Is it Time to Relook at Underground Electric Utilities..Again?

Posted on January 17, 2013
Posted By: Brian Sheets
A number of factors are converging to create an ideal opportunity for the utility industry.

  • The aging grid infrastructure is having difficulty keeping up with the societal demands of the 21st century.

  • Global terrorism has shown us the vulnerability of our grid infrastructure.

  • Meteorological predictions for a greater magnitude of storms in our nation's future portend more power outages.

  • Wide-spread power outages associated with inclement weather create economic, safety, and quality-of-life issues.

  • Renewable energy technology, despite its current disfavor with member of Congress, is showing resurgence in the form of micro-grid applications on DoD installations to provide them with grid security and reliability.

  • There is a growing momentum of interest in upgrading our national infrastructure.

What do all of these seemingly dissociated issues have in common? Let's explore a thread of synergy.

A brief scan of the Internet will disclose numerous articles and studies reflecting the time-honored notion that overhead electric utilities are far more economical than underground installations. Articles abound from the Edison Electric Institute, RAM Utilities, SCE&G, FPL, New Hampshire Public Utilities, and others. More than one makes reference to the study conducted in 2003 by the North Carolina Public Staff Utility Commission.1

They published a report highlighting the excessive costs associated with converting existing overhead lines to underground services. The report stated their:

...investigation consisted of (1) comparing the operational advantages and disadvantages of overhead and underground power distribution systems; (2) estimating and comparing the capital costs of converting overhead lines to underground, along with the differences in operation and maintenance (O&M) costs for the two types of systems; (3) estimating the time and human resources required to bury underground lines; (4) identifying potential additional costs to customers, municipalities, and other utilities that may result from conversion; and (5) exploring options for financing conversion projects.
The Public Staff determined that "replacing the existing overhead distribution lines of the Utilities with underground lines would cost approximately $41 billion, nearly six times the net book value of the Utilities' current distribution assets, and would require approximately 25 years to complete." They went on to show that individual customer rates would increase more than 125% to accommodate such an undertaking, including "the higher O&M costs associated with direct-buried underground systems, particularly in urban areas, where underground conductors are four times more costly to maintain than overhead facilities." Other studies reflect essentially the same findings on the economy associated with overhead vs. underground electric utilities. And, most agree on the pro's and con's associated with both approaches. An interesting dichotomy is the increased reliability of underground utilities vs. their higher repair times.

For other parts of the transmission infrastructure, the following estimates were given on the relative expense of underground vs. overhead installations:

  • Underground transmission lines are 8-10X more than overhead

  • Underground distributor feeder lines are 4-6X more than overhead

  • Underground service drop conversion is 1-3X more than overhead

Installation of electric lines within subterranean conduits also has both strengths and weaknesses. In such installations, switching cabinets and manhole covers would need to be installed every 1,000 feet and the length of underground runs would be limited in mileage due to issues related to capacitance.2

Instances of natural disasters tend to resurface the discussion regarding overhead vs. underground electric utilities, stemmed in part by the extended repair times, the recurring costs for each disaster, and the disruption to society and business.

What I noticed about all of these studies was that they limited their analysis to costs directly related to underground vs. overhead installation, related maintenance, and the potential rate impact on consumers. What I did not find was information related to the other costs associated underground vs. overhead electric utilities -- specifically the financial impact to society (people and businesses) as a result of power outages. There are studies that evaluate this "societal cost", but they stop short of merging with the cost analyses conducted by the utility industry.

So, it raises the question -- what magnitude of societal costs would have been offset were underground installations commenced 15 years ago?

Societal Impact

Societal impact can be viewed in a variety of ways, but we shall limit our brief overview to the people and financial impacts.

While there have been countless outages over the years, the following table represents the largest in terms of the number of people affected by an outage.

Largest Power Outages3

With respect to societal financial loss, a brief search revealed the following data:

  • ICF Consulting estimated the total economic cost of the August 2003 U.S. blackout to be between $7BIL and $10BIL.4

  • Cummins Power Generation published a white paper indicating that, according to research by contingency planning organizations, the cost of an electrical outage can exceed $1.0MIL per hour for the average large business.5

  • In a comprehensive analysis on the cost, Ernest Orlando Lawrence Berkeley National Laboratory published estimated that the annual cost of power interruptions to U.S. consumers is approximately $80BIL.6

  • Reuters is reporting that Con Edison estimates response and restoration costs for Hurricane Sandy and the following Nor'easter are estimated at $350MIL to $450MIL.7 This does not include the costs associated with loss of business services and products.

