History of BTM Renewable Energy Generation

Overview

California has supported customer-sited, behind-the-meter (BTM) renewable generation since the Legislature enacted Senate Bill (SB) 656 in 1995, which created Public Utilities Code Section 2827 and the first net energy metering (NEM) tariff, NEM1. NEM1 was followed by NEM2 in 2016 and the NBT (NEM3) in 2023. This page lists the statutes, Commission decisions, resolutions and major advice letters that shaped BTM renewable energy generation policy, with the most recent items at the top. Major items are in bold. For information on the tariffs available to customers today, visit the Net Energy Metering and Net Billing webpage

NEM1, NEM2 and NBT (NEM3) at a Glance

 

NEM1

NEM2

NBT (NEM3)

Established by

SB 656 (1995)

D.16-01-044 (2016)

D.22-12-056 (2022)

Open to new applicants

1996 until each utility reached its program limit (SDG&E: 29 June 2016; PG&E: 15 December 2016) or 1 July 2017 (SCE)

From each utility’s NEM1 closing date to 14 April 2023

From 15 April 2023

Eligible import rate

Any

Time-of-use rates

Specific electrification time-of-use rates

Credit for exports before true-up

Import (retail) rates

Import (retail) rates

Hourly avoided marginal cost values

Credit for net surplus at true-up

Wholesale price of energy

Wholesale price of energy

Wholesale price of energy

Non-bypassable charges based on

None

Net energy consumed in each metered interval

All energy imports

Interconnection application fee (1 MW or less)

None

PG&E $145; SCE $94; SDG&E $132

PG&E $145; SCE $94; SDG&E $132

System size limit

Customer’s annual load, capped at 1 MW (limited exceptions)

Customer’s annual load (limited exceptions)

Customer’s annual load plus up to 50 percent with an attestation of need

 

Applies to PG&E, SCE and SDG&E.

Key Milestones

  • 1995: SB 656 created Public Utilities Code Section 2827 and NEM1.
  • 1996: The first NEM1 tariffs took effect, including PG&E's Schedule E-SEG.
  • 2013: AB 327 required the CPUC to adopt a successor to NEM1.
  • 2016: D.16-01-044 adopted NEM2.
  • 2022: D.22-12-056 adopted the NBT (NEM3).
  • 15 April 2023: The NBT (NEM3) replaced NEM2 for new interconnection applications.
  • 2023: D.23-11-068 adopted the VNBT, a virtual version of the NBT (NEM3), and the NBT (NEM3) aggregation subtariff.

Timeline

2026

  • July 2026: D.26-07-029 (issuance date 13 July 2026) set out the 2032 closure process for the Solar on Multifamily Affordable Housing (SOMAH) program and updated multifamily property eligibility standards. Proceeding: R.25-01-005.
  • 15 June 2026: The California Supreme Court denied review in Center for Biological Diversity v. Public Utilities Commission, which ended the case.
  • May 2026: D.26-05-033 (issuance date 15 May 2026) denied the utilities’ application for rehearing of Resolution E-5374. Proceeding: A.25-07-010.
  • 9 March 2026: On remand, the California Court of Appeal, First Appellate District, affirmed D.22-12-056 under independent review in Center for Biological Diversity v. Public Utilities Commission. It denied rehearing on 1 April 2026.

2025

  • 7 August 2025: The California Supreme Court reversed and sent the case back in Center for Biological Diversity v. Public Utilities Commission. It held that courts must independently review the Commission’s reading of statutes, and it did not decide whether the NBT (NEM3) complies with Section 2827.1.
  • June 2025: Resolution E-5374 directed PG&E, SCE and SDG&E to let VNBT and virtual net energy metering (VNEM) benefiting accounts also take service on the NBT (NEM3) or a non-export tariff for their own BTM generation and storage. See the Virtual Net Energy Metering webpage.
  • May 2025: A Scoping Memo set the issues and schedule for R.25-01-005. Proceeding: R.25-01-005.
  • January 2025: The Commission opened Rulemaking (R.) 25-01-005 to consider changes to SOMAH, the Disadvantaged Communities Single-Family Solar Homes (DAC-SASH) program, Renewable Energy Self-Generation Bill Credit Transfer (RES-BCT) tariffs, and the solar programs and tariffs of the small multi-jurisdictional utilities (SMJUs). See the R.25-01-005 webpage. Proceeding: R.25-01-005.

