Net Energy Metering and Net Billing
Net Energy Metering and Net Billing
Key Information
For prospective or existing solar customers:
- For important information on going solar for residential customers, please visit the California Solar Consumer Protection Guide webpage.
- For additional information on going solar, or if you are encountering issues with your current system, please visit our Resources for Solar Customers webpage.
General customer-sited renewable energy information:
- For information on the NEM Revisit Rulemaking (R.)20-08-020 and Net Billing tariff, please visit the NEM Revisit webpage.
- For data on the number of projects and capacity of customer-sited renewable energy generation, please visit the California Distributed Generation Statistics website.
Note: The content on this webpage applies in the territories of the large electric investor-owned utilities (IOU): Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E). Also, this webpage only covers retail transactions for energy (not "non-export" interconnection, energy sales at avoided cost, or wholesale market transactions).
Net Billing
Since April 15, 2023, customers applying for interconnection have taken service on the new net billing tariff (NBT) pursuant to D.22-12-056. The NBT applies to the types of renewable electrical generation facilities that would previously have used standard NEM tariffs. The IOUs refer to the NBT as the “Solar Billing Plan.”
As with NEM, onsite generation is first used to serve onsite load under the NBT, offsetting energy costs. The NBT’s major difference from NEM 2.0 is that under the NBT, compensation for excess generation exported to the electric grid is applied to a customer’s bill at a rate reflecting the value of this generation to the grid. The value of the export compensation (which the IOUs term “Energy Export Credits”) is usually lower than the retail rate (see PG&E, SCE, and SDG&E rates), but can rise above the retail rate on late summer evenings. Customer-generators can maximize bill savings under the NBT by installing battery storage along with their generation, so they can use or export stored energy during these high-value hours. There are some additional aspects of the NBT that are different from NEM 2.0:
- Export compensation adder: Residential PG&E and SCE customers who apply to interconnect NBT facilities to the grid before the end of 2027 receive slightly higher-than-normal bill credits for exported energy for nine years. (SDG&E customers are excluded because their solar systems generate more bill savings due to SDG&E’s higher electric rates). Customers who are required to add solar (e.g., by California’s building code for new construction) do not receive the adder.
- “Electrification” TOU rate requirement: Customer-generators are required to take service on a specific TOU rate with lower off-peak prices and higher on-peak prices than other TOU rates. These rates reduce GHG emissions and strain on the electric grid by discouraging energy use at peak demand times of day, and they encourage customers to use electric vehicles and appliances by charging less for energy at other times. The rates currently approved are E-ELEC for PG&E, TOU-D-PRIME for SCE, and EV-TOU-5 for SDG&E.
- Nine-year legacy period: The original customer who causes a generation facility to be interconnected to the grid under the NBT is guaranteed the use of the NBT tariff for nine years. Customer-generators who move to the NBT from a previous NEM tariff are not eligible for the NBT legacy period.
- Monthly bill payment: Payment for bill charges is due monthly, so that customers are not surprised by a large annual bill after their true-up date. In months when there are excess solar bill credits, the credits roll over to following months, until the annual true-up.
For more information on the NEM Revisit Rulemaking (R.20-08-020) and NBT, please visit the NEM Revisit webpage.
Net Energy Metering
Under NEM tariffs, participating customers receive bill credits for excess generation that is exported to the electric grid during times when it is not serving onsite load. These bill credits are applied to customers' monthly bills at the retail rates (including generation, distribution, and transmission components) that the customers pay for energy consumption according to their otherwise applicable rate structures. These tariffs are closed to new enrollments.
NEM customer-generators pay the same non-bypassable charges for public services as other IOU customers, including Department of Water Resources bond, public purpose program, nuclear decommissioning, and competition transition charges. These charges fund important programs such as low-income and energy efficiency programs. NEM customer-generators are exempt from standby charges.
At the end of a customer's 12-month billing period, any balance of surplus electricity is trued up at a rate based on the recent market rate for energy resulting in "net surplus compensation" (NSC). The NSC rate is approximately $0.02 to $0.03 per kWh (for up-to-date NSC data, follow these links: PG&E, SCE, SDG&E). This rate structure was established in Commission Decision (D).11-06-016 pursuant to Assembly Bill (AB) 920 (Huffman, 2009).
