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In April 2001, Arkansas enacted legislation (HB 2325) directing the Arkansas Public Service Commission (PSC) to establish net-metering rules for certain renewable-energy systems.* The PSC approved final rules for net metering in July 2002. Subsequent legislation enacted in April 2007 (HB 2334) expanded the availability of net metering; increased the capacity limit for non-residential systems from 100 kilowatts (kW) to 300 kW; improved the law's provision for the carryover of net excess generation (NEG); and clarified the ownership of renewable-energy credits (RECs). In 2012, the PSC amended the net metering rules to exempt local, state and federal government entities and agencies from previously required indemnity agreements (Docket 12-001-R Order No. 6).

Residential renewable-energy systems up to 25 kW in capacity and non-residential systems up to 300 kW are eligible for net metering. Eligible technologies include solar, wind, hydroelectric, geothermal and biomass systems, as well as fuel cells and microturbines using renewable fuels. There is no limit specified for the aggregate capacity of all net-metered systems.

Customers carry over any NEG to the following monthly bill at the utility's retail rate. Any NEG remaining at the end of an annual billing cycle is granted to the utility. Customers own the RECs associated with their systems.

The PSC is authorized to allow utilities to assess net-metered customers "a greater fee or charge of any type, if the electric utility's direct costs of interconnection and administration of net metering outweigh the distribution system, environmental, and public policy benefits of allocating the costs among the electric utility's entire customer base."

''* Municipal utilities do not fall under the PSC's jurisdiction and are not required to follow the PSC's rules. The PSC regulates investor-owned and cooperative utilities.''