Had an interesting situation come up with one of my Georgia Power clients last week. They own a 2MVA transformer for primary service and it failed during a thunderstorm. The failure took out their production for 18 hours while waiting for repair crews. Now Georgia Power is claiming the failure was due to inadequate maintenance and refusing to provide backup service during repairs. The client is looking at $200,000 in lost production plus the transformer replacement costs. I thought primary service customers got better reliability support, but apparently not when you own the equipment. Anyone dealt with similar utility responsibility issues?
Customer Owned Transformer Maintenance - Who's Responsible When Things Go Wrong?
Greg, this is exactly why I always warn clients about the hidden risks of customer-owned transformers. Here in Chattanooga, TVA's interconnection agreements make it very clear that once you own primary equipment, you're responsible for everything downstream of their protective devices. That includes outage response, backup power arrangements, and equipment replacement. The utilities love customer-owned transformers because it transfers maintenance liability and replacement costs to the customer. Did your client have a formal maintenance agreement with a qualified contractor?
Lorraine is spot on about the liability transfer. I work with several Georgia Power customers here in Augusta who own transformers, and GP's standard interconnection agreement has very specific language about customer responsibilities. The utility will usually provide temporary service for emergencies, but only if the failure wasn't due to customer negligence. If they can prove inadequate maintenance caused the failure, you're on your own. What kind of maintenance records does your client have? Annual oil analysis, thermographic inspections, dissolved gas analysis?
That's the problem - their maintenance was pretty basic. Oil changes every few years, visual inspections, but no dissolved gas analysis or comprehensive testing. The transformer was installed in 2009 so it's not ancient, but apparently there were signs of internal problems they missed. Georgia Power's engineering group did a post-failure analysis and found elevated levels of combustible gases that should have triggered replacement. Now they're using that as justification to deny temporary service. The client is scrambling to rent a mobile transformer unit at $15,000/month while sourcing a replacement.
Greg, I feel for your client but this is a cautionary tale about transformer ownership. Here in Wichita with Evergy, we've learned that customer-owned primary equipment requires the same maintenance standards as utility equipment. That means annual DGA testing, quarterly infrared scans, and immediate response to any abnormal readings. The upfront savings from primary service rates can disappear quickly when you factor in proper maintenance costs and outage risks. Most clients underestimate the total cost of ownership.
Rachel makes a great point about maintenance standards. I've been seeing more utilities require formal maintenance documentation as a condition of interconnection agreements. They want proof of annual testing, certified maintenance contractors, and immediate notification of any abnormal conditions. The days of casual transformer maintenance are over - these utilities have been burned by customer equipment failures that affected their system reliability. Your client might want to consider switching back to utility-owned service when they replace this transformer.
Gary, that's exactly what I'm recommending. The rate savings looked good on paper but the total cost of ownership - including this failure risk - makes utility ownership more attractive. The client is looking at $180,000 for a replacement transformer plus installation, ongoing maintenance contracts, insurance increases, and now this outage cost. We're going to approach Georgia Power about converting back to secondary service with utility-owned equipment. Sometimes the "savings" just aren't worth the headaches and risks.
Smart decision, Greg. I always tell clients that customer-owned transformers make sense for large industrial operations with dedicated maintenance staff and backup power systems, but for most commercial customers, the risks outweigh the benefits. The utility rate discount is usually less than the true cost of ownership when you factor in everything properly. Hope your client can negotiate a reasonable conversion back to utility service.