Duke Energy Reaches Settlement to Shield North Carolina Customers from Data Center Costs

Duke Energy has reached a landmark agreement with regulators, technology companies and other stakeholders that will further insulate existing electricity customers from the costs of serving data centers and other large-load customers in North Carolina, a move that comes as utilities across the United States grapple with how to allocate the massive infrastructure expenses driven by the rapid expansion of AI and cloud computing.

The settlement, announced between Duke Energy's two North Carolina utilities — Duke Energy Carolinas and Duke Energy Progress — and the North Carolina Public Staff, the state agency that represents utility customers, memorializes and enhances protections the company first put in place in 2024. Other parties to the agreement include Amazon, Google, Meta, Microsoft, the Carolina Industrial Group for Fair Utility Rates and the U.S. Department of Defense.

At the core of the agreement is a straightforward principle: large-load customers, including new data centers, will pay upfront for all costs to connect to the grid. Under the terms, customers requiring grid facilities that serve only them — such as a dedicated substation — must make nonrefundable, upfront payments. For grid upgrades that benefit all customers, such as transmission lines, new large loads must provide upfront deposits and security guarantees. Additionally, new large-load customers must take service under a High Load Factor rate schedule, a separate rate class established specifically for large loads.

"It's simple — data centers will pay upfront for all costs to connect to the grid," said Kendal Bowman, Duke Energy's North Carolina president. "We're shielding other customers from these costs in a way that protects reliability and ensures everyone benefits from the economic growth coming to North Carolina."

The significance of the agreement extends beyond North Carolina. Duke Energy had previously required data centers and other large loads of 100 megawatts or more to agree to contract terms protecting other customers. If approved by state regulators, the new agreement would lower that threshold to all large-load customers of 50 megawatts or more with an 80% load factor that sign an electric service agreement in North Carolina after June 1, 2026. ESAs signed prior to that date already contain a full suite of similar customer protections. The agreement builds on Duke Energy's Customer Protection Plus framework, announced in July, which outlined how data center growth would generate billions of dollars in future customer benefits and savings for existing ratepayers.

The agreement now awaits approval by the North Carolina Utilities Commission, with a decision expected by mid-November. Duke Energy Carolinas serves approximately 2.3 million households and businesses in central and western North Carolina, including Charlotte, Durham and the Triad, while Duke Energy Progress serves about 1.6 million customers in central and eastern North Carolina and the Asheville region. The two utilities will be combined into a single utility as of January 1, 2027.

Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in Charlotte, N.C., is one of America's largest energy holding companies. Its electric utilities serve 8.7 million customers across North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, collectively owning 55,700 megawatts of energy capacity, while its natural gas utilities serve 1.6 million customers in North Carolina, South Carolina, Ohio and Kentucky.