Daily on Energy: Duke Energy CEO talks data center costs

Callie sat down with Duke Energy CEO and president Harry Sideris this morning at the Washington Examiner’s D.C. offices, where they discussed the rapid build-out of data centers, how that is affecting electricity bills, and what needs to be done to strengthen the grid. 

Duke Energy provides electricity to more than 8 million customers across six states, including the Carolinas, Florida, Indiana, Ohio, and Kentucky. Across its total service area, Duke Energy has at least eight gigawatts’ worth of data center capacity in its queue to connect to the grid. About six gigawatts of that is expected to be built in North and South Carolina alone. (Just as a quick reminder, one gigawatt is enough to power roughly 750,000 homes.) 

For months, Americans have been growing wary of this build-out, particularly as electricity prices remain high. In the latest CPI Index update from the Bureau of Labor Statistics, electricity prices had increased by 4% for the year ending in August. 

Sideris told Callie that the narrative taking hold across the country that data centers will inflate prices is “misinformation and misunderstandings.” 

He explained that, through the Trump administration’s Ratepayer Protection Pledge and initiatives such as Duke’s new Customer Protection Plus Framework, utility companies and data center developers are actively working to protect customers from price hikes. 

Duke specifically is requiring data center projects to pay for all the infrastructure needed for their energy consumption, provide proof of deposits for that necessary infrastructure, and sign long-term contracts as well as termination clauses that don’t allow for stranded assets. 

Altogether, Sideris estimates that for every gigawatt of data centers added to its portfolio, it could provide $1 billion in savings for the life of that contract to Duke customers. 

“There’s a lot of misunderstanding of they’re not paying and how they’re doing that,” Sideris said. 

When pressed on whether immediate investments in the grid, such as upgrading or building new infrastructure, could increase electricity bills, Sideris said the company has structured its tariffs and contracts to avoid that trickle-down effect. 

“Even from day one, they’re paying the infrastructure costs up front if needed for the transmission interconnections,” he said. “And then the generation is paid for by them as we’re building it out. So there is no impact to the customers.” 

Stay tuned for more from Callie’s interview with Sideris. The full discussion will be posted to the Washington Examiner’s YouTube page this week. 

Something to watch… House to tackle data center bill: House lawmakers will be taking a floor vote this evening on the Ratepayer Protection Act, which is meant to shield households from the rising energy costs related to data centers. 

The bill would require state regulators to create standards for new data centers and hyperscalers that consume over 100 megawatts of electricity to cover the costs of new generation, transmission, and infrastructure upgrades. 

The legislation has been led by Republican Rep. Gabe Evans of Colorado and co-sponsored by Democratic Rep. Kathy Castor of Florida. 

Stay tuned for more by Maydeen. 

All the rest:

THUNE OPEN TO EXPORT BAN ON DIESEL: Senate Majority Leader John Thune said he is willing to explore issuing a ban on diesel exports to curb prices. 

“We’ll be looking at any proposal that is a viable solution, but I do think if we have the supply in this country and we’re exporting it right now that might be one way of getting at it,” Thune told reporters. “If that would take pressure off of prices, you know, I’m open to exploring it.”

Diesel prices are continuing to reach record highs. As of today, the national average price of diesel is $6.26 per gallon, according to AAA. 

The Trump administration has not endorsed an export ban. Yesterday, Interior Secretary Doug Burgum told reporters at the G20 in Houston that the administration would consider an export ban if they thought it would lower prices, but “that’s not the case.” 

Another solution? Texas Democratic nominee James Talarico has recently called on his Republican opponent Ken Paxton to support a plan to suspend the federal tax on diesel. 

Republicans, including President Donald Trump, have supported similar proposals as a way to lower prices on fuel. 

However, Thune noted that suspending the federal tax on diesel is a “short-term” solution, adding that it would “create holes” in the Highway Trust Fund. 

Read more by Maydeen here. 

