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How Growers, Packers and Shippers can Reduce Energy Rates

Moo Energy Cows

“Rate sharks” are firms that will negotiate lower energy rates on your behalf in exchange for a share in the resulting savings: typically 50%.  But you shouldn’t need to pay a third party to get the best price you can for energy…   your utility is obligated to work with you to find the best rate for your operations.  And the best rates available for businesses are typically associated with Agriculture.

What you need to know to qualify for low Ag rates in PG&E territory:

shark_attack_painting-wallpaper-2048x1536You must have 70% of energy use is for “agricultural end-use” and is related to processes that do not change the form of the agricultural product.   Specifically:

YOU CAN:

  • Grow Crops
  • Raise Livestock
  • Pump water for Irrigation
  • Sort
  • Pack
  • Shell
  • Refrigerate
  • Retard and/or accelerate the natural processes of ripening or decomposition.
YOU CANNOT:

  • Cook it
  • Process it
  • Can, preserve, or ferment a product, thereby materially altering the flavor, keeping quality, or any other property, the extracting of juices or other substances, or the making of any substantial change of form
  • Perform other activities defined as “Processing” under the California Food & Agriculture Code § 42519

If more than 30% of your electricity bills go toward the ineligible energy uses, the utility will force you onto higher commercial or industrial rates.   But there are many strategies that can be deployed to mitigate this risk, including load allocation, meter splitting, rate analytics and arbitrage.   And if you can generate your own energy via solar, wind or another renewable source, you can perform a little “utility rate judo” and sell the more expensive energy to the utility… then buy back cheaper energy off peak hours.

More on that in a future blog: stay tuned, and don’t swim with the rate sharks.

About the Author

Tom Millhoff
TMillhoff@HelioPower.com
760.563.5528 Tom Millhoff:If you have more questions about agricultural energy rates in California, contact Tom Millhoff, Agribusiness Practice Leader for a free rate consultation.

 

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