State’s Net Energy Metering Aggregation program has led to increased adoption of solar and other renewables

By Christine Souza 

California Farm Bureau Federation

CALIFORNIA — A proposed decision under consideration by the California Public Utilities Commission would bring changes to a program implemented to encourage private investment in on-site renewable energy.

The state’s Net Energy Metering Aggregation program, or NEMA, has led to increased adoption of solar and other renewables by farms, ranches, and other businesses.

Under a proposed decision outlined in August, the PUC on Nov. 2 is due to consider changes that would affect multimeter customers of the state’s three investor-owned utilities — Pacific Gas and Electric Co., San Diego Gas and Electric Co., and Southern California Edison. The proposed decision would effectively eliminate the benefit of aggregation for power used and generated by customers with more than one meter.

The purpose of net energy metering is to compensate customers for generating renewable energy that is exported to the electric grid to help the state meet its renewable energy goals. State legislation passed in 2012 authorized aggregation of meters on contiguous parcels, enabling renewable customers to offset energy generated against energy used from more than one account.

“Net energy metering aggregation has been the option for our members to control their costs and utilize renewable energy to operate in a sustainable fashion,” said Karen Norene Mills, California Farm Bureau director of legal services. “The argument by utilities has been that NEMA customers don’t pay their full cost of service, but there’s no evidence that that is correct. Our position is NEMA customers do pay their cost of the program, and so there’s no reason to change it.”

The proposed decision is a response to a PUC-requested study of net energy metering under NEM 2.0, the second version of the program that allowed customer generators to receive full retail rate credit for energy exported to the grid and compensation for surplus energy. NEM 2.0 also required a switch to time-of-use rates.

The study, which looks at only net metering and not aggregation, claimed that the program negatively impacts nonparticipating and low-income ratepayers and is not cost-effective.

However, California Farm Bureau associate counsel Kevin Johnston said the proposed decision “would unfairly discriminate against multimeter customers compared to single-meter customers and effectively eliminate the use of NEMA in agriculture.”

In joint comments submitted Sept. 28 to the PUC, the California Farm Bureau and the Agricultural Energy Consumers Association challenged the proposed decision and urged the commission to retain the subtariff for multimeter aggregation.

If benefits of aggregation disappear, the two organizations argued, that effectively ends net energy metering programs for agriculture and discriminates against multimeter customers compared to single-meter customers.

“We’ve argued either just leave us as is under the existing NEMA program or do the research and come back to us,” Johnston said. “In this process, the fundamental aspect of why Farm Bureau and others fought for the NEMA program has been lost, and the commission hasn’t proven that that change should take place to NEMA.”

Interested in investing in renewable energy, many farmers were early adopters of NEMA. “But now, with significant proposed changes to the program,” Johnson said, “the commission and utilities are making it cost-prohibitive to do so.”

The changes in the proposed decision should have been addressed under new net billing tariff guidelines known as NEM 3.0, which took effect Apr. 15. But Johnston said Farm Bureau succeeded in convincing the commission defer its decision regarding net energy metering aggregation for nonresidential customers such as agriculture.

He said Farm Bureau made the request because the PUC study largely focused on single-meter customers and found residential net energy metering customers created the cost impacts.

Unlike NEM 2.0, under the new billing program, there are lower rates of compensation for power generation, and the program reflects time-of-use rates with lower rates for the nighttime and early morning hours. The new version of the program provides some incentives for pairing solar with battery storage.

Tulare County dairy producer Ken De Groot invested in solar on his farm about seven years ago. He said the changes in the proposed decision “benefit utilities because of the high-value, time-of-use period changes to late evening when little solar power is generated, and average compensation rates for generated solar power are therefore sharply reduced.”

Fresno County farmer Russel Efird, who farms nut crops, raisins and fruit, began investing in on-farm solar in 2015. He said the farm’s solar installations generate about 1.25 megawatts of renewable energy, saving the farm considerable costs annually through the NEMA programs. The cost of the farm’s energy usage, which is mostly for irrigation pumping, and powering homes and buildings, is offset by the solar energy generated on the farm.

For customers under the earlier programs, the compensation rates stay intact for 20 years and then are shifted to the new net energy metering program.

“Depending on where you are in that 20-year span with these other (NEM) programs, you’ll have to decide whether it’s a good fit for you to move on to this new program,” Efird said.

With some nut crops at break-even prices, he added, “You have to do the math and decide whether it is worth it. It is very much unique to the individual operation and where they stand financially.”

At the Nov. 2 meeting, the PUC may approve the proposed decision or make revisions. For more information, visit cpuc.ca.gov/nemrevisit.