NEMA-Led Coalition Seeks Bipartisan Support on Distribution Transformer Supply Chain Legislation
The National Electrical Manufacturers Association (NEMA), along with a broad coalition of trade associations, labor organizations, and companies, sent a letter to the Senate today seeking additional bipartisan support for S. 3627, the Distribution Transformer Efficiency and Supply Chain Reliability Act of 2024, sponsored by Senators Sherrod Brown (D-OH) and Ted Cruz (R-TX). The 12-member coalition, launched by NEMA in 2023, is working to ensure a secure and reliable domestic supply chain for critical grid components including distribution transformers.
The American Public Power Association, Cleveland-Cliffs, Inc., Edison Electric Institute, The GridWise Alliance, International Brotherhood of Electrical Workers, Leading Builders of America, National Association of Home Builders, National Rural Electric Cooperative Association, Transformer Manufacturing Association of America, United Auto Workers Union Local 3303, and Zero Emission Transportation Association joined NEMA in requesting Senators’ co-sponsorships.
“We thank Senators Brown and Cruz for sponsoring S.3627 and taking action to provide long-term supply chain certainty for transformer component suppliers, manufacturers, utilities and customers while maintaining practical efficiency gains,” said Debra Phillips, president and CEO, NEMA. “Our partners who’ve joined us on this letter understand the urgency of bolstering our transformer supply chain. Every aspect of American life that requires electricity depends on this critical grid infrastructure.”
“The ability to manufacture high-quality transformers domestically is critical from both a national security and national economic perspective. S. 3627 strikes the appropriate balance between implementing reasonable efficiency standards for distribution transformers while providing long-term supply chain certainty for domestic manufacturers at a critical time in the industry,” said Joe Donovan, executive director of the TMAA. “The diverse nature of this coalition with organizations from manufacturing, utilities and labor affirms that balance. The TMAA encourages passage of S. 3627 and thanks those offices that have joined onto the bill.”
The Department of Energy’s (DOE) 2023 proposed rule, Energy Conservation Program: Energy Conservation Standards for Distribution Transformers, effectively requires distribution transformers to shift from using industry standard grain oriented electrical steel (GOES) cores to amorphous steel cores to achieve marginal efficiency gains. DOE already requires distribution transformers to be highly efficient; currently, these products are made to be no less than 97.7% efficient. The shift in core steel would significantly upend the distribution transformer supply chain at a time when customers are already forced to wait more than two years for new orders due to supply chain complications. DOE is required to finalize its rule by June 1 and the rule is currently pending review at the Office of Management and Budget.
Since DOE published the proposed rule, NEMA has worked with lawmakers and supply chain partners to advocate for compromise legislation. The coalition letter follows a June 2023 bipartisan letter from Senator Bill Hagerty (R-TN), signed by 48 Senators, urging DOE to change course on the rule. In the House of Representatives, Congressmen Chris Deluzio (D-PA-17) and Mike Kelly (R-PA-16) have introduced a companion bill to the Brown and Cruz Senate version.
The Distribution Transformer Efficiency and Supply Chain Reliability Act of 2024 would set reasonable efficiency standards for distribution transformers and allow sufficient time for manufacturers and suppliers to implement the new manufacturing process. The legislation would also limit the ability of DOE to increase efficiency standards on distribution transformers in the future, removing this critical grid infrastructure from a constant cycle of supply chain disruptions. Finally, the legislation would preserve the ability for manufacturers to use industry standard GOES, while providing U.S. steel manufacturers sufficient time to meet new efficiency levels.
