WASHINGTON — The Tennessee Valley Authority, the nation’s largest public utility, will raise the electricity rates for data centers by about 10%.
The board of directors unanimously approved the rate structure change during its quarterly meeting in Memphis last week.
In Alabama, TVA provides power to the northernmost counties, including some data centers located in the area. The utility also covers customers in Tennessee, Mississippi, Kentucky, Georgia, North Carolina and Virginia.
The special rate, which is set to begin Oct. 1 in phases over the next three fiscal years, will apply to new and existing data centers. The structure includes four rate classes depending on the customer’s contract demand.
“This data center rate is designed to maintain low rates and high reliability for existing residential and other customers, even as we support significant growth of data centers in the valley, by ensuring that data center customers pay for the system builds and updates required to serve their loads,” Tom Rice, TVA chief financial officer, said during the meeting.
As debate, anxiety and controversy surround the massive facilities that fuel the rise in artificial intelligence, the public utility is aiming to keep the burden of electricity costs associated with data centers off neighbors while planning for the future needs of technological advances.
The data center rate structure also includes a capacity commitment charge for new and expanding centers that use more than five megawatts of electricity.
“This provision covers the incremental capacity cost the data center rate alone does not cover, and ensures that any new data center load supports ongoing high reliability for all TVA customers,” Rice said.
TVA’s data center rate structure is part of the utility’s larger commitment to the White House’s Ratepayer Protection Pledge, which it signed onto last month. The initiative requires tech companies and major power users to fully finance the water and energy infrastructure for the data centers without imposing costs on consumers.
“As AI and advanced industries consume more electricity, TVA’s Board is making sure that hardworking American families and small businesses aren’t left carrying the cost,” TVA Chair Mitch Graves said in a statement. “By modernizing our rate structure and strengthening American-made energy, we’re advancing our nation’s AI and energy dominance while safeguarding the people we serve.”
During its Aug. 20 meeting, the board did not ask any questions or participate in any lengthy discussion about the data center rate structure. Only Director Randy Jones of Guntersville asked Rice to emphasize TVA’s support of the Ratepayer Protection Pledge. All board members are appointed by the president and confirmed by the U.S. Senate.
Nearly 20% of TVA’s industrial load came from data centers last year, according to former TVA President and CEO Don Moul, who mentioned the statistic during an earnings webcast in February. Data center growth is expected to double in the region by 2030.