California's Net Billing Tariff (NEM 3.0): export values, the nine-year lock and battery math

Which tariff your home is on

The first question is not what net billing pays but whether it applies to you. The answer turns on a date and on who owns the account.

The NEM 2.0 tariff closed to new applicants after a sunset period. The CPUC's NEM Revisit page states that customers who submitted a NEM interconnection application by April 14, 2023 were not affected by the decision, and that the Net Billing Tariff applies to customers who submit an application on or after April 15, 2023. The decision defines a residential application date as the submission of an application free of major deficiencies, including a signed contract, a single-line diagram and the state's required solar disclosure and consumer protection documents. A system that missed that window by a day is a net billing system.

Existing NEM 1.0 and NEM 2.0 customers keep their legacy terms, within limits on additions that the grandfathering guide reads from the PG&E tariff. Decision 22-12-056 recites that the Commission, in Decision 16-01-044, set a legacy period of 20 years from a customer's interconnection date for NEM 2.0, and the 2022 decision left that period in place for current customers. When a legacy period ends, the customer moves to the successor tariff, and the decision excludes those transitioning customers from the ACC Plus adder described below.

Only the three investor-owned utilities regulated by the CPUC are covered. Customers of municipal utilities such as the Los Angeles Department of Water and Power or the Sacramento Municipal Utility District are governed by their own utility's rules, which this page does not cover. The state pages hub and DSIRE are the starting points for those.

How the export credit is set

Ordering Paragraph 1 of the decision lays out the mechanics in one dense paragraph. Retail export compensation rates are based on hourly Avoided Cost Calculator values averaged across the days of each month, with separate values for weekdays and for weekends and holidays. In practice that produces a grid of prices: one for each hour of the day, in each month, on two kinds of day. A kilowatt-hour exported at 1 p.m. on a spring weekday and one exported at 7 p.m. on a September weekday earn very different credits.

The decision's customer explanation, written for homeowners and attached as Appendix A, says the export value generally follows time-of-use periods: low credits during the cheaper periods, and higher credits in the most valuable evening hours. It adds a point that matters for every payback estimate: the export price will usually be lower than what you pay for a kilowatt-hour of electricity.

Then comes the lock. For customers who join during the tariff's first five years, which the decision calls the glide path, export credits come from a nine-year schedule of hourly values taken from the most recent Avoided Cost Calculator adopted as of January 1 of the year the customer interconnects. Appendix A translates that for homeowners: if you apply to connect before the end of 2027, the prices for your first nine years after interconnection are based on what was predicted before you installed, which gives you a measure of certainty for estimating savings. It also says you may opt out of the arrangement. After the nine years, or for anyone who opts out or applies after 2027, the explanation says export prices are set every two years and can rise or fall.

So a homeowner applying in 2026 is choosing, in effect, a fixed nine-year schedule of export values. That makes the export side of a 2026 California quote more predictable than it looks: the values are published, they do not reset annually, and your installer can model them hour by hour. What the lock does not fix is the import side. Retail rates, which decide what each self-consumed kilowatt-hour saves you, are not locked by this tariff.

Where to see the actual numbers

This page does not print hourly export values, because they are long tables that differ by utility, month, hour, day type and vintage year, and a single figure would mislead. Each utility publishes its net billing export rate tables on its solar or net billing pages, and the CPUC posts the Avoided Cost Calculator and its documentation. Ask your installer which vintage year their model used and to show the export credit by month in the production model; the production estimate guide explains how to read that model before trusting its totals.

The ACC Plus adder, by utility

To ease the shift away from retail-rate credits, the decision added a cents-per-kilowatt-hour adder on top of the export value, called ACC Plus, for customers who join during the five-year glide path. The adopted amounts, from the decision's table, are below. For a given customer, the adder stays constant for nine years from interconnection. For each new cohort of customers, the decision says the adder decreases by 20 percent of the first-year rate each year until it reaches zero.

Funding comes from all ratepayers through the public purpose program charge. The adder appears as its own line on the bill, can be applied to all charges, including non-bypassable charges, and any unused amount rolls forward to future bills. It is not available to customers moving onto net billing at the end of a NEM 1.0 or NEM 2.0 legacy period, to customers who bought a building with an existing system, or, per Appendix A, to customers required to add solar by the state building code, such as many new homes (how that required size is calculated is set out in the California new-home solar requirement guide).

Appendix A explains the SDG&E exclusion: its customers' systems were expected to generate more bill savings because of SDG&E's higher electric rates. For the adder, the decision defines low-income customers as households enrolled in CARE or FERA, resident-owners of single-family homes in disadvantaged communities, and residential customers in California Indian Country.