PERMITTING REFORM STILL NOT THERE: After nearly a year since the House passed its own version of a bill accelerating the federal permitting process, we should know if the Senate will be able to finalize its own deal this week. 

Top Republican negotiator Sen. Shelley Moore Capito of West Virginia confirmed to Daily on Energy alum Josh Siegel last night that significant progress was made over the September recess. 

She revealed that some sections of a potential deal on permitting were sent to the White House over the weekend, adding that they are getting close to striking an agreement with Democrats. 

“We’ll know this week,” she said. 

Democratic negotiators also appear confident that they are nearing a package that can also hit their priorities – much of which has been focused on streamlining transmission-related permitting to bring more renewable energy onto the grid. But concerns are still lingering that the Trump administration would not fairly implement bipartisan permitting legislation and continue to block or stall wind and solar projects. 

“The substance of the bill isn’t all the equation,” Democratic negotiator Sheldon Whitehouse of Rhode Island told Siegel today. “It’s going to be extremely hard to sell any bill to my caucus in an environment where the law doesn’t matter.” 

OIL PRICES REMAIN ELEVATED: International and domestic benchmarks for oil rose again today as traders try to figure out how long the outage of Saudi Arabia’s East-West Pipeline will last. 

Just before 2:30 p.m. EDT, Brent crude had risen 3.08% and was selling at $108.94 a barrel. West Texas Intermediate also jumped 4.35% and was priced at $105.80 a barrel. 

“With Hormuz, the Saudi bypass and Bab al-Mandeb all simultaneously exposed, the market is pricing a broader loss of route flexibility, not just a supply shock,” Kotak Neo analyst Kaynat Chainwala said in a note obtained by the Wall Street Journal. “Unless there’s a credible diplomatic breakthrough, the risk premium looks set to stay elevated.”

Administration officials are still attempting to ease market fears, with Energy Secretary Chris Wright insisting that the Saudi pipeline will open in a matter of days. 

“This will be a brief and temporary interruption. It will be measured in days,” he told CNBC this morning. 

Some industry analysts hold a much more pessimistic view, with Lipow Oil Associates estimating yesterday that it would take “months” to repair the pipeline’s pumping stations. Other reports have suggested the pipeline will remain out of service for three to five weeks. 

RUSSIA AND UKRAINE LAUNCH NEW ENERGY STRIKES DESPITE TRUMP’S CEASEFIRE CLAIM: Yesterday morning, Trump said that both Ukraine and Russia had agreed to halt all attacks on the other’s energy infrastructure, claiming that the recent strikes were the driving force behind soaring diesel prices. 

That supposed ceasefire, however, was short lived. 

Overnight, Russia launched 200 drones at Ukraine, striking several energy and port facilities, according to NBC News. 

In retaliation, Ukraine launched an attack on Russia’s Syzran oil refinery, as well as a separate drone production facility and launch site. 

The cost of diesel continued to tick upward today, hitting a new record average of $6.26 a gallon, according to AAA. 

ICYMI – DATA CENTERS WILL NEED $110 BILLION TO BUILD NEW POWER: Data centers in the U.S. will need $110 billion to build 45 gigawatts of new power through 2030. 

The analysis by Moody’s Ratings said that more than 30 gigawatts of the power will be coming from natural gas-fired units, which is about 4 billion cubic feet of incremental gas supply, Bloomberg reports. The rest of the power will come from solar and energy storage, with nuclear restarts accounting for less than 5%. 

Ryan Wobbrock, senior vice president of ratings at Moody’s Ratings’ global infrastructure finance group, told Bloomberg that the $110 billion worth of new power plants could add $25 billion to $30 billion a year to electricity costs. 

However, he noted that the way that is passed on to consumers will depend on the rate-making process and other rules for allocating costs in each area. Wobbrock added that data centers will pay for as much as $15 billion of those costs because they are being built on their AI campuses.

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