RICHMOND, Va. - Governor Abigail Spanberger on Friday signed legislation that does two things: tells regulators to make data centers pay for their electricity costs, and lets Dominion Energy spend a truly eye-watering $900,000 per mile burying local power lines. The bills, sponsored by Senate President Pro Tem Louise Lucas, D-Portsmouth, and Del. Destiny LeVere Bolling, D-Henrico, originally would have also forced data centers to cover the costs of buying electricity from PJM Interconnection’s capacity market - the regional grid operator for Virginia, 12 other states, and D.C. But Spanberger removed that requirement and replaced it with more regulatory authority to allocate costs. Because nothing says "fairness" like a bureaucrat getting more power to decide who pays for what.
Those capacity market costs, which kick in when the grid is under peak strain, have skyrocketed from about $28 per megawatt-hour in 2023 to $329 in 2025 - a price jump that makes Bitcoin look stable. That contributed to a 1.5 to 5 percent increase in all customers’ bills, because the pace at which data centers want to connect to the grid, combined with a lack of new power generation, has created a supply-and-demand imbalance that raises costs for everyone. You know, classic economics.
The provision on underground cables would let Dominion spend up to $900,000 a mile for a strategic undergrounding program - burying the local distribution lines that deliver power to homes, which are less prone to storm damage. The program, set to expire in 2028, has already added a $4.88 monthly fee to the bill of a typical residential customer, which ratepayer advocates are not thrilled about.
Spanberger added several amendments during the legislative session giving the State Corporation Commission (SCC), which regulates utilities, greater discretion to reject the line-underground program. But the legislature rejected that language while accepting other amendments. One of the accepted amendments removed the requirement for Dominion to ask regulators to have data centers pay for capacity market costs and substation financing costs. Instead, it directs the SCC to more broadly take “all steps necessary” to ensure residential customers don’t pay for data center electricity costs. Because vague directives are the backbone of effective regulation.
“I appreciate that the General Assembly accepted my amendments directing the SCC to make sure that data centers are paying their fair share for energy generation and distribution,” Spanberger said in a statement Friday. She also said she received a “commitment” from Dominion to “limit undergrounding projects to help contain costs” by serving areas most prone to extreme weather threats, and that Dominion wouldn’t seek more work than previously mandated by the 2018 Grid Transformation Security Act through early 2033. Another amendment gave the SCC more authority to determine if a request to finance fuel costs is in the public interest when approving or rejecting a utility’s proposal. The original bill required the commission to simply accept or reject the proposal.
Steve Haner, a senior fellow at the Thomas Jefferson conservative think tank, credited the legislature - with many new members - for paying “closer attention” to what Dominion asks for and what it means. Which is progress, we suppose.
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