Will Scott is the North Carolina policy director of the Environmental Defense Fund. Hudson Kingston is the legal director at CURE, a nonprofit rural environmental and energy democracy organization in Minnesota.
The data center boom has become a cash cow for investor-owned utilities across the country. Many utility companies are seeking approval for costly new gas plants and other fossil fuel infrastructure based on uncertain projections of future demand for data centers and other large customers. If those projections fall short, ratepayers are left with 30 years of payments for projects that are increasingly expensive to build and slow to develop. We can’t let phantom projections for new data centers leave regular ratepayers with the bill.
Hudson Kingston
Historically, state regulators have given utilities significant latitude to pursue new generation. Yet, as heating and cooling bills become painfully unaffordable for families and local businesses, utility regulators are increasingly skeptical of proposals that could leave them paying for decades of dirty and expensive fossil fuel infrastructure, when clean, renewable energy and batteries provide a reliable, homegrown and affordable alternative. Indeed, a recent study found that batteries are now cheaper than gas peaker plants, globally.
Will Scott
While customers are forced to pay increasingly higher energy bills, utility shareholders are guaranteed profits on centralized fossil energy projects. The bigger and more costly the construction, the more money energy corporations make. Once new energy infrastructure is approved by state regulators, utilities can start recovering the costs through customer rates even before the project is built and in use. Because utilities make profits off the infrastructure they build, and not the energy they sell, executives have a financial incentive to keep building to benefit shareholders.
To be clear, getting ahead of potential demand is not inherently problematic. Investing in clean and affordable energy generation to meet everyday customers’ future needs for things like home heating and cooling and electric vehicle charging would lower prices and improve reliability. The issue is that utilities are using that incentive and uncertain future demand to justify spending customers’ money on new fossil fuel infrastructure that will raise prices and pollution.
Amid this surge in data center proposals, regulators must be proactive and diligent in protecting customers from imprudent utility spending on fossil fuels, particularly when clean energy offers an affordable alternative.
In the Midwest, Minnesota Power proposed large amounts of new gas generation as part of its plan to meet future electricity demand. Instead of granting the utility carte blanche to build more gas infrastructure, as is common in these proceedings, Minnesota’s regulators have directed the utility to explore less costly alternatives, including a scenario that adds wind, solar and storage instead of expensive and polluting gas power plants that would run afoul of the state’s carbon-free standard.
Wind and solar have been cheaper than gas plants for nearly a decade in the U.S. Clean energy keeps getting more affordable while the cost of constructing new gas plants has increased by 66%, and the time required to bring them online grew by 23% between 2023 and 2025. Despite that, in 2025 utilities reported plans to build 24 GW of gas plant capacity, representing a 570% increase over 2023. Utilities justify this build out of gas plants on the basis of projected data-center demand, rather than the current needs of households and local businesses. Not all regulators are buying it.
In North Carolina, regulators rejected a Duke Energy $584 million gas turbine that the company argued is needed to meet the energy needs of anticipated large customers, particularly data centers. Regulators found that Duke’s anticipated load projections were not justification enough to saddle customers with another expensive gas project, that the project put too much risk on residential ratepayers and that the utility had not adequately examined potentially cheaper alternatives, like batteries.
With profits driving spending decisions rather than what’s in the best interest of customers, utilities wielding monopoly power often deliberately squeeze out more affordable energy sources, such as wind and solar — which are also faster to bring online — when forced to split ownership of those facilities with project developers.
In fact, some utilities are actively working against cheaper energy options. Duke Energy was found to have artificially capped energy storage and solar energy in its modeling to justify the need for new, lucrative gas plants.
In Minnesota and North Carolina, we’ve seen what happens when state regulators use their authority to stand up to utilities and protect residents from unnecessarily high energy costs. Both states offer examples of how regulators can push back against costly gas projects and put the interests of ratepayers first. Speculative demand should not be the burden of customers, and customers shouldn’t have to pay for gas when solar and wind are cheaper.
The question for regulators is no longer simply whether utilities can find a reason to build another gas plant. It is whether utilities can prove that customers actually need it, whether clean energy and batteries could do a better, more cost-efficient job, and whether families and businesses should unnecessarily shoulder decades of debt risk to cover short term demand projections driven by data center developers.
