I have a little bit of experience in this field, having cataloged over 14,000 distribution transformers for Connecticut Light & Power last year.
First of all, what the hell is anyone doing cutting locks to gain access to anyone's property? If I did that I would have been fired so fast I'd warp back in time. Second, no distribution transformer currently on the market is capable of processing the kind of information they're talking about, and power companies will not replace a transformer unless it stops working or blows up. The oldest one I saw was a 1947 Westinghouse and it was still on the line, transforming away.
Lastly, while I'll always come down on the side of the property owners, any health concerns here are complete bunk. That being said, it is clearly wrong for the municipality to twist their arm as goons for the power company.