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⚡ THIS WEEK'S SIGNAL
Most of what data centers cost the grid never reaches you through a headline rate case. It arrives through riders, the small line items nobody reads. In Virginia, the transmission one is Rider T1. This summer, regulators trimmed its projected household increase from $2.90 to 94 cents a month and told Dominion to charge data centers directly for the substations built for them. Microsoft filed notice it may appeal. The fence-line costs moved. The expensive lines upstream haven't.
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📰 MAIN STORY
Dominion's homework is due in about a month. On July 31, Virginia's State Corporation Commission (SCC, the state's utility regulator) approved Dominion's Rider T1, the bill line that recovers transmission costs, in Case No. PUR-2026-00056. It also gave Dominion 90 days to file terms making large-load customers pay for the "direct connect" facilities built to serve them: substations and the equipment tying a customer to the bulk grid. We flagged the order in A $2.8 Billion Line, an $80 Million Deposit, and One 250 MW Customer and said the follow-on filing was the document to read. It lands on top of the GS-5 rate class from The Pledge Doesn't Set Your Rate. Here's What Does.
Read what each party is optimizing for. Dominion wants recovery it can defend: in rebuttal it backed its existing method while offering two alternatives that shift some costs to data centers, and it faces a NextEra merger hearing starting November 17. The Spanberger administration wants a "but for" standard: if an upgrade wouldn't exist without the customer, the customer pays. Commission staff, the Piedmont Environmental Council, Sierra Club and Appalachian Voices wanted mandatory upfront payments. Microsoft, with more than a dozen Virginia data centers per the Virginia Mercury, argued the case was never noticed for a methodology change, then filed a notice of appeal to the Virginia Supreme Court on August 28. Analysis: that notice is an option, not a bet. Assignments of error aren't due until 120 days after the order, so Microsoft reads Dominion's filing first.
Here is the contrast. A typical household using 1,000 kilowatt-hours a month will see Rider T1 rise 94 cents, down from the $2.90 Dominion first filed, a 67.5% cut the SCC attributes to two allocation changes, including counting the GS-5 class's 85% transmission minimum demand charge (SCC fact sheet). That is the cheap part. The Piedmont Environmental Council, citing Dominion, puts data center requests above 70 gigawatts, needing about 233 new substations at an estimated $6 billion to $12 billion before any new lines. The order moved fast on the equipment at the fence line. On higher-order transmission, the lines that cross everyone's county, the Commission chose what it called a more deliberate approach.
The numbers worth keeping. Dominion's May 1 application sought a $124.7 million increase to the rider's revenue requirement. GS-5 contracts run 14 years, and service agreements signed on or after January 1, 2027 carry $1.5 million per megawatt in collateral. Commissioners named Valley Link, a planned 115-mile, 765-kilovolt line from Lynchburg to Culpeper, as a project that could in future be directly assigned to GS-5. Governor Spanberger's September 18 Data Center Accountability Framework folds this tariff into her 2027 legislative package.
Scenario A: Dominion defines "direct connect" broadly, makes payment mandatory and upfront, and the SCC adopts it. Microsoft, Amazon, Google and Meta carry more capital per Virginia campus before energization, and Dominion shareholders, or a combined NextEra's, own a utility whose data center growth leans less on assets it must defend in rider cases. Analysis: customer-funded plant generally stays out of the rate base a utility earns a return on. Households see smaller T1 increments per new campus.
Scenario B: The filing defines it narrowly, or Microsoft's appeal buys time. Direct assignment stops at the substation fence, Valley Link-class lines keep flowing through class allocation, and ratepayers keep carrying them through T1 while the 2027 General Assembly argues.
Watch on or about October 29: Dominion's direct-assignment filing in PUR-2026-00056, and specifically how much wire it counts as "direct connect."
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🧾 DEAL DECODER
The instrument: a contribution in aid of construction (CIAC) for direct-connect facilities.
Who signs what. A large-load customer and Dominion, under terms Dominion must propose by late October through changes to its line-extension policy. Not a PPA, not a rate class, not GS-5's collateral posting.
