How does net billing work?

The biggest difference from net metering is net billing customers receive an avoided cost price per kilowatt-hour from their utility versus a credit at retail cost. The avoided cost price which the utility pays for your solar overproduction (per kilowatt-hour) is often equal to or less than the wholesale price which the utility pays for purchasing energy from other energy power plants. In otherwards, it is the “avoided costs” the utility does not have to pay to produce or purchase the same amount of power. When excess solar energy during the month is sent to the utility, each kilowatt-hour is calculated and credited at the avoided cost rate to the customer’s monthly bill. Rural Electric Co-ops and Municipal utilities typically offer net billing to their customers because they are not required to follow IOU policies for net metering. Based on your utility, net metering credits will typically zero out (or true-up) once a year. Credits are stored and used as needed during the month. Any excess credits are carried over month by month until the end of the true-up month.

For more information, read our blog article Utility Net Metering vs. Utility Net Billing.