HomeMy WebLinkAbout2024-011 Distribution TransformersMarch 29, 2024 Report No. 2024-011
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Department of Energy’s (DOE) Energy Efficiency Rule Proposal for Distribution Transformers.
EXECUTIVE SUMMARY:
Over the last couple of years, DME staff have been working with partner entities (American Public
Power Association, Texas Public Power Association, and various other electric utilities) to bring
awareness to supply chain challenges impacting the availability of distribution transformers. Since
the beginning of the COVID pandemic, the entire electric industry has experienced longer lead
times and increasing prices as a result of workforce shortages, transportation delays, and the
availability of raw materials (core steel, primarily). In addition, proposed standards by the DOE,
requiring the use of new materials (amorphous steel vs core steel, for example) are anticipated to
delay the manufacturing and delivery of distribution transformers and further increase lead times.
While DME staff have not previously informed the City Council about the DOE’s proposed
standards, nor disputed their efficiency or environmental impacts, the focus of DME’s federal
legislative activity has been to advocate for a slowdown in the implementation of these standards
so that lead times do not increase further. As of today, DME estimates that lead times are at 3-5
years from the date of order. If the DOE’s proposed standards take effect, DME anticipates lead
time may grow to 5-7 years.
DISCUSSION:
The availability of distribution transformers post Covid 19 pandemic has been severely reduced
causing the supply chain constraints that increased lead times and prices.1 These distribution
transformers are essential to meet the customer growth being experienced in Denton and all of
Texas. Equally important to DME is to maintain an inventory of distribution transformers to
replace equipment that fail or is damaged and to ensure that there is sufficient spare equipment to
restore electric service in the event of a catastrophic weather event impacting DME customers.
Since January 2022, the American Public Power Association (APPA) has issued three briefs
(Attachments A, B, & C) addressing supply chain challenges and the DOE’s proposed standards.
In October 2022, APPA announced the results of its August 2022 members’ survey that shows
“the production of distribution transformers is not meeting current demand, ‘as evident in the
significantly growing lead times, lack of stock in yards and the high number of project deferrals’
… “Ninety-five (95) public power utilities serving a total of 6,719,596 meters responded to the
survey.” See the APPA website for more information here: APPA Survey of Members Shows
Distribution Transformer Production Not Meeting Demand | American Public Power Association .
1 Price increases of up to 300% have been seen on certain types of distribution transformers.
March 29, 2024 Report No. 2024-011
In May 2023, the Department of Energy announced the proposed Energy Efficiency Rule which
did not appear to consider the documented distribution transformer shortages and lack of
manufacturing capacity to produce the new transformer efficiency standards.
Beginning in July 2023, DME staff engaged on the issue by advocating for support of legislation
that would provide federal funding to enhance domestic production of distribution transformers.
Unfortunately, the effort failed to gain support and the funding was not included in the 2024
Energy and Water Appropriations Bill. In conjunction with this effort, DME staff also engaged
with Federal Legislators regarding the DOE’s proposed standards and advocated for a delay in
their implementation. To date, DME staff’s engagement on these matters have included: letters of
support signed by Mayor Hudspeth; meeting with Federal Legislators and/or their staff; and
gathering and sharing DME specific inventory and procurement data on distribution transformers
to APPA and others. DME’s efforts have mirrored those by APPA, TPPA, and other electric
utilities across the Country. Due to a staff oversight, letters signed by the Mayor in February 2024
were not provided to the City Council and have been attached to this report (Attachment D).
In January 2024, Senator Brown (D-OH) introduced S. 3627, The Distribution Transformer
Efficiency and Supply Chain Reliability Act of 2024, and co-sponsored by Senator Cruz (R-TX)
and others. A companion bill in the House (H.R. 7171) has also been introduced and is identical
to the Senate bill. Both bills delay the DOE’s proposed standards for 10 years after they are
finalized. To be clear, other bills have also been introduced that would delay the implementation
of DOE’s proposed standards for 5 years. DME staff continue to monitor these bills, but no formal
action has been taken other than their introduction.
