., large commercial boilers), DOE conducts price 
surveys using publicly available pricing data published on major online 
retailer websites and/or by soliciting prices from distributors and 
other commercial channels.
    In the present case, DOE conducted the analysis by applying 
materials prices to the distribution transformer designs modeled by 
OPS. The resulting bill of materials provides the basis for the 
manufacturer production cost (``MPC'') estimates to which mark-ups are 
applied to generate manufacturer selling prices (``MSP''). The primary 
material costs in distribution transformers come from electrical steel 
used for the core and the aluminum or copper conductor used for the 
primary and secondary winding. DOE presented preliminary costing data 
and methodology in the August 2021 Preliminary Analysis TSD.
    Regarding the cost analysis generally, NEMA commented that the 
material prices presented in the preliminary analysis do not reflect 
the post-COVID world and may be low by as much as half. (NEMA, No. 50 
at p. 2) Eaton commented that PPI for power and distribution 
transformers has increased around 25 percent from 2020 levels and so 
costs are going to be higher and payback periods will be longer. 
(Eaton, No. 55 at p. 13) Howard echoed the concerns that Covid-19 has 
created labor and supply chain issues. (Howard, No. 59 at p. 1) Howard 
commented that their internal studies showed incremental MSPs as much 
as four times higher than what DOE showed in their preliminary 
analysis. (Howard, No. 59 at p. 2) Carte commented that the cost of 
both copper and aluminum have risen substantially in the past year. 
(Carte, No. 54 at pp. 3-4) Powermiths added that market megatrends, 
such as the pandemic, decarbonization and electric vehicles may impact 
the analysis and create uncertainty. Powesmiths recommended DOE delay 
changes until these megatrends settle. (Powersmiths, No. 46 at pp. 6-7) 
Powersmiths and Carte commented that the market is in a state of flux 
right now and it may be

[[Page 1765]]

prudent to hold off any changes to efficiency standards until prices 
settle. (Carte, No. 54 at p. 4; Powersmiths, No. 46 at p. 7)
    DOE data confirms that prices have been up recently, however, it is 
difficult to say for certain how those prices will vary in the medium 
to long terms and what those prices will be in the future. Rather than 
trying to project future prices, DOE relies on a five-year average in 
its base case and evaluates how the results would change with different 
pricing sensitivities. The recent price increases described by comments 
are incorporated into this five-year average and as a result, prices in 
the NOPR analysis are higher than they were in the August 2021 
Preliminary Analysis TSD.
    Eaton commented that in evaluating amended energy conservation 
standards, DOE should solicit quotations from at least three 
distribution transformer manufacturers for each representative unit and 
create a cost-down cost estimate to calibrate the bottom-up estimates. 
(Eaton, No. 55 at p. 19)
    As DOE noted in section IV.C.2.b, DOE welcomes manufacturers to 
submit design and costing data for distribution transformers. DOE notes 
that in addition to soliciting public comment in a written format and 
public interviews, DOE conducts confidential manufacturer interviews 
through which much of the pricing data is gathered. DOE has made some 
updates to its cost analysis in response to manufacturer feedback, as 
described in the following sections.
a. Electrical Steel Prices
    Electrical steel is one of the primary drivers of efficiency 
improvements and the relative costs associated with transitioning to 
lower loss steels can impact the cost effectiveness of amended 
efficiency standards. As noted, in section IV.A.5, the sourcing 
practices of individual manufacturers and production locations can 
impact prices as not all steel manufacturers produce the same 
electrical steels and trade actions have historically impacted the 
industry. DOE presented pricing in the August 2021 Preliminary Analysis 
TSD and requested comment. (August 2021 Preliminary Analysis TSD at p. 
2-53)
    ERMCO commented that the core steel costs presented in the 
preliminary analysis seem reasonable, but market growth in sectors, 
like EVs, may drive future prices up. (ERMCO, No. 45 at p. 1) 
Powersmiths commented that smaller manufacturers cannot access the DOE 
costs because volume drives price. Powersmiths noted that for one of 
the pdr steels it uses, the price has increased as much as 61 percent 
and they do not see them returning to their lower prices. (Powersmiths, 
No. 46 at p. 6)
    Carte commented that there is a global shortage of electrical steel 
and the price is up 20 percent in this year alone, with current prices 
up 76 percent from the 2008 peak. (Carte, No. 54 at p. 3) Carte noted 
that some industry sources expect prices to far exceed their 2008 
peaks. (Carte, No 54 at p. 3)
    Carte cited several reasons for the increase in pricing. China has 
reduced export of GOES in recent years. (Carte, No. 54 at p. 3) Second, 
increased competition from non-oriented electrical steel serving the 
electric vehicle industry which has encouraged some steel manufacturers 
to convert GOES production lines to non-oriented electrical steel 
production lines. (Carte, No. 54 at p. 3)
    DOE has updated pricing in this analysis in response to stakeholder 
feedback and confidential manufacturer interviews. Prices for 
electrical steel have increased significantly in recent years. 
Manufacturers noted that this price increase was particularly high for 
foreign electrical steel. DOE has applied a 5-year average price in its 
base case analysis. The prices in and conducted sensitivities for 
various other pricing scenarios, as discussed in section IV.C.3.
    EEI commented that higher standards may significantly impact all 
non-amorphous cores and limit choice and lead to higher prices for 
consumers considering limited availability of certain steel. (EEI, No. 
56 at p. 3)
    DOE generally assumes pricing to be reflective of current market 
costs. While higher standards could limit which steels are available to 
meet standards, DOE notes that a handful of high-volume steels 
currently dominate the industry. Historically, when amended standards 
have been adopted, steel manufacturers have increased capacity of the 
electrical steel grades needed to meet amended efficiency standards. 
These materials may have higher costs, but they also tend to have 
higher costs in the current market. Rather than trying to predict what 
the cost and market breakdown would be in the presence of amended 
standards, DOE relies on a five-year average and conducts price 
sensitivities to ensure that energy savings are cost effective under 
different pricing structures.
    Carte commented that while they don't purchase amorphous steel, DOE 
may want to verify that amorphous steel from China is still available 
and questioned if there were any domestic manufacturers of amorphous 
steel. (Carte, No. 54 at p. 3) DOE notes that amorphous steel is 
produced domestically, as well as in China and Japan.
    NEEA commented that its research suggests amorphous cores are lower 
first cost above 100 kVA single-phase or 500 kVA three-phase and there 
are several utilities commonly purchasing amorphous in the U.S. and 
Canada. (NEEA, No. 51 at p. 8) Metglas commented that its internal 
calculations show that amorphous steel is not close to price parity 
with GOES, using DOE's preliminary analysis assumed pricing. (Metglas, 
No. 53 at p. 2) Metglas commented that recent bid data shows amorphous 
transformers typically need an A value over $7 per Watt and A to B 
ratio greater than $3 per Watt for amorphous transformers to win on 
total ownership cost bids. (Metglas, No. 53 at p. 2) Metglas commented 
that DOE's preliminary analysis pricing of amorphous is accurate for 
sourced cores, but may be lesser for manufacturers who produce their 
own cores. (Metglas, No. 53 at p. 5)
    Metglas commented that some transformer manufacturers source cores 
while other produce them internally. (Metglas, No. 53 at p. 5) NEMA 
disagreed with DOE's assumption that all amorphous cores are sourced 
and deferred to individual NEMA members as to their specific practices. 
(NEMA, No. 50 at p. 11)
    Pricing for amorphous steel has increased slightly since the 
preliminary analysis but less so than GOES steel, and in particular 
foreign produced GOES. As such, amorphous steel is generally more 
competitive on first cost than it was in the preliminary analysis. As 
NEEA suggested, DOE did observe instances where amorphous transformers 
are lower first cost. However, that has not necessarily led to 
increased adoption, in part because most manufacturers' capital 
equipment is set-up for GOES core production. Amorphous transformer 
production would require manufacturer investment to fill high volume 
orders. As such, the first cost competitiveness of amorphous steel in 
certain applications has not necessarily corresponded to equivalent 
market share. DOE has continued to assume sourced core pricing for 
amorphous steel as most manufacturers do not have the capacity to 
produce cores in volume. While Metglas notes that manufacturers 
producing their own cores could have lesser costs, DOE notes in that 
scenario they would likely have additional retooling costs that would 
be aggregated over unit volume and increase core price relative to raw 
materials. More details regarding DOE's

[[Page 1766]]

pricing of amorphous steel are included in chapter 5 of the TSD.
    For this NOPR, DOE's analysis shows that it is cost-effective to 
meet the proposed standards for liquid-immersed and low-voltage dry-
type distribution transformers fabricated with amorphous steel cores. 
An energy conservation standard that significantly increases adoption 
of amorphous core distribution transformers would represent a 
substantial shift in the distribution transformer market. Such a shift 
could impact pricing and competition among steel suppliers in ways that 
may not be perfectly predictable, as the resulting market equilibrium 
would depend on decisions made by market participants outside of DOE's 
control. However, it is important to emphasize that price volatility in 
electrical steel and shifts in the market's competitive balance are not 
limited to amorphous steel.
    Substantial volatility has characterized the U.S. steel market over 
the last several decades. From 2000 to 2007, U.S. steel markets, and 
more specifically the U.S. electrical steel market, began to experience 
pressure from several directions. Demand in China and India for high-
efficiency, grain-oriented core steel contributed to increased prices 
and reduced global availability. Cost-cutting measures and technical 
innovation at their respective facilities, combined with the lower 
value of the U.S. dollar enabled domestic core steel suppliers to 
become globally competitive exporters.
    In late 2007, the U.S. steel market began to decline with the onset 
of the global economic crisis. U.S. steel manufacturing declined to 
nearly 50 percent of production capacity utilization in 2009 from 
almost 90 percent in 2008. Only in China and India did the production 
and use of electrical grade steel increase for 2009.\51\ In 2010, the 
price of steel began to recover. However, the recovery was driven more 
by increasing cost of material inputs, such as iron ore and coking 
coal, than broad demand recovery.
---------------------------------------------------------------------------

    \51\ International Trade Administration. Global Steel Report. 
(Last accessed September 1, 2022) https://legacy.trade.gov/steel/pdfs/global-monitor-report-2018.pdf.
---------------------------------------------------------------------------

    In 2011, core steel prices again fell considerably. At this time, 
China began to transition from a net electrical steel importer to a net 
electrical steel exporter.\52\ Between 2005 and 2011, China imported an 
estimated 253,000 to 353,000 tonnes of electrical steel. During this 
time, China added significant domestic electrical steel production 
capacity, such that from 2016 to 2019 only about 22,000 tonnes were 
imported to China annually. China also exported nearly 200,000 tonnes 
of electric steel annually by the late 2010's.
---------------------------------------------------------------------------

    \52\ Capital Trade Incorporated, Effective Trade Relief on 
Transformer Cores and Laminations, 2020. Submitted as part of AK 
Steel comment at Docket No. BIS-2020-0015-0075 at p. 168.
---------------------------------------------------------------------------

    Many of the exporters formerly serving China sought new markets 
around 2011, namely the United States. The rise in U.S. imports at this 
time hurt domestic U.S. steel manufacturers, such that in 2013, 
domestic U.S. steel stakeholders filed anti-dumping and countervailing 
duty petitions with the U.S. International Trade Commission.\53\ The 
resulting investigation found that ``an industry in the United States 
is neither materially injured nor threatened with material injury by 
reason of imports of grain-oriented electrical steel . . . to be sold 
in the United States at less than fair value.'' \54\
---------------------------------------------------------------------------

    \53\ U.S. International Trade Commission, Grain-Oriented 
Electrical Steel from Germany, Japan, and Poland, Investigation Nos. 
731-TA-1233, 1234, and 1236. September 2014.
    \54\ Id.
---------------------------------------------------------------------------

    In the amorphous steel market, the necessary manufacturing 
technology has existed for many decades and has been used in 
distribution transformers since the late 1980s.\55\ In many countries, 
amorphous steel is widely used in the cores of distribution 
transformers.\56\ Significant amorphous steel use tends to occur (1) in 
places with both comparatively lower labor costs and significant 
electrification (e.g., India, China); and (2) in regions with 
relatively high loss valuations on losses (e.g., certain provinces of 
Canada).
---------------------------------------------------------------------------

    \55\ DeCristofaro, N., Amorphous Metals in Electric-Power 
Distribution Applications, Material Research Society, MRS Bulletin, 
Volume 23, Number 5, 1998.
    \56\ BPA's Emerging Technologies Initiative, Phase 1 report: 
High Efficiency Distribution Transformer Technology Assessment, 
April 2020. Available online at: https://www.bpa.gov/EE/NewsEvents/presentations/Documents/Transformer%20webinar%204-7-20%20Final.pdf.
---------------------------------------------------------------------------

    Beginning in 2018, the U.S. government instituted a series of 
import duties on aluminum and steel articles, among other items. Steel 
and aluminum articles were generally subject to respective import 
duties of 25 and 10 percent ad valorem.\57\ 83 FR 11619; 83 FR 11625. 
Since March 2018, several presidential proclamations have created or 
modified steel and aluminum tariffs, including changes to the products 
covered, countries subject to the tariffs, exclusions, etc.\58\ Given 
the recency of several publications, combined with the supply chain 
disruptions caused by the Covid-19 pandemic, many of the price effects 
that, directly or indirectly, impact the pricing of distribution 
transformers may still be stabilizing.
---------------------------------------------------------------------------

    \57\ Ad valorem tariffs are assessed in proportion to an item's 
monetary value.
    \58\ Congressional Research Service, Section 232 Investigations: 
Overview and Issues for Congress, May 18, 2021, Available online at: 
https://fas.org/sgp/crs/misc/R45249.pdf.
---------------------------------------------------------------------------

    Another recent trend in distribution transformer manufacturing is 
an increase in rate of import or purchase of finished core products. 
The impact of electrical steel tariffs on manufacturers' costs varies 
widely depending on if manufacturers are purchasing raw electrical 
steel and paying a 25-percent tariff if the steel is imported, or if 
they are importing finished transformer cores which, along with 
distribution transformer core laminations and finished transformer 
imports, are not subject to the tariffs. Some stakeholders have argued 
that this trend toward importing distribution transformer cores, 
primarily from Mexico and Canada, is a method of circumventing tariffs, 
as electrical steel sold in the global market has been less expensive 
than domestic electrical steel on account of being unfairly 
traded.59 60 Conversely, other stakeholders have commented 
that this trend predated the electrical steel tariffs and that 
importation of transformer components is often necessary to remain 
competitive in the U.S. market, given the limited number of domestic 
manufacturers that produce transformer laminations and 
cores.61 62
---------------------------------------------------------------------------

    \59\ (AK Steel, Docket No. BIS-2020-0015-0075 at pp. 43-58).
    \60\ (American Iron and Steel Institute, Docket No. BIS-2020-
0015-0033 at pp. 2-5).
    \61\ (Central Maloney Inc., Docket No. BIS-2020-0015-0015 at pp. 
1).
    \62\ (NEMA, Docket No. BIS-2020-0015-0034 at pp. 3-4).
---------------------------------------------------------------------------

    On May 19, 2020, the U.S. Department of Commerce (DOC) opened an 
investigation into the potential circumvention of tariffs via imports 
of finished distribution transformer cores and laminations. 85 FR 
29926. On November 18, 2021, DOC published a summary of the results of 
their investigation in a notice to the Federal Register. The report 
stated that importation of both GOES laminations and finished wound and 
stacked cores has significantly increased in recent years, with 
importation of laminations increasing from $15 million in 2015 to $33 
million in 2019, and importation of finished cores increasing from $22 
million in 2015 to $167 million in 2019. DOC attributed these 
increases, at least in part, to the increased electrical steel costs 
resulting from the imposed tariffs on electrical steel. In response to 
their investigation, DOC stated it is exploring several options to 
shift the market towards domestic production and

[[Page 1767]]

consumption of GOES, including extending tariffs to include laminations 
and finished cores. No trade action has been taken at the time of 
publication of this NOPR. 86 FR 64606.
    More recently, DOE learned from stakeholders during manufacturer 
interviews and from public comments that pricing of electrical steel 
has risen such that in the current market, it is similar between 
domestic and foreign electrical steel (i.e., the price of foreign 
electrical steel without any tariffs applied). (Powersmiths, No. 46 at 
p. 6; Carte, No. 54 at p. 3) These recent price increases, particularly 
in foreign produced electrical steel, were cited as being a result of 
both general supply chain complications and increased demand for non-
oriented electrical steel (NOES) from electric motor applications. 
(NEMA, No. 50 at p. 9; Powersmiths, No. 46 at p. 5; Zarnowski, Public 
Meeting Transcript, No. 40 at p. 36; Looby, Public Meeting Transcript, 
No. 40 at p. 37)
    Since 2016, there has been one domestic supplier and multiple 
global suppliers of GOES. The amorphous steel market follows the same 
pattern, with one domestic supplier and multiple global suppliers. 
Further, although the current foreign suppliers of amorphous steel are 
primarily based in Japan and China, DOE received feedback through 
public comment and manufacturer interviews that South Korean and German 
steel suppliers have the capabilities to expand their steel production 
to include amorphous steel, if demand for amorphous steel increases. 
(Metglas, No. 11 at p. 2) DOE does not have data suggesting that 
amorphous steel is inherently more expensive to produce than GOES. Both 
varieties rely on similar inputs and both are capital-intensive, 
therefore tending to reduce per-pound production costs with higher 
capacity utilizations.
    Public comments by Metglas stated that within two years of 
developing the know-how to produce amorphous ribbon, producers in China 
were able to add 70,000 Mt of capacity.\63\ Public statements from one 
manufacturer in Europe note that since the expiration of an initial 
patent related to amorphous steel production, there have been a number 
of additional amorphous suppliers and material prices have been 
stable.\64\ Given these historical examples with which manufacturers 
have been able to quickly add amorphous capacity, along with the cited 
number of producers capable of making amorphous steel, DOE's view is 
that it is reasonable to expect that if there were insufficient 
amorphous steel production capacity to meet amended energy conservation 
standards, some manufacturers with the expertise to produce amorphous 
steel would enter the market and manufacturers currently without the 
expertise to manufacture amorphous steel may invest in its development.
---------------------------------------------------------------------------

    \63\ Metglas, Section 232 National Security Investigation of 
Imports of Steel: Comments by Metglas, Inc. Requesting the Inclusion 
of Amorphous Steel, 2017. https://www.bis.doc.gov/index.php/232-steel-public-comments/1835-metglas-amorphous-public-comment.
    \64\ Wilson Power Solutions, Amorphous Metal Transformers--Myth 
Buster, 2018. https://www.wilsonpowersolutions.co.uk/app/uploads/2017/05/WPS_AMT_Myth_Buster_2018-2.pdf.
---------------------------------------------------------------------------

    Additionally, during manufacturer interviews, stakeholders 
indicated that in the current marketplace there are shortages of GOES 
steel products, leading to greater price levels and volatility. Because 
GOES production can be shifted to NOES products at modest cost, these 
shortages are likely driven at least in part by rising demands for NOES 
in manufacture of motors and electric vehicles. This demand creates 
competition for GOES production capacity. Given recent trends of 
decarbonization initiatives and industrial reshoring, the manufacture 
of NOES for electric vehicle production appears poised to put 
competitive pressure on GOES production well into the future.\65\
---------------------------------------------------------------------------

    \65\ Example: California's electric vehicle adoption executive 
order: https://www.gov.ca.gov/wp-content/uploads/2020/09/9.23.20-EO-N-79-20-Climate.pdf, 2022.
---------------------------------------------------------------------------

    Further, there has been, and remains, competition for available 
low-loss grades of GOES between the power and distribution transformer 
segments. Cliffs commented that while high-permeability GOES works well 
in distribution transformers, it has historically been sold as a laser 
DR product to the power transformer market; NEMA commented that both 
distribution and power transformers compete for steel demand. (Cliffs, 
No. 57 at p. 1; NEMA, No. 50 at p. 9) Therefore, it is likely that any 
energy savings associated with use of lower-loss core steel, whether it 
be amorphous or grain-oriented, would require investment from steel 
manufacturing industry at-large to increase capacity of either lower-
loss GOES steels or of amorphous steel.
    Rather than constructing sensitivity analysis scenarios to reflect 
every potential combination of factors that may affect steel pricing 
(e.g., various tariffs and quotas, competition from NOES, decisions by 
steelmakers in various countries to add production capacity) or making 
assumptions regarding how changes in production volume affect material 
prices, DOE relies on a 5-year average pricing for its core steel.
    DOE requests comment on the current and future market pressures 
influencing the price of GOES. Specifically, DOE is interested in the 
barriers to and costs associated with converting a factory production 
line from GOES to NOES.
    DOE further requests comment regarding how the prices of both GOES 
and amorphous are expected to change in the immediate and distant 
future.
    DOE requests comment regarding the barriers to converting current 
M3 or 23hib90 electrical steel production to lower-loss GOES core 
steels.
    DOE requests comment as to if there are markets for amorphous 
ribbon, similar to NOES competition from GOES production, which would 
put competitive pressures on the production of amorphous ribbon for 
distribution transformers.
    DOE requests comment on how a potentially limited supply of 
transformer core steel, both of amorphous and GOES, may affect core 
steel price and availability. DOE seeks comment on any factors which 
uniquely affect specific steel grades (e.g., amorphous, M-grades, hib, 
dr, pdr). Additionally, DOE seeks comment on how it should model a 
potentially concentrated domestic steel market in its analysis, 
resulting from a limited number of suppliers for the amorphous market 
or from competition with NOES for the GOES market, including any use of 
game theoretic modeling as appropriate.
b. Scrap Factor
    In the August 2021 Preliminary Analysis TSD, DOE noted that it 
applies various scrap markups to distribution transformer bills of 
materials (August 2021 Preliminary Analysis TSD at p. 2-53). DOE 
requested comment on its scrap factor markups. Metglas commented that 
DOE should not apply a scrap to a finished core because the scrap would 
be included in the core costs. (Metglas, No. 53 at p. 5)
    DOE notes that a scrap factor is still applied to prefabricated 
cores to account for any potential breakage of cores and any scrap 
associated with assembling the windings or insulation on the cores. 
However, a lesser factor is used as compared to GOES because much of 
the scrap costs would be priced into the core production.
    Metglas commented that the scrap rate for GOES seemed low but did 
not provide an alternative value. (Metglas, No. 53 at p. 5) Eaton 
commented that it is unclear which mark-ups are applied

[[Page 1768]]

to which cores and DOE should clarify. (Eaton, No. 55 at p. 14)
    DOE has maintained the scrap factors from the preliminary analysis 
as it did not receive alternative values and has updated the language 
in chapter 5 of the TSD to better explain how scrap factors were 
applied. DOE has added equations in chapter 5 to walk through how the 
material costs were translated to MSPs.
c. Other Material Costs
    In the August 2021 Preliminary Analysis TSD, DOE presented material 
prices and requested comment on a variety of additional materials used 
in distribution transformer construction. (August 2021 Preliminary 
Analysis TSD at p. 2-50)
    Eaton commented that while windings combs and epoxy resin have 
materials cost listed, they are not used in liquid immersed 
transformers. (Eaton, No. 55 at p. 14) DOE notes that it did not apply 
either of those costs to liquid-immersed distribution transformers and 
has made that more clear in the NOPR TSD.
    Eaton commented that mineral oil and mild steel prices are higher 
than was shown in the August 2021 Preliminary Analysis TSD. (Eaton, No. 
55 at p. 14) Eaton commented that DOE may be underestimating pricing, 
in part due to underestimating the number and costs of some of the 
fixed components, such as the number of bushings for RU4 and RU5. 
(Eaton, No. 55 at pp. 14-16) DOE has made modifications to the pricing 
of its fixed components and updated costs to reflect generally price 
changes in the underlying commodities. DOE notes that the fixed-costs 
generally do not vary with efficiency and as such, higher pricing of 
these fixed-components would not impact the pay-back periods for more 
efficient distribution transformers.
    Specifically, regarding the cost of the distribution transformer 
tank, Eaton commented that the cost is too low and appears to have 
omitted the cost of the cabinet and associated labor. (Eaton, No. 55 at 
p. 15)
    Part of the difference in tank costs cited by Eaton, is likely 
associated with the increase in tank steel that has occurred between 
when the preliminary analysis prices were gathered compared to the NOPR 
prices. DOE has updated tank steel prices, which has increased the 
price of the distribution transformer tank. DOE notes that weld time 
would generally be included in calculation of labor. DOE has added 
additional detail as to calculation of tank cost in chapter 5 of the 
TSD.
    NEMA commented that radiators are not always included in footprint 
calculations but cabinet/enclosures are and DOE should add these into 
the analysis. (NEMA, No. 50 at p. 14)
    DOE has modeled a cabinet and enclosure in its sizing of 
distribution transformer tanks. DOE has presented these additional 
details in chapter 5 of the TSD.
d. Cost Mark-Ups
Factory Overhead
    In the August 2021 Preliminary Analysis TSD, DOE noted that it used 
a factory overhead markup to account for all indirect costs associated 
with production, indirect materials and energy used, taxes, and 
insurance. (August 2021 Preliminary Analysis TSD at p. 2-57)
    Eaton commented that it was unclear what exactly the factory 
overhead markup was applied to, for example, did it include only 
materials the consumer produced themselves or did it apply to purchased 
parts as well. (Eaton, No. 55 at p. 15)
    DOE applied the factory overhead markup to all material costs, 
which would include purchased parts. DOE understands that purchased 
parts would still require factory space, certain equipment usage, 
taxes, and insurance. DOE has added detail in chapter 5 of the TSD as 
to how it applied the Factory Overhead Mark-up.
Labor
    Labor costs are an important aspect of the cost of manufacturing a 
distribution transformer. In the August 2021 Preliminary Analysis TSD, 
DOE described how the number of labor hours were derived for each 
distribution transformer design. For liquid-immersed distribution 
transformers, DOE generally relied on a bottoms-up approach, estimating 
the various hours associated with the various steps in distribution 
transformer manufacturing. For dry-type distribution transformers, DOE 
relies on a top-down approach to estimate the total labor for a unit 
using equations derived from manufacturer data. These equations include 
a base labor charge for a given unit and a variable charge that varies 
with transformer size. DOE notes in the August 2021 Preliminary 
Analysis TSD, it mistakenly outlined a bottom-up approach for LVDTs 
when in fact a top-down labor estimate was used. This discussion is 
modified in chapter 5 of the TSD, while the estimated labor per unit is 
unchanged.
    In response to the August 2021 Preliminary Analysis TSD, Eaton 
noted that the estimates of labor hours for RU4 and RU5 appeared to 
notably underestimate the required labor per unit and noted many 
specific areas in the bottom-up approach that appeared to underestimate 
labor. (Eaton, No. 55 at p. 17-19) Eaton also noted that DOE 
overestimated the RU5 additional number of labor hours for building an 
amorphous distribution transformer and that the only difference would 
be that an amorphous transformer would have a split core assembly, 
which would require above 1 hour of additional labor. (Eaton, No. 55 at 
p. 20)
    In manufacturer interviews, DOE received concurring feedback that 
while its estimates of labor per unit and bottoms-up approach were 
approximately accurate for its single-phase, liquid-immersed units, 
three-phase units require substantially more labor. DOE relied on 
manufacturer interviews and confidential data to develop estimates for 
labor hours for RU4 and RU5 that assumes a base labor number of hours 
and a variable that scales with unit size, similar to what is done for 
the dry-type distribution transformers. These equations are presented 
in chapter 5 of the TSD.
    Eaton commented that it believes the fully burdened cost of labor 
is way too low and a value of $200/hour or more seems more appropriate. 
(Eaton, No. 55 at p. 16)
    DOE applies a labor cost per hour that is generally derived from 
the U.S. Bureau of Labor Statistic rates for North American Industry 
Classification System (``NAICS'') Code 335311--``Power, Distribution, 
and Specialty Transformer Manufacturing'' production employee hourly 
rates and applied mark-ups for indirect production, overhead, fringe, 
assembly labor up-time, and a nonproduction mark-up to get a fully 
burdened cost of labor. In the preliminary analysis, DOE adjusted the 
labor rate upward in response to manufacturer feedback. While some 
manufacturers may have different labor costs, DOE generally considers 
the BLS statistics approximately representative. DOE has adjusted labor 
costs from the preliminary analysis based on the ratio of increased 
labor costs in NAICS code.
Shipping
    In the August 2021 Preliminary Analysis TSD, DOE noted that it used 
a price per pound estimate to estimate the shipping cost of 
distribution transformers. DOE stated that while shipping costs will 
vary depending on several factors, including weight, volume, footprint, 
order size, destination, distance, and other, general shipping costs 
(fuel prices, driver wages, demand, etc.), the price-per-pound estimate 
is an appropriate approximation of shipping costs and

[[Page 1769]]

reflects that there would be increased shipping costs associated with 
larger distribution transformers. DOE then applied a non-production 
markup on top of its shipping costs. DOE requested comment on its 
methodology and the shipping costs used in the preliminary analysis. 
(August 2021 Preliminary Analysis TSD at p. 2-56)
    Howard commented that they have their own shipping division and 
trucks and optimize shipments to be most efficient. (Howard, No. 59 at 
p. 3) Eaton commented that shipping costs vary but on average, DOE's 
shipping cost estimates are reasonable. (Eaton, No. 55 at p. 16)
    DOE did not receive any comment or data suggesting an alternative 
approach to shipping costs, therefore DOE has retained its price-per-
pound mark-up to account for shipping in the NOPR analysis.
Manufacturer Markup
    To account for the manufacturer's nonproduction costs and profit 
margin, DOE applies a manufacturer markup to the MPC. The resulting MSP 
is the price at which the manufacturer distributes a unit into 
commerce. In the preliminary analysis, DOE applied a gross margin 
percentage of 20 percent for all distribution transformers.\66\
---------------------------------------------------------------------------

    \66\ The gross margin percentage of 20 percent is based on a 
manufacturer markup of 1.25.
---------------------------------------------------------------------------

    Eaton commented that its gross profit margin was higher and a 20 
percent gross margin is too low for a publicly traded corporation with 
obligations to stakeholders.\67\ (Eaton, No. 55 at p. 16-17)
---------------------------------------------------------------------------

    \67\ A 20 percent gross margin is equivalent to a 1.25 
manufacturer markup.
---------------------------------------------------------------------------

    DOE's average gross margin was developed by examining the annual 
Securities and Exchange Commission (SEC) 10-K reports filed by 
publicly-traded manufacturers primarily engaged in distribution 
transformer manufacturing and whose combined product range includes 
distribution transformers.
    While some corporations may have higher gross margins, the gross 
margin is unchanged from the April 2013 Standards Final Rule and was 
presented to manufacturers in confidential interviews as part of both 
the preliminary analysis and the NOPR analysis. While some 
manufacturers noted higher or lower gross margins, depending on the 
product class, there was generally agreement that the 20 percent gross 
margin was appropriate for the industry. As such, DOE has retained the 
20 percent gross margin as part of the NOPR analysis.
4. Cost-Efficiency Results
    The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of energy efficiency (in 
percentage) versus MSP (in dollars), which form the basis for 
subsequent analyses in the preliminary analysis. DOE developed sixteen 
curves representing the sixteen representative units. DOE implemented 
design options by analyzing a variety of core steel material, winding 
material and core construction method for each representative unit and 
applying manufacturer selling prices to the output of the model for 
each design option combination. See TSD chapter 5 for additional detail 
on the engineering analysis.
    Powersmiths commented that the cost-efficiency plots show it is too 
cheap to achieve higher efficiency and if it were really that cheap, 
the market would move there without legislation. (Powersmiths, No. 46 
at p. 5) Conversely, Metglas commented that the market does not 
evaluate based on efficiency and the only way to see efficiency 
improvements is via amended energy conservation standards. (Metglas, 
No. 53 at p. 8)
    In general, DOE's analysis assumes most distribution transformer 
customers purchase based on lowest first cost and there is limited 
market above minimum efficiency standards (see section IV.F.3.c). 
Therefore, DOE does not have data to support manufacturers will build 
above minimum efficiency standards, aside from certain select 
applications, even if it were only modestly more expensive.
    The Efficiency Advocates commented that the percentage of 
transformers core steels purchased in the preliminary analysis shows 
that too few GOES transformers are being selected, indicating a 
potential issue in the engineering analysis. (Efficiency Advocates, No. 
52 at p. 7)
    DOE has acknowledged that aside from lowest first cost, 
manufacturers may be limited in their steel choice under the base case. 
In certain cases, the incremental cost to higher efficiency standards 
may be low but assumes access to suppliers of better performing steel. 
DOE has updated its baseline analysis to reflect the steel choices that 
are currently made in the industry as described in section IV.F.3.a.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and sales taxes to convert the MSP estimates derived in the 
engineering analysis to consumer prices, which are then used in the LCC 
and PBP analysis. At each step in the distribution channel, companies 
mark up the price of the product to cover costs. DOE's markup analysis 
assumes that the MSPs estimated in the engineering analysis (see 
section IV.C of this document) are occurring in a competitive 
distribution transformer market as discussed in section V.B.2.d of this 
document.
    For distribution transformers, the main parties in the distribution 
chain differ depending on the type of distribution transformer being 
purchased and by whom.
    Liquid-immersed distribution transformers are almost exclusively 
purchased and installed by electrical distribution companies, as such 
the distribution chained assumed by DOE reflect the different parties 
involved. Dry-type distribution transformers are used to step down 
voltages from primary service into the building to voltages used by 
different circuits within a building, such as, plug loads, lighting, 
and specialty equipment; as such DOE modelled that dry-type 
distribution transformers are purchased by non-residential customers, 
i.e., commercial, and industrial customers.
    DOE considered the following distribution channel shown in Table 
IV.5.

                         Table IV.5--Distribution Channels for Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                                                                    Market share
                 Type                            Consumer                (%)            Distribution channel
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed.......................  Investor-owned utility...              82  Manufacturer [rarr] Consumer.
                                                                               18  Manufacturer [rarr]
                                                                                    Distributor [rarr] Consumer.
                                        Publicly-owned utility...             100  Manufacturer [rarr]
                                                                                    Distributor [rarr] Consumer.
LVDT..................................  All......................             100  Manufacturer [rarr]
                                                                                    Distributor [rarr]
                                                                                    Electrical contractor[rarr]
                                                                                    Consumer.

[[Page 1770]]

 
MVDT..................................  All......................             100  Manufacturer [rarr]
                                                                                    Distributor [rarr]
                                                                                    Electrical contractor[rarr]
                                                                                    Consumer.
----------------------------------------------------------------------------------------------------------------

    Howard commented that in in their experience that liquid-immersed 
distribution transformers are sold directly (more than 80%) to the 
utilities through our agents or manufacturing representatives. (Howard, 
No. 59 at p. 2) DOE notes that the distribution channels used in the 
preliminary analysis include a large fraction of sales as being direct 
to purchases by utilities that would encompass the circumstances 
described by Howard, as shown in Table IV.5.\68\ For this analysis DOE 
maintained the distribution channels distribution channels described in 
its preliminary analysis.
---------------------------------------------------------------------------

    \68\ See: Technical Support Document, chapter 2, page 2-58. 
https://www.regulations.gov/document/EERE-2019-BT-STD-0018-0040.
---------------------------------------------------------------------------

    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for distribution transformers.

E. Energy Use Analysis

    The energy use analysis produces energy use estimates and end-use 
load shapes for distribution transformers. The energy use analysis 
estimates the range of energy use of distribution transformers in the 
field (i.e., as they are used by consumers) enabling evaluation of 
energy savings from the operation of distribution transformer equipment 
at various efficiency levels, while the end-use load characterization 
allows evaluation of the impact on monthly and peak demand for 
electricity. The energy use analysis provides the basis for other 
analyses DOE performed, particularly assessments of the energy savings 
and the savings in operating costs that could result from adoption of 
amended or new standards.
    As presented in section IV.C transformers losses can be categorized 
as ``no-load'' or ``load.'' No-load losses are roughly constant with 
the load on the transformer and exist whenever the distribution 
transformer is energized (i.e., connected to electrical power). Load 
losses, by contrast, are zero at when the transformer is unloaded, but 
grow quadratically with load on the transformer.
    Because the application of distribution transformers varies 
significantly by type of distribution transformer (liquid-immersed or 
dry-type) and ownership (electric utilities own approximately 95 
percent of liquid-immersed distribution transformers; commercial/
industrial entities use mainly dry type), DOE performed two separate 
end-use load analyses to evaluate distribution transformer efficiency. 
The analysis for liquid-immersed distribution transformers assumes that 
these are owned by utilities and uses hourly load and price data to 
estimate the energy, peak demand, and cost impacts of improved 
efficiency. For dry-type distribution transformers, the analysis 
assumes that these are owned by commercial and industrial (``C&I'') 
entities, so the energy and cost savings estimates are based on monthly 
building-level demand and energy consumption data and marginal 
electricity prices. In both cases, the energy and cost savings are 
estimated for individual distribution transformers and aggregated to 
the national level using weights derived from transformer shipments 
data.
1. Hourly Load Model
    For utilities, the cost of serving the next increment of load 
varies as a function of the current load on the system. To 
appropriately estimate the cost impacts of improved distribution 
transformer efficiency in the Life-cycle Cost (LCC) analysis, it is 
therefore important to capture the correlation between electric system 
loads and operating costs and between individual distribution 
transformer loads and system loads. For this reason, DOE estimated 
hourly loads on individual liquid-immersed distribution transformers 
using a statistical model that simulates two relationships: (1) the 
relationship between system load and system marginal price; and (2) the 
relationship between the distribution transformer load and system load. 
Both are estimated at a regional level. Distribution transformer 
loading is an important factor in determining which types of 
distribution transformer designs will deliver a specified efficiency, 
and for calculating distribution transformer losses, and the time 
dependent values of those losses. To inform the hourly load model DOE 
examined the data made available through the IEEE Distribution 
Transformer Subcommittee Task Force.
a. Hourly Per-Unit Load (PUL)
    GEUS commented that because of load diversity, individual 
distribution transformer capacity (kVA) per home depends on the number 
of homes connected to the transformer. For example, GEUS will place a 
15 kVA transformer for a single 1200 square foot home, but 8 of these 
homes can be served by a single 50 kVA transformer. GEUS further 
commented that to balance transformer core (no-load) losses and 
resistive (load) losses their design strategy is to serve as many homes 
as possible within a 300 feet radius of the transformer. This design 
reduces transformer core (no-load) losses by reducing the transformer 
kVA/home, thereby reducing the ratio of no-load to load losses on each 
transformer. (GEUS, No. 58 at p. 1) Howard commented that it is their 
understanding that in some rural areas, there are transformers that are 
very lightly loaded, and in other areas, some units are loaded much 
more than 50 percent (Howard, No. 59 at p. 3) NEMA commented that the 
in-situ PUL varies widely from region to region and customer to 
customer. (NEMA, No. 50 at p. 12)
    The Advocates asserted that DOE's estimation of PUL to be too high 
and that if DOE decides to maintain these PUL inputs at their current 
values, the Department should provide a sensitivity analysis that 
enables commenters to evaluate the effect of PUL assumptions on the 
overall energy savings and economic analysis. (Efficiency Advocates, 
No. 52 at p. 6) Additionally, they commented that they believe DOE may 
be overestimating initial PUL (sic) in the preliminary analysis; this 
may negatively affect higher EL designs that prioritize core loss 
reductions and they urged DOE to update its assumptions based on 
recently available data. (Efficiency Advocates, No. 52 at pp. 2, 5)
    Metglas commented that it is not possible to derive transformer PUL 
just from the meter data. To get a transformer's PUL, one must 
associate which meters are getting supplied from which transformer. 
Further Metglas commented that, the data has come from only 127 zip 
codes adjacent to each other. Metglas asserted that the sample is too 
small to draw conclusions at the National level, and suggested that DOE 
base their ruling on data submitted by Electric Utilities to the IEEE 
Transformer Committee which indicates

[[Page 1771]]

that the average PUL on transformers are in the 0.1-0.2 values. 
(Metglas, No. 53 at p. 7-8)
    NEEA further noted that the per-unit bases for both the system and 
individual transformer loads in the joint histogram estimates are not 
related to the transformer per-unit loads using nameplate capacities as 
the basis. They claim that this means that the loading estimates 
obtained from the joint histograms cannot be directly applied to the 
cited transformer loss formula, since the latter assumes a per-unit 
loading on a capacity basis. (NEEA, No. 51 at p. 2-3)
    In this NOPR, DOE applied the same approach it used in the August 
2021 preliminary analysis where the hourly PUL is a function of both 
the transformer's simulated load and initial peak load (IPL). Where:

PUL = simulated loadhourly x IPL.

    To capture the wide diversity in distribution transformer loading 
that is observed in the field, DOE used a two-step approach. 
Transformer load data were used to develop a set of joint probability 
distribution functions (JPDF) which capture the relationship between 
individual transformer loads and the total system load.\69\ The 
transformer loads were calculated as the sum load of all connected 
meters on a given transformer for each available hour of the year. 
Because the system load is the sum of the individual transformer loads, 
the value of the system load in a given hour conditions the probability 
of the transformer load taking on a particular value. To represent the 
full range of system load conditions in the U.S., DOE used FERC Form 
714 \70\ data to compile separate system load PDFs for each census 
division. These system PDFs are combined with a selected transformer 
JPDF to generate a simulated load appropriate to that system. As the 
simulated transformer loads are scaled to a maximum of one, to 
calculate the losses, the load is multiplied by a scaling factor 
selected from the distribution of Initial Peak Loads (IPL), and by the 
capacity of the representative unit being modeled. In the August 2021 
preliminary analysis, DOE defined the IPL as a triangular distribution 
between 50 and 130 percent of a transformer's capacity with a mean of 
85 percent. This produces an hourly distribution of PUL values from 
which hourly load losses are determined. These distributions of loads 
capture the variability of distribution transformers load diversity, 
from very low to very high loads, that are seen in the field.
---------------------------------------------------------------------------

    \69\ See: Distribution Transformer Load Simulation Inputs, 
Technical Support Document, chapter 7.
    \70\ https://www.ferc.gov/industries-data/electric/general-information/electric-industry-forms/form-no-714-annual-electric/data.
---------------------------------------------------------------------------

    In response to the comments from the Advocates and Metglas, DOE 
revised the IPL assumptions in this NOPR to more closely align the 
resulting PUL with data made available through the IEEE Distribution 
Transformer Subcommittee Task Force. The revised mean PULs for liquid-
immersed representative unit used in this NOPR are shown in Table IV.6.

