A North Carolina House committee has advanced a sweeping bill designed to prevent utilities and ratepayers from absorbing the financial risks of massive AI-related infrastructure expansion if projected data center demand fails to materialize.. The measure would also impose some of the stricter proposed cooling restrictions in the US for large data centers, including a ban on evaporative and open-loop cooling systems for qualifying facilities. Together, those provisions aim to force hyperscalers to internalize more infrastructure risk while constraining how qualifying facilities are physically built \u2013 an approach few states have pursued simultaneously.. Earlier debate focused on cooling restrictions, siting rules, and local impacts from large AI campuses. Newer revisions and parallel utility proceedings increasingly frame hyperscale campuses as a grid-planning and infrastructure-financing challenge tied to transmission expansion, reserve margins, long-term utility contracts, and the risk of stranded costs if demand falls short.. Related:Virginia Tightens Data Center Generator Permitting as Community Scrutiny Grows. The proposed Ratepayer Protection Act (SB 730) would apply to data centers consuming more than 100 MW, imposing new contract requirements, cooling restrictions, and siting rules while reshaping the state\u2019s approach to long-range power planning, electric reliability, and major infrastructure development.. Much of the legislation mirrors protections that utilities are already pursuing in rate cases, transmission planning proceedings, and large-load negotiations.. The bill now advances through the North Carolina legislature as lawmakers debate how utilities, regulators, hyperscalers, and ratepayers should share the costs and liabilities tied to rapid AI infrastructure expansion.. Why Now: AI-Driven Load Growth. Utilities across the US are scrambling to manage projected AI-related electricity demand that, in some regions, rivals the combined load growth of previous decades. Regulators from Texas to PJM Interconnection are increasingly debating who should pay for the generation, transmission, and reserve capacity needed to support hyperscale campuses if demand ramps more slowly than expected.. North Carolina\u2019s long-range power-planning report says electricity demand across the Carolinas is projected to rise \u201csignificantly more than previously expected\u201d because of economic development tied to \u201clarge-load factor customers such as data centers.\u201d The report projects 15-year load growth up to eight times last decade\u2019s level, adding nearly 80 TWh, and regulators have increased Duke Energy\u2019s required planning reserve margins to 22% by 2031.. Related:Oklahoma Law Opens New Front in AI Data Center Power Debate. Duke\u2019s signed and proposed data center pipeline now represents one of the largest concentrated load-growth waves in the utility\u2019s history. During the company\u2019s May 2026 earnings call, Duke said it had signed 7.6 GW of electric service agreements with data center customers, added another 2.7 GW during the first quarter alone, and was discussing an additional 15.4 GW of potential projects.. The scale of those projections is intensifying fears that utilities could overbuild generation and transmission infrastructure if projects ramp more slowly than forecast.. Affordability adds pressure. North Carolina residential electricity prices averaged about 16 cents per kilowatt-hour in March 2026, below the US average of roughly 18.7 cents per kilowatt-hour, according to US Energy Information Administration data. The gap heightens scrutiny of how much AI-related infrastructure spending flows into future customer rates.. SB 730 and parallel regulatory proceedings aim to reduce the risk to existing customers from major grid buildouts tied to projected data center growth. (Image: Getty). The Utility Playbook: Large-Load Tariffs and Customer Guarantees. Duke said it was using minimum-demand agreements, credit support requirements, refundable capital advances, and termination charges to reduce financial exposure tied to large-load infrastructure expansion. During the company\u2019s first-quarter earnings call, executives said those contracts include provisions that \u201cprotect existing customers\u201d by spreading fixed costs across a larger customer base. Utilities fear building infrastructure for projects that reserve massive electrical capacity years before full deployment \u2013 or never fully materialize at all.. Related:Why FAST-41 Now Covers AI Data Centers and Copper. Those pressures are already reshaping utility operations inside North Carolina regulatory proceedings. According to reviews of recent North Carolina Utilities Commission (NCUC) filings, Duke created a new intake process for customers above 100 MW that includes transmission studies, advance capital payments, minimum billing provisions, and interruptible-service obligations. Duke also groups some customers into tranches resembling generator-interconnection study clusters as utilities confront transmission constraints in fast-growing areas. The NCUC now requires Duke to file semiannual reports on major electric-load additions tied to data centers and other large customers.. Major cloud operators are also intervening directly in those proceedings. In an April filing before the NCUC, Microsoft said it is investing in the phased development of North Carolina data centers and expects to become \u201ca significant retail customer\u201d of Duke Energy Progress. Microsoft said it has \u201ca significant interest in the availability of an adequate and reliable source of electricity upon reasonable terms and conditions\u201d as well as \u201can interest in the development of customer programs for large load customers.