Item 11- Underground Utilities Study Report v1 Final — original pdf

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UNDERGROUND FEASIBILITY STUDY AUSTIN ENERGY PROJECT NUMBER 169435 REVISION 1 Item 11Disclaimer 1898 & Co.® is a part of Burns & McDonnell that performs or provides business, technology, and consulting services. 1898 & Co. does not provide legal, accounting, or tax advice. The reader is responsible for obtaining independent advice concerning these matters. That advice should be considered by reader, as it may affect the content, opinions, advice, or guidance given by 1898 & Co. Further, 1898 & Co. has no obligation and has made no undertaking to update these materials after the date hereof, notwithstanding that such information may become outdated or inaccurate. These materials serve only as the focus for consideration or discussion; they are incomplete without the accompanying oral commentary or explanation and may not be relied on as a stand-alone document. The information, analysis, and opinions contained in this material are based on publicly available sources, secondary market research, and financial or operational information, or otherwise information provided by or through 1898 & Co. clients whom have represented to 1898 & Co. they have received appropriate permissions to provide to 1898 & Co., and as directed by such clients, that 1898 & Co. is to rely on such client-provided information as current, accurate, and complete. 1898 & Co. has not conducted complete or exhaustive research, or independently verified any such information utilized herein, and makes no representation or warranty, express or implied, that such information is current, accurate, or complete. Projected data and conclusions contained herein are based (unless sourced otherwise) on the information described above and are the opinions of 1898 & Co. which should not be construed as definitive forecasts and are not guaranteed. Current and future conditions may vary greatly from those utilized or assumed by 1898 & Co. 1898 & Co. has no control over weather; cost and availability of labor, material, and equipment; labor productivity; energy or commodity pricing; demand or usage; population demographics; market conditions; changes in technology, and other economic or political factors affecting such estimates, analyses, and recommendations. To the fullest extent permitted by law, 1898 & Co. shall have no liability whatsoever to any reader or any other third party, and any third party hereby waives and releases any rights and claims it may have at any time against 1898 & Co. and any Burns & McDonnell affiliated company, with regard to this material, including but not limited to the accuracy or completeness thereof. Any entity in possession of, or that reads or otherwise utilizes information herein is assumed to have executed or otherwise be responsible and obligated to comply with the contents of any Confidentiality Agreement and shall hold and protect its contents, information, forecasts, and opinions contained herein in confidence and not share with others without prior written authorization. Undergrounding Feasibility Study | Austin Energy Table of Contents CONTENTS 1.0 Executive Summary ................................................................... 1-1 Resolution No. 20230323-084 .................................................................. 1-2 1.1 1.2 Recommendation for Austin Energy ........................................................... 1-2 2.0 Study Approach ........................................................................ 2-1 3.0 System Assessment .................................................................... 3-1 Modeling Framework.............................................................................. 3-1 3.1 3.2 Core Data & Analytics ............................................................................. 3-1 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.2.7 Geographical Information System ............................................................ 3-2 System Sections ................................................................................. 3-3 Outage Management System .................................................................. 3-3 Customer Data ................................................................................... 3-4 Subterranean Conditions ....................................................................... 3-5 Vegetation Density .............................................................................. 3-6 Accessibility ...................................................................................... 3-7 4.0 Environmental Review ................................................................ 4-1 Ecology Criteria .................................................................................... 4-1 4.1 4.1.1 4.1.2 4.1.3 Critical Habitat .................................................................................. 4-1 Karst Zones ....................................................................................... 4-2 Wetlands .......................................................................................... 4-2 4.2 4.3 4.4 Definition of Risk for Ecology Criteria ......................................................... 4-2 Cultural Resources Criteria ...................................................................... 4-2 Results and Discussion ............................................................................ 4-2 5.0 Field Visits and Data Verification ................................................... 5-1 Field Visit Methodology .......................................................................... 5-2 5.1 5.2 Inspection Findings ................................................................................ 5-3 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.2.6 Structural Findings .............................................................................. 5-3 Wildlife Guards .................................................................................. 5-3 Right of Way Maintenance ..................................................................... 5-3 Technical Challenges ........................................................................... 5-3 Other Financial Considerations ............................................................... 5-4 Environmental Impact .......................................................................... 5-4 5.3 Field Visit Summary and Recommendations .................................................. 5-5 6.0 Overhead to Underground Business Case Analysis .............................. 6-1 Financial Assumptions ............................................................................ 6-1 6.1 6.2 6.3 Cost Assumptions .................................................................................. 6-1 Avoided Life-cycle Costs (Benefits) ............................................................ 6-2 TOC Austin Energy Undergrounding Feasibility Study | Austin Energy Table of Contents 6.3.1 6.3.2 6.3.3 Outage Reactive Cost ........................................................................... 6-2 Vegetation Management Costs (Cyclical Program Costs).................................. 6-3 Customer Outage Cost .......................................................................... 