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Three years after soaring wholesale electricity prices pushed Pacific Gas & Electric towards insolvency, a federal judge has approved a bankruptcy plan for California’s largest utility.
In partnership with the Schwarzenegger Administration and the major utilities, AECA has filed a proposal with the California Public Utilities Commission (CPUC) to create a special incentive electric rate for farmers who use diesel engines for irrigation.
The proposal, supported by Pacific Gas & Electric (PG&E) and Southern California Edison (SCE), now goes to the CPUC for approval. The Commission could approve the program as early as March 2005.
“The utilities really need to be complimented on putting forward a very important program to greatly improve air quality for Sacramento and San Joaquin Valley residents” said Michael Boccadoro, AECA’s Executive Director.
The special rate would be offered to any grower who currently operates diesel-driven equipment. In exchange for permanently retiring the engine, the grower will receive a 20% discount from current agricultural rates. This rate would increase by 1.5% per year over the next ten years, however it would not be subject to any other possible rate change. The rate was structured with this cost certainty to insure that farmers could calculate the long-term costs of conversion, without concern that the utility could change the rates drastically in the future.
Additionally, the rate will have a significantly lower demand charge, and the “ratchet” demand would be eliminated. That means that the grower will only pay for demand incurred in the month the electric pump is operated. The hourly electric rate will be generally equal to the cost of operating a diesel-engine, so over the ten-year life of the program the incentive rate should cost the same as if the farmer kept their current diesel engine.
The proposal also offers an improved “hook-up” allowance for running the necessary line-extensions to plug into the grid. As a result, the cost to the customer connecting to the distribution line will be reduced significantly. In most cases, there will be no line extension cost to the customer.
Participation in this program does not preclude a farmer from utilizing the Carl Moyer Program to purchase a new electric motor.
“We’ve reviewed this new rate proposal and feel confident it will offer a solid incentive for farmers to move back to electricity,” said Roger Isom, Vice President of the California Cotton Growers and Ginners Association. “This creative voluntary program sponsored by AECA is a proactive way to solve a growing problem for the agricultural industry.”
Local air regulators are considering draft rules that would incur significant costs on farmers who use diesel pumps, such as mandating new cleaner engines in the coming years.
“This program can offer a real alternative for farmers facing these decisions in the near future,” said Boccadoro. “We know most farmers prefer electricity, and with this program they can now go back to electricity, aid in cleaning the air, and do so without any significant new costs.”
The proposal will be reviewed by the CPUC over the next few months. AECA is seeking letters of support for this program to encourage the CPUC to approve the program as quickly as possible. This is particularly important as farmers will begin making capitol decisions as early as 2005, when local air regulations are expected to be adopted.
Sample letters of support are available on the AECA webpage: www.AECAonline.com If you have any questions regarding this proposal, or would like to see a copy of the proposed rate and line-extension rules, please contact Dan Geis, AECA Public Affairs at (916) 447-6206.
VOLUME 12, NUMBER 1
WINTER 2005
Proposal would aid conversion back to electricity
The proposal has been hailed by air quality regulators and environmental groups, demonstrating the broad and growing coalition of support for this program. Diesel irrigation pumps have been identified as a significant source of air pollution in California, particularly in the San Joaquin and Sacramento Valleys.INSIDE:
Agricultural Energy Consumers Assocation
925 L Street, Suite 800 / Sacramento, CA 95814
1 (916) 447-6206
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