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118th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 118-431
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PROTECTING AMERICA'S DISTRIBUTION TRANSFORMER SUPPLY CHAIN ACT
_______
March 26, 2024.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mrs. Rodgers of Washington, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 4167]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 4167) to prohibit the Secretary of Energy from
changing energy conservation standards for distribution
transformers for a certain period, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Committee Action................................................. 3
Committee Votes.................................................. 3
Oversight Findings and Recommendations........................... 6
New Budget Authority, Entitlement Authority, and Tax Expenditures 6
Congressional Budget Office Estimate............................. 6
Federal Mandates Statement....................................... 7
Statement of General Performance Goals and Objectives............ 7
Duplication of Federal Programs.................................. 7
Related Committee and Subcommittee Hearings...................... 7
Committee Cost Estimate.......................................... 8
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 8
Advisory Committee Statement..................................... 8
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 9
Minority Views................................................... 10
PURPOSE AND SUMMARY
H.R. 4167, the ``Protecting America's Distribution
Transformer Supply Chain Act,'' was introduced by
Representative Richard Hudson (R-NC) on June 15, 2023. This
legislation would prohibit the Department of Energy (DOE) from
imposing new efficiency standards for distribution transformers
until five years after the date of enactment and maintain the
current standards for distribution transformers that were
published in 2013 as remaining in effect for the intervening
period.
BACKGROUND AND NEED FOR LEGISLATION
Pursuant to the Energy Policy and Conservation Act of 1975
(EPCA), DOE is authorized to establish minimum energy
efficiency standards for consumer appliances and equipment.
Since the passage of EPCA, DOE has issued regulations for more
than 60 products, representing about 90 percent of home energy
use.\1\ Some of those products include dishwashers, dryers,
washing machines, cooktop stoves, refrigerators, ceiling fans,
furnaces, air conditioners, and light bulbs. The procedures DOE
utilizes to issue efficiency standards were first formalized by
the 1996 Process Rule.
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\1\U.S. Department of Energy, Saving Energy & Money with Appliance
and Equipment Standards in the U.S., (2017), https://www.energy.gov/
eere/buildings/articles/appliance-and-equipment-standards-fact-sheet.
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In 2020, DOE finalized a rule to modernize the Process Rule
in an effort to increase transparency, accountability, and
regulatory certainty for the American people. In its
justification for updating the Process Rule, DOE conducted an
analysis which found that ``over the last three decades, 60
percent of standards were projected to save 0.3 quads or more
over 30 years, and those 60 percent of standards accounted for
96 percent of total energy savings. The other 40 percent of
standards, projected to save less than 0.3 quads, accounted for
just 4 percent of total energy savings.''\2\
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\2\https://www.energy.gov/articles/department-energy-issues-final-
process-rule-modernizing-procedures-consideration-energy.
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In December 2021, DOE issued another final rule relating to
the Process Rule, removing the recently-added requirement to
conduct a comparative economic analysis of economic
justification, and removing the threshold for determining when
the significant energy savings criterion is met.\3\
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\3\10 C.F.R. Part 40 (2021), https://www.regulations.gov/document/
EERE-2021-BT-STD-0003-0075.
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On January 11, 2023, DOE issued a proposed rule that, if
finalized, would raise the minimum efficiency standards for
certain types of distribution transformers manufactured and
sold into commerce. DOE has stated this may require switching
to a new type of steel for one part of the transformer. Certain
electric power trade groups have cited supply chain challenges
that may impact the availability of this type of steel and
suggested that DOE's proposed standards could negatively impact
grid reliability. The Committee finds that DOE's proposed rule
would not save a significant amount of energy, and it is not
technically feasible or cost-effective.
H.R. 4167, the ``Protecting America's Distribution
Transformer Supply Chain Act,'' was introduced by Rep. Hudson
(R-NC) on June 15, 2023. The legislation would prohibit DOE
from imposing new efficiency standards for distribution
transformers until 5 years after the date of enactment. Under
the legislation, the current standards for distribution
transformers that were published by DOE in 2013 would remain in
effect in the intervening period of time.
