Undergrounding California’s Utility Lines:

A Statewide Proposal

Source: Peter Foley/Environmental Protection Agency

Iris Fan, Ryan Fleischman, William Lavin, & Risheng Pan

Public Policy 219

Information and the Policy Process

Professor Boushey

Problem

Burying of utility lines, a policy known as undergrounding, is an innovative solution that solves a myriad number of problems simultaneously. Coupled with undergrounding the power lines, communities can also modernize their energy grids, an area where many communities in the United States are falling behind. As strong earthquakes and other extreme weather lurch in California’s imminent future, burying electrical power line has become a necessary preparation. An outage resulting in a failure of one single above ground power line can knock out the electricity for an entire city. Underground power line policies have already begun to implemented in a number of California cities, including Anaheim and San Diego. However, a lack of underground electrical lines in poorer areas in California in comparison to richer areas has lead to social inequality. The homes with underground power lines have added value and are worth more than homes with above ground power lines. Above ground power lines also cause public safety issues. The lines can easily start electrical fires and cause fatalities and severe injuries. A California plan to plan to bury the state’s utility wires would reduce a public safety issue and ensure poor areas would receive the same safety and quality electricity that richer cities currently benefit from.

The status quo system of aboveground power lines also engenders myriad issues which impact the state’s power grid. Simple to complex weather events can bring the power out to entire cities and cost taxpayers billions of dollars (energy.ca.gov). Downed power lines are extremely hazardous and can be life-threatening to individuals near them. It is important to also note that the current power poles are not sturdy. The aboveground systems are based on antiquated technology from the 19th Century. Incidents such as earthquakes and traffic collisions can bring power poles and lines to the ground, thus presenting additional hazards. All it takes in many instances is strong winds or a collision from a moving vehicle to bring down a wooden utility pole. These are truly dangerous problems that many cities have begun solving by undergrounding their power lines.

There currently is not an ample amount of research into the strictly monetary upfront costs versus long-term benefits of undergrounding. Martin Kaste in his NPR article on the subject titled “If Power Lines Fall, Why Don’t They Go Underground?” quotes an MIT professor’s explanation of this issue:

Stephen Hammer, a professor of energy planning at MIT, says he's searched the literature in his field for any analysis of what it costs us to keep fixing those overhead wires. “Some things are just never raised… And I think [that's] touching on an issue that we just never get to until there is some ... crisis when the wires come down and we're saying, “Why do we do this? Why do we keep doing this?” (Hammer in Kaste).

The professor is explaining the conundrum within the policy process of reactionary policy making. He questions why communities wait until after-the-fact to discuss and consider undergrounding options. This fiscal impact evaluations must be conducted in the absence of a natural disaster so a sound evaluation can be conducted. This policy proposal and evaluation will ideally help fill this gap in this seemingly under-researched topic.

Further Evidence

Specifically within the state of California, power outages that are related solely to downed power lines results in high economic costs. To further explain, “the total cost of wildlife-caused power outages for California ranges from $32 million to $317 million per year” (energy.ca.gov). Per a 2013 report prepared by the President’s Council of Economic Advisers and the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability, with assistance from the White House Office of Science and Technology, the economic benefits of increasing electric grid resilience to weather outages through undergrounding are vast. The report details the costs of weather-related incidents which bring power lines to the ground and cause widespread power outages: “the annual cost of power outages caused by severe weather between 2003 and 2012… are estimated to have cost the U.S. economy an inflation-adjusted annual average of $18 billion to $33 billion” (energy.gov). Outages in the state and county cost the economy and consumers inordinate amounts of money.

When it comes to weather-related outages, the state of California is a primary risk to seeing more frequent and prolonged power outages in the years to come due the the impacts of climate change. Figure 1 illustrates the increase in national weather-related outages in the last thirty years:

Figure 1: National Weather-Related Outages

Source: Nextgen Climate America

This chart illustrates that there has been an across-the-board increase in all forms of weather events. Each of these analyzed contribute to more frequent and prolonged power outages that are both extremely expensive and deadly. Weather events are specifically hazardous to aboveground utility lines. An illustrative example of this occurred “in August 2006, [when]Midwest Energy (Hays, Kansas, U.S.) experienced a windstorm that blew down a 2-mile (3.2-km) stretch of wood transmission and distribution poles in western Kansas. All poles broke at the ground line. Thousands of customers experienced outages…” (Engel et al. 2007). When power is cut to people’s homes, this presents a uniquely dangerous risk, especially during the winter and summer months among the most vulnerable populations. When air conditioning and heating systems are stopped due to power failure, elderly and sick individuals are at prime risk.

