Part 13
Can we blame data centers for rising utility costs?
It’s complicated.
By Peter Cary, Contributing Writer
The accelerating use of energy-intensive artificial intelligence has contributed to an impending power crisis in Virginia, the biggest data center market in the world. This ongoing series of stories – The New Energy Crisis – explores the repercussions for our region, where our energy will come from, the price to be paid in dollars, safety and quality of life, and potential solutions.
Virginians’ power bills have increased 14.5% since 2022 and doubled in 25 years. But Dominion Energy customers scrutinizing their bills to understand why are likely confused. They see only part of the picture.
A power bill shows how much energy a customer used, and the utility multiplies that usage by various “base rates” – cents per kilowatt-hour used – to pay for the cost of generation, transmission and fuel for the generators.
But the bill does not show charges for numerous power and clean-energy projects. Known as rate adjustment clauses, or “riders,” these are the fastest growing part of the bill.
Utilities say they are doing their best to protect residential customers from the soaring cost of the electricity they buy on daily markets, mainly driven by data center demand and the cost of fuel. But the riders keep rising.
In an October report, the State Corporation Commission, which regulates electric utilities, noted that the average monthly Dominion bill in 2007 was $90.59. This year it is $172, up 90% over 19 years. The riders were up $53 – growing 20 times faster than base rates. (Dominion’s base rates also increased this year, the first hike since 1992, raising bills $11.34.)
Dominion has 15 riders. They are susceptible to inflation, supply-chain issues and legislation. They can drop or end, but mostly they go up. Last year, six Dominion riders increased, one decreased, and seven stayed the same, together adding $10 to an average monthly residential bill, or $120 a year.
Roughly half the riders help Dominion address rising power demand from data centers.
One charges ratepayers $11.23 a month for Dominion’s share of a $11.5 billion offshore wind project. The rider rose $2.60 last year for the average residential customer. Another rider adds $7.98 to pay for clean-energy certificates Dominion is legislated to buy because it does not generate enough green energy. That charge rose $3 last year.
Upgrading nuclear power plants costs homeowners $3.48 a month. Clean-energy projects add $3.67; that charge was $2.19 less a year ago. Residents pay $1.77 a month to clean up coal plant sites, including Possum Point, a charge that rose 59 cents last year. And March 1, residents started paying $9 a year more for a new gas peaker plant to handle data center demand.
Transmission improvements, such as new towers and lines, are funded by another rider, which adds $11.79 to the $9.70 transmission base charge.
Power purchase agreements – contracts to buy power from outside companies – and electricity bought in a daily regional auction are packaged in the “fuel” category on bills, alongside diesel oil and coal. All fuel charges are governed by one big rider that costs $29.68 a month.
Some charges are not listed even in the riders. Dominion reserves power for future years, which adds $1.98 to base rates this year.
Some riders will grow by design. Ratepayers are being charged 29 cents per month for development of a proposed small modular reactor. When the reactor is under construction, charges probably will rise.
Some riders will drop. A Dominion spokesman says the charge for offshore wind will start falling next year as the project is completed, and will become a credit by 2031.
While the riders are not seen on bills, they can be located on Dominion’s website. (See graphic for how to access.)
Unlike Dominion, a huge investor-owned utility, the Northern Virginia and the Rappahannock Electric cooperatives have no riders. Still, their customers pay for things not listed on their bills. Both co-ops charge a monthly service fee -- $21.30 for NOVEC and $24.48 for REC – to cover billing, metering, customer service and administrative costs.
That fee has stayed steady, but both co-ops also bill for a “power cost adjustment” that has been rising.
Currently, the power cost adjustment on an average $145 NOVEC bill is $13.20. According to NOVEC officials, it contains billing for a small biomass generation plant, purchased electricity and fees that Dominion charges NOVEC for the Dominion lines that serve NOVEC’s territory.
Some of those costs are also found in NOVEC’s charges for “supply.” So, overall, an average NOVEC customer pays $9.94 for Dominion’s transmission lines, $15.40 to reserve future power, plus other fees, company officials said.
REC has base rates higher than NOVEC or Dominion. Distribution base rates start at 6.4 cents per kilowatt-hour, while NOVEC’s starts at 1.3 cents and Dominion’s at 3.6 cents.
Spokesperson Casey Hollins said REC’s rates are higher because it has fewer customers per mile than the more urbanized utilities, and that means fewer customers to pay for infrastructure. But she said that when all costs are considered, REC’s members, with an average bill of $159, pay less than Dominion’s.
Rappahannock’s power cost adjustment has been adjusting upward. In 2023, the charge to an average residential customer was $17. By January, it was $24 per 1,000 kWh. “On Jan. 1, 2026, we were able to pass through a slight power cost decrease. While it was just under $1, it was a stark contrast to the higher increases experienced by many other utilities,” Hollins wrote in an email.
REC buys its power from Old Dominion Electric Cooperative, which also participates in the capacity auction that reserves power for the future. These prices are reflected in REC’s power cost adjustment.
Capacity prices made headlines in 2025 when the prices to reserve power for 2026-2027 shot up 800% higher than the previous year. Those costs are starting to show up on bills.
But utilities also buy power in daily auctions, and those prices are surging, too.
“Data center load is the primary reason for…the tight supply-and-demand balance and high prices,” wrote Independent Market Monitor, the regional watchdog, in a March report. These prices were up 50% between 2024 and 2025.
All these increases are creeping into everyone’s bills.
Officials at all three utilities said their companies had taken steps to insulate residential ratepayers from these huge increases. Dominion noted that since it produces most of its own power, it does not have to buy much at auction, so the capacity charge was kept to $1.98 a month. Still, customers pay for riders to generate that power.
NOVEC says it enters into long-term contracts with generation plants and does other hedging to keep prices as low as possible for residents, something it does not do for data centers, whose rates more closely reflect the rise of the daily market. The company says the total rates for its data centers have hiked 76% since 2023, whereas residents’ rates have increased only 3.3%.
“NOVEC’s customers are paying among the lowest rates in the state,” said Katherine Bond, vice president for commercial operations.
REC said its energy supplier’s diversified generation sources and long-term contracts buffer market volatility.
That said, no one expects electricity costs to drop. Fuel costs are exacerbated by the war with Iran and record hot and cold temperatures.
Peter Cary can be reached at pcary@fauquier.com.
