$67 billion NextEra-Dominion merger bad for consumers
The company and its subsidiaries in Florida have faced criticism for profiting from a $1.5 billion rate hike on Floridians and for pocketing $1 billion in tax savings without passing it on to consumers.
(Editor’s Note: NextEra Energy owns Florida Power & Light (FPL). Over the past 5 years, FPL residential bills have climbed by roughly 45%. This equates to customers paying upwards of $510 to $600 more annually than they did five years ago. FPL has maintained some of the highest profit margins for an investor-owned utility in the nation, hovering between roughly 23.5% and 27% over the five-year period.)
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Seeking to cash in on spiking energy demand from the expansion of artificial intelligence data centers across the US, the Florida energy giant NextEra announced a $67 billion deal on Monday to acquire Virginia’s Dominion Energy.
But while the deal is expected to be lucrative for the massive new entity, with national power demands projected to spike perhaps by as much as 25% over the next five years, consumer advocates fear that the proposed merger will be bad for consumers, creating an unaccountable corporate behemoth that will raise costs on ratepayers.
According to Utility Dive, the new entity created by the merger will serve a combined 10 million customers across Florida, Virginia, North Carolina, and South Carolina.
With a market cap of $250 billion, the companies said they’d be the “world’s largest regulated electric utility business by market capitalization and one of the world’s largest energy infrastructure companies.”
But the deal still needs to be approved by federal regulators, a process that will likely pose minimal difficulty given the Trump administration’s friendliness toward other corporate megamergers across industries, from media to railroads.
It will also be required to obtain local approvals, including in Virginia, where the recently elected Democratic Gov. Abigail Spanberger has made lowering utility costs and requiring data centers to “pay their fair share” central campaign promises, as massive new projects have been met with furious local backlash around the country.
Tyson Slocum, director of the energy program for the consumer advocacy watchdog Public Citizen, said that “this absurd proposal to merge two massive, well-capitalized utilities should be dead on arrival for state and federal regulators.” He added that “household customers have everything to lose and nothing to gain by allowing two behemoths, NextEra and Dominion, to merge.”
The company’s combined rate base—the value of assets recognized by regulators when setting rates—are valued at about $138 billion, according to the deal announcement. It said they plan to expand that value by 11% by 2032 with major infrastructure expansions.
Though the company has proposed offering $2.25 billion in credits to customers for two years after the deal closes, consumer advocates fear it is simply meant to ease upfront investment costs, leaving the real rate hikes to show up later once the credits expire.
The group Clean Virginia argued that the proposal needed to be subject “to the most rigorous scrutiny possible,” given NextEra’s “deeply troubling track record” in Florida.
The company and its subsidiaries in Florida have faced criticism for profiting from a $1.5 billion rate hike on Floridians and for pocketing $1 billion in tax savings without passing it on to consumers.
The company is also renowned for its extensive use of dark money to influence legislators in both parties, as well as Republican Florida Gov. Ron DeSantis, to kill clean energy and other policies that disfavor its business.
David Pomerantz, the executive director of the Energy and Policy Institute, told The New York Times that “a megamonopoly of this size, with the kind of money to buy political influence that NextEra will have, will be nearly impossible to regulate.”
NextEra CEO John Ketchum has said the deal is necessary to accommodate “America’s golden age of power demand.”
“Electricity demand is rising faster than it has in decades,” Ketchum said. “We are bringing NextEra Energy and Dominion Energy together because scale matters more than ever.”
But Slocum called this “a false narrative.”
“The merger will do nothing to increase generating capacity, let alone desperately needed renewable generating capacity,” he said. “These megautilities are merely using rising concern about data centers as an excuse to concentrate political and economic power of two giant utilities to maximize financial returns to shareholders.”
He said federal and state regulators “should reject this outlandish, unnecessary merger as completely contrary to the public interest.”
