Economics of Owning vs. Renting LED Street Lights in National Grid and NYSEG territories

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1 Clean Energy Communities Program Economics of Owning vs. Renting LED Street Lights in National Grid and NYSEG territories Amanda Mazzoni, CNY RPDB Corner of Auburn and Fulton St., Village of Hannibal before (left) and after (right) LED streetlight conversion 1

2 CNY Regional Planning and Development Board Community Development Economic Development Environmental Management Transportation Planning Energy Management -Clean Energy Communities program 2

3 Outside of New York City, about 74% of street lights in the state are utility-owned. Local governments pay a rental charge for each fixture, plus electricity supply and other volumetric charges. Two possible pathways to LED streetlight conversion: 1. Upgrade to utility LEDs. 2. Purchase streetlight system from the utility, and convert to LEDs NYS legislation and recent PSC rulings have made this easier.

4 Upgrading to Utility-Owned LED Options LED street lights are an option you must request the utility to install. Municipalities must pay stranded costs of lights being replaced. Utility tariffs allow utilities to set pace of conversion. You can choose which of their LED sizes (watts) to install where. W Manlius St., Village of East Syracuse before (left) and after (right) LED streetlight conversion

5 Moving Forward with Municipal Ownership Purchase of street light system is negotiated between the utility and municipality. For NG, will be undepreciated NBV plus transaction and transition costs For NYSEG, will be NBV plus expected future return on Facilities plus 7% for administrative and general expenses. With 2015 amendments to NYS Public Service Law, the purchase process has been streamlined;; timeframes & requirements are set out in PSC-approved tariff rather than left wholly to utility discretion.

6 Purchasing the Street Light System: Basic Steps 1. Municipality requests purchase price estimate;; utility has 90 days to respond (90 business days for NYSEG). 2. Municipality notifies utility within 180 days to proceed with process. 3. Municipality & utility reach agreement on price/operating Agreement and utility must file with PSC within 60 days 4. PSC approves sale (3-6 months.)

7 Which LED Conversion Pathway is Best? Consider: Annual costs. Energy savings. Lighting choices: Wattages, correlated color temperature (CCT), advanced control options. Speed of conversion. Convenience. Crews converting streetlights to LED in the Village of Minoa

8 Utility-Owned Pathway / National Grid Stranded costs to be determined on case-by-case basis. Energy rates lower, facility fees higher than existing lights;; overall savings Bill reduction of approximately 20% after stranded costs;; energy savings of ~75% Payback periods average of 6.0 years Choice of four LED wattages, no choice in color (4000K) Recent updates through Rate Case filing updated depreciation schedule (taken into account), $1.6 million in LED streetlight incentives annually will make LED conversion more cost effective 8

9 Municipal Pathway / National Grid Territory 80-85% annual bill reduction (vs. ~20% under LED tariff rate), after system purchase, LED conversion, and maintenance factored in (not including financing costs). Payback period on investment: 5-10 yrs (not including financing costs, and depending on utility purchase price). 9

10 Utility-Owned Pathway / NYSEG Stranded costs to be determined on case-by-case basis. All rates lower than existing lights. Bill reduction of ~50% on average after stranded costs;; energy savings of 70-75%, depending on choice of replacement wattages. Payback periods about 0.5 year Choice of wattages and color 3000K or 4000K Current PSC filing with tariff updates additional LED wattages and lower LED monthly costs

11 Municipal Ownership Pathway / NYSEG 60-75% annual bill reduction (vs. ~50% under LED tariff rate), after system purchase & LED conversion (not including financing costs). Payback period on investment: 4-11 yrs (not including financing costs, and depending on utility purchase price). Municipal ownership could yield up to 25 percent additional long term cost savings over utility ownership if system purchases prices and other upfront costs are near the low end of the ranges. But at the high end, municipal ownership could end up costing up to 50 percent more on a long term basis than converting to utility-owned LEDs.

12 LED Street Light Conversion in New York A Common Sense Guide for Local Governments in the Mid- Hudson Region Ø Benefits Ø LED Options Ø Ownership Ø Procurement and Financing Ø Comparison of Options