BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 703| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 703 Author: Florez (D), et al Amended: 7/16/03 Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 5-1, 7/8/03 AYES: Bowen, Alarcon, Dunn, Murray, Vasconcellos NOES: McClintock NO VOTE RECORDED: Morrow, Battin, Sher SUBJECT : Electricity rates: agricultural irrigation pumps SOURCE : Author DIGEST : This bill declares the intent of the Legislature to establish cost-effective agricultural and water pumping electricity rate schedules that are competitive with diesel rates to prevent additional conversions of agricultural irrigation pumps to diesel-driven engines. ANALYSIS : Irrigation pumps and certain other agricultural equipment can be operated by either diesel engines or electric motors. Based on current diesel prices and investor-owned utility (IOU) electricity rates, the operating costs of an electric pump is significantly higher (probably 50-100 percent) than the operating costs of a diesel pump. Equipment costs vary widely and pending air quality permitting requirements will make operating diesel pumps more expensive. CONTINUED SB 703 Page 2 According the State Air Resources Board, there are over 8,200 diesel irrigation pumps in the state, which emit almost 44 tons per day of oxides of nitrogen (NOx) during the high-ozone summer season. Most of these pumps are located in the Central Valley and are responsible for about 16 percent of stationary source NOx emissions in the valley. Although diesel pumps and other diesel agricultural equipment are a significant contributor to severe Central Valley air pollution from NOx and particulate matter emissions, agricultural equipment is exempt under state law from the air quality permitting requirements that apply to other stationary sources. This exemption has been found to be a violation of the federal Clean Air Act pursuant to a settlement of a lawsuit against the U.S. Environmental Protection Agency. The Clean Air Act violation exposes the state to federal enforcement and significant financial sanctions. SB 700 (Florez), pending in the Assembly, addresses this by repealing the exemption for agricultural equipment and requiring air districts to require operating permits for agricultural equipment no later than July 1, 2004. This bill finds that a significant number of agricultural equipment, including irrigation pumps and wind machines, have been converted from electrical motors to diesel-driven engines because of rising electricity rates. The bill finds that diesel-driven equipment exacerbates air quality and public health problems and the reduction of emissions from such equipment through conversion to electricity and ultra-clean and low-emission technologies is in the public interest. The bill states that it is the policy of the state and of the State Public Utilities Commission to encourage alternatives to diesel through the development of long-term rate structures that are competitive. This bill declares the intent of the Legislature to establish cost-effective agricultural and water pumping electricity rate schedules that are competitive with diesel rates to prevent additional conversions of agricultural irrigation pumps, and to provide an incentive to convert SB 703 Page 3 diesel-driven irrigation pumps back to electrical motors. The bill states legislative intent that any discounts are to be financed by the beneficiaries of the air quality improvements, to avoid shifting costs to nonbeneficiaries. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/18/03) Agricultural Energy Consumers Association California Air Pollution Control Officers' Association California Citrus Mutual California Cotton Ginners and Growers Associations California Farm Bureau Federation Fresno County Farm Bureau Monterey Bay Unified Air Pollution Control District San Joaquin Valley Air Pollution Control District Sunkist Growers WM Bolthouse Farms, Inc. NC:cm 8/19/03 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****