Net metering is a policy by many states in the United States designed to help the adoption of renewable energy. Net metering was pioneered in the United States as a way to allow solar and wind to provide electricity whenever available and allow use of that electricity whenever it was needed, beginning with utilities in Idaho in 1980, and in Arizona in 1981. In 1983, Minnesota passed the first state net metering law. As of March 2015, 44 states and Washington, D.C. have developed mandatory net metering rules for at least some utilities. However, although the states' rules are clear, few utilities actually compensate at full retail rates.
Net metering policies are determined by states, which have set policies varying on a number of key dimensions. The Energy Policy Act of 2005 required state electricity regulators to "consider" (but not necessarily implement) rules that mandate public electric utilities make net metering available to their customers upon request. Several legislative bills have been proposed to institute a federal standard limit on net metering. They range from H.R. 729, which sets a net metering cap at 2% of forecasted aggregate customer peak demand, to H.R. 1945, which has no aggregate cap, but does limit residential users to 10 kW, a low limit compared to many states, such as New Mexico, with an 80,000 kW limit, or states such as Arizona, Colorado, New Jersey, and Ohio, which limit as a percentage of load.
Policies by state Arizona, California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and West Virginia are considered the most favorable states for net metering, as they are the only states to receive an "A" rating from Freeing the Grid in 2015.
Regulators in multiple states are acting as "referees" in debates between utility companies and advocates of distributed resources, such as solar panel arrays. In 2016 the National Association of Regulatory Utility Commissioners (NARUC) published the Manual on Distributed Energy Resources Compensation as a way to help states decide on rate structures dealing with homes and businesses that generate their own power and send excess power back to the electric grid. The intention behind the manual is to "provide a consistent framework for evaluating rate design decisions in the age of distributed energy resources." The president of NARUC, when he commissioned the manual, said his instructions to the committee writing the manual were to write a "practical, expert and most importantly ideologically neutral guide that offers advice" to states. A draft of the manual was released in July, which generated more than 70 public comments from stakeholder groups. Those comments were reviewed, and the final version of the manual was designed. The updated manual covers various issues that state regulators have been struggling with including net metering, the value of solar energy, and cost shifting from DER to non-DER customers. DER is being integrated into the national grid at a rapid pace, and the system of electricity generation, delivery, and utilization are constantly changing with new technology.
The Edison Electric Institute and the Solar Energy Industries Association both supported the manual. However, the main point of contention between utility companies and the solar industry is the question of whether distributed generation systems represent cost shift from those with the systems (people with solar panels) to those without them (everyone else who uses electricity).
Phil Moeller of the Edison Electric Institute said, "We want to DER [distributed energy resources] but we want to make sure the rate structure is right to minimize cost shifts." Moeller is a former member of the Federal Energy Regulatory Commission (FERC), a federal government regulatory agency. Sean Gallaher of the Solar Energy Industries Association said, "There seems to be an assumption that revenue erosion from DER results in an inadequacy of cost recovery for the utility and therefore a shift of costs to non-participating customers. You can't just assume that."
State Subscriber limit(% of peak) Power limitRes/Com(kW) Monthlyrollover Annualcompensation Alabama no limit 100 yes, can be indefinitely varies Alaska 1.5 25 yes, indefinitely retail rate Arizona no limit 125% of load yes, avoided-cost at end of billing year avoided cost Arkansas no limit 25/300 yes, until end of billing year retail rate California 5 1,000 yes, can be indefinitely varies Colorado no limit 120% of load or 10/25* yes, indefinitely varies* Connecticut no limit 2,000 yes, avoided-cost at end of billing year retail rate Delaware 5 25/500 or 2,000* yes, but banked kWh expire yearly on 31 Mar. retail rate District of Columbia no limit 1,000 yes, indefinitely retail rate Florida no limit 2,000 yes, avoided-cost at end of billing year retail rate Georgia 0.2 10/100 no determined rate Hawaii none 50 or 100* yes, until end of billing year none Idaho 0.1 25 or 25/100* no retail rate or avoided-cost* Illinois 1 40 yes, until end of billing year retail rate Indiana 1 1000 yes, indefinitely retail rate Iowa no limit 500 yes, indefinitely retail rate Kansas 1 25/200 yes, until end of billing year retail rate Kentucky 1 30 yes, indefinitely avoided cost Louisiana no limit 25/300 yes, indefinitely avoided cost Maine no limit 100 or 660* yes, until end of billing year retail rate Maryland 1500 MW 2,000 yes, until end of billing year retail rate Massachusetts** 6 peak demand 4 private 5 public 60, 1,000 or 2,000 varies varies Michigan 0.75 150 yes, indefinitely partial retail rate Minnesota no limit 40 no retail rate Mississippi wholesale rate plus 2.5 cents per kwh standard, plus an additional 2.0 cents for low income customers Missouri 5 100 yes, until end of billing year avoided-cost Montana no limit 50 yes, until end of billing year lost