CPUC Undergrounding Programs Description

Conversion of Overhead Electric Lines to Underground Facilities and Construction of New Underground Electric Lines

Undergrounding electric distribution and transmission lines can beautify major thoroughfares, civic areas, scenic highways, and residential and commercial areas, elevate property value in communities, reduce urban and industrial blight, enhance electric reliability and make wildfire prone areas safer. Since the late 1960’s, the CPUC’s undergrounding programs have contributed to the new construction and overhead to underground conversion of over 73,500 miles of distribution lines cumulatively. To date, about 33 percent of the 220,590 miles of distribution lines across the state are underground.

Below is a detailed overview of the benefits, challenges, and costs of undergrounding; how undergrounding fits in the context of wildfire risk mitigation, the various undergrounding programs that the CPUC regulates; the history of the undergrounding programs; annual undergrounding reports to the CPUC; and additional resources.

For public inquiries, please contact the Public Advisor’s Office at public.advisor@cpuc.ca.gov or at 1-866-849-8390.

For media inquiries, please reach out to the News and Outreach Office at news@cpuc.ca.gov or at 415-703-1366.

If you have any questions, please send an email to the Rule20Questions@cpuc.ca.gov mailbox.

I. What is Undergrounding?

Undergrounding refers to the conversion of existing overhead electric facilities, which consist of poles, wires and related equipment, to underground facilities, which consist of trenches lined with conduit which house the wires, underground vaults, and/or surface mounted structures (i.e. pad mounts) for transformers and other equipment. Undergrounding also refers to the construction of new electric lines, line extensions, and service extensions built underground.

The investor-owned utilities regulated by the CPUC have broad responsibilities to manage the electric utility distribution infrastructure. As part of their responsibilities, they build and maintain distribution facilities that service customers. Since the 1960s, most new distribution facilities have been designed and installed underground. For communities developed prior to the late 1960s, most distribution infrastructure is overhead. Undergrounding is typically more expensive than overhead lines to build and maintain, so most existing overhead systems remain above ground.

Nevertheless, there are several ways that these historic overhead systems are converted to undergrounding. Utility distribution planners may decide to convert an overhead system to underground for safety, cost, reliability or maintenance reasons. In 1967 the CPUC adopted and an Overhead Conversion Program known as Electric Rule 20 to support overhead conversion projects initiated by local communities. The program allows cities and counties (collectively communities) to identify areas for undergrounding. Depending on the project characteristics and eligibility under pre-established criteria, the utility may fund some, all, or none of the costs of an overhead conversion.

Communities interested in overhead conversion identify a project and work with the utility to determine whether it qualifies for utility funding.

II. Benefits and trade-offs of Undergrounding

There are many potential benefits to undergrounding distribution infrastructure. Perhaps the most noticeable benefits are aesthetic. These benefits are arguably greatest along California’s miles of scenic highway, in parks and recreation areas, and in crowded urban environments, but there may be some benefit in almost any location. Along with aesthetic benefits comes possible increases in property value that accrue to homeowners along the route.

Additionally, there is enhanced safety and reliability. Converting powerlines to underground can eliminate safety issues that arise from vehicles crashing into poles or from vegetation igniting fire when contacting the overhead conductors. Infrastructure that is converted underground is also more reliable than overhead infrastructure. For example, it is less vulnerable to high winds brought about by Santa Ana winds, hurricanes and winter storms that can damage the poles and wires. Outages may still result from other causes and the restoration times are often longer than for above ground infrastructure as utility crews have a more difficult time in locating the faults in underground circuits. There are also safety issues associated with explosions and fires in underground vaults.

III. Underground Conversion Challenges

Edison Electric Institute’s “Out of Sight, Out of Mind 2012” study on the undergrounding of overhead power lines identified several disadvantages to both installing and having electric facilities underground. The most obvious issue is posed by the cost, which can be between 2.4 and 10 times as expensive than building new overhead lines in California. Other issues include longer construction/installation timeframes relative to overhead, longer fault location and restoration timeframes and in turn, risk for longer power outages, and underground facilities are susceptible to flooding.

