The latest round of carbon allowances auctioned off to buyers under the Regional Greenhouse Gas Initiative (RGGI) saw a clearing price that is up over 900 percent since the multi-state program began in 2008, potentially driving up the cost of Connecticut’s energy supply in a way far less visible to ratepayers than Connecticut’s public benefits charge.

Connecticut was one of the first states to join RGGI, which auctions off carbon allowances that fossil-fuel power generators are required to own to sell their power to utility companies. Often referred to as a “cap and invest program,” participating states, including Connecticut, each lower the number of allowances available for auction over time, driving up the prices paid by energy producers and thereby generating more auction revenue that is funneled to preferred energy programs.

In 2008, the clearing price for the first auction of carbon credits was $3.07 per allowance; as of the latest auction in June 2026, the clearing price was $35 per allowance, according to RGGI’s auction history. The increase is even more pronounced when considering that the clearing price was mostly below $2 per allowance between September 2009 and March 2013. 

Following that, the price increased steadily before making a $10 jump between March and June 2026 when auction proceeds reached $642 million.

The clearing price rose as the cap on CO2 allowances decreased from 188 million in 2009 to 66.5 million in 2025. According to RGGI, the cap on allowances is determined by each participating state. Often, these CO2 allowances are resold on the secondary market by successful bidders, potentially pushing the price impact higher.

According to figures published on RGGI’s website, Connecticut in 2009 had a cap of 10.9 million CO2 allowances; by the 2026 auction, Connecticut’s cap had decreased to 4.1 million allowances. 

The declining cap has meant more money flowing to preferred state energy programs. In 2009, Connecticut received $4.2 million in proceeds for its first auction; as of the auction in June, Connecticut will receive $36.4 million, pushing the state’s total revenue generated from RGGI to over $70 million for the year so far. In 2025, Connecticut received a total of $84.1 million across four separate auctions. 

The revenue generated is spread across several energy efficiency programs, including the Connecticut Green Bank, rebates for electric vehicles and bicycles, and state-mandated programs administered by utility companies like Energize CT.

According to a 2025 report released by RGGI, in 2023 Connecticut directed $30 million in annual auction proceeds toward the energy efficiency programs administered by Eversource and United Illuminating, followed by roughly $10 million to the Green Bank to support solar development in the state and the state electric vehicle rebate program, and lastly $3.2 million to the Department of Energy and Environmental Protection (DEEP) for administrative purposes.

RGGI funds were also used to develop an Environmental Justice Screening Tool, a map “to identify vulnerable populations that may be disproportionately impacted by programs, policies, or projects and to inform initiatives for creating healthy communities,” according to the Connecticut Institute for Resilience and Climate Action at UConn.

However, some of these programs receiving tens of millions in RGGI auction proceeds also receive tens of millions through Connecticut’s public benefits charge, which requires ratepayers to fund government-mandated programs.

Ratepayers send roughly $25 million per year to the Connecticut Green Bank, and $160 million per year to the energy efficiency programs administered by the utilities.

While the program claims to reduce emissions tied to electric energy generation, it also has the added effect of increasing costs to energy suppliers, which then gets passed down to consumers, although how much of Connecticut’s second-highest-in-the-country electric rates are attributable to the increasing cost of the CO2 allowance auctions is difficult to determine, according to a 2020 Office of Legislative Research report that said RGGI may “indirectly impact a customer’s bill.”

A 2025 analysis of RGGI’s effect on states in the PJM Interconnection — a wholesale energy market that includes RGGI states like New Jersey, Virginia, Maryland and Delaware — by the Boston-based consulting firm Tabors, Caramanis, Rudkevich found RGGI increases emissions by benefiting power plants in other non-RGGI states while also increasing the cost on ratepayers in RGGI states. 

“While in the past RGGI has had a positive impact on the reduction of CO2 in PJM, that impact has now moved from a reduction in CO2 to one of an increase in CO2 along with a significant increase in cost to consumers in PJM,” the analysis concluded.

Another 2025 study found that initially RGGI had little to no effect on wholesale electricity prices at first but as the caps lowered the effects became more pronounced and noticeable.

“RGGI states achieved substantial reductions in CO₂ emissions alongside a transition to cleaner generation technologies,” wrote study authors Ze Song and Gail Hochman. “Importantly, the industry’s response to environmental regulation did not immediately affect electricity prices. However, as the emissions cap tightened, price effects became more pronounced: following the 2014 adjustment that reduced the cap to roughly 50% of its 2008 level, wholesale prices increased by 0.68 to 5.57 cents/kWh.”

RGGI itself indicates that participation in the program increases electricity prices but argues that the energy efficiencies achieved by the program ultimately result in less energy usage and therefore lower bills.

Virginia, a political battleground state, left RGGI for a few years before rejoining in 2026. While re-entry into RGGI was projected to increase costs for ratepayers, Viriginia lawmakers passed a law to reduce the impact by using part of the RGGI auction proceeds as a credit toward ratepayers’ bills, according to VPM.

Dominion Energy spokesman Jeremy Slayton told the news outlet that the cost of carbon allowances “are a pass-through cost” to consumers.

RGGI typically holds four CO2 allowance auctions per year, and the auction proceeds typically repeat, meaning Connecticut could be on track to receive between $140 and $150 million from RGGI auctions in 2026.

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