North Carolina’s data-center expansion is becoming a test of something more fundamental than where the next AI facility will connect: how the state assigns the cost of building the electricity system needed to serve it. Attorney General Jeff Jackson is asking the North Carolina Utilities Commission to create a dedicated rate class for data centers and other exceptionally large electricity users, putting the economics of new generation and grid infrastructure at the center of the regulatory debate.

North Carolina’s Grid Has Entered A New Phase

The argument arrives as North Carolina prepares for a power system increasingly shaped by large computing loads, industrial development and continuing electricity demand. Data centers supporting artificial intelligence, cloud computing and other digital services can create unusually large and concentrated requirements for electricity, changing the assumptions utilities use when planning generation and transmission. Jackson’s proposal asks regulators to recognize that difference through a separate customer classification rather than relying solely on existing rate structures.

At stake is not simply the monthly electricity bill paid by an individual data center, but the chain of investment that can precede its arrival. A utility may need to plan generation, transmission and other infrastructure around projected large-load demand before those customers reach full operation, creating a gap between forecast demand and actual consumption. That gap becomes important when projected demand fails to materialize, because customers could ultimately face costs associated with infrastructure built to serve electricity demand that does not arrive as forecast. The regulatory question then shifts from whether new customers should pay for electricity to whether they should also carry the financial exposure created by infrastructure built specifically around their anticipated demand.

Jackson’s September proposal builds on arguments his office has already advanced during Duke Energy’s rate proceedings. His office says a dedicated rate class could establish consistent rules for large-load customers, make the terms governing those customers more transparent and reduce the risk that costs associated with serving them migrate to other ratepayers. The proposal therefore focuses less on creating another conventional tariff and more on changing how regulators identify and allocate risk when a customer’s electricity requirements become large enough to influence utility planning. The issue has become particularly consequential because Duke is simultaneously planning for additional demand while seeking approval for investments needed to maintain reliability.

Jackson Wants A Separate Rate Class

Jackson has framed the proposal around a straightforward regulatory principle: customers creating unusually large new demands should face rules that reflect the infrastructure required to serve them. His office argues that a separate classification could prevent households and smaller businesses from absorbing costs associated with generation and grid investment undertaken primarily for exceptionally large loads. The approach would also give the Utilities Commission a more consistent framework for evaluating large-load agreements rather than leaving individual arrangements to develop with limited visibility. In practice, that would move the debate toward the contractual structure behind data-center connections as well as the electricity rates themselves.

“Duke Energy is onboarding an unprecedented number of data centers without a clear plan on how to protect ratepayers from higher rates and unacceptable risk,” Jackson said. “These data centers are upending our energy system, and we need to know that the Utilities Commission is making sure data centers pay for the strain they put on the grid and don’t unfairly burden ratepayers,” Jackson said. His office has also argued that Duke’s demand projections could exceed the level of data-center growth that ultimately materializes, creating a potential mismatch between planned infrastructure and realized load. The proposal also asks Duke to disclose the template contracts it uses with data centers and other major electricity users, alongside regular reporting when individual agreements depart from those templates. Jackson is also calling for Duke to give its largest energy users a transparent and predictable pathway to build their own power generation.

Duke’s Customer Protection Framework

Duke also responded directly to Jackson’s September proposal, with spokesperson Craig Wilson saying, “Duke Energy’s focus is straightforward: data centers and other large-load customers must pay the costs required to serve them.” Wilson added, “We’re committed to protecting existing customers from the costs to serve data centers while enabling responsible growth that strengthens our communities.” In July, the company said data-center growth could produce billions of dollars in long-term customer savings as additional revenue supports investment in generation and the electric grid. Duke’s Customer Protection Plus framework guides how the company evaluates and manages these large loads while maintaining reliability and limiting exposure for customers already connected to the system.

“Data centers will provide billions of dollars in customer benefits,” said Harry Sideris, president and CEO of Duke Energy. “Duke Energy remains laser-focused on ensuring data centers not only pay their fair share but also yield savings for our existing customers.” Duke says its framework can include customer-funded connection costs, financial security, termination charges and provisions allowing temporary curtailment, depending on the customer and project. The company’s position is that those mechanisms can connect the cost of serving large loads to the customers generating the demand while allowing the broader system to benefit from additional electricity consumption. However, Jackson’s proposal suggests that customer-specific protections do not necessarily resolve the larger question of systemwide planning risk.

The Contract Becomes Part Of The Regulation

The push for contract transparency reflects a deeper change in how utility regulation intersects with data-center development. Large computing customers increasingly make infrastructure decisions years before full operations, while utilities must assess whether the associated electricity demand justifies long-lived investments. A standardized contract template would allow regulators to see the basic commercial architecture supporting those connections, while reporting deviations would expose where individual arrangements differ. That information could become important when regulators assess whether a proposed project carries enough financial commitment to justify infrastructure investment.

The proposal also raises the issue of what happens when projected large-load demand changes before the infrastructure required to serve it receives a commitment, a concern reflected in Jackson’s argument that Duke should plan around likely customers rather than uncertain demand. Data-center developers can modify project phases, alter technology deployments or change the scale of planned computing capacity, while utilities cannot always reverse major infrastructure decisions at the same speed. Jackson’s demand for more frequent forecasting aims to reduce the time between changes in expected demand and regulatory visibility into those changes. For a utility planning system built around long-lived assets, that timing difference can become a central component of financial risk.

Moreover, the dispute reaches beyond data centers themselves because the same regulatory framework could apply to other exceptionally large electricity users. North Carolina is simultaneously dealing with broader industrial and population-driven electricity demand, meaning regulators must distinguish between infrastructure required for general system growth and infrastructure whose economics depend heavily on a handful of unusually large customers. That distinction will influence how Duke justifies future generation and transmission investments and how regulators assign those investments across customer classes.

The Rate Case Could Set A New Precedent

The North Carolina Utilities Commission now sits at the center of that conflict because it regulates Duke’s rates and services and will determine how the utility’s proposals move forward. The commission must weigh Duke’s need to build and maintain infrastructure against questions about who should carry the costs when new demand concentrates among a small number of exceptionally large customers. The outcome could shape the contractual and financial rules under which future data centers connect to Duke’s system. The proposal instead puts the immediate focus on how North Carolina regulators should treat the costs, contracts and infrastructure requirements associated with exceptionally large electricity users.

Ultimately, the dispute is about how the economics of AI infrastructure should translate into the economics of a regulated power system. A data center can bring new electricity revenue and support additional investment, but the value proposition depends on how confidently regulators can forecast that demand and how effectively they allocate the associated infrastructure costs. The commission’s decision will therefore matter beyond a single Duke rate case because it can clarify how North Carolina intends to price and govern exceptionally large new loads. For data-center developers, utilities and regulators, the emerging lesson is that access to power increasingly depends on the financial architecture behind that power. Jackson’s closing position is direct: “We’re going to keep fighting to protect ratepayers,” Jackson said.