In April 2016, staff met with SCE to assess the feasibility of acquiring all SCE-owned street lights (LS1 lights), as SCE was considering selling their LS1 street lights to local jurisdictions for a limited time period. At this meeting, SCE informed the City the acquisition cost would be approximately $20 million for Garden Grove, thereby restricting the City from continuing with the acquisition process.

Another cost saving alternative presented by SCE was the conversion of all LS1 street lights into LED. This new program, titled “Option E – LED Fixture Replacement Program” would convert all LS1 lights within the City’s jurisdiction, and, per the attached Edison’s Rate Analysis, save the City approximately $40,000 annually in energy costs for the first twenty (20) years of the contract. 

In June 2016, LS1 Option E became available to customers to request LED technology for SCE-owned LS-1 street lights.  Customers do not pay any upfront capital costs; however, the contractual term is locked-in for twenty years and incorporates an energy efficiency premium, which recovers the capital expenditure for the installation of LED fixtures. Under this new Program, any future LED replacement or pole knock-down is covered by SCE as usual.

The Option E Program is also eligible for energy efficiency incentives under standard Energy Efficiency programs administered by SCE. The estimated one-time energy efficiency conversion incentive for the City of Garden Grove is approximately $500,000. This amount is finalized once the City files an application for energy efficiency rebates. Once the Option E Agreement is executed, the City will be placed into a queue for jurisdictions awaiting LED conversion. SCE is estimating the conversion to take place in 2017/2018.

There is no impact to the General Fund. The City is anticipating saving approximately $40,000 annually in street lighting costs and receiving a one-time credit of up to $500,000. Other Option E rate components are subject to California Public Utilities Commission rate changes. 

It is recommended that the City Council:

• Approve the Energy Efficiency LED Fixture Replacement Agreement with Southern California Edison (SCE) for the conversion of Edison-owned street lights to Light Emitting Diode (LED); and

• Authorize the City Manager to execute the agreement on behalf of the City.

By:  Ana V. Neal, Sr. Administrative Analyst