You can add to your solar. There is a line you can't cross.
If your building is on NEM 1.0 or NEM 2.0, that tariff is probably the most valuable energy asset you own — and it appreciates every time retail rates rise. You are allowed to expand the array without losing it. But the allowance is smaller than most people think, it is measured in a unit most people don't have, and going over it doesn't just affect the new panels. It can move the entire system to NEM 3.0.
The greater of 10% or 1 kW.
This is not an industry rule of thumb or a utility's internal policy. It is printed in the tariff sheets themselves, in near-identical language at all three large investor-owned utilities. Here it is verbatim, from PG&E Electric Schedule NEM2, Sheet 32, Special Condition 8.b (Advice 7489-E, effective January 22, 2025, issued pursuant to CPUC decision D.16-01-044):
"REGF" is utility drafting for Renewable Electrical Generating Facility — your array. Stay inside that sentence and your legacy tariff continues untouched for the rest of its term. The same provision appears here:
| Utility | Tariff | Where the rule sits |
|---|---|---|
| PG&E | Schedule NEM2 | Sheet 32, Special Condition 8.b |
| Southern California Edison | Schedule NEM-ST | Sheet 30, Special Condition 8.b |
| SDG&E | Schedule NEM-ST | Sheet 27, Special Condition 10.a |
Tariff sheets are amended regularly and sheet numbers move. These were read directly in August 2026. SMUD, Roseville Electric and other municipal utilities are not CPUC-regulated and none of this applies to them — see the Sacramento section below.
It's measured in AC watts. Your system is sold in DC watts.
This is the single most useful thing on this page, and it is almost never said out loud. The threshold isn't ten percent of the number on your proposal. The same PG&E tariff, at Sheet 20, Special Condition 3, defines what gets rated:
So the baseline is the CEC-AC rating of the modules and the AC nameplate of the inverter. It is not the DC panel wattage that appears on every proposal, every spec sheet, and in every conversation you have ever had about your system.
Systems are routinely built with DC-to-AC ratios between 1.2 and 1.4 — deliberately, because it improves production in real-world conditions. The practical consequence is that the number you know your system by and the number the utility is measuring are two different numbers, and yours is the bigger one.
Note that the 1 kW floor is genuinely useful on smaller systems. Because the tariff says "the greater of," a small array gets a full kilowatt of headroom even when 10% of its capacity is much less than that. Owners of small legacy systems often have more room than they expect, and owners of large ones have less.
There are two tests, not one.
Read the tariff sentence again and notice the word "and." The modification must not exceed the greater of 10% or 1 kW — and it must not "result in the REGF exceeding the Customer's annual onsite load."
That second clause is a separate ceiling, and it can bite on its own. It is a live risk for anyone whose consumption has fallen since the system went in: a business that changed shift patterns or replaced its lighting and HVAC, a property that lost a tenant, a household whose children have moved out. Your original system was sized to your load at the time. If the load has shrunk and the array grows, you can fail the second test while comfortably passing the first.
Confirmed present in the PG&E and SCE sheets. We could not confirm whether SDG&E's sheet carries the same clause, so SDG&E customers should treat it as applying until told otherwise.
You don't get refused. You get a choice — and one of the options is expensive.
This is where the real money is, and it is why the threshold deserves more care than it usually gets. From PG&E's NEM2 tariff, Footnote 7:
Option A — interconnect the new capacity separately, non-export
The original array keeps its legacy tariff. The added capacity is interconnected under Rule 21 as a non-exporting facility, which means it is never allowed to send power to the grid and earns no export credit at all. Its entire value is what you consume on site in the moment, or store. For a business with a large daytime load this can be a perfectly good outcome. For a property that exports most of what it makes, it is close to worthless.
Option B — move the entire system to the Net Billing Tariff
Not the new panels. The whole facility — including the array that has been earning legacy export credit for a decade — moves onto NEM 3.0 export values for good. You do not get the remainder of your 20 years back, and you cannot undo it by removing the panels afterwards.
Option C — build something that never touches the grid at all
The tariff footnote names two options because it is describing what happens to an interconnected facility. A genuinely standalone system — its own array, its own battery, its own loads, electrically isolated from utility-served wiring through an open-transition transfer switch — never files an interconnection application, so there is nothing for the utility to review against the 10% and nothing to trigger the choice above. Your legacy agreement covers the facility that's on it and is not touched.
