In an effort to address affordability issues in North Carolina, House Democrats are turning their attention to the operations of data centers and the energy policies of Duke Energy. A new legislative proposal seeks to impose stricter regulations on these entities, reflecting growing concerns over resource consumption and environmental impact.
House Bill 1063, also known as the Ratepayer and Resource Protection Act, requires data centers in North Carolina to publicly disclose detailed information about their electricity consumption, peak demand, water usage, cooling systems, and any use of emissions-free electricity. Additionally, data centers exceeding an annual water usage of a billion liters or having a peak electricity demand over 40 megawatts must produce at least 25% of their power from carbon-neutral sources.
Rep. Lindsey Prather, D-Buncombe, highlighted the actions of several local governments in North Carolina that have temporarily halted data center developments to establish suitable land use regulations. “North Carolinians want us to get ahead of this. … If a company wants to build a data center in North Carolina, they can. They must simply pay their own way and stop shifting the cost onto you, me and families like ours,” Prather emphasized at a recent press conference.
The state is becoming increasingly attractive to data center developers due to its low electricity costs, ample vacant land, and competitive tax incentives. House Bill 1063 aims to adjust these incentives by repealing tax exemptions on construction expenses, server replacements, and electricity.
“North Carolinians can end up footing the bill twice, through incentives and subsidies that never contemplated projects like these,” Prather noted. Governor Josh Stein has requested a bipartisan task force to evaluate these exemptions and possibly recommend adjustments or introduce a sunset clause. Although exact sales tax exemption figures for data centers are unavailable, estimates by the N.C. Department of Commerce suggest a range of $45 to $57 million, potentially escalating to $450 million in the future.
The proposed legislation would also prohibit both state and local governments from offering incentives to data centers, including infrastructure grants and property tax reductions.
Adam Wagner
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N.C. Newsroom
The proposed bill, sponsored by a minority of Democratic legislators, faces an uphill battle in the State House. Rep. Vernetta Alston, D-Durham, noted the lack of discussions with Republican counterparts, stating, “This is the agenda that we feel addresses the crises that are in front of us, that are in front of working everyday North Carolinians. And if folks want to come to the table and help us pass these bills, we’re open to a conversation.”
Proposed Changes to Ratemaking
Democrats are advocating for modifications in how the Utilities Commission’s performance-based regulation is conducted. Under this framework, Duke Energy can increase utility rates by meeting specific incentives that benefit ratepayers.
Such incentives could include promoting clean energy and storage, easing energy burdens for low-income households, or reducing carbon emissions. “Our bill says that if a utility wants to be rewarded for performance, it will show real results in lowering our customers’ and our energy bills, reducing shutoffs, improving efficiency, cutting peak demand and keeping overall costs under control,” stated Rep. Monika Johnson-Hostler, D-Wake.
Earlier this year, Duke Energy reported earnings of over $4.9 billion in 2025. The new proposal would require performance-based rate cases to include at least two measures linked to Duke Energy’s earnings or revenue. One measure would focus on affordability, while the other would target energy efficiency during peak usage times.
The proposal aims to revise the performance ratemaking structure established in the 2021 energy legislation, increasing the number of required performance-based regulations in a rate case from one to two. The Utilities Commission would still consider grid reliability and potential customer class biases when evaluating performance proposals.
