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The SCC serves up a nothingburger

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Dominion Energy headquarters, Richmond, VA

When Dominion Energy Virginia filed its latest integrated resource plan (IRP) last fall, critics (including me) complained that the company failed to lay out a cost-effective approach that would meet soaring energy demand from data centers while complying with Virginia’s decarbonization mandate. We hoped regulators at the State Corporation Commission would reject the IRP and demand better of our largest utility.

Instead, they chickened out. 

The SCC’s final order, issued July 15, is short but not really to the point. The order finds Dominion’s IRP “legally sufficient,” while citing previous SCC orders for the proposition that “acceptance” doesn’t mean approval “of the magnitude or specifics of Dominion’s future spending plans.” It would be hard to imagine a less enthusiastic endorsement, and the lack of analysis leaves advocates wondering, where’s the meat?

It’s true that an IRP is “only” a planning document; it doesn’t commit a utility to carrying out the plan, and the SCC still has to approve any project the utility decides to move forward with. But the point of the exercise is to ensure utilities are on the right track; that their demand projections are on target and their plans for meeting demand are realistic, cost-effective and comply with all relevant laws. This needs discussion and analysis, not merely an up-or-down vote.

Admittedly, the SCC has a long history of approving lousy IRPs while directing Dominion to do a better job the next time. That was the case here, too, with the order directing Dominion to do a few things differently in its next IRP, due in the fall of 2026. 

First, the SCC wants to see a 20-year timeline instead of the 15-year period that Dominion used this year, which is all the law requires. It’s an obvious ask, even apart from the fact the SCC cites that the regional grid operator PJM uses a 20-year planning window. A better reason is that we are just 20 years away from Dominion’s 2045 deadline for full decarbonization under the Virginia Clean Economy Act (VCEA), and anything the utility does now will have consequences extending out to that deadline. 

The SCC also neglected to mention that using just a 15-year window, and omitting the 25-year planning period that Dominion included in previous IRPs, allowed the company to avoid showing the economic consequences to consumers of spending money for fossil fuel generation that either will shut down or may become economically obsolete by 2045, long before the plants are paid off. If Dominion thinks it can justify sinking customers’ money into assets it knows will become stranded, we all deserve to see the rationale. 

The order also directs Dominion to include in its modeling at least one pathway that complies with the requirement of the VCEA that carbon-emitting facilities (including any new gas plants) be retired by 2045. This goes beyond obvious: the lack of a VCEA-compliant plan should have prompted the SCC to reject the IRP outright. 

But of course, Dominion claims new gas plants are needed for reliability, which would make them legal under the VCEA in spite of their carbon emissions and questionable long-term viability. Reliability is a red herring, as I’ve argued, and other parties to the IRP case modeled how Dominion can meet demand without building new fossil fuels. Dominion should have been required to prove its case.

But here again, the SCC chose not to engage on the issue. Requiring Dominion to do better next time is as far as it is willing to go. This is unfortunate, but the silence can’t last: in March, Dominion filed for approval of the first of its planned new gas plants. The SCC will have to address need and reliability to make a decision in that case, and it would have been better for all concerned if it had grappled with these questions now.

The order falls short in other ways, as well. While the SCC expresses concern about forecasted rate increases, it doesn’t even mention the data centers that are driving the problem. 

This is astonishing; even before Dominion filed its IRP last fall, the commission ordered the company to supplement the record with an analysis of data center impacts. When Dominion did so, it became clear that all of the load growth (and likely, much of the projected rate increases) results from this one industry. It’s beyond strange that the SCC does not even mention the supplement it ordered, or discuss whether Dominion’s duty to serve truly prevents it from protecting existing customers.

The order also accepts Dominion’s argument that it had to artificially limit the amount of low-cost solar it could include in its modeling, due to the increased difficulty of siting solar projects in Virginia. It’s true that many rural counties have been denying permits to solar projects, even as they approve data centers. But I’ve also heard a Dominion lobbyist tell legislators that permit denials have not been a problem for the company, an assertion that may have persuaded some legislators to vote against bills that would make solar siting easier. It appears Dominion tells legislators one thing and the SCC another. 

The SCC’s order contains a few other requirements for the next IRP, mostly things that really should have been included in this one. The IRP should model Virginia’s return to the Regional Greenhouse Gas Initiative, reflecting a Virginia court’s ruling that Gov. Glenn Youngkin’s withdrawal was unlawful. The IRP should assume Dominion achieves the energy efficiency targets that the SCC itself established for the company. Dominion should include an analysis of impacts on base rates and should share its modeling with utility watchdog Clean Virginia, as well as run modeling based on SCC staff inputs. Long-duration storage, a maturing technology that can replace gas combustion turbines, should be included in the next modeling.

“Do better next time” is a well-worn directive from the SCC to Dominion, but it is deeply disappointing at a time when Virginia is facing an unprecedented surge in demand from data centers and accompanying increases in utility rates. 

It’s disappointing in another way, too: this is the first major ruling from the SCC since two new judges were added to the three-member commission, and all three were appointed by a Democratically-controlled Senate. If there was ever a time for the SCC to get tough with Dominion on its climate obligations, this should have been it. 

No doubt, the problem lies in Dominion’s influence over the entire process. The utility doles out exceedingly generous campaign donations to members of both parties, so the company retains influence no matter who is in power. Not only does this give Dominion sway over who is appointed to the SCC, but commissioners have to be mindful that getting reappointed at the end of their six-year terms depends on how satisfied these Dominion-backed senators are with their rulings. 

As long as Dominion is allowed to shower senators with unlimited campaign cash, the SCC will never be free of the utility’s pernicious influence. 

Meanwhile, though, Dominion’s poor performance, and the SCC’s unwillingness to call it out, demonstrate the necessity of the comprehensive IRP reform legislation that the governor vetoed this spring. The Commission on Electric Utility Regulation is already working on similar legislation for the next session. 

Passing the IRP reform bill may not inject the SCC with greater courage, but it will ensure the commission, and the public, get a fuller look at the facts.

This article was originally published in the Virginia Mercury on July 21, 2025.

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Let’s hear it for the losers!

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In Wise County earlier this month I met the candidate daring enough, or foolish enough, to run against the most powerful Republican member of Virginia’s House of Delegates. 

When I walked into the community center in Norton, where I was to give a presentation at the invitation of the Clinch River Coalition, I found a volunteer wrangling wires to plug in the audio equipment. He was introduced to me as Josh Outsey, the man who had taken on the thankless job of Democratic challenger to Del. Terry Kilgore, R-Scott, in this fall’s election. 

Before I could stop myself, I laughed. Terry Kilgore has been in the House for 31 years, and ran unopposed in the last three elections. A politically powerful member of a politically powerful family, Kilgore represents a district that’s over 92% White and voted 83.1% for Donald J. Trump. The 63-year-old lawyer was recently elected House Republican leader.

Joshua Outsey (pronounced OOT-see), 38, is a Black actor, singer and community organizer. As of June 5, Kilgore had raised $469,509, according to the Virginia Public Access Project. Outsey had raised $200. 

Outsey gives a respectable pitch for his candidacy, grounded in both experience and policy. If this were a contest for a seat in a more balanced district, I’d have no business being amused. But no one, least of all Outsey, is under any illusions that he can unseat Kilgore. 

Still, I am filled with admiration. It is one thing to say that democracy works best when voters have choices, and quite another to agree to make yourself that choice against impossible odds. 

I’ve seen up close what even a hopeless campaign can require. A couple or three decades ago, my friend Tom Horton ran for Congress against a well-funded Republican incumbent who was firmly entrenched in Virginia politics. Tom had no trouble securing the Democratic nomination – nobody else wanted it – but he didn’t have money for a staff, and he needed a policy director. I was at home with young children and glad for the mental stimulation, so I signed on. 

Unburdened by any real prospect of success, I had a great time writing position papers based largely on my own opinions. Every once in a while, I would stop and ask myself, “I wonder what Tom thinks about this?” then shrug and plunge on. Very occasionally, Tom would balk at a position I proposed he take, and then we would talk it out.

But mostly, he didn’t have time for that. Poor Tom spent every day of the campaign on the phone trying to raise money. In the evenings he knocked on doors. If he was lucky, sometimes he was interviewed on the radio or got a quote in the paper. It was an uphill slog all the way, and none of it mattered. He lost by about the same wide margin that polls had shown him losing by at the outset of the campaign. 

He had to be disappointed, but Tom told me he loved every minute of it and would run again in a heartbeat, if he didn’t have a family to support.

