By Steve Haner,
Dominion Energy Virginia proposes to defer billing its customers until March 2027 for the Regional Greenhouse Gas Initiative carbon allowances (RGGI), which it must purchase starting July 1. The cost could come to $13 per month for the typical residential customer or $156 annually.
The State Corporation Commission will make the final decision. (The complete set of documents for the application is in this. The Energy Commission of Virginia will meet tomorrow to discuss a RGGI Rebate idea. Now, the legislators can chew on a realistic (and painfully high) estimate of customer costs.
Dominion has filed its Application in order to reinstate Rider RGGI. This was the charge on customers’ bills for the three years that Virginia was a part of the 11 state carbon tax, cap, and trade compact. Dominion’s last Rider RGGI payment was $4.40 per 1,000 kilowatt hours. This may have almost tripled.
In the auction on June 4, the carbon price set a new record of $35 per tonne. Dominion’s application assumed that prices would be up to $38 a tonne of carbon dioxide emitted through 2028. Dominion plans to retire and buy 51 million carbon credits before the end of 2028. In that article, the $7-8 per customer cost for RGGI that was forecasted proved to be a wishful thought.
Dominion offers the SCC, as is typical of the skyrocketing costs for utility fuels, a “payment schedule” that would reduce the immediate increase in cost but spread the financial impact out over a longer period. With this approach, the bill impact for a residential customer who uses 1,000 kilowatt hours would still be over $10 per month.
Dominion estimates that it will need $1.8 billion between July 1, 2018 and February 20, 2028 to pay for its carbon tax. The 13 cents a kilowatt hour under the full refund, or the 10.4 cents a kilowatt hour under the extended payment schedule, would be applied equally to all rate categories.
There would therefore be no discounts for large users, such as data centers, manufacturing facilities, sprawling warehouses, or big-box stores. Volume discounts are available on other parts of their bill. Rider RGGI will not receive any discounts.
Dominion, with its natural gas fleet, is Virginia’s largest buyer of RGGI allowances. However, Old Dominion Electric Cooperative needs RGGI credits as well to operate its coal plants. Direct costs can be easily passed on to the customers.
These gas-fired power plants in West Virginia are less likely to get their money back when they sell into the PJM interconnection market. However, a higher RGGI rate tends drive up all PJM rates. The coal plants owned by Dominion in West Virginia and Appalachian Power Company in Virginia benefit from the higher price.
RGGI has been the best thing to happen for coal and gas plants in PJM States that are not a part of RGGI.
