Resources for the Future Inc.
06/22/2026 | Press release | Distributed by Public on 06/22/2026 11:40
Affordability Data Tool: Explore Virginia’s Re-entry into the Regional Greenhouse Gas Initiative
Affordability Data Tool: Explore Virginia's Re-entry into the Regional Greenhouse Gas Initiative
This data tool explores how Virginia's re-entry into the Regional Greenhouse Gas Initiative may impact electricity prices.
Date
June 22, 2026
Authors
Publication
Data ToolReading time
6 minutesAbout this Data Tool
Our interactive Virginia Regional Greenhouse Gas Initiative (RGGI) Affordability data tool visualizes the impacts of key variables on the combined effect of RGGI and household rebates on Virginia residential electricity prices. The figure displayed in the data tool shows how Virginia's re-entry into RGGI affects electricity prices in terms of percentage changes given different allowance prices. Allowance prices are primarily determined by quarterly auctions, although allowances are also traded in the secondary market. The net impact on household prices (shown in blue), is broken out into the following two components:
- RGGI's direct "Carbon Cost" (shown in red), which is the cost of purchasing allowances that is passed on to Virginia ratepayers
- RGGI "Rebate" to residential households (shown in green), which is the percentage reduction in household electricity prices afforded by the rebate
The "Net Price Change" (shown in blue) is the net percentage change in household electricity prices caused by the combined carbon cost and rebate, given the inputs. The "Outputs" panel on the right shows how the net price change translates into monthly and annual electricity bills for a typical household that consumes 1,000 kilowatt-hours (kWh) per month. The Outputs panel also shows the gross revenues and the allocation of those revenues to alternative uses, including rebates, flood preparedness, energy-efficiency programs, and administrative costs.
Related
This Virginia RGGI Affordability data tool lets users vary key inputs in the calculation of RGGI's impact on Virginia electricity rates and rebates, visualizing the impacts. The data tool identifies five key numerical inputs and two technical assumptions regarding the treatment of allowances that are auctioned in the months before rates are expected to be revised-anticipated to be March 1, 2027, in electric utility Dominion Energy's recent request for a rate adjustment.
The following inputs are shown in descending order of importance:
- RGGI Allowance Price ($/short ton) is the market-determined allowance price. Our default value is $35 per short ton, corresponding to the clearing price in the June 3, 2026, RGGI auction. Changing this input changes the point on the graph that is highlighted, with larger allowance prices yielding both larger carbon costs and larger rebates, with the impact on rebates dominating the impacts on carbon costs.
- RGGI Revenues Set Aside for Funding State Programs in Virginia ($ millions) determines how much of the RGGI revenues are directed to the historical uses for those funds-a combination of energy-efficiency investments, flood-preparedness programs, and administrative expenses. This variable determines how much revenue remains available for rebates. Our default value is $275 million per year, equal to the average annual revenues generated for those programs during Virginia's past participation in RGGI.
- Virginia Annual RGGI Baseline Budget (millions of short tons) determines, jointly with the allowance price, the gross amount of revenues available for Virginia state programs and rebates. We use the proposed value of 22.1 million tons for 2027 reported by Carbon Pulse in April 2026. In addition to this baseline budget, the results include up to 7.4 million supplemental allowances that could come into the market from the Cost Containment Reserve, which represent additional allowances available at certain trigger prices (with two tiers of $19.50 per ton and $29.25 per ton in 2027).
- Total Annual Load Growth (%) represents the annual rate of overall electricity consumption growth in Virginia. We use a default value of 10.4%, corresponding to Dominion Energy's 2026 forecast for overall load growth. This variable affects how quickly Virginia emissions are likely to grow as in-state fossil fuel-fired power plants increase generation to meet higher demand. It also affects the rate at which carbon costs are amortized over residential, commercial, and industrial ratepayers. The results are not very sensitive to this assumption. the rate at which carbon costs are amortized over residential, commercial, and industrial ratepayers. The results are not very sensitive to this assumption.
- Share of Load Growth Met by Virginia Gas Generation (%) represents an assumption of how much load growth is met by in-state Virginia gas generation. We use a default value of 80%, assuming that most but not all incremental load will be met by natural gas. This variable affects the cost of purchasing allowances to cover the associated emissions. The remaining load growth is assumed to be met by sources not covered by RGGI, including some combination of zero-carbon sources and non-RGGI generators. The results are not very sensitive to this assumption.
- The Treatment of Pre-Rate-Year Costs and Revenues panel includes two checkboxes regarding the treatment of allowances that are auctioned in the months before rates are expected to be revised-anticipated to be March 1, 2027, in Dominion Energy's recent request for a rate adjustment. By default, both boxes are checked, which conceptually aligns our calculations with the anticipated near-term costs as specified in Dominion Energy's request. That request seeks to recover 32 months of costs over a 24-month billing period due to the 8-month delay between Virginia's entry into RGGI (July 1, 2026) and the timing of the requested rate adjustment (March 1, 2027). This treatment amplifies both the potential rate impacts from recovery of the carbon costs (first checkbox) and the rebates available for rebates (second checkbox). (See Methodology section below for more details.)
