Policy and tariff

Net metering, net billing and buyback: the three regimes

Three words used interchangeably for arrangements that pay you very differently.

Updated September 2026 · Data as of Regulator decisions and guidance read on 3 September 2026

Written by HyreSolar Research team Research and analysis

Audited by HyreSolar Research team Data audit and fact check

Retail is what net metering credits exports at Generation, distribution and transmission

No netting is what changes under net billing The adopting decision’s own words

9 years was the payback the successor tariff was designed around Stated design target

The short answer

The difference is whether your meter nets, and what your exports are credited at. Under net energy metering, a regulator's own description is that participating customers receive bill credits for exported generation "at the retail rates (including generation, distribution, and transmission components)" they pay for consumption. A kilowatt-hour out cancels a kilowatt-hour in. Under a net billing tariff, that stops. The adopting decision is explicit: "Imports and exports will be calculated based on no netting of consumption and production". You pay the retail rate for everything you draw and are credited separately, at "a rate reflecting the value of this generation to the grid", for everything you send. Buyback is the generic term for any arrangement that purchases exports at a defined rate rather than crediting them against consumption. Same panels, same roof, same sunshine, materially different economics.

The three, in a regulator’s own words where possible

Net energy metering (NEM): Verbatim: participating customers "receive bill credits for excess generation that is exported to the electric grid… applied to customers’ monthly bills at the retail rates (including generation, distribution, and transmission components) that the customers pay for energy consumption". Exports and imports offset each other at the same price.
Net billing: Verbatim: "As with NEM, onsite generation is first used to serve onsite load… The major difference is that compensation for excess generation exported to the electric grid is applied to a customer’s bill at a rate reflecting the value of this generation to the grid." Two different prices, one for what you buy and a lower one for what you sell.
Buyback: The generic label for any tariff that purchases exported energy at a defined rate rather than crediting it against your consumption. Net billing is one form of it. Terminology varies between states and utilities, so the label matters less than the rate.
Avoided cost: The basis on which export rates are commonly set under net billing: what it would have cost the utility to obtain that energy otherwise. In the implementation we read, hourly avoided cost values averaged across a month and differentiated between weekdays and weekends or holidays.
True-up: The annual reconciliation of what you imported against what you were credited for exporting. Both regimes commonly use one, which is why monthly statements can be misleading until the year closes.

The two words that carry the whole difference

If you take one thing from this page, take the phrase "no netting".

Under net metering, the arrangement is close to what most people intuitively picture. Your meter runs in both directions. Electricity you export offsets electricity you import, at the same retail price, so an exported kilowatt-hour is worth exactly as much as an imported one costs. The bill reflects the net position.

The adopting decision for the successor tariff we read says, in its ordering paragraph: "A net billing tariff is adopted. Imports and exports will be calculated based on no netting of consumption and production and will be trued-up on an annual basis."

That single clause changes the economics of a rooftop system more than any hardware decision. Once imports and exports are not netted, they are two separate transactions at two separate prices. You buy at retail. You sell at whatever the export rate is. And the export rate is set by reference to the value of that energy to the grid rather than to what you pay for energy, which in practice means it is lower, and it varies by hour.

A useful way to feel the difference: under net metering, a kilowatt-hour you export in the middle of a sunny day is a kilowatt-hour you do not pay for in the evening. Under net billing, it is a small credit against a large evening bill.

The three regimes on the questions that decide your bill

	Net energy metering	Net billing	Buyback generally
Does the meter net?	Yes. Exports offset imports	No. Explicitly, in the adopting decision	Generally no
What are exports worth?	The retail rate, including generation, distribution and transmission components	A rate reflecting the value of that generation to the grid	A defined purchase rate, however set
What do imports cost?	The retail rate on your schedule	The retail rate on your schedule	The retail rate on your schedule
Does the export rate vary by hour?	It does not need to, since it equals the retail rate	Yes, where it is set from hourly avoided cost values	Depends on the tariff
Effect of sending power at midday	Full value, offsetting evening consumption	Lower value, because midday is when that energy is worth least to the grid	Depends on the rate design
Does a battery change much?	Less, since exports already earn full value	More, since storing for later use avoids a low export rate and a high import rate	Usually more

Definitions from the regulator’s own guidance and from the adopting decision. Read 3 September 2026.

The last row is the practical consequence. Under net metering the grid is an efficient battery that pays full price. Under net billing it is not, which is why storage economics change so sharply when a state moves between the two.

What a transition actually looked like

The best-documented move from one regime to the other is California's, and the decision that made it is public, so we can be specific rather than general.

The decision was adopted on 15 December 2022, under a rulemaking that had been running since 2020, exercising a statutory authority to revise the tariff. It set the previous tariff's sunset at 120 days from adoption, and the successor became operative for new interconnection applicants from 15 April 2023. The earlier tariffs are, in the regulator's words, "closed to new enrollments".

