We know the companies supplying electricity to most of the country are large corporations, but it can be easy to think of them as community-­based. After all, we regularly describe these organizations as “local” utilities, and their websites, mailings and other public communications make a point to draw folksy connections to the regions they serve.

However, many of today’s investor-owned utilities (IOUs) left those hometown roots decades ago, becoming widely diversified energy providers working across national—and even international—borders. Recently, a wave of mergers and acquisitions is raising questions regarding just how much larger these providers should be allowed to grow.

In May, NextEra Energy announced plans to purchase Dominion Energy in a $67 billion deal that would create the nation’s (and the world’s) biggest regulated electric utility. As rates climb to pay for the infrastructure required to support a massive buildout of artificial intelligence (A.I.) data centers, legislators and utility commissions are asking, how big is too big when it comes to these regulated monopolies?

Decades in the making

The current consolidation trend can be traced back to the deregulation of electric utilities that began in the early 1990s. That’s when Congress began carving away restrictions in the 1935 Public Utility Holding Company Act, which prohibited the expansion of utility companies beyond the limits of their physical infrastructure. This meant IOUs were vertically integrated, owning all generation and distribution systems within their service territories.

The Energy Policy Act of 1992 allowed for independent power producers (IPPs), separating generation from power distribution and allowing utilities and independent companies to invest in power plants outside their service territories. In some states, utilities were required to split off their generation assets, introducing wholesale power markets where monopolies had previously existed.

What followed is familiar to anyone who remembers the court-ordered breakup of the former phone monopoly AT&T into regional providers for local service, with long-distance service thrown open to competition. When the Telecommunications Act of 1996 passed, those local “Baby Bells” began reconsolidating back into national players.

In the electric utility industry, this regrouping has led to similar growth in ever-larger national players, with holdings spread across multiple state lines.

Scaling up

NextEra Energy was already the nation’s largest utility holding company, even before the Dominion Energy deal was announced. It began life in the 1920s as Florida Power & Light (FPL). 

As deregulation began, it folded FPL into the new FPL Group and started up an IPP business focused on wind and solar. In 2010, it took on the name NextEra Energy, underscoring its leadership in renewables. The company now claims to be the world’s largest generator of renewable energy, drawing on wind and solar resources.

The purchase of Virginia-based Dominion Energy would give NextEra access to the nation’s fastest-growing energy demand, thanks to Northern Virginia’s enormous data center market. The financial potential for NextEra isn’t in electricity sales to the more than 600 data centers already located in that region—it’s in building out the infrastructure to support that industry’s continued growth. 

Remember that electric utilities’ primary income stream is the regulated rate of return they receive on physical investments. The generators, substations and lines new data centers will require could translate into decades of financial stability. In their merger announcement, the companies estimated their combined total of new large-load projects would top 130 gigawatts.

It’s this kind of growth potential that’s turning electric utilities into prime acquisition targets. Other recent deals include investment group BlackRock Inc.’s $33.4 billion acquisition of AES, which primarily serves customers across Indiana and Ohio. While still under review, this acquisition would be BlackRock’s second in two years, following the purchase of Minnesota-based Allete in 2025. Also in 2025, Constellation Energy paid $29 billion to purchase Calpine, an IPP operating across 22 U.S. states and Canada.

What’s next

As with the data centers helping to drive utility investment, this kind of consolidation is drawing scrutiny from lawmakers and regulators. Topping the list is a fear new owners will attempt to hike ratepayers’ bills. This can happen when acquirers commit to paying a premium above the value of a utility’s existing assets. For example, NextEra Energy’s purchase price of $67 billion is higher than Dominion’s book value previously used to set rates. There’s a question of whether NextEra will attempt to boost that rate base by the amount of the premium, essentially forcing its new customers to pay for the acquisition.

NextEra is promising $2.25 billion in upfront bill credits spread over two years to help address this fear, but skeptics point out that customers could be stuck with higher bills for decades.

NextEra’s bid was formally submitted to Virginia’s State Corporation Commission on July 16, starting a six-month clock for its review. Approval isn’t certain—NextEra’s previous attempts to merge with companies in Texas (Oncor), Hawaii (Hawaiian Electric) and South Carolina (SCANA) all failed.

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