Net Metering vs Net Billing, Explained
Net metering is an arrangement where a solar customer's meter runs backward when their panels produce more electricity than the home uses, and the utility credits that surplus at the full retail rate — the same price per kilowatt-hour the customer would otherwise pay to buy power. Net billing, sometimes called avoided-cost compensation or export compensation, works differently: the utility credits surplus generation at a lower rate, typically tied to the utility's wholesale or avoided-cost rate, which is often significantly less than the retail rate. Because the difference between these two structures can meaningfully affect how quickly a solar system offsets its cost, understanding which one applies to your situation matters before you make any financial assumptions.
Which compensation structure you receive depends almost entirely on your specific utility and your interconnection date — the date your system was officially approved and connected to the grid. Different utilities within the same state can operate under different tariffs, and state regulators sometimes authorize new compensation structures that apply only to customers who interconnect after a certain date. This means two neighbors served by different utilities, or who interconnected in different years, may receive substantially different export rates even though they live in the same state.
Many states that originally offered full-retail net metering have since closed that program to new applicants, often citing concerns about cost allocation among ratepayers. Customers who interconnected before the closing date are typically grandfathered under the original terms for a defined period, while new customers automatically enroll under the replacement structure. The length of grandfathering periods and the terms of successor tariffs vary widely by state and utility.
Because export compensation, state solar tax credits, property-tax exemptions, sales-tax exemptions, and other incentives are determined at the state and utility level, there is no single national rate or uniform benefit package. The federal residential solar tax credit under Internal Revenue Code Section 25D has expired for systems placed in service after December 31, 2025. The only authoritative sources for your actual benefits are your state public utility commission's current rules, your utility's filed tariff, your state energy office, and the IRS for any remaining federal questions. This page provides general reference information only and is not tax or financial advice; always confirm current terms directly with those official sources before making decisions.
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Verified as of June 2026. How we verify this data. Informational only — not tax or legal advice.