The Tennessee Valley Authority could soon change the way it charges data centers for electricity.
The utility that generates power for 10 million people across the region will be discussing a special rate for large industrial customers, which will include many data centers, at its quarterly board meeting Thursday.
Data centers can raise everyone’s monthly electricity bills, which residents in Tennessee and parts of surrounding states pay to local power companies that buy power from TVA.
The cost impact is not a simple equation of more data centers, higher bills. Rather, it’s a matter of how TVA chooses to meet demand from data centers and the accuracy of load forecasting.
Data centers comprised 10% of TVA’s entire electric load last year. The utility had 11 GW of requests from data centers in July 2025, according to TVA, which currently has a total of about 38 GW of power.
In response, TVA has primarily been betting on large, centralized fossil fuel plants. TVA has plans to build or expand more than a dozen gas plants over the next decade, according to its interconnection queue, and it’s pushed off the closure dates of its remaining four coal plants. The utility also has a more distant goal of new nuclear plants, widely considered one of the most expensive forms of new generation. Neighboring utilities in the Southeast like Florida Power & Light and Duke Energy Florida are primarily investing in solar, while TVA’s modest plans for solar shrunk even further this year in its long-term plan draft.
In the context of data center growth, solar and battery systems could offer TVA more flexibility, given that solar farms are modular and can scale up quickly alongside demand, according to Maggie Shober, a utility expert at the Southern Alliance for Clean Energy, which just called for an 18-month moratorium on new large data centers in Tennessee, North Carolina, Georgia and Florida.
“Data centers lock in unwanted noise and air pollution, drain tens of millions of gallons of water a day, and are approved under agreements lacking transparency, often before residents know a project is coming,” SACE’s director Stephen Smith wrote in the post Tuesday. “Utilities profit from the buildout and pass the costs on to customers whether power demand materializes or not, locking in decades of new fossil fuel power plants.”
Nationally, 36 states have policies pending or in place to try to shield ratepayers from the grid infrastructure costs of data centers. Those policies, called large load tariffs, typically aim to improve transparency, protect customers and mitigate risk around large loads. Tariffs may also have rules around clean energy and customer commitments, according to the nonprofit Smart Electric Power Alliance.
TVA plans to reveal its special rate for large industrial customers Thursday at its board meeting.
Copyright 2026 WPLN News
