Your Solar True-Up Bill, Explained (California 2026)
Your true-up is the annual reconciliation or reset of your solar account — but what you actually pay then depends on your tariff. Legacy NEM 1.0 and NEM 2.0 customers may have annual billing, while Net Billing Tariff (NEM 3.0) customers pay bill charges monthly and carry unused credits to the annual true-up. So you’re not hit with a whole year of net imports in one statement.
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- On SCE, PG&E and SDG&E, a true-up is the annual reconciliation or reset of your solar account — but what you actually pay at that point depends on your tariff.
- Legacy NEM 1.0 and NEM 2.0 may use annual billing (charges and credits roll over the 12-month cycle and settle at true-up). Net Billing Tariff (NEM 3.0) customers pay bill charges monthly and carry unused credits to the annual true-up — so you are not hit with a whole year of net imports in one statement.
- Under NEM 3.0, imports and exports are priced separately in dollars — it is not a one-for-one kWh bank.
- LADWP is different — a municipal utility that bills bi-monthly on its own solar rate schedules, not NEM 3.0.
What a true-up actually is
A true-up is the annual reconciliation or reset of your solar account — but what settles at that point depends on your tariff.
When you go solar on an investor-owned utility — Southern California Edison, PG&E or SDG&E — you don’t stop getting a bill. A true-up is the annual reconciliation or reset of a solar account, but what is actually paid at that point depends on the tariff. Legacy NEM 1.0 and NEM 2.0 customers may have annual billing, while Net Billing Tariff customers pay bill charges monthly and carry unused credits to the annual true-up.
In other words, “true-up” names the once-a-year event — it is not a promise that a whole year of energy is settled in a single payment. For the mechanics of one monthly statement, see how your monthly SCE solar bill works. This article is about the annual event — and what does (and doesn’t) land in it.
Which tariff are you on — monthly or annual billing?
Whether your net energy charges are paid month to month or deferred to year-end depends on the tariff you interconnected under.
Legacy NEM 1.0 and NEM 2.0 (systems interconnected before the April 2023 cutover) can use annual billing: your net energy charges and credits are tracked across the 12-month cycle, and a balance can settle at the annual true-up. NEM 2.0 also offered an optional monthly payment plan, but the classic experience was small monthly fixed charges with the energy math finishing at year-end.
The Net Billing Tariff (NEM 3.0) — which applies to new SCE, PG&E and SDG&E solar since April 2023 — works differently: you pay your bill charges every month. Imports are priced at your retail time-of-use rate and exports earn a separate time-varying credit; when your credits exceed your charges in a month, the leftover rolls forward. What carries to the annual true-up is chiefly those unused credits — so an NBT customer is not billed a whole year of net imports in one surprise statement.
What settles when: legacy NEM vs. the Net Billing Tariff
Some line items are billed every period; what reaches the annual true-up differs by tariff. Here is the split for a typical IOU solar customer.
| Line item | Legacy NEM 1.0 / 2.0 | Net Billing Tariff (NEM 3.0) |
|---|---|---|
| Minimum / base delivery charge | Billed every month | Billed every month |
| Non-bypassable charges | Charged on each imported kWh (roughly 2–4¢, approximate) | Charged on each imported kWh (roughly 2–4¢, approximate) |
| Imported (grid) energy | Tracked across the year; can roll over and reconcile at the annual true-up (annual billing) | Priced at your retail time-of-use rate and billed each month — you pay monthly, not at year-end |
| Export credits | Credited at the retail rate (minus non-bypassable charges), largely netting against imports over the year | A separate time-varying dollar credit, usually well below retail; leftover credits roll forward month to month |
| What reaches the annual true-up | A running 12-month balance of charges and credits is reconciled | Chiefly unused / leftover credits — not a whole year of net imports |
| Net surplus (overproduced all year) | Settled at a low Net Surplus Compensation rate (roughly 2–3¢/kWh) if elected | Settled at a low Net Surplus Compensation rate (roughly 2–3¢/kWh); surplus generally doesn’t carry over as cash |
Sources: SCE — Understanding Your NEM Bill · CPUC — Net Energy Metering & Net Billing
Why a true-up can still surprise you
Even when you pay every month, the year-end statement can look bigger than the small bills before it.
On the Net Billing Tariff you pay bill charges every month, so the true-up itself is mostly a reconciliation of leftover credits — but the run-up can still feel like a jump. Through the sunny months your export credits may cover much of your charges, making summer bills look tiny; when those banked credits run out in winter, the monthly charges you owe climb, and the true-up tallies where the year landed. On legacy annual billing the effect is larger, because more of the energy math is deferred to year-end.
A true-up balance does not automatically mean your system is broken or undersized. “Solar working normally” and “still owing at true-up” are different questions — we cover the panels-are-on-but-I-still-get-a-bill case in why you still have a bill after solar, and the my-bill-went-up case in why your bill went up after solar.
A quick checklist
- Usage grew — a new EV, added AC, a pool pump, or more people at home since the system was sized.
- The system was under-sized for your real consumption, so you imported more than you exported over the year.
- Evening-heavy usage on NEM 3.0 — you export cheap midday power but buy expensive peak power at night, with no battery to bridge the gap.
- Fixed and non-bypassable charges added up across the year even when solar zeroed out the energy.
- A shady or off-angle roof, panel soiling, or an inverter issue quietly cut production.
- Rate changes — import rates rose faster than your export credits.
