Virginia data center boom pushes Dominion deeper into costly power market

• Dominion's fuel expenses jumped from $2.31 billion (2.59 cents/kWh) in 2021 to a projected $4.35 billion (3.95 cents/kWh) through June 2027, an 88% increase
• Wholesale market electricity costs 6.28 cents/kWh compared to less than 1 cent/kWh for nuclear fuel, exposing customers to spot prices that can reach thousands of dollars per megawatt hour during extreme weather
• Virginia regulators and consumer advocates argue data center load growth unfairly spreads costs to residential customers, while Dominion claims its $11.7 billion offshore wind project will save customers $5 billion over 10 years

Summary

Key Development: Dominion Energy's Virginia operations face surging fuel costs driven by explosive data center growth, raising concerns about residential customer bill impacts and the proposed $66.8 billion NextEra Energy merger.

Critical Figures:

• Fuel costs have risen 88% since 2021, from $2.31 billion (2.59 cents/kWh) to a projected $4.35 billion through June 2027 (3.95 cents/kWh)
• Virginia Electric's reliance on PJM wholesale market purchases jumped from 14% (2021) to 23% of energy supply
• Wholesale electricity costs 6.28 cents/kWh versus nuclear fuel at less than 1 cent/kWh
• Average monthly customer bills could increase 13% to $195 from $173, or 5% if bond financing defers costs
• Dominion serves 2.7 million homes and businesses in Virginia

Market Context: Virginia hosts the world's largest data center market, with AI-driven electricity demand creating unprecedented power requirements. PJM Interconnection's wholesale market serves 67 million people across a region spanning Washington, D.C. to Chicago, where spot prices can spike to thousands of dollars per megawatt-hour during extreme weather.

Political Implications: Governor Abigail Spanberger is intervening in the NextEra-Dominion merger review, demanding commitments on affordability, jobs, and clean energy. Regulators and consumer advocates argue data center costs are unfairly spread across residential customers, though the industry disputes responsibility for bill increases.

Mitigation Strategy: Dominion claims its $11.7 billion offshore wind project will generate approximately $5 billion in customer fuel savings over 10 years. The company emphasizes expanding owned generation capacity to hedge against volatile wholesale market exposure.