Net metering is the contract term that defines how a utility compensates a residential solar customer for the kilowatt-hours their system produces. After system sizing, it is the single largest input into payback math. The economics of a 7 kW install can vary by three to five years of payback depending entirely on the utility's net-metering rule, with no change to the physical installation. Understanding which regime applies at a specific address is the foundational verification before treating any installer payback projection as definitive.
The basic mechanism
A residential solar system produces electricity continuously during daylight hours. At any given moment, that production either offsets electricity the home is consuming (self-consumption), or it exports to the utility grid (because the home is not using it as fast as it is being produced). Both flows have economic value, but they are not always valued the same way.
Net metering is the policy and tariff structure that defines the relative value. Different utilities, regulated by different state public utility commissions, apply different rules. Within a single state, the rule can change between investor-owned utilities, municipal utilities, and rural electric cooperatives. The Summit Energy Solutions four-state footprint (Illinois, Wisconsin, Colorado, Oregon) spans four meaningfully different regimes plus several muni-utility variants.
Four basic compensation regimes
Most residential net-metering structures in the United States fit into one of four categories, with subtle variations within each.
Retail-rate net metering (1:1). The utility credits exported kilowatt-hours at the full all-in delivered rate, the same rate the homeowner pays for grid consumption. Self-consumption and exports are mathematically equivalent. This is the simplest regime and the one that most homeowner intuition assumes. It was the standard structure for new ComEd customers in Illinois through December 31, 2024, and it remains the structure for ComEd customers grandfathered before that date. Standard PGE and Pacific Power net metering in Oregon, and standard Xcel Energy net metering in Colorado, both compensate exports at full retail rate today.
Supply-rate-only compensation (post-2025 ComEd Smart Solar Billing). Exports credit at the wholesale supply rate, not the all-in delivered rate. The supply rate is the energy-only portion; delivery, transmission, capacity, and fixed charges are excluded from the export credit. ComEd's current supply rate is 9.66 cents per kWh through May 2026; the all-in delivered rate is near 16 cents. Exports earn roughly 60 percent of the per-kWh value of self-consumption. Optimal sizing under this regime favors smaller systems matched closer to daytime baseload, since oversized systems lose value on the export side.
Avoided-cost buy-back (We Energies in Wisconsin). The utility compensates exports at an avoided-cost rate that reflects the utility's own marginal cost of generation, not retail value. We Energies pays approximately 4.2 cents per kWh as of the 2026 customer-generation rates filing, well below the all-in delivered rate near 19 cents. Self-consumption captures roughly 4.5 times the value of export under this regime. This is the regime in which battery pairing meaningfully changes the math: a battery converts what would have been a 4.2-cent export into a 19-cent offset on the same kilowatt-hour, after round-trip losses. Avoided-cost compensation is more common in states with conservative public utility commissions and in territories with limited solar penetration.
Production-payment overlay (Xcel Solar*Rewards in Colorado). A production-based incentive paid on every kilowatt-hour generated by the system, regardless of whether that kilowatt-hour is self-consumed or exported. The payment is layered on top of whatever net-metering rule applies. Xcel pays approximately 2 cents per kWh on residential systems under a 20-year contract, in addition to standard retail-rate net metering. Production payments mean export-vs-self-consumption strategy matters less than under pure avoided-cost; the production payment narrows the gap. Production-payment programs are increasingly rare and program rates have declined from earlier years.
How each regime changes sizing strategy
Optimal sizing for a residential solar system is not just a function of annual usage. It depends on how the utility compensates the kilowatt-hours the system will produce. Under retail-rate net metering, sizing the array to match annual consumption is mathematically straightforward, because the grid functions as a free battery. Under supply-rate or avoided-cost regimes, the optimization shifts toward sizing for daytime baseload, because production above that load earns a lower per-kWh value when exported.
The practical implication: the same 9 kW system on the same physical roof can be the right call in retail-NEM territory and an over-sized system in avoided-cost territory. Installer quotes that arrive with the same sizing recommendation regardless of utility are running on incomplete analysis.
State-by-state reference
Illinois. Pre-2025 ComEd customers: retail-rate net metering, grandfathered for the original interconnection term. Post-January 1, 2025 ComEd customers: Smart Solar Billing with supply-rate exports. Ameren downstate customers: Rider NMOS, with a choice between kWh-netting and monetary credit. Naperville Electric Utility: muni tariff with retail offset on the electric-utility component of the bill only, plus April annual cash-out at approximately 4.9 cents per kWh.
