The Department of Energy and Environmental Protection (DEEP) opened a public comment period to amend state regulations and further lower the number of carbon allowances fossil-fuel powered electricity generators are required to purchase through the Regional Greenhouse Gas Initiative (RGGI), which auctions off those allowances and returns to the money to participating states.

The auction price per allowance has increased over 900 percent since Connecticut began participating in the program that involves all New England states, New York, Delaware, Maryland, and Virginia, which just rejoined the program. Those allowance costs are passed on to consumers, which can increase the cost of electricity.

Each state sets its own cap on how many carbon allowances they will allow to be auctioned off. Connecticut’s cap has decreased from 10.9 million allowances in 2009, when the price was roughly $3 per allowance, to 4.1 million allowances in 2026, when the latest clearing price was $35 per allowance.

Under the proposed regulatory amendment offered by DEEP, RGGI’s cap would be reduced between 60 and 90 percent between 2027 and 2037, although they indicate the “level of cap reduction will automatically be relaxed… if needed to help lower energy prices,” according to DEEP’s slide presentation.

In his opening remarks, DEEP Senior Policy Advisory Bruce Ho made the department’s case for further reducing the number of allowances, highlighting the $627 million returned to Connecticut through the auctions since 2009. Those funds are primarily used for energy efficiency projects, electric vehicle rebates, and funding for the Connecticut Green Bank. Ho also noted that since 2022, PURA has used $117 million of those funds toward “direct rate reductions” for Connecticut ratepayers.

According to DEEP’s presentation, RGGI proceeds above $47 million in 2026 are meant to be returned to ratepayers via rate reductions. 

Ho argued that requiring fossil-fuel powered generators to purchase auction allowances incentivizes them to become more fuel efficient and emit less carbon through technology upgrades. He also argued that it makes non-carbon emitting generators like the Millstone Nuclear Power Plant “more competitive,” thereby lowering the cost.

“There have been numerous studies of RGGI since its existence which have also shown that the program has provided net economic benefits in terms of increased GDP and job growth throughout the region and provides significant health benefits by reducing air pollution,” Ho said.

The public hearing portion of DEEP’s regulatory proposal was sparsely attended with only two speakers, one from the Acadia Center and another from the Natural Resources Defense Council, offering their support for the proposed amendments, but the period for offering written comment will remain open until August 3, 2026. DEEP will then develop its final regulatory proposal and submit the amendment to the General Assembly’s bipartisan Regulatory Review Committee.

“Adopting these updates is required for Connecticut and the other participating states to continue to be a part of RGGI and continue to receive its benefits,” Ho said.

Connecticut has some of the highest electricity rates in the nation and there are no signs that will change anytime soon; Eversource, the state’s largest electricity provider, has submitted a request to increase their rates by 18 percent; ratepayers are covering roughly $1 billion per year in public benefits charges to fund state mandated energy programs, some of which are also funded by RGGI; wind farms off the coast of Connecticut have power purchase agreements that run three times more expensive that natural gas, and attempts to expand natural gas pipelines into New England have been met with strong resistance.

Electricity costs in Connecticut have generated significant public outrage, particularly following the COVID years when public benefit costs skyrocketed, and are frequently cited by businesses as one of state’s biggest obstacles to growth.

In their 2025 survey of businesses, the Connecticut Business and Industry Association found 18 percent of business owners believed the General Assembly should focus on energy prices, second only to healthcare costs at 20 percent.

In their 2025 State of the Market report, ISO-New England, the region’s nonprofit electricity transmission organization, wrote that natural gas and CO2 allowances were “the primary cause of rising wholesale energy prices” in the region, and accounted for an additional $10 to $13 per Mega Watt hour in most New England states and higher in Massachusetts.

“Since 2022, forward gas prices in New England have increased significantly, and the premium over upstream areas has grown, reflecting a higher likelihood that pipeline constraints will cause extreme spot prices,” the 2025 report said. “Regional Greenhouse Gas Initiative (“RGGI”) and Massachusetts CO2 allowance prices have also risen dramatically and now account for a large share of generators’ costs (e.g., about 24 to 30 percent of combined cycle generator production costs in 2025).”

And while some states like Virginia have opted out of the program temporarily, Ho said that if Connecticut left RGGI consumers would still pay the increased costs, but the state would not receive the tens of millions generated by the auction proceeds. Because Connecticut purchases its energy from the ISO-NE market and all surrounding states participate in RGGI.

“Those costs of RGGI compliance for emitting power plants will continue to show up in the regional market even if Connecticut doesn’t apply RGGI requirements in our state,” Ho said. “That means there are costs associated with RGGI no matter what Connecticut does, as long as our participating states move forward, which they are doing.”

Connecticut’s energy prices have become a hot topic on the gubernatorial campaign trail with candidates offering their takes on how to lower costs and taking aim at Gov. Ned Lamont who has seen prices rise dramatically during his eight years in office, which was marred by a scandal within the Public Utilities Regulatory Authority.

In July 2018, residential standard service for electric generation was 8.53 cents per kilowatt hour for Eversource customers; as of July 2026, the standard rate is 11.58 cents per kilowatt hour. 

Lamont’s primary challenger, Rep. Josh Elliott, D-Hamden, has proposed allowing more municipalities to own electric utilities as they do in towns like Wallingford; GOP nominee Sen. Ryan Fazio, R-Greenwich, argues for eliminating the public benefits charge.

Lamont issued a press release in May in response to Eversource’s rate increase request, criticizing the company for its CEO pay and stating he “will keep fighting to make energy more affordable for our residents,” through a diversified energy portfolio that is less affected by international factors.

“That means pursuing a diversified energy portfolio that includes renewable energy and the latest technology, making sure we don’t have all our eggs in one basket when there are macroeconomic factors (tariffs, a war in Iran) that are out of our control,” Lamont said. “This administration will not let our residents be taken advantage of without a fight.”

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