The largest energy industry merger in American history could lower electricity bills and speed the build-out of infrastructure to power more data centers — if it can get past the buzz of affordability policy.
The proposed connection, announced Monday, is designed for the age of artificial intelligence. This would create a power giant on par with the world’s largest oil companies, consisting of NextEra Energy, the nation’s largest utility, and Dominion Energy, which has the world’s largest concentration of data centers.
“I can’t emphasize enough that this is a defining moment,” NextEra CEO John Ketchum said on an investor call Monday. “The country needs more energy infrastructure built faster, more efficiently and more cost-effectively than ever before. Combining two major American companies can better achieve the speed and scale that the moment requires.”
The deal will result in lower costs for Dominion’s customers in Virginia, North Carolina and South Carolina through a two-year $2.25 billion payout, which would reduce it to about $25 a month by 2028, Ketchum said.
But elected officials in Virginia, where Dominion is a powerful fixture in state politics, We’re wary of NextEra’s claims A merger creating a dominant utility holding company could reduce costs to taxpayers in the long run, it said.
“This merger needs to be strongly examined for how it will impact energy bills,” Rep. Suhas Subramanyam (D-Va.), whose district includes “Data Center Street” in Northern Virginia, said in a statement. “A company that specialized in building energy infrastructure acquired a company that liked to raise rates for new infrastructure.”
The deal also must be approved by federal regulators. Industry analysts say they expect the country to receive approval from the Federal Energy Regulatory Commission, which is under pressure from the Trump administration, to speed up data center connections to regional power grids.
“With this administration so focused on winning the AI war, they will do whatever it takes to help companies respond to gigawatt demand,” said James West, an analyst at Melius Research.
The deal also requires approval from the Nuclear Regulatory Commission as well as state regulators in North Carolina, South Carolina and Virginia.
But Virginia may prove the biggest bump in the road. Democratic Governor Abigail Spanberger, who was elected to office in November. continued to keep costs low for households Seeing higher electricity bills. Democratic Attorney General Jay Jones, whose office also serves as an advocate for Virginia’s taxpayers put the deal under the microscope. The deal will need approval from the Virginia State Corporation Commission.
“We take this role very seriously and will review relevant regulatory filings to protect taxpayers and evaluate the allegations referenced in the announcement,” Jones spokeswoman RaeAnn Pickett said.
Spanberger’s office did not immediately respond to requests for comment.
Both of the state’s Democratic senators urged caution. “Any proposed merger must put Virginia energy customers first and ensure taxpayers have access to reliable and affordable energy,” said a spokesman for Sen. Mark Warner.
“The devil is in the details,” said a spokesman for Sen. Tim Kaine, the former governor of Virginia.
By acquiring Richmond, Virginia-based Dominion, NextEra is acquiring a services unit at the heart of America’s data center boom. Virginia is home to the world’s largest collection of energy-consuming data centers for cloud computing and artificial intelligence. Dominion has added more and more technology industry customers in recent quarters.
As energy demand from data centers grows rapidly, NextEra has positioned itself as the power supplier of choice for technology companies. NextEra in January 2025 partnership announced with gas turbine manufacturer GE Vernova to develop power plants serving data centers. The company was also selected to develop by the White House in March. 10 gigawatt natural gas capacity in Pennsylvania and Texas as part of a trade deal with Japan.
The deal is “the clearest possible confirmation that the AI-driven energy demand supercycle is a decades-long infrastructure build, not a cyclical trade,” Wedbush energy industry analysts said in a note to clients Monday.
Dominion is a lobbying force in Virginia. For decades, the monopolistic utility has been a major corporate contributor to legislative races, allowing it to get much of what it wants through the Virginia General Assembly. That changed last year as state regulators came under political pressure. limiting benefit rate increases – and as tensions mount over who will foot the bill for utility spending on the infrastructure to serve data center demand.
Rob Rains, director of policy research at Washington Analysis, wrote that Dominion has enough political baggage in Virginia that the state could emerge as the deal’s biggest obstacle.
State regulators will use the regulatory cost and benefit test to review the deal, he wrote, “so some type of agreement may be required to get approval and that still may not be sufficient.”
Alex Kania, utilities and energy research analyst at BTIG, said states are likely to raise questions about impacts on retail energy prices.
“Anytime you see a regulatory process like this, there’s going to be a lot of scrutiny that’s going to be applied to that affordability equation,” Kania said. “It will be critical for NextEra and Dominion to show customers in all three states that there are credit score benefits as well as interest rate benefits.”
This isn’t the first time NextEra has tried to acquire a major utility. It attempted to acquire Duke Energy in 2020 but was rejected by the North Carolina-based utility giant.
NextEra executives expressed optimism that they could complete the deal with Dominion, estimating it would take 12-18 months to obtain the necessary regulatory approvals.
“I think we’ve tried to structure this transaction in a really thoughtful way. We’re putting customers first,” Ketchum said.
Joel Kirkland and Benjamin Storrow contributed to this report.
