North Carolina Governor Calls for Stronger Data Center Tariffs to Curb Rising Electricity Costs

North Carolina Governor Josh Stein on Oct. 27 urged the North Carolina Utilities Commission to strengthen proposed rate protections for data centers and other large electricity users, requiring them to cover the full costs of their energy consumption, including generation, and provide their own clean energy resources.

Governor Stein and Attorney General Jeff Jackson recently filed a response to Duke Energy’s proposal to establish the state’s first large load tariff. The proposed settlement includes protections requiring large customers to cover grid-related costs. Stein called for stronger provisions addressing electricity generation and urged NC UC and other stakeholders to ensure that large energy users pay the full costs of their impact on the electricity system.

Energy Futures Group’s analysis, developed in collaboration with the governor’s bipartisan Energy Policy Task Force, estimates that large electricity loads could add $50 billion in additional costs through 2050. Data centers account for approximately 30 percent of new energy projects but represent 80 percent of projected future electricity demand. Under a business-as-usual scenario, large loads, primarily from data centers, could account for 85 percent of new demand through 2035. The report projects that electricity demand growth over the next 15 years will be five times the rate recorded during the previous two decades.

The analysis also identifies potential savings from alternative energy policies. Pursuing a net-zero emissions target, beginning emissions reductions in the mid-2030s and adopting technologies that improve grid efficiency could save ratepayers $14.6 billion compared with a business-as-usual scenario. Requiring half of new large-load customers to pay for or provide the clean energy resources they have committed to and operate flexibly could save other ratepayers $20 billion.

The proposed tariff could establish how the costs of grid infrastructure and electricity generation are allocated between large energy users and other ratepayers. Other states have taken similar steps to limit cost shifting. In Ohio, regulators approved a tariff requiring certain large customers served by AEP Ohio to pay for a minimum share of contracted electricity capacity. Virginia regulators also approved a separate rate class for large electricity users served by Dominion Energy Virginia, with minimum payment requirements intended to protect other customers from the costs of serving these loads.