by Steve Haner,
The massive data centers behind a growing energy crunch in Virginia will begin to pay substantially more for electricity in Dominion Energy’s territory, but not until 2027. The State Corporation Commission’s (SCC) approval of a new rate structure for the largest users will probably only intensify debates about what is their “fair share.”
On November 25, the Commission issued its final order on a Dominion general rate review, approving the new GS-5 rate class for the large digital customers and a general rate increase for all customers. It was the same day the SCC approved another Dominion application, this one to build a contested natural gas generation plant in Chesterfield County.
It wrapped up the first general review of the utility’s revenues, profits and operating rules since the 2023 General Assembly had relaxed some of the mandates it had imposed to protect the utility’s profits. At the time, the Thomas Jefferson Institute praised the discretion returned to the SCC, but warned it would not lower customer costs, despite promises to that effect. The coming price hikes might have been worse, however, without that added independence.
The bottom line for consumers is their bills will rise as of January 1 and then will rise again a year later. Over 2026 and 2027, the utility can collect more than $1.3 billion more from its 2.8 million customers through higher base rates. The SCC also approved an increase in the utility’s authorized profit margin, from a 9.7 to 9.8 percent return on equity.
For a residential consumer using 1,000 kilowatt hours of electricity, a typical month for many, the base rate will rise $11.24 on January 1 and another $2.36 on January 1, 2027. There will be comparable cost increases in the customer categories for businesses of all sizes, as well. The rising cost of doing business usually ends up adding to prices for the customers of those businesses.
The higher authorized return on equity will also apply to all the utility’s various rate adjustment clauses, such as the separate charges it imposes to pay for the offshore wind construction, all the recent solar projects it has added and now the approved Chesterfield County natural gas generator. The Chesterfield project will also spark a price hike next month, initially another 60 cents per 1,000 kWh but quickly rising to over $2.
