News Summary
Dominion Energy reveals significant growth in demand from data centers, with a capacity increase to 40 GW under contract. The company plans to invest $50.1 billion from 2025 to 2029 to accommodate this surge. A new rate class for high-energy users will ensure large data centers cover their service costs. Proposed rate increases for residential customers align with rising electricity demand. Dominion’s strategy includes infrastructure expansion and a focus on carbon-free energy sources, affecting electricity pricing dynamics in Virginia.
Virginia – Dominion Energy has reported significant growth in demand from data centers, a trend that shows no signs of slowing down. During a recent Q1 earnings call, Chief Financial Officer Steven Ridge revealed that the utility company is experiencing continued robust interest in power solutions, particularly for traditional cloud and inference needs. This surge is reflected in the utility’s substantial increase in data center capacity, which has now reached approximately 40 gigawatts (GW) under contract as of December 2024, a notable increase of 88% from 21 GW reported in July 2024.
To accommodate this demand, Dominion Energy has revised its capital forecast, planning to invest $50.1 billion between 2025 and 2029, which is up from a previous estimate of $43.2 billion. This reflects a 16% increase in spending aimed at expanding its infrastructure to meet growing electricity needs. Last year alone, the company connected 15 new data centers, contributing nearly 1 GW of additional power capacity, and it anticipates connecting another 15 data centers this year.
In line with this expansion, Dominion Energy has introduced a new rate class specifically for high-energy users, including large data centers. This change is designed to ensure that these significant power consumers cover their full service costs and, consequently, protect non-industrial rate payers from bearing financial burdens linked to the rising demand. For this new rate structure, large load users are required to enter into a 14-year contract, committing to a set power demand and covering costs even if their actual consumption is lower than what they requested.
The new rate class is applicable for facilities with a measured or contracted demand of 25 megawatts (MW) or more, along with a load factor of at least 75%. This move is expected to impact around 131 operational data centers in Virginia and approximately 139 customers in total. The Joint Legislative Audit and Review Commission (JLARC) has supported this strategic adjustment, emphasizing the necessity for financial accountability from large load consumers in light of the projected increase in infrastructure costs.
The rising electricity demand from data centers is a pressing concern, with projections suggesting that such growth could result in increased rates for all utility customers. In response to this challenge, Dominion Energy has filed for a rate increase of $10.50 per month for the average resident, along with additional hikes to cover increased fuel costs. This move aligns with similar proposals initiated by other utilities, such as Appalachian Power and Rappahannock Electric Cooperative, which seek to mitigate the financial impact on regular customers while managing costs associated with expanding service to data centers.
The Virginia State Corporation Commission is set to evaluate Dominion’s proposed rate changes alongside those from other utilities to ensure fairness and accountability in the pricing structure for customers. Dominion Energy’s comprehensive approach to its 2024 Integrated Resource Plan seeks to maintain an “all of the above” stance on power generation, with a focus on carbon-free energy sources that contribute to 80% of the overall capacity.
In addition to these developments, Dominion Energy plans to allocate $7.6 billion towards new transmission assets to support its growing operations. However, it is forecasted that residential customers may end up covering 55% of these new infrastructure costs, even if these systems primarily serve data centers.
This multifaceted strategy, which includes infrastructure expansion and a redesigned rate framework, reflects Dominion Energy’s commitment to tackling rising energy demands while ensuring that costs are distributed fairly among its customer base. The future implications of these decisions on Virginia utilities could significantly influence electricity pricing dynamics across the region.
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WILLIAMSBURG STAFF WRITER The WILLIAMSBURG STAFF WRITER represents the experienced team at HEREWilliamsburg.com, your go-to source for actionable local news and information in Williamsburg, James City County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Williamsburg Farmers Market, Yorktown Market Days, and Busch Gardens Food & Wine Festival. Our coverage extends to key organizations like the Greater Williamsburg Chamber of Commerce and Colonial Williamsburg Foundation, plus leading businesses in education and hospitality that power the local economy such as College of William & Mary, The Williamsburg Winery, and Sodexo. As part of the broader HERE network, including HEREVirginiaBeach.com, we provide comprehensive, credible insights into Virginia's dynamic landscape.
