North Carolina Regulators Block Duke Energy Gas Plant for Amazon Data Center

Key points

• The North Carolina Utilities Commission denied Duke Energy’s application for a 250-megawatt gas plant at the Smith Energy Complex, which was intended to primarily serve a 21-building Amazon data center campus.
• Republican commissioners William Brawley, Tommy Tucker, and Donald van der Vaart argued that Duke did not adequately demonstrate compliance with the White House’s Ratepayer Protection Pledge, which aims to ensure tech companies, not residential customers, bear the costs of AI-driven energy demands.
• The denial is not final; Duke Energy can refile its application, but the commission stated that any future proposal must include cost recovery mechanisms that align with the voluntary pledge.
• Amazon has obtained permits from the state Department of Environmental Quality to run 57 temporary non-emergency diesel generators for one year, along with nearly 600 backup diesel generators, to power the facility while it awaits grid connection.
• Local opposition in Hamlet, North Carolina, has intensified, with residents and environmental advocates citing concerns over fine particulate matter emissions and cancer risks from the temporary diesel infrastructure.
• Duke Energy expressed disappointment in the decision, stating it believed the project was the least-cost path to maintain reliable service, while Amazon did not respond to requests for comment.

Background

This regulatory action occurs amid a broader national backlash against AI-driven data centers, which have spurred a surge in gas-powered energy projects. Previous coverage noted that Amazon is pursuing similar behind-the-meter gas plants in Texas, including a facility in Pecos County that could become the largest single source of climate pollution in the US. A Global Energy Monitor study reported that gas-powered projects for US data centers more than doubled to over 189 GW by mid-2026. Additionally, multiple states have enacted legislation to curb data center growth or roll back tax subsidies, reflecting growing skepticism among regulators and the public regarding the environmental and financial impacts of these facilities.

Why it matters

The rejection signals a shift in regulatory attitudes toward AI infrastructure, with state bodies increasingly scrutinizing whether utility costs are being shifted onto residential ratepayers. By invoking Trump’s Ratepayer Protection Pledge, the North Carolina commission has set a precedent that may influence how other states evaluate large-scale energy projects for tech giants. The decision also highlights the tension between rapid AI expansion and local community concerns over environmental health and energy costs, potentially slowing the pace of data center development in regions where public opposition is strong.

What to watch

Duke Energy will assess next steps and may refile its application with revised cost recovery mechanisms that comply with the Ratepayer Protection Pledge. In the interim, Amazon will rely on its permitted diesel generators to power the data center until it can connect to the electric grid. The commission is also moving to implement a large load tariff that would explicitly assign data center energy costs to operators, which could further shape future regulatory decisions. Local opposition in Hamlet is likely to continue as the temporary diesel infrastructure operates, potentially leading to further environmental and public health disputes.