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The names, untangled
Three terms get used for overlapping things, and the confusion is not accidental. It is useful to anyone selling into it.
- Net energy metering (NEM): the older family of arrangements, now referred to as NEM 1.0 and NEM 2.0.
- Net Billing Tariff (NBT): the current arrangement, which the CPUC adopted in decision D.22-12-056. This is what people mean when they say NEM-3.
- Your utility's brand name for it: PG&E, for example, calls its implementation the Solar Billing Plan. Same tariff, different label on the bill.
Who it applies to
The CPUC states that the Net Billing Tariff became effective April 15, 2023, for new customer applications. PG&E states the same boundary from its side: customers who submitted an interconnection application after April 14, 2023, are enrolled on the Solar Billing Plan.
The application date is the thing that matters, not your installation date and not your signature date on a sales contract. If you are being told which tariff you will be on, ask which date that determination is keyed to and get the answer in writing.
How exported energy is valued now
This is the substance of the change. Under the Net Billing Tariff, per the CPUC, export credits are applied to a customer's bill at a rate reflecting the value of that generation to the grid, using CPUC Avoided Cost Calculator values, which the CPUC notes are usually lower than retail rates, though the CPUC also notes that compensation can occasionally exceed retail rates during late summer evenings.
Three consequences follow, and they are the whole reason the California solar conversation sounds different than it did a few years ago:
- Timing became the variable. A kilowatt-hour exported at one hour and a kilowatt-hour exported at another are not worth the same. Annual production alone no longer describes the economics.
- Energy you use yourself is treated differently than energy you export. That is the mechanical reason storage entered the conversation for so many households. Not because a battery is inherently good, but because the value of shifting energy in time went up.
- A proposal built on retail-rate export credit is describing a tariff that no longer applies to new applicants. If the arithmetic in front of you assumes exports are credited at what you pay, ask which tariff it was modeled under.
What happens to people who already had solar
The CPUC states that existing NEM 2.0 customers are allowed to remain on the NEM 2.0 tariff for 20 years from the date they interconnected, with the option to switch to current tariffs. NEM 1.0 closed to new enrollments following sunset dates in 2016 and 2017.
This matters when you buy a house with solar already on it, and it matters if anyone suggests you add capacity to an existing system. Changes to an existing system can affect which tariff you are on. Before modifying a system that is on a legacy tariff, confirm in writing with your utility what the modification does to your tariff status. That question has a real dollar answer and it is not always the one you expect.
The CPUC also describes a nine-year period tied to the export price schedule that applies when a customer first interconnects. The eligibility conditions on that are specific, so read them on the CPUC's page rather than in a summary, this one included.
What the tariff does not do
- It does not eliminate an electricity bill. The CPUC's consumer guide says to expect a reduced bill, not the absence of one.
- It does not make any particular system size correct for your house.
- It does not make batteries automatically worthwhile. It changes what determines whether they are, which is not the same claim.
- It does not set what an installer charges you. Equipment and installation pricing is a separate negotiation with its own leverage.
Before you sign anything in California
The state's own protections are listed in the California Solar Consumer Protection Guide: you must receive the Solar Energy System Disclosure Document before signing, you are entitled to the contract in the language the salesperson spoke to you, you have at least three business days to cancel (five if you are 65 or older), and savings calculations may not assume electricity rate increases above 10% as of 2025. Verify any contractor's license at the Contractors State License Board before signing. The guide names C-46, C-10 and B as the valid classifications.
On federal tax credits: the IRS states the residential clean energy credit "is not available for any property placed in service after December 31, 2025." That date has passed. Read the IRS page and speak to a qualified tax professional about your own position. Nothing here is tax advice.
Keep reading
- Fresno, PG&E, and the battery questionHow the tariff change reframes what storage is for.
- How we use public property and weather recordsHow public records inform a property report, and where their limits are.
- CPUC: Net Energy Metering and the Net Billing TariffThe primary source for everything on this page.