Southern Alliance calls data center moratorium

by: Drea Peebles

Posted: Aug 19, 2026 / 06:37 PM EDT

Updated: Aug 19, 2026 / 06:43 PM EDT

KNOXVILLE, Tenn. (WATE) — As East Tennessee continues to add homes, businesses and new development, another growing source of electricity demand is putting added attention on the region's power grid: data centers.

The Southern Alliance for Clean Energy is calling for an 18-month moratorium on new large data centers across Tennessee and four other Southeastern states, arguing communities need more time to establish protections involving electricity costs, infrastructure, water use and transparency.

The call comes as the Tennessee Valley Authority said electricity demand in the region continues to increase, primarily because of population growth and data center growth. TVA's Board of Directors is scheduled to meet Thursday in Memphis, where members are expected to consider several issues tied to future power demand, including the utility's 2026 Integrated Resource Plan and arrangements involving electric loads greater than 100 megawatts.

Stephen Smith, executive director of the Southern Alliance for Clean Energy, said his organization is particularly concerned about utilities building expensive infrastructure around projected data center demand that may not ultimately materialize.

"If TVA has to build a giant power plant to serve this load and the company that they're designing it for goes away, what are they going to do with that power? Who's going to pay for that power?" Smith said.

Smith described the data center market as highly speculative and said his organization wants utilities and large-load customers to be more transparent about who is responsible for the cost of new power plants and other infrastructure.

"If you have stranded infrastructure that is built to serve the load and the load goes away in the Tennessee Valley, ultimately you and I end up paying for it," Smith said.

Locally, Knoxville Utilities Board said three data centers currently operate within its service territory. The largest is contracted to draw up to 73 megawatts of electricity.

For comparison, if 73 megawatts were used continuously for a full year, that would amount to roughly the annual electricity consumption of more than 60,000 average U.S. homes, based on U.S. Energy Information Administration data showing the average household uses about 10,500 kilowatt-hours each year. Actual usage by the data center may be lower than its maximum contracted demand.

KUB said, however, its existing data centers have not left residential customers paying for the local infrastructure needed to serve them.

According to the utility, each of the three data centers paid upfront for all electric-system upgrades required for its service. KUB said it requires any developer or large customer to pay for infrastructure upgrades necessary to meet that customer's specific needs so Knox County residents and small businesses do not subsidize private industrial growth.

"We believe that KUB is enforcing on a local level," Smith said. "But what we don't know is how TVA is holding these large loads accountable to make sure that the large load is going to be the ones paying for it, not you and I."

KUB also said its larger data center customers operate under "interruptible" contracts, meaning they are required to reduce electricity use when the grid is under significant strain. During recent extreme weather events, KUB said curtailments from interruptible customers reduced the utility's total electric load by approximately 5%.

KUB purchases nearly all of the electricity it distributes from TVA, making the distinction between local infrastructure costs and the broader regional power system important. KUB said TVA began discussions with local power companies earlier this year about ensuring data centers pay their fair share for power, and KUB is participating in those discussions.

Smith said the Southern Alliance for Clean Energy's proposed moratorium is not intended to permanently ban data centers. Instead, the group wants additional transparency and safeguards in place before more large facilities are approved.

"We need to slow down, make sure we're making good decisions, and they're giving us the answers and being transparent," Smith said.

TVA did not have anyone available for an interview Wednesday ahead of Thursday's board meeting. A TVA spokesperson told WATE the questions surrounding data centers and growing electricity demand are among the issues expected to be discussed by the board.

TVA said it plans to release additional information following Thursday's meeting.