Cost to Pull Poles, Bury Wires: $40 Million; Beach Pipes Gone, Utility Rate Hike Possible

STONE HARBOR – Long-awaited estimates from Atlantic City Electric (ACE) on the costs of moving last year’s higher voltage transmission lines underground present a real challenge to residents who seek the removal of the large galvanized steel poles, now standard with new wiring. 
The borough could be looking at as much as $40 million to dismantle and remove the poles and bury transmission lines.
According to Borough Administrator Jill Gougher and Chief Financial Officer James Craft, ACE presented the borough with “high-level estimates” that include further design and engineering work along with projections for construction and implementation. 
The utility recently completed an over $70-million project on the island which included the new transmission capacity, a rebuilt substation at 60th Street in Avalon and an upcoming augmentation of its distribution feeder system.
With dual transmission feeds from the mainland and a substation capable of handling the electrical needs of the entire island, the utility is adding feeder distribution lines which will further enhance reliability and resiliency, according to ACE engineers.
Meanwhile a large group of residents in Stone Harbor has argued to have the electric infrastructure buried across the island, a step ACE says is more expensive and not appropriate to pass on to its full rate base.
The struggle between residents and the utility became one of the most intense of political issues during the June primary this year and may contribute to significant changes on borough council after the Nov. 8 election.
Cost estimates to bury the transmission lines and remove the steel poles are daunting. Gougher said the figure could approach $40 million, all of which the borough would have to pay for the utility to redo its transmission infrastructure.
The Peermont substation, which was part of the ACE phase one project, would not be impacted.
Craft said that adding $40 million to the borough’s bond debt would increase debt service by $2.8 million annually and translate to about a six cents increase in the municipal tax rate, currently 23.9 cents per $100 of assessed value. 
Perhaps more significantly, the addition of that much to the debt would probably mean a downgrading of the borough’s AA credit rating to A+, a move that would impact (i.e. increase)  interest rates for any new capital projects.
No one rose to discuss the estimates or Gougher’s report of the conversations with ACE.
One piece of news for residents along 83rd Street was that ACE has agreed to delay the Phase II infrastructure upgrades involving new feeder distribution lines until 2018.
“This will give the residents of 83rd Street more time to pursue their efforts to have the distribution line system on their street moved underground,” Mayor Suzanne Walters said.
ACE announced at an Avalon Borough Council meeting last week that the two new distributing feeder lines, one moving north and one moving south from the 60th Street substation, would be done in 2017 instead of being spread over two years.
In effect, moving the 2018 work in Avalon back into 2017 allowed ACE to grant Stone Harbor’s request for a delay in Phase II in that borough.
Utility Rate Increase
Utility rate increases are on the way for Stone Harbor property owners. Council President Karen Lane responded to a question from the public by explaining that a recent project to remove pipes from the beach cost the borough utility $12 million. “The public wanted it, so it was done,” she said.
 She added that the expense of that project caused much-needed infrastructure work to be postponed.  “Now we are playing catch up,” she said.
The cost of removing pipes from the beach and the needed infrastructure work require a rate increase. 
At an earlier work session, Lane had said that there would probably be a need for two consecutive years of increases with even a third increase a couple of years after those.
Actual figures were temporarily posted on the borough website, but they have since been removed. Gougher said what was posted contained calculation errors and that the new proposed rates when ready would be lower.
Dredging
Council needed to pass a resolution for a change order to a contract related to work associated with the dredging plan. 
According to Lane and Walters, earlier resolutions left off efforts related to Tuxedo Cove. The area was always intended to be fully a part of the dredging effort.
No one seemed clear on how the Cove was left off the contract with Sevenson Environmental, the contractor.
There was word that the borough may be allowed to use sand from the dredge material on two sections of beach provided that testing shows that the final material after dewatering is 90 percent sand.
Areas being considered are near 111th Street or at the Point.
The expected total net, if it can be used, will amount to about 10,000 cubic yards, so the impact will not be substantial in the overall beach fill.
No resolution is in place to the U.S. Department of Fish and Wildlife use of a federal statute to block Hereford Inlet’s use as the borrow area for a Stone Harbor beach replenishment project this fall. 
The statute, long in place, has never been invoked on earlier beach projects that borrowed sand from Hereford Inlet.
Failure to resolve that dispute could mean a delay in the Army Corps of Engineers’ beach replenishment project on Seven Mile Island.
The projects for Stone Harbor and Avalon are linked.  Even though Avalon’s borrow area is Townsend Inlet, neither beach replenishment effort will go forward this fall if both do not go forward.
To contact Vince Conti, email vconti@cmcherald.com.