---

So it’s no wonder that the energy crisis in California has prompted almost everybody to examine their options including not depending of PG&E and SCE - today on the very edge of bankruptcy - to fuel our home and turn the wheels of our industries.

Now, one megawatt at a time the San Joaquin Valley’s response to the power crisis and lack of confidence in the big utilities is to look at making electricity closer to home - how about in the barn right across the driveway?

That’s what Kings County supervisor and farmer Tony Oliveira is planning for his dairy farm.  “We’ve contracted with a Colorado company along with 4 other area dairies to use waste methane to power an on-farm cogeneration turbine.” It would provide heat and electricity and allow the company who is marketing the package to sell electric power back to the grid.  The company - Microgy - has some 20 systems in operation now and is making a push into California at a time farmers and industries are hungry for alternatives.  Besides providing on-site power, the system solves a waste problem that is haunting dairymen right now - concerns over water and air pollution - that has thwarted the expansion of the dairy industry here.

Use of local resources to produce power is not a new idea, but high prices of natural gas and oil and lack of a sure supply of electricity in the past months have prompted many companies to search for their own alternatives.

At Tulare’s Land O’Lakes the company is bringing in a new turbine that will supply about 60% of their own power needs, says Mike Rosa engineer at the big co-op.  The cooperative was forced to dump milk in recent weeks because Edison cut their juice during the rolling blackouts.

Down Highway 99, California Dairies in Tipton is installing a 14 megawatt cogeneration system that will supply 100% of the needs for the plant, says Gary Korsmeier CEO with the company.  “I just wish we would have ordered it a year earlier,” says Korsmeier.

The new power plant won’t be at work until the end of this year.  At a second plant owned by California Dairies in Artesia the company had a 34 megawatt cogeneration plant operational for years but when deregulation in California hit the plant was dismantled and carted away - a huge mistake in retrospect admits Korsmeier.  Dairy processors can use both the heat needed to dry product and the electricity.

In Dinuba, a former wood fired cogeneration plant next to the now closed saw mill is expected to crank up again within the next few months - now owned by Fresno State University Alumni Association.  Rated at 12.5 megawatts, the plant must first make a deal with a buyer of electricity.

The rub for many small power producers right now who already have contracts with one of the big utilities is that they aren’t getting paid.

At Friant Power Authority the company is faced with fiscal difficulties because they are owed money by PG&E.  Wind generators in Tehachapi are faced with the same difficulty with SCE.

Faced with same problem is the biomass complex in Sanger that has shut down because PG&E can’t pay the bill.
The plant Dynamis Inc. - a 40 megawatt natural gas plant - has had to curtail operations says general manager George Carroll because PG&E hasn’t paid their December bill totaling $2 million to the company.  Now Dynamis who has to pay a natural gas supplier can’t pay them.  Carroll says there is great uncertainty statewide over whether the utilities will file bankruptcy or who will pay the bill.  For now despite the need by the electricity grid for all the power California can muster many small power producers aren’t delivering electricity because of the financial roadblocks.  This week PG&E said they would pay only 15% of their December bills.  Both utilities have defaulted on supplier payments.

The shaky status of the two private utilities in California has pushed the state into the power business - at least as a buyer and seller.  But they can also be a promoter offering incentives for generation of local power.

Ag Energy To push ag energy production, Senator Jim Costa will introduce new state legislation promoting ag waste to energy in the next few weeks, says staffer Dennis Albiani.  The legislation will offer tax credits, loans and loan guarantees to private and public entities who transform waste into electric power.  That would include converting methane to power and biomass plants along with poultry operations, says Albiani.

“There are some challenges and not just the financing challenge,” he says.  The “inter connection problem” with the grid is a big one.  “We’d like to remove the decision if you can connect to the grid away from the utilities,” he says.  Albiani says he feels “for the little guy” who is ready to make power but has to deal with PG&E to sell it.  Many are shut down because they can’t get paid by PG&E or SCE.”

“We are worried however, that many small producers could get into the power business only to have some gas pipeline company push large quantities of natural gasoline into the state and effectively pull the plug on the new competition.”  Albiani says the introduction of the legislation would be to use local power locally promoting tie ins with irrigation districts who need power with ag producers who make it for example.

