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Resolution No. 2018-051RESOLUTION NO. 2018-51 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING THE CITY OF VERNON PUBLIC UTILITIES DEPARTMENT AMENDED ECONOMIC DEVELOPMENT RATE PROGRAM AND THE GENERAL FORM OF AGREEMENT FOR ECONOMIC DEVELOPMENT INCENTIVE ON ELECTRIC SERVICE REGARDING ELECTRICAL RATES TO BE CHARGED FOR ELECTRICAL ENERGY DISTRIBUTED AND SUPPLIED BY THE CITY WITHIN ITS BOUNDARIES WHEREAS, the City Council of the City of Vernon adopted Ordinance No. 1030 on May 16, 1995, providing that rates to be charged for electrical energy distributed and supplied by the City within its boundaries shall be set by resolution; and WHEREAS, April 16, 2013, the City Council of the City of Vernon adopted Resolution No. 2013-46 approving the City of Vernon Light and Power Department Economic Development Rate, the Agreement for an Economic Development Incentive on electric services and the affidavit for Economic Development regarding electrical rates to be charged for electrical energy distributed and supplied by the City within its boundaries; and WHEREAS, on December 5, 2017, the City Council of the City of Vernon adopted Resolution No. 2017-63 approving the extension of the Economic Development Rate Program (the "EDR") for an additional one year to allow City staff to develop a successor program to the EDR; and WHEREAS, the existing EDR provides an incentive of up to twenty percent (20%) reduction off of the customers' otherwise applicable tariff (OAT) for five (5) years, excluding taxes; and WHEREAS, by memorandum dated December 18, 2018, the General Manager of the Public Utilities Department has recommended that the EDR program be restructured to amend the existing twenty percent (200) five year EDR program with a five year tiered incentive program; and WHEREAS, the City Council of the City of Vernon desires to approve the amended Economic Development Rate Program and the general form of Agreement for Economic Development Incentive on Electric Service. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act (CEQA), because is not in reference to a "project" subject to the CEQA Guidelines under Section 15378 because it involves an administrative activity and (b) even if this approval were a "project" subject to CEQA, the approval requested is exempt in accordance with CEQA Guidelines Section 15061(b)(3), the general rule that CEQA only applies to projects that may have a significant effect on the environment, and any construction that may occur by a private party in the future in reliance on this approval would be subject to CEQA review by another governmental agency at that time when actual details of any physical proposal would be more than speculative. SECTION 3: The City Council of the City of Vernon hereby approves the City of Vernon Public Utilities Department amended Economic Development Rate Program and approves and adopts the general form of the Agreement for Economic Development Incentive on Electric Service for use by the City, as attached hereto as Exhibit A. SECTION 4: The City Council of the City of Vernon hereby - 2 - instructs the City Administrator, or his designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized, including but not limited to, any non -substantive changes to the Agreement attached herein. SECTION 5: The City Clerk of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk of the City of Vernon shall cause this resolution and the City Clerk's certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 18th day of December, 2018. Name: Yvette Woodruff -Perez ATTEST: • A Maria E. Aya a, ty Clerk APPROVED AS TQ FORM: Brian Byun, Senior Deputy Ci y Attorney Title: Mayor - 3 - STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, Maria E. Ayala, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 2018-51, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, December 18, 2018, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this -W~ day of December, 2018, at Vernon, California. (SEAL) Maria E. Ayala, C4ity Clerk - 4 - EXHIBIT A CITY OF VERNON VERNON PUBLIC UTILITIES DEPARTMENT SCHEDULE ED ECONOMIC DEVELOPMENT RATE APPLICABILITY Applicable to qualified customers locating or expanding load on the City of Vernon's transmission and/or distribution system. Customers taking service on Schedule ED must sign an Agreement for Economic Development Incentive on Electric Service (Form No. ED). TF.RRITORY Within the city limits of the City of Vernon. RATES The ED rate provides an incentive percentage reduction off the customers'; otherwise applicable tariff (OAT) per the schedule in Table I for five years, excluding taxes. This reduction shall be calculated on the rate components of the customer's bill that correlate to services the City of Vernon