COMMITTEE ACTION
On September 13, 2023, the Subcommittee on Energy, Climate,
and Grid Security held a hearing on H.R. 4167. The title of the
hearing was ``Keeping the Lights On: Enhancing Reliability and
Efficiency to Power American Homes.'' The Subcommittee received
testimony from:
Gene Rodrigues, Assistant Secretary for
Electricity, Office of Electricity, U.S. Department of
Energy;
David Ortiz, Director, Office of Electric
Reliability, Federal Energy Regulatory Commission;
Kevin Messner, Executive Vice President and
Chief Policy Officer, Association of Home Appliance
Manufacturers;
B. Robert Paulling, President and Chief
Executive Officer, Mid-Carolina Electric Cooperative on
behalf of the National Rural Electrical Cooperatives
Association;
Ben Lieberman, Senior Fellow, Competitive
Enterprise Institute; and,
Andrew deLaski, Executive Director,
Appliance Standards Awareness Project.
On October 24 and 25, 2023, the Subcommittee on Energy,
Climate, and Grid Security met in open markup session and
forwarded H.R. 4167, without amendment, to the full Committee
by a record vote of 17 yeas and 13 nays.
On December 5 and 6, 2023, the full Committee on Energy and
Commerce met in open markup session and ordered H.R. 4167,
without amendment, favorably reported to the House by a record
vote of 24 yeas and 22 nays.
COMMITTEE VOTES
Clause 3(b) of rule XIII requires the Committee to list the
record votes on the motion to report legislation and amendments
thereto. The following reflects the record votes taken during
the Committee consideration:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
OVERSIGHT FINDINGS AND RECOMMENDATIONS
Pursuant to clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII, the Committee held hearings and made findings that
are reflected in this report.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
Pursuant to clause 3(c)(2) of rule XIII, the Committee
finds that H.R. 4167 would result in no new or increased budget
authority, entitlement authority, or tax expenditures or
revenues.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII, the following is
the cost estimate provided by the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
H.R. 4167 would prohibit the Department of Energy (DOE)
from proposing or implementing any rule that, within five years
of enactment, amends energy conservation standards for
distribution transformers as specified in a final rule that
took effect in June 2013.\1\ (A distribution transformer is a
device that provides the final voltage transformation in the
electric power system.) Under current law, the Energy Policy
and Conservation Act, as amended, authorizes DOE to regulate
energy efficiency standards for various appliances and
equipment, including distribution transformers.
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\1\Department of Energy, ``Energy Conservation Program: Energy
Conservation Standards for Distribution Transformers,'' 78 Fed. Reg.
23336 (April 18, 2013), http://tinyurl.com/myup9abc.
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CBO is unaware of any proposed rules related to
distribution transformers that would affect the federal budget.
In addition, CBO does not expect that the bill's provisions
would affect federal spending on programs related to
distribution transformers, such as the Energy Efficient
Transformer Rebates Program. On that basis, CBO estimates that
implementing H.R. 4167 would not affect the federal budget.
The CBO staff contact for this estimate is Aaron Krupkin.
The estimate was reviewed by H. Samuel Papenfuss, Deputy
Director of Budget Analysis.
Phillip L. Swagel,
Director, Congressional Budget Office.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
Pursuant to clause 3(c)(4) of rule XIII, the general
performance goal or objective of this legislation is to ensure
energy reliability by maintaining the current efficiency
standards and prohibiting the DOE from imposing new efficiency
standards for distribution transformers until five years after
the date of enactment.
DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII, no provision of
H.R. 4167 is known to be duplicative of another Federal
program, including any program that was included in a report to
Congress pursuant to section 21 of Public Law 111-139 or the
most recent Catalog of Federal Domestic Assistance.
RELATED COMMITTEE AND SUBCOMMITTEE HEARINGS
Pursuant to clause 3(c)(6) of rule XIII, the following
related hearings were used to develop or consider H.R. 4167:
On June 16, 2023, the Subcommittee on
Energy, Climate, and Grid Security held a hearing. The
title of the hearing was ``Enhancing America's Grid
Security and Resilience.'' The Subcommittee received
testimony from:
William Ray, Director and Deputy
Homeland Security Advisor, Division of
Emergency Management, North Carolina Department
of Public Safety;
Mark Aysta, Managing Director,
Enterprise Security, Duke Energy;
Tim Ponseti, Vice President,
Operations, SERC Reliability Corporation; and,
Jordan Kern, Assistant
Professor, North Carolina State University,
Department of Industrial and Systems
Engineering.
