Virginia RGGI carbon auction exceeds estimates, raising electricity cost concerns

Virginia’s first auction of Regional Greenhouse Gas Initiative (RGGI) carbon allowances since rejoining the compact has generated approximately $259 million, more than double the state’s previous fiscal estimates. The auction cleared at $37.65 per ton of carbon emissions, a significant increase from the $19.63 price used in earlier state projections.

Electricity producers, led by Dominion Energy, may face up to $1 billion in carbon tax costs this fiscal year. Dominion Energy has already petitioned the Virginia State Corporation Commission to reinstate a rider to recover these costs from customers. Without mitigation, the utility estimates the charge could add roughly $13 per month to the bill of a typical residential customer using 1,000 kilowatt-hours.

Governor Abigail Spanberger has stated that Virginians will be protected from these costs through a new RGGI credit. Under the state budget, 45% of RGGI revenue is directed back to certain residential and small-business utility customers to offset the impact.