TVA proposes new rate class for data centers to protect customer power bills
The Tennessee Valley Authority (TVA) is proposing a new rate class for data centers to protect residential power bills, with a vote expected later this year. Concurrently, several East Tennessee localities, including Sweetwater, Rockwood, and Knox County, are enacting or considering restrictive zoning ordinances due to concerns about data center resource consumption, noise, and environmental impact. The Blount Partnership also opposes AI data centers in Blount County.
The Tennessee Valley Authority (TVA) is initiating a process to create a new rate class specifically for data centers, aiming to protect the 10 million residents in its service region from increased power costs. TVA spokesperson Scott Brooks stated that data centers currently account for 18-20% of TVA's industrial load, a figure projected to double by 2030, and the proposed changes may require upfront payments before data centers connect to the grid.
The TVA Board of Directors is expected to vote on the proposal in August or November. While KUB (Knoxville Utilities Board) and the Tennessee Valley Public Power Association (TVPPA) have expressed support for measures to ensure data centers pay their fair share and protect consumers, the changes are not intended to alter average customer rates. Brooks noted that data centers' 24/7, high-power usage makes them a unique load.
Simultaneously, several East Tennessee communities are implementing or developing regulations. The City of Sweetwater has passed an ordinance restricting data processing centers, including AI and cryptocurrency facilities, to M-2 Heavy Industrial Zones, with specific requirements for lot size, setbacks, and noise levels, citing citizen concerns over resources and environmental impact. The City of Rockwood also passed ordinances defining data centers in its zoning code, permitting them in M-1 Light Industrial Districts subject to Board of Zoning Appeals approval. Knox County is also working on preemptive regulations.
The Blount Partnership, which promotes business in Blount County, opposes AI data centers in the area, with communications director Jeff Muir highlighting concerns about the significant electricity and water consumption, environmental impact, and low job creation. Muir acknowledged the tax revenue benefits but argued against data centers as the best use of local resources, indicating ongoing local opposition.