Deluzio, Kelly Introduce Bipartisan Effort to Strengthen Supply Chains for America’s Transformers, Protect U.S. Energy Security

WASHINGTON, D.C. — Yesterday, Congressman Chris Deluzio (D-PA-17) and Mike Kelly (R-PA-16) introduced the House version of the Distribution Transformer Efficiency and Supply Chain Reliability Act. A companion bill to the Senate version introduced by Senator Sherrod Brown (D-OH) and Senator Ted Cruz (R-TX), this legislation would strengthen the nation’s transformer supply chain by laying out new realistic energy efficiency standards that will help domestic transformer manufacturing meet increasing demand, without undermining current American steel production or overloading existing supply chains. 

Last January, the U.S. Department of Energy released a proposed rule that risks exacerbating ongoing supply chain challenges for distribution transformers and issues of shortages for related components. If finalized, the proposed rule would require all distribution transformers to shift the composition of their core from the current industry standard of grain oriented electrical steel (GOES) to amorphous metal cores. This shift would likely hurt U.S. steel manufacturers and union workers who depend on this kind of work for their paychecks. 

Right now, manufacturers’ production lines are set up for designs that use GOES, and GOES currently accounts for more than 95 percent of the domestic distribution transformer market. Further, this kind of large-scale recalibration of the steel supply chain for distribution transformers will further delay manufacturing timelines by an estimated 18 months to two years, at least. U.S. manufacturers and their workers would be hurt by this proposed Department of Energy requirement mandate to transition transformers to amorphous metal cores—further disadvantaging them on the global market and risking our national security by adding vulnerability to the nation’s grid. 

The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024 would stop the new Department of Energy rule from taking effect and instead institute a new energy efficiency standard for transformers at levels that preserve market opportunities for GOES as well as amorphous metal. It would also provide a phase-in window of 10 years before the new standard goes into effect to provide the certainty and time necessary for GOES and transformer supply chains to properly adapt to the new standards without further exacerbating supply chain challenges, and grid reliability and resiliency. 

“There’s only one GOES producer left in the US, and they are right here in Western Pennsylvania,” said Rep. Deluzio. “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. As we continue to electrify our grid and move into a clean energy future, we’re going to need to beef up the grid – and the best way to do that is with American-made electrical steel.”  

"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. Kelly said. "The Department of Energy's misguided policy would jeopardize electricity for millions of Americans. This new legislation takes the necessary next steps to strengthen our electrical grid while also protecting American national security and economic interests." 

Other co-leads of the bill include Reps. Henry Cuellar (D-TX), Susan Wild (D-PA) Brian Fitzpatrick (R-PA), Lloyd Smucker (R-PA), Guy Reschenthaler (R-PA), Steve Womack (R-AR), Dan Meuser (R-PA). 

This bill is also supported by the National Rural Electric Cooperative Association, National Electrical Manufacturers Association, Edison Electric Institute, National Association of Home Builders, Leading Builders of America, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) Local 3303, UAW Local 4104, and Cleveland-Cliffs Inc. 

“UAW Local 3303 of Butler PA and UAW Local 4104 of Zanesville OH gratefully applaud the efforts of Congressmen Kelly, Deluzio, and all the cosponsors of this bill,” said Jamie Sychak, UAW Local 3303 President. “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. This bipartisan bill preserves our nation’s ability to do just that all while protecting good union jobs, national security, and our country’s energy independence.” 

“I commend Congressman Chris Deluzio and Congressman Mike Kelly for their introduction of The Distribution Transformer Efficiency & Supply Chain Reliability Act of 2024 in the U.S. House of Representatives,” said Lourenco Goncalves, Cleveland-Cliffs Inc. Chairman, President & Chief Executive Officer. “Cleveland-Cliffs’ continued production of and investment in Grain-Oriented Electrical Steel (GOES) requires common sense policies that promote energy efficiency and maximize utilization of domestically produced GOES.  This legislation will ensure the continued use of highly efficient GOES in distribution transformers that support the electric grid and ensure U.S. energy security, thus preserving good-paying, union jobs in Western Pennsylvania and Ohio.” 

“A strong supply of distribution transformers is critical to ensuring a reliable grid that delivers electricity to all Americans,” said Debra Phillips, President and CEO, National Electrical Manufacturers Association (NEMA). “In the face of ongoing supply chain challenges, we appreciate the continued bipartisan focus on this important issue. We commend Representatives Kelly (R-PA) and Deluzio (D-PA) for introducing this legislation that will provide domestic manufacturers with the certainty they need to meet the ever-growing demand for transformers and continue to deliver these vital grid components to ensure long-term energy efficiency and reliability for customers.”

“This legislation is a bipartisan antidote to Department of Energy’s unworkable proposal to rapidly tighten transformer efficiency standards, which would exacerbate the already long lead times electric cooperatives face to obtain distribution transformers. The bill would allow for the adoption of an updated standard over a more realistic timeframe while ensuring the appropriate supply of grain-oriented steel that manufacturers need to speed transformer production. We are grateful to Reps. Deluzio (D-PA) and Kelly (R-PA) for championing this effort and for jumpstarting its consideration in the House by introducing this critical bill,” said Jim Matheson, CEO, National Rural Electric Cooperative Association. 

More background on the legislation is available here. The bill text is available here.

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