2024

  • November 2024: D.24-11-006 (issuance date 14 November 2024) simplified SOMAH administration, added integrated storage as an eligible measure, and allowed early incentive payments for tribal projects. Proceeding: R.14-07-002. 
  • September 2024: D.24-09-051 (issuance date 27 September 2024) denied rehearing of, and modified, Resolution E-5301. Proceeding: A.24-01-004. 
  • 15 February 2024: The VNBT and the NBT (NEM3) aggregation subtariff took effect for new interconnection applications.
  • February 2024: Energy Division approved SOMAH Advice Letter 147-E, which implemented SB 355 (Eggman, 2023).

2023

  • 20 December 2023: The California Court of Appeal, First Appellate District, upheld D.22-12-056 in Center for Biological Diversity v. Public Utilities Commission, deferring to the Commission. 
  • 30 November 2023: Resolution E-5301 approved PG&E’s, SCE’s and SDG&E’s NBT (NEM3) tariffs with minor modifications.
  • 16 November 2023: The Commission adopted D.23-11-068 (issuance date 22 November 2023). It established the VNBT, the virtual version of the NBT (NEM3), and an aggregation subtariff of the NBT (NEM3), enhanced solar consumer protections, planned a future NBT (NEM3) evaluation, clarified NEM Fuel Cell tariff requirements, implemented the prevailing wage requirement of Public Utilities Code Section 769.2, and continued the SOMAH and Multifamily Affordable Solar Housing (MASH) VNEM tariffs. Proceeding: R.20-08-020.
  • 29 June 2023: D.23-06-056 (issuance date 30 June 2023) denied applications for rehearing of D.22-12-056. Proceeding: R.20-08-020.
  • 15 April 2023: The NBT (NEM3) began applying to new interconnection applications. NEM2 closed to new applications after 14 April 2023.
  • March 2023: D.23-03-007 (issuance date 21 March 2023) raised SOMAH incentives to $3.50 per watt for tenant areas and $1.19 per watt for common areas and ended the annual incentive step-down. Proceeding: R.14-07-002.
  • March 2023: An Amended Scoping Memo added implementation of AB 2143 (Carrillo, 2022) to R.20-08-020. Proceeding: R.20-08-020.

2022

  • 15 December 2022: The Commission adopted D.22-12-056 (issuance date 19 December 2022), which established the NBT (NEM3) as the successor to NEM2 for customers submitting interconnection applications on or after 15 April 2023, with a nine-year legacy period. It also reduced the legacy period for new VNEM customers from 20 years to nine. See the NBT (NEM3) webpage. Proceeding: R.20-08-020.
  • 10 November 2022: The December 2021 proposed decision in R.20-08-020 was withdrawn and a new proposed decision was issued. Proceeding: R.20-08-020.
  • 15 September 2022: D.22-09-009 (issuance date 19 September 2022) reopened R.14-07-002 and amended the SOMAH forecast budgeting process. Proceeding: R.14-07-002.
  • 14 July 2022: D.22-07-001 (issuance date 18 July 2022) limited NEM facilities interconnecting to the transmission grid to 1 MW or less. Proceeding: R.11-09-011.
  • 9 May 2022: A ruling sought comments on a transition adder for customers moving from NEM2 to the successor tariff and on collecting public purpose program charges from successor tariff customers. See the NEM Revisit Fact Sheet webpage. Proceeding: R.20-08-020.
  • 21 April 2022: D.22-04-056 (issuance date 26 April 2022) denied SDG&E’s application for rehearing of D.20-08-007. Proceeding: R.14-07-002.
  • 2022: The Legislature enacted AB 2143 (Carrillo), which added Public Utilities Code Sections 769.2 and 913.13.

2021

  • 16 December 2021: D.21-12-031 (issuance date 20 December 2021) directed the large utilities to speed up interconnection of VNEM arrangements that include resiliency storage. Proceeding: R.20-05-012.
  • 23 September 2021: The Commission adopted D.21-09-024 (issuance date 24 September 2021), which set up a process to assess the continued need for an assistance fund for residential solar customers harmed by fraud, poor workmanship or Contractors License Law violations. It closed R.14-07-002. Proceeding: R.14-07-002.
  • June 2021: D.21-06-026 (issuance date 25 June 2021) required the utilities to set up a search engine for NEM interconnection documents, authorized a public list of noncompliant solar providers, and modified spot audits. Proceeding: R.14-07-002.
  • June 2021: D.21-06-005 (issuance date 4 June 2021) refined multifamily property eligibility for the Self-Generation Incentive Program and use of the VNEM tariff. Proceeding: R.20-05-012.
  • February 2021: D.21-02-007 (issuance date 17 February 2021) adopted guiding principles for the NEM revisit proceeding. Proceeding: R.20-08-020.
  • January 2021: The final NEM2 Evaluation (Lookback Study) was released through a ruling. It found NEM2 cost-effective for participants (Participant Cost Test ratio of 1.77) but not for ratepayers (Ratepayer Impact Measure ratio of 0.37). An E3 white paper on successor tariff options was released on 28 January 2021. See the NEM2 Evaluation webpage. Proceeding: R.20-08-020.
  • 2021: The Legislature enacted SB 155, which required fuel cells to begin operating by 31 December 2023 to take service on the NEM Fuel Cell tariff, and SB 479, which extended RES-BCT eligibility to California Native American tribal governments.

