Two of America’s largest power companies have plans to merge. NextEra Energy intends to acquire Dominion Energy in a deal that, if approved, could have implications for how fast utilities can build new infrastructure for surging electricity demand and how much consumers will have to pay.
Valued at nearly $67 billion, the deal would create a single company controlling both the largest data center market in the U.S. and the nation’s biggest renewable energy development operation. The combined company would serve about 10 million utility customer accounts across Florida, Virginia, North Carolina and South Carolina, and own 110 gigawatts of generation from a wide array of energy sources, according to Axios.
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The deal still must be approved by federal and state regulators, which may not happen until 2027.
The announcement lands at a pivotal moment for the utility industry. The electricity needs of AI data centers are pushing utilities to expand at a pace not seen in decades. Meanwhile, ratepayers across the country are facing increasing costs to power their homes. The merger announcement has drawn mixed reactions from industry analysts and consumer advocates.
What does it mean for data center development?
“Electricity demand is rising faster than it has in decades,” NextEra CEO John Ketchum said in a statement. Ketchum has been tapped to lead the combined company.
Dominion’s service territory in Northern Virginia is home to the largest concentration of data centers in the world. Currently, there are 51 gigawatts of prospective data center projects looking to connect to the Dominion grid, UtilityDive reported.
The combined company would hold a pipeline of more than 130 gigawatts of prospective large electricity loads, according to a press release.
NextEra has been a leader in the development of renewable energy, and more recently, the rollout of grid-scale batteries that help store power from wind and solar for periods when the sun doesn’t shine or the wind doesn’t blow.
Jigar Shah, who was a Department of Energy official in the Biden administration, said NextEra is spending $5.5 billion on batteries through 2029 to add to its existing battery fleet with a nearly 4-gigawatt capacity.
“Dropping NextEra’s storage expertise onto Virginia’s data center load could be transformative,” Shah wrote in a post on X.
How could ratepayers be impacted?
Dominion said the merger would not increase rates for its customers. And as part of the deal, the companies have proposed $2.3 billion in bill credits for Dominion customers in Virginia, North Carolina and South Carolina, spread over two years following the close of the merger.
But consumer advocates are raising alarms, pointing to failed acquisitions in the past, and NextEra’s track record in Florida.
The company has previously attempted mergers with Hawaiian Electric, Texas’ Oncor Electric and Duke Energy in North Carolina. Duke Energy turned down the deal while the Texas and Hawaii mergers “failed due to regulators’ skepticism,” said Shelby Green, research and communications manager at the utility watchdog group Energy and Policy Institute.
“This time around, NextEra is trying to smooth over regulators’ skepticism by harping on ‘customer benefits,’ largely by offering short-term savings in the form of bill credits,” Green told Straight Arrow. “After that, customers are on their own.”
In Florida, NextEra’s subsidiary Florida Power & Light received approval last year for a $7 billion rate increase that inflated monthly customer bills by $7 to $14 per month. At the same time, the utility’s guaranteed rate of return on infrastructure investments increased to 10.9%, which opponents argued is higher than the industry standard.
“Before Virginia ratepayers are locked into a relationship with NextEra Energy, every policymaker and regulator in the Commonwealth needs to understand what NextEra has done in Florida,” said Brennan Gilmore, executive director of the nonprofit Clean Virginia, in a press release.
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