HomeMy WebLinkAbout2014-07-30 PACKET 09 STREET LIGHT UTILITY FUND REVIEW
To: Honorable Mayor and City Council
Ryan Schroeder, City Administrator
From: Jennifer M. Levitt, P.E., City Engineer
Ryan Burfeind, Graduate Engineer
Date: July 24, 2014
Re: Street Light Utility Enterprise Fund Review
Background
The City of Cottage Grove Street Light Enterprise Utility Fund is used to pay for expenses
related to street lights and traffic signals in the City of Cottage Grove. The City currently has
2,863 street lights, 443 which are owned and maintained by Xcel Energy and 2,420 which
are owned and maintained by Cottage Grove. There are also 147 feed points, which provide
power to all of the street lights, and seven traffic signals in the City.
There are two separate fees for this fund. The first is the street light fee, which has a
residential rate of $2.45 per household per month. The second is the street light
maintenance surcharge, which has a residential rate of $0.85 per household per month. The
street light fee has remained constant since the year 2010, when it was reduced from the
2009 rate of $3.30. This fund is used to pay for personnel, utility, maintenance, and system
improvement costs.
Discussion
Past Expenditures
A detailed review of the street light fund was completed for 2008 to 2013. This review
included both the operating income of the fund and the cash flow within the fund. The
difference between these two reviews is the operating income takes into account
depreciation and developer capital contributions and does not include capital outlay. A
review of the cash flow within the fund is the opposite. It does not take into account
depreciation or developer capital contributions, but it does take into account capital outlay.
Table 1 below details the breakdown of the operating income review.
Table 1 – Fund Operating Income Breakdown
2008 2009 2010 2011 2012 2013
Operating Revenues
Street Light Fees
$ 498,501 $ 503,006 $ 392,803 $ 398,178 $ 399,577 $ 401,068
Maintenance
Surcharge
$ 86,555 $ 87,231 $ 87,696 $ 88,493 $ 89,434 $ 90,490
Total Operating
Revenues
$ 585,056 $ 590,237 $ 480,499 $ 486,671 $ 489,011 $ 491,558
Operating Expenses
Personal
Services
$ 52,414 $ 56,202 $ 66,213 $ 65,797 $ 75,597 $ 78,338
Commodities
$ 29,587 $ 19,181 $ 44,744 $ 31,048 $ 59,797 $ 54,068
Items for resale
$ 472 $ 25,432 $ - $ 19,792 $ 11,859 $ 37,999
Contractual
$ 260,854 $ 292,577 $ 305,472 $ 310,595 $ 331,415 $ 376,076
System
Improvements
$ - $ - $ - $ 76,892 $ 54,730 $ 55,434
Admin Charge
$ 41,300 $ 41,900 $ 42,500 $ 42,500 $ 43,800 $ 44,700
Depreciation
$ 115,595 $ 116,648 $ 118,519 $ 122,776 $ 127,183 $ 139,255
Total Operating
Expenses
$ 500,222 $ 551,940 $ 577,448 $ 669,400 $ 704,381 $ 785,870
Operating
Income
$ 84,834 $ 38,297 $ (96,949) $ (182,729) $ (215,370) $ (294,312)
Non-Operating Revenues (Expenses)
Misc. Revenues
$ 106,328 $ 6,464 $ 13,663 $ 45,937 $ 51,685 $ 89,279
Developer
Capital
Contributions
$ - $ 105,316 $ - $ 23,686 $ - $ 102,580
Transfer Out for
PW bldg
contribution
$ (9,000) $ (9,000) $ (9,000) $ (9,000) $ (9,000) $ (9,000)
Investement
Earnings (loss)
$ 93,083 $ 38,463 $ 25,857 $ 34,439 $ 16,946 $ (18,677)
Transfer Out W.
Point Douglas
Contrib.
$ - $ - $ - $ - $ (284,479) $ -
Total
nonoperating
revenues
(expenses)
$ 190,411 $ 141,243 $ 30,520 $ 95,062 $ (224,848) $ 164,182
Net Income
(Loss)
$ 275,245 $ 179,540 $ (66,429) $ (87,667) $ (440,218) $ (130,130)
Table 2 and Figure 1 summarize the cash flow within the street light utility fund between the
years of 2008-2013. This breakdown show the decreasing cash in the fund in recent years,
primarily due to increasing maintenance costs and recent capital outlay.
