NEM 3.0 Does NOT Apply to LADWP
LADWP and other municipal utilities are exempt from NEM 3.0. LA homeowners keep full retail net metering and save $1,800+/yr with solar. Here's what changed for the rest of California.
Last Updated: March 2026
What is NEM 3.0?
The plain-English explanation
The Simple Version
NEM 3.0 (officially "Net Billing Tariff") changes how much California utilities pay you when your solar panels send excess electricity to the grid.
- Export credits dropped ~75% — Excess solar you send to the grid is worth less
- Self-consumption unchanged — Solar you use directly still saves full retail rate
- Batteries matter more — Storing solar for evening use maximizes value
Who is affected?
NEM 3.0 applies to new solar installations connecting to PG&E, SCE, or SDG&E after April 14, 2023. LADWP customers (Los Angeles) are NOT affected — LADWP has its own separate net metering program.
Does NEM 3.0 Apply to LADWP?
No — LADWP and other municipal utilities are exempt from NEM 3.0
LADWP Has Its Own Net Metering Program
The Los Angeles Department of Water and Power (LADWP) is a municipal utility, not regulated by the California Public Utilities Commission (CPUC). NEM 3.0 — officially the Net Billing Tariff — only applies to CPUC-regulated investor-owned utilities: PG&E, SCE, and SDG&E. LADWP customers keep their own net metering program with generally more favorable credit rates.
Affected by NEM 3.0
- PG&E (Northern California)
- SCE (Southern California Edison)
- SDG&E (San Diego)
NOT Affected (Municipal)
- LADWP (Los Angeles)
- GWP (Glendale Water & Power)
- BWP (Burbank Water and Power)
- Pasadena Water and Power
What Changed & Why It Matters
Side-by-side comparison of NEM 2.0 vs NEM 3.0
| Aspect | NEM 2.0 (Old) | NEM 3.0 (Current) | Impact |
|---|---|---|---|
| Export Credits | Full retail rate (~$0.30/kWh) | Reduced rate (~$0.05-0.08/kWh avg) | 75-80% reduction in export value |
| System Value | Maximize exports, sell to grid | Maximize self-consumption | Batteries become more valuable |
| Payback Period | 5-7 years typical | 8-12 years without battery | Longer but still profitable |
| Best Strategy | Large system, export excess | Right-sized + battery storage | Design approach changed |
How NEM 3.0 Affects Different Homeowners
Real scenarios to help you understand your situation
The Morning Worker
Away 8am-6pm, uses electricity in evening
Solar exports during day, uses cheap credits at night
Without battery: Exports earn little, buys expensive evening power. With battery: Stores daytime solar for evening use.
The Work-From-Home Professional
Home during peak solar hours, uses AC midday
Good savings from direct solar use and exports
Excellent self-consumption means NEM 3.0 impact is minimal
The Retired Couple
Home most of the day, moderate usage
Good savings, excess credits built up
Natural self-consumption pattern works well under NEM 3.0
The Large Family
High usage, multiple schedules, evening peak
Large system to cover high bills
High evening usage requires battery to maximize savings
How to Maximize Value Under NEM 3.0
Smart strategies for the new policy environment
Add Battery Storage
Store excess daytime solar for evening use when export credits are lowest and your usage is highest. This captures value that would otherwise be lost to low export rates.
- Use stored solar at peak evening rates
- Backup power during outages
- SGIP rebates reduce cost
Shift Usage to Daytime
Run high-energy appliances during solar production hours to maximize self-consumption. Smart home automation can help.
- Run dishwasher, laundry midday
- Pre-cool home in afternoon
- Charge EVs during solar hours
Right-Size Your System
Under NEM 3.0, oversized systems provide diminishing returns. Design for your actual consumption patterns, not maximum roof coverage.
- Match system to actual usage
- Invest savings in battery storage
- Plan for future EV if applicable
Focus on Self-Consumption
Every kWh you use directly from your panels saves you the full retail rate (~$0.30-0.45), not just the export credit (~$0.05-0.08).
- Direct use saves 4-6x more than exports
- Monitor production and usage patterns
- Optimize with smart home integration
Learn More
NEM 3.0 FAQ
Your questions answered
Does LADWP use NEM 3.0?
No. LADWP (Los Angeles Department of Water and Power) does NOT use NEM 3.0. LADWP is a municipal utility that operates its own net metering program, completely separate from the CPUC's Net Billing Tariff (NEM 3.0). NEM 3.0 only applies to customers of investor-owned utilities: PG&E, SCE, and SDG&E. If you live in the City of Los Angeles and get your electricity from LADWP, NEM 3.0 does not affect you.
Does NEM 3.0 apply to LADWP net metering?
No, NEM 3.0 does not apply to LADWP net metering. LADWP has its own solar net metering program with different (generally more favorable) credit rates than NEM 3.0. Similarly, other municipal utilities like Glendale Water & Power (GWP), Burbank Water and Power (BWP), and Pasadena Water and Power are also exempt from NEM 3.0.
What is NEM 3.0?
NEM 3.0 (Net Energy Metering 3.0), officially called Net Billing Tariff, is California's current solar policy for new installations connecting to PG&E, SCE, or SDG&E. It replaced NEM 2.0 in April 2023 and changed how solar customers are credited for electricity they export to the grid. Municipal utilities like LADWP, GWP, and BWP have their own separate net metering programs.
How much are NEM 3.0 export credits worth?
Under NEM 3.0, export credits vary by time of day and season, typically ranging from $0.03-0.08 per kWh on average—about 75% less than NEM 2.0 retail rates. The exact rate depends on your utility's Avoided Cost Calculator values, which change annually.
Is solar still worth it under NEM 3.0?
Yes, solar is still financially beneficial under NEM 3.0. While export credits are lower, California has some of the highest electricity rates in the country ($0.30-0.45/kWh). Every kWh you use directly from your panels still saves you the full retail rate. Adding a battery can restore much of the economic benefit by storing solar for evening use.
Which utilities are affected by NEM 3.0 in California?
NEM 3.0 applies only to the three investor-owned utilities regulated by the CPUC: Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E). Municipal utilities like LADWP, Glendale Water & Power, Burbank Water and Power, Pasadena Water and Power, and Sacramento Municipal Utility District (SMUD) are NOT affected by NEM 3.0 and have their own net metering programs.
Should I add a battery under NEM 3.0?
For most homeowners who use electricity primarily in the evening, a battery significantly improves NEM 3.0 economics. The battery stores excess daytime solar production for use when rates are highest and export credits are lowest. California's SGIP program also offers rebates to reduce battery costs.
Can I get grandfathered into NEM 2.0?
No, NEM 2.0 closed to new applications in April 2023. Existing NEM 2.0 customers are grandfathered for 20 years from their original interconnection date. New installations must enroll in NEM 3.0 (Net Billing Tariff).
See Your NEM 3.0 Solar Savings
Get a personalized estimate that accounts for NEM 3.0 rates, battery storage options, and your specific usage patterns.