By California law, each utility with overhead lines (PG&E, AT&T and Comcast) is required to set aside a small portion of our monthly payments for future undergrounding of those lines. For Los Altos Hills this amounts to about $50,000 per year that is set aside for these projects, accumulating over time if unused. We used our accumulated funds to fund our two pilot projects in 2008.
Using these funds alone, it would take hundreds of years to underground our entire town.
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"Undergrounding" refers to burial of our existing overhead utilities. These include electricity (PG&E), cable TV/broadband Internet (Comcast), and landline phones (AT&T). Burying the lines means getting rid of the poles, which can also effect streetlights (we have only one in Los Altos Hills) and some wireless transmitters (like those used by PG&E for collecting smart meter data). Most undergrounding projects now place transformers and switchgear in surface pad-mounted enclosures for reliability. The lines would be buried alongside or under our roads, possibly under our existing pathways to reduce traffic disruption.
Since about 1990 all new construction has required underground utilities, but over 50% of our utilities remain above ground , including most major thoroughfares.
In 2002 we hired R.W. Beck (a large construction services company, now Leidos Engineering) to do an inventory of our overhead lines and also provide an estimate of the cost to bury all of it. During that process they identified approximately 60 miles of overhead utility lines within our town
In addition to fact-finding from other California cities and towns (including Palo Alto, Tiburon, Manhattan Beach, Hermosa Beach, San Diego) the town initiated two small undergrounding projects in 2008: one on Purissima along the baseball fields and one on Altamont adjacent to Byrne Preserve. Combined length of these two projects was just over a mile (6000 feet). These were pilot projects to give us experience, and were funded by the town's "20A" funds (see description below).
We believe the cost in our town would be approximately $100 per foot, prior to rebates (see below).
Cost estimates for undergrounding (on a cost per foot basis) vary tremendously due to many factors; it is difficult to get good data that is relevant to our town. This was the primary motivation for the bid we requested from R.W. Beck in 2004 and our two pilot projects in 2008. The bid from R.W. Beck in 2004 worked out to $164 per foot. The final cost of our two small pilot projects was $130 per foot (ref: R.Chiu email on "UG costs" dated 11/19/08). Some recent estimates from a neighborhood effort on La Cresta are closer to $250 per foot. None of these figures include a "betterment" rebate from PG&E (see below).
In terms of large scale undergrounding projects, our neighbor Palo Alto has some of the best data, although they have more sidewalks and streetlights than Los Altos Hills, which would normally indicate our costs should be lower. They are about halfway done with their long term project to bury all their wires. In 2004 they told our committee their current cost was $90 per foot, and this figure was steadily decreasing as (1) they gained experience and (2) horizontal boring (used to avoid disrupting roads and landscapes) costs declined.
At that time Palo Alto told us they hoped to eventually get costs down to $50 per foot.
Our current estimate is $20 million for the entire town.
PG&E informed us in 2011 that we would get a "betterment" rebate from them when their old overhead system was replaced by a new underground system in any large (20B) project. The size of the rebate is based on their budgetary cost of a brand new overhead system, minus the book (depreciated) value of the system we replaced. Our PG&E representative (Sindy Mikkelsen) told us this rebate could range from a low of 30% to 50% or more of our total project cost; in recent PG&E undergrounding projects in Carmel, Belvedere and Pebble Beach (study), the rebate has been about 50% of the cost. This was new and exciting news, and provides a significant cost reduction.
The original estimate received from R.W. Beck in 2004 was $52M for a town-wide project; as noted above this did not include any rebate from PG&E, and the final cost of our two pilot projects was lower than their bid: $130 per foot instead of Beck's figure of $164 per foot.
We believe a town wide project will provide significant economies of scale over our two small pilot projects. Furthermore, we see no reason why we should not be able to come close to Palo Alto's actual costs on a town-wide project (note that Palo Alto expressed some interest in bidding on our town-wide project if we got to that stage).
So we can reasonably hope for a cost at or below $100 per foot, across our 60 miles of lines. Adding a 40% rebate from PG&E, we arrive at our estimate of the total cost for undergrounding our town of $20M.
There are a variety of options for funding an infrastructure project like this, but we believe a Utilities User Tax may be most appropriate.
In 2004 our committee conducted a town-wide survey (performed by Godbe Research) and found that 40% of the town would support undergrounding at the $52M price tag, funded by a 40 year bond.
Since then we learned undergrounding could also be funded from a Utilities User Tax (UUT), a flat tax on local utility bills administered by the utilities. The UUT might prove advantageous over other funding methods since those who use the utilities the most (big energy, cable & phone bills) would pay more, and there are exclusions for low income residents. In our Godbe survey we found the highest opposition was from longer-term residents -- many of whom have low bills -- while the broadest support came from newer residents. Given the estimated cost above and our understanding of utility revenues we believe a 7.5% UUT could pay for town undergrounding in as little as 15 years. (For comparison, Palo Alto is 50 years into their undergrounding project, and has many years to go.)
Yes. Underground utilities have been proven to be safer, more reliable, and less prone to severe weather. Palo Alto has learned over time that this is particularly true when placing equipment (transformers, switches, etc) above ground on pads instead of submerged in vaults (submerged vaults are prone to flooding).
Yes. We are not aware of any formal studies, but anecdotal information from California cities that have done significant undergrounding (including Tiburon, Manhattan Beach and Hermosa Beach) indicates that real estate prices in the affected areas go up 5% or more relative to areas of those cities which retain overhead utilities.
Clearly, given current Los Altos Hills real estate prices a 5% increase in real estate values would more than make up for the cost of undergrounding as estimated above.