What the tariff does
Net Energy Metering (NEM) governs the financial relationship between residential solar generators and their investor-owned utility. When your home’s solar PV system produces more electricity than the home is using at a given moment, the excess is exported back through the meter to the utility’s grid. NEM determines how that exported energy is valued and credited on your bill.
The shift from NEM 2.0 to NEM 3.0
Under NEM 2.0 (in effect 2016–April 2023), exported solar was credited at the full retail rate — effectively one-to-one with what the customer would have paid for grid electricity. Under NEM 3.0 (also called the Net Billing Tariff), exported solar is credited at the utility’s Avoided Cost Calculator rates, which are generally much lower than retail rates and vary by time of day and season.
The intended effect is to shift the economics of residential solar toward self-consumption: pairing solar with battery storage so the home uses its own generation rather than exporting it for low-value credits. This is also why SGIP rebates for paired storage have grown in importance under NEM 3.0.
How crediting works (general)
- Your meter records both directions— electricity drawn from the grid and electricity exported to the grid.
- Energy you consume on-sitefrom your own solar offsets retail-rate purchases at full retail value (you simply don’t buy that electricity).
- Energy you export to the grid is credited at the Avoided Cost Calculator rate for that specific month and hour. Evening summer hours (high grid stress) typically have higher export values than daytime spring hours.
- True-up is conducted at the end of a 12-month cycle. If your account has net credits, you may receive a payment. If your account has net charges, you owe the balance.
Legacy preservation (NEM 1.0 and 2.0)
Customers who interconnected under NEM 1.0 (the original program, pre-2016) or NEM 2.0 (2016–April 2023) retain those tariff terms for 20 years from the date of their original Permission to Operate. The CPUC decision explicitly grandfathered legacy customers; their accounts do not automatically transition to NEM 3.0.
Where to verify
- CPUC NEM page: cpuc.ca.gov/nem
- Decision D.22-12-056: CPUC document repository
- PG&E NEM information: pge.com solar & renewable
Source: California Public Utilities Commission Decision D.22-12-056 establishing the Net Billing Tariff. Avoided Cost Calculator values are updated periodically by the CPUC. Specific export-credit values for your account depend on the month, hour, and utility. Verify with your utility before relying on a specific figure.