How Net Metering Affects Your Electric Bill
Learn how rooftop solar net metering (and state-specific tariffs like California's Net Billing Tariff, commonly called the Solar Billing Plan or NEM 3) calculates imported vs. exported kWh, bill credits, annual true-ups, minimum bills, and fixed customer fees.
Key Takeaways & Core Facts
- Net metering tracks the bi-directional flow of electricity: kWh imported from the grid minus surplus solar kWh exported back to the grid.
- Compensation structures vary by state and utility—ranging from classic 1:1 full retail rate credits to state-specific net-billing tariffs (such as California's Net Billing Tariff / NEM 3, which succeeded NEM 2.0 on April 15, 2023).
- Net metering does not eliminate all electric charges; solar customers still pay fixed monthly customer fees, grid interconnection charges, and minimum bills.
Direct Answer: How Net Metering Affects Your Electric Bill
Net Energy Metering (NEM) is a utility billing mechanism that credits rooftop solar owners for surplus electricity generated by their solar panels and exported to the electric grid.
Your monthly bill calculates Net Grid Energy (Imported kWh − Exported kWh). However, net metering compensation rules vary significantly by state—ranging from classic 1:1 full retail rate credits to state-specific net-billing export rates.
Bi-Directional Metering, Solar Credits & True-Ups
Solar net metering statements incorporate specific mechanical and policy rules:
- Bi-Directional Smart Metering: A specialized utility meter records electricity imported from the grid when solar panels are not producing (e.g., at night) and electricity exported to the grid during sunny afternoon peak production.
- Compensation Structures: Under classic 1:1 net metering laws, exported kWh receives full retail credit value. California-specific example: California’s Net Billing Tariff was adopted through CPUC Decision D.22-12-056 within proceeding R.20-08-020. It applies to qualifying interconnection applications submitted on or after April 15, 2023. California investor-owned utilities refer to it as the Solar Billing Plan. Surplus solar exports under the Net Billing Tariff are credited at variable wholesale avoided-cost rates rather than full 1:1 retail rates.
- Monthly Carryover & Annual True-Up: Excess monthly export credits carry forward to offset future bills. At the end of a 12-month billing cycle, an annual true-up reconciles remaining solar credits.
- Minimum Bills & Fixed Fees: Net metering does not eliminate all utility expenses; solar customers remain responsible for fixed monthly customer connection fees and mandatory minimum bills.
Net Metering Policy Comparison: Full Retail vs. Net Billing
| Net Metering Policy | Export Credit Rate | Grid Import Cost (20¢) | Export Credit Value | Monthly Energy Charge | Minimum Fixed Charge |
|---|---|---|---|---|---|
| Classic 1:1 Retail Net Metering (Legacy Tariffs) | 100% Retail Rate (20.0 ¢/kWh) | $160.00 | -$120.00 | $40.00 | +$12.00 Fixed Fee |
| Avoided-Cost Net Billing (California NEM 3.0) | Avoided Cost (~6.0 ¢/kWh) | $160.00 | -$36.00 | $124.00 | +$12.00 Fixed Fee |
| Buy-All / Sell-All Tariff | Wholesale Rate (~4.0 ¢/kWh) | $160.00 | -$24.00 | $136.00 | +$12.00 Fixed Fee |
* Note: Solar export credit rates, true-up schedules, and fixed grid fees vary by state public utility commission regulations and utility tariff. Figures represent an illustrative calculation assumption.
Assumptions & Jurisdictional Differences
Rooftop solar panels do not automatically eliminate your electric bill. Always check your specific electric utility solar interconnection tariff to verify export credit rates and fixed customer charges.
Analyze your net meter statement with our Electricity Bill Analyzer or learn more about TOU solar interaction in our Time-of-Use Electricity Rate Guide or state rates on our U.S. Electricity Rates Directory.
Electricity Bill Analyzer
Analyze net grid energy consumption (Imported kWh − Exported kWh) and monthly utility minimum charges.
Analyze Solar Net Metering →Government & Official Data Sources
- California Public Utilities Commission — Net Billing Tariff Decision D.22-12-056 (Proceeding R.20-08-020) (Net Billing Tariff adopted via Decision D.22-12-056 in proceeding R.20-08-020, Solar Billing Plan rules, and April 15, 2023 transition)
- National Renewable Energy Laboratory — Net Energy Metering (NEM) Policy & Compensation Models (Bi-directional metering, 1:1 retail credit, avoided cost compensation, and annual true-up rules)
- U.S. Department of Energy — Homeowner Guide to Solar Net Metering & Utility Interconnection (Imported vs exported kWh, grid interconnection fees, minimum monthly bills, and TOU interaction)