Net Metering (California)

From Open Energy Information

Last modified on February 12, 2015.

Rules Regulations Policies Program

Place California
Name Net Metering
Incentive Type Net Metering
Applicable Sector Agricultural, Commercial, Fed. Government, General Public/Consumer, Industrial, Local Government, Low-Income Residential, Multi-Family Residential, Nonprofit, Residential, Schools, State Government
Eligible Technologies Anaerobic Digestion, Biomass, Fuel Cells, Fuel Cells using Renewable Fuels, Geothermal Electric, Hydroelectric, Landfill Gas, Municipal Solid Waste, Ocean Thermal, Photovoltaics, Solar Thermal Electric, Tidal Energy, Wave Energy, Wind, Biogas from manure methane production or as a byproduct of the anaerobic digestion of biosolids and animal waste
Active Incentive Yes
Implementing Sector State/Territory
Energy Category Renewable Energy Incentive Programs
Aggregate Capacity Limit 5% of utility's peak demand (statewide limit 500 MW for fuel cells)
Applicable Utilities All utilities except LADWP

Meter Aggregation Virtual net metering allowed for multi-tenant properties.

Meter aggregation allowed for local governments if all participating accounts receive a time-of-use rate.
Pending determination from the CPUC and ratemaking authorities of other utilities, meter aggregation may be allowed for all customers with multiple meters on parcels of land contiguous to the location of the renewable energy system. See below for more explanation.

Net Excess Generation Credited to customer's next bill at retail rate. After 12-month cycle, customer may opt to roll over credit indefinitely or to receive payment for credit at a rate equal to the 12-month average spot market price for the hours of 7 am to 5 pm for the year in which the surplus power was generated. (If customer makes no affirmative decision, credit is granted to utility with no compensation for customer.)

REC Ownership Customer owns RECs. If customer receives payment for net excess generation at the end of a 12-month cycle, utility owns RECs associated with those electricity credits.

System Capacity Limit 1 MW

5 MW for systems operating under the bill credit transfer program authorized by Public Utilities Code 2830. System must be owned by, operated by, or on property under the control of, a local government or university.

Date added to DSIRE 2000-01-01
Last DSIRE Review 2013-10-09
Last Substantive Modification
to Summary by DSIRE

References DSIRE[1]


California's net-metering law originally took effect in 1996 and applies to all utilities with one exception*. The law has been amended numerous times since its enactment, most recently by AB 327 of 2013.

Eligible Technologies
The original law applied to wind-energy systems, solar-electric systems and hybrid (wind/solar) systems. In September 2002, legislation (AB 2228) allowed biogas-electric facilities up to 1 megawatt (MW) to net meter until December 31, 2005, under a pilot program. This pilot program was extended until December 31, 2009, upon the enactment of AB 728 in September 2005. SB 489 did away with the pilot program, and instead allowed for biomass and all other RPS-eligible technologies to participate in net metering under the same terms available for solar and wind.

Other legislation enacted in October 2003 (AB 1214) made fuel cells eligible for net metering until the cumulative rated generating capacity of net-metered fuel cells reaches 112.5 MW statewide. AB 2165 increased the statewide maximum to 500 MW, and requires each utility to provide net metering for eligible fuel cells until it reaches its proportionate share of the 500 MW cap. Previously restricted to fuel cells that begin operation prior to January 1, 2014, AB 2165 of 2012 extended the eligibility deadline to January 1, 2015, and AB 327 of 2013 further extended the deadline to January 1, 2017.

Aggregate Capacity Limit
Legislation enacted in 2006 (SB 1) increased the aggregate limit of net-metered systems in a utility's service territory from 0.5% to 2.5% of the utility's aggregate customer peak demand. AB 510 of 2010 further raised the aggregate limit to 5%. In practice, all three investor-owned utilities have interpreted "aggregate customer peak demand" differently, and are using different methodologies to calculate their net metering caps. The CPUC approved a proposed decision in May 2012 to more clearly define "aggregate customer peak demand" for all utilities. The decision defines aggregate customer peak demand as the sum of the non-coincident peak demands of all utility customers. Previously, the utilities had used the largest instantaneous peak demand as their reference point. This methodology was later codified by the Legislature with AB 327 of 2013. Alll utilities, even those not regulated by the CPUC must use the methodology explained above to calculate their aggregate capacity limit. The rule for the investor-owned utilities is a bit more nuanced as explained below.

AB 327 of 2013 specifies that "large electrical corporations" with more than 100,000 service connections must offer net metering until it reaches its net metering program limit or July 1, 2017, whichever comes first. For additional clarity, the legislation assigns a specific net metering program limit for each of the three large electrical corporations, as shown below. Beginnning July 1, 2017, or when the utiility reaches its net metering program limit, the utility must offer a standard contract or tariff, as described below.

