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To the many reasons we already had to be wary of the siren call of data centers, we now can add this week’ s announcement of a proposed $67 billion merger of Dominion Energy with NextEra Energy. The combination would create the world’s largest regulated utility, on a par with the world’s largest oil companies, which right there should give us pause. When the elephants in the room start their mating rituals, it’s time for the rest of us to rush for the exits to avoid getting trampled.
NextEra, already this country’s largest utility,is known as its biggest developer of renewable energy even as it assiduously contributes to the rapid build-out of natural gas-fired power stations. That apparent contradiction is a result of its partnership with Google Cloud to provide electricity to its data centers, a partnership with gas turbine maker GE Vernova to develop power plants to serve data centers, and its early efforts to develop 10 gigawatts of natural gas capacity in Pennsylvania and Texas to fire up the turbines that power those data centers. So, not exactly a “green” power company.
Dominion, meanwhile, supplies electricity to the world’s largest concentration of data centers, right here in Virginia. What could be a better fit? Unless, of course, you’re one of the 3.6 million homes and businesses currently served by Dominion, which bumped up residential rates $11.24 a month this past January. Or as summarized by state assemblyman Suhas Subramanyam, whose district includes the data center megaplex in northern Virginia, “A company that specializes in building energy infrastructure just bought a company that likes to increase rates for new infrastructure.”
The merger is so clearly not in the best interests of Virginia ratepayers that the utilities are proposing to sweeten the pot with $2.25 billion in bill credits to ratepayers over two years—a seemingly impressive number that works out to just $25 a month per customer. After that, of course, it’s back to business as usual, albeit with an even more imposing multi-state behemoth than we have now flexing its lobbying and campaign contributions muscles to get its way.
Industry consultant Arif Gasilov, who sees data center electricity demand as fundamentally restructuring utility ownership, told POWER Magazine this week that mergers like the one now on the table threaten to overturn public restraint on critical utility monopolies. “Virginia’s SB 253, signed into law this spring, was specifically designed to shift more of those infrastructure costs onto data centers and away from residential customers,” he said. “The question now is how NextEra [a company whose growth thesis is built on serving large-load customers] implements a law that was designed to make those same customers pay more and more. That inequality between the new owner’s business model and the state’s cost allocation policy is what stakeholders should be watching.”
The merger won’t be a done deal for at least another year, as it must be approved by shareholders of both corporations and pass muster with a bevy of regulatory agencies, including the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission and the U.S. Dept. of Justice, as well as state regulators in Virginia—notably the State Corporation Commission—and both Carolinas. But as imposing as that sounds, it comes in the context of a White House that is more than receptive to corporate mergers and whose favorite adjective is “big.”
It also comes at a time when the massive data center build-out is driving electricity bills steadily higher, with Americans paying an average of 8.5% more for electricity in December than a year earlier, and 28% more over the past five years. The National Energy Assistance Directors Association is projecting that U.S. households will pay an estimated $778 to cool their homes this summer, also an 8.5% increase over last year.
Roof-top solar has never looked more attractive. The proposed data center at Staunton Crossing has never looked uglier.
Looking askance 