Virginia regulators will now require data centers to pay for transmission infrastructure built specifically for their facilities, rather than spreading those costs across all utility customers, under a State Corporation Commission order that Gov. Abigail Spanberger’s office announced Aug. 5.
The order directs Dominion Energy to develop a tariff assigning the cost of new transmission projects directly to data centers and other large-load customers whose developments make the infrastructure necessary. Previously, those costs could be spread across a broader customer base that includes households and small businesses. The administration projects the change will save Virginia families, small businesses and other ratepayers hundreds of millions of dollars.
Follows a rare gubernatorial filing
The SCC order follows a filing Spanberger’s administration made with the commission last month urging regulators to shield ratepayers from rising energy costs tied to data center growth β action Virginia officials described as an unusually direct intervention by a sitting governor into a utility regulatory proceeding. Virginia is home to the largest concentration of data centers in the world, concentrated in Northern Virginia’s “Data Center Alley,” and the buildout has strained the regional power grid while raising concerns about who ultimately bears the cost of new transmission capacity.
“This order makes sure that data centers are paying the full cost of the transmission infrastructure their developments require,” Spanberger said in the announcement. Josephus Allmond, the administration’s chief energy officer, said the change means “data centers will pay for those costs directly” instead of the expense being spread across all ratepayers.
The order also drew support from state lawmakers. State Sen. Schuyler VanValkenburg, who joined 19 other legislators in a letter to the SCC backing Spanberger’s position, said the move “protects Virginians from higher utility bills and assigns the cost where it belongs.”
The stakes are unusually high in Virginia, which hosts the largest concentration of data centers anywhere in the world. Northern Virginia’s data center vacancy rate hit a record low of 0.3% this year as the region added a record amount of new capacity, according to CBRE research published this month, underscoring how fast the buildout β and the accompanying demand for new transmission lines β has continued even as ratepayer costs have become a political flashpoint.
What it means
The order is a verified regulatory action from Virginia’s SCC, and the ratepayer-cost framework it establishes β assigning transmission costs tied to specific large loads directly to those customers β is described accurately in the state’s own release. The “hundreds of millions of dollars” in projected ratepayer savings is the administration’s estimate rather than an independently audited figure, and the practical cost impact on individual data center developers, who have already been paying steep premiums for land in Northern Virginia, was not detailed in the release.
What to watch: how Dominion Energy structures the new tariff in response to the order, and whether other states with heavy data center concentrations follow Virginia’s lead in shifting transmission costs onto the facilities that require them. Texas regulators have already taken a different but related step, ordering an audit of more than 1,800 data centers before allowing new grid hookups, part of a broader national pattern of states moving to manage the strain hyperscale campuses are putting on regional power systems.