Net metering program limits:

  • San Diego Gas and Electric: 607 MW of nameplate generating capacity
  • Southern California Edison: 2,240 MW of nameplate generating capacity
  • Pacific Gas and Electric: 2,409 MW of nameplate generating capacity

Net Excess Generation
Net excess generation (NEG) is carried forward to a customer's next bill. Under prior law, any NEG remaining at the end of each 12-month period was granted to the customer's utility. AB 920 of 2009 gave customers who are net metering solar and wind systems two additional options for the NEG remaining after a 12 month period. Customers have the option of rolling over any remaining NEG from month-to-month indefinitely, or they can receive financial compensation from their utility for the remaining NEG. The CPUC set the compensation rate at the 12-month average spot market price for the hours of 7 am to 5 pm for the year in which the surplus power was generated. Click here to read more about annual net surplus compensation. The rate making authorities of municipal utilities must develop their own compensation method for the remaining NEG through a public proceeding.

Renewable Energy Credits
The renewable energy credits (RECs) associated with the electricity produced and used on-site remain with the customer-generator. If, however, the customer chooses to receive financial compensation for the NEG remaining after a 12 month period, the utility will be granted the RECs associated with just that surplus they purchase.

Virtual Metering Options
AB 2466 of 2008 allows a local government, if certain conditions are met, to distribute bill credits from a renewable energy system across more than one meter. To be eligible for this billing arrangement all electrical accounts involved must receive electricity under a time-of-use tariff, and all accounts must be owned by the same entity. Click here to learn more about the bill credit transfer program for local government.

California also allows virtual net metering for certain utility customers. Originally authorized just for customers participating in the Multifamily Affordable Solar Housing (MASH) program, the CPUC voted in July 2011 in favor of a proposed decision which extends virtual net metering to all multi-tenant properties and to all distributed generation technologies. Virtual net metering allows the bill credits associated with the electricity produced by the system to be distributed across all the tenants' electricity bills. Click here to read more about virtual net metering.

Meter Aggregation
SB 594 of 2012 allowed for the possibility of meter aggregation under net metering pending a favorable determination by the CPUC and the ratemaking authorities of publicly-owned utilities. A single customer with multiple meters on contiguous property may elect to aggregate the electrical load of their meters and apply the generation credits of a renewable energy system also located on contiguous property to all of the meters. Before this meter aggregation is allowed, however, the CPUC must determine that meter aggregation will not increase the expected revenue obligations of other customers not participating in net metering. The bill requires the CPUC to make this determination by September 30, 2013. Similarly, the ratemaking authorities of publicly-owned utilities must make a favorable determination regarding the rate impact on its non-net metered customers before allowing meter aggregation. A publicly-owned utility must make this determination with 180 days of receiving the first request from a customer to aggregate their meters. If meter aggregation is allowed, participating customers will be ineligible to receive compensation for any net surplus generation remaining after a 12 month period as described above.

Restriction on Additional Fees
California does not allow any new or additional demand charges, standby charges, customer charges, minimum monthly charges, interconnection charges, or other charges that would increase an eligible customer-generator's costs beyond those of other customers in the rate class to which the eligible customer-generator would otherwise be assigned. The CPUC has explicitly ruled that technologies eligible for net metering (up to 1 MW) are exempt from interconnection application fees, as well as from initial and supplemental interconnection review fees.

Publicly owned utilities may elect to provide co-energy metering, which is the same as net-metering, but incorporates a time-of-use rate schedule. Customer-generators with systems sized between 10 kW and 1 MW who are subject to time-of-use rates are entitled to deliver electricity back to the system for the same time-of-use (including real-time) price that they pay for power purchases. However, time-of-use customers who choose to co-energy meter must pay for the metering equipment capable of making such measurements. Customer-generators retain ownership of all renewable-energy credits (RECs) associated with the generation of electricity they use on site.

Standard Contracts or Tariffs (Future)
AB 327 of 2013 tasks the CPUC with designing a standard contract or tariff to be used by eligible customer-generators in the service territory of one of the investor-owned utilities once net metering is no longer available. According to the law, as described above, the investor-owned utilities must make net metering available until that utility reaches its net metering program capacity limit or July 1, 2017, whichever comes first. At that point, the utility must make available to new customer-generators the standard contract or tariff developed by the CPUC. The CPUC has broad authority to develop this standard contract or tariff, but AB 327 provides some general parameters regarding costs and benefits to customer-generators and the electrical system. The bill also allows for a period of transition, the length of which will be determined by the CPUC, during which time existing net metering customers can continue to net meter under the old rules.

Additional Resources:

* Publicly-owned electric utilities with more than 750,000 customers which also provide water are exempt from offering net metering. Los Angeles Department of Water and Power (LADWP) is the only utility that falls in this category.

Incentive Contact

Contact Name Ehren Seybert
Department California Public Utilities Commission
Address 505 Van Ness Ave.
Place San Francisco, California
Zip/Postal Code 94102
Phone (415) 703-5991

Contact Name Gabe Petlin (Virtual Net Metering)
Department California Public Utilities Commission
Address 505 Van Ness Avenue
Place San Francisco, California
Zip/Postal Code 94102
Phone (415) 703-1677


Authorities (Please contact the if there are any file problems.)

Authority 1: Cal Pub Util Code § 2827, et seq.
Date Effective 1996-01-01
Date Enacted 1995 (subsequently amended)

Authority 2: CA Public Utilities Code § 2830
Date Enacted 2008-09-28

Authority 3: AB 327
Date Enacted 2013-10-07

  • Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.[1]


  1. 1.0 1.1  "Database of State Incentives for Renewables and Efficiency (DSIRE)"