Pennsylvania
How the state’s net metering rule works and how utilities such as PECO Energy, PPL Electric Utilities and Duquesne Light word the year-end settlement, each with its tariff page.
Net metering explained
Net metering is a billing arrangement that lets certain customers reduce the electricity they are billed for by what their solar panels send back to the grid. Your state and electric utility decide who is eligible, so ask your utility how it counts that power.
Source: U.S. Energy Information Administration (EIA), Glossary, “Net metering”; U.S. Department of Energy (DOE), “Homeowner’s Guide to Solar” (both undated). Checked 9 Oct 2026.
In this guide
Net metering and net billing are two ways your bill can treat the solar power you send back. One made-up month, worked both ways, shows how the same panels give two different bills.
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What is net metering?
Net metering is a billing arrangement in which the power your solar system sends to the grid offsets the electricity you buy from it. Your bill then counts only the difference.
The name comes from the 1990s, the DOE says, when the electric meter simply ran backwards while power was being exported. Today it is “rarely that simple,” the DOE adds.
- Net metering
- Utility tariffs or billing programs that let certain types of customers reduce the electricity the grid bills them for in a billing period, as the EIA defines it.
- Export credit
- The credit your bill gives you for the extra power your system makes and returns to the grid, as the Federal Trade Commission (FTC) describes it. Under net metering it is counted in kilowatt-hours, the National Laboratory of the Rockies (NLR) says.
- Tariff
- The published rate schedules and general terms and conditions under which a service is supplied, as the EIA defines it.
- Kilowatt-hour (kWh)
- One kilowatt (1,000 watts) of power used for one hour, as the EIA defines it.
Source: EIA, Glossary entries “Net metering”, “Tariff” and “Kilowatthour (kWh)” (all undated); FTC, “Solar Power for Your Home” (April 2022); NLR, “Energy Compensation Mechanisms for Distributed Generation” (updated 20 Feb 2026); DOE, “Homeowner’s Guide to Solar” (undated). Checked 9 Oct 2026.
How does net metering work on your bill?
Under net metering, your bill counts the electricity you buy from the grid minus the surplus you send to it over each billing period. The EIA puts it as total consumption minus solar generation within a specific billing period, regardless of when the surplus reached the grid.
- The panels make 600 kWh.
- The home uses 400 kWh of that as it is made.
- The other 200 kWh, the surplus, goes to the grid.
- The home also buys 500 kWh from the grid, so it uses 900 kWh in all.
Made-up numbers. Net metering counts the 500 kWh the home bought and the 200 kWh it sent back, so 300 kWh are billed.
Source: EIA, “Lower compensation rates for residential solar PV generation could reduce overall adoption” (25 Mar 2020); 16 U.S.C. 2621(d)(11) (2024 edition). The figures in the list are invented. Checked 9 Oct 2026.
Only the 200 kWh surplus earns credit. The home uses the other 400 kWh straight from the panels, so that power never reaches the grid, and the grid supplies the remaining 500 kWh.
What is the difference between net metering and net billing?
Net metering usually credits the power you send back at the retail rate, the EIA says. Net billing pays a different rate, which the NLR describes as lower. Staff of the New Jersey Board of Public Utilities (BPU) list net metering, net billing and buy all sell all as separate mechanisms.
| Model | How your bill counts the power | What the power you send back earns |
|---|---|---|
| Net metering | The surplus you send back offsets the electricity you buy, and you are billed for the difference over the billing period. | Usually a credit at the retail rate (NLR; EIA; BPU staff). |
| Net billing | Your bill measures the power you import and the power you export, and the exports are credited at a set sell rate. Banked kilowatt-hours are typically not allowed. | A sell rate that differs from the retail rate and often reflects the utility’s avoided cost (NLR; BPU staff). |
Another arrangement, buy all sell all, has you pay the retail rate for everything your home uses. It pays you a set sell rate for everything your panels make, the NLR says. The EIA calls this setup gross metering.
