RECOMMENDATION TO COUNCIL
Staff recommends City Council adopt a resolution authorizing the City Manager to execute the attached Retail Electric Energy Services Agreement with TSI Semiconductors America LLC operating at 7501 Foothills Boulevard.
| BACKGROUND
For many years the City of Roseville Electric Utility has worked closely with its large energy consuming customers to design future infrastructure, pre-purchase power, plan maintenance-related outages, coordinate load shedding options during system emergencies, and implement energy efficiency improvements for the benefit of the individual customer, the electric utility, the other ratepayers, and the City as whole.
Since 2000, the City has regularly entered into similar energy services agreements with NEC, Telefunken and the local school districts. One large customer that has a long partnership with the City but has not previously entered into an energy services agreement is TSI Semiconductors America LLC (TSI).
The purpose of this Agreement is to stabilize the utility’s future revenues and reduce the risk of needing to raise rates on other customers if the company ceased operations. The term of the Agreement would be February 6, 2019 through February 5, 2021. The key obligations of the proposed Agreement between the City and TSI include:
- Customer agrees to:
- receive electricity only from the City
- provide load forecasts to the City
- coordinate future energy efficiency projects with the City
- participate in peak load reduction programs with the City
- partner with the City to reduce energy demand during grid emergencies.
- The City agrees to:
- provide a 15% discount on customer’s energy charges in the first year of the Agreement
- provide a 7.5% discount on customer’s energy charges in the second year of the Agreement.
This Agreement will provide significant value to the City and other ratepayers. A portion of TSI’s existing energy rate pays to maintain and operate the City’s electric distribution system. TSI will agree that the City will be their sole energy provider for the duration of the Agreement. Roseville Electric estimates that TSI currently provides over $2,000,000 in annual contributions to help maintain and operate the City’s electrical distribution system and pay the utility's debt service. Without this agreement, those funds from TSI will be at risk.
| FISCAL IMPACT
The fiscal impact of the Agreement will result in an estimated revenue reduction to the electric utility of $400,000 in FY2018-19, $750,000 in FY2019-20, and $275,000 in FY2020-21 in incentives over the 24 month duration of the contract. Funds are available in the approved fiscal year 2018-19 budget to cover the impact of the Agreement. Staff will recommend the City Council approve the impact on future year budgets during those annual budget processes. There is no expected tax revenue impact of this Agreement.
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ECONOMIC DEVELOPMENT / JOBS CREATED
Adopting this Resolution will be an important incentive for this significant customer to maintain company operations and retain jobs in the City and could assist in regaining a portion of the 240 fulltime positions and one part time position lost in December 2018.
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ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or reasonably foreseeable indirect physical changes in the environment (CEQA Guidelines §15061(B)(3)). An agreement for retail energy services does not include the potential for a significant environmental effect, and therefore is not subject to CEQA.
| Respectfully Submitted,
Philip McAvoy, Assistant Electric Utility Director
Michelle Bertolino, Electric Utility Director | | | 
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Dominick Casey, City Manager
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