1997 AGN OCT 07 I11 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT For the Council Meeting of October 7, 1997 TO: Honorable Mayor and City Council APPROVAL: Len Wood, Interim City Manager FROM: Thomas K. Clarke, Utility Director SUBJECT: Electric Utility Rates, Recommendation to Lower Kilowatt Eligibility Threshold for Rate Schedule G-3 Contract Service DATE: September 22, 1997 BACKGROUND A copy of Rate Schedule G-3 is attached. The rate schedule was established to provide the City and large customers with the opportunity to develop a customized rate based on the customer's unique load and service characteristics. Only our 3 largest customers are currently eligible for this opportunity. ANALYSIS Staff is aware of the keen interest large customers have in potential savings available through electric utility industry restructuring. Staff has confirmed with several of these customers that they expect the City to offer them rates comparabIQ to those that their competitors are obtaining from other companies. Restructuring is likely to create larger differentials between the electric service costs of Colton's industrial customers and those outside of Colton. Staff believes that increasing the number of customers eligible for contract rates will improve the City's ability to retain these important employers. The proposed kilowatt thresholds will extend this opportunity to our 25 largest consumers of electricity. This matter came before the Utilities Commission in its meeting of September 8, 1997, and was approved unanimously. ALTERNATIVES A do nothing strategy is likely to result in the loss of large customers and the associated revenue. Fixed costs would be spread over a smaller number of kilowatt-hours, placing upward pressure on rates. A more generalized approach would be to revise the Time -of -Use rates that are applied to these customers. This takes load characteristics into reasonable account, but does not allow for customization based on other costs of service, such as specific installed distribution equipment:. Such an approach would also be unnecessarily simultaneous in its application, resulting in additional loss of revenue. Item # 11