Virginia lawmakers question RGGI costs

(The Center Square) – Virginia lawmakers on Tuesday questioned the potential cost of the Commonwealth's return to the Regional Greenhouse Gas Initiative as Dominion Energy projected residential customer bills could increase by about $13 per month under a proposed carbon-trading rider. The discussion came during a meeting of the Commission on Electric Utility Regulation, which will become the Energy Commission of Virginia on July 1, days after Dominion Energy Virginia filed a request with the State Corporation Commission to reinstate Rider RGGI following the commonwealth's return to the multistate carbon-reduction program. RGGI is a regional cap-and-trade program requiring power plants to purchase carbon allowances through quarterly auctions. Utilities can then seek recovery of those compliance costs through customer rates. Virginia first joined the program in 2021; former Gov. Glenn Youngkin withdrew the Commonwealth in 2023. Earlier this year, lawmakers included language in House Bill 29 directing the Department of Environmental Quality to reinstate Virginia's participation. Virginia is scheduled to formally reenter RGGI on July 1 and participate in September and December 2026 allowance auctions. In its SCC filing, Dominion projected a monthly Rider RGGI charge of about $13 for a typical residential customer using 1,000 kilowatt-hours per month during the March 2027 through February 2028 rate year. Dominion also proposed spreading some recovery costs over two years, which would lower the projected monthly impact to about $10.36. The filing also stated future auction prices could affect those estimates. Dallas Burtraw, a senior fellow with Resources for the Future, told lawmakers the most recent RGGI auction cleared around $35 per ton, significantly higher than prices during Virginia's earlier participation. Lawmakers debated whether future auction proceeds should primarily support customer rebates, flood mitigation efforts or energy-efficiency programs. Commission materials showed Virginia generated about $825.8 million in RGGI auction proceeds from 2021 through 2023. Of that amount, roughly $413.9 million went toward low-income energy-efficiency programs through the Department of Housing and Community Development, while about $372.5 million supported community flood preparedness programs through the Department of Conservation and Recreation. Burtraw argued returning a larger share of proceeds directly to residential customers could offset rising electricity costs. Sen. Mark Obenshain questioned whether directing rebates primarily toward households could hurt Virginia's ability to attract manufacturers and other large energy users. "What I'm hearing is that while I live in Virginia because I love Virginia, that these businesses aren't going to make economic decisions and that they're going to come here and stay here because they too love Virginia," Obenshain said. William Shobe, a research professor of public policy emeritus at the University of Virginia, told lawmakers electricity prices are only one factor businesses consider when deciding where to locate and said Virginia's lower-emissions energy policies may also appeal to some companies.