Understanding Virginia’s Rising Electricity Prices

Residential electricity prices across the U.S. have been rising since 2021, and Virginia is no exception. According to the U.S. Energy Information Administration (EIA), Virginia's average residential electricity price stands at 16.01 ¢/kWh, up from 14.17 ¢/kWh a year earlier. This represents a 13% year-over-year increase and an approximate 30% rise from 2021 levels. While Virginia's rates remain slightly below the national average of 17.62 ¢/kWh, the Commonwealth is narrowing the gap. Three structural forces explain this trajectory: fuel price volatility, heavy infrastructure investments, and accelerating demand from data centers.

Month	2021	2022	2023	2024	2025
January	$10.89	$11.97	$13.96	$13.44	$14.04
February	$11.24	$11.93	$14.32	$13.92	$14.34
March	$11.55	$12.37	$14.67	$14.66	$15.02
April	$12.66	$12.66	$14.58	$14.91	$15.43
May	$12.06	$12.82	$15.19	$14.95	$15.41
June	$12.41	$13.32	$15.13	$15.25	$15.41
July	$12.53	$14.23	$13.88	$14.31	$15.92
August	$12.71	$14.14	$13.85	$14.17	$16.01
September	$12.33	$14.58	$14.69	$15.42
October	$12.37	$14.41	$14.16	$14.96
November	$11.81	$14.32	$13.93	$14.86
December	$11.71	$13.81	$13.54	$14.46

Virginia Monthly Residential Electricity Prices, 2021–2025 (¢/kWh)

Source: U.S. Energy Information Administration (EIA), Electric Power Monthly

Fuel Costs and Rate Adjustments

Natural gas price volatility is the most visible driver of Virginia electricity costs. In 2024, natural gas fueled ~60% of Virginia's in-state electricity generation—up from 55% in 2023—followed by nuclear, hydro, solar, and other renewables. The sharpest fuel increases came in 2021–2022, when natural gas and coal prices nearly doubled driven by pandemic recovery, inflation, and the geopolitical impacts from Russia-Ukraine war. Dominion Energy Virginia, the state’s largest utility, reported a $1 billion under-recovery in fuel expenses (ReisingerGooch). The State Corporation Commission (SCC) approved a fuel factor increase effective July 2022, adding about $14.93/month for a typical 1,000 kWh residential bill (SCC News Release). Fuel prices later moderated, but a new concern has emerged: natural gas prices are expected to increase from U.S. liquefied natural gas (LNG) exports. As the U.S. has ramped up LNG exports to become the world's largest supplier, domestic natural gas prices have become increasingly tethered to global markets rather than U.S. supply-demand dynamics. Virginia, which relies on natural gas for almost 60% of its electricity in 2024, faces a structural vulnerability to this "LNG export premium."

These swings underscore a critical point: fuel costs are passed directly through to customers; households bear the volatility of fuel risk.

Infrastructure and Riders

Beyond fuel volatility, capital spending is pushing rates higher. Dominion plans to invest $50.1 billion between 2025–2029, a 16% increase from earlier plans. The Virginia Clean Economy Act (2020) requires utilities to retire coal plants and ramp up renewables (Virginia Mercury, 2024). Projects include the now $10.7 billion Coastal Virginia Offshore Wind farm (CVOW). While CVOW will eventually eliminate fuel costs and estimated to deliver ~$3 billion in fuel savings during its first decade, these upfront capital costs must be recovered through customer rates.

Most costs show up through Rate Adjustment Clauses (RACs). As the SCC has noted, Dominion’s base rates have been flat since 2007, but overall electricity bills continue to rise through these Riders.

Data Centers: Virginia’s Unique Challenge

Northern Virginia hosts 13% of the world’s data center capacity (Virginia Scope, 2023). By 2022, data centers already consumed 21% of Dominion’s electricity sales (Piedmont Environmental Council).

Dominion projects 40 GW of new data center capacity contracted by 2024, nearly double mid-year levels (DatacenterDynamics, 2025). With these additions, peak load could rise from 17,350 MW in 2024 to 26,600 MW by 2039. Without data centers, demand would remain nearly flat.

Serving this growth requires nearly 200 new transmission projects. Dominion estimates its capital spending will be 20% higher due to data centers. Regulators are now considering reforms: Dominion has proposed a new high-load customer class to reflect the significant load growth attributed to VA data centers. The Virginia State Corporation Commission is currently evaluating this proposal as part of Dominion's rate case proceedings. How regulators resolve this allocation question will significantly influence whether data center growth translates proportionally to residential rate increases.

Impact on Households

For Virginians, the overall impact has been clear and measurable:

• A 4–5 ¢/kWh increase since 2021 now translates to about $40–50 more per month for a household using 1,000 kWh.

• Average monthly bills rose from roughly $120–$125 in 2021 to about $160–$170 by 2025.

• Electricity prices have grown faster than general inflation; year-over-year, prices increased 13% from August 2024 to August 2025 alone.

Conclusion

Virginia mirrors a national trend: fuel volatility (amplified by global LNG export dynamics) and infrastructure costs are raising retail electricity prices. But Virginia is unique — its data center boom drives much of Dominion’s future demand. Barring significant new generation additions, changes in natural gas global markets, or data center growth patterns, the underlying cost pressures driving Virginia's price increases appear structural and durable. The big question remains: should households continue to share equally in the costs of powering hyperscale data centers? The State Corporation Commission's pending decisions on Dominion's rate case and proposed high-load customer class will influence how costs are distributed across residential and commercial customers through the 2030s.