What is Net Metering?

Net metering is defined as measuring the difference between the electricity supplied over the electric distribution system and the electricity generated by a customer which is fed back into the electric distribution system over a billing period. Simply stated, the meter is allowed to register the flow of electricity in both directions, and only the net amount is billed (or credited) each month. The customer has the option to run the meter backward and may choose to receive a credit from the Distribution Company equal to the average monthly market price of generation per kilowatt-hour in any month during which there was a positive net difference between kilowatt-hours; generated and consumed. This credit will appear on the following month's bill.

Why is Net Metering Beneficial?

Utility retail distribution rates for consumption are typically higher than market pricing for generation alone since retail rates include delivery costs and other charges. Net metering essentially values the generated energy at the full distribution rate of the local utility, up to the point where generation exceeds consumption. I.e., the generated energy is allowed to directly offset retail energy consumption. This provides substantial economic benefits to eligible customer generating facilities.