WASHINGTON — A proposed Biden administration rule designed to save energy threatens a Butler plant and more than 1,000 jobs, according to manufacturing leaders and area members of Congress.
The lawmakers are trying to block a proposed Energy Department rule that they say could force manufacturers of electric distribution transformers to use amorphous metal cores instead of traditional grain-oriented steel cores that now are produced in only one plant in the U.S. — Butler Works, owned by Cleveland-Cliffs. The Cleveland-based company just announced the idling of a West Virginia tinplate mill based on a separate Biden administration decision on import tariffs.
The bill is sponsored by U.S. Reps. Mike Kelly, R-Butler; Chris Deluzio, D-Aspinwall; and Guy Reschenthaler, R-Peters. U.S. Sens. Sherrod Brown, D-Ohio, and Ted Cruz, R-Texas, have introduced similar legislation.
“I want the Butler County community to know this: we will fight like hell to protect the 1,300 jobs at the Butler Works plant,” Mr. Kelly said.
In a statement, the Energy Department said it is working to issue a rule that “is responsive to the comments and allows American businesses and workers to deliver — and consumers to benefit from — the most reliable, efficient, and affordable grid possible to meet growing energy demand.”
Transformers commonly are found on platforms or utility poles across the U.S. power grid, helping deliver power from high voltage lines to residential and commercial lines, decreasing or increasing the voltage as needed. Amorphous metal transformer cores rely on an ultra-thin steel, compared to the more traditional electrical steel.
The Energy Department says the newer, slightly more expensive product is more energy efficient and therefore saves money.
Lawmakers and industry and labor leaders have fought the agency’s proposed new efficiency standards since they were announced last year.
They say closing the door on traditional grain-oriented electrical steel cores could undercut the already-stressed supply chain for transformers and hurt the U.S. electrical grid, in part because there is only one domestic amorphous metal manufacturer — South Carolina-based Metglas. The company did not immediately respond to a message seeking comment.
“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,” Mr. Kelly said. "This new legislation takes the necessary next steps to strengthen our electrical grid while also protecting American national security and economic interests."
Mr. Deluzio said the bill, which would delay the potential new energy standards by at least a decade, ensures the Butler plant “and its union workers don’t get choked out by severe standards” proposed by the Energy Department.
“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,” he said in a statement announcing the proposed bill.
The Energy Department has reviewed thousands of pages of comments on the proposal and met with labor, manufacturing and energy efficiency leaders. A decision could come by June.
While the agency says its proposal would cut the equivalent of more than 300 million metric tons of carbon dioxide emissions over the next three decades, lawmakers and workers say distribution transformers already are more than 97% energy efficient.
“Cleveland-Cliffs’ continued production of and investment in grain-oriented electrical steel requires common sense policies that promote energy efficiency and maximize utilization of domestically produced GOES,” Laurenco Goncalves, the company’s president and CEO, said in a statement.
“This legislation will ensure the continued use of highly efficient [grain-oriented electrical steel] 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.”
Labor and manufacturing leaders quickly embraced the bill, which came after Mr. Kelly and Mr. Deluzio urged Energy Secretary Jennifer Granholm in December to change the proposed rule.
“Energy efficient transformers are crucial components of our nation’s infrastructure. Equally important is our ability to manufacture them domestically from U.S. sourced electrical steel,” said Jamie Sychak, president of United Auto Workers Local 3303, which represents more than 1,300 workers at the Butler plant. His statement was among many submitted in support of the bill.
Lawmakers estimate the new rule could cost more than 1,500 American jobs.
Jim Matheson, CEO of the National Rural Electric Cooperative Association, called the proposal to “rapidly tighten” transformer efficiency standards “unworkable.” Electric cooperatives already face long lead times to obtain distribution transformers, he said.
“The bill would allow for the adoption of an updated standard over a more realistic time frame while ensuring the appropriate supply of grain-oriented steel that manufacturers need to speed transformer production,” Mr. Matheson said.
Debra Phillips, who heads the National Electrical Manufacturers Association, said in a statement that a strong supply of distribution transformers is critical for a reliable grid. “In the face of ongoing supply chain challenges, we appreciate the continued bipartisan focus on this important issue,” she said.
In 2022, the Biden administration designated grain-oriented electrical steel among “critical goods and materials” and invoked the Defense Production Act to ramp up production of power grid infrastructure such as transformers.
But last summer, 47 senators, including Pennsylvania Democrats Bob Casey and John Fetterman, wrote to Ms. Granholm to say the agency’s proposal undermines the administration’s own efforts “by phasing out the primary market for U.S.-produced [grain-oriented electrical steel].”
“We are concerned that requiring the use of amorphous steel for new distribution transformers could put the administration’s electrification goals at risk by exacerbating an existing grid vulnerability,” they wrote.
The Energy Department does not describe the proposed efficiency standards as a mandate to use amorphous metal, but acknowledged “this may require switching to a new type of steel for one part of the transformer,” the Congressional Research Service said earlier this year.
The agency says it wants to diversify domestic steel production, including of amorphous steel, in part because of the existing tight supply of traditional steel. The new rule could go into effect in 2027.
Any long-term solutions “must allow for the ability to maintain and grow a secure domestic supply of electric steel and transformers, and strengthen domestic workforces,” the department said.
The Energy Department said last year that the amorphous steel industry has demonstrated it could quickly build up capacity and meet demand before the new standards are in place — but only “in the presence of an amended standard.”
“While there has historically been concern over the fact that there is only a single domestic supplier of amorphous steel, the [grain-oriented electrical steel] market is also served by a single domestic supplier,” the agency said last year.
“The current market of electrical steel in distribution transformer applications is very much a global market at present.”
While European Union manufacturers produce traditional steel, so do Russia and China. The Congressional Research Service said the major amorphous steel producers are in Japan, China and the European Union.
Benjamin Kail: bkail@post-gazette.com; @BenKail
First Published: February 22, 2024, 10:30 a.m.
Updated: February 23, 2024, 5:28 p.m.
