ALJ/TOM-MOD-POD/avs Agenda ID #4581

Adjudicatory

5/26/2005 Item 41

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 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.

TABLE OF CONTENTS

TITLE PAGE

OPINION 22

Introduction 22

Background 44

Discussion 1010

Conclusion 2121

Appeal of Presiding Officer's Decision (POD) 2121

Assignment of Proceeding 2424

Findings of Fact 2424

Conclusions of Law 2828

ORDER 3131

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.

Further, even if viable markets did not exist for almond hulls and shells, so that the hulls and shells were merely agricultural residues, rather than agricultural products in their own right, Complainants still would not be entitled to an agricultural rate for hulling and shelling operations. Under Producers Dairy Foods, Inc. v. Pacific Gas and Electric Company, Decision (D.) 97-09-043 (Producers Dairy), since hulling and shelling dramatically change the appearance of the almond, by removing it from the hard outer shell and the fuzzy hull, hulling and shelling change the form of the agricultural product. In addition, under Airway Gins v. Pacific Gas and Electric Company, D.03-04-059 (Airway Gins), hulling and shelling change the form of the almond, the hull, and the shell because these processes involve breaking open, cracking, splintering, and fracturing the hulls and shells.

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 Pub. Util. Code § 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 § 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 § 740.11 could significantly broaden the types of uses that qualify for agricultural rates.

The adoption of § 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.