NC House limits data centers, requires nuclear power before closing coal plants
AI-generated summary reviewed by our newsroom.
- House passed the Ratepayer Protection Act; it still needs Senate and governor approval.
- Bill bans evaporative cooling for hyperscale centers and blocks local incentive awards.
- Bill bars phasing out baseload plants over 100 MW without a 1,000 MW nuclear plant.
Following a partisan debate Wednesday, the North Carolina House passed the state’s most extensive data center regulations to date, a set of policies restricting how the largest of these in-demand but divisive facilities can be cooled, funded, and owned.
But it was a separate provision within the 13-page bill that divided representatives along mostly party lines. In addition to addressing data centers, the legislation prevents Duke Energy from retiring a natural gas or coal plant until the company gets a permit to build a bigger nuclear site.
The House approved the bill, titled the Ratepayer Protection Act, late Wednesday afternoon by a vote of 69 to 44. Two Democrats joined the majority Republicans in favor. To become law, it will need signoff from the GOP-controlled Senate before being sent to Democratic Gov. Josh Stein.
“North Carolinians are seeing higher electricity bills driven by rapid data center growth and aggressive energy mandates,” Rep. Matthew Winslow, a Youngsville Republican who had helped write the bill, said during the floor debate.
The legislation would prevent large hyperscale data centers (defined as drawing 100 megawatts or more) from using evaporative cooling systems. These systems are more energy efficient but use considerably more water compared to alternatives like closed-loop cooling systems.
The Ratepayer Protection Act would prevent local governments from awarding economic incentives to hyperscale operators. Last year, Richmond County approved a 20-year tax incentive for Amazon to build a $10 billion data center campus in the rural community. However, the House bill did not address the state sales tax breaks data center developers can currently access.
It also would prohibit individuals or companies from four adversarial foreign governments — Iran, China, Russia, and North Korea — from owning 100-megawatt-plus data centers in North Carolina. And the bill sets rules for how electric utility providers contract with data center applicants, including minimum billing and contract length rules designed to protect what the utilities spend and ultimately pass on to ratepayers.
Additionally, developers who seek to build data centers within 500 feet of schools and homes must first assess the “sound profile” of their prospective facility.
“We know around the country what data centers are doing to communities,” said Rep. Pricey Harrison of Greensboro, who was one of two House Democrats to vote in favor. “We know how it is raising people’s power bills, sucking out all the water, the noise, the heat, the pollution. It’s vital that we set up guardrails to protect us from this industry, and this bill is a good first step.”
As artificial intelligence use rises, big tech companies and lesser-known developers alike have looked to establish massive data center campuses across North Carolina. In October, Duke Energy estimated data centers accounted for 80% of the wattage it would need to power all prospective economic projects in the Carolinas.
Communities have met this data center rush with a mix of acceptance and backlash. Some have given incentives. Increasingly, however, local governments have paused data center permitting through 12-month moratoriums.
In comments Tuesday to the House Commerce and Economic Development Committee, Khara Boender of the Data Center Coalition cautioned lawmakers against specifying certain cooling technologies, setting “prescriptive” rules for utility service contracts, or prohibiting “economic development tools that could reduce North Carolina’s competitiveness.”
Boender said her organization represents Google, Amazon, Meta and Microsoft, among many other companies.
North Carolina’s nuclear and coal debate
After detailing data center policies, the second half of the Ratepayer Protection Act includes policies on long-term power generation.
The legislation commissions a study to assess any energy costs associated with North Carolina’s 2050 carbon neutrality goal. And in what sparked the majority of debate Wednesday, the bill blocks the North Carolina Utilities Commission from phasing out a “baseload” facility — nuclear power, natural gas or coal — above 100 megawatts until the public body authorizes the electric public utility (effectively, only Duke Energy) to build a nuclear power plant capable of generating 1,000 megawatts.
This rule is designed to “ensure the adequacy of baseload and dispatchable generation from a clean energy resource,” the legislation reads.
“We’re still battling wrong energy policies that go back to 2007,” said Rep. Dean Arp, a Monroe Republican and a co-author of the legislation, alluding to actions taken under previous Democratic leadership. “This bill saves ratepayers from higher rates.”
Rep. Brandon Lofton of Charlotte joined several of his Democratic colleagues in criticizing the nuclear power substitute requirement as something that will prolong a more expensive power source.
“I have concerns that in the same bill where we’re trying to protect ratepayers from bearing the cost of data centers,” he said, “we’re actually requiring them to bear the cost of outdated coal plants.”
