HB 1847

This bill requires the owner or operator of a data center, including a proposed data center or an existing data center seeking expansion, to pay for the full cost of infrastructure needed to support the data center, including expansions or upgrades to ex isting utility infrastructure necessary to both support the proposed or existing data center and continue providing the same services to the utility's existing customers. However, this provision does not prohibit a local government, the state, or a utili ty from entering into an agreement regarding infrastructure needed to support the data center as long as the agreement does not allow the cost of infrastructure to be paid for by an entity or individual other than the owner or operator of the data center. This bill requires an electric utility to do both of the following:  Conduct the electric utility's ratemaking to ensure that the cost of infrastructure needed to support provision of electric services to a data center, including a proposed data center or an existing data center seeking expansion, and provision of electric services to such data center, is paid solely by the owner or operator of the data center.  Not raise the rate charged to residential customers or other commercial or industrial customers due to increased electric demand caused by a proposed data center, existing data center, or expansion of an existing data center. This bill prohibits an electric utility from distributing the cost, or otherwise requiring an affected electric membership or power distribution group or organization to pay, for the cost of infrastructure or electric demand caused by a proposed data cen ter, existing data center, or expansion of an existing data center. However, an electric utility may create a new customer class for a data center if necessary to effectuate this bill. Before an electric utility imposes a rate increase, the electric uti li ty (i) must make a written finding that the rate increase is not attributable to the data center and (ii) must make the written finding publicly available. This bill authorizes a residential or other commercial or industrial customer, or electric membership or power distribution group or organization, that believes that an electric utility has violated this bill to submit a complaint in accordance with eith er of the following:  If the electric utility is an electric cooperative or public electric utility, to the Tennessee public utility commission.  If the electric utility is a county-owned, municipal-owned, or metropolitan-owned utility that provides electric services to the public, to the utility's governing board, or, if there is no designated governing board for the utility, to the local government that owns or operates the electric utility. This bill applies to conduct occurring and contracts or agreements entered into, amended, or renewed on or after January 1, 2027. ON APRIL 21, 2026, THE HOUSE ADOPTED AMENDMENTS #1 AND 2, AND PASSED HOUSE BILL 1847, AS AMENDED. AMENDMENT #1 rewrites the bill to, instead, generally prohibit a municipality or electric utility to pay or absorb the cost of electrical infrastructure incurred to serve a data center. As used in this amendment, "cost of electrical infrastructure"" means the costs, capitalized under generally accepted accounting principles, of purchasing, constructing, installing, or equipping infrastructure that are incurred by a developer, owner, or operator of a data center, a municipality, or an electric utility and t hat would not be incurred but for the actual or expected increase in electric demand resulting from a newly constructed or expanded data center . ""Data center"" means a building that primarily contains electronic equipment used to process, store, or transmit digital information and environmental control equipment necessary to maintain proper operating conditions for such electronic equipment; and is projected to have a peak electric demand of 50 megawatts or more during the first three years of operation. However, ""data center"" does not include a facility owned or operated by this state; or a facility owned or operated by a provider of telecommunications, broadband, internet, cable, mobile, or wireless telecommunications services, or by a broadband internet access provid er, if such facility primarily support network operations or broadband access servers. ""Infrastructure"" means electrical transmission and distribution facilities, including transmission and distribution lines, service lines and conductors, substations, tra nsformers, switching stations, metering equipment, protection and control equipment, and related equipment and appurtenances, and includes rights-of-way and easements necessary to construct, operate, or maintain the facilities, if the facilities are owned by an electric utility or a municipality . This amendment authorizes an electric utility to assign or allocate a portion of the electric utility's costs associated with the cost of electrical infrastructure to general utility system improvements if (i) the associated improvements include improvem ents beyond those necessary to delivery electric service to the data center; (ii) the associated improvements may be used to deliver electric service outside the data center while continuing to provide the same electric service to the electric utility's e xi sting customers; (iii) the costs are incurred in connection with the repair, maintenance, or replacement of infrastructure for which a person other than the electric utility originally incurred the cost of electrical infrastructure; and (iv) the assignmen t or allocation is made in accordance with the electric utility's contribution-in-aid-of-construction policies, or the electric utility's other policies or practices, governing the assignment or allocation of the costs. This amendment authorizes an electric utility to reimburse a data center owner or operator for the cost of electrical infrastructure incurred by the data center or operator if (i) the reimbursement is made in accordance with the electric utility's standard policies or procedures; (ii) the policies or procedures apply to customers receiving comparable service from the electric utility; (iii) the policies or procedures are not exclusively applicable to data centers; (iv) the policies or procedures do not res ult in more favorable reimbursement to the data center than to other customers receiving comparable service; and (v) the reimbursement does not cause existing customers to incur a rate increase. INDEPENDENT POWER PRODUCERS This amendment authorizes a data center to purchase and receive electric energy, capacity, or other related or ancillary services from an independent power producer located in this state, subject to federal law. Such an independent power producer may ge nerate, store, sell, or deliver electric energy, capacity, or other related ancillary services to a data center through (i) a direct interconnection behind the data center's meter if the data center does not take service from an electric utility; (ii) a dir ect interconnection behind the data center's meter with the written approval of the applicable electric utility if the data center takes service from an electric utility; or (iii) access to transmission or distribution facilities owned or operated by one (1) or more electric utilities or the Tennessee valley authority. As used in this amendment, ""independent power producer"" means an individual, partnership, cooperative, association, corporation, joint stock company, limited liability company, or other entity, including the entity's lessees, trustees, or receivers appointed by a court, that meets all of the following requirements:  Owns, operates, manages, or controls, within this state, a facility, system, plant, or equipment used to generate or store electric energy .  Sells, or agrees to sell, electric energy, capacity, or other related or ancillary services from the facility, system, plant, or equipment pursuant to one or more written agreements with one or more of the following (i) a data center owner or operator for the end-use consumption of the electric energy, capacity, or other related or ancillary services; or (ii) a wholesale purchaser of the electric energy, capacity, or other related or ancillary services, including an electric utility or the Tennessee valley authority .  Does not include an individual or entity that holds out electric energy, capacity, or other related or ancillary services for sale to a customer other than a data center owner or operator or a wholesale purchaser. APPLICABILITY This amendment applies to conduct occurring and contracts entered into, amended, or renewed on or after July 1, 2026. AMENDMENT #2 c hanges this bill's effective date from July 1, 2026, to upon becoming a law."