The Trump administration is considering revising energy efficiency requirements for distribution transformers that were approved two years ago to wide industry acclaim, generating fresh concerns among utilities and other electric sector stakeholders about grid expansion bottlenecks.
The new rules, set to go into effect in 2029, adjust transformer efficiency targets to require the use of more amorphous electrical steel in the critical grid equipment, along with the grain-oriented electrical steel, or GOES, that’s most common now.
DOE’s 2024 rule change ultimately took a middle-ground approach, allowing the use of both GOES and amorphous steel to ensure manufacturers can meet the growing need for grid equipment. When the rule was finalized, timelines to acquire new distribution transformers were running 18 months or longer, and the fear was that a rapid restructuring of manufacturing and steel supply chains would worsen the situation.
Stakeholders at the time praised the rule for balancing efficiency gains with market realities.
Trump’s DOE has taken a broad deregulatory approach to efficiency, however, seeking to roll back a host of rules finalized under the Biden administration and “permanently end home appliance and equipment mandates.”
In June, DOE published a request for comments on potential changes to the distribution transformer rule, in particular on how new requirements impact national security considerations, including “domestic manufacturing capacity, supply chain resilience, and the availability and cost of key materials.”
While Trump has campaigned against limits on how much energy light bulbs, washing machines, furnaces and other devices use, transformers are a niche product.
“We're not aware of anyone asking for this,” Andrew deLaski, executive director of the Appliance Standards Awareness Project, told Utility Dive in an email. The group supported the 2024 transformer rule and other stricter efficiency requirements DOE finalized during the Biden administration.
The Edison Electric Institute, which represents investor-owned electric utilities, supported the 2024 rule and told the DOE in comments filed July 15 that — rather than repealing the changes — its members would benefit from longer compliance times as supply chain issues and cost increases have exacerbated in the last two years.
“Compliance flexibility preserves the efficiency gains while providing DOE, industry, and the electrical steel supply chain with additional time to align investments with the realities of the current operating environment,” the group said. The sector has made investments in the past two years to meet the new efficiency requirements, and “wholesale repeal would strand those investments, discourage future investment, and disrupt the productive collaboration that has been occurring across the value chain,” EEI said.
The American Public Power Association said in comments it filed on July 9 that it “does not advocate for any changes to the final rule,” but it added that the federal government “should continue to monitor the supply chain, particularly the development of amorphous steel, to help ensure the April 2029 transition does not lead to increased constraints.”
The National Rural Electric Cooperative Association, in July 14 comments, said the 2024 rule “strikes the right balance.”
Most manufacturers still appear on board with the changes made by Biden’s DOE.
The National Electrical Manufacturers Association, which represents manufacturers of grid equipment, in July 15 comments said it “urges DOE to refrain from actions that would disrupt the certainty of the 2024 rulemaking ... The changes established a framework that provided certainty and balanced efficiency objectives with manufacturing and supply chain realities.”
The Electric Research and Manufacturing Cooperative, a U.S. manufacturer of distribution transformers, said the 2024 rule is a “reasonable, balanced, and achievable pathway toward improved energy efficiency while enhancing the stability of the U.S. transformer supply chain.”
However, at least one major stakeholder is backing DOE’s reconsideration. Cleveland-Cliffs, the second-largest steel manufacturer in the U.S., on July 15 said it supports DOE making changes to the 2024 rule it previously supported. The company is the sole producer of GOES for distribution transformers in North America.
In an April 2024 statement, Cleveland-Cliffs applauded the then-new rule and said it would ensure the company’s ability to continue producing GOES, likely leading to increased demand for its products.
Now, the steelmaker is recommending DOE “proceed with revisions to the 2024 rule to preserve utilization of GOES for all types of covered distribution transformers,” by either continuing to apply the current 2016 standards “indefinitely” or to adopt a different efficiency standard.
The 2024 energy conservation standards “will weaken domestic supply chains and serve as a disincentive for further investment in domestic GOES capacity,” Cleveland-Cliffs wrote. “This rule will also increase U.S. dependence on imported materials for transformers ...This mandate will raise the cost of transformer production, increase foreign supply dependence, and increase energy costs, all to gain negligible energy efficiency improvements.”
