Net Surplus Compensation
Green Energy Generates Its Own Rewards
With the enactment of Assembly Bill 920 (AB 920), California utilities, including PG&E, have been authorized to offer special compensation — called Net Surplus Compensation (NSC) — to customers for excess energy their renewable system generates and sends back to the grid. To learn more, just click on the headings, below, to see Net Energy Metering (NEM) customers’ most frequently asked questions.
Your Surplus Energy and Your PG&E Bill
Assembly Bill 920 (AB 920) authorized payments to be made to NEM customers who produce more electricity than they use over a 12-month period — also called the “true-up period.” The compensation offered to customers — known as Net Surplus Compensation (NSC) — is a rate based on a rolling 12-month average of spot market prices and may fluctuate on a monthly basis. If you qualify for a Net Surplus Compensation payment, it will be added to your PG&E bill as a credit. If a negative balance exists on your PG&E bill during your true-up month when this credit is applied, you may request a check.
Depending on your type of PG&E account, this credit will either be included in the “Total Adjustments”* or “Electricity” line item on your PG&E bill as shown in the examples below:
If during the course of your true-up period, the electricity in kilowatt-hours (kWh) exported to PG&E by your solar or wind generator is greater than the electricity you used onsite, you’ll have generated surplus electricity.
On your annual true-up statement, if the Total Energy amount (kWh) is shown as a negative number, you have generated surplus electricity and are entitled to compensation. If the Total Energy amount is positive, you’ve used more electricity than you produced over the course of your true-up period and may be billed for this usage. The most important thing to know is — whether you generated a surplus or not — your energy bills were still reduced thanks to your green energy commitment.
The credit you see on your NEM statement is calculated using the full retail rate for energy. Several components make up this rate, including generation, transmission, distribution, and the funding of public purpose programs. When PG&E buys energy, it pays a generator a wholesale rate for energy. Similarly, when you generate surplus energy, you receive a wholesale-type rate for generation just like all other generators. The credit shown on your statement is calculated using the retail rate, which is higher than the wholesale rate because it takes into account several costs in addition to the generation component.
Net Surplus Compensation Facts and Information
In 2009, the law governing the Net Energy Metering (NEM) program for solar and wind generators was revised by Assembly Bill 920 (AB 920) to allow payment to those customers who have generated more electricity (kWh) than they used at their annual true-up. AB 920 is an added component of the NEM program for customers whose true-ups were on January 1, 2011, or later. On June 9, 2011, the California Public Utilities Commission (CPUC) approved the Net Surplus Compensation (NSC) rate for Net Energy Metering (NEM) customers who produce more electricity (kWh) than they use over their true-up period, usually 12 billing months. This payment was authorized by Assembly Bill 920 (AB 920). The Net Surplus Compensation rate may fluctuate every month, as it is based on a rolling 12-month average of spot market prices. Based on current market prices, the rate would be approximately 4 cents per kWh.
AB 920 took effect as of January 1, 2011. So, all customers who qualify on or after that date will receive payment for their surplus electricity as soon as the regulatory requirements are in place for the payment portion of the program. We are working as quickly as possible to comply with these requirements so that we can begin to pay customers.
The AB 920 program has been in effect since January 1, 2011. Payments to PG&E customers will begin on October 21, 2011.
This program will continue indefinitely. However, you may only qualify for compensation for years (or true-ups) whereby your renewable system has excess generation. If there are no excess kWhs generated in a given true-up period, you will not receive any AB 920 compensation for that period.
The NEM solar program is designed to enable customers to offset usage, not generate surplus energy. In order to participate in the NEM program, you are required to install a PV system that allows you to offset your annual onsite consumption.
Eligibility and Enrollment
As an existing Net Energy Metering (NEM) customer, PG&E has automatically enrolled you into the program, and your eligibility for payment will start with your 2011 true-up bill. For example:
- If you have surplus electricity at the end of your typical 12-month true-up period starting in 2011, you will qualify for payment for any surplus electricity.
- If you do not have surplus electricity at the end of your typical 12-month true-up period, you will not be eligible for payment and there will be no change from the current NEM program. If you have surplus electricity in any subsequent 12-month true-up, you will qualify for payment and be notified of your eligibility.
Note that your true-up may be any number of months, as long as it ends in 2011 or thereafter. For most customers it will be a 12-month cycle.
I moved into a house that has a solar system. How do I enroll in the Net Surplus Compensation program?
Most customers who move into homes with previously interconnected solar PV systems are automatically enrolled in PG&E's NEM program and are therefore eligible for this program. If your PV system is larger than 30 kW, additional steps may be required to enroll in the NEM program. Please contact our Solar Customer Service Center at 1-877-743-4112 for more information.
If you are an NEM customer you will still be eligible to receive payment for any surplus electricity you generate. However, if you have relinquished ownership of your Renewable Energy Credits (RECs) to your system’s third-party owner, you would only be paid for the wholesale value of the surplus electricity and not for the renewable component of the compensation program. This is because payment for surplus electricity under this program is comprised of two components: the value of actual electricity generated and the value of the renewable attributes of this electricity.