IV. Undergrounding Costs in Perspective

Costs in Context

In California, undergrounding of existing overhead lines is an expensive means of enhancing safety and reliability and is not commonly used by California’s utilities outside of the Rule 20 program which is carried out primarily for scenic enhancement of areas that meet certain public interest criteria. Data from the California’s investor-owned electric utilities has shown that converting overhead distribution infrastructure to underground is up to 10 times more expensive than installing new distribution overhead lines.[1],[2 ] However, factors such as population and building density, labor costs, terrain, and geology may result in a range of costs for undergrounding conversion. Furthermore, distribution undergrounding is 8 times more expensive than insulating (covering) the conductors (wires) to prevent them from igniting when contacting vegetation and other foreign objects.[3 ]

How Much Does it Cost to Underground Existing Overhead Infrastructure?

According to PG&E, SCE and SDG&E, the costs for undergrounding existing overhead distribution infrastructure can range anywhere from $350 per foot to $1150 per foot, or $1.85 million to $6.072 million per mile.

The ranges for the IOUs are shown below:

PG&E: $650-$1,150 per ft ($3.4 M-$6.1M per mile)
SDG&E: $500-$700 per ft ($2.64M-$3.696M per mile)
SCE: $351-$990 per ft ($1.85M-$5.23M per mile)

These costs above (in 2019 US dollars) represent all costs associated with the undergrounding effort: trenching, conduit, substructures, cabling and connections, meter panel modifications, cutover work, and finally removal from service of poles and wires.

Installing new overhead distribution infrastructure is much less expensive. On average, installing new overhead distribution infrastructure costs between $634,000-$760,000 per mile ($120-$144 per foot) according to the electric utilities’ Rule 21 interconnection unit cost guides.

For transmission, the cost for constructing new overhead transmission ranges from $1 million to $11 million per mile and $6 million to $100 million per mile to convert existing overhead transmission to underground for the IOUs.

How Much Would it Cost to Underground all of California’s Overhead Lines?

California has approximately 25,526 miles of transmission lines, and approximately 239,557 miles of distribution lines, of which approximately 147,000 miles of distribution lines are overhead.

Based on an average cost of $3.8 million per circuit mile of conversion for undergrounding distribution infrastructure (across the three utilities), the ratepayers would be required to pay $559 billion to convert all 147,000 miles of overhead distribution lines in the State. Additionally, the cost of undergrounding all 34,000 miles of overhead transmission lines in the State would cost $204 billion assuming an average cost of $6 million per mile.

How Much Does Undergrounding Conversion Cost on Average in the US?

In what is considered as one of the best known studies on undergrounding, the Edison Electric Institute (EEI) provides a nationwide range of undergrounding costs for the distribution and transmission Systems in their 2012 report “Out of Sight, Out of Mind” (by Kenneth L. Hall). According to the EEI, conversion costs range from approximately $600,000 to $13 million (2019 US dollars) for distribution and $1.5 million to $33 million (2019 US dollars) for transmission.

V. Wildfire Risk Mitigation and Electric Grid Fire Hardening

How do the benefits and costs of undergrounding stack up against other means of grid hardening for wildfire mitigation?

While undergrounding can be an effective means of fire hardening the electrical system, it is likely much more expensive and may have a lower cost-to-benefit ratio relative to other methods of fire hardening. In Southern California Edison’s (SCE) current Grid Safety and Resiliency Program Application (A.)18-09-002, SCE compares the costs and benefits between three different wildfire mitigation options for their overhead infrastructure located in the High Fire Threat District:

Re-conductoring and pole replacement with conventional wires and wooden poles[4 ]
Installing or re-conductoring and pole replacement with covered (insulated) conductors and fire-resistant metal poles
Underground conversion of overhead infrastructure

SCE calculated the data in the following table which compares these fire mitigation options:

Mitigation Effectiveness-to-Cost Ratios for Undergrounding Alternatives
Mitigation Option	Relative Mitigation Effectiveness Factor*	Cost per Mile	Mitigation Effectiveness-to-Cost Ratio
Re-conductor - Conventional poles and conductors	0.15	$300,000	0.5
Covered Conductors and Fire-Resistant Metal Poles	0.6	$480,000	1.4
Underground Conversion	1	$3,000,000	0.33
* Undergrounding serves as the baseline for measuring mitigation effectiveness.

