Electricity mega-deal strains balance of AI power

NextEra Energy

18/05/2026 18:10

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, May 18 (Reuters Breakingviews) - Even giant power providers are getting supercharged by artificial intelligence. NextEra Energy’s NEE.N $67 billion all-stock deal to buy Dominion Energy D.N would create the world's largest regulated electric utility. Merging should help finance surging investment to accommodate the proliferation of energy-guzzling data centers, but state regulators have amassed some extra clout.

Following relative stagnation lately, the U.S. government now expects electricity demand to grow 60% by 2045. Power utilities spent roughly $200 billion last year on capital expenditures, or about 50% more than in 2022. Similar outlays this year alone should increase 26%, S&P Global estimates. The sums are spurring record merger activity across the industry, as companies seek cost savings and size to help fund growth.

The deal unveiled on Monday is a natural pairing, combining the largest U.S. energy project developer, NextEra, with Dominion’s fast-growing region. Northern Virginia, for example, is home to the country’s biggest cluster of data centers. Dominion shareholders get the chance to pocket a 29% premium while retaining a roughly 26% stake in the enlarged $420 billion enterprise.

Sealing a utility deal is easier said than done, however. NextEra's attempts over the past decade to acquire Duke Energy, Hawaiian Electric and Oncor all failed. State authorities blocked two of them. The Dominion deal needs approval from federal regulators, as well as those in North Carolina, South Carolina and Virginia.

Such tensions existed even before the AI spark. There's often a battle over the substantial savings generated by two uniting utilities. Slashing Dominion’s sales, general and administrative expenses by 30%, a typical proportion, would generate an extra $1 billion a year. Taxed at the standard corporate rate and capitalized, they'd be worth more than $8 billion today. Lower procurement costs and cheaper financing for Dominion projects under the combined company's better credit rating would bring additional benefits.

Like most acquisitive utilities, NextEra is trying to appease all stakeholders. The company, for example, promises dual headquarters in Florida and Virginia, with a South Carolina operational hub. Charitable giving will be increased. Dominion customers are also in line for $2.3 billion of bill credits.

Although NextEra touts "American energy dominance," its press release curiously omits any reference to artificial intelligence or data centers. Instead, it cites a “large load opportunity.” The mounting public pushback, especially in Virginia, against large, electricity-sucking facilities used in machine-learning is probably why. Pretending it's not an issue won't make it so, however. Aggrieved customers probably will want a greater share of any spoils, in an indication of the shifting AI balance of power.

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CONTEXT NEWS

NextEra Energy said on May 18 it would buy Dominion Energy in an all-stock transaction valued at about $66.8 billion in a deal that would create the world's largest regulated electric utility by market value.

Under the terms of the transaction, NextEra will exchange 0.8138 shares for each share of Dominion, paying a premium of 23% to the price on May 15, the last day of trading before the announcement. NextEra shareholders would own about 74.5% of the enlarged enterprise and Dominion's 25.5%. The companies are offering about $2.3 billion in bill credits to Dominion customers in Virginia, North Carolina and South Carolina.

The companies expect the deal to close in 12 to 18 months. It is subject to antitrust review, approval from both sets of shareholders and approval from the Federal Energy Regulatory Commission and state utility commissions.

Lazard, Bank of America and Wells Fargo are advising NextEra, while Goldman Sachs and J.P. Morgan are advising Dominion.

US utility M&A charged up by investment surge https://www.reuters.com/graphics/BRV-BRV/znpnmazdnvl/chart.png

Dominion shareholders haven't cashed in on data centers https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/byvrnwrowve/chart.png

(Editing by Jeffrey Goldfarb; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))