'Getting squeezed': NC lawmakers look to stop data centers from raising energy, water costs

North Carolina lawmakers are floating a proposal that would require large data centers to cover electricity and infrastructure costs associated with building and operating them, while also tightening rules on where they can be built, who can own them and how much water they use.

The collection of ideas in the bill has bipartisan support. It was first made public Tuesday night, ahead of a committee hearing Wednesday where the proposal, a newly rewritten version of Senate Bill 730, advanced with broad approval.

Supporters said while the bill contains many provisions, they mostly boil down to an effort to fight rising power bills for people across the state.

"The whole bill is about reducing rate-payer costs for energy," Rep. Dean Arp, R-Union, said Wednesday. "They're getting squeezed. We're having to build new generation. And so what we're trying to do is look at all-of-the-above, where rate payers are affected by energy policy."

In addition to its focus on data centers centers the bill also contains unrelated provisions such as new legal changes aimed at promoting nuclear power, and requiring state regulators to speed up permitting for power plants.

Lobbyists for various businesses and business advocacy groups packed the room as lawmakers explained what exactly the wide-ranging bill would do and debated what further changes should be added. Lawmakers leading the committee declined to allow them or any other members of the public to comment on the proposal before voting to advance it.

The bill was backed by Republicans but also won support from one of the most liberal, pro-environmental members of the legislature, Rep. Pricey Harrison, D-Guilford. "This is a great bill," she said Wednesday, adding that she did have some questions and suggestions about certain pieces. "There's a lot in it, and it's complicated," Harrison added.

“The bill proposes important first steps toward establishing a regulatory structure for data centers in North Carolina,” Harrison told WRAL prior to Wednesday's hearing. “I am happy to see policies proposed for water conservation, and limitations on polluted discharges that other states have dealt with.”  

The bill would apply to hyperscale data centers with peak monthly electricity demand of 100 megawatts or more — facilities that utilities say are driving a surge in projected power demand tied to artificial intelligence and cloud computing.

The proposal comes as data center developers increasingly run into hostility and face rejection from municipal boards that oversee zoning applications or construction permits.

Some Democrats in the legislature predicted the bill would end up going nowhere. Sen. Michael Garrett, D-Guilford, said even if the bill passes the House he's not sure Senate Republicans will allow it to become law, and he characterized it as political theater.

"It's nothing but a talking point," Garrett said. "Because if you look at any poll, people are upset about energy prices ... and we have done nothing, nothing, in this building to do anything that North Carolina families actually care about. And this bill is not going to do anything. It's going to be a talking point."

Senate Republican leader Phil Berger said Wednesday his caucus hasn't had many discussions about data center policy and he wasn't ready to say whether he'd support changes like those presented in the bill. "We'll see what comes over from the House," he told reporters. "I'm pretty sure there's some things we could find interesting to look at further, but we're not there yet."

Berger has previously expressed interest in a separate idea, not in this new bill, to stop data centers from getting a tax break on the energy they buy. Democratic Gov. Josh Stein has also proposed that same change.

Across the state, proposals for hyperscale data centers built to support artificial intelligence and cloud computing are driving unprecedented demand for electricity and water. That surge is reshaping long-term energy planning, raising new questions about who bears the environmental and financial costs of keeping the grid running.

At the core of the new proposal is a requirement that electric utilities structure contracts so data centers pay the incremental costs of serving their load, including new generation, transmission upgrades and grid expansion. The bill also includes minimum billing requirements and financial protections designed to prevent residential and small business customers from subsidizing large industrial users.

The bill favors nuclear and other large power plants while speeding up permits for new energy projects, with less focus on battery storage and other alternatives for meeting growing electricity demand.

Multiple Democrats on the committee asked why the bill doesn't also seek to promote more renewable energy options such as solar power. Arp said he wasn't sure solar power could be built at the scale needed to supply the massive demands of data centers, and he's mainly focused on making changes to keep data center energy demand from spiking people's energy bills.

"If we don't act now, the rates that ratepayers pay — their energy bills — will go up," Arp said.

Arp and other Republican lawmakers voted last year, along with a small handful of Democrats, to change the way Duke Energy and other utilities bill people for power. That new law, which Democratic Gov. Josh Stein unsuccessfully vetoed, increased what individual families pay for electricity in order to lower rates for large corporate energy customers such as factories and data centers.

Duke Energy, which provides nearly all the power used in North Carolina, is currently seeking permission for an 18% rate hike.

Who pays?

North Carolina’s data center boom has become a central issue in state energy planning.

Utilities and regulators are increasingly warning that AI-driven electricity demand could require major investments in new power plants, transmission lines and grid infrastructure across the state. Utility executives and regulators described the debate as a fundamental tension in energy policy as large facilities capable of using as much power as a small city are added to the system. 

That “who pays” question has increasingly shaped policy discussions in Raleigh as utilities warn that data center-driven demand could require major investments in generation and transmission infrastructure, potentially affecting broader electricity costs if expenses are spread across all ratepayers. 

That tension has become a growing focus in Raleigh as lawmakers, utilities, regulators and local governments debate how to manage rapid electricity demand growth tied to artificial intelligence and large-scale data center development while protecting ratepayers and maintaining grid reliability.

Duke Energy has pointed to data center growth as a key driver of future electricity demand, underscoring the pressure on utilities to build new generation and transmission infrastructure while keeping rates stable. The increase in demand is in part why the company has sought to increase rates, seeking to fund infrastructure improvements for even more demand in the future.  

“Duke Energy is committed to its customers and communities and will continue working with policymakers and regulators to deliver reliable and increasingly clean energy while keeping rates as low as possible,” Craig Wilson, a Duke Energy spokesman, said in a statement.

The company reported $9.2 billion in operating revenues during the first three months of 2026, up nearly $1 billion from a year prior according to its Q1 earnings report, growth which Duke credited in part to new data centers coming online in North Carolina and other states it serves. A presentation in Duke's earning report says data centers are positive additions because "large load customers pay their fair share of costs, benefiting existing customers over the long term as fixed costs are spread over a larger base."  

The new legislative proposal taking a critical look at data centers would also prohibit cities and counties from offering economic development incentives to attract data centers and bar the use of eminent domain for their siting, marking a shift from traditional local recruitment strategies.

“Many states have seen farmland seized for data center developments, and that is just wrong,” Harrison told WRAL Tuesday.

It would also require utilities to file data center contracts with state regulators and report projected versus actual electricity demand, increasing transparency around large-load customers and their impact on the grid.

Additional provisions of the bill would require certain cooling systems designed to reduce water consumption and create faster permitting pathways for some energy infrastructure projects.

Data center opposition

There’s broad public opposition to data centers in North Carolina, with just 24% of North Carolinians saying they’d approve of one being built in their community and 44% saying they’d oppose one, according to an April poll from Elon University.

Democrats and independents are generally aligned in opposing data centers, while Republicans are more open to approving their construction. 

Some cities and counties have welcomed new data centers and their promise of a massive boost to the local property tax base, while others have shot down the proposals after residents raised concerns about pollution and a strain on the local water supply and energy grid.

Republicans were twice as likely to be in favor than anyone else: 17% of Democrats and independents said they’d support a data center, as did 34% of Republicans.

WRAL reporter Will Doran contributed reporting.