2
Table 2 – Cash Flow Breakdown
2008 2009 2010 2011 2012 2013
Beginning Cash $ 2,205,642 $ 2,652,299 $ 2,845,749 $ 2,829,458 $ 2,849,281 $ 2,415,907
Operating
Income without
depreciation $ 200,429 $ 154,945 $ 21,570 $ (59,953) $ (88,187) $ (155,057)
Non-operating
revenues
(expenses)
without Capital
Contributions $ 190,411 $ 35,927 $ 30,520 $ 71,376 $ (224,848) $ 61,602
Capital Outlay $ - $ - $ (81,840) $ - $ (152,531) $ (656,042)
Changes in
Balance Sheet
Items $ 55,817 $ 2,578 $ 13,459 $ 8,400 $ 32,192 $ (16,164)
Net increase
(decrease) in
cash $ 446,657 $ 193,450 $ (16,291) $ 19,823 $ (433,374) $ (765,661)
$
Ending Cash 2,652,299 $ 2,845,749 $ 2,829,458 $ 2,849,281 $ 2,415,907 $ 1,650,246
Cash Flow Summary
$800,000.00 $3,000,000
$600,000.00
$2,000,000
$400,000.00
$1,000,000
$200,000.00
Cash Flow
Revenues/Expenses
$- $-
200820092010201120122013
$(200,000.00)
$(1,000,000)
$(400,000.00)
$(2,000,000)
$(600,000.00)
$(800,000.00) $(3,000,000)
Non-Operating Revnues (w/o Capital ContributionsOperating Revenues
Operating Expenses (w/o Depreciation)Capital Outlay
Changes In Balance Sheet ItemsEnding Cash
3
Figure 1 – Cash Flow Summary
Table 3 – Capital Outlay Breakdown
Item Year Amount
Aerial Feed Cabinet 2010 $81,840
Bucket Truck 2012 $83,497
E Point Douglas street
lights 2012 $69,034
W Point Douglas/TH 95
Traffic Signal contr 2012 $284,479
2013 PM street lights 2013 $265,952
Hinton Avenue street lights 2013 $358,400
Hinton Avenue traffic signal 2013 $31,690
The specific maintenance and utility expenses were analyzed to compare street light and
traffic signal expenses. The following figure shows the breakdown of these two expenses.
As seen in Figure 2, traffic signal utility bills are quite low in comparison to street lights.
Figure 3 shows that the average annual maintenance costs were very similar during the
2010 to 2013 period.
Annual Utility Bill Comparison
2010 -2013 Average
$7,776
$135,461
Street Light Utility BillsTraffic Signal Utility Bills
Figure 2 – Annual Utility Bill Comparison
4
Annual Maintenance Cost Comparison
2010 -2013 Average
$45,588
$54,125
Street Light MaintenanceTraffic Signal Maintenance
Figure 3 – Annual Maintenance Cost Comparison
Finally, street light work order were reviewed and see if there is a trend to the number of
work orders the City is receiving. Work orders were reviewed back to 2008, when the current
CRM work order system was implemented. Figure 4 shows the average number of work
orders received per month related to street lights since 2008. This graph shows a steady
increase in the number of work orders that have been received. While some of this can be
attributed to repeat callers for the same issue, part if it is likely due to the aging system.
Average Street Light Work Orders Per Month
70
60
50
40
30
20
10
0
2008200920102011201220132014
Figure 4 – Street Light Work Order History
5
Comparison with other Cities
The City of Bloomington currently has 4,400 streetlights. They own approximately 1,025 of
those lights. Xcel maintains the city’s lights; therefore, the city does not hire any full time
employees to work specifically on streetlights. Bloomington’s licensed electrician is hired
out. The construction of their light poles is part of their street construction. The 2014 Utilities
and Maintenance Budget for the city is $940,589.
The City of Oakdale currently owns 1,597 streetlights. Oakdale’s utility, water, and sewer
management workers maintain their streetlights, but their licensed electrician is hired out.
The work that is done in-house involves changing bulbs and fixing damaged lights and
broken fuses. If a pole is knocked down, they hire a contractor. The construction of the poles
is 100% outsourced. Their 2013 streetlight budget was $513,405.
The City of St. Louis Park’s traffic department consists of four full time employees who
maintain a total of 1,500 streetlights along with traffic signals, traffic signs, etc. The type of
work they do in-house includes painting poles, bulb replacement, and checking inventory.
