Kentucky net metering explained: who gets which credit, and why it matters

Kentucky net metering used to be simple: every kilowatt-hour you sent to the grid offset one you bought later. For most new systems on Kentucky’s investor-owned utilities, that’s no longer true. Since a 2019 law, the Kentucky Public Service Commission sets what newer customers earn for exported power, and the answer so far has been less than the retail rate.

What you get depends on two things: when your system began service and which utility serves you. Systems already operating when the new rules took effect keep their old one-for-one terms for 25 years. Newer systems at LG&E and KU earn a fixed dollar credit for each exported kWh, about two-thirds of the energy charge. Kentucky Power, Duke Energy Kentucky and the co-ops each have their own tariffs.

As of November 1, 2026: the credits and tariff details below reflect the sheets on file this fall. Export credits are set in rate cases and can change. Always check your utility’s current tariff.

What Senate Bill 100 changed

Senate Bill 100 passed in the 2019 session and was signed March 26, 2019. Its changes to KRS 278.465 and 278.466 took effect January 1, 2020. The key provisions in the statute as it reads today:

• The PSC sets the export rate. A utility must compensate a net metering customer for all electricity that flows to the grid, at a rate the PSC sets through ratemaking. A utility, or a generation and transmission cooperative on behalf of its members, starts that proceeding.
• Credits are in dollars. Each billing period’s compensation is a dollar-denominated bill credit. Excess credit carries forward to the next bill. It can’t move to another customer or address, and it’s never refunded in cash when you close the account.
• Legacy systems keep their terms for 25 years. A system in service before the utility’s first net metering order under the new law keeps the tariff terms in place when it started, including the 1:1 kWh credit. Those terms stay at that premises for 25 years, even if the property is sold.
• Utilities may recover their costs. A utility can seek rates that recover from net metering customers the costs of serving them, including fixed and demand-related costs.
• The 45 kW limit. An eligible system uses solar, wind, biomass or biogas, or hydro energy and has a rated capacity of 45 kW or less.
• Ownership. An eligible customer-generator is a customer who owns and operates the system on the customer’s premises, primarily to supply the customer’s own electricity.
• A 1% threshold. Once net metering capacity reaches 1% of a utility’s single-hour peak load in a calendar year, the utility has no further obligation to offer net metering to new customers.

How the credit actually works

Your meter records energy in two directions. Solar power you use as it’s produced never touches the meter. What flows out is credited; what flows in is billed.

Think of it as a mill race. The water that turns your own wheel is worth the full retail rate, because it replaces power you would have bought. The water that spills past into the pond earns whatever the tariff says. Under the newer rules, that’s less.

LG&E and KU: NMS-1 and NMS-2

LG&E and KU proposed new net metering terms in their 2020 rate cases (PSC Case Nos. 2020-00349 and 2020-00350). The PSC deferred that decision in its June 30, 2021 orders to gather more evidence. The resulting NMS-2 rider applies to systems that first began service on or after September 24, 2021.

	NMS-1	NMS-2
Who	Systems that began net metering service before September 24, 2021	Systems that began service on or after September 24, 2021
Exports earn	A kWh credit that offsets future kWh, one for one	A dollar credit per kWh: 7.534¢ at KU, 7.089¢ at LG&E
Credits apply to	Energy you buy in later billing periods	The energy charge and per-kWh riders only
Basic service charge	Not offset	Not offset
Duration	25 years under the statute	Credit can change in future rate cases

For comparison, the residential energy charge in the tariff sheets in effect this fall is 11.396¢ per kWh at KU and 11.499¢ at LG&E, before riders. Exported power earns about 66% of that at KU and 62% at LG&E. The daily basic service charge, $0.58 at KU and $0.48 at LG&E, is never offset by credits.

In the 2025 rate cases, the PSC kept the NMS-2 credits at their existing levels, consistent with the settlement. A March 4, 2026 order corrected LG&E’s appendix to show the 7.089¢ credit, and a matching order did the same for KU at 7.534¢. On rehearing, the Kentucky Solar Industries Association argued that the credits are too low. As of November 1, 2026, the tariffs still show 7.534¢ at KU and 7.089¢ at LG&E.