Maybe this is why I have a special place in my heart for underdogs. People like Tom who try, knowing they are likely to fail, and then indeed do fail, only to pick themselves up and say it was worth it anyway – they are heroes to me. Winners are dull by comparison. 

Outsey is far from being the only sacrificial lamb this election. Democrats are fielding candidates in every House race this fall, including other long-shot seats like those held by Will Morefield, another coalfields delegate who won in 2023 with 85% of the vote, and Minority Leader Todd Gilbert, who won his Shenandoah Valley district by more than 77%.

Republicans are not similarly contesting every seat, but some are taking on Democratic incumbents even in deep blue districts, including a few who are making a repeat appearance on the ballot.

These include retired technology professional Kristin Hoffman, who is challenging McLean Democratic Del. Rip Sullivan for the second time, in spite of losing by 23 points in the last election. A few miles to the east, in another Fairfax County district that voted overwhelmingly for Harris over Trump last fall, retired federal worker Ed McGovern will face Del. Kathy Tran for a third time. He lost by 20 points in 2021 and 30 points in 2023.  

I was unsuccessful in trying to reach these folks, so I don’t know their motivations. Regardless, I salute them.

Running against impossible odds can serve a purpose beyond dedication to the democratic process. Democrat Melody Cartwright told a Cardinal News reporter that she sees running for a second time against Del. Eric Phillips, R-Henry, after losing in 2023 by 40 points, as a way to support Abigail Spanberger’s gubernatorial campaign. She added candidly that forcing Republicans to spend money to defend Phillips’ seat would leave them less money to attack Democrats elsewhere.

Running for office with no expectation of winning can also be a tactic for raising awareness of a neglected cause, as many a Green Party candidate can attest. My colleague at the Mercury, Roger Chesley, recalls a candidate by the name of Gail Parker who ran for various local, state and federal offices seven times between 2006 and 2019. Calling herself “Gail for Rail,” she campaigned on the single issue of promoting light rail. A 2007 Washington Post headline snarkily called her a “One-Track Candidate.” Fair enough, but the record will reflect that Metro now extends out to Loudoun County. 

Deep in the heart of every candidate, of course, is the hope that lightning may strike. The opponent might stumble badly enough, or voters suddenly realize that who they wanted all along was someone just like the scrappy upstart, leading to an upset victory. 

It has happened. In a 2014 primary, libertarian college professor David Brat defeated Congressman Eric Cantor, the House Majority Leader at the time, in an upset that shocked the political establishment and gave hope to long-shot candidates everywhere. Brat won the general election, too, and served two terms.

Brat’s win over Cantor, followed by his loss to a Democrat in 2018 – to Abigail Spanberger, as it happened – demonstrates a final point: the political winds can shift suddenly, and when it happens, the people who benefit are the ones who’ve got their sails ready. 

Democrats have been able to field so many candidates this year because they sense such a shift coming as part of a backlash to the Trump presidency. Republicans say otherwise. Still, no matter which party wins control this fall, the outcome won’t help the longest of long-shot candidates. 

But that’s okay. Just running is a win for democracy.

This article was originally published in the Virginia Mercury on June 30, 2025.

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The war on woke…energy?

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I’ve been thinking a lot about language lately, and the strange way words that used to mean good things are now attacked as bad, and vice-versa. Diversity, equity and inclusion are radioactive. Mentioning environmental justice or climate change will get your federal program canceled. Coal is clean, even beautiful, and pointing out the connection to global warming makes you an alarmist, because speaking up when your government steers you towards disaster is now a bad thing to do. 

Recently I received an email excoriating “woke” energy policy, which seemed especially curious. I can see how awareness of historic racial injustice against Black people might nudge policy makers into greater support for renewable energy, given that pollution from fossil fuels tends to have a disparate impact on communities of color. But judging from the hostile tone of the email, I believe we may have different understandings of wokeness.  

Sometimes, though, words mean different things to different people without anyone realizing they aren’t using the same definition. That may be the case when Virginia leaders talk about the reliability of the electricity supply. Everyone agrees reliability is critical – but they may not be talking about the same thing.

Virginia’s need for power is growing at a terrific pace. Data centers consume so much electricity that our utilities can’t keep up, causing them to increase imports from out of state. That’s okay for now; West Virginia is not a hostile foreign nation. Also, Virginia is a member of a larger grid, the 13-state (plus D.C.) PJM Interconnection, which manages thousands of generating facilities to ensure output matches demand across the region. But even across this wider area, demand is increasing faster than supply, pushing up prices and threatening a shortfall. Unless we tell data centers to go elsewhere, we need more generation, and fast.

Democrats and Republicans are divided over how to increase the power supply. Democrats remain committed to the Virginia Clean Economy Act, which requires Virginia’s electricity to decarbonize by 2050. Meeting the VCEA’s milestones requires investments in renewable energy and storage, both to address climate change and to save ratepayers from the high costs of coal and fracked gas. 

Gov. Glenn Youngkin and members of his party counter that fossil fuels are tried-and-true, baseload sources of energy. They advocate abandoning the VCEA and building more gas plants, arguing that renewable energy just isn’t reliable. 

Note that these Republicans are not alarmists, so they ignore climate change. If they were the proverbial frog in a pot of water on the stove, they would consider it a point of pride that they boiled to death without acknowledging the reason.

Youngkin takes every chance he gets to slam the VCEA. As I’ve previously described, the governor sought to amend various energy-related legislation to become VCEA repeal bills, regardless of the original subject matter or how much good it could do.

Last month, Youngkin’s Director of the Department of Energy sent a report on performance-based utility regulation to the State Corporation Commission. With it was a cover letter that had nothing to say about performance-based regulation, but a lot to say about the big, bad VCEA. The letter insists that “By all models, VCEA is unable to meet Virginia’s growing energy demand” and urges the SCC to “prioritize ratepayer affordability and grid reliability over long-term VCEA compliance.” 

Unfortunately for the Youngkin administration, affordability hasn’t been an argument in favor of fossil fuels for many years now. A new solar farm generates a megawatt of electricity more cheaply than a new fossil gas plant, and that will still be true even if Congress revokes renewable energy subsidies – though doing so will make electricity less affordable. 

The argument from fossil fuel defenders then becomes that the cheapest megawatt is not a reliable megawatt. And that’s where meaning matters.

Reliability is so important that even the decarbonization mandate of the VCEA contains an important exception: a utility can build fossil fuel generation under certain circumstances, if it is the only way to keep the lights on. 

Dominion Energy is relying on this escape clause as it seeks regulatory approval to build new fossil gas combustion turbines on the site of an old coal plant in Chesterfield. The move is opposed by local residents, environmental justice advocates and climate activists. (No word on whether they are alarmists or simply alarmed.) They argue Dominion hasn’t met the conditions set out in the VCEA to trigger the escape clause, including achieving energy efficiency targets and proving it can’t meet its needs with renewable energy, energy storage and demand response programs.

Virginia Republicans not only side with Dominion on this, they increasingly favor building gas plants over renewables as a general matter, urging the reliability point. It’s an argument that never made much sense for me, given that renewables make up only 5% of PJM’s electricity. That’s way less than the national average of over 21%, and other grids aren’t crashing right and left. 

The light bulb went off for me while I was watching the May meeting of the Commission on Electric Utility Regulation. A PJM representative showed a chart of how the grid operator assigns numbers to different resources according to how they contribute to the electricity supply. Nuclear plants get the highest score because they run constantly, intermittent wind and solar sources get lower scores, with fossil fuel plants in the middle. PJM calls that a reliability score.

For some Republicans, that’s a slam-dunk: the chart proves renewable energy is unreliable. But in spite of its label, the chart doesn’t actually measure reliability; it gives points for availability, which is not the same thing. 

As I once heard a solar installer testify, few things are as reliable as the sun rising every morning (or rather, the earth rotating). With modern weather forecasting, grid operators can predict with great precision how much electricity from solar they can count on at any given time from solar facilities arrayed across the region. Solar energy is highly reliable, even though it is not always available. Add storage, and the availability issue is also resolved.

Obviously, the grid would not be reliable if solar were the only resource operators had to work with. But it isn’t. PJM calls on a mix of different sources, plus storage facilities and demand response, to ensure generation precisely matches the peaks and valleys of demand. Reliability is a matter of keeping resources in sync and ensuring a robust transmission and distribution system.

The threat to reliability today comes from the mad rush to connect new data centers. PJM has been roundly criticized for not approving new generating and storage facilities’ connection to the grid at a fast enough pace to keep up with the increase in demand and retirements of old, money-losing fossil fuel plants. Scrambling to recover, recently it decided to prioritize a smaller number of big, new gas plants over the thousands of megawatts of renewable energy and storage still languishing on its waiting list. 

