By Steve Haner,

Dominion Energy Virginia is proposing to delay until March 2027 to bill its customers for the Regional Greenhouse Gas Initiative (RGGI) carbon allowances it must buy starting July 1.  When the cost hits, however, it could be $13 a month or $156 per year for a typical residential customer.

The final decision rests with the State Corporation Commission, which will now open a case on the request (the full set of application documents is here.)  When the Energy Commission of Virginia meets tomorrow with a RGGI rebate idea on its agenda, now the legislators have a real (and painful) customer cost prediction to chew over. 

Dominion filed its application to reinstate what it calls Rider RGGI, which was on customer bills during the three previous years Virginia was part of the 11-state carbon tax, cap and trade compact.  When last Dominion customers paid Rider RGGI, it was about $4.40 per month for 1,000 kilowatt-hours.  That may now be almost triple. 

But the carbon prices set a record in the June 4 auction of $35 per ton, and in its application Dominion assumed prices through 2028 of up to $38 per ton of emitted carbon dioxide.  Dominion expects to buy and retire 51 million such carbon credits by the end of 2028.  The $7-8 per month in RGGI customer cost that was predicted in that article proved to be wishful thinking.

As is becoming typical with skyrocketing utility fuel costs, as well, Dominion is offering the SCC a “payment plan” option that would lower the immediate cost increase but extend the financial impact over additional time.  The bill impact on a residential customer using 1,000 kilowatt-hours would still be above $10 per month with that approach.

From July 1 of this year through February of 2028, a 20-month period, Dominion expects to need $1.8 billion to pay its carbon tax.  The 13 cents per kilowatt-hour under the full reimbursement, or 10.4 cents per kilowatt-hour under the extended payment plan, would apply equally to all rate classes.

Thus, there would be no discount for large users such as the data centers, major manufacturing facilities or sprawling warehouse complexes or big box stores.  On other aspects of their bills, there are some volume discounts.  There will not be any break for Rider RGGI. 

Dominion is the largest Virginia buyer of RGGI allowances with its fleet of natural gas plants, but the Old Dominion Electric Cooperative also needs RGGI credits to operate its coal plant. Its direct costs are also easy to pass on to customers.

The several independent power producers in the state running gas plants have a harder time getting this money back as they sell power into the PJM Interconnection marketplace, but a higher RGGI tax tends to drive all PJM prices higher.  Much of that higher basic price is enjoyed by the coal plants Dominion and Appalachian Power Company own in West Virginia, which sell more power into Virginia when RGGI reduces Virginia power output. 

RGGI is the best thing that ever happened for those coal and gas plants located in PJM states which are not part of RGGI.