Source: NLR, “Energy Compensation Mechanisms for Distributed Generation” (updated 20 Feb 2026), sections “Net Energy Metering”, “Buy-All, Sell-All” and “Net Billing”; BPU, Notice in Docket No. QO24090723 (updated 5 Feb 2025), “Compensation mechanism” row; EIA, “Lower compensation rates for residential solar PV generation could reduce overall adoption” (25 Mar 2020). Checked 9 Oct 2026.
What do retail rate, wholesale rate and avoided cost mean?
Retail rate, wholesale rate and avoided cost are three benchmarks for valuing a kilowatt-hour you send back.
- Retail rate
- The rate you pay to buy electricity from the grid.
- Wholesale rate
- The rate at which electricity is traded on regional electricity markets. The EIA says it is lower than the retail rate because it counts the cost of generating the power but not of delivering it.
- Avoided cost
- What the utility would otherwise pay to generate that power itself or buy it from another source, the NLR says. At a minimum it reflects the wholesale rate.
Source: EIA, “Lower compensation rates for residential solar PV generation could reduce overall adoption” (25 Mar 2020); NLR, “Energy Compensation Mechanisms for Distributed Generation” (updated 20 Feb 2026), “Avoided Cost Rate”. Checked 9 Oct 2026.
Worked example with made-up numbers
Take the home from the diagram and run its month through two bills. Every number is invented for practice.
- The home uses 900 kWh. The panels make 600 kWh; the home uses 400 kWh of that as it is made and sends 200 kWh to the grid. It buys 500 kWh from the grid.
- The retail rate is $0.20 a kWh, and a fixed charge of $10.00 a month is on every bill below.
- Net billing pays $0.08 a kWh for the 200 kWh sent back.
| Model | How the bill is worked out | Bill |
|---|---|---|
| Net metering | (500 − 200) × $0.20 + $10.00 = $60.00 + $10.00 | $70.00 |
| Net billing | 500 × $0.20 − 200 × $0.08 + $10.00 = $100.00 − $16.00 + $10.00 | $94.00 |
Source: Arithmetic on made-up inputs, computed 9 Oct 2026.
- Both models count the same 200 kWh of surplus. Only the rate on it changes, from $0.20 to $0.08 a kWh.
- If an installer estimates your bill, ask which model and which rates the estimate assumes, and write the answer beside the quote. How to compare solar quotes
What happens when you send back more than you buy?
Your rule decides what the extra earns: whether credit carries forward, for how long and whether a balance left at the end is paid out. The NLR says net metering credit is counted in kilowatt-hours and can offset use in the current billing cycle or a later one.
- Month 1, made-up numbers: the home buys 100 kWh and sends back 350 kWh. No kilowatt-hours are billed, and 250 kWh of credit carry forward.
- Month 2, made-up numbers: the home buys 600 kWh and sends back 100 kWh, so it is 500 kWh short. The 250 kWh of credit covers half of that, and 250 kWh are billed.
Source: NLR, “Energy Compensation Mechanisms for Distributed Generation” (updated 20 Feb 2026), “Net Energy Metering”; BPU, “Notice in Docket No. QO24090723” (updated 5 Feb 2025), “Credit retention” row. The two months assume carry-forward and are arithmetic on made-up inputs. Checked 9 Oct 2026.
Does net metering end your electric bill?
No. The FTC says that when you use solar power you pay for fewer kilowatt-hours but still pay the utility’s fixed charges, such as delivery or administrative costs.
Find those charges on your bill and ask which ones stay. In the example above, every made-up bill carries the $10.00 fixed charge.
Source: FTC, “Solar Power for Your Home”, “Is Solar Power Right for You?” (April 2022). Checked 9 Oct 2026.
Who sets the rules for net metering?
Your state regulator or your utility decides. Federal law (16 U.S.C. 2621) requires each state regulator, and each utility without state rate regulation, to consider net metering and decide whether to adopt it.
Congress added net metering to the standards regulators must consider on 8 Aug 2005, and the same law lets a regulator or utility decline it. So where you live decides.
The DOE says eligibility for net metering payments depends on policies and practices in your state and electric utility. It names your local utility as a good place to start. That is why Pennsylvania and New Jersey each have their own guide.
