Report to General Committee – Finance and Administration
	TO:	Mayor and Members of Council
	FROM:	Peter Loukes, Director of Operations and Asset Management
	PREPARED BY:	Alan Laver, Manager of Contracts and Utilities Kevin Newson, Purchasing Manager
	DATE OF MEETING:	August 29, 2005
	SUBJECT:	065-S-05 Contract Award for Streetlight Maintenance 2005, Power Stream

RECOMMENDATION:

THAT the tendering process be waived in accordance with Purchasing By-Law 2004-341, Part II, Section 7 (1) (c) which states “when the extension of an existing contract would prove more cost-effective or beneficial”;

AND THAT the 2005 Streetlight Maintenance and Repairs contract be awarded to the single sourced vendor Power Stream in the 2005 amount of $659,554 exclusive of GST to expire on December 31, 2005;

AND THAT funds will be provided from account # 720 720 5497 Light Maintenance Repair in the amount of $418,058 with the shortfall, estimated to be $241,496, to be included in the analysis of the year-end forecast to be presented to Council in September 2005;

AND THAT Operations and Asset Management, in consultation with Finance Department, review in 2005 options available for streetlight maintenance including continuing with Power Stream prior to the award of the work for 2006;

AND THAT Operations and Asset Management and the Finance Department review with Power Stream energy charges based on the off peak time frame usage associated with streetlighting;

AND THAT Operations and Asset Management arrange for any pilot metering projects that may be requested by Power Stream to substantiate typical streetlighting energy use.

BACKGROUND:

Power Stream has historically been the provider of streetlight maintenance services for the Town. Currently there is an inventory of over 18,400 streetlights within the Town’s boundaries. The Town’s streetlight electrical supply circuits are now integrated into the existing hydro system and require certified personnel (Journeyman Linemen) to maintain any live portion of the system.

The services provided now by Power Stream include repairs to damaged poles and fixtures, replacement of burned out bulbs (based on residents’ requests and outages reported by the Operations Department’s regular patrolling) underground/overhead supply line repairs, and locating services for underground infrastructure. The service also includes costs for the yearly re-lamping and cleaning program (all lamps are replaced on a 5 year rotation, as part of a preventative maintenance program), 2602 units are scheduled to be replaced in 2005.

Damage repairs and routine maintenance items such as bulb replacements/relamping are based on estimates provided by Power Stream and payments are made to Power Stream based on the actual certified cost for materials and labour.

Power Stream, in estimating their 2005 costs, has qualified that costs must now reflect a “fair market value” in order to comply with the “Affiliate Relationship Code”. This is due to the revised status/ownership of the organization. The costs now will include additional administrative and managerial costs that have not been charged in the past. Therefore, costs related to maintenance will increase in 2005 over 2004. Power Stream has previously been directed to maintain their service in 2005 and discussions/review of other alternatives (private contractor, additional Town staff, etc., or combination of such) will be reviewed by Operations and Asset Management in consultation with the Finance Department for recommendation for 2006.

Streetlight energy costs are at present being billed at rates approved by the Ontario Energy Board that do not take into consideration the off peak use of power associated with streetlighting. As the province and local hydros are promoting the use of off peak power, which is available to Power Stream in larger quantities at reduced rates, streetlighting would appear to naturally fall into this category. Operations and Asset Management and the Finance Department would like to open discussions with Power Stream regarding reduced rates for off peak power usages that if approved should provide substantial savings to the Town. As the existing lighting system is not metered (billing is now established based on an estimated dark hours/month table) Power Stream may require actual metering examples to determine typical street light power requirements. Operations and Asset Management can arrange for such pilot metering projects as may be required through discussion with Power Stream.

FINANCIAL CONSIDERATIONS:

Based on actual service calls in the past two years, the Town projects 1,383 general maintenance, 62 line burn-outs, and 2,602 re-lamping service calls for 2005. Details on the history and projections are presented in the chart below:

Although it is difficult to project the number and severity of streetlight failures necessitating service calls, the average for the past two years was used as the volume or number of expected occurrences basis for the award of this contract.

Power Stream also tracks and projects the Town’s streetlight maintenance requirements (e.g. number of occurrences and total anticipated cost) on an annual basis. The cost of individual service calls may differ due to the complexity of the repairs/work required. Based on Power Stream’s projections, Town staff determined the average price per occurrence to be $286.92, $2,849.51, and $33.08 for general maintenance, line burn-outs and re-lamping, respectively. When compared to 2004 average unit prices, the 2005 average rates have increased 82%, 10% and 5% for general maintenance, burn-outs and re-lamping, respectively. The increase is effective January 1, 2005.

Based upon the unit prices shown above and the average occurrences for the past two years, the purchase order for street light maintenance will be awarded to Power Stream in the amount of $659,567 for 2005 calculated as follows:

The 2005 Operating Budget for Street Light Maintenance is $418,058 in account 720-720-5497. The anticipated shortfall of $241,496 ($418,058 - $659,554) will be included in the analysis of the 2005 year-end forecast. The analysis will determine if the $241,496 can be offset by projected surpluses in other operating accounts. The year-end forecast will be presented to Council in September, 2005.

The 2006 budget will be adjusted accordingly based on projected occurrences for 2006 and anticipated cost increases. The Operations and Asset Management Department with Finance will review alternatives for the 2006 streetlight maintenance project.

In addition the review of off peak power usage with Power Stream if acknowledged and billed at a reduced rate could provide substantial savings to the Town.

Peter Loukes, P. Eng., Director of Operations and Asset Management

Jim Sales Commissioner of Community Services and Fire

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