Utilities, State, and Environmental Officials Propose Incentive to Reduce Diesel Engine Pollution

November 09, 2004

November 9, 2004

ROSEMEAD, Nov. 9, 2004 – Southern California Edison (SCE) and Pacific Gas and Electric Company (PG&E) today filed applications with the California Public Utilities Commission (CPUC) to establish an incentive program encouraging agricultural customers to convert diesel-powered irrigation pumps, a significant source of air pollution, to electric use.  The program is being hailed by air-quality regulators and environmental officials as a major step in improving air quality in the Sacramento and San Joaquin valleys.

The innovative incentive program would establish a new electric rate schedule for program participants and provide rate certainty for 10 years.  The proposed incentive rate would begin approximately 20% below the otherwise applicable rate schedule.  The rate would increase by 1.5% per year for the entire 10-year term of the program. Existing ratepayers would benefit because the additional customers provide a larger customer base to spread each utility's fixed costs.

The Sacramento and San Joaquin valley basins rank with Los Angeles and Houston as some of the most polluted regions in the nation.  This collaborative partnership with the agricultural community can facilitate the early retirement of stationary diesel engines, a significant source of the air pollution in the central valleys.

"As a Central Valley resident, I speak from first-hand experience when I tell you that we all welcome improved air quality," said California Secretary of Resources Agency Mike Chrisman.  "I would encourage those farmers who would benefit from this program to help us clean the air by retiring their diesel engine irrigation pumps.  We'll all breathe a little bit easier."

According to the California Air Resources Board (CARB), there are more than 5,700 diesel-powered irrigation pumps in the Central Valley.  These engines are significant contributors to the area’s poor air quality.  During 2003, CARB estimates that diesel-powered irrigation pumps accounted for nearly 23% of the total NOx, about 31% of the reactive organic gases and 17% of the particulate matter emitted by stationary fuel-combustion sources in the Central Valley.

"SCE is pleased to propose this new rate schedule because it would improve air quality while providing overall economic benefits to our customers," said Catherine Hackney, SCE director of public affairs.

Other key features of the new program include:  the permanent retirement of air pollution emissions credits associated with existing permitted diesel engines, enhanced line-extension allowances to help defray some of the up-front conversion costs, and pump efficiency tests to ensure the new electric pump is operating efficiently.

"This collaborative effort would result in significantly cleaner air in California's central valleys, a common objective shared by all parties involved," stated Jan Berman, PG&E director of rates.

"This is a classic example of the business community working with government regulators to achieve a common-sense solution to critical air-quality issues," said Michael Boccadoro, executive director of the Agricultural Energy Consumers Association.  "Rather than spending millions of dollars retrofitting these diesel engines to reduce emissions, through this program, we would eliminate virtually all emissions while dramatically improving the air valley residents breath.  This would be a win-win-win situation."

The next steps in the regulatory review process include the CPUC assigning a commissioner and an administrative law judge to oversee the application.  The commission could issue a decision as early as March 2005.

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An Edison International (NYSE:EIX) company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of more than 13 million via 4.6 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California.