NC lawmakers press for fast action on data center crackdown bill

A bill cracking down on data centers being built in North Carolina is expected to move quickly through the state House of Representatives starting Tuesday.

The bill was made public last month, just before the House went on break for Memorial Day. Now that they’re returning to session, lawmakers plan to debate the bill in committee once again, then quickly move to vote on the bill and send it to the state Senate for consideration.

The wide-ranging proposal 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. It would also ban local governments from paying companies incentives to build data centers in their community, and it contains unrelated provisions aimed at boosting the construction of new power plants in the state.

State Rep. Dean Arp, R-Union, previously said the bill’s combined goals of creating more power in the state, while also requiring data centers to provide more of their own power, were intended to help fight rising electrical bills.

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

"The whole bill is about reducing rate-payer costs for energy," Rep. Dean Arp, R-Union, said when the bill was first debated in committee last month. "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."

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 in Senate Bill 730 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.

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 last month.

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 first-quarter 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 earnings 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."

Data centers have faced opposition from many communities. Critics cite water and noise pollution and fears of higher utility bills caused by their intense power usage. Just 24% of North Carolinians said they’d approve of one being built in their community, according to an April poll from Elon University. 

The bill under debate seeks to address the water concerns by mandating a closed-loop system that would require data centers to recycle water for cooling, rather than constantly churning through fresh water.

And the massive power needed to run a data center 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.

Separately, Democratic Gov. Josh Stein has called for eliminating the tax loopholes that allow the companies that own data centers to avoid paying sales and use taxes on the energy they purchase or their building materials. State Senate leader Phil Berger, R-Rockingham, has said he agrees with eliminating their tax exemption for energy. Each have said those loopholes were created years ago, before the current AI-driven boom, and no longer seem needed to entice development to the state.