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Duke deal would make large data centers cover more of their power costs

A proposed Duke Energy agreement would require data centers with demand of at least 50 megawatts to pay for dedicated infrastructure and at least 75% of their contracted power. The deal still needs state approval, and consumer and environmental advocates say it leaves important questions unresolved.

Duke deal would make large data centers cover more of their power costs
CHARLOTTE — Large data centers seeking electricity from Duke Energy would face new upfront costs and minimum monthly bills under a proposed agreement intended to keep other customers from absorbing the expense of projects that are delayed, downsized or abandoned. The rules would apply to facilities with power demands of 50 megawatts or more — roughly the electricity used by 40,000 Concord households. Duke may need to build power plants and new infrastructure, including substations and transmission lines, before those facilities begin operating. Under current rules, the utility could be left with construction costs if a project never uses the power it requested, with costs potentially passed on to residential and business customers. Under the agreement, data center companies would pay upfront for infrastructure built specifically to serve them and provide financial guarantees for transmission upgrades. They could also face penalties if they cancel a project or shut a facility early. The proposal sets a minimum billing level of 75% of a facility’s requested capacity. A 50-megawatt data center, for example, would be billed as though it used at least 38 megawatts each month, even if its actual use were lower. Duke Energy spokesman Bill Norton said the requirements would make data center operators take on more of the financial risk of building infrastructure for their projects. He also argued the facilities would bring benefits because they would pay more than the cost of serving them. The agreement is part of Duke Energy Carolinas’ rate case and is not final. Public staff has approved it, but the state-appointed ratepayer representative, the North Carolina Attorney General’s Office and environmental groups have filed comments arguing that it does not adequately protect customers. The Utilities Commission is expected to decide on the agreement by the end of November. Will Scott, North Carolina policy director for the Environmental Defense Fund and a member of the governor’s Energy Policy Task Force, described the agreement as a starting point rather than a complete policy. He said it does not address local concerns such as backup generators and noise, or determine how the additional electricity will be generated. Scott has called for data centers to have a separate rate class and more ability to choose and pay directly for power sources, including solar, wind and batteries. The proposed agreement does not require a particular generation mix or settle who would bear the cost of new power plants built to meet data center demand.

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