Two details worth knowing:

• The NMS-2 rider says a customer on a two-part rate may stay on that rate structure for 25 years from the start of NMS-2 service. That language is about rate structure. It doesn’t freeze the export credit, which the PSC can revisit in any rate case.
• LG&E and KU say an NMS-1 customer who adds capacity or modifies the system must reapply and move to NMS-2. Adding battery storage doesn’t count as a modification.

A month on each rider

Take a KU household in June. Its panels produce 1,000 kWh. It uses 400 kWh of that directly and exports 600. It also imports 600 kWh at night and on cloudy days. Riders, taxes and fees are left out to keep the arithmetic clear.

	NMS-1	NMS-2
Energy charge on 600 kWh imported	Offset by 600 kWh of credits: $0.00	600 × 11.396¢ = $68.38
Export credit on 600 kWh	Included above	600 × 7.534¢ = −$45.20
Basic service charge (30 days × $0.58)	$17.40	$17.40
Total before riders and taxes	$17.40	$40.57

Same roof, same month: NMS-2 costs this household $23.17 more. In a winter month with far less export, the gap narrows to a few dollars. Over a year, the difference depends almost entirely on how much you export, which is why self-consumption matters so much now.

Kentucky Power

Kentucky Power, which serves much of eastern Kentucky, set its post-SB 100 terms in its 2020 rate case (PSC Case No. 2020-00174). The PSC’s May 14, 2021 order approved rates for Tariff NMS II, effective for service on and after May 15, 2021, and approved Tariff NMS I for existing customers. Kentucky Power has had later rate cases, so read the current NMS II sheet for the export rate that applies today, rather than a figure from 2021.

Duke Energy Kentucky

Duke Energy Kentucky serves Northern Kentucky. Its net metering terms are in its own PSC-approved tariff, and under the 2019 law its export compensation for new customers is set through PSC ratemaking. Before you sign a contract, ask Duke which net metering rider a new system would take today and what it pays for exports, and check the answer against the tariff on file with the PSC. Our Northern Kentucky page covers the region’s other local factors.

Co-ops, municipal utilities and TVA-served areas

Much of rural Kentucky is served by cooperatives. East Kentucky Power Cooperative supplies 16 owner-member co-ops. Big Rivers Electric supplies three: Jackson Purchase Energy, Kenergy and Meade County RECC. The statute lets a generation and transmission co-op start the export-rate proceeding for its members, but each distribution co-op has its own tariff. Read your co-op’s net metering tariff rather than assuming it matches a neighbor’s.

Kentucky’s definition of a “retail electric supplier” excludes municipal corporations. If a city utility serves you, its own policy governs. In parts of western and south-central Kentucky, power comes through distributors of the Tennessee Valley Authority. Ask yours directly which program applies to customer-owned solar. Our western and south-central Kentucky page has more on those territories.

What this means for your decisions

• Size for your own use. Under a dollar export credit that’s below retail and never cashes out, extra panels mostly add low-value exports.
• Shift loads into daylight where you can. Each kWh moved from night to midday is worth roughly the gap between the energy charge and the export credit.
• Don’t buy a battery on arbitrage alone. The same gap is what a battery earns per cycle, minus its losses. Our battery analysis runs the numbers.
• If you’re buying a home with solar, ask which rider the system is on and when it started. Legacy NMS-1 status is valuable. Notify the utility so the installation transfers to you, and don’t add panels without checking what you’d give up.
• Model the export credit flat or lower. The utilities have asked to change it before. Our post on solar after the 30% credit shows how much that one assumption moves payback.

What we’d do

• Find your rider on your bill or ask your utility: NMS-1, NMS-2, NMS I or II, or a co-op’s equivalent.
• Download the current tariff sheet from the PSC’s website or your utility’s site and note the export credit, what it applies to, and the effective date.
• Estimate self-consumption from your hourly or monthly data before you size anything.
• Keep the interconnection application, approval and permission-to-operate letter with your house papers. Our interconnection paperwork coordination service handles the clerical side for clients who’d rather not.

This is general information about tariffs and statutes, not legal advice. For questions about how a contract or tariff applies to you, ask your attorney or the utility, or call the PSC’s consumer line.