page_title: Net metering
section_title: United States
hierarchical_section_title: Net metering / Adoption by country / United States
caption_attribution_description: English: Net metering customers in the United States, from Electric Power Annual. 2003[1] This file may be updated.
context_page_description: Net metering is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use that electricity anytime, instead of when it is generated. This is particularly important with renewable energy sources like wind and solar, which are non-dispatchable. Monthly net metering allows consumers to use solar power generated during the day at night, or wind from a windy day later in the month. Annual net metering rolls over a net kilowatt-hour credit to the following month, allowing solar power that was generated in July to be used in December, or wind power from March in August.
  Net metering policies can vary significantly by country and by state or province: if net metering is available, if and how long banked credits can be retained, and how much the credits are worth. Most net metering laws involve monthly rollover of kWh credits, a small monthly connection fee, require a monthly payment of deficits, and annual settlement of any residual credit. Net metering uses a single, bi-directional meter and can measure the current flowing in two directions.
context_section_description: Net metering was pioneered in the United States as a way to allow solar and wind to provide electricity whenever available and allow use of that electricity whenever it was needed, beginning with utilities in Idaho in 1980, and in Arizona in 1981. In 1983, Minnesota passed the first state net metering law. As of March 2015, 44 states and Washington, D.C. have developed mandatory net metering rules for at least some utilities. However, although the states rules are clear few utilities actually compensate at full retail rates.
  Net metering policies are determined by states, which have set policies varying on a number of key dimensions. The Energy Policy Act of 2005 required state electricity regulators to "consider" (but not necessarily implement) rules that mandate public electric utilities make available upon request net metering to their customers. Several legislative bills have been proposed to institute a federal standard limit on net metering. They range from H.R. 729, which sets a net metering cap at 2% of forecasted aggregate customer peak demand, to H.R. 1945 which has no aggregate cap, but does limit residential users to 10 kW, a low limit compared to many states, such as New Mexico, with an 80,000 kW limit, or states such as Arizona, Colorado, New Jersey, and Ohio which limit as a percentage of load.
  Arizona, California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont, and West Virginia are considered the most favorable states for net metering, as they are the only states to receive an "A" rating from Freeing the Grid in 2015.
  Regulators in multiple states are acting as "referees" in debates between utility companies and advocates of distributed resources, such as solar panel arrays. In 2016 the National Association of Regulatory Utility Commissioners (NARUC) published the Manual on Distributed Energy Resources Compensation as a way to help states decide on rate structures dealing with homes and businesses that generate their own power and send excess power back to the electric grid. The intention behind the manual is to "provide a consistent framework for evaluating rate design decisions in the age of distributed energy resources." The president of NARUC, when he commissioned the manual, said his instructions to the committee writing the manual were to write a "practical, expert and most importantly ideologically neutral guide that offers advice" to states. A draft of the manual was released in July, which generated more than 70 public comments from stakeholder groups. Those comments were reviewed, and the final version of the manual was designed. The updated manual covers various issues that state regulators have been struggling with including net metering, the value of solar energy, and cost shifting from DER to non-DER customers. DER is being integrated into the national grid at a rapid pace, and the system of electricity generation, delivery, and utilization are constantly changing with new technology.
  The Edison Electric Institute and the Solar Energy Industries Association both supported the manual. However, the main point of contention between utility companies and the solar industry is the question of whether distributed generation systems represent cost shift from those with the systems (people with solar panels) to those without them (everyone else who uses electricity).
  Phil Moeller of the Edison Electric Institute said, "We want to DER [distributed energy resources] but we want to make sure the rate structure is right to minimize cost shifts." Moeller is a former member of the Federal Energy Regulatory Commission (FERC), a federal government regulatory agency. Sean Gallaher of the Solar Energy Industries Association said, "There seems to be an assumption that revenue erosion from DER results in an inadequacy of cost recovery for the utility and therefore a shift of costs to non-participating customers. You can't just assume that."
  Home-based net metering in the United States "had extremely low adoption rates" as
caption: Growth of net metering in the United States
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