Dominion-NextEra merger hits turbulence, faces opposition from Va. leaders, SCC staff

Gov. Abigail Spanberger on Tuesday warned that Virginia regulators should reject the proposed $67 billion merger between Dominion Energy and NextEra Energy unless the companies agree to freeze residential base-rate increases for six years and nearly triple their promised monthly customer credits. 

Her demands came after State Corporation Commission staff recommended Monday that the deal as proposed be rejected, citing financial risks and inadequate protections for Dominion’s Virginia customers. Attorney General Jay Jones also spoke out against the merger Tuesday, joining Lt. Gov. Ghazala Hashmi’s opposition to the deal.

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“The deal in its current form is not nearly good enough for Virginia or for Virginians,” Spanberger told reporters in a Zoom call. 

The governor said the conditions her administration filed with the SCC on Monday were aggressive but achievable. She wants commitments that regulators can enforce rather than promises of benefits that may never materialize. 

“These are very real requirements that I am putting forward because they have very real tangible benefits for Virginians,” Spanberger said. 

Dominion defended the transaction, which would create the nation’s largest utility if approved by state and federal regulators. 

Spokesman Rayhan Daudani said the merger would provide more than $2.1 billion in near-term customer and community benefits, including bill credits, payment assistance, workforce development and charitable investments. 

The companies say the deal would create 1,000 new direct jobs in Virginia and maintain current employee headcount in the state for five years. 

“The combination will also strengthen our ability to invest in reliability and critical infrastructure while helping keep energy affordable for Virginia families and businesses,” Daudani said. “Dominion Energy Virginia will remain locally led, separately regulated and fully accountable to the State Corporation Commission.”

Spanberger seeks six-year rate protections

Expert testimony filed Monday on behalf of Spanberger and Chief Energy Officer Josephus Allmond calls for freezing residential base-rate increases for three rate-review cycles, or six years, and providing monthly customer credits of $29 for four years. 

The companies’ revised proposal offers a $10 monthly credit for residential customers using 1,000 kilowatt-hours of electricity. 

Base rates account for only part of a customer’s electric bill, meaning a freeze would not prevent other charges from increasing. 

Spanberger clarified Tuesday that the SCC would still be able to lower rates under her proposal.

“While rate freeze is a pretty straightforward way to talk about it, it’s actually a rate-hike freeze,” she said. 

She argued that bill credits would offer little relief if customers faced simultaneous rate increases that consumed the savings. The administration also wants clear performance standards and consequences if the companies fail to meet their commitments. 

Asked whether rates could jump once the six-year period ends, Spanberger said future SCC proceedings would determine appropriate charges. She acknowledged that regulators must also consider the long-term consequences of combining the two companies. 

Spanberger became the first Virginia governor to formally intervene in an SCC proceeding when she joined the merger case in August. 

Her intervention allows the administration to request documents, question the companies and submit testimony. The final decision rests with the SCC’s three commissioners, who are not bound by recommendations from their staff. 

SCC cites financial risks

In a 201-page filing Monday, SCC staff concluded that Dominion and NextEra had not demonstrated the merger would preserve adequate utility service at just and reasonable rates, as required under Virginia’s Utility Transfers Act. 

The filing warned that Dominion could face additional financial and business risks because of NextEra’s unregulated operations. 

Among the safeguards staff proposed are an independent board for the Virginia utility, limits in dividend payments and a holding-company structure intended to protect Dominion if its parent company enters bankruptcy. 

The recommendations also call for maintaining the company’s employment levels for Virginia for 10 years and preventing the consolidation of generating facilities or local district offices during that period. 

SCC staff proposed another review seven to eight years after the merger closes. The recommendation leaves open the possibility of approval if the companies accept additional standards, but the final decision rests with the commissioners. 

Hashmi endorsed the staff recommendation and supported Spanberger’s position.

“Virginians deserve meaningful protections and accountability, not a deal that puts corporate interests ahead of the people we serve,” Hashmi said in a statement Tuesday.

The staff filing also raised questions about financial information withheld during the review. 

According to staff, projections for the combined companies were largely redacted from the documents provided during discovery, even under confidentiality protections. The companies said some of the withheld material involved market-sensitive projections concerning NextEra’s unregulated operations. 

Asked whether regulators could adequately assess the merger’s benefits without that information, Spanberger said: “In short, I don’t believe that they can.” 

Dominion and NextEra executives have argued that combining their operations would improve purchasing power, expand supply-chain resources and strengthen access to credit, helping control costs. 

The SCC’s determination comes weeks after regulators agreed to admit documents related to NextEra’s failed acquisition of a Florida utility to the case, details advocacy group Clean Virginia — also an intervenor in the case — said were necessary to gain a full picture of the proceedings.

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Data centers, clean energy and jobs

Spanberger’s proposed conditions extend beyond rate protections and utility bill credits.

Her administration also wants stronger safeguards against utility disconnections and changes to how electricity costs are divided among customer groups. 

It also proposes creating a separate Virginia-based subsidiary to develop zero-carbon power generation for large data centers. The subsidiary would be financially insulated from other customers to prevent those projects from shifting costs onto households and businesses. 

Another proposal would increase the share of debt in Dominion’s financing structure from 48% to 60%, with the aim of reducing the company’s overall cost of capital.

Additionally, the administration wants to revise how certain electricity costs are allocated, reducing the share paid for residential customers. 

Some of Spanberger’s proposals would require legislation rather than SCC approval. Those include creating an independent energy efficiency utility and eliminating the cap on Virginia’s rooftop solar program. 

Spanberger said those changes could benefit customers whether or not the merger proceeds. 

She also emphasized the importance of continuing Dominion’s offshore wind project, arguing that customers who have helped finance it should not see their investment jeopardized by decisions made after the merger. 

Jones, in a video statement Tuesday, said the merger would do little to solve the problems already facing Virginia’s electric grid, including growing demand, aging infrastructure and high costs.

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“That’s exactly why we have opposed this merger in front of the SCC, because the transaction won’t do anything to address those fundamental issues,” Jones said. 

He has also requested the merger review timeline be extended, proposing the 180-day period start on Sept. 14, when the companies filed additional measures in the merger proposal.

Dominion and NextEra filed their original application July 15. Under the all-stock agreement, NextEra shareholders would own 74.5% of the combined company, with Dominion shareholders holding the remaining 25.5%. 

The merger also requires regulatory approvals outside of Virginia. 

The SCC will hold in-person public hearings in Newport News on Oct. 7, Fairfax County on Oct. 9, and Richmond on Nov. 5. Written comments will be accepted through Nov. 12. An evidentiary hearing begins Nov. 17. 

Virginia regulators face a Jan. 11, 2027, deadline to act on the application under the state’s six-month review period, unless regulators agree with Jones’ request to extend it. That deadline does not guarantee the merger will close.