RGGI Is Back in Virginia. What Is It, and Why Does It Matter to Your Power Bill?
RGGI headquarters in NY | Wikipedia
In a recent post, I wrote about 10 Reasons Virginia Power Bills Are Going Up, and Data Centers Are Just One.
The point was simple.
Data centers are part of the story.
They are not the whole story.
Virginia’s power bill problem is a stack of costs. Infrastructure. Transmission. Distribution. Fuel. Purchased power. PJM Interconnection (PJM) capacity. Offshore wind. Renewable mandates. Electrification. Coal retirements. Data centers.
And now, RGGI is back in the conversation.
RGGI stands for the Regional Greenhouse Gas Initiative.
It is a multi-state carbon cap-and-trade program for power plants. Under RGGI, certain fossil-fuel power plants must buy allowances for the carbon dioxide they emit. Those allowances are sold through auctions, and the auction proceeds go back to the participating states.
That is the basic structure.
Power plant emits CO₂.
Power plant needs allowances.
Allowances are sold at auction.
The state receives the auction proceeds.
The state spends the money under its own laws and programs.
That is RGGI.
It is not a traditional tax. It is not a normal utility charge. It is not a direct customer fee.
But if a utility can recover the cost of buying allowances from customers, then the economic effect can look like a carbon charge on electric bills.
That is why RGGI belongs in the Virginia power bill conversation.
Virginia was already in RGGI
Virginia participated in RGGI from 2021 through 2023.
During that period, Virginia generated about $827.7 million from the sale of RGGI allowances.
That money did not stay with RGGI Inc.
RGGI Inc. is the administrative and technical support organization for the regional program. The auction proceeds go back to the participating states.
In Virginia’s case, the money became state-controlled program revenue.
Virginia law directed the proceeds into specific buckets.
Forty-five percent went to the Community Flood Preparedness Fund (CFPF).
Fifty percent went to low-income energy-efficiency programs administered through the Virginia Department of Housing and Community Development (DHCD).
Three percent went to the Virginia Department of Environmental Quality (DEQ) for administration of the revenue allocation, the carbon dioxide cap-and-trade program, the auction, and statewide climate change planning and mitigation activities.
Two percent went to the Virginia Department of Housing and Community Development (DHCD), in partnership with the Virginia Department of Energy, also known as Virginia Energy, to administer and implement low-income energy-efficiency programs.
The Virginia Department of Conservation and Recreation (DCR) also plays a role in administering the Community Flood Preparedness Fund.
So when someone says RGGI money is used for flood protection and energy efficiency, that is generally true.
But there is another question.
Where did the money come from?
The money does not appear out of nowhere
RGGI proceeds are often described as money paid by polluters.
That sounds simple.
But power plants and utilities do not operate outside the electric system. If allowance costs are recoverable through rates, riders, or base rates, then those costs can move through the utility system and land on customers.
That means residential customers, small businesses, commercial customers, and industrial users may ultimately help fund the allowance cost through electric bills.
Then the state receives the auction proceeds and spends the money through approved programs.
The loop looks like this:
- Power plant or utility buys allowances.
- Utility seeks recovery of those costs.
- Customers pay through electric bills.
- The state receives auction proceeds.
The state distributes the money through energy-efficiency programs, flood programs, administration, grants, loans, studies, and projects.
That does not mean every project funded by RGGI should be viewed the same way.
Programs funded through RGGI can include weatherization, energy-efficiency improvements, flood mitigation, and local resilience projects. Supporters and critics may disagree about the effectiveness or value of those programs.
But the funding mechanism is the part customers need to understand.
The auction proceeds do not originate within the state budget.
They are generated through the allowance system and the associated costs within the electric sector.
And if utilities recover allowance costs from customers, then the cost starts with the electric bill.
Why this gets confusing
The language makes RGGI hard to follow.
Carbon allowances.
Auction proceeds.
Investments.
Compliance costs.
Rate adjustment clauses.
Cap-and-trade.
Market-based programs.
Those words may be accurate.
They also make it difficult for regular customers to follow the money.
The simple question is this:
Who pays, who controls the money, and who gets it back?
That is the part Virginians should care about.
Virginia collected a lot of money
During Virginia’s earlier RGGI participation, the Commonwealth generated about $827.7 million from allowance auctions.
RGGI’s own 2023 proceeds report stated that Virginia had reported $75 million in investments in 2021. The same report also noted $752 million in unspent Virginia proceeds through 2023, while explaining that Virginia was not participating in RGGI during development of the 2022 and 2023 reports, so investment of Virginia proceeds during those years was not reflected in that report.
That does not automatically mean $752 million sat untouched forever.
It means the public reporting is not as easy to follow as it should be.
If almost $828 million was collected through this system, Virginians should be able to answer basic questions without digging through state code, RGGI reports, agency presentations, Virginia State Corporation Commission (SCC) filings, budget language, and grant award documents.
How much was collected?
How much was spent?
How much was unspent?
Which agencies controlled it?
Which programs received it?
Which localities received it?
Which contractors were paid?
How much came from residential customers?
How much came from commercial and industrial customers?
How much benefit went back to the same people who paid into the system?
Those are not partisan questions.
Those are accounting questions.
