Virginia regulators order Dominion Energy to directly assign transmission costs to data centers

Virginia's top energy regulator has directed Dominion Energy, the state's largest electric utility, to craft a new tariff structure that would shift a greater share of high-voltage transmission costs onto data centers and other large-load customers. The order, issued by the Virginia State Corporation Commission (SCC), marks a significant step in an ongoing debate over who should pay for the grid upgrades needed to serve the booming data center industry.

The directive came as part of Dominion's latest "Rider T1" transmission rate adjustment case, in which the utility argued that infrastructure built solely to connect large-load customers should not be subsidized by residential ratepayers. The SCC agreed, instructing Dominion to develop a tariff that would "directly assign" transmission infrastructure costs to data centers and other large-load customers connecting to new facilities, "with the goal of finding an acceptable and symmetrical approach towards assigning costs in these circumstances."

The proposed tariff is intended to address scenarios where transmission upgrades are driven entirely by new large-load customers. If approved, the rules would apply under Dominion's GS-5 large-load customer rate class, which requires qualifying customers to pay transmission charges based on at least 85 percent of their peak demand, even if their actual usage later declines. The new tariff is expected to take effect at the beginning of next year.

Under the new framework, Dominion could directly assign specific transmission projects—such as a new substation or a dedicated transmission line—to the data center customer or customers that triggered the need for the upgrade. The SCC cited the proposed Valley Link transmission project as a prime example of infrastructure that could fall under this assignment. The planned 115-mile (185 km), 765 kV transmission line, stretching from Lynchburg to Culpeper, is designed to deliver additional power to Northern Virginia, one of the world's largest data center markets.

The ruling was welcomed by environmental and consumer advocacy groups. "The decision establishes an important precedent: Virginia families and small businesses should not subsidize transmission infrastructure built solely to connect new large-load data centers," said Chris Miller, president of the Piedmont Environmental Council.

The move reflects a broader trend across the United States, as state regulators grapple with the surging electricity demand from data centers. In May, the Oregon Public Utility Commission approved a new rate class for data centers and other large loads, requiring them to cover the costs of grid infrastructure used to power their facilities. Similar measures have been proposed or enacted in Ohio, North Carolina, and Pennsylvania.

The Virginia order signals a potential shift in how the cost of grid expansion is distributed, with implications for data center operators, utility investors, and ratepayers alike. As the industry continues to scale, the question of cost allocation is likely to remain a central issue for regulators nationwide.