The undergrounding process involves removing the electric, telephone and cable television wires that are customarily carried on above ground poles and burying them in underground conduits, vaults or trenches.  Undergrounding is typically preferred to overhead system improvements, as the added benefits include fewer outages and associated repairs, improved aesthetics to resident and town property, improved health and safety of residents, and less economic impact due to outages.

With 87 percent of residents experiencing outages for more than one week after the latest hurricanes, the pending Florida Public Service Commission (PSC) mandates to increase reliability and the potential benefits provided by underground electric utilities, the Town Council believes that conversion from overhead to underground utilities warrants citizen consideration.

Burying Palm Beach’s electric, telephone and cable television utilities would require an additional annual tax payment for residents and an extended implementation timeline, so the Town believes residents should be given the opportunity to decide whether or not to engage in this type of project. A referendum is anticipated to be held in late 2008 or in early 2009 in which Town residents will decide whether or not the project should move forward.

The cost of an undergrounding project would be paid by taxpayers through 30-year general obligation bonds with annual payments (Schedule A tax deductible, if applicable) based on the taxable value of one’s property.

The preliminary estimated cost of the project would be $89,450,000. This figure includes a 25 percent credit from Florida Power & Light (FPL), approved by the PSC. Based on a market interest rate of 4.67 percent the updated cost estimate would equate to an annual cost to property owners of $212 per $1 million in taxable property value for debt service years 1-5; $454 per $1 million in taxable property value for debt service years 6-30; and, $242 per $1 million in taxable property value for debt service years 31-35. That means an estimated daily cost of approximately $0.58 for debt service years 1-5; $1.24 for debt service years 6-30; and, $0.66 for debt service years 31-35, all based on cost per $1 million in taxable property value. A final, official estimate of the project cost will be provided with sufficient time for residents to review before voting and in some cases, binding cost estimates from the affected utilities. The PSC determined that a 25 percent credit shall be given in recognition of avoided storm restoration costs realized by FPL by virtue of underground facilities and will be instituted for a two-year trial period for local government underground conversion projects. This approved credit tariff, called the GAF tariff, is estimated to save the Town's residents $6.18 million or more in electric utility underground conversion costs. The Town's project, if approved by voters, would receive this credit for the duration of the project, as long as a master contract is signed with FPL prior to October 4, 2008. The Town and other interested municipalities anticipate formally seeking a time extension to this PSC tariff or requesting PSC action that will make the credit tariff permanent. In addition, another credit tariff is anticipated to be considered by the PSC in early 2008 that will be representative of the avoided operations and maintenance costs avoided by FPL by virtue of the benefits of installing underground electrical facilities. One can anticipate the Town working diligently to secure these additional underground construction cost savings in 2008.

Timeline

A referendum is anticipated to be held in late 2008 or in early 2009 in which Town residents will decide whether or not the project should move forward.

Once the referendum is held, and if the project is approved, work will begin as soon as possible.  The impacts to individual streets and private property are expected to be minimal, as each phase of the conversion, which will include multiple streets, is expected to last approximately one year.  The overall process to convert the town will take an extended period of time because of the magnitude of the project (current estimates gauge approximately 10 years as the worst case scenario).  The determination of where phases will begin and end will be made at a later date, once the Town's engineers and consultants have had the opportunity to thoroughly analyze each utility's infrastructure layout.

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Process

If approved by voters, the undergrounding project would include a 100 percent conversion of the town's utilities including FPL, BellSouth and Comcast. Almost 40 miles of utility grid would be buried, with 100 percent of current poles being eliminated.

Utility wires will be buried throughout the town primarily within the road right-of-way using a geographically phased approach. Each phase of the process will consist of several steps, with the first to establish and obtain routes and easements. Then conduit will be installed by one contractor using a combination of horizontal directional drilling (HDD) and trenching. HDD is anticipated to be the primary means, as it is less invasive and results in less disruption to traffic and roadways. Trenching will be done with a back hoe, Bobcat or Ditch Witch in some areas, as it is a less costly process. Once the conduit is installed, the utility companies will install ground-based equipment such as transformers, switch cabinets and decorative streetlights. Next, the utilities will run their lines through the conduit. Those lines will then be connected to homes and equipment and the new underground system will be activated, along with the new street lights. Finally, the overhead system will be deactivated and removed.

Dark green metal cabinets would be strategically placed to accommodate the transformers and switch cabinets that are necessary to the electrical system. Underground switch cabinets are being contemplated and the cost for such is included in the cost estimate. This should eliminate any remaining aesthetic concerns for such facilities wherever the Town is able to incorporate such into the construction plan. They are expected to reside in the road right-of-way to avoid personal property disruption, except in very rare cases where this is not possible..

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Benefits

A recent survey showed that residents of the Town of Palm Beach believe underground utilities will benefit them in several ways.  Those benefits include:

• Improving the aesthetic value of homes and of the town as a whole.
• Affording more reliable power service.
• Reducing outages and service loss during storms and damage from hurricane winds.
• Improved safety for residents.

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Concerns

The survey showed that the primary concern among town residents was the cost of the project and the taxes required to provide funding to retire the project debt. Another major concern the residents expressed was the impact of the construction on traffic and the duration of that impact. All concerns are being carefully considered. When further information is available, it will be provided both on this Web site and directly to residents.

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