ACEEE NEWS RELEASE

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U.S. ENERGY DEPARTMENT SETS NEW ENERGY SAVINGS STANDARDS

New Electric Distribution Transformer Standards Improve on Earlier Proposal, But Fall Short of Utility Industry and Environmental Groups' Recommendation

October 12 , 2007

Washington, D.C.—The electric industry along with efficiency and environmental groups said new electric distribution transformer standards finalized by the Department of Energy today improve upon an initial proposal issued last year, but fall short of the strong levels the groups had jointly endorsed with one of the biggest transformer manufacturers.

"We're glad DOE has improved upon their original proposed standard," said Steven Nadel, Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). "But, with the buyers and one of the biggest sellers of transformers urging even higher standards, DOE could have done better."

Electric distribution transformers are the ubiquitous large grey, green, or sometimes brown metal cylinders or boxes on utility poles and cement pads that reduce or "step down" voltage from the levels used to efficiently ship power over an electric distribution network to the levels needed for business and household use. About 41 million transformers are in use across the U.S. A slight improvement in transformer efficiency would result in large electricity savings.

In February of this year, energy efficiency and environmental groups joined together with the utility industry (the major buyers of transformers), represented by Edison Electric Institute (EEI) and the American Public Power Association (APPA), to recommend stronger standards (see http://aceee.org/press/0702transformers.htm). One of the largest transformer manufacturers, ABB, also endorsed these strong standards in July (see http://aceee.org/press/0707transformers-ABB.htm).

"With approximately 41 million transformers serving the nation's electrical distribution systems, any improvement in efficiency is going to lead to significant energy savings, and we are glad to see this new standard," said Thomas R. Kuhn, President of the Edison Electric Institute, which represents the nation's investor-owned electric utilities. "We believe our groups' recommendation for an even higher standard would have resulted in greater energy savings, but we plan to keep working with the DOE to continually improve efficiency standards for all electrical devices."

"The twin challenges of global warming and energy security call for bold action to ensure the most efficient use of energy resources," said David B. Goldstein, Energy Program Co-Director of the Natural Resources Defense Council (NRDC). Goldstein noted that recently both the head of the President's Council on Environmental Quality, James Connaughton, and Secretary of State Condoleeza Rice had highlighted appliance standards as one of best ways to cut global warming emissions. Goldstein said, "These standards clearly fall short of making energy efficiency a top priority in the fight against global warming when both the main users and a big producer of the equipment asked for more savings."

According to the DOE, the initial standards proposed in August 2006 would have saved 1.94 quadrillion Btu's of primary energy over 29 years (according to DOE's analysis, 1.94 quadrillion Btu's equals 238 billion kilowatt-hours or roughly enough electricity to meet the annual needs of 19 million households). The higher standards recommended by utility companies, as represented by EEI and APPA, the environmental and efficiency groups, and ABB would have saved another 1.06 quadrillion Btu's (1.06 quadrillion Btu's equals 130 billion kilowatt-hours or roughly enough to meet the annual needs of an additional 10 million households), or about 50% more. With today's final rule, DOE improved upon the initial proposal, increasing savings by 0.67 quadrillion Btu's, capturing about two-thirds of the increased savings recommended by the utility, environmental, and efficiency groups, and ABB. If DOE had chosen the higher standard, the additional electricity savings over 29 years would have been about 48 billion kilowatt-hours—an amount equal to the consumption of all the homes in New York State in 2005.

"Users and producers of distribution transformers—the ones who will be impacted directly by the DOE rulemaking—called on DOE to issue stronger standards because they recognize that energy efficiency is the cheapest and fastest way to cut global warming emissions and to extend our nation's energy supplies," said Kateri Callahan, President of the Alliance to Save Energy. "DOE's decision to do less than we had asked means that we left potential energy and CO₂ savings 'on the table' and that's sad news for our country."

The utility, efficiency, and environmental groups had recommended that concerns about availability of materials needed to produce higher-efficiency transformers could be addressed with a two-stage approach consisting of modest initial standards, followed by stronger levels implemented several years later.

Individual companies that endorsed the higher standards include Exelon, Duke Energy, National Grid, Great Plains Energy, PNM Resources, Pacific Gas and Electric, Baltimore Gas and Electric, ConEd, Public Service Electric and Gas Company, New York Power Authority, Long Island Power Authority, Snohomish County Public Utility District, and Sacramento Municipal Utility District.

"In the Northeast, we're counting on DOE to set the strongest, cost-effective standards justified for each of the pending new national standards," said Sue Coakley, Executive Director of Northeast Energy Efficiency Partnerships. "Many states are setting big energy savings goals, and new standards are a big part of how those goals will be met."

Today's transformer standards are the first increased standards completed by the Bush Administration since taking office in 2001. Final standards for home heating furnaces and boilers are due out soon. Another twenty standards must be completed within the next few years under a court-ordered schedule determined in response to litigation brought by NRDC, National Consumer Law Center, and ten states.

"New energy savings standards can help curb the nation's growing appetite for energy," said Andrew deLaski, Executive Director of the Appliance Standards Awareness Project. "However, big savings will require DOE to be much less timid."

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Edison Electric Institute (EEI) is the association of United States shareholder-owned electric companies, international affiliates, and industry associates worldwide. Our U.S. members serve 97 percent of the ultimate customers in the shareholder owned segment of the industry, and 71 percent of all electric utility ultimate customers in the nation. They generate almost 60 percent of the electricity produced by U.S. electric generators.

The American Public Power Association (APPA) serves the nation's more than 2,000 not-for-profit, community- and state-owned electric systems. Public power systems serve 44 million people in 49 states, or about 15 percent of all electricity customers. They own about 10 percent of the nation's generating capacity.

The Natural Resources Defense Council (NRDC) is a national, nonprofit organization of scientists, lawyers and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has 1.2 million members and online activists nationwide, served from offices in New York, Washington, Chicago, Los Angeles, San Francisco and Beijing.

The Appliance Standards Awareness Project (ASAP) is dedicated to increasing awareness of and support for energy-saving appliance and equipment efficiency standards. Founded in 1999, ASAP is led by a steering committee that includes representatives from the environmental community, consumer groups, utilities and state government.

The Alliance to Save Energy (ASE) is a coalition of prominent business, government, consumer and environmental leaders who promote the efficient and clean use of energy worldwide to benefit the economy, environment, and national security.

Northeast Energy Efficiency Partnerships, Inc. (NEEP) is a regional nonprofit organization founded in 1996 whose mission is to promote energy efficiency in homes, buildings and industry in the Northeast U.S. through regionally coordinated programs and policies that increase the use of energy efficient products, services and practices, and that help achieve a cleaner environment and a more reliable and affordable energy system. For more information, please visit http://www.neep.org/.

The American Council for an Energy-Efficient Economy (ACEEE) is an independent, nonprofit organization dedicated to advancing energy efficiency as a means of promoting both economic prosperity and environmental protection. For information about ACEEE and its programs, publications, and conferences, contact ACEEE, 1001 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036-5525 or visit http://aceee.org/.