Three things changed at once, which is why the effect was larger than any one of them.

Export compensation moved from retail rates to avoided cost values, differentiated by hour and averaged across a month, with separate weekday and weekend or holiday values.

Netting stopped, as quoted above.

And new residential customers were put on a different retail import rate design, one the decision describes as having "high differentials between winter off-peak and summer on-peak rates". So the price you pay for the electricity you buy changed shape at the same time as the price you receive for what you sell.

The decision states its own design target explicitly: a nine-year payback for residential stand-alone solar. That is a useful thing to know, because it tells you the regulator was calibrating to a number rather than simply removing a subsidy, and because a nine-year target is a fact you can check any proposal against.

The transitional adder, and why it shrinks

The same decision adopted a temporary adder on top of the export rate, to soften the change. Its shape is worth understanding because it is a moving target rather than a feature of the tariff.

First-year residential adders differed sharply by utility: $0.022 per kilowatt-hour for one, $0.040 for another, and zero for the third. For qualifying low-income customers the figures were far higher, at $0.090 and $0.093 for the first two utilities and again zero for the third.

It decreases by 20% each year for newly enrolled customers, measured against the first-year rate, until it reaches zero, and it is available only during the first five years of the successor tariff.

There is also a lock-in that is not permanent. During those first five years, an enrolling customer's export rates are based on a nine-year schedule of values from the avoided cost calculator as adopted in the year of their interconnection. The decision states that customers enrolling after the five-year glide path will not receive a lock-in period at all.

The practical reading: under a transitional regime like this, when you interconnect changes what you get, and later is worse by design. That is a real consideration and it is also exactly the kind of thing a salesperson can use to manufacture urgency, so verify the current adder from the regulator rather than from a proposal.

Why the change happened, stated fairly

The argument for the change is worth setting out, because a page that only describes what solar owners lost is not describing the decision.

Retail-rate export credit compensates an exported kilowatt-hour at a price that includes the generation, distribution and transmission components of the retail rate. The distribution and transmission components pay for wires, poles, substations and the people who maintain them, and those costs do not fall when a neighbour exports power. The regulator's position is that crediting exports at the full retail rate therefore shifts recovery of those fixed network costs onto customers without solar.

The counter-argument, made forcefully in the same proceeding, is that distributed generation provides real value to the grid that avoided-cost methods understate, and that stability of expectations matters for people making a twenty-five-year investment.

We are not going to adjudicate that. It is a genuine policy disagreement between parties with real interests, and it was argued at length before a body whose job it is to weigh it. What a homeowner needs from it is narrower and it is not in dispute: the direction of travel in the states that have acted is toward paying less for exports and toward making self-consumption worth more than export. That changes what the right system looks like, whatever you think of the reasoning.

How to find out which regime you are actually in

Which export regime applies to you cannot be settled on this page, because it depends on your state, your utility and when you interconnect. But the question is answerable in one phone call if you ask precisely.

Ask your utility three things. Which tariff new residential solar customers are enrolled on. Whether imports and exports are netted against each other. And what rate exports are credited at, and whether that rate varies by hour.

Those three answers place you. If exports are credited at your retail rate and the meter nets, you are in a net metering regime. If you are billed for every imported kilowatt-hour and separately credited at a different, hour-varying rate, you are in a net billing or buyback regime whatever it is called locally.

Then ask the question that catches the most proposal errors: which of those the savings figure in front of you was modelled on. A projection built on retail-rate export credit describes a different tariff, and therefore a different customer, from one built on avoided-cost export rates.

One thing we are not going to do is tell you which states have moved. We verified one transition in detail from the decision itself. We attempted to verify a second state and could not reach a primary source for any of them, so we name none. Your state's public utilities commission is the authority, and it publishes its decisions.

What to do with this before you sign

1
Get the tariff name in writing from the utility
Not from the proposal. The utility knows which tariff a new solar customer is enrolled on today, and it is the only source that will still be right next month.
2
Ask whether imports and exports are netted
This one question separates the regimes more cleanly than any label. If they are not netted, everything else about your economics follows from that.
3
Get the export rate, and ask whether it varies by hour
An hour-varying export rate means the value of your production depends on when it happens, which makes the shape of your generation matter as much as its size.
4
Ask what the proposal assumed for both
Import rate and export rate are two separate assumptions and a proposal can be wrong about either. This is where over-optimistic savings figures usually come from.
5
If a transitional adder exists, verify it from the regulator
Adders shrink on a schedule and expire. A proposal quoting one from last year is quoting a number that has already gone down, and urgency built on it should be checked rather than accepted.
6
Reconsider storage in light of the answer
Under net metering the grid pays full value for exports, so storage does less. Under net billing, storing midday output to use in the evening avoids a low export rate and a high import rate at once, which is a materially different case.

