NextEra Energy, one of the largest power companies in the United States, on Monday announced plans to acquire Dominion Energy, in an all-stock deal that could transform the power industry as it races to supply electricity needed to fuel the booming growth of artificial intelligence.
Technology giants are vigorously building data centers to provide the computing power for artificial intelligence. Peak electricity demand in coming summers and winters is expected to jump more than 20 percent nationwide through 2035, due in part to data centers.
NextEra, whose shares have climbed 15 percent this year, has been looking to capitalize on what its chief executive, John Ketchum, has called “America’s golden age of power demand.” Last year, it struck deals with Google in Iowa and Meta in New Mexico.
According to the terms of the deal, NextEra, which is based in Florida and has market value of about $194 billion, would exchange about eight-tenths of a share of its stock for each outstanding share of Dominion, which has a market value of $54 billion. NextEra shareholders would ultimately own about 75 percent of the combined company, and get an additional $360 million in cash.
The agreement with Dominion, which would need approval from federal regulators, is the latest in a series of megadeals across different industries as executives and their advisers try to take advantage of agencies’ willingness to approve business consolidations under President Trump. Some are hoping that the administration may be particularly open to mergers and acquisitions ahead of the midterm elections in November, seeing them as a signal of a strong economy.
The deal also requires local approvals, including in Virginia, whose governor, Abigail Spanberger, has pledged to lower energy bills and make data centers pay more for electricity. Dominion operates retail utilities in Virginia, North Carolina and South Carolina. It serves the largest cluster of data centers in the world, known as Data Center Alley, in Virginia.
The companies said they are proposing offering $2.25 billion in bill credits to Dominion Energy’s customers in Virginia, North Carolina and South Carolina over two years after the deal closes. That would work out to around $562 in total for each of Dominion’s roughly four million customers.
The combined company would serve roughly 10 million utility customers across Florida, Virginia, North Carolina and South Carolina. Mr. Ketchum of NextEra would serve as chairman and chief executive of the new company, while Robert Blue, the chief executive of Dominion, would serve as chief executive of the company’s regulated utilities and be a director on the company’s board. Dominion will continue using its name in its service area.
“Electricity demand is rising faster than it has in decades,” Mr. Ketchum said. “We are bringing NextEra Energy and Dominion Energy together because scale matters more than ever.”
The acquisition would create a giant with ten million utility customers, as well as move NextEra into the Mid-Atlantic region, the country’s largest electricity market with 67 million customers in 13 states and Washington, D.C. It could also help reduce corporate and other costs such as management of the two companies’ nuclear power plants.
The deal is the latest in a series of agreements across the United States as electric utilities try to manage the pressures of rising electricity demand, aging equipment that has been battered by extreme weather and climate events, and higher utility bills that have become the focus of political campaigns.
Tapping into fervor over artificial intelligence and the need electricity, BlackRock, the world’s largest asset manager, and Blackstone, a private equity firm, announced acquisitions last year of some of the nation’s utility companies.
In March, a consortium led by a subsidiary of BlackRock agreed to acquire AES, a power company that owns several utility companies in North and South America and power production plants globally.
The deal spree has become a political touch point. Concern about BlackRock’s acquisitions prompted three Democratic senators to send a letter to the firm’s chairman and chief executive, Larry Fink, questioning how the company planned to ensure affordable power for utility customers.
David Pomerantz, executive director of the Energy and Policy Institute, a nonprofit energy watchdog organization, contends that a NextEra-Dominion deal would hurt utility customers and give one company outsize influence in the utility business.
“If regulators approve this merger, it will lead to higher electric bills for customers in Virginia and South Carolina,” said Mr. Pomerantz, whose organization has been chronicling the operations of NextEra for years. “A mega-monopoly of this size, with the kind of money to buy political influence that NextEra will have, will be nearly impossible to regulate.”
In Monday’s announcement, the companies sought to highlight the deal’s benefits to consumers. In addition to bill credits, the companies said their combined scale would allow for more efficiencies and better customer service.
“This combination brings together two strong operating platforms and creates an even stronger energy partner for Virginia, North Carolina, South Carolina and Florida, with the scale and balance sheet to deliver the generation, transmission and grid investments our customers and economies need,” Mr. Blue said. “This combination is built around our customers.”
Over the course of a century, NextEra has evolved into an influential power provider that began as a regional utility in Florida. The company now runs subsidiaries that own large solar and wind power farms in the West, operates nuclear power plants in Wisconsin, New Hampshire and Florida, and owns tens of thousands of miles of power lines.
NextEra has sought for years to grow its operations by acquiring other utility companies across the country but with little success. Efforts to purchase Hawaiian Electric, the state’s largest utility; Oncor, in Texas; and North Carolina’s Duke Energy, one of the nation’s largest retail providers, all fell through.
In 2019, NextEra bought a small Florida utility, Gulf Power, which operates largely in the state’s panhandle. But after Hurricane Milton hit Florida in 2024, the former Gulf Power customers faced a storm surcharge that caused significant increases in their bills. And the war in Ukraine increased fuel costs for many NextEra retail customers.
Though those costs have eased, NextEra’s Florida customers recently saw a $7 billion increase in their rates, largely affecting residential and small business customers. The state-appointed consumer representative and a coalition of energy and justice organizations have appealed the rate increase to the Florida Supreme Court.
NextEra owns Florida Power & Light, which supplies power to about 55 percent of Florida’s households and has continually sought to grow its operations by purchasing cooperative and municipal utilities. An attempt to acquire the Jacksonville Electric Authority, a municipal utility, for $11 billion ended after issues were raised about conflicts of interest within the city’s operations.
As it has continued to seek to diversify its business, NextEra began pursuing other kinds of utilities outside of the electricity business. In 2022, the company completed the acquisition of a water utility in Texas.
Dominion operates a diverse electricity generation fleet that includes three major nuclear plants, and has been building one of the largest offshore wind farms in the country to serve its four million customers.
The utility had ambitions of helping to grow the nation’s offshore wind power farms by constructing a 472-foot-long ship, named Charybdis after a mythical sea monster, to help with installation of large turbines in the ocean.
But Mr. Trump’s disdain for offshore wind power has led to cancellation of some projects and could hurt the more than $700 million Dominion has invested in the vessel.
Otherwise, Dominion has been widely seen as a stable company that expanded its own operations when it purchased the South Carolina utility SCANA in 2019, after that utility had filed bankruptcy following a failed nuclear project.
Lauren Hirsch is a Times reporter who covers deals and dealmakers in Wall Street and Washington.
The post NextEra Energy to Acquire Dominion, Creating a Utility Giant appeared first on New York Times.
