Norwich — Norwich Public Utilities is proposing a new five-year reduced electric rate for large new commercial customers to attract big businesses to the city, which would bring increased utility revenue, boost the city’s tax base and utility revenue sharing.

The cost of the proposed program already is included in a previously approved rate increase scheduled to take effect Nov. 1, NPU spokesman Chris Riley said, but it will be subject to a public hearing at 6 p.m. Aug. 31 by the Board of Public Utilities Commissioners at NPU headquarters, 16 S. Golden St.

The board is scheduled to vote on the proposed economic development rate at its Sept. 28 meeting, and it would take effect Nov. 1. The commission in 2019 approved a three-year rate structure for electricity that called for no rate increase in 2020, a 1.5% increase in 2021 starting Nov. 1 and a 1.5% increase in 2022.

Steve Sinko, NPU division manager, said the discount would apply only to the largest category of commercial customers consuming 100,000 kilowatts or more of power per month — an average home for comparison consumes about 600 kilowatts per month, Riley said. No discounts are proposed for natural gas, water or sewer usage.

Sinko said it would range from big box stores to medium and large manufacturers, possibly large hotels and entities that would become the city’s highest electricity users. The proposed rate would apply only to new Norwich businesses. Currently, the city has about 70 customers in that large commercial user category, he said.

In a presentation to the utilities commission on July 29, NPU administrators outlined the discount and potential recipients. The proposed economic development rate would be a five-year discount, which would decrease each year to the point where the new entity would pay the full electric rate in the sixth year.

In examples provided, a customer with an annual 1.6 million peak kilowatt usage would save $32,941 in the first year, a 13.5% discount, while still paying about $210,972 in electric bills to NPU. The city would receive its 10% share of $21,097. A new customer with annual peak usage of 4.2 million kilowatts would save an estimated $75,805, or 12.7% in the first year, with NPU still receiving $519,926 in electric revenue from the customer, and the city $51,923.

The largest customer category, using 21.5 peak kilowatts, would save $388,138, or 12.5%, in the first year and would pay NPU about $2.7 million for electricity, with the city receiving $270,956 in revenue sharing.

The proposed economic development rate comes as city leaders and the Norwich Community Development Corp. are considering purchasing a large tract of former farmland in Occum to create a second business park. The City Council is considering bonding $740,000 for engineering and design work to upgrade the Interstate 395 Exit 18 ramps to create a designated entrance into the proposed business park land.

NCDC has a purchase agreement with current owners Byron Brook Country Club LLC and M&A Holdings LLC, for $3.55 million for 17 parcels, that runs through Dec. 15 with possible extensions through 2022.

c.bessette@theday.com