A distribution transformer or service transformer is a transformer that provides the final voltage transformation in the electric power distribution system, stepping down the voltage used in the distribution lines to the level used by the customer. The invention of a practical efficient transformer made AC power distribution feasible; a system using distribution transformers was demonstrated as early as 1882. If mounted on a utility pole, they are called pole-mount transformers. If the distribution lines are located at ground level or underground, distribution transformers are mounted on concrete pads and locked in steel cases, thus known as distribution tap pad-mount transformers. Distribution transformers normally have ratings less than 200 kVA, although some national standards can allow for units up to 5000 kVA to be described as distribution transformers. Since distribution transformers are energized for 24 hours a day (even when they don't carry any load), reducing iron losses has an important role in their design. As they usually don't operate at full load, they are designed to have maximum efficiency at lower loads. To have a better efficiency, voltage regulation in these transformers should be kept to a minimum. Hence they are designed to have small leakage reactance. Distribution transformers are classified into different categories based on factors such as: Mounting location – pole, pad, underground vault Type of insulation – liquid-immersed or dry-type Number of phases – single-phase or three-phase Voltage class Basic impulse insulation level (BIL). Distribution transformers are normally located at a service drop, where wires run from a utility pole or underground power lines to a customer's premises. They are often used for the power supply of facilities outside settlements, such as isolated houses, farmyards or pumping stations at voltages below 30 kV. Another application is the power supply of the overhead wire of railways electrified with AC. In this case single phase distribution transformers are used.

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