11 Victorian councils were successful in receiving funding for street lighting projects through round one of the Community Energy Efficiency Program (CEEP) in 2012. Ironbark were involved in all 11 projects. An amazing 39 Victorian councils were then successful in round two, which was announced mid-2013. Since then there has been a fair amount of negotiating around funding agreements, milestone dates and project plans with the Federal Department of Industry. Ironbark has so far been engaged to develop project plans for 35 of those 39 councils and we’re thrilled that by late 2013, the first of these dozens of project plans have been officially accepted by the Federal Government.
This means the Feds have given our comprehensive project plans the big tick in accordance with the CEEP Funding Agreement. Congrats to the councils involved and also to the crew at the Department of Industry in Canberra who are working damn hard across hundreds of projects across Australia. This is great news for those councils as it's now onto delivering the project.
The CEEP Contract and Vesting of Street Lights.
Councils have been working for nearly a decade to overcome the barriers to implement energy efficient street lighting projects, so dealing with obstacles is nothing new. The latest in the long line of challenges is a threat that some councils received in late December 2013 from an organisation claiming that:
Many (all?) CEEP agreements require councils to retain ownership of the assets i.e. council CANNOT GIFT (Vest) the new lights to the distributor or potentially breach the funding agreement... Indeed our “CEEP clients” will be retaining their assets i.e. not gifting.
Ahhh… vesting of the assets. Never get sick of this one! This is nothing new. These emails, letters and scare campaigns have been running for 4-5 years from a handful of different organisations. The threats and issues are always the same, so these responses are pretty easy and quick to write.
Luckily this time the Federal Department of Industry responded to councils within a few days of this latest scare campaign, contacting CEEP street lighting recipients clarifying that, "whether a council retains of vests a light funded under CEEP is matter for councils to decide".
This latest threat is so far off the mark it is becoming laughable. But it is from an organisation that has continually tried to block energy efficient street lighting projects that councils have been seeking to undertake for a decade.
As it turns out, contrary to the letter, not a single CEEP council is retaining their assets so we're unsure how "their CEEP clients" could be retaining their assets! This is but one of many items in this letter that is patently untrue.
Ironbark have been working with one Victorian council to try and undertake contestable maintenance and retain ownership but it is proving much more difficult to implement in practice. We agree with the Federal Government - it's up to councils if councils want to vest then go for it. If they don't want to vest then don't. But they shouldn't be threatened by organisations peddling misinformation over and over again.
What is actually happening on the ground?
However let's start by looking at the dozen or so councils that have completed - or are in the process of completing - street lighting changeovers via CEEP funding and in line with funding agreements in the last eighteen months. Over the last 18 months these successfully implemented projects demonstrate that the threats around vesting and "losing your CEEP funding" are flying in the face of reality and the experience of councils, who are implementing their largest ever corporate emissions reduction projects. Here's what councils have successfully achieved:
It is council's choice - Read the Funding Agreement
A quick look at a CEEP Funding Agreement (page 6 if you want to see for yourself) defines an "asset" for the purposes of CEEP. Unless you are purchasing diamond-encrusted 24-carat gold-plated lights worth over $5,000 (per light), you have nothing to worry about.
It is council’s choice to go down the vesting or non-vesting path.
There are many complexities around street lighting ownership and regulation and councils are rightly frustrated by the power imbalances that exist. As councils who attended the NAGA Street Lighting Working Group meeting in late November 2013 learnt, simply “not vesting” the assets and “going out to alternative maintenance” isn’t as simple as quoting a few lines in a newsletter. Both street lighting bulk changes and successful contestable maintenance projects involve complex negotiations with DNSPs that must be held in good faith or else they fail.
We know this from experience, as Ironbark are the only consultant to be engaged by a Victorian council to develop a tender for street lighting that involved the option of not vesting and using an alternative maintenance provider. We developed their business case, we were also on their tender panel and we were even involved in recommending that an alternative provider be appointed!
Although maintenance and energy efficient lighting projects can be combined, the decision to complete an energy efficient bulk change and the decision to pursue a contestable maintenance program should be considered on their own merits and is council’s choice.
Contestable maintenance is risky, and while we’ll hopefully have some news very soon from that one Victorian council that engaged us, this risk is the reason why no Victorian council has successfully delivered a project of this type - yet. Energy efficient bulk changes on the other hand are so normal that 80% of Victorian councils have committed funding. Separating the decision-making is a sensible risk management strategy.
And remember that we know now that vesting the lights does not prevent you from later taking the assets back to tender for maintenance in the future. Arguing about vesting will only slow the projects and risk your funding. We know from painful experience that if you drag your feet you can miss out on millions of dollars.
Ironically you actually stand a greater chance of losing your CEEP money if you fight on the vesting front. Ironbark have tried this approach with several councils and will keep trying when councils wish to challenge the need for vesting (which can take years and may or may not be successful). However councils with CEEP funding understand that they do not have years and years but have CEEP Milestones that have to be met. And the misinformation and wildly inaccurate threats do not help council staff trying to implement these flagship projects.
Take a deep breath
In our view, a calm, patient and methodical approach will ensure that these success stories are delivered and Victorian councils can spend their electricity savings to benefit their communities. Electricity costs are wasted money – freeing up funds to invest in our communities is something truly worth working towards.
The threats are nothing new, and it’s the same old story you may have heard before. Nevertheless as a local government consultancy that represents councils on the Australian Standards Committee for Road Lighting and the Public Lighting Approvals Network (PLAN) our aim is to assist councils to reduce energy and maintenance costs. Ironbark was born out of the desire of councils wanting assistance to save money and energy in street lighting. We do not work for, or represent distribution business. We do not represent lighting suppliers. And we do not represent alternative maintenance providers.
We work for councils and we will always be there to refute misleading claims that threaten energy efficiency projects or funding.
As for those councils who have had project plans approved – it's now onto the next official CEEP Milestone and saving money, energy and emissions. We look forward to everyone else joining them, whichever path they decide to choose.