NEM 2.0 Grandfathering: What Existing Solar Owners Keep
Short answer: if you switched on solar before NEM 3.0 took effect, you’re almost certainly grandfathered on your NEM 1.0 or 2.0 tariff for about 20 years from your original interconnection (Permission to Operate) date — and simply keeping your existing system keeps it. You don’t lose it just because NEM 3.0 exists. What can reset you to NEM 3.0 is a large system expansion. Here’s the line.
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- If you switched on solar before NEM 3.0, you’re generally grandfathered on your NEM 1.0 or 2.0 tariff for about 20 years from your original interconnection (Permission to Operate, or PTO) date — per the CPUC.
- Just keeping your existing system keeps it. NEM 3.0 applies to new applications submitted on or after April 15, 2023 — not to you.
- The main thing that can reset you to NEM 3.0 is a large system expansion — beyond a one-time 1 kW or 10% allowance. Confirm with your utility before you add panels.
- LADWP is separate (municipal) — its net metering isn’t the CPUC’s NEM 2.0 or 3.0.
How many years of NEM 2.0 do you have left?
Enter the year your system got Permission to Operate (PTO). The tool counts a 20-year legacy period from that date. It’s a planning estimate — your exact PTO date and end date are on file with your utility, so confirm there.
Assumptions: Based on the CPUC’s 20-year legacy period, measured from your original interconnection / Permission to Operate date. Your exact dates are on file with your utility — confirm there. This is an estimate for planning, not a guarantee, and policy can change.
Have us confirm your tariff and PTO dateWhat “grandfathering” actually means
When California moved to NEM 3.0 (officially the Net Billing Tariff), it did not change the deal for people who already had solar. Instead, the CPUC let existing customers keep their old tariff for a fixed legacy period.
Per the CPUC, customers who interconnected under NEM 1.0 or NEM 2.0 “are allowed to remain on” that tariff for 20 years from the date they interconnected — the same date your utility calls Permission to Operate (PTO). NEM 3.0 only governs systems whose interconnection application was submitted on or after April 15, 2023. So the fact that NEM 3.0 exists does not, by itself, do anything to an older system. You keep your NEM 2.0 terms — including its much better export credits — for the rest of your 20-year window.
This matters to a lot of households: roughly 2 million California homes are on these legacy NEM 1.0/2.0 tariffs. If that’s you, the headline is simple — you’re not losing it just because a newer, worse tariff went live.
On NEM 1.0? The same idea applies — the earliest solar adopters were also given a 20-year run from their interconnection date, so many NEM 1.0 homes are still comfortably inside their window. Whichever legacy tariff you’re on, grandfathering preserves the whole arrangement that made your system pencil out — the export credit value, the annual true-up, and the rate structure you signed up for — not just a single number. That’s exactly why it’s worth knowing what protects it and what doesn’t.
| Milestone | What happens |
|---|---|
| Your PTO / interconnection date | The 20-year clock starts — this is the date to confirm with your utility |
| Years 1–20 | You stay on your original NEM tariff, with its retail-rate-style export credits, as long as you don’t trigger a reset |
| If you sell the home mid-window | The system & the remaining years generally transfer to the new owner (verify in escrow) |
| End of year 20 | You roll onto the utility’s then-current tariff — today that would be NEM 3.0 / Net Billing |
Sources: CPUC — Net Energy Metering and Net Billing · Buchalter. Confirm your own PTO date with your utility.
What keeps your NEM 2.0 — and what can reset it
Most everyday things you’d do with your system are fine. The one to be careful about is growing the system. Here’s the line, side by side.
| Generally keeps your NEM 2.0 | Can reset the whole system to NEM 3.0 |
|---|---|
| Keeping your existing, already-interconnected system running | Reaching the end of your 20-year window (you roll to the then-current tariff) |
| Routine maintenance and like-for-like panel or inverter replacement | Re-applying for interconnection in a way the utility treats as a new system |
| A one-time expansion up to 1 kW or 10% of original size, whichever is greater | Expanding beyond the 1 kW / 10% threshold — the whole system typically moves |
| Adding a home battery (generally allowed — but confirm your configuration first) | A second capacity increase after you’ve already used the one-time allowance |
| Selling the home — system & remaining years generally transfer to the buyer | Certain ownership or relocation situations — verify with your utility before acting |
Sources: Baker Home Energy · CPUC — Net Billing Tariff (D.22-12-056). Thresholds and terms vary by utility — confirm before you expand.
The expansion rule, in plain terms
PG&E, SCE and SDG&E each publish essentially the same allowance, grounded in CPUC Decision D.22-12-056: a grandfathered NEM 1.0 or 2.0 customer may increase generating capacity once by up to 1 kW or 10% of the originally approved system size, whichever is greater, without moving to the Net Billing Tariff. It was designed so you could do normal maintenance and modest tweaks without penalty.
The catch: go past that threshold and the common outcome is that your entire system — not just the new panels — is moved to NEM 3.0. That’s a big deal, because NEM 3.0 credits your exports far less. Adding a battery is generally treated separately and usually allowed without a tariff change, but battery and inverter configurations can affect your export capability, so this is exactly the kind of thing to confirm in writing with your utility first. Before you add anything, ask your utility how it affects your NEM status — the answer is worth thousands over the life of the system. If a bigger system truly makes sense, we can help you weigh keeping NEM 2.0 against expanding, and design around the threshold.
A few practical notes. The allowance is generally a one-time move, so if you already nudged your system up once, a further increase is more likely to trigger a change — check what’s already on record. Get any utility answer in writing (an email or a case number), not a verbal “you’re probably fine.” And weigh the trade-off honestly: a few extra panels aren’t worth it if they drop your entire array onto NEM 3.0’s lower export credits. In some cases a separate, independently metered second system on NEM 3.0 — paired with a battery for self-consumption — can pencil out better than expanding the grandfathered one. That depends on your utility, roof and usage, so price it both ways before you commit.
