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HOUSE BILL 2054
By Camper
SENATE BILL 1999
By Lamar
SB1999
010872
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AN ACT to amend Tennessee Code Annotated, Title 7 and
Title 65, relative to energy.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 65, Chapter 4, is amended by adding
the following as a new part:
65-4-601. Short title.
This part is known and may be cited as the "Data Center, Artificial Intelligence,
and Clean Transition Tariff Accountability Act."
65-4-602. Legislative findings and purpose.
(a) The general assembly finds that:
(1) This state is experiencing rapid growth in electricity demand from
large-scale data centers, artificial intelligence (AI) facilities, cloud computing
operations, and crypto-adjacent industries;
(2) These facilities may consume electricity at levels comparable to entire
municipalities, requiring significant new generation, transmission, and distribution
infrastructure;
(3) Absent statutory safeguards, the cost of serving such load growth
may be shifted to residential and small business ratepayers;
(4) Other states have adopted clean transition tariffs allowing large
customers to pay a voluntary premium to support new clean and reliable
generation without impacting other ratepayers; and
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(5) This state's electric system is predominantly served by the
Tennessee Valley authority (TVA), with electricity distributed through municipal
utilities and electric cooperatives.
(b) The purpose of this part is to:
(1) Protect residential and small business customers from rate increases
driven by large corporate energy demand;
(2) Establish a Tennessee clean transition tariff for large energy-intensive
users;
(3) Require large energy-intensive users to fund incremental generation
and grid upgrades proportionate to their usage; and
(4) Preserve grid reliability, affordability, and economic competitiveness.
65-4-603. Definitions.
As used in this part:
(1) "Artificial intelligence" or "AI" means a machine-based system that
can, for a given set of human-defined objectives, make predictions,
recommendations, or decisions influencing real or virtual environments and that
is capable of using machine and human-based inputs to perceive real and virtual
environments, abstract such perceptions into models through analysis in an
automated manner, and use model inference to formulate options for information
or action;
(2) "Clean transition tariff" or "CTT" means a voluntary electricity rate or
rider approved pursuant to this part that allows large energy-intensive users to
procure new, additional clean and reliable electric generation through a premium
charge, without cost-shifting to other customers;
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(3) "Commission" means the Tennessee public utility commission,
created under § 65-1-101;
(4) "Electric cooperative" means an electric cooperative or electric
membership organization organized or operating under chapter 25 of this title;
(5) "Incremental clean power" means electricity generated from new,
additional resources not already included in a utility's existing generation
portfolio;
(6) "Incremental load" means new or expanded electric demand beyond
a facility's baseline demand at the time of initial service approval;
(7) "Large energy-intensive user" or "user" means a single facility or
campus that:
(A) Has a peak electric demand of twenty-five megawatts (25
MW) or greater; or
(B) Is primarily engaged in data processing, AI training, cloud
computing, high-performance computing, or crypto-adjacent operations;
(8) "Local power company" means a municipal electric utility or electric
cooperative that purchases wholesale power from the TVA; and
(9) "Small business" means a business entity, including its affiliates, that
employs fifty (50) or fewer full-time employees.
65-4-604. Creation of a Tennessee clean transition tariff.
(a) The Tennessee public utility commission may approve one (1) or more clean
transition tariffs applicable to large energy-intensive users; provided, that the CTT meets
the requirements described in subsection (b).
(b) A clean transition tariff must:
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(1) Allow a large energy-intensive user to voluntarily procure incremental
clean power sufficient to serve one hundred percent (100%) of the user's
incremental load;
(2) Ensure that generation resources developed under the tariff are new
and additional;
(3) Prohibit the recovery of any costs from residential or small business
customers; and
(4) Be structured to preserve grid reliability and affordability.
65-4-605. Tennessee Valley authority.
(a) This part must not be construed to alter or impair the federal authority of the
Tennessee valley authority; provided, however, that local power companies serving
large energy-intensive users shall ensure that incremental load is served in a manner
consistent with the protections established in this part.
(b) A local power company serving a large energy-intensive user shall:
(1) Require participation in a clean transition tariff or equivalent TVA-
approved rate structure that:
(A) Provides incremental clean and reliable power; and
(B) Prevents cost-shifting to residential and small business
customers; and
(2) Require the large energy-intensive user to bear the proportional cost
of grid upgrades necessary to serve the user's incremental load.
(c) The commission shall coordinate with the TVA and local power companies
to:
(1) Review tariff structures applicable to large energy-intensive users;
(2) Ensure compliance with residential rate protection provisions; and
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(3) Receive annual reporting on large-load impacts and cost allocation.
65-4-606. Grid cost responsibility.
(a) A large energy-intensive user is responsible for the reasonable and
proportional costs of:
(1) Transmission and distribution upgrades;
(2) Substation construction or expansion; and
(3) Grid reliability and resilience investments required to serve
incremental load.
(b) The costs described in subdivisions (a)(1)-(3) must not be recovered from
residential or small business customers.
65-4-607. Ratepayer protection.
Prior to approving service for a large energy-intensive user, a local power
company shall demonstrate that:
(1) Residential and small business customers will not experience a rate
increase due to the user's incremental load; and
(2) All incremental generation and grid costs are fully allocated to the
large energy-intensive user.
65-4-608. Transparency and reporting.
On January 1, 2027, and each year thereafter, the commission shall submit a
report to the members of the senate commerce and labor committee, the members of
the committee of the house of representatives having jurisdiction over utilities, and the
legislative librarian, detailing:
(1) The number of large energy-intensive users served in this state;
(2) Total incremental load added statewide;
(3) Clean energy resources developed under clean transition tariffs;
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(4) Grid investments funded by large energy-intensive users; and
(5) Verified impacts on residential and small business rates.
65-4-609. Rulemaking authority.
The commission may promulgate rules necessary to effectuate this part,
including compliance standards, verification requirements, and reporting procedures.
SECTION 2. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 3. This act takes effect July 1, 2026, the public welfare requiring it, and
applies to all new or expanded large energy-intensive users seeking electric service on or after
that date.