State regulators outline path for handling rising power demand from data centers

Members of a Virginia Senate subcommittee heard from State Corporation Commission officials on Jan. 27 about how the agency is evaluating the impacts of rapid data-center growth on the electric grid and on non-data-center customers.

The nut graf: SCC staff said the commission already has regulatory tools — including biannual fuel-and-cost review proceedings and an ongoing technical conference — to consider whether data centers should be treated as a distinct customer class and to allocate costs so other customers are protected.

At the hearing, Kim Pate of the State Corporation Commission said, “The Commission regulates the rates of electric utilities,” and listed the commission’s routine duties: biannual reviews, fuel-recovery cost cases, rate-adjustment clauses and reviews of integrated-resource plans and transmission projects. She told senators the SCC convened a technical conference on Dec. 16, 2024, to take public comments related to increased demand from data centers.

Brian Pratt, also with the commission, said customer classification varies by utility and that Dominion Energy largely serves large data centers in a tariff class known as GS‑4, “which is comprised of nonresidential customers with an electric demand greater than 500 kilowatts.” He added that the GS‑4 class also includes large manufacturers and other industrial customers.

On the question of whether the SCC can create a separate rate class for data centers without new legislation, Pratt said the commission “currently review[s] customer class information and analysis as part of its regular biannual review proceedings” and that the March 31, 2025, biannual filing by Dominion is the next opportunity to address classification.

The subcommittee asked about regional grid planning and reliability. David Esa of the commission explained PJM Interconnection’s role: PJM conducts a regional transmission expansion plan that identifies system needs and recommends transmission projects; transmission owners then build the projects. Esa told the panel that PJM “does not, to my knowledge, have special responsibilities when it comes to transmitting power to data centers” beyond its regional planning process.

Senators pressed staff on protections for existing customers as large new loads arrive. Esa and Pratt described layered protections: PJM’s regional planning and the utilities’ distribution planning processes address reliability at different levels of the system. Pratt also said cost allocation is regulated: “the State Corporation Commission … does have the authority to ensure that costs are properly allocated to all the customers as appropriate.”

On timing, Pratt said the SCC expects the next Dominion biannual review filing on March 31, 2025, and that the commission intends to issue a final order in the related proceeding before the next General Assembly session.

Why it matters: Virginia’s recent surge of data‑center projects is increasing local and regional electric demand and triggering new transmission and generation planning questions. The committee’s briefing framed the SCC’s existing authorities and the near-term procedural milestones that will shape outcomes for rate design and cost allocation.

What the SCC will do next: commissioners will consider technical‑conference feedback in upcoming biannual review dockets; the subcommittee and several senators signaled interest in monitoring the issue and in possible additional legislation depending on what the SCC proposes.

Ending note: The SCC witnesses repeatedly emphasized that many of the regulatory questions the committee raised are already within the commission’s existing dockets and review processes and that forthcoming filings this spring should give the agency the record it needs to act.