Part 3
By Peter Cary, Contributing Writer
Electric bills are going up. Virginians want to know how much and why.
State regulators just approved a $2.99 monthly increase for a typical residential customer so Dominion Energy could buy renewable energy credits as required by state law.
Dominion also got approval to add $2.10 on Sept. 1 to pay for transmission lines and a program in which big customers are paid to cut back on their power when the grid is stressed.
Dominion added $8.94 on July 1 for higher fuel costs.
And 29 cents for research to possibly build a small nuclear reactor.
And it wants to add $1.98 more to pay for higher electricity costs, plus a base rate increase of $2 on Jan.1, 2027.
Add that up, and it’s $18.30 more a month, or $219 more a year.
And there’s more to come. For instance, charges for offshore wind, or a new gas turbine generator in Chesterfield.
Bills are shooting even higher at the Northern Virginia Electric Cooperative, one of the largest co-ops in the nation. On Jan. 1 the monthly bill for a 1,000-kilowatt-hour home jumped $10.35, and in July it rose another $10. That’s 18 percent in six months.
NOVEC says its rate hikes are “driven by cost increases for generation capacity and transmission service that are outside of NOVEC’s control.”
PJM Interconnection, the grid operator, “is facing challenges with electric generation as demand continues to increase, so the cost of purchased power is rising as demand outweighs supply,” NOVEC explains.
In a little more than a decade, Virginians could pay almost twice as much as they are now, depending on which calculations Dominion uses. A state audit committee puts the amount at as much as $444 a year more by 2040.
Still, says Dominion spokesman Aaron Ruby, “our prices have remained consistently at or below the national average for two decades.”
Dominion says the key reason for the hikes is inflation, but other forces are at work, too. The main one is the surge in data centers. Their heavy electricity use requires new energy plants and high-powered transmission lines, much of which is paid for by residential ratepayers. Data centers have also tightened the demand-supply equation, driving up the cost of electricity even more.
Northern Virginia residents want to know whether what they are paying is fair, whether they are paying for what data centers should be. The Times reviewed utility and regulator reports and interviewed utility officials and power experts to get answers.
Any increase is felt keenly by people already struggling. Francia Salguero runs an outreach program at St. Francis of Assisi Catholic Church in Triangle that helps people through tough times. The number of customers she has helped pay their power bills rises every year, she said. Counting Dominion customers, she had helped from January through August to compare each of the last three years, the data shows that the number rising from 64 in 2023 to 102 in 2024 to 121 in 2025. She said her own monthly electric bills have gone up too – in some months more than 30 percent – and she expects most people’s bills for August and September will be higher yet.
But it is her clients that are her main concern. Some people will suffer or die without power: the elderly, or ones with respiratory problems. One woman needed nearly $600 to get her power back on–$323 for the reconnection and the rest for the overdue bill. When she called she was crying–her child needed a nebulizer for breathing. One family she remembers was afraid that if the power was cut off they would lose all the food in their refrigerator for their children.
“They were desperate for assistance,” she said.
So far, Virginians have paid less for electricity than the national average, but that ranking may be in peril. At an auction last year where utilities reserve power for the future, prices soared 830%.
Virginia Gov. Glenn Youngkin blamed the rising prices partly on PJM’s management and called for the removal of its CEO, Manu Asthana, who said he will step down next year. But in a statement to the New York Times, Asthana said fundamental factors are at work.
“Prices are up because of tightening supply and demand driven by generator retirements and data center growth, and it’s impacting consumers,” he said. “We need to be working together on additional ways to bring supply onto the system rapidly.”
Indeed, Dominion expects to spend more than $100 billion for new power plants by 2039. Another $16 billion to $18 billion will be needed to build transmission lines by 2040 if data centers are not constrained, according to a December report by the state’s Joint Legislative Audit and Review Commission.
These billions for infrastructure are shouldered by residents, commercial and industrial users, but of the three groups, residents pay the most.
They pay 55% of transmission costs and 40% of generation costs, according to the audit. Data centers pay 26% and 16% respectively. The rest is borne by small to large commercial customers.
Data centers pay for the low-powered distribution lines that connect the centers to the high-powered transmission lines, and for the onsite or nearby substations that manage it all. They also pay for the power they use, but at a rate less than half of what residents pay, partly because they are bulk users and partly because they are cheaper to hook up and maintain than, say, residential subdivisions.
The residential vs. industrial payment split may make sense now, when data centers constitute roughly one-fourth of the power demands of all Dominion customers. But according to Dominion and PJM data, in 15 years data centers are forecast to create half of Dominion’s power demands.
The question becomes: Should data centers pay more?