Source: 16 U.S.C. 2621(a), (c) and (d)(11), Public Utility Regulatory Policies Act of 1978, section 111 (2024 edition; paragraph (d)(11) added by Pub. L. 109-58 on 8 Aug 2005); DOE, “Homeowner’s Guide to Solar” (undated). Checked 9 Oct 2026.
Which questions find the rule behind your own bill?
Seven questions get you to the rule behind your own bill. Start with your electric bill, which names your utility or electricity provider, and ask that company in writing which tariff section or plan document states the answers.
- Eligibility. Is net metering available at your address, for a system of your size, and is there a limit on total enrollment that has been reached?
- Rate. What does each kilowatt-hour you send back earn, and what sets that rate?
- Netting. Is power netted over the whole billing period or in shorter steps?
- Time of day. If your rate changes by time of day, does an export earn the rate for the hour it was sent?
- Leftover credit. Does credit left at the end of the period carry forward, and is it paid out, and at what rate?
- Charges that stay. Which charges stay on the bill whatever you send back?
- How long. If the rule changes, how long do today’s terms apply to your system?
Source: BPU, “Notice in Docket No. QO24090723” (updated 5 Feb 2025), table of policy design elements; DOE, “Homeowner’s Guide to Solar” (undated), net metering answer; NLR, “Energy Compensation Mechanisms for Distributed Generation” (updated 20 Feb 2026), “Time-of-Use Rate”. Checked 9 Oct 2026.
Questions about net metering
Do you get paid for the solar power you send to the grid?
Your state and utility decide. The DOE says net metering compensates system owners for the power they export, but whether your system qualifies depends on state and utility policies and practices. Ask your utility, or your electricity provider if you choose one, how it credits or pays for power you send back, and get the answer in writing.
Source: DOE, “Homeowner’s Guide to Solar” (undated). Checked 9 Oct 2026.
Is net metering the same as connecting to the grid?
No. Federal law lists them as separate standards. Net metering lets power generated at your home offset power the utility supplies, and interconnection connects your generating equipment to the local distribution facilities.
Source: 16 U.S.C. 2621(d)(11) and (d)(15) (2024 edition). Checked 9 Oct 2026.
Can a leased system earn net metering credit?
Where your utility uses net metering, the FTC says, it might credit your account for the surplus a leased system returns to the grid.
Source: FTC, “Solar Power for Your Home”, “Leases and Power Purchase Agreements” (April 2022). Checked 9 Oct 2026.
Which rule applies in Pennsylvania and New Jersey?
Each market has its own guide, with the rule that applies there and the tariff or regulator page behind it.
New Jersey
How net metering works for a New Jersey home, what is changing, and how the state’s electric utilities word the year-end settlement.
Find your market’s rules
Your ZIP code finds your market, and each market’s guide shows how the power you send back is credited there.
The made-up bills show how each model counts power. Your utility’s tariff or your plan documents decide what applies to your home.
Sources
Each source was checked on 9 Oct 2026. Undated pages are marked.
- U.S. Energy Information Administration, Glossary, Net metering, Tariff and Kilowatthour (kWh) (all undated).
- U.S. Energy Information Administration, Today in Energy, Lower compensation rates for residential solar PV generation could reduce overall adoption (25 Mar 2020).
- United States Code, Title 16, section 2621, Consideration and determination respecting certain ratemaking standards (Public Utility Regulatory Policies Act of 1978, section 111), 2024 edition, U.S. Government Publishing Office.
- U.S. Department of Energy, Homeowner’s Guide to Solar (undated; the net metering question only).
- National Laboratory of the Rockies (NLR, the National Renewable Energy Laboratory until its renaming on 1 Dec 2025), Energy Compensation Mechanisms for Distributed Generation (updated 20 Feb 2026).
- U.S. Department of Energy, Energy Department Renames NREL “National Lab of the Rockies” (1 Dec 2025).
- Federal Trade Commission, Solar Power for Your Home (April 2022).
- New Jersey Board of Public Utilities, Notice, In the Matter of Net Metering for Class I Renewable Energy Systems, Docket No. QO24090723 (updated 5 Feb 2025), table of policy design elements.