Norwich — City economic development leaders Tuesday welcomed a proposal by Norwich Public Utilities to create a special discount rate for new large electric customers, which will take effect Nov. 1.

The Economic Development Rate, approved unanimously Tuesday following a public hearing, will 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, NPU officials said. It will be a five-year discount that will decrease each year, with the new entity paying the full electric rate in the sixth year.

Mayor Peter Nystrom applauded the commission for focusing on economic development for the past four to five years. He said the utility discount, along with other city incentives such as federally designated Opportunity Zones, which provide investor tax breaks, and Enterprise Zones, which allow for property tax breaks.

“It represents your interest in farming large utility uses,” he said. “I think you’re taking a proactive measure. It’s good for the city, it’s good for you.”

The 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 the 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.

NCDC President Kevin Brown echoed Nystrom’s comments that the proposed discount rate would come at the toughest time for a business: as it faces construction and startup costs it has no control over.

"This will give us a leg up (to attract new business),” Brown said. “We all know utility rates continue to rise. Any community that can do this will have a leg up.”

In examples provided to the commission in a written presentation, 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 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.

c.bessette@theday.com