Dominion (Virginia) ordered to assign portion of transmission costs directly to data center operators.

The Virginia State Corporation Commission ordered Dominion Energy to amend its line extension policy to require mandatory Customer-Owned Interconnection Agreements (CIACs) for defined types of transmission facilities, with the proposed amendments to be filed in a new docket within 90 days of the final order.

The SCC's action addresses how transmission costs are allocated across customer classes. Under the order, the minimum demand adjustment decreases the residential class's allocation factor by 2.84% while increasing the GS-4 rate class's allocation factor by 4.33%. Dominion's GS-4 rate class covers large commercial or industrial customers that demand at least 500 kilowatts and receive power directly from the grid.

Dominion spokesperson Jeremy Slayton told Utility Dive: "Under the SCC's oversight, we already have among the strongest protections in the country to prevent data center driven costs from being borne by our residential customers. When we file our amended line extension policy, we will be adding even more protections for our residential customers to ensure our more energy intensive customers continue to pay their fair share."

Michael Barber, a senior energy infrastructure policy analyst with The Piedmont Environmental Council, called the SCC's decision a "huge step in the right direction." He noted that the case moved quickly—the proceeding lasted just 90 days—which constrained the depth of analysis the commission could undertake. "I think the order that the commission made was probably the most in-depth they could go into direct assignment," Barber said. "What the commission didn't do was define any other classes of transmission projects that would also be primarily caused by a given data center or multiple other data centers, and order Dominion to develop direct assignment procedures for those projects."

Looking ahead, the SCC indicated it may use the new docket to consider whether the amended policy could be extended to higher-level, upstream transmission costs, as well as the merits of a blended approach that would directly assign those costs to Dominion's proposed GS-5 rate class for energy users requiring 25 megawatts or more.

Major hyperscaler companies including Google and Amazon testified during the SCC's hearings and requested voluntary CIACs, but the commission ruled that the payments must be mandatory. Barber anticipates that Virginia will serve as a "bellwether, or canary in the coalmine" for these cost allocation issues nationwide, with "a lot of eyes" watching Dominion's upcoming filing.