Everything You Need to Know About True-up Statements

Jordan Grimmer

Last Updated: January 25th, 2023

Energy Meter

In addition to helping the environment and establishing energy independence, one of the biggest appeals of solar energy is its ability to reduce a household’s energy bill. In ideal conditions, solar power can even eliminate utility expenses altogether.

That said, many solar users are surprised to receive a bill, called a true-up statement, from their utility provider one year after their system activation:

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“Do your homework before you go with any solar company. We have been hit with a true-up of $1,500 with [my power company] after being promised a minimal amount at the end of the year.”
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“I was not fully informed about the True-Up portion by the sales rep. He informed me that I should expect a refund in March for the power not used from [the power company]. Wrong!!! I got a bill for $1,200.”
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“I was not happy with [my solar provider] because they did not tell us about the end of the year true-up bill.”

Whether you are contemplating solar panels for your home or your home is already producing solar power, it’s important to understand what a true-up statement is, what it entails, and how to prepare for it.

What is it?

Per Enphase Energy, a true-up statement “​​reconciles all the cumulative energy charges, credits, and any compensation you may be entitled to for the entire solar billing cycle.” In short, if your solar panel system produced more energy than your household consumed during the billing cycle, the utility will credit you for the surplus (more on that later).

Conversely, if the system produced less energy than your household consumed, meaning you relied on the power grid to pick up the slack, the utility will charge you for the difference.

Reminder: True-up statements only apply to "grid-tied” systems, or solar arrays that connect directly to the municipal energy grid. If you have an off-grid system that runs independent from the grid, your home’s energy is powered by the solar panel system, a generator, and/or a backup solar battery.

What’s on it?

energy statement

After receiving their first annual true-up statement, many homeowners wonder why they still receive a monthly bill from their utility provider? The monthly statement serves two main purposes:

First, to keep consumers current on regular, non–energy related delivery charges from the utility.

Second, to provide a monthly snapshot of what the annual true-up statement will ultimately look like.

As for the true-up statement itself, here’s what you can expect to find:

1. The cumulative amount of kilowatt-hours (kWh) your solar system produced over the previous 12 months, 2. how many kilowatt-hours your home bought from the utility grid and how many of those kilowatt-hours were covered by your net metering credits (more on that below), and 3. the retail rate* and amount of solar energy credits owed to you, or the total amount you owe the utility provider.

*Depending on the interconnection agreement you signed with your utility provider, the retail rate (or tariff) at which the power company charges you for the energy you borrow will fall into one of two options:

  • Time-of-use (TOU) tariff — This applies a variable rate to energy consumption based on the time of day, and incentivizes consumers to use more energy during low-demand or “off-peak” hours.
  • Tiered tariffs — Tiered tariffs are not time-of-day dependent, but rather assign different retail rates depending on the total amount of energy used. If a household maintains energy consumption below a certain level each month, they’ll be charged a lower rate for that energy. Conversely, if they exceed the allowed number of kilowatt-hours for the lower rate, they’ll be charged a higher rate.

For a detailed breakdown of what you will see on your true-up statement, check out PG&E's sample document.

A word about net metering

To better understand who will receive a true-up statement, we need to talk about net metering. Net metering is a mechanism that requires utilities to compensate solar users for whatever energy they contribute to the grid. But as described in our article, “Net Metering in the United States”, all states are not created equal when it comes to solar policy. Some states provide generous incentives and require utilities to compensate solar users for their surplus energy. Others don’t.

Depending on the state you live in, your true-up statement may or may not include relevant credits for your system’s excess energy. Take a look at our interactive map (below) to see how your state’s net metering policy measures up.

How do I prepare for it?

To avoid a surprise bill at the end of the year, take the following three steps:

  1. Take a close look at your interconnection agreement, especially as it relates to tariffs. Whether you’re on a TOU tariff or tiered rate plan can greatly influence your monthly bill as well as your end-of-year statement.
  2. Monitor your energy usage closely. Review your monthly statement to determine just how much power your system is producing. Contact your solar provider if the system is significantly underperforming against the agreed-upon production rate.
  3. Set money aside each month to prepare for your true-up statement. While the total amount varies by system and locale, true-up statements can range from hundreds to thousands of dollars before credits are applied.

Despite solar’s growing popularity, true-up statements still represent a major learning curve for new solar owners and lessees. Understanding the mechanics and the factors informing this annual statement will help solar users manage their expectations and better prepare for years when their solar arrays may not perform at the level they were expecting.

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