It’s Time To Bury the Network

This morning I awoke to the news that there were two fatalities and two injured as a result of a vehicle colliding with a power line pole in Henderson. Now I don’t know the details of the accident or whether alcohol was involved, but we could all agree that motor vehicle fatalities are often preventable, senseless waste of life. Further, I’d argue a collision into a utility pole is even more of a waste because it is largely avoidable.

Undergrounding (or burying) power lines has been compulsory in new developments since the 1960s, but needless to say a lot of Auckland was built prior to then and it is there that power lines remain ossified in place polluting the landscape. The process of undergrounding lines, in effect, makes the road safer by burying lines previously housed on old concrete utility posts and replacing concrete light stands with more frangible metal lighting units.

I took overhead power lines for granted growing up in West Auckland, but I remember visiting my cousins in the (then) new developments of Albany and Half Moon Bay and noticing how much “cleaner” the suburbs looked because they didn’t have a Spaghettified mess of wires overhead (admittedly there are also other reasons why those parts of town seem nicer). 

Well, now my suburb is finally getting the luxe treatment of undergrounding. It was meant to be completed in May 2021, but it is now September and my street is still pockmarked with craters and the lines are still overhead. 

At the rate Vector is presently undergrounding the Auckland network, it is slated to be completed by 3118 AD. Yes you read that right - over a millennia away - making it one of the world’s longest construction projects ever. Currently, Vector is spending approximately $10 million a year on undergrounding - and from memory, undergrounding costs approximately $500k per KM of road.

Here’s the catch though - Auckland could’ve been living in 3118 by 2010 had Vector’s commenced its grand plan of undergrounding Auckland for a bargain price $400 million in 2000. 

The question then was how would Vector finance this $400 million and what was the economic return? Well, turns out this grand scheme was effectively a backdoor to privatisation and would have to be funded by a 20-25 per cent sell-off of the 100 per cent community-owned enterprise. Vector refused to fund it through borrowing, saying the economic returns would not be worth it.

I’m not going to recalculate Vector’s economics returns had we, as Aucklanders, decided to go through with this ambitious project, nor do I have the time. Thankfully, with the benefit of hindsight, we can do some back-of-the-envelope cost-benefit analysis, and I’m going to relitigate that the social returns would have been worth the investment (assuming Vector was on budget).

The “Back-of-the-Envelope” Methodology

Since 2001, there have been 10,835 identified collisions with a utility pole in Auckland according to the Crash Analysis System. These collisions have directly resulted in 110 individual fatalities (not including the two today), 665 “serious crashes” and 2783 “minor crashes”.

According to the Ministry of Transport, the value of a statistical life (VOSL) is $4.53 million per fatality at June 2019 prices. Further, the average social cost is estimated at $850,000 per reported serious injury and $87,000 per reported minor injury. I’m going to assume a uniform value of statistical life regardless of when the accident occured, and regardless of the victim’s own circumstances - i.e. I’m not calculating years of life lost.

I don’t know the details of each and every crash, but now imagine if these accidents were entirely avoided as the utility poles are all underground: We can work out the social costs avoided by having the undergrounded such poles.

The total VOSL for the 110 fatalities is $498.3m. In order to compare apples with apples, I’ll discount this at 4% back to April 2000, yielding $236.5m. Likewise, the total discounted social cost of serious crashes is approximately $258m, and the total discounted social costs of minor crashes is $115m.

Hence, with the benefit of hindsight, the proposed $400m investment in undergrounding could have saved us a total of $609.4m of social costs. That’s a total net benefit of $209.4m.

I suspect the total net benefit is actually much higher than above, as research shows:

“Undergrounding these networks provides benefits to both utility businesses and households. Underground networks generally provide a more secure and reliable service. They greatly reduce the risks of damage from fires, strong winds and other severe weather events, which can cause extended power outages and risks of electrocution. They lead to more aesthetically pleasing residential areas and savings from lower network energy losses, avoided pole maintenance costs and avoided costs of trimming trees away from power lines.”

So, what next?

Let’s not wait until the year 3118 to reap the benefits of an underground network. Auckland Council should be investing now and stop kicking the can down the road. Auckland is supposedly a world class city, yet we still have entirely preventable fatalities on our road network. Alongside a cohesive roading and transport strategy for Auckland that includes more reliable public transport, safer roads for micromobility and increased walkability of cities, undergrounding will play a key part in building a more resilient and safer road network. One more fatality will be one too many.