Energy Expert: Net Energy Metering

Energy Expert: Net Energy Metering

MCE’s Energy Expert Series takes a deeper dive into more complex energy topics like the development of the “duck curve” and the nuts and bolts of net energy metering. Go behind the scenes with our Energy Expert series or read more in our Energy 101 series.

If you have solar panels on your home or business, chances are you’re familiar with net energy metering (NEM). NEM provides customers who generate their own electricity a method for accounting for any electricity sent back to the grid. When you have solar panels or other generation facilities on your property, it’s likely you’re sending energy back to the electric grid. NEM allows utilities to account for this power and add credits to your bills to help offset your energy usage at times when you aren’t generating your own power.

How does net energy metering work?

NEM is a careful accounting process made available to customers that produce their own electricity. Most often, this electricity is produced from solar panels, but it also applies to customers that use wind, biomass, or fuel cell technology to power their on-site electricity usage. NEM uses the meter tied to the electric grid to account for the electricity being produced and used on site.

Let’s use you, a typical solar customer, as an example. The solar panels on your home or business produce electricity during the day, with the most output occurring between 11 a.m. and 4 p.m. As an average homeowner, you consume fairly low electricity during those hours, meaning your panels produce more electricity than you’re using. This excess power is sent to the grid through your meter, and your utility keeps track of how much energy you sent back to the grid and at what times, so that you can be properly credited for the power generation.

In the evening, your solar panels no longer generate electricity. This means when you use electricity in your home, you pull power directly from the grid. Your utility uses your meter to track how much energy you’re consuming and at what times, so they can properly bill you for this electricity consumption. Net energy metering enables you to balance these charges and credits, reducing your overall electricity bill.

How does NEM billing work?

NEM billing is more complicated than a typical energy bill because you’re tracking charges and credits for an account. If you receive electric generation service through PG&E, your NEM bill functions slightly differently than if you receive service through MCE. View a complete breakdown of an average NEM bill and learn more about the differences between MCE and PG&E’s NEM offerings on our website.

True-up with PG&E

PG&E customers pay their energy bill on an annual basis. Each month, you pay a minimum delivery charge, and credits or charges are banked on the summary of NEM charges table. You aren’t asked to pay for anything other than the minimum delivery charge until your annual “true-up,” when all credits and charges are balanced, and then you’re assessed a total fee. Some customers may receive a low annual bill, or even no bill, because of their solar credits. Other customers may have to pay a large bill. How much you pay depends on how much energy your solar panels produced over the year and how much electricity you pulled from the grid. If your solar system is undersized for your consumption habits, you likely owe on your true-up.

Your true-up occurs on the anniversary of the date when your solar panels were activated with PG&E.

True-up with MCE

MCE doesn’t conduct an annual true-up. When you enroll in MCE’s service, PG&E automatically performs a true-up. You are asked to pay what you owe at that time and your billing cycle starts again. Moving forward, you still receive a smaller annual true-up with PG&E on just the delivery side of your bill, but MCE credits or charges your account on a monthly basis, based on your electricity usage.

For example, if your solar system is sized appropriately for your usage, you probably over generate electricity during the summer months. MCE applies credits to your account for any energy that you send back to the grid during those months. In the winter, your panels probably underproduce, and you must pull electricity from the grid. MCE charges you for power in the month that you use it. However, because you have credits banked from the summer months when you overproduced, these credits are applied to your winter bills before you’re asked to pay MCE.

MCE’s monthly billing system often results in a lower bill when PG&E issues its annual true-up.

How do NEM credits work?

The energy meter installed at your home tracks not only how much electricity is being generated by your panels and sent to the grid but also how much net power you’re consuming. Every customer is on an electric rate schedule that details what you’re being charged for your electricity consumption. Currently, customers can choose between several time-of-use rates that have different pricing schedules. MCE offers a selection of rates for residential and commercial customers that mimic PG&E’s rate offerings. Customers must contact PG&E to change their rate schedule.

You’re credited for your excess solar generation based on the retail value of the electricity at the time it’s being produced, as determined by your rate schedule. Most solar customers are on a time-of-use rate that charges $0.071 per kilowatt-hour ($0.082 during summer months) for electricity used during the hours outside 4-9 p.m., when most of your solar production occurs. You’re credited at $0.071 for each kilowatt-hour that you send back to the energy grid. Your distribution services are credited the same way.

If you’re a net producer customer (meaning that over the course of the year your panels produce more electricity than your entire yearly consumption), you receive compensation for your surplus generation. For example, if you produced 1,000 kilowatt-hours more than you used over the year, you’re eligible to receive a cash-out check or an on-bill credit. MCE and PG&E credit surplus generation slightly differently.

Surplus Generation with PG&E

PG&E credits your surplus generation at the wholesale rate, which is generally around $0.03 per kilowatt-hour. For 1,000 kilowatt-hours, you receive about $30 in credit. You’re eligible to request payment at the time of your true-up as either a bill credit or a check.

Surplus Generation with MCE

MCE credits your surplus generation at twice the wholesale rate, which is generally around $0.06 per kilowatt-hour. For 1,000 kilowatt-hours, you receive about $60 in credit. MCE accounts for surplus generation each year in the spring and automatically distributes checks to customers for their surplus credit. Customers with at least $50 in credits are eligible to receive a check and are compensated for up to $5,000 in surplus credits. If you have less than $50 in credit, the credit is automatically applied to future bills as an on-bill retail credit. No action is needed to receive compensation from MCE for surplus generation.

How do I enroll in NEM?

When you install solar panels or another type of generation on your home or business, you must complete an interconnection agreement with PG&E. PG&E automatically enrolls you in NEM and informs MCE so that we can properly track and account for your generation services.

If you’re interested in learning more about how solar power works, check out our most recent Energy 101 blog. You can also find additional information about MCE’s solar and net energy metering program on our website at

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