RGGI is coming back
Virginia exited RGGI after 2023.
Now Virginia is moving back into the program.
Dominion has filed with the Virginia State Corporation Commission (SCC) to reinstate and update Rider RGGI to recover projected and actual costs related to buying RGGI allowances.
That is the part that matters for customers.
RGGI is not just an environmental policy sitting in a policy binder.
It can show up on the power bill.
The utility buys allowances because state law requires participation in the program.
The utility then seeks to recover those compliance costs.
The Virginia State Corporation Commission (SCC) reviews the request.
If approved, customers pay through the approved recovery mechanism.
What RGGI does not explain
RGGI does not explain everything.
It is not the only reason power bills are going up.
Virginia’s electric system is already under pressure from load growth, data centers, renewable mandates, offshore wind, transmission upgrades, local distribution work, storm hardening, fuel costs, purchased power, PJM Interconnection (PJM) capacity costs, and the broader push to electrify more of the economy.
RGGI is one more layer in that stack.
But it is an important layer because it converts a utility compliance cost into state-controlled program money.
That is the key.
The customer may see the cost on the bill.
The state receives the proceeds.
The money is then redistributed through programs.
That structure deserves scrutiny.
The data center connection
RGGI is not a data center program.
RGGI was not created for data centers.
RGGI does not directly fund data centers.
But data centers are driving major load growth in Virginia, and major load growth requires a bigger, more expensive electric system.
More generation.
More transmission.
More substations.
More transformers.
More land.
More permitting.
More backup.
More capital.
That puts political pressure on electric bills.
RGGI adds another cost recovery issue to that same bill.
At the same time, RGGI proceeds can be used by the state for things like energy-efficiency programs, bill relief, and flood resilience.
That creates a loop.
Electric customers may pay more because of allowance costs.
The state receives auction proceeds.
The state can then use some of that money for selected customer relief or public programs.
That may help certain people and projects.
But it does not change the basic fact that the money came from the electric system.
The question Virginians should ask
The better question is this:
Are the people paying into RGGI the same people benefiting from RGGI?
If the answer is yes, show the numbers.
If the answer is no, explain the transfer.
RGGI is a system that takes money from the electric system and turns it into state-directed program revenue.
Maybe you support that.
Maybe you do not.
But Virginians should at least understand the mechanism.
The plain-English summary
RGGI is a carbon allowance program for power plants.
Power plants must buy allowances for CO₂ emissions.
Those allowances are sold through auctions.
The auction money goes to the state.
Virginia law directs the money mostly to low-income energy efficiency and flood preparedness.
The Virginia Department of Environmental Quality (DEQ), Virginia Department of Housing and Community Development (DHCD), Virginia Department of Conservation and Recreation (DCR), Virginia Department of Energy, and Virginia State Corporation Commission (SCC) all touch different parts of this system.
Utilities can seek to recover allowance costs from customers.
That means the money may ultimately come from electric bill payers.
The state then redistributes the proceeds through public programs, grants, loans, administration, and projects.
That is the loop.
So when we talk about Virginia power bills going up, RGGI should be included in the cost stack.
Not because it is the only issue.
Not because it explains everything.
But because it is another example of the same pattern described in 10 Reasons Virginia Power Bills Are Going Up, and Data Centers Are Just One.
The electric grid is being asked to do more.
The policy stack is getting heavier.
The billing mechanisms are getting more complicated.
And the customer is still the one at the end of the wire.
That is the part we should not lose sight of.
References
Regional Greenhouse Gas Initiative. Program Overview
https://www.rggi.org/
Regional Greenhouse Gas Initiative. 2023 RGGI Proceeds Report
https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2023.pdf
Virginia Department of Environmental Quality. Carbon Trading
https://www.deq.virginia.gov/air-energy/greenhouse-gases/carbon-trading
Code of Virginia. § 10.1-1330. Clean Energy and Community Flood Preparedness Act
https://law.lis.virginia.gov/vacode/title10.1/chapter13/section10.1-1330/
Code of Virginia. § 10.1-603.25. Virginia Community Flood Preparedness Fund
https://law.lis.virginia.gov/vacode/title10.1/chapter6/section10.1-603.25/
Virginia State Corporation Commission. Dominion Energy Virginia Rider RGGI Proceeding, Case PUR-2026-00006
https://www.scc.virginia.gov/case-information/submit-public-comments/cases/pur-2026-00006.html
Virginia Mercury. Virginia set to rejoin RGGI as utilities prepare to pass the cost back to ratepayers
https://virginiamercury.com/briefs/virginia-set-to-rejoin-rggi-as-utilities-prepare-to-pass-the-cost-back-to-ratepayers/
Seth Tandett is based in Richmond, Virginia, and has spent years working in the concrete construction industry across central and southern Virginia. His experience includes structural concrete work on multi-level frames, data centers, federal facilities, and other large-scale projects.
Today, Seth works in business development for Baker Construction and hosts the Concrete Logic Podcast, where he asks direct questions about what is really happening in the concrete industry.
Outside of work, Seth spends time studying economics, reading American history, and hunting waterfowl.
On the Concrete Logic Podcast, Seth brings the same approach he uses in the field: ask better questions, challenge weak answers, and focus on what actually matters in concrete.
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