  • Immediately after a blackout, it is not possible to purchase any goods without cash as no electronic payment is possible. The 2003 blackout illustrated that after 3 to 6 hours without power most fuel stations and the refineries had to close down, leaving the public without fuel for cars or backup generators as the pumps did not operate. Aluminum melting furnaces will sustain irreversible physical damage after 4-5 hours without electricity.8

  • As a result of the 2003 power outage in Italy, the cost to restaurants and bars in spoiled products and lost sales totaled up to $139MIL.8

  • In November 2006, Germany and portions of Western Europe endured a blackout which lasted two-hours. As a result, the cost to restaurants and bars in spoiled products and lost sales totaled up to $139MIL.8

While not an exhaustive list, it becomes apparent that the societal costs associated with a power outage go far beyond utility repair and equipment costs and should be included in any analysis regarding future grid design.

The Opportunity

As mentioned at the beginning of this article, we are in an excellent position to take advantage of a convergence that is occurring which could yield a number of benefits.

Aging Grid Infrastructure

Upgrading our electric utility infrastructure should be an integral part of the initiative to upgrade our national infrastructure. While roads, the FAA's new ADS-B ground-based stations, water, waste-water, natural gas, and electric utilities are all different infrastructure issues, their upgrade should be coordinated together as part of a holistic approach to the national infrastructure upgrade initiative. As many studies have recommended, this would also provide an excellent opportunity to evaluate high risk locations for the installation of underground electric utilities.

Global Terrorism

Most would agree that it is impossible to foil the efforts of a determined terrorist or computer hacker. Nonetheless, efforts can be undertaken to thwart the majority of those seeking to interrupt our national grid both electronically and through the physical destruction of equipment. Incorporating these enhancements into the new infrastructure design is timely and required. While cyber-security is a portion of the Smart Grid effort, it does not take into account the physical security benefits associated with underground electric utilities nor the protection of overhead structures.

Meteorological & Subterranean Predictions

We can't do very much to ameliorate the impact of weather or ground tremors. However, having continually better models for predicting metrological and earthquake events gives us an upper-hand in adapting our regional utility design upgrades to optimize the best technology approach during this design phase. Being able to statistically predict high risk locations and events can be factored into our design methodology. Damage-causing metrological events occur with greater frequency than earthquake-related damage, thus giving greater weight to the benefits of underground installations. And, whether you believe in global warming or not, most weather forecasters agree that the frequency and severity of future storms will be greater than in the past -- thus, more repair and replacement costs associated with overhead utilities.

Economic, Safety, and Quality-of-life Issues

As the data above intimates, the cost associated with any power outage is far greater than just the repair/replacement costs of the affected utility equipment. Factoring in the type of social and business infrastructure within a region should also be incorporated into our future design effort to mitigate future societal costs related to power outages. Part of the design effort should be to advise primary regional industries on the use of alternative energy systems, including the use of UPS equipment. The Smart Grid initiative stops short of this by only inquiring as to consumers' willingness to avail themselves of technology innovations brought about by the Smart Grid. I am advocating a more proactive approach by forming a partnership with our major commercial customers.

Renewable Energy Technology & Micro-Grids

While some utilities have embraced the incorporation of renewable energy, others have been dragging their feet for fear it will negate the level of revenue associated with legacy generation facilities. While profits do make the world go round, the importance of upgrading our national infrastructure and the ideal opportunity we now have for accomplishing the same should outweigh NIMBY attitudes. Solar, wind, geothermal and other proven technologies have an important role in ensuring reliable and secure access to electric power generation. The magnitude of that contribution and possible installation locations should be a part of the new infrastructure design to ensure adequate transmission capacity. The Smart Grid initiative looks at a portion of this through activities that take into account large-scale renewable energy systems; although there is little focus on smaller scale distributed generation and micro-grids. Rather than let developers decide where large-scale wind, solar, and geothermal energy systems will be built, why not have the locations of such facilities be pre-determined as a part of overall national infrastructure design? In so doing, the pre-determined locations and maximum potential energy capacity of each can be factored into the design so that the new utility infrastructure can accommodate this future growth.

Growing Momentum of Interest

From a top-level perspective, the upgrade of the national infrastructure will make use of federal monies to help facilitate the initiative. While the American Recovery and Reinvestment Act of 2009 provided U.S. DOE with $4.5BIL to fund the Smart Grid initiative, this is primarily a utility system design and beta test program. Future infrastructure system funding will aid in mitigating the costs associated with underground utility construction -- funds that would not normally be available during a routine upgrade effort.

