As data centers drive a power boom, North Carolina faces a costly question: Who pays?

North Carolina’s push to attract data centers and power the artificial intelligence boom is colliding with a simpler question for households: Who will pay for the electricity infrastructure needed to run them?

The massive computer facilities that power AI require enormous amounts of electricity — often operating around the clock with little tolerance for outages. Meeting that demand can require new substations, transmission upgrades, batteries and, in some cases, new power plants.

Across the country, utilities and regulators are beginning to wrestle with how those costs should be divided.

Some states have already moved to create protections designed to prevent existing customers from subsidizing the rapid growth of data centers.

North Carolina, by contrast, is still working out many of those rules.

That difference became clear during a recent panel discussion at the UNC Cleantech Summit in Chapel Hill, where utility executives from Duke Energy, Florida Power & Light, Arizona Public Service and Dominion Energy described how their states are responding to the surge in electricity demand from large technology companies.

A surge in demand

Duke Energy says about 6 gigawatts of data center demand is now in its development pipeline in the Carolinas.

To put that in perspective, that amount of electricity could roughly between 3 million to 6 million homes, depending on usage levels.

Neil Bhagat, who leads Duke Energy’s transmission strategy team, said the company is still early in the process of integrating that level of growth into the power grid.

“The process is still, I’d say, in some ways, being defined,” Bhagat said.

He compared the moment to the solar development boom that hit North Carolina several years ago, when a rush of projects forced the utility to rethink how it studied and connected new power generation to the grid.

“With data centers, it’s very similar,” Bhagat said. “All this investment and money is coming in, and now we have to come up with processes that can meet the interconnection requirements.”

The stakes are high because the infrastructure needed to serve that growth can be expensive.

Jeff Miscikowski, vice president of construction at Dominion Energy, said utilities are already seeing steep costs tied to transmission upgrades needed to support large new customers.

“In order to provide the generation to serve the load, we also have to upgrade the transmission system along the way,” he said. “And that’s what we’re seeing now in pretty hefty bills for the interconnect upgrade costs.”

Guardrails in other states

Other states have begun building explicit policies to manage that growth and protect existing customers.

Florida Power & Light created a large-load tariff that requires data center developers to commit to long-term contracts and post financial guarantees to cover the cost of new power infrastructure needed to serve them.

“We realize we can’t burden our rate payers with any incremental costs,” said Tim Oliver, vice president of development at Florida Power & Light. “And that’s why we designed that tariff that way.”

Arizona Public Service has taken a similar approach, requiring developers to post substantial collateral before projects move forward.

Derek Seaman, the utility’s director of integrated system planning, said those financial commitments help separate serious projects from speculative proposals.

“Only the real players are going to show up and put money out there,” he said.

Seaman said the required collateral can reach $1.5 million to $2 million per megawatt, meaning a single large project could require billions of dollars in financial backing.

Virginia, which hosts the world’s largest concentration of data centers, has also faced mounting pressure over electricity costs.

Dominion Energy serves Northern Virginia’s data center hub, where facilities clustered around Washington Dulles International Airport already account for 4 to 5 gigawatts of electricity demand — about one-fifth of the utility’s peak load.

State lawmakers ordered an audit in 2025 to examine whether data centers were paying their fair share of power system costs. Regulators later moved toward a new rate structure aimed at providing more transparency about what large technology companies pay compared with residential customers.

Duke’s approach

Duke Energy says it already has safeguards in place.

In a statement to WRAL, Duke spokesperson Jeff Brooks said contracts with large electricity users require them to pay the full cost of connecting their facilities to the grid, including infrastructure upgrades such as transmission lines, substations and local power equipment.

Brooks said those agreements also include financial protections designed to prevent speculative projects from leaving other customers responsible for unfinished infrastructure.

Contracts can require minimum bills, termination penalties and financial security, such as letters of credit or parent company guarantees, he said.

If infrastructure upgrades benefit the broader grid, those costs are spread across customers in proportion to the electricity they use — a system overseen by regulators.

Duke argues that large industrial customers can ultimately help lower costs by spreading the fixed costs of maintaining the grid across more users.

“Data centers, manufacturers and other large-load customers help lower costs for all customers by spreading fixed infrastructure expenses across a broader base,” Brooks said.

But the scale and speed of projected growth are still raising questions.

Data centers currently account for less than 1% of Duke Energy’s peak electricity demand in the Carolinas. But the company expects them to represent about 10% of its total electricity sales by 2030, Brooks said.

The generation question

Meeting that demand could require building new power plants.

Bhagat said natural gas is likely to be one of several technologies used to support data center growth, alongside batteries, solar and other tools.

But that approach comes with trade-offs.

Fuel costs for natural gas plants are typically passed directly through to customers, meaning volatility in gas prices can affect electricity bills. New fossil fuel infrastructure also raises climate concerns at a time when North Carolina is trying to reduce emissions from its power sector.

Some utilities see batteries and renewable energy playing a larger role in meeting new demand.

Oliver said Florida is planning to use large battery storage systems to supply new data centers more quickly.

“Essentially, our solution is battery storage,” Oliver said. “We can build that as quick as you can build your data center.”

Renewables and storage are increasingly attractive to utilities because they can often be deployed faster than traditional power plants and have lower long-term operating costs.

Still, most utilities say meeting the explosive demand from artificial intelligence will likely require a mix of technologies.

“It’s really an all-of-the-above structure,” Miscikowski said.

A debate still forming

The rapid expansion of data centers is forcing utilities to rethink long-standing assumptions about electricity demand.

For decades, electricity consumption in many parts of the country grew slowly — often less than 1% per year. Now utilities are forecasting much faster growth driven by artificial intelligence, manufacturing and electrification.

That shift is arriving faster in some states than others.

Florida has built a new tariff. Arizona requires large collateral payments. Virginia has already conducted a statewide audit and adopted new rate structures.

North Carolina’s policy response is still taking shape.

A state energy policy task force recently recommended tools such as tariffs for large electricity users, but those proposals have not yet been implemented.

As artificial intelligence accelerates and data center development spreads across the state, the debate over who pays for the electricity to power it is likely just beginning.