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HomeMy WebLinkAbout2013-05-01 PACKET 12.A.REQUEST OF CITY COUNCIL ACTION COUNCIL MEETING DATE 5/1/13 PREPARED BY: Community Development ORIGINATING DEPARTMENT AGENDA ITEM # . ' Jennifer Levitt STAFF AUTHOR *************�*****************�**************** COUNCIL ACTION REQUEST Workshop: Electrical Undergrounding STAFF RECOMMENDATION Workshop: Electrical Undergrounding BUDGET IMPLICATION $N/A $N/A N/A BUDGETED AMOUNT ACTUAL AMOUNT FUNDING SOURCE ADVISORY COMMISSION ACTION ❑ PLANNING ❑ PUBLIC SAFETY � PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENTS DATE 2/11/13 REVIEWED ❑ ❑ � ❑ ❑ ❑ ❑ � MEMO/LETTER: Memo from Jennifer Levitt dated 4/25/13 ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: Publications on Undergrounding ADMINISTRATOR'S COMMENTS: Administrator APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ �� Date **********************************�****�******** COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER City of Cottage Grove Minnesota To: Honorable Mayor, City Council, and Ryan Schroeder From: Jennifer Levitt, Community Development Director/City Engineer Date: April 25, 2013 Subject: Workshop: Electrical Undergrounding Background The City of Cottage Grove has contemplated for many years requesting Xcel Energy to under- ground aerial power lines in the community. The City has the ability to make that request of Xcel Energy, but it does come with a cost to the City. Aerial electrical lines do detract from the aesthetic appeal of a road corridor. There are benefits associated with underground electrical facilities such as reduced maintenance due to storm damage, improved reliability, improved public safety, and improved property values. The publication "The Power to Change the Face of America...Converting Overhead Utilities to Underground" (02009 Underground 2020) outlines the issues involving underground electrical lines and is included in the workshop packet. In all new residential areas electrical lines are installed underground. Currently, many of the aerial power lines follow major road corridors in the community, such as Hinton Avenue, East Point Douglas Road, 70th Street, 65th Street, 90th Street, Jamaica Avenue, and 80th Street. In order to better understand what a transmission line is, Xcel Energy provides this definition and description: Think of transmission lines as an "interstate highway system" for electricity: They are a vital link used to deliver electricity over long distances from power sources to transmis- sion substations closer to homes and businesses. There are about 160,000 miles of overhead transmission lines 230 kilovolt or higher in the United States (based on a 2002 Department of Energy study); primarily because of cost, less than 1 percent is underground. The lines interconnect 750,000 megawatts of generating capacity nationwide. A strong transmission system assures reliable electricity. Utilities connect their transmis- sion systems to neighboring systems run by other utilities. These interconnected systems form regional grids that allow power to flow from one area to another, ensuring reliable and efficient electric delivery to customers, even during emergencies. Electricity also cannot be stored; it has to be generated, transmitted and distributed the moment you turn on your computer or any other appliance. Traveling at almost the speed of light — 186,000 miles a second — electricity arrives where it's demanded at almost the same time it's produced. Representatives from Xcel Energy attended the Public Works Commission meeting on February 11, 2013. They reviewed the constraints associated with undergrounding electric lines, reliability Honorable Mayor, City Council and Ryan Schroeder Workshop: Electrical Undergrounding April 25, 2013 Page 2 of 3 issues associated with undergrounding vs aerial, and the costs associated with undergrounding requests. A memo from Colette Jurek and Steve Koski, Xcel Energy, is enclosed with their res- ponses to additional questions that were asked at the Commission meeting to provide further information related to life span of facilities, service trips, accident data, and liability. At the meeting the Public Works Commission was presented a publication called "The High Price of Aesthetics, The Benefits of Burying Existing Overhead Systems in Most Instances Do Not Justify the High Price Tag." A copy of this publication is included in the workshop packet. Discussion The City has reviewed seven different road corridors in the community that could be considered for undergrounding electrical lines; they are outlined in the attached map. Xcel Energy has pro- vided the City a rough estimate for costs associated with undergrounding requests. There are many factors that can affect the cost of a project, such as encountering rock, electrical looping for back feeding an area, how many switching stations are needed, and how many intersections are crossed as part of the project and the associated challenges with those crossings. The table below represents the estimated costs for each corridor: In the CIP workshop with the City Council on March 23, 2013, the above corridor under- grounding projects did not rank as a mandated, priority, or desired project in the exercise. The corridors ranked in the lowest tier of potential projects. There are three specific projects that the City has requested cost estimates for that are slated for immediate construction and they are as follows: Cost Estimate for Underground Electrical East Point Douglas Road — Menards to Walmart: $117,491.83 The cost estimate to relocate electrical distribution underground to include the removal of 13 poles along East Point Douglas Road, installation of approximately 2,700 feet of 750AL under- ground, installation of three load breaker centers, and other associated equipment. Cost break down includes five poles at incremental cost of $29,010.86 and eight poles at age depreciation value of $88,480.97. Honorable Mayor, City Council and Ryan Schroeder Workshop: Electrical Undergrounding April 25, 2013 Page 3 of 3 Keats Avenue and 70th Street, West of Joliet Avenue South: $48,672.35 The project will consist of the relocation of the pole line on the south side of 70th Street from Joliet Avenue to Keats Avenue. It will go underground at the pole west of Joliet to the north side of 70th, from that point run east and rise up on a pole that is just north of the intersection of 70th Street and Keats Avenue. It will also include installation of a LBC to feed customers. The loca- tion of the LBC will be near the intersection of 70th Street and Jorgensen Lane. All cable installed will be by directional bore. Hinton Avenue, between 70th Street and 80th Street: $485,000 (+/- 30%� Estimate includes the installation of four Padmount Switches (PMH), two Load Break Centers (LBC), 6,000 feet of 750a1 three-phase cable, 2,000 feet of 1/Oal 3-phase cable. For a more refined analysis, an engineering fee will be required in the amount of $5,000.00. An engineering study is required due to the number of system taps coming off of this feeder system requiring load analysis of each tap to understand how system taps can be split and/or joined based on loads. n THE POWER TO CHANGE THE FACE OF AMERICA... C onvertin �verhead Uti I ities g to Under round g � 2009 Underground 2020 ;rF . 