One company who would like to generate power from local resources is Visalia’s Wood Industries who has green waste contracts from various Tulare County cities.  The company is looking into using a moth-balled cogeneration plant they own on their property at 99 and 198 - right next to the City of Visalia waste water treatment plant.  The 2 megawatt plant could be fired up in months, says owner Kent Kaulfuss.  In addition, Kaulfuss has access to a 17 megawatt cogen that could be relocated to Visalia and pressed into service if some sort of agreement can be made with power users and a local jurisdiction like the city.

Kaulfuss says the values of using waste resources to generate electricity not only makes sense, “it can bypass the Edison grid which adds about 5 cents of costs to the average bill” if the logistics can be worked out.  Then power can be offered at substantial savings to the end user.

Looking to site industry right next to power production is Hanford Energy Park who is under construction on a 99 megawatt gas fired cogen next to their existing coke fired plant in the Hanford industrial park.  The goal - attract big food processing companies to the site  located right next door taking advantage of the fact they don’t have to wheel the power or pay to wheel it either.

“That’s what I think we should do in the Visalia Industrial Park,” says city engineer Lew Nelson.  Nelson is working with Kaulfuss on the idea along with the notion that cogeneration at the Visalia Waste Water Treatment Plant could work.  “We already use our waste methane,” says Nelson although they don’t generate power.  The need there is for just under one megawatt - the largest consumer of electricity for the City of Visalia.  Another company is offering to install natural gas fired systems that will generate electricity on a turn key basis providing the city an opportunity to get into power production without having to make a capital expense.

During the recent threatened blackouts, Tulare County companies on the I-6 program allowing interruptible power contracts to go into effect for 6 hour stretches day after day - were particularly hard hit.  One company, IVEX, on a deadline to make strawberry containers for this season, fell behind on its production at its Visalia facilities.  With the help of the City of Visalia and Visalia Chamber companies traveled to Sacramento to lobby for the end of their I-6 program for fear IVEX and other may close or send orders planned to be produced here - out of state.

After the visit the state rescinded the rule and allowed these companies to exit that agreement.  While this benefits the industries - the loss of some 3000 megawatts that Edison and others could switch off if need be - now make it more likely residential areas could see blackouts in the future, some believe.

Now IVEX has sited a trailer at their manufacturing plant with idle generators to be used for back up.  But companies are lobbying the local Air Board to use diesel fuel generators for more than just back up.  Concern is over this summer when demand for electricity statewide is expected to spike 30% - making blackouts even more likely.
Cities and the state are promoting conservation - a goal of cutting use by 7% statewide.  This includes reducing outdoor lighting and efforts in offices to reduce lighting and turn off computer monitors when they aren’t in use.  But reducing the load on the electric grid by all these localized efforts to produce power could help in a big way, too.

Few New Plants California hasn’t built much new generation for the past decade.  An SCE study suggests load growth in state demand has increased by around 5500 megawatts from 1994 to 1999 while supply during the same 4 year period grew only by 600 megawatts.

But that is heading in the other direction fast today prompted by the state’s biggest energy crisis ever.  Much of our power has historically come into the valley from as far away generating facilities including out of state.  Today the San Joaquin Valley’s southern region of the Air Pollution Control District has permits for 1909 megawatts of power.  A megawatt is enough power to handle 1000 homes.  But proposed there is 3183 megawatts - mostly under construction with over 1300 megawatts available by the end of this year.  But not this summer.

A number of the existing and proposed big natural gas fired cogens are in Kern County near oil/gas fields and fed by a network of gas lines that criss cross Kern County.  Natural gas is used to heat the heavy oil of Kern County to extract it and therefor it’s a place that cogens have been sited before.  Unlike other areas of California power plants in the oil fields of Kern County don’t face opposition from neighbors or environmentalists as well - no small factor these days.

Duke Energy Companies looking to expand power plants along the coast face NIMBY problems causing some like Duke Energy to look for a new opportunity in the Valley sources say.  The company is looking into a plant on the westside near the California Aqueduct as a source of power.  The plant would be near big high powerlines that can be tapped to feed electricity into the grid.  Locating next to these big lines is attractive to power companies for the same reason McDonalds locates next to the freeway interchanges, say industry sources.