Pursuant to SB 656 (Alquist, 1995), the CPUC created the first NEM tariff, commonly known as “NEM 1.0,” in 1996. Customer-generators interconnected their systems to the grid under the NEM 1.0 tariff between then and the 2016-2017 NEM 1.0 sunset dates. The CPUC created the second NEM tariff, “NEM 2.0,” in 2016 pursuant to AB 327 (Perea, 2013). For information on the NEM 2.0 Rulemaking, R.14-07-002, please visit the NEM Successor Tariff webpage. To align NEM customer costs more closely with non-NEM customer costs, NEM 2.0 requires customer-generators to:
- Pay a one-time interconnection fee. Customer-generators with facilities under 1 MW pay a fee based on each IOU's historic interconnection costs. PG&E’s fee is $145; SCE’s $94; and SDG&E’s $132. Customer-generators with systems over 1 MW pay an $800 fee and pay for all transmission/distribution system upgrades.
- Pay non-bypassable charges in each metered interval. Customer-generators pay small charges on each net kilowatt-hour (kWh) of electricity they consume from the grid in a metered interval.
- Transfer to a time-of-use (TOU) rate. Customer-generators must take service on a TOU rate to participate in NEM 2.0.
Key differences between the three standard NEM/NBT tariffs are described below.
| NEM 1.0 | NEM 2.0 | NBT | |
| Eligible import rate schedule | Any | TOU rates | Specific “electrification” TOU rates |
| Onsite use of generated energy avoids energy imports |
Yes | Yes | Yes |
| Basis of credits for retail energy exports before true-up |
Import rates | Import rates | CPUC Avoided Cost Calculator values (usually lower than import rates) |
| Basis of credits for net surplus energy at true-up |
holesale price of energy | Wholesale price of energy | Wholesale price of energy |
| Basis of non-bypassable charges calculation |
Net energy consumed (imports minus exports) in a year |
Net energy consumed in a metered interval (1 hour for residential and 15 minutes for nonresidential customers) |
All energy imports |
| Interconnection fee | None | $94-145 | $94-145 |
| Billing and true-up period | Annual billing, annual true-up (both charges and credits roll over for 12 months) |
Annual billing, annual true-up (both charges and credits roll over for 12 months) |
Monthly billing (pay monthly); annual true-up (credits roll over for 12 months) |
| Installation size limit | Customer’s annual electric load with limited exceptions; capped at 1 MW |
Customer’s annual electric load with limited exceptions |
Customer’s annual electric load plus up to 50% if customer attests to need |
Regulatory Documents
Listed here in reverse chronological order (most recent first) are selected CPUC decisions and other documents relevant to NEM and the NBT. Please contact us if you have any suggestions for additions.
- Resolution E-5301: Approves the IOUs’ proposed net billing tariffs
- D.23-11-068: Plans an evaluation of the NBT
- D.22-12-056: Adopts the NBT
- D.22-07-001: Limits the NEM facilities allowed to interconnect to the transmission grid to those less than or equal to one megawatt of capacity
- D.21-02-007: Adopts guiding principles for the NEM revisit proceeding
- D.20-06-017: Allows storage devices to charge from the grid before Public Safety Power Shutoffs and removes the large storage sizing limit for three years
- D.19-01-030: Modifies the D.14-05-033 rules for large storage devices
- D.18-02-008: Modifies the D.16-04-020 bill credit estimation methodology
- D.16-04-020: Adopts estimation and metering options for small storage devices
- D.16-01-044: Adopts the NEM successor tariff (NEM 2.0)
- D.14-05-033: Creates rules for pairing storage devices with NEM generation facilities
- D.14-03-041: Establishes a 20-year transition period for NEM customers
- D.12-05-036: Clarifies the calculation of the NEM 1.0 cap
- D.11-06-016: Adopts a net surplus compensation rate
Small Utility NEM and Net Billing Tariffs
The small IOUs have their own tariffs, designed and approved separately from those described above. Liberty Utilities has a NEM tariff. Bear Valley Electric Service has an NBT called the Distributed Generation Service Tariff. Pacific Power has an NBT called the Net Billing Service.
Contact Us
If you have questions about information on this webpage, please contact the CPUC Energy Division at energy@cpuc.ca.gov.