Underground Distribution: Attractive but Difficult to Justify

The Edison Electric Institute (EEI) recently conducted a study and released a report examining the costs and benefits of placing distribution infrastructure underground. The study concludes that while it is difficult for utilities to justify undergrounding based on pure cost/benefit and reliability analysis, aesthetics and other difficult-to-quantify factors continue to make undergrounding an attractive option—particularly for new construction.

The report, titled “Out of Sight, Out of Mind?” states that while almost 80 percent of the U.S. electric grid has been built with overhead lines, approximately half of investor-owned utilities’ capital expenditures for new T&D lines over the past 10 years has been for underground lines.

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The study also found, to no surprise, that putting lines underground is expensive—in the neighborhood of 10 times more expensive than the cost per mile of building new overhead line. According to the report, the average cost of building overhead line is $120,000 per mile, while figures from select U.S. utilities indicate that building underground can cost from $700,000-plus to well over $1.5 million per mile (see figure).

While the cost side of the equation is fairly cut-and-dried, the benefit side is far more nebulous. Comparing reliability statistics results in a near wash. Underground systems generally suffer fewer but longer outages. Using data from three North Carolina utilities, the report found that outage frequency was 50 percent less on underground systems compared with overhead systems, but outage duration was 58 percent longer on underground as compared with overhead.

The report notes other factors related to the reliability of overhead vs. underground systems:

  • It is generally easier to locate faults on overhead lines than it is on underground lines;
  • faults on overhead lines generally can be repaired quicker than they can on underground lines;
  • underground maintenance is more expensive in urban areas when compared to overhead maintenance;
  • Maryland utilities report that overhead lines have a longer reliable life than underground lines; and
  • the flooding that can accompany heavy storms and hurricanes can cause significant failures in underground systems.

The report states that “U most undergrounding projects cannot be economically justified and must cite intangible, unquantifiable benefits such as improved community or neighborhood aesthetics for their justification.”

Quoting findings from an earlier Australian study, the EEI report notes other benefits besides the improved aesthetic appeal of underground lines vs. overhead lines. Those benefits include:

  • reduced automobile-pole accidents,
  • reduced tree-pruning costs,
  • increased property values, and
  • reduced brushfire risks.

Despite difficulty in arriving at clear cost/benefit-based justification for building distribution infrastructure underground, the report concludes that in the future, “it appears that the undergrounding of existing overhead lines will continue, justified primarily by aesthetic consideration—not reliability or economic benefit. The challenge for decision makers is determining who will pay for these projects and who will benefit.”

EEI’s “Out of Sight, Out of Mind?” report was authored by Brad Johnson, an independent energy adviser. The full 19-page report is available for free download through the Industry Issues section of the EEI website at www.eei.org.

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