News Column

Modesto eyes loan to replace streetlights

August 12, 2014

By Kevin Valine, The Modesto Bee



Aug. 12--The City Council is expected to decide Tuesday night whether to apply for a $3 million state loan to replace streetlights with energy-efficient ones that would reduce Modesto's electric bill by several hundred thousand dollars annually, though it could take a couple of years before the city receives the loan.

The loan would be with the California Energy Commission.

This proposal comes after the council on June 24 rejected an energy efficiency proposal from global giant Siemens Industry over concerns about the cost and financing. A Siemens official implored council members for more time to resolve the concerns and claimed city staff members had provided the council with inaccurate information.

Siemens offered to replace nearly 9,500 streetlights and upgrade the lighting at 16 city facilities and the heating, air and ventilation system at the Police Department for $8.4 million, and lend Modesto the money to pay for the work. Modesto would have paid Siemens back over 15 years at 2.75 percent, increasing the project's cost to $10.4 million.

Modesto would have repaid Siemens from the savings on its electric bills.

The bulk of the project consisted of replacing nearly 9,500 streetlights at a cost of $5.4 million, according to a city report. City staff and one of Siemens' competitors said that work could be done cheaper. The city estimates it can replace the streetlights for $3.75 million.

The California Energy Commission caps its loans for energy efficiency and energy generation projects at $3 million. Modesto could replace about 7,500 streetlights for that amount. The loan would be at 1 percent interest and repaid through electric bill savings.

The commission lends $6 million to $8 million annually for energy efficiency and generation projects, according to commission spokeswoman Amber Pasricha Beck. The funding is issued in June and December.

Pasricha Beck said five cities have loan applications with the commission and funding is issued on a first-come, first-served basis. She said Modesto is looking at a couple of years before its application would be approved unless one of the five cities drops its request or asks for less money. She added that those are rare occurrences.

Modesto Traffic Engineer Jeff Barnes said city officials are looking at other funding options as well, including borrowing money from city accounts. He said officials expect to present these options to the council in September.

Modesto spends about $936,800 annually on electricity for the nearly 9,500 streetlights, according to a city report. Barnes said replacing those high-pressure sodium streetlights with light-emitting diodes would save the city $374,000 to $574,000 annually, based on the wattage of the replacement lights. Modesto will test the streetlight wattage to determine which lights provide the appropriate amount of light.

The light-emitting diodes produce a whiter light. The high-pressure sodium lights have an orange-colored tint and distort the color of objects.

Modesto has 11,035 streetlights. It upgraded the lights on about 700 of them with funding through the federal stimulus program; about 700 streetlights are older high-voltage ones, which are much more expensive to replace; and more than 100 are in a lighting district or a specialized type of streetlight in a Village I subdivision.

Modesto worked with Siemens for more than a year before the deal unraveled.

The council in April 2013 approved having Siemens conduct an energy audit and develop a proposal for the city to save money on its utility costs. At its June 10 meeting, the council approved entering into an agreement with Siemens, but that was contingent upon approving the project's financing at the June 24 meeting.

City officials have said they had more questions as Siemens provided them with more information and the city conducted more of its own research.

Modesto owes Siemens$225,000 for the audit. City officials said Monday that Siemens has yet to bill Modesto for the audit.

In other action, the council is expected to:

--Meet in closed session to discuss the state's plan to build a new downtown courthouse to replace the outdated one. Modesto has acted as the middleman in the complex land deal involving several private property owners. The council approved the deal in April. Interim City Manager Jim Holgersson said Tuesday night's discussion involves minor details.

Bee staff writer Kevin Valine can be reached at kvaline@modbee.com or (209) 578-2316.

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(c)2014 The Modesto Bee (Modesto, Calif.)

Visit The Modesto Bee (Modesto, Calif.) at www.modbee.com

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Source: Modesto Bee (CA)


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