SCC considers making data centers shoulder more of the cost of transmission lines
The Virginia State Corporation Commission is considering a proposal to make data centers responsible for a greater share of the costs associated with new high-voltage transmission lines. This initiative, supported by the Governor's administration, aims to shift costs from typical ratepayers to high-load customers like data centers. The data center industry, including Microsoft, opposes this change, arguing they already pay their legally allocated share.
The Virginia State Corporation Commission (SCC) is currently reviewing a contentious proposal that could significantly alter how data centers contribute to the cost of electricity transmission lines. Governor Abigail Spanberger's administration, along with consumer advocates, argues that data centers, as high-load customers, should bear the full cost of high-voltage lines built primarily to serve their extensive power needs, using a "but for" cost allocation method.
This debate is unfolding as part of Dominion Energy's case before state regulators, where the utility seeks to recover approximately $1.5 billion in transmission grid costs from customers. While Dominion initially projected a $2.90 monthly increase for typical households, it later refined this to $0.94 cents per month. However, Chief Energy Officer Josephus Allmond and Deputy Chief Energy Officer Louise White of the Governor's office advocate for data centers to pay for all transmission upgrades not otherwise necessary, aiming to shield Virginia families from subsidizing commercial expansion.
The data center industry, including Microsoft, which operates numerous facilities in Virginia, opposes the proposed changes. A lawyer for Microsoft argued before the SCC that the special Rider T-1 case for Dominion was not intended to re-examine cost allocation methodologies and that the three-month review period is insufficient. Senator Russet Perry, D-Loudoun, who sponsored a related bill that failed in the General Assembly, testified in support of assigning costs to data centers when they drive the need for new infrastructure.
SCC staff have noted that data centers are the primary driver of Dominion's load forecast and associated transmission projects. The Governor's office also suggested allowing data centers to pay upfront for project costs and called for a dedicated technical conference to address transmission planning challenges. The SCC is expected to make a decision by August 1.