Official Summary Text
This bill requires the owner or operator of a data center, including a proposed data center or an existing data center seeking expansion, to pay for the full cost of infrastructure needed to support the data center, including expansions or upgrades to ex
isting utility infrastructure necessary to both support the proposed or existing data center and continue providing the same services to the utility's existing customers. However, this provision does not prohibit a local government, the state, or a utili
ty
from entering into an agreement regarding infrastructure needed to support the data center as long as the agreement does not allow the cost of infrastructure to be paid for by an entity or individual other than the owner or operator of the data center.
This bill requires an electric utility to do both of the following:
Conduct the electric utility's ratemaking to ensure that the cost of infrastructure needed to support provision of electric services to a data center, including a proposed data center or an existing data center seeking expansion, and provision of electric services to such data center, is paid solely by the owner or operator of the data center.
Not raise the rate charged to residential customers or other commercial or industrial customers due to increased electric demand caused by a proposed data center, existing data center, or expansion of an existing data center.
This bill prohibits an electric utility from distributing the cost, or otherwise requiring an affected electric membership or power distribution group or organization to pay, for the cost of infrastructure or electric demand caused by a proposed data cen
ter, existing data center, or expansion of an existing data center. However, an electric utility may create a new customer class for a data center if necessary to effectuate this bill. Before an electric utility imposes a rate increase, the electric uti
li
ty (i) must make a written finding that the rate increase is not attributable to the data center and (ii) must make the written finding publicly available.
This bill authorizes a residential or other commercial or industrial customer, or electric membership or power distribution group or organization, that believes that an electric utility has violated this bill to submit a complaint in accordance with eith
er of the following:
If the electric utility is an electric cooperative or public electric utility, to the Tennessee public utility commission.
If the electric utility is a county-owned, municipal-owned, or metropolitan-owned utility that provides electric services to the public, to the utility's governing board, or, if there is no designated governing board for the utility, to the local government that owns or operates the electric utility.
This bill applies to conduct occurring and contracts or agreements entered into, amended, or renewed on or after January 1, 2027.
ON APRIL 21, 2026, THE HOUSE ADOPTED AMENDMENTS #1 AND 2, AND PASSED HOUSE BILL 1847, AS AMENDED.
AMENDMENT #1
rewrites the bill to, instead, generally prohibit a municipality or electric utility to pay or absorb the cost of electrical infrastructure incurred to serve a data center. As used in this amendment, "cost of electrical infrastructure" means
the costs, capitalized under generally accepted accounting principles, of purchasing, constructing, installing, or equipping infrastructure that are incurred by a developer, owner, or operator of a data center, a municipality, or an electric utility and t
hat would not
be incurred but for the actual or expected increase in electric demand resulting from a newly constructed or expanded data center
. "Data center" means a building that primarily contains electronic equipment used to process, store, or transmit digital information and environmental control equipment necessary to maintain proper operating conditions for such electronic equipment; and
is projected to have a peak electric demand of 50 megawatts or more during the first three years of operation. However, "data
center" does not include a facility owned or operated by this state; or a facility owned or operated by a provider of telecommunications, broadband, internet, cable, mobile, or wireless telecommunications services, or by a broadband internet access provid
er, if such facility primarily support network operations or broadband access servers. "Infrastructure" means
electrical transmission and distribution facilities, including transmission and distribution lines, service lines and conductors, substations, tra
nsformers, switching stations, metering equipment, protection and control equipment, and related equipment and appurtenances, and includes rights-of-way and easements necessary to construct, operate, or maintain the facilities, if the facilities are owned
by an electric utility or a municipality
.
