We've got a manufacturing client in Indianapolis looking at primary service from IPL instead of secondary. They're at 2.8MW load and currently paying about $340,000 annually on Rate LPF. IPL is quoting primary service at Rate HPF with about 8% discount on energy charges. Anyone have experience with the cost-benefit analysis on customer-owned transformers? The upfront capital is around $180k but the monthly savings look substantial.
IPL Primary Service - Worth the Investment?
Greg - we did similar analysis for a steel plant here in Cleveland with FirstEnergy. The primary discount was 12% on demand and 6% on energy. Break-even was about 18 months with their load profile. Make sure you factor in maintenance costs - transformer oil testing, annual inspections, replacement reserves. Also check if IPL requires redundant transformers for that load level.
In Pittsburgh, Duquesne Light's primary rates under Schedule LP have voltage discounts that vary by delivery voltage. 4kV gets you about 4%, 23kV gets 8%, and 69kV can be 12-15%. The key is understanding your actual voltage delivery point. Sometimes utilities quote primary rates but still deliver at secondary voltage through their own transformers - no discount applies then.
Walt makes a good point about actual delivery voltage. IPL confirmed they'd deliver at 12.47kV to our pad-mount transformer. Frank - did your Cleveland client end up making the switch? I'm also concerned about liability insurance increases for customer-owned equipment.
Yes, they switched in 2011 and are very happy. Insurance bump was only about $3,000 annually. The real surprise was avoiding demand ratchet charges during their summer shutdown - the primary rate structure was more forgiving. Total first-year savings were $52,000 versus projected $38,000.
Chicago here - ComEd's primary discounts are generous but they're sticklers about power factor. Sub-0.95 PF gets you penalty charges that can wipe out the voltage discount. Make sure your client's PF is solid or budget for capacitor banks. We had one client lose $15k in penalties before catching the issue.
Good catch Yuri. This client runs around 0.92 PF so capacitors are definitely needed. Frank - can you share what transformer specs your Cleveland client went with? Trying to decide between 3000kVA and 3500kVA units.
They went with dual 2000kVA units for redundancy. Slightly higher capital cost but gives them N-1 reliability. Their insurance company actually gave them a small break on the premium for the redundant design. I'd lean toward the 3500kVA single unit for your load unless downtime costs are severe.