text: Good morning. Here’s your Early Warning for Monday, 12 September 2022.TODAY’S BRIEFING:READ TIME: 11 mins 52 secondsInFocus: Senators warn of transformer shortages, impacts to energy emergenciesInside the BeltwayDomestic INTSUMGeostrategic INTSUMLow-Intensity Conflict Activity Rollup & OutlookInFocus: Senators warn of transformer shortages, impacts to energy emergenciesA number of House and Senate Republicans from Alabama, Florida, Mississippi, Tennessee, and Virginia asked President Biden to do more to combat energy shortages by lowering manufacturing costs for electrical components. According to the letter, “[Republicans] have heard from Local Power Companies serving our region that the availability of transformers is particularly dire… In the past months, costs are skyrocketing, and lead times for some manufacturers are up to two years – while others are not taking orders at all.” The letter describes cost and availability of raw materials as the primary bottleneck for the production of special steel used in large transformer production. The Republicans cite conservation standards implemented by the Department of Energy (DOE) that require additional steel needed to build the transformers.Analyst Comment: Large transformers use specialized steel called grain-oriented electrical steel (GOES). There’s a single domestic producer operating two plants – one in Zanesville, Ohio, and another in Butler, Pennsylvania – that provides steel for transformer manufacturing. A 2021 government report found that disruption to either of those two facilities would cause the U.S. to again rely on foreign countries for domestic GOES needs. Industry officials since at least 2015 have warned that low availability and high production times for large transformers will exacerbate emergency conditions. In 2017, the DOE directed stakeholders to solve the transformer shortage. Ultimately, they proposed voluntary participation, leaving it up to power companies whether or not to invest millions of dollars in capital to build a surplus of transformers. Still not solved by 2020, former President Donald Trump signed Executive Order 13920, which directed an increase in domestic production of electrical equipment, which was then supplied by foreign manufacturing. Since 2020, domestic production has been plagued by high costs and raw materials unavailability, which has prevented a solution to the transformer shortage.The bottom line is that this is a well-known and well-publicized issue that government efforts spanning at least seven years have been unable to solve. A 2021 government report warned that attacks or mechanical failure of transformers could cause major power disruptions. In his book Blackout Wars, former CIA analyst Peter Vincent Pry warned that physical damage to nine of roughly 3,000 transformers could probably cause a failure cascade of the country’s power grid systems. While the number of transformers in the national stockpile is not public information, one industry official recently said that the supply is “very, very low” and that replacing a large substation transformer could, at best, take weeks. Available transformers have to be disassembled, transported, and put back together, a process that can take three weeks or longer. Given that defense officials have warned that adversaries such as Russia and China are likely to strike the U.S. power grid in the event of gray zone escalation or a military conflict, the country’s transformer vulnerability represents a low risk, high payoff target for foreign exploitation. – M.S.INSIDE THE BELTWAYWHITE HOUSE: Nothing Significant to Report (NSTR)