CONCLUSION:
DME staff remain concerned that the proposed DOE standards will further exacerbate distribution
transformer lead times. However, in recent testimony by the Secretary of Energy, Jennifer
Granholm, before the House Subcommittee on Energy and Water Development and Related
Agencies, she indicated that DOE “has been listening to criticism of its proposed rule to tighten
energy efficiency requirements for distribution transformers and ‘adjustments have been made’.
The DOE’s draft rule proposed the new energy efficiency standard for distribution transformers to
take effect in 2027, estimating it would save consumers approximately $15 billion over 30 years.
The agency has indicated it intends to issue a final rule in April.” Below is a link to the referenced
article:
Granholm tells Congress ‘adjustments have been made’ to distribution transformer proposal | Utility Dive
While the possibility of a resolution to this matter may be forthcoming, DME staff recommends
that legislative efforts to date continue in partnership with other entities across the Country. If a
City Council member would like to discuss this matter further or provide other direction to DME
staff, please submit a two-minute pitch request to the City Manager’s Office for an upcoming City
Council meeting.
March 29, 2024 Report No. 2024-011
ATTACHMENTS:
A – APPA’s Issue Brief (January 2022) Energy Efficiency.
B – APPA’s Issue Brief (May 2022) Critical Infrastructure and Supply Chain Constraints.
C – APPA’s Issue Brief (January 2024) Energy Efficiency.
D – Mayor Hudspeth’s February 2024 Letters.
STAFF CONTACT:
Tony Puente
DME General Manager
Antonio.Puente@cityofdenton.com
940-349-8487
REQUESTOR:
Staff Initiated
STAFF TIME TO COMPLETE REPORT:
2 hours
PublicPower.org
ISSUE BRIEF January 2022
Energy Efficiency
Summary
Energy efficiency is the ability to maximize energy use via more
efficient technologies throughout the electric utility system, as
well as for electric customers to minimize their energy use via
a variety of tools, technologies, and behaviors. It is one of the
most important, cost-saving tools available to utilities to meet
energy demand, defer generation investment, and reduce green-
house gas and other emissions. The federal government creates
incentives for energy efficiency through legislation, regulations,
the tax code, and executive orders. The American Public Power
Association (APPA) provides tools and supports research and
development projects for its members to deploy energy effi-
ciency measures at their utilities. APPA is generally supportive of
federal efforts to encourage and support such activities so long
as they are cost-effective for consumers and have a reasonable
payback period.
Regulatory Action
Beginning with the Energy Policy and Conservation Act
(EPCA) of 1975, Congress has passed several laws to promote
energy efficiency standards for consumer products and equip-
ment. Today, the Department of Energy’s (DOE) Building
Technologies Office implements minimum energy conserva-
tion standards for more than sixty categories of products. The
standard setting process, which includes the publication of
a proposed rule in the Federal Register, allows for public and
stakeholder feedback. DOE is required to set standards that are
“technically feasible and economically justified.” In 2007, Con-
gress passed the Energy Independence and Security Act (EISA),
which required DOE to create a schedule for the regular review
and updating of efficiency standards. DOE, along with the
Environmental Protection Agency, also administers the volun-
tary ENERGY STAR program to identify products and building
materials that go beyond federal efficiency standards.
While many of the efficiency standards set by DOE regulate
consumer products, including ceiling fans, light bulbs, furnaces,
and refrigerators, others may directly impact public power utili-
ties, notably the efficiency standards for distribution transform-
ers. Public power utilities, especially smaller municipally owned
electric utilities, are often distribution-only asset owners and
operators. A significant portion of their capital costs are for the
transformers and wires that bring electricity to end-use custom-
ers. Thus, APPA believes that any energy efficiency regulations
on distribution transformers must be economically justified to
ensure that end-use customers recoup the costs for any increases
in capital investments required through such regulations. Com-
plex electric system equipment, like a distribution transformer,
also requires an especially flexible and thoughtful approach
when it comes to energy efficiency regulations as there are often
situations where efficiency gains can come at the cost of broader
optimal system operability.
