12 Jul 2012

Burying power lines could double current electricity rates – depends on who pays

Written by Jim Pierobon

What is it that public officials and ratepayers don’t get about burying power lines? This is an enormously expensive undertaking that would significantly drive up the rates everyone pays for electricity.

Is it worth it? I strongly doubt it.

This type of scene was repeated in hundreds of neighborhoods throughout the greater Washington, DC area after the June 29 ‘derecho’ storm. CREDIT: The Washington Post

Even so, utilities should not hide behind cost estimates to obfuscate their performance in restoring power.

As happens after every extended outage, it’s easy for those who don’t take time to consider all perspectives to presume relocating power lines underground is the solution. The debate over whether utilities such as Pepco, Baltimore Gas & Electric, Dominion Virginia Power and American Electric Power restored power as quickly as they should have after storms such as the June 29 ‘derecho’ will never end. But cold hard facts need to play a more prominent role.

Utilities should be armed with data and information explain their actions, or lack thereof. Public officials should stop grandstanding, whether we’re approaching an election or not.

Based on a numerous studies by or for regulators and elected officials in Maryland, Virginia and North Carolina, the cost to relocate power distribution lines underground would likely increase electricity rates by about 50% to 125%. In urban areas, I believe those estimates may only scratch the surface.

After a 2003 winter storm that cut power to about 2 million people, officials concluded from a widely- cited study in North Carolina that placing power lines underground would “prohibitively expensive,” take 25 years to complete and raise electric bills by 125 percent.

Maryland’s Task Force to Study Moving Overhead Utility Lines Underground found in 2003 that the average estimated cost to underground lines was about $900,000 per mile.

A low estimate provided by Pepco since then of $3 million per mile is more than three times what the task force estimated in 2003. , Pepco’s estimate ranges to $12 million per mile in urban areas, spokesman Marcus Beal  recently told Gazette.net.  To bury the entire overhead system would cost billions, he said.

Maryland state Delegate Tom Hucker, D-Montgomery County, for one is calling for a fresh independent assessment. But that may not materially change the basic facts here. D.C. Council member Mary M. Cheh, a Democrat, has introduced a proposal that would create a commission to identify where in the city power lines could be buried. The installation would be paid for through a 4 percent assessment on electricity bills.

When you hear public officials argue it’s time to bury our power lines, be sure to ask them what is their plan to pay for it and if the means justify the costs and how much time it would take to pull it off. Would the end justify the means?

If utilities get their ratepayers to shoulder most or all of the costs thereby relieving shareholders of the burden, or responsibility, such a debate deserves to continue. In an interview with The Washington Post, Michael Maxwell, Pepco’s vice president for asset management, is quoted as saying the company is NOT opposed to the two proposals (emphasis added). “I think we just have to . . . sit down and figure out what’s the right way to do it,” he said.

Here are three other assessments by investor-owned utilities:

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