Amid growing pushback over data centers and rising utility bills, consumer advocates are urging state regulators to create new rates for large electricity users. Last week, Attorney General Jeff Jackson posted a video calling on the North Carolina Utilities Commission to create a separate set of rates for data centers and other power-hungry businesses to protect residential ratepayers.
“They use massive amounts of energy, they strain the entire system, and, going into this new era, we need specific protections to make sure that families don’t see rates spike because of gigantic users on the grid,” Jackson said.
Duke Energy Carolinas is requesting a 14% rate hike starting next year. Jackson and other consumer advocates filed testimony saying this rate case is an opportunity to create new rates for data centers and other large-load customers.
But is this something state regulators can do in a general rate case?
State regulators are running out of time to act
The state’s utility customer advocacy group, called the Public Staff, also supports new rates for data centers and other customers that consume a lot of energy.
David Williamson, an engineer with the Public Staff, said Jackson’s request has precedent. The commission did something similar with Dominion Energy’s electric-vehicle-owning customers last year when they approved new time-of-use rates.
“Generally, they'll have cheaper pricing periods in the middle of the night to encourage overnight charging, as opposed to on a summer day, 5 p.m., during the peak period,” Williamson said.
In a filing last month with state regulators, the Public Staff said the Utilities Commission not only could create new rates during the current proceedings, but should do so now because many energy‑intensive businesses — including new data centers — have already signed contracts with Duke Energy for future service.
In the Carolinas, Duke has signed contracts with 16 energy-intensive businesses that would bring 4,337 megawatts of new demand to the region. That’s nearly double the capacity of the McGuire nuclear power plant in Mecklenburg County, or more than 3 million homes.
The filing pointed to a recent Duke Energy earnings call in which Duke CEO Harry Sideris said, “We have a team in place that their goal, seven days a week, 24 hours a day, is how do we get these things signed quicker, how do we service them quicker.”
Duke Energy Carolinas currently offers some tariffs that apply to large load customers, but none of them are mandatory, and the Public Staff’s testimony said these tariffs, combined with Duke’s existing contracts, aren’t sufficient to ensure that new data centers pay their way.
The filing went on to say that without new protections, like these proposed rates, there is a risk that current residential customers could end up footing the bill for the new power plants needed to support these businesses.
The Public Staff explained what a data center tariff might look like. It would target businesses that request 50 megawatts or more of power. The new mandatory rates would apply only to businesses that plan to use at least 80% of their requested load. That distinguishes data centers from other large-load customers, since these facilities demand power around the clock. It is also why data centers might require Duke Energy to build new power plants, rather than rely on its existing infrastructure.
The new rates would require data centers and other businesses to pay minimum monthly bills and exit fees for early termination.
“If the [Large Load Customer’s] plans change, the [Large Load Customer] cannot simply walk away from the system and leave the remaining customer base with the bill,” the Public Staff’s filing read.
It would also include other provisions to shield existing customers from rate hikes, such as requiring data centers to curtail operations during a certain number of hours each year.
State regulators will make a decision on Duke’s rate case before the new rates are scheduled to take effect on Jan. 1, 2027.
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