Duke Energy has introduced a new rate plan in North Carolina aimed at large-scale energy consumers like data centers. This innovative tariff repurposes a current rate structure and mandates its use for entities with significant and consistent energy demands.
Despite the agreement’s intentions, environmental advocates remain critical, highlighting areas where it does not meet expectations.
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Will Scott, the North Carolina policy director for the Environmental Defense Fund, remarked, “Some of these elements may have been present in previous contracts, but those were highly confidential. 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.”
Scott expressed concerns that the agreement doesn’t fully address the N.C. Utilities Commission’s inquiries, particularly regarding the need for a distinct customer category for high-demand data centers. Additionally, the proposal doesn’t currently offer avenues for data centers to invest in renewable energy initiatives, such as solar or wind energy sources.
“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 added, emphasizing the need for data centers to share the financial burden of their energy demands.
Duke Energy asserts that this tariff will shield residential and business customers from the financial impact of subsidizing data center growth.
However, Nick Jimenez, a senior attorney at the Southern Environmental Law Center, expressed skepticism. He noted that the agreement doesn’t ensure that data centers will cover the entire expense of new transmission enhancements.
Jimenez explained, “Maybe because it just leaves, never builds the data center. Whatever the reason. And the rest of us are stuck holding the bag, paying for those assets.”
Under the proposed structure, data centers would initially finance specific infrastructure like substations. Yet, broader transmission upgrades would initially be spread across all customers, with reimbursement occurring over the data center’s contract duration with Duke.
This arrangement might lead to short-term rate hikes, potentially followed by reductions later. If a data center terminates its contract early, it would only pay part of the remaining costs.
The new tariff won’t affect companies with agreements with Duke Energy made by June 1, 2026. This includes projects like the Digital Reality Moores Chapel in Charlotte, the University City PowerHouse data center in Charlotte, and an Amazon data center in Rockingham.
The effective implementation of the settlement hinges on the approval of the N.C. Utilities Commission, which will decide its execution timeline.
