Key facts
- Dominion's fuel costs in Virginia have increased by 88% since 2021.
- The utility expects to purchase 23% of its energy from the wholesale market, up from 14% in 2021.
- Average monthly bills could increase by up to 13% to $195 due to fuel costs.
- Governor Abigail Spanberger plans to intervene in Dominion's merger review with NextEra Energy.
- Dominion's $11.7 billion offshore wind project is expected to save customers $5 billion over its first 10 years.
Dominion's fuel costs in Virginia have surged by nearly 90% over the past five years, driven by escalating demand from the state's booming data center market. This increased reliance on the volatile wholesale electricity market, operated by PJM Interconnection, is raising concerns about higher power bills for residential customers.
Virginia Electric, a unit of Dominion Energy, forecasts fuel expenses of $4.35 billion through June 2027, an average of 3.95 cents per kilowatt hour, an 88% increase from 2021. The utility expects to source 23% of its energy from the wholesale market, up from 14% in 2021. This exposure means Dominion faces potential price spikes, with spot prices sometimes reaching thousands of dollars per megawatt hour.
Governor Abigail Spanberger has announced her intention to intervene in the regulatory review of NextEra Energy's proposed $66.8 billion merger with Dominion, aiming to secure commitments on power bill affordability, job protections, and clean energy investments. Staff at the Virginia State Corporation Commission noted that significant load growth from data centers is increasingly exposing Dominion to the wholesale market's volatility.
While Dominion and the data center industry argue that data centers are paying their fair share and not causing residential bill increases, consumer advocates and lawmakers contend that the costs are being spread too broadly. Dominion executives highlighted that its $11.7 billion offshore wind project is projected to save customers approximately $5 billion over its first decade of operation, serving as a hedge against market prices.