- State leaders convene and suspend North Carolina's fuel taxes.

Duke Energy says its new deal protects citizens from data center energy price hikes and money flows out of North Carolina's U.S.

Senate race.

This is "State Lines."

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♪ - Welcome back to "State Lines."

I'm Kelly McCullen.

Joining me today, Skye David of New Frame Incorporated, a debuting Alex Baltzegar of NC Free.

Hi, Alex.

Welcome to the show, by the way.

- Thank you for having me.

- You're in great company.

Do you know that?

- I do know that.

- All right.

I'm Claudia Rivera Cotto of Enlace Latinos in Seat 3, and our good friend Steve Rao, political analyst in Seat 4.

Hello to everyone, especially hello to you, Alex.

Good half hour, busy week in politics where North Carolina lawmakers overwhelmingly, practically unanimously approved a temporary suspension of the state fuels tax.

North Carolina's 42 cents per gallon tax will be suspended through November 30th, 2026.

Republicans say existing reserve funds will fully protect the highway trust fund.

Senate President Pro Tem Phil Berger told the press he thinks the suspension will cost about $360 million.

The bill will also allow off-road diesel fuel to be used in highway vehicles.

Claudia, I saw you at the special session sitting there typing away.

So this policy takes effect.

Now, once the governor signs, now what?

- So he actually signed this morning, and we will eventually start to see the gas prices go down, but we don't know exactly what's the amount.

From what we have heard, particularly, this is gonna be about 30 cents per gallon.

This was an estimate from the University of Pennsylvania, so that's what we could expect to see.

Also, Senator Phil Berger said that this can also vary from different gasoline stations because of the market, so we would just have to keep an eye on that.

- Steve, this is a nice populist move that had bipartisan support, but as a policy, we've removed the fuel tax.

The state leaders say we have reserves, so all good, right?

- Well, I'm a little bit skeptical.

I mean, I think, first of all, it's good to save money with a bipartisan effort like this, but I am concerned about the 360 million cost, and whether you have reserves to back that up.

As a former elected official at the local level in Morrisville, I can tell you so many infrastructure projects across Wake County have been delayed because DOT didn't have adequate funding, so I really think there is an opportunity to have a more long-term conversation, a more transparent process of how we can fund North Carolina's infrastructure, our roads, our bridges.

I like Senator Chaudhuri's amendment.

He had an amendment that sometimes retailers take advantage of the situation, which would guarantee that these savings go into the pockets of consumers, so I think they tried that in Virginia, and it didn't pass, but Senator Chaudhuri offered that as an amendment, and I think that's a good thing, but I like transparency and long-term discussion, so hopefully this will help, and it's always good when Democrats and Republicans can work together in North Carolina.

- How fast can legislation take effect at a statewide level?

That's a very subjective opinion, but the expectation out of Raleigh is if this is signed on Friday, then consumers should see relief almost, they make it sound immediately.

- Yeah, I think that to Claudia's point about it'll be a little bit of a delay, and it could be different station to station.

That's because the tax that you, you pay the tax as you get the gas, so they've already paid for what they have, but how fast does station X run out of gas and then get more, and then maybe prices will come down, versus maybe a station that has a bunch of gas, and so it's not gonna be until a week later, something like that.

- Alex, how does this work?

So I've heard Democrats talk about that.

The gas already at the gas station, the gas station owner pays the taxes up front.

If it's a rural gas station, they're not gonna burn through a tank of gas very quickly, but in Charlotte or Raleigh, they could be filling up this weekend with tax-free fuel.

- That's right, so to Skye's point, the rural gas stations are gonna be slower to see this change, but I think anywhere urban or suburban, you're gonna see gas prices under $4 a gallon within a week.

- What does this say about the gas tax?

They went after that one immediately.

It's a very high-retail political matter.

We'll talk about the politics next, but as a policy, just dropping the fuels tax with, what, 48-hour notice, petition two days later, and then boom, this bill's on the governor's desk Wednesday afternoon.

- Right, I think the intention here is to get consumers feeling a little bit better about the economy as we're heading into the election season, and I think Senator Berger was right.

This is kind of a feel-good policy.

I mean, you look at the effect of it per person, and maybe you're saving several dollars a gallon, or not per gallon, but per fill-up.

So, I don't know.

We'll see how, I think it was good to put a cap on how long it's gonna last, 'cause it is a lot of money from the stabilization and inflation reserve.

- Claudia, I can't remember a $360 million bill passing the legislature in about 90 minutes.

First time I've ever seen it move that fast.

I'm sure it has been done before.

