Energy costs: Decision would ease impact of rate expiration

Issue Date: December 16, 2015
By Christine Souza

Farmers who faced sticker shock on their electric bills with the turn of the new year would see relief under a proposed decision to be reviewed as early as this week by the California Public Utilities Commission.

The issue involves an agricultural electricity rate created as an incentive for farmers to switch from diesel irrigation pumps to electrical pumps, to meet updated air quality standards. In the Pacific Gas and Electric Co. service territory, the rate is known as the Agricultural Internal Combustion Engine Conversion Incentive Rate, or AG-ICE for short.

The special rate is due to expire on Dec. 31, with customers transitioning to full, standard agricultural rates on Jan. 1. In some cases, affected agricultural customers could have seen their rates rise by up to 70 percent, according to Karen Norene Mills, associate counsel and director of public utilities for the California Farm Bureau Federation.

CFBF, the Agricultural Energy Consumers Association and PG&E jointly petitioned the Public Utilities Commission to provide relief in the form of a two-year transition to standard agricultural rates for AG-ICE customers. A proposed decision by an administrative law judge, which must be approved by the CPUC, would authorize the transition.

Mills worked on behalf of Farm Bureau members to petition the CPUC for the multi-year transition period for affected agricultural customers, with annual stepped increases instead of moving the customers to regular agricultural rates at once.

Under the proposed decision, PG&E would implement a transition period to move existing AG-ICE customers to regular agricultural rate schedules by January 2018. PG&E would be directed to increase the AG-ICE rate 25 percent for the calendar year 2016, by another 25 percent for 2017, and then move customers to full, regular agricultural rates in January 2018. The 2016 and 2017 transition rates would apply only to customers who were on the AG-ICE rate in December 2015.

A similar transition period has been requested for Southern California Edison Co. customers on the same type of rate. Mills said a separate settlement has been reached in the Edison case, which could be formalized before March 31. In the meantime, the current, special rate will remain in effect for affected Edison agricultural customers.

Within the PG&E service area, 1,752 accounts or meter-service connections would be affected by the change, Mills said, and in the Edison service area, approximately 250 accounts would be affected.

"We have made a strong case to the CPUC to approve the transition for affected PG&E and Edison customers," she said.

Without the pending action by the CPUC, agricultural customers on the AG-ICE rate schedule in PG&E would move to a regular agricultural rate as of Jan. 1, resulting in a significant increase in their electricity costs.

San Joaquin County farmer Kenny Watkins estimated his current cost for electricity on the AG-ICE schedule is $24,526; on the AG-5B schedule, one of the rate schedules available for transition, the cost would increase to $42,799.

"The AG-5B schedule was the cheapest option and this is an incredible expense compared to what we were paying before under the AG-ICE schedule," Watkins said.

He said the two-year transition period would give him more time to explore alternative power sources.

"I'm even thinking about looking into solar to help bring the cost down. I think that is what we're going to have to do. I've got the land, but it all takes time and effort," he said.

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.