The paper is concerned with transformer economics from the viewpoint of an electricity supply undertaking. It describes a new method of approach by the device of “yearly economic efficiency.” This term is defined and its use illustrated by reference to a range of distribution transformers.A comparison formula is next deduced and applied to two transformers of the same size but having different characteristics.Finally, a supply undertaking is examined and operating conditions are tabulated. The constants necessary for the comparison or purchasing formula are obtained from the information available, and an actual purchasing formula is worked out. Economic efficiency curves for the undertaking's distribution transformers are given, and the lines on which improvements should be made are indicated.