Distribution Transformer Loss Costs

A car owner must make some important decisions when purchasing a new vehicle—particularly if he or she has not bought one in decades. The features of the hundreds of 2015 models available can seem overwhelming. The budget-conscious owner, considering factors such as fuel efficiency, miles/kilometers driven, and gas prices, soon learns that low price does not mean low cost. A highly fuel-efficient car with a high cost may be uneconomic at 1998 gas prices, but a paying proposition in 2015—or not. In order to make an informed decision, the potential owner must calculate his or her numbers correctly.

Similar to accurate gas prices, correct estimates of transformer loss costs can help minimize total ownership cost (TOC), a financial estimate used to determine direct and indirect costs of a product or system. Distribution transformers in a municipally-owned utility can make up more than 10 percent of the book value of its assets—and last decades. Therefore, crucially, utilities must ensure that their distribution transformers are as economic as possible to own and operate. Utilities can achieve this goal by accounting for a transformer’s losses upon purchase.