Virginia Supreme Court rules in favor of utility charge for carbon reduction

The State Corporation Commission acted lawfully when it approved a request from the Virginia Electric and Power Company to add a surcharge to utility bills to cover the costs of purchasing carbon allowances in Regional Greenhouse Gas Initiative auctions. That’s according to an opinion yesterday by the Virginia Supreme Court. 

“Though highly complex in its details, the [Carbon Dioxide] Budget Trading Program relies on a basic economic thesis: CO2 emissions can be reduced over time by making those responsible for them pay for the right to emit,” reads the opinion by Justice D. Arthur Kelsey

The group Appalachian Voices had filed an appeal of the SCC decision and argued that the regulator did not follow the correct process. The Virginia Supreme Court disagreed. 

Virginia Electric and Power Company is otherwise known as Dominion Energy. In November 2020, they filed a petition with the SCC stating they would need to purchase 29 million CO2 allowances at a cost of approximately $168 million to cover emissions. The SCC approved the “rate-adjustment clause” last November. Appalachian Voices challenged the approval and argued the RGGI rider was not shown to be “necessary.”

“The costs are recoverable, therefore, because they were necessary to comply with VEPCO’s statutory duty to purchase allowances for every short ton of CO2 emitted from its power plants,” reads page six of the opinion

The ruling concludes that the appropriate venue for Appalachian Voices to argue for a least-cost program is when the SCC reviews plans for Dominion’s “renewable energy portfolio standard program.” 

A section from the opinion describing the position of Appalachian Voices (read the opinion

The nine-page ruling is a good place to start for anyone interested in learning more about how Virginia joined the Regional Greenhouse Gas Initiative through executive action in 2019 followed by adoption of the Clean Energy and Community Flood Preparedness Act in 2020 by the General Assembly. 

Governor Glenn Youngkin, who has spent much of this year traveling to states and supporting Republican candidates, signed an executive order on his first day in office pledging to remove Virginia from RGGI. Legislation to dismantle the state’s participation in the cap-and-trade program failed in this year’s General Assembly, where each party has narrow control over one House. 

In May, Dominion asked the SCC if it could suspend the charge due to Youngkin’s declaration, as reported in the Virginia Mercury.

In September, Youngkin’s acting Secretary of Natural Resources outlined a plan to leave RGGI administratively and called the surcharge a regressive tax. The energy plan released by the Youngkin administration earlier this month only mentions RGGI once in a passing comment that appears to state it is not needed to reduce greenhouse gas emissions. 

An image from Governor Youngkin’s 2022 Virginia Energy Plan downplays the role that RGGI can play in reducing carbon dioxide emissions (view the plan)

Meanwhile, Virginia will participate in the 58th auction on December 7, 2022. The Commonwealth of Virginia has participated in seven auctions since it joined RGGI and has received $452,218,091.37. 

Under law, 45 percent of the funding must go to the Virginia Community Flood Preparedness Fund. 

Charlottesville has received three grants from the program with $153,000 to create a flood model for the Moores Creek watershed in round 1, $94,276 to create a Charlottesville Resilience Plan in round 2, and $275,000 to create a 2-dimensional stormwater management model for Meadow Creek and the Rivanna River in round 3. 

“The primary function of the SWMM model is to analyze the watershed by using configurations to quantify flooding associated with both existing and future watershed conditions,” reads that grant application. Potential drainage improvement projects can be geospatially mapped in relation to predicted future flooding, so City staff can make assessments about the value of individual projects.” 

In round 3, Albemarle County was successful in obtaining a $118,313 grant for a floodplain staff and resilience plan. 

“While we typically have the funding and staffing necessary to implement and develop our major programs, this is not necessarily the case for emerging demands – such as flood resilience planning,” reads their application. “In addition to requiring more staff capacity to take on the development of a flood resilience plan, we also lack some of the internal technical expertise required for this type of endeavor.”

For a full list of awards, visit the Department of Conservation and Recreation’s website. To learn more about yesterday’s Virginia Supreme Court ruling, check out the Virginia Mercury’s Sarah Vogelsong. 

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the October 28, 2022 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.

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