Why It Matters
North Carolina lawmakers are moving forward with legislation aimed at preventing data centers from passing energy costs to residential and commercial ratepayers. The measure requires new environmental impact studies and sets development standards as state and local officials grapple with how to regulate the facilities’ expanding footprint.
Senate Bill 730 advanced through the House Energy and Public Utilities Committee on Wednesday and now heads to the House Rules Committee.
What Happened
The committee voted to advance the Ratepayer Protection Act, which establishes baseline requirements for large data center construction in North Carolina. The legislation mandates noise studies for large facilities and grants local governments authority to assess impacts on water resources, air quality, and agricultural land before approving projects.
Under the bill, data centers must install closed-loop water cooling systems designed to minimize water consumption. The measure also prohibits local governments from offering tax incentives to data centers, though it does not address state-level tax breaks.
Representative Matthew Winslow of Franklin said the legislation prioritizes ratepayers by requiring data centers to cover their own energy costs and preventing those expenses from being shifted to families and small businesses.
By the Numbers
The bill comes as multiple North Carolina municipalities have imposed temporary development moratoriums to study data center proposals before granting approvals. Governor Josh Stein has asked the legislature to modify or repeal existing statewide tax incentives for data centers.
North Carolina’s electric utilities are working toward a carbon neutrality target of 2050, a timeline lawmakers discussed during committee deliberations.
The Policy Debate
Representative Ray Jeffers raised concerns about the ban on local tax incentives, noting that his county has been negotiating with Microsoft on a data center project. He questioned why the state would eliminate competition between counties seeking to attract facilities.
Representative Dean Arp responded that energy policy and consumption are state-level issues affecting rates for all residents, justifying the centralized approach.
The bill also requires a review of existing utility policies to determine whether they are contributing to affordability problems for state residents. It prohibits retirement of baseload power plants until they can be replaced with nuclear resources to maintain grid reliability.
Representative Pricey Harrison expressed concern that the baseload provision could extend the operation of coal plants, which tend to be inefficient and costly to maintain. Arp said the provision was not written with coal in mind and instead focuses on preventing blackouts or brownouts during the transition to new generation sources.
Zoom Out
States across the country are weighing how to regulate data center development as the facilities demand increasing amounts of electricity and water. The expansion of artificial intelligence and cloud computing services has driven demand for new data center capacity, prompting both economic development interest and concerns about infrastructure strain.
North Carolina has reduced its solar energy development in recent months even as it maintains long-term carbon reduction goals. Harrison said she gained confidence that the state can still meet its 2050 target after discussing the bill with committee staff, noting that some data center operators have committed to bringing their own generation capacity.
What’s Next
The measure now moves to the House Rules Committee. If it passes the full House, it would need reconciliation with any Senate changes before heading to the governor’s desk.