             Table IV.6--Distribution of Per-Unit-Load for Liquid-Immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                                                                       Mean
                            Rep. unit                                simulated       Mean IPL        Mean PUL
                                                                    hourly load
----------------------------------------------------------------------------------------------------------------
1...............................................................            0.29            0.75            0.22
2...............................................................            0.27            0.75            0.20
3...............................................................            0.32            0.75            0.24
4...............................................................            0.26            0.75            0.20
5...............................................................            0.31            0.75            0.23
----------------------------------------------------------------------------------------------------------------

b. Joint Probability Distribution Function (JPDF)
    NEEA commented that when processing the load data into JPDF of 
loads that observed hourly loads for both commercial and residential 
customers were scaled by corresponding annual maxima prior to being 
counted towards the joint histogram, so that the observations may be 
treated as if on a per-unit basis. This is inconsistent with the per-
unit notion in power systems, but permissible in this context if so 
stated. However, the problem of bias applied to an entire set of 
observations for a given transformer or ``system'' by an abnormally 
large (or small) peak observation is not acknowledged and therefore not 
treated. (NEEA, No. 51 at p. 2). DOE notes that the transformer data 
were screened to remove outliers before being used to construct JPDFs; 
a small number of transformers in the database may none-the-less have 
quite large or quite small peak loads, but the associated low 
probability leads to minimal impact on the energy loss calculations. 
The data will be reviewed again to ensure that outliers have been 
removed.
    NEEA found issue with DOE's terminology in the TSD, which stated 
that DOE applies the joint histogram as a measure of correlation; and 
this is not the typical interpretation of joint probability. NEEA 
further recommended that a covariance-based measure (e.g., correlation 
coefficient) is the appropriate class of metric in this case because 
the subject load processes will necessarily be related as a consequence 
of common influences, each of which is in turn a stochastic process. 
(NEEA, No. 51 at pp. 2-3) In response, DOE agrees with NEEA's comment 
that the term ``correlation'' used in the TSD is not appropriate. The 
system load is the sum of the loads on individual transformers, so the 
system load and transformer loads are not independent random variables. 
The relationship between the two, represented by the JPDF, is a 
conditional probability distribution. DOE attempts to document its 
analyses in plain language, and the term correlation was used simply to 
indicate that the relationship between the transformer and system loads 
is not random. For this NOPR DOE will continue to use the term 
correlation to describe the general relationship between transformer 
and system loads, using footnotes to provide technical precision as 
needed.
    On the topic of industrial loads for liquid-immersed distribution 
transformers NEEA asserted that as describe in the TSD appendix 7A, 
that in the case of industrial customers, actual transformer load data 
were not available and would be problematic for the estimation of the 
subject joint histograms. (NEEA, No. 18 at p. 2) At the time of the 
August 2021 Preliminary Analysis TSD, DOE was unable to acquire the 
transformer loads from industrial customers. As discussed in

[[Page 1772]]

TSD appendix 7A, DOE was able to include the hourly meter loads from 
industrial customers, which contain hourly variability in load factor, 
as proxies for transformer loads--which were included in its database 
of JPDFs.
    DOE requests comment or data showing hourly transformer loads for 
industrial customers.
    NEEA additionally requested that DOE rationalize the choice of bin 
resolution in the joint histogram estimates. (NEEA, No. 51 at p. 2) In 
the August 2021 Preliminary Analysis TSD, DOE applied the same 
methodology to the creation and population of JPDFs as it did in the 
April 2013 Standards Final Rule. For the April 2013 Standards Final 
Rule, DOE balanced the bin resolution to 10 bins to ensure that each 
bin contained sufficient data to be sampled during its Monte Carlo 
simulation (~2 percent of samples per bin), this was also balanced 
against the computational limits of preforming this model within an 
Excel spreadsheet. For the August 2021 Preliminary Analysis TSD, DOE 
considered increasing the bin count, but after testing found that this 
did not significantly alter the resulting averages, as such DOE elected 
to maintain the approach that stakeholders were already familiar with. 
For this NOPR, DOE will maintain the 10 bins that were applied in the 
August 2021 Preliminary Analysis TSD.
2. Monthly Per-Unit Load (PUL)
    Powersmiths commented that, in the context of low-voltage dry-type 
distribution transformers, it has consistently measured much lower 
typical loading levels, across most vertical markets, in the range of 
15-25 percent of nameplate capacity, which is in line with the 
publication in 1999 with the Cadmus Group Study and supported 
frequently since then in industry and at previous rulemaking sessions. 
(Powersmiths, No. 46 at p. 1)
    DOE received no further comments on the in-field PUL for dry-type 
distribution transformers. Since the comments from Powersmiths align 
with DOE's analysis which shows an average RMS PUL for dry-type 
transformers to be in 16-27 percent of nameplate capacity DOE did not 
make any changes to its dry-type load model for this NOPR.
3. Future Load Growth
    In its August 2021 Preliminary Analysis TSD, DOE applied an annual 
load growth rate of 0.9 percent, based on U.S. Energy Information 
Administration (``EIA''), Annual Energy Outlook (``AEO'') 2021 
projected purchased electricity: delivered electricity trend, to 
liquid-immersed transformers, and zero percent for low- and medium-
voltage dry-type transformers.\71\ On the subject of future load growth 
DOE received comments from EEI, CDA, Howard, Efficiency Advocates, 
Metglas. and NEMA.
---------------------------------------------------------------------------

    \71\ TSD chapter 2, p. 2-63, August 2021. https://www.regulations.gov/document/EERE-2019-BT-STD-0018-0040.
---------------------------------------------------------------------------

    Both EEI and CDA commented that they believe that loads on 
individual liquid-immersed distribution transformers will increase over 
the equipment's lifetimes due to several factors. Both speculated that 
the increase in loads will be driven by evolving ``mega trends'' in the 
electric utility industry, specifically increased electric vehicle 
charging, and increased building electrification. (EEI No. 56 at p. 2; 
CDA No. 47 at p. 1) The CDA further commented that EEI has projected 
loading increases of 10-50 percent over the forecast period that will 
greatly change operating practices in the utilities. This suggests the 
increasing importance of transformer load losses as well as balance and 
minimization of total losses. (CDA, No. 47 at p. 2) Howard commented 
that we are at the threshold of having many electric vehicles (EV) that 
will require a lot of energy use through the transformer. How quickly 
this will happen, remains to be seen. (Howard, No. 59 at p. 3)
    NEMA commented that while they could not state with certainty what 
the appropriate load growth rate would be, they disagreed with an 
assumption of zero percent load growth. (NEMA, No. 50 at p. 13)
    The Advocates, and Metglas challenged DOE application of a 0.9 
percent annual load growth for liquid-immersed distribution 
transformers. Both asserted that the assumption of load growth rate 
applied to liquid-immersed distribution transformers of 0.9 percent per 
year was not justified as the National growth in electric demand will 
be matched by increased distribution capacity. They asserted that the 
load growth rate assumed by DOE, the average increase in annual 
electricity sales from AEO, is not entirely driven by increased 
electrical load on existing liquid-immersed distribution transformers, 
but in fact driven by grid expansion. (Advocates, No. 52 at pp. 5-6; 
Metglas, No. 53 at pp. 1, 5-6)
    Additionally, the Advocates commented that they believe utilities 
will plan conservatively by installing larger transformers capable of 
handling rare peak demand events. Citing as evidence the IEEE load data 
as suggesting utilities are already doing this as the reported average 
peak loads were only 50 percent of nameplate capacity. Utility 
decisions for how they size transformers are unlikely to change for new 
and replacement transformer installations given the uncertainties 
around future electricity demand. (Efficiency Advocates, No. 52 at pp. 
5-6) This notion was supported by NEMA who commented that as consumer 
demand (for electricity) increases due to the migration to all-electric 
homes and buildings, and it stands to reason that kVA sizes will 
increase over time as utilities upgrade capacity to serve these 
consumer demands. Likewise, investments in renewable energy generation 
will cause changes to transformer shipments, unit sizes and selections. 
(NEMA, No. 50 at p. 16)
    As the August 2021 Preliminary Analysis TSD indicated, and by the 
comments received, there are many factors that potentially impact 
future distribution transformer load growth, and that these factors may 
be in opposition. At this time, many utilities, states, and 
municipalities are pursuing electric vehicle charging programs, it is 
unclear the extent to which increases in electricity demand for 
electric vehicle charging, or other state level decarbonization efforts 
will impact current distribution transformer sizing practices (for 
example, whether distribution utilities plan to upgrade their systems 
to increase the capacity of connected distribution transformers--thus 
maintaining current loads as a function of distribution transformer 
capacity; or if distribution utilities do not plan to upgrade their 
systems and will allow the loads on existing distribution transformers 
to rise). EEI, CDA, and Howard speculate that these initiatives will 
increase the intensive per-unit-load over time as a function of per 
unit of installed capacity. However, they did not provide any 
quantitative evidence that this is indeed happening on the distribution 
systems, or regions which are moving forward with decarbonization 
efforts. Further, the hypothesis that intensive load growth will be a 
factor in the future is not supported by the available future trends in 
AEO2022, as indicated by the purchased electricity trend as it 
represents the delivered electricity to the customer. The Advocates and 
Metglas asserted that the load growth rate 0.9 percent per year was too 
great, and that higher loads in response to decarbonization initiatives 
would be met with the extensive growth of the distribution system, 
i.e., increasing the total capacity of the distribution system

[[Page 1773]]

through larger distribution transformers, or greater shipments, or some 
combination of both. Again, neither the Advocates nor Metglas provided 
any data to support their position. For this NOPR, DOE finds that 
neither position provides enough evidence to change its assumptions 
from the August 2021 Preliminary Analysis TSD. For this NOPR, DOE 
updated its load growth assumption for liquid-immersed distribution 
transformers based on the change in average growth of AEO2022: 
Purchased Electricity: Delivered Electricity at 0.5 percent.\72\
---------------------------------------------------------------------------

    \72\ www.eia.gov/outlooks/aeo/data/browser/#/?id=2-
AEO2022&region=1-
0&cases=ref2022&start=2020&end=2050&f=A&linechart=ref2022-
d011222a.152-2-AEO2022.1-0~ref2022-d011222a.104-2-AEO2022.1-
0↦=ref2022-d011222a.4-2-AEO2022.1-0&ctype=linechart&sourcekey=0.
---------------------------------------------------------------------------

    To help inform DOE's prediction of future load growth trend, DOE 
seeks data on the following for regions where decarbonization efforts 
are ongoing. DOE seeks hourly PUL data at the level of the transformer 
bank for each of the past five years to establish an unambiguous 
relationship between transformer loads and decarbonization policy and 
inform if any intensive load growth is indeed occurring. Additionally, 
DOE seeks the average capacity of shipment into regions where 
decarbonization efforts are occurring over the same five-year period to 
inform the rate of any extensive load growth that may be occurring in 
response to these programs.
4. Harmonic Content/Non-Linear Loads
    Harmonic current refers to electrical power at alternating current 
frequencies greater than the fundamental frequency. Distribution 
transformers in service are commonly subject to (and must tolerate) 
harmonic current of a degree that varies by application.
    Powersmiths commented that the effects of harmonic content on LVDT 
can create significant customer risk due to transformer overheating, 
particularly when the transformer is under heavy loads. This was 
primarily an issue when general purpose transformers are installed 
outside prescribed harmonic limits. (Powersmiths No. 18 at p. 3)
    Additionally, Powersmiths asserted that because DOE does not 
account for harmonic content in its loading analysis that it 
misrepresents the impact of additional heat on losses. Powersmiths 
concluded that light loading means the harmonic-related heat does not 
typically threaten the transformer, but it is not an excuse to leave 
this hidden risk unsaid as the load on any given transformer could be 
taken to full capacity based on its nameplate rating, and associated 
protection, at any time during its long life. (Powersmiths No. 18 at p. 
3) NEEA requested that for the next energy conservation lookback that 
DOE include harmonic content in its analysis (NEEA No. 18 at p. 4)
    In response to the commenters regarding the inclusion of harmonic 
content, DOE agrees with NEEA and that in addition to determining the 
necessary input to adequately model the impacts of harmonic content at 
the National level, DOE would also have to consider how changes in 
transformer design would affect the availability of designs and the 
impacts on efficiency. DOE further concurs with Powersmiths that, on 
average, distribution transformers are lightly loaded, as shown in its 
analysis (see section IV.E.2) and that harmonic heat would not 
typically be an issue and would likely have minimal impact on the 
transformers covered by this NOPR. For this NOPR DOE will not consider 
the impacts of harmonic content but may examine them at a future date.
    DOE notes that the installation and commissioning of distribution 
transformers, either general purpose or specialty equipment, falls 
outside the Department's authority and would be under the purview of 
local building or fire codes and ordinances.
    Chapter 7 of the NOPR TSD provides details on DOE's energy use 
analysis for distribution transformers.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
distribution transformers. The effect of new or amended energy 
conservation standards on individual consumers usually involves a 
reduction in operating cost and an increase in purchase cost. DOE used 
the following two metrics to measure consumer impacts:
    [ballot] The LCC is the total consumer expense of an appliance or 
product over the life of that product, consisting of total installed 
cost (manufacturer selling price, distribution chain markups, sales 
tax, and installation costs) plus operating costs (expenses for energy 
use, maintenance, and repair). To compute the operating costs, DOE 
discounts future operating costs to the time of purchase and sums them 
over the lifetime of the product.
    [ballot] The PBP is the estimated amount of time (in years) it 
takes consumers to recover the increased purchase cost (including 
installation) of a more-efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
at higher efficiency levels by the change in annual operating cost for 
the year that amended or new standards are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of distribution transformers in the 
absence of new or amended energy conservation standards. In contrast, 
the PBP for a given efficiency level is measured relative to the 
baseline product.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
electric distribution utilities, and commercial and industrial 
(``C&I'') customers. As stated previously, DOE developed these 
customers samples from various sources, including utility data from the 
Federal Energy Regulatory Commission (FERC), Energy Information Agency 
(EIA); and C&I data from the Commercial Building Energy Consumption 
Survey (CBECS), and Manufacturing Energy Consumption Survey (MECS). For 
each sample, DOE determined the energy consumption, in terms of no-load 
and load losses for the distribution transformers and the appropriate 
electricity price. By developing a representative sample of consumer 
entities, the analysis captured the variability in energy consumption 
and energy prices associated with the use of distribution transformer.
    Inputs to the calculation of total installed cost include the cost 
of the equipment--which includes MSPs, retailer and distributor 
markups, and sales taxes--and installation costs. Inputs to the 
calculation of operating expenses include annual energy consumption, 
electricity prices and price projections, repair and maintenance costs, 
equipment lifetimes, and discount rates. DOE created distributions of 
values for equipment lifetime, discount rates, and sales taxes, with 
probabilities attached to each value, to account for their uncertainty 
and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and distribution transformer 
samples. For this rulemaking, the Monte Carlo approach is implemented 
as a computer simulation. The model calculated the LCC and PBP for 
products at each

[[Page 1774]]

efficiency level for 10,000 individual distribution transformer 
installations per simulation run. The analytical results include a 
distribution of 10,000 data points showing the range of LCC savings for 
a given efficiency level relative to the no-new-standards case 
efficiency distribution. In performing an iteration of the Monte Carlo 
simulation for a given consumer, product efficiency is as a function of 
the consumer choice model described in section IV.F.3 of this document. 
If the chosen equipment's efficiency is greater than or equal to the 
efficiency of the standard level under consideration, the LCC and PBP 
calculation reveals that a consumer is not impacted by the standard 
level. By accounting for consumers who already purchase more-efficient 
products, DOE avoids overstating the potential benefits from increasing 
product efficiency.
    DOE calculated the LCC and PBP for all consumers of distribution 
transformers as if each were to purchase a new equipment in the 
expected year of required compliance with new or amended standards. 
Amended standards would apply to distribution transformers manufactured 
3 years after the date on which any new or amended standard is 
published. At this time, DOE estimates publication of a final rule in 
2024. Therefore, for purposes of its analysis, DOE used 2027 as the 
first year of compliance with any amended standards for distribution 
transformers.
    Table IV.7 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the model, and of all the inputs 
to the LCC and PBP analyses, are contained in chapter 8 of the NOPR TSD 
and its appendices.

Table IV.7--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
              Inputs                            Source/method
------------------------------------------------------------------------
Equipment Cost....................  Derived by multiplying MPCs by
                                     manufacturer and retailer markups
                                     and sales tax, as appropriate. Used
                                     historical data to derive a price
                                     scaling index to project product
                                     costs.
Installation Costs................  Assumed no change with efficiency
                                     level.
Annual Energy Use.................  The total annual energy use
                                     multiplied by the hours per year.
                                     Average number of hours based on
                                     field data.
                                    Variability: Based on distribution
                                     transformer load data or customer
                                     load data.
Electricity Prices................  Hourly Prices: Based on EIA's Form
                                     861 data for 2015, scaled to 2021
                                     using AEO2022.
                                    Variability: Regional variability is
                                     captured through individual price
                                     signals for each EMM region.
                                    Monthly Prices: Based on an analysis
                                     of EEI average bills, and
                                     electricity tariffs from 2019,
                                     scaled to 2021 using AEO2022.
                                    Variability: Regional variability is
                                     captured through individual price
                                     signals for each Census region.
Energy Price Trends...............  Based on AEO2022 price projections.
Repair and Maintenance Costs......  Assumed no change with efficiency
                                     level.
Product Lifetime..................  Average: 32 years, with a maximum of
                                     60 years.
Discount Rates....................  Approach involves identifying all
                                     possible debt or asset classes that
                                     might be used to purchase the
                                     considered equipment or might be
                                     affected indirectly. Primary data
                                     source was the Federal Reserve
                                     Board's Survey of Consumer
                                     Finances.
Compliance Date...................  2027.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.

1. Equipment Cost
    To calculate consumer product costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described 
previously (along with sales taxes). DOE used different markups for 
baseline products and higher-efficiency products, because DOE applies 
an incremental markup to the increase in MSP associated with higher-
efficiency products.
    To forecast a price trend for this NOPR, DOE maintained the 
approach employed in the August 2021 Preliminary Analysis TSD, where it 
derived an inflation-adjusted index of the Producer Price Index 
(``PPI'') for electric power and specialty transformer manufacturing 
from 1967 to 2019.\73\ These data show a long-term decline from 1975 to 
2003, and then increase since then. There is considerable uncertainty 
as to whether the recent trend has peaked, and would be followed by a 
return to the previous long-term declining trend, or whether the recent 
trend represents the beginning of a long-term rising trend due to 
global demand for distribution transformers and rising commodity costs 
for key distribution transformer components. Given the uncertainty, DOE 
chose to use constant prices (2021 levels) for both its LCC and PBP 
analysis and the NIA. For the NIA, DOE also analyzed the sensitivity of 
results to alternative distribution transformer price forecasts.
---------------------------------------------------------------------------

    \73\ For this NOPR DOE maintained its use of the two Produce 
Price Indexes published by the U.S. Bureau of Labor Statistics for: 
Electric power and specialty transformer PPI (PCU335311335311), and 
Power and distribution transformers PPI (PCU3353113353111).
---------------------------------------------------------------------------

    DOE did not receive any comments regarding its determination of 
future equipment costs and did not make any changes for this NOPR.
2. Efficiency Levels
    For this NOPR, DOE analyzed different efficiency levels, these are 
expressed as a function of loss reduction over the equipment baseline. 
For units greater than 2,500 kVA, there is not a current baseline 
efficiency level that must be met. Therefore, DOE established EL1 for 
these units as if they were aligning with the current energy 
conservation standards efficiency vs kVA relationship, scaled to the 
larger kVA sizes. To calculate this, DOE scaled the maximum losses of 
the minimally compliant 2,500 kVA unit to the 3,750 kVA size using the 
equipment class specific scaling relationships in TSD appendix 5C. For 
example, a 2,500 kVA unit that meets current energy conservation 
standards is 99.53 percent efficient and has 5903 W of loss at 50 
percent load. Using the 0.79 scaling relationship for three-phase 
liquid-immersed distribution transformers, described in appendix 5C, 
the losses of a 3,750 kVA unit would be 8131 W, corresponding to 99.57 
percent efficient at 50 percent load.
    EL2 through EL5 align with the same percentage reduction in loss as 
their respective EC but rather than being relative to a baseline level, 
efficiency levels were established relative to EL1 levels.

[[Page 1775]]

    The rate of reduction is shown in Table IV.8, and the corresponding 
efficiency ratings in Table IV.9.

                    Table IV.8--Efficiency Levels as Percentage Reduction of Baseline Losses
----------------------------------------------------------------------------------------------------------------
                                                                        EL
         Equipment type          -------------------------------------------------------------------------------
                                         1               2               3               4         5  (max-tech)
----------------------------------------------------------------------------------------------------------------
Liquid-immersed:
    <=2,500 kVA.................             2.5               5              10              20              40
    >2,500 kVA..................            * 40            ** 5           ** 10           ** 20           ** 40
Low-voltage Dry-type:
    1[phis].....................              10              20              30              40              50
    3[phis].....................               5              10              20              30              40
----------------------------------------------------------------------------------------------------------------
Medium-voltage Dry-type:
    <46 kV BIL..................               5              10              20              30              40
    >=46 and <96 kV BIL, and                   5              10              20              30              40
     <=2,500 kVA................
    >=46 and <96 kV BIL, and                * 43           ** 10           ** 20           ** 30           ** 40
     >2,500 kVA.................
    >=96 kV BIL and <=2,500 kVA.               5              10              20              30              35
    >=96 kV BIL and >2,500 kVA..            * 34           ** 10           ** 20           ** 30           ** 35
----------------------------------------------------------------------------------------------------------------
* Equipment currently not subject to standards. Therefore, reduction in losses relative to least efficient
  product on market.
** Reduction in losses relative to EL1.


                                                              Table IV.9--Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Efficiency level
                Rep. unit                       kVA      -----------------------------------------------------------------------------------------------
                                                                 0               1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................              50           99.11           99.13           99.15           99.20           99.29           99.46
2.......................................              25           98.95           98.98           99.00           99.05           99.16           99.37
3.......................................             500           99.49           99.50           99.52           99.54           99.59           99.69
4.......................................             150           99.16           99.18           99.20           99.24           99.33           99.49
5.......................................           1,500           99.48           99.49           99.51           99.53           99.58           99.69
6.......................................              25           98.00           98.20           98.39           98.60           98.79           98.99
7.......................................              75           98.60           98.67           98.74           98.88           99.02           99.16
8.......................................             300           99.02           99.07           99.12           99.22           99.31           99.41
9.......................................             300           98.93           98.98           99.04           99.14           99.25           99.36
10......................................           1,500           99.37           99.40           99.43           99.50           99.56           99.62
11......................................             300           98.81           98.87           98.93           99.05           99.16           99.28
12......................................           1,500           99.30           99.33           99.37           99.44           99.51           99.58
13......................................             300           98.69           98.75           98.82           98.95           99.08           99.14
14......................................           2,000           99.28           99.32           99.35           99.42           99.49           99.53
15......................................           112.5           99.11           99.13           99.15           99.20           99.29           99.46
16......................................           1,000           99.43           99.44           99.46           99.49           99.54           99.66
17......................................           3,750            n.a.           99.57           99.59           99.61           99.66           99.74
18......................................           3,750            n.a.           99.48           99.53           99.58           99.64           99.69
19......................................           3,750            n.a.           99.41           99.47           99.53           99.59           99.62
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE did not receive any comment regarding the loss rates, nor the 
efficiency levels applied in the preliminary analysis, and continued 
their use for this NOPR.
    DOE requests comments on its methodology for establishing the 
energy efficiency levels for distribution transformers greater than 
2,500 kVA. DOE request comment on its assumed energy efficiency 
ratings.
3. Modeling Distribution Transformer Purchase Decision
    In the August 2021 Preliminary Analysis TSD, DOE presented its 
assumption on how distribution transformers were purchased. DOE used an 
approach that focuses on the selection criteria customers are known to 
use when purchasing distribution transformers. Those criteria include 
first costs, as well as the Total-Owning Cost (``TOC'') method. The TOC 
method combines first costs with the cost of losses. Purchasers of 
distribution transformers, especially in the utility sector, have 
historically used the TOC method to determine which distribution 
transformers to purchase. However, comments received from stakeholders 
responding to the 2012 ECS NOPR (77 FR 7323) and the June 2019 RFI (84 
FR 28254) indicate that the widespread practice of concluding the final 
purchase of a distribution transformer based on TOC is rare, instead 
customers have been purchasing the lowest first cost transformer design 
regardless of its loss performance.
    The utility industry developed TOC evaluation as a tool to reflect 
the unique financial environment faced by each distribution transformer 
purchaser. To express variation in such factors as the cost of electric 
energy, and capacity and financing costs, the utility industry 
developed a range of evaluation factors: A and B values, to use in 
their calculations.\74\ A and B are the

[[Page 1776]]

equivalent first costs of the no-load and load losses (in $/watt), 
respectively.
---------------------------------------------------------------------------

    \74\ In modeling the purchase decision for distribution 
transformers DOE developed a probabilistic model of A and B values 
based on utility requests for quotations when purchasing 
distribution transformers. In the context of the LCC the A and B 
model estimates the likely values that a utility might use when 
making a purchase decision.
---------------------------------------------------------------------------

    In response to the August 2021 Preliminary Analysis TSD, DOE 
received the following comments regarding the modeling of distribution 
transformer purchases.
a. Basecase Equipment Selection
    Regarding how engineering designs were selected by the consumer 
choice model in the LCC, DOE received comments from Metglas and the 
Efficiency Advocates. Metglas commented that it did not agree with the 
DOE purchase decision model. Stating that the fraction of designs using 
amorphous steel as a core material were grossly overstated in the 
standards, and no-new standards cases. Metglas further stated that 
currently the fraction of amorphous core distribution transformers is 
on the order of 2-3 percent of the market and that this fraction has 
been constant for the past 7 years. (Metglas, No. 53 at pp. 1-2) 
Additionally, the Efficiency Advocates recommended that DOE take ``a 
hard look at'' the purchasing behaviors of distribution transformers in 
the current marketplace. (Efficiency Advocates, No. 40 at p. 83)
    In response to these comments DOE examined its responses received 
during manufacturer interviews. From these responses, DOE understands 
that in the current market that amorphous core distribution 
transformers (both liquid-immersed and dry-type) are shipped in limited 
quantities, supporting Metglas' claim. The reason for this is believed 
to be limitations in amorphous core fabricating capacity among 
manufacturers. DOE's research indicates that distribution transformers 
can be fabricated with amorphous core steels that are cost competitive 
with conventional steels as shown in the engineering analysis (see 
section IV.C), but they cannot currently be fabricated in the 
quantities needed to meet the large order requirement of electric 
utilities, and as such, are limited to niche products. Accordingly, DOE 
has updated its customer choice model and, in the no-new standards case 
has limited type of core steel materials to the ratios shown in Table 
IV.10.

     Table IV.10--Core Material Limits in the No-New Standards Case
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Baseline Steel for Liquid-Immersed:  Baseline Steel for Dry-Type:
     87% M3 or 23hib090.         97% M4 or hib-M4 (M3 as
                                         modeled).
     3% Amorphous (mostly        3% PDR.
     in TOC applications above
     standards).
     10% 23PDR085.               0% AM.
------------------------------------------------------------------------

    Based on interviews with manufactures, and supporting research, DOE 
finds that there are no global supply constraints of amorphous ribbon 
for fabrication into transformer cores. And in the potential new-
standards case, DOE does not limit the selection of the designs in the 
engineering database by core material type. Further, DOE understands 
that there are current production limitations for turning amorphous 
ribbons into transformer cores that would require the capital 
investment in ribbon cutting, and core stacking machines at higher 
intensities to meet the quantity requirements placed on manufacturers 
by electric utilities. The impacts of the additional capital investment 
on manufacturers in the potential new-standards case are captured in 
manufacturer impact analysis described in section IV.J of this 
document.
b. Total Owning Cost (``TOC'') and Evaluators
    In the August 2021 Preliminary Analysis TSD, DOE used TOC 
evaluation rates as follows: 10 percent of liquid-immersed transformer 
purchases were concluded using TOC, and 0 percent of low-voltage dry-
type and medium-voltage dry-type transformer purchases were concluded 
using TOC. DOE received comment from several stakeholders regarding the 
rates at which TOC are practiced.
    NEMA commented that the experience among their members varies, but 
in NEMA's experience the percentage of TOC use in purchasing decisions 
for three-phase designs is higher than 10 percent: varying between 15-
20 percent, and for single-phase designs, they believe the use of TOC 
in purchasing decisions is closer to 40 percent. (NEMA, No. 50 at p. 
13) Additionally, NEMA responded to DOE's request for information 
relating customer application of TOC as a function of distribution 
transformer capacity. NEMA responded that NEMA did not have detailed 
information on breakouts of TOC purchasing influence by kVA and that 
their members are investigating whether their customer information can 
be analyzed for useful insight on this subject (NEMA, No. 50 at pp. 13-
14) Metglas commented that few transformer purchasers are using TOC 
evaluations, and 10 percent may be a reasonable estimate for those 
still using TOC. And in their experience the few remaining TOC 
evaluators reveal that they will abandon TOC as soon as their existing 
tenders are delivered.; leading to speculation that this practice could 
be nearly extinct within the next 2-3 years. (Metglas, No. 53 at p. 6)
    DOE estimated the rate of consumers using TOC as a tool to inform 
the purchase of a distribution transformer to be 10 percent for liquid-
immersed distribution transformers. These rates were established in 
response to stakeholder comments in the February 2012 NOPR (77 FR 7323) 
to which DOE received no adverse comments. Further, these rates were 
again put forward for comment in the June 2019 RFI (84 FR 28254) to 
which DOE did not receive any adverse comments.\75\ In light of this 
long history of established low rates of TOC adoption for the purchase 
of distribution transformers DOE finds the comments received from NEMA 
to be inconsistent with historical comments from a wide range of 
stakeholders. Ibid. For this NOPR, DOE is maintaining the same rates of 
TOC evaluators established in the August 2021 ECS Preliminary Analysis 
TSD, however, DOE recognizes that circumstances change over time and 
has included in this NOPR a LCC sensitivity case with evaluation rates 
suggested by NEMA. The result of this sensitivity analysis can be found 
in appendix 8G of the TSD.
---------------------------------------------------------------------------

    \75\ Please see the summary of comments regarding the rate of 
evaluators in the August 2021 ECS Preliminary Analysis, Technical 
Support Document, p 2-69; https://www.regulations.gov/document/EERE-2019-BT-STD-0018-0023.
---------------------------------------------------------------------------

    Powersmiths commented that it is not true that 100 percent of LVDT 
distribution transformers are purchased on minimum first cost, adding 
that their market is selling only distribution

[[Page 1777]]

transformers that significantly exceed minimum efficiency standards and 
the NEMA Premium transformer market existed prior to the 2016 energy 
conservation standards. (Powersmiths, No. 46 at pp. 3-4) Powersmiths 
commented that minimum efficiency is rarely the optimal choice for 
consumers and there is value in both new construction and retrofits 
that exceed energy conservation standards. (Powersmiths, No. 46 at p. 
4) Powersmiths added that trends toward green buildings have increased 
the number of consumers looking at value beyond first cost which may 
increase the value-added LVDT market. (Powersmiths, No. 46 at p. 4)
    DOE recognizes that distribution transformers are purchased at 
different efficiency levels depending on the specific demands of 
consumers. For this analysis DOE did not receive a specific fraction of 
LVDT distribution transformers that were sold above the current 
standard, in the absence of such information DOE relied on the consumer 
choice model to determine the equipment price in addition to the 
fraction of equipment sold with higher performance cores constructed 
from PDR steel, as discussed in section IV.F.3.a of this document.
Band of Equivalents (``BOE'')
    In the August 2021 Preliminary Analysis TSD, DOE proposed the 
following definition for Band of Equivalents (``BOE''): as a method to 
establish equivalency between a set of transformer designs within a 
range of similar TOC. BOE is defined as those transformer designs 
within a range of similar TOCs; the range of TOC varies from utility to 
utility and is expressed in percentage terms. In practice, the 
purchaser would consider the TOC of the transformer designs within the 
BOE and would select the lowest first-cost design from this set.
    NEMA agreed with the Department's assumptions with respect to their 
reflection of industry experiences and practices. NEMA further stated 
that its members are investigating whether their customer information 
can be analyzed for useful insight on this subject. (NEMA, No. 50 at p. 
13) Metglas comment that BOE within a TOC calculation is often used 
because the assumptions within the TOC calculations are estimates. BOE 
can be up to 10 percent of TOC, meaning the TOC evaluations within this 
band are treated as equal, and when used in lieu of TOC, the fraction 
of consumers who evaluate using TOC drops to less than 5 percent. 
(Metglas, No. 53 at p. 7)
    Based on the comments received DOE will maintain the definition 
previously stated. However, for this NOPR, DOE did not receive enough 
information or data to apply BOE to a fraction of transformer 
purchasers.
Evaluation Rates and High Electricity Costs
    In the August 2021 ECS Preliminary Analysis TSD, DOE requested 
comment on whether those consumers that purchase distribution 
transformers based on TOC are likely to pay higher electricity costs. 
Howard commented that certain utilities with high electricity costs use 
the TOC (Total Owning Cost) approach to minimize their overall owning 
costs. And the manufacturer will work with the user to determine the 
best overall value to buy, and that this is good approach in those 
areas. (Howard, No. 59 at p. 3) NEMA commented that it stands to reason 
that consumers with higher electricity costs are more likely to 
consider TOC in purchasing decisions. (NEMA, No. 50 at p. 13-14)
    The comments DOE received on this subject were supportive of the 
notion that consumers who have higher electricity costs would 
reasonably have higher adoption of using TOC as a purchasing tool. 
However, the comments did not provide any information, or data to 
support including this relationship in this NOPR. To relate higher 
electricity costs with increased TOC use, DOE would require from 
stakeholders the fraction of transformers specified and shipped to 
regions of higher electricity costs using TOC or BOE.
    DOE requests comment on its assumed TOC adoption rate of 10 
percent. Specifically, DOE requests comment on the TOC rate suggested 
by NEMA, that between 15 and 20 percent of 3-phase liquid-immersed 
distribution transformers are purchased using TOC, and that 40 percent 
of 1-phase liquid-immersed distribution transformers are purchased 
using TOC. DOE notes, that it is seeking data related to concluded 
sales based on lowest TOC in the strictest sense, excluding those 
transformers sold using band of equivalents (see the section on band of 
equivalents, above)
    DOE requests comment on the fraction of distribution transformers 
purchased by customers using the BOE methodology. DOE notes, that it is 
seeking data related to concluded sales based on lowest BOE in the 
strictest sense, excluding those transformers sold using total owning 
costs.
    DOE request comment if the rates of TOC or BOE vary by transformer 
capacity or number of phases. Further, DOE seeks the fraction of 
distribution transformer sales using either method into the different 
regions in order to capture the believed relationship between higher 
electricity costs and purchase evaluation behavior.
c. Non-evaluators and First Cost Purchases
    DOE defined those consumers who do not purchase based on TOC as 
those who purchase based on lowest first costs. NEMA commented that 
they disagreed with DOE's assumption that purchasers who do not 
purchase based on TOC purchase strictly on a first cost basis. Stating, 
in relation to dry-type distribution transformers, that customers also 
care about production times, availability, perceived quality, design 
options and other factors relating to timing and performance. Further, 
in relation to liquid-immersed transformers, improved tank steel 
(stainless) or biodegradable immersion oil are potential upgrades 
outside electrical performance which NEMA members have had requested by 
customers. (NEMA, No. 50 at pp. 13-14)
    DOE acknowledges that customers of distribution transformers will 
specify design aspects, or other criteria that will impact the cost of 
a transformer when making a purchasing decision that is not related to 
distribution transformer efficiency. As mentioned by NEMA in their 
comment, customers may have additional criteria when purchasing a 
distribution transformer that would be considered either an equipment 
upgrade outside of the equipment's electrical performance, or 
operational considerations that would affect the first costs. The 
analysis conducted by the Department in support of its energy saving 
mission are limited to design aspects that affect the quantification of 
increased energy efficiency of the equipment in question, in this case, 
distribution transformers. These design aspects are defined in the 
current test procedure and quantified in the engineering analysis. 
Since the aspects listed by NEMA are outside of the electrical, and 
efficiency performance of distribution transformers, therefore they are 
not considered in this analysis.
4. Installation Costs
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE used data from 
RSMeans to estimate the baseline installation cost

[[Page 1778]]

for distribution transformers.\76\ In the August 2021 Preliminary 
Analysis TSD, DOE asserted that there would be no difference in 
installation costs between baseline and more efficient equipment. DOE 
also asserted that 5 percent of replacement installations would face 
increased costs over baseline equipment due to the need for site 
modifications.
---------------------------------------------------------------------------

    \76\ Gordian, RSMeans Online, https://www.rsmeans.com/products/online (Last accessed: March 2022).
---------------------------------------------------------------------------

    DOE received comments from GEUS, Carte, and NEMA of the subject of 
installing distribution transformers.
    GEUS expressed concern that higher standards may increase 
transformer weights such that 50 kVA transformers can no longer be 
handled with standard bucket trucks and would require a larger truck to 
preform installations. (GEUS, No. 58 at p. 1)
    The load bearing capacity of vehicles classified as a bucket truck 
typically accommodate a wide range of lifting capacity depending on 
each individual truck. The analysis conducted for this NOPR shows a 
maximum of weight for a 50 kVA pole mounted liquid-immersed 
distribution of 1440 lbs. at the maximum technology case. Without 
knowing the specifics regarding the equipment used by GEUS, DOE cannot 
definitively say whether their existing bucket trucks will be 
sufficient.
    Transformers are typically installed using a bucket truck, or crane 
truck. DOE requests comment on the typical maximum lifting capacity, 
and the typical transformer capacity being installed.
    Additionally, Carte and NEMA expressed concern over the increasing 
of distribution transformer size in order to meet a potential revised 
standard. Carte commented that utilities are concerned with the 
increase in size and weight associated with efficiency standards, with 
potential issues for pole replacement, concrete load limits, and 
vaults. (Carte, No. 54 at p. 2-3) NEMA commented that when designing a 
new transformer to fit an existing pad footprint, the only way to add 
more active material to raise efficiency is to increase the height of 
the unit. This may not be feasible in situations where cables run 
underground. There may not be sufficient length remaining in those 
cables to reach a higher set of bushings to connect the unit to the 
network. (NEMA, No. 50 at p. 14)
    As in the August 2021 Preliminary Analysis TSD, DOE acknowledges 
that there may be issues when installing a replacement distribution 
transformer on an existing pad, or underground enclosure. However, as 
discussed in appendix 7D of the August 2021 Preliminary Analysis TSD, 
many of these issues can be avoided through proper equipment 
specification at the time of purchase. The issues that both Carte and 
NEMA reference, apart from vault replacement/renovation, can be 
addressed during purchasing with proper specifications. Given that no 
new information has been put forward in response to the August 2021 
Preliminary Analysis TSD, DOE will maintain its assumptions and 
approach where increased installation costs over the no-new standards 
case are considered atypical and applied at a rate of 5 percent of 
installations occurrences.
    For this NOPR, DOE reiterates its request for the following 
information. DOE requests data and feedback on the size limitations of 
pad-mounted distribution transformers. Specifically, what sizes, 
voltages, or other features are currently unable to fit on current 
pads, and the dimension of these pads. DOE seeks data on the typical 
concrete pad dimensions for 50 and 500 kVA single-; and 500, and 1500 
kVA three-phase distribution transformers. DOE seeks data on the 
typical service lifetimes of supporting concrete pads.
5. Annual Energy Consumption
    For each sampled customer, DOE determined the energy consumption 
for a distribution transformer at different efficiency levels using the 
approach described previously in section IV.E of this document.
6. Electricity Prices
    DOE derived average and marginal electricity prices for 
distribution transformers using two different methodologies to reflect 
the differences in how the electricity is paid for by consumers of 
distribution transformers. For liquid-immersed distribution 
transformers, which are largely owned and operated by electric 
distribution companies, who purchase electricity from a variety of 
markets, DOE developed an hourly electricity costs model. For low- and 
medium-voltage dry-type, which are primarily owned and operated by C&I 
entities, DOE developed a monthly electricity cost model.
a. Hourly Electricity Costs
    To evaluate the electricity costs associated with liquid-immersed 
distribution transformers, DOE used marginal electricity prices. 
Marginal prices are those utilities pay for the last kilowatt-hour of 
electricity produced that may be higher or lower than the average 
price, depending on the relationships among capacity, generation, 
transmission, and distribution costs. The general structure of the 
hourly marginal cost methodology divides the costs of electricity into 
capacity components and energy cost components. For each component, the 
economic value for both no-load losses and load losses is estimated. 
The capacity components include generation and transmission capacity; 
they also include a reserve margin for ensuring system reliability, 
with factors that account for system losses. Energy cost components 
include a marginal cost of supply that varies by the hour.
    The marginal costs methodology was developed for each regional 
Balancing Authority listed in EIA's Form EIA-861 database (based on 
``Annual Electric Power Industry Report'').\77\ To calculate the hourly 
price of electricity, DOE used the day-ahead market clearing price for 
regions having wholesale electricity markets, and system lambda values 
for all other regions. System lambda values, which are roughly equal to 
the operating cost of the next unit in line for dispatch, are filed by 
control area operators under FERC Form 714.\78\
---------------------------------------------------------------------------

    \77\ Available at https://www.eia.doe.gov/cneaf/electricity/page/eia861.html.
    \78\ https://www.ferc.gov/industries-data/electric/general-information/electric-industry-forms/form-no-714-annual-electric/overview.
---------------------------------------------------------------------------

    EEI commented that the utilization of 2015 data and ``scaling it'' 
to the year of analysis was misguided given the clean energy progress 
the electric sector has made in the intervening years. The mix of 
resources used to generate electricity in the United States has changed 
dramatically over the last decade and is increasingly cleaner. EEI 
commented that, starting in 2016, natural gas surpassed coal as the 
main source of electricity generation in the United States, and in 2020 
natural gas-based generation powered 40 percent of the country's 
electricity, compared to coal-based generation at 19 percent.
    In response to EEI, DOE notes that it scaled the cost of 
electricity from 2015 to the present using AEO2022 electricity price 
trend, and that this trend accounts for changes in the electricity 
supply mix over this period.\79\ Additionally, DOE captures the 
advances in reducing GHG and other pollutants from the Nation's 
electricity generators in its Emissions

[[Page 1779]]

Analysis, described in section IV.K. This analysis captures both shift 
in generation, and the reduction in coal-based generation, and 
resulting emissions referenced by EEI, from 2027 through the end of 
this this NOPR's analysis period.
---------------------------------------------------------------------------

    \79\ U.S. Energy Information Administration, Annual Energy 
Outlook 2022, Table 3. Energy Prices by Sector and Source Case: 
AEO2022 Reference case [verbar] Region: United States, 2022 
(Available at: https://www.eia.gov/outlooks/aeo/data/browser/#/
?id=3-AEO2022&region=1-
0&cases=ref2022&start=2020&end=2050&f=A&linechart=ref2022-
d011222a.3-3-AEO2022.1-0~ref2022-d011222a.55-3-AEO2022.1-
0↦=ref2022-d011222a.4-3-AEO2022.1-0&ctype=linechart&sourcekey=0, 
Last access: June 1, 2022).
---------------------------------------------------------------------------

    DOE received no further comment regarding it electricity costs 
analysis and maintained the approach used in the August 2021 
Preliminary Analysis TSD for this NOPR.
7. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. Typically, 
small incremental increases in product efficiency produce no, or only 
minor, changes in repair and maintenance costs compared to baseline 
efficiency products. In the August 2021 Preliminary Analysis TSD, DOE 
asserted that maintenance and repair costs do not increase with 
transformer efficiency. NEMA responded that they agree with these 
assumptions. (NEMA, No. 50 at p. 16)
    Based on this response DOE continued its assumptions that 
maintenance and repair costs do not increase with transformer 
efficiency for this NOPR analysis.
8. Equipment Lifetime
    For distribution transformers, DOE used a distribution of 
lifetimes, with an estimated average of 32 years and maximum 60 years.
    NEMA commented that they have no alternative lifetimes to suggest, 
and the equipment lifetimes are suitably representative. (NEMA, No. 50 
at p. 16) However, NEMA postulated that, logically, increased 
(equipment) prices will create pressure on some customers to rebuild 
existing property. NEMA did not provide the additional service life 
that would be extended to rebuilt equipment in this event, or to what 
extent the average service lifetime of a distribution transformer would 
increase. As the average lifetime presented in the August 2021 
Preliminary Analysis TSD, at 32 years, is quite long, for this NOPR, 
DOE maintained the lifetime estimates presented in the August 2021 
Preliminary Analysis TSD.
    DOE request the average extension of distribution transformer 
service life that can be achieved through rebuilding. Additionally, DOE 
requests comment on the fraction of transformer that are repaired by 
their original purchasing entity and returned to service, thereby 
extending the transformer's service lifetime beyond the estimated 
lifetimes of 32 years with a maximum of 60 years.
9. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. DOE employs a two-step 
approach in calculating discount rates for analyzing customer economic 
impacts (e.g., LCC). The first step is to assume that the actual cost 
of capital approximates the appropriate customer discount rate. The 
second step is to use the capital asset pricing model (CAPM) to 
calculate the equity capital component of the customer discount rate. 
For this NOPR, DOE estimated a statistical distribution of commercial 
customer discount rates that varied by distribution transformer type, 
by calculating the cost of capital for the different types of 
distribution transformer owners.
    DOE's method views the purchase of a higher efficiency appliance as 
an investment that yields a stream of energy cost savings. DOE derived 
the discount rates for the LCC analysis by estimating the cost of 
capital for companies or public entities that purchase distribution 
transformers. For private firms, the weighted average cost of capital 
(WACC) is commonly used to estimate the present value of cash flows to 
be derived from a typical company project or investment. Most companies 
use both debt and equity capital to fund investments, so their cost of 
capital is the weighted average of the cost to the firm of equity and 
debt financing, as estimated from financial data for publicly traded 
firms in the sectors that purchase distribution transformers.\80\ As 
discount rates can differ across industries, DOE estimates separate 
discount rate distributions for a number of aggregate sectors with 
which elements of the LCC building sample can be associated.
---------------------------------------------------------------------------

    \80\ Previously, Damodaran Online provided firm-level data, but 
now only industry-level data is available, as compiled from 
individual firm data, for the period of 1998-2018. The data sets 
note the number of firms included in the industry average for each 
year.
---------------------------------------------------------------------------

    EEI commented that DOE should utilize up to date information to 
apply an appropriate discount rate for electric companies. (EEI, No. 56 
at p. 4) DOE understands that this comment is in reference to DOE 
applying the Federal Government discount rate to local Municipal 
Utilities (MUNIs) consumers in the LCC analysis in the August 2021 
Preliminary Analysis TSD. This was in error and has been corrected in 
this NOPR; consumer impacts for MUNIs are now calculated using the 
distribution of state/local government discount rates shown in Table 
IV.11. The mean WACC for this distribution is 2.67 percent.\81\
---------------------------------------------------------------------------

    \81\ Sources: For values through Q2 2016, Federal Reserve Bank 
of Saint Louis, ``State and Local Bonds--Bond Buyer Go 20-Bond 
Municipal Bond Index--Discontinued Series,'' https://fred.stlouisfed.org/series/WSLB20 (Last accessed February 2022). For 
Q3 2016 through 2021, Bartel Associates LLC, ``20 Year AA Municipal 
Bond Quarterly Rates,'' updated January 5, 2022, https://bartel-associates.com/resources/select-gasb-67-68-discount-rate-indices 
(Last accessed February 2022).

                        Table IV.11--Applied Discount Rates for Publicly Owned Utilities
----------------------------------------------------------------------------------------------------------------
                                                                                                   Observations
                            Rate bin                                 Rates (%)      Weight (%)      (quarters)
----------------------------------------------------------------------------------------------------------------
<0%.............................................................            -1.9             3.0               4
0-1%............................................................             0.9             2.3               3
1-2%............................................................             1.6            23.3              31
2-3%............................................................             2.5            25.6              34
3-4%............................................................             3.5            35.3              47
4-5%............................................................             4.2            10.5              14
----------------------------------------------------------------------------------------------------------------

    DOE received no further comments on its discount rate analysis and 
maintained its approach for this NOPR. See chapter 8 of the NOPR TSD 
for further details on the development of consumer discount rates.
10. Energy Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a

[[Page 1780]]

potential energy conservation standard at a particular efficiency 
level, DOE's LCC analysis considered the projected distribution (market 
shares) of product efficiencies under the no-new-standards case (i.e., 
the case without amended or new energy conservation standards). To 
determine an appropriate basecase against which to compare various 
potential standard levels, DOE used the purchase-decision model 
described in section IV.F.3, where distribution transformers are 
purchased based on either lowest first cost, or, on lowest TOC. In the 
no-new-standards case distribution transformers are chosen from among 
the entire range of available distribution transformer designs for each 
representative unit simulated in the engineering analysis based on this 
purchase-decision model. This selection is constrained only by 
purchase-price in the majority of cases (90 percent, and 100 percent 
for liquid-immerses, and all dry-type transformers, respectively), and 
reflect the MSPs of the available designs determined in the engineering 
analysis in section IV.C.1 of this document. The resulting distribution 
of transformer efficiency in the No-New-Standards Case is shown in 
Table IV.12.
    Comments received regarding the energy efficiency distribution in 
the no-new-standards case are addressed in the discussion regarding the 
modeling of distribution transformer purchase decisions, in section 
IV.F.2 of this document.
    See chapter 8 of the NOPR TSD for further information on the 
derivation of the efficiency distributions.

               Table IV.12--Applied Distribution of Equipment Efficiencies in the No-New Standards Case, Fraction of Units at Each EL (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Efficiency level
                   EC                        Rep unit    -----------------------------------------------------------------------------------------------
                                                                 0               1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................               1            90.6             6.1             0.3             0.9             1.6             0.4
1.......................................               2            99.1             0.3             0.4             0.1             0.0             0.0
1.......................................               3            96.5             1.0             2.2             0.1             0.2             0.1
2.......................................               4            65.0            30.7             1.2             0.1             2.1             0.9
2.......................................               5            93.5             4.2             1.7             0.6             0.0             0.0
2.......................................              17            97.7             0.2             0.3             0.8             0.8             0.2
12......................................              15            64.8            31.4             0.8             0.0             2.1             0.9
12......................................              16            93.9             3.9             1.6             0.4             0.0             0.0
3.......................................               6            31.4            46.4            21.3             0.9             0.0             0.0
4.......................................               7            83.4            15.1             1.5             0.0             0.0             0.0
4.......................................               8            49.0            45.1             6.0             0.0             0.0             0.0
6.......................................               9            28.0            50.0            22.0             0.0             0.0             0.0
6.......................................              10            87.5            12.5             0.0             0.0             0.0             0.0
8.......................................              11            76.2            23.8             0.0             0.0             0.0             0.0
8.......................................              12            90.6             9.4             0.0             0.0             0.0             0.0
8.......................................              18           100.0             0.0             0.0             0.0             0.0             0.0
10......................................              13            90.4             9.7             0.0             0.0             0.0             0.0
10......................................              14           100.0             0.0             0.0             0.0             0.0             0.0
10......................................              19           100.0             0.0             0.0             0.0             0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: may not sum to 100 due to rounding.

11. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    As noted previously, EPCA establishes a rebuttable presumption that 
a standard is economically justified if the Secretary finds that the 
additional cost to the consumer of purchasing a product complying with 
an energy conservation standard level will be less than three times the 
value of the first year's energy savings resulting from the standard, 
as calculated under the applicable test procedure. (42 U.S.C. 
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE 
determined the value of the first year's energy savings by calculating 
the energy savings in accordance with the applicable DOE test 
procedure, and multiplying those savings by the average energy price 
projection for the year in which compliance with the amended standards 
would be required. The results of this analysis provide an important 
element of DOE's evaluation of the economic justification for a 
potential standard level (thereby supporting or rebutting the results 
of any preliminary determination of economic justification). The 
rebuttable presumption payback calculation is discussed in section 
V.B.1.c of this document.

G. Shipments Analysis

    DOE uses projections of annual product shipments to calculate the 
national impacts of potential amended or new energy conservation 
standards on energy use, NPV, and future manufacturer cash flows.\82\ 
The shipments model takes an accounting approach, tracking market 
shares of each product class and the vintage of units in the stock. 
Stock accounting uses product shipments as inputs to estimate the age 
distribution of in-service product stocks for all years. The age 
distribution of in-service product stocks is a key input to 
calculations of both the NES and NPV, because operating costs for any 
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

    \82\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    DOE projected distribution transformer shipments for the no-new 
standards case by assuming that long-

[[Page 1781]]

term growth in distribution transformer shipments will be driven by 
long-term growth in electricity consumption. DOE developed its initial 
shipments inputs based on data from the previous final rule, and data 
submitted to DOE from interested parties; these initial shipments are 
shown for the assumed compliance year, by distribution transformer 
type, in Table IV.13 through Table IV.15. For this NOPR, DOE received 
additional data from manufacturers via confidential interviews, 
resulting in revised shipments estimates for liquid-immersed 
distribution transformers. DOE developed the shipments projection for 
liquid-immersed distribution transformers by assuming that annual 
shipments growth is equal to growth in electricity consumption for all 
sectors, as given by the AEO2022 forecast through 2050. DOE's model 
assumed that growth in annual shipments of dry-type distribution 
transformers would be equal to the growth in electricity consumption 
for commercial and industrial sectors, respectively. The model starts 
with an estimate of the overall growth in distribution transformer 
capacity, and then estimates shipments for particular representative 
units and capacities using estimates of the recent market shares for 
different design and size categories.

