Virginia residents move closer to $35 power-bill rebates from a $650 million carbon fund

A budget measure under consideration in Virginia could eventually lower electricity costs for some residents.

If it takes effect, certain utility customers would get about $35 a year from the state's expanding carbon-credit revenue.

What's happening?

The U.S. Sun reported that Virginia lawmakers approved a two-year budget on Monday that includes an amendment to send about 45% of the state's Regional Greenhouse Gas Initiative proceeds back to residents as electric bill credits, according to Virginia Mercury. The budget is now awaiting review from Governor Abigail Spanberger.

The Regional Greenhouse Gas Initiative, or RGGI, is a multistate cap-and-invest program that requires utilities that burn non-renewable fuels to purchase carbon credits. The arrangement generates revenue for participating states while also pushing power companies toward cleaner energy by making pollution more expensive.

If approved, the change would translate to roughly $3 a month off electric bills for Virginians, or about $35 annually. Virginia Chief Energy Officer Josephus Allmond said Dominion Energy would see the largest effect, along with Appalachian Power Company and Old Dominion Electric Cooperative.

The issue is emerging as Dominion asks the State Corporation Commission to approve an RGGI rider of $10 to $13 per month beginning in spring 2027. In 2021, that charge averaged about $4 for a typical customer.

Why does it matter?

RGGI is designed to cut carbon dioxide pollution from power plants, and policies that accelerate the shift toward cleaner electricity can also help reduce other harmful air pollutants associated with non-renewable energy use. Over time, cleaner air can translate into healthier communities.

Critics say bill credits are only one part of the picture, because the same fund also pays for flood-resilience work and programs aimed at reducing energy burdens for low-income Virginians, the U.S. Sun reported. With the fund estimated at about $650 million, they argue that redirecting nearly half of it could weaken those efforts.

Virginia faces both climate-related flooding risks and affordability challenges, putting short-term bill relief alongside investments meant to protect homes and reduce costs over time.

What's being done?

Nothing will change on customer bills yet. The rebate cannot move forward unless Governor Abigail Spanberger signs the budget provision. Even then, the State Corporation Commission would still need to approve the changes when utilities formally request RGGI-related cost reductions, according to the U.S. Sun.

Allmond has argued that the state could still support multiple priorities at once. Dominion would have to purchase 51 million carbon credits from July through December to comply, bringing Virginia's total revenue to about $1.2 billion — money he says could be split between low-income energy rebates and flood-mitigation work.

Virginia would not be alone, either: Other states have already rolled out relief credits, including California's automatic $46 payments earlier this year.

Critics, however, remain skeptical. "It's shortsighted to shift almost half of all RGGI proceeds away from vital resilience programs to accommodate scare tactics from the power industry," Jay Ford of the Chesapeake Bay Foundation, the group's Virginia policy director, said. 

"Before pulling from the underfunded programs that protect our communities and permanently lower electricity costs for low-income Virginians, we should look first to hold the industry accountable."

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