This amendment authorizes an electric utility to assign or allocate a portion of the electric utility's costs associated with the cost of electrical infrastructure to general utility system improvements if (i) the associated improvements include improvem
ents beyond those necessary to delivery electric service to the data center; (ii) the associated improvements may be used to deliver electric service outside the data center while continuing to provide the same electric service to the electric utility's e
xi
sting customers; (iii) the costs are incurred in connection with the repair, maintenance, or replacement of infrastructure for which a person other than the electric utility originally incurred the cost of electrical infrastructure; and (iv) the assignmen
t or allocation is made in accordance with the electric utility's contribution-in-aid-of-construction policies, or the electric utility's other policies or practices, governing the assignment or allocation of the costs.
This amendment authorizes an electric utility to reimburse a data center owner or operator for the cost of electrical infrastructure incurred by the data center or operator if (i) the
reimbursement is made in accordance with the electric utility's standard policies or procedures;
(ii) the
policies or procedures apply to customers receiving comparable service from the electric utility;
(iii) the
policies or procedures are not exclusively applicable to data centers;
(iv) the policies
or procedures do not res
ult in more favorable reimbursement to the data center than to other customers receiving comparable service; and
(v) the reimbursement
does not cause existing customers to incur a rate increase.
INDEPENDENT POWER PRODUCERS
This amendment authorizes a data center to purchase and receive electric energy, capacity, or other related or ancillary services from an independent power producer located in this state, subject to federal law. Such an independent power producer may ge
nerate, store, sell, or deliver electric energy, capacity, or other related ancillary services to a data center through (i) a
direct interconnection behind the data center's meter if the data center does not take service from an electric utility;
(ii) a
dir
ect interconnection behind the data center's meter with the written approval of the applicable electric utility if the data center takes service from an electric utility; or
(iii) access
to transmission or distribution facilities owned or operated by one (1) or more electric utilities or the Tennessee valley authority.
As used in this amendment, "independent power producer"
means an individual, partnership, cooperative, association, corporation, joint stock company, limited liability company, or other entity, including the entity's lessees, trustees, or receivers appointed by a court, that
meets all of the following requirements:
Owns, operates, manages, or controls, within this state, a facility, system, plant, or equipment used to generate or store electric energy
.
Sells, or agrees to sell, electric energy, capacity, or other related or ancillary services from the facility, system, plant, or equipment pursuant to one or more written agreements with one or more of the following (i) a
data center owner or operator for the end-use consumption of the electric energy, capacity, or other related or ancillary services; or
(ii) a
wholesale purchaser of the electric energy, capacity, or other related or ancillary services, including an electric utility or the Tennessee valley authority
.
Does not include an individual or entity that holds out electric energy, capacity, or other related or ancillary services for sale to a customer other than a data center owner or operator or a wholesale purchaser.
APPLICABILITY
This amendment applies to conduct occurring and contracts entered into, amended, or renewed on or after July 1, 2026.
AMENDMENT #2
c
hanges this bill's effective date from July 1, 2026, to upon becoming a law.
Current Bill Text
Read the full stored bill text
SENATE BILL 2128
By Taylor
HOUSE BILL 1847
By Butler
HB1847
009419
- 1 -
AN ACT to amend Tennessee Code Annotated, Title 5;
Title 6; Title 7; Title 13 and Title 65, relative to data
centers.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 13, is amended by adding the following
as a new chapter:
13-12-101.