                        Table IV.13--Estimated Liquid-Immersed Shipments for 2027 (Units)
----------------------------------------------------------------------------------------------------------------
                                           Single-phase                             Three-phase
         Capacity (kVA)          -------------------------------------------------------------------------------
                                        Pad             OH              Pad             OH              NVS
----------------------------------------------------------------------------------------------------------------
10..............................             677          71,325               0               0               0
15..............................           4,679         147,344               0               0               0
25..............................          44,873         329,589               0               0               0
30..............................               0               0              10              68               0
38..............................           8,184          45,629               0               0               0
45..............................               0               0             714             692               0
50..............................          79,074         149,710               0               0               0
75..............................          42,684          24,149           6,523             661               0
100.............................          32,830          20,537               0               0               0
113.............................               0               0           1,773              95               0
150.............................               0               0          13,066             787               0
167.............................           8,272           5,926               0               0               0
225.............................               0               0           2,972              16               0
250.............................             134             508               0               0               0
300.............................               0               0          13,061             268               0
333.............................               4             890               0               0               0
500.............................               3             488           9,867               0               3
667.............................               6               0              13               0              13
750.............................               0               0           6,057               0              49
833.............................              70              21              39               0              39
1,000...........................               0               0           5,426               0             127
1,500...........................               0               0           5,886               0             150
2,000...........................               0               0           2,349               0             103
2,500...........................               0               0           3,701               0             359
3,750...........................               0               0             286               0               0
5,000...........................               0               0              95               0               0
                                 -------------------------------------------------------------------------------
    Total.......................         221,490         796,116          71,838           2,587             843
----------------------------------------------------------------------------------------------------------------


 Table IV.14--Estimated Low-Voltage Dry-Type Shipments for 2027 (Units)
------------------------------------------------------------------------
             Capacity (kVA)                Single-phase     Three-phase
------------------------------------------------------------------------
10......................................               3  ..............
15......................................           2,792          18,398
25......................................           6,215  ..............
30......................................  ..............          44,689
37.5....................................           3,777  ..............
45......................................  ..............          47,106
50......................................           5,821  ..............
75......................................           3,508          62,205
100.....................................           2,200  ..............
112.3...................................  ..............          27,858
150.....................................  ..............          22,062
167.....................................  ..............  ..............
225.....................................  ..............           7,828
250.....................................              28  ..............
300.....................................  ..............           4,109
333.....................................  ..............  ..............
500.....................................  ..............           2,527
667.....................................  ..............  ..............
750.....................................  ..............             614
833.....................................  ..............  ..............
1,000...................................  ..............              17

[[Page 1782]]

 
1,500...................................  ..............              11
2,000...................................  ..............  ..............
2,500...................................  ..............  ..............
                                         -------------------------------
    Total...............................          24,344         237,423
------------------------------------------------------------------------


                                        Table IV.15--Estimated Medium-Voltage Dry-Type Shipments for 2027 (Units)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Single-phase                                     Three-phase
                     Capacity (kVA)                      -----------------------------------------------------------------------------------------------
                                                           20-45 kV BIL    46-95 kV BIL     >=96 kV BIL    20-45 kV BIL    46-95 kV BIL     >=96 kV BIL
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................................             250             180              60               0               0               0
15......................................................             250             180              60               5               0               0
25......................................................              60              40              20               0               0               0
30......................................................               0               0               0              10               0               0
38......................................................              60              40              20               0               0               0
45......................................................               0               0               0              10               0               0
50......................................................              30              20              10               0               0               0
75......................................................              30              20              10               4               2               0
100.....................................................              12              20               6               0               0               0
113.....................................................               0               0               0              30               4               0
150.....................................................               0               0               0              35               5               0
167.....................................................               7              10               3               0               0               0
225.....................................................               0               0               0              29              12               0
250.....................................................              15              20               3               0               0               0
300.....................................................              15               0               0              91              30              25
333.....................................................              12              20               4               0               0               0
500.....................................................               0               0               0             177              85              74
667.....................................................               0               0               0               0               0               0
750.....................................................               0               0               0              72             121              75
833.....................................................               0               0               0               0               0               0
1,000...................................................               0               0               0              45             242             194
1,500...................................................               0               0               0               0             363             244
2,000...................................................               0               0               0               0             605             280
2,500...................................................               0               0               0               0             605             394
3,750...................................................               0               0               0               0              12               8
5,000...................................................               0               0               0               0               4               3
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................             741             550             196             508           2,074           1,297
--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Equipment Switching
    In response to the shipments analysis presented in the August 2021 
Preliminary Analysis TSD, NEMA commented that manufacturers have had 
customers avoid liquid-immersed entirely and use dry-type designs due 
to local purchasing restrictions or policies. (NEMA, No. 50 at p. 14)
    DOE understands that medium-voltage dry-type distribution 
transformers (MVDT) can be used as replacement for liquid-immersed 
distribution transformers but DOE has always considered it as an edge 
case due to the differences in purchase price, and consumer sensitivity 
to first costs. DOE does not have sufficient data to model the 
substitution of liquid-immersed distribution transformers with MVDT.
    DOE requests comment on which liquid-immersed distribution 
transformers capacities are typically replaced with MVDT. DOE further 
requests data that would indicate a trend in these substitutions. DOE 
further requests data that would help it determine which types of 
customers are preforming these substitutions, e.g., industrial 
customers, invertor owned utilities, MUNIs, etc.
2. Trends in Distribution Transformer Capacity (kVA)
    NEMA commented that as consumer demand increases due to migration 
to all-electric homes and buildings, it stands to reason that kVA sizes 
will increase over time as infrastructure upgrades capacity to serve 
these consumer demands. Likewise, NEMA commented that investments in 
renewable energy generation will cause changes to transformer 
shipments, unit sizes and selections, and, that DOE should examine non-
static capacity scenarios, where kVA of units by type increases over 
time as NEMA members express growth in average kVA of ordered units 
over time in recent years, presumably due to increased electrification 
of consumer and industrial applications. (NEMA, No. 50 at pp. 16-17)
    DOE has limited data available to conduct the sensitivity requested 
by NEMA at this time. To do so DOE would require the current average 
kVA capacity for each of the representative units analyzed in the 
engineering analysis, section IV.C.1 of this document. If DOE were to 
apply a shift in growing capacity without input data from stakeholders, 
it would have the effect on inflating the energy savings estimates. In 
response to NEMA's comment DOE requests data to inform a shift in the 
capacity distribution to larger capacity distribution transformers. 
Additionally, DOE requests information on the extent that this 
increasing trend in capacity would affect all types of distribution

[[Page 1783]]

transformers, or only medium-voltage distribution transformers.

H. National Impact Analysis

    The NIA assesses the national energy savings (``NES'') and the NPV 
from a national perspective of total consumer costs and savings that 
would be expected to result from new or amended standards at specific 
efficiency levels.\83\ (``Consumer'' in this context refers to 
consumers of the product being regulated.) DOE calculates the NES and 
NPV for the potential standard levels considered based on projections 
of annual product shipments, along with the annual energy consumption 
and total installed cost data from the energy use and LCC analyses. For 
the present analysis, DOE projected the energy savings, operating cost 
savings, product costs, and NPV of consumer benefits over the lifetime 
of distribution transformers sold from 2027 through 2056.
---------------------------------------------------------------------------

    \83\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new or amended standards by comparing 
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each 
product class in the absence of new or amended energy conservation 
standards. For this projection, DOE considers historical trends in 
efficiency and various forces that are likely to affect the mix of 
efficiencies over time. DOE compares the no-new-standards case with 
projections characterizing the market for each product class if DOE 
adopted new or amended standards at specific energy efficiency levels 
(i.e., the TSLs or standards cases) for that class. For the standards 
cases, DOE considers how a given standard would likely affect the 
market shares of products with efficiencies greater than the standard.
    DOE uses a model to calculate the energy savings and the national 
consumer costs and savings from each TSL. Interested parties can review 
DOE's analyses by changing various input quantities within the model. 
The NIA model uses typical values (as opposed to probability 
distributions) as inputs.
    Table IV.16 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

   Table IV.16--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
              Inputs                               Method
------------------------------------------------------------------------
Shipments.........................  Annual shipments from shipments
                                     model.
                                    Initial Shipments: Market reports
                                     from HVOLT, stakeholder data,
                                     confidential manufacturer data.
                                    Future Shipments: Projection based
                                     on trends from AEO2022:
                                    Liquid-immersed: Future electricity
                                     sales trends.
                                    Low-, Medium-voltage Dry-type:
                                     Future commercial floor space and
                                     industrial output trends.
Compliance Date of Standard.......  2027.
Efficiency Trends.................  No-new-standards case: constant
                                     efficiency over time.
                                    Standards cases: constant efficiency
                                     over time.
Annual Energy Consumption per Unit  Annual weighted-average values are a
                                     function of energy use at each TSL.
Total Installed Cost per Unit.....  Annual weighted-average values are a
                                     function of cost at each TSL.
                                    Incorporates projection of future
                                     product prices based on historical
                                     data.
Annual Energy Cost per Unit.......  Annual weighted-average values as a
                                     function of the annual energy
                                     consumption per unit and energy
                                     prices.
Repair and Maintenance Cost per     Annual values do not change with
 Unit.                               efficiency level.
Energy Price Trends...............  AEO2022 projections (to 2050) and
                                     constant 2050 thereafter.
Energy Site-to-Primary and FFC      A time-series conversion factor
 Conversion.                         based on AEO2022.
Discount Rate.....................  3 percent and 7 percent.
Present Year......................  2022.
------------------------------------------------------------------------

    DOE projected the energy savings, operating cost savings, product 
costs, and NPV of consumer benefits over the lifetime of distribution 
transformers sold from 2027 through 2056 Given the extremely durable 
nature of distribution transformers, this creates an analytical 
timeframe from 2027 through 2115. DOE seeks comment on the current 
analytical timeline, and potential alternative analytical timeframes.
1. Equipment Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. Section IV.F.3of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case for each 
of the considered equipment classes for the year of anticipated 
compliance with an amended or new standard. As discussed in section 
IV.F.3, DOE has found that the vast majority of distribution 
transformers are purchased based on first cost. For both the no-new 
standards case and amended standards case, DOE used the results of the 
consumer choice mode in the LCC, described in section IV.F.3 to 
establish the shipment-weighted efficiency for the year of potential 
standards are assumed to become effective (2027). For this NOPR, 
despite the availability of a wide range of efficiencies, DOE modelled 
that these efficiencies would remain static over time because the 
purchase decision is largely based on first-costs (see section IV.F.3 
of this document) and DOE's application of constant future equipment 
costs (see section IV.F.1 of this document).
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products between each 
potential standards case (``TSL'') and the case with no new or amended 
energy conservation standards. DOE calculated the national energy 
consumption by multiplying the number of units (stock) of each product 
(by vintage or age) by the unit energy consumption (also by vintage). 
DOE calculated annual NES based on the difference in national energy 
consumption for the no-new standards case and for each higher 
efficiency standard case. DOE estimated

[[Page 1784]]

energy consumption and savings based on site energy and converted the 
electricity consumption and savings to primary energy (i.e., the energy 
consumed by power plants to generate site electricity) using annual 
conversion factors derived from AEO2022. Cumulative energy savings are 
the sum of the NES for each year over the timeframe of the analysis.
    Use of higher-efficiency equipment is occasionally associated with 
a direct rebound effect, which refers to an increase in utilization of 
the equipment due to the increase in efficiency and its lower operating 
cost. A distribution transformer's utilization is entirely dependent on 
the aggregation of the connected loads on the circuit the distribution 
transformer serves. Greater utilization would result in greater per-
unit load (PUL) on the distribution transformer. Any increase in 
distribution transformer PUL is coincidental, and not related to 
rebound effect.
    DOE accounts for incidental load growth on the distribution 
transformer resulting from additional connections not related to the 
rebound effect due to increased equipment efficiency.in the LCC 
analysis in the form of future load growth. See section IV.E.3 for more 
details on DOE approach to load growth.
    Because DOE did not find any data to support the inclusion of a 
rebound effect specific to distribution transformers, did not include a 
rebound effect in this NOPR.
    DOE requests comment on its assumption that including a rebound 
effect is inappropriate for distribution transformers.
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the 
approaches discussed in the August 18, 2011 notice, DOE published a 
statement of amended policy in which DOE explained its determination 
that EIA's National Energy Modeling System (``NEMS'') is the most 
appropriate tool for its FFC analysis and its intention to use NEMS for 
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain, 
multi-sector, partial equilibrium model of the U.S. energy sector \84\ 
that EIA uses to prepare its Annual Energy Outlook. The FFC factors 
incorporate losses in production and delivery in the case of natural 
gas (including fugitive emissions) and additional energy used to 
produce and deliver the various fuels used by power plants. The 
approach used for deriving FFC measures of energy use and emissions is 
described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------

    \84\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009. 
Available at www.eia.gov/forecasts/aeo/index.cfm (last accessed 
April 1, 2022).
---------------------------------------------------------------------------

3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are (1) total annual installed cost, (2) total 
annual operating costs (energy costs and repair and maintenance costs), 
and (3) a discount factor to calculate the present value of costs and 
savings. DOE calculates net savings each year as the difference between 
the no-new-standards case and each standards case in terms of total 
savings in operating costs versus total increases in installed costs. 
DOE calculates operating cost savings over the lifetime of each product 
shipped during the projection period.
    As discussed in section IV.F.1 of this document, DOE developed 
distribution transformers price trends based on historical PPI data. 
DOE applied the same trends to project prices for each product class at 
each considered efficiency level, which was a constant price trend 
through the end of the analysis period in 2056. DOE's projection of 
product prices is described in appendix 10C of the NOPR TSD.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
projections on the consumer NPV for the considered TSLs for 
distribution transformers. In addition to the default price trend, DOE 
considered two product price sensitivity cases: (1) a high price 
decline case based on the years between 2003-2019 and (2) a low price 
decline case based on the years between 1967-2002. The derivation of 
these price trends and the results of these sensitivity cases are 
described in appendix 10C of the NOPR TSD.
    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average regional energy 
prices by the projection of annual national-average electricity price 
changes in the Reference case from AEO2022, which has an end year of 
2050. To estimate price trends after 2050, DOE maintained the price 
constant at 2050 levels. As part of the NIA, DOE also analyzed 
scenarios that used inputs from variants of the AEO2022 Reference case 
that have lower and higher economic growth. Those cases have lower and 
higher energy price trends compared to the Reference case. NIA results 
based on these cases are presented in appendix 10C of the NOPR TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPR, DOE estimated the NPV of consumer benefits using both a 3-percent 
and a 7-percent real discount rate. DOE uses these discount rates in 
accordance with guidance provided by the Office of Management and 
Budget (``OMB'') to Federal agencies on the development of regulatory 
analysis.\85\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \85\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at 
www.whitehouse.gov/omb/memoranda/m03-21.html (last accessed April 1, 
2022).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended energy 
conservation standards on consumers, DOE evaluates the impact on 
identifiable subgroups of consumers that may be disproportionately 
affected by a new or amended national standard. The purpose of a 
subgroup analysis is to determine the extent of any such 
disproportional impacts. DOE evaluates impacts on particular subgroups 
of consumers by analyzing the LCC impacts and PBP for those particular 
consumers from alternative standard levels. For this NOPR, DOE analyzed 
the impacts of the considered standard levels on two subgroups: (1) 
utilities serving low population densities and (2) utility purchasers 
of vault (underground) and subsurface installations. DOE used the LCC 
and PBP model to estimate the impacts of the considered efficiency 
levels on these

[[Page 1785]]

subgroups. Chapter 11 in the NOPR TSD describes the consumer subgroup 
analysis.
1. Utilities Serving Low Customer Populations
    In rural areas, mostly served by municipal utilities (MUNIs) the 
number of customers per distribution transformer is lower than in 
metropolitan areas and may result in lower PULs. For this NOPR, as in 
the April 2013 Standards Final Rule, DOE reduced the PUL by adjusting 
the distribution of IPLs, as discussed in section IV.E.1.a resulting in 
the PULs shown below in Table IV.17. Further, DOE altered the customer 
sample to limit the distribution of discount rates to those observed by 
State and local governments discussed in IV.F.9. DOE notes that while 
MUNIs deploy a range of distribution transformers to serve their 
customers, in low population densities the most common unit is a 25 kVA 
pole overheard liquid-immersed distribution transformer, which is 
represented in this analysis as representative unit 2.

   Table IV.17--Distribution of Per-Unit-Load for Liquid-Immersed Distribution Transformers Owned by Utilities
                                             Serving Low Populations
----------------------------------------------------------------------------------------------------------------
                            Rep. unit                                Mean RMS        Mean IPL        Mean PUL
----------------------------------------------------------------------------------------------------------------
1...............................................................            0.29            0.60            0.18
2...............................................................            0.27            0.60            0.16
3...............................................................            0.32            0.60            0.19
4...............................................................            0.26            0.60            0.15
5...............................................................            0.31            0.60            0.19
----------------------------------------------------------------------------------------------------------------

    DOE requests comment on the mean PUL applied to distribution 
transformers owned and operated by utilities serving low customer 
populations.
2. Utility Purchasers of Vault (Underground) and Subsurface 
Installations
    In some urban areas, utilities provide service to customers by 
deploying parts of their transformer fleet in subsurface vaults, or 
other prefabricated underground concrete structure, referred to as 
vaults. At issue in the potential amended standards case is that as the 
volume (ft\3\) of the more efficient replacement transformers may be 
too large to fit into the existing vault, which would have to be 
replaced to fit the new equipment. This analysis is applied to the 
representative units 15 and 16, specifically defined in the engineering 
analysis for vault and submersible liquid-immersed distribution 
transformers (see section IV.C.1).
    NEMA commented that they agree with the proposed approach to 
examine utility costs regarding replacement of existing vault and 
subsurface transformers. (NEMA No 18 at p. 17).
    DOE has not received any data from stakeholders regarding the costs 
associated with vault replacement due increased distribution 
transformer volume. For this subgroups analysis DOE examined the 
National average price of concrete vault construction with 6-inch-thick 
walls for variously sized vaults from RSMeans.\86\ DOE notes that the 
costs required to install a new vault can vary above the cost of the 
prefabricated concrete vault. These additional costs would include but 
are not limited to, excavation and disposal of the original vault, and 
backfilling. While stakeholders have discussed that these costs can be 
prohibitive, they have not to date provided examples of such costs, or 
itemized cost breakdowns associated with vault replacement. Due to this 
lack of information DOE has taken a simple approach and multiplied the 
costs from RSMeans by three to provide a gross vault installation 
estimate. This gross vault installation estimate represents the labor 
time and material costs associated with excavation, vault installation, 
and backfilling when replacing the no-new-standards vault with a new 
structure. DOE applied the following simple linear fit relating the 
cost of vault replacement to transformer volume.
---------------------------------------------------------------------------

    \86\ RSMeans, Series: 330563130050, 330563130150, 330563130100, 
330563130200, 330563130250, 330563130300, https://www.rsmeans.com/ 
(Last access: March 15, 2022).

VaultReplacement = 24.201 x DTVolume + 4,930.8

                  Table IV.18--Vault Replacement Costs
                                 [2021$]
------------------------------------------------------------------------
                                                            Replacement
          Vault dimensions (ft)           Volume (ft\3\)   cost (2021$)
------------------------------------------------------------------------
5' x 10' x 6' high......................             300          12,450
5' x 12' x 6' high......................             360          13,050
6' x 10' x 6' high......................             360          13,050
6' x 12' x 6' high......................             360          14,625
6' x 13' x 6' high......................             468          18,300
8' x 14' x 7' high......................             784          23,550
------------------------------------------------------------------------

    DOE requests comment on its assumed vault replacement costs 
methodology. DOE seeks comment or data regarding the installation 
procedures associated with vault replacement. vault expansion 
(renovation), and vault transformer installation and their respective 
costs for replacement transformers. Additionally, DOE seeks information 
on the typical expected lifetime of underground concrete vaults.

[[Page 1786]]

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of distribution 
transformers and to estimate the potential impacts of such standards on 
employment and manufacturing capacity. The MIA has both quantitative 
and qualitative aspects and includes analyses of projected industry 
cash flows, the INPV, investments in research and development (``R&D'') 
and manufacturing capital, and domestic manufacturing employment. 
Additionally, the MIA seeks to determine how amended energy 
conservation standards might affect manufacturing employment, capacity, 
and competition, as well as how standards contribute to overall 
regulatory burden. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups, including small 
business manufacturers.
    The quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (``GRIM''), an industry cash flow model with 
inputs specific to this rulemaking. The key GRIM inputs include data on 
the industry cost structure, unit production costs, product shipments, 
manufacturer markups, and investments in R&D and manufacturing capital 
required to produce compliant equipment. The key GRIM outputs are the 
INPV, which is the sum of industry annual cash flows over the analysis 
period, discounted using the industry-weighted average cost of capital, 
and the impact to domestic manufacturing employment. The model uses 
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by 
comparing changes in INPV and domestic manufacturing employment between 
a no-new-standards case and the various standards cases (i.e., TSLs). 
To capture the uncertainty relating to manufacturer pricing strategies 
following amended standards, the GRIM estimates a range of possible 
impacts under different scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, the cumulative impact of other DOE and 
non-DOE regulations, and impacts on manufacturer subgroups. The 
complete MIA is outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the distribution transformer 
manufacturing industry based on the market and technology assessment, 
preliminary manufacturer interviews, and publicly available 
information. This included a top-down analysis of distribution 
transformer manufacturers that DOE used to derive preliminary financial 
inputs for the GRIM (e.g., revenues; materials, labor, overhead, and 
depreciation expenses; selling, general, and administrative expenses 
(``SG&A''); and R&D expenses). DOE also used public sources of 
information to further calibrate its initial characterization of the 
distribution transformer manufacturing industry, including information 
from the April 2013 Standards Final Rule, individual company filings of 
form 10-K from the SEC,\87\ corporate annual reports, the U.S. Census 
Bureau's Economic Census,\88\ and reports from D&B Hoovers.\89\
---------------------------------------------------------------------------

    \87\ www.sec.gov/edgar.shtml.
    \88\ www.census.gov/programs-surveys/asm.html.
    \89\ www.app.avention.com.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework industry cash-flow 
analysis to quantify the potential impacts of amended energy 
conservation standards. The GRIM uses several factors to determine a 
series of annual cash flows starting with the announcement of the 
standard and extending over a 30-year period following the compliance 
date of the standard. These factors include annual expected revenues, 
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures. 
In general, energy conservation standards can affect manufacturer cash 
flow in three distinct ways: (1) creating a need for increased 
investment, (2) raising production costs per unit, and (3) altering 
revenue due to higher per-unit prices and changes in sales volumes.
    In addition, during Phase 2, DOE developed interview guides to 
distribute to manufacturers of distribution transformers in order to 
develop other key GRIM inputs, including product and capital conversion 
costs, and to gather additional information on the anticipated effects 
of energy conservation standards on revenues, direct employment, 
capital assets, industry competitiveness, industry consolidation, and 
manufacturer subgroup impacts.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with representative manufacturers. During these interviews, 
DOE discussed engineering, manufacturing, procurement, and financial 
topics to validate assumptions used in the GRIM and to identify key 
issues or concerns. See section IV.J.3 of this document for a 
description of the key issues raised by manufacturers during the 
interviews. As part of Phase 3, DOE also evaluated subgroups of 
manufacturers that may be disproportionately impacted by amended 
standards or that may not be accurately represented by the average cost 
assumptions used to develop the industry cash flow analysis. Such 
manufacturer subgroups may include small business manufacturers, low-
volume manufacturers (``LVMs''), niche players, and/or manufacturers 
exhibiting a cost structure that largely differs from the industry 
average. DOE identified one subgroup for a separate impact analysis: 
small business manufacturers. The small business subgroup is discussed 
in section VI.B, ``Review under the Regulatory Flexibility Act'' and in 
chapter 12 of the NOPR TSD.
2. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flow due to 
amended standards that result in a higher or lower industry value. The 
GRIM uses a standard, annual discounted cash-flow analysis that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs. The GRIM models changes in costs, 
distribution of shipments, investments, and manufacturer margins that 
could result from amended energy conservation standards. The GRIM 
spreadsheet uses the inputs to arrive at a series of annual cash flows, 
beginning in 2022 (the reference year of the analysis) and continuing 
to 2056. DOE calculated INPVs by summing the stream of annual 
discounted cash flows during this period. For manufacturers of 
distribution transformers, DOE used a real discount rate of 7.4 percent 
for liquid-immersed distribution transformers, 11.1 percent for low-
voltage dry-type distribution transformers, and 9.0 percent for medium-
voltage dry-type distribution transformers, which was derived from the 
April 2013 Standards Final Rule and then modified according to feedback 
received during manufacturer interviews.\90\
---------------------------------------------------------------------------

    \90\ See Chapter 12 of the April 2013 Final Rule TSD for 
discussion of where initial discount factors were derived, available 
online at www.regulations.gov/document/EERE-2010-BT-STD-0048-0760. 
For the April 2013 Final Rule, DOE initially calculated a 9.1 
percent discount rate, however during manufacturer interviews 
conducted for that rulemaking, manufacturers suggested using 
different discount rates specific for each equipment class group. 
During manufacturer interviews conducted for this NOPR, 
manufacturers continued to agree that using different discount rates 
for each equipment class group is appropriate.

---------------------------------------------------------------------------

[[Page 1787]]

    DOE requests comment on the real discount rates used in this NOPR. 
Specifically, if 7.4 percent for liquid-immersed distribution 
transformer manufacturers, 11.1 percent for low-voltage dry-type 
distribution transformer manufacturers, and 9.0 percent for medium-
voltage dry-type distribution transformer manufacturers are appropriate 
discount rates to use in the GRIM.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of amended 
energy conservation standards on manufacturers. As discussed 
previously, DOE developed critical GRIM inputs using a number of 
sources, including publicly available data, results of the engineering 
analysis and shipments analysis, and information gathered from industry 
stakeholders during the course of manufacturer interviews. The GRIM 
results are presented in section V.B.2. Additional details about the 
GRIM, the discount rate, and other financial parameters can be found in 
chapter 12 of the NOPR TSD.
a. Manufacturer Production Costs
    Manufacturing more efficient equipment is typically more expensive 
than manufacturing baseline equipment due to the use of more complex 
components, which are typically more costly than baseline components. 
The changes in the MPCs of covered products can affect the revenues, 
gross margins, and cash flow of the industry.
    During the engineering analysis, DOE used transformer design 
software to create a database of designs spanning a broad range of 
efficiencies for each of the representative units. This design software 
generated a bill of materials. DOE then applied markups to allow for 
scrap, handling, factory overhead, and other non-production costs, as 
well as profit, to estimate the MSP.
    These designs and their MSPs are subsequently inputted into the LCC 
customer choice model. For each efficiency level and within each 
representative unit, the LCC model uses a consumer choice model and 
criteria described in section IV.F.3 to select a subset of all the 
potential designs options (and associated MSPs). This subset is meant 
to represent those designs that would actually be shipped in the market 
under the various analyzed TSLs. DOE inputted into the GRIM the 
weighted average cost of the designs selected by the LCC model and 
scaled those MSPs to other selected capacities in each design line's 
KVA range.
    For a complete description of the MSPs, see chapter 5 of the NOPR 
TSD.
b. Shipments Projections
    The GRIM estimates manufacturer revenues based on total unit 
shipment projections and the distribution of those shipments by 
efficiency level. Changes in sales volumes and efficiency mix over time 
can significantly affect manufacturer finances. For this analysis, the 
GRIM uses the NIA's annual shipment projections derived from the 
shipments analysis from 2022 (the reference year) to 2056 (the end year 
of the analysis period). See chapter 9 of the NOPR TSD for additional 
details.
c. Product and Capital Conversion Costs
    Amended energy conservation standards could cause manufacturers to 
incur conversion costs to bring their production facilities and 
equipment designs into compliance. DOE evaluated the level of 
conversion-related expenditures that would be needed to comply with 
each considered efficiency level in each equipment class. For the MIA, 
DOE classified these conversion costs into two major groups: (1) 
product conversion costs; and (2) capital conversion costs. Product 
conversion costs are investments in research, development, testing, 
marketing, and other non-capitalized costs necessary to make product 
designs comply with amended energy conservation standards. Capital 
conversion costs are investments in property, plant, and equipment 
necessary to adapt or change existing production facilities such that 
new compliant equipment designs can be fabricated and assembled.
    For capital conversion costs, DOE prepared bottom-up estimates of 
the costs required to meet amended standards at each TSL for each 
representative unit. To do this, DOE used equipment cost estimates from 
the April 2013 Standards Final Rule and from information provided by 
manufacturers and equipment suppliers, an understanding of the 
manufacturing processes at distribution transformer manufacturing 
facilities developed during interviews and in consultation with subject 
matter experts, and the properties associated with different core and 
winding materials. Major drivers of capital conversion costs include 
changes in core steel type (and thickness), core weight, and core stack 
height, all of which are interdependent and can vary by efficiency 
level. DOE uses estimates of the core steel quantities needed by steel 
type for each TSL to model the additional equipment the industry would 
need to meet each TSL.
    Capital conversion costs are primarily driven at each TSL by the 
potential need for the industry to expand capacity for amorphous 
production. Based on interviews with manufacturers and equipment 
suppliers, based on the responses, DOE's model assumed an amorphous 
production line capable of producing 1,200 tons annual of amorphous 
cores would cost approximately $1,000,000 in capital investments. This 
includes costs associated with purchasing annealing ovens, core cutting 
machines, lacing tables, and other miscellaneous equipment. The 
quantity of amorphous steel are outputs of the engineering analysis and 
the LCC. At higher TSLs, the percent of distribution transformers 
selected in the LCC consumer choice model that have amorphous cores 
increases. Additionally, at the highest TSLs, the quantity of amorphous 
steel per distribution transformer also increases. As the increasing 
stringency of the TSLs drive the use of amorphous cores in distribution 
transformers, capital conversion costs increase.
    For product conversion costs, DOE understands the production of 
amorphous cores requires unique expertise and equipment. For 
manufacturers without experience with amorphous steel, a standard that 
would likely be met using amorphous cores would require the development 
or the procurement of the technical knowledge to produce cores. Because 
amorphous steel is thinner and more brittle after annealing, materials 
management, safety measures, and design considerations that are not 
associated with non-amorphous steels would need to be implemented.
    DOE estimated product conversion costs would be equal to the annual 
industry R&D expenses for those TSLs where a majority of the market 
would be expected to transition to amorphous material. These one-time 
product conversion costs would be in addition to the annual R&D 
expenses normally incurred by distribution transformer manufacturers. 
These one-time expenditures account for the design, engineering, 
prototyping, and other R&D efforts the industry would have to undertake 
to move to a predominately amorphous market. For TSLs that would

[[Page 1788]]

not require the use of amorphous cores, but would still require 
distribution transformer models to be redesigned to meet higher 
efficiency levels, DOE estimated product conversion costs would be 
equal to 50 percent the annual industry R&D expenses. These one-time 
product conversion costs would also be in addition to the annual R&D 
expenses normally incurred by distribution transformer manufacturers.
    Capital and product conversion costs are key inputs into the GRIM 
and directly impact the change in INPV (which is outputted from the 
model) due to analyzed amended standards. The GRIM assumes all 
conversion-related investments occur between the year of publication of 
the final rule and the year by which manufacturers must comply with the 
amended standards. The conversion cost figures used in the GRIM can be 
found in section V.B.2 of this document. For additional information on 
the estimated capital and product conversion costs, see chapter 12 of 
the NOPR TSD.
d. Manufacturer Markup Scenarios
    MSPs include direct manufacturing production costs (i.e., labor, 
materials, and overhead estimated in DOE's MPCs) and all non-production 
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate 
the MSPs in the GRIM, DOE applied manufacturer markups to the MPCs 
estimated in the engineering analysis for each equipment class and 
efficiency level. Modifying these margins in the standards case yields 
different sets of impacts on manufacturers. For the MIA, DOE modeled 
two standards-case scenarios to represent uncertainty regarding the 
potential impacts on prices and profitability for manufacturers 
following the implementation of amended energy conservation standards: 
(1) a preservation of gross margin percentage markup scenario; and (2) 
a preservation of operating profit scenario. These scenarios lead to 
different margins that, when applied to the MPCs, result in varying 
revenue and cash flow impacts on distribution transformer 
manufacturers.
    Under the preservation of gross margin percentage scenario, DOE 
applied the same single uniform ``gross margin percentage'' that is 
used in the no-new-standards case across all efficiency levels in the 
standards cases. This scenario assumes that manufacturers would be able 
to maintain the same amount of profit as a percentage of revenues at 
all TSLs, even as the MPCs increase in the standards case. Based on 
data from the April 2013 Standards Final Rule, publicly available 
financial information for manufacturers of distribution transformers, 
and comments made during manufacturer interviews, DOE estimated a gross 
margin percentage of 20 percent for all distribution transformers.\91\ 
Because this scenario assumes that manufacturers would be able to 
maintain the same gross margin percentage as MPCs increase in response 
to the analyzed energy conservation standards, it represents the upper 
bound to industry profitability under amended energy conservation 
standards.
---------------------------------------------------------------------------

    \91\ The gross margin percentage of 20 percent is based on a 
manufacturer markup of 1.25.
---------------------------------------------------------------------------

    Under the preservation of operating profit scenario, DOE modeled a 
situation in which manufacturers are not able to increase per-unit 
operating profit in proportion to increases in MPCs. Under this 
scenario, as the cost of production (MPCs) increase, manufacturers 
reduce their manufacturer markups (on a percentage basis) to a level 
that maintains the no-new-standards operating profit (in absolute 
dollars). The implicit assumption behind this scenario is that the 
industry can only maintain its operating profit in absolute dollars 
after compliance with amended standards. Therefore, operating margin in 
percentage terms is reduced between the no-new-standards case and the 
analyzed standards cases. DOE adjusted the manufacturer markups in the 
GRIM at each TSL to yield approximately the same earnings before 
interest and taxes in the standards case in the year after the 
compliance date of the amended standards as in the no-new-standards 
case. This scenario represents the lower bound to industry 
profitability under amended energy conservation standards.
    A comparison of industry financial impacts under the two scenarios 
is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
    DOE interviewed manufacturers representing approximately 60 percent 
of the liquid-immersed distribution transformer industry; approximately 
50 percent of the LVDT distribution transformer industry; and 
approximately 60 percent of the MVDT distribution transformer industry.
    In interviews, DOE asked manufacturers to describe their major 
concerns regarding this rulemaking. The following section highlights 
manufacturer concerns that helped inform the projected potential 
impacts of an amended standard on the industry. Manufacturer interviews 
are conducted under non-disclosure agreements (``NDAs''), so DOE does 
not document these discussions in the same way that it does public 
comments in the comment summaries and DOE's responses throughout the 
rest of this document.
a. Material Shortages and Prices
    Throughout interviews and comments, manufacturers noted substantial 
material shortages leading to both higher, more volatile prices and, at 
points, an inability to procure certain materials--particularly 
electrical steel. Manufacturers noted that these shortages reflect 
rising demand for electrical steel domestically and internationally as 
well as more general supply chain issues caused by the COVID-19 
pandemic. Demand for steel, according to manufacturers, appears to be 
driven by the growing electric vehicles and electric motors sectors 
(prompting some steel producers to shift production away from GOES 
suited for core manufacturing to non-grain-oriented steels suited for 
electric vehicle production) as well as more general rising demand for 
electrical steel abroad (leading to foreign steel producers reducing 
exports to the United States). Manufacturers also noted that prices for 
copper and aluminum have risen substantially, though have not been 
subject to allocations as electrical steel has.
    Manufacturers stated that higher energy conservation standards will 
most likely lead to greater demand for materials necessary to build 
more efficient transformers--potentially leading to less material 
availability and greater cost concerns, particularly for manufacturers 
without long-term relationships with suppliers. Further, several 
manufacturers argued that establishing more stringent energy 
conservation standards during a period of material price volatility may 
undermine DOE's analysis as it relates to the short-term and long-term 
economic impact of such a standard.
b. Use of Amorphous Materials
    Manufacturers raised concerns about energy conservation standards 
that would require the use of amorphous steel cores. Manufacturers who 
currently make their own cores stated that amorphous core production 
requires a different manufacturing process that would require a 
substantial amount of new capital equipment and retrofits of existing 
equipment that could, additionally, require more facility floor space. 
Some manufacturers noted that they may need to switch to

[[Page 1789]]

purchasing cores for products covered by energy conservation standards. 
Moving from a lower to a higher grade of non-amorphous steel would 
result in significantly less costs and most manufacturers could 
continue to use the same core production equipment. Manufacturers that 
currently purchase cores noted less capital conversion costs associated 
with such an increase in standards but did note that there is a limited 
number of suppliers of amorphous steel grades both in North America and 
globally--potentially meaning a limited supply of amorphous steel in a 
market with relatively little competition.
c. Larger Distribution Transformers
    Manufacturers noted that energy conservation standard increases, 
short of requiring amorphous core usage, would likely lead to larger 
distribution transformers. Manufacturers stated that larger transformer 
sizes could complicate efforts to design transformers to replace 
existing transformers where space is limited. Utilities, for example, 
have built vaults, where distribution transformers are placed, of a 
certain size. If a replacement distribution transformer cannot be 
designed to fit the current vault space, then utilities will need to 
build new vaults, increasing costs and construction-related disruption 
significantly. Manufacturers indicated that this was not a significant 
issue with new construction projects, where infrastructure can be built 
around the size of the distribution transformer.
4. Discussion of MIA Comments
    In response to the August 2021 Preliminary Analysis TSD, a few 
interested parties made comments regarding the MIA, including comments 
on small businesses and capital equipment. DOE addresses these comments 
in this section.
a. Small Businesses
    Powersmiths commented that large manufacturers are likely to be 
able to meet higher efficiency standards given they will likely have 
the resources to make the necessary capital investments to comply with 
standards and would likely gain additional revenue from the higher per 
transformer prices. However, if energy conservation standards require 
large capital investments, these costs could put small businesses out 
of business. (Powersmiths, No.46 at p. 6) While Schneider commented 
that there is an increase in the number of companies that produce 
assembled cores for distribution transformer manufacturers (as opposed 
to distribution transformer manufacturers being required to fabricate 
their own cores internally). Schneider continued stating that the 
availability to purchase assembled cores would not place a 
disproportionate burden on small businesses. (Schneider, No. 49 at p. 
15)
    DOE agrees that large capital and production conversion costs could 
put additional strains on all distribution transformer manufacturers, 
and especially small business. As part of the MIA DOE calculates the 
expected conversion costs (capital and product conversion costs). The 
methodology for calculating these conversion costs are described in 
section IV.J.2.c and these cost estimates are presented in section 
V.B.2.a. Additionally, DOE specifically examines the potential impact 
of small businesses in section VI.B of this document.
    As stated in section IV.J.2.c, conversion costs are primarily 
driven by the costs associated with the production of amorphous cores, 
and to a lesser extent larger and more efficient GOES cores. DOE agrees 
with Schneider's comment that small businesses could mitigate larger 
conversion costs by purchasing assembled cores as opposed to making the 
investments to produce more efficient GOES cores or amorphous cores, in 
order to comply with the analyzed standards.
b. Capital Equipment
    ERMCO comments that larger cores may require new or different 
manufacturing equipment. (ERMCO, No. 45 at p. 1) DOE agrees that while 
capital conversion costs are primarily driven by the costs associated 
with the production of amorphous cores, there are capital conversion 
costs associated with production of larger cores. DOE accounts for the 
need for manufacturers to purchase new or different equipment in the 
capital conversion cost estimates described in section IV.J.2.c, with 
these cost estimates presented in section V.B.2.a of this document.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of other gases 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion.
    The analysis of electric power sector emissions of CO2, 
NOX, SO2, and Hg uses emissions factors intended 
to represent the marginal impacts of the change in electricity 
consumption associated with amended or new standards. The methodology 
is based on results published for the AEO, including a set of side 
cases that implement a variety of efficiency-related policies. The 
methodology is described in appendix 13A in the NOPR TSD. The analysis 
presented in this notice uses projections from AEO2022. Power sector 
emissions of CH4 and N2O from fuel combustion are 
estimated using Emission Factors for Greenhouse Gas Inventories 
published by the Environmental Protection Agency (EPA).\92\
---------------------------------------------------------------------------

    \92\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12, 
2021).
---------------------------------------------------------------------------

    FFC upstream emissions, which include emissions from fuel 
combustion during extraction, processing, and transportation of fuels, 
and ``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2, are estimated based on the 
methodology described in chapter 15 of the NOPR TSD.
    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. For power sector 
emissions, specific emissions intensity factors are calculated by 
sector and end use. Total emissions reductions are estimated using the 
energy savings calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
    DOE's no-new-standards case for the electric power sector reflects 
the AEO, which incorporates the projected impacts of existing air 
quality regulations on emissions. AEO2022 generally represents current 
legislation and environmental regulations, including recent government 
actions, that were in place at the time of preparation of AEO2022, 
including the emissions control programs discussed in the following 
paragraphs.\93\
---------------------------------------------------------------------------

    \93\ For further information, see the Assumptions to AEO2022 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed June, 2022).
---------------------------------------------------------------------------

    SO2 emissions from affected electric generating units 
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions

[[Page 1790]]

cap on SO2 for affected EGUs in the 48 contiguous States and 
the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2 
emissions from numerous States in the eastern half of the United States 
are also limited under the Cross-State Air Pollution Rule (``CSAPR''). 
76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce 
certain emissions, including annual SO2 emissions, and went 
into effect as of January 1, 2015.\94\ AEO2022 incorporates 
implementation of CSAPR, including the update to the CSAPR ozone season 
program emission budgets and target dates issued in 2016. 81 FR 74504 
(Oct. 26, 2016).\95\ Compliance with CSAPR is flexible among EGUs and 
is enforced through the use of tradable emissions allowances. Under 
existing EPA regulations, for states subject to SO2 
emissions limits under CSAPR, excess SO2 emissions 
allowances resulting from the lower electricity demand caused by the 
adoption of an efficiency standard could be used to permit offsetting 
increases in SO2 emissions by another regulated EGU.
---------------------------------------------------------------------------

    \94\ CSAPR requires states to address annual emissions of 
SO2 and NOX, precursors to the formation of 
fine particulate matter (PM2.5) pollution, in order to 
address the interstate transport of pollution with respect to the 
1997 and 2006 PM2.5 National Ambient Air Quality 
Standards (``NAAQS''). CSAPR also requires certain states to address 
the ozone season (May-September) emissions of NOX, a 
precursor to the formation of ozone pollution, in order to address 
the interstate transport of ozone pollution with respect to the 1997 
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a 
supplemental rule that included an additional five states in the 
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) 
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008 
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
    \95\ In Sept. 2019, the D.C. Court of Appeals remanded the 2016 
CSAPR Update to EPA. In April 2021, EPA finalized the 2021 CSAPR 
Update which resolved the interstate transport obligations of 21 
states for the 2008 ozone NAAQS. 86 FR 23054 (April 30, 2021); see 
also, 86 FR 29948 (June 4, 2021) (correction to preamble). The 2021 
CSAPR Update became effective on June 29, 2021. The release of AEO 
2021 in February 2021 predated the 2021 CSAPR Update.
---------------------------------------------------------------------------

    However, beginning in 2016, SO2 emissions began to fall 
as a result of the Mercury and Air Toxics Standards (``MATS'') for 
power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final rule, EPA 
established a standard for hydrogen chloride as a surrogate for acid 
gas hazardous air pollutants (``HAP''), and also established a standard 
for SO2 (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO2 emissions are 
being reduced as a result of the control technologies installed on 
coal-fired power plants to comply with the MATS requirements for acid 
gas. In order to continue operating, coal power plants must have either 
flue gas desulfurization or dry sorbent injection systems installed. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Because of the emissions reductions 
under the MATS, it is unlikely that excess SO2 emissions 
allowances resulting from the lower electricity demand would be needed 
or used to permit offsetting increases in SO2 emissions by 
another regulated EGU. Therefore, energy conservation standards that 
decrease electricity generation would generally reduce SO2 
emissions. DOE estimated SO2 emissions reduction using 
emissions factors based on AEO2022.
    CSAPR also established limits on NOX emissions for 
numerous States in the eastern half of the United States. Energy 
conservation standards would have little effect on NOX 
emissions in those States covered by CSAPR emissions limits if excess 
NOX emissions allowances resulting from the lower 
electricity demand could be used to permit offsetting increases in 
NOX emissions from other EGUs. In such case, NOX 
emissions would remain near the limit even if electricity generation 
goes down. A different case could possibly result, depending on the 
configuration of the power sector in the different regions and the need 
for allowances, such that NOX emissions might not remain at 
the limit in the case of lower electricity demand. In this case, energy 
conservation standards might reduce NOX emissions in covered 
States. Despite this possibility, DOE has chosen to be conservative in 
its analysis and has maintained the assumption that standards will not 
reduce NOX emissions in States covered by CSAPR. Energy 
conservation standards would be expected to reduce NOX 
emissions in the States not covered by CSAPR. DOE used AEO2022 data to 
derive NOX emissions factors for the group of States not 
covered by CSAPR.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would be expected to slightly reduce Hg emissions. DOE 
estimated mercury emissions reduction using emissions factors based on 
AEO2022, which incorporates the MATS.