The Commission has placed a hold on any payments for Renewable Energy Credits until the California Energy Commission has set up a process to verify and track these attributes. Once this process is in place, PG&E should be allowed to make an additional payment to you in exchange for the REC value of your excess kWh.
Can I take advantage of this program if I am a Multifamily Affordable Solar Housing / New Solar Housing Partnership low-income customer?
Yes. Each PG&E electric account owner, whether a tenant unit or common area, which is under our NEM Virtual Net Metering program is eligible for this payment. If the electricity (kWh) allocated to your account over your true-up year exceeds your usage, you should be eligible to receive payment.
I own more than one Net Energy Metered property, does this program affect just me as the property owner or each property I own?
Each NEM account is treated separately, and you cannot combine accounts. Also, you must be the PG&E customer of record to participate in the NEM program.
What happens if I sold my house and moved out of an area served by PG&E before my 2011 true-up? Will I still receive partial payment?
The legislation does not make a provision for pre-2011 payment. If you moved prior to January 1, 2011 your account would be trued-up under the pre-AB 920 program rules and you would not receive payment for any surplus electricity you exported up to that time.
What happens if I sell my house and move out of an area served by PG&E after the 2011 true-up? Will I still be paid for the time that I generated surplus electricity?
Should you close your PG&E electric account starting in 2011, your account will be trued-up, just like any other true-up, under the new program, and you will be eligible to receive any payment due, should you generate surplus electricity.
You are not eligible for this program. You will need to contact your energy service provider or community choice aggregator directly for information about programs they offer.
Credits and Payments
If you qualify, the Net Surplus Compensation (NSC) you've earned will show on your Net Energy Metering (NEM) annual true-up statement in the "Net Surplus Compensation" box on the first page, The NSC amount reflected will be factored into your billing at the time of your annual true-up and will be incorporated into the line item for "Electricity" on your PG&E blue bill. If a negative balance exists on your PG&E bill after this credit is applied, you may leave the credit on your bill. The credit will never expire but will be used towards future energy charges or if you prefer, you may contact PG&E to request a check if the credit is over $1.00.
The Net Surplus Compensation rate may fluctuate monthly, as it is based on a rolling 12-month average of spot market prices. Your Net Surplus Compensation rate is determined by using the average day-ahead spot market prices (between 7 am and 5 pm) of procuring electricity for the previous 12 months from the time of your true-up. For example, if your true-up is in the month of October, prices from September of the previous year to the September of the current year will be used to calculate the rate that will then be applied for customers truing-up in the month of October. Given fluctuations in energy costs over time, your Net Surplus Compensation rate will also vary from year to year, possibly rising or falling along with market costs of energy. Based on current market prices, the rate would be approximately 4 cents per kWh.
View this month’s Net Surplus Compensation (PDF, 14 KB) rate information.
No. Payment is issued only if the customer has surplus electricity (i.e., exports more kilowatt-hours to the grid than they use over their true-up period). It’s not uncommon for a customer to have a monetary NEM credit, which is calculated using the full retail rate for energy. Several components make up this rate, including generation, transmission, distribution, and the funding of public purpose programs. These credits may show throughout the true-up period and at the time of their annual true-up, even if there is not actual surplus electricity. This can happen especially with solar energy, which is often exported to PG&E during peak periods when electricity is more expensive, and energy used is often supplied by PG&E’s grid during off-peak periods when electricity costs less. To understand more about the NEM billing process, refer see our how it works page.
No, credits are not available for excess generation prior to January 1, 2011.
No. However, if your payment is less than $1 you will not be eligible for a cash payment, but will receive a credit on your next bill.
Customers will begin receiving their Net Surplus Compensation on their bill at the end of October 2011. Bill credits will be applied to all eligible customers’ statements and if, after all charges are factored in, a credit over $1 remains, customers may request a check.
You could take advantage of any of PG&E’s many energy efficiency program options. More information about these programs is available at www.pge.com.
All investor-owned utilities in California are required to provide this program.
REC stands for Renewable Energy Credits and represents the renewable attributes of your solar or wind energy generation. The California Energy Commission has been charged with setting up a process for verifying and tracking these RECs. Once the REC program is in place, you may be able to receive a subsequent payment, in addition to the payment you receive for any surplus electricity you generate, based on the value of your RECs.
It is not known at this time how this program will impact electric rates.
If you have specific questions about your account or would like to request a check, please contact the PG&E Solar Center at 1-877-743-4112, Monday through Friday from 8 a.m. to 5 p.m.
To opt-out of your Net Surplus Compensation payment, use the Request to Opt-out of/ Opt-in to Compensation for Surplus Electricity form (PDF, 155 KB).
View this month’s Net Surplus Compensation (PDF, 14 KB) rate information.
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