Virginia regulators are weighing a decision that could determine who pays for the state's surging electricity demand as data centers continue to expand — everyday households or the tech companies driving the need for new transmission upgrades.
At a hearing this week, Dominion Energy, major tech firms, consumer advocates, and state officials clashed over whether the costs tied to those massive new power loads should be spread across customers or assigned more directly to the companies creating them.
What happened?
A key issue in the case is Rider T-1, the transmission line item on Dominion bills. Dominion says it needs the rider increased to collect roughly $1.5 billion for transmission projects, and its latest forecast puts the average residential impact at about $0.94 per month rather than the $2.90 monthly increase it first projected, according to Utility Dive.
During the hearing before the Virginia State Corporation Commission, Louise White, deputy energy officer for Virginia Gov. Abigail Spanberger's office, said, according to Utility Dive, that the governor's office wants the SCC to consider three steps: a "but for" cost standard, CIAC payments at the transmission level, and a shift to an average summer/winter peak cost allocation method.
Will Cleveland, an attorney and lobbyist testifying for Google, argued that it is "simply too early in the process" to know whether Dominion's recently approved large-load rate changes already address the cost burden.
Others said the burden shift is already visible, not merely a future possibility. Andrew Major, an SCC attorney speaking for commission staff, said "there remains a glaring cross-class subsidization occurring to the benefit of new GS-5 customers."
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Arguments continued on Wednesday, and the commission has until Aug. 1 to issue its ruling.
Why does it matter?
If transmission upgrades are being built largely to serve energy-intensive data centers, many advocates say households and small businesses should not be left paying for those investments through higher monthly bills.
That question carries particular weight in Virginia, where data center growth has accelerated rapidly, especially in Loudoun County. Loudoun County senior assistant county attorney Jonathan Zator warned that "the stakes are particularly high" there and, according to Utility Dive, pushed for direct cost allocation and CIAC payments for upgrades linked on a "but for" basis to large-load customers.
Michael Goggin of Grid Strategies, testifying for Appalachian Voices, pointed to concerns about stranded asset risk tied to data center development.
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What's being done?
Several parties are backing solutions aimed at limiting how much of the burden falls on ratepayers. One option is CIAC, which would require or allow large customers to make upfront payments for transmission facilities connected to their demand.
Amazon witness Cameron Brooks said voluntary CIAC payments could reduce the burden on ratepayers and make "the customer's financial responsibility for the identified facilities … clear, enforceable, and integral to mitigating subsidization and stranded cost risks."
Others are urging the commission to change how transmission costs are allocated. Dominion currently uses a 12 coincident peak methodology in Virginia, but consumer advocates and state officials argue that alternatives such as the summer and winter peak average approach may better reflect actual cost causation.
John Farmer, who heads the consumer counsel office's insurance and utilities regulatory section at the Virginia Attorney General's Office, said, according to Utility Dive, that direct assignment is worth pursuing where regulators can determine who caused the cost. He also said, according to Utility Dive, that the summer/winter peak average approach could be a "reasonable" alternative and that Dominion had not made a persuasive case against it.
These proceedings could determine whether the cost of rapid industrial growth is absorbed by billion-dollar companies or by households.
As Cleveland put it, it may be "simply too early in the process" to know whether recent reforms are enough. But Major's warning was more direct: "there remains a glaring cross-class subsidization occurring to the benefit of new GS-5 customers."
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