The Opportunity
- Solar pays hardest against the electricity you already buy: common areas, house meters and any master-meter load absorbed in rent
- Where electric submetering is lawful, tenants pay exactly the utility's rate. The owner's compensation is the utility's master-meter discount, with no markup and no billing fee
- Submeter billing is a retrofit option for older master-metered residential buildings. Units permitted on or after July 1, 1982 are metered by the utility, and commercial tenants in PG&E, SCE or SDG&E territory generally can't be submeter-billed for electricity (EV charging aside)
- Revenue-grade dual metering separates solar from grid, so you know exactly what your array is offsetting and every tenant bill ties back to a certified read
The Mistake Most Owners Make
You've put a solar array on the roof. Now someone is pitching you the "micro-utility" play: meter the panels, sell the power to your tenants at retail, and keep the spread.
In California, that plan doesn't survive contact with the Public Utilities Code. Owners who chase it either take on legal exposure or end up with a billing system built for revenue the law doesn't allow.
The owners who get the most from solar do something simpler: they point it at the load they pay for, and they measure everything.
The Legal Framework: What You Can and Can't Bill
Four rules decide what an owner may charge tenants for electricity in California:
- Same rate as the utility (PUC §739.5). A master-meter customer serving tenants of an apartment building, mobilehome park or similar residential complex must charge each tenant the rate that tenant would pay buying directly from the utility. The owner's compensation is the utility's master-meter rate differential, which covers the reasonable average cost of submeter service. No separate billing or admin fee is authorized, and rebates and California Climate Credits pass through to tenants.
- New residential is utility-metered (PUC §780.5). Every residential unit with a building permit obtained on or after July 1, 1982 must be individually metered, which the tariffs read as metered by the utility. PG&E Electric Rule 18 limits residential submetering to systems in place by December 14, 1981, and SCE Schedule DMS-1 and SDG&E Schedule DS.
- Commercial is different. In PG&E, SCE and SDG&E territory, commercial tenants generally can't be submeter-billed for electricity. It is absorbed in rent, with EV charging as the main exception. LADWP, which is not a CPUC-regulated utility, allows pass-through to residential and commercial units at no more than LADWP would charge, with no added fees.
- No RUBS for electricity. California's weights-and-measures rules require a dedicated electric submeter whenever a tenant isn't served directly by the utility and electricity isn't included in fixed rent (4 CCR §4027.5). Your lawful options are rent-inclusive, submetered at utility rates, or utility-metered.
Where Solar Fits
None of these rules creates a margin on tenant electricity, and on-site solar doesn't change that. Tenant charges stay at the utility's rate. Public Utilities Code §218(b) speaks to when on-site generation for your own use or your tenants' use keeps you from being treated as a utility, but it doesn't set what a tenant may be charged. How your solar credits interact with tenant billing depends on your tariff and interconnection agreement, so have your specific setup reviewed before you bill anyone.
Where Solar Earns Its Keep
Where the value lands, by building type
| Master-metered, electricity included in rent | Every kWh the owner buys |
| Older master-metered apartments, submeter-billed | Common areas and owner-paid load |
| Residential permitted on or after July 1, 1982 | Common areas and house meters |
| Commercial, PG&E / SCE / SDG&E territory | Owner and common-area load |
| Commercial, LADWP territory | Owner and common-area load |
Wherever tenants are billed at all, they pay the utility's own rate.
Every kWh your array covers is a kWh you don't buy from the grid. Lobby lighting, hallways, parking structures, pool pumps, elevators, laundry rooms and EV chargers all run on your account, and they are exactly the loads solar is built to carry.
The Technical Challenge: Separating Solar from Grid
To know what your array is worth, and to bill tenants accurately where the law allows it, you need a metering system that can tell apart:
- Grid Usage – Power drawn from SCE, PG&E, SDG&E or LADWP
- Solar Production – Power delivered by your rooftop array against on-site load
- Tenant Consumption – What each submetered unit actually used
Capturing this in 15-minute intervals lines production up against time-of-use rate periods, which is where the value of every offset kWh is decided.