An Accumulation of Benefits

Having a unified approach to national infrastructure design, of which utilities is a part, provides a number of shared benefits:

  • Construction related to new or refurbished roadways is an excellent time to incorporate the installation of underground utilities.

  • Likewise, when designing the optimal routing of transmission and distribution feeder lines, it would be prudent to consider how new or existing adjacent roadways could be incorporated into the same construction effort.

  • Several reports advocated the analysis of at-risk geographic areas which could benefit from the installation of underground utilities. Incorporating this into the national infrastructure upgrade initiative would be timely.

  • The increase in construction jobs associated with the infrastructure upgrade would lower unemployment while also contributing more to federal and state coffers in the form of additional income taxes. In so doing, both people and deficit reduction benefit. A portion of this benefit is associated with the Recovery Act which provides $100 million for workforce training.

  • Taking a tops-down, singular, holistic design approach will make the resultant design more economical and efficient. Elimination of regional barriers, the unification and operating specifications & standards, and the standardization of installation protocols will contribute toward a more effective design and project execution.

  • A centrally designed infrastructure will lay the foundation for more coordinated improvements in the future, resulting in less future costs.

Doesn't the "Smart Grid" Initiative Fix All of This?

In a word -- no.

The focus of the Smart Grid initiative is from the utilities' perspective of grid infrastructure enhancement. The program benefits were intended to include:9

  • More efficient transmission of electricity

  • Quicker restoration of electricity after power disturbances

  • Reduced operations and management costs for utilities, and ultimately lower power costs for consumers

  • Reduced peak demand, which will also help lower electricity rates

  • Increased integration of large-scale renewable energy systems

  • Better integration of customer-owner power generation systems, including renewable energy systems

  • Improved security

The two largest initiatives are the Smart Grid Investment Grant (SGIG) program and the Smart Grid Demonstration Program (SGDP). SGIG focuses on deploying existing Smart Grid technologies, tools, and techniques to improve grid performance while SGDP explores advanced Smart Grid and energy storage systems and evaluates performance for future applications.10

A top priority of the SGIG and SGDP programs involves ensuring that projects properly address interoperability (the capability of two or more networks, systems, devices, applications, or components to share and readily use information securely and effectively with little or no inconvenience to the user) and cyber-security(the ability of electric networks to detect and respond to unwanted intrusions by hackers or terrorists into grid-connected software and hardware systems, including protections to prevent unauthorized access to data or system controls.).10

While the work being conducted by those associated with the Smart Grid effort is an important piece of the puzzle, it's not the whole puzzle. That will occur when the societal impacts of power outages are incorporated into the utility infrastructure design activity and subsequently rolled up into a national infrastructure effort.

An Approach

While DOE's Office of Electricity Delivery and Energy Reliability (OE) is responsible for managing these five-year Smart Grid programs, it does not negate the fact that the utility industry in the U.S. is fractured between varying types of utilities: IOU's, REA's, Muni's, and federal government entities.11 For the new infrastructure design to be most effective, the industry may have to take a more "consolidated" approach.

Such a notion may strike a volatile cord in some who fear that the unification of the utility grid may seem like a nationalization (anti-deregulation) effort. While some may dispute the federal government's degree of organizational competence, having a unified national utility infrastructure embracing a single design methodology, one set of regulations, one set of operating specifications, and no regulatory or operational interference between private utilities & municipalities, would ease the entire design upgrade effort. Some may feel that the "interoperability" aspect of the Smart Grid initiative addresses this; however, that focus is on equipment interaction as opposed to the unification or elimination of regulatory barriers between municipalities and utility types.

While I am not advocating the nationalization of the utility industry, I am advocating the project design and management gains that could occur from such a singular-approach effort. As an industry, to survive in a manner that will ensure resources will be available for future demand, there must be a re-alignment in our approach to doing business. We must not fall victim to the struggles seen in countries like India, where utilities got behind the curve relative to having sufficient resources to meet demand. Making an upgrade to the utility infrastructure a part of an overall national effort will enhance the efficiencies that can be realized from such an approach.


We have to remember that the Smart Grid should be more than just a utility industry initiative; rather, it should be part of a larger national infrastructure upgrade that is necessary to ensure our country is well-positioned for future growth and development. Our legacy to future generations is to leave them a national infrastructure that facilitates, rather than hinders, growth in technology, commerce, energy generation, transportation, telecommunications, and education. The inclusion of an underground utility installation strategy in our national infrastructure discussions is an important element of that future.













