Sermis,
we had a company deliver new mineral oil ( shell diala) for our transformers out here in SoCal, the truck drivers that brought it from L.A. told us they burn any left over (new stuff, not used) in their trucks all the time. I think they mixed it 50/50, let me see if I can find their number... I should have it somewhere around the mess that is my desk. You could ask the guys that deliver it ...
here's a link to Shell's page about Diala:
http://www.shellusserver.com/products/pdf/DialaAX.pdf
As for the used stuff, as long as it doesn't look super dark, it should be ok if it passes a few concern points. On the PCB front, you can't really tell how "crapped up" it is by color, I've personally pulled coffee colored oil all the way to perfectly clear like brand new...PCB's can be all over the chart. there are a few old timer Southern California Edison guys around that swear PCB's aren't that harmful, they used to dip their arms into the stuff. like anything else, it may be harmful if you are pre-disposed to it, blah, blah...
For me, more than the PCB content, why are they giving it away? Transformer oil isn't cheap ( roughly $6/gal for 10k gallons, iirc) last time I got it, but that included delivery lousiana to SoCal.
I would be more worried about Dissolved gases in the oil. Transformers can make numerous gases that may have some negative effects on a diesel motor. Due to different things happening inside due to loose connections or outright elelctrical faults you could have a generation of methane, ethane, ethylene or acetelyene, along with nitrogen and oxygen. I've worked at a power plant since 1988 and have been around transformers a little longer than that. The oil stays in the transformer unless there is a PCB concern or something else happens that filter pressing and vacuum drying the oil won't fix. the only reason I could see them changing the oil out without a pre-existing problem would be an upgrade in oil type due to Insurance requirements to switch to something more fire resistant than the mineral oil. If they are changing it to get rid of the original transformer oil(Askeral or similar), most likely it would be very high concentration PCB stuff. It would seem they wouldn't be giving away >50 PPM PCB because that would be Federally controlled Hazardous waste, but we all know there are people out there that don't exactly follow the rules all the time.
There is also a procedure to "scrub" PCB's out of Oil filled transformers ( for disposal or reuse) by filling them with Diesel fuel and wait 24 hours or more to allow the diesel to absorb the PCB, then drain and refill with more diesel, then drain and refill with clean oil , then drain and refill again with clean oil to get a previously PCB crapped transformer (XFMR) back to less than 50 PPM. ( We are getting ready to correct a small XFMR here by draining and just refilling with new oil. It's at 375 ppm PCB right now, easier to fill with clean oil, that'll bring it down to where we have some more time to deal with it)
I would ask for a analysis of the oil, or Sermis,you can send me a little bottle of it and I'll run it to SCE's lab( the local power company, I know the guys at the lab well from all the XFMR oil I take there)
Bottom line, find out why they are really changing out the oil. It's not normal for any utility I know of to change out the oil unless there's a problem with the oil, either real or imagined by the lawyers. A little long winded, but hopefully helpful..