Who gets to share or bear the cost of underground transmission lines?
Who’s got the power?
In a dispute over delivery of electric power, the power to decide whether transmission lines are buried or placed overhead is up in the air.
Both the Washoe County Commission and the Reno City Council unanimously agreed to appeal a recent decision regarding power. The issue lies in who pays for the electrical kind and who wields the less tangible kind when it comes to making that decision.
The Nevada Public Utilities Commission (NPUC) decided on Oct. 4 that the extra costs of burying transmission power lines instead of using overhead lines could be paid by utility customers within the city or county that ordered burial. This would be decided on a case-by-case basis, which would favor undergrounding for safety purposes (at airports or major traffic areas, for example) but not to minimize eyesores.
“If the commission did not at least assign cost responsibility to this level, a larger group of customers who neither caused the cost nor benefited from it will be burdened with the cost,” the NPUC said in its decision.
Transmission lines are major power lines of more than 60 kilovolts that link communities to substations and power plants. Local governments and residents tend to favor undergrounding to avoid both safety and visual pitfalls of overhead power lines. However, burial can cost from two to seven times the amount of putting lines overhead, depending on their size and how difficult excavation may be. Power companies want to know who’s going to pay for it.
Currently, such costs in Northern Nevada are spread across Sierra Pacific Power Company’s entire rate base, which includes the Reno area and stretches as far east as Elko.
Washoe County and the city of Reno contend that although the NPUC has the power to set rates, it’s not authorized to decide whether undergrounding is necessary or not. They want this issue decided by the Nevada Legislature, which will not meet until 2007.
The Washoe County Commission agreed to appeal the decision at its Nov. 8 meeting, and the Reno City Council followed suit on Nov. 16.
“The [NPUC] is saying undergrounding is unnecessary except for safety reasons,” said Washoe County Commissioner Jim Galloway. “Our grounds of appeal is they don’t have the jurisdiction to make that kind of call.”
The NPUC’s decision also said utility customers who don’t directly benefit from the undergrounding, such as by receiving power or preserving their views, shouldn’t have to pay for its extra costs when installing an overhead line would create the same amount of power for less money.
“Why should people in Elko pay for undergrounding in Washoe County?” said one NPUC policy advisor.
The NPUC staff further noted in its decision: “This policy complies with the ratemaking principle that the cost-causers should pay the costs they impose upon the system.”
But Galloway thinks the NPUC has a skewed view of who the “cost-causers” and “beneficiaries” are.
“The only actual beneficiaries of the new transmission line are the areas that use the power,” he argues. “And these are not the same areas where the [county] commissioners required undergrounding.”
The issue was spurred after the NPUC heard complaints earlier this year from Sierra Pacific Power regarding Washoe County imposition of a condition on a special use permit for the new high-voltage Tracy-Silver Lake transmission line (120 kilovolt) in the Spanish Springs Valley Ranch area. One transmission line now runs from Tracy through Spanish Springs to Silver Lake. For power to run both ways between these areas, a second transmission line was needed. Washoe County approved the project but required the power line be underground to protect both the safety and views of area residents.
Lois Avery, a member of the Spanish Springs Citizens Advisory Board and a Spanish Springs resident whose home narrowly missed being along the transmission line route, also wonders why the NPUC considers people along that route “beneficiaries” rather than those receiving the actual power.
“They don’t have anything blocking their view now,” she said. “They’re calling them beneficiaries, but those people are like, ‘Hey, we’re the victims!’ “
The Sierra Pacific Power and Nevada Power companies estimated burial of the transmission line for the Spanish Springs project will increase construction costs by roughly $6.5 million—550 percent more than would be required for an overhead line.
This creates an extra hassle for utility companies because of the retroactive manner in which rates are set: When Sierra Pacific Power installs an underground line because a local government tells them to, it can only recover the costs through its customers if the NPUC later deems the utility company used the money wisely. Otherwise, Sierra Pacific’s shareholders have to foot the bill.
Figures from Energy Source, a Reno-based company hired by the Coalition for Community Friendly Power Facilities to investigate the costs of undergrounding, acknowledged that burying the Tracy-Silver Lake line would cost about six times more than putting it overhead. However, the company reported that if the costs were spread across the rate base, the impacts of burying the transmission line over the next 20 years would result in roughly 30 cents more a month for residential customers.
“It’s a negligible thing to pay in order not to have overhead power lines,” said Avery.
The NPUC hasn’t yet addressed how the costs for the Tracy-Silver Lake transmission line will be recovered.
As costs are being debated, another important issue has emerged. Sierra Pacific Power told the NPUC that Washoe County’s decision to underground the Tracy-Silver Lake line may indicate a future trend to make undergrounding the norm. Sierra Pacific and Nevada Power asked the NPUC to clearly establish what it considers undergrounding for safety and to define a process for recovering undergrounding costs. The NPUC decided to open its own case in May regarding the matter, which resulted in the decision now being appealed.
County and city officials worry that the NPUC’s decision could inadvertently sway local land use planning.
“There’s an incredible ripple effect as a result of this,” said Reno City Council member Pierre Hascheff. “At the end of the day, I don’t think it’s fair for the city to have to tell its constituents they have to pay for underground transmission lines.”
Galloway agreed. “This decision will, I believe, unreasonably discourage local governments from requiring any undergrounding in the future,” he said.