Two honest caveats. "Off-grid" has to mean actually isolated — a grid-interactive inverter merely configured not to export is still an interconnected generator and still counts against your allowance. And it does not escape the building department: an off-grid PV system is still governed by the electrical code and still needs permits and inspection. What you're buying is self-consumption plus storage, with no export value at all, which is why this usually makes sense for one islandable load rather than a whole house — a well pump, an ag pump, a shop or barn, an EV charger, a detached ADU.
The asymmetry is the whole story. Adding a kilowatt of well-oriented panels in Northern California produces very roughly 1,600 to 1,700 kWh a year — that's the gain, and it's real. What's at risk is the export value of every kilowatt-hour the entire system sends to the grid, for every remaining year of the legacy period. On most systems those two numbers are not the same size, and the larger one is the one you already own.
How much larger depends on your array, your load shape and your tariff, and we won't put a single blended figure on it — for the same reason we don't publish an average NEM 3.0 export rate. Under legacy net metering an exported kilowatt-hour is credited near the retail rate, less non-bypassable charges. Under the Net Billing Tariff it is credited at hourly avoided-cost values that collapse to almost nothing at midday, when most rooftop solar actually exports, and spike on summer evenings. When California made that switch for new customers, pv magazine put the reduction in export compensation at roughly 75%, and the residential market fell by 45% over the following year.
One dating detail worth knowing, from the same footnote: this provision "will only be enforced after April 14, 2023, and for Load Aggregation after February 14, 2024." Before the Net Billing Tariff existed there was nowhere to send an over-threshold customer, so nothing happened to them. That is why advice written before 2023 — which is still sitting on a lot of websites — is not safe to rely on.
Your 20 years started at Permission to Operate.
The legacy period is 20 years at all three investor-owned utilities, and it runs from your PTO date — the day the utility authorized the system to run in parallel with the grid. SDG&E calls the same milestone Authorization to Operate in Parallel.
It does not run from the day you signed the contract, the day the panels went on the roof, the day you passed building inspection, or the day the CPUC issued a decision. Those dates can sit many months either side of PTO, and on a long commercial project the gap can be over a year.
The end is slightly later than the anniversary itself. PG&E's tariff runs the period to "the conclusion of the Customer's applicable Relevant Period that ends immediately on or after the 20th anniversary of the original PTO date" — in plain terms, to the end of your next annual true-up after the 20-year mark.
What we can't tell you
We could not find primary tariff text stating what tariff a customer is automatically moved to when the 20 years expire naturally. The industry assumption is "whatever the current successor tariff is at that time," which today means the Net Billing Tariff — but we would rather flag that as an assumption than present it as a rule.
A battery does not count against your 10%.
This surprises people, including some installers. Storage is governed by its own special condition, separate from the modification cap that applies to generation. It is not treated as an enlargement of the generator at all. From PG&E Electric Schedule NEM2, Special Condition 9.d:
SCE's Schedule NEM-ST, Special Condition 8.d, says the same thing about "Integrated or Directly Connected Energy Storage Devices." Both trace to D.16-01-044 rather than to the 2022 Net Billing Tariff decision that most articles cite — the conclusion those articles reach is right even where the citation isn't.
- You are not forced into a solar-only battery. The tariffs define two protected categories. Integrated storage charges only from the paired array. Directly Connected storage sits behind the meter and may also charge from the grid — SCE's tariff says so explicitly. The grid-chargeable version is what most owners actually want, for time-of-use arbitrage and outage cover, and it is expressly accommodated.
- Under 10 kW AC there is no sizing relationship required at all. Both utilities state there are no additional sizing requirements for the storage device relative to the size of the renewable generator. Above 10 kW, storage is capped at 150% of the paired generator's maximum output — SCE's own worked example is a 15 kW generator permitting up to 30 kW of storage. That cap sits in a 2017 sheet and one secondary source claims it has since been suspended; we could not find an advice letter doing so, so verify it against the current tariff book before relying on either position on a commercial project.
