Dominion Energy customers, already feeling the effects of rising energy costs and other household expenses, will be zapped with a rate increase of about $13.50 a month over the next two years. But the good news emerging from a recent State Corporation Commission meeting is that a new, separate rate class will be created for power-hungry data centers, whose rapid growth is partly responsible for soaring prices.
The SCC rejected a request from Dominion that would have boosted bills by roughly double the approved rate. In a statement, the commissioners for the independent utility regulator wrote that the reduced rate request was sufficient for the company “to recover reasonable and prudent projected costs and earn a reasonable rate of return.” Last year, Dominion reported a net income of $2.1 billion, about $100 million more than the year before.
In a separate vote, the SCC approved a new rate class effective in 2027 for high-load customers using over 25MW of power, which would capture the many of the data centers under construction or in use by tech giants such as Amazon, Meta and Alphabet, the owners of Google. Those users will pay a minimum of 85% of contracted distribution and transmission demand and 60% of generation demand. Above that, the rates would increase further. In addition, major users would have to sign a 14-year contract holding them responsible for energy costs even if they don’t build or use less power than anticipated.
Appalachian Voices, a nonprofit environmental and public health organization that monitors utilities closely, praised the SCC’s creation of a new rate class. “Residential customers should not be subsidizing these wealthy companies, and Virginians are relying on the commission to address these fundamental questions of fairness,” said Peter Anderson, the group’s director of state energy policy.
Northern Virginia has the largest concentration of data centers in the nation, and proposals for new facilities — some controversial, such as a proposal in Chesapeake rejected by City Council — have popped up in Hampton Roads and across the commonwealth.
Most localities seem to welcome the windfall in real estate tax revenue, look past the meager number of long-term jobs added by the projects, wrestle with the surges in water consumption and leave electricity needs for the state and Dominion Power to figure out.
A study last year for the General Assembly found that electricity demand will double in the next 15 years, largely because of data centers. A different study by the Center for Energy and Environmental Analysis estimated Virginians will pay upwards of $1,110 more a year for electricity by 2040.
Meanwhile, many Virginians are struggling to pay their utility bills. In 2024, the Energy Justice Lab at Indiana University calculated, Dominion Energy disconnected nearly 340,000 people for falling behind on payments.
People certainly need to pay their bills, but that many disconnections suggests the need for the utility company and the state to go to extraordinary lengths to ensure financially troubled Virginians have enough electricity to survive temperature extremes. And that data centers don’t add to their woes — or burdens of other customers.
Dominion, the state’s largest utility company, has long wielded significant power in Richmond and influence over the Virginians’ finances — so much so that Norfolk’s Henry Howell, a populist Democrat who served as lieutenant governor some 50 years ago, claimed the acronym for one of the company’s precursors, VEPCO, stood for the “very expensive power company.”
Much has changed since then, of course, but the battle to keep that nickname at bay is constant.
We all enjoy the modern conveniences that electricity affords us, and many of us hold Dominion’s service reliability and response time for repairs in high regard. But appreciation for that service is not a blank check, and Virginia’s leaders need to insist in the years ahead that residential customers can afford to keep the lights, heat and air conditioning on – and aren’t subsidizing the growth of economic powerhouses such as Google, Meta and Microsoft.
