Net Metering for Dummies

There are four primary components of your electricity bill: Generation, Transmission, Distribution, and Retail.

When the wealthy eco-conscious among us install a solar panel system on their roofs, this power production represents only one of four components of your electricity bill: Generation.

Under “net-metering” billing regimes, solar power producers can sell their excess electricity (i.e., that which exceeds their demand) back to the utility, for which they [the rooftop solar owners] usually are credited the full-retail rate of electricity. So the value of the credit is based on:

However, the owner of the solar panel only contributed one of the four components of your electricity bill (Generation). Remember:

Because they are credited for far more than they contribute, the solar panel owners, in practice, are receiving three major components of your electricity bill (Transmission, Distribution, and Retail) for free.

Of course, there’s no such thing as a free lunch. So who pays for the free ride afforded solar panel owners by unfair net-metering policies? Of course: