Low-Energy Fridays: The NextEra/Dominion Merger Highlights the Need for Competition

Note: Tom Opdyke is the new policy director for R Street’s Energy and Environment program. A detailed announcement about his new role coming soon. Low-Energy Fridays will continue its regular schedule in the meantime.

The energy world barely had time for its first cup of coffee on Monday before the news of the NextEra/Dominion merger made headlines. Based in Florida, NextEra already owns two major subsidiaries: Florida Power & Light Company and NextEra Energy Resources. The former is America’s largest electric utility, while the latter is one of its largest energy infrastructure development companies. Virginia-based Dominion provides regulated electricity services in North Carolina, South Carolina, and Virginia, as well as natural gas throughout the United States. According to the two companies’ own estimates, the merger would create the world’s largest regulated electric utility by market capitalization (i.e., the total value of its stock) and one of the world’s largest energy infrastructure companies. The combined company would also own and operate an enormous amount of power generation, including the most wind and solar generation capacity in the country as well as 16 nuclear reactors.  

The deal still has a long way to go—from board approvals to federal regulators to utilities commissions in North Carolina, South Carolina, and Virginia—but that didn’t stop the avalanche of commentary following Monday’s announcement. Some pointed out that the merger gives NextEra a strong foothold into PJM, the country’s largest regional transmission organization (RTO), amid concerns about data centers, regulatory changes, increased permitting timelines and, as always, ensuring reliability. Others, like Sen. Richard Blumenthal (D-Conn.), raised questions about possible anti-competitive practices. Still others mused on what it means for clean energy, as NextEra is already the country’s largest renewable energy developer. 

However, many focused on what effect the merger may have on consumer electricity prices—some certain prices will increase; others suggesting the opposite. While there is no question that pricing is important to consumers, a larger question remains: Why are consumers being held hostage to one merger’s effects on pricing to begin with?   

Regardless of whether the merger goes through, households in Virginia and the Carolinas will still have the same number of choices when it comes to their electricity provider: one. Even considering the role of regulators in pricing, consumers remain constrained to whatever deal is made between the regulators and that sole provider. (Bear in mind that utilities across the country filed requests for $9.4 billion in rate increases in the first quarter of 2026 alone.) Meanwhile, in what might be an attempt to appease affordability-minded policymakers and regulators, NextEra and Dominion committed to offering credits to consumers paid out over two years. But even with those credits, consumers will still be forced to go along with any price increases. We’ve seen similar cases of regulated utilities agreeing to what seem like concessions for the public good while leaving room to pass other costs on to consumers who can’t choose to do business with another utility company.  

This is one of those unfortunate scenarios in which a monopoly exists not because a company outdid its competitors, but because the system itself doesn’t allow competition. With only one game in town, consumers have no power to influence the market by taking their business elsewhere. What would help consumers in the wake of this merger would be the ability to choose whether they want to take whatever rates NextEra/Dominion offer or sign up with another provider. 

Many readers will already recognize this as the general argument for retail electricity choice, which allows consumers of all types to purchase electricity from competitive retail distributors at prices set by the market. These distributors are generally separate from the companies generating the electricity (in the NextEra/Dominion case, there would have to be some separation between its roles as a generator and a distributor). Currently, only 13 states and Washington, D.C. give residents this option.   

If the NextEra/Dominion merger were happening in such a market, the credits these companies are offering would be a market incentive to encourage consumers to do business with them rather than an attempt to smooth the way for a merger. These credits amount to $550 per customer (if spread evenly among consumers in all sectors). Assuming a 1,000 kWh per month demand, the average residential monthly power bill across Virginia and the Carolinas works out to $156—meaning NextEra and Dominion would be offering a nearly 15 percent discount for two years. In a competitive retail market, that could easily persuade many customers to stick with them (while allowing them to leave once those subsidies expire).  

Unfortunately, such a market can’t be created with the wave of a wand. Residents of Virginia and the Carolinas will not wake up tomorrow with the sudden ability to choose their electricity provider. That takes time, detailed planning, and political will. But if policymakers are committed to addressing residents’ concerns about price increases, it’s time to stop relying on layers of regulation and create a system that allows markets to do what they do best when consumers actually have choices.