California’s Solar Billing Plan

Start with the account, not the phrase NEM 3.0

The California Public Utilities Commission calls the current framework the Net Billing Tariff, or NBT. The three large investor-owned utilities generally call it the Solar Billing Plan. It applies to the renewable-generation systems that would previously have used standard net energy metering when the interconnection application falls under the new rules. CPUC guidance says applications submitted from April 15, 2023 generally take service on NBT in PG&E, SCE and SDG&E territory.

Homeowners often call this NEM 3.0, but that nickname can hide important account details. An older system may remain on NEM 1.0 or NEM 2.0. A municipal utility may use a different program. A community-choice aggregator may control the generation part of import and export pricing while the investor-owned utility continues delivery and billing. Before comparing proposals, identify the serving utility, generation provider, current rate schedule, solar tariff, interconnection date and annual settlement month from the actual account.

Onsite use and grid exports are two different transactions

Solar electricity used immediately inside the home serves the home’s load before an equivalent amount would be imported from the grid. That avoided import can be economically different from sending a surplus kilowatt-hour to the grid. Under NBT, the utility applies Energy Export Credits to eligible exported energy using values tied to the electricity’s value to the grid rather than simply matching the full retail import price.

The CPUC says those export values are usually below retail prices, although some late-summer evening periods can be worth more. This is why an annual production total is not enough to explain a projected bill. Two homes can produce the same annual solar kilowatt-hours but have different results if one uses more electricity while the array is producing and the other exports heavily at midday, then imports again during higher-priced evening hours.

Export credits change by hour, season and utility

NBT export values are time-sensitive. The CPUC’s avoided-cost framework can produce different values for each hour of the year. Utilities publish the applicable tables or files, and those values can differ by utility, calendar year, installation vintage and, in some cases, climate zone or generation provider. A proposal should identify the source and vintage of the export assumptions instead of using one universal cents-per-kWh figure.

SCE’s current homeowner explanation illustrates the pattern: export credits may be lower during solar-rich daytime hours and higher during summer evening demand. SDG&E publishes current and legacy export-pricing files and explains that its hourly values are aggregated by month, day type and hour. These examples are useful for understanding the mechanism, but they are not a quote for every address. Use the serving utility’s current files and the account’s own generation arrangement.

Required time-of-use rates make load timing visible

The CPUC identifies specific electrification time-of-use rates for residential NBT customers: E-ELEC for PG&E, TOU-D-PRIME for SCE and EV-TOU-5 for SDG&E. The rate names and terms can change, so the final utility tariff controls. These schedules are designed with lower prices outside peak periods and higher prices during higher-demand windows.

For an SCE Solar Billing Plan customer, SCE says TOU-D-PRIME prices are often highest on summer weekdays from 4 p.m. to 9 p.m. PG&E similarly directs Solar Billing Plan residential customers to its Electric Home rate and notes a base-services charge. SDG&E describes EV-TOU-5 and a base-services charge for Solar Billing Plan customers. A responsible estimate should model imports by time period and season, not multiply the home’s annual usage by one average rate.

A battery can shift energy, but it does not erase limits

A battery can store part of the home’s midday solar surplus for evening use. That may reduce higher-priced grid imports and can also allow exports during periods with higher credit values when the equipment, tariff and operating permissions allow it. The CPUC notes that batteries can help customers use or export stored energy during higher-value hours. The purpose should be stated clearly: bill management, outage backup or a balance of both.

Storage has usable-energy, power, efficiency, reserve and cycling limits. A backup reserve leaves less energy available for daily rate management. Cloudy weather, seasonal production and household loads change how much energy is available. The proposal should disclose assumed battery capacity, operating mode, reserve setting, round-trip losses and dispatch schedule. It should not present every solar surplus kilowatt-hour as if it can be moved without loss into the single most valuable hour.

Monthly bills and annual true-up still work together

NBT is not a promise of one annual bill. CPUC guidance says charges are due monthly, while unused eligible credits can roll forward until the annual true-up. PG&E describes monthly statements that include imports, exports, bonus credits when applicable, taxes and other charges, followed by an annual summary and credit reconciliation. SCE describes a yearly settlement that reviews grid use, exports and Energy Export Credits.

The exact bill presentation varies by utility and whether a community-choice provider supplies generation. Homeowners should examine at least one sample bill for the applicable utility and compare it with their first live statements after permission to operate. Keep track of energy imported from the grid, energy exported, export-credit dollars, base or fixed charges, non-bypassable charges and any annual adjustment. A solar monitoring app shows system production, but it does not replace the utility meter or tariff calculation.

Some charges remain even when annual production is high

A solar system can reduce grid purchases without eliminating every line on the bill. Utilities identify base-services or fixed charges, taxes and non-bypassable charges that may not be offset by export credits. SCE expressly says Energy Export Credits cannot cover certain taxes and fees, including its Base Services Charge. SDG&E says export credits cannot offset non-bypassable charges or its Base Services Charge. PG&E lists taxes, Base Services Charge and non-bypassable charges among monthly statement factors.