Nebraska 1 25 yes, until end of billing year avoided-cost Nevada 3 1,000 yes, indefinitely retail rate New Hampshire 1 100/1,000 yes, indefinitely avoided-cost New Jersey no limit previous years consumption yes, avoided-cost at end of billing year retail rate New Mexico no limit 80,000 if under US$50 avoided-cost New York 1 or 0.3 (wind) 10 to 2,000 or peak load varies avoided-cost or retail rate North Carolina no limit 1000 yes, until summer billing season retail rate North Dakota no limit 100 no avoided-cost Ohio no limit no explicit limit yes, until end of billing year generation rate Oklahoma no limit 100 or 25,000/year no avoided-cost, but utility not required to purchase Oregon 0.5 or no limit* 10/25 or 25/2,000* yes, until end of billing year* varies Pennsylvania no limit 50/3,000 or 5,000 yes, until end of billing year. "price-to-compare" (generation and transmission cost) Rhode Island 2 1,650 for most, 2250 or 3500* optional slightly less than retail rate South Carolina 0.2 20/100 yes, until summer billing season time-of-rate use or less South Dakota Tennessee Texas*** no limit 20 or 25 no varies Utah varies* 25/2,000 or 10* varies - credits expire annually with the March billing* avoided-cost or retail rate* Vermont 15 250 yes, accumulated up to 12 months, rolling retail rate Virginia 1 10/500 yes, avoided-cost option at end of billing year retail rate Washington 4.0 percent of the utility's peak demand during 1996 100 yes, until end of billing year retail rate West Virginia 0.1 25 yes, up to twelve months retail rate Wisconsin no limit 20 no retail rate for renewables, avoided-cost for non-renewables Wyoming no limit 25 yes, avoided-cost at end of billing year retail rate
Note: Some additional minor variations not listed in this table may apply. N/A = Not available. Lost = Excess electricity credit or credit not claimed is granted to utility. Retail rate = Final sale price of electricity. Avoided-cost = "Wholesale" price of electricity (cost to the utility).* = Depending on utility.** = Massachusetts distinguishes policies for different "classes" of systems.*** = Only available to customers of Austin Energy, CPS Energy, or retail electric providers in Oncor service areas such as TXU Energy, Reliant Energy, Shell Energy, or Green Mountain Energy (Green Mountain Energy is not a utility but a retail electric provider; according to www.powertochoose.com). Successor tariffs and net billing
Beginning in the late 2010s, several states replaced traditional retail-rate net metering with successor tariffs that compensate electricity exported to the grid at a separately calculated rate, a structure often described as net billing.
California In December 2022, the California Public Utilities Commission (CPUC) adopted Decision D.22-12-056, creating a Net Billing Tariff, informally called "NEM 3.0" to succeed NEM 2.0 for new interconnection applicants effective April 15, 2023. Under the tariff, exported electricity is credited at values derived from the commission's Avoided Cost Calculator rather than at the retail rate, cutting average export compensation by about 75 percent, from roughly $0.30 per kWh to about $0.08 per kWh. The tariff applies in the service territories of the state's three large investor-owned utilities: Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric. Municipal utilities set their own customer-generation rules. Customers already enrolled in NEM 1.0 or NEM 2.0 remain on those tariffs for 20 years from their interconnection date.
The decision drew criticism from solar advocates. Bernadette Del Chiaro, executive director of the California Solar & Storage Association, said the decision "would really hurt" and warned it did not support a growing solar market. The CPUC said the tariff would still lead to an average payback of nine years for residential rooftop solar, based on an assumed installed cost of $3.30 per watt.
Characteristics of each state
Arizona
Arkansas In 2016, the Arkansas state legislature enacted Act 827, which directed the Arkansas Public Service Commission to review changes to the state's net metering system. In March 2017, regulators decided to "grandfather existing solar customers into retail net metering rates for the next 20 years." Another decision made by the commission would allow the original net metering rates to stay with the home if it is sold. According to Utility Dive, "There are relatively few solar customers in Arkansas, and advocates worry changes in the next part of the proceeding could slow the market's growth if regulators make too deep a cut to remuneration rates."
In Arkansas, early in 2017 state regulators voted to grandfather existing solar customers into the current retail net metering rate until 2037. The Arkansas Public Service Commission convened a working group to look at the costs and benefits of net metering; the working group was split along ideological lines and each of two subgroups submitted its own set of recommendations instead of having a unified position. The first subgroup, composed of conservation and advanced energy groups, wanted no changes to the state's net metering rates. The second subgroup, made up of public utilities, wanted to have an embedded cost service approach that would determine the costs and benefits associated with that metering. Entergy was a part of the second subgroup and said "the current net-metering policy that credits excess generation at the full retail rate must be changed for new net-metering customers."
That second group "argued that crediting net-metering customers for costs that are not avoided 'means that the electric utility does not recover its entire cost of providing service to each net-metering customer, net of quantifiable benefits.
California As of October 2018, net metering is up for debate again in California.