HomeMy WebLinkAboutD-2.1. Approval to Extend Electric Rate Schedule EDR-3_ApprovedD-2
SCHEDULED ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES 6,vl. 'f{L
DATE: JUNE 24, 2019
SUBJECT: APPROVAL TO EXTEND ELECTRIC RATE "SCHEDULE EDR-3"
BACKGROUND:
The current Economic Development Rate-3 (EDR-3) was approved by the Utility Board in 2015
and is set to expire on June 30, 2019. EDR-3 provides a discounted electric utility rate to new or
expanding businesses for a period up to five years, and it has been successfully used as part of an
economic development package to attract such customers to locate in Azusa. The proposed
action would approve the continuation of the EDR-3 rates until canceled or replaced and extend
them to customers offering medical and lodging services within Azusa.
RECOMMENDATION:
Staff recommends the Utility Board approve the following action:
1)Adopt Resolution No. 2019-UB-08 approving i) an extension of Electric Rate "Schedule
EDR-3 -Economic Development Rate-3" electric rates to new or expanding non
residential customers until canceled or replaced and ii) extend the applicability of the
EDR-3 electric rates to customers offering medical and lodging services.
ANALYSIS:
The current Economic Development Rate adopted by the Utility Board in 2015 will expire on
June 30, 2019 for new customers.
Schedule EDR-3 currently provides new customers a potential declining electricity rate discount
of up to 40% over a 5 year period. Staff believes that providing discounted electricity prices for
new commercial and/or industrial customers is an important tool for the City as it promotes
economic development in the community. For many new and/or expanding businesses, the cost of
electricity is an important factor in their decision to invest in Azusa. Azusa Light & Water
believes that the availability of discounted electric rates could make a difference in the
decision by a commercial/industrial entity to locate or expand locally. As such, it is
proposing to extend the existing Schedule EDR-3 to better reflect the current local economic and
market conditions.
UB-11
Approved
Utility Board
06/24/19
Economic Development Rate Extension
June 24, 2019
Page 2
A summary of the key aspects of the proposed Schedule EDR-3 is as follows:
•Commercial/industrial customers occupying new buildings/facilities, or existing space that
has been vacant for 180 days or longer, would receive a 15% discount for the first 36 months
and a 10% discount for the next 24 months.
•Discounts will be effective for a 60 month period.
•An additional 15% discount for 12 months and 5% for the following 24 months would apply
to those customers who qualified above and who have developed property owned or
previously owned by the City or the City’s redevelopment agency.
•An additional 15% discount for 12 months and 5% for the following 24 months would apply
to those customers who are providing new or expanded industrial load of at least 100 KW
with a minimum “load factor” of 50 percent.
Below shows above discounts for respective customer types:
Category Year
1
Year
2
Year
3
Year
4
Year
5
New Commercial/Industrial Customers in New
Building or Space vacant for over 180 days 15% 15% 15% 10% 10%
1.New Commercial/Industrial Customers who
have developed property owned, or previously
owned, by City
+15%+5%+5%+0%+0%
2.New or Expanded Industrial Customer load of at
least 100KW and a minimum 50% “load factor”+15%+5%+5%+0%+0%
3.New Commercial/Industrial Customers
otherwise qualified for EDR-3 with primary
business in “Special Retail Categories”
+5%+5%+5%+5%+5%
4.New Commercial/Industrial Customers
otherwise qualified for EDR-3 located in
“Downtown Azusa”
+5%+5%+5%+5%+5%
•A customer may only receive either discount 1 or 2 above, but not both. The “Special Retail
Categories” and “Downtown Azusa” discounts (3 and 4 above) are additive and both may
apply to customers who qualify.
•Discounts would not apply to various bill surcharges/taxes as defined in the rate schedule.
•Entities who received approved plans/permits or development agreements, and initiated
electric service prior to April 1, 2019, are not eligible for Schedule EDR-3.
UB-12
Economic Development Rate Extension
June 24, 2019
Page 3
Staff has reviewed the projected financial impact of the proposed Economic Development discounts.
Even at the maximum discount level, the retail revenue to be received by the utility for energy new
EDR-3 customers is projected to be in excess of current and projected market price of wholesale
electricity available to Azusa.
FISCAL IMPACT:
This is a continuation of the existing Schedule EDR-3, so there will be no fiscal impact as
compared to the budgets going back to 2015. Also, the discounts provided under EDR-3 will last
only 60 months, therefore the impact of any discounts is relatively short term and full rate
recovery would continue for many years beyond the discounted period.
