State regulators in Virginia are rethinking who should absorb the cost of the major transmission buildout needed as data centers push electricity demand higher.
As Virginia Mercury reported, a new order could place a larger share of those expenses on the biggest power users, reducing how much is spread across households and small businesses.
What happened?
The State Corporation Commission's final order requires Dominion Energy to create a tariff or similar policy that would more directly connect certain transmission costs to data centers and other large-load customers.
As the publication noted, the question emerged in Dominion's latest rider T1 case, the rate-adjustment mechanism the utility uses to recover the cost of building high-voltage transmission lines and substations.
Virginia Mercury reported that Gov. Abigail Spanberger's administration took the unusual step of weighing in, arguing that residential customers should not be billed for projects built solely because of data center growth.
"This order — which is projected to save Virginians hundreds of millions of dollars — makes sure that data centers are paying the full cost of the transmission infrastructure their developments require," Spanberger said in a statement.
TCD Picks » Quince Spotlight
💡These best-sellers from Quince deliver affordable, sustainable luxury for all
Commissioners also said that a new tariff may still leave some situations unresolved when reliability upgrades appear to be driven directly by one or more large-load customers.
In its 2024 integrated resource plan, Dominion listed 203 transmission projects in its grid connection pipeline, Virginia Mercury reported.
The commission also cited the proposed Valley Link transmission line, a 115-mile, 765-kilovolt project from Lynchburg to Culpeper, as an example of the type of project that could eventually be charged more directly to large-load users.
Why does it matter?
Because transmission infrastructure is costly, the way utilities divide those expenses can affect monthly power bills. When the charges are spread across the entire customer base, households can end up helping pay for projects that mostly serve power-intensive commercial sites.
TCD Picks » Quince Spotlight
💡These best-sellers from Quince deliver affordable, sustainable luxury for all
That matters especially in Virginia, where Northern Virginia remains a major data center hub. As more facilities connect to the grid, the need for substations, line upgrades, and long-distance transmission capacity rises with them.
In this case, Dominion sought to recover $1.5 billion through the rider, which Virginia Mercury said would amount to about 94 cents per month for the average customer.
That was already down from an initial estimate of $2.90 a month after Dominion changed its formula to shift more costs to data centers. Environmental advocates said the ruling could help establish a more equitable approach.
"The decision establishes an important precedent: Virginia families and small businesses should not subsidize transmission infrastructure built solely to connect new large-load data centers," said Chris Miller, president of the Piedmont Environmental Council, according to Virginia Mercury.
What's being done?
The outlet noted Dominion now has to develop the tariff or broader policy framework requested by regulators, a process that will determine when transmission costs can be billed directly to data centers and other very large users instead of being shared more widely.
Even with the GS-5 class in place, commissioners said there may be transmission-related reliability costs that still need a clearer method for assigning responsibility.
The governor also said in the statement she plans to work with lawmakers so data centers "pay their fair share, adhere to strict environmental standards, and listen to the concerns of local communities."
Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here.
