Resolution Confirming Support for Pacific Gas and Electric Company’s Application to Establish an Enhanced Economic Development Rate.

Meeting Date September 03, 2013

Agenda Item #7. Resolution Confirming Support for Pacific Gas and Electric Company’s Application to Establish an Enhanced Economic Development Rate.

STAFF REPORT

AGENDA ITEM: Resolution Confirming Support for Pacific Gas and Electric Company’s Application to Establish an Enhanced Economic Development Rate.

MEETING DATE: September 3, 2013

PREPARED BY: Jose Antonio Ramirez, City Manager

REVIEWED BY: Jose Antonio Ramirez, City Manager

RECOMMENDATION:

Adopt Resolution No. 2013-_, confirming support for Pacific Gas and Electric (PG&E) Company’s Application to establish an Enhanced Economic Development Rate.

BACKGROUND/DISCUSSION:

In response to local government requests for assistance (including the City of Livingston), PG&E submitted a proposal to the California Public Utilities Commission (CPUC) in March 2012 to create an Enhanced Economic Development energy rate. The proposal stipulates that businesses locating or expanding in counties with significantly higher than average unemployment, adding a minimum of 200kw of energy or more, would receive 35 percent off of their electric rates for five years. It is a rate reduction that is substantial enough to catch the attention of employers looking to expand or locate on the West Coast and bring badly needed jobs to our cities and counties. Investments in counties with unemployment rates that are 25% higher than the state average would be eligible for this incentive.

A broad coalition of local jurisdictions -comprised of 30 California cities, including Livingston, and 10 counties – has backed this initiative. Furthermore, the initiative is also strongly backed by US Senator Dianne Feinstein, Congressman Jim Costa, State Senator Anthony Cannella and Merced County. The objective is to incent job creation in the communities in greatest need and where people are struggling the most financially.

After an eighteen month-long regulatory proceeding before the CPUC, the CPUC will finally make a final decision on PG&E’s application in September. On August 9, 2013, the CPUC released its Proposed Decision on the Enhanced Economic Development rate. While the decision acknowledged the need for the Enhanced Economic Development Rate in cities and counties with high unemployment rates, eligible businesses need to count on getting a 35 percent discount on their rates for a five-year term in order for the Enhanced Economic Development Rate to be marketable, meaningful and feasible.

This resolution will communicate to the CPUC commissioners how much cities and counties like Livingston are in need of an effective Enhanced Economic Development Rate that will help attract and retain qualifying businesses and, thus, attract and retain jobs.

The CPUC will make a final decision on PG&E’s application for the Enhanced Economic Development Rate at its September 19’h meeting in San Francisco.

Below is a list of the cities and counties that are part of the Local Government Parties coalition as well as organizations supporting the Enhanced Economic Development Rate:

COUNTIES (10)

• FRESNO

• KINGS

• KERN

• MADERA

• MERCED

• SAN BENITO

• SAN JOAQUIN

• SHASTA

• TEHAMA

• YUBA

CITIES (30)

• ATWATER

• AVENAL

• CHOWCHILLA

• CLOVIS

• COALINGA

• COLUSA

• CORNING

• DINUBA

• FIREBAUGH (CITY MANAGER)

• FOWLER (CITY MANAGER)

• FRESNO

• HURON

• KERMAN

• KINGSBURG

• FIREBAUGH

• FOWLER

• LEMOORE

• LIVE OAK

• LIVINGSTON

• MADERA

• MENDOTA

• ORANGE COVE

• RED BLUFF

• REEDLEY

• SAN JOAQUIN

• SANGER

• SELMA

• SHAFTER

• STOCKTON

• WILLOWS

Organizations That Provided Letters of Support:

• Fresno EDC

• Kings EDC

• Fresno Chamber of Commerce

• San Joaqnin Valley Clean Energy Org

• California League of Food Processors

• CA Cities Latino Caucus and the Latino Coalition

• CA Partnership for the San Joaquin Valley

• Shasta EDC

• 3CORE EDC (Chico)

• State Center Community College District

• Fresno COG

• Fresno Area Hispanic Chamber of Commerce

• Fresno Metro Black Chamber of Commerce

• Kern EDC

• Fresno Workforce Investment Board

FISCAL IMPACT:

None to the City.

ATTACHMENTS:

I. Resolution No. 2013-

RESOLUTION NO. 2013-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LIVINGSTON CONFIRMING SUPPORT FOR PACIFIC GAS AND ELECTRIC COMPANY’S APPLICATION TO ESTABLISH AN ENHANCED ECONOMIC DEVELOPMENT RATE

WHEREAS, in consultation with local government, Pacific Gas and Electric Company (PG&E) developed electric rate options specifically designed to attract employment to and new investment in California, or retain existing California employers and investors; and

WHEREAS, PG&E drafted rate options such that customers with new or retained power loads of at least 200 kilowatts, might receive either a 12 percent rate reduction for 5 years in any part of PG&E’s service area or a 35 percent rate reduction if the county has unemployment rates at least 25 percent higher than the state average; and

WHEREAS, in March 2012, PG&E filed an Application with the California Public Utilities Commission (CPUC) for authority to offer those options: i.e. a "Standard" and an "Enhanced" Economic Development Rate (EDR); and

WHEREAS, recently released figures for July 2013 indicate that California’s statewide unemployment rate is 8.7% (US at 7.4%) but many California counties still suffer double digit unemployment, thereby confirming the need for an Enhanced EDR; and

WHEREAS, on August 9, 2013, the CPUC Judge issued a Proposed Decision to authorize the Standard EDR with the 12 percent discount but the Enhanced EDR option would only be for potential refunds and those ranging from 12 percent up-to 35 percent, depending on various calculations and unpredictable factors; and

WHEREAS, the Proposed Decision on the Enhanced EDR option introduces too much uncertainty, makes marketing the Enhanced EDR option to investors too problematic and risks the Enhanced EDR option being ineffective; and

WHEREAS, for an effective Enhanced EDR, any uncertainty must be remedied, the methodology used to calculate the discounts should result in the savings intended and the discount should be applied to eligible businesses’ energy bills, not as refunds one year later; and

WHEREAS, the CPUC should approve an effective Enhanced Rate that will provide job creation incentives in California’s most economically distressed cities and counties;

NOW THEREFORE, BE IT RESOLVED that the Livingston City Council confirms its support for PG&E’s Application for an Enhanced Economic Development Rate and urges the CPUC to ensure an effective Enhanced Rate that is meaningful to the counties and cities in need of job retention and job creation measures, and that it urgently approve the new Enhanced Economic Development Rate.

Passed and adopted this 3rd day of September, 2013, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Rodrigo Espinoza, Mayor of the City of Livingston

ATTEST:

I, hereby certify that the foregoing resolution was regularly introduced, passed and adopted at a regular meeting of the City Council of the City of Livingston this 3rd day of September, 2013.

Betty Cota, Deputy City Clerk of the City of Livingston

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