The U.S. energy market has changed dramatically over the past several years. As today’s high power bills demonstrate, the price of generating electricity with natural gas or coal is no longer a bargain for Virginia utility customers. High overseas demand for U.S. natural gas, along with old, expensive-to-maintain power plants, has caused electricity prices to soar.
Relief will only come from our utilities diversifying their fuel mix with cheaper energy sources, such as solar, wind and nuclear power, which are virtually immune from overseas influence and offer lower and more price stable electricity generation.
Nudging the state’s monopoly utilities in that direction and positioning Virginia ratepayers to benefit from this new energy economy is what the Regional Greenhouse Gas Initiative (RGGI) is all about. RGGI is a market-based program that not only can lower electric bills, it also cuts harmful air pollution and invests in critical infrastructure.
That is why Gov. Glenn Youngkin’s seeming obsession with pulling Virginia out of RGGI is such a head scratcher. It will only drag the state backwards and jeopardize Virginians’ pocketbooks, health and economy.
Patterned after the successful Reagan-Bush acid rain program, RGGI uses the same tools of free market competition that control prices and increase efficiency to accelerate energy diversification and modernization of monopoly utilities, which are unfortunately insulated from normal free market forces.
In his zeal, Youngkin has wrongly saddled RGGI with the blame for high electricity costs when the very utilities responsible for these costs say otherwise. Last fall, when Dominion raised monthly rates by $14.93 and Appalachian Power increased its rates by $20, both companies cited spikes in the cost of natural gas, which supplies more than half of Virginia’s electricity.
Despite higher and more unstable natural gas prices, Dominion Energy recently released a resource plan, a plan that Youngkin has publicly praised, that doubles down on natural gas generation by expanding its number of gas plants, practically guaranteeing more rate hikes for its captive base of customers.
The huge spikes last year in the price of both oil and natural gas due to the war in Ukraine demonstrated just how vulnerable globally traded fossil fuels, even those produced here, are to events halfway around the world.
Although the governor and the General Assembly recently took a long-overdue baby step toward utility accountability, passing a bill that requires Dominion to do away with extra charges known as “riders” from electric bills, far more is needed to protect Virginia ratepayers.
Only RGGI’s market pressure can reliably lower costs in the long run, as it encourages diversification with cheaper energy sources that are not influenced by international conflicts or overseas demand. Solar and wind energy makes good economic sense because the fuel is free, unlike natural gas and coal. Electricity from coal and gas typically costs between $45 and $80 per megawatt hour, while new solar electricity with battery storage for nighttime generation costs under $20 per megawatt hour.
It’s not just lower, more stable electricity prices that Youngkin is ignoring, it’s the massive economic impact. Clean energy is expected to be a $23 trillion market by the end of this decade. Major companies in Virginia, like Mars, Nestle and Unilever, have voiced their support for RGGI because it provides market certainty and lower overhead costs.
RGGI also provides a crucial funding stream that helps cities throughout the state improve stormwater infrastructure and other flood prevention measures without burdening taxpayers. RGGI has delivered nearly $600 million in proceeds to Virginia, $100 million of which has already been used for flood resilience projects.
Gov. Youngkin needs to stop doing the bidding of Dominion and other monopoly utilities by trying to repeal RGGI. He needs to heed the public’s call to leverage this market-based program to lower electric bills and supercharge the state’s economy. There is nothing woke about it. In fact, it’s what we conservatives have been preaching since time immemorial: just follow the market.
Dave Jenkins is the president of Conservatives for Responsible Stewardship.