This distinction matters when a proposal uses phrases such as 100% offset or bill replacement. An annual production estimate equal to annual consumption does not mean every imported kilowatt-hour is offset dollar-for-dollar. Ask for a separate line showing estimated remaining utility charges. If the proposal displays only the solar or PPA payment, it is not yet a complete comparison with the existing utility bill.

Bonus credits have eligibility and timing rules

The CPUC describes an export-compensation adder for eligible residential PG&E and SCE customers whose NBT facilities apply to interconnect before the end of 2027. The higher credits generally apply for nine years. Customers required to install solar under California building rules are not eligible, and SDG&E customers are excluded from this adder under the CPUC’s decision. Utility materials may call this an Energy Export Bonus Credit or a similar name.

Do not treat the adder as a permanent statewide incentive or insert it into every savings model. Confirm the application date, utility, customer category and eligibility in writing. The utility’s final interconnection and billing records control. If a proposal depends materially on a bonus, ask for the modeled result both with and without that bonus so the homeowner can see the sensitivity.

Existing NEM systems need a separate review

A homeowner with an older solar system may be on a legacy NEM tariff with materially different export treatment. CPUC guidance says NEM 1.0 and NEM 2.0 customers receive export credits under their applicable retail-rate structures, while NBT uses avoided-cost-based values for exports before true-up. The relevant interconnection date, original customer status and tariff records matter.

An addition, replacement, repair, battery retrofit or ownership change can raise program questions. Do not assume that adding panels has the same administrative effect as adding storage, or that a new owner automatically receives every term held by the original customer. Ask the utility or qualified project team to confirm the proposed work’s tariff treatment before signing. Preserve copies of the original permission-to-operate notice, interconnection agreement, rate schedule and recent true-up statements.

Community-choice and municipal customers follow different paths

A community-choice aggregator, or CCA, may provide generation while PG&E, SCE or SDG&E handles delivery, metering and much of the bill. SDG&E, for example, tells San Diego Community Power and Clean Energy Alliance customers to consult the CCA for generation import and export pricing. Similar separation can occur elsewhere. A correct proposal should identify both entities and avoid treating a CCA account as identical to bundled utility service.

Municipal utilities such as Anaheim Public Utilities, LADWP, Riverside Public Utilities and SMUD do not use the large-IOU NBT merely because the address is in California. Their own tariffs, interconnection rules and settlement procedures apply. Verify the provider using the service address and current bill. A state-level Solar Billing Plan explanation is useful background, not a substitute for the serving utility’s current documents.

Read the forecast like an estimate, not a guarantee

A long-term solar comparison usually combines measured history with assumptions about future production, degradation, household use, utility prices, export values and battery behavior. Those inputs are not all equally certain. Separate current tariff facts from projections. A utility-rate escalation assumption is not an approved forecast, and a historical rate increase does not prove the same increase will continue.

Request a base case and at least one less favorable case. Useful sensitivity tests include lower solar production, higher evening consumption, fewer high-value exports, a larger backup reserve, slower utility-price growth and changed household loads. For a lease or PPA, compare the complete scheduled payment path and any escalator with estimated remaining utility charges. Written guarantees, if any, come from the signed agreement and should not be inferred from sales software.

A decision-ready proposal should show the energy flow

Ask for twelve months of interval or bill data when available, the planned system size, annual production estimate and monthly production profile. The model should distinguish solar used directly in the home, energy sent into the battery, battery discharge, grid imports and grid exports. It should state the utility, CCA if present, import rate, export-value source, tariff vintage, fixed charges and modeling date.

The proposal should also identify which values are measured, which are current published rates and which are assumptions. Confirm equipment models, battery configuration, operating reserve, degradation assumptions, roof and shade inputs, interconnection responsibility and the appropriately licensed installation contractor. A clean graphic is helpful only when the underlying numbers and sources can be reviewed.

Use a short verification checklist before signing

First, match the service address to the utility and generation provider. Second, identify the current tariff and whether the account is NEM 1.0, NEM 2.0, NBT or a municipal program. Third, compare twelve months of usage by season and time of day. Fourth, review modeled imports, exports, self-consumption and remaining charges. Fifth, test battery assumptions and backup reserve.

Finally, read the governing proposal, interconnection documents, financing agreement, lease or PPA rather than relying on verbal summaries. Confirm payment terms, escalation, production guarantees, service responsibilities, transfer and purchase provisions, cancellation rights and contractor identity. Solar Billing Plan economics are address- and behavior-specific. The best next step is not a universal savings percentage; it is a transparent model tied to the home’s actual bill and the current official tariff.

Apply this to your California home

Compare the matching solar PPA in California page, the Axia by Qcells pathway and Qcells equipment. Local permit and utility questions are covered in our Irvine, Anaheim and Orange County pages.