Commission approves Appalachian Power Company proposal  reducing compensation to rooftop solar customers for net exports while retaining essential elements of net metering 

RICHMOND, VA. — The State Corporation Commission (SCC) approved Appalachian Power Company’s proposal to cut by 70% the compensation rate for net excess power that rooftop solar systems supply to the grid, with a few important modifications. The Commission noted that only “[a]ny net excess generation that is ‘fed back to the electric grid’ as measured over the course of the 12-month net metering period shall be compensated” at the new avoided cost rate. Retaining the annual net metering period is a crucial departure from Appalachian Power Company’s proposal, which would have changed to an hourly net metering period. By changing the netting interval from annual to hourly, APCo’s proposal would have classified significantly more solar generation as “excess,” and only eligible for the reduced compensation rate. In its order, the Commission noted that net metering is cost beneficial and delivers net economic benefit to APCO’s service territory and benefits to the Commonwealth from reduced carbon emissions.  The Commission also made a modest increase to the new export rate over APCO’s proposal to account for the benefits from rooftop solar systems reducing the total electricity demand. This decision does not affect existing rooftop solar customers, and low-income solar customers can select either the existing or the new compensation program.  

In addition to offering a rapidly deployable, clean solution to load growth and improving grid resilience, rooftop solar provides customers with agency over their energy bills—allowing them to choose their energy source and reduce their exposure to rising utility costs.   

On behalf of its client, Appalachian Voices, the Southern Environmental Law Center engaged one of the nation’s leading experts, Tom Beach, to evaluate and critique Appalachian Power’s proposal and to defend the current “1:1” rate, where the utility pays the same rate for power it receives from solar systems that customers pay when they use electricity from the grid. Using well-established standards and sophisticated analysis, Mr. Beach’s testimony demonstrated that rooftop solar provides net benefits to all customers in Appalachian Power’s territory and recommending that the Commission maintain the existing rate until there is significantly more rooftop solar on the system. Rooftop solar penetration in the utility’s territory is currently very low—less than 1% of peak load.  

“Virginia is looking for ways to bring new clean energy resources online quickly — and one of the best ways to do that is through smaller solar facilities that have little to no impact on land use. With this order, the Commission has largely preserved a net metering system that reasonably allows customers to finance their own solar energy systems, while balancing other important considerations. However, going forward we need to create as many incentives as possible for folks to own solar, as the benefits to all utility customers are so clear,” said Peter Anderson, Director of State Energy Policy with Appalachian Voices.  

Josephus Allmond, a staff attorney at the Southern Environmental Law Center noted that while, after today’s decision, new rooftop solar customers in APCo’s territory will retain the 1:1 retail rate for net metering up to their annual usage, any generation above that level will be compensated at the new, reduced rate of 5.66 cents per kilowatt-hour.  

“Our expert identified important benefits to net metering that the Commission’s new reduced compensation rate does not account for, although the Commission does acknowledge several tangible benefits from net metering. We appreciate that the Commission used its discretion to keep the net metering interval annual, rather than hourly, which significantly mitigates the potential harm of APCo’s initial proposal,” Allmond said.  

This past spring, Dominion Energy also proposed changes to its rooftop solar program, which the Commission will review at an evidentiary hearing in January. Dominion’s proposal would drop the 1:1 rate, move to a half-hour netting interval, and make the economics of rooftop solar more difficult for residential customers, frustrating customer choice and limiting the potential of distributed generation as a tool to cost-effectively serve/mitigate recent load growth.