provides the customer. Table 1 Year 1 2 3 4 5 Incentive 20% 15% 12% 8% 5% Incentive Limiter: The average rate after application of the incentive under this schedule cannot be less than the Floor Price described below. FLOOR PRICE: The sum of revenues collected by the City of Vernon from the customer, exclusive of any additional applicable taxes, shall not fall below a Floor Price equal to marginal generation charges, embedded distribution charges, CAISO and other transmission charges, public benefits charges (PBC), and the green -energy surcharges that are allocated to the customer. The revenues will be reviewed annually to ensure that they equal or exceed the Floor Price, up to the OAT revenues the customer would have paid if it had not received the incentive. Additional lump -sum charges may be due to the City of Vernon or credits due to the customer after each annual review. The charges will be designed to ensure that revenues do not fall below the annual Floor Price. Credits, if available after the annual review, will be provided if the customer's incentive rate had been previously reduced from the maximum incentive level, due to the Floor Price. PROGRAM EXPIRATION: This schedule will remain open to new participants until December 31, 2023. This schedule will also remain in effect until such time the last agreement expires or terminates. SPECIAL CONDITIONS: 1. Eligible Customers: Eligible customers are those on or electing existing schedule: TOU-G, or TOU-V, or their successor rate schedule. Unless specified in the Agreement for Economic Development Incentive on Electric Service, new customers with maximum billing demands greater than 100 kW, or existing customers who add at least 100 kW of demand may qualify. For existing customers, only the additional demand may qualify for service under Schedule ED. New or additional billing demand does not include billing demand that exists within the City of Vernon at the time eligibility is determined. Residential customers and state or local government agencies are not qualified customers under this rate schedule. Contract: Service under this schedule is provided under a five-year agreement. 3. Start Date: The start date of the incentive rate period shall commence within 24 months from the date of execution for service and shall be designated by the customer within the agreement. 4. Metering: Separate electric metering for new or additional load may be required if, in the City of Vernon's sole opinion, it is necessary to provide service under this schedule. The customer will be responsible for any costs associated with providing separate electric metering. 5. "But For" Test In order to be eligible for this schedule, the customer must sign an affidavit, attesting to the fact that "but for " this incentive rate, either on its own or in combination with a package of incentives made available to the customer from other sources, the customer would not have located operations or added load within the City of Vernon. AGREEMENT FOR ECONOMIC DEVELOPMENT INCENTIVE ON ELECTRIC SERVICE This agreement is made between a(n) Vernon. ("Applicant"), and the City of RECITALS: The Economic Development rate was established and is made available at the City of Vernon's sole discretion. The Economic Development Rate is a five-year incentive rate, as set forth in Schedule ED. AGREEMENT: Applicant and the City of Vernon agree to the following terms and conditions: QUALIFICATION CRITERIA. Applicant is or will be a customer, eligible for receiving service under Schedule TOU-G, TOU-V or its successor rate schedule. The electric load subject to his agreement is a maximum billing demand of at least 100 kW of net new load to the City of Vernon. The minimum 100 kW of net new load must be maintained for at least three consecutive months during the initial 12 months of this agreement. Only new load that will be regularly served by the City of Vernon will be eligible for this incentive. 2. BILL INCENTIVE. Electric service to Applicant's premises shall be delivered under Applicant's otherwise applicable tariff (OAT), which is . A five-year rate incentive percentage reduction will be applied to the customer's OAT (excluding taxes) in accordance with Schedule ED. This reduction shall be calculated on the rate components of the customer's bill that correlate to service that the City of Vernon provides the customer. If needed the City of Vernon may reduce the incentive percentage to ensure that revenues exceed the Floor Price. This incentive under this schedule will be limited by the Floor Price, as defined in Schedule ED. In calculating the Floor Price, the City of Vernon will make use of its best estimate of the marginal cost to serve the customer. The revenues from each participant will be reviewed annually and/or at the end of the agreement to ensure that they equal or exceed the Floor price for each year of the agreement, up to the OAT revenue that the customer would have paid if it had not received the incentive. Applicant's rate under this schedule will be subject to an annual review, with potential additional lump - sum charges due to the City of Vernon or credits due to Applicant. The charges shall ensure that the rate does not fall below the Floor Price each year. Credits, if available after the annual review, will be provided if the customer's incentive rate had been previously reduced from the maximum incentive above as a result of the application of the Floor price limitation. 