by Steve Haner

Governor Abigail Spanberger’s proposed amendment to the Regional Greenhouse Gas Initiative rebate system will give most but not all residential customers of Virginia’s rural electric cooperatives a shot at some cash back. The Northern Virginia Electric Cooperative is still in the RGGI wilderness.

The feeding frenzy over the RGGI carbon tax dollars, predicted when a carbon allowance auction reached a record $35 per ton of emitted CO2 last month, is well underway and getting very complicated, perhaps too complicated. The state is likely to reap $800 million to $1 billion or more per year in RGGI taxes at that $35 per ton carbon price.

Spanberger’s new language, due for a vote when the Assembly comes back on Monday, also precludes any rebate to a non-Virginia customer. That presumes there will be utility customers deemed “non-Virginian” who are paying the utility a direct RGGI tax on their bills but will not be eligible for rebates.

Do they not teach the Commerce Clause of the U.S. Constitution anymore? Can a state law discriminate that way against people or a business in another state? (I cannot find a link directly to the amendment she put out last night, so it is set out at the end of this column.)

Spanberger and her fellow Democrats in the Assembly have gone from claiming that RGGI, with its carbon dioxide tax, cap and trade approach would lower customer costs, to admitting customers foot the bill. The generation companies that must pay the tax on the coal, oil, and natural gas they use simply pass it along to customers somehow.

During Virginia’s last spell under the RGGI tax regime, 2021-23, Dominion Energy Virginia was the only RGGI tax paying utility that set up a way to bill customers directly. It proposes to do so again starting next year at $13 per 1,000 kilowatt hours of usage. Under the rebate plan, whatever a residential customer or small business customer pays, they will effectively get back. 

The Old Dominion Electric Cooperative is a coalition of 11 Virginia rural electric cooperatives outside the territories of Dominion or Appalachian Power Company. ODEC also owns power plants burning hydrocarbon fuels and will have to pay the carbon tax starting next week. 

While it has not sought in the past to calculate that cost by member company or individual coop customer, it will now be under pressure to do that. Once the RGGI impact per customer is specified on the bills, that amount can then be rebated.

But Northern Virginia Electric Cooperative (NOVEC) is not part of ODEC. It depends almost entirely on purchased power, owning just one small biomass power plant which is not required to buy RGGI credits. It is likely impossible for it to calculate how much the RGGI allowance tax impacts its individual customers because the regional PJM Interconnection it uses includes RGGI states and non-RGGI states.

By energy demand (not customers or territory, but by sales) NOVEC is the number two provider in the state. It has shot past most of the other providers because it also serves a major portion of Virginia’s data center population. In recent years it has also been a lower cost provider, even among the various cooperatives. The RGGI impact will shuffle that.

What Spanberger’s amendment does not do is change how the RGGI dollars are allocated. She sticks with the Assembly’s previous approach that only 45 percent of the RGGI proceeds will go toward rebates. The remaining 55 percent will go as the law previously dictated, to flood mitigation and home energy efficiency renovations. Some of those are squawking about having to share with residential customers, but that fight is over.

Spanberger’s amendment does not clear up the confusion that will result from the words “small general service” to describe the small portion of non-residential users that will get rebates. Dominion for example has GS-1, GS-2 and GS-3 before you get to the very large users in GS-4 and above. Will only GS-1 businesses qualify?

Many very important energy customers – hospitals, grocery stores, schools, warehouses, telecommunications providers – will see no rebates and they are just as capable as the power companies of raising their prices to collect the dollars. RGGI raises rates. That was its purpose from the inception. 

Whatever rebate dollars now flow to cooperative customers, the dollars available to rebate to Dominion and Appalachian customers will shrink. The more broadly “general service” is defined, the dollars for rebate to residential customers will shrink.

As mentioned before, they didn’t think this through. Nope. And the “double whammy” impact of RGGI, the way it generally raises all electricity prices in Virginia and within PJM, is money that will never return to any customer in any class. The huge winners there are the solar and wind generators getting higher daily prices than they would see without RGGI.

The new language from Spanberger:

“E. Notwithstanding any other provision of law, beginning July 1, 2026, an amount equal to 45 percent of all revenue collected pursuant to a program established under § 10.1-1330 of the Code of Virginia, shall be remitted by the Commonwealth to any Phase I or Phase II Utility, as those terms are defined in subdivision A 1 of § 56-585.1 of the Code of Virginia, which has a rate adjustment clause petition approved or pending approval by the State Corporation Commission (the “Commission”) pursuant to subdivision A 5 e of § 56-585.1 of the Code of Virginia for recovery of the costs of emissions allowances, or an entity organized pursuant to Chapter 9.1 of Title 56 for distribution permitted only to Virginia customers and reflected as a line item on the customer bill labeled RGGI Credit. Each Phase I or Phase II Utility shall subsequently distribute such funds received from the Commonwealth as a credit to its customers in the residential, Small General Service, and church classes in a manner approved by the Commission, including that such credit shall be reflected as a line item on the customer bill labeled RGGI Credit. Such credit shall only be distributed to Virginia customers. The remaining 55 percent of the revenue collected shall be distributed consistent with § 10.1-1330 C. of the Code of Virginia.”

(Appalachian in the Phase One utility, Dominion Phase Two, the cooperatives are covered by Chapter 9.1 of Title 56.)