TVA to charge data centers more for power under separate rate
The Tennessee Valley Authority (TVA) board approved a new, higher electricity rate specifically for data centers, effective October 1. This measure is designed to protect residents and other businesses from increased power costs due to the growing demand from data center development. The rate will raise power costs for data centers by approximately 10% over the next three years.
The Tennessee Valley Authority (TVA) board of directors has approved a measure to charge data centers a separate, higher electric rate, effective October 1. The decision, made at a quarterly meeting in Memphis, aims to shield residents and other businesses in TVA's seven-state service region from cost increases driven by the expanding data center industry.
Tom Rice, TVA's Chief Financial Officer, stated that the new rate will increase power costs for data centers by roughly 10% through a phased approach over three years. This move is intended to support American AI leadership while maintaining fair and transparent power costs for other consumers. TVA, the nation's largest public utility, directly serves large data centers operated by Google and recently approved Elon Musk's SpaceXAI (formerly xAI) to become a directly served customer under the new higher rate. SpaceXAI will also fund all necessary transmission and interconnection facilities.
TVA board chair Mitch Graves highlighted that the federal agency is aligning with President Donald Trump's Ratepayer Protection Pledge. Memphis Mayor Paul Young expressed support for the decision, emphasizing that companies creating extraordinary demand should contribute to the infrastructure costs. The TVA board also approved an annual budget without a rate increase for residents and other businesses, reinforcing its commitment to affordable power rates.