2020

  • December 2020: D.20-12-003 (issuance date 8 December 2020) gave direction on DAC-SASH marketing and outreach and extended DAC-SASH eligibility to California Indian Country. Proceeding: R.14-07-002.
  • November 2020: A Scoping Memo set the issues and schedule for R.20-08-020. Proceeding: R.20-08-020.
  • August 2020: The Commission opened R.20-08-020 to develop a successor to NEM2. See the NEM Revisit webpage. Proceeding: R.20-08-020.
  • August 2020: D.20-08-001 (issuance date 13 August 2020) adopted standardized inputs and assumptions for solar bill savings estimates. Proceeding: R.14-07-002.
  • August 2020: D.20-08-007 (issuance date 11 August 2020) allowed VNEM netting of bill credits across multiple accounts. Proceeding: R.14-07-002.
  • 31 July 2020: The California Solar Initiative (CSI) Thermal Program closed to new applications.
  • June 2020: D.20-06-017 (issuance date 17 June 2020) allowed NEM-paired storage to charge from the grid before Public Safety Power Shutoffs and removed the large storage sizing limit for three years. Proceeding: R.19-09-009.
  • June 2020: Resolution E-5054 limited a solar project to either SOMAH or the Multifamily Affordable Solar Housing (MASH) program.
  • April 2020: D.20-04-012 (issuance date 23 April 2020) continued SOMAH funding through 30 June 2026. Proceeding: R.14-07-002.
  • February 2020: D.20-02-011 (issuance date 14 February 2020) modified the solar consumer protection requirements of D.18-09-044. Proceeding: R.14-07-002.
  • February 2020: The final research plan for the NEM2 evaluation was approved.
  • January 2020: D.20-01-007 (issuance date 23 January 2020) approved PacifiCorp’s (Pacific Power’s) net billing program, the Net Billing Service, to replace its NEM1 tariff. Proceeding: A.19-04-013.
  • January 2020: D.20-01-008 (issuance date 22 January 2020) approved Bear Valley Electric Service’s net billing program, the Distributed Generation Service tariff. Proceeding: A.19-03-011.

2019

  • October 2019: D.19-10-040 (issuance date 30 October 2019) denied a petition for modification of D.16-01-044 and modified D.18-09-044. Proceeding: R.14-07-002.
  • 12 September 2019: Resolution E-5020 approved the DAC-SASH Program Handbook and Implementation Plan, launching the program. See the Solar in Disadvantaged Communities webpage.
  • September 2019: D.19-09-027 (issuance date 18 September 2019) made multifamily systems on the VNEM tariff eligible for the Self-Generation Incentive Program. Proceeding: R.12-11-005.
  • 1 July 2019: SOMAH began accepting applications.
  • April 2019: Resolution E-4987 approved the SOMAH Program Handbook and Implementation Plan with modifications. Energy Division disposed of SDG&E Advice Letter 3285-E, which established a SOMAH balancing account.
  • March 2019: D.19-03-015 (issuance date 5 April 2019) gave the utilities flexibility in SOMAH administrative spending and set co-funding and incentive agreement deadlines. Proceeding: R.14-07-002.
  • January 2019: D.19-01-030 (issuance date 5 February 2019) modified the D.14-05-033 rules for large storage devices paired with NEM generation. Proceeding: R.14-07-002.

2018

  • October 2018: D.18-10-007 (issuance date 18 October 2018) corrected and clarified D.18-06-027. Proceeding: R.14-07-002.
  • September 2018: D.18-09-044 (issuance date 5 October 2018) set up the process for a solar information packet, now the California Solar Consumer Protection Guide, required solar providers to upload key documents before interconnection, and authorized ratepayer funding for the NEM2 evaluation. Proceeding: R.14-07-002.
  • June 2018: D.18-06-027 (issuance date 22 June 2018) created the DAC-SASH program, which provides incentives for rooftop solar for income-qualified homeowners in disadvantaged communities, as directed by AB 327. Proceeding: R.14-07-002.
  • February 2018: D.18-02-008 (issuance date 15 February 2018) modified the D.16-04-020 bill credit estimation methodology for storage. Proceeding: R.14-07-002.