Authored By:
Mr. Sheets is a senior executive with over 30 years of strategic and tactical experience in operations and engineering management assignments in renewable energy and multiple high-tech industry sectors. He is well-versed in applying business process re-engineering to enhance organizational performance and team effectiveness. His specialty is transforming strategic corporate mandates into tactical initiatives that achieve business goals through developing and initiating new programs in complex operating environments involving cross-functional

Other Posts by: Brian Sheets

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January, 22 2013

Malcolm Rawlingson says

Brian - a brilliant article. Well done Sir.

I could not agree with you more. The concept of operating a modern society on lengths of wire strung between wooden poles seems absolutely nuts to me.

One of the reasons why this infrastructure endures without apparent serious challenge is that the costs you speak of are generally covered by insurance - so they are not normally picked up by the utility itself. However they are most certainly a big cost to society as a whole.

In addition technology is about to change the whole landscape of under ground power cables. Superconducting high voltage cables are already in operation in some cities where above-ground rights of way for additional supply capacity are all but impossible to get.

Also I have heard that there is significant research going on into this new material Graphene - which is highly conductive with very very low resistivity. That means the I squared R losses in such cables promise to be extremely low - much lower than current overhead wires. Is 1000 kV underground cables on the horizon? I think it is.

The weather issues are very real and a new infrastructure designed to be immune from such weather (and human) attacks is easily possible. There is almost no maintenance required and certainly no tree branches or other natural growth to be routinely cleared. However I do not buy the argument that the weather is getting more extreme or that the frequency of storms is increasing. Storms have been a feature of power line damage for years and years. The storms are no different it is the consequences of the storms that have changed. More people connected with more electrically dependent devices than ever before spells more inconvenience and financial loss when these devices - now essential to modern living - are no longer available when the electricity goes off.

THAT is what has changed. There is more storm damage simply because there are more power lines powering more electrical equipment.

But I agree with you fully that the time is rapidly approaching where the balance in favour of underground lines is reaching the tipping point.



However the resistance to this change goes much further than cost. The hidden narrative here is that most utility companies have no real desire or incentive to accommodate a distributed grid. The high cost of the infrastructure change is not quite a smoke screen but it sure is a very powerful argument for keeping the status quo.

January, 22 2013

Len Gould says

Good article. And though I agree with most of Malcolm above, it still seems necessary to add the boilerplate "All readers need to be aware that there is a well organized and well financed worldwide effort to discredit the science indicating anthropogenic greenhouse gas releases can affect climate."

It seems excessively ambitious with current technology to require transmission to go underground. Some long-term forward planning for routes along with overstrength tower structures is probably smarter. Even undergrounding distribution feeders outside of city cores may be excessive, hanging 4 sets of 1,000 amp three-phase on well-braced concrete poles at shorter intervals can likely withstand most weather events outside of tornado alley. However, I also get frustrated watching a line of such feeders being re-built three times in the past 25 years along a local street which was widened twice in that time. Plan ahead!

As a promoter of the IMEUC marketing plan for electricity, which envisions VERY smart meters forming the core of a private and universally accessable electricity market, I very much hesitate to confuse such initiatives with "Smart Grid". IMEUC provides for spontaneous micro-gridding at fair prices automatically, and provides the ISO with all necessary information for stable operation. I think upgrades related to T&D should continue to be called Smart Grid, but these efforts should remain clear of the customer's meters.

January, 22 2013

bill payne says

'Most would agree that it is impossible to foil the efforts of a determined terrorist or computer hacker.' Probably.That's why the Guy Fawkes patina photo

But the feds are not only creating individual zombies, they are also creating corporate zombies. An obvious example: “green” energy. Without subsidies, loan guarantees, tax benefits and direct giveaways, the industry as we know it would not exist. Nor would the ethanol industry in the Midwest. Nor the security industry in the Northern Virginia suburbs of Washington, DC.

Bill Bonner The Daily Reckoning Monday January 7, 2012

From: "Jim Vess" To: Sent: Thursday, January 17, 2013 7:51:04 AM Subject: Your Comments on EnergyPulse

Mr. Payne,

We have received several complaints regarding some of your comments on EnergyPulse. Please keep your comments relevant to the subject of the article.

Also, please do not post images in your comments.

