Net Energy Metering (NEM) Successor Tariff  

On January 28, 2016, the CPUC approved Decision (D.) 16-01-044, adopting a NEM successor tariff that continues the existing NEM structure while making adjustments to align the costs of NEM successor customers more closely with those of non-NEM customers. The Utilities filed Advice Letters with the CPUC implementing the new requirements on February 29, 2016. The Advice Letters were approved by the Commission in June 2016 in Resolution E-4792. The NEM successor tariff is currently in effect in SDG&E's service territory.   

Establishing a Successor Tariff or Contract Pursuant to Public Utilities Code 2827.1


On October 7, 2013, Governor Brown signed Assembly Bill (AB) 327 (Perea) directing the Commission to develop a standard tariff or contract for eligible customer-generators with a renewable electrical generation facility no later than December 31, 2015. In developing the standard contract or tariff, Public Utilities (PU) Code 2827.1 requires the Commission to do the following:

  • Ensure that customer-sited renewable distributed generation continues to grow sustainably;
  • Include specific alternatives designed for the growth of distributed generation among residential customers in disadvantaged communities;
  • Ensure that the successor tariff is based on the costs and benefits of the renewable electrical generation facility;
  • Ensure that the total benefits of the tariff to all customers and the electrical system are approximately equal to the total costs;
  • Allow distributed generation projects sized to customer load that are greater than 1 MW in size to interconnect under reasonable charges if they do not have significant impact on the distribution grid; and,
  • Establish terms of service and billing rules for eligible customer generators, consistent with all other relevant statutory requirements.

For each large investor-owned utility, the successor tariff is to take effect either on July 1, 2017, or upon reaching the 5% program limit for NEM capacity set forth in the Public Utilities Code Section 2827, whichever is earlier.

Full text of AB 327 (Perea) is available here

For general questions about NEM or the successor tariff/contract, please contact Shannon O'Rourke, Shannon.O', (415)-703-5574.


In July 2014, the Commission adopted Rulemaking (R.) 14-07-002 to develop a successor to existing NEM tariffs, pursuant to Public Utilities (PU) Code Section 2827.1.  

To join this or any other proceeding’s service list, please visit our Service List page. For more information on how you can participate in this proceeding, please visit the Commission’s Public Advisor page.

Decision Adopting Successor to Net Energy Metering Tariff 

On January 28, 2016, the CPUC approved Decision  (D.) 16-01-044, adopting a NEM successor tariff that continues the existing NEM structure while making adjustments to align the costs of NEM successor customers more closely with those of non-NEM customers. Note: these changes to the NEM tariff are only for customers that interconnect under the new NEM successor tariff and not to existing NEM customers. 

New elements to the NEM successor tariff made by the Decision include:

  • New one-time interconnection fee: Requires NEM successor customers with systems under 1 MW to pay a reasonable, pre-approved interconnection fee. 
    • Utilities will propose the fee via Advice Letter based on actual historical interconnection costs. Likely to be approximately $75-$150. 
    • Customers larger than 1 MW will pay all interconnection fees and upgrade costs. 
  • Non-bypassable charges: NEM successor customers will pay non-bypassable charges on each kilowatt-hour (kWh) of electricity they consume from the grid. 
    • Non-bypassable charges fund important programs such as low income and efficiency programs. 
    • All utility customers, except current NEM customers, pay non-bypassable charges on all energy they consume from the gird. Current NEM customers only pay on usage from the grid after NEM exports are subtracted. 
    • Non-bypassable charges are equivalent to approximately 2-3 cents per kWh. 
  • Time-of-use (TOU) rate: Residential NEM successor customers to take service on a TOU rate. 

Workshop on Consumer Protection Issues Under the NEM Successor Tariff

The NEM Successor tariff decision (D.16-01-044) directed Energy Division staff, in collaboration with R.14-07-002 parties, to undertake further consideration of consumer protection measures, including the development of an information packet for customers interested in taking service under the NEM successor tariff. As a first step in the Commission’s further consideration of these issues, the purpose of this workshop will be to identify:

  1. Consumer protection issues NEM customers have encountered; and 
  2. Existing regulation and jurisdiction over consumer protection for NEM customers.  

Go To: 
Meeting Number: 749 027 625 
Meeting Password: !Energy1 
Phone Attendees (Listen Only) 
Conference Line: (866-628-9975) Participant Code: 1570876#


Public Process to Develop Proposals for the NEM Successor Tariff

Energy Division Staff led robust public process, including numerous public workshops, to develop and gather public input for the development of proposals of NEM successor tariff. Information and supporting documents on the process and workshops can be found here.