3. INCENTIVE CALCULATION. Terms and conditions necessary for the incentive calculation are defined and agreed to as follows: Billing determinants used for calculating the first year incentives will be the City of Vernon's best estimate of expected usages and demand for customer expansion and attraction cases. For expansion cases, the previous 12- months of historical metered data, if available, will be used to determine current usage levels, and the incentive will be calculated only on that portion of demand and usage that is added. During the annual and contract term review, the City of Vernon will compare the revenues received to the Floor Price to ensure that the revenues received remain at least equal to the Floor Price throughout the duration of the contract. The City of Vernon reserves the right to reduce the contracted demands stated by the Applicant below if it is determined that the Applicant's actual load at full operation of the facility after the Commencement Date of this Agreement is more than 25% less than the contracted maximum demands stated below. [Please mark the appropriate space below, indicating whether this is an agreement for the Applicant's entire load or only a portion of the Applicant's load.] a. New customer Locating in the City of Vernon. b. Expansion of the existing customer's load. C. The contracted demand of the new or expanded load is estimated to be kW. The excluded Demands, if applicable, are determined by averaging the Applicants four highest measured demands during each seasonal period during the 12-mont period preceding the execution date of this agreement, if available. If Applicant separately meters the Reserved Demand, Applicants Excluded Demand will be zero (0) kW for each season. The City of Vernon and the Applicant agree that the excluded demand is: July to September: May, June, October: kW kW November to April: kW The Incentive Ratio for each month is defined as the difference between the Applicant's maximum demand for that month and the excluded Demand divided by that same month's maximum demand. The Incentive Ratio will be a fraction from zero (0) to one (1). The Economic Development Rate discount is determined as the product of the rate incentive, the Incentive Ratio and the subtotal changes on the rate components of the Applicant's bill that correlate to service that the City of Vernon Provides to Applicant. 4. COMMENCEMENT DATE. The incentive shall commence on the Applicants regularly scheduled meter read day in the month of 20 , which is within a 24-month period of the date of execution of this agreement, as required by rate Schedule ED. 5. METERING. Applicant agrees to be responsible for all costs associated with providing separate electric metering if the City of Vernon, at its sole discretion, deems such metering a necessary condition to implement this rate. If Applicant is deemed to require separately metered reserved demand, Applicant must have metering in place before the incentive rate will apply. Applicant's ability to have required metering in place shall not delay the commencement date provided in Section 4 by which the Applicant would have otherwise received the incentive. 6. TERM OF AGREEMENT. This agreement shall take effect immediately and remain in effect for a term of five years following the commencement date of the rate incentive. TERMINATION AGREEMENT Applicant may terminate this agreement upon 30 days written notice. The City of Vernon may also terminate this agreement upon 30 days written notice in the event Applicant no longer meets the qualifications described elsewhere in the Agreement and in Rate Schedule ED. Notwithstanding these rights of termination, the Applicant shall be subject to Liquidated Damages as provided in Section 9 of this agreement. 8. "BUT FOR" TEST Applicant attests that "but for" the terms of this agreement, either on its own or in combination with a package of incentives made available to the Applicant from other sources, the Applicant would not have located, or increased its operations within the City of Vernon. Applicant shall sign the attached affidavit to that effect. 