Amazon's cloud division, AWS, posted one of its best quarters on record last week, with operating margin up 6.5 percentage points from a year earlier. But 1.3 of those points, about $551 million, came from a single accounting line: a gain on long-term electricity contracts for power Amazon may never actually use. Amazon's own guidance for next quarter assumes that number goes back to zero.
How the gain shows up on the books
The gain is not money that changed hands. It is the value of what amounts to an option on roughly 270 million megawatt-hours of electricity, weighted toward delivery nine or more years out. Amazon signs long-term power contracts, some running 20 years, to secure electricity for data centers it has not finished building. Its 10-Q states that the company may make or receive net cash payments rather than take delivery of electricity when its consumption falls short of committed quantities due to operational variability. Because that possibility exists, the contracts are treated as a running bet on future power prices rather than an ordinary purchase, and their value is recalculated every quarter whether the bet is currently paying off or not. No cash changed hands this quarter, so there is no transaction to check the $551 million estimate against.
Every large power buyer in the country faces a version of the same question: whether the electricity load it has contracted for will show up the way the contract assumed. Amazon's derivative accounting is one company's way of carrying that uncertainty on its books. The utilities serving these loads are managing the same risk from the other side.
Dominion's collateral requirement
A new data center rate class from Dominion Energy, approved in November, takes effect for new contracts starting January 2027 and requires large customers to post $1.5 million in collateral for every megawatt of contracted capacity. Dominion says the contract term and collateral requirement ensure that if a data center shuts down completely, the utility's minimum revenue threshold is still met.
A nine-day hearing set the price
The $1.5 million figure came out of a nine-day evidentiary hearing in Virginia in September 2025 that drew filings from Google, Microsoft, the U.S. Department of Defense and Amazon. Dominion requested a return on equity, the profit rate regulators let it earn on shareholders' money, of at least 10.40 percent; the trade group Data Center Coalition argued for 8.90 percent. Regulators split the difference at 9.8 percent, the return Dominion now earns for carrying the hedge. Latitude Intelligence, which tracks collateral terms across large-load tariffs nationally, found that Dominion is the only utility in the country that states a flat price per megawatt rather than a multiple of the customer's monthly bill.
For a customer with top-tier credit, the real cost of holding that collateral over the contract's fourteen-year term works out to about $169,000 per megawatt, nearly a ninth of the $1.5 million sticker price, but only if the contract runs its full term. A data center that defaults early, before most of its collateral has been released, faces a cost much closer to the full $1.5 million. Dominion's order says the collateral accrues interest, but it does not state a rate.
Loudoun County moves toward a moratorium
On July 22, the Board of Supervisors in Loudoun County, Virginia, voted to prepare a moratorium on new data center applications, site plans and substation permits, to be taken up at the board's September 15 meeting. Loudoun hosts the largest concentration of data centers in the world. The same meeting rejected a 780-megawatt campus outright. The board carved out an exception, passed 5 to 4, for 24 applications already filed before February 2025, on the condition they proceed without substantial changes and sit at least 500 feet from residential property. The county attorney told the board a blanket moratorium likely lacks legal standing under Virginia law, which requires each application to be judged on its own merits. The supervisor who cast the lone dissenting vote said that if the board passes it in September, "somebody will sue."
Other Virginia localities are following
Chesapeake has approved an eight-month pause on new data center applications, and Suffolk is rewriting its own rules under a similar pause. Front Royal is drafting language that would ban data centers from its zoning code entirely. None of these restrictions existed a year earlier.