Prepared by: Reviewed and Approved:
Paul Reid Manny Robledo
Utility Programs Specialist Director of Utilities
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Resolution No. 2019-UB-08
2)Schedule EDR-3
UB-13
1
RESOLUTION NO. 2019-UB-08
A RESOLUTION OF THE UTILITY BOARD / CITY COUNCIL OF
THE CITY OF AZUSA, CALIFORNIA, APPROVING ELECTRIC
UTILITY RATE SCHEDULE “EDR-3 ECONOMIC
DEVELOPMENT RATE - 3” PROVIDING ECONOMIC
DEVELOPMENT INCENTIVES FOR QUALIFIED
NONRESIDENTIAL ELECTRIC CUSTOMERS
WHEREAS, pursuant to Section 78-37 of the Azusa Municipal Code, the Utility
Board / City Council is required to adopt rules and regulations governing the operation
and services provided by the Azusa Light & Water Department; and
WHEREAS, the City of Azusa owns and operates an electric utility that provides
electricity to over 16,500 metered accounts; and
WHEREAS, the City of Azusa has a comprehensive program to promote
economic development in the community; and
WHEREAS, discounted electric rates for new commercial and industrial entities
will help attract such businesses to the City of Azusa; and
WHEREAS, discounted electric rates for qualifying industrial businesses that are
existing customers of Azusa Light & Water will help them expand their operations in the
City of Azusa; and
WHEREAS, the expansion of commercial and industrial business activity inside
the City of Azusa is vital to the local economy and provides jobs to residents of Azusa;
NOW, THEREFORE, THE UTILITY BOARD/CITY COUNCIL OF THE
CITY OF AZUSA, CALIFORNIA DOES RESOLVE, DECLARE, DETERMINE,
AND ORDER AS FOLLOWS:
1.That the “EDR-3 Schedule Economic Development Rate -3”, attached
hereto as Exhibit A, is hereby modified and included in Azusa Light & Water
Rules and Regulations.
2.That Schedule EDR-3, attached hereto as Exhibit A, shall become
effective on July 1, 2019.
3.The City Clerk shall certify the adoption of this Resolution.
PASSED, APPROVED and ADOPTED this 24th day of June, 2019.
UB-14
2
___________________________________
Joseph Romero Rocha
Board Member/Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
Secretary/City Clerk
UB-15
3
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution 2019-UB-08 was adopted
at a regular meeting of the Azusa Utility Board on the 24th day of June, 2019, by the
following vote of the Council:
AYES: BOARD/COUNCILMEMBERS:
NOES: BOARD/COUNCILMEMBERS:
ABSENT: BOARD/COUNCILMEMBERS:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
Secretary/City Clerk
APPROVED AS TO FORM:
___________________________________
City Attorney
Best Best & Krieger
UB-16
Changes to take effect July 1, 2019, text to be deleted is highlighted in strikeout.
Changes to take effect July 1, 2019, text to be added is highlighted in underline.
Text that is not highlighted is current and is being provided for context and reference.
EXHIBIT A
SCHEDULE EDR-3
ECONOMIC DEVELOPMENT RATE-3
Applicability:
Applicable to qualified non-residential customers receiving electric service from Azusa Light &
Water for the purpose of (i) incenting businesses occupying new buildings/facilities or certain
vacated commercial space, (ii) industrial business attraction and/or expansion; (iii) developing
properties which either are or had been owned by the City of Azusa or its redevelopment agency
for development purposes or (iv) encouraging the location of new commercial customers in
special retail categories or locations in the service area; as provided below.
Territory:
Within the electric service area of the City of Azusa.
Rate:
New non-residential customers occupying space in (i) new buildings/facilities or (ii) existing
commercial buildings/facilities that have been vacant for one hundred and eighty (180) days or
longer, are eligible to receive a discount equal to 15% of the electric bill associated with the
qualifying facility electric load for the first 36 months and a discount equal to 10% for the next
twenty four months. In addition, certain customers may qualify for additional discounts as
described below, provided that no customer may receive both additional discount 1 and
additional discount 2.
1.Additional Discount New Non-residential Customers developing “City of Azusa Owned
Property”
Non-residential customers who are otherwise qualified to receive an EDR-3 discount and who
develop City of Azusa Owned Property are eligible to receive an additional 15% discount to their
electric bill for the first 12 months and an additional 5% discount to their electric bill for the next
24 months. “City of Azusa Owned Property” shall mean property owned by the City of Azusa or
the Azusa Redevelopment Agency on January 1, 2012.
