Duke Energy has reached an agreement with data center operators on a long-sought large-load tariff, or special rate for some big new energy users, in North Carolina.
The agreement repurposes an existing tariff, making it compulsory for data centers and other customers who use a lot of energy most of the time.
But environmental groups say it falls short on some key points.
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“Some of these elements may have been present in previous contracts, but those were highly confidential,” said Will Scott, N.C. policy director for Environmental Defense Fund, in a written statement to WFAE. “This gives us a clear floor so everyone—including potential data center operators—know how much risk they need to take on versus general ratepayers.”
He said the settlement leaves many of the N.C. Utilities Commission’s questions unanswered, such as whether Duke Energy needs a separate customer class for these power-hungry data centers. The tariff proposal also leaves some details about cost allocation to be hashed out during the next rate case, which could be two years from now, and it does not include a path for data center operators to invest in renewable energy sources, such as new solar or wind farms.
"This settlement is a step in the right direction towards making sure data centers pay the cost of grid upgrades they cause, but it fails to do the same for new power plants,” Scott said. “If data centers are going to demand entire power plants' worth of energy, they should help bear those costs and have the option to select cleaner, cheaper options than Duke’s default of coal and gas.”
Duke Energy said the tariff would further protect residents and businesses from subsidizing data center development through higher rates.
Southern Environmental Law Center senior attorney Nick Jimenez has doubts. He said the agreement doesn’t guarantee data centers will pay the full cost of new transmission upgrades.
“Maybe because it just leaves, never builds the data center,” Jimenez said. “Whatever the reason. And the rest of us are stuck holding the bag, paying for those assets.”
New data centers would pay upfront for so-called “dedicated facilities,” such as new substations to get power from the grid. But that doesn’t apply to other transmission upgrades. Those costs would be spread across all customers in the beginning, and paid back over the course of the data center’s contract with Duke.
This would raise rates in the short term and possibly lower them in the long term. Unless the data center exits its contract early; then it would only pay a fraction of its remaining balance.
The proposed tariff wouldn’t apply to companies that signed a contract with Duke on or before June 1, 2026. This may include the Digital Reality Moores Chapel project in Charlotte, the University City PowerHouse data center in Charlotte and Amazon’s data center project in Rockingham.
The N.C. Utilities Commission will have to approve some version of the settlement for it to take effect. That order will determine when and how it’s implemented.