6-3 6.4 Business Case Results ............................................................................. 6-4 7.0 Summarized Findings ................................................................. 7-1 Recommendations for Austin Energy .......................................................... 7-2 7.1 FIGURES Figure 1-1: Austin Energy Service Area............................................................. 1-1 Figure 2-1: Underground Feasibility Study Framework .......................................... 2-1 Figure 3-1: Core Data and Analytics Summary .................................................... 3-2 Figure 3-2: Example Asset to Section Relationship ............................................... 3-2 Figure 3-3: Districts Across Austin Energy’s System .............................................. 3-3 Figure 3-4: Customers by Circuit .................................................................... 3-4 Figure 3-5: Subterranean Map ....................................................................... 3-5 Figure 3-6: Subterranean Conditions ............................................................... 3-6 Figure 3-7: Vegetation Density ...................................................................... 3-6 Figure 3-8: Overhead Primary Conductor Street Access ......................................... 3-7 Figure 4-1: Environmental Risk Data Considering Ecology and Cultural Criteria .................................................................................... 4-4 Figure 5-1: Map of Locations (Structures) Observed ............................................. 5-2 Figure 5-2: Existing Underground Utility Parallel to Overhead Distribution ................. 5-4 Figure 6-1: ICE Calculator Monetized Cost of Outage Summary ................................ 6-3 TABLES Table 3-1: Austin Energy’s System Wide Metered Customer Breakdown ..................... 3-4 Table 4-1: Environmental Risk Data ................................................................ 4-3 Table 6-1: Financial Assumptions ................................................................... 6-1 Table 6-2: Non-Equipment Outage Reactive Cost ................................................ 6-3 Table 7-1: Summary of Findings ..................................................................... 7-1 TOC Austin Energy Undergrounding Feasibility Study | Austin Energy Table of Contents LIST OF ABBREVIATIONS Abbreviation Term/Phrase/Name AEP BCA BCCP BCR C&I CIS CMI DBH DOE American Electric Power Benefit Cost Analysis Balcones Canyonlands Conservation Plan Benefit Cost Ratio Commercial & Industrial Customer Information System Customer Minutes Interrupted Diameter at Breast Height Department of Energy ERCOT Electric Reliability Council of Texas ESA GIS HCP HPALM ICE NRHP NWI OH OMS PPE ROW RTHL TxDOT UG USFWS Endangered Species Act Geographical Information System Habitat Conservation Plan Hybrid Potential Archaeological Liability Map Interruption Cost Estimator National Register of Historic Places National Wetlands Inventory Overhead [Distribution Lines] Outage Management System Personal Protective Equipment Right-of-Way Recorded Texas Historic Landmarks Texas Department of Transportation Underground [Distribution Lines] United States Fish and Wildlife Service TOC Austin Energy Undergrounding Feasibility Study | Austin Energy Executive Summary 1.0 Executive Summary As the City of Austin has evolved rapidly over the last few decades, so has the electric system. Austin Energy was founded in 1895 and is a municipally owned electric utility company serving Austin, Texas, and portions of Travis and Williamson counties. As a member of the Electric Reliability Council of Texas (ERCOT), Austin Energy owns, operates, and maintains a complex network of electric distribution and transmission lines, substations, and other equipment to deliver power to its customers. With over 12,000 miles of distribution lines and 550,000+ customers, Austin Energy is the 3rd largest municipally owned power utility in the United States. Figure 1-1 shows the Austin Energy Service Area. In the past decade, the City of Austin has experienced extreme heat, flooding, and ice storms. After the ice storm of February 2023, Austin Energy directed its staff to budget for an undergrounding feasibility study. Further, Austin City Council adopted a resolution in March 2023 (Resolution No. 20230323-084) calling for Austin Energy to pursue a study of converting the existing overhead system to underground. This Undergrounding Feasibility study is intended to provide Austin Energy and the city’s stakeholders with insight into the economic and technical feasibility of moving large sections of the system from overhead to underground, per the resolution. Figure 1-1: Austin Energy Service Area 1-1 Austin Energy Undergrounding Feasibility Study | Austin Energy Executive Summary 1.1 Resolution No. 20230323-084 Austin City Council’s resolution notes that the extreme weather events experienced by the city of Austin “have highlighted the need for resilient infrastructure.” The resolution identifies the need to evaluate undergrounding of electric distribution lines using a total lifecycle approach, considering upfront costs as well as reliability benefits and total cost of ownership to appropriately compare undergrounding to other alternatives when rebuilding the distribution system. This undergrounding feasibility study developed as part of this directive contains a methodology for use in identifying areas of the system where undergrounding may be more technically and economically feasible than other areas. This study does not compare undergrounding projects to the benefits or costs of any alternative options or system configurations. Therefore, as the recommendations in this study suggest, additional study, design, and engineering must be done to evaluate the best solution for Austin Energy for any given segment of the system. Recommendation for Austin Energy 1.2 With all the costs, environmental challenges, and uncertainties in converting the existing overhead system to underground, 1898 & Co. does not recommend undertaking a system-wide effort to convert existing overhead lines to underground at this time. There are areas of the system where, on their own merits, converting overhead to underground has a good business case to be made, but it is possible that other alternatives may be more attractive solely due to the cost required for a single project and the missed benefits by spreading that same cost throughout the system. That said, there are areas on the system where Austin Energy could determine if undergrounding is the right approach and those should be further evaluated on a case-by-case basis. 