The N.C. House of Representatives voted Wednesday to advance legislation that puts some guardrails around data center development in the state while also preventing Duke Energy from retiring coal- or gas-fired power plants until it obtains permission to build a new nuclear plant.
The vote was largely along party lines, with Democrats arguing that they support rules around data center development but believe that keeping the state's remaining coal plants online will increase electric bills.
House Republicans introduced the updated version of Senate Bill 730 last week, saying it was intended to protect ratepayers who are already struggling with rising power bills and facing the potential of another one from Duke Energy.
Rep. Dean Arp, R-Union, evoked the Christmas Eve rolling blackouts that Duke implemented for about half a million North Carolina customers during Winter Storm Elliott,
"Reliable baseload energy generation must stay online. We don't retire dependable, dispatchable energy generation until firm, clean baseload generation is ready to replace it. Critics have offered no other option," Arp said during Wednesday's debate.
Arp wrote the updated version of the bill along with Rep. Matthew Winslow, R-Franklin.
Democrats were frustrated that it asked them to vote on data center regulations, which they broadly supported, and tweaks to energy policy that they broadly did not. Rep. Maria Cervania, D-Wake, moved Wednesday to divide the bill, with one piece addressing data centers and the other addressing the broader energy policy questions.
"These are distinct policy areas that have different stakeholders, different impacts and different long-term consequences for our state," Cervania said on the House floor.
House Majority Leader Brenden Jones, R-Columbus, asked members to vote against Cervania's amendment.
"We've had a very robust debate on this, a lot of amendments. We've vetted this very well," Jones said, successfully urging his colleagues to reject the amendment.
Ultimately, the House passed Senate Bill 730 by a margin of 69 to 44, largely along party lines. Democrats Pricey Harrison, D-Guilford, and Shelly Willingham, D-Edgecombe, joined Republicans and a pair of Mecklenburg County unaffiliated representatives in voting for the bill.
Duke Energy's coal use
During Wednesday's debate, Democrats expressed concern that keeping coal plants online until construction of a nuclear plant is approved will be expensive to ratepayers. Rep. Brandon Lofton, D-Mecklenburg, said it locks ratepayers into paying for "an outdated, more costly, less efficient means of energy."
"We should have a provision in this bill that holds them harmless and repays them for the additional costs that they're going to pay because of this," Lofton said.
Republicans tabled his amendment that would have done just that.
The resource plan Duke Energy filed with North Carolina regulators last year said that the utility anticipates that coal prices will remain volatile and that the industry has a hard time competing with natural gas or renewable power sources.
Duke officials also wrote that fewer people are choosing to enter coal mining, pushing up labor costs among the remaining people in the field and in turn increasing the cost of coal. And in turn, the labor shortage makes it hard for producers to ramp up production when utilities like Duke face heightened demand.
"As cost pressures impact smaller producers with fewer economies of scale, consolidations and overall contractions can be expected to put upward price pressures on coal, further reducing the competitiveness of coal as a generation resource," Duke wrote in a coal-oriented appendix to its 2025 resource plan.
In its Utilities Commission filing, Duke officials write that they haven't used the utilities' coal plants as baseload generation in about a decade, instead treating them as "intermediate generation," or power plants that are ramped up or down based on the daily power demand.
Duke operates eight remaining coal-fired power units spread across five North Carolina locations. Its most recent resource plan proposes beginning to retire them in 2031 at the Mayo plant in Person County, with Duke leaving coal entirely when a pair of units at Belews Creek in Stokes County retire in 2040.
Republicans maintain that replacing those plants with another resource that can be called upon when needed is necessary, and they are wary of solar-powered battery storage.
"The reason that's in the bill is to keep the baseload from going down so we don't have brownouts when the high-cost alternative energy is not there to generate electricity when it's needed," said Rep. John Blust, R-Greensboro.
Building a nuclear plant
Lofton pointed to a report Duke Energy filed with the Utilities Commission last year stating that the quickest it could build a nuclear reactor in the Carolinas would be between 10 to 13 years, likely at its W.S. Lee plant in Anderson County, S.C., about two hours southwest of Charlotte.
"There are not things that are brought online very quickly. They haven't been in the past, and we're going to put that cost on our ratepayers in the meantime," Lofton said.
Duke's report says it would request an out-of-state CPCN from the North Carolina commission in the first year of the project, followed by about five years of licensing.
Utility officials wrote that they would order "long-lead equipment" like reactor pressure vessels, generators and modules for the containment vessel in year one. If any of these were delayed for any reason, they wrote, the project would be delayed "day for day," with the timeline potentially accelerating if those items arrived earlier than expected.
From there, Duke officials estimate that building the reactor would take between five and eight years.
"The construction duration is the longest stage of the project due to the complex nature of large-scale projects," the 2025 report says.
A new nuclear plant at any other site would take longer to build, Duke officials wrote, because a variety of regulatory forms including site analyses, environmental studies and site safety reports haven't been completed for them.
Arp, a consistently pro-nuclear voice in the House, said building a nuclear plant offers customers consistent electricity that few other power sources can.
"You can't get any cleaner than nuclear, zero emissions running day and night, every season, every storm. The replacement isn't a gamble. It's the cleanest baseload there is," Arp said.
Arp also expressed frustration that Duke's previous filings were being used to discuss the legislation, noting that the utility company has not taken a public stance on the bill.
Data center guardrails
Senate Bill 730 also puts some mandates around large data centers, specifically facilities that will use at least 100 megawatts of electricity in a given month.
The bill bans local governments from offering them incentives and requires local governments to study their sound impacts on buildings within 500 feet. It also puts requirements around the electricity service contracts to the facilities, including mandating that they last at least 15 years and include protections preventing costs of serving the facility from being passed along to other ratepayers.
"This is a remarkable step we're taking on data centers," said Harrison, who has sponsored several bills intended to control data center development in North Carolina.
An earlier version of the bill required large data centers to use closed-loop cooling systems, but a lobbyist for industry trade group the Data Center Coalition expressed concerns about it during a House committee on Tuesday.
Wednesday, bill sponsors ran an amendment that instead tasked the N.C. Department of Environmental Quality with creating rules by September 1 requiring the facilities to use closed-loop cooling or reclaimed water cooling systems "as necessary" to address water use concerns. The amendment also banned large data centers from using evaporative cooling systems.
Senate Bill 730 will now return to the Senate. It is unclear what kind of reception it will receive there.
Asked about the legislation Wednesday afternoon, Senate leader Phil Berger, R-Rockingham, largely demurred, saying he was unfamiliar with the bill's specifics.
"We'll see what they send over and we'll take a look at it," Berger told reporters.