According to SCE, underground conversion is roughly 7 times more expensive than covering the conductors and replacing wooden poles with fire resistant poles. Additionally, the latter option has a mitigation benefit-to-cost ratio that is significantly higher than both undergrounding and conventional pole and wire replacement.

VI. Electric Tariff Rule 20 Overhead to Underground Conversion – Overview

Tariff Rule 20 is the vehicle for the implementation of the underground conversion programs. Rule 20 provides three levels, A, B, and C, of progressively diminishing ratepayer funding for the projects, and a sub-program D which is specific to undergrounding in SDG&E’s Fire Threat District. For the Rule 20 Program, Cities identify overhead lines that they wish to convert to underground and in consultation with their investor owned utility (IOU) determine if the conversion project qualifies for any of the Rule 20 A, B, C or D programs. If qualified utility ratepayer funds will cover between 0 and 100% of the costs of the conversion project as detailed below. Approximately 35-40 miles of overhead lines are converted each year to underground through Rule 20 Sections A, B, and C. There have not been any Rule 20D projects to date.

a. Rule 20A

Rule 20A projects are constructed in areas of a community that are used most often by the general public. Rule 20A projects are nominated by the city or county and are paid for by the electric utility ratepayers. Under Rule 20A, the CPUC requires the utility to allocate a certain amount of work credits each year to the cities and unincorporated counties for conversion projects. Because ratepayers contribute the bulk of the costs of Rule 20A programs through utility rates, the projects must be in the public interest by meeting one or more of the following public interest criteria:

Eliminate an unusually heavy concentration of overhead lines;
Involve a street or road with a high volume of public traffic;
Benefit a civic or public recreation area or area of unusual scenic interest;
Be listed as an arterial street or major collector as defined in the Governor’s Office of Planning and Research (OPR) Guidelines.

The determination of “general public interest” under these criteria is made by the local government, after holding public hearings, in consultation with the utility.

In addition, the community must also have accumulated enough Rule 20A work credit allocations to fund a project. Such allocations are given out annually by the utility and communities can accumulate them over several years until they have sufficient funding to complete a project. Communities may borrow forward five years to obtain additional credits. Once enough work credits are available, the community forms a utility underground district by municipal resolution to initiate a project.

The program is voluntary, and the communities identify the overhead conversion projects in consultation with the utilities. Each year Rule 20A results in converting approximately 20 miles of overhead distribution lines to underground.

b. Rule 20B

Projects in larger developments or areas that do not meet any of the above criteria can be performed as Rule 20B projects. At a minimum, the proposed project should involve both sides of a street for a minimum of 600 feet. The applicant (residents, city, developer) is responsible for the installation of the conduit, substructures and boxes, as well as paying for the cost to complete the installation of the underground (electric, telephone and cable) system. Unlike Rule 20A, there are no work credits involved with Rule 20B and the applicant expends funds and receives reimbursement after the project is complete the electric utility credits the applicant in the amount of an equivalent overhead system, plus the taxes, if applicable. This reimbursement typically ranges from 20 to 40 percent of the project cost.

c. Rule 20C

Projects that do not qualify under 20A or 20C are performed under Rule 20C. Rule 20C projects are less than 600 feet in length and typically involve one or more property owners. The applicant(s) bear the cost of the entire undergrounding project and receive a small credit for the salvage cost of the facilities, less depreciation, that do not go underground

d. Rule 20D

Rule 20D is currently only in SDG&E’s service territory and it applies specifically to undergrounding in SDG&E’s high fire threat areas where undergrounding is deemed by SDG&E to be a preferred method for wildfire mitigation in a given area. Rule 20D is structured similar to the Rule 20A program: projects are selected by the local community and are 100 percent ratepayer funded. SDG&E allocates work credits annually to eligible communities. Unlike Rule 20A, Rule 20D only allows communities to utilize work credits towards the conversion of primary distribution to underground. The program does not pay for undergrounding secondary lines or services, or for panel conversions for residences or businesses

VII. Current Undergrounding Proceeding R.17-05-010

On May 19, 2017, the CPUC issued the Order Instituting Rulemaking to Consider

Revisions to Electric Rule 20 and Related Matters (“Rule 20 OIR”). The Rule 20 OIR will review issues related to undergrounding of electric distribution lines and consider the possibility of revising the Rule 20 program in order to enhance the fair, efficient allocation of ratepayer funds to communities for undergrounding overhead electric infrastructure. In November 2018, the CPUC issued a Scoping Memo for the proceeding, which focused the first phase on resolving near-term issues with the Rule 20 program. To date, Staff has hosted three workshops in 2017, 2019, and 2020 and collected extensive data from the utilities on their Rule 20A programs dating back to 2005. Furthermore, the CPUC Staff issued a Staff Proposal in February 2020 which detailed a comprehensive reform proposal for the Rule 20 program. Program reforms must be adopted by a CPUC Decision which is anticipated later in 2020 or early 2021.

