09-11-2012 CC RPT 09 - Laserfiche WebLink

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Schedule TED and Schedule BR—Page 3 Distribution and Transmission Costs: Cost recovery for distribution and transmission facilities are built into electric rates based upon the number and load of existing customers and include a limited growth factor. Cost recovery for these fixed-costs is spread over several decades so it would be possible to reduce or eliminate these charges for new customers over a limited time frame. This benefit could be made available to customers bringing significant new load to the utility if it were expected there would be a measureable long-term increase in revenues. Over a longer, several-year period, an increase of new customer load would help reduce the overall distribution and transmission costs for all customers. It would therefore be reasonable to defer chaminq full costs for distribution and transmission service to new large customer load for an initial three vear period if it were determined that the customer would permanently locate in RPU's service territory. Generation Costs: Energy costs for a significant new load represent RPU's marginal cost of power, a variable cost. At a minimum, any new customer should be charged for this marginal cost to ensure RPU receives revenues to cover new costs. Marginal costs do not include all fixed costs, so the rate should be transitioned to the average cost within a short period of time. Load analysis from RPU staff show that state renewable requirements create pressure on rates. Without load growth, which will come primarily from business customers, rates increases will be higher than if RPU doesn't realize load growth. This is because there are stranded assets at Intermountain Power Project (IPP) for which RPU will still be required to pay significant fixed costs for which RPU will not obtain any energy. Therefore the load growth RPU encourages from our commercial/industrial customers benefit all customers by resulting in lower rates. Standard Temporary Economic Development Rate Agreements A standard agreement format will be used in securing contracts with customers who are eligible for and are approved for Schedule TED. A pre-approved standard agreement assures a fair and non-discriminatory approach, and will expedite the process and simplify approval. The Agreement will be for a period not to exceed 64 months, and will include provisions for the customer to reimburse RPU for the discounted rate should the customer cease operations in Riverside or fails to maintain a minimum monthly demand of 20kW in any two of the preceding twelve months during the term of the Agreement. Applicability for Schedule TED will be determined by the General Manager, in accordance with the guidelines which are included in the proposed Resolution. The guidelines include objective criteria by which the General Manager will make his recommendation. The customer must sign the standard Temporary Economic Development Rate Agreement in order for Schedule TED to be applicable. The City Attorney's Office has approved the proposed format for the Temporary Economic Development Rate Agreement ("TED Rate Agreement"). Business Retention Rate RPU also proposes to continue participation in the City's Seizing our Destiny/Economic Development Action Plan by extending the existing agreement deadline date of Schedule BR. Currently, customers who qualify for Schedule BR must have an agreement executed prior to December 31, 2012. RPU proposes to extend the agreement execution deadline through December 31, 2015. 9-3