ENERGY

Review sought of rising costs to bury power lines

By Patrick Anderson
PBN Staff Writer

11/3/14

Supporters of burying high-voltage lines between Providence and East Providence waited 11 years for a detailed estimate of how much the project would cost. Now that it’s in, they have sticker shock.

After studying the project for most of 2014, utility National Grid last month pegged the cost of the long-debated project at $34 million, more than double what the project was thought to initially cost back in 2003, and $11 million more than the best guess last year.

That means the money set aside by state leaders to pay for the project would only cover about half its current cost, raising new questions about the prospects of an effort that has already languished for more than a decade.

To make sure that National Grid’s numbers add up, Providence and East Providence officials have proposed conducting an independent review of the study before deciding whether to forge ahead.

It is, after all, ratepayers in those two cities who will fill in any gaps with a surcharge on their electric bills.

“I do think there is a chance the cost is overblown and I am pushing for a review,” said Providence resident David Riley, president of the Friends of India Point Park, which has championed the power-line project.

Explaining why the new cost estimate is so much larger than the previous one, National Grid spokesman David Graves said the new estimate accounted for several factors that hadn’t been considered before.

Those include extensive underground surveys and analysis to determine what crews will come across once they begin digging, design of the underwater cable itself and $1.9 million to acquire a privately owned parking lot next to Al Forno restaurant at the intersection of Bridge Street and Tockwotton Street. The property will be the site of a “transition station” where the cable can be accessed by a manhole where it emerges from the Providence River crossing.

Then there is the natural escalation of material and labor costs over seven years, Graves said.

Where both Providence and East Providence officials had questions about the estimate are its margin of error.

National Grid said the actual cost of the project could be 25 percent lower or higher than $33.9 million, but also included a $5.5 million “contingency” for unexpected costs. If the contingency is in addition to the 25 percent tolerance, they would account for $14 million, or 41 percent of the total project cost.

“There are a number of open questions, including whether the tolerance of plus or minus 25 percent includes or does not reflect nearly $6 million in anticipated contingencies,” said Providence Deputy City Solicitor Adrienne Southgate in an email.

Perhaps even more important than whether National Grid’s cost estimate is accurate is whether, if it is, Providence and East Providence still want to go ahead with it.

Southgate declined to say. Mark Russo, an attorney representing East Providence in the power-line project, said he believes the cities are committed to the project, but policymakers will need to re-evaluate it when they have a firm idea of the cost.

The Rhode Island attorney general’s office helped initiate the power-line burial project back in 2003, and remains a stakeholder.

“Attorney General Kilmartin is concerned by the significant increase in estimated costs provided by National Grid,” said spokeswoman Amy Kempe in an email response. “Before a decision can be made to move forward [on] burying the power lines or not, the attorney general would like to meet with the interested parties in light of the new cost estimates to determine the continued level of interest and financial commitment to the project.”

Part of the long-term transition of Providence and East Providence’s waterfronts from centers of industry and transportation to residences and recreation, the power-line burial project gained steam with the creation of India Point Park and the Iway project.

The cables in question are regional transmission lines starting at Providence’s Franklin Square substation, crossing the Providence River and then India Point Park before crossing the Seekonk River into East Providence near the current Tockwotton Home.

Utility officials agree the old towers bringing the cables over the Seekonk River need to be replaced, which project supporters have argued makes it a good time to place the whole system underground.

The power lines currently are an eyesore, they argue, depressing property values in an area that includes the Interstate 195 land the state is desperately trying to develop, and limits recreational use.

Supporters of the project include the local colleges, real estate developers and environmental groups, in addition to groups like Friends of India Point Park.

National Grid has been, at best, ambivalent about the project, which it considers aesthetic, and potentially complicating future maintenance.

For the project to move forward, Graves said National Grid is looking for a commitment from the cities that they are ready to proceed and pass along any funding gap to ratepayers.

But even for a project as old and well-studied as this one, it’s still unclear exactly how large that funding gap is.

Part of the problem is murkiness in exactly how much has been set aside to pay for the work already.

The last estimate presented to the R.I. Energy Facilities Siting Board by National Grid was $17.2 million.

But part of the money set aside for the project has been collecting interest, last calculated in 2012, which has presumably increased.

Then there’s the matter of how much the regional power-grid operator, ISO New England, will contribute to the project.

In February 2006, ISO agreed to share $1.5 million of the project costs throughout the region. That amount represented the cost of replacing the obsolete towers across the Seekonk River, which it figured would need to be done in the near future even without an undergrounding.

But presumably that overhead replacement would also have gone up in cost since early 2006.

ISO spokeswoman Marcia Blomberg said the transmission owner, in this case National Grid, would need to request an updated commitment if it believes costs have increased more than 10 percent. So far that hasn’t happened yet, she said.

On the other side of the ledger, the Energy Facilities Siting Board allowed National Grid to draw upon up to $1 million of the project money to conduct the engineering study.

Exactly how much the study ended up costing was not yet available, said National Grid spokesman David Graves.

Energy Facilities Siting Board spokesman Tom Kogut said at the agency’s last meeting the assumption had been that at least part of the $1 million may be left over and could be used to fund the independent review, which is priced at about $25,000. The two cities and Kilmartin’s office have formally requested that the Siting Board approve funding for the review, an agreement for which is being worked on with National Grid.

And finally, National Grid’s study report said $375,000 in state “Greenways” grant money is no longer available.

To firm all these issues up, National Grid has been asked to update its estimate of the available funds before the next Siting Board meeting, which is expected to come before the end of the year.

“The people who don’t want to do this would say the new cost is too expensive,” Riley said. “But the case for doing it is stronger than ever.” •