It is also a common occurrence that strong winds can spur a disaster known as “arcing” of utility lines. When this occurs, this is also generally referred to as “power flashes” and is generally resulted from high-strength winds. Per weather expert Dan Robinson, “wind is most frequently the culprit in causing damage to power lines. Wind can damage lines directly and indirectly. Falling trees and branches can topple wires and poles. Airborne debris can lodge into wires, causing a short circuit” (2015). Power flashes frequently illuminate the funnels and debris clouds of tornados, as the intense winds destroy power lines and equipment. The economic costs that results directly from weather-related outages can all be avoided simultaneously through the increasingly popular policy of undergrounding utility lines.

Proposed Solution

It is with the scope of this problem in mind that we lay out our statewide policy solution: creating a undergrounding proposal that will incentivize cities and counties in California to introduce bond measures to fund undergrounding programs in their jurisdictions. The proposed solution must first be introduced as a bill to the California State Legislature and will be comprised of three primary elements: 1. A detailed explanation of incentives (program perks and policy expectations) meant to entice cities to modernize their utility systems with our undergrounding proposal; 2. The creation of a commission housed within the Department of Public Works to provide expertise in the planning, implementation, and evaluation phases of the plan, and; 3. A model bond measure that will detail to local ordinances sample funding and implementation plans to be introduced as a vote by the people. Implementation of this plan will be carried out over a timespan of fifty years, with the goal of undergrounding all of California's lines which are viable for the policy. This viability will be determined through expertise provided by the state upon the basis of strict environmental standards and considerations. State legislators writing the language of this bill should keep open the idea of additional funding to aid in the implementation of this policy in cities.

Undergrounding has been done in many local communities and cities, such as Anaheim, CA, which began its policy of undergrounding in the late 1990s and continues through today. The undergrounding program in Anaheim is “provided through a 4–percent surcharge on electric bills, while phone and cable TV companies pay for undergrounding their facilities. Residents and businesses benefit from the improvements while Anaheim’s residential rates continue to be lower than electric rates in neighboring communities” (anaheim.net). The funding stream adopted for the Anaheim undergrounding plan will take upwards of fifty years to fund. This is how the policy was able to be enacted in the first place. By minimizing the costs to consumers and taxpayers as much as possible by only including this small surcharge, ratepayers did not vocalize complaints as loudly as they may have otherwise. Anaheim pitched this program as a “beautification of city streets.” This is an appealing pitch to taxpayers as it increases home values and makes for a generally more slightly and safe neighborhood. The case of Anaheim is one that should be emulated in cities and counties across the state. This policy proposal will seek to incentivize local ordinances to implement bond measures which would fund similar programs in their cities.

The detailed explanation of benefits and program expectations will be used as a policy tool to incentivize cities to implement the measure locally. Coupling undergrounding of the power lines with modernizing the power grid will also the state millions of dollars in the long-run, as extreme weather events are expected to increase due to climate change (nasa.gov). There have been more frequent and more severe weather related events in the recent past, and this trend is expected to continue for years to come. It is also an important perk that “underground systems are more aesthetically pleasing. Property values tend to be higher in neighborhoods with underground lines versus the lines overhead” (Atkinson 2015). Based on a study titled An Impact Study of 345kV Electric Transmission Line on Rural Property Value in Marathon County - Wisconsin (2006) Kielisch finds that the property value loss of homes in neighborhoods with overhead utility lines could be “as low as -15%, and when [aboveground lines] bisected a large parcel, the loss was as high as -34%.” Another study titled Properties Near Power Lines and Valuation Issues: Condemnation or Inverse Condemnation finds that “many buyers refused to even look at [properties with overhead powerlines] ... Some brokers said that such properties can take three times longer and finally sell at a 25% loss of value” (Bolton 1993 in Kielisch 2006). This data shows that our undergrounding proposal will directly benefit homeowners, as we predict that they will see increases in their properties’ value. This is one of the greatest perks and selling points of our innovative policy proposal.