Their licensed electrician is hired out. 100% of the light pole construction is outsourced; they
order the parts and hire a contractor to install them. The City of St. Louis Park’s budget last
year was around $250,000, which paid for replacing poles and light bulbs. Their 2014 Street
Light Replacement Program is currently still in the design stage but they are planning to
replace the streetlight systems that have reached their life expectancy. As a part of this
project, the light fixtures will be replaced and upgraded to LED lights.
With the City of St. Paul being such a large city, their streetlight management is quite large
as well. There are currently about 37,000 city owned streetlights on St. Paul’s streets today.
The city has 12 total electricians and about four of them do project type work. Their
employees do all of the work on the streetlights except for federally funded projects. The city
has an outstanding level of service when replacing street light outages. Once an employee
is notified of a burnt out lamp, it takes about one hour for it to be replaced. Not only does St.
Paul manage their own streetlights, they also have a total of 13 other municipalities that they
help to maintain, including the City of Cottage Grove. As expected, the City of St. Paul’s
street lighting maintenance budget for 2014 is very extensive totaling $1,234,323.
A rate study was also completed, comparing the City of Cottage Grove residential fee to
other communities in the Metropolitan area. Figure 5 shows how Cottage Grove compares
to these other communities.
6
2014 Street Light Rate Costs
Avg Rate = $2.49
3.50
3.33
3.30
3.28
3.20
Street Light Cost per House per Month ($)
3.00
2.99
3.00
2.81
2.71
2.67
2.59
2.50
2.18
2.152.15
1.92
2.00
1.83
1.64
1.55
1.50
1.50
1.00
0.50
0.00
Figure 5 – Street Light Fee Comparison
Future System Improvements
When looking at the future of the street light fund, a major component will be the amount of
money spent on system improvements. The two improvements that were looked at were
the installation of conduit and retrofitting street lights with LED fixtures. The implementation
of these system improvements would be included with pavement management projects. The
10 year plan for pavement management was reviewed and used to produce a quantities for
these two improvements.
Currently the majority of the Cottage Grove street lights are powered by direct bury wires.
These wires have very little protection from the environment, and part of the increase in work
orders can be attributed to these wires reaching their life expectancy and beginning to fail.
Since the year 2000, conduit with wires running inside have been placed to power the street
lights in all new developments. This conduit helps to protect the wire, and also makes it
much easier to replace a section of wire if it fails. A cost estimate was completed to see
7
what the cost would be to install conduit in each pavement management area for the next
10 years, and is summarized in Table 4. This same practice has already been used in the
past, when conduit was installed in the Thompson Grove neighborhood during the 2003
Pavement Management project.
Table 4 – Conduit Installation Costs
Year Street Feed Wire (LF) Hand Hole Feed Point Conduit & Wire Total Project
Lights Points Installation Replacement Installation Costs*
2015 129 8 34,711 $66,537 $30,483 $303,088 $560,151
2016 105 5 27,328 $56,866 $20,004 $250,553 $458,393
2017 90 7 45,219 $51,179 $29,406 $435,317 $722,264
2018 139 9 34,910 $82,995 $39,699 $352,879 $665,803
2019 130 8 34,172 $81,503 $37,052 $362,688 $673,740
2020 95 6 22,449 $62,538 $29,179 $250,177 $478,650
2021 52 3 7,870 $35,943 $15,319 $92,090 $200,693
2023 118 6 26,925 $85,640 $32,169 $330,808 $628,065
2024 23 3 7,902 $17,527 $16,889 $101,942 $190,902
Total
$4,578,660
* Includes 10% Contingency and 30% Indirect Costs
The cost to install LED light fixtures in each pavement management area was also
estimated. This installation would be completed separate of pavement management. Street
lights currently have a 100 Watt HID light fixtures, which have a life expectancy of around
22,000 hours. New LED light fixtures have use a 50 Watt lamp, and have a life expectancy
of approximately 100,000 hours. When looking at payback, maintenance costs are also
included. The HPS lights require lamp replacement every 5 years and ballast replacement
every 15 years. The new LED fixtures require lamp and ballast approximately every 22
years. Based on an average electricity rate of $0.10 per KWH and including maintenance
cost savings, each LED light fixture installed would have a simple payback of approximately
26 years. The breakdown if this cost savings is shown in Table 5. This does not take into
account future increases in electricity rates. Table 6 summarizes the cost estimate for LED
light fixture installation in pavement management projects for the next 10 years.
