Power companies Dominion Energy and Big Tech industries maneuvering towards significant rate decision in Virginia
In Virginia, a rate-setting showdown between Dominion Energy and tech companies, including Amazon, Google, and Microsoft, has begun. The dispute revolves around potential data center growth and customer rates.
Dominion Energy has proposed a base rate increase of $8.51 per month in 2026 and another $2 per month in 2027. This increase is rooted in two proposals: increasing its profit margin to 10.4 percent and changing its fuel factor to include capacity market purchases.
Tech companies, however, are opposing Dominion's proposed rates for the high-load class. Under their joint proposal, data centers would be responsible for 50% of generation costs and 75% of new electricity transmission and distribution lines needed to serve them. The tech companies are also seeking to lower the minimum demand charges for data centers.
The tech companies' expansion in Northern Virginia could triple energy demands across the state from about 10,000 megawatt hours in 2023 to more than 30,000 megawatt hours by 2040. This rapid growth has led to concerns among residents, including students, employees, and retirees, who have opposed the potential rate hike due to the strain on their wallets.
The State Corporation Commission (SCC) is examining proposals to set parameters on how data centers will bear future utility costs. The SCC held a technical conference in December with tech company representatives to understand the demands of data centers.
One of the most controversial proposals is Dominion's plan to create a new customer class for "high-load customers," which would include energy-intensive customers such as tech companies. This proposal has been met with opposition from the tech companies, who are pushing for the ability to cancel their contracts with a fee less than what Dominion is requesting.
The Sierra Club, an environmental nonprofit, has pushed for an additional provision under the high-load class to allow data centers to directly source clean electricity from third-party and non-utility entities.
The Virginia Attorney General's Office of Consumer Counsel noted an SCC staff position that the utility's profit level be set at 9.8 percent. Assistant Attorney General Meade Browder said, "Fortunately, there are things that the commission can do in this proceeding to help alleviate and mitigate cost impacts and stranded cost risk associated with new high-load customers."
As of December, there is no available information regarding the status of negotiations between Dominion Energy and tech companies regarding energy costs for data centers in Virginia.
In addition, Dominion Energy proposed a rate increase for residential customers that would result in a $240 annual increase. The SCC is reviewing a proposal by Dominion to charge high-load customers separately to temper higher across-the-board rate increases and secure their payments for upgrades.
Across PJM's service area, capacity costs have risen to $329.17 per megawatt-day in 2025, hitting the price ceiling set for the next two years. Lawmakers this year introduced dozens of bills to increase regulation of data centers, but none of them progressed into law.
As the SCC prepares to make a decision in December regarding the rate increase request, both parties are expected to continue their negotiations to find a solution that balances the needs of tech companies and residents in Virginia.
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