The particularities of the Lausanne (Switzerland) district heating system, which are due mainly to the topographical situation, leading to a separation of the system into three height zones, are discussed, as are the rate structures, which are characterized by very low capital cost. Finally, an exergy consideration is made concerning the loss caused by the building transfer stations (corresponding roughly to an annual loss of electricity that is 3 .5% of total heat sold), taking into account the distribution of space heating and hot water requirements and part-load performance of the heat exchanges. It shows the influence of transfer station design (oversizing of about one-third is useful, as is true of the counterflow arrangement) and of the supply-temperature strategy of the distribution network.