- Storage is also measured in AC, at the inverter nameplate — the same principle as the generation threshold. An AC-coupled battery therefore has a clean independent number; a DC-coupled battery shares the solar inverter and its contribution has to be documented against that shared AC output. That is a paperwork difference, not an eligibility difference. Both are allowed.
- Upsizing a battery later has its own separate limit. SCE caps a later increase to an existing paired battery at 10% of its original maximum aggregate output capacity without new interconnection review. Note that this is a third, distinct 10%-flavoured rule — different from the 150% initial sizing rule and different again from the 10%/1 kW generation cap. They are easy to conflate and they do not mean the same thing.
What's safe, what isn't, and what genuinely isn't settled.
| What you want to do | Effect on legacy net metering |
|---|---|
| Replace a failed inverter with the same or lower AC rating | Safe — the tariff covers "modifications and/or repairs" under the same rule |
| Add storage (PG&E / SCE / SDG&E) | Safe — carved out under its own special condition |
| Sell the property | Safe — eligibility survives transfer to a new owner, operator or account, provided the facility stays at its original location |
| Add capacity within the greater of 10% or 1 kW AC, still under annual onsite load | Safe — both tests must pass |
| Add capacity beyond that threshold | Forces the choice: separate non-export interconnection, or the whole facility to NBT |
| Move the system to a different property | Breaks it — SDG&E's tariff calls a transfer to a new location "a new installation requiring a new Interconnection Agreement" |
| Take panels down for a re-roof and put the same panels back | Not addressed in any tariff text we could find. It very likely falls under "remains at its original location," but that is an inference — tell your utility before, not after |
Two things the internet states confidently that the tariff does not say
- That the allowance is "one time." A great many solar articles say this flatly. The tariff text doesn't. It measures modifications against capacity "as established when the REGF was originally interconnected" — which describes a fixed ceiling against the original baseline, not a single-use coupon. In practice the outcome is often the same: use 8% on a first addition and only 2% of headroom is left. But the mechanism matters, because someone told "you get exactly one shot" may believe a small first addition burned the whole allowance when it didn't.
- That you definitely do, or definitely don't, need a new interconnection application. Guidance differs between utilities and we could not reconcile it. Treat filing as the default: an unnecessary filing costs a fee, while a missing one is how a system ends up out of compliance.
On a commercial array, 10% is the binding number.
Everything above applies to commercial and agricultural systems on legacy NEM — the tariffs don't distinguish. But the practical picture is different in three ways that matter to a property owner or a portfolio.
The 1 kW floor stops helping
On a 250 kW AC array, 10% is 25 kW and the 1 kW alternative is irrelevant. The allowance is real but proportional — and on a system that large, a DC-versus-AC misunderstanding is measured in tens of kilowatts, not hundreds of watts. Establishing the original interconnected AC capacity from the interconnection agreement is the first step of any expansion study, not an afterthought.
The onsite load test is a live constraint
Commercial load moves. A hotel that changed its laundry operation, a facility that swapped to LED and high-efficiency HVAC, a packhouse running a shorter season — all reduce annual onsite load, and the tariff's second condition is measured against it. We have seen the efficiency upgrade and the solar expansion pitched to the same owner in the same year by different vendors, neither aware of the other.
Non-export is often actually viable
The Rule 21 non-export option is a poor consolation prize for a house that exports all day. It is a genuinely reasonable answer for a building with a large, steady daytime load — cold storage, manufacturing, a hotel in season — where nearly all new production is consumed on site anyway. On commercial sites this option deserves to be priced properly rather than dismissed.
In SMUD territory, almost none of the above applies.
The Sacramento metro is split between SMUD, PG&E and Roseville Electric. SMUD is a customer-owned municipal utility and is not regulated by the CPUC, so the NEM2 tariff language quoted on this page — the 10%/1 kW threshold, the storage carve-out, the 20-year PTO clock — governs nothing in SMUD territory. NEM 3.0 doesn't apply there either.
SMUD has its own legacy protection with its own shape. If you interconnected on or before February 28, 2022, you are on SMUD's older retail-rate net metering through the end of 2030. And there is one specific trap that inverts the advice above:
Worth noting in SMUD's favour, because it cuts against the usual narrative: SMUD raised its export rate on June 1, 2026, from 7.4¢ to 9.6¢ per kWh — a 30% increase, the maximum a single update allows, applied to existing Solar and Storage Rate customers too. The full SMUD versus PG&E comparison is here →
"Can they take it away?"
