Virtual Net Metering in California: How VNEM, the Virtual Net Billing Tariff and Meter Aggregation Work

Virtual net metering lets one solar system on a multi-tenant property send bill credits to several meters, split by an allocation the owner files with the utility. In PG&E, SCE and SDG&E territory, new projects since February 15, 2024 use the Virtual Net Billing Tariff, which values exported energy at hourly avoided-cost rates. Projects already on the older VNEM tariff keep its terms until their legacy period ends.

This guide explains virtual net metering and meter aggregation, what the CPUC’s 2022 and 2023 decisions changed, how credits are split between meters, what AB 2175 does, and how apartment buildings and Los Angeles differ.

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What virtual net metering is

The CPUC describes virtual net energy metering and its successor, the Virtual Net Billing Tariff, as the way property owners share the benefits of an on-site renewable generator with their tenants. The utility applies bill credits for the system’s energy to the tenants’ and common areas’ individual monthly bills, based on a pre-arranged allocation agreement. No master meter or rewiring of tenant meters is needed.

The idea started with affordable housing. The CPUC’s 2023 decision traces it to AB 2723 of 2006 and the Multifamily Affordable Solar Housing program, which used virtual net metering because it moves the benefit of a building owner’s solar to tenants without master-metering hardware.

Virtual net metering versus meter aggregation

The two are often confused. In its 2022 net billing decision the CPUC kept them as separate subtariffs, agreeing they serve different purposes: virtual net metering mainly for multi-tenant properties, and net energy metering aggregation, or NEMA, mainly for agricultural customers.

• Virtual net metering shares one system among different customers at one property, such as an apartment building’s tenants and its common areas, or the tenants of an office building.
• Aggregation serves one customer with several meters. Public Utilities Code Section 2827 lets that customer aggregate the load of meters on the property with the generator and on adjacent or contiguous property the customer solely owns, leases or rents. Parcels split by a street, highway or public thoroughfare count as contiguous if they are otherwise contiguous and under the same ownership. The generator must total 1 MW or less, and the customer pays the utility’s service charges for the extra billing.

The 2022 decision also narrowed aggregation for new applicants after NEM 2.0 closed: it limited NEMA to customers who already had two or more meters on the date of the decision, and cut the legacy period for new VNEM and NEMA customers from 20 years to nine.

The Virtual Net Billing Tariff: what changed in 2024

In Decision 23-11-068 of November 16, 2023, the CPUC replaced virtual net metering for new customers with the Virtual Net Billing Tariff and gave the old tariff a 90-day sunset. The CPUC’s VNEM page says that as of February 15, 2024, all new applicants take service on the Virtual Net Billing Tariff unless they qualify for the SOMAH or MASH tariffs. The key rules:

• Credits split by allocation form. Bill credits go to benefiting accounts in the proportions on the credit allocation form, apply to import charges from any time period in the monthly bill, and carry forward within the year. Each account is trued up annually.
• Residential tenants net in 15-minute intervals. A residential tenant’s share of generation first reduces that tenant’s own grid use, and only the net surplus earns export credit. The utilities must give residential benefiting accounts their 15-minute data. Nonresidential accounts get no netting; their share arrives as a dollar credit.
• Exports valued like NEM 3.0. Export credits use hourly Avoided Cost Calculator values, averaged across the days of each month and split between weekdays and weekends or holidays. Projects enrolling in the first five years lock a nine-year schedule of those values.
• Monthly bills. Customers pay all charges monthly and remain subject to minimum bills, fixed charges and four non-bypassable charges: public purpose programs, nuclear decommissioning, competition transition and the Wildfire Fund charge.
• A nine-year term tied to the system. A new owner of the generator continues the original legacy period, and so does a new tenant.
• Storage is welcome. Adding a battery does not change the system’s tariff status or legacy period, and the system with storage may run in isolation to serve on-site loads during planned or emergency outages.

