City of San Diego

Undergrounding increased from $2.35 million per mile to $6.09 million per mile.

The undergrounding of unsightly wires around San Diego has resumed but not only has the number of projects been slashed in half, but costs have increased by over 100 percent.

"This cost is insane, this increase in one year," said Councilmember Marni von Wilpert at a meeting last week of the environmental committee, where an update was given on the progress.

The city has been burying overhead utility lines since 1970 when a franchise agreement with SDG&E was implemented but has only finished 400 miles. There are about 1,000 miles left to go. The completion of nearly all residential areas is expected within the next 54 years.

"I'm going to be in the ground dead before any wires," said La Jolla resident Phil Ginsberg, whose neighborhood has seen one delay after another.

Years ago the city's goal for burying lines was 15 miles a year but in the last few years, it's been based on fund balance, said Chelsea Klaseus, deputy director of the city transportation department.

In 2021, as the franchise agreement neared expiration, SDG&E paused work on new projects, which caused the fund balance to grow, but also pushed everything back, Klaseus said. A new franchise agreement was signed that year, followed in April 2022 by an undergrounding memorandum of understanding (MOU).

Now the city is re-starting projects under the new agreement terms.

Eleven projects have resumed work. Crown Point 2 BB in Pacific Beach is fully in construction. But last year they had 13 fiscal projects and moving forward to 2024, it's down to six, then they will start only an average of one project per fiscal year for the next three fiscal years.

"You can already see the scaling back based on the new cost estimates, now that we are in that new MOU," Klaseus said.

According to a city report, the Underground Surcharge Fund beginning balance for FY 2023 was approximately $221.6 million.

The report notes that the new MOU, which has yielded information about SDG&E’s costs for design, construction and overhead, "shows significant inflation since the project cost estimates were developed under the prior MOU," shrinking the number of projects that can be funded annually.

The average cost per mile of utilities undergrounding increased from $2.35 million per mile to $6.09 million per mile. The average cost per project increased from $9 million to $23.2 million.

Those estimates reflect the prices the utility expects to get through competitive bidding of design and construction contracts, plus its estimated internal labor and overhead charges.

Along with the work slowdown, new climate and equity goals have to be figured in. New factors added to the franchise agreement are high fire risk in communities of concern. With its 2023 fiscal project list, the city is figuring out criteria for incorporating both as priorities for future projects.

"Historically, we know there have been a lot of projects that went through the allocation process that have just been sitting there for years," Klaseus said. "There's no funding associated or timelines of allocation. That means high fire risk and communities of concern were not part of the process."

The most equitable way forward, she said, is to re-prioritize the remaining unallocated projects, as well as the earlier "rule 20A projects" that were not grandfathered into new state rulemaking.

Locals expressed frustration with the exorbitant cost of work some said was just "digging trenches."