2017

  • December 2017: D.17-12-022 (issuance date 18 December 2017) established the SOMAH program and required SOMAH VNEM tariffs. Proceeding: R.14-07-002.
  • December 2017: D.17-12-005 (issuance date 21 December 2017) allowed VNEM interconnection with storage. Proceeding: R.14-07-002.
  • 1 July 2017: SCE began accepting new customers on NEM2.
  • June 2017: Resolution E-4854 authorized the SMJUs to implement NEM aggregation.
  • 2017: The Legislature enacted AB 1070 (Gonzalez Fletcher), which directed the CPUC to develop solar consumer protection materials and standardized bill savings inputs.

2016

  • 31 December 2016: The California Solar Initiative (CSI) General Market Program closed.
  • 15 December 2016: PG&E reached its NEM1 program limit and new customers began taking service on NEM2.
  • September 2016: D.16-09-036 (issuance date 22 September 2016) modified D.16-01-044 and denied rehearing of the decision, as modified. Proceeding: R.14-07-002.
  • 29 June 2016: SDG&E reached its NEM1 program limit and new customers began taking service on NEM2.
  • June 2016: Resolution E-4792 approved the large utilities’ NEM2 and VNEM successor tariffs.
  • April 2016: D.16-04-020 (issuance date 28 April 2016) adopted estimation and metering options for small storage devices paired with NEM generation. Proceeding: R.12-11-005.
  • 28 January 2016: The Commission adopted D.16-01-044 (issuance date 5 February 2016), which created NEM2 with interconnection fees, non-bypassable charges and time-of-use rates. See the Net Energy Metering Rulemaking (R.14-07-002) webpage. Proceeding: R.14-07-002.

2015

2014

  • November 2014: D.14-11-001 (issuance date 13 November 2014) updated MASH reporting requirements. Proceeding: R.12-11-005.
  • 10 July 2014: The Commission opened R.14-07-002 to develop the successor to NEM1. Proceeding: R.14-07-002.
  • 10 July 2014: Resolution E-4665 approved SCE’s and SDG&E’s NEM aggregation tariffs with modifications.
  • May 2014: D.14-05-033 (issuance date 23 May 2014) created rules for pairing storage devices with NEM generation facilities. Proceeding: R.12-11-005.
  • March 2014: D.14-03-041 (issuance date 4 April 2014) established a 20-year legacy period for customers who took service on NEM1 before the successor tariff. Proceeding: R.12-11-005.

2013

  • 7 October 2013: The Legislature enacted AB 327 (Perea), which added Public Utilities Code Section 2827.1, directed the CPUC to develop a successor to NEM1 and alternatives for disadvantaged communities, and set 1 July 2017 or each utility’s program limit as the end of NEM1 enrollment.
  • 19 September 2013: Resolution E-4610 authorized the large utilities to implement NEM aggregation under SB 594.
  • 2013: The Legislature enacted AB 217 (Bradford), which extended SASH and MASH with $108 million in new funding.

2012

  • 24 May 2012: The Commission adopted D.12-05-036 (issuance date 30 May 2012), which clarified that the 5 percent NEM1 program limit is based on the sum of customers’ non-coincident peak demands. Proceeding: R.10-05-004.
  • 19 April 2012: Resolution E-4481 authorized the large utilities’ general market VNEM tariffs.
  • 2012: The Legislature enacted SB 594 (Wolk), which authorized NEM aggregation.

2011

  • July 2011: D.11-07-031 (issuance date 20 July 2011) directed the large utilities to propose VNEM tariffs for market-rate multi-tenant properties. Proceeding: R.10-05-004.
  • June 2011: D.11-06-016 (issuance date 20 June 2011) adopted a net surplus compensation rate pursuant to AB 920 (Huffman, 2009). Proceeding: A.10-03-001 et al.
  • 2011: The Legislature enacted SB 489 (Wolk), which made all technologies eligible for NEM also eligible for VNEM.

2010

  • 2010: The Legislature enacted AB 510 (Skinner), which raised the NEM1 program limit from 2.5 percent to 5 percent of each utility’s aggregate customer peak demand.
  • 2010: Resolution E-4283 created the RES-BCT tariff pursuant to AB 2466 (Laird, 2008).
  • 21 January 2010: D.10-01-022 (issuance date 22 January 2010) established the CSI-Thermal Program for solar water heating. Proceeding: R.08-03-008.

2009

  • August 2009: D.09-08-026 (issuance date 21 August 2009) adopted a cost-benefit methodology for distributed generation. Proceeding: R.08-03-008.