Here is the honest answer, in the order that the risks actually rank. Nothing has taken legacy status away to date, and the two most publicised threats both ended without doing so.
- The legislation aimed directly at it did not pass. AB 942 would have cut the legacy period from 20 years to 10 and terminated it on sale of the home — the two things that would have mattered most. Its net metering provisions were stripped out in committee in July 2025, the bill was retitled, and it has sat in Senate Rules since that August without a floor vote. It never became law. The 2025–2026 session ends in the last days of August 2026, so its final disposition may already be settled by the time you read this; what is certain is that no bill has shortened anyone's legacy period.
- The NEM 3.0 litigation is over, and it wasn't about you. The long-running challenge to the Net Billing Tariff ended on June 10, 2026, when the California Supreme Court declined further review after the Court of Appeal affirmed the CPUC's decision a second time. Two things follow. The tariff structure is now settled rather than provisional — and the case only ever concerned the tariff applied to new customers. Existing grandfathering was never at issue in it.
- The thing that actually did reduce your solar's value was rate design, not net metering. All three investor-owned utilities now bill a flat monthly charge set by CPUC decision D.24-05-028 — around $24.15 standard, $12 for FERA, $6 for CARE — which PG&E introduced in March 2026 as the Base Services Charge. No generation of any kind offsets a fixed charge; there is no solar exemption and never was one. It arrived paired with a volumetric rate reduction, which slightly lowers the value of every kilowatt-hour you self-consume. A repeal attempt died in committee in 2024.
- The real risk to your tariff is not political. It's clerical. The documented way legacy customers lose grandfathering is not a decision in San Francisco. It is a box on an interconnection application, filled in by somebody else, converting the system to a current tariff during an otherwise routine addition. Read the application before it is submitted, and read the first bill after PTO on any modification. If the tariff code changed, say so immediately — it is far easier to correct in the first billing cycle than in the fourth.
Regulatory position stated as of August 27, 2026, and this is a genuinely fast-moving area. We date this page rather than let it quietly age, and we'd rather you called to check a date than relied on a page you found six months from now.
Plug-in solar and your legacy tariff: an open question.
California's plug-in solar bill, SB 868, passed both houses in late August 2026. It would exempt small plug-in photovoltaic devices — up to 1,200 W AC per dwelling — from utility interconnection requirements entirely. As of this writing it has not been signed, and it would not take effect before January 1, 2027 in any case.
Here is why it appears on this page. A plug-in device is still generating capacity added to a property, and the bill is silent on how one interacts with an existing NEM 1.0 or NEM 2.0 agreement. That silence is an identified gap, not a documented permission. Given that the device might save a few hundred dollars a year while a legacy tariff can be worth considerably more, the asymmetry runs the same way as everything else on this page.
And note that a plug-in device is emphatically not Option C above. It synchronises to the utility waveform and feeds a utility-served circuit through a receptacle, so it is grid-interactive by construction — SB 868 exempts it from interconnection requirements, which is not the same as making it a standalone system. The full picture on SB 868: what it covers, the 1,200 W cap, the certification gap and what it realistically saves →
We're brokers. We don't have panels to sell you.
That matters here more than almost anywhere else, because on this particular question the interests genuinely diverge. An installer's expansion is revenue. Sometimes the right answer is a smaller addition than anyone wants to sell, or storage instead of panels, or nothing at all for another six years. We can say that.
Independent system inspection
- Your original interconnected AC capacity established from the paperwork, not estimated
- PTO date located and your remaining legacy term calculated
- Actual production measured against what the system was modelled to make
- Physical inspection of array, racking, penetrations and electrical
- Written report you can hand to a buyer, an agent or a lender
Extensive inspection is $699 and adds deeper electrical testing and thermal imaging. Residential pricing, greater Sacramento. What's covered →
YES Monitor
- Your system watched daily by a person, whatever brand it is
- Built for commercial fleets and multi-site portfolios first
- A call when production drops — not an app notification you'll miss
- Catches the quiet failures that a legacy tariff makes expensive
- Manufacturer warranty claims pursued on your behalf
A grandfathered system that underproduces is losing your most valuable credits. How the monitoring works →
Legacy net metering, frequently asked.
