California Utility Guide

Net Billing Tariff (NEM 3) & Time-of-Use Rates

April 6, 2026

Top Takeaways

1. Time-of-Use rates are required (4-9 pm on-peak)
2. Export credits are given for solar sent to the grid
3. Pairing solar with battery storage can maximize utility savings

Net Billing Tariff (NEM 3)

California's Net Billing Tariff, also called NEM 3 and the Solar Billing Plan, is applicable in Investor Owned Utilities PG&E, SCE, and SDGE. Many municipal utilities have also adopted export credits, however, a few have not including LADWP which continues to provide net metering.

Time-of-Use Charges
Time-of-Use (TOU) rates are required when installing solar under NEM 3. With TOU, utility charges are higher during on-peak hours, and lower during off-peak hours. On-Peak time periods are 4-9pm, everyday, in the NEM 3 eligible TOU rates.

Export Credits
There is no 1-to-1 net metering in most utilities in California when excess solar is sent to the grid. Instead, export credits are provided for all solar production not stored in a battery or immediately consumed in the home. The NEM 3 export credit value changes every hour of the day, and is almost always lower than the retail rate the utility charges except for a few 'power hours' in the evenings of August and September. Uniquely with NEM 3, the majority of the solar savings value comes from consuming and storing solar inside the home.

To maximize savings, homeowners are encouraged to shift electricity usage away from on-peak time periods and pair solar systems with battery storage allowing you to import less energy from the grid.

San Diego Gas & Electric states it best:

Pacific Gas & Electric "PG&E"

PG&E NEM 3 customers are placed on the Electric Home rate plan, E-ELEC.

E-ELEC price per kWh rates for grid usage in effect as of March 1, 2026.

Average Rates: The average hourly export credit in 2025-2026 is estimated at 3-6 cents per kWh. With the average retail rate under E-ELEC over 40 cents per kWh, it's clear why the goal is to use solar in the home (or store it for later) rather than receiving a low export credit.

Solar savings will be a blend of the retail rates and export credits for each kilowatt-hour (kWh) of solar energy produced. With storage and shifting usage away from on-peak consumption, the blended average savings per kWh will be higher.

There's a monthly basic service charge of $24 per month, which may not be reduced by solar export credits. PG&E adopted a $24 fixed charge for all customers with or without solar on March 1, 2026.

Tips in PG&E

• In the Summer, try to reduce grid consumption during 4-9pm peak hours.
• Charging an Electric Vehicle in the morning is recommended while your solar system is producing, and it's still off-peak pricing.
• Pre-cooling your home in the afternoon, and turn it off at 4pm.

Learn more from PG&E about the Solar Billing Plan including a sample bill.

Southern California Edison "SCE"

SCE NEM 3 customers are placed on rate plan TOU-D-PRIME

Summer Rates (June - September)

Winter Rates (October - May)

TOU-D-PRIME price per kWh rates for grid usage in effect as of January 1, 2026.

Average Rates: The average hourly export credit in 2025-2026 is estimated at 4-7 cents per kWh. With the average retail rate under TOU-D-PRIME over 34 cents per kWh, it's clear why the goal is to use solar in the home (or store it for later) rather than receiving a low credit.

There's a monthly basic service charge of $24 per month, which may not be reduced by solar export credits. SCE adopted a $24 fixed charge for all customers with or without solar on November 15, 2025.

Tips in SCE

• Reduce consumption during 4-9pm peak hours everyday, year round.
• Pre-cooling your home in the afternoon and turn it off at 4pm.

Learn more from SCE on the Solar Billing Plan and a solar bill guide.

San Diego Gas & Electric "SDGE"

SDGE NEM 3 customers are placed on the EV-TOU-5. Yes, even if you do not have an electric vehicle, solar customers are placed on the EV-TOU-5 rate.

EV-TOU-5 price per kWh rates for grid usage in effect as of April 1, 2026.

*10am-2pm in March & April weekdays are also Super Off-Peak

Average Rates: The average hourly export credit in 2025-2026 is estimated at just 3 cents per kWh. With the average retail rate under EV-TOU-5 over 40 cents per kWh, it's clear why the goal is to use solar in the home (or store it for later) rather than receiving a low credit.

There's a monthly basic service charge of $24 per month, which may not be reduced by solar export credits. SDGE adopted a $24 fixed charge for all customers with or without solar on October 1, 2025.

Tips in SDGE

• In SDGE, On-Peak rates are especially high in the summer. It's important to reduce consumption during 4-9pm peak hours (7 days a week).
• Shift any controllable loads like charging an EV to super off-peak hours.

Learn more from SDGE on the Solar Billing Plan and Understanding your solar bill.

Los Angeles Department of Water & Power "LADWP"

1. LADWP still offers 1-to-1 net metering
2. Time-of-Use is optional, and pairs well with solar

1-to-1 Net Metering
As a municipal utility, LADWP is not governed by the same rules as the other utilities. LADWP offers 1-to-1 net metering meaning production and consumption 'net,' or subtract, at the same retail rate the utility charges you.

Rate Plan Options
Most LADWP customers are on the R-1A Standard Residential Rate. R-1A charges are tiered with a $10 per month minimum bill + 'energy adjustments.' Excess NEM credits cannot apply to several rate adjustments causing large NEM banks to rollover for the future while the customer incurs charges the current month.

R-1A Standard Residential Rate

R-1B Time of Use is recommended for most solar customers. It works well for solar customers who can reduce consumption during 1-5pm on-peak hours (or pair the system with battery storage). While there's a $12 monthly fixed charge, there is no minimum bill, so excess credits can offset the entire electric bill to $0.

Learn more by watching LADWP's Reading Your Solar Bill video

Imperial Irrigation District "IID"

Net Billing (export credits) began in Imperial Irrigation District (IID) in 2016. All solar exported to grid is currently credited 6.98 cents per kWh. All consumption from the grid is charged the same retail rate you pay the utility today.

IID's Net Billing policy is different compared to NEM 3 in two major ways. First, the credit is the same year-round; it's not changing every hour. Second, Time of Use rates are optional.

Net Billing in IID

• Solar production will first power loads in the home avoiding the need to purchase electricity at the utility’s retail rate
• Inflow: Electricity consumed from the grid will continue to be charged the utility’s retail rate
• Outflow: Excess solar generation exported to the grid is credited at the current credit rate of 6.98 cents per kWh
• Pairing Battery Energy Storage with your LightReach solar system is a smart way to use more solar electricity in your home reducing the amount of electricity you need to purchase from the grid in addition to providing backup power during an outage.

Learn more from IID about Net Billing and see a sample bill.