By Steve Haner

Despite great public angst and political theater, the data center industry has emerged from the 2025 General Assembly unscathed. Virginians will continue to compete with Internet and cloud customers from all over the country and the world for electricity, as the data centers continue to proliferate here.  

One bill dealing with the land use considerations of siting future plants did pass, House Bill 1601. The final substitute version is focused on a site assessment the utility will have to provide localities before adding a new data center with a 100-megawatt peak demand. Plenty of existing and planned projects will not meet that high threshold. It is a paper tiger bill, with a Senate companion paper tiger.

A second successful bill merely directs the State Corporation Commission to do something it already has the power to do and was probably already planning to undertake. The approved version of House Bill 2084 reads:

…no later than July 1, 2027, the State Corporation Commission (the Commission) shall, under its existing authority, determine whether the Phase I or Phase II Utility is using rates, tolls, charges, or schedules that contain reasonable classifications of customers. In making this determination, the Commission shall consider whether new or separate customer classifications are reasonable. (Appalachian Power is “Phase I” and Dominion “Phase II”).

A third bill that sailed through the Assembly with far too little attention was one the data center industry must like, House Bill 2644 and Senate Bill 1197. They probably should be on the “veto bait” list of bad energy bills discussed Friday. They allow member-owned electric cooperatives to make deals with a data center with more than 90 megawatts of demand on an unregulated basis.

The idea is to use an affiliate to take on the risk of serving these giant customers, but it is far from clear that “firewall” would protect the coops’ general membership if the huge customer went belly up leaving stranded costs. This bill circumvents the restraints the SCC placed on Rappahannock Electric Cooperative when it applied last year to set up such an affiliate, an arrangement which would not have been unregulated.

Let that sink in a second, because those two bills passed with no negative votes.  The Assembly has voted unanimously to allow the unregulated sale of massive amounts of electricity in every cooperative’s territory.  The Joint Legislative Audit and Review Commission, in its report on the data centers impact, had mentioned the idea of serving them with affiliates. But it did not say the arrangements should be unregulated.

Dozens of other bills failed. Some sought to change the current tax incentives that are helping to attract the industry to Virginia, including the attachment of conditions on future plants seeking the tax break. Much of the push to rein in the industry was coming from the clean energy advocates, concerned that the rising demand would undercut their push to eliminate hydrocarbons. Sierra Club leader Ivy Main bemoaned the lack of success on Virginia Mercury.

The upside to this outcome is the ball does move to the court(room) of the State Corporation Commission, which has already convened a major technical conference on the issues posed by the data centers. A substantial number of legislators seemed more comfortable letting the SCC work with minimal directives from them. 

On a parallel track, the Federal Energy Regulatory Commission has held one technical conference on the issues raised when a data center seeks to “co-locate” with a major generation source dedicated to its service. Now it will move forward with a regulatory process focused on that issue in the PJM Interconnection region which includes Virginia, with another conference chaired by Virginia’s Mark Christie in June. 

All the legislators will go home and claim to their voters they did something to protect ratepayers from this claimed “scourge.” They did not, not really.