State regulators have reinstated a monthly surcharge for Dominion Energy customers to cover the cost of carbon allowances purchased through the Regional Greenhouse Gas Initiative.
Virginia is slated to leave RGGI at the end of this year, after a state regulatory board approved a withdrawal from the program led by Gov. Glenn Youngkin’s administration.
The charge for a “standard” customer using 1,000 kilowatt-hours a month will be $4.44 beginning Sept. 1, per an approval from the State Corporation Commission on July 12.
It’s not exactly a new charge: A previous rider of approximately $2.39 to cover the allowances was in place for Dominion customers until July 2022. Dominion requested regulators waive the charge, given the governor’s intention of leaving the initiative.
In December, Dominion told regulators it needs the cash to cover previously purchased carbon allowances and those it will buy before the end of 2023.
RGGI is a multi-state carbon market that seeks to reduce emissions from power plants over time. It does this using a cap-and-trade system: RGGI sets a combined cap on emissions for the power sectors of its member states. That cap is lowered every year.
Power generators, like Dominion, must buy allowances out of that cap for the carbon dioxide they emit. So, in theory, as the cap shrinks and allowances become increasingly scarce, they also become more expensive, incentivizing generators to invest as early as possible in renewable and zero-carbon sources.
Under state law, Dominion is required to recover all operating costs from ratepayers — including the cost of carbon allowances.
Because of that guaranteed return and the captive nature of Dominion ratepayers, Youngkin framed RGGI as a tax on Virginians. His administration also argued that RGGI had failed to reduce Virginia’s carbon emissions since the state joined in 2021.
While the state actively participated in RGGI, carbon emissions from the state’s power plants decreased. But the state Department of Environmental Quality says imports of energy increased, and from states without carbon reduction laws like Virginia’s — meaning our total carbon footprint increased as well.
Democrats have been very supportive of the program. Proceeds from the allowances purchased by Virginia power generators are returned to the state, which uses them for flood resilience and energy efficiency programs. The state has raised $657 million for those programs through RGGI.
