CHARLOTTE — To address concerns about the rising cost of energy due to the data center boom, several big tech companies came to an agreement with Duke Energy and customer advocacy groups on a set of rules to ensure data centers pay their fair share for the power they use.
The concerns stem from the dramatic demands for energy that some of these projects require. The rules apply to projects demanding 50MW or more, which is about equivalent to the amount of electricity used by the roughly 40,000 households in the city of Concord.
For Duke Energy to provide all that power, it needs to build new power plants and a lot of new infrastructure like transmission lines and substations before the projects come online. However, under current state regulations, there’s no guarantee that data center project would actually use all the power it’s demanding, or would get built at all. This would leave other residential or business customers stuck paying for all that construction through our power bills.
Duke Energy spokesman Bill Norton said these new rules are meant to prevent that.
“They do absolutely need to put more skin in the game up front,” Norton said.
These new rules require data center companies to pay upfront for infrastructure built specifically to serve them, like a new substation near their property. These companies would also have to provide financial guarantees for any transmission upgrades to serve them and pay penalties if they cancel their project or close the data center early.
The rules also establish a minimum 75% billing requirement.
That means a 50MW data center would have to pay as if it was using at least 38MW of electricity every month, even if it ended up using less.
“The way we see it is you know data centers are going to create billions of dollars in benefits for households because they’re going to pay more than it costs to serve it,” Bill Norton said.
The agreement isn’t final. While it has the approval of public staff, several groups have filed comments criticizing the agreement for not going far enough to protect customer interests. That includes the state-appointed representative for ratepayers, the North Carolina Attorney General’s Office, and a number of environmental advocacy groups.
Will Scott, the North Carolina Policy Director for the Environmental Defense Fund and a member of the Governor’s Energy Policy Task Force, called the agreement a step in the right direction but not even close to a final policy framework.
“I think this is really Duke, the hyperscalers who are building the data centers, and the public staff, the state consumer advocate, kind of setting a floor for what we should have going forward,” he said. “I think this is also pretty narrow in terms of people’s concerns, like things like backup generators, issues like noise, other local impacts. This doesn’t touch any of that.”
Scott wants a plan that addresses where all this new electricity will come from. He argues data centers should be part of a new rate class that can work with utilities to help choose and directly pay for the kind of power they want for their facility.
“Let’s say they have their own corporate carbon reduction goals, they might want to select a mix of solar, wind, and batteries to help power their facility, not just reduce default of gas and coal,” he said. “This doesn’t give them the ability to do that, and it doesn’t put them on the hook for bearing the cost of those power plants that are built for them."
This agreement is part of the Duke Energy Carolinas rate case. It still needs approval from the Utilities Commission. That’s expected by the end of November.
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