Method and limitations

What was read

The regulator's own guidance page for the definitions of net energy metering and net billing, quoted verbatim, and the adopting decision itself for the mechanical change, the operative dates, the design target, the adder table and the glide path. The decision is a public document and every figure above is from it.

Where we have synthesised rather than quoted, most obviously in describing "buyback" as a generic label, the page says so.

One transition, described in detail, and no list

We deliberately do not publish a list of states that have moved off retail net metering. We verified one transition thoroughly from the decision that made it. We attempted to verify a second state and every source we tried refused access, so we have nothing to say about any other state and say nothing.

The structural distinctions on this page are general and the numbers are not. Adder amounts, export rates, dates and tariff names all belong to one state and three utilities.

What this page does not cover

What happens to an existing system when the rules change. Legacy and grandfathering are substantial enough to have their own page, and there is a finding there about who a legacy period belongs to that surprises most people.

Time-of-use peak windows and rates. Also separate, because the import side deserves its own treatment.

Questions

What is the difference between net metering and net billing?

Whether the meter nets. Under net metering, exported electricity offsets imported electricity at the retail rate, so a kilowatt-hour out cancels a kilowatt-hour in. Under net billing the adopting decision we read states that imports and exports are calculated with no netting: you pay retail for everything you draw and are credited separately, at a lower rate reflecting the value of that generation to the grid, for everything you send.

What is a buyback rate?

A generic term for any tariff that purchases your exported energy at a defined rate rather than crediting it against your consumption. Net billing is one form. Because terminology varies between states and utilities, the label matters much less than two facts: whether imports and exports are netted, and what the export rate actually is.

Why are exports worth less under net billing?

Because they are priced by what the energy is worth to the grid rather than by what you pay for energy. In the implementation we read, export rates are set from hourly avoided cost values, averaged across a month and differentiated between weekdays and weekends or holidays. Midday, when a solar array exports most, is generally when that energy is worth least.

Does this make solar not worth it?

It changes the arithmetic rather than settling it. The decision we read states its own design target of a nine-year payback for residential stand-alone solar, so the regulator was calibrating to a number rather than removing the case entirely. What it does mean is that a proposal modelled on retail-rate export credit is describing the wrong tariff, and that self-consumption matters much more than it used to.

Does a battery make more sense under net billing?

Generally yes, in principle. Under net metering the grid effectively acts as a store that pays full retail value, so storage adds less. Under net billing, holding midday output to use in the evening avoids both a low export rate and a high import rate. Whether it pays in your case is arithmetic on your own tariff and consumption.

What is the adder and will I get it?

A temporary top-up on the export rate adopted to soften the transition. In the case we read it differed sharply by utility, was much larger for qualifying low-income customers, was zero at one utility, decreases by 20% annually for newly enrolled customers and is available only during the first five years of the tariff. Verify the current figure with the regulator rather than from a proposal.

Which states have moved off net metering?

We are not going to give you a list. We verified one transition in detail from the decision that made it, attempted to verify a second state and could not reach a primary source for any. Your state’s public utilities commission publishes its decisions and is the authority on this.

How do I find out which regime I would be in?

Ask your utility three things: which tariff new residential solar customers are enrolled on, whether imports and exports are netted, and what rate exports are credited at and whether it varies by hour. Then ask your installer which of those the savings figure assumed. The gap between those two answers is where most disappointment comes from.

Written and audited by

HyreSolar Research

Primary-source research, data analysis and fact checking

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66: researched pages published

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Data as of Regulator decisions and guidance read on 3 September 2026. Authorship on this site is organisational: the analysis belongs to the desk rather than to a named individual, and we do not publish credentials we do not hold. Our editorial policy sets out how we source, date and correct what we publish.

Sources & retrieval dates

CPUC, Customer-Sited Renewable Energy Generation — Source for the verbatim definitions of net energy metering, including that bill credits are applied at the retail rates covering generation, distribution and transmission components, and of net billing, including that compensation for exported generation is applied at a rate reflecting the value of that generation to the grid. Also the source for the statement that the earlier tariffs are closed to new enrollments and that the successor has applied to new applicants since 15 April 2023. Retrieved 3 September 2026.
CPUC Decision 22-12-056: Decision Revising Net Energy Metering Tariff and Subtariffs — Adopted 15 December 2022 in Rulemaking 20-08-020. Source for the ordering paragraph adopting the net billing tariff with imports and exports calculated on no netting of consumption and production and trued up annually, for export rates based on hourly avoided cost values averaged across a month and differentiated by weekdays and weekends or holidays, for the 120-day sunset of the prior tariff, for the stated nine-year payback design target, for the first-year adder amounts by utility and for low-income customers, for the 20% annual decay and five-year availability of that adder, and for the nine-year schedule of export values available during the glide path and its absence afterwards. Retrieved 3 September 2026.

Not sure which regime your quote assumed?

Send us the proposal and your utility. We will tell you what it assumed for imports and exports, and what the tariff you would actually be enrolled on says.

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