Meanwhile, PJM wants utilities to keep operating coal plants even though it will make electricity less affordable and violate state climate laws. In this it is joined by the Trump administration, which wants to require utilities to keep running coal plants explicitly to support the coal industry. 

Analysts say this is the wrong way to achieve reliability. A recent report from the consulting firm Synapse estimates that PJM’s approach will raise residential electricity bills by 60% by 2036-2040. By contrast, reforming its interconnection process and enabling more renewable energy and storage to come online would lower bills by 7%. By Synapse’s calculation, Virginia would see the most savings of any state. 

In other words, Virginia Republicans are pursuing reliability the wrong way. Instead of pressuring Democrats to back away from the VCEA, they ought to be pressuring PJM to reform its approach. Reliable power doesn’t have to be expensive, if you take the politics out of it.

This article was originally published in the Virginia Mercury on June 3, 2025.

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Utility efforts to undermine rooftop solar meet stiff opposition from Virginia customers

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Photo courtesy of Solarize Blacksburg

Virginia’s investor-owned utilities thought 2025 would be the year they put an end to net metering – and with it, rooftop solar installers’ modest competition with their monopoly.. The 2020 Virginia Clean Economy Act (VCEA) removed many barriers that residents and businesses installing solar panels under the state’s net metering law had faced, but it also called for the State Corporation Commission to reevaluate the program, beginning right about now. 

 Not surprisingly, Dominion Energy and Appalachian Power are seizing this opportunity to push for changes that would undermine the economic calculus supporting customer-owned solar.  

Since at least 2007, Virginia law has required that customers of Dominion and APCo who have solar panels on their property be credited for surplus electricity they supply to the grid at the same retail rate they pay for electricity. The credit is applied against the cost of the electricity the customer draws from the grid at times when the panels aren’t generating, reducing what they owe on their electric bill. 

But now that they have the chance, both utilities have filed proposals to end net metering. Both essentially propose to charge new solar customers the full retail rate for the electricity they draw from the grid (with Dominion using a more complicated half-hour “netting”), but compensate them for electricity fed to the grid only at the utility’s “avoided cost,” or what it pays to buy electricity from other generators. By law, existing customers and new low-income customers with solar would be unaffected.

APCo calculates avoided cost as the wholesale cost of energy and capacity, plus transmission and ancillary services, for a total of less than 5 cents per kilowatt-hour. Thus, a homeowner with solar panels would now pay the full retail rate of about 17 cents/kWh for electricity drawn from the grid, while being credited at less than one-third that amount for electricity put back on the grid. 

Dominion’s approach instead pegs avoided cost to what it pays for solar generation and associated renewable energy certificates (RECs) bought from certain small producers under power purchase agreements, an average of about 9.5 cents/kWh. Dominion’s residential rate currently averages about 14 cents/kWh, but would go up to more than 16 cents if its latest rate increase request is granted.

The VCEA gave APCo the first swing at the piñata. APCo filed its proposal in September, and the SCC will hold an evidentiary hearing on May 20. Dominion only filed its petition last week, and no hearing date has been set yet. 

Not surprisingly, APCo’s proposal generated fierce opposition from advocates and solar installers. They point out that it’s hard enough to make the economics of home solar work with net metering at the retail rate; slashing the compensation for electricity returned to the grid by more than one-third, as Dominion proposes, or two-thirds, as APCo wants, would make solar a losing proposition for most homeowners. Maybe economies of scale and other factors would allow the market for commercial solar to survive under Dominion’s program, though Dominion’s insistence on confiscating customers’ RECs won’t make anyone happy.

If solar owners definitely lose under APCo’s plan, advocates say other ratepayers don’t necessarily win. A homeowner’s surplus generation travels only the short distance to the nearest neighbor, lessening the need for the utility to generate and transmit power to meet the neighbor’s demand. Since the utility charges that neighbor the regular retail rate for the electricity, without having to bring it from somewhere else, the utility saves on transmission costs. On top of that, the surplus solar comes in during the day, when demand is typically higher than at night and electricity is more costly, making solar more valuable to the utility. Plus, it is clean and renewable, and the customer bears all the cost and risk of the investment.

Utilities do not share this rosy view. By their way of thinking, solar customers use the grid as free energy storage and backup power, without paying their fair share of grid costs. Not only does this deprive the utility of revenue, but those grid costs now have to be spread out among the remaining customers. This, they say, creates a cost shift from solar owners to everyone else. 

More than a decade ago, Virginia took tentative steps towards resolving the dispute, with the Department of Environmental Quality setting up a stakeholder group to work towards a “value of solar” analysis. The process was never completed — the utilities walked away from the table when it appeared the results weren’t going to be what they wanted, and the group’s work product did not include numeric values or policy recommendations. 

Virginia is hardly alone in navigating these clashing narratives. 

Other states and regulators have arrived at very different conclusions as to the “correct” value of distributed solar to utilities, ratepayers, and society as a whole. States like Maryland kept net metering after a value of solar analysis concluded the benefits outweighed the costs. On the other hand, California famously ended its net metering program in 2022 when solar comprised almost 20% of electricity generated in the state and created a mid-day surplus without enough storage to absorb it; at the time, 45% of that solar was distributed. That same year, however, Florida Gov. Ron DeSantis vetoed an unpopular bill that would have phased out net metering in the state.

The experience of other states, combined with an abundance of research and analysis conducted over the years, gives the SCC a lot to work with as it considers the fate of net metering for APCo’s customers this year, and later for Dominion’s.

Countering the arguments of the utility’s hired witnesses, solar industry and environmental organizations have weighed in on the APCo docket with testimony from experts with nationwide experience. The experts pointed out a range of errors and omissions in the utility’s work product. They also presented their own benefit-cost analyses demonstrating a value for distributed solar in excess of the retail price of electricity, using tests often applied to energy efficiency and demand-response programs.

Perhaps even more significantly, SCC staff also filed an analysis that found many of the same problems with APCo’s proposal, including failures to comply with statutory requirements. The staff report did not include a quantitative analysis, but it urged the importance of considering benefits that APCo had ignored. Like the intervenors, staff recommended the commission reject APCo’s plan and retain its net metering program as it is, at least for now.  

Although the staff report would seem likely to carry weight with the commissioners, it’s never easy to predict what the SCC will do in any case before it. But in Virginia, unlike California, distributed solar makes up vanishingly little of total electric generation. Even taking the utilities’ arguments at face value, it seems foolish to upend this small but important market to remedy a perceived harm that is, at least for now, more theoretical than real. 

This article originally appeared in the Virginia Mercury on May 8, 2025.

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Will special rate classes protect Va. residents from the costs of serving data centers?

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Data center between housing community and a bike path
A data center in Ashburn, Virginia. Photo by Hugh Kenny, Piedmont Environmental Council.

For the past few years, observers have been warning that the huge surge in demand for electricity to serve data centers will mean higher electricity bills. In its December 2024 report on data centers in Virginia, the Joint Legislative Audit and Review Commission (JLARC) confirmed projections that the increased demand for power and the need for new infrastructure to serve data centers would raise rates for everyone, not just the data centers. 

Right on cue, on March 31 Dominion Energy Virginia filed a request with the State Corporation Commission to increase the rates it charges to all customers. If granted, the increase would amount to an additional $10.50 on the monthly bill of an average resident. In a separate filing on the same day, Dominion asked to increase residents’ bills by another $10.92 per month to pay for higher fuel costs.  

Either out of a monumental failure to read the room, or because Dominion executives feel they might as well be hung for a sheep as a lamb, the rate filing also asks for an increase in the company’s authorized rate of return, from 9.7% currently to 10.4%.

But it’s not all bad news. Along with the rate increase request, Dominion filed a proposal to create a new rate class for large-load customers like data centers. The move coincides with enactment of new legislation requiringthe SCC to examine whether electric utilities should separate data centers into their own rate class to protect other customers, something the SCC was in fact already doing. 

And Dominion is not alone. Virginia’s other major investor-owned utility, Appalachian Power, filed a similar proposal on March 24, following onefrom Rappahannock Electric Cooperative (REC) on March 12. The proposals reflect a growing consensus that ordinary residents should not be forced to bear the cost of building new infrastructure needed only because of data centers. Moreover, if data centers close up shop before the costs of the new infrastructure are fully paid for, residents should not get stuck paying off these now-stranded assets.  

