Higher data center power tariffs: who pays for reserved capacity?

The campus problem

Illustrative scenario, not a claimed client result.

Assume an illustrative 180 MW campus develops in three 60 MW phases. Tenant A is committed, Tenant B can delay opening, and Tenant C remains uncontracted. The campus infrastructure company signs for the full service block because that appears to secure the ultimate development.

How separate tariffs can protect other customers

Consider an illustrative system upgrade with a $30 million annual revenue requirement. Suppose $12 million is attributable to a new campus under the accepted cost study. If the campus reliably funds that $12 million, the amount remaining for other customers is $18 million. If it contributes only $4 million and regulators allow recovery of the full requirement, another $8 million must be recovered elsewhere. These figures explain the mechanism; they are not a utility forecast or a recommended allocation.

Three protections address different failure points. Cost allocation assigns the appropriate share to the customers responsible for it. Minimum payments protect recovery when actual demand is below the commitment. Credit support and enforceable termination obligations address nonpayment and early departure. None works well if the original infrastructure forecast is inflated or the contractual counterparty cannot pay.

The claim should be fewer costs shifted to other customers, not guaranteed lower bills. Fuel prices, wholesale capacity, storm repairs, existing investment and the total approved revenue requirement can still raise rates. Virginia's decision itself approved residential increases. The reduction from the utility's requested increase cannot be attributed entirely to GS-5. SCC decision announcement

Virginia: approved, effective January 2027

Virginia's State Corporation Commission approved Dominion's new GS-5 large-load class on November 25, 2025, effective January 1, 2027. The final order defines eligibility as measured or contracted demand of at least 25 MW on a contiguous site and measured or expected load factor of at least 75% and minimum payments for qualifying customers based on 85% of contracted transmission and distribution demand and 60% of generation demand. Applicability must be checked against the tariff, not inferred from a data center label. Virginia SCC decision announcement The SCC's subsequent explanation describes a 14-year service obligation for new large-load customers contracting from January 1, 2027, credit-dependent security requirements and exceptions for some existing customers. It also calls for further examination of generation and transmission cost allocation. This is a package of protections, not simply a higher energy price applied to every facility. SCC large-load fact sheet The development implication is direct: a campus can consume less electricity than planned while retaining a substantial payment obligation. A low commodity price does not neutralize an oversized reservation.

Texas: statute and proposed rules are different

Texas SB 6 establishes large-load financial and interconnection requirements and directs a review of transmission cost allocation. It does not create one statewide data center electricity price. Texas SB 6, enrolled text In June 2026, Governor Abbott directed the PUC and ERCOT to identify further protections against shifting data center infrastructure costs to residential and small-business customers. A policy directive is not itself an approved customer tariff. Governor's June 2026 directive The July 24, 2026 Texas Register publishes Project 58000 proposals to replace summer four-coincident-peak transmission allocation with twelve monthly peaks, introduce large-load minimum billing demand, and begin certain billing when service is available rather than when the customer fully uses it. Proposed minimum demand uses the greatest of contracted peak, prior-year noncoincident peak or twelve-coincident-peak demand; the proposed billing obligation lasts at least 20 years. These are proposed provisions in the source reviewed, not a verified final tariff. A final adoption order and applicable utility implementation must be checked before underwriting them as binding. Texas Register, proposed rules Virginia's percentages should not be imported into a Texas model. Competitive retail supply, regulated delivery, municipal systems and cooperatives require different document sets. The common issue is who finances capacity that is built for a customer whose demand is uncertain.

SCC decision announcement

The cost of reserving capacity ahead of tenants

Under a hypothetical 85% demand floor applied to that entire block, minimum billable demand would be 153 MW. If actual demand were only 60 MW, the difference would be 93 MW. At an assumed $10 per kW-month for the modeled demand component, that difference represents $930,000 monthly. This is arithmetic using an illustrative charge, not a Dominion or Texas bill calculation. Energy, other tariff components and ramp provisions are excluded.

The missing tenant does not automatically reduce the utility obligation. If the campus company owes it while leases pass through only measured consumption, the sponsor funds the gap. Charging Tenant A for Tenant C's speculative phase is not a solution unless the allocation is explicit and commercially accepted.

Solutions and their tradeoffs

Phase the service reservation

Limit unsupported minimum payments by matching the opening block to supported tenant demand.

Conditions to resolve: Confirm expansion rights, later delivery dates and the cost of subsequent upgrades.

Reserve full capacity with funded support

Protect an early commitment where signed tenants and sponsor liquidity justify it.

Conditions to resolve: Size collateral and cash reserves for delayed occupancy, not only the expected ramp.

Match tenant reservations to utility commitments

Allocate payments to the parties benefiting from reserved capacity.

Conditions to resolve: Reconcile guarantees, termination, transfers and ramp dates across the actual contracts.

Add flexibility or on-site supply

Reduce purchased energy or eligible measured peaks where the tariff permits it.

Conditions to resolve: A contractual demand floor can remain even when imports fall. Test standby charges, permits and capital cost.

Our approach: from the decision to delivery

Sitebraid treats the tariff as part of the campus development system. We establish the applicable provider route, separate approved terms from pending changes, and reconcile utility demand to tenant demand, cooling and shared losses. The model must distinguish energy expense, demand charges, infrastructure contributions and collateral rather than compress them into one advertised rate.

Align the obligation and the balance sheet

We then test the service block against tenant credit and the phase plan. For every shared asset, the work identifies the owner, funding source, payment trigger and party carrying delayed occupancy. Utility agreements and tenant commitments must be reconciled by the appropriate commercial and legal teams. Sitebraid's responsibility is the integrated solution and defined decision, not a promise that a regulator will approve an exception.

Fund the downside before releasing capital

The downside case includes a delayed phase, tenant failure, higher delivery charges and on-site generation unavailable when needed. We compare phased service with the full reservation and establish what must change before capital is released. A developer should know the maximum cash exposure before describing power as secured.

How we protect the decision

Solar, storage or a private network should be tested against the actual charge it can change. An asset that lowers imports may leave the billing floor intact. Do not finance equipment using savings that depend on a proposed tariff exception or unavailable operating permission.

The result the owner should require

The engagement should produce a documented service route, a reconciled phase-by-phase bill model, clear ownership of minimum obligations, and sufficient funding for the accepted downside. Completion means the owner can choose and fund a supportable commitment. A target electricity price without the agreements behind it is not completion.

The decision to take forward

The strongest campus is not the one that shifts the most risk to households or promises the lowest energy rate. It is the one whose infrastructure, tenant revenue and credit can sustain the service it reserves.