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Schedule TED and Schedule BR—Page 2 <br /> BACKGROUND: <br /> Temporary Economic Development Rate <br /> In the Mayor's State of the City Address in 2010, RPU was requested to provide assistance <br /> with a green economic development plan and to continue to take steps for Riverside to <br /> become the model solar city in Southern California. The RPU Electric Environmental and <br /> Economic Effectiveness (E4) Plan, approved by City Council in July 2010, was created to <br /> assist Riverside in continuing to be at the forefront of sustainability and developing a green <br /> economy while creating a market segment that can provide jobs and local economic <br /> development. The multi-faceted plan developed by staff promoted economic development <br /> while still being environmentally responsible. The plan included components for energy <br /> efficiency, renewable energy, green jobs, economic development, low income assistance, and <br /> an electric rate "freeze" through the end of 2012. <br /> An 18-month update of the E4 Plan and RPU's participation in the City's Seizing our <br /> Destiny/Economic Development Action Plan was presented to the Board of Public Utilities on <br /> March 2, 2012 and the City Council on March 6, 2012. The update of the E4 Plan included <br /> RPU's ability to assist in economic development by expanding the eligibility under the current <br /> Economic Development Rate Schedule to include certain businesses identified in the City's <br /> Seizing our Destiny/Economic Development Action Plan. <br /> RPU proposes to continue participation in the City's Seizing our Destiny/Economic <br /> Development Action Plan by creating a new Schedule TED that provides discounts of 30%, <br /> 20% and 10% for new qualifying electric customers through December 31, 2013, 2014 and <br /> 2015, respectively. Rate discounts would apply from the Otherwise Applicable Tariff. New <br /> customers must be a new commercial entity to the City and have a projected minimum monthly <br /> demand equal to or exceeding 20kW and not exceeding 500 kW, but are not otherwise limited <br /> by business type. Customers must agree to execute a TED agreement requiring <br /> reimbursement of the discounted rate should the customer cease operations or fail to maintain <br /> a minimum monthly demand of 20kW in any two of the preceding twelve months at any time <br /> through December 31, 2017. <br /> The Board of Public Utilities and City Council have the ability to address the current local <br /> economic conditions by creating Schedule TED and continuing to provide rate certainty and <br /> predictability for new small and mid-sized businesses in the community. Approximately 40 <br /> new customers located in Riverside would have qualified under the proposed Schedule TED. <br /> The existing Economic Development rate (Schedule ED) will continue to be used to attract <br /> larger commercial and industrial customers. <br /> In general, RPU delivers electricity to customers through distribution and transmission <br /> facilities. These facilities represent long-term capital investment whose dollars are spread <br /> amongst all customers and recovered over periods in the range of 20 to 30 years. Energy is <br /> produced and/or obtained from generation facilities through long-term contracts to meet base <br /> load needs, with cyclical and peaking needs obtained through short-term contracts, internal <br /> generation or on the open market. The purchases through short-term contracts and the open <br /> market represent the marginal cost of power for increased load requirements. RPU has a <br /> number of fixed costs which must be paid regardless of customer demand or load. Additional <br /> revenue generated by expanded load (new customers) will reduce the costs to existing <br /> customers, as the fixed costs will be allocated over a larger group of customers. Below is a <br /> brief description of RPU's fixed costs: <br /> 9-2 <br />