Farm ACW Evidence

At all times prior to the beginning of this dispute in 2001, Farm ACW was a customer of SDG&E. Dr. William Arterberry, the owner of Farm ACW, a 1,000-acre avocado farm, testified that Farm ACW periodically needed generators on its property to deal with SDG&E outages and other contingencies. He found it more cost-effective to purchase used generation equipment on the surplus market than to rent generators to service the farm during blackouts, brownouts, or other utility failures. His largest generator (1,500 kW), on which he primarily relied to serve the entire farm, was installed in 1992 or 1993, and was moved to his generator building in 1995. The large generator was used to shave peak electric usage and reduce his electric bill. His generator was used during peak hours because during the hot summer months avocadoes cannot survive without water, which required pumping. In addition to operating the pumps, the farm uses electricity for refrigeration, dormitories, and other services that cannot be completely shut off.

Dr. Arterberry testified that the farm irrigation system delivers not only water to the 180,000 producing trees, but also fertilizer, which is mixed with the water pumped from the farm's wells and is conveyed over the farm's 1,000 acres. He stated that one of the most important nutrients avocadoes require is potassium, and the best compound to provide that nutrient is the relatively insoluble potassium sulfate. In order to dissolve the potassium sulfate, he increased the water temperature in his mixing pond using the waste heat from the generation process. He explained that cooling water removes the jacket heat from the farm's 1,500 kW generator, taking it to a heat exchanger through which well water is passed to raise the water's temperature. In addition, the generator's exhaust gasses are diverted into a pipe, into which the hot well water from the heat exchanger is sprayed. The water is further heated by cooling the gas. The hot water flows into the pond, raising its temperature to a level at which potassium sulfate is soluble, enabling Farm ACW to dissolve the fertilizer in the irrigation water for delivery to the trees. The water that is sprayed into the exhaust also removes carbon from the gas. The carbon and attached oil floats on the surface of the water; by adding compost to the pond, bacteria are introduced that digest the carbon and are conveyed through the irrigation system providing the avocado trees additional nutrition.

Dr. Arterberry further testified that on or about January 22, 2001, Farm ACW disconnected both its lower voltage level switch and its main switch from SDG&E's system. After the disconnect, electricity could not flow from SDG&E's system to the farm.

Jaley Firooz, a registered engineer with degrees in electrical engineering and finance who had worked for SDG&E for over 20 years, in the course of which she had, among many other duties, performed analyses of cogeneration projects, was called to offer expert testimony on whether the Farm ACW operation satisfied the definition of "cogeneration" established in Public Utilities Code Section 218.5.

Ms. Firooz analyzed the Farm ACW cogeneration process. She explained the application of the two-part test prescribed by Section 218.5 to the process described by Dr. Arterberry. The statute's first test (specified in subdivision (a)) compares the percent of useful thermal energy to the total annual energy output of the facility. She calculated the useful thermal energy produced by the facility by determining the quantity of heat energy, measured in BTUs, necessary to raise the 900 gallons of well water passing hourly through the heat exchanger by 25 degrees Fahrenheit. She then calculated the facility's total energy output by determining the electricity output of the generator and adding that figure to the facility's useful thermal energy output. She concluded that 6.8% of the energy produced by Farm ACW's generator was in the form of useful thermal energy, surpassing the 5% requirement of the statute.

To administer the second test prescribed by Section 218.5 (subdivision (b)), she divided the sum of the annual electric power output and one-half of the useful thermal energy by the total fuel input, concluding that the fuel efficiency of the cogeneration system was 43.2%, surpassing the statutory requirement of 42.5%. She gave her expert opinion that Farm ACW's generation facility satisfied both standards for cogeneration established by Section 218.5.