Thank you,

Jim Vess Content Manager Energy Central 2821 S. Parker Rd., Suite 1105 Aurora, CO 80014 303-228-4744

Thank you for choosing Energy Central

Media Control for Profit

January, 22 2013

Malcolm Rawlingson says

Agree Len, do not dispute your logic here at all. In fact the Cuban distribution system is on concrete stanchions or poles - they do not use wood at all - probably because they are short of tall pine trees. Their distribution system does not seem to be anywhere near as affected by storms - even severe hurricanes - as does the US and Canadian systems where anything more than a strong breeze seems to knock out the power.

The point to be made is that wooden poles with power cables strung between them is an archaic system and needs to be modernised. It could indeed be accomplished by the methods you describe but if you are going to spend the money then the very best solution is to put distribution cables underground. The cost in terms of the whole society is small. It is a question of who pays. The utilities say - not me. The Government says not me and the Municipalities say - not me. But if all three paid a third of the cost - recoverable over time from the end user then I think that would be beneficial to all. Of course I think the chances of such an agreement are about as close to zero as you can get.

I must say that I do not entirely disagree with Len that a smart grid and smart consumer meters have advantages - but what we have right now (at least in the highly advanced Province of Ontario) is a very costly meter on the wall that does absolutely nothing. In fact it is worse than the meter I had before we went "smart".

At least I could read the darn thing - now I cannot. If that is progress please send me back 20 years when I was better off and I had a meter that I could read. I quite enjoyed watching the disc go around and around. I could see a visible result when I turned things off in the house. Now I have no feedback at all. About as useless an invention as one could get. Now tie that in to a computer so that I can actually look up the electricity I am using and you have a whole new ball game.

So I think I see where Len is going but the reality is a whole lot different than that.

And it REALLY galls me when I see a made in Mexico sign on he darn meter. Can't we make these in Ontario for goodness sakes.


January, 22 2013

Malcolm Rawlingson says

Bill, the system as a whole is quite resilient to localized damage by any means weather or otherwise but when widespread weather systems cause wide spread damage the system cannot cope with that. If the cables were underground as described in the article then I think we would have much more immunity from the longer outages associated with weather system interference.

On the whole though we do have quite a reliable system but it could be made even better by the methods described in the article. As always technology is the key and right now we do not have the inexpensive technology we need to make underground cables viable. We will get there in time of course but in the mean time we will have to put up with the storm damage.

And of course I fully agree that the so-called and incorrectly named green energy projects are (a) not environmentally friendly at all and (b) would not exist without subsidy.

The trouble is that our media folks like to tout anything with the label green as being good. Solar electric panels are not green energy at all - making them consumes vast amounts of fossil fuels - far more than they will ever save in their lifespan so to me the whole concept of solar power is about as UN green as you could possibly be.

And I do agree with Len that there is a whole army of people out there that exist solely to destroy the global warming argument. That fact does not make the argument for global warming right or wrong. Only science is able to do that. Good science considers all possible alternatives and is prepared to change depending on the evidence presented. Bad science comes to conclusions and is not prepared to consider alternatives.

I will leave the reader to consider where the current Global warming argument fits into that philosophy. Good discussion.

While I am (somewhat) set in my ways I do consider all arguments presented in these discussions and in some cases my views have changed (slightly) so I do welcome everyone's point of view - even though it may not agree with mine.

This is a a very good article though and the points made are really important in some areas of the US where weather systems can be destructive to overhead power systems.

In general the power system reliability in most parts of the US and Canada is very high and the expense of underground lines does not warrant any significant change although I can see the logic of the arguments and really do not disagree with putting all our electrical power underground. It is just a matter of cost and a matter of who pays. Malcolm


January, 22 2013

Len Gould says

Hi Malcolm. One thing, putting a lot of distribution cables underground could sure put a lot of people to work.... but of course that might cause an increase in labour demand which might cause an increase in average wages .... ok, forget it.

January, 22 2013

Len Gould says

Maybe the utilities could be allowed special peermits to bring in crews from Mexico??

January, 23 2013

bill payne says

Hello Mr Vess, Your nonsense not appreated.

January, 23 2013

bill payne says

January, 23 2013

Malcolm Rawlingson says

It sure would put lots of people to work. Problem is is would be folks with skills we are already short of. The days of hand digging trenches are done. It is all high tech machinery these days. Equipment operators are like gold dust in Alberta and elsewhere and when Keystone and the other pipelines get built that will make a bad situation worse. My son told me last weekend that when he went for his license to tow a trailer the truck training school said they have over 50 requests for truck drivers a day. Average age of truckers - 56. Young guys don't want to get into it. Big labour problems ahead my friend. Really big.


PS Can anyone let me know what on earth Bill P is on about.

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