Part of this policy proposal also includes the creation of a sub-department housed within the California Department of Public Works. The so-called Undergrounding Commission will be charged with approving city applications and providing expertise to localities during their implementation and evaluation phases. Cities will apply to the state department, and a team of experts will travel to the ordinance where the measure is to be introduced. This team will provide expertise which will help cities implement the undergrounding plans locally. The expert bureaucrats will also be charged with the evaluation of the local policies to ensure that cost and timeline standards are being met without issue.

Our model bond measure is one of the essential aspects of the implementation plan. Based off the successful plans that we have analyzed, we recommend that cities and counties use language like that within Figure 2. Using a funding formula that we created through a synthesis of several sources, we have determined an estimate of the cost per mile of constructing underground lines and replacing the old system. This formula is also part of the recommended bond measure:

Figure 2: Sample Bond Measure

SAMPLE: Bond Measure U

To upgrade city utility systems by replacing the aboveground system, the City Council has approved the form of this ballot proposition and specifying certain other details for the issuance of its general obligation bonds in the aggregate principal amount of $x, or so much thereof as may be issued under the laws governing the indebtedness of cities, for the purpose of providing funds for undergrounding of utilities within the jurisdiction thereof.

We expect cities will be able to afford these local undergrounding measures without much financial help from the state, but this option should remain open to provide additional incentives for cities to implement the undergrounding plan. We have shown that this program will increase property values by around 30%, and this will also directly increase the levied property tax revenue. The recommended a tax increase that does not appear in the language of Figure 2 where it is politically viable, as it will be the sole prerogative of the city council writing the measure as a means of additional funding. This will of course depend on how much infrastructure money the particular jurisdiction has at its disposal at the time of program implementation. This is all to note that in the long-run, we expect this program to pay for itself in additional property tax revenue.

The technical process involved in the undergrounding utility lines is a rather straightforward one. However, there are subtle distinctions in the types of requisite builds that should happen in rural, urban, and suburban environments. Figure 3 illustrates what a typical dig diagram looks like for urban areas:

Figure 3: Typical Work Sequence for Underground Line Installation - Urban Area

Source: Public Service Commission of Wisconsin

The subtle but important differences in the technical process will be discovered by our expert urban planners who will be employed under the newly created Undergrounding Commission. Experts will advise contractors on the proper building techniques to ensure cost-efficiency and environmental protection.

Based on an aggregate of past undergrounding plans that have been implemented, we have estimated an average cost per mile that we will utilize in consultation with local government. The full cost will now be known until the team of urban planners investigate several factors in the individual cities or counties. It is expected that based on our aggregated average that the cost per mile will be $1,200,000. This number was derived of through data provided by programs that have been implemented in Anaheim, Wisconsin, Florida, and Washington, D.C.

Policy Instruments, Tools, and the Implementation Phase

In identifying problem areas in our state-wide undergrounding proposal, we will detail the breadth and scope of the implementation plan. We will identify the issues that we could conceive of that may occur throughout the implementation phase. To alleviate these foreseen issues, we will identify new forms of oversight and monitoring to ensure the program's success, as well as innovative policy tools aimed at quelling business and community concerns regarding the undergrounding proposal. These tools will be introduced to address the feasibility and practicality of the overall proposal. We will describe the plan itself in detail and identify issues as they appear throughout the phases of implementation.

First, we will conduct an in-depth program evaluation of the undergrounding plans that have been implemented in Anaheim, Washington, D.C., and Wisconsin. We will use data from the detailed evaluations of these cities’ plans to determine the generalized cost figures for the state of California that can be applied locally. For the purposes of the initial project, our cost figures will be estimates based off the data from Anaheim and Wisconsin. Our program evaluations will give us information such as cost figures and implementation methodology as well as the technical aspects of their undergrounding conversion plans. As part of the initial implementation plan, California cities introducing bond measures to underground their utility lines will need to apply to the newly created Undergrounding Commission, which will be housed under California’s Department of Public Works. The process of approving cities will first include a team of environmental and geological experts who will ensure the environmental soundness of the ground that will house the lines. Areas that are prone to flooding and high-tide risk will not be required to house the undergrounding technology as it currently exists. In these instances, funds will be provided to cities to modernize and upgrade their above-ground systems. The policy implementation tool of expertise is essential to this aspect of our proposal. Utilizing scientific experts will provide insight that cannot be provided by the Legislature. These experts will approve or disapprove the project cities based upon strict environmental standards. These regulations and standards of application are to assure the feasibility and safe operability of the program.

