NextEra Energy, one of the largest U.S. power producers, announced May 18 that it has agreed to buy utility Dominion Energy in an all-stock deal valued at nearly $67 billion that would combine two East Coast energy giants and create the largest U.S. electricity producer with multiple megaprojects and about 10 million customer accounts. The combined entity would have a market capitalization of nearly $250 billion, which the companies say would make the new company “the world’s largest regulated electric utility business by market capitalization and one of the world’s largest energy infrastructure companies.”
The new company would rank as the nation’s largest operator of gas-fired power plants and utility-scale battery storage, as well as the second largest operator of nuclear plants, the companies said. The transaction has been unanimously approved by the boards of directors of both companies, but could take up to 18 months to close with numerous required approvals from state and federal regulators.
Florida-based NextEra has about six million customers and a market value of nearly $200 billion, while Virginia-based Dominion serves four million customers and is valued at more than $50 billion. NextEra shareholders will own approximately 75% of the company, with Dominion shareholders holding the remainder. NextEra units operate nuclear plants in Florida, New Hampshire and Wisconsin; solar and wind farms in states such as Arizona and Texas; and has nearly 13,000 miles of transmission lines in North America. Dominion owns the Millstone nuclear plant in Connecticut.
NextEra last year announced a partnership with gas turbine maker GE Vernova to develop power plants that serve data centers, and was selected by the White House in March to provide 10 GW of natural gas capacity to Pennsylvania and Texas under a trade deal with Japan. The company has also undertaken clean energy and battery storage projects to meet the short-term energy needs of data centers and technology companies.
NextEra CEO John Ketchum would be chairman and CEO of the combined company, and Dominion chairman, president and CEO Robert Blue would become chairman and CEO of its regulated utilities and a member of the board. The combined company will operate under the name NextEra Energy, with dual headquarters in Juno Beach, Florida, and Richmond, Virginia.
According to analysts, the purchase would allow NextEra to gain a strong foothold in the data center sector. Dominion’s presence in the Mid-Atlantic states includes the so-called “Data Center Alley” in northern Virginia that has become a major hub for the artificial intelligence industry.
Dominion is also nearing completion of the nation’s largest offshore wind project, the 2.6 GW Coastal Virginia Offshore Wind project in Virginia Beach, Va., despite a failed effort by the Trump administration, halted by court order earlier this year, to halt the installation of 176 turbines and related infrastructure. About 14 of the turbines, each 14.7 MW, are complete and starting to generate power. The project is scheduled for full completion by June 2027. The total price tag has increased from $9.8 billion to $11.4 billion due to cost pressures, including tariffs on imported components, but NextEra’s Ketchum told analysts that “the project is on track and given the investment that has been made, it’s the right thing to do to finish it.”
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In a statement, Ketchum said that with projects “getting bigger and more complex, customers need affordable and reliable energy now, not years from now. We’re bringing NextEra Energy and Dominion Energy together because scale matters more than ever, not because of size, but because scale translates into capital and operational efficiency.”
Dominion has connected more than 450 data centers in Virginia, with the sector accounting for about 28 percent of its electricity sales in the state, Blue said at the CERAWeek by S&P Global conference in Houston in March. The two utilities would operate under the name NextEra and trade on the New York Stock Exchange under the symbol NEE, and the CEOs noted that they will have a combined ownership of 110 GW of power generation capacity across all energy sources and a 130 GW portfolio of large potential customers.
Dominion gets rating upgrades
Moody’s Ratings on May 18 was confirmed Dominion Energy’s ratings have a positive to negative outlook, with NextEra agreed to guarantee its debt after the transaction closed, “resulting in a one-notch upgrade to Dominion’s existing ratings,” it said.
S&P Global said it “revised our view of Dominion [and its business units] … to positive from stable.” The rating agency said it expects to see Dominion as a core element of NextEra going forward as they “operate in lines of business that closely align with [NextEra’s] major companies and customer base… [and] they are very successful at what they do.”
The deal would combine “two well-run utility franchises,” BTIG CEO and power and utility analyst Alex Kania said in a research statement. The combined entity would be “one of the few players involved [the regional grid territory] of PJM Interconnection that could easily provide comprehensive grid and generation solutions at large loads,” he said.
NextEra already has a deal with Google related to the planned restart of the Duane Arnold nuclear plant in Iowa and has partnered with tech giant Meta to add 190 MW of solar and 168 MW of battery storage to the grid in New Mexico. The company also began commercial operation this year of the Crossroads-Hobbs-Roadrunner project, a 137-mile, $291.6 million 345-kV electric transmission line also in New Mexico.
The consumer advocacy group Clean Virginia has asked state officials to review the proposed merger with “the most rigorous scrutiny possible,” citing what it said were unethical rate hikes and divestments in Florida by NextEra’s Florida Power & Light business unit. According to E and E News, NextEra also tried to buy North Carolina-based Duke Energy in 2020, but no deal could be reached.
“I think we really tried to structure this transaction thoughtfully,” Ketchum said. “We put customers first.”
