Microsoft challenges data centre costs after pledging to protect ratepayers

Microsoft is challenging efforts to make Big Tech pay upfront for energy infrastructure, just months after signing a Donald Trump-led pledge to shield ratepayers from those costs.

The tech giant has appealed to the Virginia Supreme Court over new rules in the state, which hosts the world’s largest collection of data centres, requiring developers to pay for the construction of transmission infrastructure upfront.

While the notice of appeal did not specify its objections, Microsoft had previously warned the ruling could cut across federal efforts to tackle the issue.

The challenge comes as data centres across the US face fierce backlash for their impact on electricity costs, water supplies and noise pollution. More than $130bn of such projects were blocked or delayed in the first quarter of 2026, according to Data Centre Watch.

Microsoft in October cancelled plans for a 244-acre facility in Caledonia, Wisconsin, after running into local opposition.

Rising electricity costs are of particular concern to the Trump administration entering the midterm elections as Americans struggle with a broader affordability crunch. According to the Energy Information Administration, residential electricity costs have risen 15 per cent since the president took office.

Dominion Energy, the utility serving much of Virginia’s data centre region, sought permission from Virginia’s State Corporation Commission earlier this year to recover more than $1.5bn it spent developing transmission infrastructure. Previously, much of that spending was financed by the company and recovered in customer bills.

During the process, Microsoft asserted the Virginia approach could clash with regulators’ efforts at the federal level to standardise how data centres pay for grid upgrades.

Governor Abigail Spanberger’s office urged regulators to protect utility customers from “severe stranded-asset risks” and utility “capital biases that prioritise shareholder profits over Virginia’s ratepayers”. In July, the commission ordered Dominion to charge data centres directly and upfront for transmission infrastructure built for them.

Under the process for challenging commission rulings, Microsoft appealed directly to the state’s Supreme Court. Its appeal, filed quietly last Friday, did not identify which provisions it wants overturned.

Microsoft on Thursday said it remains committed to bearing “the costs [data centres] cause”, and said the appeal is intended to ensure cost allocation “appropriately applies cost-causation principles”.

Virginia and the White House did not immediately respond to requests for comment.

Microsoft has at least 11 data centre campuses operating, planned or under construction in Virginia. Dominion serves roughly two-thirds of the state, including “data centre alley”, the largest cluster of such facilities in the world.

The move puts the company’s prior commitments under scrutiny. In January, Microsoft was the first tech giant to publicly pledge to pay higher electricity rates in areas it builds data centres to cover the costs of new power plants and transmission lines.

Ari Peskoe, director at Harvard Law School’s Electricity Law Initiative, said: “I would have guessed for a trillion-dollar corporation like Microsoft, the amount of money at issue here is not worth the PR pushback you’re going to get.”

In March, the company, along with Amazon, Google, Meta, xAI, Oracle and OpenAI, gathered at the White House to sign Trump’s “ratepayer protection pledge”, committing to “paying the full cost of their energy and infrastructure, no matter what”.

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However, experts have noted the pledge lacks an enforcement mechanism and is vague on what infrastructure data centres will have to pay for.

Big Tech has backed efforts to pay over time for infrastructure, which critics say could leave ratepayers on the hook for cancelled, downsized or uneconomic plans.

Transmission lines are essential for carrying electricity between power plants and end users. Data centres consume a massive amount of electricity, with “hyperscaler” campuses typically requiring at least 100 megawatts, enough to power 50,000 homes.

Dominion also on Thursday said it has “among the strongest protections in the country to prevent data centre-driven costs from being borne by our residential customers” and that it “will be adding even more protections”.