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STATE OF CALIFORNIA Arnold Schwarzenegger, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

May 13, 2005

Agenda ID 4612

Alternate to Agenda 4581

Adjudicatory

PARTIES OF RECORD IN CASE 04-01-020

Enclosed is a Draft Alternate Decision of President Michael R. Peevey. Please note that this is a different decision from the Presiding Officer's Decision (POD) of Administrative Law Judge (ALJ) Prestidge, previously mailed to you on 10/25/2004. The opportunity to file an appeal to the POD has passed. Pursuant to Public Utilities Code Section 1701.2(a), President Peevey's Alternate Decision need not be served on the parties, nor are comments required. However, in this instance, as a courtesy to the parties, President Peevey is giving parties the opportunity to comment on his Decision. Comments are due on May 20, 2005.

When the Commission considers the Presiding Officer's Decision and any decision different from the POD, the Commission may act by adopting all or part of the decisions as written, amend or modify the decisions, or set aside and prepare its own decision, so long as the Commission's decision is based on the record developed in the investigation, and if the decision differs from the POD, has a written explanation of the differences. (See Public Utilities Code Section 1701.2(a).) Only when the Commission acts does the decision become binding on the parties.

Parties shall adhere to the rules for filing comments on draft decision, as delineated in Article 19 of the Commission's Rules of Practice and Procedure. These Rules are accessible on the Commission's website at www.cpuc.ca.gov. Pursuant to Rule 77.3, opening comments may not exceed 15 pages. Comments should be served separately on the assigned Commissioner and the assigned ALJ. For that purpose, I suggest electronic mail, hand delivery, overnight mail, or other expeditious method of service.

Sincerely,

/s/ ANGELA K. MINKIN (by LTC)

Angela K. Minkin

Chief Administrative Law Judge

Attachment

COM/MP1/RSK/acb DRAFT Agenda Item 4612

Decision DRAFT ALTERNATE DECISION OF PRES. MICHAEL R. PEEVEY

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Almond Tree Hulling Co.; Arakelian Farms; Baugher Ranch; Beretta Property Management; Campos Brothers Farms; Central California Almond Growers Association; Central Valley Almond Association, Inc.; CF Koehen & Sons, Inc.; Dairyland Hullers; Farmers Cooperative; Harriet Baldwin; Harris-Woolf Almond Huller; Hashem Naraghi; Hilltop Circle L. Ranch; James M. Paiva; James R. Lewis Orchards Inc.; John Wynn; Mintum Almond Coop, Inc.; North State Hulling Co-op, Inc.; Pacific Almond Co.; Paramount Farms, Inc.; Paramount Farming Company; Parreira Almond Processing Co.; Peter D. Peterson; Stewart and Jasper Orchards; South Valley Farms; Strain Orchards; The Hulling Company; TM Duche Nut Co. Inc.; Vernon Paddack; West Valley Hulling/Barry Baker; Xcel Shelling, LLC.,

              Complainants,

            vs.

Pacific Gas and Electric Company and DOES 1 through 100,

              Defendant.

Case No. 04-01-020

(Filed January 21, 2004)

OPINION

Introduction

In this case, we are called upon to decide whether a group of 32 almond hullers/shellers located within the service territory of defendant Pacific Gas and Electric Company (PG&E) are required to take electric service from PG&E under commercial rates, or are entitled to service at the lower agricultural rates PG&E offers pursuant to § 744 of the Public Utilities Code. This requires us to construe the eligibility criterion for PG&E's agricultural tariff, which states in pertinent part:


"A customer will be served under this schedule if 70 percent or more of the energy use is for agricultural end-uses. Agricultural end-uses include growing crops, raising livestock, pumping water for agricultural irrigation, or other uses which involve production for sale, and which do not change the form of the agricultural product." (Emphasis added.)

Since there is no real dispute that complainants satisfy the other eligibility conditions, the controlling issue in this case is whether the hulling and shelling process changes the form of the agricultural product-the almond. PG&E contends that the hulling and shelling process changes the form of the unhulled almond, which PG&E believes is the agricultural product. Complainants, on the other hand, contend that no change in form occurs, because the hulling and shelling process simply removes "extraneous plant material" while leaving the almond intact-thereby preserving its form.

On October 25, 2004, the Presiding Officer's Decision (POD), prepared by Administrative Law Judge Myra J. Prestidge, was mailed to parties. The POD denied the complainants request to be included under PG&E's agricultural tariff rates for their hulling/shelling operations. The POD found that the unhulled almond consists of three distinct agricultural products-the hull, the shell and the almond (or almond meat)-and that the removal of the hulls and shells constitutes a change in the form of the agricultural product making the hulling/shelling process ineligible for more favorable agricultural tariff rates. The POD was subsequently appealed by the complainants on the basis that hulls and shells are agricultural residues and their removal does not alter the agricultural product-the almond itself.

After careful consideration of this matter, we accept the complainants appeal. We conclude that (1) the agricultural product is the almond itself, and not the hull or shell, and (2) the removal of the hulls and shells from the almond does not constitute a "change of form" within the meaning of PG&E's eligibility statement. Thus, the complainants are entitled to service under PG&E's agricultural tariff.

As a consequence of this decision, complainants 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.

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