NEM 2.0 vs. NEM 3.0: why they true up differently
Both have an annual true-up, but they bill on different schedules and value your exports in fundamentally different ways.
NEM 2.0 (legacy, for systems interconnected before the April 2023 cutover) credits exports at close to the retail rate, minus non-bypassable charges, and can use annual billing — over the year, exported and imported kWh largely net against each other, and the balance reconciles at the true-up.
NEM 3.0 — the Net Billing Tariff — bills monthly and prices imports and exports separately in dollars: you buy grid power at your full time-of-use retail rate, and you earn a time-varying export credit that’s usually far below retail (an illustrative 5–8¢/kWh at common midday hours, with a few late-summer evening hours worth much more). It is not a kWh-for-kWh bank — how your summer exports offset later bills depends on those hourly dollar values, and what carries to the annual true-up is chiefly unused credits. For the full breakdown, see NEM 3.0 explained for California.
What happens if you overproduce: net surplus
Generating more than you use across the whole year doesn’t earn a retail-rate check.
If, over the full 12 months, your credits exceed your charges, the leftover is settled through Net Surplus Compensation (NSC) — but only at a low, market-based rate (roughly 2–3¢/kWh), and generally only if you’ve opted in. Surplus credits don’t roll forward as cash the way many people assume. In practice this means over-sizing a system to “bank” a big surplus rarely pays — you’re far better off consuming your own production than exporting it for pennies.
How to avoid a big true-up next year
You can’t change the tariff, but you can change how much you import.
Right-size the system
Size to your actual annual usage — including any EV or heat-pump plans — so you’re not quietly importing more than you offset. These are estimates, not guarantees.
Self-consume midday power
Run the dishwasher, laundry, pool pump and EV charging while the sun is up, so cheap solar serves your load instead of earning a low export credit.
Add a battery
On NEM 3.0, storing midday production and using it during expensive evening peaks is the single biggest lever on your true-up. See how NEM 3.0 rewards storage.
Watch your usage drift
New appliances, more occupants, or a hotter summer raise imports. Check your utility’s app mid-cycle so the true-up isn’t a year-end surprise.
LADWP customers: a different system entirely
If your power comes from LADWP, none of the NEM 3.0 rules above apply to you.
LADWP is a municipal utility, not one of the CPUC-regulated investor-owned utilities, so it is not on NEM 3.0 / the Net Billing Tariff. It bills bi-monthly (every two months) and runs its own municipal solar rate schedules, which work on their own terms. Rules and credit values can change, so confirm the current schedule on LADWP’s rate pages rather than assuming it matches SCE. Much of Los Angeles is LADWP territory, so check which utility actually serves your address before comparing your true-up to a neighbor’s.
Frequently asked
What is a solar true-up bill in California?
A true-up is the annual reconciliation or reset of your solar account on SCE, PG&E and SDG&E — but what you actually pay then depends on your tariff. Legacy NEM 1.0 and NEM 2.0 customers may be on annual billing, where charges and credits roll over the 12-month cycle and a balance settles at true-up. Net Billing Tariff (NEM 3.0) customers pay their bill charges every month and mainly carry unused credits to the annual true-up. Any leftover surplus is handled through low-rate Net Surplus Compensation.
Why is my solar true-up bill so high?
On the Net Billing Tariff you pay every month, so a high year-end figure usually reflects rising winter charges once your summer export credits run out — not a whole year billed at once. Common causes: your usage grew (a new EV, more AC), the system was under-sized, you use most of your power in the evening while exporting cheap midday power under NEM 3.0, or fixed and non-bypassable charges added up over the year. Reduced production from shade, soiling or an inverter fault can also do it. On legacy annual billing, more of the energy math is deferred to year-end, so the swing is larger. It doesn’t automatically mean your system is broken.
How often am I billed, and when does the true-up happen?
It depends on your tariff. On the investor-owned utilities you get a statement every month. Under the Net Billing Tariff (NEM 3.0) you pay your bill charges monthly, and the annual true-up — typically the anniversary of your interconnection — mainly reconciles leftover credits. Legacy NEM 1.0 / 2.0 customers may be on annual billing, where the net energy balance settles at that yearly true-up. LADWP is different: it bills bi-monthly under its own municipal solar rate schedules, not NEM 3.0.
Do my solar credits roll over or expire?
Within your 12-month cycle, dollar credits roll from month to month to offset later charges. At the annual true-up the cycle resets. Under NEM 3.0, any leftover surplus is settled at a low Net Surplus Compensation rate (market-based, roughly 2–3¢/kWh) if you opted in — it generally does not carry forward as cash. Don’t count on banking a big surplus for a retail-rate payout.
Does a true-up bill mean my solar isn't working?
Not necessarily. A true-up balance can appear even when the system performs exactly as designed — it simply reflects that you imported more value than you exported over the year. If you’re seeing a bill you didn’t expect, the specifics are covered in why you still have a bill after solar and why your bill went up after solar.
Is LADWP's true-up different from SCE's?
Yes. LADWP is a municipal utility and is not on NEM 3.0 / the Net Billing Tariff. It bills bi-monthly and runs its own solar rate schedules on their own terms, so its credits and reconciliation don’t match SCE’s. Rules can change — confirm the current schedule on LADWP’s rate pages before comparing bills.
Related reading
Not sure what your true-up is telling you?
Send us a recent statement and your utility. We'll explain what you pay monthly vs. what reconciles at true-up, and whether a battery or resize would shrink next year's bill — a plain-English read, not a sales pitch.
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)