In Dominion’s case, there is good reason to worry. In the first day of testimony at the SCC regarding the company’s 2024 Integrated Resource Plan (IRP), a Dominion witness admitted that of the $7.6 billion worth of planned new transmission infrastructure listed in the IRP, residential customers will pay 55%, including for infrastructure that serves only data centers. 

It’s not immediately clear how much setting up a new rate class for data centers will change that outcome. Dominion proposes creating a new large-load class for customers using at least 25 MW at capacities of 75% or more (meaning that they have a consistently high level of electricity use, as data centers do). These customers would be subject to a number of new requirements, including posting collateral and paying for the substation equipment that supplies them. They would also have to sign 14-year contracts (including an optional 4-year ramp-up period) obligating them to pay for the greater of actual electricity use or 60% of the generation and 85% of the transmission and distribution capacity they sign up for, even if they use less.

Dominion says the proposed generation demand charge is much lower than that for transmission because transmission and distribution assets must be designed for 100% of capacity, while generation is only planned for 85% actual metered load. Based on that, though, you might think the correct demand charges would be set at 100% for transmission and 85% for generation. It’s also not clear whether 14 years is long enough to recover all the costs incurred to build new infrastructure, or whether that’s even the outcome Dominion is striving for. 

There are sure to be a lot more of these kinds of questions when the SCC takes up Dominion’s rate case. The SCC will have to evaluate Dominion’s proposed large-load tariff against a worst-case scenario: an industry-wide disruption that suddenly and dramatically reduces data center demand across the state, leaving a utility with excess generation and transmission capacity that can’t be backfilled and that other customers will be stuck paying for. 

Fortunately, Dominion’s proposal doesn’t have to be considered in isolation, since the SCC will be able to compare it to those from APCo, REC and utilities in other states. According to APCo’s filing, its new rate class would be limited to the largest new customers (those with at least 150 MW in total or 100 MW at a single site). These customers would be required to pay a minimum of 80% of contracted demand even if they use less, which the company says is a significant increase from the demand charge of 60% that applies to existing customers. (You’ll notice it’s also a lot more than the 60% demand charge Dominion is proposing for data centers.) 

APCo’s filing notes that its proposal is consistent with a data center tariff it recently agreed to in settling a case in West Virginia; in both cases, customers would have to sign 12-year contracts, following an optional ramping-up term of up to 4 years, with requirements for posting collateral and stiff exit terms. 

APCo has other experience to go on as well. Its parent company, American Electric Power (AEP), made news when its subsidiary in central Ohio proposed to charge data center customers at least 90% of contracted demand or 90% of their highest demand over the preceding 11 months, whichever is higher, and committing them to contract terms of at least 10 years, after a ramp-up period of up to four years. Data centers pushed back hard on these terms, and the Ohio Public Utilities Commission is considering different settlement proposals with somewhat lower demand charges. 

REC’s filing takes an entirely different approach. REC is the largest of Virginia’s co-ops, serving a territory that stretches from Frederick County in northwest Virginia down through Spotsylvania and as far east as King William County. As data center development pushes outward from Northern Virginia, REC finds itself overwhelmed with new demand. It now expects up to 17 gigawatts of data center demand by 2040, up from near zero in 2023, dwarfing all other customers’ loads.  

Like other utilities, electric cooperatives have an obligation to serve all comers in their territory, so if a new data center moves in, they have to provide the power. But unlike Dominion and other investor-owned utilities, co-ops are customer-owned nonprofits. They are highly motivated to protect their existing customers from the costs – and risks – involved in serving new ones. 

REC is a distribution cooperative only, with no generation of its own. Today, REC gets all its electricity from Old Dominion Electric Cooperative (ODEC), a sort of umbrella organization that owns generating plants and supplements those with power purchased on the PJM wholesale market. But when ODEC learned how much new data center load REC was expecting, it told REC to look elsewhere for the power. 

REC’s solution is to silo off big data centers and other customers with more than 25 megawatts in demand, and keep all the costs and risks involved within that space. According to the proposal the co-op filed with the SCC, data centers that want to get power from REC will have to post collateral, contribute to the cost of new infrastructure and sign two agreements, one for the power supply and one for its delivery. REC (or an affiliate it plans to create for this purpose) will buy electricity from PJM on the open market and pass through the cost. Alternatively, the data centers will be able to buy electricity from competitive service providers, allowing them, for example, to procure renewable energy.  

REC’s proposed delivery contract is similarly designed to ensure the data centers pay all the grid costs the utility will incur in serving them. In addition to contributing to the cost of new infrastructure, data centers will have to sign contracts with terms that must “be structured to recover the full cost of distribution and/or sub-transmission plant investment, maintenance and operation.” This includes payment of a demand charge that isn’t specified but appears to be as high as 100% of peak demand – meaning, there would be no risk that these grid costs would end up on the tab of residents and other customers outside the class.

REC’s approach might be seen as a sort of gold standard for protecting other ratepayers from the costs and risks involved in providing energy to data centers. It’s not a perfect antidote for rate increases, because the tight supply of generating capacity within PJM is already pushing up costs of electricity even for existing customers. And buying electricity on the open market may cost data center customers more than buying it from a utility that owns its own generation, as Dominion and APCo do. But that isn’t a concern that will keep REC’s other customers up at night. 

The very different approaches proposed by REC, on the one hand, and Dominion and APCo, on the other, reflect the difference between a nonprofit distribution cooperative and investor-owned utilities that build and own generation. Building stuff is how investor-owned utilities earn a profit. The bigger their customer base and the more electricity those customers demand, the more the profit. The data center industry looks to them like a big, fat golden goose. 

It isn’t surprising, then, that neither Dominion nor APCo are proposing solutions that put all the risks involved with serving data centers onto the industry, the way REC’s proposal does. As a new Harvard Law School reportdetails, the utility profit motive and the political muscle of Big Tech inevitably lead to a cost shift onto other customers.  

Maybe there is something different about data centers in Virginia that justifies involving ordinary residential customers in this risk. Dominion will surely make that pitch when the SCC takes up the case. 

It will be interesting to observe, but color me skeptical.

Originally published on April 25, 2025 in the Virginia Mercury.

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Remember when ethics in government mattered?

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Protesters in front of a Tesla building.
People line up in front of a Tesla Service Center to protest Elon Musk. Rockville, Maryland. Photo by G. Edward Johnson via Wikimedia

It was only a decade ago that a governor of Virginia, Bob McDonnell, was embroiled in a corruption scandal resulting from his acceptance of $177,000 in gifts and loans from a businessman in exchange for promoting the company’s diet supplement. The quid pro quo struck many people at the time as more tacky than corrupt; and indeed, the U.S. Supreme Court eventually overturned his conviction on the grounds that using the governor’s mansion as a promotion venue wasn’t a sufficiently “official” act. 

These days, the kerfuffle raised by the exposure of McDonnell’s little side hustle feels almost quaint. It also feels like foreshadowing, anticipating President Donald Trump’s use of the White House lawn as a Tesla showroom to thank Elon Musk for his hard work in destroying American government. 

In the present-day version, though, it does not appear the carmaker’s $290 million in election spending played a role beyond instilling a warm fuzzy feeling in the bosom of the president. So while ordinary people may be appalled, and Democratic leaders like Rep. Gerry Connolly of Virginia are demanding an investigation, it’s hard to see the Supreme Court batting an eye. Is it so different from Justice Clarence Thomas accepting a luxury RV from a wealthy businessman?

Trading favors among the rich and powerful seems to be how it works in Trump’s America. Anyone who isn’t using his public position for his own gain is a chump. And while the laws prohibiting corruption are still on the books, Trump has ensured there are no federal prosecutors left with the independence to go after his allies. 

Besides which, in the unlikely event your cupidity actually gets you convicted of a crime, the president has a history going back to his first term of handing out pardons to MAGA loyalists regardless of their crimes. Sufficiently demonstrating fealty to the president may be enough to secure your place in his No Grifter Left Behind program. Frankly, the judge who sentences you has more to fear from the president than you do.  

By design, Trump’s attacks on American government, civil society and the world order have been so various and extreme as to leave opponents breathless. The resistance looks like a team of firefighters trying to deal with a large and very determined pack of juvenile arsonists. 

Yet, of all the fires now burning, Trump’s attacks on the rule of law might pose the single greatest threat to the country’s stability and prosperity. Trump’s firing of government watchdogs, blacklisting a law firm that represented his enemies, and defying judges who rule against him are unprecedented in modern U.S. history. Our economy as well as our democracy was built on a system of checks and balances that made corruption the newsworthy exception rather than the dismal norm.

