Requires data center owners to pay full cost of necessary support infrastructure.

This bill requires that any new or expanding data center in Tennessee bear the full financial responsibility for all public infrastructure—roads, bridges, utilities, cooling systems, fiber connections, and the like—needed to serve it. Under the new chapter added to Title 13, “infrastructure” costs are defined broadly to include both capitalized expenses (per GAAP) and fees imposed by municipalities or utilities. Data center developers cannot shift those costs onto taxpayers, neighboring ratepayers, or other commercial and industrial customers.

Electric utilities must structure their rates so that data centers alone pay for the additional generation, transmission, substation, and distribution upgrades triggered by their load. Utilities are expressly forbidden from raising rates on residential or other business customers to cover data-center-related costs. If necessary, utilities may even create a separate “data center” customer class. Any rate increase must be accompanied by a publicly posted finding demonstrating it is unrelated to data-center demand. Aggrieved customers have a right to lodge complaints with the Tennessee Public Utility Commission or with the governing board of a municipal or cooperative utility.

By taking effect January 1, 2027, this measure clarifies that local governments and utilities may still negotiate cost-sharing agreements—but only where the data center owner remains the ultimate payer. Fiscal analysts estimate that shifting tens of millions in infrastructure expenditures back onto private developers will save taxpayers and existing ratepayers at least $10 million statewide over time.