Client bought a commercial property in Denver that came with a customer-owned transformer. They're eligible for the primary voltage discount on Xcel Energy. But the transformer is 30 years old and will need replacing eventually. The client asked me: if they transfer the transformer to Xcel and let the utility own it, what happens to their billing?
Transformer ownership transfer — billing implications
If the utility takes ownership of the transformer, the client loses the primary voltage discount and goes to the secondary rate. But they also lose the maintenance responsibility for a 30-year-old transformer. A transformer replacement can cost $50,000-$150,000 depending on size. The math question is: does the annual primary voltage discount exceed the annualized cost of transformer ownership (maintenance, eventual replacement, insurance)? If the discount is $15,000/year and a new transformer costs $80,000 with a 25-year life, the client is better off keeping ownership.
Derek laid out the analysis perfectly. This is a financial decision, not a billing error. Your role as the auditor is to quantify the primary voltage discount so the client can compare it to the cost of transformer ownership. Present the numbers and let the client decide. Some clients prefer the simplicity of utility-owned equipment. Others prefer the savings of customer ownership. Also check whether Xcel has a transformer rental option — some utilities will rent the transformer to the customer, which gives them the primary discount while transferring maintenance risk to the utility for a monthly fee.
The transformer rental option is brilliant — didn't know that existed. Going to check Xcel's tariff for rental provisions. If they offer it, the client gets the discount without the maintenance headache. Best of both worlds.