They Welcomed 37 Data Centers to Town. Now Their Schools Have to Dim the Lights to Cut Energy Costs
Henrico County has been home to massive data-center investment. However, now, a 25 percent electricity-rate increase is hitting its government and schools.
Henrico County, Virginia, has spent years courting data centers. Now it’s asking public employees to help shrink the power bill.
Beginning July 1, Henrico’s electricity rate will rise nearly 25 percent, adding about $5 million in annual costs across county government and school facilities. In a June 26 email, County Manager John Vithoulkas asked employees to turn off lights, shut down computers, unplug chargers, adjust blinds, and avoid space heaters, which he said can cost the county $150 to $300 a year each to run.
Henrico says the message was not just about cost-cutting. Ben Sheppard, the county’s communications director, told Inc. the email reflected “good fiscal stewardship and good environmental stewardship,” both of which he said are core values of the county.
The request landed in one of Virginia’s fast-growing data-center hubs. Henrico is home to 37 data centers, according to a county planning staff analysis, with major facilities clustered around White Oak Technology Park.
The rate increase comes through a new electricity contract negotiated by the Virginia Energy Purchasing Governmental Association, which buys power for local governments, school systems, towns, cities, and public authorities in Dominion Energy territory. VEPGA has said members will see a 24.9 percent overall increase beginning July 1, followed by at least another 12 percent increase in July 2027.
Dominion Energy told Inc. the municipal rates reflect “inflationary pressures and rising costs of fuel, purchased power, grid equipment, and the necessary investments to maintain a reliable grid to serve growing demand.”
The grid fight
The demand is now the fight. Monitoring Analytics, the independent market monitor for PJM, said wholesale power costs across PJM rose 62.7 percent in the first five months of 2026 compared with the same period last year.
Capacity costs—payments meant to ensure enough power supply is available in the future—rose 412.9 percent. The market monitor estimated that data-center load accounted for 74.7 percent of the increase in capacity-market revenues in the 2025-2026 auction and increased wholesale power prices by $11.26 per megawatt-hour in the first five months of 2026, a 24.4 percent increase.
Joseph Bowring of Monitoring Analytics told Inc. that PJM proposals discussed this week would increase those impacts and shift costs and risks to other customers.
PJM said it is trying to ease the supply-and-demand imbalance driving higher capacity costs. Dan Lockwood, a PJM spokesperson, told Inc. the grid operator is working on market reforms, faster interconnection of new power resources, new rules for integrating large loads such as data centers, more demand flexibility, and better demand forecasting.
The timing is not incidental. PJM members this week advanced a plan to source more electricity for rising data-center demand after capacity prices in the region surged more than 1,000 percent since roughly 2024. PJM’s board will make the final policy decision on the matter.
The data-center industry says it is being blamed for a broader electricity problem. Nicole Riley, director of Virginia government affairs for the Data Center Coalition, told Inc. the industry is “committed to paying the full cost of the energy it uses.”
“Nonpartisan studies by JLARC, the Lawrence Berkeley National Laboratory, and others have consistently found that data centers do not raise energy prices and that data centers pay for all the power they use, just like any other customer,” Riley said.
Dominion also pointed to Virginia’s new large-user rate class, saying the state has “among the strongest protections in the country to prevent data center costs from being passed onto residential or municipal customers.” The new class increases upfront commitments and minimum demand charges for large users, including data centers.
The local trade-off
Henrico has benefited from the boom. Sheppard said the county established its Affordable Housing Trust Fund in July 2024 with $60 million in data-center tax revenue. So far, 69 homes supported by the fund have been sold to first-time homebuyers, and another 401 have been awarded development funding.
But the public cost side is moving up the agenda. Henrico has tightened its approach to data-centers, adding guidelines around utility adequacy, buffers, noise studies, and setbacks from residential areas.
Henrico’s problem is now the problem facing communities across the country: Data centers can make local budgets richer while making the regional power system more expensive to run. The next test is whether new grid rules can keep those two ledgers separate.
turnnoffyourmind
snowghoul
jacobvanloon
2087
dailybridgerton
gracieabrams