L. Monetizing Emissions Impacts

    As part of the development of this proposed rule, for the purpose 
of complying with the requirements of Executive Order 12866, DOE 
considered the estimated monetary benefits from the reduced emissions 
of CO2, CH4, N2O, NOX, and 
SO2 that are expected to result from each of the TSLs 
considered. In order to make this calculation analogous to the 
calculation of the NPV of consumer benefit, DOE considered the reduced 
emissions expected to result over the lifetime of products shipped in 
the projection period for each TSL. This section summarizes the basis 
for the values used for monetizing the emissions benefits and presents 
the values considered in this NOPR.
    On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction issued 
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of 
the Fifth Circuit's order, the preliminary injunction is no longer in 
effect, pending resolution of the federal government's appeal of that 
injunction or a further court order. Among other things, the 
preliminary injunction enjoined the defendants in that case from 
``adopting, employing, treating as binding, or relying upon'' the 
interim estimates of the social cost of greenhouse gases--which were 
issued by the Interagency Working Group on the Social Cost of 
Greenhouse Gases on February 26, 2021--to monetize the benefits of 
reducing greenhouse gas emissions. As reflected in this rule, DOE has 
reverted to its approach prior to the injunction and presents monetized 
greenhouse gas abatement benefits where appropriate and permissible 
under law. DOE requests comment on how to address the climate benefits 
and non-monetized effects of the proposal.
1. Monetization of Greenhouse Gas Emissions
    For the purpose of complying with the requirements of Executive 
Order 12866, DOE estimates the monetized benefits of the reductions in 
emissions of CO2, CH4, and N2O by 
using a measure of the social cost (``SC'') of each pollutant (e.g., 
SC-GHGs). These estimates represent the monetary value of the net harm 
to society associated with a marginal increase in emissions of these 
pollutants in a given year, or the benefit of avoiding that increase. 
These estimates are intended to include (but are not limited to) 
climate-change-related changes in net agricultural productivity, human 
health, property damages from increased flood risk, disruption of 
energy systems, risk of conflict, environmental migration, and the 
value of ecosystem services. DOE exercises its own judgment in 
presenting monetized climate benefits as recommended by applicable

[[Page 1791]]

Executive orders and guidance, and DOE would reach the same conclusion 
presented in this proposed rulemaking in the absence of the social cost 
of greenhouse gases, including the February 2021 Interim Estimates 
presented by the Interagency Working Group on the Social Cost of 
Greenhouse Gases.
    DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions (i.e., SC-GHGs) using the 
estimates presented in the Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990 published in February 2021 by the Interagency Working Group 
on the Social Cost of Greenhouse Gases (IWG) (IWG, 2021). The SC-GHGs 
is the monetary value of the net harm to society associated with a 
marginal increase in emissions in a given year, or the benefit of 
avoiding that increase. In principle, SC-GHGs includes the value of all 
climate change impacts, including (but not limited to) changes in net 
agricultural productivity, human health effects, property damage from 
increased flood risk and natural disasters, disruption of energy 
systems, risk of conflict, environmental migration, and the value of 
ecosystem services. The SC-GHGs therefore, reflects the societal value 
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting 
benefit-cost analyses of policies that affect CO2, 
N2O and CH4 emissions. As a member of the IWG 
involved in the development of the February 2021 SC-GHG TSD), the DOE 
agrees that the interim SC-GHG estimates represent the most appropriate 
estimate of the SC-GHG until revised estimates have been developed 
reflecting the latest, peer-reviewed science.
    The SC-GHGs estimates presented here were developed over many 
years, using transparent process, peer-reviewed methodologies, the best 
science available at the time of that process, and with input from the 
public. Specifically, in 2009, an interagency working group (IWG) that 
included the DOE and other executive branch agencies and offices was 
established to ensure that agencies were using the best available 
science and to promote consistency in the social cost of carbon (SC-
CO2) values used across agencies. The IWG published SC-
CO2 estimates in 2010 that were developed from an ensemble 
of three widely cited integrated assessment models (IAMs) that estimate 
global climate damages using highly aggregated representations of 
climate processes and the global economy combined into a single 
modeling framework. The three IAMs were run using a common set of input 
assumptions in each model for future population, economic, and 
CO2 emissions growth, as well as equilibrium climate 
sensitivity (ECS)--a measure of the globally averaged temperature 
response to increased atmospheric CO2 concentrations. These 
estimates were updated in 2013 based on new versions of each IAM. In 
August 2016 the IWG published estimates of the social cost of methane 
(SC-CH4) and nitrous oxide (SC-N2O) using 
methodologies that are consistent with the methodology underlying the 
SC-CO2 estimates. The modeling approach that extends the IWG 
SC-CO2 methodology to non-CO2 GHGs has undergone 
multiple stages of peer review. The SC-CH4 and SC-
N2O estimates were developed by Marten et al. (2015) and 
underwent a standard double-blind peer review process prior to journal 
publication. In 2015, as part of the response to public comments 
received to a 2013 solicitation for comments on the SC-CO2 
estimates, the IWG announced a National Academies of Sciences, 
Engineering, and Medicine review of the SC-CO2 estimates to 
offer advice on how to approach future updates to ensure that the 
estimates continue to reflect the best available science and 
methodologies. In January 2017, the National Academies released their 
final report, Valuing Climate Damages: Updating Estimation of the 
Social Cost of Carbon Dioxide, and recommended specific criteria for 
future updates to the SC-CO2 estimates, a modeling framework 
to satisfy the specified criteria, and both near-term updates and 
longer-term research needs pertaining to various components of the 
estimation process (National Academies, 2017). Shortly thereafter, in 
March 2017, President Trump issued Executive Order 13783, which 
disbanded the IWG, withdrew the previous TSDs, and directed agencies to 
ensure SC-CO2 estimates used in regulatory analyses are 
consistent with the guidance contained in OMB's Circular A-4, 
``including with respect to the consideration of domestic versus 
international impacts and the consideration of appropriate discount 
rates'' (E.O. 13783, Section 5(c)). Benefit-cost analyses following 
E.O. 13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and 
were calculated using two discount rates recommended by Circular A-4, 3 
percent and 7 percent. All other methodological decisions and model 
versions used in SC-GHG calculations remained the same as those used by 
the IWG in 2010 and 2013, respectively.
    On January 20, 2021, President Biden issued Executive Order 13990, 
which re-established the IWG and directed it to ensure that the U.S. 
Government's estimates of the social cost of carbon and other 
greenhouse gases reflect the best available science and the 
recommendations of the National Academies (2017). The IWG was tasked 
with first reviewing the SC-GHG estimates currently used in Federal 
analyses and publishing interim estimates within 30 days of the E.O. 
that reflect the full impact of GHG emissions, including by taking 
global damages into account. The interim SC-GHG estimates published in 
February 2021 are used here to estimate the climate benefits for this 
proposed rulemaking. The E.O. instructs the IWG to undertake a fuller 
update of the SC-GHG estimates by January 2022 that takes into 
consideration the advice of the National Academies (2017) and other 
recent scientific literature. The February 2021 SC-GHG TSD provides a 
complete discussion of the IWG's initial review conducted under E.O. 
13990. In particular, the IWG found that the SC-GHG estimates used 
under E.O. 13783 fail to reflect the full impact of GHG emissions in 
multiple ways.
    First, the IWG found that the SC-GHG estimates used under E.O. 
13783 fail to fully capture many climate impacts that affect the 
welfare of U.S. citizens and residents, and those impacts are better 
reflected by global measures of the SC-GHG. Examples of effects omitted 
from the E.O. 13783 estimates include direct effects on U.S. citizens, 
assets, and investments located abroad, supply chains, U.S. military 
assets and interests abroad, and tourism, and spillover pathways such 
as economic and political destabilization and global migration that can 
lead to adverse impacts on U.S. national security, public health, and 
humanitarian concerns. In addition, assessing the benefits of U.S. GHG 
mitigation activities requires consideration of how those actions may 
affect mitigation activities by other countries, as those international 
mitigation actions will provide a benefit to U.S. citizens and 
residents by mitigating climate impacts that affect U.S. citizens and 
residents. A wide range of scientific and economic experts have 
emphasized the issue of reciprocity as support for considering global 
damages of GHG emissions. If the United States does not consider 
impacts on other countries, it is difficult to convince other countries 
to consider the

[[Page 1792]]

impacts of their emissions on the United States. The only way to 
achieve an efficient allocation of resources for emissions reduction on 
a global basis--and so benefit the U.S. and its citizens--is for all 
countries to base their policies on global estimates of damages. As a 
member of the IWG involved in the development of the February 2021 SC-
GHG TSD, DOE agrees with this assessment and, therefore, in this 
proposed rule DOE centers attention on a global measure of SC-GHG. This 
approach is the same as that taken in DOE regulatory analyses from 2012 
through 2016. A robust estimate of climate damages that accrue only to 
U.S. citizens and residents does not currently exist in the literature. 
As explained in the February 2021 TSD, existing estimates are both 
incomplete and an underestimate of total damages that accrue only to 
the citizens and residents of the U.S. because they do not fully 
capture the regional interactions and spillovers discussed above, nor 
do they include all of the important physical, ecological, and economic 
impacts of climate change recognized in the climate change literature. 
As noted in the February 2021 SC-GHG TSD, the IWG will continue to 
review developments in the literature, including more robust 
methodologies for estimating a U.S.-specific SC-GHG value, and explore 
ways to better inform the public of the full range of carbon impacts. 
As a member of the IWG, DOE will continue to follow developments in the 
literature pertaining to this issue.
    Second, the IWG found that the use of the social rate of return on 
capital (7 percent under current OMB Circular A-4 guidance) to discount 
the future benefits of reducing GHG emissions inappropriately 
underestimates the impacts of climate change for the purposes of 
estimating the SC-GHG. Consistent with the findings of the National 
Academies (2017) and the economic literature, the IWG continued to 
conclude that the consumption rate of interest is the theoretically 
appropriate discount rate in an intergenerational context (IWG 2010, 
2013, 2016a, 2016b), and recommended that discount rate uncertainty and 
relevant aspects of intergenerational ethical considerations be 
accounted for in selecting future discount rates. As a member of the 
IWG involved in the development of the February 2021 SC-GHG TSD, DOE 
agrees with this assessment and will continue to follow developments in 
the literature pertaining to this issue.
    Furthermore, the damage estimates developed for use in the SC-GHG 
are estimated in consumption-equivalent terms, and so an application of 
OMB Circular A-4's guidance for regulatory analysis would then use the 
consumption discount rate to calculate the SC-GHG. DOE agrees with this 
assessment and will continue to follow developments in the literature 
pertaining to this issue. DOE also notes that while OMB Circular A-4, 
as published in 2003, recommends using 3% and 7% discount rates as 
``default'' values, Circular A-4 also reminds agencies that ``different 
regulations may call for different emphases in the analysis, depending 
on the nature and complexity of the regulatory issues and the 
sensitivity of the benefit and cost estimates to the key assumptions.'' 
On discounting, Circular A-4 recognizes that ``special ethical 
considerations arise when comparing benefits and costs across 
generations,'' and Circular A-4 acknowledges that analyses may 
appropriately ``discount future costs and consumption benefits . . . at 
a lower rate than for intragenerational analysis.'' In the 2015 
Response to Comments on the Social Cost of Carbon for Regulatory Impact 
Analysis, OMB, DOE, and the other IWG members recognized that 
``Circular A-4 is a living document'' and ``the use of 7 percent is not 
considered appropriate for intergenerational discounting. There is wide 
support for this view in the academic literature, and it is recognized 
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate 
is not appropriate to apply to value the social cost of greenhouse 
gases in the analysis presented in this analysis. In this analysis, to 
calculate the present and annualized values of climate benefits, DOE 
uses the same discount rate as the rate used to discount the value of 
damages from future GHG emissions, for internal consistency. That 
approach to discounting follows the same approach that the February 
2021 TSD recommends ``to ensure internal consistency--i.e., future 
damages from climate change using the SC-GHG at 2.5 percent should be 
discounted to the base year of the analysis using the same 2.5 percent 
rate.'' DOE has also consulted the National Academies' 2017 
recommendations on how SC-GHG estimates can ``be combined in RIAs with 
other cost and benefits estimates that may use different discount 
rates.'' The National Academies reviewed ``several options,'' including 
``presenting all discount rate combinations of other costs and benefits 
with [SC-GHG] estimates.''
    While the IWG works to assess how best to incorporate the latest, 
peer reviewed science to develop an updated set of SC-GHG estimates, it 
set the interim estimates to be the most recent estimates developed by 
the IWG prior to the group being disbanded in 2017. The estimates rely 
on the same models and harmonized inputs and are calculated using a 
range of discount rates. As explained in the February 2021 SC-GHG TSD, 
the IWG has recommended that agencies to revert to the same set of four 
values drawn from the SC-GHG distributions based on three discount 
rates as were used in regulatory analyses between 2010 and 2016 and 
subject to public comment. For each discount rate, the IWG combined the 
distributions across models and socioeconomic emissions scenarios 
(applying equal weight to each) and then selected a set of four values 
recommended for use in benefit-cost analyses: an average value 
resulting from the model runs for each of three discount rates (2.5 
percent, 3 percent, and 5 percent), plus a fourth value, selected as 
the 95th percentile of estimates based on a 3 percent discount rate. 
The fourth value was included to provide information on potentially 
higher-than-expected economic impacts from climate change. As explained 
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects 
the immediate need to have an operational SC-GHG for use in regulatory 
benefit-cost analyses and other applications that was developed using a 
transparent process, peer-reviewed methodologies, and the science 
available at the time of that process. Those estimates were subject to 
public comment in the context of dozens of proposed rulemakings as well 
as in a dedicated public comment period in 2013.
    There are a number of limitations and uncertainties associated with 
the SC-GHG estimates. First, the current scientific and economic 
understanding of discounting approaches suggests discount rates 
appropriate for intergenerational analysis in the context of climate 
change are likely to be less than 3 percent, near 2 percent or lower. 
Second, the IAMs used to produce these interim estimates do not include 
all of the important physical, ecological, and economic impacts of 
climate change recognized in the climate change literature and the 
science underlying their ``damage functions''--i.e., the core parts of 
the IAMs that map global mean temperature changes and other physical 
impacts of climate change into economic (both market and nonmarket) 
damages--lags behind the most recent research. For example, limitations 
include the incomplete treatment of catastrophic and non-catastrophic 
impacts in the integrated assessment models, their incomplete treatment 
of

[[Page 1793]]

adaptation and technological change, the incomplete way in which inter-
regional and intersectoral linkages are modeled, uncertainty in the 
extrapolation of damages to high temperatures, and inadequate 
representation of the relationship between the discount rate and 
uncertainty in economic growth over long time horizons. Likewise, the 
socioeconomic and emissions scenarios used as inputs to the models do 
not reflect new information from the last decade of scenario generation 
or the full range of projections. The modeling limitations do not all 
work in the same direction in terms of their influence on the SC-CO2 
estimates. However, as discussed in the February 2021 TSD, the IWG has 
recommended that, taken together, the limitations suggest that the 
interim SC-GHG estimates used in this final rule likely underestimate 
the damages from GHG emissions. DOE concurs with this assessment.
    DOE's derivations of the SC-GHG (i.e., SC-CO2, SC-
N2O, and SC-CH4) values used for this NOPR are 
discussed in the following sections, and the results of DOE's analyses 
estimating the benefits of the reductions in emissions of these 
pollutants are presented in section V.B.6 of this document.
a. Social Cost of Carbon
    The SC-CO2 values used for this NOPR were generated 
using the values presented in the 2021 update from the IWG's February 
2021 TSD. Table IV.19 shows the updated sets of SC-CO2 
estimates from the latest interagency update in 5-year increments from 
2020 to 2050. The full set of annual values used is presented in 
Appendix 14A of the NOPR TSD. For purposes of capturing the 
uncertainties involved in regulatory impact analysis, DOE has 
determined it is appropriate to include all four sets of SC-
CO2 values, as recommended by the IWG.\96\
---------------------------------------------------------------------------

    \96\ For example, the February 2021 TSD discusses how the 
understanding of discounting approaches suggests that discount rates 
appropriate for intergenerational analysis in the context of climate 
change may be lower than 3 percent.

                    Table IV.19--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2070
                                           [2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                          Discount rate and statistics
-----------------------------------------------------------------------------------------------------------------
                                                                                                     3%, 95th
                 Emissions year                     5%, average     3%, average    2.5%, average    percentile
----------------------------------------------------------------------------------------------------------------
2020............................................              14              51              76             151
2025............................................              17              56              83             169
2030............................................              19              62              89             186
2035............................................              22              67              96             205
2040............................................              25              73             103             224
2045............................................              28              79             109             242
2050............................................              32              84             116             259
2055............................................              35              89             122             265
2060............................................              38              93             128             275
2065............................................              44             100             135             300
2070............................................              49             108             143             326
----------------------------------------------------------------------------------------------------------------

    The SC-CO2 values used for this NOPR were based on the 
values presented in the 2021 update from the IWG's February 2021 SC-GHG 
TSD. For 2051 to 2070, DOE used estimates published by EPA, adjusted to 
2021$.\97\ These estimates are based on methods, assumptions, and 
parameters identical to the 2020-2050 estimates published by the IWG. 
DOE expects additional climate benefits to accrue for any longer-life 
transformers post 2070, but a lack of available SC-CO2 
estimates for emissions years beyond 2070 prevents DOE from monetizing 
these potential benefits in this analysis. If further analysis of 
monetized climate benefits beyond 2070 becomes available prior to the 
publication of the final rule, DOE will include that analysis in the 
final rule. DOE multiplied the CO2 emissions reduction 
estimated for each year by the SC-CO2 value for that year in 
each of the four cases. To calculate a present value of the stream of 
monetary values, DOE discounted the values in each of the four cases 
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
---------------------------------------------------------------------------

    \97\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 13, 
2022).
---------------------------------------------------------------------------

b. Social Cost of Methane and Nitrous Oxide
    The SC-CH4 and SC-N2O values used for this 
NOPR were generated using the values presented in the February 2021 
TSD. Table IV.20 shows the updated sets of SC-CH4 and SC-
N2O estimates from the latest interagency update in 5-year 
increments from 2020 to 2050. The full set of annual values used is 
presented in Appendix 14A of the NOPR TSD. To capture the uncertainties 
involved in regulatory impact analysis, DOE has determined it is 
appropriate to include all four sets of SC-CH4 and SC-
N2O values, as recommended by the IWG.

                                  Table IV.20--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2070
                                                                 [2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     SC-CH4--discount rate and statistic                    SC-N2O--discount rate and statistic
                                           -------------------------------------------------------------------------------------------------------------
                                                 5%           3%          2.5%           3%             5%           3%          2.5%           3%
                   Year                    -------------------------------------------------------------------------------------------------------------
                                                                                        95th                                                   95th
                                              Average      Average      Average      percentile      Average      Average      Average      percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020......................................          663        1,480        1,946           3,893        5,760       18,342       27,037          48,090

[[Page 1794]]

 
2025......................................          799        1,714        2,223           4,533        6,766       20,520       29,811          54,108
2030......................................          935        1,948        2,499           5,173        7,772       22,698       32,585          60,125
2035......................................        1,106        2,224        2,817           5,939        9,007       25,149       35,632          66,898
2040......................................        1,277        2,500        3,136           6,705       10,241       27,600       38,678          73,670
2045......................................        1,464        2,778        3,450           7,426       11,687       30,238       41,888          80,766
2050......................................        1,651        3,057        3,763           8,147       13,133       32,875       45,098          87,863
2055......................................        1,772        3,221        3,942           8,332       14,758       35,539       48,236          94,117
2060......................................        1,899        3,395        4,130           8,539       16,424       38,300       51,507         100,845
2065......................................        2,508        4,163        4,960          11,177       19,687       42,625       56,397         115,590
2070......................................        3,130        4,976        5,867          14,079       23,018       47,072       61,428         130,928
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the cases using the specific discount 
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
    For the NOPR, DOE estimated the monetized value of NOX 
and SO2 emissions reductions from electricity generation 
using the latest benefit per ton estimates for that sector from the 
EPA's Benefits Mapping and Analysis Program.\98\ DOE used EPA's values 
for PM2.5-related benefits associated with NOX 
and SO2 and for ozone-related benefits associated with 
NOX for 2025 2030, and 2040, calculated with discount rates 
of 3 percent and 7 percent. DOE used linear interpolation to define 
values for the years not given in the 2025 to 2040 period; for years 
beyond 2040 the values are held constant. DOE derived values specific 
to the sector for distribution transformer using a method described in 
appendix 14B of the NOPR TSD.
---------------------------------------------------------------------------

    \98\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors 
from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------

    DOE multiplied the site emissions reduction (in tons) in each year 
by the associated $/ton values, and then discounted each series using 
discount rates of 3 percent and 7 percent as appropriate.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power generation industry that would result from the adoption 
of new or amended energy conservation standards. The utility impact 
analysis estimates the changes in installed electrical capacity and 
generation that would result for each TSL. The analysis is based on 
published output from the NEMS associated with AEO2022. NEMS produces 
the AEO Reference case, as well as a number of side cases that estimate 
the economy-wide impacts of changes to energy supply and demand. For 
the current analysis, impacts are quantified by comparing the levels of 
electricity sector generation, installed capacity, fuel consumption and 
emissions in the AEO2022 Reference case and various side cases. Details 
of the methodology are provided in the appendices to chapters 13 and 15 
of the NOPR TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of potential new or 
amended energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts from new or 
amended energy conservation standards include both direct and indirect 
impacts. Direct employment impacts are any changes in the number of 
employees of manufacturers of the products subject to standards, their 
suppliers, and related service firms. The MIA addresses those impacts. 
Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more-efficient appliances. Indirect 
employment impacts from standards consist of the net jobs created or 
eliminated in the national economy, other than in the manufacturing 
sector being regulated, caused by (1) reduced spending by consumers on 
energy, (2) reduced spending on new energy supply by the utility 
industry, (3) increased consumer spending on the products to which the 
new standards apply and other goods and services, and (4) the effects 
of those three factors throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (``BLS''). BLS regularly publishes its estimates of 
the number of jobs per million dollars of economic activity in 
different sectors of the economy, as well as the jobs created elsewhere 
in the economy by this same economic activity. Data from BLS indicate 
that expenditures in the utility sector generally create fewer jobs 
(both directly and indirectly) than expenditures in other sectors of 
the economy.\99\ There are many reasons for these differences, 
including wage differences and the fact that the utility sector is more 
capital-intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of

[[Page 1795]]

efficiency standards is to shift economic activity from a less labor-
intensive sector (i.e., the utility sector) to more labor-intensive 
sectors (e.g., the retail and service sectors). Thus, the BLS data 
suggest that net national employment may increase due to shifts in 
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------

    \99\ See U.S. Department of Commerce-Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1997. U.S. Government 
Printing Office: Washington, DC. Available at apps.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed June 1, 2022).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 4 
(``ImSET'').\100\ ImSET is a special-purpose version of the ``U.S. 
Benchmark National Input-Output'' (``I-O'') model, which was designed 
to estimate the national employment and income effects of energy-saving 
technologies. The ImSET software includes a computer-based I-O model 
having structural coefficients that characterize economic flows among 
187 sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \100\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model 
Description and User Guide. 2015. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and that the uncertainties involved in projecting employment 
impacts, especially changes in the later years of the analysis. Because 
ImSET does not incorporate price changes, the employment effects 
predicted by ImSET may over-estimate actual job impacts over the long 
run for this rule. Therefore, DOE used ImSET only to generate results 
for near-term timeframes (2031), where these uncertainties are reduced. 
For more details on the employment impact analysis, see chapter 16 of 
the NOPR TSD.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for 
distribution transformers. It addresses the TSLs examined by DOE, the 
projected impacts of each of these levels if adopted as energy 
conservation standards for distribution transformers, and the standards 
levels that DOE is proposing to adopt in this NOPR. Additional details 
regarding DOE's analyses are contained in the NOPR TSD supporting this 
document.

A. Trial Standard Levels

    In general, DOE typically evaluates potential amended standards for 
products and equipment by grouping individual efficiency levels for 
each class into TSLs. Use of TSLs allows DOE to identify and consider 
manufacturer cost interactions between the equipment classes, to the 
extent that there are such interactions, and market cross elasticity 
from consumer purchasing decisions that may change when different 
standard levels are set. DOE presents the results for the TSLs in this 
document, while the results for all efficiency levels that DOE analyzed 
are in the NOPR TSD.
    In the analysis conducted for this NOPR, DOE analyzed the benefits 
and burdens of five TSLs for distribution transformers. DOE developed 
TSLs that combine efficiency levels for each analyzed representative 
unit and their respective equipment classes. For this NOPR, DOE defined 
its efficiency levels as a percentage reduction in baseline losses (see 
section IV.F.2). To create TSLs, DOE maintained this approach and 
directly mapped ELs to TSLs, with the exception of liquid-immersed 
submersible distribution transformers which remain at baseline for all 
TSLs except max-tech. For submersible distribution transformers, being 
able to fit in an existing vault is a consumer feature of significant 
utility and these transformers often serve high density applications. 
DOE recognizes that beyond some size increase a vault replacement may 
be necessary, however, DOE lacks sufficient data as to where exactly 
that vault replacement is needed. In order to maintain the consumer 
utility associated with submersible transformers, DOE has taken the 
conservative approach of not considering TSLs for submersible 
transformers aside from max-tech. DOE presents the results for the TSLs 
in this document, while the results for all efficiency levels that DOE 
analyzed are in the NOPR TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
that DOE has identified for potential amended energy conservation 
standards for distribution transformers. TSL 5 represents the maximum 
technologically feasible (``max-tech'') energy efficiency for all 
product classes. TSL 4 represents a loss reduction over baseline of 20 
percent for liquid-immersed transformers, except submersible liquid-
immersed transformers which remain at baseline; a 40 and 30 percent 
reduction in baseline losses for single-, and three-phase low-voltage 
distribution transformers, respectively; and a 30 percent reduction in 
baseline losses for all medium-voltage dry-type distribution 
transformers. TSL 3 represents a loss reduction over baseline of 10 
percent for liquid-immersed transformers, except submersible liquid-
immersed transformers which remain at baseline; a 30 and 20 percent 
reduction in baseline losses for single-, and three-phase low-voltage 
distribution transformers, respectively; and a 20 percent reduction in 
baseline losses for all medium-voltage dry-type distribution 
transformers. TSL 2 represents a loss reduction over baseline of 5 
percent for liquid-immersed transformers, except submersible liquid-
immersed transformers which remain at baseline; a 20 and 10 percent 
reduction in baseline losses for single-, and three-phase low-voltage 
distribution transformers, respectively; and a 10 percent reduction in 
baseline losses for all medium-voltage dry-type distribution 
transformers. TSL 1 represents a loss reduction over baseline of 2.5 
percent for liquid-immersed transformers, except submersible liquid-
immersed transformers which remain at baseline; a 10 and 5 percent 
reduction in baseline losses for single-, and three-phase low-voltage 
distribution transformers, respectively; and a 5 percent reduction in 
baseline losses for all medium-voltage dry-type distribution 
transformers.

                                Table V.1--Efficiency Level to Trial Standard Level Mapping for Distribution Transformers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Trial standard level
              Equipment type                   EC        RU      Phases                BIL             -------------------------------------------------
                                                                                                            1         2         3         4         5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Liquid-immersed...........................         1         1         1  All.........................         1         2         3         4         5
                                                   1         2         1  All.........................         1         2         3         4         5
                                                   1         3         1  All.........................         1         2         3         4         5
                                                   2         4         3  All.........................         1         2         3         4         5

[[Page 1796]]

 
                                                   2         5         3  All.........................         1         2         3         4         5
                                                   2        17         3  All.........................         1         2         3         4         5
                                                  12        15         3  All.........................         0         0         0         0         5
                                                  12        16         3  All.........................         0         0         0         0         5
Low-voltage Dry-type......................         3         6         1  All.........................         1         2         3         4         5
                                                   4         7         3  All.........................         1         2         3         4         5
                                                   4         8         3  All.........................         1         2         3         4         5
Medium-voltage Dry-type...................         5      * 9V         1  <46 kV......................         1         2         3         4         5
                                                   5       10V         1  <46 kV......................         1         2         3         4         5
                                                   6         9         3  <46 kV......................         1         2         3         4         5
                                                   6        10         3  <46 kV......................         1         2         3         4         5
                                                   7       11V         1  >=46 and <96 kV.............         1         2         3         4         5
                                                   7       12V         1  >=46 and <96 kV.............         1         2         3         4         5
                                                   8        11         3  >=46 and <96 kV.............         1         2         3         4         5
                                                   8        12         3  >=46 and <96 kV.............         1         2         3         4         5
                                                   8        18         3  >=46 and <96 kV.............         1         2         3         4         5
                                                   9       13V         1  >=96 kV.....................         1         2         3         4         5
                                                   9       14V         1  >=96 kV.....................         1         2         3         4         5
                                                  10        13         3  >=96 kV.....................         1         2         3         4         5
                                                  10        14         3  >=96 kV.....................         1         2         3         4         5
                                                  10        19         3  >=96 kV.....................         1         2         3         4         5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE constructed the TSLs for this NOPR to include ELs 
representative of ELs with similar characteristics (i.e., using similar 
technologies and/or efficiencies, and having roughly comparable 
equipment availability). The use of representative ELs provided for 
greater distinction between the TSLs. While representative ELs were 
included in the TSLs, DOE considered all efficiency levels as part of 
its analysis.\101\
---------------------------------------------------------------------------

    \101\ Efficiency levels that were analyzed for this NOPR are 
discussed in section IV.F.2 of this document. Results by efficiency 
level are presented in TSD chapters 8, 10, and 12.
---------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on distribution transformers 
consumers by looking at the effects that potential amended standards at 
each TSL would have on the LCC and PBP. DOE also examined the impacts 
of potential standards on selected consumer subgroups. These analyses 
are discussed in the following sections.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) purchase price increases and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Because some consumers 
purchase products with higher efficiency in the no-new-standards case, 
the average savings are less than the difference between the average 
LCC of the baseline product and the average LCC at each TSL. The 
savings refer only to consumers who are affected by a standard at a 
given TSL. Those who already purchase a product with efficiency at or 
above a given TSL are not affected. Consumers for whom the LCC 
increases at a given TSL experience a net cost. Chapter 8 of the NOPR 
TSD provides detailed information on the LCC and PBP analyses.
Liquid-Immersed Distribution Transformers

                                            Table V.2--Average LCC and PBP Results for Representative Unit 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           2,917              67           1,346           4,263  ..............            31.9
1.......................................................           2,983              66           1,328           4,311            86.7            31.9
2.......................................................           3,073              65           1,299           4,373            73.0            31.9
3.......................................................           3,294              48             969           4,263            19.2            31.9
4.......................................................           3,279              45             913           4,192            16.0            31.9
5.......................................................           4,080              39             778           4,859            40.9            31.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 1 represents 20.3 percent of liquid-immersed distribution transformers units shipped, and 21.8 percent of shipments for equipment class 1
  (single phase liquid-immersed).


[[Page 1797]]


Table V.3--LCC Savings Relative to the Base Case Efficiency Distribution
                        for Representative Unit 1
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                  68.8                   -53
2...........................                  85.5                  -114
3...........................                  47.4                     0
4...........................                  33.7                    72
5...........................                  95.6                  -599
------------------------------------------------------------------------
Rep unit 1 represents 20.3 percent of liquid-immersed distribution
  transformers units shipped, and 21.8 percent of shipments for
  equipment class 1 (single phase liquid-immersed).
* The savings represent the average LCC for affected consumers.


                                            Table V.4--Average LCC and PBP Results for Representative Unit 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           1,805              41             818           2,623  ..............            31.9
1.......................................................           1,805              33             673           2,478             0.1            31.9
2.......................................................           1,810              30             613           2,423             0.5            31.9
3.......................................................           1,857              29             580           2,437             4.1            31.9
4.......................................................           1,951              27             541           2,492            10.1            31.9
5.......................................................           2,347              23             452           2,799            29.1            31.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 2 represents 72.7 percent of liquid-immersed distribution transformers units shipped, and 78.0 percent of shipments for equipment class 1
  (single phase liquid-immersed).


Table V.5--LCC Savings Relative to the Base Case Efficiency Distribution
                        for Representative Unit 2
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                  21.9                   146
2...........................                   9.6                   201
3...........................                   9.3                   186
4...........................                  13.3                   131
5...........................                  84.3                  -176
------------------------------------------------------------------------
Rep unit 2 represents 72.7 percent of liquid-immersed distribution
  transformers units shipped, and 78.0 percent of shipments for
  equipment class 1 (single phase liquid-immersed).
* The savings represent the average LCC for affected consumers.


                                            Table V.6--Average LCC and PBP Results for Representative Unit 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          10,728             427           8,523          19,251  ..............            31.8
1.......................................................          11,269             335           6,900          18,169             5.9            31.8
2.......................................................          11,304             323           6,668          17,972             5.6            31.8
3.......................................................          11,754             305           6,284          18,038             8.4            31.8
4.......................................................          12,568             275           5,656          18,225            12.2            31.8
5.......................................................          14,920             234           4,744          19,664            21.8            31.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 3 represents 0.2 percent of liquid-immersed distribution transformers units shipped, and 0.2 percent of shipments for equipment class 1 (single
  phase liquid-immersed).


Table V.7--LCC Savings Relative to the Base Case Efficiency Distribution
                        for Representative Unit 3
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                  27.9                 1,121
2...........................                  22.2                 1,312
3...........................                  23.3                 1,216

[[Page 1798]]

 
4...........................                  22.5                 1,029
5...........................                  64.5                  -414
------------------------------------------------------------------------
Rep unit 3 represents 0.2 percent of liquid-immersed distribution
  transformers units shipped, and 0.2 percent of shipments for equipment
  class 1 (single phase liquid-immersed).
* The savings represent the average LCC for affected consumers.


                                            Table V.8--Average LCC and PBP Results for Representative Unit 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          10,319             196           3,913          14,232  ..............            32.0
1.......................................................          10,403             193           3,846          14,249            25.8            32.0
2.......................................................          10,596             184           3,689          14,285            24.1            32.0
3.......................................................          11,095             137           2,768          13,863            13.1            32.0
4.......................................................          11,120             129           2,616          13,736            11.9            32.0
5.......................................................          11,798             117           2,359          14,156            18.7            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 4 represents 4.6 percent of liquid-immersed distribution transformers units shipped, and 68.0 percent of shipments for equipment class 2 (three
  phase liquid-immersed).


Table V.9--LCC Savings Relative to the Base Case Efficiency Distribution
                        for Representative Unit 4
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                  38.2                   -26
2...........................                  66.6                   -55
3...........................                  24.8                   381
4...........................                  12.9                   511
5...........................                  48.9                    77
------------------------------------------------------------------------
Rep unit 4 represents 4.6 percent of liquid-immersed distribution
  transformers units shipped, and 68.0 percent of shipments for
  equipment class 2 (three phase liquid-immersed).
* The savings represent the average LCC for affected consumers.


                                            Table V.10--Average LCC and PBP Results for Representative Unit 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          35,245           1,195          23,754          58,999  ..............            31.7
1.......................................................          36,431           1,079          21,647          58,078            10.2            31.7
2.......................................................          36,603           1,006          20,349          56,952             7.2            31.7
3.......................................................          37,550             966          19,573          57,123            10.0            31.7
4.......................................................          39,455             891          18,002          57,457            13.8            31.7
5.......................................................          52,032             744          14,880          66,912            37.2            31.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 5 represents 2.1 percent of liquid-immersed distribution transformers units shipped, and 31.5 percent of shipments for equipment class 2 (three
  phase liquid-immersed).


      Table V.11--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 5
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                  41.0                   986
2...........................                  26.7                 2,095
3...........................                  28.7                 1,888
4...........................                  28.5                 1,543

[[Page 1799]]

 
5...........................                  95.8                -7,913
------------------------------------------------------------------------
Rep unit 5 represents 2.1 percent of liquid-immersed distribution
  transformers units shipped, and 31.5 percent of shipments for
  equipment class 2 (three phase liquid-immersed).
* The savings represent the average LCC for affected consumers.


                                           Table V.12--Average LCC and PBP Results for Representative Unit 15
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ----------------------------------------------------------------     Simple          Average
                     Standard level                                        First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           period          (years)
                                                                               cost            cost                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          10,749             196           3,919          14,668  ..............            32.0
1.......................................................          10,833             193           3,855          14,687            26.3            32.0
2.......................................................          11,026             185           3,700          14,727            24.5            32.0
3.......................................................          11,523             137           2,778          14,301            13.1            32.0
4.......................................................          11,548             129           2,628          14,176            12.0            32.0
5.......................................................          12,228             117           2,367          14,595            18.8            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 15 represents <0.1 percent of liquid-immersed distribution transformers units shipped, and 0.4 percent of equipment class 12 shipments.


      Table V.13--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 15
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021$) *
------------------------------------------------------------------------
1...........................                  38.3                   -30
2...........................                  67.3                   -61
3...........................                  24.5                   379
4...........................                  12.8                   507
5...........................                  49.4                    74
------------------------------------------------------------------------
Rep unit 15 represents <0.1 percent of liquid-immersed distribution
  transformers units shipped, and 0.4 percent of shipments for equipment
  class 12 (three phase liquid-immersed submersible).
* The savings represent the average LCC for affected consumers.


                                           Table V.14--Average LCC and PBP Results for Representative Unit 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2021$)
                                                         ----------------------------------------------------------------     Simple          Average
                     Standard level                                        First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           period          (years)
                                                                               cost            cost                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          35,814           1,255          25,345          61,159  ..............            32.1
1.......................................................          37,015           1,146          23,365          60,380            11.0            32.1
2.......................................................          37,183           1,085          22,313          59,496             8.0            32.1
3.......................................................          38,135           1,045          21,549          59,684            11.1            32.1
4.......................................................          40,044             961          19,748          59,791            14.4            32.1
5.......................................................          52,622             789          16,044          68,666            36.1            32.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 16 represents 0.1 percent of liquid-immersed distribution transformers units shipped, and 99.6 percent of shipments for equipment class 12
  (three phase liquid-immersed submersible).


      Table V.15--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 16
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021$) *
------------------------------------------------------------------------
1...........................                  42.0                   829
2...........................                  28.9                 1,700
3...........................                  32.3                 1,482
4...........................                  29.5                 1,368

[[Page 1800]]

 
5...........................                  95.1                -7,509
------------------------------------------------------------------------
Rep unit 16 represents 0.1 percent of liquid-immersed distribution
  transformers units shipped, and 99.6 percent of shipments for
  equipment class 12 (three phase liquid-immersed submersible).
* The savings represent the average LCC for affected consumers.


                                           Table V.16--Average LCC and PBP Results for Representative Unit 17
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2021$)
                                                         ----------------------------------------------------------------     Simple          Average
                     Standard level                                        First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           period          (years)
                                                                               cost            cost                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          55,256           3,485          71,294         126,550  ..............            32.1
1.......................................................          70,709           2,485          50,618         121,327            15.5            32.1
2.......................................................          72,775           2,283          47,047         119,822            14.6            32.1
3.......................................................          74,623           2,208          45,574         120,197            15.2            32.1
4.......................................................          78,307           2,028          41,715         120,023            15.8            32.1
5.......................................................         102,728           1,650          33,556         136,283            25.9            32.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 17 represents <0.1 percent of liquid-immersed distribution transformers units shipped, and 0.5 percent of shipments for equipment class 2
  (three phase liquid-immersed).


      Table V.17--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 17
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021$) *
------------------------------------------------------------------------
1...........................                  42.8                 5,346
2...........................                  34.2                 6,873
3...........................                  36.8                 6,472
4...........................                  41.5                 6,594
5...........................                  73.9                -9,755
------------------------------------------------------------------------
Rep unit 17 represents <0.1 percent of liquid-immersed distribution
  transformers units shipped, and 0.5 percent of shipments for equipment
  class 2 (three phase liquid-immersed).
* The savings represent the average LCC for affected consumers.

Low-Voltage Dry-Type Distribution Transformers

                                            Table V.18--Average LCC and PBP Results for Representative Unit 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2021$)
                                                         ----------------------------------------------------------------     Simple          Average
                     Standard level                                        First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           period          (years)
                                                                               cost            cost                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           1,737              97           1,424           3,161  ..............            31.9
1.......................................................           1,735              90           1,327           3,063             0.0            31.9
2.......................................................           1,783              83           1,220           3,003             3.3            31.9
3.......................................................           1,890              77           1,127           3,017             7.6            31.9
4.......................................................           2,144              62             908           3,053            11.7            31.9
5.......................................................           2,311              48             703           3,014            11.7            31.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 6 represents 9.3 percent of low-voltage dry-type distribution transformers units shipped, and 100.0 percent of shipments for equipment class 3
  (single phase low-voltage dry-type).


      Table V.19--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 6
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021$) *
------------------------------------------------------------------------
1...........................                     1                   312

[[Page 1801]]

 
2...........................                    17                   203
3...........................                    33                   146
4...........................                    43                   108
5...........................                    40                   147
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 6 represents 9.3 percent of low-voltage dry-type distribution
  transformers units shipped, and 100.0 percent of shipments for
  equipment class 3 (single phase low-voltage dry-type).


                                            Table V.20--Average LCC and PBP Results for Representative Unit 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2021$)
                                                         ----------------------------------------------------------------     Simple          Average
                     Standard level                                        First year's      Lifetime                         payback        lifetime
                                                          Installed cost     operating       operating          LCC           period          (years)
                                                                               cost            cost                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           3,974             228           3,366           7,340  ..............            32.1
1.......................................................           3,929             211           3,114           7,043             0.0            32.1
2.......................................................           3,920             206           3,029           6,950             0.0            32.1
3.......................................................           4,266             193           2,842           7,108             8.2            32.1
4.......................................................           4,621             143           2,102           6,723             7.5            32.1
5.......................................................           4,829             132           1,947           6,776             8.9            32.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 7 represents 84.9 percent of low-voltage dry-type distribution transformers units shipped, and 93.6 percent of shipments for equipment class 4
  (three phase low-voltage dry-type).


      Table V.21--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 7
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021$) *
------------------------------------------------------------------------
1...........................                     8                   357
2...........................                     7                   397
3...........................                    28                   233
4...........................                     9                   617
5...........................                    15                   564
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 7 represents 84.9 percent of low-voltage dry-type distribution
  transformers units shipped, and 93.6 percent of shipments for
  equipment class 4 (three phase low-voltage dry-type).


                                            Table V.22--Average LCC and PBP Results for Representative Unit 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           9,252             632           9,207          18,459  ..............            32.0
1.......................................................           9,348             613           8,937          18,285             5.2            32.0
2.......................................................           9,746             588           8,570          18,316            11.3            32.0
3.......................................................          10,620             542           7,898          18,517            15.2            32.0
4.......................................................          12,297             373           5,439          17,737            11.8            32.0
5.......................................................          12,297             373           5,439          17,737            11.8            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 8 represents 5.8 percent of low-voltage dry-type distribution transformers units shipped, and 6.4 percent of shipments for equipment class 4
  (three phase low-voltage dry-type).


      Table V.23--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 8
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                    12                   355
2...........................                    41                   152

[[Page 1802]]

 
3...........................                    57                   -58
4...........................                    31                   722
5...........................                    31                   722
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 8 represents 5.8 percent of low-voltage dry-type distribution
  transformers units shipped, and 6.4 percent of shipments for equipment
  class 4 (three phase low-voltage dry-type).

Medium-Voltage Dry-Type Distribution Transformers

                                            Table V.24--Average LCC and PBP Results for Representative Unit 9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          14,830             918          13,450          28,281  ..............            32.1
1.......................................................          14,874             895          13,115          27,990             2.0            32.1
2.......................................................          14,961             862          12,628          27,589             2.4            32.1
3.......................................................          15,984             800          11,725          27,709             9.8            32.1
4.......................................................          17,981             726          10,639          28,620            16.4            32.1
5.......................................................          19,047             602           8,823          27,870            13.4            32.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 9 represents 7.3 percent of medium-voltage dry-type distribution transformers units shipped, and 77.0 percent of shipments for equipment class
  6 (three phase medium-voltage dry-type, 20-45 kV BIL).


      Table V.25--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 9
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                     4                 1,039
2...........................                    10                   887
3...........................                    39                   571
4...........................                    64                  -339
5...........................                    49                   410
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 9 represents 7.3 percent of medium-voltage dry-type
  distribution transformers units shipped, and 77.0 percent of shipments
  for equipment class 6 (three phase medium-voltage dry-type, 20-45 kV
  BIL).


                                           Table V.26--Average LCC and PBP Results for Representative Unit 10
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          45,167           2,799          41,003          86,169  ..............            32.0
1.......................................................          45,363           2,674          39,185          84,548             1.6            32.0
2.......................................................          47,461           2,597          38,056          85,516            11.4            32.0
3.......................................................          55,429           2,276          33,366          88,794            19.7            32.0
4.......................................................          59,426           2,039          29,887          89,313            18.8            32.0
5.......................................................          67,353           1,838          26,950          94,303            23.1            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 10 represents 2.2 percent of medium-voltage dry-type distribution transformers units shipped, and 23.0 percent of shipments for equipment class
  6 (three phase medium-voltage dry-type, 20-45 kV BIL).


[[Page 1803]]


      Table V.27--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 10
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                    15                 1,854
2...........................                    38                   653
3...........................                    78                -2,625
4...........................                    81                -3,144
5...........................                    91                -8,133
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 10 represents 2.2 percent of medium-voltage dry-type
  distribution transformers units shipped, and 23.0 percent of shipments
  for equipment class 6 (three phase medium-voltage dry-type, 20-45 kV
  BIL).


                                           Table V.28--Average LCC and PBP Results for Representative Unit 11
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          20,788           1,190          17,353          38,141  ..............            32.0
1.......................................................          20,948           1,156          16,859          37,807             4.7            32.0
2.......................................................          21,792           1,106          16,123          37,915            11.9            32.0
3.......................................................          23,458             951          13,870          37,328            11.2            32.0
4.......................................................          23,880             859          12,516          36,396             9.3            32.0
5.......................................................          25,903             769          11,216          37,119            12.2            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 11 represents 2.6 percent of medium-voltage dry-type distribution transformers units shipped, and 6.6 percent of shipments for equipment class
  8 (three phase medium-voltage dry-type, 45-95 kV BIL).


      Table V.29--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 11
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                    26                   438
2...........................                    46                   226
3...........................                    35                   813
4...........................                    15                 1,744
5...........................                    38                 1,021
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 11 represents 2.6 percent of medium-voltage dry-type
  distribution transformers units shipped, and 6.6 percent of shipments
  for equipment class 8 (three phase medium-voltage dry-type, 45-95 kV
  BIL).


                                           Table V.30--Average LCC and PBP Results for Representative Unit 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          54,830           3,290          47,795         102,625  ..............            32.0
1.......................................................          52,818           3,138          45,595          98,413             0.0            32.0
2.......................................................          55,069           3,063          44,505          99,574             1.1            32.0
3.......................................................          63,490           2,659          38,639         102,129            13.7            32.0
4.......................................................          67,333           2,430          35,311         102,644            14.5            32.0
5.......................................................          74,722           2,206          32,055         106,777            18.4            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 12 represents 36.0 percent of medium-voltage dry-type distribution transformers units shipped, and 92.6 percent of shipments for equipment
  class 8 (three phase medium-voltage dry-type, 45-95 kV BIL).


      Table V.31--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 12
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021)$ *
------------------------------------------------------------------------
1...........................                     1                 4,649
2...........................                     9                 3,051
3...........................                    49                   496

[[Page 1804]]

 
4...........................                    54                   -19
5...........................                    80                -4,152
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 12 represents 36.0 percent of medium-voltage dry-type
  distribution transformers units shipped, and 92.6 percent of shipments
  for equipment class 8 (three phase medium-voltage dry-type, 45-95 kV
  BIL).


                                           Table V.32--Average LCC and PBP Results for Representative Unit 18
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          85,302           9,986         145,749         231,051  ..............            32.2
1.......................................................         103,468           6,764          98,728         202,196             5.6            32.2
2.......................................................         113,456           6,493          94,798         208,254             8.1            32.2
3.......................................................         134,347           5,429          79,221         213,567            10.8            32.2
4.......................................................         137,299           5,289          77,183         214,481            11.1            32.2
5.......................................................         153,330           4,864          71,007         224,338            13.3            32.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 18 represents 0.3 percent of medium-voltage dry-type distribution transformers units shipped, and 0.8 percent of shipments for equipment class
  8 (three phase medium-voltage dry-type, 45-95 kV BIL).


      Table V.33--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 18
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021$) *
------------------------------------------------------------------------
1...........................                     5                28,855
2...........................                    12                22,797
3...........................                    24                17,483
4...........................                    26                16,570
5...........................                    44                 6,713
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 18 represents 0.3 percent of medium-voltage dry-type
  distribution transformers units shipped, and 0.8 percent of shipments
  for equipment class 8 (three phase medium-voltage dry-type, 45-95 kV
  BIL).


                                           Table V.34--Average LCC and PBP Results for Representative Unit 13
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          24,894           1,316          19,168          44,062  ..............            31.9
1.......................................................          25,304           1,256          18,292          43,597             6.8            31.9
2.......................................................          26,181           1,212          17,653          43,835            12.4            31.9
3.......................................................          28,454           1,111          16,176          44,630            17.3            31.9
4.......................................................          31,436             986          14,364          45,801            19.8            31.9
5.......................................................          31,983             936          13,636          45,619            18.7            31.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 13 represents 1.8 percent of medium-voltage dry-type distribution transformers units shipped, and 7.6 percent of shipments for equipment class
  10 (three phase medium-voltage dry-type, >=96 kV BIL).


      Table V.35--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 13
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021$) *
------------------------------------------------------------------------
1...........................                    24                   515
2...........................                    44                   228
3...........................                    72                  -568
4...........................                    81                -1,739

[[Page 1805]]

 
5...........................                    80                -1,557
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 13 represents 1.8 percent of medium-voltage dry-type
  distribution transformers units shipped, and 7.6 percent of shipments
  for equipment class 10 (three phase medium-voltage dry-type, >=96 kV
  BIL).


                                           Table V.36--Average LCC and PBP Results for Representative Unit 14
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          63,684           4,386          63,615         127,299  ..............            32.0
1.......................................................          66,945           4,263          61,834         128,779            26.6            32.0
2.......................................................          70,089           4,140          60,066         130,155            26.1            32.0
3.......................................................          80,939           3,629          52,588         133,527            22.8            32.0
4.......................................................          85,714           3,281          47,555         133,268            19.9            32.0
5.......................................................          93,684           3,027          43,893         137,577            22.1            32.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 14 represents 22.1 percent of medium-voltage dry-type distribution transformers units shipped, and 91.5 percent of shipments for equipment
  class 10 (three phase medium-voltage dry-type, >=96 kV BIL).


      Table V.37--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 14
------------------------------------------------------------------------
                                                      Average savings--
       Standard level         % Consumers with net   impacted consumers
                                      cost                (2021$) *
------------------------------------------------------------------------
1...........................                    88                -1,480
2...........................                    87                -2,856
3...........................                    78                -6,228
4...........................                    82                -5,969
5...........................                    93               -10,278
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 14 represents 22.1 percent of medium-voltage dry-type
  distribution transformers units shipped, and 91.5 percent of shipments
  for equipment class 10 (three phase medium-voltage dry-type, >=96 kV
  BIL).


                                           Table V.38--Average LCC and PBP Results for Representative Unit 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2021$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                     Standard level                                        First year's      Lifetime                     period (years)     lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          88,951           9,349         136,177         225,128  ..............            31.9
1.......................................................         107,573           7,209         105,019         212,591             8.7            31.9
2.......................................................         117,299           6,845          99,747         217,046            11.3            31.9
3.......................................................         137,304           5,717          83,212         220,516            13.3            31.9
4.......................................................         142,539           5,455          79,409         221,948            13.8            31.9
5.......................................................         154,646           5,105          74,341         228,988            15.5            31.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rep unit 19 represents 0.2 percent of medium-voltage dry-type distribution transformers units shipped, and 0.8 percent of shipments for equipment class
  10 (three phase medium-voltage dry-type, >=96 kV BIL).


      Table V.39--LCC Savings Relative to the Base Case Efficiency
                 Distribution for Representative Unit 19
------------------------------------------------------------------------
                                                      Average savings--
       Standard level           % Consumers with     impacted consumers
                                    net cost              (2021)$ *
------------------------------------------------------------------------
1...........................                    16                12,536
2...........................                    38                 8,082
3...........................                    43                 4,611
4...........................                    47                 3,180

[[Page 1806]]

 
5...........................                    63                -3,860
------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Rep unit 19 represents 0.2 percent of medium-voltage dry-type
  distribution transformers units shipped, and 0.8 percent of shipments
  for equipment class 10 (three phase medium-voltage dry-type, >=96 kV
  BIL).

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on utilities who deploy distribution transformers in 
vaults or other space constrained areas, and utilities who serve low 
population densities. Table V.40 compares the average LCC savings and 
PBP at each efficiency level for the consumer subgroups with similar 
metrics for the entire consumer sample for equipment classes 1 and 2. 
Chapter 11 of the NOPR TSD presents the complete LCC and PBP results 
for the subgroups.
Utilities Serving Low Population Densities

  Table V.40--Comparison of LCC Savings and PBP for Utilities Serving Low Population Densities Subgroup and All
                                        Utilities; Representative Unit 1
----------------------------------------------------------------------------------------------------------------
                                                                                         Serving low  population
                              TSL                                    All utilities              densities
----------------------------------------------------------------------------------------------------------------
                                           Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      -53                      -55
2.............................................................                     -114                     -112
3.............................................................                        0                       90
4.............................................................                       72                      178
5.............................................................                     -599                     -497
----------------------------------------------------------------------------------------------------------------
                                             Payback Period (years)
----------------------------------------------------------------------------------------------------------------
1.............................................................                     78.6                    120.6
2.............................................................                     69.2                     86.0
3.............................................................                     19.3                     19.0
4.............................................................                     16.2                     15.8
5.............................................................                     40.5                     42.2
----------------------------------------------------------------------------------------------------------------
                                           Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................................                       69                       66
2.............................................................                       86                       82
3.............................................................                       47                       33
4.............................................................                       34                       20
5.............................................................                       96                       92
----------------------------------------------------------------------------------------------------------------
Rep unit 1 represents 20.3 percent of liquid-immersed distribution transformers units shipped, and 21.8 percent
  of shipments for equipment class 1 (single phase liquid-immersed).


