by Karen Kinard, Bridge2Blue
Virginia’s return to the Regional Greenhouse Gas Initiative (RGGI) on July 1, 2026, restores one of the most effective climate and community‑resilience programs the Commonwealth has ever implemented. After Gov. Glenn Youngkin withdrew Virginia through regulatory action (a move courts signaled exceeded executive authority), the General Assembly reinstated RGGI through statute. With that, Virginia reenters a program that has already proved its value and is poised to do so again. It works so well that oil and gas interests spread misinformation about it far and wide.
RGGI’s Track Record in Virginia (2021–2023)
Before the withdrawal, RGGI generated over $828 million for Virginia. State law required that revenue be spent on two priorities:
- Low‑income energy efficiency upgrades (50%)
- Community flood‑resilience projects (45%)
The results were concrete. Thousands of low‑income households received weatherization, HVAC replacement, insulation, and roof repair — upgrades that permanently lowered energy bills by $300–$600 per year. Flood‑resilience grants funded stormwater improvements, coastal protection, and drainage upgrades in dozens of localities, including Hampton Roads, Alexandria, Richmond, and Buchanan County. RGGI also helped drive down carbon pollution as Dominion Energy retired coal units and expanded solar generation.
New in 2026: Using the Resilience Bucket to Offset High Bills
The 2026 reinstatement bill added a new consumer‑protection tool: a portion of the resilience bucket may now be used to offset energy‑bill increases, especially during periods of extreme heat or cold. This change was supported by Youngkin and legislators who wanted RGGI revenue to provide direct, near‑term relief to households facing rising bills from data‑center‑driven grid costs and weather extremes.
This means resilience dollars can now fund:
- bill credits during peak‑cost seasons;
- community cooling centers and warming centers;
- emergency utility‑assistance programs; and
- local infrastructure upgrades that reduce long‑term energy burdens.
It’s the first time Virginia has allowed resilience funds to be used this way — turning climate‑resilience dollars into bill‑resilience dollars when families need help the most.
Is RGGI a “Tax on Homeowners”? The Data Says No
Critics often argue that RGGI functions as a “tax on homeowners,” but evidence from Virginia’s earlier participation and from states with a long‑term RGGI history show the impact on electric bills has been minimal to negligible. During 2021-2023, the average residential bill increase attributable to RGGI was roughly $2–$3 per month, while efficiency upgrades funded by RGGI lowered bills for many low‑income households by hundreds of dollars per year.
Independent reviews of Maryland, Delaware, and New York show the same pattern: carbon pollution fell sharply while electricity prices rose more slowly than in non‑RGGI states, largely because efficiency investments reduce demand and stabilize system costs.
Why Data Centers Will Mask RGGI’s Small Bill Impact
By 2026, Northern Virginia’s data-center boom was creating rate pressures far larger than anything RGGI ever produced. Dominion’s filings already show multi‑billion‑dollar transmission upgrades, new substations, and accelerated grid reinforcement, costs that dwarf RGGI’s previous impact of about $4 per month. If bills rise $15-$25 per month due to data‑center infrastructure, RGGI’s portion becomes nearly invisible. Ironically, if Dominion’s emissions rise because of data‑center load, Dominion must pay the state, and those funds can be used to offset bills for households most affected by rising energy costs.
Not connected to a rate increase that just went into effect, Dominion has formally asked the State Corporation Commission (SCC) to approve a significantly higher RGGI rider because carbon‑allowance auction prices have risen sharply since Virginia last participated in the program. Dominion previously charged households a rider of about $4.40 per month, but the utility is now proposing a rider of up to $13 per month. Auction bidding prices can increase for various reasons, including the fact that CO₂ targets are hard to meet with soaring data-center demands, and more allowances must be sought.
Under Virginia law, utilities are normally allowed to pass through fuel and carbon‑compliance costs to ratepayers, which is why Dominion has filed for this increase. But the SCC may approve, modify, or reject the proposal before any increase reaches consumers, and regulators have already shown a willingness to assign more costs directly to data centers rather than households. Energy regulators must balance consumer and provider interests.
