Spanberger Signs Bills Shifting Data Center Costs

Virginia Governor Signs Dominion-Backed Bills. All Eyes on Regulators Now. – Image for illustrative purposes only (Image credits: Pixabay)

Richmond, Va. – Gov. Abigail Spanberger signed legislation on Thursday that gives the State Corporation Commission new tools to assign electricity expenses directly to data centers while authorizing Dominion Energy to recover costs for burying distribution lines at up to $900,000 per mile. The measures reflect growing pressure on Virginia’s power grid from rapid data center expansion. They also expand the commission’s authority over how utilities recover profits on such projects.

Core Changes in the New Laws

The bills direct regulators to develop specific cost-allocation methods that prevent residential and small-business customers from bearing the full burden of serving large data centers. Dominion Energy gains clearer pathways to include line-burial expenses in its rate base, which supports undergrounding work aimed at improving reliability during storms. Profit-recovery provisions allow the company to earn returns on these investments once approved by the commission. The legislation stops short of mandating any particular rate design, leaving those details to future proceedings.

Practical Effects for Utilities and Large Users

Data center operators now face the prospect of higher or more targeted electricity rates once the commission completes its review. Dominion Energy can move forward with burial projects that previously faced uncertain cost recovery, potentially accelerating work in suburban and rural areas. Smaller customers gain some protection from cross-subsidization, though the exact savings will depend on how the commission structures the new charges. Utilities across the state will watch the first rate cases closely to gauge how similar projects might be treated elsewhere.

Expanded Authority for State Regulators

The State Corporation Commission receives broader discretion to evaluate cost-recovery requests and to set precedents that could influence future infrastructure decisions. Staff will need to balance reliability goals with affordability concerns as they review Dominion’s filings. Hearings are expected to draw input from consumer advocates, data center developers, and environmental groups. The commission’s rulings will likely set benchmarks for how quickly undergrounding projects move from planning to construction. This added oversight role comes at a time when Virginia’s electricity demand forecasts continue to rise sharply because of new hyperscale facilities. Regulators must now weigh technical reliability data against long-term rate impacts in each case they consider.

Next Steps for Implementation

Dominion Energy is expected to submit detailed cost-recovery proposals within the coming months. The commission will open dockets to gather public comment and technical evidence before issuing orders. Stakeholders anticipate the first decisions could arrive by late summer or early fall. These outcomes will determine whether the new framework delivers measurable relief for residential rates while supporting grid modernization.