This story was reported and written by our media partner the Virginia Mercury.
Public hearings in the case to decide the fate of the proposed merger between Dominion Energy and Florida-based NextEra Energy begin this week at the State Corporation Commission. The $67 billion all-stock deal would create the largest regulated utility in the world.
In the months preceding the hearings, scores of lawmakers, consumer advocates and citizens have strongly opposed the proposal, with leaders at the top level of state government pushing for more time to review the case.
As public testimony gets underway Thursday, here are the key details of the case so far.
The proposal: original and revamped versions
NextEra owns the traditional utility Florida Power and Light Company as well as the unregulated NextEra Energy Resources, which constructs and operates large scale energy infrastructure. If NextEra acquires Dominion, it would create a combined portfolio of over 10 million customers, 110 gigawatts of power, and a connection queue of 130 GW.
In the joint proposal’s latest filing, the companies laid out a deal that included a bill credit totalling about $10 monthly on the average residential customer’s bill, for four years total.
The revised offerings also include job protection for Dominion employees for five years, the promise to build an office building in downtown Richmond and various workforce development investments and weatherization programs totaling up to $200 million.
NextEra shareholders will own 74.5% of shares and Dominion shareholders will own 25.5%, if the merger is approved.
Dominion has assured regulators that the utility would remain its own entity that is still beholden to Virginia state laws, including the Virginia Clean Economy Act and its mandate that Dominion be carbon-free by 2045, with some exceptions.
In a July interview with the Mercury, Dominion’s vice president of corporate affairs and communication Bill Murray said that the merging of the companies would expand the energy infrastructure buying power, a cost-cutting maneuver.
Buying in bulk would bring down the price of infrastructure needed in the buildout to meet the power demands that are growing in both the utilities’ territories, he said.
“It’s not a matter of we threw our hands up and said ‘we can’t do this, somebody, please, merge with us,’” Murray said. “But doing it together… at a one-notch credit rating upgrade, financing it more efficiently. That’s a benefit to customers.”
This is not the first iteration of the proposal. The first version of the deal was filed over the summer and included bill credits for just two years. Dominion customers in the GS5 rate class, largely data centers, would have been able to cash in on the credits, too.
But the updated version redirects the savings GS5 customers would have realized in order to extend the credit for residential customers.
In his testimony, Dominion CEO Bob Blue stated the companies “believe(d) that their original bill credit allocation proposal is fair and reasonable,” but they offered the alternative plan as a way to ease concerns.
Another aspect of the merger case that prompted public concerns and led some lawmakers to raise questions of ethics: SCC Chairwoman Kelsey Bagot used to work for NextEra.
Bagot worked as an attorney for the utility for two years until 2024 when she was appointed to the commission, which led to her resignation of the post.
Sen. Scott Surovell, D-Fairfax, he stated in an Aug. 12 letter to Bagot that “several members of the General Assembly and other third parties that have raised questions about your continued participation as a commissioner in this matter due to your prior employment by NextEra Energy especially in light of your prior recusal in a prior NextEra Energy case.”
In a response letter, Bagot stated that she will not be recusing herself from the merger case, despite stepping back during previous NextEra related cases.
Bagot said she consulted legal counsel and determined that her involvement in the merger case did not violate the Canons of Judicial Conduct.
“As has been demonstrated by long-standing historical Commissioner practice, mere work history with a regulated entity has not served as a categorical basis requiring recusal,” Bagot wrote.
Pre-filed arguments against the merger
Virginia law is at the center of the case, and is a key consideration for commissioners.
The Utility Transfers Act states:
The commissioners will base their decision on whether “adequate service to the public at just and reasonable rates will not be impaired or jeopardized” by approving the merging of the two companies .
In the initial review of the proposal, SCC staff made a slate of recommendations regarding whether the two companies have met their burden of proof that the merger would protect ratepayers. Staff determined that they had not.
“The Merger Commitments and Supplemental Merger Commitments of the Petitioners are not sufficient to ensure that (Dominion) will maintain the resources to provide adequate service to its customers post-Merger,” staff testimony stated, adding that NextEra’s “unregulated, competitive business” exposed Dominion to additional risks.
That unregulated business is the NextEra Energy Resources (NEER) branch of the company. The energy infrastructure value is closely tied to the market value of power. As power demands grow, so does the cost of electricity, leading to which means more profits for these unregulated companies.
