TVA will consider a new electricity rate for data centers this week

The Tennessee Valley Authority (TVA) is preparing to unveil a new electricity rate structure for its large industrial customers, a category that increasingly includes data centers. This decision, to be discussed at the utility's upcoming quarterly board meeting, reflects the significant and growing energy demands from data centers, which comprised 10% of TVA's total electric load last year and represent 11 GW of requests for July 2025.

Critics, including the Southern Alliance for Clean Energy (SACE), express concern that TVA's strategy to meet this demand heavily favors centralized fossil fuel plants, with plans to build or expand over a dozen gas plants and postpone coal plant closures. Maggie Shober, a utility expert at SACE, argues that solar and battery systems offer more flexible and scalable alternatives. SACE director Stephen Smith called for an 18-month moratorium on new large data centers in Tennessee, North Carolina, Georgia, and Florida, citing concerns over noise, air and water pollution, and a lack of transparency in approval processes.

Nationally, 36 states are exploring or have implemented policies, known as large load tariffs, to protect ratepayers from the infrastructure costs associated with data center growth. These policies often focus on improving transparency, mitigating risk, and sometimes include clean energy requirements. TVA's move to a special rate for large industrial customers aligns with these broader national trends as utilities grapple with the unique demands of the data center industry.