NC Senate Bill 730: The Ratepayer Protection Act

1. Executive Summary

SB 730 passed the NC House 69-44 on June 3, 2026, and is now in the Senate Rules Committee [1]. The bill mandates closed-loop cooling, 15-year utility contracts, and foreign ownership restrictions for data centers above 100 MW [2]. It has two critical gaps: it leaves the state's $45 to $57 million per year data center tax exemption untouched [3][4], and it blocks coal plant retirements until new nuclear capacity is permitted, costing ratepayers an estimated $128 million per year in above-market fuel and maintenance costs [5][6].

2. Current Status

Key detail: The Senate originally passed a narrow energy bill. The House transformed it into a data center regulation vehicle. The Senate must now vote on a substantially different bill than what it originally passed [1][2].

3. What the Bill Does

The House committee substitute contains seven major provisions targeting data centers with peak monthly demand of 100 MW or more [2][7]:

1. 15-year utility contracts with full cost allocation. Data centers must pay the full incremental costs of generation, transmission, and grid expansion. Minimum billing provisions prevent facilities from reserving capacity without paying for it [2].
2. Closed-loop water cooling systems. Mandates closed-loop or water-minimizing cooling technology. Open-loop systems that draw and discharge surface water are prohibited [2][8].
3. Local tax incentive ban. Counties and municipalities cannot offer property tax abatements, deferrals, rebates, or grants to data center operators [2][9].
4. Eminent domain prohibition. Data center operators cannot use eminent domain to acquire property [2].
5. Foreign ownership restrictions. Entities owned or controlled by China, Iran, North Korea, or Russia are prohibited from owning or operating covered data centers [2].
6. Environmental and community impact studies. Noise studies, air quality assessments, water impact analyses, and community impact reports required before zoning approval [2][7].
7. Revolving door provision. NCUC members and Public Staff cannot work for regulated utilities for 6 months after leaving office [2].

The bill also reclassifies future nuclear facilities (placed in service on or after January 1, 2007) as "new clean energy" under the Clean Energy and Clean Transportation Act (CEPS). All three existing NC nuclear stations predate this cutoff and are not reclassified [1][10].

4. What the Bill Does Not Do

Gap 1: State Tax Exemptions Remain Untouched

North Carolina exempts data centers from state sales tax on electricity, equipment, and construction materials under GS 105-164.13 [3]. The fiscal impact is substantial:

SB 730 bans local incentives while preserving state incentives. This asymmetry weakens local bargaining power: counties cannot offer tax breaks to negotiate community benefit agreements, but the state continues providing them with no performance requirements [3][4][9].

The May 2026 budget framework proposes repealing only the electricity exemption (~$20M/yr), preserving hardware and construction exemptions [11]. NC is one of 12 states with no regular public reporting on exemption costs [4].

Gap 2: Coal Retirement Block

A companion provision (originally in SB 770, now incorporated into the House substitute) prohibits the NCUC from authorizing retirement of any baseload plant until Duke Energy obtains a certificate of public necessity for new nuclear capacity [5][6].

Duke's coal fleet includes approximately 6.2 GW across multiple stations, all scheduled for retirement by 2036 under the Carbon Plan. Key facilities include Mayo Plant in Person County (2031), Roxboro Steam Station (2034), and Marshall Steam Station (2032-2034) [5][12].

Nuclear certificates require NRC review, public hearings, and state-level certificates of public convenience and necessity. The timeline is typically 5 to 10 years. The Vogtle expansion in Georgia took 15 years and cost $34 billion against a $14 billion estimate. The VC Summer project in South Carolina was abandoned after $9 billion in spending [13]. Coal retirements could be blocked indefinitely.

Running aging coal plants above market rates costs ratepayers an estimated $128 million per year in above-market fuel and maintenance expenses, plus continued air quality and health impacts on surrounding communities [5][6].

5. Comparison: SB 730 vs HB 1063 vs HB 1213

6. The Tax Break Breakdown

State Sales Tax Exemption

Under GS 105-164.13, data centers meeting investment thresholds ($150M over 5 years for Tier 1, $75M for Tier 2 and 3 counties) are exempt from state sales tax on electricity, computer equipment, cooling systems, and construction materials [3]. The exemption has no sunset date and no performance reporting requirement. NC is one of 12 states that do not regularly publish the cost of these exemptions [4].

