HomeMy WebLinkAboutAgenda Report - April 1, 2009 I-02 PHyZ
CITY OF LODI
COUNCIL COMMUNICATION
TN
AGENDA TITLE: Public Hearing to Introduce Ordinance amending Chapter 13.20 "Electrical
Service" by adding a new Section 13.20.315 titled Schedule EDR -- Economic
Development Rates (EUD)
MEETING DATE: April 1, 2009
PREPARED BY: Electric Utility Director
RFC01M —4 DED ACTION: Conduct a Public Hearing to introduce ordinance amending Chapter
13.20 "Electrical Service" by adding a new Section 13.20.315titled
Schedule EDR (Industrial Development Incentive Discount).
BACKGROUND INFORMATION: Over the years, many electric utilities have implemented special
discounted rate tariffs to encourage economic/industrial
development within their service areas.
A report prepared for the Electric Utility Department (EUD) by MBMC, Inc. in late 2006 highlighted a
number of California electric utility economic/industrial incentive rates. MBMC found that most electric
utilities that offered such rates, targeted high "load factor" industrial and/or manufacturing customers for
either business expansion or for relocation to their service areas by offering rate discounts of various
amounts and for various periods.
Given the relativelyweak financial condition of the electric utility at the time, staff elected not to
recommend the establishment of an economic development discount program. Given recent
improvements in the electric utility's financials and declining economic conditions for business, however,
EUD believes consideration of an economic/industrial development discount rate is now appropriate to
further EUD and community goals related to industrial and business development.
As such, EUD is proposing establishment of an Economic Development Rate (EDR) discount to be
available to new or expanded industrial businessesfor a two-year period beginning July 1, 2009. Key
elements of the proposed program for industrial customers are as follows:
. Incentives are provided for 36 months to qualified customers:
. Applies to new or expanded industrial 106d only (i.e. no retail);
• 10 -percent base discount;
• Exfra 3 -percent job creaiioris" a15-CUu i tminimum 25 jobs for G2 customers and 50 jobs
otherwise);
• Extra 5 -percent discountfor new or expanded facilities that receive a Silver or higher "Leadership
in Energy and Environmental Design" (LEED) designation;
• Extra 5 -percent discountfor qualified entities that are located within the designated Enterprise
Zone;
• No entity may receive a total discount in excess of 20 percent and discounts do not apply to billing
surcharges;
• Minimum load addition of 50 to 200KW depending on rate class;
APPROVED:
BlaiKK44, City Manager
Public Hearing to Introduce Ordinance amending Ch ipter 13.20 "Electrical Service" by adding a new Section 13.20.315
UIW Schedule 1'!DR — dconomic Development Incen ive Discount (EUD)
April 1, 21W
Pale 2 of Z
. 45 percent minimum "load factor"; and
• June 30, 2011 sunset
In addition, Schedule EDR incorporates two fL rther discounts — one for new tourism and wine industry
businesses and one for new green technology businesses.
a 10 -percent discount to new businesses that are substantially and directly related to tourism
andlor the wine industry. Examples of such businesses include those that are marketing Lodi
andlor local wine products, hotel including bed -and -breakfast establishments, and restaurants, gift
shops and boutique -type stores within or immediately adjacent to the downtown Lodi shopping
district. This provision responds to comments by the Lodi Chamber of Commerce at the City
Council's January 13, 2009 Shirtsleeve on this subject.
a 10 -percent discount to new businesses that are substantially and directly involved in the
development, marketing, sale, manufacturing and/or installation of green technology products and
services. Examples of such businesses include those directly involved in solar, wind, geothermal,
biomass, and fuel cell industries. Green Technology Businesses that are otherwise eligible for an
EDR Industrial Business discount may elect to apply for that discount in lieu of the Green
Technology Business discount.
Once in effect, it is EUD's intent to review the effectiveness of the proposed economic development
incentive program during the first 18 months of operation and report the findings to City Council. At that
time, Staff may propose (i) extending the program in its original form; (ii) modifying the program to
enhance its effectiveness; or (iii) allowing the program to sunset on June 30, 2011.