8
Table 5 – LED Cost Savings Breakdown
HID Lamp Watts 100
LED Lamp Watts 50
Annual Run Time Hours 4400
Average Electric Costs/per KWH 0.1
HID lamp cost (5 year life) $30
HID balast cost (15 year life) $200
HID Annual KWH 440
LED Annual Kwh 220
Annual power cost savings $22.00
Equivalent Annual Savings $19.33
Total Annual Savings $41.33
Installation Costs $1,090.95
Simple Payback (years) 26.4
Table 6 – LED Fixture Installation Costs
Year Street Installation Labor LED Fixture Costs Total Construction Costs*
Lights Costs
2015 129 $114,455 $26,277 $140,733
2016 105 $97,819 $22,458 $120,277
2017 90 $88,037 $20,212 $108,250
2018 139 $142,767 $32,777 $175,545
2019 130 $140,200 $32,188 $172,387
2020 95 $107,576 $24,698 $132,274
2021 52 $61,828 $14,195 $76,023
2023 118 $147,317 $33,822 $181,139
2024 23 $30,150 $6,922 $37,072
Total
$1,143,699
* LED installation would be completed in house, so 10% contingency and 30% indirect costs
are not included
Future Rate Structure
In order to reverse the decreasing trend seen in Figure 1 a proposed rate structure for the
next 10 years is shown in Table 7. This rate structure includes a 5% increase each year
from 2015-2024. Figure 5 demonstrates how these rates would affect the fund balance if
both conduit and LED retrofits are completed in each pavement management project for the
next 10 years. Figure 6 demonstrates the projected fund balance if only the LED retrofits
are completed in pavement management areas each year for the next 10 years. Figure 5
shows that even with the proposed rate increases, the Street Light fund cannot continue to
support conduit installation within each pavement management project. Figure 6 shows that
an annual increase in rates of 5% will support the Street Light fund, along with the installation
of LED lights in each year’s pavement management project. A complete breakdown of this
proposed budget can be seen in Appendix A of this report.
9
Table 7 – Proposed Rate Structure
Residential - Residential - Commercial Commercial Street Light
Year City Owned Rural Xcel Owned - By Lot - By Footage Maintenance
2014 $2.45 $3.75 $5.15 $2.46 $1.05 $0.85
2015 $2.57 $3.94 $5.15 $2.58 $1.10 $0.89
2016 $2.70 $4.13 $5.15 $2.71 $1.16 $0.94
2017 $2.84 $4.34 $5.15 $2.85 $1.22 $0.98
2018 $2.98 $4.56 $5.15 $2.99 $1.28 $1.03
2019 $3.13 $4.79 $5.15 $3.14 $1.34 $1.08
2020 $3.28 $5.03 $5.15 $3.30 $1.41 $1.14
2021 $3.45 $5.28 $5.15 $3.46 $1.48 $1.20
2022 $3.62 $5.54 $5.15 $3.63 $1.55 $1.26
2023 $3.80 $5.82 $5.15 $3.82 $1.63 $1.32
2024 $3.99 $6.11 $5.15 $4.01 $1.71 $1.38
Street Light Fund Cash Flow
$2,000,000
$1,000,000
$-
20142015201620172018201920202021202220232024
$(1,000,000)
$(2,000,000)
$(3,000,000)
$(4,000,000)
$(5,000,000)
Total Operating RevenuesTotal Operating Expenses
Non-Operating Expenses/RevenuesEnding Cash
Figure 5 – Street Light Utility Fund Cash Flow – Conduit & LED Install
10
Street Light Fund Cash Flow
$1,250,000
$1,000,000
$750,000
$500,000
$250,000
$-
20142015201620172018201920202021202220232024
$(250,000)
$(500,000)
$(750,000)
$(1,000,000)
Total Operating RevenuesTotal Operating Expenses
Non-Operating Expenses/RevenuesEnding Cash
Figure 6 – Street Light Utility Fund Cash Flow – LED Install Only
Recommendation
It is recommended the City Council approve a 5% rate increase for the Street Light
Enterprise fund for 2015, as shown in Table 7 of this report. This rate increase will begin to
reverse the decreasing fund balance trend that has been experienced in recent years. It
was also allow start of an LED retrofit program to be completed in residential areas in
conjunction with pavement management projects.
11