Denton Municipal Electric has told customers and developers that it may not be able to connect new service because its supply of transformers is running low, according to a city staff report prepared for the Public Utilities Board.
The board is scheduled on Monday, Oct. 19, to consider recommending a contract with Alamo Transformer Supply Company of San Antonio to refurbish, rebuild and sell salvaged transformers to the city utility. The deal would run one year with four optional one-year renewals, capped at $4 million over five years. The item is on the board's consent agenda; the City Council has the final say.
Inventory held for emergencies
The agenda information sheet from the city's procurement office says the transformers DME has on hand are at levels set aside for emergencies and for restoring service during normal daily operations. For new construction, the utility hands out transformers on a first-come, first-ready basis to customers and developers whose permits and inspections are complete.
Staff describe nationwide shortages of distribution transformers, underground cable and substation equipment. Lead times on some transformers are approaching 80 weeks, vendors cannot give reliable delivery estimates, and the average cost of transformers DME buys from its suppliers has risen 350% or more, the report says. Depending on size and type, a single unit can cost more than $100,000.
How the money would be spent
The report estimates $800,000 a year: about $300,000 for disposal and salvage, $250,000 for refurbishing and repair, and $250,000 held as an emergency contingency. The contract also covers hauling away transformers that cannot be repaired and the oil drained from them. Purchases would be made only as needed, and the city is not obligated to spend the full amount.
Staff say having the contract in place will slow the need for emergency transformer purchases. The first year's spending is already in the adopted budget, paid from DME's capital account.
The city sent its request for qualifications to 736 firms and received four responses. Evaluators scored Alamo highest at 77.5 points out of 100, ahead of Texas Electric Cooperatives of McKinney at 74.5, Greenville Transformer Co. at 63.5 and Emerald Transformer of Georgetown at 62.