4 {' � � •' ; \ : I � .' ' � i� _ � �� , �._ .. . ��.� � .� � , ,� - ,� . �- , �I , . yy !.� bj � � _ � r� ! �� .d.` � . � ,��� ,�, ,• _ , -1 X` ��'� ." � �'�',r l�,f ;�. �i t •a �',/:� _ . Y '=it �;i �"•'t V' . ` Executive Summary More than 3 million miles of electrical cables are strung overhead across the country. Add to that at least 180 million telephone and cable TV lines, and iYs no wonder hurricanes, tornadoes, fires and ice storms are wreaking havoc on America's electrical systems each year, causing utility outages that last days, weeks and longer. Power outages over extended periods present major health and safety concerns and economic losses. In the aftermath of these storms, there is invariably an outcry from the public, the government and the media to place overhead utilities underground. Concerns about the reliability of overhead lines, increases in their maintenance and operating costs, and issues of public safety and quality-of-life are leading more and more utilities and municipalities to the realization that converting overhead distribution lines to underground is the best way to provide high-quality service to their customers. According to a report by the Edison Electric Institute, "almost 70 percent of the nation's distribution system has been built with overhead power lines." Over the past 15 years or so, however, "appro�mately half the capital expenditures by U.S, investor-owned utilities for new transmission and distribution wires have been for underground wires." Making such a conversion is rarely justified solely on the basis of costs. For utility companies, undergrounding provides potential benefits through reduced operations and maintenance (O&Ivn costs, reduced tree trimming costs, less storm damage, reduced loss of day-to-day electricity sales, and reduced losses of electricity sales when customers lose power after storms. Creative funding options are often available to make the goal of undergrounding a reality. For some conversions, the evolution of horizontal directional drilling and the ability to physically locate underground utilities using vacuum have been key to the success of many of these projects. The Situation The headlines are everywhere. In September 2008, heavy winds in Ohio caused an outage which deprived approximately 2.6 million customers of power. In December 2008, ice storms in the northeast cut power to millions of customers. Overhead power lines have caused devastating fires in San Diego County. In addition to the utility's restoration costs, social costs of outages include lost revenue and other business disruptions, public safety and security, and convenience. As so-called 100-year storms and events happen with frightening regularity, forecasters anticipate that increased hurricane activity will continue to occur in some regions and extended drought conditions will continue in others, causing significant impact to utilities, primarily in the Gulf, Atlantic and Pacific coastal areas. According to Michael Beehler, associate vice president of Burns and McDonnell and moderator of the utility industry's 2009 DistribuTech conference held in San Diego, "the total restoration costs for Hurricanes Katrina, Rita, Gustav, and Ike totaled approximately $2 billion. Some power lines were downed during both Hurricane Rita in 2005 and Hurricane Ike in 2008. We rebuilt the system and then we rebuilt it again." In September 2003, Hurricane Juan, one of the most damaging hurricanes to impact Canada, made landfall in Nova Scotia, resulting in more than $24 million in damage to Halifax Regional Municipality infrastructure and property. In addition, Nova Scotia Power Inc. (NSPI) incurred costs of $12.6 million as a result of the storm or approximately 11% of earnings that year. In just the next 14 months, Nova Scotia was struck by two more storms resulting in above-average power outages and substantial power infrastructure repair costs. The majority of the outages resulted from downed power transmission and distribution lines due to high winds, fallen trees and branches, ice and snow. Sample of Electric Outages Caused by Severe Storms: 1996-2005 (Not inclusive of all storms) Storm Event Utility Date Customers OutageDuratfon Im acted Da s Hurricanes Entergy 2005 832,000 Power never Katrina & Rita restored for some in New Orleans Hurricane Wilma Florida Power & 2005 3,200,000 18 Li ht Hurricane Florida Power & 2004 2,800,000 12 Francis Li ht Hurricane Isabel Dominion, VA 2003 1,800,000 14 Power BGE 2003 790,000 8 Ice Storm Kentuck Utilities 2003 146,000 8 Ice Storm Duke 2002 1,375,000 9 Carolina Power 2002 561,000 8 Ice Storm KCPL 2002 305,000 10 Snowstorm Carolina Power 2000 173,000 5 Hurricane Floyd Virginia Power 1999 800,000 5 Carolina Power 1999 537,000 6 BGE 1999 500,000 8 Ice Storm Pepco 1999 213,000 5 BGE 1999 360,000 5 Ice Storm Central Maine 1998 250,000 21 Power Ice Storm Virginia Power 1998 401,000 10 Hurricane Fran Virginia Power 1996 415,000 6 1996 450,000 9 Ice Storm Duke 1996 650,000 8 Carolina Power 1996 790,000 10 Source: Press Accounfs of Storms Table used in A Study on the Costs and Benefrts of Undergrounding Power Gtnes. Prepared for the Edison Electric Institute (EEI). Add to that the aging conditions of overhead lines and poles, the encroachment of overgrown trees, aesthetic considerations and public safety concerns — such as vehicle/utility pole accidents which result in approximately 1,000 fatalities every year, and live-wire contact