Dan McGowan reports on another of those budget-saving measures in Providence that have something just, well, peculiar about them:
Providence says it’s poised to save more than $24 million over the next 11 years by purchasing all of the city’s 16,800 streetlights from National Grid and converting them to light-emitting diode fixtures, or LED lights.
With both administration officials and the city’s internal auditor calling the idea a “no-brainer,” the City Council Finance Committee on Monday approved a plan to borrow $13 million to finance the project. The full City Council could consider the proposal as soon as Thursday.
I can’t help but feel that there’s a dog that’s not barking, in this mystery.
Here’s the upshot: When all is said and done, Providence will pay $16 million to buy the streetlights — just the top, not the pole or the wiring in it — from National Grid and replace the bulbs with LEDs. On top of losing $2.3 million per year in maintenance fees, National Grid will give the city a $2.5 million bonus for the technology switch. Providence will then shift responsibility for maintenance to the Partnership for Rhode Island Streetlight Management (PRISM), which will charge the city $420,000 to pay a private company (perhaps National Grid) to do the work, plus a $62,000-per-year processing fee. The bulk of the savings will come from the expectation that the LEDs will use about 22% of the energy of current bulbs.
The outside organizations deserve a look. Municipal Leasing Consultants, which will handle the financing, appears to be a private for-profit organization whose primary selling point is that it allows municipalities to go into debt to buy big-ticket items without going back to their voters for approval. Because MLC technically buys the items, the cost doesn’t go on the city’s list of capital expenditures, and because it’s essentially a lease-to-own arrangement, the city never has to request permission to borrow the money.
As for PRISM, that’s just a “fictitious name” for the Washington County Regional Planning Council, which is what it sounds like: a non-profit organization with backing from the RI Foundation run by a group of town governments and others (like the University of Rhode Island) to make decisions and implement “sustainable” policies a step beyond the reach of local voters in South County. The organization has no experience in maintaining streetlights, particularly in an urban setting.
So, basically, the arrangement will be that each city streetlight will remain on city-owned land, with National Grid (a public utility) owning the pole, topped with a light that the city is leasing from a private financier, but for which a fictitiously named private non-profit group will manage outsourced maintenance, charging a fee that is almost as much as its entire 2013 personnel costs. If that is an efficient, money-saving deal, what exists now must be a nightmare of government regulations and insider graft, and one can’t help but think that simply cleaning up the regulations and eliminating the graft would save taxpayers even more money.
So, why is National Grid so quiet on this, considering that it stands to lose millions? Or, if these lights can be maintained at such a savings, why isn’t National Grid just giving up its excess profit in order to keep some profit?
The answer is tangled up with a long history of restrictions and mandates that prevents the public utility from acting like an actual company or its customers from making rational decisions. Moreover, the utility doesn’t make out as badly as it may seem. National Grid doesn’t profit on the energy that it distributes; it merely passes along the costs that it negotiates with suppliers, and the state allows it to recoup any losses. That means Providence’s savings will come largely at the expense of all ratepayers (first, those in the commercial group), and you can be sure that, by one program or another, either ratepayers or taxpayers will be paying for the $2.5 million rebate.
Beyond that, National Grid will be receiving the purchase price for the lights and offloading any risk that it might face for mandates to replace the bulbs at its own expense, or other problems that might be looming. When all is said and done, if National Grid does indeed continue to perform the maintenance, its loss will be less than a million dollars per year, which can surely be shuffled onto the price of maintaining the pole or onto other customers. (It would be just another $51 per pole per year, for example.)
In short, this “no brainer” deal for the City of Providence turns out to be mostly an exercise in wealth redistribution, not from rich corporations, but from residential energy users and their local employers to the government of Providence, a few private government satellites, and the manufacturers of politically popular energy products. Sometimes it seems as if “no brain” is really politicians’ understanding of the electorate.