The first utility account a buyer opens after closing on a Salem home is usually with City Hall at 114 North Broad Street, not with a power company. The City of Salem owns and runs its own electric distribution system, and the Salem Electric Department serves about 13,300 customers. Outside Salem, a home on Appalachian Power's system gets two separate bills from two separate institutions: real estate taxes from the locality and electricity from the utility.
That one structural difference changes how Salem should be compared with its neighbors. In Salem, the tax bill and the light bill both go to the same government, and money moves between them. So the real estate rate is only part of the picture.
The line in Salem's budget that ties the two bills together
Salem's adopted FY2027 budget books a "Payment in Lieu of Taxes From Electric Fund" of $3,160,000 into the city's General Fund. That's the same amount it budgeted for FY2026, and FY2025 actuals came in at the same figure. A payment in lieu of taxes is the utility's contribution to general city government, roughly what a private utility would otherwise owe in taxes. The total Electric Fund budget for FY2027 is about $54.58 million.
To put that number in homeowner terms, compare it with the real estate tax. Salem budgets $42,224,939 in real estate tax revenue for FY2027 at a rate of $1.16 per $100 of assessed value. By our own arithmetic, each cent of that rate brings in about $364,000, so the electric payment is worth roughly 8 to 9 cents of real estate tax rate. This is an estimate, not a figure the city publishes. It still shows the scale: a meaningful share of what Salem spends on general government comes in through electric bills rather than property taxes.
A July 2026 working paper that compared audited city financial reports found the same pattern. It reported that Salem moved 6.8% of its Electric Fund operating revenue to the General Fund in FY2024. Municipal utilities commonly work this way, and the city does it openly in its budget. For a buyer, it means Salem's $1.16 rate and Roanoke County's $1.03 rate don't cover the same set of costs.
A rate that falls while the revenue climbs
On May 11, 2026, Salem City Council adopted Resolution 1527, setting the FY2027 real estate rate at $1.16 per $100. Council members Hunter Holliday, Randy Foley, Anne Marie Green, and Mayor Renée Turk voted aye, and John Saunders was absent. This was the second two-cent cut in a row. The rate was $1.20, then $1.18, and now $1.16. Mayor Turk said the cuts were possible because of current budget conditions and that future needs may not always allow more decreases. Personal property stayed at $3.40 per $100.
The same budget expects real estate tax revenue to rise from $39,621,653 to $42,224,939, an increase of $2,603,286. A lower rate can only bring in more money if the assessed value behind it grows faster than the rate falls. Salem reassesses real estate every year. City Manager's office budget letter dated April 13, 2026, also mentions new home construction and building improvements as part of the revenue picture. We didn't find a published 2026 reassessment percentage for Salem homes, so the budget can't tell you how much any single home's value went up. It does show that the city expects to collect more property tax in total at the lower rate.
For an owner, the two-cent cut saves $20 a year per $100,000 of assessed value. That savings goes away for any home whose assessment rose by more than about 1.7% over the year.
How the three neighbors handled the same year
Roanoke County and the City of Roanoke faced the same rising values and made different choices.
| Locality | 2026 real estate rate per $100 | What changed |
|---|---|---|
| City of Salem | $1.16 | Cut two cents, the second straight two-cent cut |
| Roanoke County | $1.03 | Held flat after three years of cuts totaling six cents; 2026 assessments up 6.72% |
| City of Roanoke | $1.22 | Held flat; tax base up 6.55%, or $757 million |
The Roanoke Times reported that holding the county rate at $1.03 means an effective tax increase for most county owners because of reassessment. Hollins District Supervisor Phil North said every board member wanted another reduction. According to Cardinal News, County Administrator Richard Caywood has called the county's current path unsustainable over the long term. He listed raising tax rates, reducing government services, or changing the county's financial arrangement with its school division as future options. Cardinal News reported that the City of Roanoke approved its budget in the second straight year of significant cuts.
Of the three, Salem was the only one that cut its rate this year. Part of the reason it could is the steady $3.16 million coming in from its electric utility.
