Governor Abigail Spanberger signed a bill last month to return Virginia to the Regional Greenhouse Gas Initiative, or RGGI, a cap-and-trade program for power plant emissions. The move aims to manage rising electricity costs amid a data center boom, despite past concerns over consumer bills. Supporters argue it will shift costs from households to large users.
Abigail Spanberger, a Democrat who won the Virginia governor’s race last November, campaigned on making electricity bills more affordable. The state hosts the world’s largest concentration of AI data centers, driving a 15 percent rise in energy use. Data centers now consume 20 percent of Virginia’s electricity, potentially reaching over 50 percent by 2030, according to the Electric Power Research Institute. Dominion Energy, the state’s largest utility, is straining to meet the demand surge. Spanberger’s Republican predecessor, Glenn Youngkin, had exited RGGI in 2022, but she signed legislation last month to rejoin the program covering Northeast and mid-Atlantic states. Under RGGI, utilities pay for each ton of carbon dioxide emitted below a declining cap, with revenues funding energy efficiency and clean energy shifts. “Of course [RGGI] imposes costs on ratepayers, because we’re trying to internalize the costs that pollution is causing on everyone else,” said William Shobe, an emeritus professor at the University of Virginia and RGGI architect. “But…if you design it right, it’s another tool for reallocating the costs that data centers are imposing on ratepayers.” Previously, Virginia used $250 million in RGGI funds for low-income home weatherization and HVAC upgrades, reducing overall energy use and bills. Dominion plans to reimpose a surcharge of about $4.50 monthly on average households, as permit prices have doubled to $16 per ton. However, new rates require large users like data centers to cover most of their power costs, sparing residential customers. Andrew McKeon, head of the RGGI nonprofit, noted Virginia rejoins at its prior emissions allocation. Experts differ on RGGI’s impact. Shuting Pomerleau of American Action Forum doubts it will accelerate decarbonization beyond the Virginia Clean Economy Act’s 2045 fossil fuel phaseout mandate. Jamie Dickerson of the Acadia Center sees it as “a direct price signal” favoring solar and batteries over gas as Dominion invests tens of billions to meet demand.