This shows the legislature can come together, even if they fight a little bit over it, but it was fast.

- Yes, I think that affordability is definitely a hot topic right now, and when we also look at North Carolina, North Carolina has a triple-A bonding rate, so it's a really good financial decision right now to make this, and maybe some people can say they can decide to use it for something else, but at the same time, gas prices are a real concern for farmers and Uber drivers and delivery drivers would also be probably very happy about this.

- Yeah, politically, the gas tax suspension did move with unusual speed, as we've discussed.

Republican leaders, they did announce that special session just last weekend, Sunday maybe, had enough support by petition to call it on Monday, and the special session held that session on Wednesday.

The bill passed without open floor debate to speak of.

Governor Josh Stein supports fuel tax relief.

He did call the suspension an election year gimmick, though, and some legislative Republicans, Steve, your point, they sought some amendments to the bill for additional tax relief on utilities and water, whatever else besides fuel, and said it didn't go far enough.

Now we can talk the fun stuff, the politics of it.

Is this a policy decision?

Was this an election year gimmick?

Or is it both?

- I'd say it's both.

I mean, if you look at the polling right now, over 50% of voters are putting the cost of services and goods as the number one issue as they're looking towards the upcoming election.

So it is hitting people's pocketbooks, and like I said, I think the gas tax, you go to the tank, that's one of the core things that you're thinking about when you're measuring in your head how much stuff is costing.

It's gas, it's milk, it's bread.

So I think the gas tax, I mean, it's something that's gonna affect pretty immediately the cost at the pump, and so I think voters are gonna be feeling a little bit better going into the election.

- Skye, that make stuff cost less.

That just played right into the Cooper playbook.

Republicans seem to have adopted it, and the political critics say they could've done this policy last week when they were in session.

They didn't need to call a special session.

What happened there?

- Well, I think, to Alex's point, the polls are coming back, and then on Friday, you heard that national Republicans were pulling out of the Whatley race, and so money's not coming in, and people are talking about affordability.

So all of those things really taken together created a situation where we can act, we can act fast, and we can do something that's going to show consumers we care right before the election.

- Steve, your fellow Democrats, they barked and growled about this idea of cutting the gas tax, offered other amendments.

They knew they wouldn't pass them, but yet they all voted for it, except maybe one in the House.

- Well, I mean, I think affordability is a big issue.

I mean, people are really feeling it at the pump, feeling it at grocery stores.

Go out to dinner recently.

I mean, it's just so expensive, food prices.

I mean, at the end of the day, though, I think there was politics behind this, right?

I mean, as Skye said, I think polling has come back, many tight races.

I think the Democrats are getting momentum, particularly what I hear from the NC House races, some close races.

So this could help Republicans in close races if gas prices start coming down.

So it is political season, but I mean, I think Democrats voting for it, they're not gonna vote against affordability, right?

- Claudia, what happens when gas stations don't lower their rate per gallon, their prices at the pump, or as far as once we know there's over 40 cents in taxes being removed from the pump price?

- So it seems like the bill doesn't really state what will happen if we don't see any reduction at the gas stations, but Senator Phil Berger did say that us journalists should be looking at the gas prices.

So I guess we will just have to see when this takes effect and also how it looks and varies by gas station.

- This is pure market competition, right?

So I don't think we're gonna see a problem, especially where there is competition amongst gas stations with the price lowering.

It's gonna happen automatically.

So like I said, I think we're gonna see under $4 a gallon pretty quickly.

- On the free market though, we have been paying $4.09 a gallon, at least in my town.

So the market will support $4.09 a gallon.

- What happens when your neighboring gas station drops it to $3.99?

Are you gonna drop your prices?

- I don't own a gas station.

That's a good question, though, not necessarily, Skye.

Does free market step in and fill this void, this tax cut?

- I think it's going to have to.

I mean, to your point, once one station does it, the other stations are going to have to do it, or otherwise everybody's gonna go to the station that costs less.

- Yeah, and the other thing we haven't talked about is we are fighting two wars at the same time, and I think there's a chance to criticize President Trump's foreign policy today.

- Why should the state budget in any way take a hit for the actions of the federal government and U.S.

Congress and the executive branch of this country?

- I don't think, well, I don't think they should take a hit for it.

- But taking a hit for it.

- But we are taking a hit.

I mean, that's exactly the point, and I think that that's, we're gonna see what North Carolinians, how they vote in the midterms, but I do think that is something to consider.

You brought up a good point there.

- You know, when I saw them create this stabilization and inflation reserve in the first place, I was thinking to myself, like, how in the world is North Carolina gonna have a fund that's gonna fight how much money the federal government's printing when it comes to inflation?