One small dent in the load will come this year at Kaweah Delta Hospital where two new cogeneration systems will be installed to handle 100% of the need at the hospital.

While some see cogeneration as the way to grow independent of the energy grid, others are cautioning about the skyrocketing prices of natural gas - the fuel of choice to fire up those cogen plants and most of the proposed new generation coming on line in the state over the next few years.  “We’re not going to get into cogeneration for our cheese plant until we see what happens with natural gas,” says Larry Jensen of Leprino Foods.  The uncertainty in how power will be bought and sold in the state and who pays who will keep new capital investment on the sidelines for now suggests cogenerator Chuck Garner of Dinuba Energy.  Garner doesn’t have to worry about a natural gas price because their plant is a biomass facility.

Smell A Rat Smelling a rat in interstate natural gas delivery is Willis Bennett, a Colorado natural gas broker who says El Paso Natural Gas sold capacity on its Texas-to-California pipeline to an unregulated affiliate and after that there was a lack of capacity in the pipeline that drove up prices in November and December. Prices jumped 700% in a clear case of price gouging, he believes.  The CPUC has asked the FERC to invalidate the contract between the two “incestuous” companies, says Bennett in an effort to restore competition price that had jumped from under $2 last year to $55 dollars in December are now down to $11 per MMbtu today.

In December Sempra Energy petitioned the FERC to put a cap on natural gas prices coming into the state by suggesting that it costs about $8.50 per MMbtu to deliver natural gas to the border and the rest of the cost to buy space on the pipeline. Bennett points out that only 13% of natural gas supplies come from in-state production although large finds of natural gas in the Delano/Kern area have been named and Sacramento too has ample supplies.  Bennett says there isn’t really a supply problem but a price manipulation problem because of control over pipelines.  Can we extract more local natural gas - can we do it without further harming the Air Basin?

Now there is new generation of relatively portable or at least refrigerator size power units that can be pressed into service more quickly than huge power plants.  Technological advances in these units have come a long way in recent years.  Pressing power making units into service - not from centralized power stations - but at the source of demand in these smaller units called “distributed generation.”  One such unit is box sized fuel cells that fire up with natural gas or other fuel and make electricity out of the mixing of hydrogen and oxygen.  Fuel cells are hailed by many as the power source of the future in part because they have zero air emissions.  Today per kilowatt cost for stationary fuel cells remain high but that is expected to change over the next few years.

Portable Jet Engines Small jet engines called micro turbines are another example of the trend.  Capstone Turbine of Chatsworth is one company making these smaller units delivering small power plants to places like smaller manufacturers or hospitals who want onsite power on demand.  The publically traded company has recently shipped their 1000th unit.
St. Agnes Hospital is putting in micro turbines to generate the power for their new expanded facility.

While it’s good to site a turbine at your plant, what happens when you have excess power you’d like to sell back to the grid?  That’s what regulators have to sort out in coming months now that the electric generation and distribution is undergoing a re-examination.

Under the state’s deregulation mechanics, all power sold had to go through the Power Exchange who set one price for power - in essence defeating the purpose of deregulation - tough competition.  It was easier for high volume generators of electricity to make millions off the Power Exchange instead of allowing small and big deals to sort themselves out.  The existing utilities were one of the winners in the scheme and that way all those retail companies that wanted to break the monopoly for sale of electricity mostly failed.  Many have given their customers back to the big utilities.

SCE Offer Glenn Cardaronella of SCE-Tulare says the utility has “profited off the price spread” it paid during regulation and so was now willing to pay back about $1.5 billion to help pay off the debt they are saddled with - over $4 billion on electricity they bought to deliver to customers but could not recover under state law.  The PUC is considering the proposal.  Who will pay off the rest of the debt?  That’s the $64 question the state has not yet grappled with.  A court may force the issue in the next few days.

But there is a new direction that may encourage the formation of more municipal power systems and small power producers, suggests David Crow, who heads up the SJVAPCD - the Air Board.  “Three weeks of constant stage 3 alerts has everybody looking at new options,” says Crow, the Air Board gets involved because many businesses are looking to hook up diesel generators to keep the lights on at some 1200 sites in the Air District.

