Question for the group about the economics of customer-owned transformers. I have a client here in Cincinnati considering switching from Duke Energy secondary service to primary service to capture the voltage discount. They're currently paying about $35,000 monthly on secondary service and the primary voltage discount would be approximately 2.2% on distribution charges. However, they'd need to purchase and maintain their own 1000kVA transformer. Duke is quoting $65,000 for the transformer plus annual maintenance contracts around $3,500. Are these typical costs and does the math usually work out favorably for customer ownership?
Customer-Owned Transformer Maintenance Costs vs Voltage Discounts
Anyone? This seems like a decision that many of you have probably helped clients evaluate. I'm trying to determine if there are other factors I should be considering beyond the straightforward payback calculation.
Cecilia, the economics really depend on the specific discount percentage and the client's load profile. Here in Georgia, I generally see payback periods of 4-7 years for customer-owned transformers when factoring in voltage discounts. Your $65K transformer cost seems reasonable for 1000kVA. But don't forget to factor in the electrical infrastructure modifications needed to handle primary voltage - disconnect switches, protective equipment, etc. Those costs can add another $20-30K. Also consider the client's risk tolerance for owning and maintaining electrical equipment versus just paying the utility bill.