Virginia regulators have set parameters to separate dedicated grid-connection costs from broader transmission investments whose allocation remains unresolved. The distinction will determine which costs are charged directly to an individual large-load customer rather than recovered across Dominion Energy Virginia’s retail customers.
In a July 31 final order, the State Corporation Commission (SCC) directed Dominion to file within 90 days an amended line-extension policy that would require a mandatory contribution in aid of construction (CIAC) for defined “direct connect” transmission facilities.
The policy is to apply prospectively to new or expanding large loads that are the “but-for” cause of dedicated substations or lines connecting them to the bulk transmission system.
Under the SCC’s required net-of-revenue method, expected transmission-charge revenue would offset eligible capital spending, with the remainder collected from the individual customer through the CIAC. Dominion and SCC staff still must propose an explicit definition of qualifying facilities.
Shared upgrades remain unresolved
The SCC stopped short of deciding how to assign higher-order transmission costs. Higher-order costs can include supplemental projects needed to address transmission-system reliability issues attributable to one or more large loads. The next docket may extend the line-extension policy, assign some higher-order costs to the GS-5 large-load class or leave the direct-connect approach unchanged.
The proceeding was contested: Amazon opposed mandatory direct cost allocation, while Google supported allowing large customers to make voluntary CIAC payments under Dominion’s line-extension policy.
The July order also made a separate rate-allocation decision for Dominion’s Rider T1 transmission charges, effective Sept. 1. The SCC approved a method that accounts for forecast large-load growth and an 85% minimum transmission-demand charge beginning Jan. 1, 2027. For a typical residential customer using 1,000 kilowatt-hours a month, the modeled Rider T1 increase fell from $2.90 to $0.94.
The 85% minimum is part of a wider response to forecast electricity-demand growth that the SCC says is driven primarily by data centers. The GS-5 class covers customers demanding 25 megawatts or more. New qualifying customers contracting on or after Jan. 1, 2027 face a 14-year service obligation. New and existing large-load customers are generally billed on at least 85% of contracted transmission and distribution demand, with customers that began service before Jan. 1, 2016 exempt from the minimum.
Gov. Abigail Spanberger’s office said Aug. 5 that the order would save Virginians “hundreds of millions of dollars” and described it as requiring data centers to cover transmission infrastructure built exclusively for those facilities. The release does not publish a calculation for the savings estimate.
Spanberger also said data centers would pay “the full cost” of transmission infrastructure their developments require. The SCC’s mechanism is a net-of-revenue CIAC for direct-connect facilities, while higher-order transmission costs remain unresolved.
Federal review covers regional costs
The state proceeding sits alongside Federal Energy Regulatory Commission (FERC) show-cause proceedings involving all six regional grid operators. FERC required them to justify why existing tariffs remain just and reasonable without clear and consistent large-load provisions or propose changes. The orders address cost shifting among transmission customers while leaving retail-customer cost shifting to states.