TVA welcomes data centers, but at a price

TVA welcomes data centers, but at a price

BPR News |
By
Katie Myers

Published August 25, 2026 at 4:45 PM EDT

A TVA board meeting in Norris, Tennessee in May 2023.

This coverage is made possible through a partnership between BPR and Grist , a nonprofit environmental media organization.

The Tennessee Valley Authority, which covers seven states in the Southeast including a portion of western North Carolina, just passed a new rate for data centers.

At the latest quarterly board meeting for the utility, held in Memphis, Tennessee, the board passed the rate change, while moving forward with its Integrated Resource Plan, a document that outlines its approach to energy through 2050.

This document has been the subject of contention from environmental groups throughout the Tennessee Valley and the utility's seven-state footprint, which includes North Carolina. The plan drops most of TVA's already limited investment in solar power and all of its planned investment in wind energy, and instead focuses on coal, gas and nuclear power.

The rate change, which goes into effect on October 1, 2026, is expected to be billed at about 10%, and phased in over three years.

Spokesperson Scott Brooks says the utility has been successful in its efforts to prevent a new rate increase for electricity customers.

"One of TVA's missions is economic development," Brooks said. "We try to balance that line where we welcome economic development, but, but not at the cost or the expense of people who pay their power bills."

The change includes a new upfront cost for large customers. The utility expects to see its electric load grow to between 9 and 33 gigawatts of power by 2040.

According to reporting from WPLN, data centers comprised 10% of the electric load for TVA last year. TVA board members are expecting this growth to continue, and have justified recent changes in direction as a means of keeping up with this demand.

As the utility delays the closures of existing coal plants, while investing in a new gas plant in Cheatham County, board members have defended these moves as necessary in order to ensure reliable growth. However, critics say it lengthens their commitment to fossil fuels, which are the main cause of climate change. It also may cause a financial burden – coal plants are expensive to maintain, with the Cumberland Fossil Plant likely costing upwards of $730 million in maintenance costs, by the TVA's own estimate.

"You're about to be run over by a truck, and instead of taking a big step to get out of the way, TVA took a tiny step that basically still leaves you in the path," said Stephen Smith, executive director of the Southern Alliance for Clean Energy, a nonprofit environmental research organization.

Southern Alliance for Clean Energy published an op-ed last week arguing that these choices, made in the name of accommodating anticipated surges in electric load, mean that costs may still be passed onto customers. According to the organization's research analyst Maggie Shober, some questions remain to be answered about the change. In the board meeting, the TVA did not give details about whether the change applies to all large customers or just data centers, how it would handle the problem of a stranded asset should a data center close up shop, or how the cost of these data centers might be determined.

"Making them only pay 10% more is no guarantee that those costs are not going to be spread onto the customers," Stephen Smith said.