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In this image from the Environmental Working Group’s website, it shows how the group is billing its study, with the headline “Power drain: Big ag’s $100 million energy subsidy.” The study is drawing fire from farmers and others who say the information is misleading.
The Environmental Working Group study can be found online at www.ewg.org
Valley farmers fire back at environmental group's study
Critics say claims of electric rates subsidized by government are misleading

Bob Krauter
Capital Press California Editor, 6/1/07

Central Valley farmers are amped up by a study that says they are getting cut-rate electricity from the federal government.

Riverdale farmer Ross Borba, commenting on a study released Wednesday by the Environmental Working Group, bristled at the criticism that 7,000 farmers who receive irrigation water from the Central Valley Project also get subsidized electricity.

"We are paying for the project, including its cost of operation just as I would if I put a solar system on my house. Then I should be entitled to whatever the benefits of that investment were," Borba said.

The study alleges that farmers pay about 1 cent per kilowatt-hour, a rate subsidized by about $100 million in federal funds when rates are compared to Pacific Gas and Electric customers.

"We saw this as an extension of the work we have done on water subsidies," said Bill Walker, vice president of the Oakland-based Environmental Working Group. "This is another example of how a relatively few farmers in California's Central Valley really have a competitive advantage over a lot of people who happen to be outside the Central Valley Project."

Walker said his group, which has for years charged that Central Valley Project farm customers get water subsidies worth at least a half a billion dollars annually. He said the same farmers are also now getting power subsidized to the tune of about $100 million a year, "so that is a significant competitive advantage that they have over farmers who aren't lucky enough to be in the system."

Jeff McCracken, a spokesman for the U.S. Bureau of Reclamation, called the study and its authors "misleading".

"What these guys are doing - I call them statistically-retentive," McCracken said. "They are comparing the wholesale cost of power that the federal government generates from facilities built in the 1950s and 1960s to the retail cost of power that PG&E is generating today, including a profit and much higher costs for nuclear power plants that they are paying for. That, in itself, is extremely misleading to the average person."

McCracken said the Central Valley Project system generates about 5 million megawatts of electricity, of which only 1.5 million megawatts are used to move water. Farmers pay the power cost, but McCracken said the Bureau of Reclamation cannot charge them any more than it what it costs to generate the power under federal law.

"To imply that these guys are subsidized and they are getting rich off of this is ridiculous," he said.

In Westlands Water District, the Environmental Working Group study concluded that power subsidies in 2002 were worth about $165,000 per farm.

Sarah Woolfe, a spokesperson for Westlands Water District, countered the claim.

"This infrastructure was built and legislation was authorized to provide its own power at cost and the fact that it produced additional power and sells it to other agencies is a huge benefit to the state," Woolfe said.

"The CVP was built to generate its own power and to sell the excess power to other public agencies and it has been doing that efficiently and very well. And we are paying for the construction of that facility," he said.

The Environmental Working Group recommends that Central Valley Project water users should pay prices approximating the market rate for power used to store and move irrigation water through the system of 1,500 miles of canals.

Five Points farmer Dan Errotabere said if rates are raised on farmers, consumers will ultimately pay higher food costs.

"Fundamentally, the project was designed to do exactly what it does - hold down the input costs of farming," he said. "If you change or adjust that higher as they suggest, it only comes to affect consumers down the road."

Walker acknowledged that power and water rates in Central Valley Project contracts cannot be changed without congressional action. Walker's office has been in contact with Rep. George Miller, D-Martinez, who sits on House Subcommittee on Water and Power.

"They don't have any concrete proposals yet, but they are interested in looking at ideas and some of the ideas we suggested to them are we need to restore the San Joaquin River, but we are not sure where the money is coming from," Walker said. "How about a small increase in amount that Central Valley farmers are paying for their power and that money goes to fund restoration of the San Joaquin River?"

Bob Krauter is the Capital Press California editor based in Sacramento. His e-mail address is bkrauter@capitalpress.com.

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