Are Utility Tariffs Halting Smart Street Light Adoption?

When a city makes its streetlights smart it expects a big payoff. Solutions that include adaptive controls and LED lights drive big savings on electric rates, reduce carbon emissions, and lower operations and maintenance costs. At least that's what a city expects. But as as one might expect it's a little more complicated than one might think. The source of that complication, various types of tariffs. So a utility tariff is a essentially a cost per unit, whether that's kilowatt hours of energy or per street light. And those rates depend on the location, the price of generation, taxes, transmission, distribution and regulations. In many cases, these tariffs haven't been updated in years, and oftentimes they're fixed The cities would be paying a set fixed rate per month. whatever they choose to do in terms of these variable lighting policies. So there's a problem in that. And the process to redesign a tariff takes years. In California... The Public Utilities Commission handles each utility separately, and they do it on a three-year, revolving three to four-year cycle. And it takes two to three years to negotiate a rate case. It's a problem... It's a process that may not begin until a city has installed and used the technology, and in other cases, the utilities own the streetlights and they may not want to invest in new technology at all. So what does this mean for the future of smart cities? San Diego is a prime example of a city where tariff issues have slowed innovation. Starting in 2010, the city spent millions on the replacement of 35 ,000 city -owned streetlights. Switching to LEDs from the outdated, low -pressure sodium and high -pressure sodium lights. In 2014, the city began another streetlight project, this time replacing 3 ,600 lights and adding adaptive control capability and an LED light grid technology that embedded a wireless control solution with GPS into each light pole. The project was capped at $5 million. The city piloted a tariff that was more complementary to the new dimming controls and the... the city could more accurately measure individual lights but it took the utility sdg and e more than three years to move forward with the protocols for a customer -owned meter the metering component was a really difficult one because the utility wanted to control all the standards and reliability and capabilities of the meter and uh and the burden of of creating that standard that relationship cost wise fell on the city of San Diego. So they were the ones that had to prove that they could come up with a meter that met the utility standards. Jean Bonadere is the executive director with the California Streetlight Association. The organization tasked with advocating for fair electric rates to local governments in California. Basically in California it's within a range. It's about if you don't own streetlight it costs you about $14 a month to operate that streetlight if you do own the street light it costs you about four dollars a month so that's a pretty significant cost difference and so so there are rates and tariffs depending on if the city and county owns it if the utility owns it there are certain other uh categories that have to do with attachment devices so if you want to put a camera on or a sensor on and you have an adaptive control there are other tariff categories and then the traffic control category which is street um traffic signals and and those sorts of things that operate um 24 7 365 they have an entirely different rate category and so now They're talking about applying time of use tariffs or higher rates to streetlights that are on during their peak periods versus non-peak periods. And it used to be that that, you know, the streetlights were its public safety and they were just on or they were off. And now they're starting to look at different ways to adapt their revenue stream in there. expense stream. In the United States, there isn't a national framework or strategy that dictates the tariffs added onto streetlights, which is why they vary greatly by location and ownership of the streetlights. In the United States and Australia, utilities often own the streetlights, which not only adds more capital costs to the tariffs, but can translate into a slower adoption of technology. That's according to Talenta co -founder and chief commercial officer Will Gibson to Lentz as a provider. of smart street light controls and smart city applications. On the assumption that the utility may well be a monopoly, then it is probable they will be a regulated monopoly. So they will have effectively a fixed business performance that they are allowed to achieve by the regulators. So there is an overarching framework that the utilities... have to operate within. And increasingly, the regulators will apply pressure to the utilities to operate more effectively, more efficiently. But at the end of the day, the utility is probably in business to sell energy, sell electricity in this case. So it's not intuitively in their interest to go overboard in helping accelerate the reductions of providing electricity and, you know, selling what is their main business. As a result, an increasing number of cities are now buying back their streetlights from utility. That's because for a city, a streetlight tariff can have a huge impact on its overall budget. The cost of electricity and streetlight infrastructure accounts for as much as 50 % of a city's budget. whereas it only makes up about 1% of utilities. But a utility isn't always willing to sell the infrastructure. And if it does, the price to buy the streetlights isn't cheap. So how can a local government efficiently and cheaply redesign a tariff? It's difficult. So the only way that we've seen to change these kinds of structures is to do what we've done over time and wait for a new regulations. to come up because they they're on their cyclical every five to ten years they have to come up with a new structure so the utilities tend to be unwilling to change that when they don't have to because they they're based on long -term um sustainability in their rates uh predictability in their rates so they don't want to change that they don't want to change their their load or how things are working through their system. The only one that we've seen that has actually changed the structure was when Manchester decided to change over their lights to LEDs because they're the biggest city in New Hampshire. So they had more arguing power and they got that moving forward. So as a city, you have that power. As a municipality, not as much. It all comes... streetlights take a lead role in smart city developments. They serve as a connectivity for cameras, sensors, and even charging docks for EVs, which is why the ownership and the tariffs make up such a messy debate. My opinion is, and that this is what it is, is an opinion, is that the vertical infrastructure in communities is a valuable asset and streetlights are the most ubiquitous vertical infrastructure in communities so who owns it how it's how it's financed how tariffs are created to allow for like wi -fi or a cellular phone or a camera i think it's a really valuable infrastructure component to allowing many other things to happen happen in our communications technologies and our smart smart city strategies now we did reach out to utilities to better understand their perspective on managing streetlight tariffs but we couldn't find one to speak with us if you're a utility willing to weigh in on this topic be sure to hit the button below and we'll reach out to you for an interview and for more coverage on this topic and everything else revolving around smart streetlights be sure to stick with current