injuries — and it's no wonder utilities are converting overhead distribution lines, and eventually transmission lines to underground. Success - Edmond Electric Taking an incremental, section-by-section approach to conversion has proven to be a win-win for many utilities and municipalities, including municipally-owned Edmond Electric, (Oklahoma). A case study, published by Dean Sherrick, distribution superintendent, describes Edmond as a`bedroom community' of Oklahoma City where residents appreciate their trees and quality of life. Citizens wanted to be rid of their lines and poles, in part because of aesthetics, and in part because Edmond is located in "tornado alley". The community is also prone to ice storms. According to Sherrick, who oversaw the community's overhead to underground conversion, "Given the aging condition of some of our 96-year-old company's poles and facilities, our utility first identified azeas already in need of repair and upgrade. By starting with an azea that needed attention, some of the conversion expense couid be absorbed in annual maintenance and upgrade costs already budgeted." First project completed was Henderson Hills, converting nearly 500 residents to buried electric cable in conduit. The next project targets a similarly sized neighborhood where outages have been high and older equipment needs replacement and repairs." Sherrick credits horizontal directional drilling (HDD) with reducing installation and restoration costs, and minimizing disruptions to the community, tr�c problems and recurring sinking caused associated with open trenches, setting a precedent for future projects. Their city council approved a revised budget line item for overhead to underground conversion covering five years. Project Power On (Undergrounding) — AmerenUE AmerenUE, which serves customers in Missouri, is undergoing a$300 million core reliability program, designed to better protect its delivery system against the forces of nature. This effort includes substantial underground cabling in areas where undergrounding is feasible to improve reliability. The project planning, design, and construction represent a major collaborative effort between UE, county and municipal governments, the region's contracting industry and UE customers. UE also has identified some "must-do" undergrounding projects that supersede the local government engagement process. In all cases, the upgrades will be designed to improve reliability, not just the cosmetic appearance of the system. The undergrounding projects could include high- or low-voltage overhead lines and may include service conductors physically attached to customer residences and/or businesses. In some cases, small portions of overhead circuitty may be reconstructed or relocated before they are placed underground. The project is part of a$1 billion initiative to improve reliability and protect the environment. Potential Benefits of Underground Electric Facilities Advantages of underground lines include aesthetics, higher public acceptance, perceived benefits of protection against electromagnetic field radiation (which is still present in underground lines), fewer interruptions, and lower maintenance costs. Failure rates of overhead lines and underground cables vary widely, but typically underground cable outage rates are about half of their equivalent overhead line types. Potentially far fewer momentary interruptions occur from lightning, animals and tree branches falling on wires which de-energize a circuit and then re-energize it a moment later. Primary benefits most often cited can be divided into four azeas: Potential[y Reduced Maintenance And Operating Costs • Lower storm restoration cost • Lower tree-trimming cost Improved Reliability • Increased reliability during severe weather (wind-related storm damage will be greatly reduced for an underground system, and areas not subjected to flooding and storm surges experience minimal damage and interruption of electric service. • Less damage during severe weather • Far fewer momentary interruptions • Improved utility relations regarding tree trimming Improved Public Safety • Fewer motor vehicle accidents • Reduced live-wire contact injuries • Fewer Fires Improved Property Values • Improved aesthetics (removal of unsightly poles and wires, enhanced tree canopies) • Fewer structures impacting sidewalks Tangible Savings The following chart, which summarizes the total benefits that the Virginia State Corporation Commission calculated Virginia utilities might realize if the state's entire electric distribution system were placed underground, shows tangib(e metrics for projecting savings to utilities. It shows an annual projected savings of approximately $104 million. Cost Savin Item: $/Year O erations & Maintenance no savin s Tree Trimmin $ 50,000,000 "Hundred-Year" Post Storm Rebuild $ 40,000,000 Reduction in Day-to-Day Lost Electricity Sales $ 12,000,000 Elimination of Lost Electricity Sales From $ 2,000,000 "Hundred-Year" Storms Total $ 1 'Placement of Utllity Distribution Llnes Underground" Societal Benefits The following summarizes some of the societal benefits, including enhanced electric reliabiliiy to the economy, reduced economic losses to customers due to fewer power outages after major storms, and reduced injuries and deaths from automobiles striking utility poles. Reports indicate nine out of 10 new subdivisions bury power lines. Some of the cities which have already developed comprehensive plans to bury or relocate utility lines to improve aesthetics, include: • Colorado Springs, Colorado • New Castle, Delaware • Frederick, Maryland • Saratoga Springs, New York • San Antonio, Texas • Williamsburg, Virginia • Tacoma, Washington Utilities vary in how they charge for providing underground service to new residential construction. Some samples of residential undergrounding requirements are illustrated in the following: Utili State R uirement SDG&E, PGE & SCE CA Customer/Developer pays for trenching & backfilling. Utility a s remainin costs. Atlantic City Electric NJ Customer/Developer pays $802.74 + $4.35 per front foot for each home. Utility pays remainin costs. Cobb Electric Membership Corp. GA CustomerJdeveloper pays $260 per customer. Utility pays remainin costs. Green Mountain Power VT Customer/Developer pays for trenching & backfilling. Utility a s remainin costs. Nantucket Electric Co. MA The utility pays up