JDIG Grants

The Job Development Investment Grant program can provide cash grants to data centers, but these are rarely used because data centers create few jobs relative to their investment size. A $1 billion facility may employ 50 to 100 permanent workers [16].

Local Incentives (What SB 730 Bans)

Counties have offered property tax abatements, fee waivers, and infrastructure subsidies to attract data centers. SB 730 prohibits all local tax incentives for covered facilities [2][9]. While this prevents a "race to the bottom" between counties, it also eliminates the primary tool counties use to negotiate community benefit agreements, performance benchmarks, and local hiring commitments.

What Each Bill Does Differently

• SB 730: Bans local incentives. Preserves all state exemptions [2].
• HB 1063: Bans local incentives AND repeals state sales tax exemptions effective January 1, 2027 [14].
• HB 1213: Full repeal of all state data center tax exemptions. Does not address local incentives [15].
• Budget framework (May 2026): Repeals only the electricity exemption (~$20M/yr). Preserves hardware and construction exemptions [11].

7. What Is Actually Driving Electric Rate Increases

Data centers are frequently cited as the cause of rising electricity rates. The evidence shows they are a future concern, not a current driver. The top three verified contributors to recent rate increases in Duke Energy Carolinas territory [17][18][19]:

Data center load growth is projected to add 5 to 8 GW of demand in the Carolinas by 2035 [17][20]. If that demand is not matched by new generation, it will increase rates. SB 730's cost allocation provisions address this by requiring data centers to pay their incremental infrastructure costs. But the coal retirement block works in the opposite direction, locking in above-market generation costs for all ratepayers.

8. The 100 MW Threshold Problem

SB 730 applies only to facilities with 100 MW or more of peak monthly demand [2]. This threshold is significantly higher than what most jurisdictions and utilities use:

A survey of US utility tariffs for large loads found that 86% of tracked tariffs use thresholds below 100 MW [22]. SB 730's threshold exempts the majority of data center facilities in the state.

Campus Fragmentation

A developer can build multiple sub-100 MW buildings on adjacent parcels, each under a separate LLC, and escape all provisions of SB 730 [2]. Nothing in the bill aggregates load across commonly owned or affiliated facilities. A 300 MW campus split into four 75 MW buildings with four LLCs is legally four unregulated facilities.

9. Anti-Fragmentation Solutions

Other jurisdictions have recognized and addressed the fragmentation problem:

SB 730 contains none of these mechanisms. Without anti-fragmentation language, the 100 MW threshold is not a floor; it is a target to design around.

10. A Graduated Framework Proposal

Rather than a single binary threshold, a graduated framework applies universal baseline standards to all data centers with tiered requirements that scale with facility size:

Universal Baseline (All Data Centers)

• Closed-loop or air-cooled systems (no open-loop surface water withdrawal)
• Noise limits at property lines (50 dBA daytime, 40 dBA nighttime)
• Foreign adversary ownership restrictions
• Annual water and energy usage reporting

Graduated Tiers

This approach eliminates the cliff effect of a single threshold while ensuring that even smaller facilities meet baseline environmental and community standards.

11. What Other States Are Doing

12. What Vance County Should Watch

1. Senate concurrence vote timing. The Senate must vote on the House substitute, which is substantially different from what it originally passed. Watch for whether it goes to conference committee or receives a straight up-or-down vote [1].
2. Governor Stein's position. Stein has called for "reexamining" data center tax incentives but has not taken a public position on SB 730 specifically. A veto is possible if the coal retirement block remains [30].
3. Whether the coal provision gets stripped. The coal retirement block is the most controversial provision. If removed in conference or by Senate amendment, the bill becomes significantly more viable and less costly to ratepayers [5][6].
4. Budget negotiations on the tax exemption. The state budget is a separate vehicle. The May 2026 framework repeals only the electricity exemption. Watch for whether hardware and construction exemptions survive the final budget [11].
5. Natelli rezoning implications. Michael Natelli is attempting to rezone 40 acres in Vance County for an "industrial park." Residents have raised concerns this is a data center precursor. Natelli was previously involved in a withdrawn data center project in Apex (Wake County). If the rezoning is approved before SB 730 passes, none of the bill's environmental study requirements would apply retroactively [31].
6. Person County precedent. Adjacent Person County sold 1,350 acres to Microsoft in October 2024 for approximately $27 million under an NDA that prevented public disclosure before closing. The Mayo coal plant in Person County is one of the facilities whose retirement could be blocked by SB 730's nuclear provision [12][32].