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Plans Evolve For Burying Pepco Lines

October 31, 2013 by FHC

by Elizabeth Wiener
Current Newspapers staff writer

Pepco 2An ambitious plan to put major power lines underground in the city’s outer wards is facing a key question: Who’s going to pay for it, and how?

Two D.C. Council committees heard testimony Tuesday [October 22nd] on a bill to finance the estimated $1 billion “undergrounding” project, which was proposed jointly by Pepco and the D.C. government last spring. A major impetus is the infamous “derecho” storm that left 100,000 residents without power during the June 2012 heat wave, but officials are also mindful that prolonged outages may worsen as global climate change spawns even more violent storms.

The bill spells out a complicated financing plan that must be approved by both the council and D.C. Public Service Commission before any digging begins. Though costs would be roughly split by Pepco and the District – through a combination of long-term bonds and direct funding – it’s clear the lion’s share would be borne by District residents and businesses, whether through taxes or rate surcharges on electric bills.

Here’s the funding breakdown, largely the same as proposed by a task force last May: Pepco would put up about $500 million, to be “recovered” from surcharges on customer bills. The city would issue about $375 million in revenue bonds, carrying a relatively low interest rate because of District backing, and also recoup those costs through a separate bill surcharge. Between $62 million and $125 million in capital improvement funds – some from the federal government – would help pay for the excavation, repaving and other street work that would remain the District’s responsibility.

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At the hearing, City Administrator Allen Lew and Pepco CEO Joe Rigby said the impact on individual residential electric bills will be limited.

Current estimates are that the average residential bill would rise by $1.50 during the first year of construction, and by $3.25 during the seventh and final year. After that, bills will drop as bonds are repaid, Rigby said. And low-income homeowners who already get discounts on their utility bills would be exempted from any surcharge, Lew added. But for businesses and owners of multifamily housing, their share of the costs loom large.

Shaun Pharr, senior vice president of the Apartment and Office Building Association of Metropolitan Washington, said his members would bear 82 percent of the cost, or “a 10 percent or more increase solely for this project, annually for 60-plus years.” And that extra cost, passed on to retail and residential tenants, comes as the same parties face increased gas, water and sewer bills.

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“You’ve got these double/triple whammies. It’s a cumulative spike,” Pharr said. “And undergrounding is not a silver bullet. It has its liabilities – high cost and continuing vulnerability” to outages.

There were other concerns about the so-called enabling legislation, and the project itself. Several witnesses said it fails to spell out a clear way to coordinate among various utilities to ensure that streets are not dug up, repaved and dug up again.

The coordination is difficult, said Dorothy Brizill of DC Watch, since the plan still doesn’t specify which of the high-voltage distribution lines in wards 3, 4, 5, 7 and 8 – the project’s target area – will be among the 60 targeted for undergrounding. (Most power lines in the central part of the city are already underground.)

“Only when you know what neighborhoods are affected can you be sure you don’t tear up the same streets, again and again,” Brizill said.

Witnesses also wanted to ensure that the huge, multi-year construction projects can create jobs for D.C. residents and small contractors. “The benefits [of undergrounding] are largely invisible,” testified Rabbi Jessica Oleon of the Washington Interfaith Network. “But hiring locally will provide a visible benefit.”

Vicki Leonard, spokesperson for a local small contractors group, said the project could create 800 utility construction jobs a year.

“The new bill… must have a well-defined and rigorous local hiring program,” she said.

Others urged the council to ensure that the latest, and greenest, technology is part of the program. Several members of D.C. Climate Action suggested building redundancy into the grid, “looping and sectionalizing” to isolate outages, and using locally generated power sources rather than fossil fuel.

Robert Robinson of a group called Grid 2.0 suggested “microgrids” that allow campuses and other large institutions to produce and circulate their own power.

“We can either keep patching together a 20th-century system or develop a grid that will power us through the 21st century,” he said.

But whatever the pitfalls, supporters of undergrounding said the benefits outweigh the costs.

“Weather experts say derechos will hit D.C. once every four years,” said Jim Dinegar of the Greater Washington Board of Trade. “When the power goes, we lose safety and economic security. Not undergrounding and expecting different results is not sensible. We fully support this move.”

Council members also recognized the trade-offs. “The elderly on fixed income are most vulnerable to a $3 increase, but they’re also most vulnerable when the electricity goes out,” said Muriel Bowser of Ward 4.

“We need to be able to say to residents, ‘Not only will this improve the system, but do so in a way you can afford.’”

Neither relevant council committee – Government Operations nor Finance and Revenue – has set a date yet for marking up the bill so it can advance to the full council. From there it would go to the D.C. Public Service Commission, which would have to approve the financing and cost recovery systems.

Reprinted, with permission, from the October 23rd issue of The Northwest Current.

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