Powering Strong Communities

We Must Keep Expressing Urgency About the Transformer Crisis

As we approach the November midterm elections, we’re bombarded in the news and on social media by pundits and politicians from across the political spectrum telling Americans about the various crises we face. Perhaps it is no surprise that lost in all the noise is the crisis facing our industry: the increasingly urgent and untenable situation of the availability of distribution transformers – without which we cannot deliver electricity.

According to a recent survey of APPA’s members, the average lead time for transformer delivery is 12-18 months, up from a three-month norm that had been the average for years. Anecdotally, I have heard from our members that ridiculous bids are coming in from some domestic transformer manufacturers – such as 3-5 years for transformer delivery. What if everyone in the U.S. had to wait 3-5 years to replace their refrigerators? Our policymakers would be talking about the problem nonstop, pushing the refrigerator manufacturers to increase their capabilities.

Before I speculate on the reasons why they have not reacted this way to our dire situation, I would note that public power utilities, and the rest of the industry, have been concerned about this for well over a year. We did our first informal member survey on the topic in November 2021, and the responses signaled serious concern – and not just for transformers. The survey identified supply chain constraints among components such as smart meters, bucket trucks, conduits, and bolts, and our industry faces still other constraints, such as in getting insulators for large transmission lines. APPA did another, more formal, survey in early 2022, to better understand the demand for distribution transformers. This second survey further underscored that this is a national problem affecting all of our members in some form or fashion. Transformers are so crucial, and the situation so alarming, that we have focused our advocacy efforts on addressing this constraint. We have established a platform that enables our members to share information about what their needs are more holistically, and that sharing has occurred beyond transformers. 

As I have opined elsewhere, we have tried to engage with the manufacturing community to understand their constraints and offer possible solutions. We have heard different things from individual manufacturers, but labor and materials constraints seem to be top of mind.  We joined our brethren trade association, the National Rural Electric Cooperative Association, in asking for a temporary waiver of a transformer conservation standard established in 2016 by the Department of Energy in hopes that it could enable more streamlined processing of core steel (essential for transformers). We could not get a straight answer from the manufacturers about whether that would be helpful from their perspective, but we felt strongly that we had to try, as even minimal relief would be better than nothing. DOE denied our request over the summer.

After the devastation caused by Hurricane Ian, we were able to get some additional media attention to this problem. While public power utilities and the rest of the industry banded together, as they always do, to respond to this disaster and restore power as quickly as possible in Florida – thank you, lineworkers, for your dedication and fortitude in traveling from all over the country to help – we are concerned that the hurricane depleted many remaining distribution transformer stockpiles. As a result, our utilities are inviting bids from foreign transformer companies, and we will see what that entails. Our members are already refurbishing and rehabbing transformers as much as possible, but that is not enough.

Some policymakers have taken note and sent letters highlighting the issue and seeking solutions. But the lack of outrage is telling. Many of our members have told construction companies in their communities that they cannot provide electricity to their new or planned homes and businesses. Think about that for a second, especially given inflation, gas prices, and the other challenges we face.

Why have we not gotten policymakers’ full attention? One possible reason is that electric utilities do their jobs very well in this country. When we express concerns about reliability, we are often ignored because we manage to get the job done anyway. Another is that the same core steel that is used for electric transformers is also needed for electric vehicles, and the federal government has provided substantial additional subsidies for vehicles and charging infrastructure in the last two years, sending a market signal about prioritization.  Don’t get me wrong, we want EVs as well and have broadly supported many of the policies put in place (before we realized the transformer crunch and that interrelationship), but without electricity, electric vehicles are useless.

We need solutions – we are willing and able to roll up our sleeves and find them, working with our manufacturing colleagues. We need the federal government to enable that conversation and prioritize these fundamental electric components above other priorities, at least to get us through this crisis.