But then I think it was interesting to see it used in this case where we actually did have money set aside to pay for something temporarily, like the gas tax being removed.

- Claudia, does this help Republicans in the polls across North Carolina, particularly in the House and Senate legislative races?

- Whether it helps them in the polls, I think it's gonna have to wait and see how much it actually drops, and then also if people really relate the drop to the Republican majority at the legislature, because I think the Democrats are also using this momentum, saying that the legislature had the chance to do something in May, and they didn't, so both parties are really tapping into this issue.

- Yes.

- Something that's really interesting is that they changed the rules on Wednesday to allow House members to primary sponsor the bill, so generally in the House, you could only have four primary sponsors.

This bill had 50 or 60.

- You know, I saw that.

There was some social media posts where some House members, some I don't know them personally, but they called a special session, and I found that interesting.

They did, I guess.

- That is true, because they each individually have to sign off on that and put their wet signature on a piece of paper, so there was someone driving around North Carolina picking up all of these papers and taking them back.

- There's a lot of hours left to now on November 3rd.

I have experience with that, but we'll see.

- This is something we've seen for years.

I mean, the party in power gets to play legislative politics and set the agenda and make the rules.

- And Claudia and the press corps have been dispatched to the local gas station to make sure the pump prices drop accordingly.

Our next topic's about AI and data centers where Duke Energy says it has reached a deal that will protect you from higher electricity costs tied to when data centers come to your town.

Duke North Carolina President says data centers will pay all the upfront costs of connecting to the power grid.

The deal also creates a new rate schedule for the heaviest electricity consumers.

Amazon, Google, Microsoft, and Meta support the agreement.

All four companies are developing or are currently operating data centers in North Carolina.

The softball pitch to Steve Rao.

You're developing a great media brand in AI and tech.

Okay, Duke says, trust us, your bill will not go up because of data centers, you say.

- Well, I say this is a good positive step in the right direction because there's been so much resistance from both parties on AI data centers everywhere, right?

I think there was an ad I saw one time that was from a Republican.

They called him Data Center Dave, right?

Nobody wants data centers.

But the reality is that I think it's a good thing that Duke Energy's adding this policy.

And Governor Stein has even asked for, he was on Fox News the other day talking about data centers coming in with their own energy sources, their energy and power.

Because the fact is 100,000 Chat GPT searches daily consume enough electricity for 30,000 homes.

That's a lot of energy.

And so how are we gonna power these big data centers?

So we're gonna have to do it in a way that doesn't drive the cost to consumers, looking at even solar, renewable, others.

So we need an AI strategy across the country and in North Carolina.

Part of it's gonna be energy, part of it's gonna be productivity for state agencies.

Today it's taking only 10 minutes to get a real ID.

Dave Denny, the secretary and the team there are working on AI.

But we gotta upskill our workforce and we gotta have energy.

So these are all really complicated situation.

But AI is not a bad word.

It's not going away.

So we're gonna have to deal with it.

- Skye, we talk about this issue a lot on this show, but I am drawn to the fact, he says 30,000 Chat GPT searches.

- From Fareed Zakaria, by the way.

- Yeah, I'll take that.

That's folks like us using AI.

So the people want AI.

I love it.

(laughing) But I do love it.

I use it all the time, but yet in my community, I would be against the data center coming in, but I need that data center so my phone can give me advice.

- Yeah, I think that this is something that maybe should have happened a few years ago because people have lost that trust in these data centers.

The tide has shifted against them, and that is across the political spectrum.

So maybe if you had heard a year and a half ago that they were gonna pay their way, they were gonna pay for the new power, folks might have been more susceptible to allowing a data center in their community.

- Is Duke part of your portfolio with NC Free?

Are they part of it?

- Yeah, Duke Energy is a, they're actually a founding member of NC Free.

- So tread lightly here, but thank you for the transparency.

Why can't they get their customers to believe them in your opinion?

- Yeah, well, I honestly think this is a good move for consumers too.

I mean, you saw the state's consumer advocate sign on to this too.

So it does allow more expectation from consumers where we know who's gonna be paying for these things.

We know it is gonna be the data centers themselves fronting the costs.

There's a lot of concern amongst consumers that they're worried that maybe some of these costs are gonna be passed on to them, but I think this settlement was a really good deal in a positive direction for consumers.

- Claudia, are data centers a kitchen table issue or is it a fun news event for reporters to cover at that one town hall meeting where everyone that cares is in that one room, all 80 of them in a town of 100,000?

