MANY VIRGINIA politicians complain that the Environmental Protection Agency has set a harsh greenhouse-gas target that they say will harm consumers and businesses. But instead of adopting a smart strategy for minimizing costs, the General Assembly has approved a bad bill that would loosen regulation of Dominion Power, one of Richmond’s most powerful lobbies, for five years. The bill is now with Gov. Terry McAuliffe (D). He should reject it, and then lawmakers should take more productive action.

The General Assembly’s proposal would freeze Dominion Power’s base rate for the next half decade. The idea, proponents argue, is to provide rate “stability” both for Dominion and its consumers during a period in which EPA carbon-dioxide rules could destabilize the power industry. Dominion warns that, if the state doesn’t adopt this policy, consumers would risk price spikes related to the transition from coal-fired power.

But there’s a big downside. Dominion would not undergo normal biennial financial reviews. Under that process, the State Corporation Commission audits Dominion’s books and determines whether the monopoly utility has earned undue profit. If it has, the company has to rebate some of its earnings to customers. If the company overearns two reviews in a row, it must lower rates. The bill would suspend that process — while still leaving Dominion an avenue to increase charges. The base rate that the legislation would freeze only accounts for about half of customers’ bills.

EPA regulations might indeed raise Dominion’s costs in coming years. But regulators could account for those added costs in the normal give-and-take between the utility and its state overseers. In the meantime, Dominion customers should not lose the protections against overcharging they have had for several years.

A more intelligent response rests in an idea that legislators rejected this month. The smartest and easiest way to comply with EPA greenhouse-gas rules would be to band with other states and put a common price on carbon-dioxide emissions across a region, a plan that enlists market forces to determine where and how to cut greenhouse gases. Instead of having to comply with strict mandates, carbon-intensive industries can buy permits and continue emitting. Those firms for whom it would be more economical can cut back and avoid a carbon charge. Trading pollution permits among firms would result in an efficient, market-generated carbon price. Costs would be minimized.

Del. Ronald A. Villanueva (R-Virginia Beach) proposed a bill this year that would bring Virginia into the Regional Greenhouse Gas Initiative, a multi-state pact already operating on the elegant logic of carbon pricing. His General Assembly colleagues didn’t let it out of committee, but his bill remains the right response to the fear of high EPA-related compliance costs.