STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

October 25, 2004

TO: PARTIES OF RECORD IN CASE 04-01-020

This proceeding was filed on January 21, 2004, and is assigned to
Commissioner Loretta Lynch and Administrative Law Judge (ALJ) Myra Prestidge. This is the decision of the Presiding Officer, ALJ Prestidge.

Any party to this adjudicatory proceeding may file and serve an Appeal of the Presiding Officer's Decision within 30 days of the date of issuance (i.e., the date of mailing) of this decision. In addition, any Commissioner may request review of the Presiding Officer's Decision by filing and serving a Request for Review within 30 days of the date of issuance.

Appeals and Requests for Review must set forth specifically the grounds on which the appellant or requestor believes the Presiding Officer's Decision to be unlawful or erroneous. The purpose of an Appeal or Request for Review is to alert the Commission to a potential error, so that the error may be corrected expeditiously by the Commission. Vague assertions as to the record or the law, without citation, may be accorded little weight.

Appeals and Requests for Review must be served on all parties and accompanied by a certificate of service. Any party may file and serve a Response to an Appeal or Request for Review no later than 15 days after the date the Appeal or Request for Review was filed. In cases of multiple Appeals or Requests for Review, the Response may be to all such filings and may be filed 15 days after the last such Appeal or Request for Review was filed. Replies to Responses are not permitted. (See, generally, Rule 8.2 of the Commission's Rules of Practice and Procedure.)

If no Appeal or Request for Review is filed within 30 days of the date of issuance of the Presiding Officer's Decision, the decision shall become the decision of the Commission. In this event, the Commission will designate a decision number and advise the parties by letter that the Presiding Officer's Decision has become the Commission's decision.

/s/ Angela K. Minkin

Angela K. Minkin, Chief

Administrative Law Judge

ANG:avs

Attachment

ALJ/TOM-POD/avs

PRESIDING OFFICER'S DECISION (Mailed 10/25/2004)

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., Complainant, vs. Pacific Gas and Electric Company and DOES 1 through 100, Defendant.

Case No. 04-01-020 (Filed January 21, 2004)

Paul G. Kerkorian, Attorney at Law,

Utility Cost Management, Inc. for Complainants.

Daniel F. Cooley, Attorney at Law, for

Pacific Gas and Electric Company, Defendant.

O P I N I O N

TABLE OF CONTENTS

TITLE PAGE

OPINION 22

Introduction 22

Background 44

Discussion 1010

Conclusion 2020

Assignment of Proceeding 2020

ORDER 2626

OPINION

Introduction

This case involves a determination of whether almond hulling and/or shelling operations qualify to receive electric service at an agricultural rate under PG&E's tariffs.¹ We find that almond hullers and/or shellers do not qualify for a discounted agricultural rate for electricity because the form of the almond is changed during hulling and shelling, which involves cracking, breaking open, splintering and severing the hulls and shells, and separating the raw almond into three agricultural products, the almond meat, the hull, and the shell. Since a viable market exists for almond hulls and shells, which can be sold as cattle feed and cattle bedding, respectively, and there is a strong demand for almond meats, our decision today does not compel almond growers, hullers and shellers to forego profitable markets for their products in order to qualify for an agricultural rate.

We note that the Pacific Gas and Electric Company (PG&E) tariff has necessitated several Commission decisions to resolve disputes between PG&E and customers regarding their eligibility for agricultural rates. Also, the eligibility statement for the PG&E agricultural tariff (the PG&E tariff) differs from the comparable tariff for Southern California Edison Company (Edison). As a result, the eligibility of utility customers engaged in the same activity for an agricultural rate may differ based solely on whether their operations are located within the PG&E or Edison service territory.

In addition, in 2001, the Legislature enacted Public Utilities Code Section 740.11,² which strongly encourages the Commission to consider permitting all agricultural commodity processing customers to be eligible for agricultural rates for electricity, to the extent that this change would not result in cost shifting to other customer classes. Since previously enacted Section 740.1 defines customers eligible for an agricultural rate as "persons or corporations whose primary purpose is the agrarian production of food or fiber," the change proposed by Section 740.11 could significantly broaden the types of uses that qualify for agricultural rates.

The adoption of Section 740.11, the different approaches of agricultural rate tariffs, and the need to treat similarly situated utility customers equitably with regard to their eligibility for agricultural rates, all suggest that a re-examination of the Commission's policies regarding agricultural tariffs may be timely.