The Net Surplus Compensation (NSC) rate may fluctuate monthly, as it is based on a rolling 12 month average of spot market prices. Based on current market prices, the rate would be just under 4 cents per kWh. You may also be eligible for additional compensation if you own the Renewable Energy Credits (RECs). The California Energy Commission is in the process of evaluating the REC program.
Not necessarily. Payment is issued only if the customer has excess generation (i.e., exports more kilowatt-hours to the grid than they use over their true-up period). It is not uncommon for a customer to have a monetary credit at the time of their true-up and actually not have excess generation. This can happen especially with solar energy which is often exported to SDG&E during peak periods when electricity is more expensive and credited at the higher rate, then energy used is supplied by SDG&E’s grid during off-peak periods when electricity costs less.
A credit will be applied to your account and you will receive a letter providing the details of your credit; how many excess kwhrs you had, the remittance price per kwhr and the total refund amount. SDG&E will apply this credit to any outstanding bill amount that you owed at the time of your true-up. Any amount that is left over, you may call and request as a refund check or leave it on the account to apply towards future bills.
Your initial true-up period began when you first received authorization to operate your generator. The true-up period ends after 12 months of billing. The year is “trued-up” with credits being applied retroactively or backwards throughout the year. Therefore, if you started your generator in November, your true up period would end in October. During the winter months you may have been a net user and purchased energy from SDG&E. During the summer months, you may have had excess electricity, which we would go back and apply towards the months you were a net user in the winter months. This allows all generation to be applied to all utility purchases regardless of what time of year you started your system.
The credit you see on your NEM statement is calculated using the full retail rate for energy. Several components go into this rate, including generation, transmission, distribution, and the funding of public purpose programs. When SDG&E buys energy it pays a generator the wholesale rate for energy. Similarly, when you have excess generation, you will receive the wholesale rate for generation, like all other generators. The credit shown on your statement is calculated using the retail rate, which is higher than the wholesale rate because it takes into account several components in addition to the generation component.
Your CPA or other tax consultant are best able to answer those questions for you. But SDG&E is required to report and send a Form 1099 on any compensate amounts $600 or more made to an entity that is not a corporation, a governmental agency or a recognized non-profit agency.