There has been a great deal of discussion the last few weeks about theabove ground utility lines along Eldorado.Â Â Shelly Slater, Channel 8 News, even covered the issue in her news report.Â See the story HEREÂ Â
This item will be discussed this Tuesdy, August 5th, at our City Council meeting.Â The staff report we were provided isÂ attached below:
Â Â Â Â
Â Â Â Â Â Â Â Â Office of the City Manager
Re:Â Â Â Â Utility Undergrounding â€“ Background and Issue Paper
Â While the construction of utility poles in and along the Eldorado (between the Dallas North Tollway and FM423) corridor have prompted a great deal of discussion and debate, it is important to note that this issue has been one with which cities have struggled for some time. As you will see below, Frisco, as well as other cities, have been attempting to regulate this issue for some time. However, we all continue to be hampered by the decisions of the Public Utility Commission and the courts of the state of Texas. This paper attempts to provide some historical perspective on this overall issue and also highlight for you some specifics on related cost projections.
NOTE: Please note that the only cost numbers contained in this report that are confirmed at this point is the cost of burying the Coserv lines along Eldorado. Other numbers are calculated based on the data at hand at the time of completing this report. However, such additional cost projections are fairly conservative based on prevailing market data.
Historical Perspective of the Undergrounding Issue:
The section attempts to provide you with a high level historical perspective of some of the events that have impacted decisions related to the undergrounding of utilities.
The City of Frisco has been attempting to regulate the undergrounding of utilities for a number of years. There have been provisions contained in the Subdivision Regulations for a number of years regarding this matter, some of which have had to be removed due to court cases related to this issue. The City also passed an Underground Utility ordinance a couple of years ago to deal with utility lines along thoroughfares. However, if the city says the developer must bury the lines along thoroughfares and the cost of that burial has to be paid by the developer then the developer will argue they are carrying a disproportionate amount of the cost and/or that the city does not have a valid governmental interest in having the lines buried.Â And if the city says the utility must bury the lines along thoroughfares and the cost of burial has to be paid by the utility then the utility will argue that the cost of burial would have to be passed along to the rate payer thus violating their rate tariff set by the PUC (Oncor) or simply violates their Board adopted rate structure (Coserv). In summary, these recent court cases prevent the city from being able to require the burial of lines unless the city (the tax payer) pays the costs. A quick cost analysis of the impact the Eldorado issue, as well as the overall issue, could have is provided in the next section.
Â Cost Analysis:
This section provides a high level review of the estimated cost to address the undergrounding issue. It examines the cost from a neutral perspective of who may have to pay these costs but then also provides an analysis of how that cost, if transferred to the City might impact the tax rate.
Cost Estimate Example â€“Â
Approximately $5,500,000 to bury Coserv lines on both sides of Eldorado Parkway (estimate provided by Coserv Electric, see Attachment #1)
$5,500,000 Ã· 4.6 miles (approx. 2.3 mi. of right-of-way per side) = ~$1,195,562 per mile
(This calculation is the estimate to bury the Eldorado Coserv line only and does NOT include the cost of a private easement, boring or burial cost of any additional utilities such as cable. Also, this assumes the cost for the entire length of this section of roadway thus any reduction in length drives up the cost per mile estimate.)
Â Potential Additional Costs:
These estimates are based on general market knowledge and could be higher or lower. However, a very conservative approach was taken to completing these estimates.
Item/ServiceÂ Â Â Â Â Â Â Â Â Â Â Â AssumptionsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Estimated Cost
Private EasementÂ Â Â Â Â Â Â Â 15′ easement @ $10sfÂ Â Â Â Â Â Â Â $1,584,000
Screening ReplacementÂ Â Â Â 1 mile of replacementÂ Â Â Â Â Â Â Â $700,000Â Â Â Â Â Â Â Â
Cable andor Telco Burial 15% of CoservÂ Â Â Â Â Â Â Â Â Â Â Â $825,000
BoringÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $Unknown .
TotalÂ Â $3,109,000
If these additional costs were realized the project cost would total approximately $8,609,000.
City – If the City of Frisco were to assume the cost of burying the Edlorado Coserv line only ($5,500,000), there would need to be an adjustment to the tax rate to cover such cost. Below is an approximation of what that adjustment would need to look like:
Â¢.01 on Tax Rate generates = $1,264,672, therefore, it would take a Â¢.043 Tax Rate increase to fund the Eldorado Coserv line only.
Below is provided an approximation of what a tax rate adjustment would look like if the City of Frisco were to assume all of the projected cost above $8,609,000:
Â¢.01 on Tax Rate generates = $1,264,672 therefore, it would take a Â¢.068 Tax Rate increase to fund the Eldorado Coserv line only.