Who fronts the capital, and who gets it back how. The customer pays upfront for the substation and connecting equipment; Dominion builds and owns it. Whether any portion is refundable is for the filing to answer. Contrast GS-5, where the customer pays over 14 years through an 85% transmission minimum demand charge (SCC November 2025 order).
Who eats the loss if the load never shows. Under a true CIAC, the customer already paid, like paying for your driveway before the house goes up. Everything past the driveway is undecided.
Precedent. California's draft Resolution E-5455 would require Google to post an extra refundable advance of $600,000 per megawatt. The next Virginia applicant will cite whichever regime costs less.
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⚡ QUICK HITS
Google's San Jose Vote Slipped Again, to October 8: CPUC President Reynolds held Resolution E-5455, PG&E's exceptional-case agreement to energize Google's 250 MW San Jose load, from the September 17 meeting, the third voting agenda it has come off since August. The advice letter was filed last December, and it is the California half of the same question Virginia is answering this fall: how much of the wire does one customer buy? [Stoel Rives]
A Merger Case Now Sits Beside the Rider Case: SCC hearings on NextEra's proposed acquisition of Dominion (PUR-2026-00112) begin November 17, and Governor Spanberger intervened on August 17, saying the deal as proposed risks saddling customers with unaffordable rates. For retail investors holding either name through an index fund, the direct-assignment filing and the merger record will be read in the same building within three weeks of each other. [ReisingerGooch]
PJM Asked FERC to Make Data Centers Bring Their Own Capacity: PJM's proposed Interim Resource Adequacy Service would put large loads that haven't paid for new capacity or backstop purchases first in line for curtailment on the grid's hardest days, and PJM asked FERC to rule within 60 days. For utility planners, the detail that matters is that it leaves retail cost allocation to the states, which means another SCC docket if it's approved. [Virginia Mercury]
The Next Rider Is Already Filed, and It Is Bigger: On August 12, Dominion asked to raise Rider DIST, its distribution rider covering grid transformation, undergrounding and rural broadband, to about $463.5 million for the rate year starting June 1, 2027. That adds roughly $3.46 a month for a typical 1,000 kWh household, more than three times this summer's T1 increase, and the SCC hasn't set a schedule yet. [ReisingerGooch]
Loudoun Takes Up Its Grandfather Clause October 6: Loudoun County staff will present an amendment that would strip by-right status from data center applications filed before the county's March 2025 change and require public hearings and a full board vote. For fence-line neighborhoods dealing with noise and backup generators, it is the first local venue where those complaints could reshape an already-filed project. [Virginia Mercury]
🧭 THE EXPOSURE MAP
If you hold equities. Analysis: direct assignment moves part of the grid buildout from regulated rate base toward hyperscaler capital budgets. That pressures the rate-base growth assumption behind regulated utilities and adds an upfront line to data center developers' project costs. Confirming or contradicting events: Dominion's October filing, the November 17 merger hearing, and Q3 hyperscaler capex commentary. Companies named here are participants in the structure, not recommendations.
If you run projects at a utility. Can your organization tell a customer, before the study is done, which facilities are direct connect and which are network? That line is about to carry a price, and the customer will want it in writing.
If you set or influence policy. Virginia is splitting cost causation into two speeds: fast at the fence line, deliberate upstream. The next venues are the SCC's review of Dominion's filing and the 2027 General Assembly.
If you pay a utility bill or buy AI compute. Rider T1's increase is 94 cents a month at 1,000 kWh. Any change from direct assignment reaches bills through future rider cases, over years, not months. Nothing here reprices your AI tools this quarter.
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🔧 TOOL / RESOURCE OF THE WEEK
Virginia SCC Docket Search: The commission's public case database, where Dominion's direct-assignment filing will appear under PUR-2026-00056. Ratepayers who want the actual terms rather than the press release can read the filing the day it posts. → scc.virginia.gov/docketsearch
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💬 CLOSING THOUGHT
I'm cautiously encouraged. A regulator put a principle on the fence line and a date on the filing, more than most states have done. For that to hold, "direct connect" has to mean more than the switchgear by the parking lot, and the upstream question can't stall in court. The driveway is getting priced. The highway isn't.
Will the upstream lines get settled in Richmond, or in Washington? I think that's the chapter a lot of us are waiting on.