This was brought home to me in a conversation I had recently with a rancher in, of all places, Patagonia, at the far tip of South America. (When the going gets tough, the not-very-tough go hiking.) The owner of an 8,000-acre estancia turned out to have been involved in Chilean politics for 30 years, representing his region in the Chilean Congress. He didn’t know much about what was going on in the U.S., he admitted, but he felt encouraged by the news that Trump was cutting waste and fraud. 

Okay, yes, I guffawed, but I was also struck that, with all the turmoil and crises going on in Washington, the only thing that survived a distance of 6,000 miles was Trump’s spin on his actions. Still, you hardly need to go to Chile to find people who accept Trump’s through-the-looking-glass framing of his dismantling of government institutions. 

A pro-Trump family member, as big-hearted a guy as you will ever meet, told me he was sad that people in developing countries would go without food and medicine as a result of Trump shutting down foreign aid, but it had to be done “because of all the fraud.” Virginia Gov. Glenn Youngkin is also an ardent supporter of Trump’s ever-expanding trims, last week defending the slashing of thousands of federal workers’ jobs as “dislocation” necessary to “gain efficiencies and reduce costs in the federal government.”

That’s the power of language. What Trump calls fraud and corruption turns out to be grants for things he doesn’t like, but his choice of words makes it seem he is fighting for the kind of honest government he is actually working to undermine. 

It’s not wrong for people to worry about corruption, though, whether it is the imaginary kind Trump invokes or the real kind we will face when no watchdogs are left to hold his appointees accountable. Whether conservative or socialist, corruption in government leads to a siphoning off of public dollars, the erosion of social cohesion and trust, economic distortion and lower levels of investment in education and health care. Sure, some businesses are going to prosper when they can evade laws with just a well-placed application of palm grease, but economists find that overall, official corruption is a drag on a country’s economic performance. Not to mention, most of us see it as fundamentally unAmerican.  

But has Trump actually launched the U.S. on a slippery slide down the corruption index? I talked over my concerns with a fellow Mercury contributor, Michael O’Grady. O’Grady is a research economist and Ph.D. candidate at Virginia Commonwealth University who studies public policy and administration, and he thinks the situation is even worse than I suggest. 

Like many scholars, he feels the face-off between Trump and the courts has brought the U.S. to what he calls “the biggest inflection point since at least U.S. v. Nixon, and maybe since Marbury v. Madison in 1803.”  And, he points out, if Musk’s Department of Government Efficiency was really uncovering fraud in government contracts, we should have seen cases being referred to the Department of Justice for prosecution. 

Meanwhile, he says, the firing of government watchdogs and the politicization of the federal government will have real consequences on people’s lives, affecting everything from housing costs to the stock market. When government oversight lapses, corporations tend to engage in market manipulation and tax evasion. To take one example, last summer the DOJ sued a company called RealPage for allowing competing landlords to collude in setting apartment rents. We aren’t likely to see that kind of action from the Trump administration.

O’Grady doesn’t see how this can end well, and neither do I. I’d like to think that in the U.S., our fifty state governments could provide some kind of pushback against malfeasance at the federal level. But I’m aware that’s delusional. For one thing, my own experience is that federal bureaucrats are saints compared to state and local officials, who have much more motivation to swap favors with people and businesses in their communities. And for another, Republican fealty to Trump is so strong that it’s hard to imagine a state attorney general from his own party taking action even if state laws were implicated. Recall that it wasn’t a state prosecutor who indicted Bob McDonnell; it was the U.S. Department of Justice. 

I’d have much less concern over Democrats rallying around a party leader if roles were reversed. Loyalty is a conservative value, not a liberal one. Recall how Democratic governor Ralph Northam was called on to resign by members of his own party over a blackface incident. Democrats eat their own.

For now, at least, one bulwark against Trumpism remains: an independent, non-partisan press committed to reporting the facts and holding government officials accountable. There has never been as great a need for unbiased journalism as there is today, or more need for ordinary Americans to support it. 

O’Grady reminded me of the (probably apocryphal) story of Benjamin Franklin describing the young United States as “a republic, if you can keep it.” Whether we keep it now depends on us.

This article was published in the Virginia Mercury on March 25, 2025.

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Distributed solar bills move forward, while progress on siting utility solar stalls out

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Photo credit Norfolk Solar.

Virginia’s desire to be a leader on clean energy has faced numerous challenges over the past few years, coming from many different directions. Landowners who want utility-scale solar on their rural property face increasingly hostile county boards, with no provisions for relief. 

School systems, local governments and commercial customers that want solar on their buildings have been blocked by expensive new interconnection requirements imposed by Dominion Energy. And the clock is ticking on net metering, the program that gives customers with solar panels a one-for-one credit on surplus electricity they feed back into the grid. 

The solar industry is used to struggling for every foothold it gets in Virginia, but these new challenges come at a particularly bad time. With data center growth creating huge pressures on our electricity supply, Virginia needs more clean energy in every size range, and needs it now. Any coherent approach to meeting demand has to include removing unnecessary barriers to both utility-scale and distributed solar. That both are facing more barriers, rather than less, suggests the state still hasn’t figured out what it takes to be an energy leader.  

None of the legislation at the General Assembly this year addresses this fundamental failing head-on, but several bills took on some of the barriers. In particular, bills focused on rooftop solar and other distributed generation have made it to halftime in decent shape.

Sadly, the same cannot be said of bills designed to bring more utility-scale solar to Virginia, including siting legislation developed by the Commission on Electric Utility Regulation (CEUR) and carried by Del. Rip Sullivan, D-Fairfax, and Sen. Creigh Deeds, D-Charlottesville. The legislation sought to tackle the biggest obstacle to unleashing gigawatts of clean, low-cost energy across Virginia: local governments that deny permits to solar and energy storage facilities, acceding to neighbors who don’t want to have to look at solar panels where they once saw fields and forests. (Anti-solar fossil fuel front groups don’t help matters either.)  

On the House side, Sullivan’s HB2126 was killed in a subcommittee vote. Senate Bill 1190 made it to the Senate Floor but was defeated when two Democrats, Senators Russet Perry and Lashrecse Aird, joined with all Republicans in siding with localities that did not want to cede any part of their authority over land use. The bill would have pressured local governments, but it did not strip them of authority. They would have been required to include in their comprehensive plans targets for energy production and energy efficiency (the latter an interesting addition). In evaluating specific projects, localities would have had to consider advisory opinions that would be issued by a new interagency panel of experts recruited from Virginia universities. Perhaps of greatest import, localities would no longer have been allowed to adopt ordinances that ban all projects outright or place unreasonable restrictions on them, or deny permits “without a reasonable basis.”

The Senate bill “incorporated” (by which is meant, it jettisoned the provisions of) another solar siting bill from Sen. Jeremy McPike, D-Woodbridge, and a separate piece of legislation from Sen. Schuyler VanValkenburg, D-Richmond, that would have prescribed rigorous best practices for utility solar projects.

Over in the House, however, a companion to VanValkenburg’s bill from Del. Candi Munyon King, D-Dumfries, HB2438, passed the chamber 48-46. The bill came from the solar industry itself, proposing to adopt the highest standards for itself. So why wasn’t the vote unanimous? Go figure.

Bills advancing small-scale solar move forward

Legislation promoting distributed generation did not go through the CEUR pipe, but these bills show some wear and tear of their own.  A loose-knit group of advocates under the banner of the Equitable Solar Alliance came in with a package of three bills, all of which remain alive after favorable committee votes. 

HB1883, from Del. Katrina Callsen, D-Charlottesville, increases the tiny carve-out for distributed solar that is part of Dominion’s obligation to buy renewable energy certificates in compliance with Virginia’s renewable portfolio standard. The bill has been pared down since it was introduced but still makes several changes benefiting behind-the-meter solar and battery storage systems under 3 MW.  The distributed generation carve-out, currently 1% of the renewable standard target, will get bumped to 3% in 2026 and 5% in 2028, with further changes possible later if the the State Corporation Commission (SCC) decides on it. Third-party power purchase agreements, which had been restricted to commercial projects, will now be available to residential customers. And whereas currently only projects smaller than 1 MW can earn up to $75 per renewable energy certificate, the bill now makes that amount available for projects up to 3 MW. (Certificates for larger solar projects are effectively capped at $45 per certificate.) 

Callsen’s bill also raises to 600 MW, from 200 MW currently, the target for solar on previously developed sites. It also specifies that 65% of distributed projects qualifying for the Virginia Clean Economy Act’s 1,100 MW target for solar under 3 MW should be developed by non-utility providers.  

