House Energy committee hears RGGI briefing as allowance prices and auction revenue climb

Representative Kathleen James convened the House Energy and Digital Infrastructure Committee on Jan. 31 for a briefing on the Regional Greenhouse Gas Initiative (RGGI), the regional CO2 cap-and-invest program that auctions emissions allowances and returns proceeds to participating states.

The presentation, led by James Zartek of Vermont’s Climate Action Office with staff support from the Public Service Department and the Public Utility Commission, outlined RGGI’s purpose, scale and recent trends. "It's a very good deal for Vermont," Zartek said, noting that while the 2024 regional cap allows roughly 84,000,000 tons of CO2, Vermont’s total emissions across all sectors are just over 7,000,000 metric tons. He summarized that RGGI creates allowances that states auction and can reinvest; Vermont has historically directed those proceeds mainly to weatherization and thermal-efficiency programs.

The committee heard detailed state figures and compliance costs for Vermont’s covered power plants. Citing notes provided by RGGI staff, Zartek said Burlington Electric Department’s Penny Lane accounted for about 2,003 tons of covered CO2 and roughly $24,000 in allowance costs during the 2021–2023 control period, while Green Mountain Power’s Berlin 5 accounted for about 7,025 tons and slightly more than $85,000 in costs over that same period. Committee members pressed staff on how entities can comply; presenters said plants can reduce on-site emissions or purchase allowances, and substantial use of biofuels can alter a unit’s CO2 accounting because biogenic carbon is treated differently in inventories.

Mal Ganzak, director of the Division of Energy and Efficiency Resources at the Public Utility Commission, presented the 2024 auction report and how Vermont spends RGGI proceeds. "Close to $55,000,000, since, you know, 02/2008 when this auction started," Ganzak said, summarizing cumulative receipts and noting Vermont’s receipts were just under $54,000,000 as of 2024 and exceeded $9,000,000 in 2024 alone. He explained that PUC auction results are distributed quickly to energy efficiency utilities (EEUs) and folded into existing program portfolios, with a significant share targeted at low-income weatherization.

Ganzak said RGGI funds are ‘‘augmentative’’ to existing EEU programs rather than standalone measures and estimated that RGGI comprises roughly 75–80% of Thermal Efficiency Program Fund (TEPF) spending, the rest coming from other market revenues. He described differences in cost-effectiveness across program types: market-rate rebate programs tend to deliver more MMBTU savings per dollar because they influence purchase decisions, while intensive low-income weatherization delivers higher per-unit costs but addresses customers with greater needs.

On pricing, Zartek said the clearing price has been "going up quite a bit," a trend members linked to heightened state ambition in the ongoing third program review and to market participants reacting ahead of pending rule changes. He also noted RGGI’s independent market monitor has reported that trading activity appears orderly. Staff estimated the program’s direct effect on retail electric rates at a little over half a cent per kilowatt-hour based on current allowance prices and regional emission rates, with administrative compliance costs described as minimal.

Committee members asked about reporting and next steps. Zartek said RGGI is in a program-review phase, that a new model rule is expected in the spring, and that Vermont will adopt a state rule to mirror the regional outcome. Staff confirmed the RGGI report and related materials are posted for the committee and that members will continue to receive statutory reports and annual updates.

The briefing provided committee members with updated compliance figures, a clearer picture of how Vermont uses auction proceeds for weatherization and efficiency, and a preview of impending regional rule changes that are influencing allowance prices and state revenues.