Supply chain challenges affected many industries over the last few years and the electric industry was no exception. CPS Energy faced a shortage of single-phase transformers in 2023, which are needed to serve residential customers. This shortage caused delays in providing electricity to new subdivisions and multi-family projects. However, the utility has resolved the issue and for the start of 2024, have a sufficient supply to satisfy the need for residential transformers to install in new home developments.
This is a significant achievement for CPS Energy, especially considering that last year the utility experienced a 40% increase in demand for residential transformers, a three-year high.
Transformers are essential to help a community grow. It’s projected that the population in the Alamo City and surrounding region will increase by 30% by the end of the decade. This surge means a greater demand for residences and the required transformers needed to provide electric and gas services. These same transformers also support critical industries such as construction, real estate, and leasing which contribute over 16% to the economy. Locally, construction accounts for about 66,000 homegrown jobs. Supporting residential construction keeps the economy healthy and ensures workers do not lose pay due to delays.
To speed up the delivery of these critical materials, CPS Energy implemented a multi-prong approach that benefitted residential developers and, ultimately, homeowners, to get electricity in new homes. This approach included:
- Expand and diversify sources.
- Increase engagement with vendors and manufacturers.
- Join forces with other utilities to buy and sell to each other.
- Refurbish existing transformers.
- Purchase components to convert other transformer sizes for flexible use.
CPS Energy has experienced reduced lead times for new residential transformer orders. Lead times have gone from as long as one year to as low as four months. This recovery at the manufacturer level has also helped local distributors bounce back and have stock available on some popular transformer sizes.
CPS Energy’s 2024 supply forecast projects around 1,900 transformers for Q1 and approximately 4,500 for the full year.
“Our region continues to be in the headlines for its booming population growth. Our supply chain team has worked nonstop to secure transformers to meet the rising demand for new homes and apartments. We want CPS Energy to serve as a model for other utilities to follow to prepare for the growing energy demands of their communities,” said Vice President of Supply Chain at CPS Energy, Maria Stanton.
CPS Energy has also been successful in ensuring the utility has the transformers it needs to run its operations. The utility requires transmission autotransformers to support operations and reliability, transmission growth, and the replacement of aging autotransformers. CPS Energy plans to request approval from the Board of Trustees for new multi-year contracts to purchase these autotransformers at the next February 5, 2024 board meeting.
Utilities across the country, including CPS Energy, are still working to secure three-phase transformers to power larger commercial sites including shopping centers, restaurants, and logistics centers—major industries that create thousands of jobs. One of the barriers to securing these larger transformers is the stiff competition from other industries.
CPS Energy continues to stay flexible and find innovative solutions to the various ongoing supply chain challenges.