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RIVERSIDE PUBLIC UTILITIES Board Memorandum r' `z Et UTILITIES BOARD OF PUBLIC UTILITIES DATE: August 6, 2010 ITEM NO: 6 SUBJECT: FIVE-YEAR ELECTRIC RATE AGREEMENT WITH GOODRICH AEROSTRUCTURES GROUP ISSUE, That the Board of Public Utilities approve a contract with Goodrich Aerostructures Group that transitions the company from a contract rate to the published Time-of-Use rate over five years. RECOMMENDATION: That the Board of Public Utilities recommend that the City Council approve the electric rake agreement with Goodrich Aerostructures Group. BACKGROUND: Goodrich has historically benefitted from electric rates that are significantly below those of comparable Riverside Public Utility(RPU) customers. Goodrich has in turn provided a number of benefits to Riverside, including being an employer of varying levels of local residents, being a partner in lowering the City's peak electric demand, and implementing a number of energy efficiency initiatives. A noted intent of those energy agreements has been to evolve from contract energy rates towards RPU's standard published Time-of-Use (TOU) rates paid by all other large comparable retail customers. Starting in 1985, Goodrich entered into the first energy agreement with RPU. This contract was drafted to allow Goodrich (then Rohr) to run their newly constructed 3.6MW cogeneration unit to supply power to the facility and sell any excess power to RPU. The agreement was modified and/or amended in 1988 and 1994. In 1995, a Comprehensive Agreement for Power Purchases was negotiated in which Goodrich was to purchase all electric power from RPU and reserve the cogeneration power for facility and Riverside City emergencies. This agreement carne as a result of a State of California "Red Team" analysts that explored cost cutting measures to help retain Goodrich as a California business, specifically in Riverside. As the 1995 agreement approached expiration, RPU and Goodrich personnel met to draft a new contract and in 2005 Goodrich signed the Second Amendment to the electric service agreement. This five year contract expires in September 2010. The recitals of the contract discuss that Goodrich is subject to the existing TOU rate but was provided a significantly subsidized cost as an economic development tool. Like in the previous agreements, the discounted energy rates was considered short-term and intended to move Goodrich closer to RPU's standard TOU rate. Staff has been working with Goodrich over the past twelve months to prepare an electric rate agreement which transitions Goodrich over a five-year period to the published TOU rate paid by all other similar sized customers. Goodrich will be billed a flat kilowatt hour(kWh) rate during these five years. As of October 1, 2009 (the last year of the current agreement), Goodrich was charged 6.973 cents per kWh. Under the proposed agreement, beginning on October 1, 2010, this rate will be increased asset forth below in a cents per kWh format: