Providence Finance Committee approves request to buy streetlights, convert to LED fixtures

PROVIDENCE – The Providence Finance Committee on Monday approved a $13 million debt service request to buy every city streetlight and convert each one into LED fixtures, a move officials said could save the city $24.2 million through the next 10 years and help reduce its short-term debt.
The proposed lease purchase agreement, between the city and Municipal Leasing Consultants, would allow Providence to purchase all 16,800 streetlights owned by National Grid PLC.
The city would then convert the streetlights to LED (light-emitting diobe) fixtures, which use less electricity when producing light.
Brett Smiley, chief operating officer for Mayor Jorge O. Elorza, told committee members that savings from the streetlight project could be realized in multiple ways.
“First, in the form of reduced energy consumption, because we’ll be upgrading all the fixtures to high-efficiency LED lights,” Smiley said. “Second, through having significant reductions in the maintenance costs that we currently pay National Grid.”
National Grid maintains the city streetlights for about $138 per light, which totals approximately $2.3 million each year, according to an internal city report. Until state legislation passed two years ago, however, municipalities could not own or maintain their own streetlights. But now municipalities can put maintenance projects out to bid. Providence expects to announce the winning bid at some point this month.
Lawrence J. Mancini, city finance director, estimates the city could realize net savings of about $24.2 million through fiscal 2026. After owning the streetlights, the city estimates it would pay to maintain the streetlights at a fixed amount of $25 per streetlight, totaling about $450,000 annually, according to the report.
The city would borrow the $13 million through a 10-year lease with interest of 2.59 percent. But the structuring of the deal would allow the city to hold off making its first full payment through the first 18 months, and purchase the streetlights outright for $1 once the lease expires, according to Providence internal auditor Matthew M. Clarkin Jr.
Clarkin estimates the annual debt service payments would be fixed at about $1.6 million for fiscal 2018 through fiscal 2026, according to the report. But he agrees with Mancini and calculates the city would save because of reduced maintenance and electricity use.
In the short-term, Providence could be eligible for a $2.5 million rebate for participating in National Grid’s Rebate Program. Smiley says he expects the money to be put toward debt reduction in either this fiscal year or the next.
“The rebate will go toward debt reduction this year if we can, but we’ve been burned before with the timing of these [rebates,]” Smiley said. The full City Council is slated to take a final vote on Thursday and if approved, the city would aim to start installing new light fixtures in February with a project completion date of July or August, according to Smiley.
The full breakdown of proposed expenses for the $13 million project are as follows:

  • Material, including the purchase of LED fixtures and electronic, computer controls: $6.9 million
  • Labor, including energy audit: $2.4 million
  • Purchase price of existing poles and fixtures from National Grid for conversion to LED: $2.7 million
  • Contingencies for additional replacement costs associated with conversion program: $1 million

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