To calculate the "Funded State Programs" numbers in the Outputs panel, we assume that the following percentages of the revenues set aside will go to the following programs: 45% to flood preparedness, 50% to low-income energy efficiency, 3% to administration of climate programs, and 2% to administration of energy-efficiency programs, consistent with the proportions specified in the Clean Energy and Community Flood Preparedness Act.
Methodology
Calculations
The methodology behind our calculations is straightforward. We project future values of total load, residential load, and residential electricity prices by extrapolating from recent historical values and the load-growth input. We calculate the emissions that are covered by RGGI from Virginia power plants by assuming coal generation will fall back to 2023 levels (the year Virginia was last in RGGI). The gap between load growth and the reduced coal-fired generation is met by a mix of gas and non-emitting or non-RGGI generation, according to the corresponding data tool input. Virginia power-sector emissions are calculated by multiplying these gas- and coal-generation figures times the average rates of carbon dioxide emissions for Virginia gas and coal plants, respectively. We calculate the carbon cost by multiplying the associated emissions by the allowance price and then dividing by total Virginia electricity consumption. This calculation yields an estimate of the carbon cost in cents per kWh.
Treatment of Pre-Rate-Year Costs and Revenues
Our analysis is complicated by the fact that, although Virginia is re-entering RGGI on July 1, 2026, electricity rates will not be affected until early 2027 due to the time needed for policymakers to negotiate how allowance expenditures will be incorporated into electricity rates. This time lag creates an overhang of costs and revenues that amplify the near-term impacts on electricity prices in both the positive and negative directions.
We assume that new rates and decisions regarding the use of auction revenues will go into effect on March 1, 2027, corresponding to Dominion Energy's June 5 request for a rate adjustment. The time lag implies that there will be eight months when generators will be buying allowances-and Virginia receiving auction revenue-with no compensating change in electricity rates (July 2026 through February 2027). Dominion Energy has proposed spreading those 8 months evenly over two 12-month "Rate Years," effectively apportioning 4 months of allowance costs to each of Rate Years 2027 and 2028. Thus, in both 2027 and 2028, 16 months' worth of carbon costs (and potentially rebates) are being applied to a 12-month period.
The apportioned increases in costs and rebates across 2027 and 2028 thus amplifies the potential impacts on electricity rates in those years by a factor of 1.33 (16 months of allowances spread over 12 months of rate increases). The same is true of allowance value: Virginia is collecting revenues from RGGI auctions during those eight months that can be used to amplify rebates in 2027 and 2028.
Beyond 2028, however, this amplification will no longer be in effect because the eight months of extra allowance sales will have been exhausted. These two checkboxes determine whether the 1.33-factor amplification of gross carbon costs and rebates are included in the calculation. If the boxes are unchecked, the 1.33-factor amplification is removed, in which case the estimated carbon costs and revenues are reflected as annualized, steady-state values that are more applicable to 2029 and beyond.
Rate Impacts
In the default setting, the carbon cost comes to just over 1.08 cents per kWh, very close to the rate increase of 1.04 cents per kWh requested by Dominion Energy on June 5, 2026, after accounting for the treatment of pre-rate-year allowance expenses. This carbon cost amounts to a 6.6% increase in average Virginia residential electricity prices, or about a $10.75 increase in the monthly bill for a household that consumes 1,000 kWh of electricity per month.
For the rebates, we calculate gross RGGI revenues by multiplying the allowance price by Virginia's budget, including any Cost Containment Reserve allowances that are released, depending on the allowance price. With the 1.33 multiplier due to the pre-rate-year auction revenues, the rebates amount to $1.4 billion annually. After setting aside $275 million for Virginia state programs, about $1.1 billion is rebated to all residential electricity consumers in Virginia in the form of a uniform reduction in electricity prices. Spread out over approximately 48 billion kWh of annual residential load, the rebate yields a price reduction of about 2.3 cents per kWh (about≈ $1.1 billion/48 billion kWh). This price reduction amounts to approximately 14.2% of the average residential electricity price, or about a $23 decrease in monthly bills for a household that consumes 1,000 kWh per month.
This rebate of 2.3 cents per kWh (14.2%) on Virginia electricity prices more than offsets RGGI's direct effect of +1.08 cents (6.6%). The net reduction is thus 1.2 cents per kWh (7.6%) in household electricity prices, or about $12 in net monthly savings for a typical household that consumes 1,000 kWh per month.
Resources for the Future Inc. published this content on June 22, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on June 22, 2026 at 17:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]