Virginia Was Going to Charge Every Household $2.90 a Month for a Data Center Power Line. Regulators Cut It to 94 Cents by Billing the Data Centers Instead.

Dominion Energy is building a new 765,000-volt transmission line between Lynchburg and Culpeper, Virginia — the kind of high-voltage corridor that exists almost entirely because Northern Virginia's data center alley needs more power than the grid it inherited can move. Dominion's plan was to recover that cost, and the cost of several other transmission projects like it, the way utilities normally do: spread it across every residential bill in its territory, data center or not. For a typical household using 1,000 kilowatt-hours a month, that meant $2.90 more, every month, indefinitely. On August 5th, the Virginia State Corporation Commission said no to that math and ordered a different one. The revised number is 94 cents.

That's not a rounding error. It's a two-thirds cut to what every Dominion residential customer in Virginia was about to pay for infrastructure built mainly to serve a handful of enormous industrial customers, achieved by making those customers carry more of their own weight instead.

The mechanism: a rate class built for exactly this

The tool the SCC used didn't appear out of nowhere. In its final order on Dominion's 2025 biennial review (Case No. PUR-2025-00058), issued November 25th, the Commission created a new GS-5 rate class specifically for customers demanding 25 megawatts or more — squarely the data center range. Starting January 1, 2027, GS-5 customers have to pay a minimum demand charge equal to at least 85% of their contracted transmission and distribution demand and 60% of their contracted generation demand, locked in over 14-year commitments. They also have to post collateral Dominion can draw on if they default, and give three years' notice before cutting their contracted demand. That's a materially stricter floor than the 80%-over-20-years minimum Michigan regulators built into DTE's Google contract a few weeks later — Virginia's version asks for less time but a harder number, and backs it with cash.

Pay for your own line

The August 5th order is where Virginia went further than most states that have tried this. Rather than just lowering the data centers' bill and leaving everyone else's math untouched, the Commission directed Dominion to build a tariff that directly assigns the cost of transmission infrastructure built specifically to serve large loads — the Lynchburg-to-Culpeper line among the first candidates — to the GS-5 class itself, instead of folding it into the rate every customer pays. Dominion still has to write the actual tariff language and bring it back in a future filing, so the mechanics aren't final. But the direction is clear: if a transmission line exists because of data center demand, the data centers causing that demand are supposed to pay for it, not the household three counties away that will never see a server rack.

I am proud that after my administration urged state regulators to protect Virginia families and small businesses from shouldering the cost of new transmission infrastructure meant to serve data centers, the SCC listened.Gov. Abigail Spanberger

Spanberger's office pushed the Commission on this directly, and it's projecting the shift will save Virginia households, small businesses, and other ratepayers hundreds of millions of dollars over time — an estimate from her administration, not an audited figure, but one that tracks with the scale of the $1.5 billion in transmission costs Dominion originally asked to recover through base rates.

What this doesn't fix yet

I think the honest caveat matters here as much as the win. The Commission's own order acknowledges this approach 'may not address all instances' where large-load growth is driving transmission spending — it reaches infrastructure built to serve a specific large customer, not the broader, systemwide upgrades the current data center boom is also pushing utilities to build across their whole territory. Those costs, for now, still land in the general rate base. Consumer advocates covering the underlying rate case have made the same point from the other direction: the Commission approved a smaller increase than Dominion wanted ($565.7 million for 2026 against an $822 million ask, with return on equity capped at 9.8% instead of 10.4%), but residential bills are still going up, just by less than they would have.

What Virginia has built so far is a floor, not a ceiling: a mechanism that works cleanly when you can point to one line and one customer class causing it, and that still has to prove it can handle the messier, systemwide version of the same problem once Dominion files the actual tariff language. For a state that calls itself the data center capital of the world, getting the cost-allocation math right here is going to matter a lot more than any single groundbreaking.