The group’s full report will not be released for several weeks, but City Administrator Allen Y. Lew said the task force has agreed on its main recommendation: Put the lines most vulnerable to storm damage underground over the next seven to eight years.
Although both Pepco and the District government would play a role in financing the project, $875 million of the $1 billion in spending would be directly borne by Pepco ratepayers via surcharges on their electric bills. The rest — between $62 million and $125 million, officials said — would be incorporated into the city transportation department’s existing capital projects program.
Proceeding with the plan, officials said, will require the approval of the D.C. Council and the D.C. Public Service Commission, the body charged with regulating Pepco and other utilities. The project would be handled separately from a $52 million rate hike request Pepco filed with the commission in March.
The underground surcharges would initially add about $1.50 to the average residential bill, rising to about $3.25 over the next seven years. Low-income customers enrolled in Pepco’s existing assistance program would be exempt from the charges, which would be retired after the 15-year bonds are paid off.
Joseph M. Rigby, Pepco Holdings president and chief executive, who co-chaired the task force with Lew, said the proposal could have a “very significant” impact on electrical reliability, particularly during severe weather events.
“What’s been pretty clear to us, in our experience, is that the expectations of customers have shifted,” he said. “Over the course of my career, people could say, ‘Well, you know, if the power’s on in three or four days, that’s okay.’ I think those days are over.
. . . T
he tolerance of the customers for any kind of an extended outage is rightly very limited.”
The group was not tasked with looking into Maryland or Virginia outage problems. It was convened in August, less than two months after a pair of powerful storms swept through the city, leaving some neighborhoods without power for several days. In the aftermath, Gray said, residents were “fed up” with weather-related outages. “We need a game-changer,” he added.
But it was unclear at the time whether city leaders would have the wherewithal to propose a significant line-burial plan given the enormous costs. A 2010 report from Shaw Consultants estimated the cost of burying all major distribution lines at more than $2 billion. Besides the expense, putting the lines underground has another downside: It can be more expensive and time-consuming to repair and maintain buried equipment.
The 60 lines represent about one-third of Pepco’s above-ground “feeders” — high-voltage lines that run from substations into individual neighborhoods, serving an average of 1,200 customers each. Under the proposal, service lines to individual households would not be buried, officials said, because of the excessive cost and limited benefit.
“We picked the feeders that had the largest impact, especially during storms,” said William M. Gausman, Pepco’s senior vice president for strategic initiatives. “Today, if a tree comes down, the entire community goes out. In the future, if that tree comes down
. . .
instead of having a thousand customers out, you might have five or six customers out.”
Officials did not identify precise lines eyed for burial, but Gausman said they are chiefly in the periphery of the city. Most feeders downtown and in denser central neighborhoods are fed by underground lines.
A Washington Post poll conducted in July found that roughly half of D.C. residents were willing to pay extra in their power bills to bury electric lines to prevent outages, with 30 percent willing to pay $6 or more monthly. About one-third said they would be unwilling to pay extra. The rest had no opinion.
Lew said the group’s most complicated task — one that pushed its work several months longer than expected — was figuring out how to finance the work.
“Pepco can’t do it by themselves, and we can’t do it by ourselves, but if there was a way where we can work together to do this as partners, kind of like a public-private partnership, that was the closest we could come to actually making this work,” he said.
Under the task force plan, the District would float $375 million of revenue bonds supported by a ratepayer surcharge. Lew said the plan would not implicate the District’s strict debt cap, under which city leaders have limited room for borrowing through at least 2019. Pepco’s approximately $500 million portion of the financing would involve a combination of borrowing and equity financing, also supported by the surcharge.
An outline of the proposal shared by task force leaders indicates that Pepco would use its portion of the financing to design the project, install the underground electrical equipment and cover ancillary costs, such as public outreach. The District-financed funds would be used to build conduits and vaults under city streets and sidewalks, which would then be handed over to Pepco for maintenance.
Rigby, who leads a utility that has come under close scrutiny for its spotty reliability record, acknowledged that asking city residents to pay more on their electric bills “can be an emotional issue, and it can line us up for criticism.” But he emphasized that city lawmakers will have the final decision on whether to proceed with the proposal.
“I think that in the minds of customers, there are few things quite as valuable as electricity,” he said.
“The cost of that electricity and the cost of that reliable service
. . .
it’s a very good deal relative to what we spend on our cable and our phone bills.”