NEM 2.0 Grandfathering: What Existing Solar Owners Keep

The CPUC created the first net metering tariff, NEM 1.0, in 1996. Each utility moved new customers to NEM 2.0 when it reached its program limit: SDG&E on June 29, 2016 and PG&E on December 15, 2016, while SCE moved on July 1, 2017 (CPUC). NEM 2.0 closed to new customers with applications submitted after April 14, 2023. A complete application filed by that date kept NEM 2.0 eligibility if the project got final building-permit sign-off and electrical clearance within three years — that is, before April 15, 2026 — with discretion for delays the utility caused (D.22-12-056; PG&E NEM2; SCE NEM-ST). Applications from April 15, 2023 go on the Net Billing Tariff, often called NEM 3.0.

Under both legacy tariffs, a kilowatt-hour you export earns a bill credit at the retail rate you pay for imports — on a time-of-use plan, the rate for that period — and the account settles once a year at true-up. NEM 2.0 added a time-of-use rate requirement and a one-time interconnection fee, and it calculates non-bypassable charges on the net energy drawn from the grid in each hour rather than over the whole year. The Net Billing Tariff instead credits exports at Avoided Cost Calculator values that are usually below import rates — for SCE customers who start in 2026, about 3¢ to 21¢ per kWh by season and hour (SCE).

A legacy system can be modified or repaired and keep its 20-year period as long as it grows by no more than the greater of 10% of its nameplate capacity when first interconnected or 1 kW, and stays within your annual on-site use. For a 6 kW system that means 1 kW (10% would be only 0.6 kW); for a 12 kW system, 1.2 kW. The limit is measured against the original size, so several small additions count together.

Past the limit there are two paths. The extra panels can be interconnected separately under a Rule 21 non-export agreement — a relay or control keeps them from sending power to the grid — and the original system keeps its 20 years. Or the whole system moves to the Net Billing Tariff (SCE; PG&E). Before adding panels, ask your utility in writing how it will treat the change. The trade-offs, including when a separate system makes sense, are in adding panels to an existing system.

The CPUC made clear that a NEM 2.0 customer “may add battery storage to their existing distributed generation system without altering their NEM 2.0 status” (D.22-12-056). There is one exception, now written into both tariffs: a customer who adds storage through the Self-Generation Incentive Program and has a reservation accepted on or after June 4, 2024 must move to the Net Billing Tariff. Batteries funded through SGIP’s Residential Solar and Storage Equity, low-income Equity Resiliency and San Joaquin Valley residential budgets are exempt. If you are weighing an SGIP incentive on a grandfathered system, price both outcomes first; the program’s current budgets are in SGIP battery incentives.

SCE’s tariff protects legacy customers whose systems are destroyed in an area covered by a state or federal emergency declaration — as after the January 2025 fires in Los Angeles County. The customer keeps the original PTO date and 20-year period if the same customer of record submits a new interconnection request for a replacement system sized to no more than 12 months of historic or estimated use, and the replacement gets PTO within four years of the loss, unless documentation shows the new request was filed. The interconnection application fee is waived for systems up to 1 MW. If the property is sold before the system is rebuilt, the protection does not pass to the buyer (SCE NEM-ST, Special Condition 9). PG&E’s NEM2 tariff has a similar provision.

At the end of the true-up year that closes on or after the 20th anniversary, the system moves to the Net Billing Tariff and an eligible rate plan. It does so without the new-customer extras: the CPUC ruled that customers moving from NEM 1.0 or 2.0 at the end of their legacy period do not receive the ACC Plus adder, and they get no nine-year Net Billing legacy period (D.22-12-056; CPUC). The earliest systems are reaching that point now: a NEM 1.0 system with a 2006 PTO date hits 20 years in 2026. SCE’s first NEM 2.0 systems, from mid-2017, reach it in 2037, and the last ones, completed around spring 2026, in about 2046.

The 20 years cover the tariff, not the whole bill. D.16-01-044 says the guaranteed duration applies only to service under the net metering tariff, “not to any other aspect of the customer’s bill.” Rates and fixed charges can change: since November 2025, SCE bills legacy customers its Base Services Charge each month, and because SCE lowered its per-kWh rates at the same time, NEM 1.0 and 2.0 credits fell with them (SCE). How that shows up on the statement is in SCE solar billing explained.

LADWP customers: none of the NEM 2.0 and 3.0 rules above apply. The Los Angeles Department of Water and Power is a municipal utility with its own net metering program, outside the CPUC’s tariffs; see LADWP net metering. Cali Energy (CSLB #1032379) installs in both LADWP and SCE territory, so if you are not sure which rules govern your roof, ask us.

Figures on this page come from the primary sources below and, where noted, from Cali Energy calculations using the stated assumptions. Rates, incentives, and program terms change; each was verified October 5, 2026.

1. CPUC — Net Energy Metering and Net Billing (NEM 1.0, NEM 2.0 and Net Billing Tariff compared)
2. CPUC — Net Energy Metering Rulemaking R.14-07-002 (utility transition dates to NEM 2.0)
3. CPUC Decision D.14-03-041 — 20-year transition period, modifications and transfer rules
4. CPUC Decision D.16-01-044 — NEM successor tariff (NEM 2.0)
5. CPUC Decision D.22-12-056 — Net Billing Tariff, NEM 2.0 sunset, storage additions, nine-year legacy period
6. SCE — Schedule NEM-ST, Net Energy Metering Successor Tariff (Special Conditions 8–10)
7. PG&E — Electric Schedule NEM2, Net Energy Metering Service
8. SCE — Solar Billing Plan (Energy Export Credit values)
9. SCE — Base Services Charge (effective November 2025, applies to NEM and Solar Billing Plan customers)
10. California Legislature — AB 942 (2025–2026) bill status
11. SCE — Net Energy Metering FAQ (expansion limits also apply to added storage; “NEM 1.0/2.0 Expansion” application)