Rappahannock Electric outlines plan to separate large data‑center loads from member rates

Rappahannock Electric Cooperative officials told the Madison County Board of Supervisors they are pursuing legal and rate changes intended to keep costs for residential and small‑business members separate from very large electricity customers such as hyperscale data centers.

The cooperative’s director of government affairs, Lindsay Watson, told the board REC is “growing, and I want to provide you with an update,” and described a two‑track strategy: create a wholly owned affiliate to buy power on the wholesale market for large customers and file a dedicated tariff to recover costs from those customers rather than from REC’s traditional membership.

Why it matters: REC serves parts of multiple Virginia counties that include Madison County. Board members pressed REC on how rapid data‑center growth could affect reliability and price for local customers. REC said separating large loads into a subsidiary and a dedicated tariff would allocate the costs of delivery, construction and transmission to those facilities and reduce the risk that non‑participating members would underwrite a large customer’s infrastructure or a payment default.

Key facts and process: Watson said REC serves about 180,000 accounts and that the co‑op has seen interest equal to thousands of megawatts beyond its historic peak. REC Chief Financial Officer Steven Roddy said, “it took us 100 years to get to 180,000 members,” and described filings REC has made at the State Corporation Commission (SCC). REC has: (1) formed Hyperscale Energy Services as a wholly owned affiliate; (2) had an operating services agreement (OSA) between REC and Hyperscale approved on Feb. 17; and (3) filed a Large Power Dedicated Facility (LPDF) tariff with the SCC on March 12. The LPDF proposal would apply to individual loads above 25 megawatts with high capacity factors and base charges on installed capacity and substation costs rather than solely on energy usage.

Financial protections REC described include up‑front contributions in aid of construction for substations, collateral or other financial assurances for transmission charges, and contracting (energy services and power services agreements) that would pass wholesale market purchases through the affiliate and onto the customer. REC said those mechanisms are intended to ensure the cost of new substations, redundancy and operating and maintenance expenses are borne by the large customer rather than diluted across the membership.

Unresolved items: The LPDF tariff is under SCC review and REC staff said they are responding to questions. Board members asked how additional demand will be met regionally; REC referenced PJM planning and ODEC (its generation/wholesale partner) and said new generation and transmission will be required across the PJM footprint. REC also told the board that the Virginia Clean Energy Economy Act does not directly bind cooperatives under the same procurement requirements as investor‑owned utilities, but REC will procure in the market and thereby inherit the market’s resource mix.

Local context and next steps: REC urged communities to use the SCC public comment period if they want to weigh in on the LPDF tariff; REC said the law enabling cooperatives to use a subsidiary to serve very large loads was passed this year and signed by Governor Youngkin and becomes effective in July. The board did not take formal action during the meeting; REC fielded questions and offered to provide further details to county staff.

Ending: REC officials said they will continue to engage the SCC process and to brief local governments; Madison County supervisors said they would track the filings and consider whether to submit comments during the SCC public comment period.