In August 2021, DOE proposed new energy efficiency
regulations for distribution transformers in Docket # EERE-
2019-BT-STD-0018. APPA filed comments with DOE in the
proceeding. The comments recommended that DOE delay
implementation of any new energy efficiency regulation until
the market for transformer materials has returned to the projec-
tions used in the economic justification for the proposed regula-
tion. The comments noted the need for flexible and economi-
cally justified regulations, as well as cited current supply chain
constraints for distribution transformers. The proposed rule is
still pending before DOE.
Congressional Action
Congress has long had, and continues to have, a strong interest
in promoting energy efficiency. Several energy efficiency provi-
sions were included in the Energy Act of 2020, which passed as
part of the Consolidated Appropriations Act of 2021 and was
signed into law on December 27, 2020. Specifically, the law
PublicPower.org
Energy Efficiency
reauthorized the Weatherization Assistance Program, a DOE
program which funds energy efficiency upgrades for low-income
households. The Energy Act of 2020 also directed DOE to
establish rebate programs to encourage the replacement of inef-
ficient electric motors and transformers, which APPA supports.
The Infrastructure Investment and Jobs Act (H.R. 3684),
signed into law on November 15, 2021, appropriated an ad-
ditional $2.5 billion for the Weatherization Assistance Program
and $550 million for the DOE Energy Efficiency Conservation
Block Grant program, which provides block grants to cities,
states, and Indian tribes for energy efficiency and conservation
projects. Additionally, the law will create a grant program for
energy efficiency improvements and renewable energy deploy-
ment at public schools.
Both Congress and the Biden administration have looked
to federal energy efficiency standards to spur energy efficiency,
with President Biden including an “Energy Efficiency and Clean
Electricity Standard” as part of the American Jobs Plan, an
infrastructure proposal released in March 2021 prior to the de-
velopment of the bipartisan Infrastructure Investment and Jobs
Act. Similarly, Representatives Peter Welch (D-VT) and Yvette
Clarke (D-NY) introduced legislation, H.R. 5889, the Ameri-
can Energy Efficiency Act, which would create a national energy
efficiency standard and require utilities to achieve a 27 percent
cumulative reduction in electricity use by 2035. Congress needs
to be cognizant that many energy efficiency improvements
require customers to purchase new appliances, make upgrades to
their homes or businesses, and/or change their personal behav-
ior, all actions that utilities cannot control. Though several states
have implemented energy efficiency goals or standards, APPA
believes that incentives, grants, rebates, and federal support for
efficiency-related research and development are a more effective
means to achieve greater energy efficiency nationally.
APPA Position
APPA strongly supports legislation to improve energy efficiency
in multiple sectors. Many public power utilities have already
taken steps on their own or through federal incentives, state
funds, or local initiatives to improve their own energy efficiency
and incentivize their customers to do the same. APPA will con-
tinue to work with Congress to promote strong energy efficiency
policies, as well as ensure that DOE efficiency standards issued
under EPCA are technically feasible and economically justified.
APPA Contact
Sarah Mathias, Government Relations Director,
202-467-2959 / smathias@publicpower.org
The American Public Power Association is the voice of
not-for-profit, community-owned utilities that power
2,000 towns and cities nationwide. We represent
public power before the federal government to protect
the interests of the more than 49 million people that
public power utilities serve, and the 96,000 people
they employ. Our association advocates and advises
on electricity policy, technology, trends, training, and
operations. Our members strengthen their communi-
ties by providing superior service, engaging citizens,
and instilling pride in community-owned power.
