CC - Item 6C - Southern california Edison Street Lighting Acquisition and Conversion ProgramROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: BILL R. MANIS, CITY MANAGER "C'7 v_ r \
DATE: NOVEMBER 8, 2016
SUBJECT: SOUTHERN CALIFORNIA EDISON (SCE) STREET LIGHT
ACQUISITION AND CONVERSION PROGRAM
SUMMARY
During the fourth quarter of 2015, the City Council directed staff to work with Southern
California Edison (SCE) to prepare a valuation report for the streetlights within the City. The
purpose of the report was to consider the potential acquisition and /or conversion of the
streetlights by the City. The SCE report was completed on October 13, 2015, and is attached for
the City Council's review.
When the SCE representatives presented the valuation report to staff, they provided information
on a potential upcoming program that would allow cities to request SCE to retrofit or convert
existing streetlights with Light Emitting Diode (LED) fixtures and bulbs. This program was
approved by the State of California in June 2016. As an alternative to purchasing the streetlights,
the City could ask SCE to perform these retrofits at no initial capital cost and a net annual
savings. Staff also worked with Tanko Lighting on additional options. Two presentations were
made before the City Council on September 13 & 27 of this year, one from SCE and the other
from Tanko Lighting. Both presentations were of a similar nature, with slightly different
objectives.
The majority of the streetlights within the City are owned and maintained by SCE. SCE charges
a rate for the electricity to these streetlights that is termed an LS -1 rate. An LS -1 rate, includes
the cost for electricity and all other costs associated with the streetlight, such as the streetlight
pole /fixture maintenance and recuperation of the original system installation cost. A small
number of streetlights are owned and maintained by the City. SCE charges a rate for the
electricity to these streetlights that is termed an LS -2 rate. This rate, includes only the cost for
electricity and is much lower than the LS -1 rate.
Currently, the City four has options, which are summarized below:
rrEM NUMBER: �(,�
City Council Meeting
November 8, 2016
Page 2 of 5
STATUS QUO
If the City stays with the existing SCE lights and nothing is modified, the following are the
associated costs:
Annual Facilities Charge (Flat Rate)
$
236,065
Annual Energy Charges (Average)
$
83,898
IbtalAnnualCost
$
319,963
CITY OF ROSEMEAD ACQUISITION AND LED CONVERSION
If the City chooses to acquire the existing streetlights from SCE and converts to LED bulbs, the
following are t
ie estrmatea associates costs ana savml
Utilizing City Fund
Total Fund Balance] $1,246,598
Annual Costs
Annual Facilities Charge (Flat Rate) $
65,158
Annual Maintenance Charge (Estimated) $
16,000
Energy Charges (Average) $
25,000
Total Annual Costs $
106,158
Annual Savings
Currrent Annual Cost $
319,963
Total Annual Cost $
(106,158)
Total Annual Savings; $
213,805
Financing Acquisition and Converstion
Acquisition Cost _ $
918,798
Coverstion Cost $
500,000
Rebate (Estimate) $
(172,200)
Total Amount Financed! $1,246,598
Acquisition Cost $ 918,798
Coverstion Cost $ 500,000
Rebate (Estimate) $ (172,200)
Annual Costs
Estimated Annual Financing Costs (3% for 20 years) $ 84,000
Annual Facilities Charge (Flat Rate) $ 65,158
Annual Maintenance Charge (Estimated) $ 16,000
Energy Charges (Average) $ 25,000
Total Annual Costs; $ 190,158
Annual Savings
urrrent Annual Cost $ 319,963
otal Annual Cost $ (190,158)
Total Annual Savings,i $ 129,805
City Council Meeting
November 8, 2016
Paee 3 of 5
SCE CONVERSION PROGRAM TO LED BULBS (first- come- first- served basis)
If the City chooses to convert the existing streetlights from High Pressure Sodium to LED bulbs,
the following at "
TANKO LIGHTING ACQUISITION AND LED CONVERSION
If the City chooses to contract with Tanko Lighting and acquires the streetlights from SCE and
converts to LEI
I mmI)s, me tollowmg are the esttmatect assoctatea costs and saver
Utilizing City Fund Balance
Annual Costs
Acquisition Cost
Annual Facilities Charge (Flat Rate)
$223,962
Annual Energy Charges (Average)
$25,000
Total Annual Costs';
$2 48,962
Annual Savings
(172,200)
Currrent Annual Cost $
319,963
Total Annual Cost $
(248,962)
Total Annual Savings; $
71,001
TANKO LIGHTING ACQUISITION AND LED CONVERSION
If the City chooses to contract with Tanko Lighting and acquires the streetlights from SCE and
converts to LEI
I mmI)s, me tollowmg are the esttmatect assoctatea costs and saver
Utilizing City Fund Balance
Acquisition Cost
$
918,798
Coversfion Cost
$
544,989
Rebate (Estimate)
$
(172,200)
Total Fund Balance,!