The tariff follows the system, not you
NEM grandfathering is tied to the interconnected system, so when a home sells, the remaining years generally pass to the new owner — if 6 of the 20 years are used, the buyer inherits about 14. Sellers: pull your PTO date and tariff designation from your utility account and put them in the disclosure package. Buyers: verify the tariff and PTO date with the utility before you close, and don’t assume a system upgrade the previous owner made stayed within the expansion allowance.
A proposal is not a law
In 2025, a proposed bill (AB 942) drew alarming headlines for trying to shorten the 20-year window and change what happens when a solar home is sold. Two things to keep in mind: it is a proposed bill, not enacted law, and as of the last legislative action we could verify (amended in the state Senate on July 17, 2025) its harshest cutbacks to existing owners had been narrowed in committee. Legislation can still change — check the current status before making decisions, and don’t let a headline rush you into anything. The rules described on this page reflect the CPUC’s current tariff framework.
Why keeping NEM 2.0 is worth protecting
The whole reason grandfathering matters is that NEM 2.0 pays you far more for the energy you send back to the grid than NEM 3.0 does.
Under NEM 2.0, your exports are credited at close to the retail rate — the same rough value as the power you buy. Under NEM 3.0 (Net Billing), exports earn a time-varying credit that is usually far below retail — an illustrative 5–8 cents per kWh at common midday hours, though a few late-summer evening hours can be worth much more. Common estimates put the average export credit roughly 75% lower than NEM 2.0. That gap is exactly why a grandfathered owner should think twice before doing anything that could reset the clock, and why NEM 3.0 designs lean so heavily on batteries and self-consumption.
How those credits actually show up on your statement depends on your utility and rate plan — see how SCE solar billing works and how it stacks up against Los Angeles electricity rates. If you’re weighing new solar under today’s rules instead, we cover the current math in is solar still worth it in California?
- Log into your utility account (SCE, PG&E or SDG&E) and find your rate/tariff name — it should reference NEM or Net Energy Metering, not Net Billing.
- Note your Permission to Operate (PTO) date — add 20 years to estimate when your window ends.
- Before any expansion, ask the utility in writing whether it stays within the 1 kW / 10% one-time allowance.
- Keep your PTO letter and interconnection paperwork — you’ll want it if you sell.
One more time on LADWP: if your power comes from the Los Angeles Department of Water and Power, none of the NEM 2.0-versus-3.0 rules above apply to you. LADWP is a municipal utility with its own net metering program, separate from the CPUC. This page covers the investor-owned utilities — SCE, PG&E and SDG&E. Cali Energy (CSLB #1032379) works across both, so if you’re not sure which set of rules governs your roof, ask us.
Frequently asked
How long does NEM 2.0 grandfathering last in California?
Per the CPUC, NEM 1.0 and NEM 2.0 customers may stay on their legacy tariff for 20 years from the date they interconnected — the same date your utility calls Permission to Operate (PTO). Add 20 years to your PTO date for an estimate of when your window ends, and confirm the exact date with your utility.
Will I lose NEM 2.0 now that NEM 3.0 exists?
No — not automatically. NEM 3.0 (the Net Billing Tariff) applies to interconnection applications submitted on or after April 15, 2023. If your system was interconnected earlier, keeping it as-is keeps your grandfathered tariff for the rest of your 20-year window.
Can I add panels or a battery without losing NEM 2.0?
A battery is generally allowed without a tariff change — provided the configuration and interconnection comply with your utility's current rules; confirm before installing. For panels, there’s a one-time allowance to expand by up to 1 kW or 10% of the original size, whichever is greater (CPUC D.22-12-056). Exceeding the permitted expansion may require moving the whole system to NEM 3.0 — get written confirmation from your utility before modifying the system.
Does NEM 2.0 transfer if I sell my home?
Generally yes. The tariff follows the interconnected system, so the buyer inherits the remaining years — if 6 of 20 are used, roughly 14 remain. Verify the tariff and PTO date with the utility during escrow. Note that a proposed bill (AB 942, 2025–26 session, still pending as of mid-2026) touching home-sale rules has been debated; a proposal is not law, so check current status before relying on any change.
What happens at the end of the 20 years?
You roll onto your utility’s then-current tariff. Under today’s rules that would be NEM 3.0 / Net Billing, which credits exports at a time-varying rate usually well below retail. The exact successor rules that far out could differ — but the 20-year clock itself is what ends.
Is LADWP under NEM 2.0 or NEM 3.0?
Neither. The Los Angeles Department of Water and Power is a municipal utility with its own net metering program, separate from the CPUC’s NEM 2.0 and NEM 3.0. The rules on this page apply to the investor-owned utilities — SCE, PG&E and SDG&E.
Related reading
Not sure which NEM tariff you're on?
We'll help you read your utility account, confirm your PTO date and 20-year window, and design any expansion so it doesn't accidentally cost you your NEM 2.0. Call Cali Energy at +1-323-844-7777 (CSLB #1032379).
Get a free estimatePrepared by Cali Energy, August 2026. This article is for general educational purposes only and is not legal, tax, financial, engineering, or utility advice. Rates, incentives, codes, permit requirements, equipment specifications, prices, and program terms may change; figures and timelines are estimates, not guarantees. Confirm current requirements with the applicable utility, AHJ, program administrator, manufacturer, or a licensed professional. See our Content Disclaimer. Cali Energy · 19201 Parthenia St Unit E, Northridge, CA 91324 · CSLB #1032379 (B, C-10, C-39)