Got a client here in Phoenix looking at switching from secondary to primary service. APS is quoting them Schedule E-32 primary at 4.8¢/kWh vs 5.2¢/kWh on secondary Schedule E-20. Customer would need to install their own 480V transformer and switchgear. Monthly demand is running 850kW average. Has anyone run the numbers on payback for transformer ownership? The rate differential looks good but I'm concerned about maintenance costs down the road.
APS Primary Service - Worth the Switch?
Sarah, we see this a lot down here in Dallas with Oncor. The primary discount is usually worth it above 500kW if the customer has decent electrical staff. Your client should factor in about $2,000/year for transformer maintenance and testing. At 850kW demand, that rate differential should save them around $34,000 annually. Payback on a good 1000kVA transformer setup is typically 3-4 years.
Don't forget about the demand charge differential too. In Ohio, FirstEnergy gives about a $1.50/kW discount on primary service. With 850kW that's another $1,275/month in savings. The math usually works out pretty well if they're planning to stay put for at least 5 years.
One thing to watch for - make sure APS isn't charging a facilities charge for the primary connection. Cleveland Electric did that to one of my clients and it killed the economics. Also verify what happens if they want to downsize later - some utilities make it very expensive to go back to secondary service.
Frank, good point on the facilities charge. I'll check the tariff language carefully. Jim, the demand charge discount is exactly what I was hoping to hear - that really improves the business case. Marcus, your payback timeframe sounds about right based on my preliminary numbers.
We had a manufacturing client in Minneapolis switch to Xcel primary service last year. Saved them about $28,000 annually but they had to spend $65,000 on the transformer and electrical upgrades. The kicker was they got a $15,000 rebate from Xcel for the efficiency improvements. Sometimes the utility incentives can really sweeten the deal.
Hank makes a great point about rebates. Here in Connecticut, Eversource offers substantial incentives for customers who take primary service and install high-efficiency transformers. Sarah, definitely ask APS about any available programs before your client makes the final decision.
Update: just confirmed with the client that they ended up saving $31,200 in the first year after accounting for all costs. The transformer efficiency gains were better than expected - about 2% energy savings vs their old utility-owned unit.