1-2 Austin Energy Undergrounding Feasibility Study | Austin Energy Study Approach 2.0 Study Approach 1898 & Co. used its experience developing electric system resilience studies across the country to build the process and configure the models used in this study. These models have withstood regulatory scrutiny in multiple jurisdictions, most recently at the Public Utility Commission of Texas with resilience filings for Entergy Texas, AEP Texas, Oncor, and Texas-New Mexico Power. Figure 2-1 below illustrates the Underground Feasibility Study framework, which starts with a data-driven approach. By using detailed asset data, informed by a core set of analytics (e.g., asset condition, environmental risk, subterrain condition, customer density, costs), 1898 & Co. developed an analytically driven method to quantify the risk (i.e., likelihood of outage events and/or equipment failures multiplied by the consequences of those failures) to the overhead system. Assessment of undergrounding projects is done by calculating the amount of benefit (i.e., risk reduced by undergrounding) per dollar of cost to develop a benefit-to-cost ratio (BCR). It should be noted that a BCR greater than 1 for a project does not automatically mean the project is recommended, as there may be less costly alternatives that provide the same or similar benefit. Instead, BCR provides a quantitative metric to which Austin Energy can refer to when making project decisions. Figure 2-1: Underground Feasibility Study Framework 2-1 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment 3.0 System Assessment 1898 & Co. developed a model to assess the overhead system. Utilizing the data and analytics outlined in Section 3.2, the model provided a preliminary evaluation of Austin Energy’s system. This scoring-based assessment aided in the selection of sites for walk-down inspections of the Austin Energy service territory. This data also supported the cost and benefit analysis described in Section 6.0. Modeling Framework 3.1 The items analyzed in the model are listed below and grouped into 3 main categories: likelihood of failure, consequence of failure, and construction risk. The model scored each of the following factors that help inform the feasibility of undergrounding: ■ Likelihood of Failure - The probability that an outage may occur due to equipment failure or environmental causes (animals, lightning, vegetation, etc.).  Age & Condition-Based – 1898 & Co. used asset characteristics from the geographical information system (GIS) and industry deterioration curves to establish a percentage chance of failing in the next 10 years for each asset  Vegetation Density – Assets near higher areas of vegetation density are more prone to failure events from trees and limbs  Historical Outages – Historical outage incidents per year, normalized by mile, provide another layer of risk that has been incorporated into the analysis ■ Consequence of Failure - The customer impact and restoration costs associated with failure.  Street Access – 1898 & Co. used geospatial analytics to determine where poles are in relation to the road for street access. Identifying if the section is in the front lot or rear lot helps evaluate how difficult it is for crews to access each of the assets to perform proactive or reactive work. This affects customer outage duration and repair cost assumptions in the analysis.  Customer Count and Type – Customer type (residential, small commercial/industrial, large commercial/industrial) plays an important role in determining the benefit of avoided outages. 1898 & Co. assigned customer counts and types to individual assets across the system to include in the analysis. ■ Construction Risk – Challenges faced when undergrounding, impacting cost and schedule.  Subterranean – The depth to a restrictive layer (rock)  Population Density – Urban vs Rural Core Data & Analytics 3.2 The feasibility approach and methodology used to analyze overhead to underground conversions are data driven. This section outlines the core datasets and base algorithms employed within the model. The section also outlines the items that were included in the evaluation of the distribution system. Figure 3-1 presents a summary of the core data and analytics leveraged for the system analysis. 3-1 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment Figure 3-1: Core Data and Analytics Summary 3.2.1 Geographical Information System GIS provides the list of circuit assets in Austin Energy’s system and how they are connected to each other. Since the risk-based planning approach is fundamentally a bottom-up asset management methodology, it starts with the asset data, then rolls all the assets up to sections for analysis. The relationship between assets and sections is illustrated in the example geospatial figure below, Figure 3-2. Figure 3-2: Example Asset to Section Relationship 1 The Overhead to Underground model utilizes GIS data from each of the districts shown in Figure 3-3 below and project scoping data to create an asset register for each section, estimating the count and type of each asset in a section that is analyzed for underground conversion. 1 Example graphic, not a section on Austin Energy’s system 3-2 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment Figure 3-3: Districts Across Austin Energy’s System 3.2.2 For this analysis, the entire overhead distribution system was divided into approximately 5,000 sections. System Sections Although there are 5,000 miles of overhead distribution lines, each section does not equal one mile. Instead, sections were determined based on the placement of protection or isolation devices throughout the system. Said another way, each section includes all the infrastructure and customers that would be affected by an outage that occurred due to a fault within the section. Some sections are longer than a mile and others are shorter than a mile. 3.2.3 Outage Management System The outage management system (OMS) includes detailed outage information by cause code for each protection device over the last 11 years, provided by Austin Energy. The data includes outage causes, durations, customers interrupted, customer minutes interrupted2 (CMI), dates, and locations for outage events. The Analysis utilized this information to understand the historical outages for the various distribution laterals and feeders on the system. The OMS data is utilized to identify outages that can be mitigated by investments in OH to UG conversions. 2 Customer Minutes Interrupted = Customers experiencing an outage multiplied by the duration (minutes) of the outage 3-3 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment 3.2.4 Austin Energy provided customer count and type information with database relationships to GIS and OMS. Customer Data This data allowed the model to directly link the number and type of customers impacted to each section analyzed. Types of customers include Residential, Small Commercial and Industrial (C&I), Large C&I, and Critical customers. This customer information is used in concert with the estimated event and failure duration to estimate the CMI for each section analyzed, which is then converted to dollars using the Department of Energy’s (DOE) Interruption Cost Estimator (ICE) Calculator (see Section 6.3.3). This is foundational for the customer-centric benefit-cost assessment approach. Table 3-1 provides an overview of the customer count and types across Austin Energy’s system. Austin Energy serves a relatively high percentage of Large C&I customers compared to peer utilities. The large C&I customers can drive significant investment because of the high customer outage cost associated with an outage. Table 3-1: Austin Energy’s System Wide Metered Customer Breakdown Customer Type Customer Count Percentage Residential Customers Small C&I Customers Large C&I Customers Critical Customers Total 501,559 28,752 25,815 600 556,726 90.1 % 5.2 % 4.6 % 0.1 % 100 % Figure 3-4 illustrates the number and type of downstream customers impacted by a failure on each section, where circuits are ranked by customer count and divided by customer type: Residential, Small C&I, Large C&I, and Critical. As shown in the figure, the distribution of residential and non-residential customers is fairly uniform across the system. This distribution is one element of prioritizing places where undergrounding may provide the most benefit to Austin Energy’s customers. Figure 3-4: Customers by Circuit 3-4 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment 3.2.5 Undergrounding electric utility lines presents several challenges, including the difficulty and expense of Subterranean Conditions installation in poor soil conditions, such as rocky terrain. In Austin, the rocky soil conditions reside largely west of Interstate 35. 