Lt. Gov. Ghazala Hashmi is traveling the commonwealth on an “Energy Costs Listening Tour,” joined by Democratic legislators to discuss rising utility bills. Gov. Abigail Spanberger has also made energy affordability a major theme, pressing regulators to ensure data centers pay their costs.
But there is a glaring omission in Virginia’s new political conversation about electric bills: What has actually driven the energy price increases?
Between June 2022 and June 2026, the monthly bill for a typical Dominion Energy Virginia residential customer using 1,000 kilowatt-hours increased from about $127 to roughly $176 — an increase of approximately $49, or 39 percent. (Disclosure: Dominion is one of our donors but donors have no say in news decisions; see our policy).
A closer look at Dominion’s rates finds that $27, or over half of that increase, is in the clean-energy/Virginia Clean Economy Act (VCEA)-related category. This includes offshore wind, solar, storage and renewable-energy compliance. Distribution increased by $19, fuel and energy by $12 and transmission by $5, while declining legacy-generation and environmental costs offset part of those increases.
But the point remains: VCEA-related and clean energy costs have been the largest contributor to the recent increase in residential bills. That deserves as much attention at an “energy cost” summit as data centers.
While a case can be made that data centers may have lowered or slowed the growth of energy costs to residential customers in the past, they are unquestionably becoming a major driver of future costs.
Virginia’s Joint Legislative Audit and Review Committee (JLARC) has projected that data-center growth could eventually add roughly $14 to $37 per month to a typical Dominion residential bill. Since that report, our State Corporation Commission (SCC) has adopted regulatory changes that should ameliorate some of that.
The much bigger issue is that data center growth is colliding with an energy policy designed in 2020 when Dominion’s electricity demand had been flat for more than a decade.
Now Virginia is trying to serve the fastest-growing electricity demand in America while simultaneously retiring dispatchable generation, expanding renewable mandates, building huge amounts of storage and importing more power through a strained regional grid. That last problem means more controversial transmission lines.
The VCEA and growing demand from data centers combine to multiply Virginia’s energy problems. The VCEA’s renewable portfolio requirement is based on electricity sales. As data centers increase electricity consumption, Virginia must correspondingly increase its percentage of renewable generation, renewable energy certificate purchases, or pay deficiency payments — which by law must be passed on to customers.
The SCC has explicitly recognized that large-load customers operating 24/7 will require vast amounts of additional electricity while simultaneously increasing VCEA compliance obligations. It has also noted that future deficiency payments would impose significant costs on ratepayers without directly producing additional generation, transmission, or distribution service.
That is the collision Virginia’s political leaders should be discussing at any listening tour.
Spanberger’s approach illustrates the problem. While she is right to protect residential ratepayers from large-load demands for new transmission lines or the cost to create reserves to cover increased capacity needs, the Governor is simultaneously supporting policies that add costs elsewhere in the system.
Her administration has backed dramatically expanded energy-storage requirements and Virginia’s return to the Regional Greenhouse Gas Initiative while continuing to support the VCEA framework — all of which add massive costs to ratepayers without increasing reliable energy generation. And the reliability problem is becoming serious.
In one recent SCC proceeding, approximately 1,000 megawatts of proposed solar and storage represented only about 139 megawatts of accredited capacity — the capacity the grid can actually count on when needed. So, while solar can provide inexpensive electricity during daylight hours, its 1,000 megawatts of solar nameplate capacity is nowhere near the same thing as 1,000 megawatts of natural-gas generation available during a winter evening or system emergency.
Virginia risks paying once for the resources needed to comply with renewable mandates and again for the storage, natural gas, nuclear generation and transmission needed to make the grid reliable.
Hashmi and other Democrats are right to hold public meetings about electricity costs. Spanberger is right to scrutinize whether data centers are paying their fair share. But an honest affordability debate cannot begin with data centers and end with Dominion.
It must also ask whether the VCEA’s mandates, hydrocarbon retirement schedules and looming financial penalties still make sense in a Virginia that consumes vastly more electricity than lawmakers ever expected. The VCEA was written for a world of flat electricity demand, before the growth of data centers.
That collision — not data centers alone — is the energy problem Richmond needs to confront.
Derrick Max is vice president of policy for the Jefferson Forum.
