- Virginia’s return to RGGI has coincided with a sharp rise in carbon allowance prices, with the latest auction clearing at $37.65 per allowance.
- Dominion Energy is seeking to recover higher RGGI costs from customers through a proposed monthly charge of roughly $10 to $13.
- RGGI is entering a tighter phase as participating states reduce emissions caps through 2033, while Virginia prepares to align with the updated rules.
Virginia’s return to the Regional Greenhouse Gas Initiative, or Virginia RGGI, has pushed carbon allowance prices sharply higher, while Dominion Energy seeks approval to recover the cost from customers through a proposed monthly charge. The development, reported by the Virginian Pilot, puts Dominion Energy and Virginia electricity customers at the center of a renewed debate over the cost of the regional carbon market.
Virginia resumed participation in RGGI on July 1 after leaving the program in 2023 under former Gov. Glenn Youngkin. The state had originally joined in 2021. Under the system, covered power plants must acquire an allowance for each metric ton of carbon dioxide they emit.
The first auction following Virginia’s return cleared at $37.65 per allowance on Sept. 9, according to RGGI. 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.
Why electricity bills are in focus
Dominion has asked Virginia regulators to reinstate its RGGI rate adjustment mechanism. The company estimates it will need roughly 51 million allowances between July 2026 and the end of 2028, with its filing assuming allowance prices between $37.04 and $38.32. Its filing projects a Virginia jurisdictional revenue requirement of about $1.18 billion tied to RGGI costs over that period.
A Virginia Mercury report said Dominion’s proposed RGGI charge could amount to roughly $10 to $13 a month beginning in spring 2027, compared with about $4 a month during the state’s earlier participation. The State Corporation Commission is considering Dominion’s petition, with public comments currently scheduled through Oct. 21.
The potential increase comes as Virginia households are already facing other electricity-cost pressures. Dominion says an approved 2026 rate adjustment is expected to raise the average residential bill by $11.24, with another $2.36 increase scheduled for 2027.
RGGI’s next phase
The financial picture is also changing because Virginia’s law directs 45% of RGGI revenue toward credits for eligible residential and other customers, with the remaining 55% distributed under the state’s existing framework.
Meanwhile, RGGI’s broader program is becoming more restrictive. Participating states agreed in their third program review to lower the regional emissions cap beginning in 2027, with allowances declining through 2033. The updated rules also expand cost-containment reserves intended to provide additional allowances when prices rise sharply.
Virginia is expected to align its program with those updated rules by Jan. 1, 2027, meaning the state’s return to RGGI is only the beginning of a broader regulatory transition.
Read more: Pennsylvania Pulls Out Of Regional Greenhouse Gas Initiative After Years Of Dispute
