Virginia’s Dominion Energy and Florida’s NextEra Energy have announced a merger. The proposed electricity behemoth would host 110 gigawatts of power, making it the largest regulated electricity utility company in the nation. This deal has yet to be sanctioned by the Federal Energy Regulatory Commission as well as federal antitrust agencies, and NextEra Energy has a history of thwarted acquisition efforts. The level of scrutiny exhibited by these previously failed efforts is entirely necessary for this merger. The rise of megawatt-guzzling data centers to support artificial intelligence presents a motive for the ambitious Florida energy company merger, which may result in higher energy bills for consumers and drastic environmental consequences. While there are sophisticated legal efforts to mitigate these concerns, any real examination into the merger reveals a taste for profit at the detriment of Virginians. While Dominion Energy is certainly not the gold standard for energy companies, state regulatory agencies need to halt this merger before Virginians, and others, suffer the effects of a malevolent monopoly. Private companies are not required to look out for Virginians — regulators need to.
One thing is for certain — Dominion Energy is in need of real reform. Jigar Shah, solar energy enthusiast and former Biden administration official, once said that the Virginian energy company “may be the worst-run utility in America.” It has been known for sporadic rate spikes, including those up to 183 percent during colder months. Its infrastructure is out-dated and insufficient for the energy demand of Virginian data centers, meaning customer coverage is diminishing. It continually fails to accurately price its products, demonstrated by the repeated rate hikes to recover lost profits in recent years — the most recent for one billion dollars. Even so, over the past few decades, the company has systematically overcharged Virginians by about $2 billion. Dominion gets away with all of this through its lobbying influence on Richmond’s lawmakers. Dominion is not a successful company by any means, but its proposed life-line via NextEra Energy is likely flipping Virginians out of the frying pan and into the fire.
Dominion is flawed, but worse so, NextEra is a company attempting a monopolistic merger in an industry already racked with the kind of cartel behavior that does not work for consumers. As most monopolies know, the best way to convince Virginians that this merger is in their interest is to offer cheaper energy. The companies offered a $2.25 billion energy cost credit spread across two years — it aims to lower Virginians’ energy bills. The effect of this attempted bribery is stunted when one considers the future rate hikes. It does not take a mathematician to add the $1 billion of backlogged payments it must make back and $2 billion in overcharges and deem these credits a publicity stunt. Instead of justifying a monopoly with real energy savings and updated infrastructure to Virginians, these companies push an imaginary one-time credit.
It makes sense to hide the true effects of a merger behind flimsy bribes if the true intent is to profit off of dubious data center energy demand. The effect of data center growth in Virginia is hard to miss in this merger. Northern Virginia is a hotbed for the new data centers fueling an increasing demand for artificial intelligence while also posing huge threats for consumers.
For one, there is the well-known environmental degradation — data centers pose huge problems to water supplies that Virginians rely on for drinking and recreation. NextEra is no friend of sustainability, as even though 22 percent of the company’s electricity production comes from solar, NextEra seems only to be a fan of renewable energy when they are profiting from it. For example, the company lobbied heavily in Florida to restrict the spread of rooftop solar panels selling surplus energy back to the grid, a major enticement to homeowners. Additionally, just as offshore wind farms expand off the coast of Virginia, NextEra seems poised to halt that progress. Data centers seem to be the next big sustainability issue for NextEra to pretend to care about, and the merger with Dominion will pave the way for further environmental damage. It ain’t easy bein’ green, especially if you do not try.
Additionally, the cost of data centers shows up on Virginians’ energy bills. Without rehashing an issue well-debated, data centers suck up electricity on a grid with a finite supply. Gov. Abigail Spanberger recently signed a bill to remedy this effect, pushing the energy costs on data centers rather than Virginians. But this policy has been criticized for not doing enough, and with Dominion merging with a new profit-aggressive data center-oriented company, the problem of Virginians footing data centers’ bills remains.
Expecting a large company to respect the well-being of its customers is a stretch of imagination. Mergers are not instigated for the benefits they bring to new markets, but instead, they are instigated for the benefits they bring to companies — hence the large political donations of both companies. NextEra and Dominion claim that this merger will save money on Virginians’ energy bills — of course they do. They fail to mention Florida’s large energy profit margins taken from the pockets of Floridians. However, it should be expected that government regulators will put the energy cost concerns of Virginians before the profits of a Florida-based company. Spanberger has made steps, but Virginians cannot keep picking up the slack of irresponsible energy companies. This merger will only make Dominion and NextEra more powerful, but the benefits to taxpayers are slim. Virginia regulators cannot allow this to come to pass.
Paul Kurtzweil is an opinion columnist who writes about economics, business and housing for The Cavalier Daily. He can be reached at opinion@cavalierdaily.com.
The opinions expressed in this column are not necessarily those of The Cavalier Daily. Columns represent the views of the authors alone.
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