Have you ever wondered why the power seldom goes out in Manhattan, New York City [2]? It’s because the power-grid, including phone/internet, gas and cable is buried underground!
I used to live in Oakland Park, Florida [3] and it pretty much guaranteed that my power would go out every time a summer thunder-storm would roll through the area. I can’t count the number of times I sat without power; sometimes even for days during hurricane season. For those people who’ve never lived in the south, it sucks to be without A/C in July or August. My friends living further out west in Weston, Florida [4] never had these types of issues. Why? You guessed it, their power-grid was completely buried underground.
[5]U.S. Power Grid
So why with all the hurricanes that strike the Gulf Region, all the Tornadoes that strike the Midwest and all the ice/snow storms that strike the Northeast aren’t we burying all utilities underground?
Very simple, it costs a lot of money to change the existing above ground system to an underground system. Yet, many regions across the country are slowly adapting to underground services, especially in new construction communities and in heavily congested areas such as downtown areas of larger cities. So let’s take a look at the disadvantages versus advantages of underground utilities with the emphasis on the electric grid to keep it simple for argument sake.
Advantages for Underground Utilities
1) Eye-sore is gone. Let’s face it; nobody wants to look outside their window and look at an ugly utility pole with wires hanging across your backyard or front-yard.
[6]Underground Grid
2) Power is more likely to stay on during weather related events such as wind, ice and snow. Trees won’t fall on power-lines and ice/snow can’t form on the lines, thus keeping your power on; even during a hurricane.
3) Safer – for the environment and people. No more need for cutting down trees for the thousands of utility poles that are needed to replace broken ones and people don’t have to worry about the electromagnetic fields surrounding electric cables.
Disadvantages of Underground Utilities
1) Cost of Repairs – if something does go wrong with the underground cables then the cost is much higher versus above ground and it takes longer to fix.
2) Doesn’t work well in flood prone area – it’s a fact that if an area regularly floods during rain storms or flooding due to excessive snow melt, etc. the underground system tends to break down a lot more.
From the above it would seem that it would make sense to bury everything underground. If your power goes out 4 – 6 times per year (average for above ground utility) and then compare it against it only going out once every 2 years (average for underground utility) then most people would prefer an underground utility in their neighborhood; even if it meant that if the power goes out it may take a few extra hours to get the power back on.
So why aren’t all municipalities switching to underground utilities?
It makes financial sense to bury everything underground when constructing a new community. The cost per household on average goes up by $500 for new construction [7]. So a $175,000 home construction would cost an extra $500 to construct in order to have underground utilities or add about 0.3% to the cost. Needless to say, this makes sense. Not only for the city and the citizens, but for the utility company as well since it reduces maintenance costs over the long run.
The problem arises when cities want to switch from existing above ground utilities to underground utilities. The rough cost is about $1 million per mile [7] to bury it underground. To give you an idea, FPL (Florida Power & Light) has a total of 64,000 miles of distribution lines [8]. A little over a third, 24,000, is buried underground. Therefore, if FPL had to bury everything underground they would look at a total cost of 40,000 x $1 million = $40 billion! That’s roughly $15k per customer or $9.5k if you want to split the cost amongst all customers, which needless to say is a huge amount of money. Even if you divested the cost over ten years for the consumer it would still add $79 – $125/month to their electric bill. Not many customers will opt for that, I can guarantee you that…
[9]Blackout
One may argue that if you take into consideration the cost annually associated with repairs to the system that it should pay for itself over an extended period of time, but that’s not really the case. Case studies in North Carolina, Florida and Seattle [10] have shown that it would only cover 15% in a worst case scenario and up to 38% in a best case scenario. So in Florida’s case it would only save FPL about $15 billion, thus leaving them with a $25 billion gap.
Is there any solution that could make financial sense to bury utilities underground?
Most of Western Europe and most of Japan has gone underground in the past few decades, so why them and not the U.S.A.? The reason is that most countries in Europe heavily subsidized the construction of the underground utilities during the 70s and 80s and in today’s political and financial climate there isn’t going to be an appetite in the U.S. to spend tens of billions of dollars every year for this massive undertaking.
Going back to the FPL example; hypothetically for a 15 year project, FPL could cover the $15 billion in cost as that’s the amount of money it’s going to save in repairs/maintenance anyway, so in essence it doesn’t cost them a dime. In other words the $1 billion per year they would spent on construction is earned back in a reduction of repairs. However, somebody will still need to cover the difference, which is $25 billion.
[11]Power Failure
If you were to cut it in 3 parts then the Federal government would subsidize about $8.5 billion of it. The State would contribute another $8.5 billion and the consumer would have to cover the remaining $8 billion; again, all this spread out over 15 years so about $530-$565 million per year. This adds up to about $126 per FPL customer per year or about $10.50 per month extra in the electric bill.
Bear in mind that the State would have to come up with half a billion dollars per year as well, so it’s likely they would need to raise revenues through the form of added utility taxes, unless of course they can find the money by cutting spending.
For now, it’s more likely that municipalities will continue to force utilities and contractors to bury utilities underground for new construction projects, but existing above ground utilities are going to stay until a better financial/economical climate starts taking hold. Even then it’s going to be an uphill battle for proponents to get this approved, but maybe another catastrophe will push the public and political appetite in that direction. Also, bear in mind the number of outages, including massive blackouts, has been going up by 9.5% per year since the early 1990s [12]. The main reason for this is that the U.S. power grid is outdated. It was built over half a century ago, so maybe it may not be a bad idea to upgrade the system and bury the cables underground while we’re at it…
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