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:
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.
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.
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:
For a detailed breakdown of what you will see on your true-up statement, check out PG&E's sample document.
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.
To avoid a surprise bill at the end of the year, take the following three steps:
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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