FISCAL IMPACT: The fiscal impact of Schedule EDR is difficult to project, but the proposed
discounts are expected to have a relatively minor impact on the electric utility. On
average, the electric utility expects to recover its marginal cost to provide service
during the discount period.
FUNDING: None required.
Jo vers
Deputy City Manager/Intemal Skrvices Director
Ele0ric Utility DirectoC� �Sg
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
SCHEDULE EDR
ECONOMIC DEVELOPMENT INCENTIVE DISCOUNT
APPLICABILITY:
This rate is available to qualified commercial customers for the purpose of industrial business
attraction or existing industrial facility expansion and (ii) new businesses directly related to
tourism and/or the wine industry, Customers must file an application requesting an Economic
Development Incentive Discount (EDR) priorto taking electric service for the qualified new or
expanded load
Industrial Businesses
QUALIFYING CUSTOMERS:
;4.n Industrial customer is one who operates facilities that are not involved in the sale of goods
and services directly to the public as determined by the Electric Utility Department (EUD).
BASE DISCOUNT:
The Base Discount shall equal ten percent (10%) of the electric bill associated with the qualified
new or expanded load. The Base Discount shall not apply to the Solar Surcharge, CEC fee,
State Energy Tax or any other assessment or charge levied on electric bills after the effective
date of this rate schedule unless specifically provided otherwise. (Note: The EDR is not
available for G I customers.)
JOBS CREATION DISCOUNT:
An EDR qualified customer may receive an additional five percent (5%) discount of the electric
bill associated with the qualified new or exparnded load if they create a minimum of 25 new jobs
(G2 customers) or 50 new jobs (G3, G4, G5 aind 11 customers). If the newjob count associated
With, giialifiPH new or expanaea load falls below this level in any given month, no Jobs Creation
Discount shall be applied for that month. The Jobs Creation Discount shall not apply to the Solar
Surcharge, CEC fee, State Energy Tax or any other assessmentor charge levied on electric
bills after the effective date of this rate schedule unless specifically provided otherwise.
ENERGY EFFICIENCY DISCOUNT:
An EDR qualified customer may receive an additional five percent (5%) discount of the electric
bill associated with the qualified new or expanded load if the new facilities constructed for the
new or expanded load are awarded a Silver or higher "Leadership in Energy and Environmental
Design" (LEED) designation. Following receipt of the applicable LEED certification, the
additional discount shall become effective for the remainder of the EDR period.
EDR-1/3 Effective July 1,2009
Ordinance No.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
SCHEDULE EDR
ECONOMIC DEVELOPMENT INCENTIVE DISCOUNT
ENTERPRISEZONE DISCOUNT:
An EDR qualified customer may receive an additional five (5%) discount of the electric bill
associated with the qualified new or expanded load if the new or expanded load are located
within the boundaries of the City's Enterprise Zone as set forth at the time of customer
application.
MAXIMUM DISCOUNT LEVEL:
In no event may a single new or expanded load receive a total discount in excess of twenty
percent (20%) of the electric bill associated with the qualified new or expanded load.
MINIMUM LOAD ADDITION:
To qualify for the Economic Development Incentive Discount, the new or expanded load must
be sized at or greater than the following:
G2 50 kilowatts
G3
50 KW
G4
100 KW
G5
200 KW
11
200 KVV
Customer must provide information satisfactoryto EUD regarding the planned size of the new or
expanded load. The new or expanded load eligible for an EDR shall be separately metered. If a
customer's discounted load level falls below the applicable minimum level in any given month,
no discount shall be applied for that month.
LOAD FACTOR:.
Customer shall maintain a monthly load factor of at least 45 percentfor the load receiving a
discount. If the load factor falls below this level in any given month, no discount shall be applied
for that month.
SCHEDULE 11 AMENDMENT
On the effective date of this Schedule EDR, the provision of the 11 Rate Schedule providing for
a 10% discount in electric rates for twelve months if a customer adds 200 KW or more of electric
load, shall be null and void.
EDR-213 Effective July 1, 2009
Ordinance No.
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
SCHEDULE EDR
ECONOMIC DEVELOPMENT INCENTIVE DISCOUNT
Tourism andlor Wine Industry Businesses
QUALIFYING CUSTOMERS:
The EDR shall apply only to those businesses that are substantially and directly related to
tourism andlor the wine industry as determined by the Electric Utility Department (EUD).
