Hurricanes Helene and Milton remind us of electricity infrastructure’s vulnerability to extreme weather events. However, at least one Florida community, Babcock Ranch, managed to avoid electricity shutoffs from downed power lines. A newspaper story reported that “All the structures at Babcock Ranch are built to withstand more than 150-mile-per-hour hurricane force winds, and its 150-megawatt solar farms and underground transmission system means the community rarely loses electricity… After Hurricane Milton, the town saw some downed trees and traffic lights, but they never lost power.”
In addition to electricity outages, downed lines cause wildfires when live wires come in contact with vegetation. Investigators identified downed power lines as the cause of several devastating fires, including California’s 2017 Tubbs Fire and the 2018 Camp Fire, the 2023 Hawaii’s Maui Fire, and the 2024 Texas’ Smokehouse Creek Fire.
America’s Aging Grid
Decarbonization involves electrifying the transportation sector and heating/cooling systems for commercial buildings and homes. But electrification reduces emissions only if electricity is generated by clean sources and can be moved from generation points (often located in remote areas) to consumption points (often in cities).
A resilient transmission grid is critical for decarbonization. This poses a problem because America’s electricity transmission infrastructure was built 60 to 70 years ago. Drive on highways or through most cities and you will find electricity wires strung on wooden poles and steel structures. Aesthetics aside, this system is vulnerable to extreme weather events that produce strong winds. This is why transmission lines need to be buried underground, as is done in many European countries.
Moreover, low-income households suffer the most from power outages because they cannot afford backup generators or batteries. In addition, with rising housing costs, these households are moving to less sparsely populated areas along the urban-rural interface, which often has more trees and ground cover serving as fuel for fires.
But Who Will Pay?
Burying power lines is costly. Depending on the terrain, California Public Utilities Commission estimates these costs can range from $1.85 million to $6.072 million per mile.
The 2021 Bipartisan Infrastructure Law allocated $10.5 billion to the Grid Resilience and Innovation Partnerships to improve grid infrastructure especially its resilience to extreme weather events. Given the scale of the problem (600,000 miles of transmission lines and 5.5 million miles of local distribution lines), the federal and state governments can only do so much. Because utilities have limited budgets to absorb new costs, consumers will eventually need to pick up the tab.
What might be the calculus at the consumer level? On the one hand, individuals with short-term horizons might be less willing to pay to prevent problems from future hurricanes and wildfires. On the other hand, households recognize that homes are their most valuable asset. Extreme weather events threaten this investment because increased wildfire and hurricane risk are causing insurance companies to withdraw from states such as California and Florida. Without insurance (or with very high insurance rates), getting mortgages becomes challenging, and home values decline.
Utilities have incentives to bury power lines as long as they can secure rate hikes. Recall Pacific Gas and Electric (PG&E) settled for $13.5 billion with victims of various fires and filed for bankruptcy protection in 2019. However, regulators fear energy inflation and are wary of rate hikes. This reluctance was on display when PG&E wanted to hike rates to defray $5.9 billion to bury 2,0o0 miles of power lines. Fearing a political backlash to the sticker shock of higher rates, the California Public Utilities Commission has allowed PG&E to increase rates only in installments (4 hikes in 2024 alone).
California Consumers are Willing to Pay for Undergrounding
Are regulators overthinking consumer opposition? In a recently published paper with Professors Azusa Uji and Jaehyun Song, we surveyed California residents about their willingness to pay $30 per month for burying power lines. We found a relatively high level of willingness (5.12 on a 1-7 scale). This probably suggests that regulators are overestimating consumer opposition to rate hikes. Arguably, households are supportive of rate hikes because they see a direct benefit from them.
We also explored if the support for a $30 per month charge changed when respondents were given additional information about co-benefits of undergrounding power lines. We divided respondents into groups and told them of different co-benefits: (1) supports equity because electricity outages disproportionately hurt low-income households, (2) places the U.S. at par with Western European countries in this area, or (3) supports climate goals.
With support for the monthly $30 charge already high, we were not surprised that additional information about equity co-benefits or making America’s infrastructure at par with Europe did not increase support. What surprised us, however, was that support levels dropped a bit when respondents received the information that undergrounding brings climate co-benefits. This could be due to several factors. For example, because climate change has become a polarizing issue, some respondents might oppose policies with climate implications. Or, some may believe that governments should pay for problems caused by climate change.
The good news is that individuals recognize that extreme weather events are disrupting their lives and investments, and are willing to bear additional costs to protect against such events. While our study was limited to one state and one issue, it raises the possibility that individuals might be willing to pay extra for other types of climate adaptation investments such as river embankments, tree cover, and improved water systems, as long as these investments are framed in terms of local benefits and not labeled as climate policies.
