Virginia agency considers making data centers shoulder more of the cost of transmission lines
Virginia regulators are evaluating a proposal to shift the cost burden of new transmission lines from households to data centers, a move opposed by the data center industry. The State Corporation Commission (SCC) is considering how Dominion Energy's $1.5 billion transmission grid expansion costs will impact customer utility rates, with a decision expected by August 1. Governor Abigail Spanberger's administration and consumer advocates argue that data centers, as high-load customers, should pay for lines built primarily to serve them.
Virginia's State Corporation Commission (SCC) is currently reviewing a significant proposal that could compel data centers to cover a larger share of the costs for new transmission lines. This initiative, supported by Governor Abigail Spanberger's administration and consumer advocates, suggests that high-load customers like data centers should bear the full cost of high-voltage lines that primarily serve their operations, rather than the expense being subsidized by residential ratepayers.
The debate is unfolding within Dominion Energy's case before state regulators, which seeks to determine how $1.5 billion in transmission grid expansion costs will be allocated. Dominion initially projected a $2.90 monthly increase for typical households but later refined this to $0.94 cents. Chief Energy Officer Josephus Allmond and Deputy Chief Energy Officer Louise White from the Governor's office testified that data centers should pay for any network or substation upgrades solely triggered by their presence. This position is echoed by Senator Russet Perry, D-Loudoun, who previously sponsored a bill to direct the SCC to examine such cost allocation methods, though the bill did not pass the General Assembly.
The data center industry, including a lawyer for Microsoft, which operates numerous data centers in Virginia, is opposing the proposed change. They argue that they already pay legally mandated transmission infrastructure costs and that the current three-month review process is insufficient to fundamentally alter cost assignment methodologies. SCC staff, however, have indicated that data centers are the primary drivers of the company's load forecast and associated transmission projects. The commission is expected to make a decision by August 1.