Mark Hanson’s house revolves around the sun.
Solar energy from his 10,000-watt array of panels powers the computers, hot water tank and other everyday appliances in his Botetourt County home.
It also supplies the electricity for more whimsical features such as the red, green and blue neon and argon lights on his kitchen ceiling, the wall-mounted Geochron map that tracks the movement of sunlight across the earth and the 1979 pinball machine that he restored using parts purchased online.
By producing enough energy to cover his needs, his monthly power bill is just $43 — the sum of a basic charge that covers billing and other services plus a tax from his electric cooperative. Without solar, he estimates he would pay about $300 monthly.
“It pretty much zeroes out our power bill,” Hanson said.
When his solar panels produce more electricity than he uses, such as on sunny summer days, the excess is credited toward his bill for use at other times, such as at night or when it’s cloudy.
That’s possible thanks to a system called net metering, and it’s a selling point when a homeowner is considering whether buying solar panels will be a good financial investment.
Hanson, a retired electrical engineer, is president of REEVA, the Renewable Energy and Electric Vehicle Association. It’s a volunteer organization whose approximately 120 members help install solar panels and tackle other do-it-yourself projects at homes in the Roanoke and New River Valley regions.
Hanson and other home solar proponents are concerned about a recent proposal by Appalachian Power to reduce by more than 70% the net metering credit that it pays future residential solar users, which the utility says would add more than $60 to the average residential solar user’s monthly bill.
They say it could lengthen the amount of time it takes a homeowner to recoup the cost of buying solar panels, which could deter some people from buying such systems and slow the adoption of renewable energy in Virginia.
“Allowing APCo to significantly reduce the value of net metering will directly affect a customer’s ability to afford a solar energy system and thus directly limit their energy choice,” said Chris Roberts, co-owner of Christiansburg-based Baseline Solar Solutions, which sells and installs residential solar panel systems.
Hanson’s assessment was more blunt.
“It’ll pretty much kill residential solar,” he said.
Appalachian disagrees. It says that home solar users still save money by producing their own electricity. And it says that with the current net metering credit, customers who don’t own solar panels are subsidizing those who do, to the tune of about $938 per residential solar customer each year.
“The current program includes compensation for not only the full generation portion of their bills, but also for the transmission, distribution, and other systems that the customers are still using every day to meet their energy needs, as well as to send the excess energy they produce to the grid,” said Appalachian Power spokesperson Ashley Workman.
State regulators are set to consider the matter at a hearing this spring.
Appalachian’s proposal by the numbers
In August, Appalachian Power filed a petition with the State Corporation Commission, which regulates utilities in Virginia, for permission to change the rules of its net metering program.
The Virginia Clean Economy Act, a 2020 law that requires Dominion Energy and Appalachian to achieve carbon-free energy portfolios by 2045 and 2050, respectively, required Appalachian to request a proceeding with the SCC.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
The SCC will determine, among other things, how much the utility should pay residential and business customers for the benefits of their solar facilities and whether to change the cap on how much renewable energy can be fed into the grid; that cap is currently set at 6% of the utility’s peak load.
Today, Appalachian credits home solar users 16 cents per kilowatt-hour for their excess electricity.
In filings with the SCC, the utility has asked to reduce the credit rate to 4.72 cents — a 71% decrease — for new solar panel owners.
Those who already have solar panels would be grandfathered into the current rate for 25 years.
As of last year, Appalachian had 3,868 customers who participate in its net metering program. Nearly all of them use solar to do so, and more than 80% of them are residential customers.
While that figure has grown exponentially since 2018 from 991 “customer-generators” — as Appalachian Power calls them — it still accounts for less than 1% of the power company’s 540,000 customers in Virginia today.
Appalachian said in its petition that its proposed net metering credit of 4.72 cents per kilowatt-hour would factor in solar panel owners’ use of the power grid. It also would compensate them for excess electricity at the utility’s “avoided cost” — what it would pay to generate that electricity or purchase it from elsewhere — instead of the current “full retail rate.”
The utility said that if state regulators don’t allow it to lower the net metering credit rate, then they should lower the statewide 6% cap to further limit how many people can participate in net metering.
The energy capacity of Appalachian’s net metering customers totals 36.9 megawatts. For comparison, the average capacity of a utility-scale solar farm in Virginia is about 40 megawatts. That 36.9-megawatt figure represents a little over 1% of Appalachian’s 3,225-megawatt Virginia peak load recorded last year, well below the current 6% cap.
Home solar users still would benefit financially from producing the power that they consume, in part because solar panel systems continue to get cheaper while the utility’s electricity rates continue to rise, Appalachian said.