1898 & Co.’s analysis of these conditions was conducted using geospatial data from the United States Geological Survey, providing a detailed understanding of the subterranean environment. See Figure 3-5 below. This geospatial analysis identified specific areas with challenging soil conditions, enabling more informed decision-making and strategic planning for the installation of underground utility lines, which are typically buried at depths of 4 feet. Areas with a high risk of rock closer to the surface were modeled with a higher cost of installation. Figure 3-5: Subterranean Map Figure 3-6 below summarizes the subterranean conditions across the districts within Austin Energy’s territory. 3-5 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment Figure 3-6: Subterranean Conditions 3.2.6 The level of vegetation density around overhead infrastructure can have a significant impact on the Vegetation Density expected asset life of the infrastructure, specifically poles. 1898 & Co. utilized satellite tree canopy data to estimate the percentage of vegetation for each section of overhead conductor on the system, as shown in Figure 3-7. For example, vegetation density for some sections analyzed is as high as 55%, and 30% of the sections analyzed have an average vegetation density of at least 20%. Figure 3-7: Vegetation Density 3-6 Austin Energy Undergrounding Feasibility Study | Austin Energy System Assessment 3.2.7 The ability of work crews to access an asset has an impact on the duration of the outage and the cost to Accessibility restore that part of the system. For example, rear-lot infrastructure takes much longer and costs more to repair and restore than front-lot infrastructure. To account for differences in accessibility, the model performed a geospatial analysis of each structure against a data set of roads. Structures within a certain distance of the road were designated as having roadside access, while others were designated as in the deep right-of-way (ROW). Based on this analysis, shown in Figure 3-8, 46% of Austin Energy’s overhead primary conductor is in rear lots, making access more difficult. Figure 3-8: Overhead Primary Conductor Street Access 3-7 Austin Energy Undergrounding Feasibility Study | Austin Energy Environmental Review 4.0 Environmental Review 1898 & Co. leveraged professionals with expertise in various environmental disciplines (terrestrial and aquatic ecology, land use and planning, and cultural resources) to determine which environmental criteria should be included in the analysis. Since the project involves replacing overhead distribution lines with underground distribution lines, the selection of criteria for analysis focused on those criteria that would be most impacted by ground disturbance, trenching, or boring. Each criterion was then given a risk category— high, medium, or neutral. The term “neutral” is preferred in place of “low” to avoid misleading language about the actual risk present at any feature and because a final determination cannot be made in the absence of field surveys. Information for each criterion was obtained from publicly available databases, except previously recorded archeological sites, which are restricted. A GIS model was run to determine the number of times a criterion was intercepted, or encountered, for each section analyzed. The analysis was high level, and the criteria involved an intersection of each feature rather than length across each feature. For distribution lines that were intersected by both high risk and medium risk categories, the features were assigned to the High risk category. Only those features that were not intersected by any of the five ecological nor seven cultural criteria remain neutral. Ecology Criteria 4.1 The ecology specialist determined that endangered and threatened species and wetlands would pose the most risk for the project, based mainly on the fact that additional permitting would be required, potentially leading to delays in the project schedule. Stream crossings (which can be bored under), and floodplains were considered minor criteria and have not been analyzed at this time. The amount of woodland coverage was addressed earlier in this report. Federal- and State-listed endangered and threatened species lists for Travis and Williamson Counties were reviewed. It was determined that critical habitat, karst zones (caves), and wetlands were the most important from an ecological perspective. For seven federally endangered species — golden-cheeked warbler (Setophaga chrysoparia), Bone Cave harvestman (Texella reyesi), Kretschmar Cave mold beetle (Texamaurops reddelli), Reddell harvestman (Texella reddelli), Tooth Cave ground beetle (Radine persephone), Tooth Cave pseudoscorpion (Tartarocreagris texana), and Tooth Cave spider (Neoleptoneta myopica) — mitigation can be achieved through the Balcones Canyonlands Conservation Plan (BCCP) or other Habitat Conservation Plans (HCPs). Other federally listed species in Austin Energy’s service not covered under the BCCP or an HCP must be done through the U.S. Fish and Wildlife Service (USFWS). 4.1.1 USFWS, in Section 3(5)(A) of the Endangered Species Act (ESA), defines critical habitat as: Critical Habitat “(i) the specific areas within the geographical area occupied by the species, at the time that it is listed in accordance with the ESA, on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and (ii) specific areas outside the geographical area occupied by a species at the time it is listed, upon a determination by the Secretary of the Interior that such areas are essential for the conservation of the species” (USFWS, 1973). 4-1 Austin Energy Undergrounding Feasibility Study | Austin Energy Environmental Review Critical habitat is present in Austin Energy’s service area for amphibians such as the Austin blind salamander (Eurycea waterlooensis), Barton Springs salamander (Eurycea sosorum), and Jollyville Plateau Salamander (Eurycea tonkawae); mussels such as Texas fatmucket (Lampsilis bracteata); and a plant, bracted twistflower (Streptanthus bracteatus). Karst Zones 4.1.2 Karst Zone 1 is an area known to contain endangered cave fauna. Karst Zone 2 is an area having a high probability of suitable habitat for endangered or other endemic invertebrate cave fauna. Invertebrate cave fauna in Austin Energy’s service area includes the Bone Cave harvestman, Kretschmar Cave mold beetle, Reddell harvestman, Tooth Cave ground beetle, Tooth Cave pseudoscorpion, and Tooth Cave spider. 