Net Energy Metering (NEM) is a billing mechanism that allows customers who generate their own electricity.

From rooftop solar to receive credits for electricity they generate. However, this system created a "cost shift" problem: because of the high credit they receive on their bills for their excess generation, solar customers don’t pay their fair share for use of the grid, so other customers end up paying what NEM customers avoid, and this creates an unfair cost burden on customers who don’t have solar including most low-income customers.

Net Energy Metering (NEM) allows rooftop solar customers to sell excess power back to the grid at full retail rates, which is much higher than the actual value of the electricity. This results in non-solar customers subsidizing solar customers by paying more to cover grid maintenance and other costs​.

In 2024, non-solar customers paid an estimated $8.5 billion in subsidies to support NEM customers. This cost continues to grow as electricity rates rise​.

The subsidies primarily benefit wealthier homeowners who can afford solar panels, while lower-income, renting, and minority communities bear the brunt of the cost through higher electricity rates​.

Yes, in 2022, the California Public Utilities Commission (CPUC) introduced the Net Billing Tariff (NBT) for new solar customers, reducing the excess payments they receive for exported electricity. However, legacy NEM customers still benefit from the old system for up to 20 years​.

Several proposals aim to reduce the cost shift, including:

1. Switching legacy NEM customers to the new NBT system after 10 years instead of 20, which could save $54.4 billion from 2026 to 2043​

2. Requiring new homeowners to adopt the NBT system when purchasing a home with an existing solar system, saving $2.5 billion​.

3. Reallocating the California Climate Credit from solar to non-solar customers, providing an estimated $1.1 billion in relief by 2030​.

No. Rooftop solar would still be incentivized, but subsidies would be more aligned with the actual value of the electricity produced. Solar customers would still save money by using their own energy​.

If the current system remains, the cost shift will continue growing, disproportionately impacting non-solar customers—especially lower-income households—by raising their energy bills significantly​.