California Street Light Association STREET LIGHTS OWN OR RENT Public Works Officers Institute League of California Cities/County Engineers Association of California Jean Bonander, Executive Director, CALSLA Wednesday, March 25, 2015 CALSLA The California City County Street Light Association (CALSLA) has advocated on behalf of local government street light customers for affordable electric rates and for a high level of service from electric utilities for over 30 years. CALSLA encourages ownership of street light and traffic facilities by cities/counties as a means to control costs, to improve service levels and to better manage future technologies and opportunities to use capital assets. 2
Overview City/County Ownership Rates by Investor Owned Utility (IOU) IOU Perspectives about Ownership Why Own? How to Acquire Street Light Facilities Understand the Value of Street Lights Questions/Comments 3 City/County Street Light Ownership Rates by Investor Owned Utility (IOU) IOU City/Co Percentage Owned Owned Ownership SCE 653,209 115,460 85%/15% PG&E 175,585 554,000 24%/76% SDG&E 27,981 119,469 19%/81% 4
IOU Perspectives about Ownership 1 Southern California Edison (SCE) Changed policy 3 years ago and established an Acquisition Process $10K to inventory and value street light assets SCE sets a price City/County agrees to pay price, SCE submits CPUC application to transfer assets To date, 1 City has completed process and is awaiting CPUC approval 28 to 34 other cities have paid $10K and are awaiting inventory & valuation Policy may be changing CALSLA and others are attempting to clarify 5 IOU Perspectives about Ownership 2 Pacific Gas & Electric (PG&E) Negotiates to sell assets when cities/counties make the request, per the following policy statement from PG&E s Section 851 CPUC filings: PG&E wishes to sell the Streetlight System because it has received a fair offer from Cities... Cities could get ownership of the Streetlight Systems through eminent domain. If Cities were to condemn the Streetlight Systems, a court would set the purchase price, and PG&E and Cities would incur litigation fees associated with the condemnation process. By selling the Streetlight Systems through a negotiated sale, PG&E can avoid the costs of litigation and an uncertain sale price. San Diego Gas & Electric (SDG&E) Cooperatively negotiates to sell assets when cities/counties make the request 6
Why Own? Primary purpose of an IOU is to sell a commodity electricity and/or gas, and deliver it to its customers reliably and safely; cities and counties appropriately decide how the electricity/gas will be used LS 2 (customer owned) rates are significantly cheaper than LS 1 (utility owned) rates Cities/counties can maintain/operate/repair/replace street light facilities at lower costs than the IOUs Street Light assets have value with ownership, cities/counties can get loans and grants for improvements, can use assets to meet energy efficiency goals If owned, street light retrofitting to LEDs is the lowest hanging fruit in meeting Climate Action Plan carbon reduction goals Adaptive controls on owned street lights will reduce future costs and increase uses of street light facilities 7 How to Acquire Street Light Facilities Valuation of Assets Valuation Analysis Case Law and Evidence Code regarding Valuation Methodologies Comparable Sales Capitalization of Income Replacement Cost New Less Depreciation (RCNLD) Depreciation Methodology Negotiation Strategies with Investor Owned Utilities (IOUs) If Negotiations Falter, Legal Options 8
Don t Underestimate the Value of Your Infrastructure especially Street Lights Inventory. Locate, then inventory the facilities and examine the condition of your street lights. Knowing what you have allows you to properly value your assets. Audit. Audit your bills and inventory to make sure you are being accurately charged for electricity and facilities. Retrofit. Retrofit your lights with adaptive controls and LEDs for lower electrical/maintenance costs. 9 Don t Underestimate the Value of Your Infrastructure especially Street Lights Invest. Low interest rates and lower costs for the facilities mean the return on your capital investment will be a shorter time frame. You may be able to pay the capital cost for improvements from your future savings, depending on your source of financing. Adapt. Consider adaptive controls future possible uses for your street light system could include: Meter your usage for cost savings/dimming (new rates coming!) Super fast cellular and radio frequency (RF) micro communications systems assure net neutrality and access for all Micro grid electrical backup systems and electric car/device recharging stations Change intensity and color of lights for safety and decorative uses Sensors for monitoring for pollution, dangerous conditions 10
Thank You Questions or Comments? CALIFORNIA STREET LIGHT ASSOCIATION Jean A Bonander, Executive Director 56 Hacienda Drive, Tiburon CA 94920 1127 (415) 508 7527 jeanbonander@gmail.com, jean@calsla.org www.calsla.org 11