07-20-12 BPU RPT 12 - Laserfiche WebLink

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RIVERSIDE PUBLIC UTILITIES Board Memorandum PUBLIC U T I L I T I E 5 BOARD OF PUBLIC UTILITIES DATE: July 29, 2912 ITEM NO: 12 SUBJECT: THIRD ENERGY AGREEMENT BETWEEN UNIVERSITY OF CALIFORNIA RIVERSIDE AND THE CITY OF RIVERSIDE ISSUE: In 1998,the City of Riverside entered into a Strategic Energy Agreementfor energy service with University of California Riverside(UCR)that has subsequently been amended twice and expired in September 2911. A new five year comprehensive electric energy agreement between the University of California Riverside and the City of Riverside is proposed. RECOMMENDATION: That the Board of Public Utilities recommend to the City Council approval of the Third Energy Agreement between the City of Riverside and the University of California Riverside to provide electric services as stipulated in the Agreement. BACKGROUND: The University of California at Riverside (UCR)is Riverside Public Utilities'(RPU)largest customer. UCR is unique among RPU's electric customers as they take their energy delivery for the majority of the main campus area at a substation that is almost exclusively utilized by UCR. UCR then delivers this electricity through a distribution system on the main campus that it owns and operates. Therefore, RPU does not charge UCR for the cost of delivering electricity on the main campus through the Utility owned distribution system as we do for other customers. UCR has also shifted a significant portion of their electricity usage to off-peak periods, generally between midnight and 6:99 a.m., through installation of several Thermal Energy Storage (TES) systems. A TES system cools water during off peak hours and then uses the cold water as a means to air condition the main campus during peak afternoon and early evening hours. UCR has air conditioning needs 24 hours a day, every day of the year. This approach helps smooth UCR's load, making energy purchases by RPU more economical. Due to this more predictable, consistent use, RPU can purchase additional base load resources to serve UCR's load profile to provide a mutually beneficial rate agreement. Cost savings to the customer of 15-20 percent are expected when obtaining service at a 69kV rather than the 12kV rate. As UCR takes service delivery at the 69kV level, it requires them to purchase and maintain several million dollars of substation equipment to operate their own main campus distribution system (this is an option available to all customers, but is only cost beneficial for the largest few). RPU owns the substation, and wishes to continue to do so in order to provide unlimited access to maintain and repair the overall City system. In order to procure the lower rate associated with 69kV service: UCR will lease the substation equipment from RPU during the term of the contract with the option to purchase the equipment if RPU chooses to sell the substation equipment. Another vital component of the contract and recommended rate structure is UCR's ability to shed substantial load on short notice. This Agreement provides for a rebate of$1,000,909 for UCR to install additional TES system capacity or to provide rebates for solar projects.