PublicPower.org
T he U.S. economy has been deeply impacted by
supply chain constraints. These constraints are due to
shortages of labor and multiple classes of materials,
causing disruptions on a global level. For public pow-
er utilities, the ability to provide reliable and affordable power to
homes, businesses, and critical facilities is foundational to both
their business model and the recovery and expansion of the U.S.
economy. Prioritization of critical electric infrastructure and the
electric industry’s critical functions during this period of material
shortages and delays is necessary to prevent further economic
slowdown and ensure electric reliability.
Supply of critical equipment and materials is
decreasing while demand continues to grow,
widening the gap between what is available
and what is needed.
Electric utilities are experiencing shortages of distribution
transformers, smart meters, conductor materials, skilled labor,
and other necessities due to the economic impacts from the
COVID-19 pandemic. Delayed investments and expanding lead
times for new equipment caused by a lack of materials and labor
will continue to compound the problem—possibly for years to
come.
As the economy rebounds from the impacts of the pandemic,
additional electric capacity is needed to power new residential
and commercial development, new manufacturing facilities, and
to support a rapidly expanding electric vehicle fleet. Public pow-
er utilities are investing heavily in clean energy technologies to
meet environmental goals. Simultaneously, the industry is facing
extreme weather events, which have become more frequent and
severe, requiring more resource-intensive response and resto-
ration.
Critical Infrastructure
And Supply Chain Constraints
Distribution transformers and other
materials are in critically short supply.
Distribution transformers are essential for electric utilities to
expand capacity, provide electricity to new communities, and
restore service when existing infrastructure is damaged during
a hurricane, winter storm, or other natural disaster. In a recent
survey of public power utilities, 80 percent reported having
either pad-mounted or pole-mounted distribution transformer
inventories that are lower today than they were in 2018. The
median percent of distribution transformers companies have this
year compared to 2018 is down by 25 percent. Some companies
have only 10 to 15 percent of the number of transformers they
had four years ago.
Lead times to purchase new distribution transformers have
risen from three months in 2018 to an extraordinary 12 months
or more today. Utilities have relied on their existing inventory
of transformers and other measures to bridge the gap between
equipment purchase and arrival but have begun to report that
their buffer inventories are decreasing to unacceptable levels.
Assuming no changes to the current situation, 21 percent of
surveyed public power utilities could run out of new transform-
ers within the quoted 12-month lead time needed for newly
purchased equipment to arrive.
Prolonged supply chain constraints on
critical electric infrastructure could be
detrimental to the U.S.
As hurricane and wildfire season approaches, maintaining a suffi-
cient inventory of critical equipment for emergency response and
restoration is especially important. The historically severe grid
impacts of Hurricane Laura in 2020 and Hurricane Ida in 2021
combined with increasingly urgent supply chain constraints have
ISSUE BRIEF May 2022
Critical Infrastructure and Supply Chain Constraints
PublicPower.org
left electric utilities with depleted and decreasing transformer
inventories, raising concerns about the feasibility of responding
to and recovering from another severe storm season, even with a
robust mutual aid program in place.
Supply chain constraints, particularly shortages of distri-
bution transformers, have caused electric utilities to delay or
cancel infrastructure projects that would require more resources
than are available. Many of the industry’s planned projects are
designed intentionally to transition to cleaner energy resources,
and significant construction delays have the potential to put the
nation’s clean energy objectives at risk. Already the transformer
shortage is impacting the housing market, with construction
companies being required to use generators long-term to keep
their job sites powered while utilities look for transformers to
feed new electrical load.
To ensure that supply chain constraints do not impact reli-
ability, utilities are taking extraordinary measures to meet current
demand with the limited supply of equipment that is available,
including refurbishing older equipment and identifying swap-
ping equipment in the field to generate spares from underuti-
lized equipment. These are last-ditch efforts to protect the safety
of electric customers and sustain other sectors that depend on
electricity, but these efforts move the industry further away from
clean energy, efficiency, and affordability goals.
