Data centers may face new tariffs next year in Duke Energy region in NC
North Carolina's Utilities Commission is seeking proposals for new "large load tariffs" to be imposed on data center operators powered by Duke Energy, possibly starting in 2027. These tariffs aim to ensure data centers pay for the power grid upgrades their massive energy demands necessitate, preventing everyday customers from bearing the costs. Two proposals from Duke Energy and the state's Public Staff are being considered, with a decision expected this fall.
The North Carolina Utilities Commission has initiated a process to develop new "large load tariffs" for data center operators, which could take effect in 2027. These tariffs, which are standardized electric rates, are designed to make data centers financially responsible for the significant power grid upgrades required to meet their rapidly growing energy demands. The move follows a White House-led "Ratepayer Protection Pledge" committed to by N.C. Gov. Josh Stein and Duke Energy in July, aiming to prevent residential customers from subsidizing data center energy costs.
The commission is currently reviewing two proposals: one from Duke Energy and another from North Carolina's Public Staff, a state-run utility watchdog. Duke's plan suggests an "overlay" to existing tariffs for new contracts signed after January 1, while Public Staff's proposal would apply new tariffs in addition to existing ones for all large customers taking service after the same date. The Public Staff also seeks stronger terms for contract termination. Both plans propose minimum 10-15 year contracts and two years' notice for termination.
Experts at a recent hearing highlighted the "unprecedented amount of load" data centers are placing on the grid, making it difficult to separate costs benefiting data centers from those benefiting other customers. Public Staff analysis revealed that some current contracts allow data centers to pay disproportionately low tariffs compared to the infrastructure upgrades they necessitate. The Utilities Commission is expected to decide on implementing a system-wide large load tariff this fall, as part of Duke Energy's ongoing rate cases for its North Carolina subsidiaries.