A new House proposal would impose new limits on large data centers in North Carolina while adding ratepayer protections aimed at shielding residents and businesses from higher utility costs.
State Reps. Matthew Winslow, R-Franklin; Dean Arp, R-Union; and Kyle Hall, R-Forsyth, announced Wednesday the introduction of a proposed House committee substitute to Senate Bill 730, re-titling the measure the “Ratepayer Protection Act.”
“Data centers bring economic opportunity, but they must not come at the expense of our ratepayers, our water resources, or our energy reliability,” Winslow said in a press release Thursday. “The Ratepayer Protection Act strikes the right balance — encouraging responsible growth while putting North Carolina families first.”
The proposed changes would shift the bill’s focus to new regulations on large data centers, including requirements for noise-impact assessments, local review of water and environmental impacts, limits on cooling systems, and restrictions on ownership by entities tied to foreign adversaries.
“North Carolinians are already feeling the pinch of higher electricity bills, and we cannot allow massive data centers and unrealistic green energy mandates to make it worse,” Winslow added. “The Ratepayer Protection Act puts people over profits by ensuring data centers pay their fair share, protecting our drinking water, safeguarding local communities, and keeping reliable, affordable power flowing to our homes and businesses. This is about common-sense protections for the hardworking families and job creators who call North Carolina home.”
The proposal would also require large data centers to cover added infrastructure and energy costs, a provision supporters say is intended to prevent those costs from being shifted to residential and retail electric customers.
The issue comes amid growing concern over the energy demands of data centers used for artificial intelligence. Nearly four-fifths of voters, 78.2%, agreed that new data center facilities should have to provide for their own energy generation, according to Carolina Journal polling. Of those surveyed, 59.8% strongly supported the measure, while fewer than 10% opposed requiring data centers to provide their own electricity.
Jon Sanders, director of the John Locke Foundation’s Center for Food, Power, and Life, said the idea is worth considering as lawmakers look for ways to protect ratepayers from costs associated with new data center demand.
“This is an idea worth exploring in order to keep other customers from shouldering the costs of constructing new power plants to meet the new demand, specifically from data centers,” Sanders said. “That said, changing the law to allow data centers voluntarily to supply or contract for their own power independent from the grid would shield other customers from the risks without requiring special contracts and terms with the utility.”
The proposal also prevents major power plants from being retired before adequate replacement resources are available, a provision supporters say is intended to protect against energy shortages and price spikes.
Sanders said the proposal would address a major flaw in the state’s Carbon Plan law.
“This proposal would prevent a major problem with the Carbon Plan law, which is the very real threat of retiring baseload power sources, coal and natural gas, and replacing them with weather-dependent renewables that cannot be relied upon to dispatch power when it’s needed,” Sanders said. “Our research shows that the cheapest and most reliable way to reach the Carbon Plan’s goal is through nuclear power, and that is what this proposal would do. Nevertheless, the Carbon Plan elevating its political goal above affordable, reliable power has always been the biggest problem with it.”
Sanders said the proposal could go further.
“It would be optimal to stipulate that any retiring baseload capacity can be replaced only by an equal or greater amount of new baseload power capacity,” Sanders said. “Adequate, reliable, and affordable power is far more important to North Carolinians than an unrelated and increasingly impractical policy goal of ‘carbon neutral’ electricity.”
Carolina Journal polling found that 51.9% of voters said they support replacing retiring coal-fired power plants with equally reliable energy sources, defined as sources capable of providing power any time of day or night without backup. Slightly more than a quarter of voters, 27.6%, opposed that approach, while 20.6% were unsure.
The proposal follows earlier bipartisan legislation filed in April that would eliminate several sales and use tax exemptions for qualifying data centers, including exemptions for electricity, computer software, equipment, and support infrastructure, as lawmakers continue to scrutinize the costs of subsidizing the expanding artificial intelligence and cloud-computing industry.
The measure remains in the House, where it would need committee approval before moving further in the chamber.