AMENDMENT TO THE LIGHT AND POWER RATE ORDINANCE TO INCLUDE AN

ECONOMIC DEVELOPMENT RATEFOR QUALIFIED BUSINESSES

 

City CouncilNovember 2, 2015

Item 10

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Reason

• Implement Recommendation of Economic Development Task Force to:

“Provide utility incentives or flexible payment terms to targeted job producers that upgrade outdated facilities.”

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Criteria

• Eligible type of business ( use NAICS codes)• Customer must have new or incremental

electric service minimum of 50 kW or 10% of existing demand, whichever is greater.

• Customer must pay all electrical interconnection costs prior to electrical work.

• Discounts are limited to a maximum of $100,000 for each customer.

• Customer is required to enter into a contract with the City to take service under this rate schedule.

Econ Dev Strategic Plan

Task Force

• Engineering

• Technology / R&D

• Finance

• Healthcare

• Design

• Dining and Retail

Proposed Incentive

Engineering

Technology / R&D

Manufacturing

Construction

Dining

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Three Digit NAICS codes

NAICS Industry Group

 Construction Group236 Construction of Buildings

237Heavy and Civil Engineering Constr.

238 Specialty Trade Contractors

Information Group511 Publishing512 Motion Picture513 Television514 Online data517 Telecommunications518 Data Processing519 Internet publishing/other

Single Classifications541 Prof. Science, Technology

722 Restaurant

NAICS Industry Group

Manufacturing Group311 Food 312 Beverage 314 Textile Product315 Apparel322 Paper323 Printing325 Chemical326 Plastics and Rubber327 Non Metallic Mineral332 Fabricated Metal333 Machinery334 Computer and Electronic335 Electrical Equipment336 Transportation337 Furniture339 Misc (Medical, sports, toys)

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R & D - Recent

• 98 N San Gabriel:   Warehouse that was upgraded to R&D (2006)> Three 250 kW transformers> $52,795 ($15,251 labor)

• 404 N Halstead: Caltech start-up had to upgrade power (2012)> One 300 kW transformer> $27,404 ($4,941 labor)

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R & D – Potential Upgrades

• Pasadena BioScience Collaborative – limits on power (and inability to pay for upgrade) have limited their expansion and ability to acquire new equipment The property owner is required to install a private property vault, transformer and 1000amp 120/208V switch gear served from the underground system.

• 125 N Vinedo:  Example of warehouse that would be good candidate for upgrade to R&D

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Restaurants

• 1347 N Lake:  Example of retail that would be good candidate for upgrade to restaurant

• 180 S Lake Avenue: Lost ground floor restaurant because building owner did not want to pay for power upgrade costs

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Option 1: Discount Interconnection

• An up front discount on costs to install new or upgraded interconnection from the customer’s meter to PWP’s electric distribution system

• Covers labor and administrative costs for work performed by PWP staff (not contractors)

• Costs normally charged to the customer per Regulation 21, Electric Service Requirements

• Maximum discount: $200 per kW of incremental load or $100,000 per customer

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Option 2 – Three year rate discount

• A discount on the customer’s otherwise applicable electric rates for three years>Year 1 – 20% discount off the electric charges>Year 2 – 10% discount off the electric charges >Year 3 – 5% discount off the electric charges

• Covers Energy Charges, Transmission Charges, and Distribution Charges associated with the new or incremental load

• Maximum of $100,000 per customer

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Example Rate Discounts

Customer Size

50 kW 150 kW 300 kW1,000 kW

Monthly Bill 2,706 8,102 16,049 49,515

Year 1 Discount

9,302 27,907 55,157 100,000

Year 2 Discount

6,202 18,605 36,771 0

Year 3 Discount

3,101 9,302 8,072 0

Total Savings

18,605 55,814 100,000 100,000

Existing Customer Base

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Industry Group

No of Cust

Avg/Max

Demand

Avg Revenu

e

Total Revenu

e

Construction 21 6/50 5,055 107,847

Manufacturing 123 43/588 18,399 2,266,140

Information 80 32/555 26,232 2,096,382

Prof, Sci, Tech 125 21/1,890 11,137 1,392,146

Restaurant 249 28/460 20,714 5,166,298

All Groups 599 28/1,890 18,417 11,028,813

Existing Customer Base >50kW

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Industry Group

No of Cust

Avg/Max

Demand

Avg Revenu

e

Total Revenu

e

Construction <1 -- Partial Year --

Manufacturing 20 184/588 88,702 1,796,255

Information 7 281/555 197,820 1,384,740

Prof, Sci, Tech 5 424/1,890 187,752 844,884

Restaurant 47 88/460 54,588 2,583,844

All Groups 79 149/1,890 83,667 6,609,723

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First Source – Not Recommended

• Pasadena’s First Source hiring program (PMC Chapter 14.80) was established to encourage certain local hiring for new development projects that receive public money.

• This incentive is encourage power infrastructure upgrades that will lead to future job growth

• The labor related to the install of new or upgraded connections to PWP’s electric distribution system is conducted by PWP staff and/or approved subcontractors.

Recommendation

• Find that the proposed action is not a project subject to the California Environmental Quality Act (“CEQA”),,

• Direct the City Attorney to prepare an amendment to Pasadena Municipal Code (“PMC”) Chapter 13.04, the Light and Power Rate Ordinance to include an Economic Development Rate schedule as described herein.