NEM 1.0 vs. NEM 2.0

On January 28, 2016, the California Public Utilities Commission (CPUC) approved new Net Metering rules, which defend how utility companies compensate customers with rooftop solar. The new rules were approved by the PUC with a 3-2 vote.

The new Net Metering tariff, known as NEM 2.0 (Net Energy Metering, version 2) was hailed largely as a victory for the Solar Energy Industry. The NEM 2.0 policies change how utilities will calculate charges and credits for solar customers, once the specific benchmarks are obtained. Importantly, accounts interconnected under NEM 2.0 will be grand-fathered on the NEM 2.0 rates for 20 years from the date of operation, and there is no maximum size of generating system that can be interconnected.


The NEM 2.0 decision applies only to the 3 California investor-owned utilities (known as IOU’s): SDG&E, PG&E, and SCE. NEM 2.0 takes effect when an IOU obtains 5% of it’s retail load or mid-2017, whichever comes first. SDG&E obtained their 5% on June 29, 2016 and PG&E obtained their 5% in April 2017.  Both have begun NEM 2.0 policies. SCE is expected to follow no later than June 30, 2017.

To track IOU progress toward 5% retail load trigger, click on the utility link below.


  1. No new NEM specific charges: NEM 2.0 largely follows NEM 1.0 structure.
  2. Additional Charges: No Demand, Fixed, or Stand-by Charges.
  3. Retail NEM: Retail NEM will remain in place as part of NEM 2.0.
  4. Grandfathering: NEM 2.0 Customers will have their accounts grandfathered on the new tariff for 20 years from the date their solar system is interconnected.
  5. Residential Time-of-Use (TOU) rates and fixed charges: Residential customers will be required to use TOU rates (when available). All solar customers must take service on a TOU rate schedule, so excess generation will be credited more during times of peak electricity system need (BUT current NEM customers will be able to stay on their current rate plans).
  6. Pass-Through Charges: All customers will have to pay approximately 2-3 cents per kWh of non-bypassable charges on energy they consume from the Grid.
  7. Interconnection Fees: Solar customers will be required to pay a one-time Interconnection Fee of $75 – $100.
  8. Future Changes?: The PUC will review NEM rules again in 2019. Any new changes will not impact those previous Solar Customers.


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