Duke Energy Florida filed a regulatory proposal to exempt large industrial loads, including AI data centers, from standard rate structures under the state's new utility legislation.
Duke Energy Florida’s proposal “doesn’t attempt to comply with the most basic provisions” of Florida’s new data center law, state public counsel Walt Trierweiler said at a hearing.
As the first investor-owned utility to submit its SB 484 compliance proposal to the Florida PSC, Duke Energy Florida outlined provisions for large-load customers. These include a 20-year minimum term of service and revisions to its Contribution in Aid of Construction tariff, which would require large-load applicants to advance the total estimated costs to extend service.
Bradley Marshall, a senior Earthjustice attorney representing Florida Rising, warned that if a data center bubble were to burst, “the general body of customers will be left holding the bag for billions and billions of dollars of infrastructure in the form of generation and transmission that it does not need.” He stressed the urgency of the proceeding: “This is a case of first impression, and the Commission must get this right. We already have an affordability crisis in this state, and now we have a new law that quite sensibly requires that data centers pay their full cost of service. Duke's proposal doesn't come close and must be rejected.”
John Moyle, an attorney representing the Florida Industrial Power Users Group, argued the opposite, cautioning that the state should “not want to get caught up in a rush to do something about data centers and have harm inadvertently inflicted upon these large load customers.”
Defending the proposal, Duke attorney Dianne Triplett stated that “no party has identified a mechanism by which approval of this tariff could increase any customer rates before the end of 2027, which is DEF’s settlement term.” She laid out her reasoning: “Here's why: one, base rates are frozen during the settlement period. Two, we are unlikely to incur significant large load costs during the settlement period. And three, even if we do incur such cost, shareholders bear them during the settlement period.”
During questioning, Major Ryan Thompson, an attorney in the Office of General Counsel at the Florida PSC, pointed to a provision in DEF’s 2024 settlement agreement that allows the utility to “modify or change its base rates in light of a government imposition.” When Thompson asked Matthew Chatelain, pricing and regulatory solutions manager at Duke Energy Corp., whether he was aware of the clause, Chatelain confirmed his awareness but expressed uncertainty over “what, necessarily, would cause that exception to kick in.”
The clause specifies that DEF cannot seek recovery of “costs of any type or category that have historically and traditionally been recovered in base rates,” except under three exceptional scenarios. One exception applies when costs are “the direct and unavoidable result of new governmental impositions or requirements.” Thompson paraphrased this language to Chatelain and asked if the provision’s existence would surprise him; Chatelain replied that it would not.
Thompson later questioned Steve Wishart, assistant vice president at Concentric Energy Advisors, who testified as a DEF witness. In his direct testimony, Wishart noted that while utilities actively compete to attract large-load users, Florida is “not currently a top-tier market for data centers.” Thompson pressed him on rate design: “Would using average embedded rates make Florida more attractive or less attractive for data centers?” He clarified that average embedded rates do not place certain customers in a separate rate class, unlike an incremental cost tariff. “Would it be fair to say that data centers are attracted to average embedded rates?” Thompson asked.
Wishart confirmed that he believes this structure appeals to data centers “because of the perception of fairness,” though he also testified that an average embedded rate structure “definitely” increases long-term costs for data centers due to asset depreciation.