HB1883 passed the House unanimously. Its Senate companion, SB1040from Valkenburg, made it through committee without Republican support but passed the Senate 26-14. 

Two other bills, HB2346 from Del. Phil Hernandez, D-Norfolk, and SB1100 from Sen. Ghazala Hashmi, D-Richmond, establish a pilot program for virtual power plants (VPPs), which aggregate customer solar and storage resources and demand response capabilities. In concept, a VPP allows a utility to pay customers to let it make use of these capabilities, enabling it to meet peak demand without having to increase generation. (If you are familiar with programs in which your utility pays you to let it cycle your air conditioner off for a few minutes at a time on hot summer days, you have the idea.) VPPs are becoming popular in other states as a way to subsidize customers’ investments in things like battery storage, while reducing utility costs and saving money for all ratepayers. 

The original hope for this legislation was ambitious: a vision of energy democracy that would reshape the way utilities interact with residential and commercial customers and make the most efficient use of new technologies like electric vehicle charging and smart appliances. The financial benefits to customers could even be enough to offset the costs of investments like home batteries, potentially offering a way for rooftop solar to remain affordable even if the SCC guts Virginia’s net metering program. 

But, this being Virginia, the legislation making its way through committee calls only for pilot programs that utilities design and largely control, although they will be voluntary for participants. After 2028, however, the SCC may create permanent programs. SB1100 passed the Senate 22-18. HB2346 passed the House 71-27.

The third bill in the package, HB2356 from Del. Candi Munyon King, establishes an apprenticeship program to help develop a clean energy workforce, and requires participants to be paid prevailing wages. This bill is more politically divisive than the first two, and it passed the House only on a party-line vote. A companion bill passed the Senate on a party-line vote as well. With Republicans unified in opposition, we are likely to see amendments or a veto from the governor. 

A couple of other bills seek to address the costs of interconnecting small-scale solar facilities, including those on schools and government buildings. After Dominion Energy changed its rules in late 2022, customers found the cost of connecting solar facilities to the distribution grid was suddenly so high as to make it impossible to pursue projects in the affected size range.

HB2266 from Del. Kathy Tran, D-Springfield, requires the SCC to approve upgrades to the distribution system that are needed to accommodate grid-connected solar — a safeguard designed to prevent the utility from larding on costs. The utility must then spread the costs across all projects that benefit from the expanded capacity. This strikes me as a pretty elegant solution to the interconnection muddle. HB2266 passed the House 57-41. 

 SB1058 from Sen. Adam Ebbin, D-Alexandria, originally would have simply exempted public schools from interconnection costs. It was amended to look like Tran’s bill and then passed the Senate 21-18.

Finally, a bill from Del. David Bulova, D-Fairfax, would allow local governments to include in their land development ordinances a requirement that certain non-residential applicants install solar on a portion of a parking lot. HB2037 passed the House on a 64-32 vote and will now go to the Senate Committee on Local Government. 

This article was originally published in the Virginia Mercury on February 3, 2025. It has been updated to reflect the most recent General Assembly votes.

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It’s the fossil fuels, stupid

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For low-cost electricity, Virginia needs renewable energy — not gas plants

smokestack
Photo credit Stiller Beobachter via Wikimedia.

Southwest Virginia leaders are up in arms over electricity rate hikes. It’s understandable: Appalachian Power, which serves residents in 34 counties, has raised rates by over 46% since July 2021, and its rates now rank among the state’s highest. Last March, it sought another increase that would have resulted in residents paying $10.22 more per month on average. Although the State Corporation Commission’s November ruling granted APCo a much smaller rate hike, customers are raising a ruckus about the high bills.

Complaints have reached such a fever pitch that Del. James Morefield, a Republican who represents parts of five southwest Virginia counties, filed legislation this month to cap the rates APCo can charge. Over in the Senate, another southwest Virginia Republican, Travis Hackworth, has launched a direct attack on APCo’s monopoly: His legislation would allow any residential customer of APCo whose monthly bill exceeds 125% of the statewide average to buy electricity from another provider.  

These bills might be more performative than serious. But in this case, legislators themselves are at least partly to blame. In 2023, another Southwest Virginia Republican, Israel O’Quinn, drove legislation that excused APCo from having to write integrated resource plans (IRPs) – those pesky documents that tell regulators how a utility plans to comply with state laws and meet the needs of customers at least cost. Both Hackworth and Morefield voted for the bill. 

In 2024, O’Quinn also championed legislation that allows APCo to charge customers for costs of developing a small modular nuclear reactor. Hackworth also supported this new burden on ratepayers, though Morefield did not.

This year, the Commission on Electric Utility Regulation is promoting legislation to reform the IRP process, including making APCo file plans again. That may help. Fundamentally, though, the primary reason APCo’s customers are paying so much is that the utility remains so dependent on fossil fuels. As of the date of its 2022 IRP, APCo relied on coal and fracked gas for 85% of its electricity. Prices for both fuels spiked so high in 2021 and 2022 that utilities were left with huge bills to pay. 

 In 2022, APCo told the SCC it had spent an extra $361 million over budget on gas and coal. Virginia law allows fuel costs to be passed through to customers, so the SCC couldn’t prevent bills from rising to cover the outlay. Instead, the SCC allowed the company to recover the excess fuel costs from its customers over two years by charging roughly $20 more per month to residents, spreading out the pain but also extending it. O’Quinn’s 2023 legislation let the company finance the costs, which meant customers pay interest on top of the fuel costs.

 APCo was not the only utility passing along high gas costs. Dominion Energy Virginia also got caught off guard and asked to spread its excess fuel costs out over three years, adding an average of $15 to residential customer bills. Dominion customers are not happy either. 

 Gas prices have since dropped, and the remarkably short memories of legislators have led them to think they will now stay low forever. Having learned precisely nothing, they also insist that the only way to ensure an adequate supply of reliable, low-cost energy to serve the data center boom is for Virginia to increase its reliance on gas instead of transitioning away from it.    

 The evidence does not support this fantasy. Contrary to Republican orthodoxy, new renewable energy is cheaper than new fossil fuel generation. That’s why in 2024, 94% of all new power capacity in the U.S. came from solar, batteries and wind energy. Fossil gas made up just 4% of new generating capacity. Yes, many states are now proposing to build new gas plants, so the trend could reverse, but that’s only because the rush of data centers and new manufacturing has made large users desperate for more energy at any cost. 

 It’s true that solar, Virginia’s least-cost resource, only produces electricity when the sun shines. But even adding battery storage to solar energy, allowing it to serve as baseload power or a peak power resource, still results in lower electricity costs than the gas combustion plants that are used to produce electricity at peak times. (In Virginia, Del. Rip Sullivan, D-Fairfax, has introduced legislation to expand storage targets for Dominion and APco, including for long-duration storage.)

 The era of low-cost renewable energy is fairly new, but it is already impacting utility bills across the country. Virginia used to boast of its low rates; now there are 22 states with lower residential electricity rates than Virginia. And of those, U.S. Energy Information data shows that all but five generate a higher percentage of their electricity from renewable energy. 

With data centers proliferating across Virginia unchecked, utility rates are under even more pressure now. The Joint Legislative and Audit Review Commission data center study, released last month, warns that ratepayer costs will inevitably rise under an “unrestrained growth” scenario that reflects current policy.

It’s too early to tell whether any of the many bills to protect residential ratepayers and put guardrails on data center development will pass. For now, the governor and many Republicans seem to prefer to use the crisis to crush the transition to renewable energy. As in past years, Republicans have introduced bills to repeal the Virginia Clean Economy Act or undermine it in various ways.

Making solar more difficult and expensive to build is also part of the strategy. The party that used to stand for individual liberty and personal property rights now instead champions local governments that deny farmers the ability to put solar on their land.

Talking up fossil fuels and dumping on solar may make for good politics with the folks in rural districts. That doesn’t mean it’s in their interests. If high utility bills are what really matter, legislators should be pushing renewable energy and storage, not expensive gas plants. 

This article appeared in the Virginia Mercury on January 20, 2025. Interestingly, today writers at two other publications, Cardinal News and Bacon’s Rebellion, took up one aspect of this topic that I only alluded to, the fact that Virginia “imports” more electricity than any other state. Virginia politicians have been exercised on this topic for as long as I’ve been writing, and it has always struck me as strange. It’s not like we need to worry about the political ramifications of a trade imbalance with Pennsylvania.

