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State Commission Requires Data Centers to Pay Interconnection Facilities Costs
On July 31, 2026 the Virginia State Corporation Commission (SCC) entered an final order directing large load customers including data centers in Dominion’s service territory to pay for the “direct connect” facilities needed to serve them. These are the facilities that connect the customer to the bulk transmission system and include substations, each of which can cost between $25 million to $50 million, based on evidence presented in the case.
In terms of a contribution in aid of construction or “CIAC”the Commission found that the “record established that there is a relationship between mandatory CIACs and the risk addressed by collateral requirements recently approved for certain large-load customers.53 The Commission directs the Company, in coordination with Staff, to consider how the mandatory CIAC can be used to offset or reduce collateral requirements in an equitable manner.”
The CIAC payment – – is calculated by netting anticipated transmission revenues against the costs and will be further fleshed out in a filing by Dominion within 90 days. This CIAC payment should reduce or eliminate the customer’s collateral requirement.
The SCC further concluded that the evidence showed that the provisions in the new large load rate schedule and associated terms and conditions of service will lead to $78 million in additional revenues from data centers during the upcoming transmission rate year. About $56.4 million of that amount will be allocated to residential customers (the rest to small commercial customers). That allocated reduces the average rate increase for residential customers from about $3.00 to $1.00 per month.
The Commission also decided that they will initiate a separate proceeding to determine whether a CIAC or direct cost assignment is appropriate for upstream transmission facilities.