4.1.3 Wetlands The USFWS National Wetlands Inventory (NWI) database was used for this criterion. Definition of Risk for Ecology Criteria 4.2 High risk areas for ecological resources were identified as areas that intersect Karst Zone 1, critical habitat, and NWI-mapped wetlands. Because undergrounding involves trenching, construction activities could impact the delicate temperature/moisture balance of the cave habitat. A similar impact would be expected for the salamanders. Trenching in critical habitat for the bracted twist flower could destroy individual plants. Such activities would involve USFWS coordination and mitigation. Boring under streams may avoid impacting critical habitat for the Texas fat mucket. Overhead distribution typically spans wetlands. However, underground distribution would require boring (expensive) or trenching, which would require wetland delineations and a U.S. Army Corps of Engineers permit. The intersection of Karst Zone 2 is considered medium risk, since Karst Zone 2 only includes areas that have a high probability of suitable habitat being present rather than known endangered cave fauna being present. Cultural Resources Criteria 4.3 1898 & Co. cultural resources specialists reviewed the Texas Archeological Sites Atlas (Atlas) to identify previously recorded archeological sites and other previously designated historic-age resources, including National Register of Historic Places (NRHP)-listed properties and districts, National Historic Landmarks, State Antiquities Landmarks, historic-age cemeteries, and Recorded Texas Historic Landmarks (RTHLs), within the proposed study area. Additionally, the Texas Department of Transportation’s (TxDOT’s) Hybrid Potential Archaeological Liability Map (HPALM) was used to assess the potential for previously unrecorded cultural resources within the study area. High risk areas for cultural resources were identified as areas that intersect archeological sites and cemeteries, and areas with a high probability (TxDOT HPALM categories 3, 6, 7, 8, and 9) to encounter archeological sites. Medium risk areas were identified as areas that intersect NRHP-listed districts, parcels associated with NRHP-sites, RTHLs, and areas with a moderate probability (TxDOT HPALM categories 2, 4, and 5) to encounter archeological sites. Results and Discussion 4.4 Table 4-1 presents the results of the analysis. Overall, 24.5% of Austin Energy’s distribution intersects one or more of the seven high risk criteria, while 45.0% intersects one or more of only the five medium risk criteria. The remaining 30.5% do not cross high or medium risk criteria. Figure 4-1 shows the same data in a map format. 4-2 Austin Energy Undergrounding Feasibility Study | Austin Energy Environmental Review ECOLOGY CRITERIA: Table 4-1: Environmental Risk Data ID RISK CRITERION 351,290) PERCENT FEATURE COUNT (of A B C D HIGH HIGH HIGH HIGH Intersects Karst Zone 1 35,530 Intersects Critical Habitat Intersects NWI Wetland Intersects Preserve/Conse rvation 1,551 5,364 9,904 P MEDIUM Intersects Karst Zone 2 15,383 NEUTRAL All remaining wire segments CULTURAL CRITERIA: 10.1 0.4 1.5 2.8 4.4 FEATURE COUNT (of ID RISK CRITERION 351,290) PERCENT E F G Q R S HIGH HIGH HIGH Intersects Archaeological Site Intersects Cemetery 3,780 1,701 1.1 0.5 Intersects High Probability Area 37,849 10.8 MEDIUM Intersects NRHP District 12,960 MEDIUM Intersects Parcel of NRHP Site MEDIUM Intersects Parcel of RTHL 582 588 3.7 0.2 0.2 4-3 Austin Energy Undergrounding Feasibility Study | Austin Energy Environmental Review ID RISK CRITERION 351,290) PERCENT T MEDIUM Intersects Moderate Probability Area 176,829 50.3 NEUTRAL All remaining wire segments FEATURE COUNT (of OVERALL: FEATURE COUNT (of RISK ID ’S EXPLANATION 351,290) PERCENT HIGH ABCDEFG Intersects one or more of the 7 High Risk criteria 85,931 24.5 MEDIUM PQRST Intersects one or more of only the 5 Medium Risk criteria 158,236 45.0 NEUTRAL - Does not intersect any high or medium risk criteria 107,123 30.5 Figure 4-1: Environmental Risk Data Considering Ecology and Cultural Criteria 4-4 Austin Energy Undergrounding Feasibility Study | Austin Energy Field Visits and Data Verification 5.0 Field Visits and Data Verification Austin Energy requested 1898 & Co. conduct field visits. Utilizing the data and analytics outlined in previous sections of this report, the model provided a preliminary evaluation of Austin Energy’s system. The objective of the field visits was to: ■ Provide 1898 & Co. with a first-hand look into the challenges of undergrounding the system ■ Inform the technical feasibility and modeling of undergrounding feasibility ■ Validate that desktop data generally aligns with what is observed in the field The criteria used for selecting areas to visit are: ■ Visit at least 4 sections in each of the City Council Districts ■ Balance sections between backbone (mainline) and laterals ■ Use the results of the analysis to balance visiting high and low risk areas With this selection methodology, the teams observed over 40 sections of the distribution system and recorded observations of over 400 structures across all districts in Austin Energy’s service territory. The team took notes from inspections and observations on the following items: ■ Structure Condition ■ Pole Top Configurations ■ Right-of-Way Maintenance ■ Technical Challenges of Undergrounding 5-1 Austin Energy Undergrounding Feasibility Study | Austin Energy Field Visits and Data Verification Figure 5-1: Map of Locations (Structures) Observed Field Visit Methodology 5.1 The on-site assessment allowed for a firsthand evaluation of the system's infrastructure, including the condition of existing poles, wires, and transformers. Examining the specific characteristics of the overhead lines helps identify potential challenges and opportunities associated with converting overhead lines to underground, such as soil conditions, proximity to underground utilities, and the density of residential and commercial areas. During the field visit, 1898 & Co. employed various inspection techniques to assess the condition of Austin Energy's overhead distribution system. 1898 & Co. gathered detailed information about the existing infrastructure, which was crucial for evaluating the feasibility and potential challenges of converting overhead lines to underground. Observations were based on visual inspection from the ground and are intended to flag items for additional review by Austin Energy and consideration in the feasibility study. Austin Energy has a pole inspection and remediation program that performs aerial and ground inspections that include remediation and, when necessary, replacement as well as additional distribution investment programs. 5-2 Austin Energy Undergrounding Feasibility Study | Austin Energy Field Visits and Data Verification 5.2 Inspection Findings 5.2.1 The overhead conductors appeared in good condition, with no visible signs of excessive wear, corrosion, or Structural Findings mechanical damage. Several joint utility communication cables are attached to poles, which is a function of the approximately 30 telecommunications companies in town and the customer density. Austin Energy is aware that, on average, there are about 5 to 6 communications attachments per pole. 5.2.2 Wildlife Guards The field assessment of Austin Energy’s electric grid revealed a mix of new and legacy builds, with most new structures equipped with wildlife protection measures such as arrestor guards and transformer bushing guards. Austin Energy has a unique challenge with multiple species of birds and wildlife across the territory that are federally protected or represented (e.g., parrots). In addition, invasive or non-native animal species may have nesting habits that pose an operational risk to grid reliability. Austin Energy actively manages wildlife interaction to protect the system and the wildlife. While underground conversion could mitigate some risk of nesting and subsequent operational risk, existing nests may pose challenges to removing poles or equipment as part of the undergrounding process. 