The provision would require utilities that burn carbon energy sources in the state to purchase carbon credits through the Regional Greenhouse Gas Initiative (RGGI) to offset emissions, an incentive to use cleaner energy sources.
Dominion Energy would be most impacted by this law. Appalachian Power Company and Old Dominion Electric Cooperative would also have to purchase credits but not nearly as many as Dominion, according to Virginia Chief Energy Officer Josephus Allmond.
Earlier this month, Dominion asked the State Corporation Commission for permission to reinstate the RGGI rider fee onto customers’ bills, a monthly charge of about $10 to $13, starting in the spring of 2027.
This is significantly higher than what ratepayers had to pay back in 2021, when it was about $4 a month for the average residential customer. The cost increased, in part, because the governor recently signed a law directing Dominion to participate in the next carbon auction before recovering costs from customers.
The cost of the carbon credits, which will be auctioned off later this summer, have increased in price since Virginia left RGGI in 2021 at the direction of former Gov. Glenn Youngkin. At that time, the price of the credit topped out at $13.
Now, the clearing price of the credits is reportedly $35. Dominion said in its SCC filing it would need to purchase 51 million of them between July 2026 to December 2028, bringing state revenues to about $1.2 billion.
The 45% customer rebate for RGGI in the new biennial budget has met with opposition by the Chesapeake Bay Foundation.
The group said the state’s many flooding resiliency projects are often underfunded as cycles of severe weather intensify and bring damage that are costlier to clean up than prevent.
“It’s shortsighted to shift almost half of all RGGI proceeds away from vital resilience programs to accommodate scare tactics from the power industry,” said Jay Ford, CBF’s Virginia policy director.
“Before pulling from underfunded programs that protect our communities and permanently lower electricity costs for low-income Virginians, we should look first to hold the industry accountable,” he added.
Allmond countered that with the increased costs of credits and Dominion having to buy so many, there will still be an estimated $650 million in the RGGI fund to be split between flood mitigation projects and energy efficiency for low-income residents.
That is more than double what the state earned in the last year of the agreement, $305 million, according to Allmond.
The rebate will be managed through the SCC. As stipulated by the budget amendment, 45% of the fund revenues will be directed back to Dominion and other utilities, who will be required to give the money back to customers.
Allmond estimates that the return will be about $3 a month.
“We’re working on some further analysis with our utility partners to zero in on that number,” he said.
The rebate will appear on bills once the SCC approves Dominion’s request to start deducting the RGGI costs from monthly bills.
Secretary of Natural and Historic Resources David Bulova, a former member of the House of Delegates, stated that 50% of the remaining RGGI money will flow into the Community Flood Preparedness Fund.
Localities will be able to apply for grants from this fund and the state will rank the projects to determine which will receive money.
“So we’ve got fund resilience planning, capacity building grants, technical studies and then we actually have the flood mitigation projects themselves, which is which is the bulk of where that money goes to,” Bulova said.
Bulova also said an idea to allow for money from the fund to be put towards matching federal grant dollars, which some communities with major flood mitigation projects struggle to pay, has been put forward. But that move would require legislative approval to implement.