Utilities are discussing the issue with the federal government,
working with manufacturers, and with the entire sector to en-
courage additional production and sharing of transformers.
APPA Contact
Alex Hofmann, Vice President, Technical & Operations Services,
202-467-2956 / ahofmann@publicpower.org
Corry Marshall, Senior Government Relations Director,
202-467-2939 / cmarshall@publicpower.org
The American Public Power Association is the voice
of not-for-profit, community-owned utilities that
power 2,000 towns and cities nationwide. We represent
public power before the federal government to protect
the interests of the more than 49 million people that
public power utilities serve, and the 93,000 people
they employ. Our association advocates and advises on
electricity policy, technology, trends, training, and op-
erations. Our members strengthen their communities
by providing superior service, engaging citizens, and
instilling pride in community-owned power.
PublicPower.org
ISSUE BRIEF January 2024
Energy Efficiency
• Energy efficiency is one of the most important, cost-saving tools available to utilities to meet energy demand, defer generation
investment, and reduce greenhouse gas and other emissions.
• The federal government creates incentives for energy efficiency through legislation, regulations, the tax code, and executive
orders. The American Public Power Association (APPA) is generally supportive of federal efforts to encourage and support
efficiency if they are cost-effective for consumers and have a reasonable payback period.
• Given that many energy efficiency improvements require changes in customer behavior that are beyond a utility’s control,
APPA believes Congress should continue to provide incentives, grants, rebates, and federal support for energy efficiency
research and development to encourage, but not mandate, achieving greater energy efficiency.
• APPA urges the Department of Energy (DOE) to maintain current conservation standards for distribution transformers.
Background
Energy efficiency is the ability to maximize energy use via more efficient technologies throughout the electric utility system, as well
as for electric customers to minimize their energy use via a variety of tools, technologies, and behaviors. Beginning with the Energy
Policy and Conservation Act of 1975 (EPCA), Congress has passed several laws to promote energy efficiency standards for consumer
products and equipment. Today, DOE’s Building Technologies Office implements minimum energy conservation standards for more
than 60 categories of products. The standard setting process, which includes the publication of a proposed rule in the Federal Register,
allows for public and stakeholder feedback. DOE is required to set standards that are “technically feasible and economically justified.”
In 2007, Congress passed the Energy Independence and Security Act, which required DOE to create a schedule for the regular review
and updating of efficiency standards. DOE, along with the Environmental Protection Agency (EPA), administers the voluntary
ENERGY STAR program to identify products and building materials that go beyond federal efficiency standards.
While many of the efficiency standards set by DOE regulate consumer products, including ceiling fans, light bulbs, furnaces,
and refrigerators, some may directly impact public power utilities, notably the efficiency standards for distribution transformers.
Public power utilities, especially smaller ones, are often distribution-only asset owners and operators. A significant portion of their
capital costs are for the transformers and wires that bring electricity to end-use customers. APPA believes that any energy efficiency
regulations on distribution transformers must not constrain market production and be economically justified to ensure that
end-use customers recoup the costs for any increases in capital investments required through such regulations. Complex electric
system equipment, like a distribution transformer, also requires an especially flexible and thoughtful approach to energy efficiency
regulations, as there are often situations where efficiency gains can come at the cost of broader optimal system operability. For more
information on distribution transformers, please see APPA’s issue brief, “Critical Infrastructure and Supply Chain Constraints.”
In response to increasingly severe distribution transformer supply chain constraints, in May 2022, APPA and the National Rural
Electric Cooperative Association sent a letter to DOE Secretary Jennifer Granholm urging her to temporarily waive the existing
energy conservation standard for distribution transformers. Manufacturers could use the waiver at their discretion to increase output
as much as possible until the immediate supply crisis has abated, thereby increasing the stock of transformers available to public
power and other utilities. DOE subsequently denied the request.
