Wednesday, February 28, 2024

Virginia May Scrap Program that Earned Almost $600 Million and Reduced Carbon Emissions

The Surry Nuclear Power Station has created a hot spot in the James River, both literally and figuratively. (WYDaily/Courtesy Dominion Energy)
The Surry Nuclear Power Station. (WYDaily/Courtesy Dominion Energy)

RICHMOND — Approximately one in five qualifying income homes were turned down for weatherization projects before Virginia joined a multi-state air quality fund that incentivizes utility companies to lower carbon emissions.

Chase Counts has worked with the nonprofit Community Housing Partners since 2010. The organization works throughout the state on a variety of housing stability projects. They have public and private partnerships. One approximately 45-year partnership is the Weatherization Assistance Program with the Department of Energy.

Weatherization of a home involves tasks such as sealing air leaks, adding insulation and repairing heating and cooling systems to help lower utility costs.

Counts found that, until recently, applicants qualified for weatherization services, but too many home repairs were needed before weatherization would even be effective. His organization would direct people to a volunteer or church group to “hopefully” help with home repairs, Counts said.

“It’s a heartbreaking predicament to be in,” Counts said, about turning people away.

Now his organization can help with the repairs and the weatherization because of funding through the Regional Greenhouse Gas Initiative. It is known as RGGI, and pronounced Reggie.

Community Housing Partners can access millions from RGGI that are allocated to the Weatherization Deferral Repair program through the Department of Community and Housing Development.

Virginia joined RGGI in 2021, through legislation passed the year prior. Eleven other Eastern states are part of the initiative, which sets limits on carbon dioxide emissions from power plants, and reduces those limits over time. The program charges a price for pollution. Power plants acquire allowances against a ratio of their emissions. Allowances are auctioned to power plants every quarter, according to a RGGI fact sheet.

The earned money goes back to states, and the Virginia General Assembly determined RGGI funds would be channeled into flooding and energy efficiency programs. The benefits have flooded organizations like Counts with opportunities to help more citizens, he said.

The organization has served 500 income-qualifying households with home repairs that were needed before energy efficient weatherization services could also be completed.

“We have another 250 households in the queue,” Counts said. And they are getting about 15 new requests each week, he said.

Weatherization can save an estimated average between approximately $400 and $700 per household annually, according to statistics cited in a study from the L. Douglas Wilder School of Government and Public Affairs at Virginia Commonwealth University.

Rising Energy Prices and Rising Need for Help

Many utility customers feel pinched by the rising cost of utilities in Virginia — and across the U.S. State residents now pay approximately $24 more per month for electricity than they did in 2020, based on the 1,000 kilowatt-hours per month average use multiplied by the per-kilowatt-hour rate. That is before any additional fees on the bill.

The state’s electric utility rate jumped approximately 19% in a one-year period ending February 2023.

Virginia’s natural gas price jumped 62% from January 2022 to this year, according to the U.S. Energy Information Administration. Natural gas accounted for over half of Virginia’s energy generation as of two years ago. The Virginia State Corporation Commission cited increased gas prices, inflation and other economic pressure as causes for increases, according to a September press release.

Capital Area Partnership Uplifting People is a Richmond organization that offers a number of community services, including financial assistance with utility bills.

Higher-than-average energy bills have increased the number of people who need help, according to director of community services Dora Hall. She has seen an approximately 25% bump in the number of people who need help to pay utility bills. Some need help after their bills snowballed into balances over a thousand dollars, Hall said.

“[Customers] don’t have money to contribute toward the bills, and they have gotten sky high,” Hall said.

But the organization also has turned away some people and are unable to fully cover some bills, according to Hall.

Low-income households are disproportionately impacted by the rise in energy costs.

Low-income households in Virginia earn less than $65,000 annually, a calculation based on federal standards and median income from the U.S. Census Bureau data estimates. They spend about 7% of income on energy costs, according to the VCU study. Extremely low-income homes spend 16% of income on energy costs. Average-income households spend only 2% of income on energy costs.

The SCC last year approved price increases for Dominion Energy and Appalachian Power, Virginia’s two largest electric utilities. Dominion’s average monthly cost increased by almost $15 and Appalachian Power’s increased by $20 this March.

Dominion earlier this month asked for SCC approval of a proposed rate decrease. The utility company estimated bills would be reduced on average $7 per customer.

Virginia RGGI funds cannot be used to help low-income households pay utility bills. The Rhode Island governor used some RGGI funds to provide direct rate relief to qualifying households to help offset winter heating bills. The funds were estimated to lower bills by $73 a month in December and January.

