Planning Responsibly for Growing Energy Needs
Putting Members First in a Time of Extraordinary Growth
Putting Members First
in a Time of Extraordinary Growth
Data centers are all over the local, state and regional news. As a regulated utility, REC has an obligation to serve all customers in its territory. As your cooperative, REC wants you to know what we’re doing to protect reliability and affordability as data centers build facilities in our region.
Data centers are expanding rapidly across Virginia, requiring significantly more electricity than homes and most businesses. REC understands why members are asking what this growth could mean for electric rates, reliability and the infrastructure required to serve these facilities.
REC’s approach is straightforward: The members that require very significant new infrastructure investments and pose potential financial risks should be responsible for them. And REC has taken several steps to make that happen. We call this “paying their own way” or “growth must pay for growth” and it aligns with our long-standing practice.
Their Power Supply Is Kept Separate
Select a group below to see how its wholesale power arrangement works.
Traditional REC Members
Old Dominion Electric Cooperative
ODEC
Provides electricity for REC’s homes, farms and businesses.
Data Center Members
PJM
The regional wholesale electricity market.
Hyperscale Energy Services
HES
Purchases electricity from PJM for data centers.
Traditional REC Members
Approximately 65% of a typical REC member’s bill reflects the cost of wholesale power.
REC purchases electricity for its traditional members from Old Dominion Electric Cooperative (ODEC), a generation and transmission cooperative owned by REC and 10 other electric cooperatives. The costs for this power are then passed through directly on member’s bills.
ODEC uses a combination of generation plants it owns, contracts for power and market purchases to supply power to its members, including REC.
Data Center Members
To serve its data center members, REC created Hyperscale Energy Services or HES to purchase the large amounts of energy they require from the wholesale power market, PJM.
Data center members are responsible for the cost of the electricity they use, including changes in market prices.
Reliability Remains the Priority
Every new large-power project requires extensive engineering, system studies, planning and coordination. REC determines what distribution infrastructure is required to safely and reliably deliver electricity to the site.
REC also coordinates with regional power and transmission partners because the electricity serving Virginia comes through a larger interconnected grid. PJM manages the regional wholesale electricity market and coordinates the movement of electricity across all or portions of 13 states and the District of Columbia.
Some have voiced concerns about the potential for widespread power outages or blackouts resulting from data centers. It’s important to note that rolling blackouts are very rare and typically are caused by a lack of generation or transmission capacity during peak demand or extreme events. PJM has acknowledged that data center load growth is outpacing supply and capacity and is taking several actions to protect grid reliability.
REC cannot independently solve every generation or transmission challenge facing Virginia and the broader region. It can, and does, plan its own system carefully, establish strong requirements for large-power members and advocate for the generation and transmission resources necessary to support reliable growth.
Frequently Asked Questions
Are REC members paying to build electric infrastructure for data centers?
REC requires data center members to pay upfront for the REC infrastructure needed specifically to serve them. This protects existing members from financing dedicated facilities required by these projects.
Do data centers purchase electricity in the same way as residential members?
No. Through Hyperscale Energy Services, data center members have separate wholesale power supply arrangements. HES procures electricity on their behalf from the PJM wholesale market.
What does “down to the last kilowatt-hour” mean?
It means data center members are responsible for the wholesale electricity purchased to meet their needs and for every kilowatt-hour they consume. Their energy costs are not blended into the wholesale power arrangement serving REC’s traditional membership.
What happens if a proposed data center does not use as much electricity as projected?
REC requires financial collateral to secure the data center member’s projected wholesale power costs. This helps protect other members from the financial risks created by a project that is delayed, reduced or does not perform as anticipated.
Does REC decide where data centers are built?
No. REC does not make land-use and zoning decisions. REC’s role is to evaluate and provide electric service in accordance with its regulatory obligations and technical requirements.
Can REC guarantee that regional energy costs will not rise?
No utility can credibly make that promise. Wholesale energy, capacity and transmission costs are affected by many regional factors, including fuel prices, power-plant retirements, transmission constraints, extreme weather and growing demand across the PJM region.
What REC can do is ensure that the direct costs and financial risks of serving data centers within its territory are appropriately assigned to those large-power members.
Will data centers increase my electric bill?
REC has established safeguards to prevent traditional members from subsidizing the direct costs of serving data centers. Data center members fund their dedicated infrastructure, have separate wholesale power arrangements and provide financial security for their projected energy costs.
Broader regional energy costs may change for many reasons, including growing demand across the PJM grid. But within REC’s service territory, the direct costs and financial risks associated with serving data centers are assigned to those large-power members.