Gilbert Jaramillo, NOVEC’s vice president for power supply, said recently that the bill for new transmission lines in his territory has soared 167% to $1.8 billion over 12 years. NOVEC’s ratepayers have to pay that bill.
“This continued [data center] expansion will harm the average residential and non-data center customer with little to no benefit in reliability of the service they receive,” Jaramillo complained in a written statement to the State Corporation Commission. “But for data centers, much of this transmission investment would not be required.”
A study from Harvard Law School’s Electricity Law Initiative said: “The very same utility rate structures that have spread the costs of reliable power delivery for everyone are now forcing the public to pay for infrastructure designed to supply a handful of wealthy corporations.”
Dominion has long insisted that new transmission lines serve all customers. The company also argues that more data centers mean more paying customers, which dilutes costs for all. But, as NOVEC’s Jaramillo says, if it were not for the data centers, the bulk of these new costs would not exist.
For instance, when Dominion discovered in 2022 that it did not have adequate transmission to serve Loudoun County's expanding Data Center Alley, it embarked on a long list of “supplemental” projects, whose cost was listed then at $627 million.
In February, PJM approved $6.7 billion in new transmission projects, of which two are massive 765 kilovolt lines to bring power from Ohio and West Virginia to satisfy Virginia’s surge. That project alone is worth $4.6 billion and Dominion is accountable for 30 percent of its cost.
Dominion spokesman Aaron Ruby says the costs of transmission and generation are proportionately allocated to the customers they serve. Since 2020, he wrote in an email, the company has increased data centers’ share of transmission costs by 10% and cut residents' share by 10%. “This trend will continue,” he wrote.
The audit commission acknowledged that, but added that “data centers’ increased demand will likely increase system costs for all customers,” including higher electricity costs as demand rises.
The commission suggested creating a new data center customer class, further changing cost allocations, or adjusting rates more often. Such changes “could help insulate non-data center customers from statewide cost increases,” the commission wrote.
On April 1, Dominion did that. It filed with the State Corporation Commission a proposal to create a new “large load” rate class for data centers and bitcoin operations. Data centers would have to sign 14-year contracts and pay for 60% of their requested power, even if they don’t use it all, and 85 percent of their “transmission and distribution” charges. This would protect Dominion, and presumably its ratepayers, if a data center went under or moved away, and would protect ratepayers from paying for unneeded infrastructure.
Others ask for a tougher deal. An expert testifying for the Piedmont Environmental Council told the commission that data centers should pay 90 percent of their transmission costs and 90 percent of their contracted power costs.
That would bring Dominion’s treatment of data centers more in line with an agreement just reached between the Ohio utility AEP, its data centers and state regulators. Oregon just passed a law designed to set up a similar system.
“Without this separate rate class, all customers are paying for data centers to connect to the grid, and we don't think that's fair, given how much power they use,” said Jennifer Hill-Hart, policy director for the Oregon Citizens Utility Board, which pushed for the legislation.
Yet none of the arrangements reviewed by the Times protect customers from the rising cost of electricity that occurs when power supply cannot catch up to rising data center demand.
In Virginia, electricity is bought by utilities in a daily auction run by PJM. Its price depends on the type of facility – solar is cheap, nuclear is expensive – and fuel. The U.S. Energy Information Agency said in January that wholesale power prices in the PJM zone should rise roughly 10% this year, due to higher gas prices.
There is also an annual auction at which utilities bid on power a year in advance. When the auction to reserve power for 2025-2026 was held in July last year, bids closed 830% higher than the previous year’s auction. PJM said generation was diminishing while power demand was soaring, creating a very tight – and expensive – market. The auction adds $1.98 to Dominion ratepayers’ bills and $20 to NOVEC’s. (Unlike Dominion, NOVEC must buy all of its own energy so ratepayers pay more.)
Wood Mackenzie, an energy consulting service, recently predicted that due to the demand-supply squeeze, “on an average day, prices…could double or even triple.”
”To complicate matters, data centers are also getting bigger, with hyperscale facilities [using over one gigawatt] becoming increasingly common,” its report said.
The Independent Market Monitor, a watchdog group that reports to PJM, says the answer is to force data centers to bring their own power. They can build a gas-turbine plant on site, as has been done in Texas, or contract with a developer to build an off-site plant to feed power into the grid.
The monitor argues that this approach does not discriminate against data centers, as the industry has argued. Rather, it said in a report to federal regulators, “it would be unduly discriminatory to all other customers, from the smallest residential customer to the largest industrial customer, to allow large data centers to add massive amounts of load to the system with resulting price impacts.”
This story was corrected Oct. 7 to clarify predictions for hikes in electric bills.
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