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ORDINANCE: 2004-19
SUBJECT: Approving and authorizing a supplemental appropriation in the Capital
Improvement Fund to fund the conversion of traffic signal lighting and lighting
of arterial streets to a more cost and energy efficient system.
RECOMMENDATION: The Traffic Engineering Division of the Public Works Department has identified a money and energy saving opportunity for the City that requires an up front investment. The investment will change certain street and signal lights throughout the City to more cost and energy efficient systems. Ordinarily this project would have been identified through the ordinary budget process. However, this opportunity presented itself much more quickly than other capital improvement projects and thus requires a supplemental budget appropriation. This project will be funded via a lease purchase arrangement and will thus not defer or delay any existing planned projects. Staff recommends approval.
SUMMARY AND BACKGROUND OF SUBJECT MATTER: City Council typically approves the City's budget each fall as dictated by the City Charter. From time to time revisions may be made to the budget so as to appropriate for certain unforeseen expenditures. This Ordinance provides for funding to implement certain energy saving initiatives that will save the City money and reduce the City's energy consumption, over time. Given the nature of the energy savings and money saving opportunity it is prudent for Council to approve this supplemental appropriation now as opposed to the typical time frame.
PROJECT DESCRIPTION: Dave Baskett, the City's Traffic Engineer outlined this project in a memorandum to Council dated March 19, 2004, copy attached. This project will provide for a change, on certain signal lights, from incandescent light bulbs to Light Emitting Diode ("LED") light bulbs. LED bulbs are more energy efficient and cost less to replace, over time. This will save the City money and reduce energy consumption as outlined in the memorandum.
DATE OF FIRST READING: June 28, 2004
DATE OF SECOND READING: July 12, 2004
ATTACHMENTS: Ordinance O-2004-19
Memorandum Dated March 19, 2004
ORIGINATED BY: Finance Department
STAFF PERSON RESPONSIBLE: Larry Dorr, Director of Finance, 303-987-7601
SUBMITTED BY:
Larry Dorr, Finance Director
REVIEWED BY:
Joni Inman, Director Mayor and City Manager's Office
Michael J. Rock, City Manager
Public Works Department
City of Lakewood
MEMORANDUM
TO: Mayor and City Council
FROM: David A. Baskett, Traffic Engineer
DATE: March 19, 2004
SUBJECT: LED Replacement and Excel Custom Efficiency Program
Traffic Engineering is constantly looking for ways to improve traffic safety and find ways to pay for it. For several years we have been trying to figure out how we could convert our traffic signals from incandescent bulbs to Light Emitting Diode (LED) bulbs which have a much higher "target value" or in layman's terms, are easier to see. The LED's use much less power, but the bulbs themselves are expensive. However, the price of the bulbs has been steadily declining as the price of electricity continues to increase. Now we believe the two lines have crossed and it is financially feasible to pursue a major replacement program
Excel Energy has been directed by the PUC to come up with ways to reduce or eliminate power outages and "brownouts" during the summer when demand for electricity skyrockets. One of the ways they have chosen to address this is with their "Custom Efficiency Program". The program solicits proposals from customers, such as the City, who are willing to invest money to reduce peak hour demand. The customers propose ways to reduce energy consumption in exchange for a one-time lump sum payment from Excel The one time grant in many cases makes a proposal feasible. Excel benefits by reducing stress on their overloaded distribution system.
Traffic Engineering has estimated that converting all of our 12" traffic signal indications from incandescent bulbs with glass lens to Light Emitting Diode (LED) bulbs would cost approximately $575,000 in material and equipment. The project would take six months to complete. This would reduce electrical demand by 300 kW. Following Excel's requirements the City submitted a proposal which was accepted, that translates into an offer of a $150,000 grant from ExcelOur attorneys are currently reviewing the grant contract.
Energy savings of approximately $113,000 per year have been calculated. The LED signal bulbs have a guaranteed useful life of at least ten years and have been known to exceed that in many cases. The price of the bulbs has been declining rapidly as No, I meant consumption, as more people buy the unit cost go down.(do you mean "competition"?) increases.
Consistent Arterial Street Lighting
Another area of concern and a potential for cost savings is with street lighting levels. The lighting of our major streets is inconsistent. One street will be brightly lit and another less so. There is no correlation to traffic volumes or nighttime accident levels. The inconsistency causes Excel problems when called out for repairs and frequently the wrong luminaire is used as a replacement because that is what they have on their truck. This increases the inconsistency even more. In recent meetings with Excel we believe we have come up with a way to address this issue. Traffic Engineering believes that having uniform lighting levels on our major streets that is the same as the levels used by Denver will provide a better driving environment for the motorist.
The lighting of arterial streets in the City of Lakewood is inconsistent. For example Kipling Parkway south of US 285 is lit with 400-watt luminaires, from US 285 to Alameda 250-watt luminaires are used, then north of Alameda it's back to 400 watts. The attached map shows the wattage of the lighting on our major streets. This contrasts with Denver where a consistent 250-watt standard is applied.
Based on the response from my February memo, we asked Excel to provide us with a cost to make a complete conversion this year. Excel gave us an estimate of $200,000 to complete the change. For this expenditure the City will save approximately $53,000 per year in electricity cost expenditures.
Cost/Benefit Analysis
The cost of the capital LED conversion is currently estimated at $500,000 for the LED's and $75,000 for a bucket truck. Our existing crews would actually change the bulbs. The street light conversion will cost $200,000. In addition we are estimating approximately $10,000 in legal fees for the various contracts. These numbers are subject to change based upon bid prices.
Payments on a 6-year $785,000 loan would be approximately $155,000 (this assumes a 5% interest rate). Cost savings of $113,000 for the LED's and $53,000 for the street lights equal $166,000. This provides a cost savings of $11,000/ year for 6 years. Some of the $166,000 savings after that would need to be saved for the future change out of the LED bulbs as they reach their useful life of ten years. If the prices of LED bulbs continue to fall as they have in the past, approximately half of the $166,000 would be available for the general fund.
Conclusion
The Benefit-Cost analysis shows this is a financially prudent program which
will result in better traffic signal visibility and lower maintenance costs.
In addition, the conversion of street lighting to uniform levels will provide
better maintenance and lower electricity bills after conversion. Based on Council's
previous concurrence, Public Works will proceed with bringing the necessary
resolutions and ordinances to Council for action.
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