Shenango Valley News

U.S. Representative Mike Kelly (R-PA) has introduced The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024, a bill aimed at bolstering the U.S. transformer supply chain and securing domestic steel production. The legislation sets new energy efficiency standards for distribution transformers, which are crucial components of electricity grids, in order to meet increasing demand without disrupting supply chains or undermining American steel production.

The bill is a response to a proposed rule by the U.S. Department of Energy (DOE) that could exacerbate supply chain challenges for distribution transformers and create a shortage of related components. In December 2023, Rep. Kelly sent a letter opposing the proposed rule, which would mandate the use of amorphous metal (AM) cores instead of Grain-Oriented Electrical Steel (GOES) cores. GOES cores are currently used in electrical distribution transformers across the country.

Rep. Kelly is leading the bill with co-sponsors from both sides of the aisle, including Chris Deluzio (D-PA), Dan Meuser (R-PA), Susan Wild (D-PA), Brian Fitzpatrick (R-PA), Henry Cuellar (D-TX), Guy Reschenthaler (R-PA), and Lloyd Smucker (R-PA).

Rep. Kelly expressed concerns about the proposed rule, stating, "This rule would severely limit the ability of our utility providers to ensure grid reliability and security while making us dependent on foreign imports of amorphous metal. Grid security and reliability are vital to our economic and national security."

Rep. Deluzio, another co-sponsor of the bill, emphasized the importance of American-made electrical steel, saying, "There’s only one GOES producer left in the US, and they are right here in Western Pennsylvania. This bill works to ensure this plant and its union workers don’t get choked out by severe standards imposed by the Department of Energy."

The bill has received support from industry leaders and stakeholders. Lourenco Goncalves, Chairman, President & CEO of Cleveland-Cliffs Inc., praised the legislation for promoting energy efficiency and maximizing the use of domestically produced GOES. He highlighted the importance of GOES in supporting the electric grid and ensuring U.S. energy security.

The bill has also garnered support from labor unions. Jamie Sychak, President of UAW Local 3303, applauded the efforts of Rep. Kelly and Rep. Deluzio, stating, "Energy efficient transformers are crucial components of our nation’s infrastructure. Equally important is our ability to manufacture them domestically from US sourced electrical steel."

Debra Phillips, President and CEO of the National Electrical Manufacturers Association (NEMA), emphasized the need for a strong supply of distribution transformers to ensure a reliable grid. She commended the bipartisan focus on the issue and expressed appreciation for the legislation, which will provide domestic manufacturers with the certainty they need to meet the growing demand for transformers.

The bill has also received support from the National Rural Electric Cooperative Association and the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW).

Companion legislation has been introduced in the Senate by Senators Ted Cruz (R-TX) and Sherrod Brown (D-OH).

The proposed rule by the DOE comes at a time when the supply chain constraint for distribution transformers has significantly increased, with demand surpassing current production rates. The bill aims to address this issue by setting new energy efficiency standards while preserving market opportunities for both GOES and amorphous steel.

The legislation is crucial for preserving domestic steel production and securing the electrical grid. Implementation of the proposed rule would not only jeopardize American jobs but also leave the U.S. reliant on imports for critical components of the grid. The bill aims to prevent this and ensure the long-term energy efficiency and reliability of the grid for customers.

The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024 is a bipartisan effort to promote domestic manufacturing, protect American jobs, and strengthen national security.