$1,291,587
Annual Costs
Annual Facilities Charge (Flat Rate)
$
65,158
Annual Maintenance Charge (Estimated)
; $
15,713
Energy Charges (Average)
$
22,082
Total Annual Costs;
$
102,953
Annual Savings
CurrrentAnnualCost
$
319,963
Total Annual Cost
$
(102,953)
Total Annual Savings,
$
217,010
City Council Meeting
November 8, 2016
Page 4 of 5
Financing Acquisition and Converstion
Acquisition Cost $ 918,798
CoverstionCost $ 544,989
Rebate (Estimate) $ (172,200;
Total Amount Financed,, $1,291,587
Annual Costs
Estimated Annual Financing Costs (3 %o for 20 years) $ 84,000
Annual Facilities Charge (Flat Rate) $ 65,158
Annual Maintenance Charge (Estimated) $ 15,713
Energy Charges (Average) $ 22,082
Total Annual Costs'; $ 186,953
Annual Savings
rent Annual Cost $ 319,963
[AnnualCost $ (186,953
Total Annua Savings, $ 133,010
As indicated earlier, during the fourth quarter of 2015, the City notified SCE to begin the
valuation study. The study /report was completed on October 13, 2015. This process included a
$10,000 upfront fee by SCE.
Potential Purchase of Streetlights
The valuation report was submitted to staff in 2015 (Attachment). Some of the key points of the
study are as follows:
• SCE owns 2,511 streetlights in the City.
• SCE can sell 1,459 streetlights to the City. SCE is not willing to sell lights mounted on
distribution poles at this time due to safety issues.
• The valuation of the streetlights that can be sold is $918,798, or $630 per streetlight
The valuation per streetlight is relatively low compared to other jurisdictions. Some
jurisdictions have to pay closer to $2,000 per streetlight. Most communities in the SCE
system are seeing average price per pole cost in the range of $600 - $800.
• The City has until January 31, 2017 to notify SCE of the intention to enter into an
agreement to purchase the lights from SCE.
• Tanko Lighting is a vendor who will assist in securing financing for the acquisition cost
of the streetlights and manage the acquisition, conversion, operation and maintenance of
the streetlights on the City's behalf, for a fee.
• Other cities who have evaluated the purchasing of streetlights have projections of 10 -15
years to reach a point where they have a net savings from owning their streetlights. Tanko
Lighting, which has assisted cities in the process of acquiring streetlights, has estimated a
payback period of approximately 5.55 years for Rosemead. At this time the City would
save approximately $131,918 in lighting costs annually.
City Council Meeting
November 8, 2016
Page 5 of 5
STAFF RECOMMENDATION
That the City Council provide direction on the following potential options:
1. Acquisition of the streetlights from SEC and conversion to LED bulbs with City staff
managing the process and operations;
2. Continue status quo;
3. Submit request to SCE to participate in the LED Conversion Program; and
4. Acquisition of the streetlights from SCE and utilize Tanko Lighting as a third party
contractor for LED bulb conversion.
FISCAL IMPACT
The cost to acquire the streetlights from SCE would be $918,798, or $630 per streetlight. The
cost for conversion to LED would be approximately $550,000 (minus rebate of $172,200) _
$1,296,598. In order to have no capital costs up front, the cost can be financed on a long term
basis as follows:
Capital
Interest
Finance
Estimated
Costs
Rate
Term
Annual
(Rounded)
Payment
$1,296,598
3%
20 years
$84,000
STRATEGIC PLAN IMPACT - None
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Prepared by: Submitted by: Submitted by:
Curtis P. Cannon C Rafael . Fajardo, PE Kathy G cia, PE
Special Projects Manager GG City Engineer Public Works Director
Attachment: Valuation Report
Attachment
Valuation Report
October 13, 2015
�t ,, _ • �� pekuievy, �fthe�o�ta�I�S� :'v3t'ee #11�� #Systerr#_'. `_ .s_F_' ��:
Type Qty
Type
Overhead
Underground
Non -Wood 1,407
56 °%
212
1,195
Wood 1,104
44%
1,103
1
2,511
100%
1,315
1,196
400
16%
52%
48%
1950 -1959
429
17 °%
1960 -1969
351
14%
1970 -1979
266
11%
1980 -1989
443
18
1990 -1999
582
23%
2000 -2009
400
16%
2010 - present
40
2%
Ualuatro Dftlat,S_ellab
a IS StreetijghtSys�eit
*—
Qty
RCNLD
Marbelite(Concrete)
1,235
$609,581
Steel
171
$33,389
>_6
* Wood
53
$6 3,462
' / / n 73
Additional Asset Components
Subtotal
Tax / Other Adjustment
W F ��� ,•�'(,°� �. �i. Tax Neutral Price
Transition Cost
/r Valuation Price
v NrxL #0 i 0
omm .f
$26,752 iN ® (N j
$821,354
$53,674
$875,026
$43,770
$918,798
? � 30 Pecs
*Note: 5% of Wood Poles are sellable (streetlights attached to distribution poles are excluded)
Ad Hoc Replacements represent poles replaced without developer's contribution
Additional asset components relevant to the sale (i.e. riser poles, insulators, down guy, etc.)
Tax / Other Adjustment is needed to recover any tax implication
Transition Cost is the severance cost to transfer ownership of the asset
SCE CONFIDENTIAL 1