to $837.85. The customer pays the remaining costs. Consolidated Edison NY The utility charges the customer the differential in charges for uivalent overhead construction Mississippi Power MS Developer pays the cost differential above what it would cost to install overhead lines Source: "Utiliry Undergroundtng Programs'; Scientech, May, 2001 In addition, creative funding options are being implemented using special assessment areas, undergrounding districts, and state and local government initiatives. For example, according to a Florida Power & Light press release, in January 2006, the company announced that subject to Public Service Commission approval, it intended to "pay for 25 percent of the cost of converting overhead lines to underground for local govertunent-sponsored conversions. Florida Power & Light is hoping its actions will encourage local governments to take the necessary steps to invest in undergrounding." South Carolina Electric & Gas has established a special undergrounding program, approved by the South Carolina Public Service Commission. Under the program, if the local municipality agrees to contribute a matching amount, SCE&G contributes 0.5 percent of the gross receipts it is obligated to pay to the municipality. This money goes into a special undergrounding fund. Progress Energy has included a provision in its line extension policy where, upon request, it will convert overhead facilities to underground without charge in a downtown commercial area, provided the area has sufficient density. The municipality must agree to receive underground street lighting service and satisfy certain other requirements The Ciiy of Boulder, Colorado assists individuals or groups of property owners with undergrounding existing utilities adjacent to their property through the Xcel Energy Undergrounding Credit. Xcel is required to make one percent of the preceding year's electric revenues available each year for undergrounding electric distribution lines in public places. Program participants pay 50 percent of undergrounding costs up to $100,000, and 100 percent of program costs in excess of $100,000. Conclusion After decades of discussion, municipalities and electric utilities are discovering that the many real and societal advantages to undergrounding power lines go far beyond just avoiding infrastructure damage from storm events such as hurricanes and ice storms. In fact, cost benefits accrue from reducing day-to-day maintenance and operating costs, improving reliability, enhancing public safety and improving aesthetics and property values. In many areas of the country, public policies are being developed which consider some form of cost-sharing for undergrounding, as governmental agencies learn more about the benefits which accrue to themselves and to utilities, developers, homeowners, businesses, communities and other rate payers, as a result of undergrounding. Converting overhead facilities fits with many utilities' goals of providing high-quality electric service to its customers. Evolving technology, such as horizontal directional drilling, and the ability to more safely physically locate underground utilities which are already underground, are resulting in higher-than-expected production, setting a precedent for projects to come. Underground 2020 27149 Hwy. 33 Okahumpka, EL 34762 352-303-0901 www.under�,round2020.org u � 2009 Underground 2020 Biblio r� aphv InfraSource Undergrounding Assessment Phase 1 Final Report. Emera. 2003. Emera Reports Third Quarter Earnings of $11.5 Million: $4.0 Earnings Impact from Hurricane Juan. Halifax Regional Municipality. 2004. District 13 Newsletter, Winter 2004. Johnson, B.W. 2006. Out of Sight, Out of Mind? A Study on the Costs and Benefits of Undergrounding Power Lines. Prepared for the Edison Electric Institute (EEI). Kinectrics. 2005. Underground Utilities Feasibility Study for Halifax Regional Municipality. Report #: 10986-001-RA-001-RO1. Maney, C T. 2006. Benefits of Urban Underground Power Delivery. IEEE Technology and Society Magazine, Spring 1996. Navigant Consulting, "A Review of Electric Utility Undergrounding Policies and Practices," March 2005. "Overhead to Underground Conversion in Oklahoma," Transmission and Distribution World, Penton Media, August 2004. Putting Cables Underground Working Group. 1998. Putting Cables Underground. Report of the Putting Cables Underground Working Group to the Minister for Communications, Information Technology and the Arts. Australia. Sinclair Knight Merz. 1998. Consultancy to Investigate Potential Benefits From Putting Cables Underground. A study completed in support of the Putting Cables Underground Working Group. Australia. "The Real Cost of Overhead vs. Underground Transmission: It May Not Be What You Think" panel: moderated by Michael Beehler, associate vice president of Burns and McDonnell. Panelists Pacific Gas & Electric Senior Consulting Engineer Mohan Bhatia, American Electric Power Director Of Transmission Line Projects Engineering Max Chau, and Northeast Utilities System Transmission Project Director Anne Bartosewicz. "Utility Undergrounding Programs," Scientech, May 2001. Virginia 5tate Corporation Commission. 2005. Placement of Utility Distribution Lines Underground. Report to the Governor and the General Assembly of Virginia. MEMORANDUM TO: Jennifer Levitt, Cottage Grove City Engineer FROM: Colette Jurek, Community Relations Manager Steve Koski, Electric Reliability Engineer March 7, 2013 SUBJECT: Cottage Grove Public Works Commission Follow-up Questions: 2/11/13 Commission Meeting Jennifer, Steve Koski and I wanted to address some of the outstanding concerns raised during the last Public Works Commission meeting regarding undergrounding. Electric Infrastructure • With respect to our Minnesota service territory, approximately 60% of our electric feeder lines are installed overhead and 40% are installed underground. • The life span of both overhead and underground feeder cable is estimated to be 40 years. • With respect to Cottage Grove feeder lines, the following is an overhead vs. underground reliability comparison for the four-year period 2008-2012: Cottage Grove Feeders 9/1/2008 thru 8/31/2012 Overhead Feeders Number of Trips 11.0 Average Number of Trips (actual) Per Year 2.8 Total Trip Duration 13.2 Average Outage Duration (in hours) Per Year (in hours) 3.3 Underground Feeders Number of Trips Average Number of