Already the Air Board has relaxed the rule so that if there is a stage 3 alert that day, the operator can use the backup generator.  He doesn’t have to wait till the lights go out.

Speeding Approvals The district has also promised that it would speed the regulatory approval process on new generation applications from the state mandated 180 days to 30 days.  “With the marketplace unsettled and the uncertainty of natural gas prices, many people are waiting on the sidelines on the next move,” he suggests.

Lack of supply has been greeted with calls to set up generation within the state ranging from reactivation of Rancho Seco nuclear power plant outside of Sacramento to small hydro generators by irrigation districts.  Just this week, Senator Tom McClintock of Thousand Oaks posed the idea of Rancho Seco - a plant that would generate another 1100 megawatts.  Others suggest large hydro projects on the Kings like Rogers Crossing be dusted off.  Low head hydro along canals is considered by some an untapped source.

Some believe communities like Visalia or the Solid Waste JPA that operates in Tulare County could go into the power business.  Municipal power districts in California are the entities that look good these days even as the rest of the state suffers.  Merced Irrigation District - the 25th largest public utility in the state - is one example of a district that offers power to its residential and industrial customers typically 3 cents a kilowatt hour cheaper than PG&E customers and nearby Modesto ID use low prices to their industrial customers to attract and keep industry - jobs for their community.

---

Fellow farmer Mark Borba who has 14,000 acres in adjacent Westlands believes Howe’s plans to leave his farm fallow is a sad commentary on life in the Westside these days.  “He decided he’d be better off doing nothing.”
Borba says record low commodity prices and increasing input prices from fertilizer, labor to energy are bad enough but gloomy reports about the supply of water this year may be the final straw.  Authorities are estimating that the supply of state water could be as little as 20% and CVP federal water supplies between 20% and 35%. “Farmers have to decide to conserve water for their permanent crops,” he believes.

“Row crop farmers have faced 7 years of depression,” says Tony Oliveira, Kings County supervisor who farms some 4000 acres.  “We have the lowest commodity prices in 25 years while my propane costs have gone from 61 cents a year ago to about $1.47 today.

“What would Wall Street do if Ford was forced to roll back their prices to the 1960's but all their manufacturing costs were at today’s numbers?  That’s how farmers are - we can’t pass on our higher costs.  Wall Street would force Ford into bankruptcy in a hurry.  I feel bad for the worker who got laid off at Westlake but really it affects maybe 300 families not just 60,” he says. “There are layoffs at the parts house, fertilizer that won’t be used and an applicator who just told me he was going to sell his equipment.”

Farmers are not going to want to turn on pumps to irrigate because of high energy costs, says Mark Borba.  Miles of empty fields will mean less fertilizer, feed and seed and farm equipment is sold, not dissimilar to when floods filled the lakebed.

Westland farmer Borba says continued squeezing by the federal Bureau of Reclamation will likely mean reduced delivery of water to that big district this season considering the Department of Interior’s recent decision to return flow on the Trinity River.  Even without that plan, the Bureau has said water delivery could be 20 to 35% to a district with more than 560,000 acres planted last year.

Westlands believes the decision to divert irrigation water as a result of the Trinity River decision could idle 23,000 acres and mean the loss of 380 jobs.  Impacting some soils in Westland is the fact that the land is getting saline without any way to drain the salt away.  The district has sued the US government to follow through on a promise to build a drain.  Yields are going down on some land bringing one more incentive not to plant this very tough year.
In recent years the district has produced $1 billion in farm produce.

The news for cotton farmers hasn’t been encouraging coming just at the time they must make up their mind whether to plant the valley staple crop.  “Prices have fallen 15 cents a lb. since December,” says Borba.  He believes that “lenders are reluctant to fund planting Alcala this year although Pima prices are better.”  Borba sees “next year’s cotton at 61 cents and Pima with a floor price of 85 cents.”

Though cotton has been historical crop in the Westside, “every other crop we look at from alfalfa to garlic to tomatoes - none of them are very attractive.”  Tomato growers were punished last year with the collapse of Tri Valley Growers.