Another issue in the implementation will need to be addressed surrounds community concerns regarding cost figures. Public consternation is expected, and to address these concerns, part of the proposal will include a survey of constituents to identify their specific concerns. This will aid in the formulation of an educational campaign that will go directly to cities to address and quell the concerns. The survey will be sent to homes of people residing in newly qualified cities. Postage fees will be waived, and participation will be encouraged in a cover letter explaining the plan and the need for public response. Potential survey questions appear in Figure 4:

Figure 4: Sample Survey Questions

(1) Do you think undergrounding the power lines is acceptable in your neighborhood?

(2) Do you believe underground power lines will add value to your property?

(3) What are your main concerns about the proposed undergrounding plan in your city?

A five-point Likert scale will be applied to our survey, requiring all the respondents to indicate the degree of agreement or disagreement with each statement about the undergrounding program (except for open questions). Using multiple analysis methods (such as cross-tabulation, t-test, and multiple regression) to analyze collected data, we will be able to investigate people’s acceptance of the program and the factors that drive their overall interest in burying power lines. With the help of adequate information, the new Undergrounding Commission as well as the city government will be able to provide local residents with educational campaigns targeting their major concerns. An important policy tool involved in addressing the above two issues is capacity-building. With monetary investment in research and geographic investigation, the newly formed commission will be able to effectively aid in the implementation of the policy with a sound base of data and technology, which, we assume, will eventually diffuse benefits to the whole state in the long run (McDonnell & Elmore 1987).

The next phase of implementation is also one where two potential issues may emerge. We estimate that the scope of the plan should take as many as 50 years to implement. We draw this estimation from the plan in the city of Anaheim which been estimated to take 50 years to complete. The reason for this long-term implementation strategy is to alleviate consumer costs. Anaheim decided to tax its residents a 4% surcharge on their monthly electric bills. To gain compliance, we believe a mandate will be a good policy instrument here for cities to introduce in funding their local bond measures. This may not be popular: tax increases are rarely a preferable method of program funding. However, due to the widespread success of the Anaheim plan with its relatively small tax, we have chosen to recommend that cities emulate similar funding mechanisms to fund local bond measures. More importantly, the program will impart to disadvantaged individuals or communities that they are expected to benefit since the policy of undergrounding adds more value to property as well as improving living conditions (McDonnell & Elmore 1987). As both the residents and local governments will want to minimize their costs of such changes, inducements can increase their willingness to vote in favor of bond measures and implement the policy locally. Here we utilize inducement as a policy tool to provide incentives for people and “elicit performance” (McDonnell, & Elmore 1987). In this case, we are eliciting the performance of encouraging cities to underground their lines through this plan through a detailed explanation of program benefits such as increases in public safety, home values, and neighborhood aesthetic value.

Another issue that may arise from the long-term scope of the implementation plan is the issue of continuity of leadership and authority. Since we estimate the implementation plan to be upwards of 50 years, we will use the policy tool of system-change through the creation of a new commission, which has already been explained briefly. To address continuity concerns, we will codify extensive and clear rule-making authority within the newly created Undergrounding Commission, with power residing in the governor-appointed position of Chairperson of the Undergrounding Commission. The newly created chain of command will be clear and simple: this new Chairperson will answer to the Chair of the Public Utilities Commission under which it is housed. Utilizing the policy tool of system-changing, we will ensure bureaucratic continuity. System-changing in this context is “the transfer of official authority among individuals and agencies. The expected effect of system-broadening... is a change in the institutional structure by which public goods and services are delivered and often a change in the incentives which determine the nature and effects of those goods and services” (McDonnell and Elmore 1987). In the case of our proposal, we are changing the current structure of the Department of Public Works through the creation of the new Undergrounding Commission.

