The value of an underground electric distribution system was crystal clear in eastern North Dakota last month. On two consecutive nights, winds in excess of 100 mph swept through this part of the state. Huge trees that had been around for many generations were snapped off with the force of these winds. If overhead power lines were in the vicinity, they were sure to be taken to the ground with the trees.
In the region hardest hit by both windstorms, Nodak has a high percentage of underground distribution lines. Overall, our system is about 40% underground, but the percentage is higher around Grand Forks. Most of our system around Grand Forks has been built over the last 20 years, and has been put underground.
For roughly 30 years, Nodak has had a strategy to build all new power lines underground. Furthermore, we have replaced existing overhead lines with underground when such lines were in need of replacement. The definition of a line in need of replacement is of course somewhat subjective. For us, an overhead line is in need of replacement when a large percentage of the poles fail a basic inspection. At this point, rather than spending a lot of money doing major repair on an overhead line, we replace that section with underground cable.
Underground power lines have not come without serious problems over this 30-year period. The worst problem has been the poor performance of underground cable that was manufactured during the 1970s. Most of this cable began to give problems within 10 years of installation, and consequently, needed to be replaced prematurely. This so-called second replacement of this vintage cable has been expensive but necessary to improve service reliability that has been poorer than we would like. It also has caused us to go slower on our overhead to underground conversion than if this cable had been trouble free.
The good news with underground power cable is that a much superior product is being manufactured today than what was available during the 1970s. As you can expect, the cost is also much higher. The cost of one mile of underground construction today is in the neighborhood of $15,000 for single phase and $40,000 for three phase. Since we still have over 5,000 miles of overhead lines in our system, we obviously donâ€™t plan to be 100% underground soon.
The electric utility business, in general, is very capital intensive. When one operates in a region as sparsely populated as North Dakota, the capital cost per consumer becomes even more of an issue. Clearly, our most challenging issue is to maintain a quality distribution system that is affordable with so few customers.
Our strategy is to â€œmilkâ€ the most out of our older overhead system, and then replace it with quality underground cable. We wish we had a 100% underground system, but you, as ratepayers, would not be happy with the cost. We are at least pleased during a windstorm like last month that a large share of our system is now underground.