Efforts to Nix RGGI Membership

Gov. Glenn Youngkin and some lawmakers are worried utility companies pass rate increases to customers as a way to offset RGGI costs. Dominion in 2020 proposed a rider fee to absorb RGGI costs, but it was later removed. Dominion has fallen under scrutiny in the past for increasing rates or adding riders that pass project costs to consumers.

Other criticisms of RGGI state the program does not offer incentives to reduce pollution. Instead, critics state that the program is just a tax on the utility company, not an effort that effectively reduces emissions and pollution.

Republican lawmakers have attempted to repeal the law that allowed Virginia to join RGGI since they gained control of the House of Delegates in 2022.

Youngkin made clear his commitment to remove Virginia from RGGI with an executive order signed the day of his inauguration. Youngkin has used the Administrative Process Act to exit RGGI, but the legality of this avenue has been questioned.

The State Air Pollution Control Board was ordered by Youngkin to begin the regulatory process to remove Virginia from RGGI. Several Board members expressed concern with the legality of their charge, and did not understand why the repeal was before the Board. Members disagreed with the attorney general that they had the authority to supersede a law passed by the state General Assembly.

The repeal passed on 4-1 vote, with two abstentions. The next step in the regulatory process was public comment. The online comment period ended in March, with over 6,600 comments.

The next step is an upcoming official vote by the State Air Pollution Control Board on whether to remove Virginia from RGGI.

Debate Continues Over RGGI Benefits 

The Natural Resource Defense Council is a nonprofit environmental advocacy group created in the 1970s that has passed landmark legislation such as the Clean Water Act. The NRDC called the proposed withdrawal “arbitrary and capricious” under laws that govern the State Air Pollution Control Board and the Clean Energy and Community Flood Preparedness Act.

Walton Shepherd is the Virginia NRDC policy director. The governor has engaged in a “procedural threat,” Shepherd said. But, he thinks this issue will ultimately wind up in court.

“[Youngkin] is indeed going through the procedural aspects that anyone can go through whether it’s legal or not,” Shepherd said. “Anyone can push paper around and go through the processes of doing something.”

He thinks the chances of the order holding up in court are “incredibly dubious.”

Shepherd pushed against the idea that there are no incentives in RGGI. Utility companies are now forced to purchase allowances to release carbon dioxide, which could create more awareness and value around the fossil fuels being purchased and burned, according to Sheperd.

“There’s an externalized cost associated with this polluting energy that is now internalized,” Shepherd said.

Virginia’s emissions have fallen by 13% and 5% respectively in its first two years of RGGI membership, according to a NRDC statement.

Data centers are a booming industry in Virginia. The state is already considered to have one of the largest global markets with 35% of known large-scale data centers in the world, according to the Virginia Economic Development Partnership. Approximately 70% of the world’s internet traffic moves through the area, according to Energy News Network, or ENN.

RGGI can help keep carbon dioxide emissions in check, even as data centers generate more electricity use, University of Virginia environmental policy professor William Shobe told ENN.

Virginia has received almost $600 million in proceeds since its first RGGI auction in March 2021, according to the RGGI website.

Financial Impact of Exiting RGGI

The Community Housing Partners had approximately $14.5 million in federal funding and approximately $1 million from utility partners in 2015 for its statewide weatherization efforts, Counts said. The utility funding exceeded federal funding in 2021, for the first time, Counts said. The organization had approximately $19 million from utility partners and about $16 million from federal funds.

“There is more demand than the program even as it stands can handle, and arguably more demand than the weatherization network can provide at this point,” Counts said. “But that’s why we’re all ramping up and hiring like crazy, to make sure we can put these funds to good use.”

Weatherization projects received over $45 million to be allocated over three years, according to the Department of Community and Housing Development.

Over $250 million total has been directed toward low-income energy efficiency programs in the three years since Virginia joined RGGI. Over $125 million will be raised annually if Virginia stays in RGGI through 2030, according to the VCU study.

Over 100,000 homes could be weatherized by RGGI funds through 2030. That could create an estimated annual savings of $68 million per year, according to the study.

“Pulling out of RGGI, without having another funding mechanism to support the [weatherization program] is going to make it extremely challenging to use those federal and utility-sponsored resources to deliver those energy-saving services,” Counts said.

Capital News Service is a program of Virginia Commonwealth University’s Robertson School of Media and Culture. Students in the program provide state government coverage for a variety of media outlets in Virginia.

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