For more information, please see the Current Undergrounding Proceeding R.17-05-010 Webpage.

VIII. Electric Tariff Rules 15 and 16 – Electric Distribution Line Extensions and Service Line Extensions

Electric Tariff Rules 15 and 16 specify the electric utilities rules and policies concerning distribution line extensions and service line extensions respectively, and the circumstances under which they are to be constructed underground.

For more information, please see the Electric Tariff Rules 15 and 16 webpage.

IX. Undergrounding Scenic Highways – Public Utilities Code Section 320

The CPUC regulates the undergrounding of utility facilities along State Scenic Highways. Public Utilities Code Section 320, established in 1972, requires both electric and telecommunications utilities to construct all new distribution facilities underground within 1,000 feet from both sides of designated State Scenic Highways. Electric and telecommunications utilities that seek to

For more information, see the following slide deck.

X. Communications Tariff Rule 32 and Rule 40

Tariff Rules 32 (AT&T) and 40 (Verizon) are the governing tariff for converting overhead communications facilities to underground. Similar to the electric utilities, the communications companies will, at their expense, replace their overhead facilities with underground facilities in areas that determined to be in the general public interest.

See AT&T Rule 32 and Verizon Rule 40 for more information.

XI. City of San Diego Municipal Surcharge Undergrounding Program

One additional underground conversion program is the City of San Diego’s Utilities Undergrounding Program (https://www.sandiego.gov/undergrounding/) that the City has administered in partnership with SDG&E since 2002. SDG&E is authorized by the CPUC to collect a 3.53% franchise fee surcharge within the City of San Diego for undergrounding work separate from Rule 20. Through this program, 429 miles of overhead electrical facilities have been undergrounded and 1,238 miles of overhead remain. The City of San Diego completes approximately 15 miles of undergrounding per year through this program. While this program involves a charge to SDG&E ratepayers approved by the CPUC, the program is not subject to CPUC jurisdiction.

XII. History of the CPUC Undergrounding Program

The CPUC instituted the current undergrounding program in 1967. It consists of two parts. The first part, under Tariff Rules 15 and 16, requires new subdivisions (and those that were already undergrounded) to provide underground service for all new connections. The second part of the program, under Tariff Rule 20, governs both when and where a utility may convert overhead lines to underground facilities, and who shall bear the cost of the conversion.

The investigation that ultimately resulted in the establishment of the Rule 20A underground conversion program began on June 22, 1965 when the CPUC commissioned a study in Case Number 8209 to examine what additional rules and rates would be required to encourage undergrounding for aesthetic and economic purposes. The CPUC’s focus at this time on the aesthetic value related to this program is evident from the 1967 decision which established the Electric Tariff Rule 20, D.73078. The following excerpt is from the “Nature of Proceeding” section of D.73078, from Case 8209 released on September 19, 1967:

However useful and often necessary had been the seemingly total preoccupation with the engineering and commercial aspects of our utilities, the time had long passed when we could continue to ignore the need for more emphasis on aesthetic values in those new areas where natural beauty has remained relatively unspoiled or in established areas which have been victimized by man’s handiwork.

Decision (D.) 73078 adopted on September 19, 1967, requires each utility to adopt Rule 20 Tariffs containing the underground conversion rules adopted by the CPUC and report to the CPUC on an annual basis on the developments in the program. Each year, the utilities report back to the CPUC on their undergrounding project completions and separately report its Rule 20 allocation for all the cities and counties in their service territories.

Initially, the CPUC allowed the utilities to propose their own allocation and they would report it back to the CPUC. The CPUC did not specify a fixed allocation formula and gave the utilities discretion to set their own allocations. In the following years, the allocations were set such that they were made proportional to the total number of meters served in a given city and later revised based on the number of overhead meters.