Why Inverter Data Doesn't Work
Many owners try to use their solar inverter's API (SolarEdge, Enphase, etc.) as their metering. This fails for three reasons:
- It's not a billing device. Inverter data is designed for monitoring. In California, any meter a charge is based on must be type-approved and certified.
- It measures production, not consumption. You need to know what each tenant used and what your own loads drew, not just what the panels produced.
- API dependencies. If the inverter cloud goes down, you lose your data.
The Solution: Dual-Metering Architecture
A proper solar metering system has two layers:
Revenue-grade meter on the solar array output, measuring total generation.
A certified meter per unit tracking total consumption, billed at the utility's rate where submetering is lawful.
Software that reconciles production, grid and tenant reads, so you see exactly what the array offsets.
Implementation Requirements
Type-Approved, Certified Meters
Any electric meter a charge is based on must be CDFA type-approved and hold 1% accuracy at acceptance and 2% in service, with billing CTs at 0.3 accuracy class or better. ANSI accuracy classes belong on a spec sheet; California's legal test is type approval plus that tolerance.
15-Minute Interval Data
Aligns production and consumption with time-of-use periods and gives every bill an auditable read history.
Direct Data Connection
Modbus/BACnet hardwire—no cloud API dependencies for critical billing data.
Rate Table Management
Tenant bills must use the rate the utility would charge, itemized with opening and closing reads and rate blocks, with the rate schedule posted. The system has to keep current with every tariff change.
The Blueline Solar Metering Package
Blueline Electric's solar metering platform is built to meet all four requirements:
- Certified meters with direct Modbus connection
- Solar/grid separation at 15-minute resolution
- Automatic SCE/PG&E rate table updates
- Itemized tenant statements at the utility's rate
Your array stops being a black box and becomes a measured, verifiable offset to the load you pay for.
Frequently Asked Questions
Can I charge more than the utility rate?
No. Where §739.5 applies, each tenant pays exactly the rate they would pay the utility directly. You can't add billing or admin fees, rebates and California Climate Credits pass through to tenants, and your compensation is the utility's master-meter discount. LADWP's rule is similar: no more than LADWP would charge, and no added fees.
Can I sell my solar power to tenants at retail?
Not as a profit line. Residential tenant charges are capped at the utility's rate, commercial tenants in PG&E, SCE or SDG&E territory generally can't be submeter-billed for electricity (EV charging aside), and post-1982 units are utility customers in their own right. Solar's return comes from the load it offsets. If you submeter-bill tenants in a building with solar, have counsel review how your solar credits and tenant bills interact before the first bill goes out.
What about NEM 3.0 changes?
California's net billing tariff, commonly called NEM 3.0, took effect for new PG&E, SCE and SDG&E solar applications in April 2023 and credits exports at far lower values than NEM 2.0 did. That makes self-consumption the heart of the return: sizing the array to load you pay for, and proving what it offsets, matters more than ever. Your exact export value depends on your tariff and interconnection date.
Can I use RUBS for electricity instead?
No. California requires a dedicated electric submeter whenever a tenant isn't served directly by the utility and electricity isn't included in fixed rent. Ratio billing is a water tool, not an electric one.
Do tenants benefit from this?
Yes. Submetered tenants never pay more than the utility would charge, get itemized utility-style bills, receive their share of rebates and Climate Credits, and pay only for what they use. A submetered tenant also can't be refused CARE eligibility just because other units in the complex aren't submetered.
About this guide
General information, not legal or tax advice. Tariffs and rules change, and how they apply depends on your building's permit date, tariff, interconnection agreement and leases, so confirm your position with your own counsel before billing tenants for electricity.
Sources (checked September 18, 2026)
- California Public Utilities Code §739.5 (as amended by SB 1117, effective January 1, 2021)
- California Public Utilities Code §780.5
- California Business and Professions Code §12500.5
- California Code of Regulations, Title 4, §§4027–4027.5 (electric submeter tolerances and use requirements), administered by the CDFA Division of Measurement Standards
- PG&E Electric Rule 18; SCE Schedules DMS-1 and DMS-2; SDG&E Electric Rule 19 and Schedule DS
- LADWP Rules Governing Water and Electric Service, Rule 18
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