Overhead vs. Underground Electric Lines

While placing existing electric distribution lines underground may seem an attractive option, especially after major storms, virtually all objective observers in recent years have termed the effort prohibitively expensive. Widespread conversion could lead to huge price increases for electric customers, the observers warn.

In 2005, a study by the Virginia State Corporation Commission found that overhead-to-underground conversion would have "tremendous costs" that would make "a comprehensive statewide effort appear to be unreasonable."

• The study, conducted in response to a request from the General Assembly, found the cost of placing existing overhead electric, telephone and cable television lines could approach $94 billion. For electric lines alone, the cost was estimated to be $83.3 billion; the conversion cost per mile was approximately $800,000.
• A statewide conversion project would impose an additional yearly financial burden of approximately $3,000 per electric customer, the study warned. "The costs would be paid ultimately by consumers, either directly or indirectly, in the form of prices, taxes, or utility rates."
• The project would also cause "significant disruptions" for customers and "could take decades to complete," the SCC study warned.

In 2003, the Public Staff of the North Carolina Utilities Commission also concluded that conversion of existing overhead lines to underground would be "prohibitively expensive."

• The Public Staff estimated the project would cost approximately $41 billion — nearly six times the net book value of state utilities’ electric distribution assets — and take 25 years to complete.
• The capital costs alone of the undergrounding on the average residential customer’s monthly bill would result in an increase of more than 125 percent, according to the Public Staff.
• Even a smaller project to place a limited number of lines underground would have significant costs, the report said. For each $1 billion spent on conversion, the average monthly residential bill would increase by $2.34, assuming costs were spread evenly over all customers.

Similar conclusions have been reached in Maryland and New York.

• In a 2000 report, a consultant hired by the state of Maryland found wholesale undergrounding would raise residential rates by 36 to 46 percent. The findings were reaffirmed three years later by another Maryland General Assembly task force, which found that "undergrounding remains very expensive — cost is the primary obstacle to the relocation of overhead wires."
• The task force report was a key reason the 2004 Maryland General Assembly rejected a bill that would have directed the Public Service Commission to conduct a pilot undergrounding project.

Finally, in a 2005 report, the Long Island Power Authority in New York found it would cost $33.3 billion to underground the authority’s overhead distribution and transmission system.

• The study found placing distribution lines underground on Long Island would likely cost between $1.7 million and $5.4 million per mile.
• The study also found placing all facilities underground would more than double LIPA’s base electric rates, raising them as much as 153.7 percent.