  Table V.41--Comparison of LCC Savings and PBP for Utilities Serving Low Population Densities Subgroup and All
                                        Utilities; Representative Unit 2
----------------------------------------------------------------------------------------------------------------
                                                                                         Serving low  population
                              TSL                                    All utilities              densities
----------------------------------------------------------------------------------------------------------------
                                           Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      146                      189
2.............................................................                      201                      267
3.............................................................                      186                      253
4.............................................................                      131                      199
5.............................................................                     -176                     -107
----------------------------------------------------------------------------------------------------------------
                                             Payback Period (years)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      0.0                      0.0
2.............................................................                      0.4                      0.3
3.............................................................                      4.1                      3.9
4.............................................................                     10.1                      9.9
5.............................................................                     29.3                     30.2
----------------------------------------------------------------------------------------------------------------

[[Page 1807]]

 
                                           Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................................                       22                       21
2.............................................................                       10                        7
3.............................................................                        9                        7
4.............................................................                       13                       10
5.............................................................                       84                       72
----------------------------------------------------------------------------------------------------------------
Rep unit 2 represents 72.7 percent of liquid-immersed distribution transformers units shipped, and 78.0 percent
  of shipments for equipment class 1 (single phase liquid-immersed).


  Table V.42--Comparison of LCC Savings and PBP for Utilities Serving Low Population Densities Subgroup and All
                                        Utilities; Representative Unit 3
----------------------------------------------------------------------------------------------------------------
                                                                                         Serving low  population
                              TSL                                    All utilities              densities
----------------------------------------------------------------------------------------------------------------
                                           Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................................                    1,121                    1,798
2.............................................................                    1,312                    2,044
3.............................................................                    1,216                    1,962
4.............................................................                    1,029                    1,772
5.............................................................                     -414                      308
----------------------------------------------------------------------------------------------------------------
                                             Payback Period (years)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      5.9                      5.3
2.............................................................                      5.6                      5.1
3.............................................................                      8.4                      7.8
4.............................................................                     12.3                     11.9
5.............................................................                     21.8                     22.3
----------------------------------------------------------------------------------------------------------------
                                           Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................................                       28                       22
2.............................................................                       22                       16
3.............................................................                       23                       16
4.............................................................                       23                       15
5.............................................................                       65                       44
----------------------------------------------------------------------------------------------------------------
Rep unit 3 represents 0.2 percent of liquid-immersed distribution transformers units shipped, and 0.2 percent of
  shipments for equipment class 1 (single phase liquid-immersed).


    Table V.43--Comparison of LCC Savings and PBP Utilities Serving Low Population Densities Subgroup and All
                                        Utilities; Representative Unit 4
----------------------------------------------------------------------------------------------------------------
                                                                                          Serving low population
                              TSL                                    All utilities              densities
----------------------------------------------------------------------------------------------------------------
                                           Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      -26                      -12
2.............................................................                      -55                       -9
3.............................................................                      381                      629
4.............................................................                      511                      802
5.............................................................                       77                      372
----------------------------------------------------------------------------------------------------------------
                                             Payback Period (years)
----------------------------------------------------------------------------------------------------------------
1.............................................................                     26.9                     28.0
2.............................................................                     24.4                     24.4
3.............................................................                     13.2                     13.1
4.............................................................                     12.0                     11.9
5.............................................................                     18.7                     19.1
----------------------------------------------------------------------------------------------------------------
                                           Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................................                       38                       37
2.............................................................                       67                       58
3.............................................................                       25                       21

[[Page 1808]]

 
4.............................................................                       13                        9
5.............................................................                       49                       32
----------------------------------------------------------------------------------------------------------------
Rep unit 4 represents 4.6 percent of liquid-immersed distribution transformers units shipped, and 68.0 percent
  of shipments for equipment class 2 (three phase liquid-immersed).


  Table V.44--Comparison of LCC Savings and PBP for Utilities Serving Low Population Densities Subgroup and All
                                        Utilities; Representative Unit 5
----------------------------------------------------------------------------------------------------------------
                                                                                         Serving low  population
                              TSL                                    All utilities              densities
----------------------------------------------------------------------------------------------------------------
                                           Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................................                      986                    1,498
2.............................................................                    2,095                    2,876
3.............................................................                    1,888                    2,839
4.............................................................                    1,543                    2,830
5.............................................................                   -7,913                   -5,881
----------------------------------------------------------------------------------------------------------------
                                             Payback Period (years)
----------------------------------------------------------------------------------------------------------------
1.............................................................                     11.0                     10.1
2.............................................................                      8.0                      7.1
3.............................................................                     11.0                      9.9
4.............................................................                     14.2                     13.8
5.............................................................                     35.8                     37.3
----------------------------------------------------------------------------------------------------------------
                                           Consumers with Net Cost (%)
----------------------------------------------------------------------------------------------------------------
1.............................................................                       41                       38
2.............................................................                       27                       23
3.............................................................                       29                       24
4.............................................................                       29                       19
5.............................................................                       96                       89
----------------------------------------------------------------------------------------------------------------
Rep unit 5 represents 2.1 percent of liquid-immersed distribution transformers units shipped, and 31.5 percent
  of shipments for equipment class 2 (three phase liquid-immersed).

Utilities That Deploy Distribution Transformers in Vaults or Other 
Space Constrained Areas
    As noted in section IV.C.1, for this NOPR DOE considered 
submersible distribution transformers and their associated vault, or 
space constrained installation costs with individual representative 
units, 15 and 16. The consumer results for these equipment are 
presented in Table V.12 through Table V.15.
c. Rebuttable Presumption Payback
    As discussed in section IV.F.11, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for a product that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. In calculating a rebuttable 
presumption payback period for each of the considered standard level, 
DOE used discrete values, and as required by EPCA, based the energy use 
calculation on the DOE test procedure for distribution transformers. In 
contrast, the PBPs presented in section V.B.1.a were calculated using 
distributions that reflect the range of energy use in the field.
    Table V.45 presents the rebuttable-presumption payback periods for 
the considered standard level for distribution transformers. While DOE 
examined the rebuttable-presumption criterion, it considered whether 
the standard levels considered for the NOPR are economically justified 
through a more detailed analysis of the economic impacts of those 
levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full 
range of impacts to the consumer, manufacturer, Nation, and 
environment. The results of that analysis serve as the basis for DOE to 
definitively evaluate the economic justification for a potential 
standard level, thereby supporting or rebutting the results of any 
preliminary determination of economic justification.

                                                   Table V.45--Rebuttable-Presumption Payback Periods
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                           EC                                   RU       -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               1            15.9            19.9            25.3            22.1            25.7
1.......................................................               2             0.1             6.4             9.3            12.1            19.7
1.......................................................               3               0               0            74.6            19.1            17.9

[[Page 1809]]

 
2.......................................................               4            11.2            22.9            14.2            13.2            14.1
2.......................................................               5               0               0               0            21.1            26.1
2.......................................................              17             8.4             9.7            10.3            10.0            14.6
3.......................................................               6               0             2.3             4.3             8.7             8.7
4.......................................................               7               0               0             3.8             8.1             6.9
6.......................................................               8             5.6             8.1             9.7            10.6            10.6
6.......................................................               9             1.3             1.4             4.6             7.9             9.7
8.......................................................              10             1.4             6.6            18.4            15.4            16.0
8.......................................................              11             1.4             4.9             8.9             8.7             8.7
8.......................................................              18             4.6             5.8             9.7             9.6            10.2
10......................................................              12               0             0.6            63.2            18.2            15.4
10......................................................              13             5.5            10.2            12.5            43.4            25.3
10......................................................              14            21.4            11.4           -67.7            39.4            24.4
10......................................................              19             5.6             6.5            12.7            12.0            12.0
12......................................................              15            n.a.            n.a.            n.a.            n.a.            14.1
12......................................................              16            n.a.            n.a.            n.a.            n.a.            26.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of distribution transformers. 
The following section describes the expected impacts on manufacturers 
at each considered TSL. Chapter 12 of the NOPR TSD explains the 
analysis in further detail.
a. Industry Cash Flow Analysis Results
    In this section, DOE provides GRIM results from the analysis, which 
examines changes in the industry that would result from a standard. The 
following tables summarize the estimated financial impacts (represented 
by changes in INPV) of potential amended energy conservation standards 
on manufacturers of distribution transformers, as well as the 
conversion costs that DOE estimates manufacturers of distribution 
transformers would incur at each TSL. DOE analyzes the potential 
impacts on INPV separately for each type of distribution transformer 
manufacturers: liquid-immersed; LVDT; and MVDT.
    As discussed in section IV.J.2.d of this document, DOE modeled two 
scenarios to evaluate a range of cash flow impacts on the distribution 
transformer industry: (1) the preservation of gross margin percentage 
scenario and (2) the preservation of operating profit scenario. In the 
preservation of gross margin percentage scenario, distribution 
transformer manufacturers are able to maintain the same gross margin 
percentage, even as the MPCs of distribution transformers increase due 
to energy conservation standards. In this scenario, the same gross 
margin percentage of 20 percent \102\ is applied across all efficiency 
levels. In the preservation of operating profit scenario, manufacturers 
do not earn additional operating profit when compared to the no-
standards case scenario. While manufacturers make the necessary upfront 
investments required to produce compliant equipment, per-unit operating 
profit does not change in absolute dollars. The preservation of 
operating profit scenario results in the lower (or more severe) bound 
to impacts of potential amended standards on industry.
---------------------------------------------------------------------------

    \102\ The gross margin percentage of 20 percent is based on a 
manufacturer markup of 1.25.
---------------------------------------------------------------------------

    Each of the modeled scenarios results in a unique set of cash-flows 
and corresponding industry values at each TSL for each type of 
distribution transformer manufacturers. In the following discussion, 
the INPV results refer to the difference in industry value between the 
no-new-standards case and each standards case resulting from the sum of 
discounted cash-flows from 2022 through 2056. To provide perspective on 
the short-run cash-flow impact, DOE includes in the discussion of 
results a comparison of free cash flow between the no-new-standards 
case and the standards case at each TSL in the year before amended 
standards are required.
    DOE presents the range in INPV for liquid-immersed distribution 
transformer manufacturers in Table V.46 and Table V.47; the range in 
INPV for LVDT distribution transformer manufacturers in Table V.48 and 
Table V.49; and the range in INPV for MVDT distribution transformer 
manufacturers in Table V.50 and Table V.51.
Liquid-Immersed Distribution Transformers

  Table V.46--Manufacturer Impact Analysis for Liquid-Immersed Distribution Transformers--Preservation of Gross
                                           Margin Percentage Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.      1,384      1,297      1,268      1,232      1,233      1,347
Change in INPV...............  2021$ millions.  .........     (87.1)    (116.5)    (152.1)    (151.0)     (37.2)
                               %..............  .........      (6.3)      (8.4)     (11.0)     (10.9)      (2.7)
Product Conversion Costs.....  2021$ millions.  .........       72.0       82.5       99.1      102.0      102.9
Capital Conversion Costs.....  2021$ millions.  .........       56.6       92.6      150.3      168.5      186.6

[[Page 1810]]

 
    Total Conversion Costs...  2021$ millions.  .........      128.6      175.2      249.4      270.6      289.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``( )'' are negative. Some numbers might not round due to rounding.


     Table V.47--Manufacturer Impact Analysis for Liquid-Immersed Distribution Transformers--Preservation of
                                            Operating Profit Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.      1,384      1,283      1,242      1,166      1,133      1,004
Change in INPV...............  2021$ millions.  .........    (101.1)    (142.1)    (218.3)    (251.3)    (380.7)
                               %..............  .........      (7.3)     (10.3)     (15.8)     (18.1)     (27.5)
Product Conversion Costs.....  2021$ millions.  .........       72.0       82.5       99.1      102.0      102.9
Capital Conversion Costs.....  2021$ millions.  .........       56.6       92.6      150.3      168.5      186.6
                                               -----------------------------------------------------------------
    Total Conversion Costs...  2021$ millions.  .........      128.6      175.2      249.4      270.6      289.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``( )'' are negative. Some numbers might not round due to rounding.

    At TSL 1, DOE estimates the impacts on INPV for liquid-immersed 
distribution transformer manufacturers to range from -$101.1 million to 
-$87.1 million, corresponding to a change in INPV of -7.3 percent to -
6.3 percent. At TSL 1, industry free cash flow is estimated to decrease 
by approximately 56.0 percent to $40.2 million, compared to the no-new-
standard case value of $91.2 million in 2026, the year before the 
estimated compliance date.
    TSL 1 would set the energy conservation standard at EL 1 for all 
liquid-immersed distribution transformers except for submersible 
liquid-immersed transformers (Equipment Class 12, Rep. Unit 15 and 16), 
which would remain at baseline. DOE estimates that approximately 4.3 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates liquid-
immersed distribution transformer manufacturers would spend 
approximately $72.0 million in product conversion costs to redesign 
transformers and approximately $56.6 million in capital conversion 
costs as some liquid-immersed distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 1, the shipment-weighted average MPC for liquid-immersed 
distribution transformers increases by 0.6 percent relative to the no-
new-standards case shipment-weighted average MPC in 2027. In the gross 
margin percentage scenario, manufacturers can fully pass on this slight 
cost increase to customers. The slight increase in shipment-weighted 
average MPC is outweighed by the $128.6 million in conversion costs, 
causing a negative change in INPV at TSL 1 under the preservation of 
gross margin percentage scenario.
    Under the preservation of operating profit scenario, manufacturers 
earn the same per-unit operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit 
from their investments or higher MPCs. In this scenario, the 0.6 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $128.6 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 1 under the 
preservation of operating profit scenario.
    At TSL 2, DOE estimates the impacts on INPV for liquid-immersed 
distribution transformer manufacturers to range from -$142.1 million to 
-$116.5 million, corresponding to a change in INPV of -10.3 percent to 
-8.4 percent. At TSL 2, industry free cash flow is estimated to 
decrease by approximately 77.8 percent to $20.2 million, compared to 
the no-new-standard case value of $91.2 million in 2026, the year 
before the estimated compliance date.
    TSL 2 would set the energy conservation standard at EL 2 for all 
liquid-immersed distribution transformers except for submersible 
liquid-immersed transformers (Equipment Class 12, Rep. Unit 15 and 16), 
which would remain at baseline. DOE estimates that approximately 1.4 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates liquid-
immersed distribution transformer manufacturers would spend 
approximately $82.5 million in product conversion costs to redesign 
transformers and approximately $92.6 million in capital conversion 
costs as many liquid-immersed distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 2, the shipment-weighted average MPC for liquid-immersed 
distribution transformers increases by 1.7 percent relative to the no-
new-standards case shipment-weighted average MPC in 2027. The increase 
in shipment-weighted average MPC is outweighed by the $175.2 million in 
conversion costs, causing a negative change in INPV at TSL 2 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 1.7 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $175.2 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 2 under the 
preservation of operating profit scenario.
    At TSL 3, DOE estimates the impacts on INPV for liquid-immersed 
distribution transformer manufacturers to range from -$218.3 million to 
-$152.1 million, corresponding to a change in INPV of -15.8 percent to

[[Page 1811]]

-11.0 percent. At TSL 3, industry free cash flow is estimated to 
decrease by approximately 112.8 percent to -$11.6 million, compared to 
the no-new-standard case value of $91.2 million in 2026, the year 
before the estimated compliance date.
    TSL 3 would set the energy conservation standard at EL 3 for all 
liquid-immersed distribution transformers except for submersible 
liquid-immersed transformers (Equipment Class 12, Rep. Unit 15 and 16), 
which would remain at baseline. DOE estimates that approximately 0.9 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates liquid-
immersed distribution transformer manufacturers would spend 
approximately $99.1 million in product conversion costs to redesign 
transformers and approximately $150.3 million in capital conversion 
costs as most liquid-immersed distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 3, the shipment-weighted average MPC for liquid-immersed 
distribution transformers increases by 5.6 percent relative to the no-
new-standards case shipment-weighted average MPC in 2027. The moderate 
increase in shipment-weighted average MPC is outweighed by the $249.4 
million in conversion costs, causing a negative change in INPV at TSL 3 
under the preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 5.6 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $249.4 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 3 under the 
preservation of operating profit scenario.
    At TSL 4, DOE estimates the impacts on INPV for liquid-immersed 
distribution transformer manufacturers to range from -$251.3 million to 
-$151.0 million, corresponding to a change in INPV of -18.1 percent to 
-10.9 percent. At TSL 4, industry free cash flow is estimated to 
decrease by approximately 122.9 percent to -$20.9 million, compared to 
the no-new-standard case value of $91.2 million in 2026, the year 
before the estimated compliance date.
    TSL 4 would set the energy conservation standard at EL 4 for all 
liquid-immersed distribution transformers except for submersible 
liquid-immersed transformers (Equipment Class 12, Rep. Unit 15 and 16), 
which would remain at baseline. DOE estimates that approximately 0.7 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates liquid-
immersed distribution transformer manufacturers would spend 
approximately $102.0 million in product conversion costs to redesign 
transformers and approximately $168.5 million in capital conversion 
costs as almost all liquid-immersed distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 4, the shipment-weighted average MPC for liquid-immersed 
distribution transformers increases by 8.9 percent relative to the no-
new-standards case shipment-weighted average MPC in 2027. The moderate 
increase in shipment-weighted average MPC is outweighed by the $270.6 
million in conversion costs, causing a negative change in INPV at TSL 4 
under the preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 8.9 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $270.6 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 4 under the 
preservation of operating profit scenario.
    At TSL 5, DOE estimates the impacts on INPV for liquid-immersed 
distribution transformer manufacturers to range from -$380.7 million to 
-$37.2 million, corresponding to a change in INPV of -27.5 percent to -
2.7 percent. At TSL 5, industry free cash flow is estimated to decrease 
by approximately 132.1 percent to -$29.3 million, compared to the no-
new-standard case value of $91.2 million in 2026, the year before the 
estimated compliance date.
    TSL 5 would set the energy conservation standard at EL 5, max-tech, 
for all liquid-immersed distribution transformers. DOE estimates that 
approximately 0.2 percent of shipments would meet these energy 
conservation standards in the no-new-standards case in 2027. DOE 
estimates liquid-immersed distribution transformer manufacturers would 
spend approximately $102.9 million in product conversion costs to 
redesign transformers and approximately $186.6 million in capital 
conversion costs as almost all liquid-immersed distribution transformer 
cores manufactured are expected to use amorphous steel.
    At TSL 5, the shipment-weighted average MPC for liquid-immersed 
distribution transformers increases by 33.3 percent relative to the no-
new-standards case shipment-weighted average MPC in 2027. The 
significant increase in shipment-weighted average MPC is outweighed by 
the $289.4 million in conversion costs, causing a negative change in 
INPV at TSL 5 under the preservation of gross margin percentage 
scenario.
    Under the preservation of operating profit scenario, the 33.3 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $289.4 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 5 under the 
preservation of operating profit scenario.
Low-Voltage Dry-Type Distribution Transformers

  Table V.48--Manufacturer Impact Analysis for Low-Voltage Dry-Type Distribution Transformers--Preservation of
                                        Gross Margin Percentage Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.        194        189        189        177        168        161
Change in INPV...............  2021$ millions.  .........      (5.4)      (4.9)     (16.9)     (26.3)     (33.5)
                               %..............  .........      (2.8)      (2.5)      (8.7)     (13.6)     (17.2)
Product Conversion Costs.....  2021$ millions.  .........        9.6        9.6       14.5       18.9       19.1
Capital Conversion Costs.....  2021$ millions.  .........        0.0        0.0       19.1       37.2       50.3
                                               -----------------------------------------------------------------

[[Page 1812]]

 
    Total Conversion Costs...  2021$ millions.  .........        9.6        9.6       33.5       56.1       69.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``( )'' are negative. Some numbers might not round due to rounding.


  Table V.49--Manufacturer Impact Analysis for Low-Voltage Dry-Type Distribution Transformers--Preservation of
                                            Operating Profit Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.        194        189        188        167        145        133
Change in INPV...............  2021$ millions.  .........      (5.4)      (5.9)     (27.0)     (49.1)     (61.0)
                               %..............  .........      (2.8)      (3.0)     (13.9)     (25.3)     (31.4)
Product Conversion Costs.....  2021$ millions.  .........        9.6        9.6       14.5       18.9       19.1
Capital Conversion Costs.....  2021$ millions.  .........        0.0        0.0       19.1       37.2       50.3
                                               -----------------------------------------------------------------
    Total Conversion Costs...  2021$ millions.  .........        9.6        9.6       33.5       56.1       69.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``( )'' are negative. Some numbers might not round due to rounding.

    At TSL 1, DOE estimates the impacts on INPV for LVDT distribution 
transformer manufacturers to be approximately -$5.4 million, which 
corresponds to a change in INPV of -2.8 percent. At TSL 1, industry 
free cash flow is estimated to decrease by approximately 17.8 percent 
to $15.6 million, compared to the no-new-standard case value of $19.0 
million in 2026, the year before the estimated compliance date.
    TSL 1 would set the energy conservation standard at EL 1 for all 
LVDT distribution transformers. DOE estimates that approximately 22.7 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates LVDT 
distribution transformer manufacturers would spend approximately $9.6 
million in product conversion costs to redesign transformers but would 
not have to make significant investments in capital conversion costs as 
no LVDT distribution transformer cores used are expected to use 
amorphous steel.
    At TSL 1, the shipment-weighted average MPC for LVDT distribution 
transformers does not increases relative to the no-new-standards case 
shipment-weighted average MPC in 2027. The preservation of gross margin 
percentage scenario produces similar INPV results as the preservation 
of operating profit scenario due to the negligible change in MPC at TSL 
1. The change in IPNV is driven exclusively by the $9.6 million in 
conversion costs, causing a negative change in INPV at TSL 1 under both 
scenarios.
    At TSL 2, DOE estimates the impacts on INPV for LVDT distribution 
transformer manufacturers to range from -$5.9 million to -$4.9 million, 
corresponding to a change in INPV of -2.8 percent to -2.5 percent. At 
TSL 2, industry free cash flow is estimated to decrease by 
approximately 17.8 percent to $15.6 million, compared to the no-new-
standard case value of $19.0 million in 2026, the year before the 
estimated compliance date.
    TSL 2 would set the energy conservation standard at EL 2 for all 
LVDT distribution transformers. DOE estimates that approximately 3.4 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates LVDT 
distribution transformer manufacturers would spend approximately $9.6 
million in product conversion costs to redesign transformers but would 
not have to make significant investments in capital conversion costs as 
no LVDT distribution transformer cores used are expected to use 
amorphous steel.
    At TSL 2, the shipment-weighted average MPC for LVDT distribution 
transformers increases by 0.8 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The increase in shipment-
weighted average MPC is outweighed by the $9.6 million in conversion 
costs, causing a negative change in INPV at TSL 2 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 0.8 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $9.6 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 2 under the 
preservation of operating profit scenario.
    At TSL 3, DOE estimates the impacts on INPV for LVDT distribution 
transformer manufacturers to range from -$27.0 million to -$16.9 
million, corresponding to a change in INPV of -13.9 percent to -8.7 
percent. At TSL 3, industry free cash flow is estimated to decrease by 
approximately 72.1 percent to $5.3 million, compared to the no-new-
standard case value of $19.0 million in 2026, the year before the 
estimated compliance date.
    TSL 3 would set the energy conservation standard at EL 3 for all 
LVDT distribution transformers. DOE estimates that approximately 0.1 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates LVDT 
distribution transformer manufacturers would spend approximately $14.5 
million in product conversion costs to redesign transformers and 
approximately $19.1 million in capital conversion costs as some LVDT 
distribution transformers cores manufactured are expected to use 
amorphous steel.
    At TSL 3, the shipment-weighted average MPC for LVDT distribution 
transformers increases by 8.5 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The moderate increase in 
shipment-weighted average MPC is outweighed by the $33.5 million in

[[Page 1813]]

conversion costs, causing a negative change in INPV at TSL 3 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 8.5 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $33.5 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 3 under the 
preservation of operating profit scenario.
    At TSL 4, DOE estimates the impacts on INPV for LVDT distribution 
transformer manufacturers to range from -$49.1 million to -$26.3 
million, corresponding to a change in INPV of -25.3 percent to -13.6 
percent. At TSL 4, industry free cash flow is estimated to decrease by 
approximately 123.2 percent to -$4.4 million, compared to the no-new-
standard case value of $19.0 million in 2026, the year before the 
estimated compliance date.
    TSL 4 would set the energy conservation standard at EL 4 for all 
LVDT distribution transformers. DOE estimates that no shipments would 
meet these energy conservation standards in the no-new-standards case 
in 2027. DOE estimates LVDT distribution transformer manufacturers 
would spend approximately $18.9 million in product conversion costs to 
redesign all LVDT transformers and approximately $37.2 million in 
capital conversion costs as almost all LVDT distribution transformer 
cores manufactured are expected to use amorphous steel.
    At TSL 4, the shipment-weighted average MPC for LVDT distribution 
transformers increases by 19.0 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The significant increase in 
shipment-weighted average MPC is outweighed by the $56.1 million in 
conversion costs, causing a negative change in INPV at TSL 4 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 19.0 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $56.1 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 4 under the 
preservation of operating profit scenario.
    At TSL 5, DOE estimates the impacts on INPV for LVDT distribution 
transformer manufacturers to range from -$61.0 million to -$33.5 
million, corresponding to a change in INPV of -31.4 percent to -17.2 
percent. At TSL 5, industry free cash flow is estimated to decrease by 
approximately 154.4 percent to -$10.4 million, compared to the no-new-
standard case value of $19.0 million in 2026, the year before the 
estimated compliance date.
    TSL 5 would set the energy conservation standard at EL 5, max-tech, 
for all LVDT distribution transformers. DOE estimates that no shipments 
would meet these energy conservation standards at TSL 5. DOE estimates 
LVDT distribution transformer manufacturers would spend approximately 
$19.1 million in product conversion costs to redesign all LVDT 
distribution transformers and approximately $37.2 million in capital 
conversion costs as all LVDT distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 5, the shipment-weighted average MPC for LVDT distribution 
transformers increases by 23.0 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The significant increase in 
shipment-weighted average MPC is outweighed by the $69.4 million in 
conversion costs, causing a negative change in INPV at TSL 5 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 23.0 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $69.4 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 5 under the 
preservation of operating profit scenario.
Medium-Voltage Dry-Type Distribution Transformers

 Table V.50--Manufacturer Impact Analysis for Medium-Voltage Dry-Type Distribution Transformers--Preservation of
                                     Gross Margin Percentage Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.         87         85         86         80         80         82
Change in INPV...............  2021$ millions.  .........      (1.8)      (0.8)      (7.7)      (6.8)      (5.2)
                               %..............  .........      (2.1)      (0.9)      (8.8)      (7.8)      (5.9)
Product Conversion Costs.....  2021$ millions.  .........        3.1        3.1        6.0        6.1        6.2
Capital Conversion Costs.....  2021$ millions.  .........        0.0        0.0       11.9       13.1       15.1
                              ----------------------------------------------------------------------------------
    Total Conversion Costs...  2021$ millions.  .........        3.1        3.1       17.9       19.2       21.2
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``()'' are negative. Some numbers might not round due to rounding.


  Table V.51--Manufacturer Impact Analysis for Low-Voltage Dry-Type Distribution Transformers--Preservation of
                                            Operating Profit Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2021$ millions.         87         85         85         71         69         65
Change in INPV...............  2021$ millions.  .........      (1.9)      (2.7)     (16.3)     (18.7)     (22.6)
                               %..............  .........      (2.1)      (3.0)     (18.7)     (21.4)     (25.9)
Product Conversion Costs.....  2021$ millions.  .........        3.1        3.1        6.0        6.1        6.2

[[Page 1814]]

 
Capital Conversion Costs.....  2021$ millions.  .........        0.0        0.0       11.9       13.1       15.1
                              ----------------------------------------------------------------------------------
    Total Conversion Costs...  2021$ millions.  .........        3.1        3.1       17.9       19.2       21.2
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses ``( )'' are negative. Some numbers might not round due to rounding.

    At TSL 1, DOE estimates the impacts on INPV for MVDT distribution 
transformer manufacturers to range from -$1.9 million to -$1.8 million, 
which corresponds to a change in INPV of approximately -2.1 percent in 
both cases. At TSL 1, industry free cash flow is estimated to decrease 
by approximately 15.7 percent to $5.9 million, compared to the no-new-
standard case value of $7.0 million in 2026, the year before the 
estimated compliance date.
    TSL 1 would set the energy conservation standard at EL 1 for all 
MVDT distribution transformers. DOE estimates that approximately 21.2 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates MVDT 
distribution transformer manufacturers would spend approximately $3.1 
million in product conversion costs to redesign transformers but would 
not have to make significant investments in capital conversion costs as 
no MVDT distribution transformer cores are expected to use amorphous 
steel.
    At TSL 1, the shipment-weighted average MPC for MVDT distribution 
transformers does not increases relative to the no-new-standards case 
shipment-weighted average MPC in 2027. The preservation of gross margin 
percentage scenario produces similar INPV results as the preservation 
of operating profit scenario due to the negligible change in MPC at TSL 
1. The change in INPV is almost exclusively driven by the $3.1 million 
in conversion costs, causing a negative change in INPV at TSL 1 under 
both scenarios.
    At TSL 2, DOE estimates the impacts on INPV for MVDT distribution 
transformer manufacturers to range from -$2.7 million to -$0.8 million, 
corresponding to a change in INPV of -3.0 percent to -0.9 percent. At 
TSL 2, industry free cash flow is estimated to decrease by 
approximately 15.7 percent to $5.9 million, compared to the no-new-
standard case value of $7.0 million in 2026, the year before the 
estimated compliance date.
    TSL 2 would set the energy conservation standard at EL 2 for all 
MVDT distribution transformers. DOE estimates that approximately 4.2 
percent of shipments would meet or exceed these energy conservation 
standards in the no-new-standards case in 2027. DOE estimates MVDT 
distribution transformer manufacturers would spend approximately $3.1 
million in product conversion costs to redesign transformers but would 
not have to make significant investments in capital conversion costs as 
no MVDT distribution transformer cores are expected to use amorphous 
steel.
    At TSL 2, the shipment-weighted average MPC for MVDT distribution 
transformers increases by 3.2 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The increase in shipment-
weighted average MPC is outweighed by the $3.1 million in conversion 
costs, causing a negative change in INPV at TSL 2 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 3.2 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $3.1 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 2 under the 
preservation of operating profit scenario.
    At TSL 3, DOE estimates the impacts on INPV for MVDT distribution 
transformer manufacturers to range from -$16.3 million to -$7.7 
million, corresponding to a change in INPV of -18.7 percent to -8.8 
percent. At TSL 3, industry free cash flow is estimated to decrease by 
approximately 107.1 percent to -$0.5 million, compared to the no-new-
standard case value of $7.0 million in 2026, the year before the 
estimated compliance date.
    TSL 3 would set the energy conservation standard at EL 3 for all 
MVDT distribution transformers. DOE estimates that no shipments would 
meet or exceed these energy conservation standards in the no-new-
standards case in 2027. DOE estimates MVDT distribution transformer 
manufacturers would spend approximately $6.0 million in product 
conversion costs to redesign all MVDT distribution transformers and 
approximately $11.9 million in capital conversion costs as many MVDT 
distribution transformer cores manufactured are expected to use 
amorphous steel.
    At TSL 3, the shipment-weighted average MPC for MVDT distribution 
transformers increases by 14.5 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The moderate increase in 
shipment-weighted average MPC is outweighed by the $17.9 million in 
conversion costs, causing a negative change in INPV at TSL 3 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 14.5 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $17.9 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 3 under the 
preservation of operating profit scenario.
    At TSL 4, DOE estimates the impacts on INPV for MVDT distribution 
transformer manufacturers to range from -$18.7 million to -$6.8 
million, corresponding to a change in INPV of -21.4 percent to -7.8 
percent. At TSL 4, industry free cash flow is estimated to decrease by 
approximately 115.3 percent to -$1.1 million, compared to the no-new-
standard case value of $7.0 million in 2026, the year before the 
estimated compliance date.
    TSL 4 would set the energy conservation standard at EL 4 for all 
MVDT distribution transformers. DOE estimates that no shipments would 
meet these energy conservation standards in

[[Page 1815]]

the no-new-standards case in 2027. DOE estimates MVDT distribution 
transformer manufacturers would spend approximately $6.1 million in 
product conversion costs to redesign all MVDT distribution transformers 
and approximately $13.1 million in capital conversion costs as most 
MVDT distribution transformer cores manufactured are expected to use 
amorphous steel.
    At TSL 4, the shipment-weighted average MPC for MVDT distribution 
transformers increases by 20.0 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The significant increase in 
shipment-weighted average MPC is outweighed by the $19.2 million in 
conversion costs, causing a negative change in INPV at TSL 4 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 20.0 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $19.2 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 4 under the 
preservation of operating profit scenario.
    At TSL 5, DOE estimates the impacts on INPV for MVDT distribution 
transformer manufacturers to range from -$22.6 million to -$5.2 
million, corresponding to a change in INPV of -25.9 percent to -5.9 
percent. At TSL 5, industry free cash flow is estimated to decrease by 
approximately 128.4 percent to -$2.0 million, compared to the no-new-
standard case value of $7.0 million in 2026, the year before the 
estimated compliance date.
    TSL 5 would set the energy conservation standard at EL 5, max-tech, 
for all MVDT distribution transformers. DOE estimates that no shipments 
would meet these energy conservation standards at TSL 5. DOE estimates 
MVDT distribution transformer manufacturers would spend approximately 
$6.2 million in product conversion costs to redesign all MVDT 
distribution transformers and approximately $15.1 million in capital 
conversion costs as all MVDT distribution transformer cores 
manufactured are expected to use amorphous steel.
    At TSL 5, the shipment-weighted average MPC for MVDT distribution 
transformers increases by 29.4 percent relative to the no-new-standards 
case shipment-weighted average MPC in 2027. The significant increase in 
shipment-weighted average MPC is outweighed by the $21.2 million in 
conversion costs, causing a negative change in INPV at TSL 5 under the 
preservation of gross margin percentage scenario.
    Under the preservation of operating profit scenario, the 29.4 
percent shipment-weighted average MPC increase results in a reduction 
in the margin after the analyzed compliance year. This reduction in the 
margin and the $21.2 million in conversion costs incurred by 
manufacturers cause a negative change in INPV at TSL 5 under the 
preservation of operating profit scenario.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of amended energy 
conservation standards on direct employment in the distribution 
transformers industry, DOE used the GRIM to estimate the domestic labor 
expenditures and number of direct employees in the no-new-standards 
case and in each of the standards cases (TSLs) during the analysis 
period.
    Production employees are those who are directly involved in 
fabricating and assembling equipment within a manufacturer facility. 
Workers performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are 
included as production labor, as well as line supervisors.
    DOE used the GRIM to calculate the number of production employees 
from labor expenditures. DOE used statistical data from the U.S. Census 
Bureau's 2019 Annual Survey of Manufacturers (``ASM'') and the results 
of the engineering analysis to calculate industry-wide labor 
expenditures. Labor expenditures related to equipment manufacturing 
depend on the labor intensity of the product, the sales volume, and an 
assumption that wages remain fixed in real terms over time. The total 
labor expenditures in the GRIM were then converted to domestic 
production employment levels by dividing production labor expenditures 
by the annual payment per production worker.
    Non-production employees account for those workers that are not 
directly engaged in the manufacturing of the covered equipment. This 
could include sales, human resources, engineering, and management. DOE 
estimated non-production employment levels by multiplying the number of 
distribution transformer workers by a scaling factor. The scaling 
factor is calculated by taking the ratio of the total number of 
employees, and the total production workers associated with the 
industry NAICS code 335311, which covers power, distribution, and 
specialty transformer manufacturing.
    Using data from manufacturer interviews and estimated market share 
data, DOE estimates that approximately 85 percent of all liquid-
immersed distribution transformer manufacturing; 15 percent of all LVDT 
distribution transformer manufacturing; and 75 percent of all MVDT 
distribution transformer manufacturing takes place domestically.
Liquid-Immersed Distribution Transformers

                                  Table V.52--Domestic Employment for Liquid-Immersed Distribution Transformers in 2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                                              No-new-    -------------------------------------------------------------------------------
                                                          standards case         1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2027.....................           5,164           5,193           5,251           5,453           5,624           6,885
Domestic Non-Production Workers in 2027.................           1,830           1,840           1,861           1,932           1,993           2,440
                                                         -----------------------------------------------------------------------------------------------
    Total Direct Employment in 2027.....................           6,994           7,033           7,112           7,385           7,617           9,325
Potential Changes in Total Direct Employment in 2027....  ..............        (874)-39     (1,180)-118     (1,506)-391     (1,549)-623   (1,549)-2,331
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Using the estimated labor content from the GRIM combined with data 
from the 2019 ASM, DOE estimates that there would be approximately 
5,164 domestic production workers, and 1,830 domestic non-production 
workers

[[Page 1816]]

involved in liquid-immersed distribution transformer manufacturing in 
2027 in the absence of amended energy conservation standards. Table 
V.52 shows the range of the impacts of energy conservation standards on 
U.S. production on liquid-immersed distribution transformers.
    Amorphous core production is more labor intensive and would require 
additional labor expenditures. The upper range of the ``Potential 
Change in Total Direct Employment in 2027'' displayed in Table V.52, 
assumes that all domestic liquid-immersed distribution transformer 
manufacturing remains in the U.S. For this scenario, the additional 
labor expenditures associated with amorphous core production result in 
the number of total direct employees to increase due to energy 
conservation standards. At higher TSLs, the estimated number of 
amorphous cores used in liquid-immersed distribution transformers 
increases, which causes the number of direct employees to also 
increase. The lower range of the ``Potential Change in Total Direct 
Employment in 2027'' displayed in Table V.52, assumes that as more 
amorphous cores are used to meet higher energy conservation standards, 
either the amorphous core production is out-sourced to core only 
manufacturers (manufacturers that specialize in manufacturing cores 
used in distribution transformers, but do not actually manufacture 
entire distribution transformers) which may be located in foreign 
countries, or distribution transformer manufacturing is re-located to 
foreign countries. This lower range assumes that 30 percent of 
distribution transformers using amorphous cores are re-located to 
foreign countries due to the energy conservation standard. DOE 
acknowledges that each distribution transformer manufacturer would 
individually make a business decision to either make the substantial 
investments to add or increase their own amorphous core production 
capabilities and continue to manufacturer their own cores in-house; 
outsource their amorphous core production to another distribution core 
manufacturer, which may or may not be located in the U.S.; or re-locate 
some or all of their distribution transformer manufacturing to a 
foreign country. DOE acknowledges there is a wide range of potential 
domestic employment impacts due to energy conservation standards, 
especially at the higher TSLs. The ranges in potential employment 
impacts displayed in Table V.52 at each TSL attempt to provide a 
reasonable upper and lower bound to how liquid-immersed distribution 
transformer manufacturers may respond to potential energy conservation 
standards.
Low-Voltage Dry-Type Distribution Transformers

                               Table V.53--Domestic Employment for Low-Voltage Dry-Type Distribution Transformers in 2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                                              No-new-    -------------------------------------------------------------------------------
                                                          standards case         1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2027.....................             169             169             170             183             201             208
Domestic Non-Production Workers in 2027.................              60              60              60              65              71              74
                                                         -----------------------------------------------------------------------------------------------
    Total Direct Employment in 2027.....................             229             229             230             248             272             282
Potential Changes in Total Direct Employment in 2027....  ..............               0             0-1         (28)-19         (49)-43         (51)-53
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Using the estimated labor content from the GRIM combined with data 
from the 2019 ASM, DOE estimates that there would be approximately 169 
domestic production workers, and 60 domestic non-production workers 
involved in LVDT distribution transformer manufacturing in 2027 in the 
absence of amended energy conservation standards. Table V.53 shows the 
range of the impacts of energy conservation standards on U.S. 
production on LVDT distribution transformers.
    DOE used the same methodology to estimate the potential impacts to 
domestic employment for LVDT distribution transformer manufacturing 
that was used for liquid-immersed distribution transformer 
manufacturing. The upper range of the ``Potential Change in Total 
Direct Employment in 2027'' displayed in Table V.53, assumes that all 
LVDT distribution transformer manufacturing remains in the U.S. The 
lower range of the ``Potential Change in Total Direct Employment in 
2027'', assumes that 30 percent of distribution transformers using 
amorphous cores are re-located to foreign countries, either due to 
amorphous core production that is outsourced to core only manufacturers 
located in foreign countries or LVDT distribution transformer 
manufacturers re-locating their distribution transformer production to 
foreign countries.
Medium-Voltage Dry-Type Distribution Transformers

                              Table V.54--Domestic Employment for Medium-Voltage Dry-Type Distribution Transformers in 2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                                              No-new-    -------------------------------------------------------------------------------
                                                          standards case         1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2027.....................             275             275             284             315             330             356
Domestic Non-Production Workers in 2027.................              98              98             101             112             117             126
                                                         -----------------------------------------------------------------------------------------------
    Total Direct Employment in 2027.....................             373             373             385             427             447             482
Potential Changes in Total Direct Employment in 2027....  ..............               0            0-12         (63)-54         (69)-74        (83)-109
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 1817]]

    Using the estimated labor content from the GRIM combined with data 
from the 2019 ASM, DOE estimates that there would be approximately 275 
domestic production workers, and 98 domestic non-production workers 
involved in MVDT distribution transformer manufacturing in 2027 in the 
absence of amended energy conservation standards. Table V.54 shows the 
range of the impacts of energy conservation standards on U.S. 
production on MVDT distribution transformers.
    DOE used the same methodology to estimate the potential impacts to 
domestic employment for MVDT distribution transformer manufacturing 
that was used for liquid-immersed distribution transformer 
manufacturing. The upper range of the ``Potential Change in Total 
Direct Employment in 2027'' displayed in Table V.54, assumes that all 
MVDT distribution transformer manufacturing remains in the U.S. The 
lower range of the ``Potential Change in Total Direct Employment in 
2027'', assumes that 30 percent of distribution transformers using 
amorphous cores are re-located to foreign countries, either due to 
amorphous core production that is outsourced to core only manufacturers 
located in foreign countries or MVDT distribution transformer 
manufacturers re-locating their distribution transformer production to 
foreign countries.
    DOE requests comment on the estimated potential domestic employment 
impacts on distribution transformer manufacturers presented in this 
NOPR.
c. Impacts on Manufacturing Capacity
    The prices of raw materials currently used in distribution 
transformers, such as GOES, copper, and aluminum, have all experienced 
a significant increase in price starting at the beginning of 2021. The 
availability of these commodities remains a significant concern with 
distribution transformer manufacturers. As previously stated in 
IV.J.3.a, steel producers are shifting production away from GOES suited 
for distribution transformer core manufacturing to non-grain-oriented 
steels suited for electric vehicle production. However, amorphous steel 
has not seen the same significant increase in price as GOES since the 
beginning of 2021.
    The availability of amorphous steel is a concern for many 
distribution transformer manufacturers. Based on information received 
during manufacturer interviews some distribution transformer 
manufacturers suggested that there would not be enough amorphous steel 
available to be used in all or even most distribution transformers 
currently sold in the U.S. Other distribution transformer manufacturers 
and steel suppliers interviewed stated that, while the current capacity 
of amorphous steel does not exist to supply the majority of the steel 
used in distribution transformer cores, steel manufacturers are capable 
of significantly increasing their amorphous steel production if there 
is sufficient market demand for amorphous steel.
    While the availability of both GOES and amorphous steel is a 
concern for many distribution transformer manufacturers, steel 
suppliers should be able to meet the market demand for amorphous steel 
for all TSLs analyzed given the three-year compliance period for 
distribution transformers. Steel manufacturers should be able to 
significantly increase their supply of amorphous steel if they know 
there will be an increase in the demand for this material due to energy 
conservation standards for distribution transformers. See section V.C 
for a more detailed discussion of the global supply of steel.
    DOE requests comment on the potential availability of either 
amorphous steel, grain-oriented electrical steel, or any other 
materials that may be needed to meet any of the analyzed energy 
conservation standards in this rulemaking. More specifically, DOE 
requests comment on steel manufacturers' ability to increase supply of 
amorphous steel in reaction to increased demand for amorphous steel as 
a result of increased energy conservation standards for distribution 
transformers.
d. Impacts on Competition
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from imposition of standards. It further directs the 
Attorney General to determine the impacts, if any, of any lessening of 
competition. The competitive analysis includes an assessment of the 
impacts to smaller, yet significant, manufacturers. DOE bases its 
assessment on manufacturing cost data and on information collected from 
interviews with manufacturers. The manufacturer interviews focus on 
gathering information that would help in assessing asymmetrical cost 
increases to some manufacturers, increased proportion of fixed costs 
potentially increasing business risks, and potential barriers to market 
entry (e.g., proprietary technologies).
    As discussed in section IV.J.3, DOE interviewed a wide variety of 
distribution transformer manufacturers, including liquid-immersed 
distribution transformer manufacturers, LVDT distribution transformer 
manufacturers, MVDT distribution transformer manufacturers, small 
businesses, and steel suppliers. During these manufacturer interviews 
DOE asked manufacturers if energy conservation standards could result 
in a change in industry competition. Some manufacturers stated that 
there is a possibility that smaller manufacturers may exit the market 
or their market share may decrease, if these businesses are not able to 
make the investments to upgrade their production equipment or to create 
new equipment designs in order to comply with energy conservation 
standards. See section VI.B, for a complete discussion on the potential 
impacts to small businesses.
    Based on the market and technology assessment conducted for this 
NOPR analysis, DOE identified 29 manufacturers of distribution 
transformers covered by this rulemaking. See chapter 3 of this NOPR TSD 
for a complete list of the distribution transformer manufacturers. The 
distribution transformer market has a handful of major manufacturers 
for each equipment type (i.e., liquid-immersed, LVDT, MVDT). 
Transformer core sourcing is a major driver of transformer 
manufacturing strategy and competitiveness which may be impacted by the 
standards level. Typically, manufacturers with larger market shares 
produce most of their own cores and manufacturers with smaller market 
shares purchase the cores used in their distribution transformers. The 
Department does not believe the proposed standard will alter current 
core make-versus-buy decisions. The Department expects that 
manufacturers with larger market shares will make the large investments 
needed to convert their core production to amorphous steel. 
Manufacturers with smaller market shares that do not invest in 
amorphous core manufacturing will continue to have the option to source 
their cores. DOE does not anticipate a significant change in 
competition due to energy conservation standards as the business model 
and competitive position for most distribution transformer 
manufacturers will remain the same after compliance with energy 
conservation standards.
e. Impacts on Subgroups of Manufacturers
    As discussed in section IV.J.1 of this document, using average cost 
assumptions to develop an industry cash-flow estimate may not be 
adequate for assessing differential impacts among manufacturer 
subgroups. Small

[[Page 1818]]

manufacturers, niche manufacturers, and manufacturers exhibiting a cost 
structure substantially different from the industry average could be 
affected disproportionately. DOE used the results of the industry 
characterization to group manufacturers exhibiting similar 
characteristics. Consequently, DOE considered four manufacturer 
subgroups in the MIA: liquid-immersed, LVDT, MVDT, and small 
manufacturers as a subgroup for a separate impact analysis. DOE 
discussed the potential impacts on liquid-immersed, LVDT, and MVDT 
distribution transformer manufacturers separately in sections V.B.2.a 
and V.B.2.b.
    For the small business subgroup analysis, DOE applied the small 
business size standards published by the Small Business Administration 
(``SBA'') to determine whether a company is considered a small 
business. The size standards are codified at 13 CFR part 121. To be 
categorized as a small business under NAICS code 335311, ``power, 
distribution, and specialty transformer manufacturing,'' a distribution 
transformer manufacturer and its affiliates may employ a maximum of 750 
employees. The 750-employee threshold includes all employees in a 
business's parent company and any other subsidiaries. For a discussion 
of the impacts on the small manufacturer subgroup, see the Regulatory 
Flexibility Analysis in section VI.B.
f. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and the product-specific 
regulatory actions of other Federal agencies that affect the 
manufacturers of a covered product or equipment. While any one 
regulation may not impose a significant burden on manufacturers, the 
combined effects of several existing or impending regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden. In addition to energy 
conservation standards, other regulations can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can strain profits and lead companies to abandon 
product lines or markets with lower expected future returns than 
competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency. DOE requests information regarding the impact of 
cumulative regulatory burden on manufacturers of distribution 
transformers associated with multiple DOE standards or product-specific 
regulatory actions of other Federal agencies.
    DOE evaluates product-specific regulations that will take effect 
approximately 3 years before or after the estimated 2027 compliance 
date of any amended energy conservation standards for distribution 
transformers. This information is presented in Table V.55.

