NEM 3.0 in Los Angeles: What SCE and LADWP Customers Need to Know About Solar and Storage

Ask three solar companies how NEM 3.0 affects a home in Los Angeles and you may get three different answers. The reason is simple: in Los Angeles County, the rules depend on which utility serves your address. A home in Manhattan Beach and a home in Brentwood can sit 15 miles apart and operate under entirely different solar billing systems.

This guide explains what NEM 3.0 actually is, who it applies to, and how it changes the way a solar and battery system should be designed.

What NEM 3.0 Actually Is

"NEM 3.0" is the popular nickname for the Net Billing Tariff, adopted by the California Public Utilities Commission in Decision 22-12-056. It replaced net energy metering (NEM 2.0) for customers of the state's investor-owned utilities who applied to interconnect on or after April 15, 2023. Southern California Edison calls its version the Solar Billing Plan.

Under the old rules, every kilowatt-hour your panels sent to the grid offset roughly a kilowatt-hour you bought later. Under net billing, there is no one-to-one trade. You pay your rate plan price for every kilowatt-hour you pull from the grid, and you earn an export credit for every kilowatt-hour you send out. That credit changes by hour and month, and it is usually far below what you pay.

SCE vs LADWP: Why Your Address Matters

The CPUC's net billing rules apply only in the territories of PG&E, SCE, and SDG&E. The Los Angeles Department of Water and Power is a city-owned utility governed by its own board and the Los Angeles City Council, so the CPUC decision does not reach it.

• SCE customers (South Bay, Palos Verdes Peninsula, Malibu, Santa Monica, Long Beach, and much of the county outside the City of LA): new solar systems go on the Solar Billing Plan, paired with a time-of-use rate.
• LADWP customers (most of the City of Los Angeles, including Pacific Palisades, Brentwood, Hollywood, and the San Fernando Valley): solar is billed under LADWP's net energy metering rider, which still nets the energy you export against the energy you use over the billing period.

Not sure which you have? Check the logo on your electric bill. Some cities, like Burbank, Glendale, and Pasadena, have their own municipal utilities with their own rules, so the design conversation starts with your bill either way.

How SCE Values Your Solar Under the Solar Billing Plan

SCE calculates Energy Export Credit prices for every hour of the day, separately for weekdays and weekends, using the CPUC's Avoided Cost Calculator. Your prices are fixed for nine years based on the year you applied (your "vintage year"). Customers applying in 2026 are on the NBT26 schedule.

The pattern matters more than the exact numbers. Midday exports, when solar floods the grid, earn only a few cents per kilowatt-hour. Exports in the evening, when demand peaks and the sun is setting, are worth several times more. Meanwhile, residential solar customers on the plan use SCE's TOU-D-PRIME rate, where the most expensive power is from 4 to 9 pm.

In plain terms: the solar your panels make at noon is worth little if you send it to the grid, and the power you buy at 7 pm is the most expensive power you buy. That gap is exactly what a battery closes.

Why Storage Is Now the Heart of the System

Under net billing, the goal shifts from "make as much solar as possible" to "use as much of your own solar as possible, especially in the evening." A battery charges from your panels during the day and powers your home through the 4 to 9 pm peak, so you buy less high-priced energy and export less low-value energy. According to the CPUC, nearly 70 percent of net billing customers had paired batteries with their solar by the end of 2024.

That changes how a good system is engineered:

• Size solar to your real usage and future loads, not to the largest array your roof can hold. Oversized arrays mostly produce cheap midday exports.
• Size storage to your evening usage, not just to a backup wish list. The battery should cover most of the peak window on a typical day.
• Plan for electrification. An EV, heat pump, or induction range shifts your load profile, and a design that ignores it will be wrong within a few years.
• Set the battery to the right operating mode. On SCE, time-based control usually beats simple self-powered mode. Our guide on maximizing battery performance covers the settings.
• Check the electrical service. Older Los Angeles homes often need panel work to support solar, storage, and EV charging together.

What This Means for LADWP Homes

Because LADWP still nets exports against usage, solar alone remains a strong financial decision for most City of LA homes, and a battery's bill savings are smaller than in SCE territory. The case for storage on LADWP is mainly resilience: keeping the refrigerator, lights, internet, medical devices, and other critical loads running during outages and Public Safety Power Shutoffs. Learn more in our guide to battery backup for outages.

Utility rules change, and LADWP rates are set by ordinance. A system designed with room to add storage later keeps your options open.

What About Existing NEM 1.0 and 2.0 Customers?

If your solar was interconnected before the April 2023 cutoff, you generally keep your legacy net metering for the remainder of your legacy period. Be careful with major changes: significantly expanding an existing system can affect that status. Adding a battery is often possible without losing it, but it should be reviewed against your utility's rules before you sign anything.

Design for Your Bill, Not a Brochure

Under NEM 3.0, two homes with identical roofs can need very different systems. The right design comes from your utility, your rate plan, your hourly usage, and where your home is headed. Since 2010, Xero Solar has engineered solar and battery storage systems across Greater Los Angeles in both SCE and LADWP territory, including Tesla Powerwall installations. Share a recent bill and begin the conversation for a design built around how your home actually uses energy.

Frequently asked questions

Does NEM 3.0 apply to LADWP customers?

No. NEM 3.0, officially the Net Billing Tariff, was adopted by the California Public Utilities Commission and applies to investor-owned utilities like SCE, PG&E, and SDG&E. LADWP is city-owned and bills solar customers under its own net energy metering rider.

Who is on NEM 3.0 in Southern California Edison territory?

SCE customers who applied to interconnect a new solar system on or after April 15, 2023 are on the Solar Billing Plan, SCE's name for the Net Billing Tariff. Earlier customers generally keep NEM 1.0 or NEM 2.0 for their legacy period.

Do I need a battery with solar under NEM 3.0?

It is not required, but for most SCE homes it is the difference between a good investment and a mediocre one. Midday exports earn little, while evening power from 4 to 9 pm costs the most, and a battery lets you use your own solar during those hours.

Is a battery worth it for an LADWP home?

The financial case is weaker than in SCE territory because LADWP still nets your exports against your usage. The case for resilience is the same: a battery keeps essential circuits running through outages and Public Safety Power Shutoffs.

Are NEM 3.0 export credits locked in?

SCE fixes export credit prices for nine years based on the year you applied, known as your vintage year. After that period, prices may change.