North Carolina Weighs New Data Center Rate Class
Lawmakers and the state attorney general propose distinct billing rules for data centers to prevent residential customers from absorbing infrastructure costs.
Key points
- North Carolina has three competing proposals for data center rates, including two stalled bills and one regulatory filing.
- Duke Energy seeks a 6.8% rate increase, which Attorney General Jackson argues is effectively 9.3% for customers.
- The lack of a clear rate class means residential customers may bear the cost of grid strain from data centers.
North Carolina is grappling with a fragmented approach to billing for the rapid expansion of data centers. With no single legislative route agreed upon, the state faces uncertainty over how to ensure that residential customers do not shoulder the financial burden of powering these energy-intensive facilities.
The core issue is that current utility rates may not accurately reflect the specific strain data centers place on the grid. As reported by The Wake Weekly, multiple proposals are competing for attention, creating a complex legal and political landscape that could leave ratepayers exposed to higher bills while utilities secure profits from industrial demand.
Competing proposals create legislative gridlock
Two separate bills are currently stalled in the state legislature. A Republican-backed proposal, known as the Ratepayer Protection Act, remains in a Senate rules committee after passing the House. Meanwhile, a Democratic-authored bill, the Ratepayer and Resource Protection Act, includes a tiered rate schedule but has faced similar procedural hurdles.
These legislative efforts are distinct from the actions taken by Attorney General Jeff Jackson, who has filed a separate proposal with the Utilities Commission. Jackson’s approach focuses on creating a specific rate class for data centers through regulatory litigation rather than statutory law. This parallel track means that even if one bill passes, the regulatory framework may still be contested, leaving the final outcome uncertain for this session.
Utility profit targets remain under dispute
Duke Energy, which serves a significant portion of the state’s population, is seeking a rate increase that it calculates to be approximately 6.8% over two years. However, Jackson argues that the effective increase is closer to 9.3% when adjusted for other factors. The utility company cites grid hardening and efficiency improvements as justification for these hikes, while critics contend that the costs are being shifted onto residential users.
For the average household using 1,000 kilowatt-hours monthly, this rate adjustment would translate to an additional five dollars in the first year and nearly ten dollars by the second year. This financial impact is occurring while Duke Energy reports strong net income, leading to accusations that the company is leveraging data center growth to justify broader rate increases that do not benefit all customers equally.
Risk allocation favors industrial customers
The fundamental trade-off in these proposals is the allocation of financial risk. Jackson’s plan aims to ensure that data centers pay for the specific grid strain they create, preventing these costs from being diluted across the general customer base. This approach seeks to protect residential ratepayers from bearing the cost of infrastructure built primarily to serve large industrial tenants.
However, the lack of a clear consensus means that the current system remains in flux. Without a definitive rate class, utilities may continue to bill data centers under standard commercial rates, potentially allowing them to benefit from lower infrastructure costs while residential customers face the cumulative effect of grid expansion. This ambiguity represents a significant policy gap in a state undergoing rapid industrial energy growth.
