Dive Brief:

• The incoming administration in Virginia plans to work with the legislature to shift policy toward having data centers “pay their fair share” by supplying their own energy, and getting more clean energy connected to the grid, Lt. Gov.-elect Ghazala Hashmi said at a Thursday press conference to discuss the results of a Synapse Energy Economics report.
• The report, commissioned by the Natural Resources Defense Council and the Evergreen Collaborative, asserts that those two changes — plus a reduction in utility profit margins and the acceleration of vehicle and building electrification — could save a typical Virginia household $142 in 2026 and as much as $712 in 2030.
• “We have the tools today. We’ve got the skilled and talented workforce. We have a policy roadmap as well, and what we need now is the political will,” Hashmi said. “There is new energy in this legislature, and with it a real opportunity to build new energy right here in the Commonwealth.”

Dive Insight:

Virginia’s Governor-elect Abigail Spanberger supported renewable energy throughout her campaign, calling for the state to become a “national leader in clean energy” and saying last December that she would have Virginia rejoin the Regional Greenhouse Gas Initiative, or RGGI, once elected.

Hashmi framed the issue as one of affordability on Thursday, noting the report’s analysis projected significant cost savings for utility customers. “It confirms what many of us have been saying for the past several years,” she said. “Our state policies matter.”

The report said that bills are likely to increase for Dominion Energy customers as load increases, because Dominion will likely have to “procure an increasing amount of capacity” from the PJM market, which is currently undergoing price spikes due largely to data center demand.

The Virginia’s State Corporation Commission last week approved a new rate class aimed at curtailing the risk posed by data centers, requiring 14-year contracts for utility customers which consume more than 25 MW and have a monthly load factor of more than 75%.

The report said these large load tariffs protect non-data center customers from the incremental distribution costs, but “in deregulated regions such as PJM, we note that these tariffs are currently not applied to supply costs that are incurred due to associated with data centers (i.e., energy, capacity, and regional transmission costs).”

Synapse’s report concluded that “this is likely to remain the case because a) it would be difficult to isolate the impact of data centers on wholesale market prices; b) it may pose legal challenges based on discrimination or other principles; and c) these costs would not be passed through to data center customers on a retrospective basis. Synapse is not aware of any precedent for such a tariff design to mitigate these supply-side costs.”

The SCC also last week approved a rate hike requested by Dominion, which it estimates will cost the typical residential customer $11.24 more per month in 2026 — around a 7.5% increase, but lower than the 9.8% increase requested by the utility. 

In its final order, the SCC acknowledged concerns that the rate hike was subsidizing data centers, but said it concluded that Dominion was ultimately subject to “many of the same inflationary, economic, and policy impacts that have affected other segments of the economy.”

The report suggested state-level policy solutions to increase PJM capacity, including states within the market requiring all data centers to bring their own generation, or state tax incentives “coupled with requirements for data centers to self-supply with clean generation to help minimize the societal impacts of this new generation capacity.”

Hashmi said she was “ready to get to work” on energy with Gov.-elect Spanberger, Virginia Senate leadership, and the 13 new Democratic lawmakers elected to the House of Delegates. “Clean energy is not only the most affordable option, it is also the fastest to deploy and the most resilient within this changing economy,” she said.

“We look forward to working with all stakeholders and lawmakers from both parties this session to promote reliable, affordable and increasingly clean energy for Virginians,” said Dominion spokesperson Aaron Ruby in an email.

When it comes to increasing electrification in ways that benefit the grid, the report said there are “numerous policy levers states and PUCs can use,” including vehicle standards and building codes, state tax credits and rebate programs for electric vehicle adoption, carpool lane access or reserved parking for EVs, and demand response programs offered by utilities.