CHARLOTTE — As the North Carolina Utilities Commission works through the process of considering Duke Energy’s rate request, the issue of data center and other large energy users has taken a large supporting role.
As part of the settlement agreement between Duke Energy, a number of stakeholders and Public Staff, the state’s consumer advocate in commission proceedings, Duke Energy agreed to lower customer and business rates, but would establish something called a large load tariff.
Large load tariffs are rules that apply to customers who use an inordinate amount of energy to make up for the higher cost of powering them. For example, the rules the NCUC are considering are looking at projects who will use more than 50MW of power or the equivalent of 40,000 households.
Because powering such a large customer typically involves building up more electric grid infrastructure to support them, large load tariffs are meant to ensure other customers don’t bear the cost burden of that buildout.
David Rogers, the deputy director of the Sierra Club’s Beyond Coal campaign, was a part of the governor’s task force that recommended these tariffs earlier this year.
“One of the biggest concerns we hear from our members across the state about impacts of their electricity bills,” he said. “What are all these data centers going to get developed mean for my electricity bills? They’re already going up, and they’re already too high.”
Currently, the utilities commission is considering proposed tariffs from the Public Staff and Duke Energy, while taking comments from other stakeholders. The proposals differ in some parts but both include things like minimum billing requirements, minimum contracts to guarantee 10-15 year commitments and termination agreements that would require companies to pay for any major grid upgrades even if their project is canceled or never ends up using the power they said it would.
“In a lot of cases the infrastructure is starting to get built in advance of the data center even coming,” Rogers said. “That is another way of putting risks on customers.”
Clean energy groups like the Environmental Defense Fund also want these tariffs to go a step further. Will Scott, the North Carolina Policy Director, points to a proposal from the Public Staff’s proposal that would require data centers to curtail or flex some of their power usage during times when the grid is close to peak capacity, usually our hottest or coldest days. While he supports the concept of load flexibility, he worries data centers will simply choose to run the diesel generators they have on hand for backup power.
“We’ve seen this Amazon data center in Richmond County is proposing 600 diesel generators,” he said. “That can’t be the right path.”
Scott argues that would inflict an incredible amount of noise and air pollution on local communities, so instead, tariffs should include provisions that promote clean energy like solar and battery storage.
“In our view, you need to have some kind of base level of clean energy that they’re expected to bring and pay for on their own dime to ease you know the local pollution and to avoid them blowing our climate targets that we have in state law still out of the water,” he said.
The NCUC plans to make a decision on these tariffs by the end of the year when it approves Duke Energy’s rate requests.
While the tariffs can be adjusted in future commission proceedings or through the legislature, Rogers believes this is an important chance for North Carolina to take lasting action on the issue of data centers.
“While tariffs can be changed in the future, I do think it’s important that the Utilities Commission take the time to actually get this right from the start,” he said.