Virginia hosts the largest concentration of data centers in the world, and its regulator has now built a rate structure around that fact. In its final order in Dominion Energy Virginia's 2025 biennial review, issued on November 25, 2025, the State Corporation Commission (SCC) created a new GS-5 rate class for customers demanding 25 megawatts or more. The class takes effect on January 1, 2027. A fact sheet the SCC posted on February 24, 2026 sets out how the new rules will work and why the commission adopted them.
The core idea is simple. Large load customers such as hyperscale data centers will have their rates set separately, based on the costs of serving them, rather than sharing a class with other large commercial users. "This means that the SCC will now set rates separately for these large customers to recover the unique costs of providing them with electric service, minimizing cost shifting to other customer classes," the fact sheet says.
The four safeguards
The order layers several protections on top of the new class.
The first is a minimum contract term. New large load customers that contract for service on or after January 1, 2027 must take and pay for electric service for at least 14 years.
The second is a minimum charge. Large load customers must pay at least 85% of the transmission and distribution costs incurred to serve them each month, regardless of how much electricity they actually use. The SCC news release on the order puts it as a minimum of 85% of contracted distribution and transmission demand and 60% of generation demand. Unlike the contract term, this obligation applies to new and existing large load customers, although any customer that began service before January 1, 2016 is exempt.
The third is collateral. Large load customers without sufficient credit may have to guarantee funds covering up to 60% of their minimum charges over the contract term. This applies to new customers contracting from January 1, 2027.
The fourth is cost allocation. The SCC ordered Dominion to submit alternative cost allocation proposals for generation and transmission in future proceedings, so that costs that cannot be traced to a single customer are spread in a way that better reflects the growth of large loads. It also ordered Dominion to file its process for interconnecting large load customers for SCC review and approval by February 2, 2026.
The rate case around it
The data center provisions sat inside a broader rate decision that will be felt by every Dominion customer. Dominion had asked for base rate increases of $822 million in 2026 and $345 million in 2027. The commission found that the evidence supported $565.7 million in 2026 and $209.9 million in 2027.
For a typical residential customer, the approved rates mean a monthly increase of $11.24 in 2026, which the SCC said is 23.7% lower than Dominion requested, and $2.36 in 2027, 51.2% lower than requested. The commission raised Dominion's authorized return on equity from 9.7% to 9.8%, below the 10.4% the company had sought.
"As the utility regulator, we are obligated by law to set a revenue requirement that affords the Company an opportunity to recover reasonable and prudent projected costs and earn a reasonable rate of return," the commissioners wrote. "In this case, that has resulted in an increase in rates, but not to the extent requested by Dominion."
The juxtaposition matters politically. Residential bills are rising, and data center growth is the most visible change in Virginia's electricity system. The GS-5 class is the commission's answer to the question of whether households are paying for that growth.
Why the structure looks like this
Each safeguard addresses a specific risk.
A utility that builds substations, lines and generation for a 300 MW campus recovers those costs over decades through rates. If the customer leaves after five years, or never ramps to its contracted load, the assets remain and their cost falls on everyone else. A 14-year contract ties the customer to the period over which much of that investment is recovered.
The 85% minimum charge on transmission and distribution addresses under-use. Data center developers often contract for more capacity than they use in the early years, partly to secure grid access in a constrained market. A minimum bill based on contracted rather than actual demand means the customer carries the cost of the capacity it reserved.
Collateral addresses counterparty risk. Hyperscalers have deep balance sheets, but many campuses are built by developers and special purpose companies that may not. Requiring security from customers without sufficient credit protects against a developer failing midway through a contract.
The differential treatment of generation, at 60% rather than 85%, reflects the fact that generation costs are more fungible. Power plants serve the whole system and can be redeployed to other load if a data center leaves, whereas a dedicated substation cannot.
The PJM backdrop
Dominion is part of PJM Interconnection, and the cost pressure that prompted the GS-5 class is not only local. PJM's capacity auctions for the 2025/26 and later delivery years cleared at sharply higher prices than in previous years, and PJM's own load forecasts attribute most of the expected growth in peak demand to data centers, with Dominion's zone among the largest contributors.
Capacity costs flow through to every customer in a zone. A state rate class cannot change what PJM charges for capacity, but it can change how those charges and the utility's own investment are divided among customers. That is the lever Virginia has pulled.
How it compares
Virginia is not the first state to move in this direction. In July 2025, the Public Utilities Commission of Ohio approved an AEP Ohio data center tariff that requires new data centers to pay for at least 85% of their contracted capacity for up to 12 years, including a ramp period. Georgia's Public Service Commission approved a rule in January 2025 allowing Georgia Power to set special terms, including contracts of up to 15 years and minimum bills, for new customers above 100 MW. Other utilities across PJM, MISO and the Southeast have filed or adopted large load tariffs with similar elements.
What distinguishes Virginia is scale. The Dominion zone carries more data center load than any other utility service area in the US, so the GS-5 rules will govern a larger share of national data center growth than any comparable tariff.
What to watch
Three follow-up items will determine how much the new class changes outcomes. The first is the cost allocation proposals, which will decide how much of Dominion's shared generation and transmission cost is assigned to GS-5. The second is the interconnection process filing, which will shape how quickly new campuses can connect. The third is the 2027 transition itself, when existing large customers move into the new class and the minimum charge begins to bite.
The SCC described Virginia as "one of the first states to adopt comprehensive safeguards." Whether the rules are strict enough to protect households without pushing investment elsewhere will become clear only once the class is in operation.