In mapping out the scale and scope of the implementation plan, we have identified a few potential areas within where unintended problems may arise. We have codified in the proposal several policy tools designed to specifically address the problems which have been identified. The policy instrument of mandates will be utilized in several capacities. We will use environmental experts to regulate the soundness of the ground that the lines will be penetrating. Capacity-building will ensure that the public’s concerns are heard, understood, and addressed using our survey data and the educational campaign. Utilizing the policy tool of inducement, we will elicit performance of the cities to implement the plan on the local level through the passage of bond measures. Finally, the policy instrument of system-changing will be paramount to the successful implementation of our proposed undergrounding plan. To ensure leadership and bureaucratic continuity, we will codify extensive and clear rule-making authority within the newly created Undergrounding Commission, with power residing in the governor-appointed position of Chairperson of the Undergrounding Commission. In identifying key problem areas in the implementation plan, we have ideally conceived of sound policy instruments meant to alleviate many of these problems.

Political and Policy Feasibility

We have already outlined several areas where feasibility challenges will be addressed in the previous section. Choosing the funding mechanism of enticing the introduction of local bond measures, we have avoided the infeasible tax increase that would have funded this program across the board. We wanted to ensure as much local control and support as possible while avoiding an additional state tax burden. The bond measure idea that we are proposing is solely to address the infeasibility of an across-the-board statewide tax increase. This aspect of our proposal is more politically feasible than the alternative tax increase.

The overall cost of this program and the individual programs to be introduced in the cities brings up feasibility issues that must be addressed. The cost of these programs will require large investments, which we believe is another ideal reason to use the bond funding measure system. The bonds are essentially loans taken out by cities to fund these programs locally. Bond are particularly appealing because of their low interest rates. The programs will be funded through bond measures at very little cost to taxpayers.

Evaluation

We base our standard of evaluation on the three key predictions/assumptions which reside within our policy proposal. The three main policy expectations that we expect to emerge because of this plan are: a reduction in the cost of power outages to the state of California and that people will see increases in the value of their homes (which will be coupled with safer and more aesthetically pleasing neighborhoods). We will explain the standards of evaluation which will be used to measure success in these areas, as well as how we will measure program success and failure within 5, 10, and 15 years of implementation.

The first standard of evaluation is straightforward and will be conducted in the short and long term phases of the implementation. Determining if the economic impact of power outages has been reduced will be based on two piece of data. These data will be collected and stored by the Undergrounding Commission to track short and long term success. The first piece of data will simply be the number of outages. Noting every major and minor power outage will allow us to determine if the power grid is more sustainable now that it has been moved belowground. The second data source that will be used to make this determination will be the economic impact of the state’s power outages. We have shown the data on how much outages have cost the state of California in the years leading up to the implementation of our proposal. We expect to see a downward trend in the economic cost of outages that will be attributed to the expected reduction in overall outages. This first standard of evaluation will need to be conducted in the immediate short-term, as well as 5, 10, and 25 years down the line to determine long-term success. Program failure will occur if there has been no reduction in the cost and frequency of outages.

Second, we also believe it will be important to do cost evaluations in the short and long term to determine if the new underground systems have needed expensive repairs and/or upkeep. This standard of evaluation will be to determine if it has become cheaper to maintain the new system juxtaposed against the maintenance cost of the status quo above ground systems. We ideally expect that the cost of maintenance and upkeep of the new systems will be less than that of the old. If the cost of repairs exceeds the cost of upkeep for the status quo system, this is an indication of policy failure.

The third standard of evaluation will look to home value data to determine if the value of property has increased as we predict it will. We can obtain this data from analyzing home market trends. Property values should be estimated in short and long term intervals to determine program success. If home values have decreased or remained largely stagnant in areas where our proposal is implemented, then this is a blatant indication of policy failure. To assess people’s satisfaction with the new systems in their neighborhoods, we will survey residents and discover the perception of neighborhood safety and aesthetic value. We expect people will be largely happy with the implementation of these programs.

Our fourth evaluation standard will track the rate of implementation in cities across California. As one of the stated policy expectations is that all viable areas in California bury their power lines within a 50-year period, this evaluation will track the rate of bond measure introduction, determining their rate of electoral success. This standard will also determine the overall popularity of our policy. Long-term success in this area will mean that all viable cities have begun undergrounding their utility systems no longer than 50 years after this program’s initial passage in the Legislature. We believe based on the breadth of data and research synthesized for this report that this statewide undergrounding plan will bring myriad economic and environmental benefits to the state of California. It is with all this in mind that we passionately recommend this policy innovation.

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