Trips (actual) 3.0 Per Year 0.8 Total Trip Duration Average Outage Duration (in hours) 2.6 Per Year (in hours) 0.7 • Gopher State One-Call (GSOC) provides locating services to requesting parties free of charge. This includes both overhead and underground systems. • Under Minnesota Public Utilities Commission (PUC) general rules and regulations, Xcel Energy is obligated to design and construct its electric delivery system in the most prudent, least-cost alternative to meet the needs of our customers and which will maintain system reliability and perFormance. Parties requesting special facility installation such as undergrounding are responsible for those excess expenditures. Public Incidents Our insurance and claims department tracks public incidents involving both our overhead and underground systems. In the 7-county metro region for 2012, we experienced 440 poles hits which included street light poles and guy wires. During that same timeframe, we experienced 63 padmount and pedestal equipment hits. With respect to the liability question involving equipment interFerence, each case is different and liability is determined on a case-by-case basis. 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A •� �`� A - � !� ' �` 4 � �. � .. � � .�. _ , �.ac , � � ��� k_<-,�` <.�,,�„;,,. - �.s � �- _ � 4 I -�-� ��r1�*f�` � .s...*rF"'�°-r..��f � � '� .�:._.,� - - �¢� � t � _ I :_.. - � �,,... ti°'e`,- -�..— -- � -,, - - - �,�� �� � � :.� Windy and icy weather can snap utility poles. Underground lines don't have that pro6lem but are vulnerable to other damage. nience—whether on the factory floor or irn the hig,�-tech offiee. In heauil}� damaged areas, these outages can sometimes last for days or even weeks. The effect can range from hardship to catastrophe, particularly in terms of health and safety, not to mention eco- nonuc loss. It is not surprising, then, that in the �ost m�rteaai 1Lfi��t f�lloeq,s a ma�j��e storm-related power outage, there is almost always a public clamoring for burying overhead powerlines. After all, wind can't Imock down lines if there's nothing to knock down, and ice can't collect on lines already covered by the earth. It seems intuitive. Sut ifyou examin� str�die� af under- grounding and historical performance data for both undeiground and over- head lines, the benefits and costs of placing more existing overhead electric distribution infrastructure under- ground defy that logic. Ii7 fact, b�ur��ng os ea�eadl �oLarerlin�s has a huge price tag, about 10 times the cost of installing overhead lines. It is true that, compared to overhead power systems, underground lines generally have fewer power outages, but the du- ration of those outages tends to be much longer, Moreover, underground systems are not immune to outages during storins. (See the sidebar, "No Hiding from Water,") Still, there are other benefits for burying existing overhead powerlines, the most significant of which is im- proved aesthetics. Many communities and individuals want their powerlines removed from sight. The benefits de- rived from such initiatives are difficult to quantify, but they are real and can be substantial. Because these projects cannot Ue justified Uased on standard economic criteria, community and government leaders often struggle to determine who should pay and who Brad Johnsm7 rs an incleperzdent energy constdtant (btujohnso�i�ac�ainc.raet). This article is based on his stucly forEdiso�t E1ec- tric Institute. should benefit from undergrounding initiatives based on aesthetics. Undergrounding, like so many is- sues, depends on the balance between the high cost and the actual benefits. And the bottom line is that reliability Uenefits associated with burying e�cist- ing overhead systems are uncertain and in most instances do not justify the high price tag. Measuring Electric Heliability Actually, utilities are already placing a significant amount of line under- ground. Over the past 10 years, ap- proximately half (49 percent) of the capital expenditures by U.S. share- holder-owned utilities for new trans- mission and distribution lines have Ueen for underground wires. A1mosC 80 percent of the nation's electric grid, however, has been built with overhead lines. Would electric reliability be im- proved if more of these existing lines were placed underground as well? There are two primary measures of electric reliabiliry: ■ the fi•eqttency with which a customer sustains a power outage (that is, the number of power outages per year, measured by the system average inter- ruption frequency index, or SAIFI); and ■ the durcctio�z of outages (that is, the number of minutes per year a cus- tomer is without power, measured by the system average interruption dura- tion index, or SnIDI). For most utilities, it is extremely difficult to track the number of outages that occur on their systems and deter- 62 ELECTRIC PERSPECTIVES i ' f � � �'�� � — � . . � � ¢I_ '"....__ � �' _ ��-'_ ___ __.__ "__ � Y -_ . I 1 1 '1'. Underground power systems are nol immune from storm-relaled outages. Baltimore Gas & Electric recorded a large number o( failures relafed to its underground equipment during Hurri- cane Isabel in 5eptember 2003. Item that iailed Number oi tailures 1,000 kVA nefwork transformers Nefwork protecfors Swifchgearfuses 4 kV D&W iuses Pad-mounted s�Nitchgear Pad-mounted transformers Primary duclline Secondary ductline Seclions of cable renewed Underground cable faulls Source: Ballimore Gas & Elechic 5 ,,���._,- I ��. � 26 „� � 17 p r --- - � N �Y,'� _ �V 5 � 12 � — :a 8 =r-^ 10 –. 14 100+ �–_ _ _ _ r � t �.