Can I add panels to my existing solar without losing NEM 2.0?
Yes, within a limit. The tariffs allow modifications and repairs that don't increase the generating facility by more than the greater of 10% of its nameplate rating as originally interconnected, or 1 kW — and provided the result doesn't exceed your annual onsite load. Pass both tests and your legacy tariff continues untouched. The catch is in how that capacity is measured: in AC watts, not the DC number your system is sold by.
Is the 10% measured in DC or AC watts?
AC. PG&E's NEM2 tariff sets the rating basis as the CEC AC rating for each PV generator and the gross nameplate rating of the inverter for inverter-based generators. Since systems are commonly built at DC-to-AC ratios of 1.2 to 1.4, the AC baseline is meaningfully lower than the DC figure on your proposal. This is the most common way a well-intentioned expansion goes over the line.
What actually happens if the addition exceeds the limit?
You get a choice rather than a refusal. Either interconnect the new capacity separately under another eligible tariff — Rule 21 non-export, which keeps the original array on its legacy tariff but earns no export credit on the addition — or move the entire facility to the Net Billing Tariff. The second is the expensive option, because it takes the original array off legacy export rates too, permanently. Price the first option properly before accepting the second.
Does adding a battery affect my grandfathering?
Not in PG&E, SCE or SDG&E territory. Storage sits under its own special condition and is expressly "subject to the same transition period" as the array it's connected to. It doesn't consume any of your 10%. SMUD is different — it isn't CPUC-regulated, and taking a SMUD battery incentive generally moves a legacy customer onto the Solar and Storage Rate. See the Sacramento section.
When did my 20 years start?
At your Permission to Operate date — the day the utility authorized the system to run. Not the contract date, the installation date, or the permit date. SDG&E calls it Authorization to Operate in Parallel. The period runs to the end of the annual true-up period that ends on or after the 20th anniversary, so slightly past the calendar date. Find the PTO letter; it's the only date that matters.
Do I keep net metering when I sell the property?
Under the current tariffs, yes. All three utilities carry near-identical language: eligibility isn't lost when the facility is transferred to a new owner, operator or account, provided it stays at its original location. Grandfathering attaches to the site, not the person, which makes it a transferable asset a buyer can't obtain any other way. Moving a system to a different property is treated as a new installation.
Can the state take my grandfathered tariff away?
Nothing has, so far. AB 942 — the bill that would have halved the legacy period and ended it on sale — had its net metering provisions removed in committee in July 2025 and never became law. The NEM 3.0 litigation concluded in June 2026 and concerned the tariff for new customers, not existing grandfathering. Nobody can promise what a future legislature does, but the record to date is that legacy status has survived every challenge aimed at it.
Do I need to file an interconnection application to add panels?
Assume yes and confirm with your utility. Published guidance differs between utilities and we could not reconcile it. The two errors aren't symmetrical: filing unnecessarily costs a fee, while not filing when required is how a system ends up out of compliance. There is a fee in every case — ask your utility for the current figure rather than trusting a number on a website, including ours.
My installer says the expansion is fine. Isn't that enough?
Usually it is, and most installers get this right. But the person quoting the work has an interest in the answer, the threshold is measured in a unit that doesn't appear on their proposal, and the documented failure mode is a form filled in on your behalf. Ask three specific questions: what is my original interconnected capacity in AC watts, what does the interconnection application say about my tariff, and can I see it before it's submitted. Those three answers close almost all of the risk.
What if my system is leased or on a PPA?
Then the grandfathered tariff arguably belongs to the leasing company rather than to you, because they're the named party on the interconnection agreement. That changes who has to authorize any addition, including storage. We'd treat this as an open question to resolve with the contract in front of us rather than a settled rule — start by reading who is named on the interconnection agreement.
Do you only work in Sacramento?
Sacramento and the surrounding counties are home ground — Placer, El Dorado, Yolo, Sutter — and the $399/$699 inspection product is scoped to greater Sacramento. Our commercial work runs across California and beyond it. Call and ask; the answer is usually yes.