Rappahannock Electric Cooperative (REC), headquartered in Culpeper, VA, serves 183,000 residential and commercial members across 22 Virginia counties. Between 2023 and 2026, REC transformed from a rural electric cooperative into one of the primary power suppliers for the nation's largest data center corridor — without a member vote, without full public disclosure, and with its outside General Counsel simultaneously representing the data center developers whose projects are driving the load. THE NUMBERS: • REC's data center load forecast increased from 3.3 GW to 17 GW in a single year — a 415% increase. Source: SCC Case PUR-2025-00048. • Data center deposits held as cooperative liabilities: $105.6M (2024) → $351.9M (2025) — now representing 70% of total member equity ($496M). Source: REC 2025 Audited Financial Statements (myrec.coop/governance-document-center, audited April 16, 2026). • HES operating loss: $1.035 million (2025). HES revenue from energy services: $0. Source: same audited financials. • HES PJM collateral posted: $25.2 million as of December 31, 2025. HES owes REC $27.2 million in intercompany payables. HYPERSCALE ENERGY SERVICES LLC — THE UNAUTHORIZED SUBSIDIARY: On October 16, 2024, REC's Board of Directors passed Resolution #2024-10-01 authorizing a $1,500,000 loan from cooperative member funds to Hyperscale Energy Services LLC (HES) and its subsidiaries as seed capital. No member vote. No member notification. No public disclosure. Source: REC Board of Directors Meeting Minutes, October 16, 2024 (myrec.coop/governance-document-center). On November 20, 2025, the Virginia SCC issued an Order Denying Approval in Case PUR-2025-00178, rejecting the HES affiliate structure under the Virginia Affiliates Act (Title 56, Chapter 4). The SCC found the structure inconsistent with Virginia cooperative law. Despite this denial, REC's 2025 audited financials confirm HES was actively operating, had $25.2M in PJM market collateral, and owed $27.2M to REC as of December 31, 2025 — AFTER the SCC's denial. THE CONFLICT AT THE CENTER: Charles W. Payne Jr. (Hirschler Fleischer, 725 Jackson St Ste 200, Fredericksburg) is: 1. REC's outside General Counsel — confirmed in REC board minutes and Hirschler public biography 2. Registered Agent for HES, Hyperscale Energy 1 LLC, and Hyperscale Energy 2 LLC — confirmed Virginia SCC CIS entity records 3. Rezoning attorney for Amazon Data Services (approvals in 4+ localities for 20M+ sq ft of data centers) — confirmed Hirschler official biography 4. Rezoning attorney for Stack Infrastructure ($25B, 5.8M sq ft in Stafford County) — confirmed Hirschler biography 5. Appeared before Caroline County Planning Commission in 2025 simultaneously as developer attorney (Stack) + REC General Counsel + REC zoning attorney — confirmed Caroline County PC official minutes REC's members have never been told their General Counsel simultaneously represents the companies whose projects are causing REC's rate-driving load increases. This is not a footnote — the conflict sits at the financial center of every rate increase REC's 183,000 residential members will pay. THE LP-DF RATE TARIFF (PUR-2025-00048): REC petitioned the SCC in March 2025 for a new rate structure (LP-DF — Large Power Data Facility) specifically for data center customers. REC formally told the SCC in its petition that without a dedicated rate structure, data center infrastructure costs WILL shift to residential and commercial members. The SCC approved the LP-DF Tariff. The rate case remains active for ongoing monitoring. Source: SCC docket PUR-2025-00048 (scc.virginia.gov/docketsearch). VIRGINIA ATTORNEY GENERAL COMPLAINT (FILED): A formal complaint was prepared citing: (1) REC's deployment of $1.5M in member funds to HES without member authorization as a potential violation of the Virginia Consumer Protection Act (§59.1-200); (2) HES's continued operation after the November 2025 SCC denial; (3) Payne's undisclosed concurrent representation of both REC and its data center developer clients as deceptive conduct toward cooperative members; (4) the LP-DF rate structure's potential to shift infrastructure costs to residential members. HOW REC MEMBERS CAN ACT: Under Virginia Code §56-37, cooperative members may request access to the cooperative's books and records. Specific records worth requesting: the full purchase agreement and any appraisal for Partnership Blvd Properties LLC (the Ruther Glen campus parcel); any conflict-of-interest certification signed by Payne; and the full HES operating agreement post-SCC denial. Sources: REC Board Minutes October 16, 2024; REC 2025 Audited Financial Statements (both at myrec.coop); SCC Orders PUR-2025-00048 and PUR-2025-00178; Virginia SCC CIS entity records for HES, HE1, HE2; Hirschler Fleischer public attorney biography; Caroline County PC official minutes 2025.
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