9. LIQUIDATED DAMAGES If this agreement is terminated due to Applicant's misrepresentation or fraud, Applicant shall be liable for liquidated damages that equal 200% of the cumulative difference between (i) bills calculated under the Schedule ED rate to the date of termination and (ii) bills that would have been calculated under the OAT. 10. ASSIGNMENT. Applicant may assign this agreement only if the City of Vernon consents in writing and the party to whom the agreement is assigned agrees in writing to be bound by this agreement in all respects. IN WITNESS THEREOF, the Parties have executed this Agreement in multiple originals of equal dignity by their respective duly authorized representatives. Executed this day of , 20 The City of Vernon (customer) (signature) (signature) (Print Name) (Print Name) (Title) (Title) AFFADAVIT FOR ECONOMIC DEVELOPMENT RATE By signing this affidavit, an Applicant who locates or adds load in the City of Vernon hereby certifies and declares under penalty of perjury under the laws of the State of California that the statements in the following paragraphs are true and correct. 1. But for the receipt of the discounted economic development rate and the terms of the Agreement, either on its own or in combination with an economic development incentive package, the Applicant's load would not have been located, or added within the City of Vernon. 2. The load to which the Agreement applies represents kilowatt-hours (kWh) and kilowatts (kW) that either (i) does not already exist in the City of Vernon , or (ii) the Applicant considered expanding to a location outside of the City of Vernon. 3. Applicant has discussed with the City of Vernon the cost-effective conservation and load management measures the applicant may take to reduce their electric bills and the load they place on the City of Vernon's utility system. 4. On an annual basis, the cost of electricity for a new or expanding customer is at least five (5) percent of its actual operating costs, less the cost of raw materials. Executed this day of , 20 (Applicant) BY: (Signature) (Print Name) TITLE: STAFF REPORT City Council Agenda Item Report Agenda Item No. COV-426-2018 Submitted by: Oren Weiner Submitting Department: Public Utilities Meeting Date: December 18, 2018 SUBJECT A Resolution approving the City of Vernon Public Utilities Department Amended Economic Development Rate Program and the General Form of Agreement for Economic Development Incentive on electric service regarding electrical rates to be charged for electrical energy distributed and supplied by the City within its boundaries Recommendation: A. Find that the adoption of the proposed resolution is exempt under the California Environmental Quality Act (CEQA), because is not in reference to a `project" subject to the CEQA Guidelines under Section 15378 because it involves an administrative activity and (b) even if this approval were a `project" subject to CEQA, the approval requested is exempt in accordance with CEQA Guidelines Section 15061(b)(3), the general rule that CEQA only applies to projects that may have a significant effect on the environment, and any construction that may occur by a private party in the future in reliance on this approval would be subject to CEQA review by another governmental agency at that time when actual details of any physical proposal would be more than speculative; and B. Adopt a Resolution approving the City of Vernon Public Utilities Department Amended Economic Development Rate Program and the general form of Agreement for Economic Development Incentive on electric service regarding electrical rates to be charged for electrical energy distributed and supplied by the City within its boundaries. Backgroud: The Economic Development Rate ("EDR') program was approved by City Council Resolution No. 2013-46 on April 16, 2013. The EDR program was established to promote economic activity in the City and attract large electricity users into the City, as well as, to encourage existing customers to increase their electrical demand. Eligible customers are those on or electing existing rate schedule: TOU-G, or TOU-V, or their successor rate schedule. Under the program, new customers with maximum billing demands greater than 100 kW or existing customers who add at least 100 kW are eligible to receive EDR incentives. The EDR provides an incentive of up to twenty (20) percent reduction off the customers' otherwise applicable tariff for a period of 5 years, excluding taxes. Since the program inception date, the EDR program has been one of the most successful and popular programs that has resulted in stirrnlating economic activity and attracting new customers into the City. A number of large electrical users have either located their businesses in Vernon or have increased their