But as Duane Yancey noted, those electrons coming into Virginia from elsewhere in PJM do tend to be dirty. That’s especially the case for APCo, which operates coal plants in West Virginia and has been ordered by the West Virginia Public Utilities Commission to run those plants at a 69% capacity factor, regardless of the economics. I have not been able to find out anywhere the percentage of APCo’s generation that comes from coal as opposed to gas, but the West Virginia PUC order unquestionably means APCo’s Virginia customers are paying too much.

One other thing to note on the topic of imports: when I wrote that APCo’s resource mix is 85% fossil fuels, that did not mean the other 15% is renewable. In fact, most of the rest is purchased power, meaning mostly fossil fuels also.

By the way, readers may notice a few discrepancies among the articles, which is worth explaining. Both Yancey and James Bacon cite figures for Virginia electricity rates and how they compare to other states that are different from my numbers. The reason is that they are working from combined rates for residential, commercial and industrial, where I’m using residential only. Virginia’s combined rate compares more favorably to those of other states than does its residential rate because our commercial and industrial rates are lower.

Virginia’s low commercial rates have been a major draw for data centers. But if you’re a residential customer right now, maybe that’s pretty cold comfort.

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The data center energy crisis is now official

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Data center between housing community and a bike path
A data center in Ashburn, Virginia. Photo by Hugh Kenny, Piedmont Environmental Council.

It is a truth universally acknowledged, that a politician in possession of elected office must be in want of large economic development projects. 

It does not seem to matter that in the case of Virginia, this compulsion is catapulting us into a costly energy crisis that will raise utility bills for residents; that the public shows no love for this industry; and that the benefits to be gained (mostly in the form of construction jobs) will continue only as long as new projects follow one another in perpetuity until the landscape is consumed by concrete and transmission wires. 

To the credit of the Joint Legislative Audit and Review Commission (JLARC), however, it has tried to sound the alarm. JLARC’s report, “Data Centers in Virginia,” released December 9, describes the challenges facing the state as a result of the massive, ongoing buildout of this astoundingly resource-intensive industry. Many of JLARC’s conclusions seem way too sanguine to me, especially around risks to regional water supplies and air pollution from diesel generators, and the policy options it offers don’t always hit the mark.

But on the threat to Virginia’s energy supply, JLARC is blunt: Building enough infrastructure to provide electricity for even just half the data centers projected for development across the state will be difficult, requiring far more generating facilities than are under development today. 

As for the current policy of allowing completely unconstrained data center growth – indeed, subsidizing it as we do now with tax exemptions to the tune of nearly a billion dollars per year – JLARC notes we are headed for a tripling of the state’s electricity usage over just the next decade and a half.  Meeting that much demand, says the report, would be “very difficult to achieve,” even if the state jettisoned the carbon emission limits imposed by the Virginia Clean Economy Act (VCEA).

For those of you unfamiliar with the vocabulary of bureaucrats, “very difficult to achieve” is a term of art that translates roughly as, “This is nuts.”

It might have been better if JLARC had employed the vernacular, because as it is, Virginia’s elected leaders will probably take “very difficult” to be a sort of heroic challenge, like beating the Russians to the moon, when what JLARC means is more like achieving lasting peace in the Middle East. 

One problem is cost. The law of supply and demand dictates that a massive increase in energy demand that isn’t matched by an equally massive increase in energy supply will lead to higher prices for all customers. Yet new energy projects cost money, and under traditional ratemaking principles that also means higher rates for everyone. The result is that it will be impossible to protect residents from higher utility bills, unless changes are made to the way costs get allocated. 

(Figuring out how to protect residents and other non-data center customers is currently a focus of the State Corporation Commission, which held a technical conference on data centers on December 16th. Judging by what the experts it convened had to say, the SCC has its work cut out for it.) 

Even if ordinary residents could be protected, the bigger problem is that increasing the supply of energy to keep up with soaring data center demand will not be easy, fast or cheap. JLARC warns that providing enough low-cost energy requires that gas plants, solar facilities, battery projects and transmission lines all be built at a pace Virginia has never achieved before, along with onshore wind farms that have never found takers here (though that may be changing), offshore wind projects that currently lack a pathway to development, and starting ten years from now, new nuclear plants in the form of small modular reactors (SMRs) that haven’t yet achieved commercial viability.

Moreover, most of that new generation and transmission will have to overcome local opposition. On the gas side, Dominion Energy’s plans for a new plant in Chesterfield County face fierce resistance from the local community, which argues it has been burdened by fossil fuel pollution for too many years already. Why should residents suffer to benefit Big Tech?

Clean energy also struggles at the local level. Industry representatives told members of the Commission on Electric Utility Regulation (CEUR) on December 17 that more than 30 localities have effectively banned utility solar projects within their borders. Rural leaders openly take pride in their prejudice against solar. Yet legislators are squeamish about overriding local siting authority, even when counties that welcome data centers turn down the solar facilities needed to power them. 

And of course, generation projects involve willing landowners. When it comes to transmission lines that are forced on property owners through eminent domain – many of which will be needed only to carry power to data centers – the public backlash is typically even greater.

Given so much local resistance to new generation and transmission, the fact that so many legislators nonetheless remain wedded to the data center buildout testifies to the ability of the human mind to compartmentalize. 

For legislators who care about climate, JLARC has more bad news: Fully half the new data center growth coming to Virginia is slated to occur in the territories of rural electric cooperatives, which are largely unaffected by VCEA limits. In addition, very large customers of Dominion and APCo have their own VCEA loophole: if they meet certain requirements, they can leave their utility to buy power from competitive service providers. Thus, if Virginia is serious about decarbonization, it will have to tighten, not loosen, the VCEA.

The report comes with some caveats. JLARC used a team of consultants to model approaches to meeting the supply gaps, and a lot of assumptions go into the consultant’s report without a lot of details. The consultant group says it chose its mix of resources with a view to least cost, but it acknowledges that different assumptions would change the results. It may not have accounted for the fact that renewable energy and storage prices continue to drop; meanwhile, fossil gas prices are so volatile that the one certain  thing you can say about any price forecast is that it will be wrong. Moreover, it appears the effects of re-entering the Regional Greenhouse Gas Initiative were not modeled; nor were the social costs of carbon, both of which favor zero-emission sources over fossil fuel plants. 

Where there are details, some beg to be questioned. Both the consultants and JLARC take for granted that a shortage of generation in Virginia can be made up by importing electricity from other states. An easy way out, sure, but it works only if other states are producing a surplus. Unless tech companies are required to secure their own carbon-free energy supply, there is no way to guarantee imports will be available. Contrary to one of JLARC’s suggestions, then, retail choice should not be curtailed. The better move is to expand shopping options for large customers, so long as the electricity they buy is zero-carbon.

Even more suspect is the idea that, in order to comply with the VCEA, all gas plants will convert to burning green hydrogen in 2045. The report might as well say, “and then a miracle occurs.” A miracle would be more likely.

However unserious, hydrogen as a placeholder for any hoped-for technology that isn’t available today demonstrates the fundamental problem confronting Virginia’s damn-the-torpedoes approach to data centers. A refusal to put constraints on the buildout means taking a leap into the unknown and hoping something will happen to save us from the consequences of our profligacy.

And sure, maybe it will work out. Legislators tend to be optimists, and they are already betting on bright, shiny objects like SMRs, fusion, and anything else not close enough for its costs and drawbacks to be fully evident. (Not that I’m immune, but personally I’m betting on advanced geothermal, which is not just bright and shiny but already here.) And hey, for all we know, artificial intelligence, the technology most culpable for today’s energy crisis, might even produce some unexpected new energy source. 

Or it might not. Given that most of the data center buildout will happen in just the next five years, we might need an actual miracle. 

On the flip side, maybe new technology will reduce the energy demand of data centers by orders of magnitude. That would be a fantastic outcome from the standpoint of climate, water and energy — though it would end the construction gravy train in Virginia and leave a wasteland of empty concrete warehouses and stranded energy infrastructure.

Either way, the unconstrained buildout of data centers has handed Virginia leaders a problem that is, in the parlance of JLARC, “very difficult” indeed.

A version of this article originally appeared in the Virginia Mercury on December 24, 2024.

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Data centers approved, solar farms rejected: What is going on in rural Virginia?

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If Virginia Gov. Glenn Youngkin and Democratic leaders in the General Assembly are aligned on one thing, it’s their enthusiasm for bringing more data centers to the commonwealth. Where they part ways is in how to provide enough electricity to power them. Youngkin and most Republican legislators advocate for an “all of the above” approach that includes fossil gas as well as renewables; Democrats are committed to staying the course on the transition to zero-carbon energy, with a near-term emphasis on low-cost solar. 

