Virginians to pay more for electricity after state approves Dominion Energy rate hikes
VENN
RICHMOND, Va. (WRIC) -- Virginians will be paying more for energy starting in 2026 following state approval of rate hikes for Dominion Energy customers.
On Tuesday, Nov. 25, as part of Dominion Energy's biennial review, the Virginia State Corporation Commission (SCC) -- which regulates many businesses and economic interests in the Commonwealth -- approved rate increases for all Dominion Energy customers.
The typical residential customer will see a $11.24 increase in their power bill in 2026 and a further $2.36 increase in 2027, per a SCC press release.
This is a smaller increase than initially proposed by Dominion Energy, the SCC said. These rate hikes will provide a combined $565.7 million in additional revenue in 2026 and $209.9 million in 2027, rather than the respective $822 million and $345 million Dominion Energy asked for.
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“As the utility regulator, we are obligated by law to set a revenue requirement that affords the Company an opportunity to recover reasonable and prudent projected costs and earn a reasonable rate of return," the SCC said in the release. "In this case, that has resulted in an increase in rates, but not to the extent requested by Dominion.”
In addition to these base rate increases, the SCC also approved the creation of a new "GS-5 rate class," which will include customers that demand 25 megawatts of energy or more.
This rate class wouldn't include the vast majority of typical households. Per the U.S. Energy Information Administration, the average American household in 2022 used just under 11,000 kilowatt-hours yearly, or about 11 megawatt-hours.
Instead, this rate class will encompass high-energy users like data centers.
"To help insulate ratepayers from the costs around the rapid build-out and construction of infrastructure to support businesses such as data centers, certain large-scale customers will be required to pay a minimum of 85% of contracted distribution and transmission demand and 60% of generation demand, among other requirements," the SCC said in the release.
Virginia is considered the data center capital of the world, as it has the highest concentration of data centers globally. As of late 2024, nearly 150 were already up and running in the Commonwealth -- but in just the last few months, several new projects have been announced, including in Caroline County, Chesterfield County and Powhatan County.
In December 2024, the Joint Legislative Audit and Review Commission (JLARC) reported that data centers demand unprecedented amounts of power and that their continued development throughout the Commonwealth will undoubtedly put severe strain on Virginia's power grid.
JLARC added that, as data centers continue to demand more and more energy, their costs will surely trickle down to Virginians.
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“A typical residential customer of Dominion Energy could experience generation- and transmission-related costs increasing by an estimated $14 to $37 monthly in constant (or real) dollars by 2040 (independent of inflation),” JLARC said in its report.
For more information on the SCC's decision in this case, click here.
