A BILL to direct the State Corporation Commission to conduct proceedings to review cost allocation among different customer classifications for certain electric utilities.
HB658 directs the Virginia State Corporation Commission (SCC) to open proceedings examining whether certain electric utility cost-allocation practices cause customers who are not data centers to subsidize transmission, generation, and distribution costs attributable to serving data centers. The bill applies to Phase I and Phase II utilities and focuses on how costs are assigned among customer classes, including retail customers and electric service providers receiving transmission service from those utilities.
For transmission costs, the SCC must determine whether current or proposed allocations require non-data-center customers to unreasonably subsidize data-center-related transmission costs. The bill instructs the Commission to ensure, to the maximum extent possible, that transmission projects designed, constructed, or operated solely or primarily to serve data centers are not recovered from other customers. It creates a presumption that certain supplemental transmission projects serving data centers are primarily for data centers unless rebutted by clear and convincing evidence, and the proceeding must be completed by January 1, 2027. The Commission may satisfy this requirement through an ongoing proceeding.
For generation and distribution costs, the bill requires a separate proceeding for Phase II utilities to assess whether non-data-center customers are being asked to subsidize those costs as well. The utility must submit at least three alternative cost-allocation proposals in executable, fully replicable formats, including at least one using the probability of dispatch methodology referenced by NARUC. The SCC is authorized to order changes to the utility’s cost-allocation structure if it finds them appropriate.
The bill’s impact would be to increase regulatory scrutiny of how electric utilities recover costs associated with serving large data center loads, potentially shifting more of those costs to data center customers rather than spreading them across broader customer classes. It would affect Phase I and Phase II electric utilities, the SCC, data center operators, and other utility customers who may otherwise bear part of the infrastructure costs tied to data center growth.
The available legislative context suggests the bill was not advanced and was left in the House Labor and Commerce Committee. Because there are no recorded votes or committee transcripts, there is no direct evidence of floor debate or formal opposition in the provided materials. The bill’s structure, however, indicates a policy concern about cross-subsidization and a general intent to protect non-data-center customers from paying for utility infrastructure built to serve data centers.
HB658 would require the State Corporation Commission to investigate and potentially revise how electric utilities allocate transmission, generation, and distribution costs among customer classes, with a specific focus on preventing non-data-center customers from subsidizing costs associated with data centers. It would affect Phase I and Phase II utilities, the SCC’s ratemaking and cost-allocation proceedings, and data center customers that drive new utility infrastructure needs. The bill also establishes a rebuttable presumption for certain supplemental transmission projects and requires utilities to provide replicable alternative cost-allocation models, which could influence future utility rate design and cost recovery practices.
The bill appears to reflect a policy concern that rapid data center growth may be shifting utility infrastructure costs onto ordinary customers, and its language is designed to protect non-data-center ratepayers. No committee transcripts or votes are available, so there is no recorded public debate in the provided materials. The bill’s referral status—left in Labor and Commerce—suggests it did not gain enough momentum to advance, but the text itself indicates a clear pro-consumer, cost-allocation-focused intent.
The main point of contention is likely whether data centers should bear the full cost of the transmission, generation, and distribution infrastructure needed to serve them, or whether those costs should be shared across broader customer classes. Utilities may be concerned about the administrative burden of new proceedings, the presumption against cost recovery from other customers, and the requirement to produce multiple executable cost-allocation alternatives. Data center interests may object to being singled out or to methodologies that could increase their rates, while consumer advocates would likely support the bill’s effort to prevent cross-subsidization.