ordinary meeting of council to be held on tuesday, 18 july 2006

Ordinary Meeting <strong>of</strong> Council - 18 July 2006 7 / 4
Item 7
S02249
6 July 2006
Street Lighting contestability
There are three separate services, all currently supplied primarily by EnergyAustralia, that provide
street lighting. Contestability <strong>of</strong> each <strong>of</strong> these is independent <strong>of</strong> the others, and are:
• Street lighting services (owner ship and maintenance)
• Network Services (operation <strong>of</strong> electricity distribution network <strong>to</strong> which the street lighting
services is connected).
• Retail energy Services
In practice, there is no effective contestability for street lighting services given that EnergyAustralia
(EA) owns the majority <strong>of</strong> street lighting assets in the Ku-ring-gai LGA.
In theory, street lighting service is fully contestable for new assets, for example in new subdivisions
or special Council projects for public domain lighting. That is, there is no legal restriction
prohibiting Councils from providing street lighting services themselves, or from third parties. In
terms <strong>of</strong> ownership, there are however a variety <strong>of</strong> requirements established by EA that impose
significant costs where street lighting assets are owned by parties other than EA.
In terms <strong>of</strong> operation and maintenance, there are no clear technical barriers <strong>to</strong> Council’s or third
parties providing these services, as is currently done on Council or third party owned lights.
However, there is no obligation on EA <strong>to</strong> arrange with Council’s <strong>to</strong> provide such services on EA
owned lights which constitute the vast majority in the LGA.
The provision <strong>of</strong> electricity transmissions/ distribution network services is generally regarded as a
monopoly service. Competition is not expected in this area, other than around the periphery <strong>of</strong> the
existing distribution network, for example new subdivisions.
From 1 January 2001, the retailing <strong>of</strong> electricity consumed in street lighting in New South Wales
was open <strong>to</strong> competition. Competition is achieved in street lighting, by the use <strong>of</strong> accepted
pr<strong>of</strong>iling arrangements determined on the basis <strong>of</strong> an estimated electricity consumption pr<strong>of</strong>ile.
CONSULTATION
Council has consulted with Program Managers for the Street Lighting Improvement Program, and
Power and Resource Consultants for a Group Council Tender.
FINANCIAL CONSIDERATIONS
Based on the comparison <strong>of</strong> the Default rate from EA and the State Contracts Board "777", the net
saving in charges equates <strong>to</strong> 0.47 c/kWh (i.e. 4.63 c/kWh less 4.16 c/kWh), after taking in<strong>to</strong> account
all the additional charges for network losses, market charges, metering provision, renewable energy
certificates and NSW Greenhouse Gas certificates.
The net saving equates in a cost saving <strong>of</strong> $1,923 per month for Council (based on average monthly
energy usage rates <strong>of</strong> 409,258 kWh per month in 2005/06 * 0.47c/kWh).
N:\060718-OMC-SR-03480-STREET LIGHTING CHARGES F.doc/taylori /4