Close-up of a data center. (Photo: Comezora/Getty Images)
The North Carolina House Energy and Public Utilities Committee voted Wednesday to advance a bill banning data centers from shifting energy costs to other consumers and requiring additional studies before new facilities can be approved.
Senate Bill 730, “Ratepayer Protection Act,” is one of several proposals to regulate data centers at the state level. They come as local municipalities impose moratoriums, or temporary bans, so they can learn more about the facilities before approving them.
The bill sets measures for responsible data center development, such as requiring large data centers to conduct noise studies, and allowing local governments to assess impacts on water, air quality, agricultural resources and thermal plumes before approval.
Data centers would also be required by law to implement closed-loop water systems, which use as little water as possible to cool systems.
“This legislation puts ratepayers first by requiring data centers to pay their own money, protecting our water resources, strengthening energy reliability and preventing cost shifts onto families and small businesses,” Rep. Matthew Winslow (R-Franklin) said.
S730 also bans local tax incentives for data centers, but it does not address tax incentives at the state level – an issue that Republican and Democratic lawmakers alike have said needs to be revisited. Gov. Josh Stein has asked the legislature to modify or repeal existing statewide tax breaks for data centers.
Rep. Ray Jeffers (D-Person) asked for the reasoning behind the restriction on local incentives. He said his county wants a data center and has been working on a deal with Microsoft that isn’t yet finalized.
“Why take away the competitiveness between the counties?” he asked.
Rep. Dean Arp (R-Union) said he views energy policy and consumption as state issues.
“It affects everybody in the state in terms of the rate, the way everybody pays for it, and that’s why we believe it’s properly vetted here,” Arp said.
The bill would also require an examination of the state’s existing utility policies “to ensure these policies are not exacerbating affordability issues” for the state’s residents, according to the bill’s text.
Under the bill, existing baseload power plants could not be retired until they can be replaced with nuclear resources to ensure enough energy in the grid.
“The whole bill is about reducing the rate payer’s cost for energy. They’re getting squeezed,” Arp said. “What we’re trying to do is look at all the above where rate payers are affected by energy policy in North Carolina, and we don’t want rigid adherence to something just because we’ve passed it in the past.”
Rep. Pricey Harrison (D-Guilford) asked about how that process would work.
“There was some concern that it might spark the life of coal power plants at a time when we absolutely need to be reducing our carbon emissions,” she said.
NC bills target data center boom, seeking tax changes, consumer protections
Arp said that section of the bill wasn’t written with coal in mind.
“We just talked about baseload because the main thing we want to make sure of is that we’re not retiring any other baseload plants until we have power so we aren’t seeing any blackouts or brownouts,” he said.
Coal power plants tend to be inefficient and expensive to maintain. Solar energy is cheaper, but North Carolina has been moving away from it in recent months.
Harrison said North Carolina could still meet its goal for its electric utilities to reach carbon neutrality by 2050.
While she was initially worried about maintaining that deadline, she said she gained confidence after discussing the issue with the committee’s staff.
“They’re allowing the data centers to bring their own capacity, and a lot of them have been responsible actors, like Google and Microsoft,” Harrison told NC Newsline.
S730 moves to the House Rules Committee.
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