Virginia data center plan targets costs as tax benefits rise
Virginia has enacted a new data center accountability framework, including Executive Order 22, which limits state assistance and proposes shifting more infrastructure costs to the industry. This comes as reported tax benefits for data center operators rose to $1.9 billion in fiscal 2025. The framework also proposes doubling an electricity consumption tax as a penalty for operators failing to meet clean-energy commitments.
Virginia Governor Abigail Spanberger signed Executive Order 22, establishing a new data center accountability framework that combines immediate executive action with future legislative proposals. This framework aims to limit state assistance and shift more infrastructure costs to the data center industry, following a significant increase in reported tax benefits for operators, which reached nearly $1.9 billion in fiscal 2025.
Executive Order 22 specifically bars the Virginia Economic Development Partnership from offering assistance through certain state programs to new data centers projected to demand at least 25 megawatts of electricity. It also prohibits executive agencies from entering nondisclosure agreements that would prevent public disclosure of material information about proposed data centers, including incentives and resource demands. Additionally, the broader framework suggests that utilities should allocate more transmission and generation costs to data centers and other large-load customers.
The framework also proposes doubling the existing electricity consumption tax of 1.1 cents per kilowatt-hour as a penalty for operators who fail to meet clean-energy and emissions commitments after receiving priority grid access. Industry groups like the Data Center Coalition, represented by Nicole Riley, expressed support for protecting ratepayers but seek more details on implementation, warning that abrupt policy changes could jeopardize jobs. Brennan Gilmore, Executive Director of Clean Virginia, called the framework a meaningful step but raised concerns about cost and risk allocation, advocating for a pause in further development.