Tennessee has joined a growing list of states drawing a hard line between big tech’s energy appetite and the wallets of everyday utility customers. Governor Bill Lee signed HB 1847 into law last month, blocking utility companies and municipalities from passing data center electricity and infrastructure costs onto the general public.
The bill was sponsored by Republican Senator Brent Taylor of Memphis and State Representative Ed Butler of Rickman County. It sets a clear threshold: any data center pulling more than 50 megawatts from the grid must cover all costs tied to that demand, including any infrastructure upgrades or grid expansion needed to support it. Ratepayers and local governments are off the hook.
The legislation came into sharper focus because of xAI’s footprint near Memphis. The company’s first facility, Colossus 1, holds the title of the world’s largest supercomputer. Its second, Colossus 2, is set for a half-billion dollar expansion. Residents across the country have raised concerns that data centers drive up local electricity costs almost immediately after coming online, and Tennessee lawmakers responded.
Tennessee is not alone. According to lobbying research firm Multi State, roughly one-third of all energy policy bills related to data centers passed this legislative cycle include ratepayer protection provisions that require data centers to fully fund their energy demand and any related grid work.
Florida’s SB 484 mirrors Tennessee’s 50-megawatt threshold. South Dakota set its limit at 10 megawatts, Nebraska at 20. Alabama set the highest bar at 150 megawatts, but goes a step further by requiring data center contracts to actively benefit other retail utility customers. South Dakota’s SB 135 also requires power companies to maintain separate terms for data centers and ensures those facilities pay up any time their usage materially reduces the grid’s available capacity.
As AI infrastructure buildouts accelerate across the country, state legislatures are moving to make sure the financial weight of that growth lands on the companies driving it, not on residents who had no say in where those facilities were built.