Power Drain

For Immediate Release: 
Wednesday, May 30, 2007

OAKLAND - Some of America's richest and largest farms are paying pennies for the vast amounts of electricity needed to deliver irrigation water to California's arid Central Valley.

In 2002 and 2003, agribusinesses in the Central Valley Project (CVP) paid only about one cent per kilowatt-hour for electricity to transport irrigation water, according to a 15-month investigation by Environmental Working Group (EWG). Compared to Pacific Gas & Electric's agricultural rate, that's an annual subsidy of more than $100 million from U.S. taxpayers.

EWG's report is available at www.ewg.org. It shows both the price paid by each CVP irrigation district in the years studied and the amount of energy the district used.

Every year the CVP, the nation's largest federally subsidized irrigation system., moves more than 2 trillion gallons of water through 1,500 miles of canals. The electricity needed to move water around the CVP would power every home in Chico for 18 months. But just as CVP contractors pay heavily subsidized rates for their water, they pay next to nothing for the power that delivers it.

Through the federal Freedom of Information Act, EWG obtained U.S. Bureau of Reclamation documents that enabled us to calculate, for the first time, the rate paid by CVP agribusinesses and the value of their power subsidy. We found:

  • CVP power rates were 10 to 15 times lower than PG&E's industrial, agricultural or residential rates.
  • In Westlands Water District, the largest and most politically powerful irrigation district in the CVP, power subsidies in 2002 were worth about $165,000 per farm.
  • The CVP power sold to farms by the U.S. Bureau of Reclamation is essentially unregulated. No government agency, other than the Bureau itself, oversees its rates.

"In an era when other Californians have been rocked by volatile electricity prices and the constant threat of rolling blackouts, a few thousand agribusinesses are guranteed dirt-cheap power, courtesy of U.S. taxpayers," said EWG Senior Analyst Renee Sharp, lead investigator for the report.
"These subsidies are not helping small farms survive, but padding the profits of the biggest and richest farms."

Cheap power is just the tip of the iceberg of federal subsidies to the CVP:

  • Department of Agriculture data show that from 1995 to 2004, CVP agribusinesses received more than $890 million in direct commodity payments, mostly for cotton and rice.
  • An earlier EWG investigation conservatively estimated the value of CVP water subsidies at $416 million in 2002.
  • In total, federal subsidies to the CVP easily top more than half a billion dollars a year and could well reach $1 billion Ð all at taxpayers' expense.

The report recommends that CVP agribusinesses should be required to pay prices approximating market rate for the power used to store and move irrigation water. A federal agency should regulate power rates to ensure system fairness, and should make these rates publicly available. CVP contractors, and contractors in other federal water projects, should not be allowed to "double-dip" and "triple-dip" on federal subsidies.

# # #

EWG is a nonprofit research organization based in Washington, DC that uses the power of information to protect human health and the environment. The group's research on Power Subsidies is available online at https://www.ewg.org/reports/powersubsidies/.

Key Issues: