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W A T E R I E N E R G Y I L] F E RIVERSIDE PUBLIC UTILITIES III,& Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: SEPTEMBER 4, 2015 ITEM NO: 8 File ID — 15 -2811 — C SUBJECT: THE HIGH VOLTAGE ELECTRIC SERVICE AGREEMENT BETWEEN RALPHS GROCERY COMPANY AND THE CITY OF RIVERSIDE ISSUE: The issue for Board of Public Utilities consideration is approval of the First Amendment to High Voltage Electric Service Agreement at a 69 kV service level with Ralphs Grocery Company. RECOMMENDATION: That the Board of Public Utilities recommend that the City Council approve an First Amendment to High Voltage Electric Service Agreement between Ralphs Grocery Company and the City of Riverside, extending the term for three years. BACKGROUND: Ralphs Grocery Company (Ralphs) — with six supermarkets located throughout Riverside and its distribution center located at 1500 Eastridge Avenue — is one of Riverside Public Utilities' (RPU) largest customers. Ralphs operates a nearly one million square foot grocery distribution facility, which distributes dry goods and perishable products and produces various dairy products for its stores located throughout Southern California. This facility currently employs between 1,000 -1,100 workers onsite and operates on a 24/7 schedule. Approximately half of the facility is dedicated to refrigerated cold storage and uses steady base load power that results in an advantageous load profile for procuring and delivering energy to the site. Ralphs currently receives delivery of their electricity from a 69 kV level substation under a High Voltage Electric Service Agreement and has requested a three -year extension to the agreement through this Amendment. Agreements for high voltage electric service are limited to large industrial customers that RPU determines can take delivery of their electricity directly from a substation at the 69 kV service level in accordance with RPU Electric Rules and Rates. To qualify for the High Voltage rate, such large industrial customers must be located within suitable physical proximity of an existing substation as determined by RPU. The power is then transmitted from the substation through a line- specific, leased portion of the transmission system owned and operated by the City and transmitted to the customer's facilities. This type of service is cost beneficial for only some of RPU's largest customers who are billed for power at this high voltage rate. Ralphs suitable proximity to the Springs Substation, located within the Sycamore Canyon Business Park, is the primary factor for a cost effective rate under this agreement for 69 kV service. Since Ralphs takes delivery of power at this level, they are responsible for paying a portion of the operation and maintenance costs of the facilities located at the substation necessary to serve them at 69 kV, and are also responsible for internal distribution costs. Ralphs initially entered into a High Voltage Electric Service Agreement with the City in June 2000. The contract expired on May 1, 2009. Ralphs subsequently entered into a three -year High Voltage Electric Service Agreement with the City effective May 1, 2009 through April 30, 2012, and again entered into