AMENDMENT TO THE LIGHT AND POWER RATE ORDINANCE TO INCLUDE AN ECONOMIC DEVELOPMENT RATE FOR QUALIFIED BUSINESSES City Council November 2, 2015 Item 10

Reason Implement Recommendation of Economic Development Task Force to: “Provide utility incentives or flexible payment terms to targeted job producers that upgrade outdated facilities.” 2

Criteria Eligible type of business ( use NAICS codes) Customer must have new or incremental electric service minimum of 50 kW or 10% of existing demand, whichever is greater. Customer must pay all electrical interconnection costs prior to electrical work. Discounts are limited to a maximum of $100,000 for each customer. Customer is required to enter into a contract with the City to take service under this rate schedule. 3

Econ Dev Strategic Plan Task Force Engineering Technology / R&D Finance Healthcare Design Dining and Retail Proposed Incentive Engineering Technology / R&D Manufacturing Construction Dining 4

Three Digit NAICS codes NAICSIndustry Group Construction Group 236Construction of Buildings 237 Heavy and Civil Engineering Constr. 238Specialty Trade Contractors Information Group 511Publishing 512 Motion Picture 513 Television 514 Online data 517 Telecommunications 518 Data Processing 519Internet publishing/other Single Classifications 541Prof. Science, Technology 722Restaurant 5 NAICSIndustry Group Manufacturing Group 311Food 312Beverage 314Textile Product 315Apparel 322Paper 323Printing 325Chemical 326Plastics and Rubber 327Non Metallic Mineral 332Fabricated Metal 333Machinery 334Computer and Electronic 335Electrical Equipment 336Transportation 337Furniture 339Misc (Medical, sports, toys)

R & D - Recent 98 N San Gabriel: Warehouse that was upgraded to R&D (2006)  Three 250 kW transformers  $52,795 ($15,251 labor) 404 N Halstead: Caltech start-up had to upgrade power (2012)  One 300 kW transformer  $27,404 ($4,941 labor) 6

R & D – Potential Upgrades Pasadena BioScience Collaborative – limits on power (and inability to pay for upgrade) have limited their expansion and ability to acquire new equipment The property owner is required to install a private property vault, transformer and 1000amp 120/208V switch gear served from the underground system. 125 N Vinedo: Example of warehouse that would be good candidate for upgrade to R&D 7

Restaurants 1347 N Lake: Example of retail that would be good candidate for upgrade to restaurant 180 S Lake Avenue: Lost ground floor restaurant because building owner did not want to pay for power upgrade costs 8

Option 1: Discount Interconnection An up front discount on costs to install new or upgraded interconnection from the customer’s meter to PWP’s electric distribution system Covers labor and administrative costs for work performed by PWP staff (not contractors) Costs normally charged to the customer per Regulation 21, Electric Service Requirements Maximum discount: $200 per kW of incremental load or $100,000 per customer 9

Option 2 – Three year rate discount A discount on the customer’s otherwise applicable electric rates for three years  Year 1 – 20% discount off the electric charges  Year 2 – 10% discount off the electric charges  Year 3 – 5% discount off the electric charges Covers Energy Charges, Transmission Charges, and Distribution Charges associated with the new or incremental load Maximum of $100,000 per customer 10

Example Rate Discounts 11 Customer Size50 kW150 kW300 kW1,000 kW Monthly Bill 2,7068,10216,04949,515 Year 1 Discount 9,30227,90755,157100,000 Year 2 Discount 6,20218,60536,7710 Year 3 Discount 3,1019,3028,0720 Total Savings 18,60555,814100,000

Existing Customer Base 12 Industry Group No of Cust Avg/Max Demand Avg Revenue Total Revenue Construction 216/505,055107,847 Manufacturing 12343/58818,3992,266,140 Information 8032/55526,2322,096,382 Prof, Sci, Tech 12521/1,89011,1371,392,146 Restaurant 24928/46020,7145,166,298 All Groups 59928/1,89018,41711,028,813

Existing Customer Base >50kW 13 Industry Group No of Cust Avg/Max Demand Avg Revenue Total Revenue Construction <1 -- Partial Year -- Manufacturing 20184/58888,7021,796,255 Information 7281/555197,8201,384,740 Prof, Sci, Tech 5424/1,890187,752844,884 Restaurant 4788/46054,5882,583,844 All Groups 79149/1,89083,6676,609,723

First Source – Not Recommended Pasadena’s First Source hiring program (PMC Chapter 14.80) was established to encourage certain local hiring for new development projects that receive public money. This incentive is encourage power infrastructure upgrades that will lead to future job growth The labor related to the install of new or upgraded connections to PWP’s electric distribution system is conducted by PWP staff and/or approved subcontractors. 14

Recommendation Find that the proposed action is not a project subject to the California Environmental Quality Act (“CEQA”),, Direct the City Attorney to prepare an amendment to Pasadena Municipal Code (“PMC”) Chapter 13.04, the Light and Power Rate Ordinance to include an Economic Development Rate schedule as described herein.