The Federal Energy Regulatory Commission voted 4-1 on Friday to approve transmission tariff measures from Duke Energy Carolinas designed to prevent residential and small business customers from shouldering costs triggered by data centers and other massive power users. The greenlit provisions establish how facilities drawing 100 megawatts or more will be charged for grid improvements and what financial safeguards they must provide. But even as commissioners accepted the plan, they pressed Duke — and other transmission owners nationwide — to go further in shielding everyday customers from cost shifts.
Under the approved framework, new or transferred large loads must pay a "committed revenue contribution" equal to 75% of the megawatt value listed in their load schedule for each month and year over a 15-year stretch starting when the required network upgrades go live. Transmission customers needing network improvements to handle a new or transferred load will also cover a monthly charge to finance construction of those upgrades. Once the improvements are operational, Duke will pay back the transmission customer for the expenses plus interest. The utility serves roughly 3 million retail customers across the Carolinas and filed the revised network integration transmission service agreement on May 29 in response to surging large-load activity on its system.
FERC urged Duke to pursue stronger consumer safeguards, suggesting the company negotiate individualized network integration agreements offering greater protection against cost shifting than the standard pro forma agreement, or propose additional protections to the just-approved template. "We encourage transmission providers — including [Duke Energy Carolinas] — to continually reevaluate their study processes and transmission service agreements" to minimize upgrade costs and ensure adequate shields for other transmission customers as new technologies and load growth patterns emerge, the commission stated. Commissioner David Rosner called the proposal "meaningful, if imperfect," noting Duke's earlier rules had zero cost-shift protections for residential or small business customers.
The decision arrives as FERC awaits proposals from regional transmission organizations and independent system operators — due next month — for strengthening their processes for connecting large loads such as data centers. Those submissions stem from "show cause" orders the commission issued in June, which found that RTO and ISO large load interconnection rules appear inadequate, particularly for protecting existing customers from cost shifts when massive facilities require grid system upgrades to launch. Those orders don't apply to Duke Energy Carolinas and other transmission owners operating outside RTOs and ISOs. Commissioner Lindsay See said the Duke order tackles "one of the most pressing cost allocation issues we face: how to ensure large load pays its way" and that everyday customers aren't stuck with stranded costs if those loads fail to materialize, draw less power than expected, or leave early.
Dissenting Commissioner Judy Chang argued FERC should have given Duke guidance on improving the proposal rather than approving it. She faulted the plan for lacking meaningful financial security requirements or adequate transparency around executed large load agreements, and for defaulting to rolled-in rate treatment for large load network upgrades that might not sufficiently protect other customers. "I do not believe that [Duke Energy Carolinas] has demonstrated that its filing represents an acceptable level of customer protection," Chang wrote, warning the commission's precedent here steps backward from arguments in the Large Load Show Cause Orders. Rosner suggested consumer protections are inadequate nationwide, and that if state actions prove insufficient, FERC may need to expand the cost recovery framework it established in those show cause orders.