`�.", -__ _ ": ;?' : _ , , u - OVERHEAD VS. UNDERGROUND IN NORTH CAROLINA 1998-2002 Reliability category Overhead Underground System interruption rate per mile Tap line interruption rate per mile 0.6 0.3 0.4 0.2 Average outage duration (minutes) 92.0 145.0 Service conduclor inlerruptions per 1,000 customers 9.7 9.6 Source: Norlh Carolina Ulilities Commission mine the number of customers af- fected. Utility switching actions, for ex- ample, can result in momentary outages that last only a fraction of a second—it is hard to say whether or not they have an effect. Moreover, for storm-related outages, die utility often relies on customers to provide notifi- cation that they are without power. If the customer does not report the out- age, the utility may be unaware of it. Comparing the reliability of over- head powerlines to underground ones is even more difficult. Most utility out- age-reporting systems do not try to separate the two. The problem is fliat underground circuits generally have one component above the ground. Monitoring equipment is available to distinguish among outages on the overhead and underground compo- nents of the same circuit, but it is ex- pensive. In spite of these diffict�lties, utilities worldwide collect SAIFt and SaIDi data. Increasingly, regulatory commissions use this data to measure utility perfor- mance against reliability standards and then reward or penalize utilities accordingly. And several studies of underground- ing are available. The North Carolina Utilities Com- mission studied five years of under- ground and overhead reliability comparisons for the state's share- holder-owned electric utilities—Duke Energy, Progress Energy Carolinas, and Dominion North Carolina Power. (See Table 1.) The data indicate that dle fre- quency of outages on underground systems was 50 percent less than for overhead systems, but the average du- ration of an underground outage was 58 percent longer than for an overhead outage. In other words, for North Caro- lina utilities, an underground system suffers only about half the number of outages of an overhead system, but those outages t3ke almost l.b tlmes longer to repair. According to the commission's re- port, overhead lines experience shorter outage duration because it is relatively easy to locate a fault on an overhead line and repair it. A single line worker, for example, can locate and repair a fuse. Underground lines, on the other hand, require specialized equipment and crews to locate a fault, a separate crew with heavy equipment to dig up a line, and a specialized crew to repair it. This greatly increases the time (not to mention cost) to repair an under- ground fault. In urban areas, buried lines are four times more costly to maintain than overhead facllities. In the discussion of the report, Duke Power pointed out that overhead lines tend to have more power outages pri- marily due to trees coming in contact with them. Also, water and moisture infiltration can cause significant fail- ures in underground systems when they are flooded, as often happens in hurricanes. Not only that, due to cost or technical considerations, it is un- likely that 100 percent of the circuit from the substation to the customer can be placed entirely underground. This leaves the circuit vulnerable to the same types of events that affect over- head lines—high winds and ice storms. In a 2000 report issued by the Mary- land Public Service Commission, the state's utilities were asl<ed to select "comparable" overhead and under- ground feeders and provide reliability data for three years (1996-98). The data, which did not include storm-re- lated outages, varied widely. (See Table 2.) For two of the four utilities, the fre- quency of underground outages was higher; and duration was generally comparable. The commission con- cluded in its final report that the im- MAY / JUNE 2004 63 � r . �'.t`� �� Y � �� y h �Y� � a a 4 � a i ����� p, f �` �.,%� 1! � , ��� :s-� } 7C .._. �+� : r � � - �� _ .'� J p5+ " _ ; a,',. � ?r�� �j. A � �� . f �,,�� . �� I� � �I� -y +� '. � " �j ���� ` '.7',M � � � � ti ' f �::i .�'i4� � - �-:l �'s� `*"� . - � . N .;� � �r. , � �'�� ,. � q : ,µ i ,,.},� ,.�, r ;� �� * , '� i , � , � � d �� ��� p �' � £ t .' �' . , y h ` i�f �.� � ~: V � � �7 �. �� � � ° �;�. 'r' �� �;� `� , �����1 ,�,._*..�` . . �. . ,� -� �.+Y��:� . � ,� f � ��A I � � _ `Ir �•�.- . �� � 1 � �'� - �` d� I I I �?'_• '� fT ��'�. � . 4 ` �, a:' ,'i. �, � ; a i i � jJ �� '.'"� U� � �� `� f ' � � �� � W� _ _ C t' i�i' �`.��sF,..-e'. '���9������I__a�.�.�r�--�, � ���' i � ':-��k� '..__'.°__�..____ f � �,. a ��... � . , , ,. „�, . — -' — _ � 4 ` ___L_ . � � ,��rt. -� . __ -- — ' y �_;' �, y M ... . ._-_, - _ � - � 1 — �� ' � -'_ - � —�. _-.,,,,�,,,�,�� � �,�;�� - _ - �- � ��� i '`� ��� �- � � �� .-�—,,s�y�-- � _ :,.�,� ���—�,,,, _ - � y � �� j � � h�� ,� _ _ OVERHEAD VS. UNDERGROUNDIN MARYLAND (averagefor1996-98) Overhead Underground Utility, index lines lines Allegheny Power SAIFI 0.6 0.8 SAIDI 51.6 236.8 Baltimore Gas & Eleclrio SAIFI 2.6 12 SAIDI 152.7 130.0 Conecliv SAIFI 0.8 1.0 SAIDI 65.6 53.3 PEPCO SAIFI 2.1 0.7 SAIDI 3.2 2.1 SAIFI: syslem average inferruplion frequency index SAIDI: syslem average in�erruption tluration index Source: Pu61ic Service Commission ol Maryland pact of undergrounding on reliability was "unciear." One of the issues highlighted by the commission was the fact that as under- ground cables approach their end of life, failure rates increase significandy, and these failures are extremely difFicult to locate and repair. Maryland utilities report that their underground cables are becoming unreliable after 15 to 20 years and reaching their end of life after 25 to 35 years. Moreover, PEPCO found that customers served by 40-year-old overhead lines had better reliability than customers served by 20-year-old underground ones. In fact, two Maryland utilities, Choptank (a ru- ral electric cooperative) and Conectiv, have replaced underground distribu- tion systems with overhead ones to im- prove reliability. The most comprehensive under- grounding report prepared to date is probably the 1998 "Putting Cables Un- derground Working Group Report," from Australia, prepared at a cost of more than $1 million. The report ex- amined the costs and benefits of un- dergrounding all existing powerlines throughout the country. Crews can restore overheatl lines to seruice faster than underground lines, which require special repair crews antl equipment. That study, as others consistently do, shows that underground systems suffer outages suUstantially less fre- quently than overhead ones. The Aus- tralians found that the frequency of power outages in underground sys- tems (in Australia, France, and Fin- land) is, on average, less than one-third that of overhead systems. The study showed conflicting results for the duration of a power outage. Over a 10-year period in the United Kingdom, for example (as cited in the Australian report), the duration of out- ages for underground lines was a little more than half of what it was for over- head; however, in 1996 and 1997, un- derground circuits were actually less reliable than overhead ones, losing 12 percent more customer minutes. Looking Good One of the most commonly cited benefits of undergrounding is the re- moval from the landscape of poles and wires. Local communities and neigh- 64 ELECTRIC PERSPECTIVES borhoods routinely spend millions to place their existing overhead power lines underground. Given the option, builders of new residential communi- ties will often pay a premium of sev- eral thousand dollars per home to place the utilities underground. These "aesthetic" benefits are difficult to quantify but are often the primary ��.