N.C. Decision Could Point to Regulatory Hurdles for Data Centers

---

Written by John Egan for IIR News Intelligence (Sugar Land, Texas)

---

Summary

North Carolina utility regulators this month denied a request by Duke Energy to add a gas-fired combustion turbine unit at a power plant, saying the utility did not provide enough information for the commission to issue a certificate of convenience and necessity.

---

N.C. Regulators Nix Duke Request

Duke Energy Corporation has an ambitious capital construction program in North and South Carolina: it wants to spend at least $34 billion to construct roughly 50,300 megawatts (MW) of new generation capacity by 2041.

For more on that, see August 24, 2026, article - Duke Energy Files 2026 Carolinas' Resource Plan. All of Duke's proposed Carolina project activity can be viewed in these project reports and plant profiles.

Those plans include adding a 255-MW, gas-fired combustion turbine unit at the company's Sherwood H. Smith, Jr., Energy Complex in Hamlet, North Carolina. That proposed generator, which also could burn hydrogen, has an estimated total investment value of about $584 million. Duke plans to begin construction in September 2027, and finish construction by October 2029.

But the schedule for that unit addition could be pushed back. On September 18, the North Carolina Utilities Commission (NCUC) voted 2-1 to deny Duke a certificate of public convenience and necessity (CCN) for that planned unit addition. The commission cited a lack of specificity in Duke's application, particularly around planned data centers, and how the utility would implement the White House "Ratepayer Protection Pledge" it signed in March 2026 to protect captive residential and business customers from paying for the cost to serve data centers.

"We are disappointed by the North Carolina Utilities Commission's decision regarding the Smith Energy Complex CPCN application and are reviewing the order and assessing potential next steps," Duke Energy spokesperson Bill Norton told Industrial Info Resources in an email. "We believe we have demonstrated that the Smith CT is part of a least-cost path to maintain reliable and affordable service for customers as energy demand continues to grow across North Carolina."

The North Carolina regulators flagged other issues as well. For example, how would the plan to add this gas-fired generator, with its attendant carbon dioxide (CO2) emissions, affect Duke's ability to meet state laws that require utilities to achieve carbon neutrality by 2050?

Also, the request was filed before the panel ruled on Duke's integrated resource plan (IRP), a decision expected later this year. The NCUC majority pointed out that state law required utilities to pursue the lowest-cost resources to meet customer electric demand. Would investing more than half a billion dollars be the least-cost option, as required by state law? The North Carolina regulators are scheduled to issue their decision on that IRP by the end of this year.

The commission's decision to deny a CCN is not the final word. The commission order would allow Duke to re-apply at a future date.

By the Numbers

• 584: The total investment value (TIV) in millions of US dollars, that Duke plans to invest to add a new generating unit to its Smith Energy Complex.
• 255: The generating capacity, in megawatts, of the planned unit addition Duke wants to build.
• 24,500: The amount of new generating capacity, in megawatts, that Duke plans to add to its resource base by 2035.
• 70: The estimated proportion of Duke's electric load growth to 2035 that will come from data centers, according to regulatory filings.

Big Plans to Build Data Centers in the Carolinas

Industrial Info Resources is tracking 120 active and proposed data center projects in the Carolinas, currently slated to begin construction between the start of 2026 and the end of 2041.

Not all these projects will be built in Duke's service territory. But as the utility is the largest provider of power in both states, serving more than 4.8 million customers, a majority, if not a significant majority, of those proposed projects likely are slated to be built in Duke's service area.

The total investment value (TIV) of these 120 data center projects is about US$102 billion. Readers can learn more from a full list of related project reports.

Data Center Issue Called Out by One N.C. Commissioner

In a concurrent opinion to the September 18 NCUC decision, Commissioner Tommy Tucker wrote, "the proposed facility's significant and 'staggering' costs, as described by the public staff, are certain, while the proposed facility's value and need is overall uncertain due to the insufficiency of the evidence of record."

He added, "As noted in the order, the speculative (electric load) growth noted by (Duke Energy) and the public staff includes significant data center growth, and the record does not adequately establish the specific extent to which the proposed facility is intended to serve the anticipated growth in data center customer demand. While the public staff witness panel indicated that the proposed facility was not being built for a particular customer, it is not lost on me that the proposed facility will be built in the same county as a transmission project previously approved by the Commission to support the load needs of a new customer data center campus."

The utility "should provide additional evidence regarding the extent to which the Proposed Facility is needed to provide service to data centers, and how much those data centers will contribute to costs," Tucker wrote.

Tucker referenced testimony that as much as 70% of the electric load growth forecast by Duke will come from data centers. Duke spokesperson Norton could not provide a breakdown on how much of that planned capacity was driven by data center interconnection requests.

Norton said the utility owns about 34,600 MW of generating capacity in the Carolinas, and its IRP filing proposed adding 24,500 MW to the company's generation fleet by 2035.

Developers Bring Their Own Generation

Data centers represent a once-in-a-lifetime growth opportunity for electric utilities. But to capture that new load, utilities and data center developers have to clear different sets of hurdles.

Data center developers want to secure a reliable source of electricity as soon as possible. But electric utilities, which are highly regulated, typically cannot begin construction of any capital project until their regulator issues a CCN, which certifies that the proposed project is in the public interest. That could take up to one year. Once a facility is built, regulators must decide how electricity prices should change to reflect the added asset. That could take up to another year.

The lengthy regulatory process around utility construction is why some data center developers are choosing to construct their own electric generation on their planned data center campuses, or purchase power from a third party, to get faster access to a reliable source of electricity.

This trend, called "bring your own generation" (BYOG), is expected to accelerate. Several states and regional grid managers have implemented or are considering BYOG proposals to shield residential and business customers from bearing the costs of the U.S. data center buildout, according to a September 1 report from the non-partisan Congressional Research Service, "Data Centers and the Electricity Grid: Frequently Asked Questions."

Those states include New York, New Jersey, Navada, Pennsylvania, Delaware and Tennessee. The regional grid managers include the Electric Reliability Council of Texas (ERCOT), ISO New England and the PJM Interconnection, which is the grid manager for an estimated 67 million people living in parts of 13 Mid-Atlantic and Midwestern states and the District of Columbia.

There has been widespread and growing opposition to data centers across the country, propelled by concerns about their noise, pollution and effect on electricity prices, water usage and local land use. For more on that, see September 11, 2026, article - Data Centers: Some U.S. Developers Seek to Build Bridges and Bring Down Walls.

Key Takeaways

• The North Carolina Utilities Commission on Sept. 18 denied Duke Energy's request for permission to build a 255-MW, gas-fired generator, citing the need for more information, particularly around data centers.
• This action by North Carolina utility regulatory could be a harbinger of more aggressive action by regulators to ensure other classes of customers are not obligated to pay for the incremental costs for utilities to serve data centers.
• Across the nation, there is a nascent "bring your own generation" trend where data center developers are being incented or mandated to obtain non-utility power for their projects.

---

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).