New Tennessee law requires data center owners to pay full electricity, infrastructure costs
Tennessee Governor Bill Lee signed a new law (HB 1847) requiring data center owners to cover the full costs of their electricity and infrastructure, prohibiting cities and utility companies from subsidizing these expenses or raising customer rates. The law allows agreements for infrastructure as long as the data center owner pays, and comes amid development by xAI and Anthropic in Memphis.
Tennessee Governor Bill Lee signed HB 1847 into law on May 7, establishing new requirements for data center owners regarding infrastructure and electricity costs. The legislation, sponsored by Memphis Republican Senator Brent Taylor and Rickman County Republican State Representative Ed Butler, prohibits cities and electric companies from covering data centers' infrastructure or electrical needs, instead mandating that owners pay the full costs, including for any upgrades or expansion efforts.
The new law stipulates that while data center owners can enter into agreements with local governments and utility companies for necessary infrastructure, these agreements must ensure the owner bears all associated expenses. Crucially, the bill also explicitly forbids electrical utility companies from increasing customer rates to subsidize data center operations.
The signing of this statewide law comes as significant data center developments are underway in Memphis. Artificial intelligence company Anthropic is set to take over xAI's Colossus 1 facility on Riverport Road. Additionally, Elon Musk's xAI is reportedly planning a more than $659 million expansion of its Colossus 2 facility on Tulane Road in Whitehaven, though details on its planned use remain unrevealed. In April, xAI also confirmed it had ceased work on a previously announced greywater recycling facility.