Microsoft appeals Virginia rule on upfront power grid costs for data centers

In short: Microsoft has appealed to the Virginia Supreme Court over a rule that makes data centre developers pay upfront for new power transmission upgrades.

What happened

Microsoft filed an appeal after Virginia regulators ordered Dominion Energy to charge data centres directly and upfront for transmission infrastructure built for them. Transmission lines are the high voltage “highways” that move electricity from power plants to where it is used.

Virginia is home to the world’s largest cluster of data centres, and Microsoft has at least 11 campuses operating, planned, or under construction there. Data centres are large buildings filled with computers that run online services, and they use a lot of electricity. A typical large campus can need at least 100 megawatts, which is about enough to power 50,000 homes.

Dominion Energy had asked state regulators for permission to recover more than $1.5 billion it spent on transmission development. In the past, utilities often paid first and later collected the money through customer bills. Virginia’s State Corporation Commission changed that approach in July, aiming to protect regular customers from paying for upgrades meant mainly for data centres.

Microsoft said it still supports paying “the costs [data centres] cause,” and that the appeal is about making sure costs are assigned using “cost causation principles” (a basic idea that the party that creates the need should pay). The appeal notice did not specify which parts of the ruling Microsoft wants overturned.

Why it matters

Electricity prices are already rising, and residential electricity costs have increased 15% since President Donald Trump took office, according to the Energy Information Administration. If grid upgrades for data centres are paid through general customer bills, households could end up covering some of the cost, even though they did not cause the demand. The case also puts scrutiny on recent public pledges by major tech companies to cover the full energy and infrastructure costs tied to new data centres.

Source: Financial Times