Virginia Rejoins Carbon Program to Lower Power Bills

Virginia just found a way to fight climate change while lowering power bills for regular families at the same time.

Governor Abigail Spanberger ran on a promise to make electricity more affordable in a state where AI data centers are driving up energy costs. Last month, she signed a bill bringing Virginia back into a regional carbon pricing program that makes utilities pay for their pollution.

The move sounds like it would raise costs. But the plan is designed to do the opposite for most Virginians.

Here's how it works. The Regional Greenhouse Gas Initiative charges power companies for every ton of carbon dioxide they release. Virginia's biggest utility, Dominion, will pass those costs onto customers, adding about $5 per month to the average household bill.

But data centers now gobble up 20 percent of Virginia's electricity, and that number could hit 50 percent by 2030. These massive facilities will pay a huge share of the pollution fees because they use so much power.

Virginia collects the money from those fees and spends it on programs that actually reduce energy bills. Before the state left the program in 2022, it spent $250 million helping low income families weatherize homes and upgrade heating systems.

Those improvements help everyone, not just the families who get them. When people use less electricity, it pushes down prices across the whole grid.

Dominion recently created a new rate structure making "large load" users like data centers pay most of the cost for the power they consume. That shields regular homeowners from carrying the burden of the AI boom.

The Bright Side

William Shobe helped design this carbon pricing system when it launched in 2009. He teaches at the University of Virginia and says the program gives states a smart tool for managing costs.

"It's another tool for reallocating the costs that data centers are imposing on ratepayers," Shobe said. Virginia lawmakers are now considering using some of the revenue to directly help low income families pay their electric bills.

The 11 states in the program have steadily lowered their carbon caps since 2009, pushing utilities toward solar and wind power. That means cleaner air and fewer health problems from coal and gas pollution.

Even though Virginia left the program for a few years, it has to rejoin at the same emission limits as other Northeast states. The program treats Virginia as if it never left.

Climate action and lower bills don't have to be enemies after all.