North Carolina regulators block Duke Energy gas plant over cost concerns

North Carolina regulators have rejected a proposal by Duke Energy to construct a new natural gas power plant, marking a significant setback for the utility company’s expansion plans. The North Carolina Utilities Commission, which is controlled by the Republican Party, voted to deny the project in September. The decision centres on a $500 million, 250-megawatt facility that Duke Energy intended to build to supply power to a 21-building Amazon facility currently under construction near Charlotte. The commission cited President Donald Trump’s Ratepayer Protection Pledge as the primary basis for the rejection, arguing that the utility had failed to adequately demonstrate how consumers would be shielded from the associated construction costs.

The Ratepayer Protection Pledge is a voluntary agreement introduced by the White House. Under this framework, companies agree to protect American consumers from price increases driven by the energy and infrastructure requirements of data centres. Commissioners stated that if Duke Energy chooses to reapply for construction permission, it will be required to present cost recovery mechanisms that strictly comply with the terms of this voluntary agreement. This regulatory move occurs against a backdrop of growing concern regarding rising consumer energy costs linked to the rapid development of data centres across the United States. A recent report from Bank of America indicated that American consumers have experienced significant increases in utility bills since the current administration took office, with rates rising faster than inflation during the summer months.

The rejection of the Duke Energy project stands in contrast to the broader national trend of expanding natural gas infrastructure. The United States is currently constructing approximately twice as much gas-fired capacity as China, a shift driven largely by the surge in demand from artificial intelligence data centres. According to a report by the Global Energy Monitor, the number of under-construction gas power projects in the United States rose by 76 per cent in the first half of the year. The total gas power capacity at various stages of development has increased by 50 per cent since January, rising from 252 gigawatts to 378 gigawatts. This expansion contributes roughly one-third of the global total. If all these projects are completed, the United States will increase its gas fleet by around two-thirds, at a capital cost exceeding $647 billion.

Roughly half of the new capacity being developed is directly linked to the rapid growth of data centres. Many operators are opting to power these facilities with natural gas rather than renewable energy sources, a shift that is expected to significantly increase U.S. carbon emissions over the next decade. The International Energy Agency has noted that United States spending on gas- and coal-fired power plants is expected to exceed China’s for the first time in several decades. Jenny Martos, a project manager at the Global Energy Monitor, highlighted the climate implications of this trend, noting that building gas infrastructure for AI locks in decades of pollution and dependence on volatile fuel costs, which are ultimately passed down to rate payers.

The demand for efficient gas turbines has created a backlog in the technology sector, forcing some tech companies to invest in smaller, less efficient, and more polluting turbines. Despite increasing criticism from activists and residents over the environmental impact of data centres, the current administration has championed the construction of new facilities and eliminated certain environmental reviews to accelerate development. The United States has also announced record-breaking natural gas pipeline projects, aiming to solidify its position as the dominant global gas producer and supplier. However, the recent decision by North Carolina regulators suggests that some local authorities are feeling pressure from consumers to restrict development that lacks clear guarantees for cost recovery.