On September 13, 2023, the Subcommittee on
Energy, Climate, and Grid Security held a hearing on
H.R. 4167. The title of the hearing was ``Keeping the
Lights On: Enhancing Reliability and Efficiency to
Power American Homes.'' The Subcommittee received
testimony from:
Gene Rodrigues, Assistant
Secretary for Electricity, Office of
Electricity, U.S. Department of Energy;
David Ortiz, Director, Office of
Electric Reliability, Federal Energy Regulatory
Commission;
Kevin Messner, Executive Vice
President and Chief Policy Officer, Association
of Home Appliance Manufacturers;
B. Robert Paulling, President
and Chief Executive Officer, Mid-Carolina
Electric Cooperative on behalf of the National
Rural Electrical Cooperatives Association;
Ben Lieberman, Senior Fellow,
Competitive Enterprise Institute; and,
Andrew deLaski, Executive
Director, Appliance Standards Awareness
Project.
On September 28, 2023, the Subcommittee on
Energy, Climate, and Grid Security held a hearing. The
title of the hearing was ``Powering America's Economy,
Security, and Our Way of Life: Examining the State of
Grid Reliability.'' The Subcommittee received testimony
from:
Gordon van Welie, President and
Chief Executive Officer, ISO New England;
Paul Suskie, Executive Vice
President of Regulatory Policy and General
Counsel, Southwest Power Pool;
Richard J. Dewey, President and
Chief Executive Officer, New York ISO;
Todd Ramey, Senior Vice
President, Markets and Digital Strategy,
Midcontinent ISO;
Woody Rickerson, Senior Vice
President and Chief Operating Officer, ERCOT;
Neil Millar, Vice President for
Infrastructure and Operations Planning,
California ISO; and,
Frederick S. Bresler III, Senior
Vice President of Market Services, PJM
Interconnection, LLC.
COMMITTEE COST ESTIMATE
Pursuant to clause 3(d)(1) of rule XIII, the Committee
adopts as its own the cost estimate prepared by the Director of
the Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974.
EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS
Pursuant to clause 9(e), 9(f), and 9(g) of rule XXI, the
Committee finds that H.R. 4167 contains no earmarks, limited
tax benefits, or limited tariff benefits.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 provides that the Act may be cited as the
``Protecting America's Distribution Transformer Supply Chain
Act.''
Section 2. Energy Conservation Standards for Distribution Transformers
Section 2 would prohibit the DOE from imposing new
efficiency standards for distribution transformers until five
years after the date of enactment. Section 2 also would
maintain the current standards for distribution transformers,
which were published in 2013 as remaining in effect for the
intervening period.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation does not amend any existing Federal
statute.
MINORITY VIEWS
H.R. 4167, the Protecting America's Distribution
Transformer Supply Chain Act H.R. 4167, the ``Protecting
America's Distribution Transformer Supply Chain Act,'' would
prohibit the Department of Energy (DOE) from proposing or
finalizing energy efficiency standards for distribution
transformers for five years. Committee Democrats strongly
oppose this bill, as it would prevent DOE from finalizing a
standard that would save Americans $15 billion.\1\
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\1\Department of Energy, DOE Proposes New Efficiency Standards for
Distribution Transformers (Dec. 28, 2022) (press release).
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The Energy Policy and Conservation Act (EPCA) clearly
requires DOE to re-examine its efficiency standards across a
wide range of covered products no less than once every six
years.\2\ Amendments made by the Energy Policy Act of 1992 made
distribution transformers subject to EPCA's efficiency standard
requirements,\3\ and DOE last finalized energy efficiency
standards for distribution transformers in April 2013.\4\
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\2\42 U.S.C. Sec. 6295.
\3\Energy Policy Act of 1992 Sec. 124(a).
\4\Department of Energy, Energy Conservation Standards for
Distribution Transformers, 78 Fed. Reg. 23336 (June 17, 2013) (final
rule).
