02-15-2013 BPU RPT 04 - Laserfiche WebLink

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W A T E R E N E R G Y L t f € - RIVERSIDE PUBLIC UTILITIES kv& Board Memorandum PUBLIC UTILITIES BOARD OF PUBLIC UTILITIES DATE: February 15, 2413 ITEM NO: 4 SUBJECT: NEW HIGH VOLTAGE ELECTRIC SERVICE AGREEMENT BETWEEN RAISER PERMANENTE AND THE CITY OF RIVERSIDE ISSUE. The item for Board of Public Utilities consideration is approval of a three-year High Voltage Electric Service Agreement with Kaiser Permanente Hospital (Kaiser) which includes a new adjusted rate schedule. RECOMMENDATION: That the Board of Public Utilities recommend that the City Council approve a three-year High Voltage Electric Service Agreement with Kaiser Permanente, from January 1, 2013 through December 31, 2015. BACKGROUND: Kaiser, with its Riverside medical and hospital facility located on Magnolia Avenue, is one of Riverside Public Utilities' (RPU) largest customers. Kaiser is unique among RPU's electric customers as they are one of only four large customers that receives substation service; energy that flows directly to its facility from a high voltage substation. Customers with very large electricity needs may qualify for this service according to the RPU Electric Rules and Rates Schedule. This type of service is cost beneficial for only the few largest RPU customers who are billed for power with rates that reflect high voltage service apart from the distribution system costs. Kaiser receives delivery of their electricity at the 69 KV level substation. The power is then transmitted from the substation through a line-specific, leased portion of the transmission system owned and operated by the City of Riverside and transmitted to Kaiser's facilities. Their suitable proximity to the substation is another primary factor for a cost effective rate under this agreement for fig KV service. Kaiser entered into its first Electric Service Agreement with the City of Riverside in October 1998. Their current contract extension expired on December 31, 2012, and RPU staff is proposing entering into a new three-year contract with Kaiser from January 1, 2013 to December 31, 2015. The rate schedule (Exhibit "C" of Attachment 1) includes an estimated 2.6% rate increase retroactive to January 1, 2013, a 1.0% rate increase effective January 1, 2014, and a 1.4% rate increase effective January 1, 2015. The rate schedule was structured as a result of a recent Cost-of-Service study and includes Time-of-Use rates. The rate structure also includes components for energy, transmission, substation lease and substation maintenance. FISCAL IMPACT: The composite rate will adjust by an estimated 5 percent increase over the next three years. Approval of the rate contract will yield revenue of approximately $2,400,004 annually.