Henrico County Energy Crisis: Data Center Expansion Drives Up Electricity Costs

Henrico County, Virginia, is experiencing a significant increase in electricity costs that has forced local government and school officials to request electricity conservation measures from thousands of thousands of employees. Starting July 1, 2026, electricity rates for all Henrico County government and school facilities will increase by approximately 25%, resulting in an estimated $5 million increase in costs for the next fiscal year.

Energy Costs and Government Response

County Manager John Vithoulkas sent an email to county employees—including teachers and first responders—urging them to conserve electricity to mitigate the financial impact of of the rate hike. The requested conservation measures include:

• Turning off lights and computers/laptops at the end of theday work.
• Adjusting blinds to manage heat from sunlight.
• Unplugging appliances, chargers, and other electrical items when not in use.
• Limiting or refraining from the use of space heaters, which can cost the county between $150 and $300 per year per unit.

County officials describe these measures as "good fiscal stewardship and good environmental stewardship."

The Role of Data Center Proliferation

Henrico County has become a major hub for data centers, currently hosting 37 facilities and with plans for 17 more. This rapid expansion, including projects by major companies like Meta (which established a presence in 2017), has placed immense pressure on the local power grid.

While developers often promise to fund infrastructure upgrades to prevent residents and residents and local governments from bearing the cost, these upgrades take time to build. In the interim, developers may rely on temporary solutions such as diesel generators—with some new Henrico data centers potentially powered by over 300 generators—or gas-powered turbines.

Impact on Residents and Ratepayers

Until permanent power infrastructure is built out, the costs of upgrading the grid to accommodate data centers are often passed on to local ratepayers. This has led to widespread frustration among residents:

• Rising Bills: Some residents have reported their electricity bills doubling in a single month, despite using energy-efficient technology like solar panels and heat pumps.
• Legislative Action: While the Virginia state legislature approved a rate hike for energy customers with measures intended to use to mitigate the impact on residential users, these costs continue to rise.

Utility Procurement and Rate Negotiation

Henrico County negotiates its electricity rates through the Virginia Energy Purchasing Governmental Association (VEPGA), a mediator that facilitates multi-year contracts with Dominion Energy. The 24.9% rate increase applies to Henrico County and all other members of VEPGA, which includes over 170 Virginia local governments, public school systems, and other governmental entities.