While the commissioners are not bound to staff’s recommendations, they are taken into careful consideration.
In their filing, the consumer advocacy group Clean Virginia echoed staff’s concerns about the high-risk aspect of the unregulated portion of NextEra’s investments and how it is a wholly different system than Dominion’s traditional regulated utility model.
Staff created a list of over 100 requirements and conditions that they felt would protect Virginia ratepayers if the merger were allowed to move forward.
Dominion’s president should remain a Virginia resident, SCC staff recommended, and the company should maintain separate bank accounts and financing arrangements.
Another condition would bar NextEra Energy Transmission from owning any future transmission projects in the Dominion zone of regional grid operator PJM.
Dominion and NextEra have accepted a number of those policy recommendations from SCC staff and the Attorney General’s office. They did reject some aspects, including a rate freeze and certain ring-fencing protection plans.
In expert testimonyfiled on behalf of Gov. Abigail Spanberger and Chief Energy Officer Josephus Allmond, the governor’s administration called for expanded benefits and protections for rate payers.
Increasing customers’ bill credits to $29 monthly is chief among their recommendations, along with a base rate freeze for six years.
They also suggest formulating a new, separate subsidiary to oversee building zero-carbon energy generation serving large data centers, which would be financially walled off from the rest of customers.
“A $10 monthly bill credit does not provide much confidence when Dominion has already petitioned the Commission to recover more than $10 per month in fuel-related costs this year alone,” said Robert McCann in his testimony for the governor.
The governor also wants to tie Dominion executives’ bonuses to ratepayer affordability, efficiency measures, and clean energy investment benchmarks. Her recommendation only allows 50% of the compensation to be tied to shareholder benefits.
The concerns laid out in SCC staff’s recommendations mirror those of Lt. Gov. Hashmi, who formally opposed the merger last month.
After hosting a statewide listening tour, Hashmi said the overwhelming sentiment from Virginians is that they were not convinced the merger would bring down their utility bills, which have increased in recent years.
If the merger succeeds, NextEra would take over the utility company supplying power to the most data centers in the nation.
Dominion’s interconnection queue, the time it will take to bring power to any one data center project, stretches about seven years. Amazon and Google are participating in the merger case as intervenors. They have some of their own recommendations on policies that could be changed to help with bringing power to projects and the grid sooner.
“(Dominion’s) large-load interconnection study process is not keeping pace with demand. The current batch process produces project-by-project upgrade solutions whose costs are borne broadly by customers,”Cameron Brooks said on behalf of Amazon Data Services in prefiled testimony.
“The Company faces a capacity shortfall, yet customers willing to fund, source, enable, or already control new capacity at their own expense have no pathway to receive credit for that capacity.”
NextEra’s past raises concerns
In the months leading up to the beginning of the hearings, lawmakers dug into NextEra’s past business dealings. The utility has made multiple failed attempts to acquire other utilities across the nation.
Hawaiian regulators determined that NextEra’s attempt to take over Hawaiian Electric Companies was not in the public interest. In Texas, the company’s effort to take on Oncor was determined to be a risk for ratepayers due to NextEra’s hefty debt. That deal did not have tangible benefits for ratepayers, regulators said.
This summer, Virginia legislators learnedfrom industry experts that the proliferation of data centers in Virginia is an attractive draw for companies like NextEra, who want to capitalize on the buildout of the energy infrastructure needed to support them.
Clean Virginia, who is also an intervenor in the merger case, successfully petitioned to include details of a $150 million settlement over whether the company lied about its involvement in political interference schemes in Florida to be in the case’s evidence.
Requests for more time
While the General Assembly does not get to weigh in on whether the merger should be approved or not, lawmakers have tried to extend the amount of time the SCC could have to review the case.
Legislators called on Spanberger to convene a special session in order to pass a policy that would allow for the SCC to extend their six-month review period. The governor declined that request, noting that she already took action by intervening in the case.
When the revamped proposal was filed, Attorney General Jay Jones called for the clock to be reset on the six-month countdown when the SCC must make a determination on the merger. The commission has not yet ruled on this request.
That deadline remains at Jan. 11. The first public hearings have already begun in person across the state, which is a rare move by the commission.
Telephonic public testimony begins Nov. 5, with the final in person hearing scheduled in Richmond at the SCC the same day. The evidentiary portion of the case will begin Nov. 17.