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Should Utilities Be Required to Bury Power Lines?
Ted Kury Director of Energy Studies
Public Utility Research Center University of Florida
Presented at: 2013 EEI/NRECA Utility Siting Workshop Richmond, Virginia October 7, 2013
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Public Utility Research Center Research Expanding the body of knowledge in public utility regulation,
market reform, and infrastructure operations (e.g. benchmarking studies of Peru, Uganda, Brazil and Central America)
Education Teaching the principles and practices that support effective utility
policy and regulation (e.g. PURC/World Bank International Training Program on Utility Regulation and Strategy offered each January and June)
Service Engaging in outreach activities that provide ongoing professional
development and promote improved regulatory policy and infrastructure management (e.g. in-country training and university collaborations)
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The Body of Knowledge on Infrastructure Regulation
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Summary • Realities of utility regulation • Case studies in the costs and benefits of
undergrounding • Florida’s response to the storm seasons of
2004 and 2005 • Modeling the efficacy of undergrounding
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Mission Statement of Florida PSC GOALS FOR ECONOMIC REGULATION • To the extent possible, streamline regulatory requirements to provide an
open, accessible and efficient regulatory process that is fair and unbiased. • Provide a regulatory process that results in fair and reasonable rates while
offering rate base regulated utilities an opportunity to earn a fair return on their investments.
• Encourage efficiency and innovation among regulated utilities. • Encourage and facilitate responsible use of resources and technology in
the provision and consumption of utility services. GOALS FOR SERVICE REGULATION AND CONSUMER ASSISTANCE • Facilitate the provision of safe utility services at levels of quality and
reliability that comply with established industry standards and practices. • Inform utility consumers regarding utility matters. • Expedite resolution of disputes between consumers and utilities.
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Regulation and Utility Operation • Utility regulators (regardless of form) adhere to
the basic principle of safe and reliable service at just and reasonable rates
• Improving quality of service increases costs • Utilities typically have more information
regarding costs and benefits • Regulators determine what can be recovered
from ratepayers • Balance of interests is critical in meeting goals of
utility service
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State of North Carolina • Investigation following 2002 ice storm • Study focused on costs and benefits of undergrounding
existing infrastructure • Concluded that project would cost $41B (nearly six
times asset book value) and take 25 years • Electric bills would increase 125% • Recommended that each utility identify trouble areas
and develop plans to convert those facilities to underground
• Recommended that utilities continue current undergrounding practices regarding new construction
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Pepco Area in Washington, DC • Study in 2010 of the reliability implications, technical and
economic feasibility of undergrounding DC power lines • Reviewed 16 reports from 8 states from 2000 through 2009
and found that no study found quantifiable benefits for undergrounding existing facilities on a system-wide basis
• Did not model environmental impacts, business and tourist impacts of construction, resident’s inconvenience, or monetary value of aesthetics
• Concluded that 65% of outages could be avoided at a cost of $1.1B, but that an additional $4.7B would be necessary to avoid the remainder of outages
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2004 Atlantic Hurricane Season
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2005 Atlantic Hurricane Season
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Florida Storm Damage Year Named
Storm Damage (000$)
2004
Bonnie 100 Charley 5,533,680 Frances 5,602,120 Ivan 4,090,400 Jeanne 840,205
2005
Arlene 3,740 Cindy 300 Dennis 1,569,232 Katrina 208,600 Wilma 10,215,700
Total 28,064,077
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Aftermath of 2004 and 2005 Seasons • 10 named storms • $28 billion in damages • PSC convenes workshop for market
participants, commission staff, and policymakers on January 23, 2006
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FPSC Order PSC-06-035 1-PAA-E1 Florida would be better served by consolidating utility resources through a centrally coordinated
research and development effort with universities as well as research organizations. The purpose of such
effort would be to further the development of storm resilient electric utility infrastructure and
technologies that reduce storm restoration costs and outages to customers.
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Cooperative Initiatives • Model to assess the cost effectiveness of
relocating power lines under ground • Vegetation management workshops for
sharing best practices and discussing management issues
• Deployment of 50 high resolution wind monitoring stations throughout Florida
• Storm damage database
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Underground Model Flowchart
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Simulated Storm Frequency
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Model Output • Probability distribution of
– Restoration cost – Customer opportunity costs – Service interruptions
• Distribution generated before and after relocation of power lines
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Model Output Utility Annual Cost Before After Benefit
Equipment O&M $65,000.00 $29,000.00 $36,000.00Other O&M $1,653.72 $3,564.00 ($1,910.28)Lost Revenue (Storm) $15,011.14 $13,108.73 $1,902.41Lost Revenue (Non-Storm) $6,827.06 $2,730.19 $4,096.87Repairs (Storm) $2,679.56 $1,653.35 $1,026.21Repairs (Non-Storm) $14,240.00 $6,400.00 $7,840.00Others $0.00 $0.00 $0.00Total $105,411.48 $56,456.27 $48,955.21
Customer Opportunity CostStorm $296,847.74 $259,227.06 $37,620.68Non-Storm $135,005.95 $53,989.88 $81,016.08Total $431,853.70 $313,216.93 $118,636.76
Customer ReliabilityCMI (Storm) 5,956,809 5,201,883 754,926CMI (Non-Storm) 2,709,150 1,083,409 1,625,741Total 8,665,958 6,285,292 2,380,667
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Benefit Varies by Location Southeast (Ft. Lauderdale)
Northeast (Jacksonville)
Southwest (Naples)
Northwest (Pensacola)
Storms Affecting Project Area in 10,000 Hurricane Years
1,778 806 427 896
Average Annual Damage before Hardening
$2,700 $900 $1,000 $2,500
Average Annual Damage after Hardening
$1,700 $600 $600 $1,700
Average Storm Damage before Hardening
$16,000 $12,000 $23,000 $29,000
Average Storm Damage after Hardening
$10,000 $8,000 $14,000 $19,000
95th Percentile Storm Damage before Hardening
$67,000 $57,000 $96,000 $85,000
95th percentile Storm Damage after Hardening
$42,000 $38,000 $64,000 $60,000
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Conclusions • Regulator and utility need to work together to
determine the proper balance between price and service quality and reliability
• Modeling the effects of undergrounding power lines is highly technical
• Efficacy of underground relocation varies considerably with location
• Strategic undergrounding can provide benefits, but a blanket policy is almost certain to waste resources
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Thank You! • Ted Kury [email protected]
