Why the Push Against Data Centers That Bring Billions to the Virginia Economy?

An Amazon Web Services data center is shown situated near single-family homes in Stone Ridge, Va., on July 17, 2024. Nathan Howard via Getty Images

Commentary

It was 2001 when I realized the city of Buffalo, where I was living and doing radio at the time, was never going to come back from being a ghost town. That’s because there was this little art house startup tech firm called Microsoft that wanted to build a data center out of the abandoned Diamond Reo truck manufacturing facility downtown. But the city rejected it because it had grander plans for the space.

The company loved the factory’s giant floors, but the city of Buffalo said, “No, no, we’re going to make a museum for trucking history there someday.”

I’m sure there was concern, as there is in Virginia today, that this startup tech firm might not succeed (tongue in cheek … remember, it was, after all, Microsoft, and even back in 2001, it had revenues of over $25 billion).

Since then, data centers have become quite a thing. In fact, Northern Virginia is the No. 1 place for data centers in the United States. That means, at any given time, 70 percent of the world’s internet traffic goes through the commonwealth. And like Buffalo did in 2001, Virginia in 2025 is now trying to find a way to stop it.

The anti-data center crowd has been pushing the narrative that regular electric customers have to pay higher rates because of the enormous amount of electricity these centers use. I’m not making that up. That sounds counterintuitive, but it sure does get people riled up: Why should I pay more if my neighbor is the one using more?

So, after much posturing by members of the Virginia General Assembly about needing to “do something” to protect electric customers from having to pay higher rates because of all the data centers, two bills made it to Gov. Glenn Youngkin’s desk this year.

House Bill 1601 would require those opening high-energy-use facilities to assess their noise impact on residential units and schools within 500 feet.

The other is House Bill 2644 (and its companion, Senate Bill 1197). It allows member-owned electric cooperatives to create affiliate companies under the cooperative’s control that can make deals with these data centers. The law would empower the affiliates to make the deals on an unregulated basis outside the normal oversight of the state’s utility commission, allowing both parties more flexibility in negotiating terms.

The Legislature’s Joint Legislative Audit and Review Commission released a report on data centers in early December of 2024, giving the legislators ample time to read its recommendations before the two-month 2025 legislative session began and they worked on crafting these laws.

The report pointed out that the industry provides about $9.1 billion in annual activity to the Virginia economy through direct employment and “support jobs” created in the areas around these facilities.

The commission also predicted soaring energy demands and large economic benefits of the industry. The report did say that this growth could lead to a monthly bill increase of $37 for certain Virginia customers if they were asked to pay for the increased infrastructure. But would they be asked to?

The Daily Signal asked Patrick Hedger from NetChoice, a trade association of online businesses that represents the companies with data centers, why rate payers are being told that they might have to pay more because someone else would be using more electricity.

Hedger said, “The utilities will tell you that we are the best customers that they have because we are consistent, full-time users of energy and are consistent rate payers and tend to absorb capital costs that are necessary for a grid buildout.”

This seems to directly contradict the assertion from the anti-data centers crowd that the average Virginian’s electric bill will go up if more centers are added.

So, is the opposition to data centers just demagoguery? “Yeah, there is a lot of that,” Hedger said. “There’s a lot of NIMBYism, if you will, ‘Not In My Backyard,’ and unfortunately, there’s a segment of the population that is sort of reflexively skeptical of growth.”

From our investigations, it seems that there shouldn’t be any reason for Virginia ratepayers to be obligated to pay more if additional facilities locate or expand in Virginia.

That said, there is certainly higher demand for electricity with more facilities, and it appears that the governor’s “All of the Above” energy plan, which includes the development of small, modular, nuclear reactors, is the right idea for meeting that increased demand.

But Youngkin will need to make it clear that rate payers aren’t “picking up the tab” for the new infrastructure, and he’ll need to do it before November’s election, since this issue has already begun to be a political hot potato.

Reprinted by permission from The Daily Signal, a publication of The Heritage Foundation.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.