Supply Chain Challenges

Posted: April 15, 2022 at 2:28 p.m.

Hello again to our wonderful customer-owners. I hope this year is treating you well despite the unseasonably cold weather we’ve seen recently. We’ve so far lucked out and avoided any major outages unlike our neighbors to the north. Let’s hope the worst of the storms have passed us for now.

I wanted to take a few minutes to describe a topic that’s been taking up a majority of my time the past few months. I’m sure you’ve seen the news headlines about the current global supply chain issues and their impact on product availability and prices. Here at the utility, we’re not immune to these challenges, and in fact over the past 18 months the supply chain environment has become historically difficult to navigate.

Transformer availability is one key example. As a distribution utility, transformers are critical to our business as they allow us to step down voltage to a level appropriate for use at homes and businesses. Without this equipment, our typical residential and commercial electrical service would be impossible to provide.

Underground transformers have become a particular bottleneck in the utility supply chain

 

Historically, we maintained a healthy stock of transformers by ordering every few months on behalf of both the utility and customers requesting new service. Typical lead times were 2-3 months and prices were quite stable through the years. Beginning sometime last year, however, the situation shifted dramatically. Orders were repeatedly delayed. Prices started to rise or change at the last minute. And lead times stretched out to over one year.

As you can imagine, planning in this environment becomes more difficult. We’ve had to make several changes to our approach by looking out many years in advance and placing bulk orders to ensure future supply. In addition to assessing our needs for everyday maintenance and customer projects, we had been hoping to carry out extra capital improvement work as part of our strategic plan. At today’s price levels and lead times, this work has unfortunately had to take a back seat.

Underground cable is key to our capital improvement plans and has also been difficult to come by

 

Our number one priority is to ensure we have enough materials to provide reliable service to our existing customers. We’re putting additional resources behind our inventory planning and forecasting to make sure this happens. We’re also getting creative by reusing/refurbishing existing equipment, or re-purposing items that have been dormant for an extended period. These and other actions will ensure we maintain a minimum reserve of all key materials to help in the event of storm damage or another unforeseen issue.

To those looking to acquire new service, including home builders or other developers, I encourage you to get in touch with us as early as possible to assess your options. In some cases, we can be creative with our design work to establish a minimum level of service. However, in cases where key materials such as underground transformers are required you may be looking at lead times as far as 1-2 years into the future.

I’ve included more information below based on a recent handout prepared by our staff. Additional detail about starting new service can be found at the following link: https://www.epud.org/my-home/new-construction/

Please stay safe,