When I was researching solar, every installer pitched net metering like it was a magical one-for-one exchange: “Every kWh you send to the grid is like spinning your meter backwards!” That’s… close to true in some states. In Ohio with AES Ohio (formerly Dayton Power & Light territory, though I’m on AEP’s side), it’s more nuanced. Let me explain what I actually get paid and why it matters for your solar math.
What Net Metering Is Supposed to Be
The basic concept: when your solar panels produce more electricity than you’re using at that moment, the excess goes to the grid. Your utility credits you for that power. When you draw from the grid (nights, cloudy days, winter), you use those credits. At the end of a billing period, you pay for the net of what you consumed minus what you produced.
In its purest form — “true” or “full retail” net metering — you get credited at the same retail rate you pay. If electricity costs $0.12/kWh and you export 100 kWh, you get a $12 credit. You use 100 kWh from the grid next month, you pay $12. Perfect offset.
That’s the marketing version. Here’s what actually happens in practice.
How AEP Ohio Actually Does It
AEP Ohio does offer net metering for systems under 25 kW (which covers essentially all residential solar). But here’s the structure I actually deal with:
My monthly bills have several components. Net metering applies to the “generation” portion of my bill — the charge for actual electricity energy. It does not apply to:
- Customer charge: a fixed monthly fee just for having service ($10.15/month for me)
- Distribution charges: the cost of maintaining the grid infrastructure
- Various riders and surcharges: line losses, smart grid fees, renewable energy fund contributions
So even months when I produce more than I consume, I still pay $10.15 minimum plus some distribution charges. My “zero electric bill” months are actually more like $18-25 bills. That’s still dramatically better than the $160+ I was paying, but it’s not zero, and it won’t be zero as long as those fixed charges exist.
The Credit Rate and Annual True-Up
My net excess generation (when I produce more than I consume in a given month) is credited forward. The credit accumulates until the end of my “credit year” (which for me runs June to May, aligned with my interconnection date). At annual true-up, if I have leftover credits, AES Ohio compensates me at the “avoided cost” rate — roughly $0.045-0.05/kWh — not the retail rate of $0.12/kWh.
That’s the critical detail. In-period credits (used within the same billing cycle) are worth full retail value. Banked credits carried month-to-month maintain retail value. But any surplus left over at annual true-up gets paid out at roughly 40% of retail.
This means oversizing your system to maximize export is actually a poor strategy. (If your utility offers time-of-use pricing, there’s an additional layer to this — I covered exactly how I used time-of-use electric rates to cut my bill by 40% by shifting usage to off-peak windows.) The ideal is to size for roughly 100% of your annual consumption — you benefit from full-value credits during the months you’re a net importer, and you don’t end up with a pile of credits that get cashed out cheap.
My installer knew this and sized my 10.4 kW system to produce about 96-100% of my annual usage. I ran a small monthly surplus in summer that banked for winter, and I usually hit near-zero at annual true-up. That’s the right target.
My Actual Numbers Over 14 Months
Here’s what my billing looked like in rough terms:
- June-September: Produced significantly more than I used. Credits accumulated. Bills were minimum charges only ($18-25/month).
- October-November: Roughly break-even. Small amounts drawn from grid or sent to grid.
- December-February: Net purchaser. Grid consumption exceeded production. Credits drawn down. Bills ranged from $38-82/month (versus $145-175 pre-solar).
- March-May: Back to producing more than using. Credits rebuild.
Annual true-up: I had roughly 180 kWh of accumulated credits remaining. AEP paid me out at $0.047/kWh — about $8.46. A small check, essentially a rounding error, which tells me my system was sized well. Zero leftover credits would be ideal; a small leftover is fine.
My total utility spend over 14 months, including that true-up payout: about $340. Pre-solar, that 14-month spend would have been roughly $2,100. Savings: approximately $1,760 in 14 months — the net metering structure was a key input in my complete solar ROI calculation after 14 months of ownership.
Net Metering Varies Enormously by State and Utility
My situation is reasonably favorable. Some states and utilities are worse — much worse. A few things to watch for:
Value of solar tariffs vs. net metering: Some utilities have moved away from net metering entirely toward “value of solar” rates, which can be lower than retail. California’s NEM 3.0, implemented in 2023, cut export rates dramatically — from near-retail to around $0.05-0.08/kWh depending on time. This significantly changed the solar economics in the nation’s biggest solar market. New California solar buyers need to account for this; older installations were grandfathered.
Net billing vs. net metering: Some utilities pay you for exports at a predetermined rate rather than running a true meter-spin-back calculation. The distinction matters at annual true-up.
Monthly vs. annual true-up: Monthly true-up (where unused credits expire at month-end) is significantly worse for solar owners than annual true-up. If your utility only allows monthly rollover, you lose the ability to bank summer surplus for winter.
What to Ask Before You Buy
Before you sign a solar contract, get specific answers from your utility (not just your installer — they have an incentive to be optimistic):
- Do you offer true net metering or a value-of-solar tariff?
- What rate do you credit for exported power?
- What happens to excess credits at annual true-up?
- Are there any fixed charges that solar won’t offset?
- Are there any capacity limits or waitlists for interconnection?
I made the mistake of only asking my installer about net metering. I got an optimistic answer. When I actually called AEP and asked specifically about the avoided cost true-up rate, I got a different (more accurate) picture. It didn’t change my decision to go solar, but it adjusted my ROI projections by about 6 months.
The Bottom Line
Net metering is the mechanism that makes solar economically viable in most of the country. But “net metering” isn’t one thing — it varies by state, by utility, and by the details of your specific plan. The gap between full-retail net metering and a degraded export rate can be the difference between a 7-year payback and a 12-year payback on the same system. Know your utility’s actual policy before you buy. It took me one 20-minute phone call to get the information. Make that call.