Table V.55--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting
                                     Distribution Transformer Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                     Number of                       Industry        Industry
  Federal energy conservation       Number of      manufacturers      Approx.       conversion      conversion
           standard              manufacturers *   affected from  standards year       costs       costs/product
                                                   this rule **                     (millions)      revenue ***
----------------------------------------------------------------------------------------------------------------
Dedicated-Purpose Pool Pump                    5               1            2026           $46.2            2.8%
 Motors, 87 FR 37122 (June 21,                                                           (2020$)
 2022)........................
----------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule
  contributing to cumulative regulatory burden.
** This column presents the number of manufacturers producing distribution transformers that are also listed as
  manufacturers in the listed energy conservation standard contributing to cumulative regulatory burden.
*** This column presents industry conversion costs as a percentage of product revenue during the conversion
  period. Industry conversion costs are the upfront investments manufacturers must make to sell compliant
  products/equipment. The revenue used for this calculation is the revenue from just the covered product/
  equipment associated with each row. The conversion period is the time frame over which conversion costs are
  made and lasts from the publication year of the final rule to the compliance year of the energy conservation
  standard. The conversion period typically ranges from 3 to 5 years, depending on the rulemaking.

    In addition to the rulemaking listed in Table V.55, DOE has ongoing 
rulemakings for other products or equipment that distribution 
transformer manufacturers produce, including battery chargers; \103\ 
external power supplies; \104\ ceiling fan light kits; \105\ electric 
motors; \106\ residential conventional cooking products; \107\ 
dishwashers; \108\ dehumidifiers; \109\ miscellaneous refrigeration 
products; \110\ and residential clothes washers.\111\ If DOE proposes 
or finalizes any energy conservation standards for these products or 
equipment prior to finalizing energy conservation standards for 
distribution transformers, DOE will include the energy conservation 
standards for these other products or equipment as part of the 
cumulative regulatory burden for the distribution transformers final 
rule.
---------------------------------------------------------------------------

    \103\ www.regulations.gov/docket/EERE-2008-BT-STD-0005.
    \104\ www.regulations.gov/docket/EERE-2020-BT-STD-0006.
    \105\ www.regulations.gov/docket/EERE-2019-BT-STD-0040.
    \106\ www.regulations.gov/docket/EERE-2020-BT-STD-0007.
    \107\ www.regulations.gov/docket/EERE-2014-BT-STD-0005.
    \108\ www.regulations.gov/docket/EERE-2019-BT-STD-0039.
    \109\ www.regulations.gov/docket/EERE-2019-BT-STD-0043.
    \110\ www.regulations.gov/docket/EERE-2020-BT-STD-0039.
    \111\ www.regulations.gov/docket/EERE-2017-BT-STD-0014.
---------------------------------------------------------------------------

3. National Impact Analysis
    This section presents DOE's estimates of the national energy 
savings and the NPV of consumer benefits that would result from each of 
the TSLs considered as potential amended standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential amended 
standards for distribution transformers, DOE compared their energy 
consumption under the no-new-standards case to their anticipated energy 
consumption under each TSL. The savings are measured over the entire 
lifetime of products purchased in

[[Page 1819]]

the 30-year period that begins in the first full year of anticipated 
compliance with amended standards (2027-2056). Table V.56 presents 
DOE's projections of the national energy savings for each TSL 
considered for distribution transformers, the results showing DOE's 
proposed standard are in bold. Savings are reported for each of the 
equipment classes as defined in Section IV.A.2. The savings were 
calculated using the approach described in section IV.H of this 
document.

  Table V.56--Cumulative National Energy Sources for Distribution Transformers by Equipment Class; 30 Years of
                                              Shipment, (2027-2056)
----------------------------------------------------------------------------------------------------------------
                                                                  Standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                         Primary Energy Savings (Quads)
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            2.16            3.16            4.45            4.75            4.89
    Equipment Class 2...........            0.91            1.65            2.63            2.97            3.17
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.            0.08
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            3.06            4.80            7.09            7.72            8.14
----------------------------------------------------------------------------------------------------------------
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.02            0.03            0.05            0.09            0.12
    Equipment Class 4...........            0.34            0.48            0.77            2.10            2.25
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.35            0.52            0.82            2.19            2.37
         Total..................
----------------------------------------------------------------------------------------------------------------
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.01            0.02            0.03
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.05            0.07            0.23            0.29            0.35
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.02            0.04            0.14            0.19            0.22
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.08            0.11            0.39            0.51            0.61
         Total..................
----------------------------------------------------------------------------------------------------------------
                                           FFC Energy Savings (Quads)
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            2.24            3.28            4.63            4.94            5.08
    Equipment Class 2...........            0.94            1.71            2.73            3.08            3.29
    Equipment Class 12..........            0.00            0.00            0.00            0.00            0.09
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            3.18            4.99            7.36            8.02            8.45
----------------------------------------------------------------------------------------------------------------
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.02            0.03            0.05            0.09            0.12
    Equipment Class 4...........            0.35            0.50            0.80            2.19            2.34
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.37            0.54            0.85            2.28            2.47
         Total..................
----------------------------------------------------------------------------------------------------------------
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.01            0.02            0.03
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.05            0.07            0.24            0.30            0.36
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.02            0.04            0.15            0.20            0.23
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.08            0.12            0.40            0.53            0.63
         Total..................
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \112\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9 years, rather than 30 
years, of product shipments. The choice of a 9-year period is a proxy 
for the timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\113\ The review

[[Page 1820]]

timeframe established in EPCA is generally not synchronized with the 
product lifetime, product manufacturing cycles, or other factors 
specific to distribution transformers. Thus, such results are presented 
for informational purposes only and are not indicative of any change in 
DOE's analytical methodology. The NES sensitivity analysis results 
based on a 9-year analytical period are presented in Table V.57. The 
impacts are counted over the lifetime of distribution transformers 
purchased in 2027-2036, the results showing DOE's proposed standard are 
in bold.
---------------------------------------------------------------------------

    \112\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf 
(last accessed August 26, 2022).
    \113\ Section 325(m) of EPCA requires DOE to review its 
standards at least once every 6 years, and requires, for certain 
products, a 3-year period after any new standard is promulgated 
before compliance is required, except that in no case may any new 
standards be required within 6 years of the compliance date of the 
previous standards. While adding a 6-year review to the 3-year 
compliance period adds up to 9 years, DOE notes that it may 
undertake reviews at any time within the 6 year period and that the 
3-year compliance date may yield to the 6-year backstop. A 9-year 
analysis period may not be appropriate given the variability that 
occurs in the timing of standards reviews and the fact that for some 
products, the compliance period is 5 years rather than 3 years.

 Table V.57--Cumulative National Energy Savings for Distribution Transformers; 9 Years of Shipments, (2027-2036)
----------------------------------------------------------------------------------------------------------------
                                                                  Standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                         Primary Energy Savings (Quads)
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            0.62            0.90            1.27            1.36            1.39
    Equipment Class 2...........            0.26            0.47            0.75            0.85            0.90
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.            0.02
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            0.87            1.37            2.02            2.20            2.32
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.00            0.01            0.01            0.02            0.03
    Equipment Class 4...........            0.10            0.14            0.22            0.60            0.64
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.10            0.15            0.23            0.63            0.68
         Total..................
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.00            0.01            0.01
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.01            0.02            0.07            0.08            0.10
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.01            0.01            0.04            0.05            0.06
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.02            0.03            0.11            0.14            0.17
         Total..................
----------------------------------------------------------------------------------------------------------------
                                           FFC Energy Savings (Quads)
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
Equipment Class 1...............            0.64            0.93            1.32            1.41            1.45
Equipment Class 2...............            0.27            0.49            0.78            0.88            0.94
Equipment Class 12..............            n.a.            n.a.            n.a.            n.a.            0.03
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            0.91            1.42            2.10            2.29            2.41
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.00            0.01            0.01            0.03            0.04
    Equipment Class 4...........            0.10            0.14            0.23            0.62            0.67
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.11            0.15            0.24            0.65            0.70
         Total..................
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.00            0.01            0.01
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.02            0.02            0.07            0.09            0.10
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.01            0.01            0.04            0.06            0.07
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.02            0.03            0.12            0.15            0.18
         Total..................
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for distribution 
transformers. In accordance with OMB's guidelines on regulatory 
analysis,\114\ DOE calculated NPV using both a 7-percent and a 3-
percent real discount rate. Table V.58 shows the consumer NPV results 
with impacts counted over the lifetime of products purchased in 2027-
2056, the results showing DOE's proposed standard are in bold.
---------------------------------------------------------------------------

    \114\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/ (last accessed April 15, 2022).

[[Page 1821]]



    Table V.58--Cumulative Net Present Value of Consumer Benefits for Distribution Transformers; 30 Years of
                                      Shipments, Billion 2021$, (2027-2056)
----------------------------------------------------------------------------------------------------------------
                                                                  Standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             3 percent Discount Rate
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            2.55            3.34            4.00            3.45           -4.04
    Equipment Class 2...........            0.43            0.81            1.50            1.84           -2.10
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.           -0.10
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            2.98            4.15            5.50            5.30           -6.25
----------------------------------------------------------------------------------------------------------------
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.07            0.13            0.15            0.31            0.52
    Equipment Class 4...........            1.41            1.98            1.72            9.41            9.11
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                1.48            2.11            1.87            9.72            9.63
         Total..................
----------------------------------------------------------------------------------------------------------------
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.01
    Equipment Class 6...........            0.01            0.01            0.02            0.02            0.04
    Equipment Class 7...........            0.00            0.00            0.00            0.01            0.01
    Equipment Class 8...........            0.25            0.22            0.76            0.77            0.54
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.00           -0.02            0.46            0.50            0.36
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.26            0.21            1.25            1.30            0.96
         Total..................
----------------------------------------------------------------------------------------------------------------
                                             7 percent Discount Rate
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            0.78            0.94            0.82            0.24           -4.41
    Equipment Class 2...........            0.00            0.06            0.07            0.01           -2.60
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.           -0.10
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            0.78            1.00            0.89            0.26           -7.11
----------------------------------------------------------------------------------------------------------------
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.02            0.04            0.04            0.07            0.13
    Equipment Class 4...........            0.50            0.70            0.35            2.72            2.50
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.53            0.74            0.39            2.79            2.63
         Total..................
----------------------------------------------------------------------------------------------------------------
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.10            0.07            0.18            0.15            0.01
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.01           -0.04            0.08            0.08            0.00
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.09            0.04            0.27            0.23            0.00
         Total..................
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.59. The impacts are counted over the 
lifetime of products purchased in 2027-2036. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

     Table V.59--Cumulative Net Present Value of Consumer Benefits for Distribution Transformers; 9 Years of
                                      Shipments, Billion 2021$, (2027-2036)
----------------------------------------------------------------------------------------------------------------
                                                                  Standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             3 percent Discount Rate
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            0.99            1.30            1.56            1.36           -1.50
    Equipment Class 2...........            0.17            0.32            0.59            0.73           -0.78

[[Page 1822]]

 
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.           -0.04
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            1.16            1.62            2.15            2.09           -2.32
----------------------------------------------------------------------------------------------------------------
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.03            0.05            0.06            0.12            0.20
    Equipment Class 4...........            0.55            0.77            0.68            3.69            3.57
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.58            0.82            0.74            3.81            3.77
         Total..................
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.01            0.01            0.02
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.10            0.09            0.30            0.30            0.22
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........            0.00           -0.01            0.18            0.20            0.15
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.10            0.08            0.49            0.51            0.39
         Total..................
----------------------------------------------------------------------------------------------------------------
                                             7 percent Discount Rate
----------------------------------------------------------------------------------------------------------------
Liquid-Immersed:
    Equipment Class 1...........            0.40            0.49            0.43            0.14           -2.24
    Equipment Class 2...........            0.00            0.03            0.04            0.02           -1.32
    Equipment Class 12..........            n.a.            n.a.            n.a.            n.a.           -0.05
                                 -------------------------------------------------------------------------------
        Liquid-Immersed Total...            0.41            0.52            0.48            0.15           -3.61
Low-Voltage Dry-Type:
    Equipment Class 3...........            0.01            0.02            0.02            0.04            0.07
    Equipment Class 4...........            0.26            0.36            0.19            1.43            1.32
                                 -------------------------------------------------------------------------------
        Low-Voltage Dry-Type                0.27            0.39            0.21            1.46            1.38
         Total..................
----------------------------------------------------------------------------------------------------------------
Medium-Voltage Dry-Type:
    Equipment Class 5...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 6...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 7...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 8...........            0.05            0.04            0.10            0.08            0.01
    Equipment Class 9...........            0.00            0.00            0.00            0.00            0.00
    Equipment Class 10..........           -0.01           -0.02            0.05            0.04            0.00
                                 -------------------------------------------------------------------------------
        Medium-Voltage Dry-Type             0.04            0.02            0.14            0.12            0.01
         Total..................
----------------------------------------------------------------------------------------------------------------

    The previous results reflect the use of a default trend to estimate 
the change in price for distribution transformers over the analysis 
period (see section IV.F.1 of this document). DOE also conducted a 
sensitivity analysis that considered one scenario with a lower rate of 
price decline than the reference case and one scenario with a higher 
rate of price decline than the reference case. The results of these 
alternative cases are presented in appendix 10C of the NOPR TSD. In the 
high-price-decline case, the NPV of consumer benefits is higher than in 
the default case. In the low-price-decline case, the NPV of consumer 
benefits is lower than in the default case.
c. Indirect Impacts on Employment
    It is estimated that that amended energy conservation standards for 
distribution transformers would reduce energy expenditures for 
consumers of those products, with the resulting net savings being 
redirected to other forms of economic activity. These expected shifts 
in spending and economic activity could affect the demand for labor. As 
described in section IV.N of this document, DOE used an input/output 
model of the U.S. economy to estimate indirect employment impacts of 
the TSLs that DOE considered. There are uncertainties involved in 
projecting employment impacts, especially changes in the later years of 
the analysis. Therefore, DOE generated results for near-term timeframes 
(2027-2031), where these uncertainties are reduced.
    The results suggest that the proposed standards would be likely to 
have a negligible impact on the net demand for labor in the economy. 
The net change in jobs is so small that it would be imperceptible in 
national labor statistics and might be offset by other, unanticipated 
effects on employment. Chapter 16 of the NOPR TSD presents detailed 
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    As discussed in section IV.C.1.b of this document, DOE has 
tentatively concluded that the standards proposed in this NOPR would 
not lessen the utility or performance of the distribution transformers 
under consideration in this rulemaking. Manufacturers of these products 
currently offer units that meet or exceed the proposed standards.

[[Page 1823]]

5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As part of this consideration, 
DOE weighed the effects on markets for both component parts (see 
IV.C.3.a) and distribution transformer equipment (see IV.A.6). DOE's 
preliminary finding is that this rule, if finalized as proposed, would 
not significantly affect competition in the market for distribution 
transformers. See section V.B.5 for a complete discussion on industry 
competition. As discussed in section III.E.1.e, the Attorney General 
determines the impact, if any, of any lessening of competition likely 
to result from a proposed standard, and transmits such determination in 
writing to the Secretary, together with an analysis of the nature and 
extent of such impact. To assist the Attorney General in making this 
determination, DOE has provided DOJ with copies of this NOPR and the 
accompanying TSD for review. DOE will consider DOJ's comments on the 
proposed rule in determining whether to proceed to a final rule. DOE 
will publish and respond to DOJ's comments in that document. DOE 
invites comment from the public regarding the competitive impacts that 
are likely to result from this proposed rule. In addition, stakeholders 
may also provide comments separately to DOJ regarding these potential 
impacts. See the ADDRESSES section for information to send comments to 
DOJ.
6. Need of the Nation to Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. Chapter 15 in the NOPR TSD 
presents the estimated impacts on electricity generating capacity, 
relative to the no-new-standards case, for the TSLs that DOE considered 
in this rulemaking.
    Energy conservation resulting from potential energy conservation 
standards for distribution transformers is expected to yield 
environmental benefits in the form of reduced emissions of certain air 
pollutants and greenhouse gases. Table V.60 through Table V.63 provides 
DOE's estimate of cumulative emissions reductions expected to result 
from the TSLs considered in this rulemaking. The emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the NOPR TSD.

     Table V.60--Cumulative Emissions Reduction for All Distribution
      Transformers Shipped in 2027-2056 at Proposed Standard Levels
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
CO2 (million metric tons).........................                 312.0
CH4 (thousand tons)...............................                  21.3
N2O (thousand tons)...............................                   2.9
NOX (thousand tons)...............................                 146.0
SO2 (thousand tons)...............................                 129.2
Hg (tons).........................................                   0.8
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
CO2 (million metric tons).........................                  25.5
CH4 (thousand tons)...............................                2419.9
N2O (thousand tons)...............................                   0.1
NOX (thousand tons)...............................                 386.9
SO2 (thousand tons)...............................                   1.7
Hg (tons).........................................                   0.0
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
CO2 (million metric tons).........................                 337.6
CH4 (thousand tons)...............................                2441.2
N2O (thousand tons)...............................                   3.0
NOX (thousand tons)...............................                 532.9
SO2 (thousand tons)...............................                 130.9
Hg (tons).........................................                   0.9
------------------------------------------------------------------------
Negative values refer to an increase in emissions.


    Table V.61--Cumulative Emissions Reduction for Distribution Transformers for Liquid-Immersed Distribution
                                        Transformers Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            94.2           147.8           217.7           237.0           249.4
CH4 (thousand tons).............             6.4            10.1            14.8            16.2            17.0
N2O (thousand tons).............             0.9             1.4             2.0             2.2             2.3
NOX (thousand tons).............            44.1            69.2           101.9           110.9           116.7
SO2 (thousand tons).............            39.1            61.4            90.5            98.4           103.5

[[Page 1824]]

 
Hg (tons).......................             0.3             0.4             0.6             0.6             0.7
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             7.7            12.0            17.7            19.3            20.3
CH4 (thousand tons).............           726.6          1139.8          1680.6          1830.4          1929.9
N2O (thousand tons).............             0.0             0.1             0.1             0.1             0.1
NOX (thousand tons).............           116.2           182.2           268.7           292.7           308.6
SO2 (thousand tons).............             0.5             0.8             1.2             1.3             1.3
Hg (tons).......................             0.0             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           101.9           159.8           235.4           256.3           269.7
CH4 (thousand tons).............           733.1          1149.8          1695.5          1846.6          1946.9
N2O (thousand tons).............             0.9             1.4             2.1             2.3             2.4
NOX (thousand tons).............           160.3           251.4           370.6           403.6           425.2
SO2 (thousand tons).............            39.7            62.2            91.6            99.7           104.8
Hg (tons).......................             0.3             0.4             0.6             0.7             0.7
----------------------------------------------------------------------------------------------------------------
Negative values refer to an increase in emissions.


 Table V.62--Cumulative Emissions Reduction for Distribution Transformers for Low-Voltage Dry-Type Distribution
                                        Transformers Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            10.7            15.6            24.8            66.1            71.6
CH4 (thousand tons).............             0.7             1.1             1.7             4.5             4.9
N2O (thousand tons).............             0.1             0.1             0.2             0.6             0.7
NOX (thousand tons).............             5.0             7.3            11.6            30.9            33.5
SO2 (thousand tons).............             4.4             6.4            10.2            27.1            29.4
Hg (tons).......................             0.0             0.0             0.1             0.2             0.2
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             0.9             1.3             2.0             5.5             5.9
CH4 (thousand tons).............            84.0           122.4           194.5           519.1           562.4
N2O (thousand tons).............             0.0             0.0             0.0             0.0             0.0
NOX (thousand tons).............            13.4            19.6            31.1            83.0            89.9
SO2 (thousand tons).............             0.1             0.1             0.1             0.4             0.4
Hg (tons).......................             0.0             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            11.6            16.9            26.8            71.6            77.6
CH4 (thousand tons).............            84.8           123.4           196.2           523.5           567.3
N2O (thousand tons).............             0.1             0.2             0.2             0.6             0.7
NOX (thousand tons).............            18.4            26.9            42.7           113.9           123.4
SO2 (thousand tons).............             4.5             6.5            10.3            27.5            29.8
Hg (tons).......................             0.0             0.0             0.1             0.2             0.2
----------------------------------------------------------------------------------------------------------------
Negative values refer to an increase in emissions.


      Table V.63--Cumulative Emissions Reduction for Distribution Transformers for Medium-Voltage Dry-Type
                                 Distribution Transformers Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                               Trial Standard Level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             2.3             3.4            11.7            15.2            18.2
CH4 (thousand tons).............             0.2             0.2             0.8             1.0             1.2
N2O (thousand tons).............             0.0             0.0             0.1             0.1             0.2

[[Page 1825]]

 
NOX (thousand tons).............             1.1             1.6             5.5             7.1             8.5
SO2 (thousand tons).............             1.0             1.4             4.8             6.2             7.5
Hg (tons).......................             0.0             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             0.2             0.3             1.0             1.3             1.5
CH4 (thousand tons).............            18.4            27.1            92.3           120.0           143.7
N2O (thousand tons).............             0.0             0.0             0.0             0.0             0.0
NOX (thousand tons).............             2.9             4.3            14.8            19.2            23.0
SO2 (thousand tons).............             0.0             0.0             0.1             0.1             0.1
Hg (tons).......................             0.0             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             2.5             3.7            12.7            16.5            19.7
CH4 (thousand tons).............            18.6            27.3            93.1           121.1           144.9
N2O (thousand tons).............             0.0             0.0             0.1             0.1             0.2
NOX (thousand tons).............             4.0             5.9            20.2            26.3            31.5
SO2 (thousand tons).............             1.0             1.4             4.9             6.3             7.6
Hg (tons).......................             0.0             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
Negative values refer to an increase in emissions.

    As part of the analysis for this rulemaking, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
that DOE estimated for each of the considered TSLs for distribution 
transformers. Section IV.L of this document discusses the SC-
CO2 values that DOE used. Table V.64 presents the value of 
CO2 emissions reduction at each TSL for each of the SC-
CO2 cases. The time-series of annual values is presented for 
the proposed TSL in chapter 14 of the NOPR TSD.

     Table V.64--Present Value of CO2 Emissions Reduction for Distribution Transformers Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CO2 Case
                                                 ---------------------------------------------------------------
                                                           Discount rate and statistics (million 2021$)
                                                 ---------------------------------------------------------------
                       TSL                              5%              3%             2.5%             3%
                                                 ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
                                    Liquid-immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................           603.2         2,773.2         4,425.4         8,386.0
2...............................................           946.1         4,350.2         6,941.9        13,154.7
3...............................................         1,394.3         6,410.7        10,229.9        19,385.3
4...............................................         1,517.6         6,977.6        11,134.6        21,099.8
5...............................................         1,597.1         7,343.2        11,718.0        22,205.4
----------------------------------------------------------------------------------------------------------------
                                 Low-voltage Dry Type Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................            72.9           333.0           530.3         1,007.4
2...............................................           106.1           484.8           772.1         1,466.7
3...............................................           168.6           770.4         1,227.0         2,330.8
4...............................................           450.3         2,056.9         3,276.0         6,223.1
5...............................................           487.9         2,228.8         3,549.8         6,743.2
----------------------------------------------------------------------------------------------------------------
                                    Medium-voltage Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................            15.9            72.7           115.8           220.0
2...............................................            23.3           106.7           169.9           322.7
3...............................................            79.8           364.4           580.4         1,102.5
4...............................................           103.7           473.6           754.2         1,432.7
5...............................................           124.0           566.7           902.5         1,714.4
----------------------------------------------------------------------------------------------------------------


[[Page 1826]]

    As discussed in section IV.L.2, DOE estimated the climate benefits 
likely to result from the reduced emissions of methane and 
N2O that DOE estimated for each of the considered TSLs for 
distribution transformers. Table V.65 presents the value of the 
CH4 emissions reduction at each TSL, and Table V.66 presents 
the value of the N2O emissions reduction at each TSL. The 
time-series of annual values is presented for the proposed TSL in 
chapter 14 of the NOPR TSD.

   Table V.65--Present Value of Methane Emissions Reduction for Distribution Transformers Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CH4 Case
                                                 ---------------------------------------------------------------
                                                           Discount rate and statistics (million 2021$)
                                                 ---------------------------------------------------------------
                       TSL                              5%              3%             2.5%             3%
                                                 ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
                                    Liquid-immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................           202.8           659.9           939.6         1,748.1
2...............................................           318.1         1,035.0         1,473.7         2,741.9
3...............................................           469.0         1,526.2         2,173.0         4,042.9
4...............................................           510.8         1,662.2         2,366.7         4,403.2
5...............................................           538.6         1,752.5         2,495.3         4,642.6
----------------------------------------------------------------------------------------------------------------
                                 Low-voltage Dry Type Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................            24.8            80.1           113.9           212.2
2...............................................            36.2           116.7           165.8           309.0
3...............................................            57.5           185.5           263.6           491.3
4...............................................           153.4           494.9           703.4         1,310.8
5...............................................           166.2           536.3           762.2         1,420.4
----------------------------------------------------------------------------------------------------------------
                                    Medium-voltage Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................             5.4            17.6            25.0            46.6
2...............................................             8.0            25.8            36.7            68.3
3...............................................            27.3            88.0           125.1           233.2
4...............................................            35.5           114.5           162.7           303.1
5...............................................            42.4           137.0           194.7           362.8
----------------------------------------------------------------------------------------------------------------


  Table V.66--Present Value of Nitrous Oxide Emissions Reduction for Distribution Transformers Shipped in 2027-
                                                      2056
----------------------------------------------------------------------------------------------------------------
                                                                            SC-N2O Case
                                                 ---------------------------------------------------------------
                                                           Discount rate and statistics (million 2021$)
                                                 ---------------------------------------------------------------
                       TSL                              5%              3%             2.5%             3%
                                                 ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
                                    Liquid-immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................             2.1             9.2            14.5            24.5
2...............................................             3.4            14.4            22.7            38.5
3...............................................             4.9            21.2            33.5            56.7
4...............................................             5.4            23.1            36.5            61.7
5...............................................             5.7            24.3            38.4            64.9
----------------------------------------------------------------------------------------------------------------
                                 Low-voltage Dry Type Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................             0.3             1.1             1.7             2.9
2...............................................             0.4             1.6             2.5             4.2
3...............................................             0.6             2.5             4.0             6.8
4...............................................             1.6             6.8            10.6            18.0
5...............................................             1.7             7.3            11.5            19.5
----------------------------------------------------------------------------------------------------------------
                                    Medium-voltage Distribution Transformers
----------------------------------------------------------------------------------------------------------------
1...............................................             0.1             0.2             0.4             0.6
2...............................................             0.1             0.4             0.6             0.9
3...............................................             0.3             1.2             1.9             3.2
4...............................................             0.4             1.6             2.4             4.2

[[Page 1827]]

 
5...............................................             0.4             1.9             2.9             5.0
----------------------------------------------------------------------------------------------------------------

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
global and U.S. economy continues to evolve rapidly. Thus, any value 
placed on reduced GHG emissions in this proposed rulemaking is subject 
to change. That said, because of omitted damages, DOE agrees with the 
IWG that these estimates most likely underestimate the climate benefits 
of greenhouse gas reductions. DOE, together with other Federal 
agencies, will continue to review methodologies for estimating the 
monetary value of reductions in CO2 and other GHG emissions. 
This ongoing review will consider the comments on this subject that are 
part of the public record for this and other rulemakings, as well as 
other methodological assumptions and issues. DOE notes that the 
proposed standards would be economically justified even without 
inclusion of monetized benefits of reduced GHG emissions.
    DOE also estimated the monetary value of the health benefits 
associated with NOX and SO2 emissions reductions 
anticipated to result from the considered TSLs for distribution 
transformers. The dollar-per-ton values that DOE used are discussed in 
section IV.L of this document. Table V.67 presents the present value 
for NOX emissions reduction for each TSL calculated using 7-
percent and 3-percent discount rates, and Table V.68 presents similar 
results for SO2 emissions reductions. The results in these 
tables reflect application of EPA's low dollar-per-ton values, which 
DOE used to be conservative. The time-series of annual values is 
presented for the proposed TSL in chapter 14 of the NOPR TSD.

  Table V.67--Present Value of NOX Emissions Reduction for Distribution
                    Transformers Shipped in 2027-2056
------------------------------------------------------------------------
                                3% Discount rate      7% Discount rate
             TSL             -------------------------------------------
                                  Million 2021$         Million 2021$
------------------------------------------------------------------------
                Liquid-Immersed Distribution Transformers
------------------------------------------------------------------------
1...........................               1,385.3               4,631.4
2...........................               2,172.9               7,264.6
3...........................               3,203.1              10,709.0
4...........................               3,487.6              11,660.1
5...........................               3,674.0              12,283.6
------------------------------------------------------------------------
             Low-voltage Dry-Type Distribution Transformers
------------------------------------------------------------------------
1...........................                 171.4                 552.0
2...........................                 249.5                 803.7
3...........................                 396.6               1,277.5
4...........................               1,058.5               3,409.6
5...........................               1,147.0               3,694.6
------------------------------------------------------------------------
            Medium-voltage Dry-Type Distribution Transformers
------------------------------------------------------------------------
1...........................                  37.5                 120.8
2...........................                  55.0                 177.3
3...........................                 187.9                 605.4
4...........................                 244.3                 786.9
5...........................                 292.4                 941.7
------------------------------------------------------------------------


    Table V.68--Present Value of SO2 Emissions Reduction Distribution
                    Transformers Shipped in 2027-2056
------------------------------------------------------------------------
                                3% Discount rate      7% Discount rate
             TSL             -------------------------------------------
                                  Million 2021$         Million 2021$
------------------------------------------------------------------------
                Liquid-immersed Distribution Transformers
------------------------------------------------------------------------
1...........................                 477.8               1,556.7
2...........................                 749.5               2,442.2

[[Page 1828]]

 
3...........................               1,104.1               3,597.5
4...........................               1,201.2               3,913.9
5...........................               1,262.4               4,113.2
------------------------------------------------------------------------
             Low-voltage Dry-Type Distribution Transformers
------------------------------------------------------------------------
1...........................                  57.8                 181.3
2...........................                  84.2                 263.9
3...........................                 133.8                 419.3
4...........................                 357.3               1,119.8
5...........................                 387.1               1,213.4
------------------------------------------------------------------------
            Medium-voltage Dry-Type Distribution Transformers
------------------------------------------------------------------------
1...........................                  12.6                  39.5
2...........................                  18.5                  57.9
3...........................                  63.2                 198.1
4...........................                  82.1                 257.4
5...........................                  98.3                 307.9
------------------------------------------------------------------------

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No 
other factors were considered in this analysis.
8. Summary of Economic Impacts
    Table V.69 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced GHG 
and NOX and SO2 emissions to the NPV of consumer 
benefits calculated for each TSL considered in this rulemaking. The 
consumer benefits are domestic U.S. monetary savings that occur as a 
result of purchasing the covered distribution transformers, and are 
measured for the lifetime of products shipped in 2027-2056. The 
benefits associated with reduced GHG emissions resulting from the 
adopted standards are global benefits, and are also calculated based on 
the lifetime of distribution transformers shipped in 2027-2056. While 
many of the benefits from this proposed standard extend through 2115, 
the monetized benefits from GHG reductions are capped at end of 2070.

               Table V.69--Consumer NPV Combined With Present Value of Climate and Health Benefits
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                    Liquid-immersed Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                      3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........            10.0            15.1            21.7            22.9            12.3
3% Average SC-GHG case..........            12.6            19.3            27.8            29.5            19.3
2.5% Average SC-GHG case........            14.5            22.3            32.2            34.4            24.4
3% 95th percentile SC-GHG case..            19.3            29.8            43.3            46.4            37.1
----------------------------------------------------------------------------------------------------------------
                      7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             3.4             5.2             7.1             7.0             0.0
3% Average SC-GHG case..........             6.1             9.3            13.2            13.6             6.9
2.5% Average SC-GHG case........             8.0            12.4            17.6            18.5            12.1
3% 95th percentile SC-GHG case..            12.8            19.9            28.7            30.5            24.7
----------------------------------------------------------------------------------------------------------------
                                      Low-voltage Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                      3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             2.3             3.3             3.8            14.9            15.2
3% Average SC-GHG case..........             2.6             3.8             4.5            16.8            17.3
2.5% Average SC-GHG case........             2.9             4.1             5.1            18.2            18.9
3% 95th percentile SC-GHG case..             3.4             5.0             6.4            21.8            22.7
----------------------------------------------------------------------------------------------------------------
                      7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             0.9             1.2             1.1             4.8             4.8
3% Average SC-GHG case..........             1.2             1.7             1.9             6.8             6.9

[[Page 1829]]

 
2.5% Average SC-GHG case........             1.4             2.0             2.4             8.2             8.5
3% 95th percentile SC-GHG case..             2.0             2.9             3.7            11.8            12.3
----------------------------------------------------------------------------------------------------------------
                                    Medium-voltage Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                      3% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             0.4             0.5             2.2             2.5             2.4
3% Average SC-GHG case..........             0.5             0.6             2.5             2.9             2.9
2.5% Average SC-GHG case........             0.6             0.7             2.8             3.3             3.3
3% 95th percentile SC-GHG case..             0.7             0.8             3.4             4.1             4.3
----------------------------------------------------------------------------------------------------------------
                      7% discount rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........             0.2             0.1             0.6             0.7             0.6
3% Average SC-GHG case..........             0.2             0.2             1.0             1.1             1.1
2.5% Average SC-GHG case........             0.3             0.3             1.2             1.5             1.5
3% 95th percentile SC-GHG case..             0.4             0.5             1.9             2.3             2.5
----------------------------------------------------------------------------------------------------------------

C. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered equipment 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens by, 
to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    For this NOPR, DOE considered the impacts of amended standards for 
each type of distribution transformer at each TSL, beginning with the 
maximum technologically feasible level, to determine whether that level 
was economically justified. Where the max-tech level was not justified, 
DOE then considered the next most efficient level and undertook the 
same evaluation until it reached the highest efficiency level that is 
both technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens for 
each type of equipment for each TSL, tables in this section present a 
summary of the results of DOE's quantitative analysis for each TSL. In 
addition to the quantitative results presented in the tables, DOE also 
considers other burdens and benefits that affect economic 
justification. These include the impacts on identifiable subgroups of 
consumers who may be disproportionately affected by a national standard 
and impacts on employment.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
undervalue future energy savings as a result of (1) entrenched 
purchasing practices, (2) a lack of sufficient salience of the long-
term or aggregate benefits, (3) a lack of sufficient savings to warrant 
delaying or altering purchases, (4) excessive focus on the short term, 
in the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments, (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs, and (6) a divergence in incentives. For example, in the case 
of dry-type distribution transformers the purchaser is often not the 
operator of the equipment. Instead, they are often installed at the 
time of building construction and operated by tenants. In other 
circumstances where the owner is the operator, distribution 
transformers are often purchased based on lowest first cost (see 
section IV.F.3) rather than equipment efficiency. Having less than 
perfect foresight and a high degree of uncertainty about the future, 
consumers may trade off these types of investments at a higher than 
expected rate between current consumption and uncertain future energy 
cost savings.
1. Benefits and Burdens of TSLs Considered for Liquid-Immersed 
Distribution Transformers Standards
    Table V.70 and Table V.71 summarize the quantitative impacts 
estimated for each TSL for liquid-immersed distribution transformers. 
The national impacts are measured over the lifetime of distribution 
transformers purchased in the 30-year period that begins in the 
anticipated year of compliance with amended standards (2027-2056). The 
energy savings, emissions reductions, and value of emissions reductions 
refer to full-fuel-cycle results. The efficiency levels contained in 
each TSL are described in section V.A of this document. Table V.71 
shows the consumer impacts as equipment classes, which are the shipment 
weighted average results of each equipment class's representative 
units. The consumer results for each representative unit and 
information on the fraction of shipments they represent are shown in 
section B.1.

[[Page 1830]]



 Table V.70--Summary of Analytical Results for Liquid-Immersed Distribution Transformers TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................            3.22            5.06            7.43            8.02            8.45
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......          101.85          159.77          235.44          256.27          269.69
CH4 (thousand tons).............          733.07         1149.83         1695.46         1846.56         1946.92
N2O (thousand tons).............            0.92            1.45            2.14            2.32            2.44
NOX (thousand tons).............          160.27          251.40          370.62          403.57          425.24
SO2 (thousand tons).............           39.65           62.21           91.65           99.71          104.82
Hg (tons).......................            0.26            0.41            0.60            0.65            0.68
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            4.06            6.08           10.17           12.77           18.51
Climate Benefits *..............            3.44            5.40            7.96            8.66            9.12
Health Benefits **..............            6.19            9.71           14.31           15.57           16.40
Total Benefits [dagger].........           13.70           21.19           32.43           37.01           44.03
Consumer Incremental Product                1.09            1.93            4.67            7.48           24.76
 Costs [Dagger].................
Consumer Net Benefits...........            2.98            4.15            5.50            5.30           -6.25
Total Net Benefits..............           12.61           19.26           27.76           29.53           19.27
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            1.36            2.04            3.40            4.28            6.20
Climate Benefits *..............            3.44            5.40            7.96            8.66            9.12
Health Benefits **..............            1.86            2.92            4.31            4.69            4.94
Total Benefits [dagger].........            6.67           10.36           15.67           17.63           20.26
Consumer Incremental Product                0.58            1.04            2.51            4.02           13.31
 Costs [Dagger].................
Consumer Net Benefits...........            0.78            1.00            0.89            0.26           -7.11
Total Net Benefits..............            6.08            9.32           13.16           13.61            6.95
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the equipment shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. Total benefits for both the 3-
  percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the
  Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of
  considering the benefits calculated using all four SC-GHG estimates. See Table V.69 for net benefits using all
  four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.


 Table V.71--Summary of Analytical Results for Liquid-Immersed Distribution Transformers TSLs: Manufacturer and
                                                Consumer Impacts
----------------------------------------------------------------------------------------------------------------
            Category                  TSL 1 *         TSL 2 *         TSL 3 *         TSL 4 *         TSL 5 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No- 1,283 to 1,297  1,242 to 1,268  1,166 to 1,232  1,133 to 1,233  1,004 to 1,347
 new-standards case INPV =
 $1,384 million)................
Industry NPV (% change).........  (7.3) to (6.3)       (10.3) to       (15.8) to       (18.1) to       (27.5) to
                                                           (8.4)          (11.0)          (10.9)           (2.7)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
Equipment Class 1 *.............             105             135             147             120           (269)
Equipment Class 2 *.............             321             658             887             868         (2,493)
Equipment Class 12 *............            n.a.            n.a.            n.a.            n.a.         (7,482)

[[Page 1831]]

 
Shipment-Weighted Average **....             120             172             199             172           (425)
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Equipment Class 1...............            19.0            16.3             7.4            11.4            31.7
Equipment Class 2...............            20.8            18.7            12.1            12.5            24.6
Equipment Class 12..............            n.a.            n.a.            n.a.            n.a.            36.0
Shipment-Weighted Average **....              19              16               8              12              31
----------------------------------------------------------------------------------------------------------------
                                 Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Equipment Class 1...............              32              27              17              18              87
Equipment Class 2...............              39              54              26              19              64
Equipment Class 12..............            n.a.            n.a.            n.a.            n.a.              95
Shipment-Weighted Average **....              28              21              21              18              70
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change in
  the standard at certain TSLs.
* The equipment classes, shown here are the shipment weighted average results of each equipment class's
  representative units. The consumer results for each representative unit and information on the fraction of
  shipments they represent are shown in section B.1.
** Scaled across the representative capacities of each equipment class and weighted by shares of each equipment
  class in total projected shipments in 2022.

    First, DOE considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save an estimated 8.45 quads of energy, 
an amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $-7.11 billion using a discount rate of 7 percent, and 
$-6.25 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 269.69 Mt of 
CO2, 104.82 thousand tons of SO2, 425.24 thousand 
tons of NOX, 0.68 tons of Hg, 1946.92 thousand tons of 
CH4, and 2.44 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 5 is $9.12 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $4.94 billion using a 7-percent discount rate and $16.40 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 5 is $6.95 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 5 is $19.27 billion.
    At TSL 5, the average LCC impact ranges from $-269 for equipment 
class 1 to $-7,482 for equipment class 12. The median PBP ranges from 
24.6 years for equipment class 2 to 36.0 for equipment class 12. The 
fraction of consumers experiencing a net LCC cost ranges from 64 
percent for equipment class 2 to 95 percent for equipment class 12.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$380.7 million to a decrease of $37.2 million, which corresponds to a 
change in INPV of -27.5 percent and -2.7 percent, respectively. DOE 
estimates that industry must invest $289.4 million to comply with 
standards set at TSL 5.
    The Secretary tentatively concludes that at TSL 5 for liquid-
immersed distribution transformers, the benefits of energy savings, 
emission reductions, and the estimated monetary value of the emissions 
reductions would be outweighed by the economic burden on many consumers 
as indicated by lengthy PBPs, the percentage of customers who would 
experience LCC increases, negative consumer NPV at both 3 and 7 percent 
discount rates, and the capital and engineering costs that would result 
in a reduction in INPV for manufacturers. At TSL 5, the LCC savings are 
negative for most liquid-immersed distribution transformers, indicating 
there is a substantial risk that a disproportionate number of consumers 
will incur increased costs; these costs are also reflected in simple 
payback period estimates that approach or exceed average lifetimes. 
NPVs are calculated for equipment shipped over the period of 2027 
through 2056 (see section IV.H.3). Distribution transformers are 
durable equipment with a maximum lifetime estimated at 60 years (see 
section IV.F.8), accruing operating cost savings through 2115. When 
considered over this time period, the discounted value of the 
incremental equipment costs outweigh the discounted value of the 
operating costs savings. Incremental equipment costs are incurred in 
the first year of equipment life, while operating cost savings occur 
throughout the equipment lifetime, with later years heavily discounted. 
Further, there is risk of greater reduction in INPV at max-tech if 
manufacturers maintain their operating profit in the presence of 
amended efficiency standards on account of having higher costs but 
similar profits. The benefits of max-tech efficiency levels for liquid-
immersed distribution transformer do not outweigh the negative impacts 
to consumers and manufacturers. Consequently, the Secretary has 
tentatively concluded that TSL 5 is not economically justified.
    Next, DOE considered TSL 4, which would save an estimated 8.02 
quads of energy, an amount DOE considers significant. Under TSL 4, the 
NPV of consumer benefit would be $0.26 billion using a discount rate of 
7 percent, and $5.30 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 256.27 Mt of 
CO2, 99.71 thousand tons of SO2, 403.57 thousand 
tons of NOX, 0.65 tons of Hg, 1,846.56 thousand tons of 
CH4, and 2.32 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 4 is $8.66 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 4 is $4.69 billion using a 7-percent discount rate and $15.57 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount

[[Page 1832]]

rate case for climate benefits from reduced GHG emissions, the 
estimated total NPV at TSL 4 is $13.61 billion. Using a 3-percent 
discount rate for all benefits and costs, the estimated total NPV at 
TSL 4 is $29.53 billion.
    At TSL 4, the average LCC impact ranges from $120 for equipment 
class 1 to $868 for equipment class 2. The mean PBP ranges from 11.4 
years for equipment class 1 to 12.5 years for equipment class 2, well 
below the average lifetime of 32 years. The fraction of consumers 
experiencing a net LCC cost ranges is 18 percent for equipment classes 
1 and 2.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$251.3 million to a decrease of $151.0 million, which corresponds to 
decreases of 18.1 percent and 10.9 percent, respectively. DOE estimates 
that industry must invest $270.6 million to comply with standards set 
at TSL 4.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that a standard set at 
TSL 4 for liquid-immersed distribution transformers would be 
economically justified. Notably, the benefits to consumers outweigh the 
cost to manufacturers. At this TSL, the average LCC savings are 
positive across all equipment classes. An estimated 18 percent of 
liquid-immersed distribution transformer consumers experience a net 
cost. The FFC national energy savings are significant and the NPV of 
consumer benefits is positive using both a 3-percent and 7-percent 
discount rate. At TSL 4, the NPV of consumer benefits, even measured at 
the more conservative discount rate of 7 percent is larger than the 
maximum estimated manufacturers' loss in INPV. The standard levels at 
TSL 4 are economically justified even without weighing the estimated 
monetary value of emissions reductions. When those emissions reductions 
are included--representing $8.66 billion in climate benefits 
(associated with the average SC-GHG at a 3-percent discount rate), and 
$15.57 billion (using a 3-percent discount rate) or $4.69 billion 
(using a 7-percent discount rate) in health benefits--the rationale 
becomes stronger still.
    The energy savings under TSL 4 are primarily achievable by using 
amorphous steel. Both global and domestic capacity of amorphous steel 
is greater than it was during the consideration of the April 2013 
Standards Final Rule and global capacity of amorphous steel (estimated 
to be approximately 150,000-250,000 metric tons) is approximately equal 
to the U.S. demand for electrical steel in distribution transformer 
applications (estimated to be approximately 225,000 metric tons). 
Further, amorphous capacity grew in response to the April 2013 
Standards Final Rule, although market demand did not necessarily grow 
in-kind. Further, amorphous steel manufacturers' response to the April 
2013 Standards Final Rule demonstrates that amorphous capacity can be 
added quickly and would be added in response to an amended standard. 
Stakeholders have expressed willingness to increase supply to match any 
potential demand created by an amended efficiency standard. In the 
current market, increased capacity of amorphous steel is limited more 
by the demand for amorphous steel rather than any constraints on 
potential production capacity. Therefore, in the presence of an amended 
standard, it is expected that amorphous capacity would quickly rise to 
meet demand before the effective date of any amended energy 
conservation standards.
    While there has historically been concern over the fact that there 
is only a single domestic supplier of amorphous steel, the GOES market 
is also served by a single domestic supplier. Stakeholders have noted 
that sufficient domestic supply of GOES is available only for M3 steel. 
Any efficiency standard that requires steel with lower no-load losses 
than M3 would not be able to be served entirely by a domestic source 
without further investment. The current market of electrical steel in 
distribution transformer applications is very much a global market at 
present.
    Further, while some stakeholders have expressed concern as to 
whether amorphous supply would be sufficient to serve the entire 
market, stakeholders have also expressed supply concerns regarding 
GOES. Notably, stakeholders have identified increased competition for 
non-oriented electrical steel to serve the electric vehicle market. 
This competing demand is not expected to disappear in the near term and 
stakeholders have already seen supply challenges for many of the higher 
performing GOES grades. Amorphous steel has not been commercialized in 
electric motor applications and as such, does not experience the same 
competing demand for electric vehicle applications. The increased 
demand for non-oriented electrical steel also offers an alternative for 
current producers of GOES steel to transition their production to non-
oriented electrical steel, meeting a needed market demand.
    The consistent practice of distribution transformer customers to 
lightly-load their distribution transformers (see section IV.E.1.a), 
means that the majority of energy savings are associated with reducing 
no-load losses. While higher grades of GOES may have slightly improved 
no-load loss characteristics, amorphous steel tends to reduce no-load 
losses by over 60 percent. Meaning, even if the best performing grades 
of GOES were available in unlimited quantities, amorphous steel would 
still lead to significant energy savings. Further, by nature of DOE 
evaluating efficiency of liquid-immersed distribution transformers at 
50 percent load, even if loading increases such that in-service RMS 
average PUL is 50 percent, the distribution transformers produced under 
the amended efficiency standard would be more efficient than minimally 
efficient transformers on the market today.
    The transition from GOES cores to amorphous cores does require some 
amount of investment on the part of the distribution transformer 
manufacturer if they produce their own cores. While these costs are not 
trivial, the benefit to consumers vastly outweighs the cost to 
manufacturers. Further, the increased practice of outsourcing 
distribution transformer core production means that there is little 
burden on small businesses, who overwhelmingly purchase prefabricated 
distribution transformer cores, rather than producing them in-house. As 
stated, DOE conducts the ``walk-down'' analysis to determine the TSL 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA. The walk-down is not a comparative analysis, as a comparative 
analysis would result in the maximization of net benefits instead of 
energy savings that are technologically feasible and economically 
justified, which would be contrary to the statute. 86 FR 70892, 70908.
    Although DOE considered proposed amended standard levels for 
distribution transformers by grouping the efficiency levels for each 
equipment class into TSLs, DOE evaluates all analyzed efficiency levels 
in its analysis. The TSLs constructed by DOE to examine the impacts of 
amended energy efficiency standards for liquid-immersed distribution 
transformers align with the corresponding ELs defined in the 
engineering analysis. For the ELs above baseline that compose TSL 4 DOE 
finds that LCC savings are positive for all equipment classes, with 
simple paybacks well below the average equipment lifetimes. DOE also 
finds that the estimated fraction of consumers who would be negatively 
impacted from a

[[Page 1833]]

standard at TSL 4 to be 18 percent for all equipment classes.
    For liquid-immersed distribution transformers (including single-
phase and three-phase equipment) TSL 4 (i.e., the proposed TSL) 
represents a 20 percent reduction in losses over the current standard, 
with the exception of submersible liquid-immersed distribution 
transformers (equipment class 12) which remain at baseline.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for liquid-immersed 
distribution transformers at TSL 4. The proposed amended energy 
conservation standards for distribution transformers, which are 
expressed as percentage efficiency at 50 percent PUL are shown in Table 
V.72.