electrical demand significantly. Examples of such growth include new load by rPlanet Earth and expansion of Matheson Tri-gas. The combination of rPlanet Earth and Matheson Tri-gas results in a combined total retail load increase of over 15 MWs. The EDR program was established and is made available at the City of Vernon!s sole discretion. The initial term of the program ended December 31, 2017. On December 5, 2017, Resolution No. 2017-63 extended the EDR program for an additional one (1) year period, from December 31, 2017 to December 31, 2018 to allow staff to develop a successor program to the EDR. EDR incentives are being offered by several peer utilities in California. Staff reviewed six utilities in the region, including Southern California Edison, LADWP and several others. A brief review of the programs offered by the utilities in the region indicate the demand for an economic incentive program. Among the utilities staff reviewed, City of Vernon has the most generous EDR at a 20% discount for five years. Staff proposes a strategic adjustment to Vernon's existing EDR structure. The successor program to the EDR would amend the existing 20%, 5-year EDR program with a 5-year tiered incentive program as shown in Table 1 attached. The new proposed incentive structure will be both competitive with incentive levels offered by peer utilities and have an attractive introductory rate. To maintain a competitive advantage, Vernon's new EDR matches the total tenor and percentage discount of neighboring utilities. Further, Vernon's amended EDR provides a more compelling rate structure from a cash flow perspective and has a less rigorous minimwn requirement, thus making it a more desirable incentive mechanism. The EDR program will remain open to new participants until December 31, 2023. The program will also remain in effect until such time the last agreement expires or terminates. In consideration of the peer utilities review, at this time, staff is recommending the City Council adopt a successor program to the EDR. The amended EDR Tariff has been reviewed and approved as to form by the City Attorney office. Fiscal Impact: Staff completed an analysis on the revenue impact the new proposed EDR program may have to the City. Staff assumed, over the 5-year period, TOU-V customers would add a total of 2 MWs and TOU-G customers would add 200 kW eligible for EDR incentives. The EDR incentive offered to customers would be approximately $188,760 per year. ATTACHMENTS • 1. Table 1 - Five -Year Incentive Program 2. Resolution - Amending Economic Development Rate Table 1 Year 11 1 11 2 3 4 5 Incentive 1 20% 1 15% 12% 8% 5% RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING THE CITY OF VERNON PUBLIC UTILITIES DEPARTMENT AMENDED ECONOMIC DEVELOPMENT RATE PROGRAM AND THE GENERAL FORM OF AGREEMENT FOR ECONOMIC DEVELOPMENT INCENTIVE ON ELECTRIC SERVICE REGARDING ELECTRICAL RATES TO BE CHARGED FOR ELECTRICAL ENERGY DISTRIBUTED AND SUPPLIED BY THE CITY WITHIN ITS BOUNDARIES WHEREAS, the City Council of the City of Vernon adopted Ordinance No. 1030 on May 16, 1995, providing that rates to be charged for electrical energy distributed and supplied by the City within its boundaries shall be set by resolution; and WHEREAS, April 16, 2013, the City Council of the City of Vernon adopted Resolution No. 2013-46 approving the City of Vernon Light and Power Department Economic Development Rate, the Agreement for an Economic Development Incentive on electric services and the affidavit for Economic Development regarding electrical rates to be charged for electrical energy distributed and supplied by the City within its boundaries; and WHEREAS, on December 5, 2017, the City Council of the City of Vernon adopted Resolution No. 2017-63 approving the extension of the Economic Development Rate Program (the "EDR") for an additional one year to allow City staff to develop a successor program to the EDR; and WHEREAS, the existing EDR provides an incentive of up to twenty percent (200) reduction off of the customers' otherwise applicable tariff (OAT) for five (5) years, excluding taxes; and WHEREAS, by memorandum dated December 18, 2018, the General Manager of the Public Utilities Department has recommended that the 4 EDR program be restructured to amend the existing twenty percent (200) five year EDR program with a five year tiered incentive program; and WHEREAS, the City Council of the City of Vernon desires to approve the amended Economic Development Rate Program and the general form of Agreement for Economic Development Incentive on Electric Service. