Keep RGGI Tax Off Customers? Good Luck With That
by Steve Haner
Virginia Democrats are so eager to reinstate a carbon tax on Virginia’s electricity producers that there are now three pathways active to accomplish the goal: a bill, a budget amendment and a motion filed with the Virginia Court of Appeals.
There is also discussion in the most recent Inside Climate News report today about finding some way to make the utility companies and independent generators eat the cost. Otherwise, what will happen in 2026 and beyond will be what happened during the previous three years Virginia imposed the tax – it will get passed on to customers.
Inside Climate News quoted Alexandria Senator Adam Ebbin saying “there very well may be” a way to make energy producers pick up more of the Regional Greenhouse Gas Initiative costs. No, not the energy producers, senator – but you could force the cost onto the shareholders of those companies. (In the case of Virginia’s many electric cooperatives, the shareholders and the customers are the same, so no break for them.)
Too many legislators and voters do not understand the basic truth that only people pay taxes. Tax a business (or impose a tariff) and the money generally is made up three ways: from a price increase, or a reduction in profits shared with the owners or stockholders, or some internal cost cut, usually in personnel or benefits. All three combined are a possibility. The money comes from people.
It is also a basic tenet of the regulatory compact that grants our utilities their monopoly territories that they are entitled to recover 100% of their legitimate costs. All their other taxes – and there are many — come through to customers on bills, and the RGGI tax should be the same.
Returning Virginia to the regional carbon-dioxide tax, cap-and-trade RGGI compact is a given. Incoming Governor Abigail Spanberger (D) promised to reverse the actions of outgoing Governor Glenn Youngkin (R). As reported by Bacon’s Rebellion in December, the only questions were how and when. The potential paths discussed in that speculation are all in the works.
First there is House Bill 397, which will likely be approved next week by the House Agriculture, Chesapeake and Natural Resources Committee. It is a regular bill that will take effect July 1 and potentially could get Virginia back in the RGGI compact in time for the September auction. Once Virginia is back in, each auction may tax Virginia’s energy producers almost $140 million, with a total annual take of about $550 million.
But the September auction is the third of four for 2026. Those waiting to spend the tax proceeds would like to force the energy generators to start buying allowances again in the March and June 2026 auctions. A regular bill cannot do that.
So new Attorney General Jay Jones on Thursday filed a motion with the Virginia Court of Appeals to reverse the Commonwealth’s position in the pending court case over Youngkin’s withdrawal. Dropping the appeal means the Commonwealth will now accept the lower court’s ruling that Youngkin broke the law. Virginia would be primed for immediate reentry to RGGI, if the other RGGI member states agree. (They could force Virginia to wait until 2027.)
Finally, the patron of the House bill has introduced a budget amendment that would add language authorizing a quick return to RGGI. There are two budget bills as all regular readers remember, one of them a “caboose” bill making changes to the budget now in force. That bill traditionally passes as an emergency bill so it can take effect as soon as Spanberger signs it.
Offering a RGGI amendment to that bill would give General Assembly Republicans a choice to make. To impose an emergency clause requires 80% of those voting. Republicans have the votes to easily prevent adoption of an emergency clause in the Senate, and they also have sufficient votes in the House.
That is how RGGI failed in Pennsylvania in 2025. Its Republican senators refused to vote for a budget that included full membership in RGGI. They held up budget approval for months until its Democratic Governor Josh Shapiro caved. Virginia Democrats may give Republican legislators the same opportunity to stand firm despite the unpopularity of imperiling a budget bill.
Which of the three ways Democrats succeed only matters in relation to the timing of this tax returning. And if they add language to the law to prevent Dominion Energy and Appalachian Power Company from directly passing it along to customers, the immutable laws of economics dictate the cost arrives indirectly, especially if you are a stockholder.
And as an aside, Pennsylvania staying out of RGGI is the key to understanding why the whole construct is a joke, a scam, that has nothing to do with carbon-dioxide emissions from power plants. Within the PJM Interconnect system, major exporting states like Pennsylvania, Ohio and West Virginia are selling more hydrocarbon power into Virginia because the RGGI tax forces up the Virginia gas plant prices within that marketplace. Democrats just want the money.
Republished with permission from Bacon’s Rebellion.
