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Fighting to Remain Competitive Despite Increasing Power Rates in California

Brian German Agri-Business, Legislative

Damage caused by the wildfires last year may result in increasing power rates for Californians.  After fire investigators found that Pacific Gas & Electric (PG&E) equipment was ultimately responsible for wildfires in wine country last year, the utility industry is looking to AB 33 to address the multibillion-dollar price tag related to the fires.

Increasing Power Rates“What does that mean to ratepayers?  Are we going to be stuck with paying that cost in some form or another?  What does it look like going forward?” asked President and CEO of California Cotton Ginners and Growers Association (CCGGA), Roger Isom.  “There’s going to have to be safety upgrades, controls put in place, who’s going to bear the brunt of that? Again, ratepayers.”

AB 33 would create a bond structure that would allow PG&E to pay off costs associated with the fires.  Those bonds would, in turn, be paid for by “non-bypassable” charges to ratepayers.  Purchasing electricity from other sources, or largely using solar power would not exempt people from paying fees to help PG&E pay off the bonds.  Increasing power rates to cover costs that PG&E is responsible for is being looked at as a government bailout of the utility by many opponents of the legislation.

A significant number of agriculture groups including CCGGA and California Citrus Mutual are doing what they can to fight the legislation that would have a serious impact on California agriculture.  “The problem for us is, our rates are already high, from an industrial, commercial, agricultural standpoint.  We have the highest rates in the country, excluding Hawaii and Alaska,” Isom noted.  “We can’t compete.”

Higher utility rates would hit the agriculture industry especially hard, as other regulations have already increased the overall cost of production in recent years.  CCGGA found that as of February 2018, the average industrial electricity rate in California was over 95% higher than the US average for other states.


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Brian German

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Ag News Director, AgNet West