Conclusion
For the reasons discussed above, Complainants qualify to receive electric service at an agricultural rate under the PG&E tariff and they are entitled to a refund of the difference between what they have been billed for hulling/shelling under PG&E's commercial tariffs since the Fall of 2003 (when they first asked to be billed at agricultural rates) and what they would have been billed for the hulling/shelling under PG&E's agricultural tariffs. We find that no interest award is warranted because PG&E's tariff eligibility language can be considered subjective and imprecise.
Comments to Draft Alternate Decision
On May 13, 2005, President Peevey's draft alternate order was filed and served on parties.
Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Myra J. Prestidge is the assigned ALJ and the presiding officer in this proceeding.
1. Almonds grow commercially in orchards and are enclosed by a hard shell, which is enclosed in a fuzzy hull.
2. Almonds must generally be hulled within 90 days of removal from the tree and must be both hulled and shelled for human consumption.
3. The primary market is for hulled and shelled almonds. A much smaller market exists for in-shell almonds. There is no market for in-hull almonds.
4. Hulls and shells are used for cattle feed and cattle bedding.
5. In 2001, California produced 830,000,000 pounds of almonds at a total value of $731,880,000.
6. California annually produces approximately 800,000 tons of almond hulls, which have a market value of approximately $100 per ton, or $80 million.
7. Complainants produce approximately 190,000 tons of almond shells annually, which may be sold for at least 1 cent per pound, or approximately $3,800,000 per year.
8. Hulling and shelling is a highly mechanized process, which generally includes the following steps:
a. Removal of the almonds, still in their hulls and shells, from almond trees with a "shaker."
b. Drying of the almonds on the orchard floor for at least 7 to 10 days.
c. Sweeping of almonds from the almond floor using large mobile bins, which either have rotating paddle-like appendages to sweep the almonds into the bins or vacuums which suck the almonds into the bin.
d. Transportation of the almonds to the huller/sheller.
e. Separation of the almonds from dirt, twigs, leaves, etc., by putting the material through the series of vibrating screens.
f. Placement of the almonds on conveyor belts.
g. Moving the almonds through a series of shear rolls and/or a hulling cylinder to gradually crack, break open, fracture, or splinter the hulls and shells.
h. Movement of the almonds to a series of vibrating screens, which separate the unhulled, unshelled almonds from loose hulls and shells or pieces of hulls and shells.
i. Use of aspirators to blow away lighter pieces of hulls and shells as the almonds move along the conveyor belt.
j. Separation of unhulled/unshelled almonds from hulled and shelled almonds by gravity tables.
k. Putting any unhulled or unshelled almonds back through the shear rolls or hulling cylinders until the hull and shell are completely removed.
9. Hullers and shellers must generally put the almonds
through 14 to 22 shear rolls before the hulls and shells are fully removed.
10. In the small percentage of cases in which the almonds are hulled but not shelled, the almonds generally go through only 7 or 8 shear rolls so that the shell remains intact.
11. The hulling and shelling process breaks, cuts into, cracks, fractures, and splinters the hulls and shells.
12. The PG&E tariff in relevant part states that a customer is entitled to an agricultural rate for electricity if at least 70% or more of the electricity used is for an "agricultural end-use."
13. The PG&E tariff defines "agricultural end uses" to include "growing crops, raising livestock, pumping water for irrigation, or other uses which involve production for sale, and which do not change the form of the product."
14. The parties do not dispute that Complainants use at least 70% of the electricity at their facilities for hulling and shelling operations.
15. The almond, or almond meat, is the agricultural product and hulling and/or shelling does not change the form of the almond.
16. Hulling and shelling is similar to other agricultural activities that qualify for an agricultural rate under PG&E's tariff, such as removing the stems from raisins, cutting the leafy tops off of carrots, and removing the outer leaves of cabbage and lettuce, because these processes involve separating the agricultural product from extraneous plant matter, and therefore more closely resemble removing the almond from the almond tree.
17. Although there exists a market for almond hulls to be used as cattle feed, and for shells to be used as cattle bedding, almond hulls and shells are agricultural residues of almond growing.
