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Dear supporter,

Virginia is facing a crisis — one being written, contract by contract, right now.

Dominion Energy has agreed to supply power to future data centers totaling 51 gigawatts (GW) — an amount which would triple the grid’s current peak demand.

Meeting that demand will require hundreds of new substations, thousands of miles of transmission lines, and dozens of new power plants. Our communities, our environment, and our electric bills are all on the line. We need a plan.

Earlier this year the General Assembly failed to pass any significant legislation regulating data centers or addressing the unfair cost burden being placed on other ratepayers like you and me to pay for data center energy infrastructure. It now has one more opportunity to act before this gets worse. 

Legislators return to Richmond on June 18 to finalize the state budget ahead of a June 30 deadline. The budget debate has centered on whether to end the annual sales tax exemption for data centers — but PEC is calling on legislators to go further and use the budget to:

• end the sales tax exemption and
• pause approvals of new data center projects so Virginia can actually plan for the impacts of the 51GWs of data center demand that’s already been approved.

The Senate has emphasized that the industry has placed heavy demands on the electric grid across the state, provides relatively few long-term jobs, and the large amount of revenue being forfeited is critically needed to invest back into communities through the state budget needs. The House and the Governor have argued that ending the sales tax exemption would damage Virginia’s reputation with businesses and discourage future investment. 

PEC strongly believes that Virginians should not continue to subsidize the richest corporations in the world and that our state needs a pause to plan and manage the situation. The budget negotiations are one last opportunity this year to stem the tide – to stop both the give away and the crisis by contract.

This tax break has ballooned from $1.6 million in 2008 to nearly $2 billion today. It’s now the largest tax break to any single industry in Virginia — roughly 6% of the state’s annual revenue.

With around 10 GWs of operational IT load in Virginia, Virginia is already the data center capital of the world and remains one of the fastest growing markets on the globe. The industry will not leave Virginia if the tax exemption ends because it is one of, if not the, most attractive data center markets on the planet with an unmatched fiber network and cloud interconnection ecosystem.

But if we keep approving data centers without a plan, Virginians will face rising energy costs, worsening air quality, industrialized neighborhoods, and an unreliable electric grid. Recognizing this threat, both Ohio and Illinois have paused their tax credit programs for data centers. Now more than ever, people across the country are demanding real action. Virginia must pause and plan.

Want to understand the full scope of this crisis? Read our blog post  for the details on what’s at stake and why a pause is urgently needed.

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Thank you for your continued support and engagement on important issues in our region. Feel free to contact me with any questions.

Julie Bolthouse
Director of Land use
[email protected]