Utilities, labor and coalition members seek support for maintaining U.S. distribution transformer supply chain
A coalition of utilities, grid component suppliers, manufacturers, labor, and customers recently urged U.S. senators to support bipartisan legislation aimed at ensuring the domestic supply chain is maintained for a vital grid component.
Specifically, the coalition seeks Senate support for the Distribution Transformer Efficiency and Supply Chain Reliability Act of 2024, S. 3627, which would amend the Energy Policy and Conservation Act to require a certain efficiency level for certain distribution transformers.
“The security, reliability, and resiliency of America’s electrical grid depends on a readily available supply of critical components, including distribution transformers,” the coalition wrote in a March 5 letter sent to 47 senators. “Americans expect the government to be a reliable partner to help ensure that critical grid component supply chains are efficient so that these products are accessible domestically and the lights stay on.”
The letter was signed by the American Public Power Association, Cleveland-Cliffs Inc., Edison Electric Institute (EEI), The GridWise Alliance, the International Brotherhood of Electrical Workers, the Leading Builders of America, the National Association of Home Builders, the National Electrical Manufacturers Association, the National Rural Electric Cooperative Association, the Transformer Manufacturing Association of America, the United Auto Workers Union Local 3303, and the Zero Emission Transportation Association.
In their letter, the coalition members thanked the senators receiving the letter for supporting an effort led last year by U.S. Sen. Bill Hagerty (R-TN) calling on the U.S. Department of Energy (DOE) to refrain from circulating a final rule that could exacerbate the current shortage of distribution transformers.
The DOE in January 2023 published the proposed rule, “Energy Conservation Program: Energy Conservation Standards for Distribution Transformers.” If the DOE finalizes it by June 1, as required, the rule would marginally increase efficiency standards for distribution transformers by effectively requiring all products to shift from the industry standard grain oriented electrical steel (GOES) cores to amorphous steel cores, according to EEI and the coalition.
Currently, the DOE already requires these critical grid components to be highly efficient, according to the letter, which attempts to build upon Hagerty’s effort against DOE finalizing this rule.
“S. 3627 would stabilize the supply chain and ensure long-term certainty in the production of energy efficient distribution transformers with high-efficiency GOES cores,” the coalition wrote.
Calling S. 3627 “compromise legislation,” the coalition says it would address two main concerns: it would allow for practical efficiency gains in distribution transformers while simultaneously providing long-term supply chain certainty for component suppliers, manufacturers, and customers of this product.
And S. 3627 would limit the DOE’s ability to establish an efficiency standard above a plane known as trial standard level (TSL) 2. Products made to specifications higher than TSL 2 require the sole use of amorphous steel to achieve efficiency gains.
However, amorphous steel relies on imported substrate, is extremely limited in supply, and would require manufacturers to overhaul product designs and retool production processes — all of which would worsen the transformer shortage, says the coalition, adding that TSL 2 levels can be achieved with domestically available GOES, as well as with amorphous steel.
Sponsored on Jan. 18 by U.S. Sen. Sherrod Brown (D-OH), an enacted S. 3627 would not permit the DOE Secretary to finalize any rule under which the efficiency level of a distribution transformer is greater than TSL 2.
The bill’s bipartisanship — it currently has 15 cosponsors from both sides of the aisle, including U.S. Sen. Ted Cruz (R-TX) — is “an encouraging signal that both parties are serious about securing this piece of critical infrastructure,” the coalition says.
And with the rule currently pending review at the Office of Management and Budget, coalition members say the urgency for action on S. 3627 “is paramount.”
“Support and passage of this bill will help ensure that the domestic supply chain for this critical grid component, necessary to enable a community’s development as well as for energy resiliency, security, and transition, can be maintained,” according to the letter.