Examples of such businesses include those that are marketing Lodi andlor local wine products,
hotel including bed and breakfast establishments, and restaurants, gift shops and boutique -type
stores within or immediately adjacent to the downtown Lodi shopping district.
BASE DISCOUNT
The Base Discount shall equal ten percent (10%) of the electric bill associated with the qualified
new or expanded load. The Base Discount shall not apply to the Solar Surcharge, CEC fee,
State Enemy Tax or ;any other assessment or charge levied on electric bills after the effective
gate of this rate scnedule unless specifically provided otherwise.
General Provisions
LENGTH CIE' DISCOUNT:
As to any customer, the EDR shall apply for a period of thirty six (36) months.
TERM OF EDR SCHEDULE:
This Schedule EDR shall be in effect July 1,2009though June 30,201 1 for new customers.
Once a customer is placed on this rate schedule, however, that customer's discount shall be in
effect for thirty six (36) months unless terminated earlier as provided in this schedule. Electric
customers who received building permits andlor began construction prior to April 1, 2009 for
otherwise qualified EDR load shall not be eligible for an EDR discount hereunderfor that new
business or expanded load.
IMPLEMENTATION:
EUD shall be responsiblefor establishing administrative rules and processesfor administering
this rate schedule. Customers shall provide information on a timely basis to enable EUD to
verify eligibility and to administerthe terms of this rate schedule.
EDR-313 Effective July 1, 2009
OrdinanceNo .
ORDINANCE NO.
AN ORDINANCE OF THE LODI CITY COUNCILAMENDING
LODI MUNICIPAL CODE CHAPTER 13.20 "ELECTRICAL
SERVICE," BY ADDING A NEW SECTION 13.20.315 - 44?444�tt
SCHEDULE EDR ECONOMIC DEVELOPMENT RATES
BE IT ORDAINED BY THE LODI CITY COUNCIL AS FOLLOWS:
SECTION 1. Lodi Municipal Code Chapter 13.20 is hereby amended by adding a new
Section 13.20.315 - Schedule EDR — Economic Development Rates, to read as follows:
13.20.315 SCHEDULE EDR - ECONOMIC DEVELOPENT RATES
APPLICABILITY:
This rate is available to qualified commercial customersfor the purposeof (i) new industrial
business attraction or existing industrial facility expansion, (ii) new business attraction
directly related to tourism and/orthe wine industry and (ii) new business attraction directly
related to the green technology sector. Customers must file an application requesting an
Economic Development Rate (EDR) discount priorto taking electric service for the qualified
new or expanded load.
INDUSTRIAL BUSINESSES
QUALIFYING CUSTOMERS:
An industrial customer is one who operates facilities that are not involved in the sale of
goods and services directly to the public as determined by the Electric Utility Department
(EUD).
BASE DISCOUNT:
The Base Discount shall equal ten percent (10%) of the electric bill associated with the
qualified new or expanded load. The Base Discount shall not apply to the Solar Surcharge,
CEC fee, State Energy Tax or any other assessment or charge levied on electric bills after
the effective date of this rate schedule unless specifically provided otherwise. (Note: The
EDR is not available for G I customers.)
JOBS CREATION DISCOUNT:
An EDR qualified customer may receive an additional five percent (5%) discount of the
electric bill associated with the qualified new or expanded load if they create a minimum of
25 new jobs (G2 customers) or 50 new jobs (G3, G4, G5 and 11 customers). If the new job
count associated with qualified new or expanded load falls below this level in any given
month, no Jobs Creation Discount shall be applied for that month. The Jobs Creation
Discount shall not apply to the Solar Surcharge, CEC fee, State Energy Tax or any other
assessment or charge levied on electric bills after the effective date of this rate schedule
unless specifically provided otherwise.
ENERGY EFFICIENCY DISCOUNT:
An EDR qualified customer may receive an additional five percent (5%) discount of the
electric bill associated with the qualified new or expanded load if the new facilities
constructed for the new or expanded load are awarded a Silver or higher "Leadership in
Energyand Environmental Design" (LEED) designation. Following receipt of the applicable
LEED certification, the additional discount shall become effective for the remainder of the
EDR period.
