Power Drain

Big Ag's $100 Million Energy Subsidy

May 30, 2007

Power Drain: Secret Subsidies

The Bureau of Reclamation's website has an impressive amount of information about the inner workings of the CVP: Dozens of spreadsheets - updated every year - that detail the fine print of how the agency calculates water rates, what the components of these rates are for each contractor, and what the overall financial picture of the CVP looks like. [17]

At first glance, this transparency seems to extend to power charges as well. If you know where to look, you can find information on how much different water districts paid for the energy used for water storage and direct pumping in a given year. You can find information on how much of the CVP's capital costs have been assigned to different pumping plants, and which contractors benefit from these plants. You can even find information on how much energy the Bureau predicts the CVP will use from 1981 to 2030. [17]

But here's what the Bureau doesn't tell you.

There's no information on actual conveyance-related power charges, only that these costs were billed directly to water districts. Information on total power charges per acre-foot of water for water storage and direct pumping is folded into the contractor's water rates. And no matter how hard you look, you won't find the actual power rate (cents per kWh) charged to CVP contractors or enough information to calculate it. [17]

Through the Freedom of Information Act, EWG obtained Bureau Reclamation data that allowed us to calculate this rate. We soon understood why the agency wants to keep this information a secret.


Calculating power subsidies

To calculate the power subsidies being given to CVP agribusinesses, EWG obtained and analyzed hundreds of pages of federal and state documents. These documents came not only from the Bureau of Reclamation, but also from two state-formed agencies (the Tehama-Colusa Canal Authority and the San Luis-Delta Mendota Water Authority) that help administer water delivery in the CVP.

From the documents we found that all water districts are charged the same power rate in a given year. [4] This is in complete contrast to the situation with water: Different CVP districts have historically paid water rates that vary by orders of magnitude. Although these inequities have decreased since the signing of new long-term water contracts over the last two years, there are still great discrepancies between one district's price for water vs. another. For example, the 2007 contract rate for the Banta-Carbona Water District is $27.34 per acre-foot, which is about half the $56.72 per acre-foot contract water rate for Pacheco Water District, even though both districts get water from the Delta-Mendota Canal. [17]

What was startling was the astounding low price CVP districts were paying for the power used to store and transport irrigation water: just 1.1 cents per kWh in 2002, and 0.95 cents per kWh in 2003. [4]

To calculate the value of the subsidy inherent in these low rates, we first tallied up how much electricity each CVP district used in a given year, based on the data obtained from our public records requests as well as documents that are available on the Bureau of Reclamation's website. [4,18,19] We then compared CVP electricity rates to the agricultural electricity rates charged by Pacific Gas & Electric, the major power provider in the CVP service area.

In both 2002 and 2003, PG&E's agricultural power rate was 13.5 cents per kWh - 12 to 14 times higher than what CVP agribusiness pay to move their water. [20] Since the CVP used 926 million kWh of electricity to pump agricultural water in 2002 and 837 million kWh in 2003, this works out to a total power subsidy of $115 million in 2002 and $105 million for those two years, respectively. Notably, PG&E has about 100,000 agricultural power accounts, while the CVP serves fewer than 7,000 farms. [21,22] In other words, if your farm happens to be located within the CVP service area, you are one of the lucky few eligible for a power and water subsidy windfall.

For comparison purposes, it is useful to also consider what non-agricultural customers paid for power. In 2002-2003, PG&E's industrial customers paid 11.5 cents per kWh. In 2003, the industrial customers of the four other largest power providers in California paid between 8.6 and 12.7 cents per kWh.3[23] Residential customers also paid far higher electricity rates than CVP agribusinesses: In 2002 and 2003 PG&E's residential customers paid 14.2 cents per kWh, while in 2003 residential customers of the other four largest power providers paid between 10.1 and 16.3 cents per kWh. [20] (Agricultural power rates were not available for the other four large providers.)


3Similar figures were not available for 2002.