2008

  • October 2008: D.08-10-036 (issuance date 20 October 2008) established the MASH program and the first VNEM tariff. Proceeding: R.08-03-008.
  • February 2008: D.08-02-002 (issuance date 15 February 2008) directed the utilities to provide NEM to Community Choice Aggregator customers. Proceeding: R.06-03-004.

2007

  • 16 November 2007: D.07-11-045 (issuance date 19 November 2007) established the SASH program within CSI. Proceeding: R.06-03-004.

2006

  • 20 July 2006: Resolution E-3992 implemented D.05-08-013 by adopting a method for crediting exports from facilities with both NEM-eligible and NEM-ineligible generators.
  • 2006: The Legislature enacted SB 1 (Murray), which supported the CSI as part of the statewide Go Solar California effort with a goal of 3,000 MW, and raised the NEM1 program limit to 2.5 percent of each utility’s aggregate customer peak demand.

2005

  • August 2005: D.05-08-013 (issuance date 26 August 2005) adopted rules for facilities with both NEM-eligible and NEM-ineligible generators. Proceeding: R.04-03-017.

2003

  • 2003: The Legislature enacted AB 1214 (Firebaugh), which created the NEM Fuel Cell tariff in Public Utilities Code Section 2827.10.

2002

  • 2002: The Legislature enacted AB 58 (Keeley) (Chapter 836, Statutes of 2002), which required NEM1 applications and interconnection agreements to be processed within 30 working days, provided that NEM1 customers are not exempt from the public benefits charge, and directed the CPUC to report on the costs and benefits of NEM by 1 January 2005.
  • March 2002: D.02-03-057 (issuance date 26 March 2002) interpreted Public Utilities Code Section 2827(d), ruled on NEM1 interconnection fees, and directed the utilities to track interconnection and distribution system modification costs. Proceeding: R.99-10-025.

2001

  • October 2001: The current version of the California Standard Practice Manual was published. It added self-generation as a demand-side activity.
  • 11 April 2001: The Legislature enacted ABX1 29 (Kehoe) (Chapter 8, Statutes of 2001, First Extraordinary Session). Until 1 January 2003, it extended NEM1 eligibility to commercial, industrial and agricultural customers and removed the limit on the number of NEM1 customers.

2000

  • 30 September 2000: The Legislature enacted AB 918 (Keeley) (Chapter 1043, Statutes of 2000), which changed how NEM1 net consumption and generation are valued and settled over 12 months, and addressed NEM1 for customers taking electricity from other electric service providers.

1998

  • 25 September 1998: The Legislature enacted AB 1755 (Keeley) (Chapter 855, Statutes of 1998), which expanded NEM1 eligibility to small wind systems, required a standard NEM1 interconnection agreement, and based the program limit on aggregate customer peak demand.

1997

  • 3 December 1997: The Commission adopted D.97-12-044 in PG&E’s general rate case. It found that a standby charge on PG&E’s NEM1 tariff, Schedule E-SEG, would be inconsistent with Public Utilities Code Section 2827, and applied no customer charge to the schedule. Proceeding: A.94-12-005.

1996

  • June 1996: The Commission approved PG&E Advice Letter 1549-E, which created Schedule E-SEG, PG&E’s first NEM1 tariff for residential solar customers, as recorded in D.97-12-044. PG&E withdrew its proposed standby charge for the schedule in a letter dated 24 May 1996. The statute set PG&E’s NEM1 program limit at 17 MW.
  • 1 January 1996: SB 656 took effect, requiring each electric utility to offer a NEM1 tariff to residential customers with solar systems of up to 10 kW. See the Net Energy Metering and Net Billing webpage.

1995

  • August 1995: The Legislature enacted SB 656 (Alquist) (Chapter 369, Statutes of 1995), which added Public Utilities Code Section 2827 and required utilities to offer NEM to customers with solar systems, up to 0.1 percent of each utility’s 1996 peak demand forecast.

Before 1995

  • February 1983: The first edition of the California Standard Practice Manual was published.
  • 1982: The Commission adopted the first version of Electric Rule 21, the utility tariff rule that sets interconnection, operating and metering requirements for customer generation. It was designed for small, non-utility-owned generating facilities.
  • Late 1970s: California enacted solar laws that offered incentives, including a state tax credit, and protections for smaller customer-side (rooftop) solar installations (see the California Customer Choice report).
  • 1976: The Legislature enacted SB 77 (Nejedly) (Chapter 915, Statutes of 1976), California’s Private Energy Producers Act, now Public Utilities Code Sections 2801 to 2829. It encouraged private energy producers to develop independent sources of electricity and natural gas and allowed sales of power to utilities from generators using sources other than conventional power sources.