What is the adder worth? On a system that exports 4,500 kilowatt-hours a year, a Year 1 PG&E residential adder of 2.2 cents adds $99 a year, about $891 over nine years if exports hold steady. The same exports at SCE's 4.0 cents add $180 a year. Real money, but small beside the gap between retail and export values, which is why the adder rarely decides a project on its own. The decision's modeling appendix says the adders were calculated for solar-only customers to reach a nine-year simple payback on its stated assumptions, including 7,500 kilowatt-hours a year of usage and 4 percent annual rate escalation; that target is a modeling input, not a promise for your home.

How a net billing bill works month to month

Net billing changes the bill as much as the credit. The decision adopts no netting of consumption and production: every kilowatt-hour recorded flowing into the home is charged at the import rate, and every kilowatt-hour recorded flowing out is credited at the export rate. Credits can be used against import charges from any time-of-use period. Customers must pay incurred charges monthly, and accounts are trued up once a year. Appendix A puts it plainly: most net billing customers will still pay an electric bill in most months.

Several other rules from the decision shape that bill:

• Required rate plans. Residential net billing customers must take a highly differentiated time-of-use rate. The decision lists PG&E's E-ELEC, SDG&E's EV-TOU-5 and SCE's TOU-D-PRIME, or a critical peak or peak day pricing rate, and allows utilities to add eligible rates later. Appendix A describes import prices as highest between 4 p.m. and 9 p.m. For how those rate structures work, EnergyBS covers time-of-use rate strategy in depth.
• Non-bypassable charges. Four charges cannot be offset by export credits: the public purpose program charge, nuclear decommissioning charge, competition transition charge and the Wildfire Fund non-bypassable charge. The ACC Plus adder is the exception that can pay them.
• Fixed charges and minimum bills. Net billing customers remain subject to any minimum bill or fixed charge in their rate. These are set in rate cases, not in the solar tariff, so check the current rate schedule.
• CARE and FERA. The income-qualified discounts apply to what you buy but are not applied to the export compensation rate.
• Year-end surplus. If you export more than you import over 12 months, Appendix A says the surplus is paid at net surplus compensation of a few cents per kilowatt-hour.
• True-up date. A net billing customer may make a one-time request to change the annual true-up date; the true-up bill guide shows what that statement contains and how to set money aside for it.

The practical consequence: the bill becomes a monthly cash flow rather than an annual one. Summer credits still roll forward to winter, but non-bypassable and fixed charges arrive every month regardless, so a household budgeting for solar should expect a small monthly bill even in good months.

Self-consumption versus export: the arithmetic

Every kilowatt-hour your panels make goes one of two ways. Used in the home at the moment it is produced, it avoids an import at the retail rate. Sent to the grid, it earns the export credit. Under NEM 2.0 the two were worth roughly the same. Under net billing they are not, and the size of the gap is the whole story.

The table below runs one household through three system sizes at two average export values. Every input is stated. The household uses 7,500 kilowatt-hours a year, the usage the CPUC's own modeling appendix assumed for an illustrative inland residential customer. Production is 1,500 kilowatt-hours per kilowatt per year, inside this site's recorded California planning range of 1,350 to 1,600. Self-consumed solar is held at 3,000 kilowatt-hours a year for every size, a simplification that slightly flatters the larger systems. Each self-consumed kilowatt-hour is valued at 33.6 cents, the 2025 California average residential price from the U.S. Energy Information Administration recorded on this site; a time-of-use bill will value daytime hours differently. Export values of 5 and 8 cents are round illustrations, not Avoided Cost Calculator figures. Price is this site's $2.95 per watt comparison line, the U.S. Department of Energy's Q1 2025 residential benchmark (modeled market price for an 8 kW system, 2024 dollars), with no incentive subtracted.

Read down any column of three and the pattern holds: each added kilowatt raises the price by $2,950 but adds only exported energy, so payback lengthens. The marginal kilowatt makes 1,500 kilowatt-hours; at a 5-cent export value those earn $75 a year, a 39-year payback on that kilowatt alone, and at 8 cents $120 a year, about 25 years. The same kilowatt's output used in the home at 33.6 cents would earn about $504 a year, a 5.9-year payback. That is why net billing rewards sizing to daytime use rather than to annual use.

