What Are Net Energy Metering Charges at True-Up?

Solar energy adoption by residential customers introduces a unique billing structure that differs significantly from traditional utility statements. A crucial element of this system is the periodic “true-up” process, which determines the final financial obligation or credit for solar-equipped households over a defined period.

What is Net Energy Metering (NEM)

Net Energy Metering (NEM) is a billing arrangement that allows customers with solar panels to receive credit for the excess electricity their systems generate and send back to the main power grid. When solar panels produce more power than the home consumes, this surplus energy flows into the utility grid. This exported energy is tracked by a special meter, often called a bidirectional meter, which measures both electricity imported from and exported to the grid.

The credits accumulated for this exported electricity can then be used to offset the cost of power drawn from the grid when the solar panels are not generating enough energy. This typically occurs at night, on cloudy days, or during periods of high household consumption. Under NEM, customers are billed only for their “net” energy usage, which is the difference between the electricity consumed from the grid and the electricity sent back to it.

The True-Up Process Explained

While Net Energy Metering tracks energy flow and credits on an ongoing, often monthly, basis, the “true-up” is a reconciliation event that typically occurs annually. This process compares the total electricity a customer consumed from the grid with the total electricity their solar system generated and sent back over a specific billing cycle, usually 12 months.

At the conclusion of this 12-month cycle, a comprehensive statement is generated that summarizes the year’s activity. This statement calculates whether the customer has a final balance due to the utility or if they have accumulated excess credits. The true-up date is typically based on the anniversary of when the solar system was first connected to the grid.

Common Charges at True-Up

Even with a solar system, customers may encounter specific charges during the true-up process. One common category is “non-bypassable charges” (NBCs), which are fees applied to every kilowatt-hour of electricity consumed from the grid. These charges fund various public programs, such as energy efficiency initiatives, low-income assistance, or infrastructure maintenance. NBCs cannot be offset by solar energy credits, meaning they are still owed even if a customer’s solar production exceeds their consumption. They typically range from approximately 2 to 4 cents per kilowatt-hour.

Another type of charge is a minimum monthly charge, which some utilities impose regardless of a customer’s energy consumption or solar generation. This fixed fee covers costs associated with grid access, billing, and customer service. These minimum charges accrue each month and are factored into the annual true-up calculation. For instance, these charges might be in the range of $5 to $15 per month. Finally, if a customer’s total consumption from the grid over the entire true-up period exceeds their total solar generation and credits, they will be charged for that net electricity consumed at prevailing retail rates.

Calculating True-Up Charges

The calculation of true-up charges involves aggregating a customer’s cumulative net energy balance over the 12-month billing period. The utility first totals all the electricity imported from the grid and subtracts all the electricity exported to the grid throughout the year. If the result is a net consumption, the customer is billed for these kilowatt-hours at the applicable retail rates. This includes any time-of-use (TOU) rates, where electricity costs vary depending on the time of day it was used.

In addition to net consumption, non-bypassable charges are applied to the grid electricity consumed, as these costs are not offset by solar credits. Any accumulated minimum monthly charges are also added to the final true-up amount. If the solar system generated more energy than was consumed over the entire year, the customer might receive a small credit for the surplus, often at a lower wholesale or “avoided cost” rate, though this varies by utility and policy. The true-up statement ultimately provides a single, comprehensive summary of these debits and credits, resulting in the final amount due or credited.