Virginia State Corporation Commission (SCC) this month released a study of placing utility distribution lines underground. The study concluded that the tremendous costs would make a comprehensive statewide effort appear to be unreasonable. The total cost of relocating existing overhead electric, telephone and cable television lines underground could approach US$94 billion.
The study, directed by the 2004 Virginia General Assembly (HJR153), addressed the feasibility of locating existing and new lines underground, the costs of doing so, and the options for funding those costs. The legislative study resolution was adopted partly in response to damage caused to existing overhead utility lines by Hurricane Isabel in September 2003.
In Virginia, there are 96,830 miles of overhead electric distribution lines owned by investor-owned utilities and electric cooperatives serving 3.1 million customers. There are 46,000 miles of overhead lines owned by telecommunications providers serving 4.5 million customers.
The SCC study found that the primary advantages of underground utility lines are aesthetics and overall improved reliability. Underground circuits eliminate the need for most tree trimming maintenance, eliminate vehicular crashes with utility poles, reduce some electrical hazards, and nearly eliminate the need for extensive restoration efforts after major storms.
However, the SCC report states that the wholesale replacement of overhead utility distribution lines would be prohibitively expensive for local and state governments, utilities, and ultimately consumers who would pay the costs, either directly or indirectly, in the form of prices, taxes, or utility rates.
The direct costs alone for placing electric utility lines underground is estimated at $83.3 billion. This equates to approximately $800,000 per mile of overhead line with an average cost per customer of $27,000. The estimated cost for replacing overhead telecommunications lines is $10.6 billion. The average cost per mile would be $230,000, and the cost per customer would be $2400. However, the SCC notes that cost estimates provided by the utilities are based on simplifying assumptions as opposed to detailed engineering studies; therefore, actual costs could vary significantly from such projections.
In public comments received by the SCC for the study, residential customers overwhelmingly favored placing utilities underground. But in follow-up questions, these same customers generally indicated they were not willing to pay enough to fully fund the work.
The SCC concluded that a major relocation initiative could take decades to complete and encounter complications from conflicts with other existing underground utilities. Attaining new easements for utilities could involve significant time, negotiations with property owners and potential legal proceedings.
The study found that many electric utilities nationwide, and in Virginia, put much of their new distribution lines underground in residential developments, which costs substantially less than converting overhead lines to underground. A few utilities in other states are slowly converting existing overhead distribution facilities to underground in some localities.
In 2003, Virginia’s largest electric utility Dominion Virginia Power installed approximately 96% of its new residential services underground. Appalachian Power installed nearly 70% of its new residential services underground, and Delmarva Power & Light installed 50% of its new residential services underground. Allegheny Power installed approximately 85% of its suburban and 50% of rural residential services underground. The exception was Old Dominion Power, which serves a mountainous area of southwest Virginia. Old Dominion placed 13% of its rural residential services and 8% of its suburban residential services underground.
In the preparation of the study, the SCC invited the participation of interested parties, including local governments, utility companies, industry groups, and consumer organizations. It was the general consensus of this group that decisions concerning the placement of lines underground can be implemented most effectively at the local level. The SCC concluded localities would be able to judge each individual project on its merits and based on local citizens’ values and willingness to pay. Localities would be in the best position to determine the most appropriate funding of such projects, coordinate work among utilities, and classify projects in a way that affords favorable tax and tariff treatment.