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds that this action is exempt under the California Environmental Quality Act (CEQA), because is not in reference to a "project" subject to the CEQA Guidelines under Section 15378 because it involves an administrative activity and (b) even if this approval were a "project" subject to CEQA, the approval requested is exempt in accordance with CEQA Guidelines Section 15061(b)(3), the general rule that CEQA only applies to projects that may have a significant effect on the environment, and any construction that may occur by a private party in the future in reliance on this approval would be subject to CEQA review by another governmental agency at that time when actual details of any physical proposal would be more than speculative. SECTION 3: The City Council of the City of Vernon hereby approves the City of Vernon Public Utilities Department amended Economic Development Rate Program and approves and adopts the general form of the Agreement for Economic Development Incentive on Electric Service for use by the City, as attached hereto as Exhibit A. SECTION 4: The City Council of the City of Vernon hereby - 2 - instructs the City Administrator, or his designee, to take whatever actions are deemed necessary or desirable for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized, including but not limited to, any non -substantive changes to the Agreement attached herein. SECTION 5: The City Clerk of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk of the City of Vernon shall cause this resolution and the City Clerk's certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 18th day of December, 2018. ATTEST: Maria E. Ayala, City Clerk APPROVED AS TO FORM: Brian Byun, Senior Deputy City Attorney - 3 - Name: Title Mayor / Mayor Pro-Tem E. STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, Maria E. Ayala, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. , was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, December 18, 2018, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this day of December, 2018, at Vernon, California. (SEAL) - 4 - Maria E. Ayala, City Clerk CITY OF VERNON VERNON PUBLIC UTILITIES DEPARTMENT SCHEDULE ED ECONOMIC DEVELOPMENT RATE APPLICABILITY Applicable to qualified customers locating or expanding load on the City of Vernon's transmission and/or distribution system. Customers taking service on Schedule ED must sign an Agreement for Economic Development Incentive on Electric Service (Form No. ED). TERRITORY Within the city limits of the City of Vernon. RATES The ED rate provides an incentive percentage reduction off the customers'; otherwise applicable tariff (OAT) per the schedule in Table 1 for five years, excluding taxes. This reduction shall be calculated on the rate components of the customer's bill that correlate to services the City of Vernon provides the customer. Table 1 Year I 1 1 2 3 4 15 Incentive 1 20% 1 15% 12% 8% 1 5% Incentive Limiter: The average rate after application of the incentive under this schedule cannot be less than the Floor Price described below. FLOOR PRICE: The sum of revenues collected by the City of Vernon from the customer, exclusive of any additional applicable taxes, shall not fall below a Floor Price equal to marginal generation charges, embedded distribution charges, CAISO and other transmission charges, public benefits charges (PBC), and the green -energy surcharges that are allocated to the customer. The revenues will be reviewed annually to ensure that they equal or exceed the Floor Price, up to the OAT revenues the customer would have paid if it had not received the incentive. Additional lump -sum charges may be due to the City of Vernon or credits due to the customer after each annual review. The charges will be designed to ensure that revenues do not fall below the annual Floor Price. Credits, if available after the annual review, will be provided if the customer's incentive rate had been previously reduced from the maximum incentive level, due to the Floor Price. PROGRAM EXPIRATION: This schedule will remain open to new participants until December 31, 2023. This schedule will also remain in effect until such time the last agreement expires or terminates. SPECIAL CONDITIONS: 1. Eligible Customers: Eligible customers are those on or electing existing schedule: TOU-G, or TOU-V, or their successor rate schedule. Unless specified in the Agreement for Economic Development Incentive on Electric Service, new customers with maximum billing demands greater than 100 kW, or existing customers who add at least 100 kW of demand may qualify. For existing customers, only the additional demand may qualify for service under Schedule ED. New or additional billing demand does not include billing demand that exists within the City of Vernon at the time eligibility is determined. Residential customers and state or local government agencies are not qualified customers under this rate schedule. 2. Contract: Service under this schedule is provided under a five-year agreement. 