Knox News: TVA could raise data centers' rates
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TVA could increase electricity rates for heavy users like data centers
Knoxville News Sentinel
Feb. 4, 2026, 5:08 a.m. ET
- The Tennessee Valley Authority is considering higher electricity rates for heavy users like data centers.
- Data centers account for nearly 20% of the power demand from TVA's industrial customers.
- The proposal aims to prevent rate increases for other residential and business customers.
- Discussion of the new rate class was previously delayed due to a lack of a quorum on the TVA board.
Tennessee Valley Authority leaders could soon propose charging higher rates for heavy electricity users, as data centers now make up nearly a fifth of all power demand from TVA's industrial customers.
The proposed changes were discussed during the utility's quarterly webcast Feb. 3 as TVA provided financial updates to investors.
TVA, the largest public power provider in the United States, hasn’t actively courted new data centers since 2023. But new developments are changing the electricity landscape, including work being done in West Tennessee by xAI with the support of Memphis, Light, Gas & Water, one of 153 local utilities that buys power from TVA.
“This is why we'll be working with our board to ensure that serving new data centers does not create rate pressure on other electric customers and consumers across the Tennessee Valley region,” TVA CEO Don Moul said during the webcast.
The multibillion-dollar xAI project alone could go from using 150 megawatts per month to 300 in its initial phases.
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Though the federal government created TVA, the utility is funded by ratepayers – that is, the millions of residential and industrial customers buying its electricity. The rates they pay are set by the TVA Board of Directors.
TVA board members will hold their next meeting in Kentucky on Feb. 11. It will be the board’s first meeting in nearly a year with enough members to conduct regular business.
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TVA rate class discussions shelved by Trump board firings
TVA provides power for nearly 10 million people, and data centers are partly accountable for an energy demand spike in the utility's seven-state service region. Other factors driving up demand include population growth, with more people moving to the South from other parts of the U.S.
TVA began pursuing a new rate class for data centers as companies like xAI started making moves in Tennessee, but a year of upheaval in TVA’s leadership meant those plans were shelved.
TVA’s board of directors elevated Moul to CEO in early 2025 after his predecessor, Jeff Lyash, announced his retirement earlier that January. Shortly after Moul took his new role, President Donald Trump fired several Biden-appointed directors, stripping the board of the quorum needed to set policy, approve a budget, change base rates or create new rate classes.
The new class would have taken effect after a period of conversations with data center owners, Knox News reported in 2025.
In December, members of the U.S. Senate approved four board nominees – Jeff Hagood of Knoxville, Mitch Graves of Memphis, Randall Jones of Alabama and Arthur Graham of Florida – for director positions. All four took their seats on the board in January.
With a new board in place, Moul said, the utility is back to working on topics like “electric rate fairness."