If growers are crying, Borba says he feels for his employees who are struggling even if they have a job.  “I pay my employees’ heating bill - taken out of their check and what used to be a $60 heating bill has run into a $250 bill.  They have to go home and look across the kitchen table at their wife and kids with take home pay of $200.”  Westside towns like Firebaugh and Mendota already suffer unemployment from 40% and with this impending fallow season the unemployment lines are expected to get longer.

Social critics of the CalFed process asked regulators to consider the effects of small towns when they require farms to receive less water - in essence forcing thousands of acres of land into retirement.

“Land retirement may be the only option left for some farmers,” says a Westlands official.

When it comes right down to it, many have advocated that the best solution for much of the Westside soil was to retire the land back to nature - back to the lakebed it historically was.  Applying irrigation water creates more build-up - more toxic problems for birds and more surplus commodities.  That has been the drum-beat from environmentalists and folks like George Miller for decades.  But how far do you go?  Some suggest humans leave most of the West so the wolves can return, unfettered.

Tony Oliveira says the only bright spot for ag is dairy and even there,  one environmental group - the Center for Race, Poverty and the Environment - has single handedly shut down dairy expansion in all south valley counties.  But now dairymen are “ready to fight back”, he insists to support Tulare County’s Alliance legal efforts in protecting new dairy permits.  CRPE has made a big point about air emissions.  “But they don’t ask to shut down all the other industries who have air emissions.”

He says the valley should get credit for air emissions, that are not of our doing, like “all the big rigs that go from LA to SF on 99 and I-5 that affects our air.”  Air emissions flow in from the Bay Area - an imported problem but people from the Bay Area now want to shut down productive industry.  “Agriculture is breaking no regulations on methane production - converting raw product in into a health food and manure which improves the soil,” he notes.  But nobody wants to stop growth when they build a new mall or 1200 new homes that generate lots of air pollution, fireplaces and more cars, he notes.  He expects the dairy industry to win their battle in court.

Gray Acres Perhaps the most telling tale about the future of ag in the Westside is the fact that there are few young people going into it.  “The average farmer in Kings County is 55 years old,” says Oliveira.  “About a month ago my son said he saw no future in ag and went back to construction and teaching.  Oliveira says many of his nephews who grew up on farms are police officers.  “At age 53 my wife and I are doing the farm by ourselves with 3 other workers.”
“When it comes right down to it we’re talking about nothing less than the loss of our way of life,” says Oliveira who this week organized an ag task force in Kings County to highlight their crisis in local farming.  He also will join with the Fresno city group to do the same.  If it’s too late for agriculture, Oliveira and many others are not apparently going to take it lying down.

Farm operator turnover locally is surprisingly high.  A study done by researchers Don Villerejo says 38.5% of Fresno County farmers left farming in a five-year period from 1990 to 1994.  That would amount to a 100% turnover in just 13 years.  The good news - in the past there have been new operators who have come along to take the others place, particularly volatile in Fresno County have been vegetable growers.

High Turnover The high turnover rate has hit the big boys too, as a list of the top ten farms in California can attest to.  The list includes number one JG Boswell, followed by Salyer Land who is out of business selling off to Boswell, number four South Lake Farms now out of business, Newhall Land now smaller than before, Westlake Farms - this year farming about a quarter of their land, McCarthy Farms out of business, Anderson Farms out of business, Superior Farming out of business and Tenneco West also out of business.

For Kings County the string of jobs lost come even harder with the closure of a long time manufacturer - Pirelli Tire and 650 jobs.  Having lost their job in town it may no longer make sense to head back to the farm.

Consider it a sign of the times that this past month the UFW agreed to a cut in wages and benefits for workers at a San Mateo mushroom farm rather than lose 400 jobs.  The company, Money’s Mushroom, had filed for chapter 11 bankrupcy.

