North Carolina Data Centers Would Pay for Their Own Substations Up Front

Duke Energy and nine other parties filed a proposed settlement with the North Carolina Utilities Commission on October 6 that would create a mandatory rate structure for the state's largest electricity users and require them to pay up front for the substations and connection facilities that tie them to the grid. Duke announced the agreement the following day. The commission must approve some version of it before any of it takes effect.

The tariff would apply to any customer with contract demand of at least 50 megawatts and a rolling 12-month load factor of at least 80 percent, or to any customer above 150 megawatts regardless of load factor. Those customers would carry a minimum billing demand equal to 75 percent of contract demand, applied to demand charges, would post deposits or security against shared grid upgrades, and would owe damages for terminating early or cutting demand. Contracts signed with Duke on or before June 1, 2026 are exempt.

The signatories include Duke Energy Carolinas, Duke Energy Progress, the North Carolina Public Staff, Amazon, Google, Meta, Microsoft, the Carolina Industrial Group for Fair Utility Rates and the U.S. Department of Defense. Shared network upgrades would still be spread across the broader customer base at first and repaid over the life of the contract, with the cost allocation method left to the commission. The Southern Environmental Law Center and the Southern Alliance for Clean Energy objected, arguing the exit terms would let a departing customer pay as little as 25 percent of what it still owed.

The dedicated facilities provision is the part that lands on a job site. A substation, the primary feeders and the metering built solely to serve one campus would be funded by the campus owner rather than carried in a utility rate base and queued behind other capital work. That moves the schedule off a utility planning cycle and onto a developer's construction calendar, and it puts the medium- and high-voltage scope in front of commercial and industrial crews sooner: switchgear and bus work, transformer terminations, protective relaying, grounding grids, duct bank and underground feeders.

The minimum billing demand and the termination damages matter to hiring in a quieter way. A customer that has agreed to pay on 75 percent of its contract demand whether or not it draws the power is a customer unlikely to walk away mid-build, and that is the kind of certainty contractors price into backlog when they decide how many apprentices to indenture and how many journeymen to carry between jobs. The June 1 exemption cuts the other way, leaving projects already papered under the old terms on their existing agreements.

The five-member commission has not set a decision date. Duke has said it expects an order by mid-November.