SCC recognizes data center demand is driving future expenditures but many issues remain unresolved

Warrenton, VA (November 25, 2025) — The Virginia State Corporation Commission (SCC) just announced its decision in the historic rate-setting case for Dominion Energy. This case was one of the most important decisions the SCC has ever faced, in that it could effectively result in the single largest tax increase ever faced by Virginians if they are forced to subsidize the hundreds of billions of dollars in infrastructure costs needed to meet the additional 47 GW of data center energy demand.

“While this decision recognizes that data center demand is driving future expenditures – and grants Dominion’s request for a new large load class — many issues remain unresolved,” said PEC President Chris Miller. 

The SCC went further than Dominion’s proposal, directing a change in cost allocation, signaling its recognition that other ratepayers appear to be subsidizing the infrastructure needed to meet the skyrocketing energy needs of data centers. However, that change won’t be immediate; instead, the SCC directed Dominion to take it up in two years during the next rate case. 

“As our expert witness in the case pointed out, the most immediate relief for rate payers that the SCC could have made was to require the data center industry to pay for transmission lines directly serving their campuses. Unfortunately, the SCC did not address that issue in this case,” said PEC President Chris Miller. 

The ruling has three important takeaways. The first concerns establishing a distinct rate class for large load users (data centers). The second concerns cost allocation – which determines how regular ratepayers versus large load customers will be charged for the $90 billion – $270 billion in infrastructure capital expense projected by Dominion in its 2025 IRP update. The third concerns the contract framework, which determines how energy contracts with data centers will be structured to ensure ratepayers aren’t on the hook for potential stranded costs related to the build out.

The ruling stipulates:

• New Rate Class: The ruling establishes a new rate class for large-load users — those using at least 25 MW of power. This is a recognition that data centers are responsible for driving the need for future investment in the system. This rate class will apply to all data center contracts going forward and those dating back to 2016.  
• Cost Allocation: The Commission has directed Dominion to review its cost allocation and transition away from the current method in the next rate case (2027). Unfortunately, this means there will be no real relief on people’s electric bills anytime soon. 
• Contract Framework: The decision requires data centers to enter into 14-year power contracts with Dominion, including fees for early termination. These provisions offer some protections for other customers in the event the data center shifts its operations to another location or goes out of business. PEC urged the SCC to require 20-year contracts, arguing that longer contract terms are necessary to protect residential customers. 

“We are disappointed that the Commission did not impose more stringent protections. For example, our expert witness found that, at the end of the 14 year contract period, 61 percent of the capital costs to serve data centers would remain undepreciated and unrecovered,” said Miller.  “We are also disappointed that the SCC declined to require data centers to pay for their own transmission lines and other required infrastructure. PEC’s expert witness identified billions of dollars in transmission project costs that are currently allocated to all rate classes even though they only serve data center users. While the SCC signaled that it may consider transmission cost allocation in a future proceeding, these critical issues should have been decided as part of this case.”

“This decision alleviates some financial risk to Virginians, small business owners and farmers for the cost of the infrastructure needed to build out an electrical grid two to three times the size of the one we have today. But the SCC’s decision to continue the current allocation of costs among rate classes for the next two years is still unfair and does not go far enough to protect the average Virginian ratepayer,” said Miller. “During a time when families are struggling to make ends meet, the SCC is asking their constituents to continue to subsidize the energy needs of the richest companies in the world. It doesn’t make sense.”

In practical terms, this ruling results in a significant rate increase for Dominion’s residential customers. Beginning on Jan. 1, 2026, residential customers will face a 7.5% rate increase, followed by additional rate hikes in 2027. Data center companies already receive over $1 billion per year in state sales tax exemptions, and get discounted rates compared to what residential customers pay for electricity. 

Beyond the costs, the underlying issue is that no one in charge seems to understand or acknowledge the scale and complexity of the amount of energy — generation and transmission — needed to address unconstrained data center development. Nor are they looking at the aggregate impact of the data center growth and the accompanying infrastructure on our natural resources and public health. 

While $270 billion over fifteen years is a staggering number, it’s likely an underestimate. Dominion’s own estimates are ramping up steadily with the latest estimate of $50 billion of capital expenditures over the next five years. And we are only seeing the tip of the iceberg at this point.

“Importantly, with this decision, the SCC has recognized that data centers are driving future energy demand and infrastructure capital expenditures. The Commission also notes that residential and small business ratepayers are currently subsidizing large load customers through their energy bills. But with the unprecedented costs and risks of this massive infrastructure buildout to serve a single industry, it doesn’t go nearly far enough to protect residential ratepayers. There’s much more work to be done,” said Miller.

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Media Contact: Mike Doble, APR, CFCP
Piedmont Environmental Council Communications, 703-579-7963