NRECA and a broad coalition of power industry stakeholders told Energy Secretary Jennifer Granholm that a mandate to replace traditional steel cores in electric distribution transformers with less readily available amorphous steel will threaten national security and grid reliability and raise costs in an already stressed critical infrastructure market. 

“The inability to quickly manufacture and deliver these critical components threatens the ability of the electric sector to service current and planned housing markets, swiftly recover and restore service following natural disasters, and deliver the benefits of economy-wide electrification,” the coalition said in a Feb. 15 letter. 

In addition to NRECA, the letter was signed by the National Electrical Manufacturers Association, American Public Power Association, Edison Electric Institute, Leading Builders of America, National Association of Homebuilders and GridWise Alliance.

Slated to take effect in 2027, the rule would require distribution transformer manufacturers to discontinue use of grain-oriented electrical steel and replace it with amorphous steel, which enhances transformer efficiency, according to the Department of Energy.

The coalition said it recognized the importance of energy efficiency but noted that the relatively small number of domestic amorphous steel manufacturers “would delay the realization of these benefits by worsening supply chain complications already well known to DOE.” 

“The rule would impose unnecessary cost burdens and further delay the delivery of such critical products,” the coalition said. “Simply put, this DOE proposal does nothing to address, and is likely to exacerbate, the current distribution transformer shortage crisis.”

Last year under the Defense Production Act, President Joe Biden issued new authority to DOE to fast-track domestic production of transformers in support of grid resiliency and national security.

At Granholm’s request, the Electricity Subsector Coordinating Council created a “Tiger Team” in 2022 to examine the supply chain crisis and found transformer production lagging years behind demand for the foreseeable future. 

NRECA CEO Jim Matheson called the DOE’s current pursuit of the proposal “shortsighted” for its potential to “jeopardize reliability during ongoing supply chain challenges.” 

“For the past two years, electric cooperatives have sounded the alarm and asked the Department of Energy to support efforts that would reduce historic supply chain constraints in the energy sector,” Matheson said. 

The proposed rule “is playing out against the backdrop of an electric grid that is increasingly stretched,” he said. “Rather than creating a new threat to reliability and exacerbating current problems, common sense should prevail at DOE.”

At a DOE public webinar on Feb. 16, electric co-ops and other stakeholders expressed many of these concerns, including the rule’s unattainable deadline and that today’s power poles, trucks and pads may be inadequate to support the larger, heavier amorphous steel transformers. Replacing existing transformers due to age or degradation with those made from amorphous steel will lead to greater costs and delays across production and operations, they said.

NRECA believes DOE’s analysis overstates the efficiency gains of using amorphous over grain-oriented electrical steel, said Stephanie Crawford, NRECA regulatory affairs director. 

“The benefits of amorphous steel cannot be realized without specific operating conditions at electric utilities that can vary widely,” she said. “Now is the wrong time to move forward with this proposal. DOE should consider conducting some pilots with utilities interested in doing so to gain real world operating experience before moving forward with such a significant change.” 

NRECA on Feb. 10 filed comments with the Department of Justice outlining its concerns about the transformer proposal and will provide written comments to DOE by its March 27 deadline.