When the Regional Greenhouse Gas Initiative’s program review comes around, many of us at RAP think of it as a cause for celebration. Now, that may be because we are environmental protection and administrative law nerds. But we also react this way because the RGGI program is a model for responsive government. 

Program review provides the opportunity for RGGI signatory states to look at how the program is reducing power sector carbon emissions, how it affects electricity ratepayers, and how the program can make improvements for their benefit. It’s a great story; the way RGGI program review works is how government should and can work.  

Over the years, following program review and in response to input from affected electricity ratepayers, RGGI states have made significant corrections to the program — material changes that more cynical detractors thought they wouldn’t make. For example, in 2013, after program review, the states lowered the regional emissions cap by 45% to conform with their measure of then-current regional emissions levels. This created a tighter cap of 91 million short tons in 2014 and paved the way for adjustments that included each state emissions budget declining 2.5% per year from 2015 through 2020. Due to economic factors and policy efforts, emissions in the region had changed and the program adjusted. That is responsive government.  

Today, as the RGGI states conduct their latest program review, they can once again consider the effects of the program on all electricity ratepayers and make improvements for their benefit. 

Why the Focus on Electricity Ratepayers?

In December 2005, governors from the Northeast and Mid-Atlantic states were about to sign a memorandum of understanding (MOU) that would create RGGI, a first-of-its-kind market-based program for major electric generators in each of their states. Uncertain as to all of the effects that this new program might have on electricity ratepayers, RGGI’s founders — energy and air regulators like Gina McCarthy, Jim Volz, Jeanne Fox, and Brad Campbell — agreed to establish a program review as a way to ensure that the program could be adapted over time.

The RGGI founders also agreed to modify what had been a widely accepted program design feature up to that point. Initially, each state agreed that it would have full discretion over the spending of its allowance revenues. In the weeks before signing the MOU, however, the states agreed instead to earmark 25% of those revenues for “consumer benefit.” This consumer benefit allocation reflected the founders’ understanding that if the program created unintended negative impacts on electricity ratepayers, it could also support investment to mitigate those impacts.

RGGI states report that energy efficiency accounts for 51% of 2021 RGGI investments and 55% of cumulative investments. Programs funded by these investments in 2021 are expected to avoid the release of 2.3 million short tons of CO₂ and to return about $418 million in lifetime energy bill savings to more than 34,000 participating households and over 570 businesses in the region.

The same concern drew the program’s attention to energy efficiency. RGGI founders recognized that the lowest-cost strategy for mitigating power plant emissions would be one that avoided carbon-intensive energy production via demand-side energy efficiency — a resource that early RGGI modeling demonstrated was a useful emissions reduction strategy and one that would also hedge electricity ratepayer exposure to energy price increases and volatility.

EJ Communities: The RGGI Electricity Ratepayers In Need of Support Today

Environmental justice (EJ) for electricity ratepayers and their communities is the issue that stands out among the many issues raised in the two rounds of 2023 program review stakeholder comments. Of the 38 filings from March and September, approximately half (17) requested that the RGGI states prioritize the needs of frontline communities.

It is important to note that multiple organizations signed on to individual filings. For example, the RGGI Advocates Coalition represents 18 organizations, while the Earthjustice et al. comments were signed by 16 organizations. Thus, an overwhelming majority of the organizations submitting 2023 program review filings urged the RGGI states to prioritize environmental justice in their program review.

We know that “the public” is not a monolith. The same observation applies to electricity ratepayers in the RGGI region. EJ communities have distinctive features. Their residents are disproportionately people of color, and they live in disproportionately close proximity to fossil-fired power plants. While RGGI directly regulates carbon dioxide emissions from power plants, people living near a plant experience negative health effects from all the pollutants emitted — among them carbon monoxide, nitrogen dioxide, sulfur dioxide, and fine particulates. Members of EJ communities are more likely to have lower incomes and higher energy burdens — and limited capability to move away from these relatively more polluted locations. So they not only experience greater health risks but may be relatively less able than other RGGI electricity ratepayers to respond to those challenges.

Many of the commenters asked that the RGGI program:

• Address frontline community members’ exposure to poor air quality exacerbated by the electric generators covered by the program, as well as generators that are not covered by the program, such as biomass facilities and fossil generators with capacity smaller than 25 MW;
• Expand air quality monitoring;
• Lower the 25 MW program threshold to include smaller generating units in the program;
• Increase frontline community participation in decision-making;
• Incorporate EJ communities in investment planning and increase the percentage of revenue dedicated to their communities; and
• Adopt a definition of environmental justice.

As they come to the close of 2023 and program review, each RGGI state not only has a strong basis for strengthening the program, but with the good-faith engagement and comments of the many stakeholders, RGGI states have a list of specific improvements that they could adopt. In Part 2 of this blog, we will look at a number of these proposals.