For contrast, the 4,500 exported kilowatt-hours of the 5 kW system would have been worth about $1,512 a year at a retail-equivalent 33.6 cents under one-for-one credit, against $225 at a 5-cent export value. That difference is roughly what separates a California payback quoted on NEM 2.0 assumptions from one built on the current tariff, and it is the first thing to check in any quote that seems too good. The payback method page shows how to apply an export haircut to your own numbers.

System size limits under net billing

The decision lets PG&E, SCE and SDG&E net billing customers size a system up to 150 percent of usage, with two conditions. Oversizing is measured against the past 12 months of usage, unless the customer has less than a year of history or attests to a recent increase, and a customer sizing above usage must attest to expecting usage to rise to match the system within 12 months of interconnection. Net surplus generation is paid at the net surplus compensation rate.

The legal ceiling is rarely the binding one. The arithmetic above usually argues for a smaller system than usage would allow, unless the household is about to add load such as an electric vehicle or heat pump that runs during solar hours. If a California quote proposes a system at or above annual usage, ask for the export share of production and the export value used for those kilowatt-hours, and compare the result with a smaller design. The panel sizing guide walks through sizing to usage, and the same logic applies here with a steeper penalty for overshoot.

When a battery changes the answer

Net billing was designed to push new systems toward storage. The CPUC's November 2022 fact sheet on its proposal said the tariff financially incentivizes customers to store daytime solar and export or use it in the evening, when the grid needs it most. For a homeowner, a battery's net billing job is simple to describe: take kilowatt-hours that would have been exported at a low daytime credit and use them in the evening instead, avoiding imports at the peak price.

The value of that shift per kilowatt-hour is the evening import price you avoid, minus the export credit you give up, minus round-trip losses. The table below works it with stated, illustrative inputs: a battery that moves 2,500 kilowatt-hours a year out of daytime export and delivers 2,250 of them to evening load after 10 percent losses, at an installed cost of $12,000. That price is a placeholder to replace with the battery line from your own quote; the battery decision guide covers how storage is priced and when it pays in general.

Two things decide whether those rows are good or bad news. The first is the battery's own life and warranty: a payback that runs past the warranty term carries replacement risk the table does not price. The second is incentives. The federal residential clean energy credit that once covered home batteries is not available for property placed in service after December 31, 2025, according to the IRS page for that credit, last reviewed July 4, 2026. California's Self-Generation Incentive Program still funds storage for some customers; this site's program records list the CPUC's Residential Solar and Storage Equity incentive for low-income customers, so check the incentives directory and the CPUC's SGIP page for current eligibility.

A battery can also exploit the export side, as Appendix A notes, by storing midday output and exporting in the most valuable evening hours. Whether exporting or self-using that stored energy pays more depends on the locked export values for your vintage and your rate's peak price; ask the installer to model both dispatch modes. Backup power during outages is a separate job with separate equipment requirements, covered in why grid-tied solar shuts off in an outage.

What happens to the lock if you sell

The decision attaches the nine-year legacy period to the person, not to the panels. Ordering Paragraph 1(i) says the legacy period is linked to the customer who originally caused the system to be installed. If that customer moves away within nine years of interconnection and another utility customer takes control of the system, by buying, leasing or paying a power purchase agreement for it, the new customer does not have a legacy period. The exception is a legal partner of the original customer, such as a spouse or domestic partner, who keeps the original interconnection date and nine-year term.

Separately, the ACC Plus adder is not available to customers who buy a building with an existing system. A buyer of a house with net billing solar should therefore assume the seller's locked export schedule and adder do not transfer, and should value the system on current export values. A seller who markets the system's savings should be careful not to quote figures that depended on their own locked terms. The payback-if-you-sell worksheet covers the owned-system side of a sale, and the leased-solar sale guide covers transfers when a leasing company owns the equipment.

The tariff's legal status in 2026

The net billing decision has been challenged at the Commission and in court. On June 29, 2023, the CPUC adopted Decision 23-06-056 denying applications for rehearing of D.22-12-056. Environmental and consumer groups then sought review in the Court of Appeal, which affirmed the decision in 2023. The California Supreme Court granted review and, in an opinion filed August 7, 2025 in Center for Biological Diversity v. Public Utilities Commission (S283614), held that the highly deferential standard the Court of Appeal had applied was no longer the right one, reversed that judgment and sent the case back for review under current law.

On remand, the First Appellate District filed a new published opinion on March 9, 2026 (A167721), and its disposition reads that the decision is affirmed. As of that opinion, the Net Billing Tariff stands. Any later petition or ruling would appear on the California courts' docket for the case, and tariff changes would come through new CPUC decisions or utility advice letters, so check both before relying on any summary, including this one.