EEI > Issues & Policy > Generation > Distributed Generation and Net Metering Policies
Distributed Generation and Net Metering Policies
Across the country, there is growing interest in using rooftop solar panels and other small-scale, on-site power sources known as distributed generation (DG). To encourage the introduction of these systems when they first came to market years ago, many states approved a billing system called net metering.
While net metering policies vary by state, generally customers with rooftop solar or other DG systems are credited for any electricity they sell via the electric power grid. Electric companies are required to buy this power typically at the full retail rate, which includes all of the fixed costs of the poles, wires, meters, advanced technologies, and other infrastructure that makes the grid safe, reliable, and able to accommodate solar panels or other DG systems. Through the credit they receive, net-metered customers effectively are avoiding paying these costs for the grid. As a result, these costs are shifted to those customers without rooftop solar or other DG systems through higher utility bills.
Net metering policies and rate structures in many states should be updated so that everyone who uses the electric grid helps pay to maintain it and to keep it operating reliably at all times. This will ensure that all customers have safe and reliable electricity and that electric rates are fair and affordable for all customers.