SCC Orders Dominion to Develop Tariff to Assign More Transmission Costs to Data Centers

More of the cost to build the high-voltage transmission lines that serve as power highways across the state could soon be covered by data centers, after a recent decision by state regulators.

The State Corporation Commission has ordered Dominion Energy to develop a policy to directly assign the cost of transmission infrastructure to data centers and other large-load users that  connect to the facilities, “with the goal of finding an acceptable and symmetrical approach towards assigning costs in these circumstances.”

In the latest rate adjustment case for Dominion’s “rider T1” that covers the cost to build the transmission lines and substations, the company argued that data centers and other companies in their class should have to shoulder more of the cost of the power infrastructure that is necessary only to power their facilities.

In a rare move, Gov. Abigail Spanberger’s administration weighed in on the case, with officials stating that data centers should be paying their “fair share,” and that residential customers shouldn’t have to pay for power infrastructure solely used by data centers.

“Any network or substation upgrades that would not have been triggered but for a large load customer should be assigned directly to that customer, shielding regular Virginia families from subsidizing commercial extension,” Deputy Chief Energy Officer Louise White testified during a hearing in July.

In the final order, the commission recognized that even  the possible new tariff  “may not address all instances in which a utility may incur transmission-related costs to address transmission system reliability criteria violations that appear to be directly caused by the addition of one or more large-load customers.”

Dominion has reported 203 transmission projects in its grid connection pipeline, according to the company’s 2024 integrated resource plan.

Environmental groups cheered state regulators’ move this week.

“The decision establishes an important precedent: Virginia families and small businesses should not subsidize transmission infrastructure built solely to connect new large-load data centers,” said Chris Miller, president of the Piedmont Environmental Council, one of the intervening parties in the case.

The forthcoming Valley Link transmission line is an example of a project that, in the future, could be “directly assigned to the GS-5 rate class” or other alternatives, commissioners also said.

The regional grid operator allowed Dominion and other utilities to develop plans for the 115-mile, 765-kilovolt transmission line that is anticipated to stretch from Lynchburg to Culpeper to push more power to Northern Virginia, where most of the state’s data centers are concentrated.

“This order — which is projected to save Virginians hundreds of millions of dollars — makes sure that data centers are paying the full cost of the transmission infrastructure their developments require,” Spanberger said in a statement.

The governor pledged to work with state lawmakers in future legislative sessions to ensure data centers “pay their fair share, adhere to strict environmental standards, and listen to the concerns of local communities.”

Dominion asked the commission to recover $1.5 billion, which would translate to about a $.94 monthly increase for the average customer. The company originally asked for a $2.90 monthly increase, but recalculated its formula to impose higher costs on data centers and factored in the new high-load user GS5 rate class, which established an 85% transmission demand rate.

It is not clear when the SCC will rule on the new transmission tariff for data centers and what the exact savings for residential customers will be.

by Shannon Heckt, Virginia Mercury

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