PART 19
As the data center surge causes electricity bills to rise and strains the Mid-Atlantic power grid, one small city in Northern Virginia has been able to escape the stresses and even see an upside: Manassas.
The city has its own power system. It also has one operating data center and four under way, which could double the 140 megawatts of electricity the city currently uses.
Yet, under an agreement with Dominion Energy, Dominion will build the transmission lines and substations and supply the electricity needed by the data centers, taking the load and expense off Manassas’s system.
That puts Manassas in a unique position. In other jurisdictions, such as Dominion’s customer zone or areas served by co-operatives like NOVEC, the cost of the grid buildout for data centers falls on the utility and its customers.
Manassas even bills the data centers for their power use, producing a flood of revenue for the city’s utility fund, which helps keep other customers’ bills low. And the city will tax the real estate and business equipment associated with the data centers, producing a windfall that will bolster the general fund as well.
“That’s exactly why we looked at (data centers) in the first place,” said Tom Osina, who sits on the city council and the utility commission. He said the city is planning an expansion of its wastewater plant and is hoping to build a parking garage and new fire station. “Those are three where there is some serious money involved.”
Still, despite their benefits, data centers and the way they are approved are seeing pushback in Manassas.
All of this presents a picture of a city with a century-old electric system trying to take advantage of new developments. Like many such things, it’s complicated.
Century-old utility
A railroad junction and site of Civil War battles, Manassas officially became a town in 1873. In 1913, when the town barely held 1,200 people, it created its own electric utility to run as an arm of the town government. For years, it bought its power from Dominion.
In 1979, Manassas, by then the county seat, joined the seven-member Virginia Municipal Electric Utilities Association (VMEA), which began using its purchasing power to contract electricity supply for the consortium.
In 2011, VMEA and Dominion signed a 20-year contract that set a formula, approved by the Federal Energy Regulatory Commission, that governs how and how much Dominion can charge the group. Meters track each municipality’s monthly use, then Dominion charges VMEA for the total; each town pays VMEA, and VMEA pays Dominion.
One hitch is that Dominion can add charges for unanticipated costs, such as fuel for generators or for any extra power it has to buy in electricity markets. For instance, Dominion just hit the consortium with a yearlong charge that will hike residents’ monthly bills in Manassas from $25 for a small home to $50 for a large home – for some, $600 a year.
On the other hand, Dominion’s customers pay for a dozen extra items on their bills, some of which Dominion cannot pass on to Manassas customers, said Brian O’Dell, manager of Harrisonburg’s electric department and president and treasurer of VMEA.
That keeps Manassas residents’ bills lower than those of Dominion customers. The Times compared the bills of Manassas customers with those of Dominion’s, using Dominion’s bill calculator. Manassas residents using about 1,000 kWh of monthly power paid $28 less than Dominion customers using the same power; residents of a larger Manassas home using 2,000 kWh of power paid about $50 less.
But there are add-ons for Manassas customers, too. Besides the pure cost of electricity, the city tacks on charges to pay for running its electric department and maintaining its infrastructure.
And so bills in Manassas are creeping up. This year the city started adjusting its customers’ rates upward about 10% a year and will for the next several years. That’s partly because of the rising cost of equipment like transformers (up 372%) or power cable (up 240%), and partly to replenish a reserve fund that was drawn down from 2018 to 2022, said councilman Osina.
“The council just bit the bullet and said, you know, we're going to ask our residents to go through this five years because, based on what we had seen, five years of adhering to these increases would build up the utility fund again,” he said
Some of the generators the City of Manassas runs for a few hours each day to generate its own electricity. The city tests pollution emissions periodically to ensure it remains within its permitted output. Submitted Photo.
Firing up the generators
Besides negotiating prices through VMEA, the city has another way of lowering power costs. It operates 31 diesel-powered generators in five locations, including one off Godwin Drive near the old brickyard and one on E. Church Street in Old Town.
The cost of electricity is highest when demand is high, so on days when Dominion’s load nears a peak, Manassas runs its generators for a few hours, reducing its purchase from Dominion.
“If we can lessen our demand, we save money, and that's money that we actually save our residents,” Osina said.
He acknowledged that the generators spew pollutants but noted that their use is limited.
The city tests generator emissions every three years, according to Jeremy Beale, the city’s public affairs manager.
Ana Davis, Manassas’s utilities services manager, estimated that the generator practice saves the city $300,000 to $400,000 a month.
The city also turns the generators on when PJM Interconnection, the regional grid operator, is stressed by high demand. While the electricity produced by the generators does not extend beyond the city’s boundaries, it helps the region by reducing the demand in Manassas, and thus on the whole grid.
Left: Lynn Forkell Greene. Right: Diane Lane. Submitted Photos.
More data centers on the way
While Manassas data centers get their power directly from Dominion, they are billed by the city. The city sets their rates and charges extra fees, a plan that augments the city’s electricity fund. City officials say that will help refurbish aging infrastructure while keeping other customers’ bills low.
That plan is just getting underway. The city currently has one operating data center and three more projects under construction. Digital Realty owns the operating one, a 185,000-square-foot building used by a bank on the site of the former Glen-Gery Brickyard.
Amazon Web Services is starting construction on a 250,000-square-foot building on Dean Drive at Wellington Road. Amazon also purchased 20 acres from the city on Wakeman Drive next to the airport for $27.7 million. And Black Chamber Group bought the former Technology Drive Self-Storage site on Dean Drive for two data buildings it plans to lease to AWS.
When the data centers are up and operating, the city plans to tax their computer equipment, a tax that has produced a windfall for Loudoun and Prince William counties.
So far, the city has been denied that revenue because Virginia law excludes bank equipment from being taxed, and the city’s one operating data center is leased to a bank. City officials want to get that law changed.
till, some residents are saying “enough.” Concerned about the sight of the massive buildings, their noise, water use, and strain on the regional grid, they are calling for a more transparent process for data center approvals -- or even for their city to stop approving them period.
“I would rather see us diversify and focus on industries that will support the commercial services at the airport, and travel, tourism, technology,” said Dianne Lane, who is running for city council, in an interview.
Lane says if she is elected she will work to require data centers to obtain special-use permits. “I don't think we want to be hamstrung by that sole line of income,” she said.
“There are lots of places and ways that we can grow that don't rely on us becoming solely reliant on data centers. I don't think we need more.”
Lynn Forkell Greene served on the city council in 2021-2022 and is running again. She lives a short distance from Godwin Drive, and across that road is the Great Oaks subdivision, which battled Amazon for four years over the noise from its four Tanner Way data centers, so she is aware of the buildings’ downsides.
Data centers are being built in Manassas “by right,” a process that does not require a vote of approval by the city council. Greene wants data center approvals to be more open and transparent, and she thinks half the people in town agree with that position.
“I'm not wholly against data centers, but I do think we've kind of reached our limit here,” she said in an interview. “We are really at a breaking point with our infrastructure, and we have other projects that are online and coming online, and so we need to be really responsible with our resources.”
