The Cost of Transformer Failures

In the United States, petroleum-based mineral oil transformer fires occur on average daily. These damaging events can harm people, equipment, property, and the environment.

For the utility, a single incident can mean tens of thousands of dollars in clean-up and remediation costs—and that’s just what can be calculated. In terms of potential liability and reputation damage, the costs are inestimable.

For the community, the costs in terms of city services can be staggering as well. Increased emergency dispatches and special risks to ER crews due to high heat, smoke, and high voltage lines; hazmat crews needed to clean up oil contamination; and productivity losses caused by outages can have a significant negative effect on a city’s balance sheet.

Read below about the actual costs incurred by utilities and municipalities in the wake of a transformer failure—and the likelihood of their occurring.

  • Industry data shows that a significant number of substation transformer failures result in a fire1.
  • In 2001, transformer fires in Los Angeles led to an average of one fire department dispatch per day.2 In one such fire that occurred in 2007 in downtown Los Angeles, three men were seriously injured when a flash explosion occurred at a transformer they were installing at a construction site. Firefighters were transferred to a local hospital with severe burns.
  • In 2007, an explosion in a Greek Public Power company high voltage unit caused northern Greece’s network power supply system to fail, resulting in outages that spread to the neighboring countries of Macedonia and Thrace.
  • In 2007, damage to a reactor at a nuclear power plant near Hamburg, Germany was sustained when an oil-cooled transformer exploded approximately 50 meters from the reactor. Although there were no reported injuries, the shutdown of the reactor was responsible for numerous incidents that needed to be investigated by authorities.
  • 14,000 gallons of oil burned for two days after a transformer malfunction caused an explosion in Lakeland, Fl. Close to 2,600 residents and workers in the area were required to evacuate, while dozens of firefighters used liquid foam to keep the fire from spreading during the 2007 incident.
  • A major California utility paid $9 million in settlements to customers and city and state governments for a 2003 transformer fire that resulted in a four-hour power outage impacting more than 100,000 people.
  • In 2005, the primary chamber of an underground transformer at this same utility caused an explosion inside the vault that resulted in an above-ground explosion, severely injuring at least one bystander.
  • In 1997, a transformer explosion in Tennessee resulted in injury to two bystanders, one fatality, and a company settlement of $2 million.
  • Fighting transformer fires requires special fire-fighting equipment and hazardous material-response procedures to capture the mineral oil contaminated runoff that results from fighting the fire.3
  • The average age of the transformer fleet at some utilities exceeds the standard life expectancy of a transformer. Insurance companies have predicted increasing frequency of transformer failures.4

1 “Facilities Instructions, Standards, and Techniques Volume 3-32, Transformer Fire Protection,” US Department of the Interior, 2005
2 LAFD Weekly Bulletin March 27, 2002
3 “A Transforming Disaster,” FireChief Magazine Online, 2001
4 “An Analysis of Transformer Failures,” The Locomotive, William Bently, Hartford Steam Boiler