Electric bills are typically a one-way street; you send money to your power provider.
California’s major utilities want to send checks to farmers, according to Eric Baty of Verde Energy, an energy consulting company.
Baty told growers and others at the California Cotton Growers Association annual meeting in Coalinga, Calif., that checks from electricity providers can be substantial for those who sign up for what is called a “demand response program.”
Baty worked with one grower who stands to get $700,000 or possibly more for a three-year demand response program contract with his electric utility.
When power companies reach peak demand loads, the only means of additional power is to purchase it from expensive peaker plants. Utilities would rather reduce the use from existing commercial or agricultural users to meet demand elsewhere.
They do that by contracting with growers who use substantial electricity agreeing to turn off power when requested during peak use periods, typically 11 a.m to 7 p.m.
Last year the utilities called only twice to ask contracted growers to turn off power during that time period, and it was for three hours each time, Baty said. The shutdown time can be from one to four hours.
“If a farmer has high horsepower, electric motor driven water pumps, signing up for the program can offer significant savings,” Baty said. The farmer who stands to pocket $700,000 for signing a demand response contract told Baty the money he expects to receive represents about 10 percent of his annual power bill.
There is no cost to growers to sign up. Producers can opt out at any time or for any particular month. The utilities would like to have the ability to automatically turn off the pumps rather than ask growers to manually turn them off when a peak demand event is called, and they will pay for installation of the automatic pump shut-off equipment.
“The utilities will not automatically turn off the pumps without notifying you,” Baty said.
The program begins in the spring and extends for seven or eight months. “March and April are months when it is unlikely an event will be called” but contracted growers would still get checks, he noted. If a grower is irrigating heavily in the summer and cannot afford to shut off pumps, he can opt out of the contract for those months. Growers receive monthly checks in what is basically a standby program.
The farmer who expects to get the big check signed up 7.5 megawatts to be in the program. For a 258-horsepower pump using 200 KW per year, the payments would be about $8,000 annually.
Growers eligible for the program must be on a peak rate plan, Baty added. Growers are given 24 hours notice to shut down the pumps.