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outdated facilities.”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
Proposed Incentive
• Engineering
 Engineering
• Technology / R&D
 Technology / R&D
• Finance
 Manufacturing
• Healthcare
 Construction
• Design
 Dining
• Dining and Retail
4
Three Digit NAICS codes
NAICS
Industry Group
NAICS
Manufacturing Group
311
Food
312
Beverage
314
Textile Product
315
Apparel
322
Paper
323
Printing
325
Chemical
326
Plastics and Rubber
327
Non Metallic Mineral
332
Fabricated Metal
333
Machinery
334
Computer and Electronic
335
Electrical Equipment
336
Transportation
337
Furniture
339
Misc (Medical, sports, toys)
Construction Group
236
Construction of Buildings
237
Heavy and Civil Engineering Constr.
238
Specialty Trade Contractors
Information Group
511
Publishing
512
Motion Picture
513
Television
514
Online data
517
Telecommunications
518
Data Processing
519
Internet publishing/other
Single Classifications
541
Prof. Science, Technology
722
Industry Group
Restaurant
5
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
Customer Size
50 kW
150 kW
300 kW
1,000 kW
Monthly Bill
2,706
8,102
16,049
49,515
Year 1 Discount
9,302
27,907
55,157
100,000
Year 2 Discount
6,202
18,605
36,771
0
Year 3 Discount
3,101
9,302
8,072
0
Total Savings
18,605
55,814
100,000
100,000
11
Existing Customer Base
No of
Cust
Avg/Max
Demand
Avg
Revenue
Total
Revenue
Construction
21
6/50
5,055
107,847
Manufacturing
123
43/588
18,399
2,266,140
Information
80
32/555
26,232
2,096,382
Prof, Sci, Tech
125
21/1,890
11,137
1,392,146
Restaurant
249
28/460
20,714
5,166,298
All Groups
599
28/1,890
Industry Group
12
18,417 11,028,813
Existing Customer Base >50kW
Industry Group
No of
Cust
Avg/Max
Demand
Avg
Revenue
Total
Revenue
Construction
<1
-- Partial Year --
Manufacturing
20
184/588
88,702
Information
7
281/555
197,820 1,384,740
Prof, Sci, Tech
5
Restaurant
47
All Groups
79
424/1,890 187,752
88/460
1,796,255
844,884
54,588
2,583,844
149/1,890 83,667
6,609,723
13
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.