��....,�.�..�...... �........b...�.��....b t .... jects. In addition to the value of improved aesthetics (uaquantifiable, except as they pertain to property values), the Australian study brought several other potential benefits to light: ■ reduced motor-vehicle accidents caused by collisions with poles; ■ reduced losses caused by electricity outages; ■ reduced network maintenance costs; ■ reduced tree-pruning costs; ■ increased propertyvalues; ■ reduced transmission losses due to the use of larger conductors; ■ reduced greenhouse-gas emissions due to lower transmission losses; ■ reduced electrocutions; ■ reduced brushfire risks; and ■ indirect effects on the economy, such as increased employment. Only four items—regarding motor- vehicle accidents, maintenance costs, tree-trimming costs, and line losses— were deemed significant in the study's benefit/cost calculus. (See Table 3.) It identifies the reduction in losses from motor vehicle accidents as the largest benefit from undergrounding—some- thing utilities have no control over. The total for benefits came to $1.9 billion over 20 years. The Australian study developed a model to estimate costs for undergrounding e�sting overhead powerlines and came up with a whopping $16.3 billion, more than eight times the amount of benefit. (See Table 4.) The total cost per urUan or suburban customer would be $3,856. Another way of looking at it: $360,207 per mile. In contrast to the Australian study, U.S. studies have been regional in na- ture and have focused on the costs rather than the benefits of under- grounding. � . ,, ._ � � _ : . =-_�– UNDERGROUNDING IN AUSTRALIA: 20-YEAR BENEFIT PROJECTION (U.S. dollars) Tree-trimming $0.5 billion Reoairs and mainlenance �0.1 billion Motor vehicle accidents $1.1 billion Line losses >$0.1 billion Other $0.2 billion Tolal benefiis $1.9 6illion Source: "The Puiting Cables Underground Working Group ReporY' UNDERGROUNDING IN AUSTRALIA: COST PROJECTION (U.S. dollars) Excavalion $4.5 billion Instailation and malerial $3.8 billion Service connection $2.3 billion Reinstatement of service $1.9 billion Transformers $2.0 billion Street lighfs $1.1 billion Dismanfling and disposal $0.7 billion I�i�l ca�;s !�wy�.3 s.�illio�i Source: "The Pulling Cables Underground Working Group ReporP' The North Carolina Utilities Com- mission estimated it would take its three shareholder-owned utilities 25 years to underground all their e�sting overhead distribution systems—at a cost of approximately $41 billion. This six-fold increase in the existing book value of the utilities' current distribu- tion assets would require a 125-per- cent rate increase. In other words, North Carolina consumers would have to pay more than twice as much for electricityto enjoythe "benefits" of un- derground lines. Other data for U.S. utilities indicate similar costs for placing overhead powerlines underground. (See Table 5.) Often the cost is five to ten times that of new overhead lines. At $1 mil- lion per mile, a new underground sys- tem would require an investment of more than 10 times what the typical U.S. shareholder-owned utility cur- ..,.. :, :...,, :...........: :.. �:....::, u.:.,.. plant. Other factors also can result in sub- staniial addiiionai customer costs for undergrounding projects. For instance, electric undergrounding strands other utilities—cable and telephone assets, for example. They would have to as- sume the fiill cost of poles, and those costs likely shift to the customers. Also, customers may incur substan- tial additional costs to connect homes to newly installed underground ser- vice, possibly as much as $2,000 if the household electric service must be up- graded to conform to current electric codes. Both the Australian and U.S. studies identify significant issues related to who assumes the burden for under- ground costs. If utilities were told they must underground a significant por- tion of their overhead lines, who would pay for it and who would get their lines placed underground first? If the costs are fully allocated, only the wealthy may be able to afford it. On the other hand, if undergrounding is financed or socialized through a broad-6ase tax or electricity rates, people may end up paying for undergrounding projects that do not get to their neighborhoods for a decade or more (or after theyhave already moved) . New and Old Placing e�sring overhead lines under- ground is difficult to justify economi- cally. In spite of that, undergrounding is popular across the United States, and aesthetic reasons seem to trump costs. In nine out of ten new subdivi- sions, contractors bury power lines. In addition, dozens of cities have devel- oped comprehensive plans to bury or relocate utility lines to improve aes- thetics. 66 ELECTRIC PERSPECTIVES ��4�1' � ��■ _ T -• ;;�, �� � n Ji�'� ' . , �� r � � �� � �; � I ��; i I � I --��.rr_. - I �il . 9 . ' I. � ' 1 _ _ . F ' , 1 1 . 1�� i.l , � ,��— � -- — � � �`� �;.� � r.,., A',r -- ti. '� �f' + i � ... .' � �`��� ` � � ��, �-�� - ;�. ';; � - � � I _ �- SOME UTILITY UNDERGROUND COSTS �� vf -U Utility/state estimates Average cost per mile Allegheny Power $764,655 Ballimore Gas & Eleclric $952,066 California $500,000 Conectiv $728,190 Florida Power & Lighl $840,000 6eorgia Power $950,400 PEPCO $1,826,415 Puget Sound Energy $1,100,000 Virginia Power $950,000 � Sources: Maryland Selective llndergmunding Warking Group, Dare County (nc) Ilnderground SWdy, Scienlech, Pugel Sound Energy. �"� _ �:_ . � ���-- F�I� �`yr��ri �ij��� � � � �.�� �� � - , � , � �_-� ,� _ ;`�►�,-' '� �w� . ' � �,� o �Yhd�-. U R � �� T H� v - ... 