If California’s Westside is suffering so are farmers across the nation and the 2002 Farm Bill figuring billions in subsidies to keep farmers alive are expected.  Taxpayers must subsidize farmers to the tune of $4 billion annually on many traditional crops including cotton, corn and wheat all grown in the valley.   But an ag panel now wants to add new programs to assist producers of milk, sugar and, peanuts.  Another group is pushing for coverage for orange farmers and other specialty crop producers.  Olive and orange growers have been hit by what they see as unfair trade practices especially Europeans dumping in the US.  Now Sunkist wants growers to be offered a “safety net” like most of the rest of US agriculture.  The Farm Bill comes up every five years for congressional consideration.
Many consider a friendly Republican administration in George Bush and California Secretary of Agriculture Ann Veneman means financial help for California farms is on the way.

“In general, it appears that if markets are allowed to work and individual and global investment decisions are made, production agriculture in America will continue its gradual disappearance.  An increasingly urban America has tired of subsidizing our farmers and ranchers.  Agriculture is losing its appeal as an investment for our nation,” says Steven C. Blank author of The End of American Agriculture.

---

The coalition secured the land from businessman Bill Clark of Hanford, after Clark researched Visalia Surgical Hospital’s partnership with FSC Health of Fresno.  FSC Health operates Fresno Surgery Center, an award-winning surgical hospital, serving the greater Fresno market.

“We had never considered having a hospital within the Mission Oaks Plaza complex,” said Clark.  “However, I knew of the Fresno Surgery Center’s high reputation as a very special kind of hospital.  And after taking a tour of the impressive facility, and seeing first hand its unique dedication to patient care, I was sold,” said Clark.

Backers of the proposed Visalia Surgical Hospital say the facility will offer patients in Tulare County a refreshing choice in surgical care.  “As physicians, surgeons and most importantly, community members, we are thrilled to see the Visalia Surgical Hospital taking shape after four years of planning and negotiating,” said orthopedic physician Dr. James Billys, of Visalia, new facility co-founder and steering committee member.  “Visalia Surgical Hospital will provide patients in our community with a surgical alternative that will include high quality and safe care at cost comparable to those of traditional hospitals.”

A hospitality-inspired environment, similar to fine hotels, is the foundation of the proposed 20-bed facility.  The estimated $15 million dollar facility will offer private rooms filled with amenities such as televisions, VCR’s, video libraries, mini-refrigerators, small libraries of books, specialty soaps and shampoos, deluxe towels, bathrobes and hair dryers.  And, unlike traditional healthcare institutions, Visalia Surgical Hospital will have all of the decorator touches you would expect to find at a boutique hotel - including artistic window and floor coverings and a variety of artwork as well as sleeper sofas for family members.  Patients can enjoy delicious meals that combine clinical dietary needs with restaurant-quality taste and presentation, served to them in room service fashion.  Visalia Surgical Hospital will also include a one-to-three nurse-to-patient ratio, another first for medical care in the area.

Patient costs will be comparable to those of traditional hospitals.  Visalia Surgical Hospital will also accept all forms of insurance including Medicare and Medi-Cal.

“We plan to take care of every detail, creating a healing environment that offers patients privacy, comfort, delicious food and personalized care,” said Dr. Billys.  “Our goal is to offer a first for Tulare County - quality surgical care in a hospitality-inspired facility that is available for all people.”

---

Last year brought an estimated 30,000 people to Mooney’s Grove and other locations around town for the three-day event over Memorial Day weekend.  That event coincided with a recreation of a 1913 road race featuring cars of the era making a slow trek from LA to Visalia.  “We figured that between the street crowds along the way and the media attendance we reached attendance of 1 million people,” says Blain.

That year AAA sponsored the show in part because they were excited about the Panama-Pacific Road Race that was part of the festival. This year the AAA had their centennial celebration and sponsoring the event didn’t figure into the plans.

Blain says the first event drew a crowd of some 40,000 held over a two-day weekend, July 4th - perhaps a time when more locals stayed in town, compared to Memorial Day weekend, Summer's first holiday.

Blain says the group hasn’t given up on the popular event and will try again for 2002.  “It will be hard to keep the momentum when we don’t do it every year,” he admits.

The group’s proceeds went to the Boys and Girls Club last year, $20,000 and the first year $40,000.
The “race” at Mooney’s Grove drew lots of visitors to town and filled hotels and restaurants and featured classic cars of all types from all over the nation.