Net Energy Metering 2-Update

On December 15, 2022 the California Public Utilities Commission (CPUC) approved new rules that will significantly reduce economic value for customers implementing new onsite solar projects in the service territories of PG&E, SoCal Edison, and SDG&E. 

The decision was controversial, dividing vocal critics and supporters on numerous issues including energy pricing, cost allocation, and promotion of clean energy. The issue at the center of the two-year-long proceeding has been the bill credit that solar customers receive when they send (or “export”) energy out to the grid. 

Under current rules, called “Net Energy Metering 2” or NEM 2, customers receive bill credits for exported power slightly below the retail electricity rates in place at the time of export. This provides significant economic value for solar customers, since almost all onsite solar customers export  energy and would like to receive “full” value for that exported power. 

Under new rules just adopted by the CPUC, commonly called NEM 3, bill credits for exported energy will be tied to a tool called the Avoided Cost Calculator, resulting in credits close to wholesale electricity rates, which of course are much lower than retail rates. 

In other words, solar projects covered by the current NEM 2 rules will have much better economics for customers than those covered by the new NEM 3 rules.

The decision created a “Sunset Period” giving customers the opportunity to secure 20 years of legacy treatment under NEM 2 rules. To secure legacy treatment for a potential project – to preserve the economic benefits of NEM 2 – a customer must submit these files to their local utility, either PG&E, SoCal Edison, or SDG&E, by no later than April 14, 2023: 

  • Interconnection application, free of deficiencies
  • Single-line diagram
  • Complete California Contractors State License Board Solar Energy System Disclosure Document (if applicable)
  • Signed California Solar Consumer Protection Guide (if applicable)
  • Oversizing attestation (if applicable)

To maintain legacy treatment, a project also must receive a building permit sign-off from the authority having jurisdiction within three years of the interconnection application submittal date. Anyone interested in securing legacy NEM 2 treatment for a project should submit the required documents as soon as possible, to have the best chance of meeting the due dates. 

If you have any questions or would like to schedule time to discuss this issue please contact us at

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