Carbon allowances cleared at $37.65 apiece at the Regional Greenhouse Gas Initiative's Sept. 9 auction, the first since Virginia rejoined the 11-state market on July 1. The price marks a sharp run-up from $35 in June and $24.99 in March, and it anchors a filing in which Dominion Energy seeks roughly $1.18 billion in Virginia jurisdictional revenue tied to RGGI compliance costs between July 2026 and the end of 2028.

The September auction generated more than $1.07 billion across the participating states, according to RGGI. Each allowance covers one metric ton of carbon dioxide emissions from covered power plants.

Virginia rejoined RGGI after leaving the program in 2023 under former Gov. Glenn Youngkin. The state first joined in 2021. Its return places Dominion and Virginia electricity customers at the center of a renewed cost debate over the regional carbon market, as the Virginian Pilot reported.

Dominion's filing and the rate mechanism

Dominion has petitioned the Virginia State Corporation Commission to reinstate its RGGI rate adjustment mechanism, the rider that passed compliance costs through to bills during the state's earlier participation. The utility estimates it will need roughly 51 million allowances between July 2026 and the end of 2028. Its filing assumes allowance prices between $37.04 and $38.32.

The proposed charge could amount to roughly $10 to $13 per month beginning in spring 2027, according to a Virginia Mercury report. That compares with about $4 per month during Virginia's first stint in the program. The State Corporation Commission is considering the petition, with public comments scheduled through Oct. 21.

The RGGI rider would land on top of other rate pressure already approved. Dominion says a 2026 rate adjustment is expected to raise the average residential bill by $11.24 per month, with another $2.36 increase scheduled for 2027.

Where the auction revenue goes

Virginia law directs 45% of RGGI revenue toward credits for eligible residential and other customers. The remaining 55% is distributed under the state's existing framework. That revenue-sharing structure will determine how much of the auction proceeds flow back to households facing the new rider.

A tightening cap through 2033

The price environment Dominion modeled reflects structural tightening, not just Virginia's re-entry. In their third program review, participating states agreed to lower the regional emissions cap beginning in 2027, with the allowance pool declining through 2033. The updated rules also expand cost-containment reserves, which release additional allowances when prices rise sharply.

Virginia is expected to align its program with those updated rules by Jan. 1, 2027. That deadline makes the state's July return to RGGI the first step in a broader regulatory transition rather than a settled endpoint.

Two milestones now decide what happens next. The State Corporation Commission's ruling on Dominion's rider — with comments open through Oct. 21 — will set the pass-through mechanism and its size. And Virginia's Jan. 1, 2027 compliance with the tightened regional cap will determine whether the $37-to-$38 allowance prices in Dominion's filing hold, or move higher as the cap declines toward 2033.