The export adder for residential tenants

As in single-family net billing, the CPUC gave residential benefiting accounts a fixed adder on each exported kWh for the first five years of the tariff. Nonresidential accounts get none. Each tenant keeps the enrolled amount for nine years, and the adder for new enrollees drops by 20 percent of its starting value each year until it reaches zero. All ratepayers fund it through the public purpose program charge.

That table is the main difference between utilities for multifamily projects. The decision says SDG&E tenants already reach a nine-year payback because of SDG&E’s higher retail rates, so they get no adder. The single-family version of the same rules is explained in net billing vs net metering.

Aggregation net billing: the successor to NEMA

The same decision replaced NEMA for new customers with an aggregation net billing subtariff. Like NEMA, it spreads one system’s credits across the bills of a customer’s contiguous properties, but credits are now in dollars and valued by the hour of export. There is no netting of consumption, net surplus is paid and trued up once a year, and customers pay monthly. Residential customers get the same starting adders as virtual net billing, $0.022 or $0.090 per kWh with PG&E and $0.040 or $0.093 with SCE, stepping down 20 percent a year from their 2024 level; nonresidential customers and all SDG&E customers get none.

The nine-year legacy period is tied to the generator’s owner. If the owner changes, the new owner has no legacy period, unless the new owner is a spouse or domestic partner of the original owner or, for a business, an entity still majority-controlled by the same people. In SDG&E territory, the utility says NEMA closed to new applications after February 14, 2024, with new applicants moving to Solar Billing Plan Aggregation.

AB 2175: logistics and manufacturing businesses

AB 2175 was signed on July 16, 2026 and chaptered as Chapter 94, Statutes of 2026. The Legislative Counsel’s Digest describes one change to the aggregation rules in Public Utilities Code Section 2827: the CPUC must ensure that logistics businesses and manufacturing businesses are eligible customer-generators for aggregating multiple meters, if the CPUC extends the program.

It is conditional. The bill does not create a new tariff, and it applies only if the CPUC extends aggregation. A warehouse or plant owner with several meters should watch for the CPUC’s implementing decision before counting on it. Project pricing starts from commercial solar cost per watt in California.

Apartment buildings: SOMAH, MASH and the 51 percent rule

For affordable housing, the older tariffs remain. The 2023 decision kept the Multifamily Affordable Solar Housing and Solar on Multifamily Affordable Housing tariffs open, unchanged, until their statutory sunset. It also fixed three practical problems in those and the legacy VNEM tariff: the utility now adds a new tenant automatically when tenancy changes, vacant units may have a zero percent allocation, and adding a battery does not affect the system’s tariff status.

Owners using the state’s SGIP equity incentive for a multifamily project face one more condition. The 2026 SGIP Handbook requires at least 51 percent of the solar system’s output to offset tenant load and reach tenants as virtual net metering bill credits. The incentive’s current status is on the SGIP battery rebate status page.

Los Angeles: LADWP’s own VNEM pilot

City utilities are outside the CPUC’s tariffs. LADWP runs its own Virtual Net Energy Metering pilot for multifamily sites, and it works differently: the property owner sells the solar output to LADWP, at 14.5 cents per kWh for projects of 10 to 500 kW and 14.0 cents for projects above 500 kW up to 3 MW, and at least 40 percent of the proceeds go to on-site tenants. The pilot has 5 MW in total, and LADWP listed 4.14 MW still available as of January 5, 2026. Single-home rules in Los Angeles are covered in LADWP net metering.

Before you design a multi-meter project

1. Decide which arrangement fits: virtual net billing for tenants of one property, aggregation for one customer’s own meters on contiguous parcels.
2. Confirm the date your project will apply. It decides the tariff, the adder step and the nine-year schedule of export values.
3. Draft the credit allocation with tenant turnover and vacant units in mind.
4. Ask for 15-minute interval data for the benefiting accounts; residential tenants are netted in those intervals.
5. Price storage alongside solar. Evening exports are worth more than midday exports under avoided-cost values, and a battery does not reset the legacy period.