Tag Archives: agriculture

Reblog: Inconvenient Truths about Landowner (Un)Willingness to Grow Dedicated Bioenergy Crops: Choices Magazine

Dedicated production of biofuels has been a Holy Grail for the sector, but this study finds that this is unlikely.

Source: 4th Quarter 2016 | Choices Magazine Online

Economic Analysis of the 2016 California Drought for Agriculture | California WaterBlog

by Josué Medellín-Azuara, Duncan MacEwan, Richard E. Howitt, Daniel A. Sumner, and Jay R. Lund The drought continues for California’s agriculture in 2016, but with much less severe and widespread i…

Source: Economic Analysis of the 2016 California Drought for Agriculture | California WaterBlog

Rethinking the rates that utilities offer to customers

I just got back from an annual conference put on by the Center for Research in Regulated Industries. It brings together many of the applied economists and policy analysts working in California’s electricity industry. I presented a paper on reconsidering rate design.

Customers are often left out of the conversation about how to move forward into the new energy future, as they were at the recent CAISO Symposium where not a single customer representative was included in the “Town Hall Meeting.” Current retail rate tariffs seem to be designed with little thought about how customers would prefer to pay for their energy, and what might best encourage consumer energy management. And when customers are asked to take on more risk or cost to address energy needs, their revenue responsibility is often unchanged.

How should utilities align their rates and tariffs to fit customers’ preferences? Utilities both face a rapidly evolving energy marketplace and have available to them a larger portfolio of technologies to provide more services and to measure usage across different dimensions. One important step that utilities could take is to offer customers the same variety of contracts as the utilities make with their suppliers, so that rates mirror the power market.

Customers have a range of preferences, and some prefer to be more innovative or risk takers than others. To better match the market, should utilities offer a range of tariffs, and even allow customers to construct a portfolio of rates that allow a mix of hedging strategies? How should the costs be allocated equitably to customers to reflect the varying risks in those portfolios? How should the benefits of lower costs be allocated between the active and passive customers? The new metering infrastructure also provides opportunities for different billing strategies.

How should time varying rate (TVR) periods be structured to adapt to the potential shift over time when peak meter loads occur? Should the periods be defined by utility-side resources or the combination with customer-side resources? Is the meter an arbitrary division for setting the price? What is the balance between rate stability to encourage customer investment versus matching changing system costs? Should the utilities offer different TVR periods depending on the desired incentives for customer response?
In developing costs, how should utilities and commissions consider how resources are added, and in what capacity? Renewables are now part of the incremental resources for “new” load, and we can no longer rely on the assumption that fossil fuels are the marginal resource 100% of the time.

The “super off-peak” rate offered by Southern California Edison (SCE) to agricultural customers is one example of how a rate can be constructed to encourage customer participation in autonomous ongoing energy management. Are the incentives appropriate for that rate? Over what term should these rates be set given customer investment?

If you’re interested in this paper, drop me a line and I’ll send it along.

The Elusive Potential of California’s Water Supply

NRDC and the Pacific Institute just released a report purporting to show the potential for large water savings in California in the face of our severe drought. While laying out the technical potential in a static setting is a useful exercise, this report can be misleading about the true potential for water savings without significant institutional and political change. The report doesn’t account for how farmers actually respond to improved irrigation efficiencies, and how residential customers resist changing their landscapes and using recycled water.

Starting with farmers, we found in a study on the benefits of aggregating PG&E’s agricultural accounts that growers were using subsurface drip systems increase tomato yields by as much as 50%. In Fresno County, processed tomato yields have risen 26% in 5 years as flood irrigation has been replaced by drip. In addition, the amount of runoff has been reduced, so on net the new efficient irrigation technologies have lead to increased productivity with no reduction in water use.

Residential customers are resistant to the idea that they should give up their lush landscaping. As I posted previously, even in environmentally-friendly Davis, voters rejected a new rate structure that would have encouraged summer water conservation. And they are just as thrilled with using recycled water. A 2004 SDCWA survey found that 63% of residents didn’t want recycled water introduced into their drinking water. All of this adds up to political resistance to change that water professionals see as a “no-brainer.”

Another question is what happens to the downstream and groundwater basin users who now depend on runoff for their water supplies? Particularly in agriculture, water is often reused several times as it drains or percolates to the next user. Calculating the true potential savings requires a full water-budget analysis of a basin, not just adding up all of the individual savings without considering the synergism among them.

And finally, what happens to the ability to respond to variations in water conditions? Urban water agencies are already concerned about “demand hardening.” Farmers have moved to higher yield, more profitable orchard crops, but as a result they can’t easily accommodate large swings in water availability. Managing our water supply isn’t just about reducing the average consumption–it’s about creating a less vulnerable system.