TVA joins the ranks of utilities telling its customers: “Data centers are paying their fair share, just trust us!” The utilities are hoping nobody is interested or able to look under the hood to verify for themselves.
The TVA Board just approved a data center rate, and all the public knows about it is one slide with seven bullet points. Key information to answer the question of whether or not ratepayers will be protected from higher bills is missing completely from the slides and presentation, and not a single Board member asked a question before voting unanimously to approve the rate. What are these regulators good for?
What is missing?
- How does TVA define a data center? Does this rate apply to large loads above a certain size, or just data centers?
- What, if any, is the contract minimum for these customers? If they leave their contracts early, what if any exit fees to cover stranded assets will they have to pay? One of the key risks of data center load growth is that its permanency is uncertain. If TVA builds 50-year infrastructure to serve the load and the data center only operates 5 years before closing, the rest of us customers will be stuck paying for that infrastructure on our bills for the next 45 years.
- How was the cost to serve these data centers determined? Did TVA perform a cost of service study, and if so will that study ever see the light of day? What costs are included in the cost to serve: just new power plants or a portion of existing power plants? Transmission upgrades or just interconnection facilities?
TVA is planning to spend $13.5 billion over the next 3 years to meet load growth, most of which is data centers. We the ratepayers deserve more transparency to determine for ourselves whether TVA’s new rate structure is actually enough to make data centers pay their fair share. TVA might as well have an NDA (non-disclosure agreement) set up between its staff and Board members. Just as it is inappropriate for local and state elected officials to sign NDAs when discussing data center developments, utilities should not redact the relevant information to the public when setting rates for data centers.
What we do know
Very little. There is a new rate for data centers, existing and “in-flight” data centers will have 3 years to be phased into the new rate, the new rate will cost data centers about 10% more than they would have paid if this change wasn’t made, and there’s an additional charge for loads over 5 MW. That’s all the information out there about this rate schedule that the Board has already approved.
Talk is Cheap, Until it isn’t
TVA staff and Board members bragged that TVA signed the federal administration’s “Ratepayer Protection Pledge” as if that pledge is worth anything. There is nothing stopping entities from signing that pledge and doing whatever they would have done anyway.
Affordability of energy bills isn’t just a political hot topic deserving of some lip service at a public meeting. TVA has a real opportunity to protect ratepayers and leverage data center investments toward a grid that is cleaner, more reliable, and more affordable over the long term. However, all we get are some words on a slide, a unanimous vote, and no ability for advocates or the public to engage. TVA should immediately release the new data center rate schedule, the cost of service study it’s based on, and all studies and workpapers used to develop the rate schedule. Then we can determine if it’s legit, or just another utility claiming data centers are paying their fair share while not protecting ratepayers.
SACE is calling for a moratorium on data center development so we can solve these thorny issues in a transparent and fair manner. This is too important to rush or decide behind closed doors.