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During the Trump Administration, DOE ignored its statutory
obligation under EPCA to either determine that efficiency
standards for a given product did not need to be amended, or to
promulgate new standards, triggering a lawsuit from
environmental and consumer groups.\5\ DOE settled the lawsuit
in September 2022, and agreed to new deadlines for a suite of
covered products, including distribution transformers, to
either publish a final determination that a new efficiency
standard for a product would not be justified or publish a
final rule containing a new efficiency standard for a covered
product. In the settlement, DOE agreed to take final action on
a rule or determination for distribution transformers by June
30, 2024, over a decade after the previous standards were
finalized, and over five years after the deadline set by
EPCA.\6\ On January 11, 2023, DOE released a notice of proposed
rulemaking for distribution transformer efficiency standards in
the Federal Register.\7\
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\5\National Resources Defense Council, Groups Sue Energy Dept. for
Failure to Update 25 Overdue Efficiency Standards (Nov. 9, 2020) (press
release).
\6\National Resources Defense Council, DOE Settles Suit About
Overdue Efficiency Updates (Sept. 20, 2022) (press release).
\7\Department of Energy, Energy Conservation Standards for
Distribution Transformers, 88 Fed. Reg. 1722 (Jan. 11, 2023) (proposed
rule).
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EPCA requires efficiency standards to be ``technologically
feasible and economically justified.''\8\ DOE found that its
proposed rule for distribution transformer standards satisfied
those criteria and would generate approximately $15 billion in
savings.\9\ However, the majority's report claims that ``DOE's
proposed rule would not save a significant amount of energy,
and it is not technically feasible or cost-effective.'' We are
unaware of any data or analysis the committee received
supporting this claim, and it directly contradicts testimony
the Subcommittee on Energy, Climate, and Grid Security received
in a September 13, 2023 hearing from DOE Assistant Secretary
Gene Rodrigues, who testified that the proposed standards would
reduce distribution transformer losses by over 20 percent while
saving American households up to $1.5 billion per year.\10\ To
address Republican concerns, Rep. John Sarbanes offered an
amendment to H.R. 4167 during the full Committee markup of the
bill that would have waived the applicability of the ban on new
efficiency standards if the standards resulted in at least $5
billion in net benefits--ensuring that any standard would be
more than economically justified.\11\ Republicans voted the
amendment down on a party-line vote.
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\8\See note 2.
\9\See note 1.
\10\House Committee on Energy and Commerce, Testimony of Gene
Rodrigues, Assistant Secretary for Electricity, U.S. Department of
Energy, Hearing on Keeping the Lights on: Enhancing Reliability and
Efficiency to Power American Homes, 118th Cong. (Sept. 13, 2023).
\11\Amendment to H.R. 4167, 02XML, offered by Rep. Sarbanes, Dec.
12, 2023, Full Committee Markup.
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Rather than this effort that would cause American
households to pay more, the Committee Republicans should be
focused on increasing the supply of distribution transformers.
Assistant Secretary Rodrigues testified that the bill would not
increase the supply of distribution transformers and would do
nothing to alleviate the existing supply chain issues. He did,
however, testify about work that DOE is currently undertaking
to relieve constraints in the distribution transformer supply
chain, and that if granted additional resources and
authorities, DOE would be able to do more.\12\ In response to
that testimony, Rep. Schrier offered an amendment to H.R. 4167
at Subcommittee markup that would have authorized DOE to
establish ``a program to provide financial and technical
assistance to domestic manufacturers to increase domestic
production of distribution transformers, grid components, and
electrical steel.''\13\ This authorization would have partnered
with the Biden Administration's invocation of the Defense
Production Act for distribution transformers,\14\ allowing the
Administration to ease the sector's supply chain issues by
manufacturing more transformers. Republicans voted the
amendment down on a party-line vote.
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\12\See note 10.
\13\Amendment to H.R. 4167, SCN--03, offered by Rep. Schrier, Oct.
24, 2023, Subcommittee on Energy, Climate, and Grid Security Markup.
\14\The White House, Memorandum on Presidential Determination
Pursuant to Section 303 of the Defense Production Act of 1950, as
Amended, on Transformers and Electric Power Grid Components (June 6,
2022) (press release).
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For the reasons stated above, we dissent from the views
contained in the Committee's report.
Frank Pallone, Jr.,
Ranking Member.
[all]