2. Additional Discount for New or Expanded Industrial Load
Industrial customers otherwise qualified for an EDR-2 discount are eligible to receive an
additional 15% discount to their electric bill for the first 12 months and an additional 5%
discount to their electric bill for the next 24 months if the new or expanded industrial load is (i)
sized at 100 KW or greater and (ii) is projected to have a monthly load factor of 50 percent or
higher. The discount is only payable for months that the customer’s load meets these two criteria.
UB-17
For expanded industrial load, the discount is only applicable to the electricity usage associated
with the expanded load. If the expanded load cannot be separately metered, the utility will
estimate the portion of a customer’s electric bill associated with the expanded load An Industrial
Customer is one who operates facilities that are primarily used for the manufacturing of goods.
3. Additional Discount for New Non-residential Customers in Special Retail Categories
New non-residential customers who are otherwise eligible to receive an EDR-3 discount and
whose primary business is: (i) Building Materials and Garden Equipment, (ii) Food & Beverage
stores, (iii) Clothing & Accessories, (iv) Medical Services, (v) Lodging Facilities, or (vi) Food
Services & Drinking Places, are eligible to receive an additional 5% discount to their electric bill
during the term of their EDR-3 discount.
4. Additional Discount for New Non-residential Customers Locating in Azusa Downtown
New non-residential customers who are otherwise eligible to receive an EDR-3 discount and
who are located in “Azusa Downtown” (which is defined as the area between E. 5th Street to the
south, E, 9th Street to the north, N. Pasadena to the east and N. San Gabriel Avenue to the west),
are eligible to receive an additional 5% discount to their electric bill during the term of their
EDR-3 discount.
Special Conditions:
1.Schedule EDR-3 shall continue to be effective and applies to customers who receive a
permit or development agreement from the City of Azusa to build/modify qualified non-
residential facilities/businesses.
2.Customers desiring to take advantage of Schedule EDR-3 must file an application
with Azusa Light & Water for approval not later than 90 days following initiation of
electric service to the qualified new or expanded load. Applicants are encouraged to
submit an application as early as possible in their siting/development process in order to
ensure the applicability of the EDR-3 rate and the level of associated discounts for their
planned location.
3.Upon approval and initiation of electric service, EDR-3 discounts shall apply for a period
of sixty (60) months subject to paragraph 7 below.
4.The EDR-3 discounts shall not apply to the CEC fee, State Energy Tax, Public Benefits
charge or any other assessment or charge levied on electric bills after the effective date of
this rate schedule unless specifically provided otherwise. The EDR-3 discounts shall
apply to the Power Cost Adjustment or any successor surcharge/factor related to power
supply costs.
5.Expanded industrial load must be separately metered or sub-metered to enable
verification of the minimum additional load requirement. Such metering shall be at the
customer’s cost. The industrial discount premium shall not apply for any billing period
that the qualified industrial load does not meet the minimum size or load factor.
UB-18
6.Food & Beverage stores shall be a minimum of 7,500 square feet in size. Food Services
& Drinking Places must offer sit down service, have a full liquor license and be 1500
square feet or larger. The Utility Board may make exceptions to either of these
qualifications if dictated by special circumstances.
7.Light & Water shall be responsible for (i) establishing/enforcing rules and procedures for
administering this rate schedule and (ii) determining whether customers meet the
qualifications set forth herein. Customers shall provide information on a timely basis for
the purposes of verifying eligibility and administering the terms of this rate schedule.
8.Schedule EDR-3 shall remain available for new qualified customers until canceled or
modified.
9.Customers terminating their electric service prior to completion of the 60 month discount
period, and who do not immediately transfer service to a successor at that location with a
similar scale operation for the remaining discount term, shall be required to refund a pro
rata portion of their discount in excess of 15% based on the length of time still remaining
in the discount period. For example, a customer terminating service after 40 months shall
be responsible for repaying 20/60 (i.e. 1/3) of the dollar amount of the discounts
previously received in excess of the 15% level.
10.The Director of Utilities shall be responsible for implementing this rate schedule to
include determination of whether or not an applicant qualifies hereunder for a discounted
service.
11.The Azusa Utility Board may modify or eliminate EDR-3 at any time provided that such
modifications or elimination shall not affect entities that have been previously approved
for service under EDR-3.
UB-19