Spanberger, Assembly Ignore Dominion Sale, Focus on Scapegoating Data Centers

The most important energy outcome of recent legislative wrestling over Virginia’s energy-focused state budget is what it didn’t include. Governor Abigail Spanberger (D) and the legislators did not meddle with the plan for Florida’s NextEra Energy to acquire Dominion Energy.

The application for that transaction (it is not a merger, but a sale) could appear at the State Corporation Commission as early as this week. The Commission and its staff will have only 180 days to consider the application, do its own analysis, and absorb all the stakeholder commentary that will flow into its case files.

The statute setting that deadline could easily have been amended by a budget provision in either the legislative conference report or the short set of final amendments offered by the Governor. They meddled with plenty of other state laws unrelated to the budget, but not that one, despite a strong call to do so from Lieutenant Governor Gazala Hashmi (D) and the environmental groups key to their political success.

The 180-day deadline, if met, means the SCC’s decision will come before the General Assembly returns in January. The lobbying campaign to keep the legislature on the sidelines was below the radar. By far, this was Dominion’s largest victory from the session, and its other interests were well protected across the board, as always.

No, the political heat and legislative creativity this year were focused instead on the data center industry, the favored scapegoat of the hour. Blaming them for the results of all the energy policy failures since 2020 proved effective.

Nothing has changed from the gloomy assessment from a few weeks ago that Virginia’s real energy challenges were ignored by the just-completed session. The final round of legislative damage done includes an ill-advised electricity consumption tax on some (but not all) large users and a promise to rebate the cost of the Regional Greenhouse Gas Initiative to some (but not all) residential customers.

The carbon tax RGGI imposes will still inflate prices in the years to come, and not just on power produced from natural gas and coal. But residential users will be told they are getting a “credit” from the money. To call it a rebate would be an admission that it was their money in the first place.

Virginia’s slogan of “Sic Semper Tyrannis” has been replaced with “Different Strokes for Different Folks.”

A factory or a data center running a telecommunications network will pay one price for electricity, while a data center using the same number of megawatts running a hospital’s or bank’s or government’s AI operations or websites will pay a higher price.

A data center will pay a tax on the electricity it generates behind the meter on its own property for its own use, but no other person or business in the Commonwealth that supplements power in that way will pay that tax.

Some residential users may get a “credit” (rebate) of part of RGGI’s impact on their electric bill, but some most likely will not. Most business users will see no cash back and will have to eat it or pass it along with higher prices.

Data centers will face noise and water use rules applied to no other major facilities. Spanberger’s last-ditch amendment to restore some balance on the new water restrictions sparked a fierce legislative debate Monday, with a Republican senator leading the charge to tighten the screws on the industry.

It is still the goal of many to strip the industry of a partial sales tax exemption, which is very much like many other such industrial and business sales tax exemptions in the law. This is the only exemption being challenged. It is also the goal of many to impose special rules on the industry related to how it generates its own power. “Different strokes” replaces the old goal of treating all regulated entities uniformly.

The $600 million annual electricity tax to be extracted from the data centers and the likely $800 million to $1 billion the state will reap in annual RGGI tax revenue joined a list of eight other approved 2026 laws destined to cause higher electricity prices for Virginians, and to further damage the state’s competitive prospects for business investment.

Coupled with the coming universal payroll tax to pay for a new state-managed paid leave program and a wave of local sales tax increases authorized in the final budget deal, within about two years, an additional $4-5 billion per year will be supplementing the existing state and local taxes.

This train wreck is happening, and nothing will stop it now. Plan to spend more on electricity in the years to come, for your home, your small business, or your large business. Maybe you can find the capital and have the flexibility to install your own solar backups, which is what the real beneficiaries of this economic disaster want you to do.

The proper prescription for economic health in Virginia’s future? That would be the same goals the Jefferson Forum (and the Thomas Jefferson Institute) have been promoting all along.

Virginia needs additional reliable and large baseload generation, whether that comes from natural gas or from nuclear reactors, whether a utility builds them or a merchant generator. But the current leadership in the state remains hostile to hydrocarbons and wants to make it especially clear to the data centers that hydrocarbons are not wanted.

Virginia needs to fully repeal the Virginia Clean Economy Act, which is clearly a major driver of the price increases we’ve seen and of those to come. Again, the current leadership in the state will never retreat and has only added to the VCEA’s expensive top-down mandates this session.

The state’s media outlets are deep into fighting the overblown climate crisis (watch the coverage of this hot weekend) and will never be honest about how useless the VCEA mandates and RGGI are at reducing carbon emissions. When Virginia finally hits the wall, our leadership will blame the data centers, but never VCEA or RGGI.

Key Takeaways:

• Dominion’s quiet victory this session was keeping the NextEra sale on a fast SCC track while lawmakers focused their fire on data centers.
• Virginia’s latest budget deal creates a two-tier energy policy: credits for some, new taxes for others, and special rules for one politically targeted industry.
• The real drivers of higher electricity costs remain untouched: the Virginia Clean Economy Act, RGGI, and Richmond’s refusal to embrace reliable baseload power.

Steve Haner
Jefferson Forum

Steve Haner is the Senior Fellow for Energy and the Environment at the Jefferson Forum and may be reached at Steve@thomasjeffersoninst.org