- I think people are starting to hear more about it as they hear the concerns about how they can be impacted by it in affordability and also in terms of the environmental impacts that it can have on the water, et cetera.

And I did want to note that on this settlement specifically, it's a great move to the right direction, but it also has some limitations on the protections and particularly it does not guarantee that data centers will pay for the upgrades they do to the grid.

So I think that's something that we would have to take a look at.

- Alex, if people are using it and it's generating the electricity costs, is this government, in fairness, is this government interfering with the natural evolution of an emerging market?

- I think it's good for everybody to have expectations here.

I do think maybe some of the stuff started getting overblown, especially with other states that maybe made not as good decisions as North Carolina.

But in North Carolina, I think if you talk with people from Duke Energy, you talk with the data center companies, I mean, they were already agreeing to terms where consumers were gonna be protected, at least other rate payers.

So the data centers were gonna be putting the bill for most of it.

- I agree.

In addition to utility bills, which is always a good thing to keep those low, I'm just concerned about just energy usage in general.

I mean, if we don't figure out ways to power these data centers, like in Morrisville a few years ago, we were approached by Duke Energy that we were running out of power.

We went from 100 megawatt to 125 megawatt just because of our life science sector.

And I mean, the reality is, what if we came to a day where everyone's using this AI?

So I think it's good to start having these conversations of what can Duke Energy do.

Floyd McKissick at the Utilities Commission has addressed this.

The governor's got an AI leadership council.

I think this is a continued work in progress.

And the reason I said AI's not a bad word is that there's a tendency to say, "Let's stop AI."

We are gonna be having regulation concerns about that, whether we have more regulation or decreased regulation.

But at the end of the day, we know one thing, AI is not going away.

We're gonna need it, and it's here to stay.

- And the Utilities Commission played a role in this too.

So you do see a lot of different players from different perspectives that were involved in this settlement and all came to an agreement.

- Well, Raleigh's taking action.

They voted 7-1 on Tuesday night to impose a six-month moratorium on data center development.

So we can't say that you can't stop AI.

You certainly can slow it down.

- You can slow it down.

- The developer had asked for, a developer wanted annexation of land for a 100,000-square-foot data center.

The project has now been withdrawn due to public outcry.

But the city moratorium will block the city approvals for data centers larger than 10,000 square feet or a facility using more than five megawatts of power.

I caught this in the News and Observer reports that one megawatt can power up to 250 homes.

So no doubt about it, Skye.

Data centers and for us to have this hive mind in our pocket on the computer, it's a lot of electricity.

- It is.

And I think at this Raleigh City Council meeting, there were 32 people that signed up to speak and 30 were against the data center.

So that kind of tells you where the public is on these data centers.

And Raleigh's moratorium is six months.

Our surrounding cities were a little bit more.

And so they got some press on that.

But Raleigh said this will give them enough time to think of a plan because Mayor Cowell said, "We can't stop data centers.

"We are a tech hub.

"We have to have a plan for this moving forward."

- Claudia, what's the best approach in journalism for following a moratorium's in effect?

There's a lot of news that can be told, stories that can be told.

As any city leader says, "We're stopping it now.

"We have a goal in six months, 32 months."

Is it worth tracking this or just wait 'til the end of the moratorium to see what happens?

- I would be interested in seeing what are the conversations that they are having right now and in what directions they will try to go.

As we think, in Raleigh particularly, it's also important to note that we do have data centers right now.

There are eight data centers in Raleigh.

They're just smaller scale.

And this is specifically for hyperscale data centers.

So I would be interested in knowing what are the considerations of the council when it comes to that vote.

- Alex, she said 30 of 32 were against data centers, but that was 30 people in a city of over a half of million.

So more than 30 people used their Chat, their Grok and their Gemini.

Once again, back to the point.

Is it who screams at city hall loudest gets what they want under the fear that the media will go against the council?

- That's typically what happens.

I mean, if you look at the polls too, data centers are not very popular right now.

It's something that has, data centers have been defined pretty quickly in the past few years as something negative.

I will say, I grew up in a town called Evans, Georgia, which is a suburb of Augusta.

And in my home county, Columbia County, we had a Google data center come in and now a significant portion of the property taxes in that county are gonna vanish from property taxpayers.

So there are upsides too that I think are not being talked about.

The negatives of data centers are what's in the press.

- But have you heard how popular property taxes are in North Carolina right now among county and city government?

No way they're cutting taxes like that over a data center.

No, I can't say that, it might happen.

- Well, yeah, they do create some jobs.

We know that, so we want jobs.