5.2.3 Overhead distribution systems often employ a hierarchical structure, with primary feeders installed within Right of Way Maintenance public roadways' ROW for enhanced control and reliability. These primary feeders supply lateral lines within property lines, which serve smaller load demands. Austin Energy overhead distribution systems generally adhere to this standard configuration. Overhead power lines often share ROW with water and wastewater lines. Associated power poles typically carry many communication and fiber optic cables, both main lines and laterals. Due to the capacity to serve multiple customers without significant clearance restrictions, laterals are installed in the backlots of residential areas rather than on ROW. 5.2.4 Technical challenges exist when considering converting overhead lines to underground in Austin. An example Technical Challenges is that excavation and trenching in densely populated areas will be difficult, potentially disrupting traffic and utilities. Austin may have areas where trenchless solutions can be incorporated when undergrounding cables and conduits, but 1898 & Co. understands that Austin Energy will primarily rely on trenching with duct bank installations. Cable routing around existing infrastructure like water, wastewater, gas, and fiber lines could add complexities and introduce permitting issues due to coordination with multiple agencies and stakeholders. Figure 5-2 shows a potential coordination issue of an overhead electric line with attached telecoms. The pole and wire have a large oak tree on one side and existing underground telecom infrastructure on the other. The orange fencing indicates a dig location and the orange paint on the ground marks existing underground telecom. Replacing overhead equipment with underground assets will necessitate acquiring additional easements, strategic cable placement, increased fault detection points, and potential disruptions to customer service during the transition from overhead to underground power delivery. 5-3 Austin Energy Undergrounding Feasibility Study | Austin Energy Field Visits and Data Verification Figure 5-2: Existing Underground Utility Parallel to Overhead Distribution 5.2.5 Other Financial Considerations Financial considerations significantly impact the feasibility of undergrounding. The specialized skills required for undergrounding equipment contribute to higher labor costs compared to other project types. Increased material and labor expenses associated with underground infrastructure may hinder some undergrounding projects. Additionally, permits, fees, potential property damage, and service disruptions can further elevate costs. These factors and their uncertainties collectively influence the overall financial calculation and may render undergrounding impractical in some instances. 5.2.6 The final significant impact to consider is the environmental challenges in the Austin territory. Soil Environmental Impact conditions can present obstacles for trenching and trenchless methods, often necessitating specialized techniques or additional support structures. Groundwater levels and soil permeability influence the stability and performance of underground cables and the risk of water infiltration. Some trees in Austin Energy’s service area are protected. In the Austin area, the Land Development Code Section 25-8 defines “protected” trees as those with a diameter at breast height (DBH 4.5 feet) of 19 inches (60 inches circumference) or more. These trees require a permit for removal. Tree roots also pose challenges during excavation, requiring relocation or protection measures. Moreover, the presence of sensitive ecosystems or protected species necessitates careful planning and mitigation strategies to minimize environmental impacts. Construction and transportation activities can lead to noise and visual pollution, necessitating effective mitigation planning. These environmental considerations can increase the complexity of undergrounding projects, ultimately affecting their feasibility. Please refer to Section 4.0 for additional discussions of environmental risks. 5-4 Austin Energy Undergrounding Feasibility Study | Austin Energy Field Visits and Data Verification Field Visit Summary and Recommendations 5.3 Many circuits will require municipal permits to convert from overhead to underground within City ROW. Austin Energy must also coordinate with Transportation Public Works and other utility owners such as water, wastewater, and telecom to avoid underground conflicts. In addition, soil boring and testing should be considered to ensure the type of soil condition is known. Austin is known to have rocky and hilly terrains; thus, having this data beforehand can reduce the risk of having change orders on underground projects due to unknown discovery of rock. Placing underground transformers will also require additional easement. Many mainline circuits were found in the rear lot and on or near the property line. These lines are also exposed to high tree vegetation. In the initial stage of site development, the placement of circuits in the rear lot tends to be more economical for both overhead and underground. However, as residential development communities age, homeowners begin to place sheds, pools, etc., within the set easement increasing accessibility challenges. Moving circuits to the front lot will make them more accessible for operation and maintenance, reducing outage response times. The main disadvantage will be the increased potential for digs-ins –- a contractor digging into an underground power line when excavating to perform maintenance on other utility infrastructure –- due to other existing utilities being in the right-of-way. It is important to note that relocating lines to the front lot presents several challenges and uncertainties regarding customer impacts, rights-of-way costs, and project scoping, design, and engineering. Austin Energy would also need to determine how to handle customer services, whether customers can bear that cost, and how to address communications attachments. For example, if a home has historically been served by an overhead service and it is converted to underground, the overhead weatherhead on the home will need to be converted to an underground riser. This requires doing work on the home’s electric panel and in doing so anything touched will have to be brought up to current code as part of the conversion. The cost per house can vary widely depending on when it was built and the conditions found. 