Drought to affect energy costs this year and next


Issue Date: July 23, 2014
By Christine Souza

Although the amount of hydroelectricity generation is dropping along with reservoir levels during the lingering California drought, utility companies and state agencies predict adequate energy supplies for the remainder of the summer. But they say they expect the cost of electricity to increase.

"We're going to have to purchase more replacement power on the open market—and that is generally more expensive—in order to meet all of our customers' needs," said Pacific Gas and Electric Co. spokeswoman Lynsey Paolo. "We've been trying to manage our reservoirs in a way that we're keeping a reasonable supply so that we'll have low-cost hydro available, but the overall impact is that there will be an impact on rates."

Most of the energy used in California is produced within the state. More than half the energy used here comes from natural gas, followed by nuclear, large-scale hydroelectric facilities, renewable sources and a small percentage from coal. The California Independent System Operator, which operates the state's high-voltage grid, said it is confident the state will have a secure supply this summer.

"The ISO forecasts that even under the most extreme weather scenarios studied, the state will have enough supply to meet its needs," spokesman Steven Greenlee said. "Our biggest concern is wildfires that can trip transmission lines, which can make moving energy around difficult. Also, generation plants going off-line because of equipment problems are a concern."

A reduced supply of hydroelectricity this year has been offset by an increase in renewable energy production, as well as out-of-state imports and increased use of gas power plants, he said.

A spokeswoman for the California Energy Commission, Lori Sinsley, said the mixture of replacement energy "is likely to be more expensive and have more air pollution and greenhouse gas emissions than hydropower." She said higher power costs will be reflected in next year's rates and, because most California hydropower is generated in Northern California, most of the impacts of its shortfall will be in that region, particularly in the Central Valley.

Karen Norene Mills, California Farm Bureau Federation associate counsel and director of public utilities, said it will be important for decision-makers "to recognize agricultural customers are uniquely impacted by the drought."

With the drought reducing availability of surface water for irrigating crops, farmers have been pumping more groundwater to compensate—translating into higher energy loads and costs. The University of California, Davis, estimated last week that farmers could spend an additional $450 million in pumping costs this year.

"The complexity of electric ratemaking can create ripple effects in subsequent years as a result of the increased usage and costs," Mills said.

San Joaquin County winegrape grower Brad Goehring said at this point in the season he must rely on groundwater for his winegrape crop, and the added pumping will result in higher electricity bills.

"We try diligently to use our pumps during the off-peak periods, but just recently we started irrigating on-peak (weekdays, noon to 6 p.m.) simply because there's not enough hours in the day to run the pumps," said Goehring, a PG&E customer. "In a drought year, we'll have more pumps in that situation than in a normal year, because we have to make sure the vines' needs are being met."

Like many farmers, Goehring utilizes drip irrigation and relies on probes to measure soil moisture to ensure the winegrapes receive the appropriate amount of water. With the dry weather this year, he said he had to start irrigating earlier in the year.

Patrick Mullen, PG&E director of agricultural services, said the utility company has seen an overall 40 percent increase in pumping connections by its agricultural customers this year.

"Earlier this year, the volume of applications was 50 to 60 percent higher than the previous year. We've seen a substantial increase in the requests for new service in high ag areas," Mullen said. "We've moved resources to those high ag areas, to directly address those increased applications for new services or to service more pumps or larger water pumps."

In the Southern California Edison service area, Tulare County citrus grower Matthew Watkins of BeeSweet Citrus said he is using more energy to irrigate his crop.

"The majority of our increased energy costs are resulting from lack of district water, so we're having to run more wells, more often," Watkins said. "We're drilling wells; we need to put pumps in some and are ordering power, which takes months. Depending on the horsepower and the load, it can be relatively inexpensive or it can be really expensive."

Citrus grower Larry Peltzer of Ivanhoe said underground water tables are dropping, requiring more energy to bring water to the surface.

To help reduce cost, Peltzer switched to a time-of-use rate schedule, a structure that charges for energy depending on the time of day and the season the energy is used. He said the change resulted in an average energy-use savings of 15 percent for his ranch.

Watkins said BeeSweet plans to take advantage of Edison's pump retrofit program next year.

"Edison has their pump incentive program where they do rebates on pump retrofits. The main issue there is Edison does a pump test and they are backed up quite a bit," Watkins said. "I want to do all of the pump tests this year, so that next year I can do some major repairs and a new pump test and get some of those rebates."

Southern California Edison spokesman Cal Rossi said that during this drought year, the utility will ensure quick response to the needs of its agricultural customers, knowing that that "could make the difference between a successful harvest and losing their crops."

(Christine Souza is an assistant editor of Ag Alert. She may be contacted at csouza@cfbf.com.)

Related story: Utilities, agencies offer energy assistance

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