SR - AGR-6342 - CITY WIDE LIGHT EMITTING DIODES STREETLIGHT RETROFITAGENDA ITEM
May 10, 2016
TO: Honorable Mayor and
Members of the City Council
THRU: Rick Otto
City Manager
FROM: Joe DeFrancesco,
Public Works D' ector
Re view ed/Verifi
y:
City Manager
Finance Direc r
To Be Presented By:
Joe DeFrancesco
X Cons Calendar
City Mgr Rpts
Council Reports
_ Legal Affairs
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Plan/Environ
1. SUBJECT
Apply to Southern California Edison (SCE) for the reservation of funds to retrofit approximately
2,503 City streetlights to light emitting diode (LED) fixtures and to complete the On -Bill
Financing (OBF) application once it is received from SCE.
2. SUMMARY
The City has enrolled with The Energy Network to take advantage of the no -cost services
provided by their program. One potential project staff is working with The Energy Network is
the retrofit of approximately 2,503 City streetlights and intersection lights to energy efficient and
cost effective LED fixtures. By implementing this project, the City will realize an annual
savings in reduced electrical costs to power the LED fixtures and a decrease in streetlight
maintenance costs.
3. RECOMMENDED ACTION
Authorize the City Manager to execute the SCE incentive application, OBF application, OBF
agreement and other documents related to the application process with SCE for the City -Wide
LED Streetlight Retrofit.
4. FISCAL IMPACT
No funding is requested at this time.
5. STRATEGIC PLAN GOAL(S)
2d. Be fiscally healthy community — Effectively manage and develop City assets.
3e. Enhance and promote quality of life in the community — Develop and strengthen
collaborative partnerships to enhance and promote quality of life programs, projects and services.
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4b. Provide outstanding public service — Provide facilities and services to meet customer
expectations.
6. GENERAL PLAN IMPLEMENTATION
Natural Resources Element Goal 2.0 Protect air, water and energy resources from pollution and
overuse.
Policy 2.9 — Promote City operations as a model for energy efficiency and green building.
Natural Resources Element Goal 3.0 Prepare for and adapt to the effects of climate change and
promote practices that decrease the City's contribution to climate change.
7. DISCUSSION and BACKGROUND
The City has enrolled with The Energy Network to take advantage of the no -cost services
provided by their program. The Energy Network evaluates projects for energy efficiency and
assists jurisdictions with the completion of these projects. One potential project is the retrofit of
approximately 2,503 City streetlights and intersection lights to energy efficient and cost effective
LED fixtures. By implementing this project, the City will realize an annual savings in reduced
electrical costs to power the LED fixtures and a decrease in streetlight maintenance costs.
The Energy Network's turnkey delivery approach will allow the City to retain a qualified,
competitively selected contractor for this project using procedures expressly authorized under
Government Code Section 4217, et seq. Instead of using the traditional design bid -build delivery
method, staff determined that it would be more efficient and economical for the City to utilize its
National Joint Powers Alliance (NJPA) membership to take advantage of the national
cooperative contract purchasing program to complete this project. Since all NJPA contracts are
competitively bid nationally and vendors are pre - qualified by knowledgeable committees with
expertise in those trades, the City benefits from the reduced pricing made possible by large
volume national contracts. Once staff has reviewed the vendors and their proposed costs, the
final award of the contract will be brought back to the City Council.
In order to utilize this program, the City must complete a SCE incentive application, OBF
application, and, once it is approved by SCE, execute the OBF agreement. Once these steps have
been completed, the City will then select a vendor through the process described above.
The City's street lighting network consists of a mix of City street lights and Southern California
Edison (SCE) street lights. There are a total of 8,812 street lights in the City with 3,113 City -
owned and 5699 SCE - owned. Energy usage and costs from existing street light operations are on
the order of 4,700,000 kWh per year and $975,000 per year.
The City owns and maintains over 3,113 streetlights and intersection lights. The Energy Network
is recommending an estimated 2,503 qualifying lights for retrofit. No decorative streetlights have
been identified for retrofit as part of this project. The conversion to LED fixtures has the
potential to save the City over $100,000 annually in energy costs. Additionally, the City will
realize maintenance cost reduction over the 15 -year lifespan of LED fixtures, which is estimated
at $20,000 each year. The total annual savings is estimated to amount to over $120,000.
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The conversion of the existing City streetlights to LED fixtures will provide a multitude of
benefits to the City, including:
• Reducing the cost to maintain streetlights;
• Capturing $359,494 in utility incentives;
• Reducing greenhouse emissions equal to removing 2,535 vehicles off the road; and
• Decreasing the effect of future utility costs increases on the General Fund.
The total project cost for the conversion of City streetlights to LED fixtures is estimated at
$1,068,449 and will initially require an allocation from the General Fund. SCE will provide an
estimated $359,494 in incentives as reimbursement to the City once the installation is completed.
This is approximately 33.6 percent of the total cost.
The remaining 66.4 percent of the costs, estimated to be $707,315, will be funded through On-
Bill Financing (OBF). SCE's OBF program allows public agencies to finance energy - efficient
projects with zero - interest and pay back the loan as part of their utility bill. Other local agencies
such as Huntington Beach and Costa Mesa have successfully implemented energy saving
projects utilizing OBF. With OBF, the City will receive a reimbursement check from SCE
estimated at $707,315 upon project completion. These funds will then be repaid on the City's
streetlight utility bill over a period of several years.
Staff will return to Council to request funding for the project once actual project costs have been
obtained and a vendor has been selected for this project.
Currently, the City is a participating member in the North Orange County Cities (NOCC) Energy
Partnership with SCE and So. Cal. Gas (Resolution No. 10878). As a member the City receives
additional rebates/ incentives on energy efficiency projects above and beyond the standard
rebates/ incentives available to the general public. The City will leverage these rebates/
incentives to maximize the savings to the City. The rebates/ incentive program has a tier system.
The first phase of the street light project along with a few other measures could move the City up
the tier structure, ultimately resulting in additional savings for future energy efficiency projects.
Engineering staff is also working with SCE in analyzing the potential purchase of SCE -owned
street lights. SCE has provided the City a valuation for 4,359 SCE owned street lights that could
be purchased by the City. The total valuation price is $1,458,876. Staff is in the process of
performing the necessary financial analysis and will come back in the future with a
presentation/recommendation on whether to acquire those SCE owned street lights. The potential
purchase would give the City more control of energy costs and produce more energy savings by
converting those lights to LED.
8. ATTACHMENTS
• SCE On -Bill Financing Application
• SCE Incentive Application
JD;ta;lyN: \Public Works\ADMIN\LYoung \Council Items\COUNCILWay- 2016 \5- 1 0\Agenda - LS -2 LS -3 Street Light Conversion Project -
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