Cost estimates for Substation 3 soar by 141%

Rising costs continue to bedevil city plans for replacing and upgrading infrastructure. The latest example is related to efforts to upgrade Boulder City’s electric utility service as the cost estimates of Substation 3 soared by 141% and the scheduled completion date was pushed out by three full years.

“Substations are an integral part of the city’s electrical distribution infrastructure and take higher transmission voltage and transform it to a lower distribution voltage so it can be distributed and used throughout the community. Substations consist of transformers, breakers, feeders, structural components, a grounding system, a control house, and perimeter security access and controls,” explained Utilities Director Joe Stubitz.

“The city’s preliminary engineering cost estimate of $4.5 million for this project was derived from recent feeder upgrade projects which contain only one component of what makes up a substation. Due to this fact, the initial engineering estimates had a low degree of certainty until accurate pricing data could be gathered from the additional design and components needed. The first set of pricing data came back from the substation transformers which came in at over 100% of initial estimates, totaling over 80% of the initial estimated total project costs. With accurate pricing data and recent substation design and construction completion, the Colorado River Commission has developed new estimated project costs to complete the project. Lead times for the manufacturing of electrical equipment has also increased necessitating the scheduled completion date to be extended. The new estimated project costs for the complete rebuild of substation 3 is now $10,850,000 with a completion date of March 1, 2028. The rebuild of this substation is an integral part of the city’s distribution voltage conversion from 4 kV to 12 1/2 kV and will take all the loads of the existing substation, along with the existing loads at substation 2, which is at the intersection of Adams and Avenue B. The total costs to complete this project are within the existing utility rate study and do not currently impact utility rates.”

There is a lot to unpack in Stubitz’s explanation.

Under questioning from Councilwoman Cokie Booth, Stubitz explained that the initial cost estimate came from comparison with a feeder extension project. Crucially, a feeder extension does not include transformers, which are the most expensive part of a substation. (Transmission lines such as the ones that emanate from Hoover Dam carry electricity at very high voltages —generally higher than 69,000 volts or 69 kilo Volts. Distribution lines carry much lower voltage to end users after the voltage has been stepped down via a series of transformers.)

Stubitz said that when costs for the project were put together, it was with the assumption that each transformer would cost about $1 million. But when actual pricing came back, the transformers were closer to $2 million each. Substation 3 will, once completed, utilize two transformers.

“We go through the government agency so that we get a better price than if we just went out for an RFP,” Stubitz said in response to a question from Booth about the process. “We are in this interlocal agreement with the Colorado River Commission and they go out and do an RFP (request for proposal). So we have contracted with the state of Nevada and the Colorado River Commission since this is the work that they do frequently. They’re doing this work for other agencies so we utilize their expertise and their efforts to go out and solicit the vendors and the design. So they went out did an RFP through the Colorado River Commission. We did get a low bid back from that and I believe the total costs were around $3.8 million for the two substation transformers.”

Most questioning by council fell under the heading of (to quote Councilman Steve Walton in a meeting last year) “not asking a question you don’t already know the answer to.” They gave council members and Stubitz a chance to explain on the public record the importance of the substation upgrades and potential benefit to Boulder City residents and businesses.

The bottom line is capacity and reliability. Tripling the voltage of city distribution lines from 4 to 12 kV means the utility can push out more power to meet increasing demand and should, at least theoretically, reduce the number of unplanned electrical outages.

And city ratepayers are not out of the woods quite yet in terms of costs and potential effects on utility rates. Keep in mind that in a council meeting late last year, the council approved a one-word change to city code, changing the word “adjusted” to “increased.” The result of that change is that, at least unless that wording is changed at a later date, electricity rates in Boulder City can go up when prices the utility pays for power go up, but they cannot go down if costs for power drop. This was sold as a way to ensure that the utility has funds to pay for these planned upgrades.

Also, while Stubitz said that the increased costs of this upgrade would not impact current rates, he also referred to the current rate study used to set those rates. But he also noted that a new rate study would need to be done starting with the 2027 fiscal year, which begins on July 1, 2026. No guarantees have been made that rates will not increase at that time.

Still, even if rates do increase, as was pointed out by multiple members of the council, Boulder City still pays less for electricity than any other municipality in the state.

Originally scheduled for electrification in June of 2025, the completion date for Substation 3 has been pushed out to June of 2028 as lead times for procuring parts and equipment continue to increase along with prices.