WASHINGTON, D.C. – U.S. Sen. Ted Cruz (R-Texas) joined Bill Hagerty (R-Tenn.) and 45 of their colleagues in a bipartisan letter to Department of Energy (DOE) Secretary Jennifer Granholm, raising their concern about a proposed rule by the DOE that purports to increase efficiency standards on distribution transformers—critical electric grid components. The proposed rule, Energy Conservation Program: Energy Conservation Standards for Distribution Transformers, would, in effect, require the industry to produce transformers using a different type of steel. This will further exacerbate supply chain shortages as manufacturers will need significant time to revamp their production lines. The current domestic supply of this newly-required “amorphous steel” is limited, and scaling up production to accommodate the entire distribution transformer market would cause significant manufacturing delays.

About the letter, Sen. Cruz said, “Texas transformer producers have been raising concerns about this proposed rule, and I fear the unintended consequences due to limited supply, high demand, and significant residential growth in the Lone Star State will cause serious supply chain issues if this proposed rule gets enacted.”

The Senators wrote, “Currently, the United States only has one domestic producer of amorphous steel. Moving to amorphous steel cores, as proposed by DOE, would require this sole domestic supplier to rapidly scale operations from its current market share of less than five percent to accommodate the entire distribution transformer market. Such a recalibration of the supply chain will further delay manufacturing production timelines—currently estimated to be a minimum of 18 months to two years.”

About the rule, Entergy Texas President and CEO Eliecer Viamontes said, “While well-intentioned, the timing and substance of the U.S. Department of Energy’s distribution transformer efficiency rule has created uncertainty for our nation’s electric steel and transformer manufacturers at a time when suppliers need to be expanding capacity to address global supply chain constraints. This national hardship, which is being felt most acutely in Texas due to significant growth, is impacting residential housing and economic development. The proposed rule can also have implications on disaster preparedness and grid hardening activities. Entergy Texas looks forward to working with Senator Cruz and being a part of near and long-term solutions to support Texas families, our customers and the growing business needs of our state.”

The senators urged the DOE to refrain from enacting this proposed rule, which would exacerbate transformer shortages and could come at a significant cost to grid reliability and national security while offering little in the way of advancing clean energy. Additionally, the senators requested a briefing with the DOE on the advancement of the proposal and how the DOE can address the supply chain challenges.

A rule mandating the transition to a new type of steel for transformers would have a serious impact on Texas, potentially causing years-long delays for construction projects, and threatening target dates. It would also require utilities companies to find and vet foreign suppliers in order to meet demand, instead of relying on American suppliers.

Read the letter here.

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