Wisconsin. We Energies: avoided-cost buy-back rate near 4.2 cents per kWh on net exports, well below the all-in delivered rate near 19 cents. The Public Service Commission of Wisconsin opened a value-of-solar literature review in September 2024 and may revise the methodology pending Berkeley Lab study results. Other Wisconsin utilities (Madison Gas and Electric, Alliant Energy, Xcel-Wisconsin) operate under their own tariffs.
Colorado. Xcel Energy: standard retail-rate net metering plus the Solar*Rewards production payment of approximately 2 cents per kWh. CORE Electric Cooperative: separate cooperative tariff, member-elected board, no Solar*Rewards eligibility. Cooperative net-metering structures vary by board policy.
Oregon. Portland General Electric and Pacific Power: standard residential net metering, with ETO Trade Ally rebate layered on the install side. Forest Grove Light and Power, Canby Utility Board, and other muni utilities: separate municipal tariffs, no ETO eligibility, verification through the city utility billing department.
Muni-utility caveats
Muni utilities introduce a layer of variability not present on investor-owned-utility tariffs regulated by a state public utility commission. Muni rates and net-metering rules are set by city councils or utility boards under state enabling statutes, not by PUC docket. They can revise between board meetings. They sometimes carve out narrow eligibility windows or specific equipment requirements.
Naperville Electric Utility (Illinois) credits self-consumption at retail rate but only against the utility component of the bill, with monthly banking and an annual April cash-out at avoided cost near 4.9 cents per kWh. Forest Grove Light and Power and Canby Utility Board in Oregon operate outside the Energy Trust of Oregon Trade Ally rebate program; their net-metering terms should be verified directly with the utility. Verifying a muni-utility tariff is a different process than verifying an IOU tariff: it runs through the city's utility billing department rather than through the state PUC docket page.
Grandfathering: what pre-2025 customers should know
When a utility transitions from one net-metering regime to another, existing customers are typically grandfathered to the previous structure for a defined period. ComEd's January 1, 2025 transition to Smart Solar Billing grandfathered all systems with permission to operate before that date to the prior 1:1 retail-rate structure, for the original term of their interconnection agreement.
Two practical consequences for homeowners:
System sale considerations. When selling a home with a grandfathered solar installation, the original interconnection agreement should accompany the property documentation. The grandfathered rate persists for the original term, but specific transfer-of-grandfathering rules vary by utility. A buyer assuming the grandfathered rate is automatic may be wrong.
Material modifications. Material changes to the system (panel replacement, capacity increase, microinverter swap) can trigger reapplication, which moves the system from the grandfathered regime to the current one. Routine maintenance does not trigger this; major modifications might.
How to verify the rule at a specific address
Three steps confirm what net-metering rule actually applies before a quote can be evaluated.
Identify the actual utility. A property address sometimes sits across a service-territory boundary. The current utility, not the previous utility from before a move, is what matters. The current bill is the authoritative source. Naperville is a common case: a homeowner who assumes "Illinois solar means ComEd" gets a quote on the wrong tariff if the property is actually on Naperville Electric Utility.
Read the current tariff. State public utility commission docket pages publish the active residential tariff for each regulated utility. The Illinois Commerce Commission, Public Service Commission of Wisconsin, Colorado Public Utilities Commission, and Oregon Public Utility Commission each maintain searchable docket access. Reading the active rider is faster than most homeowners expect, and it is more authoritative than any installer's restatement.
Match the rate against the quote. If the quote's payback math assumes a per-kWh export value that does not appear in the current tariff, the math is wrong somewhere. Either the quote uses a stale figure from a prior tariff cycle, or the quote misidentifies the compensation regime, or the math is structurally incorrect. Any of those is grounds to ask for a corrected proposal before signing.
Bottom line
Net metering rules differ enough between regimes that the same physical install can have meaningfully different payback math across state lines and utility boundaries. Knowing whether the utility credits exports at retail, supply-rate-only, or avoided cost is a foundational input. Production-payment overlays like Solar*Rewards add a separate value stream that doesn't depend on consumption strategy. Muni utilities operate outside the standard PUC framework and require separate verification.
The state-specific walkthroughs at Illinois, Wisconsin, Colorado, and Oregon work the current tariff details for each utility in the Summit footprint, with primary-source citations documented on the methodology page.