ENTERPRISE ZONE DISCOUNT:
An EDR qualified customer may receive an additional five (5%) discount of the electric bill
associatedwith the qualified new or expanded load if the new or expanded load are located
within the boundaries of the City's Enterprise Zone as set forth at the time of customer
application.
MAXIMUM DISCOUNT LEVEL:
In no event may a single new or expanded load receive a total discount in excess of twenty
percent (20%) of the electric bill associated with the qualified new or expanded load.
MINIMUM LOAD ADDITION:
To qualify for the Economic Development Incentive Discount, the new or expanded load
must be sized at or greater than the following:
G2 50 kilowatts KW
G3
50 KW
G4
100 KW'
G5
200 KVV
11
200 KVN
Customer must provide information satisfactoryto EUD regarding the planned size of the
new or expanded load. The new or expanded load eligible for an EDR shall be separately
metered. If a customer's discounted load level falls below the applicable minimum level in
any given month, no discount shall be applied for that month.
LOAD FACTOR:
Customershall maintain a monthly load factor of at least 45 percentfor the load receiving a
discount. If the load factor falls below this level in any given month, no discount shall be
applied for that month.
SCHEDULE 11 AMENDMENT
On the effective date of this Schedule EDR, the provision of the 11 Rate Schedule providing
fora 10% discount in electric rates for twelve months if a customeradds 200 KW or more of
electric load, shall be null and void.
TOURISM AND/OR WINE INDUSTRY BUSINESSES
QUALIFYING CUSTOMERS:
The EDR shall applyonlyto those new businessesthat are substantiallyand directlyrelated
to tourism and/or the wine industry as determined by EUD. Examples of such businesses
include those that are marketing Lodi and/or local wine products, hotel including bed and
breakfast establishments, and restaurants, gift shops and boutique -type stores within or
immediately adjacent to the downtown Lodi shopping district.
2
BASE DISCOUNT:
The Base Discount shall equal ten percent (10%) of the electric bill associated with the
qualified new or expanded load. The Base Discountshall not applyto the Solar Surcharge,
CEC fee, State Energy Tax or any other assessment or charge levied on electric bills after
the effective date of this rate schedule unless specifically provided otherwise.
"GREEN" TECHNOLOGY BUSINESSES
QUALIFYING CUSTOMERS:
The EDR shall apply only to those new businesses that are substantially and directly
involved in the development, marketing, sale, manufacturing and/or installation of green
technology products and services as determined by EUD. Examples of such businesses
include those directly involved in solar, wind, geothermal, biomass, and fuel cell industries.
Green Technology Businesses that are otherwise eligible for an EDR Industrial Business
discount may elect to apply for that discount in lieu of this Green Technology Business
discount.
BASE DISCOUNT:
The Base Discount shall equal ten percent (10%) of the electric bill associated with the
qualified new or expanded load. The Base Discountshall not apply to the Solar Surcharge,
CEC fee, State Energy Tax or any other assessment or charge levied on electric bills after
the effective date of this rate schedule unless specifically provided otherwise.
GENERAL PROVISIONS
LENGTH OF DISCOUNT:
As to any customer, the EDR shall apply for a period of thirty-six (36) months.
TERM OF EDR SCHEDULE:
This Schedule EDR shall be in effect until June 30, 2011 for new customers. Once a
customer is placed on this rate schedule, however, that customer's discount shall be in
effect for thirty-six (36) months unless terminated earlier as provided in this schedule.
IMPLEMENTATION:
EUD shall be responsible for establishing administrative rules and processes for
administering this rate schedule. Customers shall provide information on a timely basis to
enable EUD to verify eligibility and to administer the terms of this rate schedule.
SECTION 2. No Mandatory Dutv of Care. This ordinance is not intended to and shall not be
construed or given effect in a manner which imposes upon the City, or any officer or
employee thereof, a mandatory duty of care towards persons or propertywithin the City or
outside of the City so as to provide a basis of civil liabilityfor damages, except as otherwise
imposed by law.
