Governor Glenn Youngkin (R) is seeking to get Virginia out of a regional carbon tax compact, yet inexplicably has offered supporters of the Regional Greenhouse Gas Initiative (RGGI) a path to protect it.
His proposal would remove the tax on monthly electric bills which has galvanized opposition and move the cost of the mandated carbon allowances into the base rates of Dominion Energy Virginia. If somebody told Youngkin that was a benefit to the taxpayers, he was misled. It still costs us money.
Who benefits from his move, especially if it becomes a long-term approach? The utility does, as it is still using ratepayer money, and also the various special interest spending programs now being supported with the RGGI taxes. The state collected $228 million last year and will likely collect $300 million in 2022.
The proposal is in the form of a budget amendment to House and Senate Bills 29, the so-called “caboose” bill that makes amendments to the budget now in force. As a language amendment to the caboose bill, if adopted, it technically would expire as of June 30, 2022.
The danger, and do not think for a moment I’m the first to see this, is that the amendment could migrate to House and Senate Bills 30, the new budget, and be in force from July 1, 2022, to June 30, 2024. By then, the RGGI tax costs would be established as a regular cost of doing business. It would reduce the excess profits that fund the customer rebates like those the State Corporation Commission just ordered and reduce the chance future excess profits might spark a rate cut.
Dominion will just love that. Guess who I suspect wrote and proffered that amendment, perhaps through a neutral intermediary? The Democrats will just love that, too, as a growing stream of cash will flow to their spending priorities. The tax could get high enough to actually justify an increase in future base rates. Let me repeat: RGGI could raise your base rates all by itself.
RGGI also functions to protect Dominion’s monopoly on generation sources in its service territory. The shrinking pool of allowances, with costs growing higher every auction, is a major block to new entrants in the energy business seeking to build fossil fuel facilities. The solution is to eliminate RGGI, not hide the cost.
There is yet another reason that this amendment must die quickly. It sets out in the budget bill much of the entire Code of Virginia dealing with utility regulation and the new clean energy mandates. It adds just one sentence to thousands of words of utility code. Once the underlying code section is in there, other amendments could quietly appear. The proper committee process is bypassed. We do not want that chapter of Title 56 set out in the budget in full.
As previously reported, Youngkin has laid out a path to repeal RGGI through the regulatory process. That will take time under the best of circumstances, and during that time the tax on electric bills remains and might even grow. Once RGGI is repealed, if the utilities still have costs they have not collected, the SCC will likely leave the tax in place a while longer.
This short-term amendment may appear to be a fix for all that, removing the tax immediately upon its passage, probably sometime in April. Maybe there is no risk that the idea of charging it to base rates will become permanent, but once something is baked into a budget bill it is hard to remove. The final conference report cannot be amended on the floor. A late governor’s amendment could be killed by the 21 Senate Democrats.
There is also a governor’s budget language amendment to eliminate RGGI, and in this case the proposed amendment is to both bills – the caboose bill and the full budget. The language does the job, but again must get approved by the Senate Finance Committee, controlled by Democrats 11-5. That is unlikely.
But the idea of burying the tax in base rates where the voters will no longer see it as a “rate adjustment clause” on their monthly bills? The Senate Democrats, with Dominion’s encouragement, will take that deal in a heartbeat. No one in either political camp is likely to let that one issue sink an otherwise-agreed-upon budget.
Strike the “RGGI in base rates” amendment. And I give the same advice the Godfather gave: pay attention to who brought you this deal.