State Senator Brent Taylor (R-Memphis) on Thursday submitted legislation that would require artificial intelligence (AI) companies to foot the bill for the infrastructure needed to support data centers in Tennessee, and would also prohibit power companies from raising rates for residential customers due to increased demand from AI data centers.
Senate Bill (SB) 2128 would require owners of data centers to pay the “full cost” of whatever is needed to accommodate their facilities, including existing electrical lines, substations, and transformers, as well as upgrades, expansions, or improvements made for their operations.
It also blocks AI companies from distributing the cost for upgrades to, “an entity or individual other than the owner or operator of the data center,” blocking any attempt by AI companies to distribute costs.
The legislation additionally requires power companies to separate AI companies from its other customers, and blocks them from raising rates due to increased demand from data centers, declaring that electric utilities shall not, “raise the rate charged to residential customers or other residential or industrial customers due to increased electric demand caused by a proposed data center, existing data center, or expansion of an existing data center.”
Taylor’s bill would also require power companies to issue public declarations that future rate hikes are not related to AI data centers, and empowers customers who believe a company violated the legislation to submit a complaint to the Tennessee Public Utility Commission.
In the Tennessee House of Representatives, the legislation is sponsored by State Representative Ed Butler (R-Rickman). The legislation cleared its first procedural hurdle in the House, but has yet to advance in the Senate.
The legislation comes weeks after State Representative John Ray Clemmons (D-Nashville) and State Senator Jeff Yarbro (D-Nashville) introduced their own legislation targeting AI data centers last month. Those bills, SB 1832 and House Bill (HB) 1461, would require data center operators to “devote 50 percent of the computing and data processing output of the facility for a public benefit.”
In their legislation, the Democrats define a public benefit as, “a positive material effect or a reduction in negative material effect on individuals, businesses, and communities in this state.”
Elon Musk’s xAI, whose supercomputer is located in Memphis, last year received approval to install permanent natural gas turbines to power its facilities. It also announced plans to build an 88-acre solar power plant that will eventually generate 10 percent of the company’s energy needs.
– – –
Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