Putting both bills on one house
Here is a single hypothetical home assessed at $325,000, which is the median sold price the Roanoke Valley Association of REALTORS reported for August 2026 across its seven-locality region. RVAR's public data covers the whole region and doesn't break out Salem, so this is a reference point, not a Salem median. All figures below are our own arithmetic.
Annual real estate tax at 2026 rates
- Salem at $1.16: about $3,770
- Roanoke County at $1.03: about $3,348
- City of Roanoke at $1.22: about $3,965
Monthly electric at 1,000 kWh, before taxes
- Salem Electric: about $157.14, based on the city's posted residential schedule of a $9.50 base charge, $0.14590 per kWh, and a $0.001736 per kWh power cost adjustment
- Appalachian Power: $169.85, the utility's published example bill effective September 24, 2026
At that usage, the Salem electric bill runs about $12.71 a month lower, or roughly $152 a year. For this house, Salem's real estate tax is about $422 higher than Roanoke County's. If the county home is on Appalachian Power's system, the electric savings close a bit more than a third of that tax gap. Against a City of Roanoke home on Appalachian Power, Salem comes out ahead on both bills. Confirm the electric provider for any specific address before you run this comparison.
Usage changes the math quickly. At 2,000 kWh a month, Salem's posted rates work out to about $304.77, compared with Appalachian Power's 2,000 kWh example of $339.70. That's a gap of about $34.93 a month, close to three times the 1,000 kWh gap. A larger home with electric heat, a heat pump running hard in January, or a workshop on the meter all shift the comparison more than a few cents of tax rate would.
What could move each number next
The two utilities are on different schedules, and both are under cost pressure.
Appalachian Power filed a base rate review with the State Corporation Commission on May 29, 2026. If approved as filed, a residential customer using 1,000 kWh a month would pay about $9.10 more per month after securitization savings. Cardinal News reported that the SCC must rule by January 15, with changes taking effect no earlier than March 1. Appalachian Power also asked for a separate $3.99 monthly residential increase under the Virginia Clean Economy Act.
Salem's budget letter says wholesale power and transmission costs have risen even though power consumption dropped slightly. Even so, the FY2027 fee schedule council adopted on May 26, 2026, changed only copy and communications fees and left electric rates alone. The latest power cost adjustment on the city's posted rate sheet is Resolution 1500, effective July 1, 2025.
Salem is also taking steps to manage those wholesale costs. Through the Blue Ridge Power Agency, the city is getting a 5-megawatt battery system from Lightshift Energy at its Electric Road substation. The battery comes under a service agreement, so the city pays no upfront capital costs. Interim director Kevin Divers said it "will allow Salem to reduce its overall peak demand charges, which helps support long-term rate stability for our customers." City spokesperson Clark Ruhland said the projected $8.5 million in savings over 20 years could help offset future cost increases.
For a buyer comparing addresses this fall, the Salem electric gap is set by city council, while the Appalachian Power side waits on a state regulator's ruling due in January.
Quick answers
Does every Salem home get power from the city? The city owns and operates the electric distribution system within Salem. During due diligence on a specific property, it's still worth confirming the provider with the seller and the city.
Is Salem's posted electric rate current? It's the residential schedule the city has posted, and the FY2027 fee changes didn't touch electric rates. The sheet has no date, so ask the Salem Electric Department for the current figures before you budget.
Will my Salem tax bill go down because the rate went down? Only if your assessment rose by less than the rate fell. Salem reassesses every year, and the city budgeted for higher total real estate tax revenue in FY2027. Your own assessment notice will tell you which way your bill goes. This is general information, not tax advice.
When you're weighing a Salem address against Cave Spring, Glenvar, or the City of Roanoke, it helps to put both bills on paper for the specific house, based on how much electricity it's likely to use. Kendra Porter, Broker/Owner and the team at Virginia Realty Group can walk through those numbers with you, property by property, before you write an offer. Contact Kendra.