3. Start Date: The start date of the incentive rate period shall commence within 24 months from the date of execution for service and shall be designated by the customer within the agreement. 4. Metering: Separate electric metering for new or additional load may be required if, in the City of Vernon's sole opinion, it is necessary to provide service under this schedule. The customer will be responsible for any costs associated with providing separate electric metering. 5. "But For" Test In order to be eligible for this schedule, the customer must sign an affidavit, attesting to the fact that "but for " this incentive rate, either on its own or in combination with a package of incentives made available to the customer from other sources, the customer would not have located operations or added load within the City of Vernon. 1C AGREEMENT FOR ECONOMIC DEVELOPMENT INCENTIVE ON ELECTRIC SERVICE This agreement is made between a(n) Vernon. ("Applicant"), and the City of RECITALS: The Economic Development rate was established and is made available at the City of Vernon's sole discretion. The Economic Development Rate is a five-year incentive rate, as set forth in Schedule ED. AGREEMENT: Applicant and the City of Vernon agree to the following terms and conditions: 1. QUALIFICATION CRITERIA. Applicant is or will be a customer, eligible for receiving service under Schedule TOU-G, TOU-V or its successor rate schedule. The electric load subject to his agreement is a maximum billing demand of at least 100 kW of net new load to the City of Vernon. The minimum 100 kW of net new load must be maintained for at least three consecutive months during the initial 12 months of this agreement. Only new load that will be regularly served by the City of Vernon will be eligible for this incentive. BILL INCENTIVE. Electric service to Applicant's premises shall be delivered under Applicant's otherwise applicable tariff (OAT), which is . A five-year rate incentive percentage reduction will be applied to the customer's OAT (excluding taxes) in accordance with Schedule ED. This reduction shall be calculated on the rate components of the customer's bill that correlate to service that the City of Vernon provides the customer. If needed the City of Vernon may reduce the incentive percentage to ensure that revenues exceed the Floor Price. This incentive under this schedule will be limited by the Floor Price, as defined in Schedule ED. In calculating the Floor Price, the City of Vernon will make use of its best estimate of the marginal cost to serve the customer. The revenues from each participant will be reviewed annually and/or at the end of the 11 agreement to ensure that they equal or exceed the Floor price for each year of the agreement, up to the OAT revenue that the customer would have paid if it had not received the incentive. Applicant's rate under this schedule will be subject to an annual review, with potential additional lump - sum charges due to the City of Vernon or credits due to Applicant. The charges shall ensure that the rate does not fall below the Floor Price each year. Credits, if available after the annual review, will be provided if the customer's incentive rate had been previously reduced from the maximum incentive above as a result of the application of the Floor price limitation. 3. INCENTIVE CALCULATION. Terms and conditions necessary for the incentive calculation are defined and agreed to as follows: Billing determinants used for calculating the first year incentives will be the City of Vernon's best estimate of expected usages and demand for customer expansion and attraction cases. For expansion cases, the previous 12- months of historical metered data, if available, will be used to determine current usage levels, and the incentive will be calculated only on that portion of demand and usage that is added. During the annual and contract term review, the City of Vernon will compare the revenues received to the Floor Price to ensure that the revenues received remain at least equal to the Floor Price throughout the duration of the contract. The City of Vernon reserves the right to reduce the contracted demands stated by the Applicant below if it is determined that the Applicant's actual load at full operation of the facility after the Commencement Date of this Agreement is more than 25% less than the contracted maximum demands stated below. [Please mark the appropriate space below, indicating whether this is an agreement for the Applicant's entire load or only a portion of the Applicant's load.] a. New customer Locating in the City of Vernon. b. Expansion of the existing customer's load. C. The contracted demand of the new or expanded load is estimated to be kW. The excluded Demands, if applicable, are