Got a client here in Philly looking at a new 2MW facility. PECO is quoting primary service at 13.2kV with customer owning the transformer. The primary rate discount looks substantial - Schedule P shows $0.0892/kWh vs $0.1045/kWh for secondary. But they're looking at $85K for the transformer and switchgear. Anyone done the math on payback for customer-owned transformers in PECO territory? This client uses about 12,000 MWh annually.
PECO Primary Service - Customer Owned Transformer Worth It?
Phil, I've seen similar situations with IPL here in Indianapolis. That $0.0153/kWh difference is significant at 12,000 MWh - you're looking at $183,600 annual savings. With an $85K investment, that's about 5.6 month payback, which is fantastic. The real question is maintenance costs and who handles transformer failures. Does PECO require backup transformer or can you get insurance coverage for outages?
Greg makes a good point about maintenance. Here in Missouri with Ameren, we've had clients burn through those savings real quick when transformers fail. Had one client spend $45K on emergency replacement after their 15-year-old unit went down during peak summer. Make sure you factor in annual maintenance contracts - usually run $3-5K per year for that size unit. Still profitable but not quite the slam dunk it appears.
Had a similar situation with Duquesne Light. The customer-owned transformer discount was tempting but we discovered the utility's power factor requirements were much stricter on primary service. Client had to add $25K in power factor correction equipment. Also, PECO might require you to carry higher insurance limits - check your liability requirements. That said, at 12,000 MWh annual usage, you should still come out way ahead even with these extras.
Thanks for the insights everyone. Walt, you're right about the insurance - PECO wants $2M general liability vs $1M for secondary service. Greg, I'm pushing the client toward a maintenance contract with the transformer vendor. The annual cost looks to be around $4,200. Even factoring in maintenance, insurance bump, and some power factor correction, we're still looking at $170K+ net annual savings. Client is moving forward with primary service.
Phil, make sure they understand the outage implications. Rocky Mountain Power here requires customers to have emergency backup plans for primary service customers. We had one client who didn't realize they'd be responsible for coordinating utility crew access during outages. They ended up paying overtime to have someone available 24/7 during storm season. Just something to add to your cost analysis.
This thread caught my attention because We Energies here in Milwaukee just revised their primary service tariff. The discount increased from 1.2 cents to 1.8 cents per kWh starting October 1st. Phil, curious how your client's project worked out? We're seeing more businesses make the switch to customer-owned transformers as the utility savings keep growing. The maintenance concerns are real but manageable with proper planning.
Linda, the project went live in October and they're already seeing the expected savings. First month bill dropped from $89,400 to $72,100 for the same kWh usage. The transformer has been rock solid so far. Client is thrilled they made the switch. Your Milwaukee rate increase makes it even more attractive - 1.8 cents differential is huge for high-usage customers.