5-5 Austin Energy Undergrounding Feasibility Study | Austin Energy Overhead to Underground Business Case Analysis 6.0 Overhead to Underground Business Case Analysis At its core, the Business Case Analysis quantifies the benefits of undergrounding in comparison to maintaining the existing infrastructure, employing an asset-centric, bottom-up analytical framework. The models capture three main categories of cost-based consequences that a given investment option can mitigate: reactive costs, cyclical program costs (vegetation management program) and customer outage costs. The customer outage cost uses the DOE ICE calculator, described in detail in Section 6.3.3 below, to assess the economic impacts to customers during power outages. For each section of overhead line studied, the model calculates a life cycle benefit of undergrounding. The benefit of undergrounding a section is the difference between its life-cycle costs if undergrounded, and that of the Status Quo scenario, which is leaving the infrastructure overhead, as is. The following sub-sections describe the approach in further detail. Financial Assumptions 6.1 Table 6-1 lists key financial assumptions used for the BCA analysis. Table 6-1: Financial Assumptions Assumption Name Model Length Model Start Year Discount Rate Inflation Rate Unit Years Year % % Values 50 2025 6.50% 2.50% Cost Assumptions 6.2 The assumed cost to convert overhead lines to underground has a significant impact on the business case evaluation for undergrounding overhead equipment across the Austin Energy system. If Austin Energy moves forward with a strategic undergrounding element of a resilience strategy, 1898 & Co. anticipates Austin Energy will work to increase certainty in the expected costs, which will increase confidence in future decisions regarding undergrounding. The overhead to underground conversion cost estimates for this analysis are intended to provide a reasonable basis for evaluating the feasibility of undergrounding the whole distribution system. Actual costs vary from project to project due to the specific cost risks applicable to each section of the system. The project cost assumptions include the following items: • • Base Cost: Austin Energy’s base cost per 100 ft of converted overhead line for engineering, design, and construction labor and materials if self-performed (i.e., completely performed by Austin Energy as opposed to hiring contractors to support via combination of engineering/design/construction) Easements: Additional costs for acquiring new easements or permits necessary to move or bury equipment 6-1 Austin Energy Undergrounding Feasibility Study | Austin Energy Overhead to Underground Business Case Analysis • Telecommunications Relocation: Due to the density of the Austin Energy system and number of overhead lines in customer rear lots, a considerable number of poles have multiple telecommunications attachments (also observed in the field visits). This complicates undergrounding when Austin Energy owns structures that telecommunications companies are attached to. This cost handles relocation and/or appropriately handling ownership of the structure • Vegetation Management: Vegetation crews will need to trim away tree limbs as necessary prior to removing poles and other overhead equipment • Traffic Control: The urban geography of the system necessitates costs for safety measures and traffic control • Contracted Engineering: Additional costs if engineering will need to be contracted out • Contracted Construction: Additional costs if construction will need to be contracted out • Contingency: Additional uncertainty associated with “known unknown” risks when converting to underground (e.g., other City departments may not have 100% accuracy of underground assets/location, protected animal species found nested in a structure(s), environmental analysis finds additional permitting is required) Using the cost assumptions above, the average price per mile for converting overhead to underground is approximately $10M per overhead mile. It should be noted that these costs are high compared to what 1898 & Co. has observed in the industry. That said, due to its urban density, environmental protection, and subterranean rock realities, among many others mentioned in this study, Austin Energy has one of the more complex undergrounding situations 1898 & Co. has encountered. Avoided Life-cycle Costs (Benefits) 6.3 The models include a range of life-cycle costs that affect the Status Quo scenario (i.e., leaving an overhead section of the system as is) and the Undergrounding scenario for that segment. When undergrounding a segment of the system has a lower life-cycle cost than the Status Quo scenario, the result is avoided future costs, which the model quantifies as a benefit. Further explanation regarding the types of life-cycle costs and assumptions in the models can be found in the following subsections. 6.3.1 Outage Reactive Cost When an outage occurs, there is a cost to restore power. This is the outage reactive cost. In its simplest form, it is the cost of the equipment that needs to be replaced as well as the labor required to restore power. Avoiding these outages is a benefit. Some outages, however, are not caused by equipment failure. That is, other outage drivers include animal contact, vegetation, weather, and interference (e.g., a car hitting a pole or a mylar balloon getting caught in wires). The model estimates two types of costs when it comes to quantifying the value of avoiding non- equipment outages, the reactive cost (e.g., cost of truck rolls), and the customer outage cost informed by the DOE ICE calculator. It is valuable to distinguish the difference in time required for outage restoration because it drives different total labor cost for the restoration. In this manner, avoiding some types of non- equipment outages is more valuable because they save more time than avoiding other types of outages. For the model, two different assumptions are used, a Simple Truck Roll cost for animal, weather, and interference causes, and a Tree/Wind Truck Roll cost used for the vegetation outages, due to additional tree trimming work involved during customer restoration. These cost assumptions are shown in Table 6-2. 6-2 Austin Energy Undergrounding Feasibility Study | Austin Energy Overhead to Underground Business Case Analysis Table 6-2: Non-Equipment Outage Reactive Cost Assumption Simple Truck Roll Tree/Wind Truck Roll Cost per Outage $2,000 $10,000 The analysis includes avoided equipment and non-equipment outage reactive costs. 6.3.2 Overhead infrastructure commonly requires vegetation management to maintain the right-of-way and Vegetation Management Costs (Cyclical Program Costs) minimize tree-related outage events. The model incorporates the costs of performing vegetation management cycles on overhead infrastructure. Vegetation management costs were applied to the Status Quo scenario. There is no vegetation management costs when the existing overhead infrastructure is converted to underground. 