Florida regulators tell Duke Energy its AI data center cost plan is on 'real shaky ground'

Florida regulators are indicating that utility proposals tied to fast-rising electricity demands will face close review. 

During a hearing this week, the state's Public Service Commission challenged whether a plan from Duke Energy adequately shields regular customers from the costs associated with the energy-intensive data centers that power artificial intelligence.

The case is emerging as one of the first major checks on a new Florida law that, according to the local Tampa Bay 28 News, was designed to require very large power users to pay for the grid upgrades their projects make necessary.

What's happening?

At a recent hearing, officials sought to examine whether Duke's filing meets the requirements of the state's new data center statute, passed this year as AI-related development accelerates across Florida and the country, the local news outlet reported.

At issue is a law intended to prevent major electricity users — including data centers — from passing on the costs of new generating capacity, transmission upgrades, and other infrastructure to the broader customer base. At the hearing, Commissioner Gary Clark suggested Duke had not clearly satisfied that requirement, telling the company, "I think you're on real shaky ground, if you ask me."

The heightened scrutiny comes as developers pitch massive facilities in Florida, including a planned site in Fort Meade. Projects like these can require so much electricity that utilities may need to build new infrastructure to serve them.

Duke has argued that existing customers would remain protected under its approach. The utility said its current rate settlement keeps data center costs out of customer base rates through the end of 2027, and that if a large-load customer falls short of generating enough revenue before then, shareholders, rather than current customers, would cover the gap.

Why does it matter?

The central question is: Who pays when huge new data centers arrive? If utilities are allowed to spread those costs across the broader public, customers who do not directly benefit from the new facilities could see their monthly electric bills rise — and possibly experience local environmental, workforce, and quality-of-life impacts.

Florida's decision could help set the tone for future cases as the state continues to grow. If regulators take a firm stance now, utilities and developers may be forced to make it clearer that expansion plans will not leave residents subsidizing AI build-outs.

The implications extend beyond Florida as well. Communities across the country are asking similar questions as officials weigh promises of economic development against the risks of heavier grid demand and potentially higher utility bills.

What's being done?

The commission has decided not to stop the case at this stage. As Tampa Bay 28 News reported, regulators declined to dismiss Duke's proposal and instead will take it up again during a more extensive two-day hearing in late August.

That next round of consideration could determine whether Duke's framework truly complies with the new law. Attorney Jordan Luebkemann of environmental firm Earthjustice described the case as "the first test of the new law," according to Tampa Bay 28.

As Luebkemann put it, "the commission has a real opportunity here to get it right from the outset," because "data centers should be paying their costs and no one else should be paying their costs for them."

Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here.