The story was originally published by The Florida Trib.

One of the country’s largest energy holding companies is probing just how closely Florida will regulate data centers and the massive costs they could pass down to electric customers, in a key first test of what advocates have called a “historic” consumer protection law.

The case before Florida’s Public Service Commission is weighing whether Duke Energy plans to do enough to shield customers from the costs of data centers — probing how state regulators will enforce a law intended to ensure that the energy-intensive facilities and not regular ratepayers are the ones covering the data center costs.

Duke was the first investor-owned utility to submit a proposal under the new Florida legislation known as Senate Bill 484, which went into effect last month, giving the PSC the chance to set guardrails for massive electric consumers known as large load customers.

“Hopefully out of all of this we will get a template for what does meet the requirements,” said Walt Trierweiler, the statutorily authorized consumer advocate for Florida’s millions of public utility customers.

“What does prevent the cost-shifting from data centers to the current body of ratepayers? And what protects those customers from subsidizing loads that don’t show up?” he added.

Data centers have become a political lightning rod across the country, galvanizing a bipartisan outpouring of opposition from residents alarmed by the sheer scale of the energy and water needed to run the facilities, which are used to power artificial intelligence and cloud computing. In calls with investors, utility company executives have touted the state as a prime market for data center expansion, with Duke anticipating billions of dollars in new investments in Florida and Indiana over the next five years, driven by the data center boom.

Under SB 484, public utilities must “reasonably ensure that each large load customer bears its own full cost of service and that such cost is not shifted to the general body of ratepayers.” That cost of service includes: connection, operations, and maintenance expenses, incremental transmission, incremental generation, and other infrastructure costs, and “any other costs required to serve a large load customer.”

The PSC, which regulates public utilities, heard about five hours of testimony Tuesday from utility representatives and expert witnesses, with commissioners largely remaining mum on Duke’s proposal for how to support large load consumers. The board did not take a formal vote, although a written order is expected after the parties submit post-hearing briefs.

Some commissioners had previously voiced concerns about the plan, with one saying Duke appeared to be on “real shaky ground,” and another — a former legislator — saying the proposal doesn’t comply with the new law.

“In my view, the petition appears facially noncompliant with the mandatory statutory requirements of Senate Bill 484 and falls outside the intended scope of the mechanism contemplated under Senate Bill 484,” Commissioner Mike La Rosa wrote in an order issued by the panel.

Attorneys for Duke have defended the proposal, saying its consumer protections ensure large load consumers will bear their full cost of service.

“[Duke Energy Florida’s] proposal protects customers today, preserves the commission’s authority tomorrow, and satisfies the Legislature’s directive,” said Dianne Triplett, an attorney for Duke.

Duke does not currently have any large load data center customers, though the utility is slated to power what could become the state’s first hyperscale facility, in Fort Meade, though that project faces further regulatory hurdles before it’s officially greenlit.

While Duke’s large load proposal sets a minimum 20-year contract term, minimum monthly bill provisions, and mandatory fees for early termination of contracts, the plan did not set specific new rates for large load customers like data centers, which advocates argued was a violation of the state law.

In Trierweiler’s view, Duke’s proposal “doesn’t attempt to comply with the most basic provisions of SB 484,” and leaves the commission – and customers – in the dark about the full projected costs of data centers, which can consume as much energy as a city.

“The potential for prosperity, economic development that uplifts the small, rural communities where they target these data centers is great. However, the converse is also great,” Trierweiler said. “The risk of devastating economic loss in subsidization is huge should any one of these data centers fail to materialize, or fail to be used throughout its life.”

Attorneys for Duke have maintained that the company wouldn’t be able to set new rates for large loads now because of the terms of its current PSC-approved rate agreement, which runs through the end of 2027. At that point, Duke said, it would be able to set new rates for large loads, with far more information about what the actual needs of the massive customers would be.

“We have committed to filing a large load customer rate at a future rate proceeding, supported by a complete cost-of-service study. At that time, all parties, including the commission, will have the full opportunity to address cost allocation, rate design and cost recovery on the complete evidentiary record,” Triplett said.

But consumer advocates found those claims unpersuasive. A staff attorney for the PSC also pointed to a provision in Duke’s current rate agreement stating that the company can recoup costs if it has to make changes to comply with new government regulations.

Backgrounding all the legal arguments and technical jargon are Floridians’ concerns that the artificial intelligence and data-center booms could go bust, leaving regular ratepayers on the hook if state regulators don’t adequately enforce consumer protections.

“If there is a bubble and it bursts, the general body of customers will be left holding the bag for billions and billions of dollars in infrastructure,” said attorney Bradley Marshall, representing the advocacy group Florida Rising, which is challenging Duke’s proposal. “This is a case of first impression and the commission must get this right.”

Kate Payne is The Florida Trib’s state government reporter. She’s spent her career in nonprofit newsrooms in Florida and Iowa and her reporting has run the gamut, from interviewing presidential candidates on the campaign trail to middle schoolers in the lunch line. Kate has won awards for her political reporting, sound editing and feature writing and was named 2024 journalist of the year by the Florida chapter of the Society of Professional Journalists. Kate’s previous newsrooms include the Associated Press and WLRN Public Media in Miami. Her stories and photographs have been published by The New York Times, The Washington Post, The Christian Science Monitor, NPR and PBS, and her reporting on the death penalty has been cited in a filing in the U.S. Supreme Court. She can be reached at kate.payne@floridatrib.org. The Tributary is a nonprofit newsroom producing high-impact government accountability and investigative journalism in the public interest. Based in Jacksonville, the Florida Trib's mission is to shine a light on systemic problems and solutions, hold those in power accountable, and focus on under covered topics through collaboration with other news organizations and the community.