The shot clock has started ticking on the largest utility merger in U.S. history.
NextEra Energy and Dominion Energy on Wednesday filed merger applications with regulators in Virginia, beginning a 180-day timer for regulators to scrutinize the deal.
The filings for the $67 billion megamerger — made also in South Carolina and North Carolina, where regulators aren’t bound by legal time limits — underscore how rapidly America’s power market is being remade by data centers.
In the Virginia filing, Dominion CEO Robert Blue revealed that the Richmond-based power company was not seeking a merger when NextEra approached the company about the idea last November. But by March, according to financial disclosures, Dominion was fielding competing offers from two different suitors.
Dominion warmed to a merger, Blue said, as it stared down a rapid increase in the power demands of a state at the heart of America’s data center boom. Dominion projects the commonwealth’s power demand will require $55 billion in capital spending over the next five years alone.
“The utility industry is clearly facing historic challenges associated with unprecedented load growth,” Blue wrote, especially as the utility balances demand for new power sources and a transition toward renewable energy.
Those challenges would be more manageable, he wrote, by combining the financial and operational power of Dominion and NextEra.
“Bigger does not mean better in and of itself,” the CEO wrote, “but here it demonstrably does.”
That statement represents the crux of the companies’ argument in favor of the merger. NextEra is America’s most valuable power company (measured by market capitalization), operates its largest utility by customers (Florida Power & Light) and is the largest developer of power plants (NextEra Energy Resources). Adding Dominion would give it 10 million customers across Florida, North Carolina, South Carolina and Virginia.
Scale, in other words, matters. The companies argued Dominion would benefit from an improved credit rating, enabling it to borrow money for investments in its system at more favorable rates and saving consumers on their monthly utility bills.
The companies also are dangling another carrot in front of regulators: $2.25 billion in customer bill credits over two years, working out to about $10 per month for an average household.
Dominion pushed for that bill credit in their negotiations with NextEra, along with stronger employee protections and a commitment to “increased community giving” of $10 million annually for five years, according to NextEra’s S-4 filing.
On May 14, the day before Dominion’s board agreed to merge with NextEra, Blue sat down in Richmond with another unnamed company seeking to buy Dominion. The CEO of that company had spent two months wooing Dominion, but their offer to shareholders was “materially below” the premium offered by NextEra, according to documents filed with the Securities and Exchange Commission, and it “did not contemplate any bill credits.”
That second offer helped cast NextEra’s terms in a better light. “Dominion did not enter into the Merger Agreement lightly,” Blue wrote.
Whether that argument will fly in Richmond — where Dominion is woven into the social, economic and political bedrock of the state capital — is an open question.
Democratic Gov. Abigail Spanberger has yet to take a position on the merger, telling the POLITICO Energy Podcast earlier this month that she’s “cautiously curious at this point in time and [will] reserve my judgment till I have further details.”
Democratic Attorney General Jay Jones, though, responded to the companies’ filings by releasing a short video Thursday morning vowing to Virginians that his office would use “every fiber of our being to make sure we protect you.”
“I ran in large part last year because I wanted to hold corporations accountable,” he said. “And that’s exactly what we’re going to do here.”
But Jones could face real limits to how much he can do. Virginia law, in addition to limiting how long regulators have to review the merger, also sets a lower bar than many other states to approving a utility takeover.
The companies have to prove to the State Corporation Commission, the legislature’s utility regulator, that “adequate service to the public at just and reasonable rates will not be impaired or jeopardized” by the merger.
Blue said that’s a standard the deal can easily clear.
“I read that as, in essence, a ‘do no harm’ standard for approval,” he wrote, arguing the terms of the deal ensure that “customers will not only not be harmed, but also will materially benefit.”
Lawmakers declined to use the budget passed in June to weigh in on the merger — all but ensuring they’ll be sidelined from a process scheduled to end the same day the Legislature’s next session begins.
“The Virginia legislature and Gov. Abigail Spanberger could have changed both the statutory standard (to make it tougher) and review time clock (to make it longer) in their budget bill last month, when they were aware of the proposed merger, but they did not,” Mark Christie, a former state regulator and Republican who served on the Federal Energy Regulatory Commission, wrote in a post on Linkedin.
“Remember that when you hear some politicians loudly pressure the [State Corporation Commission] to take more time for review or apply a standard different from what is in the Transfers Act,” he wrote. “The SCC has to follow the law as the General Assembly wrote it.”
Some experts, such as Washington Analysis’ Rob Rains, have speculated the State Corporation Commission could buy more time to review the deal by rejecting it without prejudice and letting the companies refile — essentially doubling the 180-day clock.
Analysts at Jeffries called the lack of legislative opposition “somewhat positive on the margin” in a recent note to clients. They pointed to Spanberger’s recent appointment of a Dominion executive, Edward Baine, as president of the board at Virginia Tech as a sign of support for the company from the governor.
Merger would combine risk profiles too
There are some signs that elected officials could intervene in the process.
Lt. Gov. Ghazala Hashmi, a Democrat, sent a letter with 64 questions to regulators at the SCC, saying the deal presents “unprecedented implications for Virginia’s consumers and regulatory landscape.”
The level of detail in those questions “signals there’s going to be a greater engagement from the elected leadership in Virginia,” said Cale Jaffe, a law professor at the University of Virginia Law School. “There’s a lot of voter anxiety about what this merger means, and I think that seems to be informing the Lieutenant Governor’s actions.”
One factor pushing Virginia officials to get tough on the deal: pressure from advocates who highlight the companies’ histories of political influence, including ties to a string of scandals in Florida.
“A transaction of this size doesn’t just combine two balance sheets — it combines two risk profiles into one, at a scale no regulator has ever had to govern before,” said Victoria Higgins, the Chesapeake Climate Action Network’s Virginia Director.
“And NextEra’s risk profile isn’t hypothetical. It’s a $150 million political scandal,” she added, referring to a proposed settlement over claims related to NextEra’s political actions. “It’s funding fake candidates to spoil elections. It’s a decade of rate hikes in Florida. Even more troublingly, NextEra has made clear this deal is all about seizing control of the AI data center boom.”
NextEra and Dominion did not respond to requests for comment.
One longtime observer of Virginia energy politics said he doubted the deal would make much difference for consumers, whether it is approved or not.
“NextEra or Dominion? I really don’t think the average consumer is going to care in the long run or pay that much more or less whatever happens with this sale,” Stephen Haner, a former Virginia energy lobbyist and Republican political operative, wrote in a post on Bacon’s Rebellion, a prominent conservative leaning political blog in the state. “The cost of energy is rising for a host of reasons, many out of the state’s control.”
The bigger issue facing Virginia is the control Dominion has exerted over the state’s politics, where it is a major donor to candidates from both political parties and one of the most influential voices in the state capital. Instead, the state should focus on imposing campaign donation limits, limit donations to politically connected charities and provide greater disclosure around lobbying.
“My concerns that our lax ethics laws invite corruption are fully based on that 50 years of experience and are totally bipartisan. Both parties need the handcuffs and spotlights,” he wrote. “Perhaps the high stakes of this pending sale of our dominant utility will finally wake up the voters. It is a perfect chance to try again.”