In Virginia’s RGGI framework, Appalachian Power Company (APCo) and Old Dominion Power (ODP) are also covered utilities, but their carbon‑allowance volumes are much smaller and their emission‑reduction targets less stringent than Dominion Energy’s because they operate fewer fossil‑fuel units and serve smaller customer bases.
All Eyes on Legislators, Regulators, and New Cabinet Experts
Energy cost recovery in Virginia is as complex as it is central to people’s daily lives. Every decision about how Dominion pays for fuel, carbon allowances, transmission upgrades, and data‑center‑driven load growth ultimately flows through the SCC’s technical rate cases. These cases determine whether families see higher bills or whether utilities absorb more of the cost. That complexity, combined with rising pressure from PJM market volatility, RGGI compliance, and the explosive growth of data‑center electricity demand is exactly why Gov. Abigail Spanberger created a new cabinet‑level Chief Energy Officer position.
As reported by the Virginia Mercury, she appointed Josephus Allmond, an attorney with a long history of challenging Dominion in rate cases and advocating for cleaner, lower‑cost energy strategies. Allmond’s background in litigating Dominion’s RPS, transmission, and integrated resource plan dockets gives the administration a seasoned expert who understands how utility incentives work — and how regulatory decisions can push Dominion toward greener, more affordable infrastructure rather than relying on fossil generation that drives RGGI auction prices higher.
RGGI is designed to make fossil‑fuel generation more expensive over time, pushing utilities toward cleaner, cheaper sources of electricity such as solar, wind, and storage. As allowances “get more expensive and harder to come by,” the financial incentive to shift to clean energy grows. If the SCC rejects or reduces Dominion’s proposed RGGI rider rate, Dominion must absorb more of the cost itself. That creates a real tipping point: when fossil generation becomes more expensive for Dominion than building clean‑energy infrastructure, the utility has a direct economic incentive to accelerate renewable projects and reduce reliance on carbon‑intensive generation. Maintaining pressure on data centers to reduce emissions from their backup generators also helps. . Those emissions are not counted when measuring whether Dominion meets its RGGI targets. In 2025, the SCC established a new rate class for high energy usage data centers with costs to be allocated in the 2027-28 rate case between Dominion customers and the centers.
Rising data‑center demand intensifies this dynamic. As electricity bills have risen nearly 25 percent in recent years, largely due to data‑center load growth, Dominion has had to rely more heavily on fossil‑fuel generation. More fossil-fuel generation means more RGGI allowances, which increases demand in the auctions and pushes clearing prices higher. Dominion’s proposed RGGI rider rises with them. But the SCC can reject or modify these increases, effectively pressuring Dominion to reduce fossil‑fuel use and invest in lower‑cost clean‑energy resources that reduce both emissions and long‑term ratepayer exposure.
How Other RGGI States Have Fared
RGGI’s regional track record is one of the strongest climate‑policy success stories for participating states. Since 2009:
- CO₂ emissions fell ~50%;
- Electricity prices dropped faster than in non‑RGGI states;
- Over $6 billion has been invested in efficiency and resilience; and
- Billions in public‑health benefits from cleaner air have been realized.
States like Maryland, Delaware, and New York have used RGGI funds to modernize public housing, expand solar access, and build flood‑protection infrastructure. Unfortunately, Pennsylvania Gov. Josh Shapiro conceded to leaving RGGI to obtain a long-overdue budget agreement with his state’s GOP-controlled Senate. New Jersey left in 2012 but reentered in 2020 after a change in administration.
Bottom Line
Virginia’s return to RGGI restores a proven system: lower pollution, stronger communities, and direct bill‑saving investments for families who need them most, including new tools added in 2026 to help offset rising energy costs. The Commonwealth saw these benefits once. Beginning July 1, 2026, it will see them again.
To realize the full emissions reduction and ratepayer benefits of rejoining RGGI, Virginia will also need legislation that restores strong oversight of monopoly utilities. That means reducing the profit margins utilities earn on new infrastructure, limiting automatic cost pass-through to customers, and requiring utilities to absorb a greater share of grid and generation expenses. These reforms—along with integrating RGGI planning into SCC rate cases—would finally align Virginia’s regulatory system with least‑cost energy policy and protect ratepayers from an endless cycle of profit-driven spending.
