Big Update on Street Lighting Contestability and Maintenance

Paul Brown

Street lighting contestability has hit the national headlines with an article on page 40 of the Australian Financial Review on Tuesday 12th August investigating the progress of Moreland and Sunshine Coast in their journeys to implement alternative street lighting maintenance programs. It’s a great article by the AFR’s Michael Bleby who clearly did his research and contacted a breadth of experts and the regulator to get their take. 

The article, “Lighten up, urges city” outlines the opportunities and the challenges that councils face in investigating third-party maintenance of street lights that are owned by Distribution Network Service Providers (DNSPs). As pointed out on many occasions over the few last years, this is an evolving area and the article explains that Moreland is shaping up as the “test case”. 

It touches on the potential of smart street lighting and the rise of the “Internet of Things” where individual objects have their own IP addresses and can communicate with each other, however acknowledging that for standard street lighting in Australia it’s probably a long way off because of the regulatory and ownership structures.

The article discusses Moreland’s experience over the last few years and the stalemate that has ensued between their DNSP Jemena and Council’s preferred supplier Citelum. The article states:

“Jemena basically are sitting back and hoping that by frustrating the process, ultimately the council will lose interest,” said Moreland chief executive Peter Brown. Jemena's response is blunt "OMR (maintenance) services are not contestant under the existing regulatory framework"

In Queensland a similar process is playing out with Sunshine Coast City Council investigating alternative maintenance. The article quoted Citelum’s Adam Carey and Council itself:

Citelum have already signed a contract that includes maintenance services with Queensland’s Sunshine Coast Council, Mr Carey said. “We’re involved in the process of transitioning the assets from (distributor) Energex to the council,” he said. He may be premature. The Sunshine Coast said that was not the case. “Owning the street lighting may be one of these opportunities,” it said. “The proposal is still in the early investigation states and we’ll work closely with Energex to achieve the best results.”

It’s clear that for the process to work and councils around Australia to reap the potential benefits from purchasing back street lighting assets there will have to be a great deal of negotiations with DNSPs in the spirit of cooperation. The article quotes the Australian Energy Regulator’s (AER) Chris Pattas, which explains why:

Unless a distributor agrees to give a third party access to its network for OMR [maintenance] services, it cannot be forced to, said Mr Pattas. “They’re not contestable if the distributor provides the services and continues to provide them,” Mr Pattas told The Australian Financial Review.

According to the article, the AER have recently clarified this position with Citelum and Moreland. 

This doesn’t mean contestable maintenance is not possible. It absolutely is, as outlined in this article from earlier this year. To be successful it will likely require councils to purchase street lighting assets from DNSPs and come to an agreement to access the DNSP's network. As confirmed again by the AER in the Financial Review article, councils can’t force DNSPs to do this. So it all comes down to negotiation, collaboration and time. Lots of time!

Interestingly, as councils wait and see how the Moreland and Sunshine Coast test-cases play out, some DNSPs have made it clear in the last few months that they are open to discussing and implementing alternative ownerships and maintenance models.

In an ever-changing environment, however, there are no silver bullets. Every single successful street lighting changeover in Australia – from Brisbane to northern NSW to Victoria and parts of WA – have involved negotiations and collaboration with DNSPs, in good faith.

As for Moreland, they have been one of the most progressive councils in Australia over many years and their work on street lighting will have lost them no admirers. Staff at Moreland were pivotal in seeking (and gaining) approval for the first energy efficient light in Victoria nearly a decade ago and have run endless trials on new technologies. Since 2007, the work on alternative maintenance has not led to any quick wins, but deserves the respect of the local government community in doing the hard yards in seeking a better understanding of what it is councils can reasonably do.

Having said that, Council still doesn’t have the energy efficient lights they wanted in the first place, and that neighbouring councils have implemented. They’ll still keep trying as the “test case”, but according to CEO Mr Brown, “at some point in time the city just has to call it”.