                        Table V.72--Proposed Amended Energy Conservation Standards for Liquid-Immersed Distribution Transformers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Electrical efficiency by kVA and Equipment class
---------------------------------------------------------------------------------------------------------------------------------------------------------
                    Equipment class 1                            Equipment class 2                              Equipment class 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Single-phase                                  Three-phase              Single-phase submersible         Three-phase submersible
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   kVA                                          kVA                             kVA                             kVA
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................           98.96              15           98.92              10           98.70              15           98.65
15......................................           99.05              30           99.06              15           98.82              30           98.83
25......................................           99.16              45           99.13              25           98.95              45           98.92
37.5....................................           99.24              75           99.22            37.5           99.05              75           99.03
50......................................           99.29           112.5           99.29              50           99.11           112.5           99.11
75......................................           99.35             150           99.33              75           99.19             150           99.16
100.....................................           99.40             225           99.38             100           99.25             225           99.23
167.....................................           99.46             300           99.42             167           99.33             300           99.27
250.....................................           99.51             500           99.48             250           99.39             500           99.35
333.....................................           99.54             750           99.52             333           99.43             750           99.40
500.....................................           99.59           1,000           99.54             500           99.49           1,000           99.43
667.....................................           99.62           1,500           99.58             667           99.52           1,500           99.48
833.....................................           99.64           2,000           99.61             833           99.55           2,000           99.51
                                                                   2,500           99.62  ..............  ..............           2,500           99.53
                                                                   3,750           99.66  ..............  ..............  ..............  ..............
                                                                   5,000           99.68  ..............  ..............  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Benefits and Burdens of TSLs Considered for Low-Voltage Dry-Type 
Distribution Transformers Standards
    Table V.73 and Table V.74 summarize the quantitative impacts 
estimated for each TSL for low-voltage dry-type distribution 
transformers. The national impacts are measured over the lifetime of 
distribution transformers purchased in the 30-year period that begins 
in the anticipated year of compliance with amended standards (2027-
2056). The energy savings, emissions reductions, and value of emissions 
reductions refer to full-fuel-cycle results. The efficiency levels 
contained in each TSL are described in section V.A of this document. 
Table V.74 shows the consumer impacts as Equipment classes, which are 
the shipment weighted average results of each Equipment class's 
representative units. The consumer results for each representative unit 
and information on the fraction of shipments they represent are shown 
in section B.1.

   Table V.73--Summary of Analytical Results for Low-Voltage Dry-Type Distribution Transformers TSLs: National
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................            0.37            0.54            0.85            2.28            2.47
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           11.59           16.87           26.81           71.58           77.57
CH4 (thousand tons).............           84.76          123.42          196.22          523.53          567.30
N2O (thousand tons).............            0.10            0.15            0.24            0.64            0.70
NOX (thousand tons).............           18.44           26.85           42.69          113.91          123.44
SO2 (thousand tons).............            4.45            6.48           10.30           27.51           29.81
Hg (tons).......................            0.03            0.04            0.07            0.18            0.19
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            1.42            2.07            3.26           12.88           13.45
Climate Benefits *..............            0.41            0.60            0.96            2.56            2.77
Health Benefits **..............            0.73            1.07            1.70            4.53            4.91
Total Benefits [dagger].........            2.57            3.74            5.92           19.97           21.13
Consumer Incremental Product               -0.06           -0.03            1.39            3.16            3.82
 Costs [Dagger].................
Consumer Net Benefits...........            1.48            2.11            1.87            9.72            9.63

[[Page 1834]]

 
Total Net Benefits..............            2.63            3.78            4.52           16.81           17.31
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            0.50            0.72            1.14            4.49            4.69
Climate Benefits *..............            0.41            0.60            0.96            2.56            2.77
Health Benefits **..............            0.23            0.33            0.53            1.42            1.53
Total Benefits [dagger].........            1.14            1.66            2.63            8.46            8.99
Consumer Incremental Product               -0.03           -0.02            0.75            1.70            2.05
 Costs [Dagger].................
Consumer Net Benefits...........            0.53            0.74            0.39            2.79            2.63
                                 -------------------------------------------------------------------------------
Total Net Benefits..............            1.17            1.68            1.88            6.77            6.94
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the equipment shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. Total benefits for both the 3-
  percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the
  Department does not have a single central SC-GHG point estimate. DOE emphasizes the importance and value of
  considering the benefits calculated using all four SC-GHG estimates. See Table V.69 for net benefits using all
  four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.


 Table V.74--Summary of Analytical Results for Low-Voltage Dry-Type Distribution Transformers TSLs: Manufacturer
                                              and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
            Category                  TSL 1 *         TSL 2 *         TSL 3 *         TSL 4 *         TSL 5 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No-            189      188 to 189      167 to 177      145 to 168      133 to 161
 new-standards case INPV = $194
 million........................
Industry NPV (% change).........           (2.8)  (3.0) to (2.5)       (13.9) to       (25.3) to       (31.4) to
                                                                           (8.7)          (13.6)          (17.2)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
Equipment Class 3 *.............             312             203             146             108             147
Equipment Class 4 *.............             357             381             214             624             574
Shipment-Weighted Average **....             311             315             179             492             459
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Equipment Class 3 *.............             0.0             3.3             7.6            11.7            11.7
Equipment Class 4 *.............             0.3             0.7             8.6             7.8             9.1
Shipment-Weighted Average **....             0.3             1.0             7.6             7.4             8.4
----------------------------------------------------------------------------------------------------------------
                                 Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Equipment Class 3 *.............               1              17              33              43              40
Equipment Class 4 *.............               8               9              30              10              16
Shipment-Weighted Average **....               7               9              27              13              17
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change in
  the standard at certain TSLs.
* The equipment classes, shown here are the shipment weighted average results of each equipment class's
  representative units. The consumer results for each representative unit and information on the fraction of
  shipments they represent are shown in section B.1.
** Scaled across the representative capacities of each equipment class and weighted by shares of each equipment
  class in total projected shipments in 2022


[[Page 1835]]

    First, DOE considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save an estimated 2.47 quads of energy, 
an amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $2.63 billion using a discount rate of 7 percent, and 
$9.63 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 77.57 Mt of 
CO2, 29.81 thousand tons of SO2, 123.44 thousand 
tons of NOX, 0.19 tons of Hg, 567.30 thousand tons of 
CH4, and 0.70 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 5 is $2.77 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $1.53 billion using a 7-percent discount rate and $4.91 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 5 is $6.94 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 5 is $17.31 billion.
    At TSL 5, the average LCC impact ranges from $147 for equipment 
class 3 to $574 for equipment class 4. The median PBP ranges from 9.1 
years for equipment class 4 to 11.7 years for equipment class 3. The 
fraction of consumers experiencing a net LCC cost ranges from 16 
percent for equipment class 4 to 40 percent for equipment class 3.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$61.0 million to a decrease of $33.5 million, which corresponds to 
decreases of 31.4 percent and 17.2 percent, respectively. DOE estimates 
that industry must invest $69.4 million to comply with standards set at 
TSL 5.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at a standard set 
at TSL 5 for low-voltage dry-type distribution transformers would be 
economically justified. At this TSL, the average LCC savings are 
positive across all equipment classes. An estimated 16 percent of 
equipment class 4 to 40 percent of equipment class 3 low-voltage dry-
type distribution transformer consumers experience a net cost. The FFC 
national energy savings are significant and the NPV of consumer 
benefits is positive using both a 3-percent and 7-percent discount 
rate. Notably, the benefits to consumers vastly outweigh the cost to 
manufacturers. At TSL 5, the NPV of consumer benefits, even measured at 
the more conservative discount rate of 7 percent is over 43.15 times 
higher than the maximum estimated manufacturers' loss in INPV. The 
standard levels at TSL 5 are economically justified even without 
weighing the estimated monetary value of emissions reductions. When 
those emissions reductions are included--representing $2.77 billion in 
climate benefits (associated with the average SC-GHG at a 3-percent 
discount rate), and $4.91 billion (using a 3-percent discount rate) or 
$1.53 billion (using a 7-percent discount rate) in health benefits--the 
rationale becomes stronger still.
    The energy savings under TSL 5 are primarily achievable by using 
amorphous steel. Both global and domestic capacity of amorphous steel 
is greater than it was during the consideration of the April 2013 
Standards Final Rule and global capacity of amorphous (estimated to be 
approximately 150,000-250,000 metric tons) is approximately equal to 
the U.S. demand for electrical steel in distribution transformer 
applications (estimated to be approximately 225,000 metric tons). 
Further, amorphous capacity grew in response to the April 2013 
Standards Final Rule, although market demand did not necessarily grow 
in-kind. As such, there is currently excess amorphous steel capacity. 
Amorphous manufacturers response to the April 2013 Standards Final Rule 
demonstrates that amorphous capacity can be added quickly and is 
limited more by the market demand for amorphous steel rather that the 
ability to build out new supply. Stakeholders have expressed 
willingness to increase supply to match any potential demand created by 
an amended efficiency standard. The majority of electrical steel use in 
distribution transformer applications is associated with liquid-
immersed distribution transformer. Therefore, a proposed standard for 
liquid-immersed distribution transformers that requires amorphous steel 
would result in amorphous capacity quickly rising to meet demand before 
the effective date of any amended energy conservation standards. The 
increased amorphous capacity would then be able to serve both the 
liquid-immersed and the low-voltage dry-type market.
    As discussed in section V.C.1, the consistent practice of 
distribution transformer customers to lightly-load their distribution 
transformers, means that the majority of energy savings are associated 
with reducing no-load losses. While higher grades of GOES may have 
slightly improved no-load loss characteristics, amorphous steel tends 
to reduce no-load losses by over 60 percent. By nature of DOE 
evaluating efficiency of low-voltage dry-type distribution transformers 
at 35 percent load, even if loading increases such that in-service RMS 
average PUL is 35 percent, the distribution transformers produced under 
the amended efficiency standard would be more efficient than minimally 
efficient transformers on the market today.
    As stated, DOE conducts the walk-down analysis to determine the TSL 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA.
    Although DOE considered proposed amended standard levels for 
distribution transformers by grouping the efficiency levels (ELs) for 
each equipment class into TSLs, DOE evaluates all analyzed efficiency 
levels in its analysis. For low-voltage dry-type distribution 
transformers, TSL 5 (i.e., the proposed TSL) maps directly to EL 5 for 
each equipment class and represents a 50 percent reduction in losses 
over the current standard for single-phase distribution transformers, 
and a 40 percent reduction in losses over the current standard for 
three-phase distribution transformers.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for low-voltage dry-type 
distribution transformers at TSL 5. The proposed amended energy 
conservation standards for low-voltage dry-type distribution 
transformers, which are expressed as percentage efficiency at 35 
percent PUL are shown in Table V.75.

[[Page 1836]]



  Table V.75--Proposed Amended Energy Conservation Standards for Low-Voltage Dry-Type Distribution Transformers
----------------------------------------------------------------------------------------------------------------
                       Equipment class 3                                        Equipment class 4
----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                                                       kVA
----------------------------------------------------------------------------------------------------------------
15...........................................           98.84   15..............................           98.72
25...........................................           98.99   30..............................           98.93
37.5.........................................           99.09   45..............................           99.03
50...........................................           99.14   75..............................           99.16
75...........................................           99.24   112.5...........................           99.24
100..........................................           99.30   150.............................           99.29
167..........................................           99.35   225.............................           99.36
250..........................................           99.40   300.............................           99.41
333..........................................           99.45   500.............................           99.48
                                                                750.............................           99.54
                                                                1,000...........................           99.57
----------------------------------------------------------------------------------------------------------------

3. Benefits and Burdens of TSLs Considered for Medium-Voltage Dry-Type 
Distribution Transformers Standards
    Table V.76 and Table V.77 summarize the quantitative impacts 
estimated for each TSL for medium-voltage dry-type distribution 
transformers. The national impacts are measured over the lifetime of 
distribution transformers purchased in the 30-year period that begins 
in the anticipated year of compliance with amended standards (2027-
2056). The energy savings, emissions reductions, and value of emissions 
reductions refer to full-fuel-cycle results. The efficiency levels 
contained in each TSL are described in section V.A of this document. 
Table V.77 shows the consumer impacts as equipment classes, which are 
the shipment weighted average results of each equipment class's 
representative units. The consumer results for each representative unit 
and information on the fraction of shipments they represent are shown 
in section B.1.

 Table V.76--Summary of Analytical Results for Medium-Voltage Dry-Type Distribution Transformers TSLs: National
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
            Category                   TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................            0.08            0.12            0.40            0.53            0.63
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            2.53            3.71           12.68           16.48           19.72
CH4 (thousand tons).............           18.59           27.29           93.13          121.07          144.90
N2O (thousand tons).............            0.02            0.03            0.11            0.15            0.18
NOX (thousand tons).............            4.04            5.93           20.24           26.31           31.49
SO2 (thousand tons).............            0.97            1.43            4.87            6.33            7.58
Hg (tons).......................            0.01            0.01            0.03            0.04            0.05
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            0.28            0.41            2.12            2.50            2.72
Climate Benefits *..............            0.09            0.13            0.45            0.59            0.71
Health Benefits **..............            0.16            0.24            0.80            1.04            1.25
Total Benefits [dagger].........            0.53            0.77            3.38            4.13            4.67
Consumer Incremental Product                0.02            0.19            0.87            1.19            1.76
 Costs [Dagger].................
Consumer Net Benefits...........            0.26            0.21            1.25            1.30            0.96
Total Net Benefits..............            0.51            0.58            2.50            2.94            2.92
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.            0.10            0.14            0.74            0.87            0.95
Climate Benefits *..............            0.09            0.13            0.45            0.59            0.71
Health Benefits **..............            0.05            0.07            0.25            0.33            0.39
Total Benefits [dagger].........            0.24            0.35            1.44            1.79            2.04
Consumer Incremental Product                0.01            0.10            0.47            0.64            0.94
 Costs [Dagger].................
Consumer Net Benefits...........            0.09            0.04            0.27            0.23            0.00
Total Net Benefits..............            0.23            0.24            0.97            1.14            1.10
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the equipment shipped in 2027-2056.

[[Page 1837]]

 
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SO2 and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. Total benefits for both the 3-
  percent and 7-percent cases are presented using the average SC-GHG with 3-percent discount rate, but the
  Department does not have a single central SC-GHG point estimate. . DOE emphasizes the importance and value of
  considering the benefits calculated using all four SC-GHG estimates. See Table V.69 for net benefits using all
  four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.


      Table V.77--Summary of Analytical Results for Medium-Voltage Dry-Type Distribution Transformers TSLs:
                                        Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
            Category                  TSL 1 *         TSL 2 *         TSL 3 *         TSL 4 *         TSL 5 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No-             85        85 to 86        71 to 80        69 to 80        65 to 82
 new-standards case INPV = $87
 million........................
Industry NPV ( % change)........           (2.1)  (3.0) to (0.9)       (18.7) to       (21.4) to       (25.9) to
                                                                           (8.8)           (7.8)           (5.9)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
Equipment Class 6 *.............           1,227             833           (165)           (985)         (1,557)
Equipment Class 8 *.............           4,556           3,016             647             224         (3,727)
Equipment Class 10 *............         (1,209)         (2,528)         (5,704)         (5,569)         (9,558)
Shipment-Weighted Average \**\..           1,594             641         (1,139)         (1,348)         (3,898)
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Equipment Class 6 *.............             1.9             4.5            12.1            17.0            15.6
Equipment Class 8 *.............             0.4             1.9            13.5            14.1            18.0
Equipment Class 10 *............            24.9            24.9            22.3            19.8            21.8
Shipment-Weighted Average **....             7.9             8.9            14.1            13.7            16.3
----------------------------------------------------------------------------------------------------------------
                                 Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Equipment Class 6 *.............               7              16              48              68              59
Equipment Class 8 *.............               3              11              48              51              77
Equipment Class 10 *............              83              83              77              82              92
Shipment-Weighted Average \**\..              22              26              42              46              58
----------------------------------------------------------------------------------------------------------------
The entry ``n.a.'' means not applicable because there is no change in the standard at certain TSLs.
* The equipment classes, shown here are the shipment weighted average results of each equipment class's
  representative units. The consumer results for each representative unit and information on the fraction of
  shipments they represent are shown in section B.1.
** Scaled across the representative capacities of each equipment class and weighted by shares of each equipment
  class in total projected shipments in 2022.

    First, DOE considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save an estimated 0.63 quads of energy, 
an amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $3 million using a discount rate of 7 percent, and 
$0.96 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 19.72 Mt of 
CO2, 7.58 thousand tons of SO2, 31.49 thousand 
tons of NOX, 0.05 tons of Hg, 144.90 thousand tons of 
CH4, and 0.18 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 5 is $0.71 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 5 is $0.39 billion using a 7-percent discount rate and $1.25 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 5 is $1.10 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 5 is $2.92 billion.
    At TSL 5, the average LCC impact ranges from $-9,558 for equipment 
class 10 to $-1557 for equipment class 6. The mean PBP ranges from 15.6 
years for equipment class 6 to 21.8 years for equipment class 10. The 
fraction of consumers experiencing a net LCC cost ranges from 92 
percent for equipment class 10 to 59 percent for equipment class 6.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$22.6 million to a decrease of $5.2 million,

[[Page 1838]]

which corresponds to decreases of 25.9 percent and 5.9 percent, 
respectively. DOE estimates that industry must invest $21.2 million to 
comply with standards set at TSL 5.
    The Secretary tentatively concludes that at TSL 5 for medium-
voltage dry-type distribution transformers, the benefits of energy 
savings, emission reductions, and the estimated monetary value of the 
emissions reductions would be outweighed by the economic burden on many 
consumers as indicated by the negative LCCs for many equipment classes, 
the percentage of customers who would experience LCC increases, and the 
capital and engineering costs that could result in a reduction in INPV 
for manufacturers. At TSL 5 DOE is estimating negative benefits for a 
disproportionate fraction of consumers--a shipment weighted average of 
58 percent. Further DOE estimates that there is a substantial risk to 
consumers, with a shipment weighted LCC savings for all MVDT equipment 
of -$3,898. Consequently, the Secretary has tentatively concluded that 
TSL 5 is not economically justified.
    Next, DOE considered TSL 4, which would save an estimated 0.53 
quads of energy, an amount DOE considers significant. Under TSL 4, the 
NPV of consumer benefit would be $0.23 billion using a discount rate of 
7 percent, and $1.30 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 16.48 Mt of 
CO2, 6.33 thousand tons of SO2, 26.31 thousand 
tons of NOX, 0.04 tons of Hg, 121.07 thousand tons of 
CH4, and 0.15 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 4 is $0.59 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 4 is $0.33 billion using a 7-percent discount rate and $1.04 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 4 is $1.14 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 4 is $2.94 billion.
    At TSL 4, the average LCC impact ranges from $-5,569 for equipment 
class 10 to $224 for equipment class 8. The mean PBP ranges from 14.1 
years for equipment class 8 to 19.8 years for equipment class 10. The 
fraction of consumers experiencing a net LCC cost ranges from 51 
percent for equipment class 8 to 82 percent for equipment class 10.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$18.7 million to a decrease of $6.8 million, which corresponds to 
decreases of 21.4 percent and 7.8 percent, respectively. DOE estimates 
that industry must invest $19.2 million to comply with standards set at 
TSL 4.
    The Secretary tentatively concludes that at TSL 4 for medium-
voltage dry-type distribution transformers, the benefits of energy 
savings, emission reductions, and the estimated monetary value of the 
emissions reductions would be outweighed by the economic burden on many 
consumers as indicated by the negative LCCs for many equipment classes, 
the percentage of customers who would experience LCC increases, and the 
capital and engineering costs that could result iyn a reduction in INPV 
for manufacturers. At TSL 4 DOE is estimating negative benefits for a 
disproportionate fraction of consumers shipment weighted average of 53 
percent. Further DOE estimates that there a substantial risk to 
consumers with a shipment weighted LCC savings for all MVDT equipment 
of -$1,348. Consequently, the Secretary has tentatively concluded that 
TSL 4 is not economically justified.
    Next, DOE considered TSL 3, which would save an estimated 0.40 
quads of energy, an amount DOE considers significant. Under TSL 3, the 
NPV of consumer benefit would be $0.27 billion using a discount rate of 
7 percent, and $1.25 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 12.68 Mt of 
CO2, 4.87 thousand tons of SO2, 20.24 thousand 
tons of NOX, 0.03 tons of Hg, 93.13 thousand tons of 
CH4, and 0.11 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 4 is $0.45 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 3 is $0.25 billion using a 7-percent discount rate and $0.80 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 3 is $0.97 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 3 is $2.50 billion.
    At TSL 3, the average LCC impact ranges from $-5,704 for equipment 
class 10 to $647 for equipment class 8. The mean PBP ranges from 
12.1years for equipment class 6 to 22.3 years for equipment class 10. 
The fraction of consumers experiencing a net LCC cost ranges from 77 
percent for 10 to 48 percent for both equipment class 6 and 8.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$16.3 million to a decrease of $7.7 million, which corresponds to 
decreases of 18.7 percent and 8.8 percent, respectively. DOE estimates 
that industry must invest $17.9 million to comply with standards set at 
TSL 3.
    The Secretary tentatively concludes that at TSL 3 for medium-
voltage dry-type distribution transformers, the benefits of energy 
savings, emission reductions, and the estimated monetary value of the 
emissions reductions would be outweighed by the economic burden on many 
consumers as indicated by the negative LCCs for many equipment classes, 
the percentage of customers who would experience LCC increases, and the 
capital and engineering costs that could result in a reduction in INPV 
for manufacturers. At TSL 3 DOE is estimating negative benefits for a 
disproportionate fraction of consumers shipment weighted average of 50 
percent. Further DOE estimates that there a substantial risk to 
consumers with a shipment weighted LCC savings for all MVDT equipment 
of -$1,139. Consequently, the Secretary has tentatively concluded that 
TSL 3 is not economically justified.
    Next, DOE considered TSL 2, which would save an estimated 0.12 
quads of energy, an amount DOE considers significant. Under TSL 2, the 
NPV of consumer benefit would be $0.04 billion using a discount rate of 
7 percent, and $0.21 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 3.71 Mt of 
CO2, 1.43 thousand tons of SO2, 5.93 thousand 
tons of NOX, 0.01 tons of Hg, 27.29 thousand tons of 
CH4, and 0.03 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 4 is $0.13 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 2 is $0.07 billion using a 7-percent discount rate and $0.24 
billion using a 3-percent discount rate.

[[Page 1839]]

    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 2 is $0.24 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 2 is $0.58 billion.
    At TSL 2, the average LCC impact ranges from -$2,528 for equipment 
class 10 to $3,016 for equipment class 8. The mean PBP ranges from 1.9 
years for equipment class 8 to 24.9 years for equipment class 10, which 
is below the mean lifetime of 32 years. The fraction of consumers 
experiencing a net LCC cost ranges from 11 percent for equipment class 
8 to 83 percent for equipment class 10.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$2.7 million to a decrease of $0.8 million, which corresponds to 
decreases of 3.0 percent and 0.9 percent, respectively. DOE estimates 
that industry must invest $3.1 million to comply with standards set at 
TSL 2.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at a standard set 
at TSL 2 for medium-voltage distribution transformers would be 
economically justified. At this TSL, the average LCC savings are 
positive across all equipment classes except for equipment class 10, 
with a shipment weighed average LCC for all medium-voltage dry-type 
distribution transformers of $641. An estimated 11 percent of equipment 
class 8 to 83 percent of equipment class 10 medium-voltage dry-type 
distribution transformer consumers experience a net cost, while the 
shipment weighted average of consumers who experience a net cost is 26 
percent. The FFC national energy savings are significant and the NPV of 
consumer benefits is positive using both a 3-percent and 7-percent 
discount rate. Notably, the benefits to consumers outweigh the cost to 
manufacturers. At TSL 2, the NPV of consumer benefits, even measured at 
the more conservative discount rate of 7 percent is over 38.3 times 
higher than the maximum estimated manufacturers' loss in INPV. The 
standard levels at TSL 2 are economically justified even without 
weighing the estimated monetary value of emissions reductions. When 
those emissions reductions are included--representing $0.13 billion in 
climate benefits (associated with the average SC-GHG at a 3-percent 
discount rate), and $0.24 billion (using a 3-percent discount rate) or 
$0.07 billion (using a 7-percent discount rate) in health benefits--the 
rationale becomes stronger still.
    As stated, DOE conducts the walk-down analysis to determine the TSL 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA.
    Although DOE considered proposed amended standard levels for 
distribution by grouping the efficiency levels for each equipment class 
into TSLs, DOE evaluates all analyzed efficiency levels in its 
analysis. For medium-voltage dry-type distribution transformer the TSL 
2 maps directly to EL 2 for all equipment classes. EL 2 represents a 10 
percent reduction in losses over the current standard. While the 
consumer benefits for equipment class 10 are negative at EL 2 at -
$2,528, they are positive for all other equipment representing 78 
percent of all MVDT units shipped, additionally the consumer benefits 
at EL 2, excluding equipment class 10, increases from $641 to $1,271 in 
LCC savings Further, the EL 2 represent an improvement in efficiency 
where the FFC national energy savings is maximized, with positive NPVs 
at both 3 and 7 percent, and the shipment weighted average consumer 
benefit at EL 2 is positive. The shipment weighted consumer benefits 
for TSL, and EL 2 are shown in Table V.77.
    As discussed previously, at the max-tech efficiency levels (TSL 5), 
TSL 4, and TSL 3 for all medium-voltage dry-type distribution 
transformers there is a substantial risk to consumers due to negative 
LCC savings for most equipment, with a shipment weighted average 
consumer benefit of -$3,898, -$1,348, and -$1,139, respectively, while 
at TSL 2 it is $641. Therefore, DOE has tentatively concluded that the 
efficiency levels above TSL 2 are not justified. Additionally, at the 
examined efficiency levels greater than TSL 2 DOE is estimating that a 
disproportionate fraction of consumers would be negatively impacted by 
these efficiency levels. DOE estimates that shipment weighted fraction 
of negatively impacted consumers for TSL 3, TSL 4, and TSL 5 (max-tech) 
to be 42, 46, and 58 percent, respectively.
    Therefore, based on the previous considerations, DOE proposes to 
adopt the energy conservation standards for medium-voltage dry-type 
distribution transformers at TSL 2. The proposed amended energy 
conservation standards for medium-voltage dry-type distribution 
transformers, which are expressed as percentage efficiency at 50 
percent PUL are shown in Table V.78.

                    Table V.78--Proposed Amended Energy Conservation Standards for Medium-Voltage Dry-Type Distribution Transformers
                                                   [Electrical efficiency by kVA and equipment class]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Single-phase                                                                  Three-phase
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BIL                                                                    BIL
               kVA                -------------------------------------------------          kVA         -----------------------------------------------
                                      20-45 kV        46-95 kV         >=96 kV                               20-45 kV        46-95 kV         >=96 kV
Equipment class                               EC5             EC7             EC9   ....................             EC6             EC8            EC10
--------------------------------------------------------------------------------------------------------------------------------------------------------
15...............................           98.29           98.07  ...............  15..................           97.74           97.45  ..............
25...............................           98.49           98.30  ...............  30..................           98.11           97.86  ..............
37.5.............................           98.64           98.47  ...............  45..................           98.29           98.07  ..............
50...............................           98.74           98.58  ...............  75..................           98.49           98.31  ..............
75...............................           98.86           98.71           98.68   112.5...............           98.67           98.52  ..............
100..............................           98.94           98.80           98.77   150.................           98.78           98.66  ..............
167..............................           99.06           98.95           98.92   225.................           98.94           98.82           98.71
250..............................           99.16           99.05           99.02   300.................           99.04           98.93           98.82
333..............................           99.23           99.13           99.09   500.................           99.18           99.09           99.00
500..............................           99.30           99.21           99.18   750.................           99.29           99.21           99.12
667..............................           99.34           99.26           99.23   1000................           99.35           99.28           99.20
833..............................           99.38           99.31           99.28   1500................           99.43           99.37           99.29

[[Page 1840]]

 
                                                                                    2000................           99.49           99.42           99.35
                                                                                    2500................           99.52           99.47           99.40
                                                                                    3750................           99.58           99.53           99.47
                                                                                    5000................           99.62           99.58           99.51
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Annualized Benefits and Costs of the Proposed Standards for Liquid-
Immersed Distribution Transformers
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2021$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs, and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V.79 shows the annualized values for the proposed standards 
for distribution transformers, expressed in 2021$. The results under 
the primary estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
proposed standards for distribution transformers is $424.8 million per 
year in increased equipment costs, while the estimated annual benefits 
are $451.9 million from reduced equipment operating costs, $497.4 
million from GHG reductions, and $495.3million from reduced 
NOX and SO2 emissions. In this case, the net 
benefit amounts to $1,019.8 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards for distribution transformers 
is $429.5 million per year in increased equipment costs, while the 
estimated annual benefits are $7,33.5 million in reduced operating 
costs, $497.4 million from GHG reductions, and $894.3 million from 
reduced NOX and SO2 emissions. In this case, the 
net benefit amounts to $1,695.8 million per year.

     Table V.79--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Liquid-Immersed
                                        Distribution Transformers (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                            Category                                                 Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           733.5           686.9           789.9
Climate Benefits *..............................................           497.4           478.9           519.5
Health Benefits **..............................................           894.3           860.5           934.8
Total Benefits [dagger].........................................         2,125.3         2,026.3         2,244.2
Consumer Incremental Equipment Costs [Dagger]...................           429.5           449.0           413.2
Net Benefits....................................................         1,695.8         1,577.3         1,831.0
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           451.9           425.7           482.2
Climate Benefits * (3% discount rate)...........................           497.4           478.9           519.5
Health Benefits **..............................................           495.3           477.9           515.3
Total Benefits [dagger].........................................         1,444.7         1,382.5         1,517.0
Consumer Incremental Equipment Costs [Dagger]...................           424.8           442.1           409.9
Net Benefits....................................................         1,019.8           940.5         1,107.2
----------------------------------------------------------------------------------------------------------------
This table presents the annualized costs and benefits associated with liquid-immersed distribution transformers
  equipment shipped in 2027-2056. These results include benefits to consumers which accrue after 2055 from the
  products purchased in 2027-2056.

[[Page 1841]]

 
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  PM2.5 and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented
  at real discount rates of 3 and 7 percent. See section IV.L.2 of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

5. Annualized Benefits and Costs of the Proposed Standards for Low-
Voltage Distribution Transformers
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2021$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs, and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V.80 shows the annualized values for the proposed standards 
for distribution transformers, expressed in 2021$. The results under 
the primary estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
proposed standards for distribution transformers is $216.9 million per 
year in increased equipment costs, while the estimated annual benefits 
are $495.0 million from reduced equipment operating costs, $159.2 
million from GHG reductions, and $162.1 million from reduced 
NOX and SO2 emissions. In this case, the net 
benefit amounts to $599.4 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards for distribution transformers 
is $219.3 million per year in increased equipment costs, while the 
estimated annual benefits are $772.1 million in reduced operating 
costs, $159.2 million from GHG reductions, and $281.8 million from 
reduced NOX and SO2 emissions. In this case, the 
net benefit amounts to $993.8 million per year.

Table V.80--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Low-Voltage Distribution
                                              Transformers (TSL 5)
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                            Category                                                 Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           772.1           716.9           831.3
Climate Benefits *..............................................           159.2           151.6           165.9
Health Benefits **..............................................           281.8           268.3           293.9
Total Benefits [dagger].........................................         1,213.1         1,136.7         1,291.1
Consumer Incremental Product Costs [Dagger].....................           219.3           228.7           208.7
Net Benefits....................................................           993.8           908.0         1,082.4
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           495.0           462.8           528.7
Climate Benefits * (3% discount rate)...........................           159.2           151.6           165.9
Health Benefits **..............................................           162.1           154.9           168.2
Total Benefits [dagger].........................................           816.3           769.3           862.8
Consumer Incremental Product Costs [Dagger].....................           216.9           225.2           207.3
Net Benefits....................................................           599.4           544.1           655.5
----------------------------------------------------------------------------------------------------------------
This table presents the annualized costs and benefits associated with low-voltage dry-type distribution
  transformers equipment shipped in 2027-2056. These results include benefits to consumers which accrue after
  2055 from the products purchased in 2027-2056.

[[Page 1842]]

 
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  PM2.5 and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented
  at real discount rates of 3 and 7 percent. See section IV.L.2 of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

6. Annualized Benefits and Costs of the Proposed Standards for Medium-
Voltage Distribution Transformers
    The benefits and costs of the proposed standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2021$) of the 
benefits from operating products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in product purchase costs, and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V.81 shows the annualized values for the proposed standards 
for distribution transformers, expressed in 2021$. The results under 
the primary estimate are as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
proposed standards for distribution transformers is $10.8 million per 
year in increased equipment costs, while the estimated annual benefits 
are $14.9 million from reduced equipment operating costs, $7.6 million 
from GHG reductions, and $7.8 million from reduced NOX and 
SO2 emissions. In this case, the net benefit amounts to 
$19.5 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the proposed standards for distribution transformers 
is $11.0 million per year in increased equipment costs, while the 
estimated annual benefits are $23.3 million in reduced operating costs, 
$7.6 million from GHG reductions, and $13.5 million from reduced 
NOX and SO2 emissions. In this case, the net 
benefit amounts to $33.5 million per year.

     Table V.81--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Medium-Voltage
                                        Distribution Transformers (TSL 2)
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                            Category                                                 Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................            23.3            22.2            25.8
Climate Benefits *..............................................             7.6             7.5             8.2
Health Benefits **..............................................            13.5            13.2            14.5
Total Benefits [dagger].........................................            44.4            42.9            48.5
Consumer Incremental Product Costs [Dagger].....................            11.0            11.7            10.7
Net Benefits....................................................            33.5            31.1            37.7
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................            14.9            14.3            16.4
Climate Benefits * (3% discount rate)...........................             7.6             7.5             8.2
Health Benefits **..............................................             7.8             7.6             8.3
Total Benefits [dagger].........................................            30.3            29.4            32.9
Consumer Incremental Product Costs [Dagger].....................            10.8            11.6            10.6
Net Benefits....................................................            19.5            17.9            22.2
----------------------------------------------------------------------------------------------------------------
This table presents the annualized costs and benefits associated with medium-voltage dry-type distribution
  transformers equipment shipped in 2027-2056. These results include benefits to consumers which accrue after
  2055 from the products purchased in 2027-2056.

[[Page 1843]]

 
Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As reflected in this rule,
  DOE has reverted to its approach prior to the injunction and present monetized greenhouse gas abatement
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  PM2.5 and (for NOX) ozone precursor health benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5 emissions. The health benefits are presented
  at real discount rates of 3 and 7 percent. See section IV.L.2 of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

7. Benefits and Costs of the Proposed Standards for all Considered 
Distribution Transformers
    As described in sections V.C.1 through V.C.6, for this NOPR DOE is 
proposing TSL 4 for liquid-immersed, TSL 5 for low-voltage dry-type, 
and TSL 2 for medium-voltage dry-type distribution transformers. Table 
VI.1 shows the combined cumulative benefits, and Table V.83 shows the 
combined annualized benefits for the proposed levels for all 
distribution transformers.

 Table V.82--Summary of Monetized Benefits and Costs of Proposed Energy
  Conservation Standards for all Distribution Transformers at Proposed
                             Standard Levels
------------------------------------------------------------------------
                                                      Billion $2021
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................                    26.63
Climate Benefits *.............................                    11.56
Health Benefits **.............................                    20.72
Total Benefits [dagger]........................                    58.91
Consumer Incremental Product Costs [Dagger]....                    11.49
Net Benefits...................................                    47.42
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................                     9.11
Climate Benefits * (3% discount rate)..........                    11.56
Health Benefits **.............................                     6.29
Total Benefits [dagger]........................                    26.97
Consumer Incremental Product Costs [Dagger]....                     6.17
Net Benefits...................................                    20.79
------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution
  transformers shipped in 2027-2056. These results include benefits to
  consumers which accrue after 2056 from the products shipped in 2027-
  2056.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  Federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the Federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and present monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.


[[Page 1844]]


   Table V.8384--Annualized Benefits and Costs of Proposed Energy Conservation Standards for all Distribution
                                    Transformers at Proposed Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                            Category                                                 Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................         1,528.9         1,426.0         1,647.0
Climate Benefits *..............................................           664.2           638.0           693.6
Health Benefits **..............................................         1,189.6         1,142.0         1,243.2
Total Benefits [dagger].........................................         3,382.8         3,205.9         3,583.8
Consumer Incremental Product Costs [Dagger].....................           659.8           689.4           632.6
Net Benefits....................................................         2,723.1         2,516.4         2,951.1
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           961.8           902.8         1,027.3
Climate Benefits * (3% discount rate)...........................           664.2           638.0           693.6
Health Benefits **..............................................           665.2           640.4           691.8
Total Benefits [dagger].........................................         2,291.3         2,181.2         2,412.7
Consumer Incremental Product Costs [Dagger].....................           652.5           678.9           627.8
Net Benefits....................................................         1,638.7         1,502.5         1,784.9
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the Federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the injunction and present monetized
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

D. Reporting, Certification, and Sampling Plan

    Manufacturers, including importers, must use product-specific 
certification templates to certify compliance to DOE. For distribution 
transformers, the certification template reflects the general 
certification requirements specified at 10 CFR 429.12 and the product-
specific requirements specified at 10 CFR 429.47. As discussed in the 
previous paragraphs, DOE is not proposing to amend the product-specific 
certification requirements for this equipment.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Executive Order (``E.O.'')12866, ``Regulatory Planning and 
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving 
Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011), requires 
agencies, to the extent permitted by law, to (1) propose or adopt a 
regulation only upon a reasoned determination that its benefits justify 
its costs (recognizing that some benefits and costs are difficult to 
quantify); (2) tailor regulations to impose the least burden on 
society, consistent with obtaining regulatory objectives, taking into 
account, among other things, and to the extent practicable, the costs 
of cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public. DOE 
emphasizes as well that E.O. 13563 requires agencies to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible. In its guidance, the 
Office of Information and Regulatory Affairs (``OIRA'') in the Office 
of Management and Budget (``OMB'') has emphasized that such techniques 
may include identifying changing future compliance costs that might 
result from technological innovation or anticipated behavioral changes. 
For the reasons stated in the preamble, this proposed/final regulatory 
action is consistent with these principles.

[[Page 1845]]

    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to OIRA for review. OIRA has 
determined that this proposed regulatory action constitutes an 
economically significant regulatory action under section 3(f) of E.O. 
12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE 
has provided to OIRA an assessment, including the underlying analysis, 
of benefits and costs anticipated from the proposed regulatory action, 
together with, to the extent feasible, a quantification of those costs; 
and an assessment, including the underlying analysis, of costs and 
benefits of potentially effective and reasonably feasible alternatives 
to the planned regulation, and an explanation why the planned 
regulatory action is preferable to the identified potential 
alternatives. These assessments are summarized in this preamble and 
further detail can be found in the technical support document for this 
rulemaking. A summary of the potential costs and benefits of the 
regulatory action is presented in Table VI.1 and Table VI.2.

 Table VI.1--Summary of Monetized Benefits and Costs of Proposed Energy
  Conservation Standards for all Distribution Transformers and Proposed
                             Standard Levels
------------------------------------------------------------------------
                                                      Billion $2021
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................                    26.63
Climate Benefits *.............................                    11.56
Health Benefits **.............................                    20.72
Total Benefits [dagger]........................                    58.91
Consumer Incremental Product Costs [Dagger]....                    11.49
Net Benefits...................................                    47.42
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings................                     9.11
Climate Benefits * (3% discount rate)..........                    11.56
Health Benefits **.............................                     6.29
Total Benefits [dagger]........................                    26.97
Consumer Incremental Product Costs [Dagger]....                     6.17
Net Benefits...................................                    20.79
------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution
  transformers shipped in 2027-2056. These results include benefits to
  consumers which accrue after 2056 from the products shipped in 2027-
  2056.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table V.73, Table V.74, and Table V.75. Together these represent
  the global social cost of greenhouse gases (SC-GHG). For
  presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but
  the Department does not have a single central SC-GHG point estimate.
  See section. IV.L of this document for more details. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  Federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the Federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and present monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V.69 for net benefits using all four SC-GHG
  estimates.
[Dagger] Costs include incremental equipment costs as well as
  installation costs.


    Table VI.2--Annualized Benefits and Costs of Proposed Energy Conservation Standards for all Distribution
                                    Transformers and Proposed Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                            Category                                                 Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................         1,528.9         1,426.0         1,647.0
Climate Benefits *..............................................           664.2           638.0           693.6
Health Benefits **..............................................         1,189.6         1,142.0         1,243.2
Total Benefits [dagger].........................................         3,382.8         3,205.9         3,583.8
Consumer Incremental Product Costs [Dagger].....................           659.8           689.4           632.6
Net Benefits....................................................         2,723.1         2,516.4         2,951.1
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           961.8           902.8         1,027.3

[[Page 1846]]

 
Climate Benefits * (3% discount rate)...........................           664.2           638.0           693.6
Health Benefits **..............................................           665.2           640.4           691.8
Total Benefits [dagger].........................................         2,291.3         2,181.2         2,412.7
Consumer Incremental Product Costs [Dagger].....................           652.5           678.9           627.8
Net Benefits....................................................         1,638.7         1,502.5         1,784.9
----------------------------------------------------------------------------------------------------------------
This table presents the costs and benefits associated with distribution transformers shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as shown in Table V.73, Table V.74, and Table V.75. Together
  these represent the global social cost of greenhouse gases (SC-GHG). For presentational purposes of this
  table, the climate benefits associated with the average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate. See section. IV.L of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal government's
  emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued in Louisiana
  v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the preliminary
  injunction is no longer in effect, pending resolution of the Federal government's appeal of that injunction or
  a further court order. Among other things, the preliminary injunction enjoined the defendants in that case
  from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the social cost of
  greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of Greenhouse Gases on
  February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the injunction and present monetized
  benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. The benefits are based on the
  low estimates of the monetized value. DOE is currently only monetizing (for SOX and NOX) PM2.5 precursor
  health benefits and (for NOX) ozone precursor health benefits, but will continue to assess the ability to
  monetize other effects such as health benefits from reductions in direct PM2.5 emissions. See section IV.L of
  this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table
  V.69 for net benefits using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
for any rule that by law must be proposed for public comment, unless 
the agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by E.O. 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's website www.energy.gov/gc/office-general-counsel. DOE has 
prepared the following IRFA for the products that are the subject of 
this rulemaking.
    For manufacturers of distribution transformers, the SBA has set a 
size threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. DOE used the SBA's small 
business size standards to determine whether any small entities would 
be subject to the requirements of the rule. (See 13 CFR part 121.) The 
size standards are listed by North American Industry Classification 
System (``NAICS'') code and industry description and are available at 
www.sba.gov/document/support--table-size-standards. Manufacturing of 
distribution transformers is classified under NAICS 335311, ``Power, 
Distribution, and Specialty Transformer Manufacturing.'' The SBA sets a 
threshold of 750 employees or fewer for an entity to be considered as a 
small business for this category.
1. Description of Reasons Why Action Is Being Considered
    EPCA requires that, not later than 6 years after the issuance of 
any final rule establishing or amending a standard, DOE must publish 
either a notice of determination that standards for the product do not 
need to be amended, or a NOPR including new proposed energy 
conservation standards (proceeding to a final rule, as appropriate). 
(42 U.S.C. 6316(e)(1); 42 U.S.C. 6295(m)(1)).
2. Objectives of, and Legal Basis for, Rule
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered equipment, including distribution 
transformers. Any new or amended standard for a covered product must be 
designed to achieve the maximum improvement in energy efficiency that 
the Secretary of Energy determines is technologically feasible and 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A) and 
42 U.S.C. 6295(o)(3)(B)).
3. Description on Estimated Number of Small Entities Regulated
    DOE conducted a more focused inquiry of the companies that could be 
small businesses that manufacture distribution transformers covered by 
this rulemaking. DOE used publicly available information to identify 
potential small businesses. DOE's research involved industry trade 
association membership directories (including NEMA), DOE's publicly 
available Compliance Certification Database (``CCD''), California 
Energy Commission's MAEDBS database to create a list of companies that 
manufacture or sell distribution transformers covered by this 
rulemaking. DOE also asked stakeholders and industry representatives if 
they were aware of any other small businesses during manufacturer 
interviews. DOE contacted select companies on its list, as necessary, 
to determine whether they met the SBA's definition of a small business 
that manufacturers distribution transformers covered by this 
rulemaking. DOE screened out

[[Page 1847]]

companies that did not offer products covered by this rulemaking, did 
not meet the definition of a ``small business,'' or are foreign owned 
and operated.
    DOE's analysis identified 29 companies that sell or manufacture 
distribution transformers coved by this rulemaking in the U.S. market. 
At least two of these companies are not the original equipment 
manufacturers (``OEM'') and instead privately label distribution 
transformers that are manufactured by another distribution transformer 
manufacturer. Of the 27 companies that are OEMs, DOE identified 10 
potential companies that have fewer than 750 total employees and are 
not entirely foreign owned and operated. There are three small 
businesses that manufacture liquid-immersed distribution transformers; 
there are three small businesses that manufacture LVDT and MVDT 
distribution transformers; and there are four small businesses that 
only manufacture LVDT distribution transformers.\115\
---------------------------------------------------------------------------

    \115\ Therefore, there are a total of seven small businesses 
that manufacture LVDT distribution transformers. Four that 
exclusively manufacture LVDT and three that manufacture both LVDT 
and MVDT.
---------------------------------------------------------------------------

Liquid-Immersed
    Liquid-immersed distribution transformers account for over 80 
percent of all distribution transformer shipments covered by this 
rulemaking. Six major manufacturers supply more than 80 percent of the 
market for liquid-immersed distribution transformers covered by this 
rulemaking. None of these six major manufacturers of liquid-immersed 
distribution transformers are small businesses. Most liquid-immersed 
distribution transformers are manufactured domestically. Electric 
utilities compose the customer base and typically buy on a first-cost 
basis. Many small manufacturers position themselves towards the higher 
end of the market or in particular product niches, such as network 
transformers or harmonic mitigating transformers, but, in general, 
competition is based on price after a given unit's specs are prescribed 
by a customer. None of the three small businesses have a market share 
larger than five percent of the liquid-immersed distribution 
transformer market.
Low-Voltage Dry Type
    LVDT distribution transformers account for approximately 18 percent 
of all distribution shipments covered by this rulemaking. Four major 
manufacturers supply more than 80 percent of the market for LVDT 
distribution transformers covered by this rulemaking. None of these 
four major LVDT distribution transformer manufacturers are small 
businesses. The majority of LVDT distribution transformers are 
manufactured outside the U.S., mostly in Canada and Mexico. The 
customer base rarely purchases on efficiency and is very first-cost 
conscious, which, in turn, places a premium on economies of scale in 
manufacturing. However, there are universities and other buildings that 
purchase LVDT based on efficiency as more and more organizations are 
striving to get to reduced or net-zero emission targets.
    In the LVDT market, lower volume manufacturers typically do not 
compete directly with larger volume manufacturers, as these lower 
volume manufacturers are frequently not able to compete on a first cost 
basis. However, there are lower volume manufactures that do serve 
customers that purchase more efficient LVDT distribution transformers. 
Lastly, there are some smaller firms that focus on the engineering and 
design of LVDT distribution transformers and source the production of 
some parts of the distribution transformer, most frequently the cores, 
to another company that manufactures those components.
Medium-Voltage Dry-Type
    MVDT distribution transformers account for less than one percent of 
all distribution transformer shipments covered by this rulemaking. 
There is one large MVDT distribution transformer manufacturer with a 
substantial share of the market. The rest of MVDT distribution 
transformer market is served by a mix of large and small manufactures. 
Most MVDT distribution transformers are manufactured domestically. 
Electric utilities and industrial users make up most of the customer 
base and typically buy on first-cost or features other than efficiency.
4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
Liquid-Immersed and Low-Voltage Dry-Type
    DOE is proposing to amend energy conservation standards to be at 
TSL 4 for liquid-immersed distribution transformers and TSL 5 for LVDT 
distribution transformers. This corresponds to EL 4 for most liquid-
immersed distribution transformer equipment classes and EL 5 for all 
LVDT distribution transformer equipment classes.
    Based on the LCC consumer choice model, DOE anticipates that most, 
if not all, liquid-immersed and LVDT distribution transformer 
manufacturers would use amorphous cores in their distribution 
transformers to meet these proposed amended energy conservation 
standards. While DOE anticipates that several large liquid-immersed and 
LVDT distribution transformer manufacturers would make significant 
capital investments to accommodate the production of amorphous cores, 
DOE does not anticipate that any small businesses will make these 
capital investments to be able to produce their own amorphous cores, 
based on the large capital investments need to be able to make 
amorphous cores and the limited ability for small businesses to access 
large capital investments. Based on manufacturer interviews and market 
research, DOE was able to identify one LVDT small business that 
manufactures their own cores and was not able to identify any liquid-
immersed small businesses that manufacture their own cores. The one 
LVDT small business that is currently manufacturing their own cores 
would have to make a business decision to either make a significant 
capital investment to be able to make amorphous cores or to out-source 
the production of their LVDT cores. Out-sourcing the production of 
their cores would be a significant change in their production process 
and could result in a reduction in this small business' market share in 
the LVDT distribution transformer market.
    DOE acknowledges that there is uncertainty if these small 
businesses will be able to find core manufacturers that will supply 
them with amorphous cores in order to comply with the proposed energy 
conservation standards for liquid-immersed and LVDT distribution 
transformers. DOE anticipates that there will be an increase in the 
number of large liquid-immersed and LVDT distribution transformer 
manufacturers that will out-source the production of their cores to 
core manufacturers capable of producing amorphous cores. This could 
increase the competition for small businesses to procure amorphous 
cores for their distribution transformers. Small businesses 
manufacturing liquid-immersed and LVDT distribution transformers must 
be able to procure amorphous cores suitable for their distribution 
transformers at a cost that allows them to continue to be competitive 
in the market.
    Based on feedback received during manufacturer interviews, DOE does 
not

