Arkansas Act 278, the Cost-Shifting Prevention Act, replaced the state’s old one-for-one net metering with a billing structure that pays new solar customers the utility’s avoided cost for exported energy and adds a monthly charge tied to system size. If you missed the September 30, 2024 legacy deadline, your rooftop solar in Arkansas now earns roughly a third of what it would have under the previous rules, and the design choices you make at installation matter more than they used to.
What Act 278 Actually Changed
Before Act 278 took effect on March 13, 2023, every kilowatt-hour you sent to the grid canceled out a kilowatt-hour you pulled from it, valued at the full retail rate. A 200 kWh surplus in a month was worth exactly what 200 kWh of purchased electricity would have cost you.1Entergy Arkansas. Net Metering Services
The new law scraps that exchange for new customers. It directs the Arkansas Public Service Commission to credit exported energy at the utility’s avoided cost instead of the retail price, and it adds a monthly grid charge based on the system’s nameplate alternating current capacity. The statute also creates separate customer categories, each with its own rules.2Justia Law. Arkansas Code 23-18-604 – Commission Authority
What Non-Legacy Customers Earn for Exported Energy
Arkansas defines avoided cost as the twelve-month average of the Locational Marginal Price from the utility’s load zone in either MISO or SPP, depending on which grid operator serves the utility.3Justia Law. Arkansas Code 23-18-603 – Definitions
In practice that number is far below the retail rate. SWEPCO’s Arkansas tariff listed an avoided cost of roughly $0.03 per kWh for the March 2024 through February 2025 period. A typical residential retail rate runs 10 to 12 cents per kWh, so exported solar now earns about a quarter to a third of what the same electricity costs to buy back.4DSIRE. DSIRE – Arkansas Net Billing
On top of the reduced credit, non-legacy customers pay a monthly grid charge expressed in dollars per kilowatt of nameplate AC capacity.3Justia Law. Arkansas Code 23-18-603 – Definitions It applies regardless of how much energy your system produces or exports. That fixed cost didn’t exist under the old framework.
Excess credits still carry forward month to month through your annual billing cycle, but any balance left at the end of the cycle expires. The utility is not required to pay cash for it.5Arkansas Secretary of State. Arkansas Public Service Commission Net Metering Rules For a non-legacy customer earning three-cent credits, that annual reset is one more reason to size conservatively.
Who Still Gets the Old Retail-Rate Credits
Act 278 protects two groups:
- Legacy customers, whose systems met the pre-March 12, 2023 net metering requirements and were already interconnected and operating under the old rules.
- Legacy-transitional customers, who submitted a standard interconnection agreement, executed a facilities agreement, or filed a PSC complaint over a disputed facilities agreement before September 30, 2024.
Both groups keep full retail-rate credits until June 1, 2040.2Justia Law. Arkansas Code 23-18-604 – Commission Authority That date is fixed in the statute. It isn’t twenty years from interconnection. A system turned on in 2020 and one turned on in September 2024 both lose protection the same day, after which they transition to whatever non-legacy structure is in effect.
The September 30, 2024 deadline has passed. If you didn’t have a qualifying agreement or complaint filed before that date, you’re under the avoided-cost framework no matter when you started planning your project.2Justia Law. Arkansas Code 23-18-604 – Commission Authority
How Large a System You Can Install
Arkansas caps net-metered capacity at the lower of two values:
- Residential: 25 kW AC, or 100% of your highest monthly electricity usage over the previous twelve months.
- Non-residential: 5,000 kW (5 MW) AC, or 100% of your highest monthly usage over the previous twelve months within the utility’s service territory.
The usage cap is the one that bites. If your peak month translates to roughly 10 kW of panels, you can’t install 25 kW even though the statutory ceiling would allow it. Systems with an executed interconnection agreement before December 31, 2022 may exceed these limits.3Justia Law. Arkansas Code 23-18-603 – Definitions
What a Solar Installer Must Disclose Before You Sign
Act 278 did more than change rates. Any company selling or leasing a solar system in Arkansas must give you a written proposal and at least five business days to review it before you commit. The proposal has to spell out:
- Equipment description, placement on your property, nameplate capacity, and expected monthly and annual output in kWh.
- The system’s expected annual output degradation as panels age.
- Total cost, amounts due at signing and at completion, and the full payment schedule.
- Payback period and projected monthly and annual bill savings in dollars, calculated using the rate structure that will actually apply to your system.
- Description and length of all warranties.
The installer must also either perform an energy efficiency audit on your property or tell you how to get one, and point out efficiency measures that could reduce your energy use before you invest in panels.6Justia Law. Arkansas Code 4-88-1103 – Net-Metering Customer Protections
The savings projection line is the one to read closely. A proposal that calculates payback at old retail-rate credits rather than the avoided-cost structure that will actually apply to your system is not legal under Arkansas law, and it will overstate your return by a wide margin.
Why Battery Storage Now Matters More
Under one-for-one net metering, timing didn’t matter. Every exported kilowatt-hour earned full retail credit, so panels producing at noon were as valuable as electricity used at 8 p.m. Under avoided-cost billing, every kilowatt-hour you export instead of using yourself costs you the gap between the retail rate and roughly three cents.
A battery closes that gap. It stores midday production for evening use, so instead of selling surplus at three cents and buying it back at ten or twelve, you consume your own generation when you need it. For non-legacy Arkansas customers, that self-consumption is where the real savings sit.
Batteries add significant upfront cost. The wider the spread between retail and avoided cost, the faster that cost is recovered through electricity you no longer have to buy. At current Arkansas numbers the spread is wide enough that storage deserves a line in the proposal for any new system.
Federal Tax Credits in 2026
The federal picture shifted at the same time Arkansas’s did. The residential clean energy credit under Section 25D, which covered 30% of installation costs for homeowners who buy and own their systems, expired for systems placed in service after December 31, 2025.7Internal Revenue Service. Residential Clean Energy Credit In 2026, a customer-owned residential installation in Arkansas no longer qualifies for that credit.
A commercial credit under Section 48E still applies to solar facilities placed in service through December 31, 2027. This one primarily reaches homeowners through third-party ownership, meaning leases and power purchase agreements where a company owns the panels on your roof. Residential systems under 1 MW that meet prevailing wage and apprenticeship requirements can qualify for a 30% credit, which leasing companies typically pass through as lower monthly payments. Standalone energy storage is exempt from the 2027 solar termination date, so batteries placed in service after that may still qualify under Section 48E on their own.8Office of the Law Revision Counsel. 26 U.S. Code 48E – Clean Electricity Investment Credit
Arkansas offers no state solar tax credit, sales tax exemption, or property tax exemption to pair with these federal rules. With avoided-cost export credits, a monthly capacity charge, and the residential federal credit gone, the financial case for customer-owned solar in Arkansas now rests on how much of your own generation you can use directly. System sizing and the battery decision carry weight they didn’t carry three years ago.