\u201d. Major cloud operators are also intervening outside North Carolina. In a recent Nevada proceeding, Microsoft backed a proposed Ratepayer Protection Tariff designed to ring-fence infrastructure costs tied to hyperscale growth and ensure large-load customers pay \u201call of the new costs\u201d associated with serving them. The filing warned utilities against \u201coverbuilding or over procurement\u201d tied to unrealistic forecasts and argued that AI infrastructure expansion requires new regulatory structures around transmission planning, phased ramps, and customer-funded infrastructure.. Rob Gramlich, president of transmission consulting firm Grid Strategies, told Data Center Knowledge that utilities and regulators across the country are increasingly demanding stronger financial commitments from hyperscale customers before building major infrastructure around projected AI demand. He said roughly 30 states now have some form of large-load tariff structure and called them \u201cone of the biggest developments in the electric industry over the last year.\u201d. Cooling Restrictions, Siting Rules, and Local Backlash. SB 730 would require qualifying facilities to use closed-loop water or liquid-cooling systems and prohibit evaporative or open-loop cooling approaches at sites above 100 MW. Operators would also face new siting and environmental-review requirements covering sound, water resources, thermal plumes, agricultural impacts, parks, historic sites, and nearby forestland. The legislation would also prohibit local governments from offering economic development incentives for qualifying facilities and bar the use of eminent domain to acquire data center land.. Local opposition has grown alongside concerns about electricity and water. In Chatham County, officials approved a temporary moratorium on data centers, cryptocurrency mining, and related data-processing facilities while planners study long-term impacts and draft permanent regulations. A county planning presentation supporting the moratorium cited facilities drawing \u201c50-1,000 MW of power at any given moment\u201d and consuming 1-5 million gallons of water per day.. SB 730 would require closed\u2011loop water or liquid\u2011cooling systems at qualifying sites and prohibit evaporative and open\u2011loop designs. (Image: Getty). Cost Allocation Fight: Ratepayers, Hyperscalers, and Stranded Risk. Intervenors in Duke\u2019s carbon-planning proceedings are increasingly challenging the assumptions behind the utility\u2019s infrastructure expansion plans. In a post-hearing brief filed in the NCUC\u2019s carbon plan docket, the North Carolina Environmental Justice Network and Environmental Justice Community Action Network argued that Duke failed to adequately explore demand-side alternatives, \u201cincluding from massive data centers,\u201d before pursuing large-scale natural gas expansion. The groups said the proposed buildout could expose ratepayers to stranded costs tied to speculative forecasts and questioned whether North Carolina customers should front the cost for energy infrastructure supporting \u201cmassive industrial data centers that have not made firm commitments to North Carolina.\u201d. Jigar Shah, former director of the US Department of Energy Loan Programs Office, told Data Center Knowledge that utilities and regulators are increasingly treating hyperscale AI campuses less like traditional economic development projects and more like industrial electrical loads that require dedicated infrastructure and cost-allocation frameworks.. \u201cThe existing tariff architecture, designed for loads measured in tens of megawatts with gradual ramp profiles, simply doesn’t work for loads measured in hundreds of megawatts that can arrive faster than transmission can be permitted and built,\u201d Shah said.. He said the bill\u2019s provisions are designed to address specific utility-planning \u201cfailure modes\u201d that regulators already fear or have begun to encounter as hyperscale AI demand grows.. Minimum billing requirements, he said, are meant to protect utilities from \u201cbuild it and they slow-ramp\u201d scenarios in which infrastructure gets constructed around projected AI demand that never fully materializes.. Shah added that contracted-versus-actual demand reporting creates a record for future rate cases, while curtailment studies reflect growing assumptions that AI loads may need to become partially flexible during grid stress.. Tyler Demetriou, a senior attorney at the Southern Environmental Law Center, told Data Center Knowledge that lawmakers are increasingly hearing concerns from constituents about rising electricity bills and the local impacts of hyperscale campuses. \u201cData centers no longer seem like such a good deal,\u201d he said, arguing that political attitudes have shifted as energy affordability becomes a more visible issue.. Demetriou said the rapid spread of large-load tariffs across states reflects efforts to shield residential customers from speculative infrastructure expansion tied to AI demand. He pointed to Ohio, where a recently adopted tariff structure \u201ccurbed a lot of speculative demand within a few months.\u201d. What SB 730 Would Do. SB 730 would require long-term contracts, minimum billing structures, financial guarantees, and reporting comparing contracted versus actual demand for qualifying data centers. The bill also calls for a statewide study examining whether large customers should generate part of their own electricity and whether curtailment programs should apply during periods of grid stress. Another section would accelerate parts of the state\u2019s energy permitting system by directing regulators to create expedited review pathways for electricity generation, transmission, natural gas, diesel, and related fuel infrastructure. It would also prevent the retirement of baseload generating facilities until replacement nuclear generation receives regulatory certification.. Where SB 730 Stands Now. The bill has advanced out of a North Carolina House committee and continues through the General Assembly. The outcome will shape future rate cases and transmission approvals in the state and could influence how other jurisdictions design large-load tariffs, cooling rules, and cost-allocation frameworks for AI-driven growth.<\/p>\n
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