SECTION 3. Severability. If any provision of this ordinance or the application thereof to any
person or circumstances is held invalid, such invalidity shall not affect other provisions or
applications of the ordinance which can be given effect without the invalid provision or
3
application. To this end, the provisions of this ordinance are severable. The City Council
hereby declares that itwould have adopted this ordinance irrespectiveof the invalidityof any
particular portion thereof.
SECTION 4. All ordinances and parts of ordinances in conflict herewith are repealed
insofar as such conflict may exist.
SECTION 5. This ordinance shall be published pursuantto law and shall become effective
30 days from the date of passage and adoption.
SECTION 6. This amended Schedule referenced above shall be effective on applicable
electric utility billings prepared by the City of Lodi on or after July 1, 2009, or the first date
allowable under State law.
Approved this day of April, 2009
LARRY D. HANSEN
MAYOR
ATTEST:
RANDIJOHL
City Clerk
State of California
County of San Joaquin, ss.
I, Randi Johl. City Clerk of the City of Lodi, do hereby certifythat Ordinance No. was
introduced at a regular meeting of the City Council of the City of Lodi held April 1,2009, and
was thereafter passed, adopted, and ordered to print at a regular meeting of said Council
held , 2009, by the following vote:
AYES: COUNCIL MEMBERS—
NOES: COUNCIL MEMBERS—
ABSENT: COUNCIL MEMBERS—
ABSTAIN: COUNCIL MEMBERS —
Ifurther certifythat Ordinance No. was approved and signed bythe Mayoron the date
of its passage and the same has been published pursuant to law.
4
RANDIJOHL
City Clerk
Public Hearing
Economic Development
Rate (EDR)
City Council
April 1, 2009
Background
• There has been interest by industrial customers and the
Chamber of Commerce for an economic development
rate (EDR) discount for electric
• Presently there is an EDR as part of 1-1 rate
— 10% discount on incremental load (200 KW minimum) for 12
months
• EUD also had several EDR discounts during the 1996 to
2000 period
• Economic Development discount programs are relatively
commonplace in electric industry
2
EDR Proposal
• Establish 3 economic development
discounts:
— Industrial
— Tourism and Wine -Related Businesses
— Green Technology Businesses
K
General
• 36 month discounts
• July 1 program start date
• Program available for 2 years
(thru June 2011)
• Qualified business must file EDR
application prior to taking electric service
4
Industrial
• Applies to new or expanded businesses
— Industrial or manufacturing (i.e. no retail)
• G2 or larger customers
• Minimum additional load requirement
— 50 KW (G2, G3)
— 100 KW (G4, G5, 11)
• Load factor minimum of 45%
6i
Industrial (continued)
Base discount is 10%
Additional discounts
5% "job creations" discount
• 25+ jobs for G2 customers
• 50+ jobs for all others
5% energy efficiency discount
• LEED Silver designation
5% Enterprise Zone discount
,P Maximum discount is 20%
C.1
LEED
" Leadership in Energy and Environmental
Design"
Green Building Rating System
Established by U.S. Green Buildings Council
Six areas of review including Sustainability,
Water, Energy and Atmosphere, Indoor
Environment, Materials & Resources and
Innovation
Rating levels include Platinum, Gold, Silver and
Certified
7
Tourism and Wine
• Discount is 10%
• New businesses only
• Directly & substantially related to tourism and/or
wine industries
• Some examples
— Firm marketing Lodi and/or local wine products
— Hotels including Bed & Breakfast establishments
— Restaurants, gift shops and boutique -type stores
• Located within or adjacent to downtown shopping district
E:1
Green Technology
Discount is 10%
New businesses only
Directly & substantially related to development,
marketing, sale, manufacturing and/or
installation of green technology products and
services
Green technology examples include solar, wind,
geothermal, biomass and fuel cells
• May apply instead for Industrial discount if
otherwise qualified
Program Review
• Two year program
• Staff will review program effectiveness
following 18 months of operation
• Results reported to City Council with
recommendations
— Extension w/o changes
— Extension with modifications
—Allow program to sunset as scheduled.
10
Average Rates
Rate
Average Revenue*
(¢/kwh)
G1
17.5
G2
15.8
G3
14.8
G4
13.8
G5
11.3
-1
10.1
Average
13.57 ¢/kwh
* FY 2008. Excludes surcharge revenue
11
* FY 2008.
