California Net Billing Tariff (NEM 3.0) vs Net Metering Reference

Why this matters

California's Net Billing Tariff (NBT, commonly called NEM 3.0) is the successor to NEM 2.0 and took effect for new interconnections submitted to the three large IOUs (PG&E, SCE, SDG&E) after 14 April 2023 under California Public Utilities Commission Decision 22-12-056. The shift collapsed export compensation from full-retail-credit to hourly Avoided Cost Calculator (ACC) values that average roughly 75 percent lower than retail. Solar designs that penciled out under NEM 2.0 do not pencil under NBT without storage. Contractors who quote NBT customers using NEM 2.0 payback math get charge-backs and BBB complaints. This reference is the working understanding of NBT mechanics, who is still under NEM 2.0, and the design changes that matter for sales and engineering.

Who is on which tariff

NEM 1.0 customers: interconnected before 1 July 2017. Stay on legacy terms for 20 years from PTO date.

NEM 2.0 customers: interconnected between 1 July 2017 and 14 April 2023. Stay on NEM 2.0 retail-credit netting for 20 years from PTO date.

NBT customers: any interconnection application submitted 15 April 2023 or later, OR any system modification that exceeds the legacy-grandfathering threshold (typically a system size increase of more than 10 percent or 1 kW DC). Adding a battery to a NEM 2.0 system using the right paperwork (Non-Export Storage Addendum or NEM Paired Storage rules) preserves NEM 2.0 status. Triggering a NEM 2.0 to NBT migration unintentionally on a system upgrade is a major source of customer complaints - read CPUC D.22-12-056 attachment carefully before scoping any work on a legacy NEM site.

NBT compensation mechanics

Under NBT, each kWh exported to the grid is credited at the Avoided Cost Calculator value for that specific hour. ACC values vary by:

• Climate zone (16 zones across the state)
• Hour of day (high-export midday hours are valued LOW because they coincide with the grid's solar oversupply)
• Day type (weekday/weekend)
• Month (summer evenings are valued HIGH because they coincide with the peak demand window)

Typical 2024 ACC midday export rate is roughly 5 to 8 cents per kWh while retail import rate ranges from 35 to 55 cents per kWh on time-of-use tariffs. The asymmetry is the entire policy mechanism - it incentivizes battery storage to shift solar export from midday into the peak window.

The CPUC published an additional Adder for the first nine years of operation for residential customers that interconnected in the first three years of NBT (the ACC Plus Adder). Confirm current Adder applicability with the CPUC Solar Customer Information Guide at the time of contract.

Required tariffs and forms

For a new residential install on PG&E NBT:

• Interconnection application via Pg&E's Your Projects Online portal
• Electrical Schematic (one-line) showing PV inverter, storage if any, BGW location, AC disconnect
• Site plan with main service panel location
• Single Line Diagram per CA Rule 21 Section H
• Letter of Authorization signed by the homeowner
• Customer-specific tariff election (NBT EV2-A, NBT E-ELEC, NBT TOU-D) submitted with the interconnection application

For SCE NBT, the process runs through SCE's GoGreen tool. SDG&E uses its Distributed Generation Interconnection portal. All three IOUs require a separate Permission to Operate (PTO) letter before the customer's billing changes - PTO can take 4 to 12 weeks depending on the IOU and queue depth.

Storage design implications

A well-designed NBT system uses storage to time-shift midday solar production from the low-value export window into the high-value evening window. Sizing rules of thumb that hold:

• Battery usable kWh should equal or exceed average daily peak-window load (typically 4 pm to 9 pm summer, varies by climate zone)
• Inverter export must be capable of supporting the peak-window discharge load AND simultaneously hold up backup loads during outages
• Whole-home backup configurations require careful sizing - a 13.5 kWh PW3 will not carry a whole-home with electric range and HVAC through a 14-hour outage; sales should not over-promise

For systems with no storage on NBT, payback periods stretch substantially compared to NEM 2.0. Disclose this honestly during the sales process. The CA Solar Consumer Protection Guide (CPUC-published) requires a written disclosure form be signed by the customer at contract.

CA Rule 21 fast track and Rule 21 study

Most residential PV with or without storage qualifies for Rule 21 Fast Track interconnection - automated review, no impact study, PTO within typical IOU service-level windows. Systems that exceed thresholds (typically 30 kW AC inverter capacity for residential, plus system-specific export limits) drop into the Supplemental Review or Detailed Study path which can add 6 to 18 months and substantial study fees.

Pre-screen the customer's address using the IOU's hosting capacity map (PG&E's ICA Map, SCE's DRPEP, SDG&E's Capacity Heat Map). Lots of distributed generation already on the customer's circuit means the new install will trigger Supplemental Review even at residential scale.

Customer-facing disclosures

The CPUC requires a Solar Consumer Protection Guide signed before contract. Specific NBT items the contractor must disclose in writing per CPUC General Order 156 and the Self-Generation Incentive Program rules where applicable:

• That export credits under NBT are based on time-varying ACC values, not retail rates
• That the system's projected first-year savings depend on the customer's TOU rate plan
• That storage may be required to achieve the savings shown in the proposal
• That the PTO process and timeline are managed by the utility, not the contractor
• That CALSSA (California Solar and Storage Association) maintains a complaint registry

Common field mistakes

Quoting payback math using NEM 2.0 export rates on an NBT site. The system will not pay back in the years quoted and the customer will pursue restitution.

Adding a battery to a NEM 2.0 site without filing the Paired Storage Addendum. This trips the customer off NEM 2.0 onto NBT, which is rarely reversible.

Mis-selecting the customer's TOU tariff in the proposal. Each IOU has multiple TOU-D / EV2-A / E-ELEC options with different peak windows; the wrong one in the savings model swings payback by 25 to 40 percent.

Forgetting to update the interconnection size after a design change. If the as-built array exceeds the permitted size, the utility can require a re-application with a fresh queue position.

References

• CPUC Decision 22-12-056 (Net Billing Tariff adoption)
• California Rule 21 (CPUC tariff for distributed generation interconnection)
• CPUC General Order 156 (Solar Consumer Protection)
• California Solar Consumer Protection Guide, current edition
• PG&E NBT Tariff Schedule (Schedule NEMBT)
• SCE NBT Tariff Schedule
• SDG&E NBT Tariff Schedule
• NEC 2023 Article 705 Interconnected Electric Power Production Sources
• IEEE 1547-2018 Standard for Interconnection of Distributed Energy Resources