Virginia Rejoined Carbon Compact After Rate Changes
Dominion Energy customers may see monthly bills rise by $13 as the state returns to a carbon emissions market.
Updated on Sept. 22, 2026 in Electric Vehicles
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Virginia recently participated in its first Regional Greenhouse Gas Initiative auction since 2023, generating $259 million in revenue. This return to the compact follows a request by Dominion Energy for a $13 monthly residential rate increase to cover emission allowance costs.
Why it matters
The state's return to the regional carbon market, combined with rising electricity demand from data centers, has pushed emission allowance prices to $37.65. These costs are passed directly to utility customers through rate adjustment clauses, impacting monthly household budgets.
The September 9 auction resulted in $259 million for the state at a clearing price of $37.65 per allowance. Dominion Energy projects purchasing 51 million allowances through 2028, with 45% of total state revenue now allocated for consumer rebates.
The players
Dominion Energy
The primary utility provider for Virginia that must purchase carbon allowances and seeks regulatory approval for rate hikes.
State Corporation Commission
The Virginia regulatory body responsible for evaluating and approving proposed utility rate changes for residential consumers.
Regional Greenhouse Gas Initiative
A cooperative cap-and-invest program that requires power producers to buy allowances for carbon emissions.
The details
Utility companies must purchase one allowance for every metric ton of carbon emitted, passing these costs to consumers via rate adjustment clauses. Dominion Energy projects it will need 51 million allowances through 2028 as it seeks to cover rising demand. The state plans to lower the allowance cap to 18.5 million tons by 2033 to meet reduction goals, which influences current market pricing.
Timeline
Virginia participated in the RGGI compact from 2020 through 2023.
The state officially exited the regional compact in December 2023.
The most recent auction for emission allowances occurred on September 9, 2026.
The State Corporation Commission will review the proposed rate increase on October 28, 2026.
New rider fees are proposed to take effect in March 2027.
The Home Front
Virginia's reentry into the Regional Greenhouse Gas Initiative marks a departure from its 2023 exit, re-establishing a cap-and-invest framework for state power producers. This move aligns the state's energy policy with regional standards, significantly influencing the cost structures of major utilities.
Review your monthly utility statements to track existing rate adjustment clauses before the potential March 2027 increase. Watch for official communications from the State Corporation Commission regarding the October 28 hearing to understand how your specific energy usage may be affected.
The takeaway
The cost of carbon allowances fluctuates based on regional demand and state participation levels, directly impacting utility rates. Keep your recent billing statements to compare against any rate adjustments that may be authorized by the state commission following the October hearing.
What happens next
The State Corporation Commission is scheduled to hold a hearing regarding Dominion Energy's proposed $13 residential rate increase on October 28, 2026. If approved, these new rider fees are slated to begin in March 2027.
Further reading
Learn more about how state policy affects energy costs at Electric Vehicles.
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