The RGGI states, with New Jersey, which rejoined in June.
by Steve Haner
With an eye on November 5, Virginia’s Republican legislators are expressing their concern for Virginia’s electricity customers and warning that their Democratic competitors will support a new energy carbon tax if they gain the majority. The carbon tax is a key element of the Regional Greenhouse Gas Initiative (RGGI).
In media releases and, of course, Tweets, the simple message is “Higher Taxes on Energy. Democrats Say Yes. Republicans Say No.” The key evidence provided is State Corporation Commission staff testimony (here), first made generally available on Bacon’s Rebellion, and a recent summary on the issue I wrote for the Thomas Jefferson Institute for Public Policy (here). We took a stand against joining RGGI.
That RGGI white paper has been in process all summer, and it was pure coincidence that it surfaced just as many Democrats were showing their concern for consumers by opposing a higher profit margin for Dominion Energy Virginia.
I pointed out when that came up that many of those Democrats had voted for some anti-consumer energy legislation in 2015 and 2018. That is an equally fair point for many of these Republicans. One can be cynical and dismiss all this as election posturing, or one can hope that the fog is clearing, and a future General Assembly will show more care about consumer cost and less willingness to enrich utility investors. The damage from 2015 and 2018 can be undone.
Educating and activating readers on these issues has been my goal in scores of stories over the past 16 months, with the hope voters would start raising them. It is not necessary that somebody lose an election over those votes, but a few very uncomfortable minutes in a debate or on a voter’s doorstep would be wonderful.
In the debate over Virginia joining RGGI or not, there are a series of roll call votes for 2018 and 2019 that were purely on party lines, something not true of any of the energy regulatory bills. Those were mixed votes. RGGI also ties into an ongoing national Democratic push to address the so-called “Climate Crisis,” starting at the top with their presidential wannabes.
You can read the white paper or other Thomas Jefferson Institute comments on RGGI for more detail. The bottom-line is that the carbon reduction goals (30% by 2030) are easy and will likely be met with or without RGGI, so there is no reason to impose a carbon tax unless the goal is just to raise money. Nobody is arguing with the stated goal of reducing electricity plant emissions by 30% (certainly not the utilities). Whether that accomplishes anything for the climate is another debate.
Will RGGI compliance cost the billions of marginal dollars over 25 years that the utility and SCC staff believe? Probably not, mainly because coal plants are closing rapidly anyway. But a tax of about $6 per ton on 28 million tons of CO2 emissions, or more, would be paid by customers. That will add up quickly. Nobody knows that the price of carbon allowances in the RGGI market will be in future years, but they could rise. RGGI’s own projections show a rising cost (see page 14.)
As I wrote earlier, “We’ll find out what (RGGI) costs when it starts to cost us and keep learning for decades.”
The Democrats accept SCC estimates as gospel in the argument over Dominion’s profit margin. They cannot turn around and reject the SCC’s estimates of RGGI cost impacts out of hand. And while I think the impact of that Dominion profit margin debate has been exaggerated, the SCC case truly is an important decision going forward. The legislative Democrats were correct that a 10.75% profit margin for Dominion was an outrageous and unjustified request on its part. By going high Dominion invited the attack.
This is all complicated stuff, and when it gets too complicated, it is tempting to just make it simple even if wrong. There is another letter to the editor in the Richmond Times-Dispatch today complaining that Dominion is asking for a rate hike. It is not. I complained back in December that Clean Virginia was being fast and loose with this material, but it was struggling for a way to reach people. Yes, it will cost customers more if the allowed profit margin goes up.
I understand there may be additional efforts by Republicans to make RGGI a campaign issue today. None of this is being coordinated with me. Nevertheless, this effort on RGGI is blurring a line. The same happened with the state’s income tax conformity issue, when my work for Thomas Jefferson Institute translated into several legislative proposals.
Since my work as a “reporter” is not recognized by the self-appointed gatekeeper of journalism (the Virginia Public Access Project filter), and my dabbles in policy do seem to have an impact, it may be time for a change in emphasis.