Revenue in excess of
Energy Cost
Rate
Non Energy
Revenue (%)'
Gl
46
G2
41
G3
37
G4
32
G5
19
1-1
18
Average
22%
12
Public Hearing
• Introduction of Ordinance establishing new
electric Economic Development Rate —
Schedule EDR
— Establishes electric tariff titled "Economic
Development Rate"
—Amends 11 rate schedule to remove
conflicting provision for 10% EDR discount
13
• Please immediately confirm rectVt.
of t,h is fax by c a Ith"n g 33,3-67`
CITY OF LODI
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
SUBJECT PUBLIC HEARING TO CONSIDER INTRODUCTION OF AN ORDINANCE
AMENDING CHAPTER 13.20, "ELECTRICAL SERVICE," BY ADDING A
NEW SECTION 13.20.315 TITLED, "SCHEDULE EDR — ECONOMIC
DEVELOPMENT RATES"
PUBLISH DATE: SATURDAY, MARCH 21,2009
TEAR SHEETS WANTED: One (1) please
SEND AFFIDAVIT AND B I L L TO:
DATED: THURSDAY, MARCH 19,2009
ORDERED BY:
J NIFER hK PERRIN, CMC
ASSISTANT CITY CLERK
formAadvins.doc
RAND(JOHL, CITYCLERK
City of Lodi
P . O Box 3006
Lodi, CA 95241-1910
RANDI JOHL
CITY CLERK
MARIA BECERRA
ADMINISTRATIVE CLERK
DECLARATION OF POSTING
PUBLIC HEARING TO CONSIDER INTRODUCTION OF AN ORDINANCE
AMENDING CHAPTER 13.20, "ELECTRICAL SERVICE," BY ADDING A
NEW SECTION 13.20.315 TITLED, "SCHEDULE EDR —
ECONOMIC DEVELOPMENT RATES
On Friday, March 20, 2009, in the City of Lodi, San Joaquin County, California, a Notice
of Public Hearing to consider introduction of an ordinance amending Chapter 13.20,
"Electrical Service," by adding a new Section 13.20.315 titled, "Schedule EDR —
Economic Development Rates" (attached and marked as Exhibit A) was posted at the
following locations:
Lodi Public Library
Lodi City Clerk's Office
Lodi City Hall Lobby
Lodi Carnegie Forum
declare under penaltyof perjurythat the foregoing is true and correct.
Executed on March 20, 2009, at Lodi, California.
J VNIFER 1W. PERRIN, CMC
ASSISTANT CITY CLERK
N:vAdministration\cLERKIFOrmsM3Ecras'1'EUn.noc
ORDERED B Y
RANDI JOHL
CITY CLERK
MARIA BECERRA
ADMINISTRATIVE CLERK
• CITY OF LODI
Carnegie Forum
305 West Pine Street, Lodi
NOTICE OF PUBLIC HEARING
Date: April 1, 2009
Time: 7:00 p.m.
For information regarding this notice please contact:
Can Clerk 1EXHIBIT
Telephone: (209) 333-6702
NOTICE OF PUBLIC: HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, April 1, 2009, at the hour of
7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will
conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to
consider the following matter:
a) Introduce ordinance amending Chapter 13.20, "Electrical Service," by
adding a new Section 13.20.315 titled, "Schedule EDR — Economic
Development Rates"
Information regarding this item may be obtained in the Electric Utility
Department, 1331 South Ham Lane, Lodi, (209) 333-6762. All interested
persons are invited to present their views and comments on this matter. Written
statements may be filed with the City Clerk, City Hall, 221 West Pine Street,
2nd Floor, Lodi, 95240, at anytime prior to the hearing scheduled herein, and oral
statements may be made at said hearing.
If you challenge the subject matter in court, you may be limited to raising only
those issues you or someone else raised at the public hearing described in this
notice or in written correspondence delivered to the City Clerk, 221 West Pine
Street, at or prior to the close of the public hearing.
By Ordg-r-of the Lodi City Council:
Ran
City Clerk
Dated: March 18,2009
Approved as to form:
D. Stephen Schwabauer
City Attorney
CLERKIPUBHEARWOT$CESWoteud.doo 3117/09