03-05-10 BPU RPT 11 - Laserfiche WebLink

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W A T E R I E N E R 5 Y , L I F E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: March 5, 2010 ITEM NO: 11 SUBJECT: NEW HIGH VOLTAGE ELECTRIC SERVICE AGREEMENT BETWEEN RALPHS GROCERY COMPANY AND THE CITY OF RIVERSIDE ISSUE: The issue before the Board of Public Utilities is consideration of approval to enter into a three-year, High Voltage Electric Service Agreement at a 69 kV level with Ralphs Grocery Company including 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 at a 69 kV level between Ralphs Grocery Company and the City of Riverside. BACKGROUND: Ralphs Grocery Company (Ralphs), with six (6) supermarkets located throughout Riverside and its grocery distribution center located at 1500 Eastridge Avenue is one of Riverside Public Utilities' (RPU) largest customers. Ralphs operates the nearly 1 million square foot grocery distribution facility which distributes dry goods, perishable products and dairy products for its stores located throughout Southern California. The facility includes a refrigerated warehouse that covers approximately half of the building. Ralphs has requested service at the high voltage level through this Electric Service Agreement. A High Voltage Electric Service Agreement is limited to large industrial customers that RPU determines can take delivery of their electricity directly from a substation at the 69 kV level in accordance with RPU Electric Rules and Rates. Furthermore,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 of Riverside and transmitted to the customer's facilities. This type of service is cost beneficial for only the few largest RPU customers who are billed for power at this wholesale rate. Ralphs currently receives delivery of their electricity from a 69 kV level substation. Their 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. Ralphs entered into an Electric Service Agreement with the City of Riverside in June 2000. The contract expired on May 1, 2009, and RPU staff is proposing entering into a new three-year contract with Ralphs, effective May 1, 2009 to May 1, 2012. The rate schedule was structured from the result of a recent Cost-of- Service study and includes Time-of-Use rates. Rates are calculated based upon cost components unique to each specific customer. FISCAL IMPACT: RPU recovers all costs required to serve this customer.