Fields of Broken Dreams Outages cause economic distress in California's heartland

Carl Nolte, Chronicle Staff Writer

Wednesday, January 31, 2001

©2001 San Francisco Chronicle url:http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/01/31/MN123NOLTE.DTL

California's big cities get all the attention when the lights dim and go out, but the real ground zero in the energy crisis begins just five miles south of Silicon Valley and in the farming country of California's heartland.

Suddenly, energy costs have shot up and power supplies have become uncertain, sending an economic shock wave across the center of California.

When the power went out, many dairy ranchers had to dump good milk down the drain, one Santa Clara County agribusiness firm saw its energy costs go up 500 percent, and one rural county government found its offices thrust back into the 19th century with no lights, no heat and no computers for most of a week.

Even the price of coffee at My Brother's Place cafe off Highway 99 in Tipton is going up. "I tell you,'' said one farmer having lunch there, ""the state of California is going down the dump.''

Here are reports from the front line of the energy wars:

Temperature Control

Morgan Hill

These are facts that delight trivia lovers: the biggest cash crop in the Santa Clara Valley is mushrooms -- after silicon chips, of course.

Mushroom plants are all over the place just past the San Jose city limits -- one of the biggest is Monterey Mushrooms Inc.'s facility at Morgan Hill, just five miles south of the proposed big new Cisco Systems campus.

Monterey Mushrooms, which is privately held, is the biggest mushroom producer in the United States. And mushrooms are no small pototoes -- they are the fourth largest cash crop in the country. Monterey Mushrooms grows nearly a third of that crop.

They are a fungus, grown by manipulating the environment, "a real mixture of agriculture and manufacturing," said Peter Jensen, Monterey's West Coast vice president. They are also heavily dependent on energy -- natural gas helps create the steam that sterilizes the compost and electricity helps generate the cool conditions in which the fungus grows.

"If there were no power, we would not exist," Jensen said. "PG&E is our sun," said John Davids, the "D" in B & D Mushrooms, just off Highway 101 in San Martin, one of the county's smallest mushroom farms. "We are all indoors," Davids said. "It's all artificially controlled."

When the energy crisis hit -- "crisis is an appropriate word," said Jensen -- it hit the mushroom industry like a ton of bricks.

Shah Kazemi, owner and president of Monterey Mushrooms, says his energy costs increased 500 percent in a few months, mostly in natural gas prices. "My gas prices went from $3.18 per million BTU to $14.86 in a few months," he said. "Through the roof."

Then, in late January, the rolling blackouts hit, primarily at Monterey's plant in Watsonville (Santa Cruz County). "We had hundreds of people standing around with nothing to do for one or two hours. You have to pay them, you can't send them home."

The lights went out at B & D in San Martin, too, and Davids, worried that the crop could be damaged, hustled off to a nearby Home Depot and bought a small generator for $400. He figured he had to; timing is everything in mushrooms. "If something went wrong we could lose 50 cents a pound off the price," he said. Or worse.

The Home Depot generator only ran for a little while, then the lights came back on. But the message was clear.

"I have to buy a generator if I want to stay in business," Davids said. Power, he learned, is unreliable. But diesel generators pollute the air. "What are you going to do?" he asked. He has no answer.

Monterey Mushrooms has reached the same conclusion: There has to be a change. Energy costs have increased from 5 percent of the total expenses a year ago to 20 percent. The short term answer: a 50-cents-per-box surcharge to the distributors. That's risky. It could hurt demand.

What's the long-term solution? Kazemi laughs when he's asked. "What can I do?" he said. "I feel completely powerless."

"A year or two ago, remember, we had Bosnia to worry about," said Davids. "I studied it, and read the paper every day and tried hard to understand. Finally I gave up. I couldn't understand it. Power is like that. Like Bosnia."

MILK COW BLUES

Poplar, Tulare County

It was the kind of telephone call any rancher hates -- a nightmare, just a nightmare. It was the people at the Land O'Lakes facility in Tulare, where all the dairies in the area send their milk to be processed.

"They said the power was out," said Eric Borba, one of the sons in the Frank Borba and Sons dairy ranch near Poplar. The system was all backed up, and there was no place to store the milk. The 9 o'clock milk tanker truck wasn't coming that night.

