Virginia's return to the Regional Greenhouse Gas Initiative has come with a sharp jump in the price utilities pay for carbon allowances, a change that could affect electricity bills and how the state funds climate and energy programs in the years ahead.
Here's what to know
Virginia has rejoined the Regional Greenhouse Gas Initiative, or RGGI, an agreement among 11 states designed to cut carbon pollution from power plants. The state was part of RGGI from 2020 to 2023, before Gov. Glenn Youngkin withdrew it, citing high costs for little payoff, reported The Virginian-Pilot.
In the first auction since Virginia's return, allowances sold for $37.65 each, more than double the $14.88 price from the last auction before the state left. That auction generated $259 million for Virginia, according to The Virginian-Pilot.
"I think the people who designed this 15, 20 years ago knew the price was going to go up," said Steve Haner, senior fellow for energy and the environment at the Thomas Jefferson Institute for Public Policy, in an interview with the Pilot.
More background
Under RGGI, power producers must buy an allowance for every metric ton of carbon pollution they emit, and utilities like Dominion Energy can pass that cost on to customers. William Shobe, director emeritus of the University of Virginia's Center for Economic & Policy Studies, said prices have climbed roughly 14% a year since 2012 and are likely to keep rising as allowance caps shrink through 2033.
Dominion is now asking state regulators to add a $13 monthly charge to a typical customer's bill to cover its allowance costs, up from about $4.40 a month before Virginia left RGGI.
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What's being done?
Virginia has changed how it splits RGGI revenue. Before, half went to low-income energy efficiency programs and 45% to flood preparedness. Now, 45% is set aside for customer rebates, with the rest split between flood resiliency and low-income programs. Some environmental advocates worry the smaller flood-fund share could slow projects in Hampton Roads.
Not every customer stands to benefit equally. Industrial and large retail users won't get rebates, which Haner said could push those companies to raise prices elsewhere to cover their higher utility costs.
"Businesses just pass along their costs to the extent they can," Haner said. "Kroger's not going to get a rebate, Walmart's not going to get a rebate. Your small doctor's office might, but the hospital's not."
Where can I learn more?
Virginia's return to RGGI is part of a larger conversation about how state energy policy shapes power prices and cleaner electricity.
• Virginia became the first state to take a solar-buying program statewide, cutting system costs.
• Connecticut and Virginia moved to speed home solar as advocates pushed for cheaper power.
• Across the U.S., energy storage installations kept rising as utilities prepared for demand.
• In California, an unorthodox power market drove lower bills while clean generation expanded.
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