California has led the nation in on-farm solar development, but the program at the center of that campaign is on the chopping block at the California Public Utilities Commission. The state is overhauling its approach to net energy metering and an option tailored to the unique needs of farms is up for a crucial vote this week.
More than a decade ago, the industry fought hard to develop the program and to incentivize farmers to invest in solar technology in a similar way to residential roof-top solar customers.
But farms account for just a fraction of the state’s energy landscape and carry a small voice among the broad swath of stakeholders lobbying the CPUC. For the large investor-owned utilities involved in the proceedings, the program known as Net Energy Metering Aggregation (NEMA), is not a significant moneymaker, according to agricultural advocates.
They fear the CPUC proposal would force farmers to buy electricity at full retail prices, even if they generate that energy through their own solar panels—in effect eliminating the incentive to install solar projects.
Farmers use the NEMA option to consolidate electricity use and net metering credits under one property for each of the meters on irrigation pumps. Unlike the residential net metering program, farmers are not paid for the excess electricity piped into the grid and must pay a fixed charge to cover the cost of the service. The program does allow them to offset the energy costs associated with running the pumps.
NEMA has slowly moved the state closer to meeting its climate goals by expanding its portfolio of renewable resources. But advocates say the program has proven far more valuable for delivering a critical resource to rural and disadvantaged communities, which often struggle with basic access to the grid and take a backseat to urban-led climate initiatives. They also see NEMA as a key tool for helping farmers transition under the state’s push to electrify pumps, tractors and other equipment.
Many farms rely on diesel generators to power irrigation pumps, a trend that could continue as maintenance costs mount for the existing on-farm solar arrays that fall out of NEMA. CPUC plans to grandfather those projects into the new framework, continuing the NEMA subtariff for those customers. But how long the option lasts depends on how much time is left on each farm’s contract. Some could have 20 more years, while others may have just two, says Kevin Johnston, an associate counsel with the California Farm Bureau.
Without NEMA, investing in solar gets cost prohibitive.
Kevin Johnston, California Farm BureauFarmers would have to install solar panels at each pump to offset usage. Since the pumps only run in the irrigation season and get little use in wet years, the investment rarely pencils out. In 2013 the California Farm Bureau, along with the California Climate and Agriculture Network and other advocacy groups, successfully ran the aggregation proposal through the Legislature. Senate Bill 594 enabled farmers to participate for the first time in net energy metering, according to Johnston.
The concept was billed as putting a roof on the farm—essentially regulating all the meters as if they were a microwave, refrigerator or other home appliance, he told Agri-Pulse. The NEMA program accounted for agriculture’s seasonal energy use by calculating the “true up” bill on an annual basis, rather than monthly.
CPUC was put in charge of verifying the program wouldn't shift the cost burden to other customers. It found that while agriculture accounts for the vast majority of the electric load, residential properties, such as schools and colleges, have a large number for customers who take advantage of the NEMA option as well.
The commission estimates that about 13,000 properties are connected to the grid under the NEMA subtariff, with a cumulative solar capacity of 1.02 gigawatts. More than 8,000 of those properties fall within the broad boundaries of PG&E. Nearly 2,000 of those customers are in disadvantaged communities.
In the CPUC proceeding, the three utilities involved in NEMA argue that ending the aggregation option would prevent the state from shifting the cost to other ratepayers and encourage more customers to invest in battery storage, exporting solar energy at the most beneficial times for the grid.
According to Johnston, the commission crafted its proposal with those concerns in mind. It plans to shift NEMA customers into the residential NEM category and put more emphasis on utility-scale solar development, which is a more cost-effective investment for the utilities. The farm coalition has criticized the utilities for implying NEMA is “some kind of cash grab that must be stopped.”
CPUC "is making the change, essentially, on what the utilities are telling them,” said Johnston. “This isn't rooted in fact or justified in data.”
He decried a “fundamental lack of understanding about how this program works for agriculture” and how farmers use energy, arguing that a one-size-fits-all solution does not work. He felt the message that it’s “okay to be different” is slowly seeping in, though the latest amendments to the proposal show that little has changed with the commission’s view of NEMA.
Michael Boccadoro, executive director of the Agricultural Energy Consumers Association, agreed, saying the lack of understanding is due to agriculture accounting for less than 5% of the customer base in the utility system, and much of that is for energy used in delivering water and not for farms. Those growers are “a very, very small portion of the revenues to the utilities," he said.
He told Agri-Pulse that the commission’s reasoning is fundamentally flawed, and the latest draft of the proposal is “throwing the baby out with the bathwater.”
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CPUC has struggled with modifying NEMA as well as a sister program for aggregating residential customers who live in apartments under a shared solar array, known as Virtual Net Energy Metering (VNEM).
Michael Boccadoro, Ag Energy Consumers AssociationAfter a CPUC study found considerable issues with cost shifting in the general residential NEM program, the commission instituted sweeping net metering reforms last year, slashing the value of solar credits for single-family homes. But it set aside NEMA and VNEM for more detailed analysis. After delaying a vote on proposed changes to the programs three times, CPUC issued a revised draft last week that reflected broad amendments to the VNEM proposal—reflecting concerns from consumer groups—and no major changes to the NEMA proposal. Boccadoro was “very disappointed.”
“This is unfortunately what happens when the commission deliberates in private, without opportunity for people to respond,” he said. "These last-minute revisions are not transparent and sometimes miss the mark.”
AECA and the California Farm Bureau immediately fired off a letter to the commission, arguing the proposal is selectively looking at the number of residential customers in NEMA to argue the program as a whole is shifting costs. The farm groups highlighted a finding in the CPUC study that suggests nearly all of the NEMA load is covered through the service cost. Boccadoro said cost shifting is a concern for the residential program because those customers do not pay for the cost of service like agriculture does in NEMA.
Boccadoro and Johnston offered a simple solution: Limit NEMA to just agriculture, eliminating any customers who may be misusing it. That would address CPUC’s cost shifting concerns and any residential customers left out of NEMA could instead enroll in VNEM.
Boccadoro said if the flaws in the proposed decision are not fixed, the farm coalition will file a motion for an immediate rehearing to correct them.
“It's truly frustrating, because renewable energy on-farm is the foundation of climate-smart agriculture,” he said.
Boccadoro said utilities "dislike any program that allows customers to leave their customer base.”
Yet he predicted more and more customers will be seeking to leave as rates continue to skyrocket. According to the Public Advocates Office, which advises the CPUC on behalf of consumers, average residential electric rates for the three major utilities have risen 89% to 105% over the last decade. This month CPUC is considering another 10-12% rate increase for PG&E, which would start in January, with additional double-digit bumps each year through 2026.
AECA also analyzed PG&E filing statements to discover that its CEO, Patricia Poppe, has earned more than $65 million in compensation since she assumed the role two years ago—nearly double the compensation of any other utility CEO.
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