Data centers are making the transition harder, but so is local resistance to building solar. General Assembly members mostly understand the connection, leading to a lively debate in last year’s legislative session over whether to override some local permit denials for solar projects – and if so, how to ensure the localities still have some say. Though none of the legislative proposals moved forward last year, the topic has become a central one for the recently revamped Commission on Electric Utility Regulation (CEUR). 

In January, the General Assembly is likely to consider legislation to override local solar permit denials in some cases, such as last year’s HB636 from Del. Rip Sullivan, D-Fairfax, or another approach that would break the solar logjam. It remains to be seen, however,  whether legislators will take any action on data centers.

The problem has grown only more urgent as localities have continued to approve new data center proposals with little thought given to where and how they will get the power to serve them.

Ann Bennett, Sierra Club Virginia’s data center chair, has been tracking data center permit applications across the state. She counts at least two dozen Virginia counties with data centers under development, including rural areas far outside the industry’s stronghold in suburban Northern Virginia. By Bennett’s calculation, data centers existing and under development in Virginia will consume at least 100,000 acres. 

Even as local governments woo data centers, many have become hostile to solar development. A presentation from the Weldon Cooper Center at the University of Virginia, which tracks solar permitting across Virginia, shows that far more local permits for solar facilities have been denied or withdrawn than were approved this year. 

In some cases, county boards that approve data center development also reject permits for solar farms. Sometimes, it happens even at the same meeting.

In an effort to understand this paradox, I watched footage from two county board meetings in Hanover County, one in March of this year and the other in September. At the March meeting, county supervisors approved a 1,200-acre data center complex for an area north of Ashland. Later the same night, they denied a permit for a utility-scale solar project. 

The parcels of land slated to be developed for the data center complex “included wooded areas, recently-logged areas, open fields, wetlands, ponds and stream corridors.” The developer plans to build about 30 data centers on the property, each 110 feet tall (about 10 stories), with setbacks from the property line ranging from 150 to 250 feet. The complex will require 700,000 gallons per day of cooling water. When fully developed, the data centers are expected to total a staggering 2,400 megawatts (MW) of power capacity, not far short of what all of Loudoun County had in 2022. There was no discussion of where so much electricity would come from. 

Public testimony was overwhelmingly negative. The objections echoed those that have been widely reported in response to projects such as the Prince William Digital Gateway: noise, light, a massive increase in truck traffic, secrecy surrounding the project, air pollution from diesel back-up generators. 

Yet the Hanover supervisors voted unanimously in favor of the project. It came down to money: the developer promised a tax benefit to the county over 20 years of $1.8 billion, plus upfront cash for road improvements and a $100,000 donation to a park. Supervisor Jeff Stoneman, who represents the Beaverdam district where the complex will be located, acknowledged his constituents’ concerns but noted that the revenue would be a “game-changer for this community.” 

Even for me, as thoroughly aware as I am of all the downsides of data center sprawl, the negative impacts on communities, the risks to our water and energy security, the possibility that folks will be left with nothing but regrets – well, I just have to say: It’s really hard to argue with $1.8 billion. Rural leaders see Loudoun County raking in revenue from data centers, letting it cut taxes for everyone else. Why wouldn’t they want in on that?

As I noted before, though, there was no discussion of how or where the enormous amount of electricity needed to power the data centers would be generated. This disconnect was underscored later in the same meeting when the supervisors voted to reject a 20 MW solar project on 100 acres of a 315-acre site, in the same district as the data center complex they had just approved. 

https://virginiamercury.com/2024/11/26/under-pressure-from-the-scc-dominion-reveals-the-true-cost-of-data-centers/embed/#?secret=jfq5xtYiIk#?secret=eWAcqNFGWg

It was especially hard to understand the denial of this particular permit. Supervisors agreed the project met all the terms of the county’s solar ordinance, including provisions for the use of native grasses and pollinator plants. Most of the property would remain untouched. The county would receive an upfront cash contribution of $438,600, in addition to the increased tax revenue from the project. The planning commission had recommended approval. No one testified against it; a number of people, including the farmer across the street, testified in its favor.  

Most of the discussion of the project focused on screening the solar panels from view. Supervisors fussed that the trees to be planted at the entrance were too small, and worried that some of the existing mature trees along the road might die off over time and not be replaced. The developer agreed to put larger trees at the entrance, and even to walk the perimeter annually to monitor the health of the trees, and replace any if they needed to.

It was no use. Two of the supervisors wanted to approve the project, but they were outvoted. Stoneman, the Beaverdam supervisor who had led the way in supporting the data center complex, said he worried that erosion might impair the creek on the property, in spite of ample natural buffers, and said he did not have a “comfort level” with the project.

Evidently, the county’s solar ordinance, adopted in 2023, was irrelevant, or at least, misleading. Such objective standards make a developer think it will be worth their while to put in months of planning, public outreach, and working with county staff. But then it turns out that what actually matters is whether a supervisor can achieve a certain undefined “comfort level.” 

Six months after the approval of the 2,400 MW data center complex and the denial of the 20 MW solar facility, another solar project met the same fate, again with Stoneman making the motion to deny the permit. 

This time the project would take up 250 acres of a 1,500-acre site and produce 72 MW of electricity, achieved through stacking the panels to a double height. Again, the project more than met the requirements of the county solar ordinance. The land was described as currently consisting of managed pine forest, already subject to being cut over at any time, and fully 70% of the property would be preserved for conservation. Native grasses would be planted, and sheep would do most of the vegetation management. The shepherd, Marcus Gray of Gray’s Lambscaping, attended the hearing to describe the sheep operations he runs successfully at other solar sites.  

Approval of the project would earn the county roughly $1.7 million upfront, and $300,000 in annual tax revenue. 

Supervisors praised the developer for “a really good application” that “respected” the ordinance and the environment, for the company’s willingness to listen and respond to concerns, and for agreeing to build stormwater basins and sacrifice buildable space in favor of conservation. 

Several members of the public testified in favor of the project, but this time there were also opponents. Some of them repeated common myths about solar panel toxicity and the risk of fires. One woman stated flatly, and obviously incorrectly, that it was not possible to raise sheep at a solar farm because they would die from the heat. 

The supervisors themselves did not appear ill-informed or misinformed, though one expressed surprise that Gray could successfully sell his lamb at farmers markets when buyers knew where they had been raised. (Watching, I could only laugh, because I’ve always thought of the solar-sheep synergy as a great selling point for climate-conscious carnivores.) 

The concern raised most often was the risk of impacts to the nearby North Anna River, though the developer had agreed to shrink the project to accommodate a much greater setback from the river than required. 

Ultimately, however, Supervisor Stoneman’s argument for denying the permit rested on a different argument. He praised the developer for doing a good job, and noted the project was in accordance with all requirements. But, he said, “Beaverdam is just a different place.” People take pride in the rural character and forest and farmland. Our job, he noted, is to protect the trees that are harvested on the site currently, something “that is as important as the power.” 

“Money is not the most important thing,” concluded the man who led the cheering squad for a data center complex in his district six months earlier.  

The two supervisors who had supported the smaller solar facility that had been rejected in March made their best arguments for this project as well, though they ultimately voted with Stoneman as the home supervisor. One said she supported solar “because I’m pro-farm,” and solar is a way to preserve farmland from development. The other noted that the land would certainly be developed one way or another, and the results would almost certainly be worse. Maintaining rural culture is important, he noted, but “we are approving residential development and seeing by-right development that people don’t want either.”

He also warned his colleagues, as he had in the spring, that rejecting good solar projects was going to result in legislation that would take away local authority and give it to the unelected State Corporation Commission. He said he would go along with Stoneman’s motion to deny the permit because “I assume he knows something,” but he made it clear he considered it the wrong decision, and a dangerous one for local autonomy.

Evidently, he had been paying attention to the conversation at the General Assembly.

To be clear, my sympathies lie wholeheartedly with people whose instincts are to protect the woods and fields around them. I share the one Hanover supervisor’s belief that solar is a means to preserve land from permanent development and even improve soil health and wildlife habitat, but I also understand it may be years before some people see sheep grazing under solar panels as a welcome feature in their landscape. 

So I get how a rural county, having sold a little bit of its soul for $1.8 billion, might then slam the door to other development, even after applicants had worked with the county for months in good faith and done everything asked for. 

It’s not a choice I’d make – I’d take solar over data centers every time – but then, no one made it the county’s responsibility to contribute electricity to the grid that serves it, much less to produce the electricity needed to run the data centers it embraced.

This article originally appeared in the Virginia Mercury on December 3, 2024.