1�'�� _ _ U In parts of Hawaii, 44 percent ot lines are already 6uried through a cost-sharing pro- gram. Heco is stutlying ways to underground even more. For new residentiaP construction, utilities vary on how they charge for the cost of providing underground ser- vices. For Green Mountain Power and uulities in California, the customer or developer pays for trenching and backfilling, whiLe the uti.tity pays the ts�t_ �us��mers i� A�lantic Ciih, E�ec- tric's territory pay a fixed cost, and the utility pays the rest; Nantucket Electric pays up to a certain amount, and the customer pays the rest. ConEd simply charges the difference between the un- dergrounding costs and the estimated cost to install overhead lines to the same destination. When it comes to converring exist- ing overhead lines to underground, there are a variety of programs. Several communities, for example, have estab- lished special assessment areas, where subscribers pay e�ra on their monthly bill to fund an underground project. These areas are typically created by a petition of the majority of the property owners in that area. Commonwealth Electric in Massa- chusetts has used special assessments since 1970 to fund burial efforts in his- toric communities such as Nantucket Island. One drawback to special as- sessments is that the total revenue col- lected is often minimal, requiring utilities to extend the schedule for un- dergrounding. 68 ELECTRIC PERSPECTIVES � Another approach is the establish- ment of underground districts. In Cali- fornia, the public utility commission collects a percentage of revenue from wire-based utilities for a special under- grounding fund. In order to receive these funds, a community must form an undergrounding district, approved by at least 70 percent of the areas prop- erty owners. They also must agree to pay the $500 to $2,000 it costs to con- nect each home to a new underground system. There are various other government initiatives. Under a worl</cost-sharing plan for e�risting overhead lines, Ha- -� � ,' A Cuf Above ���� The Resf For Expert TTegetdtion M�ndgement, Choose... ��RI�HT From The Start • Mechanical Line Clearing � • Right-Of-Way Mowing � • Land Clearing � • Line Cleazance • Herbicide Application • Substation Restoration And Maintenance • Commercial And Residential Tree Care WRIGHT Employee Owned P. O. Box 1718 Des Moines, IA 50306 www.wrighttree.com 1-800-882-1216 , �. � � . .s '��,�i'. J, � :�... Read What These Utiliry Customers Say: "We would not have been �ble to �•estore ser�vice as quichly as we did withottt the ha�•d wark of yozc�� crews." "I know yoza and your people worked lon� cli�`zcult ho2ars wath a nzcmber of you g:va�zg u your holida season. Thanh you - another�ob well done!' "The equipment and supervision rovided by lY/right Tree Service meet the �ro�ssional standards we require, and thu u reflected positively in the aesthetics of our substation. " For More Information, Contact: John Margeson EMAIL: jmargesonCwrighttree.com 1� �...� �� waiian Electric Company will cover costs to design, buy materials, and perform electrical work on its own facilities, including under-grounding lines. The requesting community or government agency must obtain ap- provals and design and construct the duct line infrastructure. Under SCE&G's program, if the local South Carolina municipaliry agrees to contribute a matching amount, the utility contributes 0.5 percent of the gross receipts it is obligated to pay to the municipality. This money goes into a special underground fund. In 1999 the North Carolina legisla- ture passed a law that allows Dare County on the Outer Banks to form a special utIlity district for funding over- head conversion. The counry's electric supplier, Dominion Virginia Power, would collect a maximum of $1 a month from residential customers in the county and a ma�mum of $5 a month from all other customers. The money would be placed in a special fund, managed by the utility, to be used on a pay-as-you-go basis to con- vert the county's e�sting overhead lines. As of last year, Dare Counry had not elected to form the special utIlity dis- trict. One of the reasons is that two cominunities in the county, Duck and Southern Shores, already have under- ground electric systems they paid for through development fees or special property-tax assessments. Residents in these communities believe it is unfair for them to pay undergrounding costs for other county residents. _ -_-_ � N ;`::. � � 70 ELECTRIC PERSPECTIVES ; i�� ���� �����_ _ � � �a y k �� _ T �.\'. - •1L:� ,, � ' �' � � . � � � ' . _ � � � d °, , ,� �,� �: ��j� , �. � � � ' i;� � ',�'° �' � . � � � � � , �. .. ����4.–.._— .. —"_- �ai � -� z � �:� = t .-' �;-.: �' _ �� ;� 4 � . ;;.,� , I� �'� �i fi,,-.� � _ - . ��C��� ��� � ' �,�, �� � , . � �, �t p � ' � �'� '� � �- � � �� �`� �T� q�N� .,.T I i i I I_ :�.. p I � !� 5 �� . � h II����.J� �����'I.F� �� �' l l � . � � � � u ',_;��--G�Y,���J I � � ' " � � �.:-� -:�.� � _..:� ,� p,�'i �,� - ��. � 4 _�� � Out of Sight, Not Out of Mind While communities and individuals continue to push for underground- ing—partictilarly after extended power outages caused by major storms—the reliability benefits that would result are uncertain, and the costs leave little economic justification. Indeed, in its study, the Maryland PuUlic Service Commission concluded, "If a 10-percent return is imputed to the great amounts of capital freed up by building overhead instead of under- ground line, the earnings alone will pay for substantial ongoing overhead maintenance," implying that utilities could have more resources available to improve reliabllity on overhead lines if In new as well as old communities—such as Nantucket, MA—the aesthetic beneiits of un- dergsAUnding ,pa�verlines aulweigh the casts_ � they invested less in new underground facilities. I That doesn't imply that under- grounding shouldn't happen—but its viability hangs on aesdletics, not reli- ability or economic benefits. Many c�nsumers iflna�, uti�r�t t'�eir �oti�*ea�es out of sight, regardless of cost. The challenge is to determine who will pay a for these proj ects and who will benefit. There are several undergrounding programs azound the country that are working through these equity issues and coming up with what appear to be viable compromises. Once a public- policy decision is reached to pursue an undergrounding project, it is worth- while to evaluate these programs in more detail to determine what is work- ing, and what is not. ♦ .{I'.' �\f-�x7 ��i��"l.l� (�(I!nV'r�iIETaYiir;��[t��l��l .. . fi—, iU:a i� ti"� Ci ��s2 ���II� .�xa:�'�R i�,u ...�fr� 1 i4 6 f_ :�, i�;��� � i tii��S����iY?itAVlfi�'�,`Pl �.�Iala�i�vl C ��1vC�l I �i ,.�id%�n i i en��i r a nr -r.i�r r.aainQ�.�ra �(h�:Jhr r�esr.7r I MAY / JUNE 2004 77