Power policy: NEMA Updates transformer efficiency; getting paid for spares


The National Electrical Manufacturers Association (NEMA) in separate actions asked the U.S. Department of Energy (DOE) to consider using newer data in the economic analysis of efficiency levels in certain electrical transformers, and praised federal regulators who recently allowed electric utilities to recoup the cost of keeping spare transformers in inventory. That last move could boost utility spending on electrical equipment by more than $50 million, NEMA says.

On the efficiency issue, Kyle Pitsor, NEMA vice president of government relations, said, "The rise over the past several years in materials prices, for instance, for copper and steel, is not reflected in the prices used by DOE to calculate energy efficiency levels in these transformers. The standards should be based on the best available data." In September, the U.S. Department of Energy began the process for revising standards related to distribution transformers typically used by electric utilities and manufacturing facilities.

NEMA published the TP 1-1996 standard covering transformer efficiency a decade ago. An updated version of this (TP 1-2002) is the basis for the Low Voltage Dry-Type Transformer standards specified in the Energy Policy Act of 2005; these standards go into effect January 1, 2007. Based on actual applications in New England, this LVDT standard would produce about a 50 percent savings in electricity. TP 1 continues to be the benchmark for newly proposed standards, NEMA says.

There is some controversy now, NEMA explains, among stakeholders as to what efficiency level DOE should adopt in national standards for the remaining distribution transformer types (Medium Voltage Dry-Type and Liquid Filled). NEMA says that the debate about what level is most cost effective should be based on a sound technical and economic assessment. "Determination of a cost effective efficiency level requires a tradeoff between the initial unit cost and the value of future energy savings. The DOE economic analysis being used is based on materials costs from 2002-2004. Costs from these years were historic lows in real terms."

At NEMA's request, DOE did perform an analysis based on first-quarter 2005 costs; for example, electrical steels typically used in high efficiency transformers cost about twice as much in 2005 as in the DOE base time period. However, rather than adopting the new costs as the baseline, DOE chose to continue to use the 2002-2004 data.

Because of world demand for these materials (notably from China and India), NEMA says the 2005 data is more relevant to today's debate over efficiency levels (even worse than steel, copper prices have continued to go up and are now two to three times higher than in the 2002-2004 period).

On a separate transformer topic, NEMA commended the Federal Energy Regulatory Commission for the approval of a utility industry request to recover the costs of spare transformers kept in inventory to meet demand if an event should disturb electrical grid reliability. The ruling, NEMA suggests, responds to utility concerns about reliability and, Pitsor says, "will also result in the purchase of $50 to $75 million of electrical equipment by the nation's utilities." The ruling by FERC assures the utility industry that the federal government will approve cost recovery of the purchased equipment through a single-issue rate making.

By approving the application, FERC agreed to participate in the industry's Spare Transformer Equipment Program (STEP). STEP is a coordinated, industry-wide program designed to increase the electric industry's inventory of spare transformers, ensuring sufficient capability to restore service when catastrophic events or attacks on the electrical grid have degraded reliability of equipment used to transmit electricity. Each partner in the agreement is required to maintain and, if necessary, acquire a specific number of transformers. STEP requires each participating utility to sell its spares to any other STEP utility that suffers a "triggering event," such as an act of terrorism that destroys or disables one or more substations and results in a declared state of emergency by the U.S. president.

Click here for information about NEMA's Annual Meeting, Nov. 11-13, 2006, in Washington, DC.

-- Edited by Mark T. Hoske ,
editor in chief , Control Engineering

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