Virginia SCC orders mandatory transmission CIAC for data center direct-connect facilities, leaves upstream costs open

Virginia's State Corporation Commission issued a final order on 31 July 2026 directing Dominion Energy to file, within 90 days, an amended line-extension policy requiring mandatory contributions in aid of construction (CIAC) from data centers and other large-load customers that trigger dedicated transmission infrastructure^[1]. The ruling resolves the immediate cost-allocation question in Dominion's Rider T-1 rate case - but explicitly leaves the harder question of upstream network costs for a follow-on proceeding.

What the order requires

The SCC directed Dominion to file within 90 days an amended line-extension policy requiring a mandatory CIAC for defined "direct connect" transmission facilities. The charge applies to the substations and transmission lines that physically connect a large-load customer to the bulk transmission system, and it will apply prospectively to new or expanding loads that are the "but-for" cause of those dedicated facilities.

The "but-for" standard was central to the Spanberger administration's position. Deputy Chief Energy Officer Louise White testified in July that "any network or substation upgrades that would not have been triggered but for a large load customer should be assigned directly to that customer." The SCC's order tracks that framing closely.

Google and Amazon both testified in favour of voluntary CIACs; the SCC ruled that the payments will be mandatory. That distinction matters: a voluntary framework would have left operators free to negotiate or decline, whereas a mandatory CIAC removes that optionality for any new or expanding direct-connect load going forward.

The Rider T-1 backdrop

The order emerged from Dominion's latest Rider T-1 rate adjustment case, in which the utility sought to recover around $1.5 billion in transmission costs^[1]. Rider T-1 is the line-item on every Dominion bill that recovers spending on high-voltage transmission lines and substations.

Dominion's own filings put the scale of the problem in plain terms: roughly 68% of $7.59 billion in new transmission projects planned through 2031 is driven by data center growth. Under the existing structure, those costs are spread broadly across rate classes - what the SCC's own staff attorney described as a "glaring cross-class subsidization" benefiting new large-load customers.

Dominion originally estimated the residential impact of the Rider T-1 increase at $2.90 per month for a typical 1,000 kWh household, then revised that figure down to $0.94 per month after recalculating its formula to levy more costs onto data centers and factoring in the new GS-5 rate class, which already requires large-load customers to pay a transmission demand charge based on at least 85% of their highest demand.

What the order does not resolve

The CIAC requirement covers only "direct connect" facilities - the last-mile substations and lines built exclusively for a single customer. It does not touch the broader network upgrades that Dominion builds to accommodate aggregate load growth across a region.

The SCC said it may use an upcoming docket to weigh whether the direct-assignment policy "could or should" also apply to more upstream transmission costs.^[1] That question - how to allocate the cost of backbone network reinforcements driven by data center clusters rather than individual facilities - is the larger and more contested issue. Critics including Grid Strategies have argued that direct assignment alone is insufficient and that Dominion should be directed to use PJM's regional competitive transmission planning process for the bulk of its investment, which would spread costs differently and introduce competitive procurement.

What to watch

Dominion's 90-day filing window runs to late October 2026. The SCC will then need to approve the amended tariff before it takes effect, so the first mandatory CIACs are unlikely to apply before 2027. The more consequential proceeding will be the new docket on upstream cost allocation - the one that Michael Barber of the Piedmont Environmental Council described as likely to draw "a lot of eyes" nationally, given Virginia's position as the largest data center market in the world^[1]. How the SCC draws the line between "direct connect" and "network" costs will determine whether the order is a meaningful shift or a narrow carve-out.