What is NEM 3.0 in California? Start with the bill

What the Net Billing Tariff actually is

The Net Billing Tariff (NBT) — what most people call NEM 3.0 — is the billing structure the California Public Utilities Commission adopted in Decision D.22-12-056 on December 15, 2022, as the successor to Net Energy Metering 2.0. As with NEM, your solar output first offsets the electricity you use in the home; only what’s left over gets exported to the grid. The difference from NEM 2.0 is in how that exported electricity is valued: instead of a credit close to your retail rate, it’s compensated at a rate meant to reflect what that power is actually worth to the grid at that hour.

Who’s on NEM 3.0, and who’s grandfathered

Your tariff depends on when you applied for interconnection, not when your system was installed or turned on. If you (or the home’s previous owner) submitted an interconnection application to PG&E, SCE or SDG&E on or after April 15, 2023, you’re on the Net Billing Tariff. Applications submitted before that date stayed on NEM 1.0 or NEM 2.0.

Legacy customers aren’t grandfathered forever. The CPUC states that NEM 2.0 customer-generators may remain on that tariff for 20 years from their interconnection date, under authority the commission traces to an earlier decision, D.14-03-041. PG&E states the same 20-year window for its original NEM 1.0 customers, counted the same way — from the date of interconnection, not the purchase date of the home or system. LADWP and SMUD aren’t part of this — they’re municipal utilities outside CPUC jurisdiction and set their own net metering rules. See the NEM 2.0 vs. NEM 3.0 comparison for how the two tariffs differ.

How export compensation works

There’s no single published cents-per-kWh number for NEM 3.0 exports, and this page won’t invent one. Instead, PG&E, SCE and SDG&E each calculate an hourly export credit using the CPUC’s Avoided Cost Calculator (ACC) — a model that estimates what a kilowatt-hour delivered to the grid at a given hour is worth over a 30-year horizon, built separately for each utility’s climate zones. The CPUC notes these credits are “usually lower than the retail rate” but “can rise above the retail rate on late summer evenings,” when grid demand peaks. In practice this means:

• PG&E issues an Energy Export Credit that “will vary by time of day, day of the week and season,” recalculated using the CPUC-approved ACC values, with published hourly/daily/monthly credit tables available for download for 2023–2026.
• SCE calculates its Energy Export Credit hourly, using the ACC “approved as of January 1 of the calculation year,” split into delivery (transmission, distribution, GHG adder) and generation components. Customers who enroll before January 1, 2028 get those prices locked for their first nine years on the plan.
• SDG&E builds its export credit from 8,760 hourly ACC values per climate zone, averaged across zones and split into a generation component (bundled customers only) and a delivery component (all customers), calculated separately for weekday and weekend/holiday hours each month.

For the current dollar figures — which change by plan vintage and update periodically — see your utility’s own export-pricing page rather than a fixed number here; the structure above is what won’t change month to month.

Your TOU rate (the import side)

All three investor-owned utilities require Net Billing Tariff customers to take electricity service on a time-of-use (TOU) rate, with the CPUC describing this as “high differential” pricing — lower off-peak prices, higher on-peak prices — so your bill reflects when you’re actually pulling from the grid, not just how much.

For current TOU rate periods and pricing by utility, see PG&E’s 2026 time-of-use rates, SCE’s 2026 time-of-use rates, and SDG&E’s 2026 time-of-use rates.

Which California utilities does this cover?

The CPUC’s overview applies to PG&E, SCE and SDG&E. It identifies April 15, 2023 as the start of net billing for new interconnection applications. Existing systems can have different enrollment rights; ask the utility before changing a system. LADWP and SMUD publish separate rules.

Three flows to see in the proposal

• Solar used at home: reduces electricity you otherwise buy at that time.
• Solar exported: receives the applicable export credit, usually below retail under net billing; value varies by time.
• Grid electricity imported: still appears on the bill alongside applicable charges.

An annual production total hides these flows. Ask for an hourly or interval-based comparison using your actual tariff and generation provider.

What changes when a battery is included?

Storage can move energy to a later hour, but the proposal must account for usable capacity, losses, reserve settings and installed price. Compare the remaining bill with and without storage. Ask separately about outage operation and backed-up circuits.

The annual true-up, briefly

Like NEM 2.0, the Net Billing Tariff settles annually. PG&E states any remaining credit balance is reset to zero at the start of your new 12-month cycle; SDG&E settles net exporters against import charges and pays any true annual surplus at Net Surplus Compensation rates, which are separate from and lower than the monthly export credit. What changed under NEM 3.0 is the size of that annual number, because the export side of the math now runs on ACC values instead of retail-rate credits. For how to read your own true-up statement and what the line items mean, see how the annual true-up is settled.

Why batteries matter under NEM 3.0

Because exported power is now worth less than the power you’d otherwise buy back in the evening, storing your solar and using it yourself during peak TOU hours — instead of exporting it for a lower credit — is the main lever NEM 3.0 gives homeowners to control their bill. Whether that pencils out, and by how much, depends on your utility’s export credit, your TOU rate spread, and your evening usage. For the utility-by-utility payback math, see battery payback under NEM 3.0.

If you sell your home or add panels

Selling the home: PG&E states its 20-year NEM legacy rules “are tied to the system, not the owner” — if the prior owner had used 15 of their 20 years, the new owner inherits the remaining five on the same tariff. SCE similarly states that “account changes, such as moving in or out of a residence with an NEM system or transferring the account to someone else’s name, do not affect the NEM eligibility period of the original system.” SDG&E’s Solar Billing Plan pages reviewed did not address this directly — confirm with SDG&E if you’re buying or selling a home with a legacy system there.

Adding panels: expanding a grandfathered NEM 1.0/2.0 system can move the whole account onto the Net Billing Tariff. PG&E moves accounts to the Solar Billing Plan at the next true-up date if the expansion is either more than 10% of the original system’s nameplate capacity or more than 1 kW — whichever threshold is reached first. SCE allows growth up to “the greater of 1 kW or 10 percent of the original system size” while staying on the legacy tariff, filed under a specific “NEM 1.0/2.0 Expansion” interconnection option — exceed that, or skip that filing, and the account moves to the Solar Billing Plan. Again, SDG&E’s own pages did not state an equivalent threshold in the pages checked.

NEM 3.0 timeline: the dates that shaped it, and the ones left

The date that decides your tariff is the interconnection application, not the installation or permission-to-operate date. The court record is in the NEM 3.0 lawsuit, explained, and the NEM 2.0 end dates in when NEM 2.0 expires. Sources: the CPUC net billing page, the CPUC’s December 15, 2022 announcement, the Court of Appeal opinion, PG&E and SCE, checked September 24, 2026.

Put the quotes on the same basis

A smaller monthly payment can hide a longer contract, less equipment or a larger remaining electric bill. Ask each bidder to fill the same gaps.

Follow the question you are trying to answer

• Compare the older and newer billing structures
• Review the net billing timeline
• Decide whether the quote fits your home
• Check bill and quote arithmetic