6.3.3 One of the main consequences of failure across the distribution system is the outage impact on customers. Customer Outage Cost Using annual probabilities of failure, the model estimates the probability of an asset failing and causing an outage. For each asset class, the expected duration of the outage is estimated based on historical OMS records. To monetize the societal cost of an outage, the benefit-cost evaluation utilizes the ICE Calculator. The ICE Calculator is an electric reliability planning tool developed by Freeman, Sullivan & Co. and Lawrence Berkeley National Laboratory. This tool is designed for electric reliability planners at utilities, government organizations, and other entities that are interested in estimating interruption costs and/or the benefits associated with reliability improvements in the United States. The ICE Calculator was funded by the Office of Electricity Delivery and Energy Reliability at the DOE. Figure 6-1 illustrates the values of the ICE Calculator used in this analysis. Figure 6-1: ICE Calculator Monetized Cost of Outage Summary 6-3 Austin Energy Undergrounding Feasibility Study | Austin Energy Overhead to Underground Business Case Analysis Business Case Results 6.4 The cost to convert all 5,000 sections of overhead infrastructure evaluated in this model to underground is approximately $50 billion, in 2024 dollars. Of this amount, only $1.6 billion, or 120 miles, in projects have benefits that may exceed costs (or a Benefit-Cost ratio exceeding 1). This is equivalent to 33 sections that may be beneficial to convert to underground. 6-4 Austin Energy Undergrounding Feasibility Study | Austin Energy Summarized Findings 7.0 Summarized Findings 1898 & Co.’s business case analysis on the feasibility of undergrounding the Austin Energy distribution system covered a range of elements that impact feasibility. This exercise produced valuable insight into the possible scenarios, options, and challenges for undergrounding Austin Energy’s distribution system, but it did not compare undergrounding to other types of solutions or recommend specific projects. This section provides additional findings and high-level observations 1898 & Co. is noting for Austin Energy and others to consider as it continues to evaluate undergrounding and other distribution investment options. The table below provides a summary of items evaluated in the study, 1898 & Co.’s notes on these items, and associated findings used to develop its recommendations. Table 7-1: Summary of Findings Item Findings Age / Condition The average age of the system is 36 years. This is similar to other systems we have studied. 2019, 2020, and 2022 had relatively low customer outages compared to 2021 and 2023. 2021 Historical Outages and 2023 had longer outage events due to weather and vegetation. These two years have driven the focus on investigation into what it may take to increase system resilience. Data to Field Comparison Field visits and data verification shows there is a high confidence that detailed attribute data from GIS for poles (e.g., install/manufacture date, material, height, class) is accurate when compared to what is observed on the system. On average, Austin Energy’s overhead distribution system has higher vegetation density than Vegetation Density other utilities due to laterals that run through rear lots. This is driven by the customer density of the service area and degree to which tree canopy and roots are protected in and around Austin. Equipment Accessibility Subterranean Conditions 46% of the system is in rear lots, making access tough for repairs. Moving to front lot, however, may pose negative customer impacts and increases feasibility uncertainty when considering easement and existing space underground for these lines. Approximately half of the overhead system has rocky subsoil that will make undergrounding an immediate challenge. Cost and schedule risk will increase dramatically, along with unpredictability. 7-1 Austin Energy Undergrounding Feasibility Study | Austin Energy Summarized Findings Item Findings Approximately 70% of the system is in a medium or high environmental risk zone. While the Environmental Risk actual impacts on project cost or schedule are project-specific, Austin and the surrounding area’s unique geographical and historical features add a considerable level of uncertainty to any large-scale undergrounding program. Permitting & Easements Tight areas around the city produce considerable uncertainty on feasibility and project schedules with the need to obtain permits and place underground equipment within existing easements that are usually crowded. Telecommunications Equipment The relocation of Austin Energy lines from the rear lot to the front lot introduces complexities in maintaining backyard structures with existing telecommunication company attachments. Recommendations for Austin Energy 7.1 With all of the costs, challenges, and uncertainties in converting the existing overhead distribution system to underground, 1898 & Co. does not recommend undertaking a system-wide effort to convert existing overhead lines to underground at this time. There are areas of the system where, on their own merits, converting overhead to underground has a business case to be made, but it is possible that other alternatives may be more attractive solely due to the cost required for a single project and the missed benefits of spreading that same cost throughout the system. That said, there are areas on the system where Austin Energy could determine if undergrounding is the right approach, and those should be evaluated on a case-by-case basis. • Perform ‘Strategic’ Undergrounding – Only a few utilities in the country have planned large scale undergrounding of existing overhead lines. In some cases, utilities are under the threat of severe hurricanes each year and are being selective with expensive sections, such as the backbone, where a large amount of civil work within cities is required (e.g., Tampa Electric Company is only undergrounding their laterals). The cost required for a given underground conversion project in Austin makes it difficult to justify when compared to other alternatives (e.g., overhead hardening, distribution automation) that may provide a level of resilience for a fraction of the cost. 1898 & Co. recommends Austin Energy develop a strategic undergrounding approach where undergrounding makes sense. More feasible areas include places without rocky subsurface, adequate space within existing utility easements for additional infrastructure, dense vegetation, relatively high customer density, wildfire risk areas3, and where minimal new civil infrastructure would be required. 3 Wildfire risk areas were not assessed as part of this study; however, as noted above it may be a consideration in determining whether to underground a section. 7-2 Austin Energy Undergrounding Feasibility Study | Austin Energy Summarized Findings • Evaluate Existing Overhead Programs for Adjustments – Many utilities seeking to cost-effectively reduce the risk of weather and vegetation-caused outages revisit their resilience, reliability, and asset management programs to review their objectives, investment levels, and activities. 1898 & Co. understands that Austin Energy has reliability and grid modernization efforts focused on circuit hardening (sectionalizing, overhead resiliency, wildfire mitigation) and vegetation management. In addition, we are aware of an overhead hardening study that is further evaluating circuit configuration and distribution automation. We recommend Austin Energy leverage the outcomes of the overhead hardening study to determine if any adjustments to existing overhead programs are warranted. In some cases or areas of the system, these adjustments could provide increased protection against outage events without the need for undergrounding. 7-3 Austin Energy 1898andco.com