And I mean, I'll end with this.

I mean, Wake County has had a lot of cities and towns that have done moratoriums, Apex, Wendell, a number of others.

So I think as long as you have a moratorium, all I think what we need is to use that time to have a discussion of how we come up with an AI plan where we can address these issues and continue to be a leader in the nation on innovation, jobs, opportunity.

- Skye, but this state is mostly rural by geography, but yet it does seem the big companies, they wanna go to Cary and Charlotte and to places where folks wanna live.

They'd rather have a house there than a data center next to them.

Why are these companies choosing the cool parts of the state?

- I don't know, you'd have to ask the companies.

- I'm asking you though.

You have to ask.

But has anyone given that any thought?

They're wanting to go where the people are as well.

Maybe it's an infrastructure thing.

I would like a better explanation on that.

- Yeah, I mean, you wanna go where the people are.

And you know, tech companies, they throw great parties and Raleigh's got a great downtown, Charlotte's got a great downtown.

We got the Canes, we got the Panthers.

- What's more popular now or less popular, a data center or a casino in North Carolina?

- Why are you asking me these questions?

- Michael Whatley's Senate campaign says it has temporarily pulled his TV ads while it rethinks its strategy.

The Senate Leadership Fund has paused further ad spending in North Carolina after investing over $30 million in the race.

Americans for Prosperity, they left North Carolina out of its latest $22 million ad campaign.

In response, the Democratic-aligned PAC, the super PAC called Win Senate, removed $1.1 million in ads that it would have used to support Roy Cooper.

Claudia, oh, six months ago, this was gonna be a billion-dollar race.

It didn't happen.

- Yeah, and I think that for Whatley, this is significant because as we think about the advertisement at the national level, it also shows how Republicans are prioritizing other states.

And the money that was gonna be spent here is now gonna move to Kansas, to Ohio, and other states that Cook Political Report said are now a toss-up.

And North Carolina seems to be leaning more Democrats.

So they are not as interested at the moment to continue that investment.

- Time is running out.

At this moment, if you decide not to spend, it's right in the heart of early voting.

- That's right, yep, and North Carolina, I mean, we were expecting it to be one of the central states on the map when you looked at the US Senate races across the entire country.

It was gonna be North Carolina, Maine, maybe Michigan, and maybe one or two other races.

And that pendulum has swung so far to the left that I think this, where you see Republicans, you see Democrats pulling out of North Carolina because the expectation is that Roy Cooper is gonna win this US Senate race is indicative of the tidal wave election that this is looking like for Democrats.

- So beyond just them pulling out of North Carolina, I think it was Wednesday night that Whatley's own campaign said, "We're gonna suspend our ads for right now and reassess our strategy."

That's not a good sign either when the election is right around the corner.

- But Steve, there's digital ad buying, and I know some very high-level political consultants who think TV ad buying is on its way down or out, and here comes digital.

Could it really be a realignment of Whatley's campaign ad spending?

- I mean, I guess it could be, right?

I mean, I think they're just looking at where they can maybe more wisely invest their dollars, but I do think they see the writing on the wall, and I will say this, that Cooper, I think, ran a better campaign with the Cost Less Tour.

I think Whatley, with focusing on crime, I just don't think it stuck, and I think now we have to realize that Roy Cooper will probably be elected our next US Senator.

I'm excited for North Carolina because I think with Governor Stein and Cooper having worked together so many years as friends, now a governor and our Senator Roy Cooper, it'll be a good thing for North Carolina, but I think that's where we're headed.

- I'm not putting, don't put Roy Cooper in the Senate just yet.

We have to let the votes be counted.

Claudia?

- I do think that the challenge for Whatley goes beyond the advertisement itself.

It's also its connection with Trump and Donald Trump because particularly as we're seeing, a Washington Post analysis showed that 8,000 advertisements in half of the states that are competitive removed Trump from their ads, and what we saw here was that when Whatley was doing his campaign, he brought Trump with him, so I think that might not be good for the unaffiliated voters, although it can help him with the conservative voters.

- 20 seconds, Alex.

Does the removal of Whatley's ad campaigns for TV open the opportunity for down-ballot candidates to get onto TV?

- Maybe.

- Does it matter?

- Yeah, you should have Spectrum Reach talk to you about that.

That'd be a good one to have on your show sometime, but yeah, I mean, you see across the state, lots of North Carolina House races, lots of North Carolina Senate legislative races getting up on TV, and we've been seeing that trend go up and up.

- Gotta go.

Email me your thoughts, statelines@pbsnc.org.

We'll see you next time.

- Thank you.

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