determined by averaging the Applicants four highest measured demands during each seasonal period during the 12-mont period preceding the execution date of this agreement, if available. If Applicant separately meters the Reserved Demand, Applicants Excluded Demand will be zero (0) kW for each season. The City of Vernon and the Applicant agree that the excluded demand is: July to September: May, June, October: November to April: kW kW f!W.i1 The Incentive Ratio for each month is defined as the difference between the Applicant's maximum demand for that month and the excluded Demand divided by that same month's maximum demand. The Incentive Ratio will be a fraction from zero (0) to one (1). The Economic Development Rate discount is 12 determined as the product of the rate incentive, the Incentive Ratio and the subtotal changes on the rate components of the Applicant's bill that correlate to service that the City of Vernon Provides to Applicant. COMMENCEMENT DATE. The incentive shall commence on the Applicants regularly scheduled meter read day in the month of , 20 , which is within a 24-month period of the date of execution of this agreement, as required by rate Schedule ED. 5. METERING. Applicant agrees to be responsible for all costs associated with providing separate electric metering if the City of Vernon, at its sole discretion, deems such metering a necessary condition to implement this rate. If Applicant is deemed to require separately metered reserved demand, Applicant must have metering in place before the incentive rate will apply. Applicant's ability to have required metering in place shall not delay the commencement date provided in Section 4 by which the Applicant would have otherwise received the incentive. 6. TERM OF AGREEMENT. This agreement shall take effect immediately and remain in effect for a term of five years following the commencement date of the rate incentive. 7. TERMINATION AGREEMENT Applicant may terminate this agreement upon 30 days written notice. The City of Vernon may also terminate this agreement upon 30 days written notice in the event Applicant no longer meets the qualifications described elsewhere in the Agreement and in Rate Schedule ED. Notwithstanding these rights of termination, the Applicant shall be subject to Liquidated Damages as provided in Section 9 of this agreement. 8. "BUT FOR" TEST Applicant attests that "but for" the terms of this agreement, either on its own or in combination with a package of incentives made available to the Applicant from other sources, the Applicant would not have located, or increased its operations within the City of Vernon. Applicant shall sign the attached affidavit to that effect. 9. LIQUIDATED DAMAGES If this agreement is terminated due to Applicant's misrepresentation or fraud, Applicant shall be liable for liquidated damages that equal 200% of the cumulative difference between (i) bills calculated under the Schedule ED rate to the date of termination and (ii) bills that would have been calculated under the OAT. 13 10. ASSIGNMENT. Applicant may assign this agreement only if the City of Vernon consents in writing and the party to whom the agreement is assigned agrees in writing to be bound by this agreement in all respects. 14 IN WITNESS THEREOF, the Parties have executed this Agreement in multiple originals of equal dignity by their respective duly authorized representatives. Executed this day of , 20 The City of Vernon (customer) (signature) (signature) (Print Name) (Print Name) (Title) (Title) 15 AFFADAVIT FOR ECONOMIC DEVELOPMENT RATE By signing this affidavit, an Applicant who locates or adds load in the City of Vernon hereby certifies and declares under penalty of perjury under the laws of the State of California that the statements in the following paragraphs are true and correct. l . But for the receipt of the discounted economic development rate and the terms of the Agreement, either on its own or in combination with an economic development incentive package, the Applicant's load would not have been located, or added within the City of Vernon. 2. The load to which the Agreement applies represents kilowatt-hours (kWh) and kilowatts (kW) that either (i) does not already exist in the City of Vernon , or (ii) the Applicant considered expanding to a location outside of the City of Vernon. 3. Applicant has discussed with the City of Vernon the cost-effective conservation and load management measures the applicant may take to reduce their electric bills and the load they place on the City of Vernon's utility system. 4. On an annual basis, the cost of electricity for a new or expanding customer is at least five (5) percent of its actual operating costs, less the cost of raw materials. Executed this day of , 20 (Applicant) BY: (Signature) (Print Name) TITLE: 16