Who pays for data center powerlines?
Virginia regulators are considering a significant change to how new power transmission lines, primarily driven by data center demand, are funded. Currently, all Dominion Energy customers contribute to these costs, but a proposal backed by Governor Spamberger's administration suggests data centers should bear the full expense for lines built solely for their facilities. A decision on this matter is expected by August 1st.
Residents in Northern Virginia are contributing to the cost of new data center power lines through their Dominion Energy bills, specifically via a monthly charge called a "Ryder T1" or transmission rider, amounting to $11.79 for a typical household. This funding mechanism supports new power line construction, which is projected to increase significantly due to the demand from data centers.
Data centers in Virginia have requested an unprecedented 70 gigawatts of new power, a demand equivalent to 70 nuclear reactors, according to the Piedmont Environmental Council. Dominion's state filings indicate a surge in annual spending on new transmission lines from roughly $700-800 million to $3 billion. Currently, these substantial costs are shared by all customers and data centers.
Virginia regulators in Richmond are now deliberating a potential policy change: if a transmission line is constructed solely for a data center, that data center would be required to cover the full cost. Governor Spamberger's administration has endorsed this plan, a rare intervention in a rate case. Data centers argue their existing contributions are already increasing, and current rate hikes are not attributable to them. A final decision from the regulators is anticipated by August 1st.