Dominion's AI build puts the power bill on data centers, and the carbon bill on everyone else
Dominion's third-quarter filing this morning sits under three Virginia dockets and Tuesday's election. The 14-year contracts that put the power bill on data centers leave the carbon bill on everyone else, and February's rider ruling will decide whether the AI build keeps its political license.
Richard Tang · 4 min read
Dominion Energy+2.18% — Dominion Energy, up 2.18 percent today, Virginia's primary state-regulated electric utility, filed third-quarter results this morning: reported net income under generally accepted accounting principles (GAAP) of $1.2 billion, $1.30 a share, up from $1.16 a year earlier, with operating earnings of $1.1 billion, or $1.28 a share 1. The numbers went to the SEC on an 8-K, the form companies use for material announcements, signed by chief financial officer Steven Ridge 2.
The quarter is strong because the AI build is real, and that is why the money question has moved past the quarter. Over the next 15 weeks, an election, a merger ruling and a carbon docket will decide who pays for the build. The build is worth doing and Virginia is right to chase it, but the deal on the table prices the power correctly and the carbon not at all, and that gap is where the whole thing can break.
The contract covers the power, not the carbon
The power side is contracted. Under the GS-5 class the State Corporation Commission approved last November, a customer of 25 megawatts or more signs a 14-year contract, with minimum billing floors of 85% of contracted demand on the wires and 60% on generation, plus $1.5 million of collateral per megawatt 3. That shifts the stranded-asset risk of a 39,000-megawatt build plan onto the campuses that requested it 3.
The number to watch is 12,000 megawatts of data center capacity under contract, against about 25,000 megawatts of requests; the plan is being financed against demand that is only half signed 3.
Carbon is the cost the contract left out
The 14-year contract puts the risk of an unused power plant on the campuses that sign for it, but nothing in it puts the cost of their carbon on them 4. Dominion rejoined the Regional Greenhouse Gas Initiative, the ten-state carbon market Virginia left in 2023, and this week asked regulators to recover roughly $1.2 billion in allowance costs over the next year, counting the eight months Dominion has already been back in the program 4.
The rider would start in March 2027 at about $13 a month on the average residential bill, or $10 if spread over two years, and the commission must set the methodology by February 5 4.
A state budget amendment sends 45% of the auction proceeds back to households as bill credits that energy officials expect to nearly offset the charge 4. That money comes from the state, not from the customers whose emissions bought the allowances, and whether the data center class pays a share of the rider is unsettled in the case.
Households carry the carbon rider while the merger is judged on affordability
The bill projections put the fight in one table, and the two methods inside it disagree about how much of the build reaches a residential meter.
Two methods, two futures for the same Virginia bill
- Company method
- SCC-directed method
Data
| Company method | SCC-directed method | |
|---|---|---|
| Oct 2026 | $180.31 | $180.31 |
| 2036 | $258.03 | $320.26 |
| 2046 | $283.65 | $458.22 |
Neither column is an approved rate, but the spread between them is the affordability question the merger comment record turns on: nearly 130 residents across five cities told the lieutenant governor's listening tour that bills were their recurring concern 5. Commission staff have already recommended denying the $67 billion Dominion-NextEra deal as proposed, and Gov 6. Abigail Spanberger says the commission should reject it without a six-year freeze on residential base rates 6. A decision is expected in mid-January, with public comment closing November 12 5.
The cost fight is now on the ballot
Around all of it sits Tuesday's midterm election, with 34 data-center ballot measures across 30 counties in eight states 7. The candidates are converging on the same demand from two directions: in one Georgia utility commission race, the nominees of both parties say data centers should cover their grid costs, while Pennsylvania's candidates for governor say data centers should supply their own power 8.
February is where the deal gets fixed or broken
For investors in Dominion (NYSE: D) and NextEra+2.08% — NextEra, up 2.08 percent today, the binding constraint is no longer the quarter. It is whether the commission's conditions price the carbon and the freeze into the Virginia utility's returns, because a build this size survives only while the public accepts the distribution of its cost.
The fix is concrete, and it is the work nobody has done yet. Write the rider methodology, due February 5, so the loads that drive the build carry their share of the compliance cost, and make the merger conditions cover the same ground.
Do that and the affordability revolt loses its best argument, the AI build keeps its political license, and the 12,000 megawatts under contract grows. Leave carbon on households while the power sits on long-term contracts, and the cost dispute moves to the ballot, where regulators no longer control it.
The case for the build stands: this demand is worth serving and Virginia is right to serve it. A distribution problem is an argument for finishing the contract, not for abandoning it, and February 5 is the deadline.
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