Keeping America’s Power On, Ctd

A reader writes:

The problem is that no one entity controls a share of the powerlines significant enough to make Frum's idea profitable.  Power utilities are local/regional; lines are maintained by cities/counties; the companies are regulated at the state level, often with different requirements for regional companies even when multi-state panels work on evening out the requirements.  Power generation is also handled by separate companies (for good reason – see Enron's causing rolling brownouts for why transmission and generation of this industry is a good idea absent centralized regulation).  This is a downside to federalism: fragmentation of a market can prevent economies of scale from occurring to the common good. 

An expert weighs in:

I was an engineer and long-term capital project planner at a rather large municipal utility in Canada. Before I left, we were putting the finishing touches on a new 10-year capital plan and strategy. We looked at every available option for improving the system in greater depth than we ever had in the past, including newly available technologies. Here are a few things I learned about system reliability:

1. There is definitely a business case for burying distribution systems, but not in their entirety, and not even in their majority. The only home-run we found in terms of cost-benefit is burying the trunks of feeders, i.e. the primary voltage sections that connect directly back to the substation. And even then, it was only on the sections where more than one feeder was on the pole. Reason being: if there is an outage on this section, it will wipe out power to all customers on the feeder(s).

Beyond burying those sections, your bang-for-buck investments in terms of reducing customer minutes interrupted come from attention to detail in system design. Some examples: breaking feeders up into smaller sections using well-designed fusing schemes, trimming trees near overhead wires, using robust insulation standards at the points where the primary wires connect to the transformers that feed your house (so that animals and trees don't cause small outages), and making sure that feeders are interconnected, sectionalized and properly loaded so that if one feeder goes down, many sections of it can be restored using other nearby feeders.

2. A note about "inflated" underground construction costs: There is a range of quality in underground design. It can be looped or it can be a cheap and primitive radial design. The cable can be directly buried in the soil, placed in ducts that are directly buried in the soil, or placed in ducts that are encased in concrete that is then buried in the soil. There is an array of different cables of varying quality and cost. Point being, there's a luxury option underground system and there's a low-budget system. Unfortunately, when we run the numbers on cost and reliability, it turns out that the luxury underground system is the only design that really competes, on a reliability basis, with a simple overhead system. This is why it usually only makes sense to convert the highly critical trunk portions to underground.

The exception is greenfield construction, like new subdivisions, where it's much easier to install the highest quality system underground cheaply. Where I was working, it was never in question that all new developments would be underground.

3. While the industry still has very little real world data on this, it seems that there is a huge amount of potential in smart grid technology – in particular, the fully automated and fast-acting sectionalizing and tie switches that cost relatively little to design, install and commission on overhead feeders, and that reduce the duration and size of outages on overhead lines dramatically. The cost-benefit of this technology has the potential to blow underground retrofitting out of the water.

4. It is certainly more aesthetically pleasing to bury these systems. And that leads us to the heart of what electricity infrastructure investment is truly about. The upfront costs of establishing electricity supply are staggering. But the benefits to society as a whole are gigantic as well. If we were to ask individual ratepayers to pay for the true cost of electricity supplied reliably to their homes, then we'd all be individually bankrupt overnight.

In the end, electricity is, justifiably, a subsidized public investment. The question is what kind of system do we want to pay for, collectively? There are many instances of municipal governments demanding that systems be undergrounded in areas where aesthetics are especially important. This amounts to a stimulus program of sorts. There also instances where more affluent ratepayers lobby for more aesthetically pleasing systems in their neighborhoods. If utilities relent to these private pressures, then electricity infrastructure can quickly become regressive fiscal policy. Some utilities have adopted business standards that see them building equal systems wherever possible, and allowing residents the opportunity to pay for upgrades out of pocket.