Virginia makes direct-connect data centres pay for their own lines
Serguey Asael Shinder2 min readOn 31 July the Virginia State Corporation Commission ruled that Dominion Energy must directly assign part of the cost of transmission to large-load facilities. The mechanism is a mandatory contribution in aid of construction for "direct connect" customers, covering the substations and the transmission lines that tie those facilities to the grid. Dominion was given 90 days to file an amended line extension policy in a new docket; that filing is due in October.
Microsoft lodged a notice of appeal with the Virginia Supreme Court on 28 August. It has not actually appealed: a company spokesperson told Utility Dive the notice "preserves its ability" to challenge how the decision is implemented, and that Microsoft wants any resulting rates to be transparent and to reflect the costs each customer causes. Under Virginia law the petition itself would be due four months after the final order — late November.
The case turned on Dominion's proposed change to Rider T-1, the line item through which transmission investment is recovered. A lawyer who acted for an environmental group in the hearing told Utility Dive it would be unusual to file a notice of appeal without intending to use it. The story is at https://www.utilitydive.com/news/microsoft-virginia-scc-data-center-transmission/830775/.
What it means
This is the question every grid in the world is about to answer, and Virginia answered it first. When a single customer's connection requires new substations and new lines, the default in most regulated systems is that the cost enters the rate base and is spread across everyone. A contribution in aid of construction reverses that: the party that caused the cost pays it up front. The fight is not about whether the lines get built — it is about whose bill they land on.
Note what is not being contested. Microsoft's stated objection is to implementation, not principle: it wants rates that "reflect the costs each customer creates". That is the same sentence the commission used to justify the order. When both sides agree on cost-causation and disagree only on the arithmetic, the arithmetic is where the money is — which is why Dominion's October filing matters more than the appeal.
And the timetable is the story for anyone watching from outside the US. October for the utility's proposed policy, late November for a possible petition, with load-growth decisions being made continuously in the meantime. Large loads site where the connection is cheap and fast. A jurisdiction that assigns the full cost of connection to the customer is making a choice about which data centres it gets, whether or not that is how the decision is written.