NextEra, Dominion to create huge power biz as AI drives US energy demand

NextEra Energy is seeking to acquire Dominion Energy in an all-stock deal valued at about $67bn, creating a massive power company as the energy needs of artificial intelligence (AI) drive demand higher in the United States.

It is one of the biggest proposed mergers so far this year and would create the world’s largest regulated electric utility business by market capitalisation, the companies said on Monday.

The combined company will serve approximately 10 million utility customer accounts across the US states of Florida, Virginia, North Carolina and South Carolina. The region has a fast-growing population and the world’s biggest data centre hub, which is in Virginia.

The deal will enable a swifter build-out of power infrastructure to deliver electricity to data centres proposing to connect to NextEra and Dominion, which total about 130 gigawatts of electricity demand, the companies’ executives said.

One gigawatt can power about 750,000 homes.

The merger builds on NextEra’s efforts to tap into surging demand for supplying electricity to data centres developed by Big Tech, largely for training and rolling out AI technologies. Over the last year, the Florida-based company signed an agreement with Alphabet’s Google to reopen a nuclear power plant in Iowa. It has also been announced as the developer of two Japan-backed, natural-gas-fired data centre hubs in Texas and Pennsylvania.

Virginia-based Dominion has nearly 51 gigawatts of contracted data-centre capacity and counts Alphabet, Amazon, Microsoft, Meta, Equinix, CoreWeave and CyrusOne as customers.

The potential tie-up of the two companies comes at a time when consumers worried about escalating electric bills are pushing back against AI data centres. Some governors, attorneys general and others protesting rising electricity bills say cash-strapped residents are stuck in a broken system.

Officials and lawmakers in at least six states — including Arizona, Indiana, Maryland, New Jersey, New York and Pennsylvania — are going to new lengths to try to block rate increases proposed by utilities. Some are pressing utilities to completely change their models for financing major system upgrades.

‘Scale matters’

Dominion shareholders will receive a fixed exchange ratio of 0.8138 shares of NextEra Energy for each share of Dominion that they own. Dominion stockholders will continue to receive Dominion’s current quarterly dividend through closing, plus a one-time cash payment of $360m at closing.

NextEra’s stockholders will own 74.5 percent of the combined business, while Dominion’s stockholders will own 25.5 percent.

NextEra CEO John Ketchum will serve as chairman and CEO of the combined company.

“We are bringing NextEra Energy and Dominion Energy together because scale matters more than ever— not for the sake of size, but because scale translates into capital and operating efficiencies. It enables us to buy, build, finance and operate more efficiently, which translates into more affordable electricity for our customers in the long run,” Ketchum said in a statement.