As used in this chapter:
(1) "Cooling equipment" means cooling systems, cooling towers, and
other temperature control infrastructure used primarily for and necessary to the
operation of a data center;
(2) "Cost of infrastructure" means:
(A) All costs that may be capitalized under generally accepted
accounting principles for purchasing, constructing, installing, and
equipping infrastructure; and
(B) The fees or costs imposed by a municipality or utility service
provider:
(i) Related to the construction or installation of
infrastructure; or
(ii) As a condition to the delivery of utility services to the
data center;
(3) "Data center" means a building, either newly constructed, expanded,
or remodeled, that primarily contains electronic equipment used to process,
- 2 - 009419
store, and transmit digital information, and environmental control equipment and
cooling equipment necessary to maintain the proper conditions for the operation
of the electronic equipment, including cooling equipment;
(4) "Electric cooperative" means a nonprofit electric cooperative or
electric membership corporation, whether organized or operating under title 65,
chapter 25, that distributes electric power purchased from the Tennessee valley
authority;
(5) "Electric service" means the furnishing of electric power and energy
for lighting, heating, power, or any other purpose for which electric power and
energy can be used;
(6) "Electric utility" means a utility that provides and transmits electricity
to individuals and entities located within the jurisdiction of the utility, including:
(A) A municipal electric authority created pursuant to title 7,
chapter 36;
(B) A municipal electric plant operated pursuant to title 7, chapter
52, part 1;
(C) A public utility, as defined under § 65-4-101, that provides
electricity;
(D) The electric utility of a county, metropolitan government,
municipality, or incorporated town or city; and
(E) An electric cooperative;
(7) "Infrastructure" means the streets, roads and road access, bridges,
and sidewalks, and the water, wastewater, natural gas, electric, electric
transmission lines, substations, and transformers, telecommunications, fiber optic
- 3 - 009419
connections, and storm water facilities, required for the development and
construction of a data center, and benefitting the data center;
(8) "Local government" means a county, metropolitan government,
municipality, city, or other political subdivision of this state;
(9) "Other commercial or industrial customer" means an electric utility
customer that is:
(A) Classified as a commercial or industrial customer; and
(B) Not a data center; and
(10) "Public electric utility" means a public utility, as defined under § 65-
4-101, that provides electric services.
13-12-102.
(a) The owner or operator of a data center, including a proposed data center or
an existing data center seeking expansion, shall pay for the full cost of infrastructure
needed to support the data center, including expansions or upgrades to existing utility
infrastructure necessary to both support the proposed or existing data center and
continue providing the same services to the utility's existing customers.
(b) Subsection (a) does not prohibit a local government, the state, or a utility
from entering into an agreement regarding infrastructure needed to support the data
center; provided, that the agreement does not allow the cost of infrastructure to be paid
for by an entity or individual other than the owner or operator of the data center.
13-12-103.
(a) An electric utility shall:
(1) Conduct the electric utility's ratemaking to ensure that the cost of
infrastructure needed to support provision of electric services to a data center,
including a proposed data center or an existing data center seeking expansion,
- 4 - 009419
and provision of electric services to such data center, is paid solely by the owner
or operator of the data center; and
(2) Not raise the rate charged to residential customers or other
commercial or industrial customers due to increased electric demand caused by
a proposed data center, existing data center, or expansion of an existing data
center.
(b) In addition to the requirements of subdivisions (a)(1) and (a)(2), an electric
utility shall not distribute the cost, or otherwise require an affected electric membership
or power distribution group or organization to pay, for the cost of infrastructure or electric
demand caused by a proposed data center, existing data center, or expansion of an
existing data center.
(c) Notwithstanding § 65-4-115, § 65-4-122, or another law, an electric utility
may create a new customer class for a data center if necessary to effectuate this
section.
(d) Before an electric utility imposes a rate increase, the electric utility shall
make:
(1) A written finding that the rate increase is not attributable to the data
center; and
(2) The written finding described in subdivision (d)(1) publicly available.
(e) A residential or other commercial or industrial customer, or electric
membership or power distribution group or organization, that believes that an electric
utility has violated this section may submit a complaint in accordance with the following:
(1) If the electric utility is an electric cooperative or public electric utility,
to the Tennessee public utility commission; or
- 5 - 009419
(2) If the electric utility is a county-owned, municipal-owned, or
metropolitan-owned utility that provides electric services to the public, to the
utility's governing board, or, if there is no designated governing board for the
utility, to the local government that owns or operates the electric utility.
SECTION 2. This act takes effect January 1, 2027, the public welfare requiring it, and
applies to conduct occurring and contracts or agreements entered into, amended, or renewed
on or after that date.