Proposed DOE Transformer Standards are Ill-Timed

By Jay Stowe
JEA Managing Director & Chief Executive Officer

No matter how well-intentioned, the federal government is now on a path that is likely to worsen the national transformer supply issues plaguing economic development across the country. 

By 2027, under a notice of proposed rulemaking (NOPR) by the U.S. Department of Energy (DOE), almost all distribution transformers would include amorphous steel cores, which the department asserts are more energy-efficient than those made of grain-oriented steel. Citing a need to employ new technologies and models that minimize waste, DOE estimates that the proposed standards would reduce American carbon dioxide emissions by 340 million metric tons during the next 30 years and result in approximately $15 billion in overall savings.   

JEA, a Jacksonville-based, not-for-profit, community-owned utility that provides safe, reliable, and affordable services to more than one million customers across four Northeast Florida counties, favors looking at any options that can reduce the nation’s carbon footprint. 

A case in point is our new Electric Integrated Resources Plan that has us on course for a power supply portfolio of 35% clean energy by 2030, coupled with the retirement of less efficient generating assets, 100% clean energy to serve our facilities, and expanded energy efficiency programs to offset the growing demands from the ongoing electrification of homes, businesses, and vehicles. Accomplished together, these goals will result in an 80% reduction in JEA’s overall carbon emissions since 2005. 

However, JEA believes—as do many across the utility industry nationally—that DOE’s proposed changes are ill-timed and would have the unintended consequences of decreased reliability and higher costs, which is particularly troublesome in the middle of unprecedented supply chain disruptions.   

Why?

Amorphous steel is more challenging and harder to work with than silicon steel for manufacturers and would require modifications to their facilities to accommodate. There are fewer suppliers for this steel (only one domestically) and would require a complete re-design of silicon steel core/coil assemblies. Also, in the event of a transformer short circuit, the amorphous core unit is less resilient and more likely to be damaged than a silicon steel unit. In summary, JEA is concerned about the cumulative effect/impact of these changes and their ultimate impact on operating costs, rates, and service to our customers.  

The cost-benefit equation for making this set of changes at this time just doesn’t work. Numerous sources, including the American Public Power Association, the National Rural Electric Cooperative Association and even concerned members of Congress, estimate that the switch from grain-oriented steel increases the operating energy efficiency of distribution transformers by only a fraction of a percentage point.  

At JEA, we have been embracing new approaches, which will enable us to meet a growing demand for distribution transformers, while also improving the effectiveness of our utility supply chains. Yet, the electric industry as a whole continues to experience a critical shortage of distribution transformers. The efficiency standards included in the NOPR would likely exacerbate a supply shortfall that has already reached crisis levels, threatening electric reliability, economic development, and the ongoing transition to cleaner generating resources.  

JEA is adding its voice to those who are strongly urging a pause in adoption of this NOPR until very real concerns about reliability, cost, supply and demand, and other issues are further addressed and resolved. While JEA supports the Biden administration’s stated goal to “reduce America’s carbon footprint while strengthening our security posture and lowering energy costs,” we also agree with the broader industry that both the timing and content of the significant changes proposed by DOE would actually have an adverse, longer-term impact on those aspirations.  

Published June 2023