4. Discussion

A. The Tariff and the Rule 1 Definition of "Agricultural Power Service"

TOU-PA-5 applies where Edison determines that "70% or more of the customer's electrical usage is for general agricultural purposes . . . ." TOU-PA-5 does not define "general agricultural purposes." However, for many years, Edison has interpreted eligibility for an agricultural rate under TOU-PA-5 based on the definition of "agricultural power service" stated in Rule 1,² as follows:

Agricultural power service is that portion of electric energy and service used by a person in connection with the production, harvesting, and preparation for market of agricultural and horticultural products, including poultry and livestock, on land owned and/or operated by such person for the production of agricultural products, but does not apply to the processing of products raised by others. (Emphasis added.)

Rule 1 provides definitions for terms used in Edison's tariff schedules, including "agricultural power service." As discussed below, Edison's tariffs, including Rule 1, should be interpreted together as a whole, in a manner that harmonizes different sections of the tariffs. Since the definition of "agricultural power service" is the only provision of Rule 1 that attempts to define when electricity is used in connection with agriculture, this definition appears to apply to TOU-PA-5.

B. Principles for the Interpretation of Tariffs

Tariffs filed with the Commission are administrative regulations, and are subject to the same rules that govern the interpretation of statutes.³ To interpret a tariff, the Commission must look first at its language, giving the words their ordinary meaning and avoiding interpretations which make any language surplus. The Commission must interpret the words of a tariff in context and in a reasonable, common-sense way. If the language of the tariff is clear, the Commission need not look further to interpret the tariff.⁴

C. Zacky's Eligibility for Electrical Service for the Sheila Street Facility at an Agricultural Rate

The key to determining whether Zacky should be billed for electricity used at the Sheila Street facility at an agricultural rate is whether Zacky is there engaged in the production, harvesting, and preparation for market of poultry on land owned or operated by Zacky for these purposes.

Neither TOU-PA-5 nor Rule 1 defines "production." However, while the interpretation of similar words in other statutes related to agriculture is not controlling, these interpretations are helpful in construing TOU-PA-5 and Rule 1.⁵

Food and Agriculture Code Sections 25412 and 24953⁶ both define producer as:

Any person engaged in the business of growing any poultry, which is marketed as poultry meat, for a period of 3 weeks or more for the purpose of increasing the size and weight of such poultry. (Emphasis added.)

Food and Agriculture Code Section 24953 defines "growing poultry" as "feeding and caring for poultry."⁷

Although neither TOU-PA-5 nor Rule 1 defines "preparation for market," Food and Agriculture Code Section 18674 defines "prepared" as follows: "slaughtered, canned, salted, stuffed, rendered, boned, cut up, or otherwise manufactured or processed." (Emphasis added.)

The activities at the Sheila Street facility do not include the feeding and growing of chickens for the purpose of increasing their size or weight.⁸ Once chickens are transported from the grow-out farms to the Sheila Street facility, they are not given food or water for a period of seven to twenty-four hours (the "holding period") to clear their digestive systems before slaughter.⁹ The activities undertaken at the Sheila Street facility include: "the last seven hour wait, shackling and slaughter, removal of feathers, removal of feet on an evisceration line, breaking of the neck, removal of the oil glands, removal of the intestines and other organs, removal of the giblets, chilling of the product to 36 degrees, packing the product on ice, and cutting some of the product into smaller pieces."¹⁰ These activities clearly do not fall within the definition of the growing or production of poultry, but relate to the preparation of the poultry for market. Therefore, under the plain language of Rule 1, and giving its language a reasonable, common-sense interpretation, Zacky is not entitled to be billed for electricity used at the Sheila Street facility at an agricultural rate, because the preparation of the chickens for market at the Sheila Street facility does not occur on the same premises at which the chickens are grown.

This interpretation is consistent with the Commission's previous statement in Decision (D.) 82-12-094 that Edison's definition of an agricultural customer in its tariffs " . . . applies only to the growing of food and field crops and animals, and to the processing of such products on the premises where grown." (Emphasis added.)

Zacky's argument that it is entitled to an agricultural rate for the Sheila Street facility because it is a "vertically integrated" poultry operation¹¹ is also without merit. This interpretation would contradict the plain language of Rule 1, and would make surplus the phrase in Rule 1 which defines agricultural power service to apply only when the production, harvesting, and preparation for market of agricultural products occur on the land owned or operated by the same person for the production of agricultural products.¹²

The previous Commission decisions cited by Zacky do not support its argument. Both Harris Farms, Inc. v. Pacific Gas and Electric Company, D.92-02-025 (Harris Farms) and Producers Dairy Farms, Inc. v. Pacific Gas and Electric Company (Producers Dairy), D.97-09-043, dealt with the interpretation of a PG&E tariff for agricultural customers, which has substantially different language from TOU-PA-5 and Rule 1.¹³ Therefore, these decisions are not relevant to the interpretation of TOU-PA-5 and Rule 1.

