Virginia’s return to the Regional Greenhouse Gas Initiative (RGGI) has coincided with higher carbon allowance prices, with the latest auction clearing at $37.65 per allowance. Dominion Energy is seeking regulatory approval to recover increased RGGI costs through a proposed monthly customer charge of around $10 to $13. The state’s return also changes how RGGI revenues are allocated between customer rebates, flood resilience and low-income energy programs.
Key Overview
- Latest RGGI allowance price: $37.65
- Previous June price: $35
- March price: $24.99
- Virginia’s RGGI return: July 1
- Proposed Dominion charge: About 10–13 per month
- Previous monthly charge: About $4.40
- RGGI revenue generated in September auction: More than $1.07 billion across the market
Virginia Returns to RGGI
Virginia resumed participation in the Regional Greenhouse Gas Initiative on July 1 after leaving the carbon market in 2023 under former Governor Glenn Youngkin.
The state originally joined RGGI in 2021.
Under the programme, participating power plants must obtain a carbon allowance for every metric ton of carbon dioxide they emit. The allowances are traded through auctions, creating a market price for carbon emissions.
Virginia’s return has coincided with a significant increase in allowance prices.
Carbon Allowance Price Reaches $37.65
The first RGGI auction following Virginia’s return cleared at $37.65 per allowance on September 9.
That was up from $35 in June and $24.99 in March.
The September auction generated more than $1.07 billion across the 11-state market.
The allowance was also more than double the $14.88 price recorded in the final auction before Virginia left the programme.
Virginia received approximately $259 million from the auction, according to the information provided.
Dominion Energy Seeks Higher Customer Charge
The increase in allowance prices is also affecting electricity providers.
Dominion Energy is seeking approval to recover its higher RGGI costs from customers through a proposed monthly charge.
The proposed charge is around $10 to $13 a month for a typical customer, compared with approximately $4.40 a month before Virginia left RGGI.
Under the carbon market, utilities can pass the cost of purchasing allowances on to customers.
RGGI Caps Are Set to Tighten
RGGI is entering a tighter phase as participating states reduce emissions caps through 2033.
The declining caps are intended to reduce the amount of carbon dioxide that covered power plants can emit under the programme.
William Shobe, director emeritus of the University of Virginia’s Center for Economic & Policy Studies, said allowance prices have increased by roughly 14% annually since 2012 and could continue rising as the caps decline.
The combination of Virginia’s return and tightening emissions limits is therefore affecting the market for carbon allowances.
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Virginia Changes How RGGI Revenue Is Used
Virginia has also changed how revenue generated through RGGI is allocated.
Under the previous structure, 50% of the revenue went toward low-income energy efficiency programmes, while 45% was allocated to flood preparedness.
Under the revised structure, 45% is set aside for customer rebates, with the remaining funds divided between flood resilience and low-income programmes.
The change means that a larger share of RGGI revenue is directed toward customer rebates.
Flood Resilience Funding Faces Questions
The revised allocation has raised concerns among some environmental advocates about funding available for flood resilience.
Hampton Roads, an area exposed to flooding, could be affected if less funding is available for flood preparedness projects.
The changes therefore create different priorities for the revenue generated by the carbon market, balancing customer rebates with energy efficiency and flood resilience programmes.
Impact on Businesses and Customers
The benefits of the revised revenue structure will not be distributed equally across all electricity users.
Industrial customers and large retail users will not receive the same rebates available to eligible customers.
Steve Haner, senior fellow for energy and the environment at the Thomas Jefferson Institute for Public Policy, said businesses may pass higher electricity costs through to customers where possible.
This could affect companies such as large retailers and other businesses that face higher electricity costs but do not receive customer rebates.
Outlook
Virginia’s return to RGGI has coincided with higher carbon allowance prices, with the latest auction clearing at $37.65 per allowance.
At the same time, Dominion Energy is seeking approval to recover its higher allowance costs through a proposed monthly customer charge of approximately $10 to $13.
As RGGI’s emissions caps continue to decline through 2033, allowance prices and the cost of compliance will remain important factors for utilities and electricity customers.
Virginia’s revised approach to RGGI revenue will also determine how funds are distributed between customer rebates, low-income energy efficiency programmes and flood resilience initiatives.
FAQs
1. What is RGGI?
The Regional Greenhouse Gas Initiative is a carbon market in which participating states require covered power plants to obtain allowances for their carbon dioxide emissions.
2. What is the latest RGGI allowance price?
The latest auction cleared at $37.65 per carbon allowance on September 9.
3. How much is Dominion Energy proposing to charge customers?
Dominion Energy is seeking to recover its RGGI costs through a proposed monthly charge of approximately $10 to $13 for a typical customer.
4. How will Virginia use RGGI revenue?
Under the revised allocation, 45% is set aside for customer rebates, with the remaining revenue divided between flood resilience and low-income energy programmes.
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