[[Page 1848]]

anticipate that small businesses that are currently not producing their 
own cores would have to make a significant capital investment in their 
production lines to be able to use amorphous cores, that are purchased 
from a core manufacturer, in the distribution transformers that they 
manufacture. There will be some additional product conversion costs, in 
the form of additional R&D and testing, that will need to be incurred 
by small businesses that manufacture liquid-immersed and LVDT 
distribution transformers, even if they do not manufacture their own 
cores. The methodology used to calculate product conversion costs, 
described in section IV.J.2.c, estimates that manufacturers would incur 
approximately one additional year of R&D expenditure to redesign their 
distribution transformers to be capable of accommodating the use of an 
amorphous core. Based on the financial parameters used in the GRIM, DOE 
estimated that the normal annual R&D is approximately 3.0 percent of 
annual revenue. Therefore, liquid-immersed and LVDT small businesses 
would incur an additional 3.0 percent of annual revenue to redesign 
their distribution transformers to be able to accommodate using 
amorphous cores there were purchased from core manufacturers.
Medium-Voltage Dry-Type
    DOE is proposing to amend energy conservation standards to be at 
TSL 2 for MVDT distribution transformers. This corresponds to EL 2 for 
all MVDT distribution transformer equipment classes. Based on the LCC 
consumer choice model, DOE does not anticipate that any MVDT 
distribution transformer manufacturers would use amorphous cores in 
their MVDT distribution transformers to meet these proposed energy 
conservation standards. DOE does not anticipate that MVDT manufacturers 
would make significant investments to either be able to produce cores 
capable of meeting these proposed amended energy conservation standards 
or be able to integrate more efficient purchased cores from core 
manufacturers. There will be some additional product conversion costs, 
in the form of additional R&D and testing, that will need to be 
incurred by small businesses that manufacture MVDT distribution 
transformers, even if they do not manufacture their own cores. The 
methodology used to calculate product conversion costs, described in 
section IV.J.2.c, estimates that manufacturers would incur 
approximately a half of a year of additional R&D expenditure to 
redesign their distribution transformers to higher efficiency levels, 
while not using amorphous cores. Based on the financial parameters used 
in the GRIM, DOE estimated that the normal annual R&D is approximately 
3.0 percent of annual revenue. Therefore, MVDT small businesses would 
include an additional 1.5 percent of annual revenue to redesign, MVDT 
distribution transformers to higher efficiency levels that could be met 
without using amorphous cores.
    DOE requests comment on the number of small businesses identified 
that manufacture distribution transformers covered by this rulemaking 
(three small liquid-immersed and seven LVDT small businesses; three of 
which also manufacture MVDT). Additionally, DOE requests comment on its 
initial assumption that only one LVDT small business and no liquid-
immersed small businesses manufacturer their own cores used in their 
distribution transformers.
5. Duplication, Overlap, and Conflict With Other Rules and Regulations
    Starting in 2018, imports of raw electrical steel have been subject 
to a 25 percent ad valorem tariff. This tariff does not apply to 
products made from electrical steel, such as transformer laminations 
and finished cores. In a report published on November 18, 2021, the 
Department of Commerce presented its conclusions and potential options 
to ensure the domestic supply chain of electrical steel and transformer 
components. 86 FR 64606 However, no modifications to the tariff 
structure have been made at the time of publication of this NOPR. As 
discussed in section IV.A.5, modification to the tariff structure could 
impact the pricing and availability of certain electrical steel grades 
depending on each manufacturer's given supply chain and sourcing 
practices.
    DOE is not aware of any other rules or regulations that duplicate, 
overlap, or conflict with the rule being considered today.
6. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's proposed rule, represented by 
TSL 4 for liquid-immersed distribution transformer equipment classes; 
TSL 5 for LVDT equipment classes; and TSL 2 for MVDT equipment classes. 
In reviewing alternatives to the proposed rule, DOE examined energy 
conservation standards set at lower efficiency levels. While lower TSLs 
would reduce the impacts on small business manufacturers, it would come 
at the expense of a reduction in energy savings. For liquid-immersed 
equipment classes TSL 1 achieves 60 percent lower energy savings 
compared to the energy savings at TSL 4; TSL 2 achieves 37 percent 
lower energy savings compared to the energy savings at TSL 4. For LVDT 
equipment classes TSL 1 achieves 85 percent lower energy savings 
compared to the energy savings at TSL 5; TSL 2 achieves 78 percent 
lower energy savings compared to the energy savings at TSL 5; TSL 3 
achieves 66 percent lower energy savings compared to the energy savings 
at TSL 5; and TSL 4 achieves 8 percent lower energy savings compared to 
the energy savings at TSL 5. For MVDT equipment classes TSL 1 achieves 
33 percent lower energy savings compared to the energy savings at TSL 
2.
    Based on the presented discussion, DOE tentatively concludes that 
the benefits of the energy savings from TSL 4 for liquid-immersed 
equipment classes; TSL 5 for LVDT equipment classes; and TSL 2 for MVDT 
equipment classes exceed the potential burdens placed on distribution 
transformers manufacturers, including small business manufacturers. 
Accordingly, DOE does not propose one of the other TSLs considered in 
the analysis, or the other policy alternatives examined as part of the 
regulatory impact analysis and included in chapter 17 of the NOPR TSD.
    Additional compliance flexibilities may be available through other 
means. EPCA provides that a manufacturer whose annual gross revenue 
from all of its operations does not exceed $8 million may apply for an 
exemption from all or part of an energy conservation standard for a 
period not longer than 24 months after the effective date of a final 
rule establishing the standard. (42 U.S.C. 6295(t)) Additionally, 
manufacturers subject to DOE's energy efficiency standards may apply to 
DOE's Office of Hearings and Appeals for exception relief under certain 
circumstances. Manufacturers should refer to 10 CFR part 430, subpart 
E, and 10 CFR part 1003 for additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of distribution transformers must certify to DOE that 
their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for distribution 
transformers, including any amendments adopted for those test 
procedures. DOE has established

[[Page 1849]]

regulations for the certification and recordkeeping requirements for 
all covered consumer products and commercial equipment, including 
distribution transformers. (See generally 10 CFR part 429). The 
collection-of-information requirement for the certification and 
recordkeeping is subject to review and approval by OMB under the 
Paperwork Reduction Act (``PRA''). This requirement has been approved 
by OMB under OMB control number 1910-1400. Public reporting burden for 
the certification is estimated to average 35 hours per response, 
including the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    DOE is analyzing this proposed regulation in accordance with the 
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA 
implementing regulations (10 CFR part 1021). DOE's regulations include 
a categorical exclusion for rulemakings that establish energy 
conservation standards for consumer products or industrial equipment. 
10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this 
rulemaking qualifies for categorical exclusion B5.1 because it is a 
rulemaking that establishes energy conservation standards for consumer 
products or industrial equipment, none of the exceptions identified in 
categorical exclusion B5.1(b) apply, no extraordinary circumstances 
exist that require further environmental analysis, and it otherwise 
meets the requirements for application of a categorical exclusion. See 
10 CFR 1021.410. DOE will complete its NEPA review before issuing the 
final rule.

E. Review Under Executive Order 13132

    E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes 
certain requirements on Federal agencies formulating and implementing 
policies or regulations that preempt State law or that have federalism 
implications. The Executive order requires agencies to examine the 
constitutional and statutory authority supporting any action that would 
limit the policymaking discretion of the States and to carefully assess 
the necessity for such actions. The Executive order also requires 
agencies to have an accountable process to ensure meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications. On March 14, 2000, DOE 
published a statement of policy describing the intergovernmental 
consultation process it will follow in the development of such 
regulations. 65 FR 13735. DOE has examined this proposed rule and has 
tentatively determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and prescribes Federal preemption of State regulations as to energy 
conservation for the equipment that are the subject of this proposed 
rule. States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) 
Therefore, no further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil 
Justice Reform,'' imposes on Federal agencies the general duty to 
adhere to the following requirements: (1) eliminate drafting errors and 
ambiguity, (2) write regulations to minimize litigation, (3) provide a 
clear legal standard for affected conduct rather than a general 
standard, and (4) promote simplification and burden reduction. 61 FR 
4729 (Feb. 7, 1996). Regarding the review required by section 3(a), 
section 3(b) of E.O. 12988 specifically requires that Executive 
agencies make every reasonable effort to ensure that the regulation: 
(1) clearly specifies the preemptive effect, if any, (2) clearly 
specifies any effect on existing Federal law or regulation, (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction, (4) specifies the retroactive 
effect, if any, (5) adequately defines key terms, and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this proposed rule meets the 
relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C. 
1531). For a proposed regulatory action likely to result in a rule that 
may cause the expenditure by State, local, and Tribal governments, in 
the aggregate, or by the private sector of $100 million or more in any 
one year (adjusted annually for inflation), section 202 of UMRA 
requires a Federal agency to publish a written statement that estimates 
the resulting costs, benefits, and other effects on the national 
economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal 
agency to develop an effective process to permit timely input by 
elected officers of State, local, and Tribal governments on a proposed 
``significant intergovernmental mandate,'' and requires an agency plan 
for giving notice and opportunity for timely input to potentially 
affected small governments before establishing any requirements that 
might significantly or uniquely affect them. On March 18, 1997, DOE 
published a statement of policy on its process for intergovernmental 
consultation under UMRA. 62 FR 12820. DOE's policy statement is also 
available at www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    Although this proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more in any one year by the private sector. Such expenditures may 
include: (1) investment in research and development and in capital 
expenditures by distribution transformers manufacturers in the years 
between the final rule and the compliance date for the new standards 
and (2) incremental additional expenditures by consumers to purchase 
higher-efficiency distribution transformers, starting at the compliance 
date for the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the proposed rule. (2 U.S.C. 1532(c)) The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and

[[Page 1850]]

Executive Order 12866. The SUPPLEMENTARY INFORMATION section of this 
NOPR and the TSD for this proposed rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m) 
[or a product-specific directive in 42 U.S.C. 6295 or 42 U.S.C. 6313], 
this proposed rule would establish amended energy conservation 
standards for distribution transformers that are designed to achieve 
the maximum improvement in energy efficiency that DOE has determined to 
be both technologically feasible and economically justified, as 
required by 42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B). A full 
discussion of the alternatives considered by DOE is presented in 
chapter 17 of the TSD for this proposed rule.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This proposed rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    Pursuant to E.O. 12630, ``Governmental Actions and Interference 
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15, 
1988), DOE has determined that this proposed rule would not result in 
any takings that might require compensation under the Fifth Amendment 
to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under information 
quality guidelines established by each agency pursuant to general 
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 
(Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this NOPR under the OMB and DOE guidelines and has concluded 
that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211

    E.O. 13211, ``Actions Concerning Regulations That Significantly 
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22, 
2001), requires Federal agencies to prepare and submit to OIRA at OMB, 
a Statement of Energy Effects for any proposed significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that (1) is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
proposes amended energy conservation standards for distribution 
transformers, is not a significant energy action because the proposed 
standards are not likely to have a significant adverse effect on the 
supply, distribution, or use of energy, nor has it been designated as 
such by the Administrator at OIRA. Accordingly, DOE has not prepared a 
Statement of Energy Effects on this proposed rule.

L. Information Quality

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (``OSTP''), issued its Final Information 
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan. 
14, 2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' 70 FR 2664, 2667.
    In response to OMB's Bulletin, DOE conducted formal peer reviews of 
the energy conservation standards development process and the analyses 
that are typically used and has prepared a report describing that peer 
review.\116\ Generation of this report involved a rigorous, formal, and 
documented evaluation using objective criteria and qualified and 
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the 
productivity and management effectiveness of programs and/or projects. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences to review DOE's analytical methodologies to ascertain whether 
modifications are needed to improve the Department's analyses. DOE is 
in the process of evaluating the resulting report.\117\
---------------------------------------------------------------------------

    \116\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed January 2022).
    \117\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------

VII. Public Participation

A. Attendance at the Public Meeting

    The time and date of the webinar meeting are listed in the DATES 
section at the beginning of this document. Webinar registration 
information, participant instructions, and information about the 
capabilities available to webinar participants will be published on 
DOE's website: www.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=55.

[[Page 1851]]

Participants are responsible for ensuring their systems are compatible 
with the webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has an interest in the topics addressed in this 
proposed rule, or who is representative of a group or class of persons 
that has an interest in these issues, may request an opportunity to 
make an oral presentation at the webinar. Such persons may submit to 
[email protected]. Persons who wish to speak 
should include with their request a computer file in WordPerfect, 
Microsoft Word, PDF, or text (ASCII) file format that briefly describes 
the nature of their interest in this rulemaking and the topics they 
wish to discuss. Such persons should also provide a daytime telephone 
number where they can be reached.
    DOE requests persons selected to make an oral presentation to 
submit an advance copy of their statements at least two weeks before 
the webinar. At its discretion, DOE may permit persons who cannot 
supply an advance copy of their statement to participate, if those 
persons have made advance alternative arrangements with the Building 
Technologies Office. As necessary, requests to give an oral 
presentation should ask for such alternative arrangements.
    DOE will designate a DOE official to preside at the webinar/public 
meeting and may also use a professional facilitator to aid discussion. 
The meeting will not be a judicial or evidentiary-type public hearing, 
but DOE will conduct it in accordance with section 336 of EPCA (42 
U.S.C. 6306). A court reporter will be present to record the 
proceedings and prepare a transcript. DOE reserves the right to 
schedule the order of presentations and to establish the procedures 
governing the conduct of the webinar. There shall not be discussion of 
proprietary information, costs or prices, market share, or other 
commercial matters regulated by U.S. anti-trust laws. After the webinar 
and until the end of the comment period, interested parties may submit 
further comments on the proceedings and any aspect of the rulemaking.
    The webinar will be conducted in an informal, conference style. DOE 
will a general overview of the topics addressed in this rulemaking, 
allow time for prepared general statements by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
general statement (within time limits determined by DOE), before the 
discussion of specific topics. DOE will permit, as time permits, other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly. Participants should 
be prepared to answer questions by DOE and by other participants 
concerning these issues. DOE representatives may also ask questions of 
participants concerning other matters relevant to this proposed rule. 
The official conducting the webinar/public meeting will accept 
additional comments or questions from those attending, as time permits. 
The presiding official will announce any further procedural rules or 
modification of the above procedures that may be needed for the proper 
conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this proposed rule. In addition, any person may buy a copy of the 
transcript from the transcribing reporter.

C. Conduct of the Public Webinar

    DOE will designate a DOE official to preside at the webinar/public 
meeting and may also use a professional facilitator to aid discussion. 
The meeting will not be a judicial or evidentiary-type public hearing, 
but DOE will conduct it in accordance with section 336 of EPCA (42 
U.S.C. 6306). A court reporter will be present to record the 
proceedings and prepare a transcript. DOE reserves the right to 
schedule the order of presentations and to establish the procedures 
governing the conduct of the webinar. There shall not be discussion of 
proprietary information, costs or prices, market share, or other 
commercial matters regulated by U.S. anti-trust laws. After the webinar 
and until the end of the comment period, interested parties may submit 
further comments on the proceedings and any aspect of the rulemaking.
    The webinar will be conducted in an informal, conference style. DOE 
will a general overview of the topics addressed in this rulemaking, 
allow time for prepared general statements by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
general statement (within time limits determined by DOE), before the 
discussion of specific topics. DOE will permit, as time permits, other 
participants to comment briefly on any general statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly. Participants should 
be prepared to answer questions by DOE and by other participants 
concerning these issues. DOE representatives may also ask questions of 
participants concerning other matters relevant to this rulemaking. The 
official conducting the webinar/public meeting will accept additional 
comments or questions from those attending, as time permits. The 
presiding official will announce any further procedural rules or 
modification of the above procedures that may be needed for the proper 
conduct of the webinar.
    A transcript of the webinar will be included in the docket, which 
can be viewed as described in the Docket section at the beginning of 
this proposed rule. In addition, any person may buy a copy of the 
transcript from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this document.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names,

[[Page 1852]]

organization names, correspondence containing comments, and any 
documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (``CBI'')). Comments submitted 
through www.regulations.gov cannot be claimed as CBI. Comments received 
through the website will waive any CBI claims for the information 
submitted. For information on submitting CBI, see the Confidential 
Business Information section.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email. Comments and documents submitted via 
email also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. No telefacsimiles (``faxes'') 
will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email two well-marked copies: one copy of the document marked 
``confidential'' including all the information believed to be 
confidential, and one copy of the document marked ``non-confidential'' 
with the information believed to be confidential deleted. DOE will make 
its own determination about the confidential status of the information 
and treat it according to its determination.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    (1) DOE requests comment on the proposed amendment to the 
definition of drive (isolation) transformer. DOE requests comment on 
its tentative determination that voltage ratings of 208Y/120 and 480Y/
277 indicate a design for use in general purpose applications. DOE also 
requests comment on other voltage ratings or other characteristics that 
would indicate a design for use in general purpose applications.
    (2) DOE requests comment on its proposed amendment to the 
definition of ``special-impedance transformer'' and whether it provides 
sufficient clarity as to how to treat the normal impedance ranges for 
non-standard kVA distribution transformers.
    (3) DOE requests comment on its proposed definition for 
transformers with a tap range of 20 percent or more.
    (4) DOE requests comment on its proposed amendments to the 
definitions of sealed and nonventilated transformers.
    (5) DOE requests comment on its proposed amendment to the 
definition of uninterruptable power supply transformers.
    (6) DOE requests comment as to whether its proposed definition 
better aligns with industries understanding on input and output 
voltages
    (7) Further, DOE requests comment and data on whether the proposed 
amendment would impact products that are serving distribution 
applications, and if so, the number of distribution transformers 
impacted by the proposed amendment.
    (8) DOE requests comment and data as to whether 5,000 kVA 
represents the upper end of what is considered distribution 
transformers or if another value should be used.
    (9) DOE requests comment and data as to the number of shipments of 
three-phase, liquid-immersed, distribution transformers greater than 
2,500 kVA that would meet the in-scope voltage limitations and the 
distribution of efficiencies of those units.
    (10) DOE requests comment and data as to the number of shipments of 
three-phase, dry-type, distribution transformers greater than 2,500 kVA 
that would meet the in-scope voltage limitations and the distribution 
of efficiencies of those units.
    (11) DOE requests comment on its understanding and proposed 
definition of ``submersible'' distribution transformer. Specifically, 
DOE requests information on specific design characteristics of 
distribution transformers that allow them to operate while submerged in 
water, as well as data on the impact to efficiency resulting from such 
characteristics.
    (12) DOE requests comment and data as to the impact that 
submersible characteristics have on distribution transformer 
efficiency.
    (13) DOE requests data on the difference in load loss by kVA for 
distribution transformers with multiple-voltage ratings and a voltage 
ratio other than 2:1.
    (14) DOE request data on the number of shipments for each equipment 
class of distribution transformers with multi-voltage ratios other than 
2:1.
    (15) DOE requests data on the difference in load loss by kVA for 
distribution transformers with higher currents and at what current it 
becomes more difficult to meet energy conservation standards.
    (16) DOE requests data as to the number of shipments of 
distribution transformers with the higher currents that would have a 
more difficult time meeting energy conservation standards.
    (17) DOE requests comment as to what modifications could be made to 
the April 2013 Standard Final Rule data center definition such that the 
identifying features are related to efficiency and would prevent a data 
center transformer from being used in a general purpose application.
    (18) DOE requests comment regarding its proposal not to establish a 
separate equipment class for data center distribution transformers. In 
particular,

[[Page 1853]]

DOE seeks comment regarding whether data center distribution 
transformers are able to reach the same efficiency levels as 
distribution transformers generally and the specific reasons why that 
may be the case.
    (19) DOE requests comment regarding any challenges that would exist 
if designing a distribution transformer which uses amorphous electrical 
steel in its core for data center applications and whether data center 
transformers have been built which use amorphous electrical steel in 
their cores.
    (20) DOE requests comment on the interaction of inrush current and 
data center distribution transformer design. Specifically, DOE seeks 
information regarding: (1) the range of inrush current limit values in 
use in data center distribution transformers; (2) any challenges in 
meeting such inrush current limit values when using amorphous 
electrical steel in the core; (3) whether using amorphous electrical 
steel inherently increases inrush current, and why; (4) how the 
(magnetic) remanence of grain-oriented electrical steel compares to 
that of amorphous steel; and (5) other strategies or technologies than 
distribution transformer design which could be used to limit inrush 
current and the respective costs of those measures.
    (21) DOE requests data as to how a liquid-immersed distribution 
transformer losses vary with BIL across the range of kVA values within 
scope.
    (22) DOE requests comments and data on any other types of equipment 
that may have a harder time meeting energy conservation standards. 
Specifically, DOE requests comments as to how these other equipment are 
identified based on physical features from general purpose distribution 
transformers, the number of shipments of each unit, and the possibility 
of these equipment being used in place of generally purpose 
distribution transformers.
    (23) DOE requests data demonstrating any specific distribution 
transformer designs that would have significantly different cost-
efficiency curves than those representative units modeled by DOE.
    (24) DOE requests comment on its methodology for scaling RU5, RU12, 
and RU14 to represent the efficiency of units above 3,750 kVA.
    (25) DOE requests comment on its methodology for modifying the 
results of RU4 and RU5 to represent the efficiency of submersible 
liquid-immersed units. For other potentially disadvantaged designs, DOE 
has considered establishing equipment classes to separate out those 
that would have the most difficulty achieving amended efficiency 
standards, as discussed in section IV.A.2 of this document, but 
ultimately has determined not to include such separate equipment 
classes in the proposed standards. However, DOE requests data as to the 
degree of reduction in efficiency associated with various features.
    (26) DOE requests data as to how stray and eddy losses at rated PUL 
vary with kVA and rated voltages.
    (27) DOE requests comment on the current and future market 
pressures influencing the price of GOES. Specifically, DOE is 
interested in the barriers to and costs associated with converting a 
factory production line from GOES to NOES.
    (28) DOE further requests comment regarding how the prices of both 
GOES and amorphous are expected to change in the immediate and distant 
future.
    (29) DOE requests comment regarding the barriers to converting 
current M3 or 23hib90 electrical steel production to lower-loss GOES 
core steels.
    (30) DOE requests comment as to if there are markets for amorphous 
ribbon, similar to NOES competition from GOES production, which would 
put competitive pressures on the production of amorphous ribbon for 
distribution transformers.
    (31) DOE requests comment on how a potentially limited supply of 
transformer core steel, both of amorphous and GOES, may affect core 
steel price and availability. DOE seeks comment on any factors which 
uniquely affect specific steel grades (e.g., amorphous, M-grades, hib, 
dr, pdr). Additionally, DOE seeks comment on how it should model a 
potentially concentrated domestic steel market in its analysis, 
resulting from a limited number of suppliers for the amorphous market 
or from competition with NOES for the GOES market, including any use of 
game theoretic modeling as appropriate.
    (32) DOE requests comment or data showing hourly transformer loads 
for industrial customers.
    (33) To help inform DOE's prediction of future load growth trend, 
DOE seeks data on the following for regions where decarbonization 
efforts are ongoing. DOE seeks hourly PUL data at the level of the 
transformer bank for each of the past five years to establish an 
unambiguous relationship between transformer loads and decarbonization 
policy and inform if any intensive load growth is indeed occurring. 
Additionally, DOE seeks the average capacity of shipment into regions 
where decarbonization efforts are occurring over the same five-year 
period to inform the rate of any extensive load growth that may be 
occurring in response to these programs.
    (34) DOE requests comments on its methodology for establishing the 
energy efficiency levels for distribution transformers greater than 
2500 kVA. DOE request comment on its assumed energy efficiency ratings.
    (35) DOE requests comment on its assumed TOC adoption rate of 10 
percent. Specifically, DOE requests comment on the TOC rate suggested 
by NEMA, that between 15 and 20 percent of 3-phase liquid-immersed 
distribution transformers are purchased using TOC, and that 40 percent 
of 1-phase liquid-immersed distribution transformers are purchased 
using TOC. DOE notes, that it is seeking data related to concluded 
sales based on lowest TOC in the strictest sense, excluding those 
transformers sold using band of equivalents (see the section on band of 
equivalents, above)
    (36) DOE requests comment on the fraction of distribution 
transformers purchased by customers using the BOE methodology. DOE 
notes, that it is seeking data related to concluded sales based on 
lowest BOE in the strictest sense, excluding those transformers sold 
using total owning costs.
    (37) DOE request comment if the rates of TOC or BOE vary by 
transformer capacity or number of phases. Further, DOE seeks the 
fraction of distribution transformer sales using either method into the 
different regions in order to capture the believed relationship between 
higher electricity costs and purchase evaluation behavior.
    (38) Transformers are typically installed using a bucket truck, or 
crane truck. DOE requests comment on the typical maximum lifting 
capacity, and the typical transformer capacity being installed.
    (39) For this NOPR, DOE reiterates its request for the following 
information. DOE requests data and feedback on the size limitations of 
pad-mounted distribution transformers. Specifically, what sizes, 
voltages, or other features are currently unable to fit on current 
pads, and the dimension of these pads. DOE seeks data on the typical 
concrete pad dimensions for 50 and 500 kVA single-; and 500, and 1500 
kVA three-phase distribution transformers. DOE seeks data on the 
typical service lifetimes of supporting concrete pads.
    (40) DOE request the average extension of distribution transformer 
service life that can be achieved through rebuilding. Additionally, DOE 
requests comment on the fraction of transformer that are repaired by 
their original purchasing entity and returned to

[[Page 1854]]

service, thereby extending the transformer's service lifetime beyond 
the estimated lifetimes of 32 years with a maximum of 60 years.
    (41) DOE requests comment on which liquid-immersed distribution 
transformers capacities are typically replaced with MVDT. DOE further 
requests data that would indicate a trend in these substitutions. DOE 
further requests data that would help it determine which types of 
customers are preforming these substitutions, e.g., industrial 
customers, invertor owned utilities, MUNIs, etc.
    (42) In response to NEMA's comment DOE requests data to inform a 
shift in the capacity distribution to larger capacity distribution 
transformers. Additionally, DOE requests information on the extent that 
this increasing trend in capacity would affect all types of 
distribution transformers, or only medium-voltage distribution 
transformers.
    (43) DOE projected the energy savings, operating cost savings, 
product costs, and NPV of consumer benefits over the lifetime of 
distribution transformers sold from 2027 through 2056. Given the 
extremely durable nature of distribution transformers, this creates an 
analytical timeframe from 2027 through 2115. DOE seeks comment on the 
current analytical timeline, and potential alternative analytical 
timeframes.
    (44) DOE requests comment on its assumption that including a 
rebound effect is inappropriate for distribution transformers.
    (45) DOE requests comment on the mean PUL applied to distribution 
transformers owned and operated by utilities serving low customer 
populations.
    (46) DOE requests comment on its assumed vault replacement costs 
methodology. DOE seeks comment or data regarding the installation 
procedures associated with vault replacement, vault expansion 
(renovation), and vault transformer installation and their respective 
costs for replacement transformers. Additionally, DOE seeks information 
on the typical expected lifetime of underground concrete vaults.
    (47) DOE requests comment on the real discount rates used in this 
NOPR. Specifically, if 7.4 percent for liquid-immersed distribution 
transformer manufacturers, 11.1 percent for low-voltage dry-type 
distribution transformer manufacturers, and 9.0 percent for medium-
voltage dry-type distribution transformer manufacturers are appropriate 
discount rates to use in the GRIM.
    (48) DOE requests comment on the estimated potential domestic 
employment impacts on distribution transformer manufacturers presented 
in this NOPR.
    (49) DOE requests comment on the potential availability of either 
amorphous steel, grain-oriented electrical steel, or any other 
materials that may be needed to meet any of the analyzed energy 
conservation standards in this rulemaking. More specifically, DOE 
requests comment on steel manufacturers' ability to increase supply of 
amorphous steel in reaction to increased demand for amorphous steel as 
a result of increased energy conservation standards for distribution 
transformers.
    (50) DOE requests comment on the number of small businesses 
identified that manufacture distribution transformers covered by this 
rulemaking (three small liquid-immersed and seven LVDT small 
businesses; three of which also manufacture MVDT). Additionally, DOE 
requests comment on its initial assumption that only one LVDT small 
business and no liquid-immersed small businesses manufacturer their own 
cores used in their distribution transformers.
    (51) Additionally, DOE welcomes comments on other issues relevant 
to the conduct of this rulemaking that may not specifically be 
identified in this document.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking and announcement of public meeting.

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation test procedures, and Reporting and 
recordkeeping requirements.

Signing Authority

    This document of the Department of Energy was signed on December 
28, 2022, by Francisco Alejandro Moreno, Acting Assistant Secretary for 
Energy Efficiency and Renewable Energy, pursuant to delegated authority 
from the Secretary of Energy. That document with the original signature 
and date is maintained by DOE. For administrative purposes only, and in 
compliance with requirements of the Office of the Federal Register, the 
undersigned DOE Federal Register Liaison Officer has been authorized to 
sign and submit the document in electronic format for publication, as 
an official document of the Department of Energy. This administrative 
process in no way alters the legal effect of this document upon 
publication in the Federal Register.

    Signed in Washington, DC, on December 29, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy

    For the reasons set forth in the preamble, DOE proposes to amend 
part 431 of chapter II, of title 10 of the Code of Federal Regulations, 
as set forth below:

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 431 continues to read as follows:

    Authority:  42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.

0
2. Section 431.192 is amended by:
0
a. Revising the definitions of ``Distribution transformer'', ``Drive 
(isolation) transformer'', ``Nonventilated transformer'', ``Sealed 
transformer'', ``Special-impedance transformer'', ``Transformer with a 
tap range of 20 percent or more'', ``Uninterruptible power supply 
transformer''; and
0
b. Adding in alphabetical order, definition for ``Submersible 
distribution transformer''
    The revisions and addition read as follows:


Sec.  431.19  Definitions.

* * * * *
    Distribution transformer means a transformer that:
    (1) Has an input line voltage of 34.5 kV or less;
    (2) Has an output line voltage of 600 V or less;
    (3) Is rated for operation at a frequency of 60 Hz; and
    (4) Has a capacity of 10 kVA to 5000 kVA for liquid-immersed units 
and 15 kVA to 5000 kVA for dry-type units; but
    (5) The term ``distribution transformer'' does not include a 
transformer that is an -
    (i) Autotransfromer;
    (ii) Drive (isolation) transformer;
    (iii) Grounding transformer;
    (iv) Machine-tool (control transformer);
    (v) Nonventilated transformer;
    (vi) Rectified transformer;
    (vii) Regulating transformer;
    (viii) Sealed transformer;
    (ix) Special-impedance transformer;
    (x) Testing transformer;
    (xi) Transformer with tap range of 20 percent or more;

[[Page 1855]]

    (xii) Uninterruptible power supply transformer; or
    (xiii) Welding transformer.
    Drive (isolation) transformer means a transformer that:
    (1) Isolates an electric motor from the line;
    (2) Accommodates the added loads of drive-created harmonics;
    (3) Is designed to withstand the additional mechanical stressed 
resulting from an alternating current adjustable frequency motor drive 
or a direct current motor drive; and
    (4) Has a rated output voltage that is neither ``208Y/120'' nor 
``480Y/277''.
* * * * *
    Nonventilated transformer means a dry-type transformer constructed 
so as to prevent external air circulation through the coils of the 
transformer while operating at zero gauge pressure.
* * * * *
    Sealed transformer means a dry-type transformer designed to remain 
hermetically sealed under specified condition of temperature and 
pressure.
    Special-impedance transformer means a transformer built to operate 
at an impedance outside of the normal impedance range for that 
transformer's kVA rating. The normal impedance range for each kVA 
rating for liquid-immersed and dry-type transformers is show in Tables 
1 and 2, respectively. Distribution transformers with kVA ratings not 
appearing in the tables shall have their minimum normal impedance and 
maximum normal impedance determined by linear interpolation of the kVA 
and minimum and maximum impedances, respectively, of the values 
immediately above and below that kVA rating.

                        Table 1--Normal Impedance Ranges for Liquid-Immersed Transformers
----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Impedance (%)                  kVA                 Impedance (%)
----------------------------------------------------------------------------------------------------------------
10...........................................         1.0-4.5   15..............................         1.0-4.5
15...........................................         1.0-4.5   30..............................         1.0-4.5
25...........................................         1.0-4.5   45..............................         1.0-4.5
37.5.........................................         1.0-4.5   75..............................         1.0-5.0
50...........................................         1.5-4.5   112.5...........................         1.2-6.0
75...........................................         1.5-4.5   150.............................         1.2-6.0
100..........................................         1.5-4.5   225.............................         1.2-6.0
167..........................................         1.5-4.5   300.............................         1.2-6.0
250..........................................         1.5-6.0   500.............................         1.5-7.0
333..........................................         1.5-6.0   750.............................         5.0-7.5
500..........................................         1.5-7.0   1,000...........................         5.0-7.5
667..........................................         5.0-7.5   1,500...........................         5.0-7.5
833..........................................         5.0-7.5   2,000...........................         5.0-7.5
                                                                2,500...........................         5.0-7.5
                                                                3,750...........................         5.0-7.5
                                                                5,000...........................         5.0-7.5
----------------------------------------------------------------------------------------------------------------


                           Table 2--Normal Impedance Ranges for Dry-Type Transformers
----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Impedance (%)                  kVA                 Impedance (%)
----------------------------------------------------------------------------------------------------------------
15...........................................         1.5-6.0   15..............................         1.5-6.0
25...........................................         1.5-6.0   30..............................         1.5-6.0
37.5.........................................         1.5-6.0   45..............................         1.5-6.0
50...........................................         1.5-6.0   75..............................         1.5-6.0
75...........................................         2.0-7.0   112.5...........................         1.5-6.0
100..........................................         2.0-7.0   150.............................         1.5-6.0
167..........................................         2.5-8.0   225.............................         3.0-7.0
250..........................................         3.5-8.0   300.............................         3.0-7.0
333..........................................         3.5-8.0   500.............................         4.5-8.0
500..........................................         3.5-8.0   750.............................         5.0-8.0
667..........................................         5.0-8.0   1,000...........................         5.0-8.0
833..........................................         5.0-8.0   1,500...........................         5.0-8.0
                                                                2,000...........................         5.0-8.0
                                                                2,500...........................         5.0-8.0
                                                                3,750...........................         5.0-8.0
                                                                5,000...........................         5.0-8.0
----------------------------------------------------------------------------------------------------------------

    Submersible Distribution Transformer means a liquid-immersed 
distribution transformer so constructed as to be successfully operable 
when submerged in water including the following features:
    (1) Is rated for a temperature rise of 55[deg]C;
    (2) Has insulation rated for a temperature rise of 65[deg]C;
    (3) Has sealed-tank construction; and
    (4) Has the tank, cover, and all external appurtenances made of 
corrosion-resistant material.
* * * * *
    Transformer with tap range of 20 percent or more means a 
transformer with multiple full-power voltage taps,

[[Page 1856]]

the highest of which equals at least 20 percent more than the lowest, 
computed based on the sum of the deviations of these taps from the 
transformer's maximum full-power voltage.
    Uninterruptible power supply transformer means a transformer that 
is used within an uninterruptible power system, which in turn supplies 
power to loads that are sensitive to power failure, power sages, over 
voltage, switching transients, line notice, and other power quality 
factors. It does not include distribution transformers at the input, 
output, or by-pass of an uninterruptible power system.
* * * * *
0
3. Amend Sec.  431.196 by:
0
a. Revising paragraph (a)(2) and adding paragraph (a)(3),
0
b. Revising paragraph (b)(2) and adding paragraphs (b)(3) through (4), 
and
0
c. Revising paragraph (c)(2) and adding paragraph (c)(3).
    The revisions and additions read as follows:


Sec.  431.196  Energy conservation standards and their effective dates.

    (a) * * *
    (2) The efficiency of a low-voltage, dry-type distribution 
transformer manufactured on or after January 1, 2016, but before 
January 1, 2027, shall be no less than that required for the applicable 
kVA rating in the table below. Low-voltage dry-type distribution 
transformers with kVA ratings not appearing in the table shall have 
their minimum efficiency level determined by linear interpolation of 
the kVA and efficiency values immediately above and below that kVA 
rating.

----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                                                       kVA
----------------------------------------------------------------------------------------------------------------
15...........................................           97.70   15..............................           97.89
25...........................................           98.00   30..............................           98.23
37.5.........................................           98.20   45..............................           98.40
50...........................................           98.30   75..............................           98.60
75...........................................           98.50   112.5...........................           98.74
100..........................................           98.60   150.............................           98.83
167..........................................           98.70   225.............................           98.94
250..........................................           98.80   300.............................           99.02
333..........................................           98.90   500.............................           99.14
                                                                750.............................           99.23
                                                                1000............................           99.28
----------------------------------------------------------------------------------------------------------------
Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test
  Method for Measuring the Energy Consumption of Distribution Transformers under appendix A to subpart K of 10
  CFR part 431.

    (3) The efficiency of a low-voltage dry-type distribution 
transformer manufactured on or after January 1, 2027, shall be no less 
than that required for their kVA rating in the table below. Low-voltage 
dry-type distribution transformers with kVA ratings not appearing in 
the table shall have their minimum efficiency level determined by 
linear interpolation of the kVA and efficiency values immediately above 
and below that kVA rating.

----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Efficiency (%)                 kVA                Efficiency (%)
----------------------------------------------------------------------------------------------------------------
15...........................................           98.84   15..............................           98.72
25...........................................           98.99   30..............................           98.93
37.5.........................................           99.09   45..............................           99.03
50...........................................           99.14   75..............................           99.16
75...........................................           99.24   112.5...........................           99.24
100..........................................           99.30   150.............................           99.29
167..........................................           99.35   225.............................           99.36
250..........................................           99.40   300.............................           99.41
333..........................................           99.45   500.............................           99.48
                                                                750.............................           99.54
                                                                1000............................           99.57
----------------------------------------------------------------------------------------------------------------
Note: All efficiency values are at 35 percent of nameplate-rated load, determined according to the DOE Test
  Method for Measuring the Energy Consumption of Distribution Transformers under appendix A to subpart K of 10
  CFR part 431.

    (b) * * *
    (2) The efficiency of a liquid-immersed distribution transformer, 
including submersible distribution transformers, manufactured on or 
after January 1, 2016, but before January 1, 2027, shall be no less 
than that required for their kVA rating in the table below. Liquid-
immersed distribution transformers, including submersible distribution 
transformers, with kVA ratings not appearing in the table shall have 
their minimum efficiency level determined by linear interpolation of 
the kVA and efficiency values immediately above and below that kVA 
rating.

[[Page 1857]]



----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Efficiency (%)                 kVA                Efficiency (%)
----------------------------------------------------------------------------------------------------------------
10...........................................           98.70   15..............................           98.65
15...........................................           98.82   30..............................           98.83
25...........................................           98.95   45..............................           98.92
37.5.........................................           99.05   75..............................           99.03
50...........................................           99.11   112.5...........................           99.11
75...........................................           99.19   150.............................           99.16
100..........................................           99.25   225.............................           99.23
167..........................................           99.33   300.............................           99.27
250..........................................           99.39   500.............................           99.35
333..........................................           99.43   750.............................           99.40
500..........................................           99.49   1,000...........................           99.43
667..........................................           99.52   1,500...........................           99.48
833..........................................           99.55   2,000...........................           99.51
                                                                2,500...........................           99.53
----------------------------------------------------------------------------------------------------------------
Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test-
  Procedure, appendix A to subpart K of 10 CFR part 431.

    (3) The efficiency of a liquid-immersed distribution transformer, 
that is not a submersible distribution transformer, manufactured on or 
after January 1, 2027, shall be no less than that required for their 
kVA rating in the table below. Liquid-immersed distribution 
transformers with kVA ratings not appearing in the table shall have 
their minimum efficiency level determined by linear interpolation of 
the kVA and efficiency values immediately above and below that kVA 
rating.

----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Efficiency (%)                 kVA                Efficiency (%)
----------------------------------------------------------------------------------------------------------------
10...........................................           98.96   15..............................           98.92
15...........................................           99.05   30..............................           99.06
25...........................................           99.16   45..............................           99.13
37.5.........................................           99.24   75..............................           99.22
50...........................................           99.29   112.5...........................           99.29
75...........................................           99.35   150.............................           99.33
100..........................................           99.40   225.............................           99.38
167..........................................           99.46   300.............................           99.42
250..........................................           99.51   500.............................           99.48
333..........................................           99.54   750.............................           99.52
500..........................................           99.59   1,000...........................           99.54
667..........................................           99.62   1,500...........................           99.58
833..........................................           99.64   2,000...........................           99.61
                                                                2,500...........................           99.62
                                                                3,750...........................           99.66
                                                                5,000...........................           99.68
----------------------------------------------------------------------------------------------------------------
Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test
  Method for Measuring the Energy Consumption of Distribution Transformers under appendix A to subpart K of 10
  CFR part 431.

    (4) The efficiency of a submersible distribution transformer, 
manufactured on or after January 1, 2027, shall be no less than that 
required for their kVA rating in the table below. Submersible 
distribution transformers with kVA ratings not appearing in the table 
shall have their minimum efficiency level determined by linear 
interpolation of the kVA and efficiency values immediately above and 
below that kVA rating.

----------------------------------------------------------------------------------------------------------------
                         Single-phase                                              Three-phase
----------------------------------------------------------------------------------------------------------------
                     kVA                        Efficiency (%)                 kVA                Efficiency (%)
----------------------------------------------------------------------------------------------------------------
10...........................................           98.70   15..............................           98.65
15...........................................           98.82   30..............................           98.83
25...........................................           98.95   45..............................           98.92
37.5.........................................           99.05   75..............................           99.03
50...........................................           99.11   112.5...........................           99.11
75...........................................           99.19   150.............................           99.16
100..........................................           99.25   225.............................           99.23
167..........................................           99.33   300.............................           99.27
250..........................................           99.39   500.............................           99.35
333..........................................           99.43   750.............................           99.40
500..........................................           99.49   1,000...........................           99.43

[[Page 1858]]

 
667..........................................           99.52   1,500...........................           99.48
833..........................................           99.55   2,000...........................           99.51
                                                                2,500...........................           99.53
----------------------------------------------------------------------------------------------------------------
Note: All efficiency values are at 50 percent of nameplate-rated load, determined according to the DOE Test-
  Procedure appendix A to subpart K of 10 CFT part 431.

    (c) * * *
    (2) The efficiency of a medium-voltage dry-type distribution 
transformer manufactured on or after January 1, 2016, but before 
January 1, 2027, shall be no less than that required for their kVA and 
BIL rating in the table below. Medium-voltage dry-type distribution 
transformers with kVA ratings not appearing in the table shall have 
their minimum efficiency level determined by linear interpolation of 
the kVA and efficiency values immediately above and below that kVA 
rating.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Single-phase                                                                  Three-phase
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BIL                                                                    BIL
                                  -------------------------------------------------                      -----------------------------------------------
               kVA                    20-45 kV        46-95 kV         >=96 kV               kVA             20-45 kV        46-95 kV         >=96 kV
                                  -------------------------------------------------                      -----------------------------------------------
                                   Efficiency (%)  Efficiency (%)   Efficiency (%)                        Efficiency (%)  Efficiency (%)  Efficiency (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
15...............................           98.10           97.86  ...............  15..................           97.50           97.18  ..............
25...............................           98.33           98.12  ...............  30..................           97.90           97.63  ..............
37.5.............................           98.49           98.30  ...............  45..................           98.10           97.86  ..............
50...............................           98.60           98.42  ...............  75..................           98.33           98.13  ..............
75...............................           98.73           98.57           98.53   112.5...............           98.52           98.36  ..............
100..............................           98.82           98.67           98.63   150.................           98.65           98.51  ..............
167..............................           98.96           98.83           98.80   225.................           98.82           98.69           98.57
250..............................           99.07           98.95           98.91   300.................           98.93           98.81           98.69
333..............................           99.14           99.03           98.99   500.................           99.09           98.99           98.89
500..............................           99.22           99.12           99.09   750.................           99.21           99.12           99.02
667..............................           99.27           99.18           99.15   1,000...............           99.28           99.20           99.11
833..............................           99.31           99.23           99.20   1,500...............           99.37           99.30           99.21
                                                                                    2,000...............           99.43           99.36           99.28
                                                                                    2,500...............           99.47           99.41           99.33
--------------------------------------------------------------------------------------------------------------------------------------------------------
* BIL means basic impulse insulation level
Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE Test Method for Measuring the Energy Consumption
  of Distribution Transformers under appendix A to subpart K of 10 CFR part 431.

    (3) The efficiency of a medium- voltage dry-type distribution 
transformer manufactured on or after January 1, 2027, shall be no less 
than that required for their kVA and BIL rating in the table below. 
Medium-voltage dry-type distribution transformers with kVA ratings not 
appearing in the table shall have their minimum efficiency level 
determined by linear interpolation of the kVA and efficiency values 
immediately above and below that kVA rating.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Single-phase                                                                  Three-phase
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BIL                                                                    BIL
                                  -------------------------------------------------                      -----------------------------------------------
               kVA                    20-45 kV        46-95 kV         >=96 kV               kVA             20-45 kV        46-95 kV         >=96 kV
                                  -------------------------------------------------                      -----------------------------------------------
                                   Efficiency (%)  Efficiency (%)   Efficiency (%)                        Efficiency (%)  Efficiency (%)  Efficiency (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
15...............................           98.29           98.07  ...............  15..................           97.74           97.45  ..............
25...............................           98.49           98.30  ...............  30..................           98.11           97.86  ..............
37.5.............................           98.64           98.47  ...............  45..................           98.29           98.07  ..............
50...............................           98.74           98.58  ...............  75..................           98.49           98.31  ..............
75...............................           98.86           98.71           98.68   112.5...............           98.67           98.52  ..............
100..............................           98.94           98.80           98.77   150.................           98.78           98.66  ..............
167..............................           99.06           98.95           98.92   225.................           98.94           98.82           98.71
250..............................           99.16           99.05           99.02   300.................           99.04           98.93           98.82
333..............................           99.23           99.13           99.09   500.................           99.18           99.09           99.00
500..............................           99.30           99.21           99.18   750.................           99.29           99.21           99.12
667..............................           99.34           99.26           99.23   1,000...............           99.35           99.28           99.20
833..............................           99.38           99.31           99.28   1,500...............           99.43           99.37           99.29
                                                                                    2,000...............           99.49           99.42           99.35
                                                                                    2,500...............           99.52           99.47           99.40

[[Page 1859]]

 
                                                                                    3,750...............           99.58           99.53           99.47
                                                                                    5,000...............           99.62           99.58           99.51
--------------------------------------------------------------------------------------------------------------------------------------------------------
* BIL means basic impulse insulation level
Note: All efficiency values are at 50 percent of nameplate rated load, determined according to the DOE Test Method for Measuring the Energy Consumption
  of Distribution Transformers under appendix A to subpart K of 10 CFR part 431.

* * * * *
[FR Doc. 2022-28590 Filed 1-10-23; 8:45 am]
BILLING CODE 6450-01-P