PublicPower.org
Energy Efficiency
APPA filed public comments in response to DOE proposals to increase energy efficiency standards for distribution transformers
and EPA ENERGY STAR proposals for distribution transformers. The comments supported the need for flexible and economically
justified regulations. In December 2021, APPA responded to a DOE pre-filing for distribution transformers standards recommending
that DOE delay implementation of a new energy efficiency regulation until the market for transformer materials returned to the
projections used in the economic justification for the proposed regulation, citing current supply chain constraints for distribution
transformers. In December 2022, DOE released its Notice of Proposed Rulemaking (NOPR) for new efficiency standards for all
categories of distribution transformers that would require a conversion to the use of amorphous steel cores. In March 2023, APPA
filed comments in response to the NOPR stating that the standard and analyses used in it do not comport with EPCA requirements
and that the proposed standards would “worsen already critical distribution transformer supply shortages.” The final rulemaking has
not yet been released.
Congressional Action
Several energy efficiency provisions were included in the Energy Act of 2020, which was enacted into law as part of the Consolidated
Appropriations Act of 2021 (P.L. 116-260). Specifically, the law reauthorized the Weatherization Assistance Program (WAP), a DOE
program that funds energy efficiency upgrades for low-income households. The Energy Act of 2020 also directed DOE to establish
rebate programs to encourage the replacement of inefficient electric motors and transformers, which APPA supports.
The Infrastructure Investment and Jobs Act (IIJA/P.L. 117-58) appropriated an additional $2.5 billion for the WAP. It also
appropriated $550 million for the DOE Energy Efficiency and Conservation Block Grant program, which provides block grants to
cities, states, and Indian tribes for energy efficiency and conservation projects. Additionally, the law will create a grant program for
energy efficiency improvements and renewable energy deployment at public schools.
The Inflation Reduction Act (P.L. 117-169) extended or created several new tax incentives for residential energy efficiency
improvements, including increasing the credit for residential energy efficiency home improvements, energy efficient home appliances,
creating a rebate program for residential energy saving retrofits, and new grants for states to support energy efficiency training for
contractors.
In response to increasing concerns about how the distribution transformer supply chain issue is impacting communities across the
country, including delaying when electric utilities can connect new housing and businesses to the electric grid, as well as potentially
slowing down electrification efforts, senators and representatives from both parties in the spring of 2023 sent letters to Secretary
Granholm requesting that DOE withdraw its proposed rule regarding new efficiency standards for distribution transformers. The
House letter was led by Representative Diana Harshbarger (R-TN) and signed by 64 House members. Senator Bill Hagerty (R-TN)
led a similar letter that was signed by 45 senators.
In June 2023, Representative Richard Hudson (R-NC) and Senator John Barrasso (R-WY) introduced the Protecting America’s
Distribution Transformer Supply Chain Act of 2023 (H.R. 4167/ S. 2036). The legislation would prohibit DOE from moving
forward on its proposed energy efficiency standards to increase conservation standards for distribution transformers over the next five
years. H.R. 4167 was approved by House Energy & Commerce Committee in December 2023. APPA strongly supports these bills;
at minimum, a delay of five years is needed to allow market production to catch up to demand.
Similar language to prevent DOE from using funding to move forward on the NOPR was included in the House Fiscal Year
(FY) 2024 Energy and Water Development and Related Agencies Appropriations Bill. The FY 2024 Senate Energy and Water
Appropriation Bill includes $1.2 billion through 2026 to “enhance the domestic supply chain for the manufacture of electric
grid components.” The funding is provided through several programs authorized under the IIJA. This funding could help address
identified labor and materials shortages. The committee report accompanying the bill also includes language raising concerns over the
distribution transformer crisis and the impact it could have on reliability, resilience, and affordability.
