09-26-2016 BPU RPT 12 - Laserfiche WebLink

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L'; A I= R E V E R L Y I I F F Jwl == RIVERSIDE PUBLIC UTILITIES 69& Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: SEPTEMBER 26, 2016 ITEM NO: 12 SUBJECT: THREE -YEAR ELECTRIC SERVICE AGREEMENT WITH THE UNIVERSITY OF CALIFORNIA, RIVERSIDE FOR APPROXIMATELY $34 MILLION IN ELECTRIC REVENUE AND THE USE OF APPROXIMATELY $2.5 MILLION IN PUBLIC BENEFIT FUNDS FOR QUALIFIED ENERGY EFFICIENCY PROJECTS ISSUE: Approve a three -year Electric Service Agreement between the City of Riverside and the University of California Riverside. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: Approve a three -year Electric Service Agreement between the City of Riverside and the University of California Riverside to provide electric services as stipulated in the agreement; and 2. Authorize the City Manager, or his designee, to execute the agreement. BACKGROUND: In 1998, the City of Riverside (City) entered into a strategic energy agreement for electric services with the University of California Riverside (UCR). The Electric Service Agreement has since been subsequently amended three times and expired on August 31, 2016. RPU staff is recommending the approval of a new, three -year Electric Service Agreement between UCR and the City that transitions this customer to the Large General and Industrial Service Time of Use Rate. Over the three years of this Electric Service Agreement, the estimated electric revenue is approximately $34 Million for the main campus served by the UCR Substation. UCR is Riverside Public Utilities' (RPU) largest customer, accounting for roughly 5% of the total energy used within the service territory. UCR is unique among RPU's electric customers in that 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 university owned, operated and maintained internal electric distribution system on the main campus. UCR has shifted a significant portion of their overall electrical usage to off -peak periods, generally between midnight and six a.m., through installation of several large Thermal Energy Storage (TES) systems. A TES system cools water during off -peak hours and then uses that chilled water as a means to air condition the main campus during peak afternoon and evening hours. As UCR has constant cooling needs 24/7, this TES usage helps smooth the electric load for the campus, making it easier and more economical for RPU to purchase power with base load resources without the typically large and unpredictable spikes in usage that are normally associated with cooling loads during costly summer peak hours. UCR takes service delivery at 69kV level then steps it down to the 12kV level for distribution on the main campus. It requires them to maintain several millions of dollars of substation equipment to operate their main campus internal distribution system. Ownership and maintenance of such expensive and complex electrical equipment are only cost beneficial to the very largest users of electricity. RPU owns the substation and wishes to continue to do so to