Net metering, distributed generation and net billing: how each state credits the power you send out

Two programs, two sets of rules

“Net metering” is still the phrase most solar pitches use. When a page or a salesperson uses it about a new system, ask which state and which year they mean. Each section below gives the program a new customer joins today in that state, its name, its start date and how it credits the power you send out, and neither state’s rules carry over to the other.

Michigan: distributed generation replaced net metering for new customers

The Michigan Public Service Commission (MPSC) calls the current program distributed generation, or DG, and says it replaced legacy net metering: Consumers Energy says its DG program took effect January 1, 2021, and DTE lists its older retail net metering rider, Rider 16, as closed to new applicants.

Public Act 235 of 2023 changed the program’s size limits. It increased the DG cap from 1 percent to 10 percent of a utility’s average five-year in-state peak load. At least 50 percent of the cap is reserved for systems under 20 kW, and up to 50 percent for systems over 20 kW up to 550 kW. A page that says Michigan “removed” the cap has it wrong, because the cap was raised. The law also lets an eligible generator be sized to 110 percent of the customer’s prior-12-month consumption, and it removes the generation meter requirement for systems over 20 kW. It’s been in effect since February 27, 2024.

Each utility then filed an updated DG tariff. The MPSC says all of them were approved on March 13, 2025: Consumers Energy (U-21796), DTE Electric (U-21798), Indiana Michigan Power (U-21795), UPPCO (U-21791), Alpena (U-21794), NSP (U-21793) and UMERC (U-21790). Customers must interconnect before operating.

How DTE credits you

DTE’s Rider 18 letter to rooftop solar customers states the rule in two lines. Inflow, the power you draw from the grid, is charged at the retail rate. Outflow, the excess your system sends out, is credited at the power supply rate including the power supply cost recovery factor, and the credit can offset all electric charges except securitization charges. Excess goes into an Excess Generation Bank that’s carried forward, and DTE says the credits “do not expire and cannot be withdrawn or transferred.” DTE says the first Rider 18 bill takes one to two billing cycles.

Sizing under Rider 18 is a rule for eligibility, not a forecast. A generator is eligible when expected generation does not exceed 110 percent of annual consumption, and DTE computes expected generation as nameplate DC capacity times 0.1274 times 8,760, which comes to about 1,116 kWh per kW per year. It’s the test for whether a system fits DTE’s 110 percent limit; don’t use it to predict what your roof will produce.

DTE’s rate-book sheets D-115.00 to D-116.00 hold the credit rates in cents per kWh, and those sheets aren’t reproduced here, so ask the company to show you the sheet behind its numbers.

How Consumers Energy credits you

Consumers Energy has three DG levels: Level 1 up to 20 kW, Level 2 over 20 to 150 kW and Level 3 over 150 to 550 kW, on a single meter. Its page says excess energy is credited at the power supply rate including transmission, and that as of February 27, 2024, DG credits are applied to all electric charges. A generator may offset up to 110 percent of historical 12-month usage, and the application carries a $50 fee.

Consumers also says that even with a perfect system you’ll still have a bill for fixed charges, and it warns against anyone who promises “you will not receive an electric bill.”

What this means in words

Both utilities say the same thing in different words: power you draw is charged at the retail rate, and power you send out is credited at the power supply rate. For the retail side, EIA’s Electric Power Monthly puts the average Michigan residential price at 22.99 cents per kWh in August 2026, up from 20.73 in August 2025; August is a high-use month, so that isn’t an annual average.

The MPSC’s consumer tips add a point about outages: inverters shut off in an outage by national standards, so backup power needs a battery. The battery guide picks that up.

In its October 8, 2025 report, the MPSC counted 23,910 DG customers with 24,150 installations in 2024, up from 21,609 and 21,845, with DG capacity of 222.4 MW against 189.6 MW in 2023.

California: net billing replaced net metering

California’s Public Utilities Commission (CPUC) says that since April 15, 2023, customers applying for interconnection have taken service on the new net billing tariff (NBT) under decision D.22-12-056. The three large investor-owned utilities call it the Solar Billing Plan, and “NEM 3.0” is the popular name. It applies in PG&E, SCE and SDG&E territory. LADWP and SMUD are municipal utilities, so the NBT and Rule 21 don’t apply there; ask those utilities for their own rules.

What exports earn

Under NEM 1.0 and 2.0 the basis of credits for retail energy exports is import rates. For NBT, the CPUC’s comparison table gives the basis as CPUC Avoided Cost Calculator values, “usually lower than import rates.” Its text says export credits are usually lower than the retail rate but can rise above it on late summer evenings, and that batteries let customers export in those high-value hours. About 70 percent of NBT customers had paired batteries by the end of 2024, by the CPUC’s count.

The credits are hourly and come from the Avoided Cost Calculator, not from a flat percentage of retail. On the retail side, EIA puts the average California residential price at 29.75 cents per kWh in August 2026, against 30.92 in August 2025. That’s a monthly figure for a high-use month.

Terms of the tariff

The original NBT customer can use the NBT tariff for nine years; that isn’t available to customers moving from NEM. Residential PG&E and SCE customers who apply before the end of 2027 get slightly higher export credits, called an adder, for nine years. SDG&E is excluded, and customers required by building code to add solar don’t get it. NBT customers must use an electrification time-of-use rate: E-ELEC at PG&E, TOU-D-PRIME at SCE and EV-TOU-5 at SDG&E. Bills are due monthly.

Customers who are already on NEM

NEM tariffs are closed to new enrollments. Under NEM 2.0 (decision D.14-03-041), customers are allowed to remain on that tariff for 20 years from the date they interconnected, or may switch to the current tariff. In PG&E territory, applications submitted before April 15, 2023 had to be completed before April 15, 2026 to be eligible for NEM2; from April 15, 2026 those applications transition to the Solar Billing Plan. That pipeline is closed, so a quote that promises a new NEM 2.0 enrollment is promising something the tariffs don’t offer.

Rule 21

Rule 21 is the CPUC tariff describing the interconnection, operating and metering requirements for generation connecting to an investor-owned utility’s system. It’s the process that runs alongside the tariff; the interconnection timelines guide has each utility’s review times and fees.

What to ask a company about credits

Ask the company which program and tariff it assumed, the date of the interconnection application, and where its production and credit assumptions come from. The federal credit isn’t part of any of it for a 2026 install; the federal credit page has the dates.