In the early 1990s, the allocation formula was further revised such that the total Rule 20A allocation was divided among individual cities or counties based on a 50/50 allocation formula. Under this formula, the utilities provide a base allocation set at the 1990 allocation and any change in the allocation to be based 50 percent on the ratio of the community’s overhead meters to total system overhead meters, and the other 50 percent based on the community’s total meters to total system meters. The utilities continue to use this allocation formula and have historically set aside approximately two percent of their electric revenue for overhead conversions.

While the revised allocation formula has provided a higher number of work credits to cities with greater proportions of overhead electric facilities, smaller cities have had significant difficulty saving up enough work credits to perform undergrounding work. While larger cities such as Long Beach and San Diego have been able to complete millions of dollars of undergrounding work each year, smaller communities may complete at best a few projects as they often receive modest work credit allocations in the tens or hundreds of thousands of credits equal to $1 each.

In January 2000, the CPUC opened up Rulemaking R.00-01-005 in response to AB 1149 (Aroner, Chapter 844, Statutes of 1999), which directed the CPUC to “conduct a study as to the ways to amend, revise, and improve [the Rule 20 Program].” R.00-01-005 concluded prematurely in 2005 due to the California Energy Crisis and was unable to make significant reforms to the program.

In January 2017, the CPUC’s Policy and Planning Division Staff released a program review on the Rule 20A undergrounding program for the years 2011-2015 which revealed mismanagement of the Rule 20A program and a significant ratepayer liability posed by unused, uncommitted work credits. In May 2017, the CPUC opened Rulemaking R.17-05-010 to consider changes to Electric Tariff Rule 20 in order to enhance the fair, efficient allocation of ratepayer funds to communities for the undergrounding of electric infrastructure. In February 2020, the CPUC Energy Division Staff issued a staff proposal for reforming the Rule 20 program.

Timeline

1967 – Decision 73078 required tariffs for replacement of overhead to underground distribution facilities, annual allocation amounts for overhead conversions, and reports of conversion work completed for the preceding years. Tariff Rule 20 was established for electric underground conversions and Rule 32 for telecommunication underground conversions.

1968 – Utility allocations (annual cost caps in each community) are set proportional to – the total number of electric meters;

1982 – Utility allocations were changed to reflect only the number of overhead meters;

1982 – D.82-12-069 adopted in December 1982, ordered Pacific Gas and Electric (PG&E) to consult with the League of California Cities to determine PG&E’s future Rule 20A allocation budgets.

1990 – Utility allocations were changed to be proportional to both the total number of meters and the number of overhead meters. This is the basis of the allocation formula leading into the 2017 Rulemaking.

1999 – The State Legislature passes AB 1149, which directed the CPUC to conduct a study to reform the Rule 20 program.

2000 – CPUC opened its Rulemaking R.00-01-005 to implement Assembly Bill 1149 regarding undergrounding of electric and telecommunication facilities.

2001 – The CPUC issued Decision (D.) 01-12-009 in Phase I of the OIR directing expanded use of Rule 20 funds and listing issues for Phase 2

2002 – The CPUC issued D.02-11-019 to signal consideration of a new rulemaking to address Phase 2 issues.

2002 – The CPUC in ResolutionE-3788 approved franchise fee surcharges within the City of San Diego for electric conversions not eligible for Rules 20.

2005 – D.05-04-038 closed OIR 00-01-005.

2006 – D.06-12-039 authorized AT&T to impose a special surcharge to customers in the City of San Diego for a limited time duration to recover undergrounding cost as a result of the City of San Diego Underground Utilities Procedural Ordinance.

2014 – D.14-01-002 added Rule 20D to facilitate undergrounding in high fire zone areas of San Diego Gas & Electric Company.

2017 – The CPUC’s Policy and Planning Division issued a program review report on Rule 20A for 2011-2015 and noted various issues with the Rule 20A program.

2017 – The CPUC opened its current Rulemaking R.17-05-010 to consider changes to Electric Tariff Rule 20 in order to enhance the fair, efficient allocation of ratepayer funds to communities for the undergrounding of electric infrastructure.

