North Carolina Weighs New Rate Rules for AI Data Centers

North Carolina Tackles Data Center Power Cost Allocation

North Carolina's Energy Policy Council Load Growth Task Force convened this week to address a pressing question: who should pay for the massive electrical infrastructure required to support the state's booming data center industry, particularly as artificial intelligence drives unprecedented power consumption.

The task force examined several policy mechanisms, including specialized electricity rates for large customers, provisions allowing companies to generate their own power, and demand-response programs that would incentivize consumption reduction during peak periods.

These deliberations occur against the backdrop of Duke Energy's pending rate case, in which the utility is seeking approval to raise electric rates to fund billions of dollars in grid upgrades and new generation capacity. Duke has attributed more than 85% of projected load growth from new economic development projects to data centers alone.

Why it matters

The policy decisions North Carolina makes in coming months could set a national precedent for how states balance economic development incentives with consumer protection. If existing residential and commercial customers end up subsidizing infrastructure built for data centers that fail to materialize or consume less power than anticipated, ratepayers could face higher bills for decades without corresponding economic benefits.

Proposed Rate Structures Under Consideration

The leading proposal involves creating a mandatory "large load tariff"—a separate rate class specifically designed for customers requiring massive electricity volumes. Consumer advocates, the North Carolina Utilities Commission's Public Staff, and Attorney General Jeff Jackson have all urged regulators to establish such a structure.

Under proposals filed in Duke Energy's rate case, large-load customers would face several requirements designed to protect existing ratepayers: mandatory minimum monthly bills, commitments to use a specified percentage of requested power capacity, and exit fees if projects are canceled before utilities recover infrastructure investments.

Additional concepts under review include "bring your own capacity" programs that would permit large customers to build or contract for their own generation, and load flexibility initiatives encouraging temporary consumption reductions during high-demand periods.

Federal and National Context

The Federal Energy Regulatory Commission recently directed the nation's six largest regional grid operators to justify or revise their approaches to handling massive new electricity users, including AI data centers. Federal regulators identified the same core issues North Carolina is now confronting: cost allocation, behind-the-meter generation, flexible large loads, and protecting existing customers from bearing costs associated with new development.

National demand forecasts underscore the urgency. The U.S. Energy Information Administration projects electricity demand will reach record levels in 2026 and 2027, driven substantially by AI data centers and electrification. The North American Electric Reliability Corporation recently raised its 10-year peak demand forecast by 24%, citing new data centers as the primary driver.

Several other states have already begun implementing specialized tariffs and service agreements for hyperscale customers, many incorporating long-term commitment requirements, minimum payment provisions, infrastructure cost-sharing arrangements, and options for customer-owned generation.

These details were first reported by WRAL.