December 06, 2023

Arlington, Va.—The National Electrical Manufacturers Association (NEMA) applauds the House Energy and Commerce Committee advancing H.R. 4167, the Protecting America’s Distribution Transformer Act. Sponsored by Rep. Richard Hudson (R-NC- 9). This bill would lock in today’s 97.70% efficiency requirement for distribution transformers for five years, allowing the Department of Energy to consider new energy efficiency requirements thereafter. This bill aims to provide certainty and confidence to manufacturers of this critical grid component that are currently operate with a fragile and strained supply chain. The bill would ensure that an evergreen bureaucratic mandate does not threaten DOE’s own goals of grid modernization and clean energy deployment.

“Manufacturers are working tirelessly to meet sustained record demand for these critical transformers, and we are thankful to Rep. Hudson for his work on the Protecting America’s Distribution Transformer Supply Chain Act”, said Debra Phillips, President and CEO, NEMA. “Manufacturers are committed to meeting the high levels of energy efficiency that exist today for distribution transformers, and to continuing to work with the Department of Energy to make further gains in the future. Given this time of record high demand and ongoing supply chain challenges, it is most prudent to provide manufacturing stability through regulatory certainty. This is particularly true given that the Department of Energy's proposed distribution transformer regulation would upend the manufacturing and design process, lengthen already growing lead-times, and further exacerbate supply chain disruptions with unclear gains in efficiency”.

DOE’s rule would require a wholesale shift in the source material used to make a transformer’s core, from grain oriented electrical steel to amorphous steel within an unrealistic timeframe and questionable efficiency gains. Currently, less than five percent of transformers are made using amorphous steel and there is only a single domestic supplier of this material. There is simply not enough domestic amorphous steel, nor will there be enough by DOE’s implementation date, for the entire manufacturing sector to shift their supply chains to accommodate this change. If implemented, this new rule would exacerbate dramatically the existing production lead-times for transformers.