Underground Utility Fees â€“ Why not pay for this from the fees that have already been collected from the Underground Utility Fee Ordinance? First, we only have a total of $368,834.00 in the account meaning there is nowhere near enough to complete the project in question – Eldorado. Second, the majority of the funds we do have are in other “Utility Zones” defined in the Ordinance which means the majority of the funds are not eligible to be spent on the Eldorado project because they were collected in other “Zones.” Third, and most importantly, these funds will more than likely have to be returned to those who paid them due to the enforcement issues with the ordinance outlined in the “Historical Perspective” section above.
Tariff Change â€“ Oncor has the ability to enter into agreements with cities to pay for undergrounding facilities. These agreements, on a project by project basis, spread the cost of the project across all rate payers in the city. However, there are a number of issues with this process that make it a very risky proposition. Not the least of which is the fact that an agreement can be entered into by the city to bury an Oncor line only to have Coserv come right down the same easement with an overhead line. This problem is identified in item #2 below and has already hit the City of Allen. Also, Coserv which is the provider along Eldorado has no such program available.
Problems that will continue after funding determination has been made (these apply to all such easements not just Eldorado) â€“
This section outlines some of the problems that would continue even after a funding determination is made related to the Eldorado Parkway utility matter.
The above cost estimate from Coserv does NOT include burying other utilities currently on the overhead lines such as cable andor telephone.
No matter the funding source, once a line is buried this action does not prevent another utility provider from coming right down the same easement and putting up overhead lines where the previous lines would just have been buried. This problem exists unless of course the City (the tax payers) pays AGAIN to have the new lines buried. By way of example, if the Coserv lines along Eldorado are buried by the City, then if Coserv wants to upgrade those lines in the future via overhead lines or if another utility provider wants to go in the same location with overhead lines they would have the right to do so unless the City paid to bury them a second time.
If Eldorado lines are buried at tax payer expense then what is the next line to be buried, at what cost and do you continue to raises taxes to bury lines? If it cost $5.5 million to bury only (2.3 miles x 2 =) 4.6 miles of line and the city has roughly 77 miles of thoroughfares and if the cost is similar to the line on Eldorado Parkway as outlined above that would equate to approximately $92,058,274 for one side of each thoroughfare. For both sides that would be approximately $184,116,548. Again, none of these numbers account for the “additional costs”, as outlined above, that may come into play.
Neighboring City’s Experiences:
Stated that Allen “recently paid to have Oncor put in underground lines along Stacy Road only to have CoServ put up overhead lines along the same section of roadway.” Stated that there really is “no solution to the problem due to the above [problem] and due to when the line needs to be expanded, the city is faced with the choice again of paying or having the line constructed overhead.”
They went on to say that if we find the “silver bullet” to be sure to let them know.
“Our subdivision ordinance limits the placement of above ground utilities to major thoroughfares (same as Frisco).Â SubdivisionsÂ are occasionallyÂ built along a major thoroughfare without power lines, only to have them installed later.”Â “SometimesÂ homeowners complain, but eventually theyÂ come to understand that the utility company has the right.”
Little Elm â€“
“We are having identical issues.” Co-Serv has discussed a “secondary feed” needed down to the end of the LE peninsula and that the only way to get there is a parallel line along the south side of Eldorado Parkway (existing overhead is on the north side). “CoServ, and for that matter every other electric utility, takes the position that if you want it under ground, the city is expected to pay 100% of the cost.”
Coserv Questions and Response Concerning Eldorado and Undergrounding in General:
(1) Would CoServ consider adding an additional charge to its customers in Frisco to pay to place its lines along major thoroughfares underground?
(2) If the answer to 1 is yes, what do you need from the city of Frisco to institute such a charge?
(3) If the answer to 1 is yes, what do you believe the monthly cost would be per customer?
“CoServ has been approached by other cities we serve and asked similar questions. Our response thus far has been “no”, because…
* The cost of underground construction is 3 to 5 times the cost of overhead construction and we have experienced recent dramatic increases in the cost of labor and materials. We’re seeing some underground construction costs in excess of $1 million per mile.
* There are tremendous logistical challenges with converting overhead to underground, not the least of which is cable and communications attachments, adequate underground easements, scheduling, etc. All of these can be managed, but not easily.
* At the point we agree with one municipal entity, we should expect to do it with all of them.
CoServ is willing to sit down with you and/or your designated city representatives and try to plan conversion of overhead to underground facilities. Because of road widening, or other road construction issues, we are frequently confronted with this question. We’d prefer to plan these changes without imposing fees/charges to our members. The issue of fees/charges, as you know, is ultimately a question CoServ’s elected board of directors must address. My understanding of their direction for me is to find ways to convert without raising rates.”
The bottom line is that the cost of burying utility line is very high and the available solutions are fraught with problems of their own.Â Additionally, the actions of the PUC and our Texas courts have further exacerbated the problems. On one hand, cities are being told they do not have the authority to regulate this infrastructure forcing it to be underground and on the other hand even if cities fund the undergrounding there is no guarantee that the buried facilities will remain underground thus wasting taxpayers’ dollars.
Coserv Cost Estimate