Zacky also argues that several Edison employees, who were subsequently reversed by Edison management, and a PG&E regulatory attorney have previously interpreted TOU-PA-5 and Rule 1 to apply to agricultural uses such as the Sheila Street facility. However, such interpretations are not controlling here, because the applicability of TOU-PA-5 and Rule 1 to the Sheila Street facility is a question of law for the Commission to decide.¹⁴

D. Alleged Violation of Public Utilities Code Section 453

Zacky argues that Edison's refusal to provide service to the Sheila Street facility at an agricultural rate solely because it is not located on or next to a Zacky grow-out ranch or hatchery discriminates both against Zacky individually and against vertically integrated poultry processors as a group in violation of Section 453, which states in pertinent part:

(a) No public utility shall, as to rates, charges, service, facilities, or in any other respect, make or grant any preference or advantage to any corporation or person or subject any corporation or person to any prejudice or disadvantage.

* * *

(c) No public utility shall establish or maintain any unreasonable difference as to rates, charges, service, facilities, or in any other respect, either as between localities or as between classes of service.

The fundamental purpose of Section 453 is to prevent undue discrimination. The party claiming to be the victim of discrimination under Section 453 must establish that it has suffered prejudice or disadvantage in relation to a comparable situation.¹⁵ Moreover, in order to violate Section 453, the claimed "preference or prejudice must be unjust or undue."¹⁶

Here, Edison's decision not to apply TOU-PA-5 to the Sheila Street facility does not unlawfully discriminate against Zacky. Zacky has produced no evidence to show that it has suffered prejudice or disadvantage in comparison to any other similarly situated agricultural business. The Sheila Street facility is very different from any agricultural operations at which chickens are slaughtered on the farm on which they are grown. The Sheila Street facility is located in a highly commercial, industrial area, and is zoned for manufacturing and industrial uses, not for agriculture.¹⁷ The chickens are trucked approximately one hundred miles from the grow-out ranch to the Sheila Street facility for slaughter and preparation for market.¹⁸ Even if the Commission were to view the "holding period," during which the chickens are kept alive in the holding shed in order to clear their digestive systems, as the "production" of poultry, the holding shed is located next to the processing plant and occupies only 3.9 percent of the square footage of the plant.¹⁹ Zacky has also admitted in testimony that it is unaware of any other poultry processing plant located on the same land on which the chickens are raised,²⁰ because poultry processing plants require the increased water and sewer services which are generally available in urban areas.²¹

In short, neither the physical characteristics of the Sheila Street facility nor the functions performed at the facility suggest an agricultural use. Rather, they support an inference that the electricity consumed at the facility is predominately not for "general agricultural purposes." In order to qualify for an agricultural rate under TOU-PA-5, Zacky must show that at least 70 percent of its usage at the Sheila Street facility is for "general agricultural purposes." Zacky has not made this showing. Zacky has therefore failed to meet its burden of proof under Section 453.

In addition, Zacky has failed to establish that Edison's interpretation of TOU-PA-5 and Rule 1 discriminates against vertically integrated poultry producers as a group. The purpose of TOU-PA-5 and Rule 1 is to provide reduced electrical rates for agricultural customers. In approving a tariff, the Commission has discretion to establish rate classifications based on broad economic considerations.²² Although rate classifications must be based on reasonable differentiations, rate classifications are not unreasonable or discriminatory because they are not drawn with mathematical precision or result in some inequality.²³ In view of the differences between poultry processing plants, such as the Sheila Street facility, and other agricultural operations at which chickens are slaughtered on the premises at which they were grown, we find that Edison's interpretation of TOU-PA-5 and Rule 1 does not discriminate against vertically integrated agricultural producers in violation of Section 453.²⁴

Based on the above analysis, Zacky is not entitled to be billed for electricity used at the Sheila Street facility at an agricultural rate pursuant to TOU-PA-5, and is not entitled to retroactive adjustment of its bill. We therefore need not address other issues raised by the parties.

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. This schedule is not applicable to service for which a residential or commercial/industrial schedule is applicable. In Harris Farms, the Commission found that Harris' feedmills, which provided feed for Harris' cattleraising operations, qualified for PG&E's agricultural tariff, because the feedmills were integral to an agricultural end-use, e.g., raising livestock. However, here, Zacky's Sheila Street facility does not provide goods or services which contribute to the raising of poultry, but is the location at which the poultry are slaughtered and prepared for market. TOU-PA-5 and Rule 1 also do not contain language which extends agricultural rates to "agricultural end uses." In Producer's Dairy, the Commission found that Producers Dairy qualified for service under the PG&E tariff for the site at which the milk was prepared for market by being pasteurized, homogenized, vitaminized, and having its fat content standardized. The Commission reasoned that the milk was an agricultural product and that these processes did not change the form of the milk. However, here, the eligibility of the Sheila Street facility for electrical service under TOU-PA-5 depends not on whether the form of the poultry is changed at the Sheila Street facility, but on whether electricity is used at the Sheila Street facility in connection with the production, harvesting, and preparation for market of poultry, on land owned by Zacky for the production of poultry. Further, the form of the chickens is changed at the Sheila Street facility because the chickens are killed, plucked, have body parts removed, and are placed on ice at this location.