Despite Higher Costs, Electric Utilities Increasingly Favor Undergrounding

Update EEI Report Says Aerial Lines Remain Far More Economical
By Jeff Griffin, Senior Editor | December 2013, Vol. 68 No. 12

“The economics of undergrounding utility infrastructure has always been the overarching challenge for the utility and its customers who wanted lines put underground,” says the report. “If the cost of undergrounding were nearly the same as overhead construction, the decision would be easy, but that is not the case.”

The 2012 EEI survey also collected data on the estimated cost per mile for new overhead construction, new underground construction and the cost to convert from overhead to underground. The survey collected data on the percentage breakdown of these costs between material and labor to determine if underground construction is a more labor intensive and costly process.

Collection of data was based on customer density: Urban, 150-plus customers per square mile; Suburban, 51 to 149 customers per square mile; Rural, 50 or fewer customers per square mile.

The study’s cost-per-mile estimate for converting power distribution and transmission lines from overhead to underground are in the charts below:
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Salvage value of the overhead system replaced would offset a portion of the conversion costs.

“Because each construction project is unique due to load, number of customers served and various construction parameters, there is no precise cost per mile to build utility facilities of any type for any utility,” the study points out. “The cost data in this report is not meant to be the absolute range in which utility construction costs must fall; rather, it is intended to provide a range of cost data that utilities have estimated on various projects. Also, because of the complexity of calculations involved with these costs, they are not typically updated frequently.”

Benefits and challenges
The survey sought the perspective of utilities about how they perceive the value and issues associated with undergrounding facilities. “In the 2012 survey,” says the report, “utilities were asked, ‘What benefits does your utility derive from your underground system?’ Their answers clearly reflected a perceived value, with examples including improved reliability, improved system performance, more effective routing of multiple feeders in confined areas and in the enhancement of the visual aesthetics of roadways and streets in residential and business communities.”