18. Almond orchards are planted for the production of almonds, not shells and hulls.
19. In Producers Dairy, we found that it was not the intent of the legislature to force almond producers to forego profitable markets in order to qualify for agricultural rates because there is a market for in-shell almonds.
1. Even though the change-of-form language in PG&E's agricultural tariff eligibility statement can be considered subjective and imprecise, the Commission's duty in this case is to construe the tariff language as written.
2. Eligibility for an agricultural rate under PG&E's tariff does not depend on whether the activity for which the electricity is used occurs on or off the property at which the agricultural product was raised or grown.
3. In determining whether an agricultural activity, other than raising crops or livestock or pumping water for irrigation, qualifies for an agricultural rate under PG&E's tariff, the Commission must determine whether the activity changes the form of the agricultural product.
4. Under Air Way Gins, whether an agricultural product has undergone a change in form due to processing is based on a before-and-after comparison of the constituent parts of the agricultural product, rather than the before-and-after comparison of the raw product as it is harvested from the field.
5. Under Producers Dairy and Air-Way Gins, the Commission must consider the existence of actual markets for the agricultural products, rather than theoretical markets, in determining whether a particular activity qualifies for an agricultural rate.
6. The Legislature did not intend agricultural customers to be forced to forego profitable markets for their products in favor of less viable markets in order to qualify for an agricultural rate.
7. The role of an agricultural tariff is to provide discounted rates for customers engaged in agricultural activities.
8. Eligibility for an agricultural rate under PG&E's tariff must be based on the particular use of electricity involved and a reasonable, common-sense interpretation of the tariff based on its language, or if the language is ambiguous, the regulatory or legislative intent behind the tariff.
9. Under PG&E's tariff, a reasonable, common-sense definition of "change in form" would generally include, but would not be limited to, cutting into, breaking open, crushing, fracturing, splintering, or slicing the agricultural product.
10. Regarding the relevant agricultural products, Complainants' almond hulling and/or shelling operations do not effect a "change in form" within the meaning of the PG&E tariff. Consequently, Complainants' electricity consumption for these operations qualifies for the agricultural rate under the PG&E tariff.
11. Because almond hulling/shelling is eligible for agricultural rates under PG&E's current agricultural eligibility statement, complainants are entitled to a refund equal to the difference between what they have been billed for their hulling/shelling activities under PG&E's commercial tariffs and what they should have been billed for these activities under PG&E's agricultural tariffs.
12. Each complainant should receive the refund described in the preceding Conclusion of Law for the period beginning on the date on which the complainant formally requested such a refund from PG&E, as set forth in Exhibit B attached to the complaint in this proceeding and ending on the date that each complainant is transferred to the agricultural tariff.
13. Complainants should receive electrical service from PG&E for their almond hulling/shelling activities at the applicable agricultural tariff so long as PG&E's current agricultural tariff eligibility statement remains in effect.
IT IS ORDERED that:
1. Pacific Gas and Electric Company (PG&E), within 90 days after the mailing date of this decision, shall provide electrical service for almond hulling/shelling activities to each complainant herein at PG&E's applicable agricultural rate so long as PG&E's current agricultural tariff eligibility statement remains in effect.
2. PG&E, within 90 days after the mailing date of this decision, shall refund to each complainant in this proceeding, for the period beginning on the date set forth under the column labeled "Date Requested" in Exhibit B attached to the complaint herein, and ending on the date that each complainant is converted to agricultural tariff, an amount equal to the difference between what such complainant was billed for its almond hulling/shelling activities under the commercial tariff that PG&E applied, and what such customer should have been billed for its almond hulling/shelling activities under PG&E's applicable agricultural tariff.
3. This proceeding is closed.
This order is effective today.
Dated __________________, at San Francisco, California.
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original attached Draft Alternate Decision of President Michael R. Peevey, on all parties of record in this proceeding or their attorneys of record.
Dated May 13, 2005, at San Francisco, California.
/s/ Sally Cuaresma |
Sally Cuaresma |
NOTICE
Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.
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