“Regardless of the compensation for generation exported to the grid, customer-generators receive the full retail rate benefit for generation that directly offsets energy consumption,” William Castle, director of regulatory services for Appalachian Power, said in written testimony filed with the SCC.
Under its proposed new net metering system, Appalachian says that an average residential solar user who generates 1,057 kilowatt-hours of electricity in a month and uses 1,014 of it would see their bill go from $7.96 — the utility’s basic service charge — to $68.78, an increase of $60.82.
For comparison, an average residential customer who has no solar panels and uses 1,000 kilowatt-hours monthly pays about $173. That average bill has risen more than $100 since July 2007, well ahead of the rate of inflation, and is set to increase again after regulators approved a new rate hike on Wednesday.
“Customers will still avoid the full cost of electricity when their systems are generating electricity that is being used at their home,” Workman said. “When a customer’s system is producing more than the customer is using and sending energy to the grid, they would be compensated for that excess, exported energy at the proposed rates.”
Dominion is required to request its SCC proceeding on net metering by May 1. It currently compensates net metering customers for excess energy at its full retail rate of 12.8 cents per kilowatt-hour. 
Solar installers weigh proposal’s impact
A typical residential solar system in Virginia can cost around $20,000 to $30,000, depending on its size. Buyers are eligible for incentives including a 30% federal tax credit on the purchase price.
Estimates vary, but the time required for a homeowner in Virginia to recoup the investment on a residential solar system is generally considered to be somewhere between nine and 16 years.
Saving money is the reason most people buy solar panels, said Lindsay Tomsheck, director of business development for Baseline Solar Solutions.
“The way that you measure the benefit of solar financially is you would calculate the payback time — how many years is it going to take me to recoup this investment?” Tomsheck said.
Appalachian lowering its net metering credit would mean it would take “many years longer” to break even on that investment, she said.
“Net metering is the single most important incentive for people who are going solar for financial reasons,” Tomsheck said.
Patrick Feucht, co-owner of Baseline Solar Solutions, said solar power “adds value to the grid rather than hurting it.” He said a lower net metering rate would reduce the adoption of solar technology, which would impact Virginia in multiple ways.
“Less renewable energy leads to an increase in environmental damage that will be costly or impossible to remedy,” Feucht said. “It also likely means economic damage to all electric users as rates continue to increase and to all the businesses that provide renewable energy services, like our small business, if we have to reduce workforce.”
Rick Brown, owner of Roanoke-based SolShine Energy Alternatives, noted that Appalachian promotes energy-efficiency programs such as home energy audits, where an expert assesses a home to figure out how to reduce its energy usage.
“The way I look at it is, a solar electric system is effectively doing the same thing,” Brown said. “You’re reducing your electric bill.”
Brown said that if Appalachian’s net metering rate is reduced, it could harm the residential solar industry.
“It’ll certainly have an impact on the local market, the local installers,” he said. “We may have to cut back on the number of jobs we do, and we may have to cut back on employment, unfortunately.”
Appalachian argued in its SCC filings that the current net metering rate has impacted its ability to create new jobs by reducing its revenue by $7.5 million in 2023. It predicts that impact will repeat each year.
Appalachian also said that rooftop solar is less efficient than the utility-scale solar that it’s adding to its portfolio.
“In short, the cost of energy, namely rooftop solar, associated with net metering is a relatively expensive form of energy,” Trenton Feasel, manager of economic forecasting for American Electric Power Service Corporation, an affiliate of Appalachian, said in written testimony filed with the SCC.
“Other alternatives are available that are cheaper, as environmentally friendly, and produce similar, if not greater, economic benefits. … Utility-scale solar would be the primary alternative.”
Regulators taking public comments
The State Corporation Commission will hold a hearing on Appalachian’s request at 10 a.m. May 20.
Organizations that have signed up to participate in the proceeding include Appalachian Voices, Clean Virginia, the Sierra Club, Vote Solar and Solar United Neighbors.
The SCC also is accepting comments from the public, either during the hearing or beforehand.
Anyone who wishes to comment during the hearing must register by May 13.
To register:
- Complete a form for case PUR-2024-00161 on the SCC’s website,
- Email a PDF of the form to SCCInfo@scc.virginia.gov, or
- Call the SCC at 804-371-9141 between 8:15 a.m. and 5 p.m. weekdays and provide a name and phone number that the commission should call during the hearing.
Each person will get 5 minutes to speak. The hearing will be live-streamed on the SCC’s website.
The SCC also is accepting written comments through its website until May 13.
The commission is required to issue its final order within 12 months of Aug. 30, the date that Appalachian filed its request.
Correction, May 19, 2025: The State Corporation Commission must issue its final order within 12 months of Aug. 30, 2024. That date was incorrect in an earlier version of this story.
