As Duke Energy seeks a 14% rate hike, North Carolina advocates want data centers on a separate electric bill

North Carolina consumer advocates are pushing the idea of separate energy rates for data centers, something that would create major savings on household utility bills. 

The idea is simple. If data centers and other massive electricity users are driving up grid costs, they should be billed differently from everyone else.

The issue is gaining urgency because Duke Energy Carolinas requested a 14% rate increase to begin next year.

What's happening?

Rather than folding the impact of huge new power users into ordinary residential rates, state consumer advocates want the North Carolina Utilities Commission to create a distinct pricing category for data centers and other large-load customers, according to WFAE.

That push has emerged in the Duke Energy Carolinas rate case, with Attorney General Jeff Jackson asking regulators to take action.

"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 in a video.

North Carolina Public Staff, the state's utility customer advocacy group, has taken the same position. In filings, it said regulators can establish new rates in this proceeding and should do so since Duke Energy has already entered service agreements with major energy users.

Those contracts cover 16 energy-intensive businesses that would add 4,337 megawatts of demand in the Carolinas — almost twice the McGuire nuclear plant's capacity, or enough for over 3 million homes.

Regulators are expected to rule on the case before new rates take effect Jan. 1.

Why does it matter?

Who should pay for the infrastructure needed to serve the constant electricity demand of data centers and similar facilities? As it stands, the general public will foot the bill.

According to the Public Staff, Duke Energy's tariffs for large customers are optional and may not go far enough to ensure new data centers pay for the added generation and grid investments they could require.

Without stronger protections, residential customers could subsidize new power plants.

Even relatively modest rate increases can strain families already managing housing, food, and transportation expenses.

Data centers also tend to use electricity consistently, not just during peak hours. That sets them apart from many other major customers and raises the stakes for regulators trying to keep the grid reliable without shifting costs to residential customers.

What's being done?

The proposed fix is a mandatory tariff for customers requesting 50 megawatts or more and planning to use at least 80% of that load. That profile fits many data centers.

Under the Public Staff proposal, qualifying customers would face minimum monthly bills and pay exit fees if they pull out early.

"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 filing stated, as WFAE noted.

The proposal could also require those customers to scale back operations during certain hours to ease strain on the grid during periods of high demand.

Public Staff engineer David Williamson said the commission has already shown it can create tailored rates, pointing to a case last year involving Dominion Energy's electric vehicle customers. "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, per WFAE.

State regulators will decide the issue as Duke Energy expands service to major new customers.

Meanwhile, Duke Energy CEO Harry Sideris has a different agenda, saying the company's goal is, "How do we get these things signed quicker, how do we service them quicker?"

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