Borba's storage tanks were all full, and the cattle were coming in to be milked; they are milked twice a day. "We've been here 60 years," Eric Borba said, "And never missed a milking, ever."

"Those cows was just bloated," said Frank Borba, the eldest member of the family. "We could make those cows suffer," Eric Borba said, "or dump the milk."

A good cow produces 10 gallons of milk a day, 86 pounds of milk. You can't store the milk in the cow. So they milked the cattle, opened the drain to a sump hole, and dumped the milk. The executives at the dairyassociations like to call it "applying the milk to the crops."

At dairies all over Tulare County, the same thing happened, Eric Borba said, "The tanks were all full, couldn't take any more. They dumped 20 loads of milk, a million pounds.

"We never before, under any circumstances, had to dump good milk down the drain," he said.

Nobody's to blame, the Borbas said. The creamery had a contract with Southern California Edison that said in case of an emergency Edison could interrupt the power supply for six hours. That emergency came on Jan. 18 -- two six-hour interruptions, back-to-back.

"Edison's always treated us fine," Eric Borba said, "always been good." Land O'Lakes is a cooperative owned by the dairies. It's not like it's some big, faceless corporation. "People are always saying that there are a bunch of megadairies," Eric Borba said. "But they are families, like us."

The Borbas are proud of their ranch: 1,000 cows, mostly Holsteins, and a farm, too, with alfalfa and wheat growing on the rich, flat land east of Highway 99. In the distance, out of a clearing in a rainstorm, the snow-covered Sierra Nevada is visible. Coyotes still run across the highway, even during midmorning.

Frank Borba, who is 72, remembers the old days vividly -- how they worked with horses, how they pumped the well with windmills. How his father, who came to this country from the Azores in 1914 speaking only Portuguese, bought the ranch in 1941, and how the family built it up.

"I had 80 cows, then 250," Frank Borba said, then pointing to Eric Borba and adding, "He went to 1,000." Two other sons run the other operations, including the farm.

They use electricity to run the milking machines, to cool the cows in the barn in summer, and to run the pumps; diesel for the tractors and other machinery, and propane. The cost of everything's gone up.

The dairy business used to be better. Prices were higher for one thing: "I got paid more when Carter was president," Frank Borba said. "It was $14 a hundredweight then, $11 now." Milk prices are regulated by the state.

"We're not crying over some spilled milk," Eric Borba said. "But something has to be done about this energy crisis. "Everything we do here uses energy -- to heat it, or cool it, it takes power," he said.

And it's not just a problem for some dairy rancher in Tulare County. "My mother used to say, 'If it's happening to everybody, you are all right. But if it's just happening to you, you got to look out."'

A GOOD DEAL TURNS BAD

Hanford, Kings County

This part of California is Dairyland, USA. While driving across the wide valley from Interstate 5 on a night after the rain, music plays on the car radio and the scent of the biggest industry is in the air. Methane, a cow byproduct. "You can always tell when you are home," one longtime resident said.

Hanford is the county seat of Kings County, and the county offices are in a beautiful set of modern buildings that resemble the campus of some electronics firm.

Kings County is right on the border dividing Southern California Edison Co. and Pacific Gas and Electric Co. The offices use Edison power. In 1992, Edison offered some customers a deal: Sign up for an interruptible power contract and the county could save $160,000 a year on electric bills.

Back then, power was never interrupted, and even if it was, the outage would be in six-hour blocks. It looked like a good deal. The county signed. The power was shut off 14 times last year, which was bad, but this month the energy crisis paralyzed the county offices. The lights and heat have gone out 10 times since Jan. 1 and the county offices had no heat or light for four straight days from Jan. 16 to 19.

It's cold in the valley in winter: mid-30s, so the county workers were shivering in the dark. No computers, no heat, no services.

Administrative officer Larry Spikes thought it was like being jolted back to the 19th century. Emergency services had backup power, but county health clinics couldn't operate and the human services agency could process neither cash and food stamps, nor the payroll for service providers for 1,100 blind, disabled and elderly clients.

