Tennessee bill gives data centers ability to self-power with limited regulation
Tennessee lawmakers passed a bill allowing data centers consuming over 50 megawatts to generate their own power with limited state oversight and requiring them to fund necessary utility infrastructure upgrades. While intended to protect ratepayers from costs, critics argue the bill removes environmental safeguards and public process, potentially increasing pollution from independent gas-fired power plants.
The Tennessee State Legislature has passed a bill, SB2128/HB1847, allowing data centers consuming at least 50 megawatts of power to generate their own electricity using methods like gas turbines, or to purchase power from independent producers without state or local oversight. This legislation also stipulates that if these data centers utilize public utilities, they must cover the full cost of any infrastructure upgrades required to support their operations, preventing these costs from being passed on to general ratepayers. Senator Brent Taylor and Representative Ed Butler, the bill's sponsors, stated its purpose is to protect residents from increased electricity bills stemming from new data center infrastructure.
However, Trey Bussey, an attorney with the Southern Environmental Law Center, argues the bill's exceptions and deregulation aspects will not provide "meaningful protections" against higher rates or environmental concerns. He highlighted worries that gas-fired power plants, unregulated at the state level, could emerge in communities, leading to increased air pollution and strain on water infrastructure. Bussey also pointed out the state's limited authority over utility rates under the Tennessee Valley Authority (TVA).
This bill was the sole survivor among seven pieces of legislation introduced by Tennessee lawmakers this year, many of which sought to impose stricter regulations on data centers regarding permitting, reporting on resource usage, and environmental impact. The state is home to 60 data centers, with 25 in the Nashville area and 13 in the Memphis area, including xAI's Colossus facilities, which are powered by an xAI-owned gas plant in Southaven, Mississippi. The NAACP has recently filed a lawsuit against xAI, alleging illegal air pollution from these operations. The passed bill has not yet been sent to Governor Bill Lee for signing.