North Carolina-based Duke Energy and several major technology companies, including Amazon, Microsoft, and Google, have signed a settlement outlining a new large-load tariff for data centers and other heavy power users in North Carolina. The agreement, filed with the North Carolina Utilities Commission on Tuesday, aims to ensure that these substantial power consumers pay a fair price for their usage without impacting the electricity rates for residents, according to The News & Observer.
The proposed tariff applies to customers who require more than 50 megawatts of power and operate near peak capacity consistently over 12 months, or any customer needing more than 150 megawatts. If approved by the five-member commission, the new rules would apply to service agreements signed after June 1, 2026. Duke Energy anticipates a decision from the commission by mid-November.
Under the terms, large customers would pay the standard rates that Duke Energy charges for any demand exceeding one megawatt. These customers must also commit to paying for at least 75% of their expected power needs each month, even if their actual consumption is lower. New large customers would be required to receive service under a high load factor rate schedule.
A key provision requires these large customers to fully cover the cost of any dedicated equipment, such as a substation, that exclusively serves their project. They must also bear the complete cost of other grid upgrades necessary for their operations. To back this commitment, customers are required to provide a letter of credit within 60 days of signing a service agreement. Furthermore, ending a contract early would incur significant penalties, ranging from $25 million to more than $587 million.
Kendal Bowman, Duke Energy's North Carolina president, emphasized the tariff's intent, stating that it ensures "data centers will pay upfront" for connection costs, according to Queen City News. Bowman added that the utility is shielding other customers from these costs in a way that protects reliability and ensures everyone benefits from the economic growth coming to North Carolina.
Duke Energy led private discussions with approximately 20 energy industry groups over the past two months, with proposals and comments later submitted to the commission in public filings. Besides the tech giants, Andale, a Meta subsidiary, the U.S. Department of Defense, CIGFUR, and the North Carolina Public Staff, a state-run consumer advocacy group, also signed the settlement.
However, no environmental or clean energy advocacy groups signed the agreement. Matt Abele, director of the NC Sustainable Energy Association, conveyed to Axios that he believes the tariff does not go far enough. He argued that these facilities should be required to be more self-sufficient, covering their own demand increasingly with clean, low-cost, and reliable resources. Nick Jimenez, a senior attorney at the Southern Environmental Law Center, raised concerns that the deal does not guarantee that data centers will cover the full cost of new transmission upgrades from the outset. Initially, all customers would share these costs, with the data center repaying them over the duration of its contract. The tariff itself does not mandate that large customers use clean energy.
The North Carolina Utilities Commission will consider this settlement as part of Duke Energy's broader request for a rate increase affecting customers in Charlotte and western North Carolina. This development also precedes the planned merger of Duke Energy Carolinas and Duke Energy Progress into a single utility, effective January 1, 2027.
