NC Statehouse considers 5 bills to regulate data centers

CHARLOTTE — In the legislative session so far, lawmakers on both sides of the aisle have put forth bills aimed at regulating data centers in North Carolina. Bills range from tax reform to environmental regulations to a proposed two-year moratorium on data center development.

Here’s a breakdown of the bills in order of filing.

SB 844 Affordable Energy Omnibus: Sponsored by Sen. Woodson Bradley (D-Mecklenburg) -- The bill focuses on data centers with a peak electricity demand equal to or greater than 50 MW and includes language focused on environmental and ratepayer protections.

Specifically, the bill would require utilities to come up with large load tariffs, or pricing structures for large energy users that prevent residential ratepayers from cross-subsidizing the cost of infrastructure investments required to power data centers or other large-load facilities. It would also require environmental reviews for large-load facilities, taking into account noise abatement and ecological impacts, encourage on-site power generation for data centers, and allow local municipalities or counties to come up with voter referendums to approve or deny data center projects.

It also includes a provision that would require utility companies to specifically break down energy rates and riders on customer bills and prohibit utilities from disconnecting residential customers during periods of extreme heat.

The bill has no listed cosponsors at this time.

HB 1063 Ratepayer and Resource Protection Act: Sponsored by Rep. Lindsey Prather (D-Buncombe), Rep. Monika Johnson-Hostler (D-Wake), Rep. Tim Longest (D-Wake), and Rep. Beth Helfrich (D-Mecklenburg) -- The bill focused on data centers with a peak electricity demand equal to or greater than 40 MW. It would eliminate the state sales tax exemption and a number of other economic incentives to attract data centers, set rules for higher utility rates for data center projects, add transparency provisions, and require on-site clean energy generation.

Specifically, the bill would require large data centers to file an annual report with the Department of Environmental Quality, conveying how much electricity the facility used, how much water the facility used, how much electricity was generated on the site, and data showing the efficiency of the cooling system at the facility.

Rep. Helfrich said the bill came out of a number of calls she’s gotten from constituents looking for the state to do something to tackle the environmental and energy impact of rapid data center development.

“Our job at the state level is to set the framework, set the parameters, make sure that these huge companies who want to be building in North Carolina have some skin in the game too, and that they’re contributing ultimately to helping create a grid that is resilient enough, and ideally that’s moving us towards the climate targets that we’ve set in North Carolina for 2050,” she said.

HB 1180 Data Center Amendments: Sponsored by Rep. Carolyn Logan (D-Mecklenburg), Rep. Laura Budd (D-Mecklenburg), and Rep. Maria Cervania (D-Wake) -- The bill focuses on data centers projected to have an aggregate demand of more than 20MW and requires the North Carolina Utilities Commission to develop electric service tariffs for data centers to protect residential ratepayers from cross-subsidization of infrastructure costs.

Specifically, the tariffs would require 10-year minimum contracts from data center customers, minimum billing, financial assurance for other customers in case the data center ceases operations, and notice if the data center plans to reduce its electricity demand.

HB 1189 Data Center Transparency Act: This is the only bipartisan-sponsored bill so far, with sponsors Rep. Donnie Loftis (R-Gaston), Rep. Bill Ward (R-Camden), and Pricey Harrison (D-Guilford) -- The bill eliminates the sales tax exemptions for data centers and would establish a two-year moratorium on the issuance of any permits, certifications, or other state agency approvals for the siting of data centers in North Carolina.

SB 730 Ratepayer Protection Act: This is the first bill that was put up for a committee discussion.

Sponsored by Rep. Dean Arp (R-Union) and Rep. Matthew Winslow (R-Franklin) -- The bill sets out a number of policies related to the environmental impact, ratepayer impact, and local impact of data center development, as well as a number of other energy policies. It focuses on data centers with a peak monthly electricity demand of 100MW or greater.

There are six different sections focused on data center development, focused around four main themes: preventing local environmental impact, conserving water, preventing data centers from driving up energy costs statewide, and preventing foreign ownership of data centers and the land they’re built on.

For local impact, the bill requires a noise assessment, an assessment of air pollution, and other potential negative impacts before zoning is approved. It also forbids local governments from providing economic incentives like tax breaks to attract data centers.

For water conservation, the bill requires data centers to minimize the water they use for cooling, either by requiring a closed-loop system where water is recycled or by using another conservation method.

For energy costs, similarly to HB1180, the bill would require minimum contracts and billing requirements to prevent cross-subsidization of utility infrastructure costs onto residential ratepayers.

As for the energy policies, the bill would require a study into how the data centers and the state’s 2050 climate goals are impacting electricity rates. It also prevents the Utilities Commission from approving any baseload generation retirements unless certain regulatory hurdles are passed in new nuclear projects in the state.

The energy policies have attracted scrutiny from groups worried that this will undermine the state’s climate goals and prevent the timely retirement of the state’s coal-fired power plants.

The bill’s sponsors expect the bill to go through more technical changes before it’s ready to move forward.

Industry Response

Channel 9’s Michelle Alfini spoke with Dan Diorio, the vice president of state policy for the Data Center Coalition, about a number of these policies. He said he wholeheartedly opposes moratoriums and the full removal of economic incentives. He also believes transparency requirements need to take into account the proprietary information that these data center companies are dealing with. Ultimately, though, he said most data center developers are willing to work with lawmakers to come up with policies to ensure they are paying their fair share.

“We are supportive of policies, contracts, and tariffs that ensure that costs are allocated appropriately,” he said. “I think it would be important for the state to not send a signal that it’s closed for business.”