Even prisoners in the county jail were affected: They couldn't make court dates because a tunnel connecting the jail with the county complex went dark, and it was too risky to move dangerous felons through it.

If the county wanted power, they could have it at penalty rates: $9 a kilowatt hour, or $9,000 a hour. The regular rate is 7.5 cents.

The county declared an emergency and the supervisors voted last week to buy a $550,000 generator.

At the end of the week, the state Public Utilities Commission told the power companies to not enforce the penalty surcharge to their interruptible customers, at least temporarily. But the county Board of Supervisors voted unanimously yesterday to buy the diesel generator anyway. One supervisor called the decision "a no-brainer."

Spikes thinks the emergency is a bad sign. Worse things are to come. "I don't see any light at the end of the tunnel," he said.

"There is no question this is going to do damage to the economy of the valley," Spikes said. The San Joaquin Valley, in particular, has lagged behind the state's good economic times. When unemployment rates on the coast were low, they were high in the valley, and the mainstay agricultural industry has been having a tough time.

"The ag industry has been on the ropes for years and to put this on top of the other problems, it is not going to be pretty," he said.

Kings County has been trying to diversify, and one of the mainstays was a Pirelli tire factory in Hanford.

This month, the company announced the plant would close and the 600 manufacturing jobs, all good union jobs, would be relocated to Brazil. Power wasn't the issue this time. Wages are much lower in Brazil, and they have different environmental laws.

"I don't know the solution to the power crisis," he said. "If I knew, I'd really be going somewhere."

WHAT'S THE WORD FELLAS

Tipton, Tulare County

Some say places like My Brother's Place in Tipton, just off Highway 99, south of Tulare and north of Bakersfield, are the real California: no dot-commers, no yuppies, no surfers. Nobody orders a latte.

The locals come in and talk about the usual things: the weather, football, crops, who's doing what. The current wisdom: California is headed for hell in a hand basket, and the energy crisis is the reason.

"Everything now is double what it was and crop prices are less," said a man named Frank. "Just Frank, from Tipton," he said. "That's good enough. Everybody knows me."

"All I know is that it's costing me twice as much for gas at home and for electricity," said Leon Perryman, who drives a hay truck.

"They need more power plants, but they put up a co-generation plant around here and the tree-hugger shut it down. "I don't think anybody wants to hurt the environment, you know. But something's got to give."

"That's right," Frank said. "They don't want farming in the valley." Everybody nodded. They knew who "They" are. They are driving the prices up. "Somebody's gouging us," Frank said. "How can things change like this, just overnight? If something was working, just leave it that way.

"Now even a cuppa coffee's going up here." The restaurant has posted new prices, blaming the energy crisis.

Things are bad, the men said. "The water's too high, the energy's too high," said Roy Felix in the next booth. "I don't know about the state of California. It's going down the dump."

LITTLE CONSERVATION

Santa Nella,

Merced County

Gottshalk's is a chain of Central Valley department stores. A traveler through the long valley can't miss Gottshalk's. They are in all the big malls and advertise heavily. All the stores have signs that say hours have been cut back and the lights dimmed a bit to conserve energy.

Hardly anyone else is doing the same thing. Throughout the valley, the used car lots blaze with light all night. At twilight one day last week, the high school stadium in Lemoore (Kings County), home of the Lemoore Tigers, had all six light towers lit, and it wasn't even dark yet.

Along Interstate 5 on the west side of the valley, the truck stops were lit, bright as day. Brighter. The artificial windmill at Pea Soup Anderson's restaurant in Santa Nella revolved as it always does, twinkling with light.

"You go downtown and see the lights just blazing," said Frank Borba, the dairy rancher. Downtown for him is Tulare, or maybe Visalia, the Tulare County seat.

"Even that little town over there," he said pointing at the little unincorporated town of Poplar, across the fields. "You'd think they could turn some of them off. Jeez."

From I-5 across the wide valley, the cities and towns are brilliant against the night, like Paris, the city of light.

E-mail Carl Nolte at cnolte@sfchronicle.com.

©2001 San Francisco Chronicle Page A1

-- Swissrose (cellier@azstarnet.com), February 01, 2001