2019 – The CPUC concluded its audit of PG&E's Rule 20A program in compliance with D.18-03-022 from the PG&E 2017 General Rate Case Application (A.)15-09-001.

XIII. Annual Reporting

Under the current Rule 20 program, the utilities inform communities, the CPUC and the public about the program primarily through their annual allocation letters to the cities and unincorporated county entities (collectively “communities”), the annual allocation and completion reports to the CPUC. The electric utilities send allocation letters to each of the communities in their respective service territories to explain what a given community’s Rule 20A work credit allocation is for the year. Similarly, the electric utilities file an annual allocation report in December to the CPUC detailing this information for all of the cities and counties they serve. The utilities also file Rule 20 completion reports in March of each year which detail high-level summary statistics for program expenditures and unexpended work credits for the year and cumulative, breakdowns by Rule 20A, 20B and 20C projects.

See the following link to the electric utilities’ completion and allocation reports dating back to 1967.

XIV. Frequently Asked Questions

Please see the following link for frequently asked questions on the CPUC Undergrounding Program.

XV. Resources

Prominent Undergrounding Studies

Nationwide

Out of Sight, Out of Mind 2012: An Updated Study on the Undergrounding of Overhead Power Lines by Kenneth L. Hall for the Edison Electric Institute (2012)
A Review of Electric Utility Undergrounding Policies and Practices by Navigant Consulting for the Long Island Power Authority (LIPA) (2005)

US State Regulatory Reports

California

Program Review California Overhead Conversion Program, Rule 20A For Years 2011-2015 by the CPUC (November 2016). This program review was intended to provide the CPUC with an extensive evaluation of how the Rule 20A program was being administered by each utility from 2011 to 2015 and identify any deficiencies or potential liabilities associated with the current program administration and status. This review provided recommendations for how the CPUC should move forward to improve program management and performance.
The CPUC’s Program Regarding the Undergrounding of Electric Distribution Lines by the CPUC (November 1999) (Beginning on pg. 14). This White Paper was submitted by CPUC Staff as part of the Rulemaking 00-01-005 identifies various issues with the Rule 20 Undergrounding at the time for the CPUC to consider, including those enumerated in AB 1149 (Aroner).

Virginia

Placement of Utility Distribution Lines Underground, Report to the Governor and the General Assembly of Virginia by the Virginia State Corporation Commission (2005).

North Carolina

The Feasibility of Placing Electric Distribution Facilities Underground by the North Carolina Public Staff Utilities Commission (2003)

Maine

Docket No. 98-026. State of Maine Public Utilities Commission. Inquiry into the Response by Public Utilities in Maine to the January 1998 Ice Storm (1998).

Maryland

Case No. 8977. In the Matter of the Electric Service Interruptions due to Hurricane/Tropical Storm Isabel and the Thunderstorms of August 26-28, 2003. Before the Public Service Commission of Maryland. (2004)

Florida

Preliminary Analysis of Placing Investor-Owned Electric Utility Transmission and Distribution Facilities Underground in Florida by the Florida Public Service Commission (2005).

Tariffs

XVI. Contact Us

For utility-specific undergrounding inquiries, please contact the relevant utility using the contact information found on the utility's undergrounding website.

Notes:

In the electric utilities’ joint comments on the Undergrounding Proceeding R.17.05-010 scoping memo, the utilities provide the following cost comparisons:

SCE – the cost associated with replacing the existing overhead distribution system using larger bare conductor is approximately $300,000 per circuit mile, while the cost for an underground conversion is approximately $3 million per circuit mile (see SCE’s Grid Safety and Resiliency Application (A.18-09-002), Annotated Testimony p. 53 for more information).
SDG&E’s average cost differential between overhead installations and underground installations is approximately 2.5 to 4 times higher for underground as compared to overhead.
PG&E estimates that for the entire distribution system, undergrounding existing distribution assets costs on average three times more than building new overhead lines and may be up to ten times more depending on many various project-specific factors.
Please see the following link for the utilities’ joint comments: http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M258/K116/258116720.PDF.

- Note that underground conversion and new overhead construction are not construction alternatives in practice, but the cost of new overhead construction is commonly used as a point of comparison to put undergrounding costs in context.

- Conventional wire reconductoring and wood pole replacement is presented as a point of comparison, not as a viable means of fire hardening the distribution grid.