Archived decisions

South Coast Street Lighting Private Finance Initiative

1. On 23 January 2006 Cabinet authorised the Director of Environment to prepare and return an Expression of Interest to the Department for Transport (DfT) seeking Private Finance Initiative (PFI) funding to renew and upgrade Hampshire's street lighting stock.

2. In July 2006 the County Council was informed that the Minister would like the County Council to submit an Outline Business Case (OBC) to support the proposals. The Minister also requested the Council to examine the opportunities for joint working with Southampton City Council and West Sussex County Council, both of whom had submitted separate PFI bids.

3. On 26 March 2007 the Cabinet approved the submission of a joint OBC with the other two Councils. The OBC followed DfT guidelines and the economic case justified the required PFI credits on the basis that increased lighting levels across the network would reduce night-time road accidents, crime and fear of crime. This demonstrated an economic return on the investment of 6.54 times the value of the capital works programme. This ratio between economic benefit and costs is the key factor in allocating DfT resources.

4. After a lengthy evaluation period the DfT awarded £225 million of PFI credits (a type of Government grant) on 11 February 2008. This was for a joint procurement exercise to be undertaken by the three Councils together. A PFI arrangement will cover the investment, maintenance and operation of street lighting over 25 years. Investment will be targeted to the first five years of the contract with an obligation to maintain all apparatus for the remaining 20 years of the contract. The Service Provider will also have an obligation to hand back apparatus with a defined residual life.

5. The County Council is now in the process of procuring the replacement of a substantial part of its street lighting stock and discussions with the two selected bidders in the competitive dialogue process are drawing to a conclusion. Pursuant to this, the Cabinet considered a further report on 24 November 2008 /decisions/decisions-docs/081124-cabine-R1116184235 which explained the anticipated timetable for bid evaluation and contract signing (preferred bidder status expected to be announced in March 2009, with the contract being signed in June 2009 and service commencement programmed for autumn 2009).

6. A major part of the procurement process that is being undertaken is the replacement of lighting with white, fluorescent lights that are more energy efficient. In above average crime residential areas, lighting levels will be increased to the current British Standard on key traffic routes and/or in town centres. Elsewhere lighting will be replaced at a lighting level similar to the current standard. This more targeted approach to lighting levels will maximise value for money, improve the feeling of safety yet also reduce the Council's carbon footprint. Both bidders have been provided with the Council's affordability parameters and the amount of Government grant available and bids are expected to be within these financial limits, subject to the County Council's final specification.

7. A key element of the service specification includes potentially being able to monitor and adjust lights remotely from a control room, rather than by a site visit to each streetlight to alter the dimming level. Cabinet have agreed to pursue the installation of remote monitoring equipment if this proves affordable and the share of risk is acceptable, given the much greater flexibility over lighting levels this will offer over the 25 year life of the contract.

8. The technology to achieve this remote switching is not yet fully proven and as such further details will emerge in the final stage of the procurement process. Cabinet made clear that it did not support lights being turned off after midnight, given public views on this option but noted that the originally anticipated increase in energy consumption costs was likely to be erased and brought down to zero on the basis of the revised specification being recommended.

9. The PFI procurement process is progressing well. The timetable for completion of the process is being actively managed and Cabinet members will continue to be kept informed. The replacement of the current, ageing street lighting stock will have a significant impact on safety and security for all.

10. The Cabinet authorised the Director of Environment to agree the final specification and procurement details, in consultation with the Executive Members for Policy & Resources and Environment respectively.