APPA Contact
Steve Medved, Government Relations Manager, 202-467-2928 / smedved@publicpower.org
The American Public Power Association is the voice of not-for-profit, community-owned utilities that power 2,000 towns and cities
nationwide. We represent public power before the federal government and protect the interests of the more than 49 million people
that public power utilities serve and the 96,000 people they employ.
Office of the Mayor
215 E. McKinney St., Denton, TX 76201 (940) 349-7717
OUR CORE VALUES
Inclusion Collaboration Quality Service Strategic Focus Fiscal Responsibility
ADA/EOE/ADEA www.cityofdenton.com TDD (800) 735-2989
Friday, February 2, 2024
The Honorable Ted Cruz
United States Senate
Washington DC 20510
Via email: timothy_kocher@cruz.senate.gov
Dear Senator Cruz:
Thank you for introducing bipartisan legislation (S. 3627) that will set reasonable and attainable
energy efficiency standards for electric distribution transformers without exacerbating supply
chain issues or harming domestic production of this piece of critical equipment.
Denton Municipal Electric (DME) supports the goal of increasing the efficiency of all our electric
distribution system. As a citizen-owned public utility, our priority is providing our customers with
the most affordable and reliable service possible, and improved energy efficiency plays a key role
in meeting our core mission. However, given the supply chain crisis for electric distribution
transformers, we fear that implementation of the Department of Energy’s proposed efficiency
standards will exacerbate the transformer supply chain crisis, increasing our costs and threatening
the reliability of our service. The standard outlined in your bipartisan bill will meet the goals of
increasing energy efficiency and ensuring a strong domestic supply of transformers.
I am pleased that your bill enjoys broad stakeholder support, and I hope the Senate will act on it
soon. Please let me know how we can be of assistance as you move this bill forward.
Thank you for your work on this Denton priority.
Sincerely,
Gerard Hudspeth
Mayor
Office of the Mayor
215 E. McKinney St., Denton, TX 76201 (940) 349-7717
OUR CORE VALUES
Inclusion Collaboration Quality Service Strategic Focus Fiscal Responsibility
ADA/EOE/ADEA www.cityofdenton.com TDD (800) 735-2989
Friday, February 2, 2024
The Honorable John Cornyn
United States Senate
Washington DC 20510
Via email: laura_atcheson@cornyn.senate.gov
Dear Senator Cornyn:
I am pleased that Senators Cruz and Brown have introduced bipartisan legislation (S. 3627) that
will set reasonable and attainable energy efficiency standards for electric distribution transformers
without exacerbating supply chain issues or harming domestic production of this piece of critical
equipment, and I respectfully urge you to cosponsor this bill. S. 3627 enjoys broad stakeholder
support, and I hope the Senate will act on it soon.
As we wrote last year, the supply chain crisis for electric distribution transformers seriously
impacted Denton Municipal Electric (DME). We have nearly $22 million in outstanding purchase
orders for electric distribution transformers, with a waiting time of 1.5 to 3 years for delivery of
new orders. As a result, our inventory of transformers is at levels reserved for normal, daily
operational responsibilities and emergency response but falls short of meeting the extraordinary
growth we are experiencing. DME has 71 construction-ready projects and another 131 projects
currently in the design phase. Due to the low inventory of transformers and current supply chain
issues, we have notified customers and developers DME may not be able to provide immediate
service to these projects.
DME supports the goal of increasing the efficiency of all portions of our electric distribution
system. As a citizen-owned public utility, our priority is providing our customers with the most
affordable and reliable service possible, and improved energy efficiency plays a key role in
meeting our core mission. However, given the supply chain crisis for electric distribution
transformers, we fear that implementation of the Department of Energy’s proposed efficiency
standards will exacerbate the transformer supply chain crisis, increasing our costs and threatening
the reliability of our service. The standard outlined in S. 3627 will meet the goals of increasing
energy efficiency and ensuring a strong domestic supply of transformers.
Thank you for your attention to this Denton priority.
Sincerely,
Gerard Hudspeth
Mayor