Electric companies weigh: overhead vs. underground lines

November 19th, 2008

Daytona News Journal--November 19, 2008

Staff and Wire Report

From the Gulf Coast to Ohio, the only thing louder than the howling winds from hurricanes this year were the complaints about how long it took to get the lights back on.

As an extraordinarily violent hurricane season comes to a close, utilities again weigh the costs, and the ensuing price hikes, of armoring power lines.

"If the Mother Nature paradigm has shifted and it's going to cost us $80 (million) to $150 million every three years that's a different financial model," said Mike Madison, president and chief executive of Cleco Corp., based in Pineville, La. Madison spoke at the annual meeting of the Edison Electric Institute in Phoenix last week.

Gustav knocked out power to 90 percent of his 273,000 customers in September.

Hurricanes Gustav and Ike combined to knock out power to nearly 8 million homes and businesses over summer, some for as long as two weeks. Many who had power restored after Gustav roared through Louisiana, lost it again when Ike plowed into the Texas coast.

Putting lines underground would cost about $1 million a mile -- 10 times the cost of overhead lines, according to an Edison Electric study.

And faith in even those fortifications was doused by hurricanes Ivan and Katrina.

But in the past three years, after hurricanes Katrina, Rita, Gustav and Ike did unprecedented damage to the nation's power infrastructure, there remains the question of whether the cost is one consumers must bear.

About 80 percent of new subdivisions in Volusia and Flagler counties have underground lines, but it's much more difficult and expensive to make the switch from existing, above-ground systems, said Bob Coleman, a spokesman for Florida Power & Light.

"There are no houses or sidewalks, so it's easier to do," Coleman said of new subdivisions.

FPL has a program that pays 25 percent of the cost when a city converts to underground lines, which he said will be occurring next year in Daytona Beach Shores, when road work occurs on A1A.

"The city floated a bond issue for the rest," he said.

Coleman said he doesn't know how many of FPL's 200,000 customers in Volusia and Flagler currently have underground lines, which fare better against wind-caused outages during storms.

"But they're subject to flooding if something happens to the cable. And you have to wait until it dries out to repair," he said of underground lines. "The incidence (of problems) is lower, but the time to repair is higher. And the aesthetics is better."

In the 13 years prior to a 2006 study by the Edison Electric Institute, about half of all capital expenditures by U.S. investor-owned utilities for new transmission and distribution wires have been for underground wires. Still, about 70 percent of the nation's distribution system has been built with overhead lines.

Research has shown that there are fewer outages in areas where there are underground lines, and underground lines can make sense in new residential areas or densely populated areas such as New York City.

The Edison study also found, however, utility rates would skyrocket between 80 percent and 125 percent.

That would be a hard sell to consumers, who are already footing the bill for climbing energy and commodity costs. Those costs are projected to increase by 9.5 percent in 2009, according to the Energy Information Administration.

"It would be a really scary number at the worst possible time," Edison Electric spokesman Jim Owen said.

And even if underground lines survive a hurricane, the aboveground transmission lines that feed power to the underground lines remain vulnerable.

"Putting lines underground is not the magic bullet people think it is," said Cherie Jacobs, a spokeswoman for Progress Energy Florida.

Jacobs said Progress is investing $90 million to harden its system by strengthening transmission and distribution lines. Progress has 76,000 customer accounts in Volusia County.

In Florida, regulators are studying the progression of destruction during hurricanes, trying to learn what failed, why and at what point in the storm.

"Over time, we want to develop policies to help strengthen the weak points," said Kirsten Olsen, spokeswoman for the Florida Public Service Commission.

But the discussion always returns to cost and providing a reliable system at the lowest price for customers.

"It becomes hard to put an additional cost on them even if strengthens the grid," Olsen said.

-- Staff Writer Ray Weiss contributed to this Associated Press report