US utility Tennessee Valley Authority (TVA) has imposed higher rates on data centers seeking a grid connection across its service area, which stretches from southern Virginia to central Mississippi.

The TVA board said that it had approved a series of actions "to protect consumers, ensure long-term reliability and strengthen the nation’s energy security as demand for electricity accelerates across the Valley region and the country."

The board approved a series of recommendations within the utility’s Integrated Resource Plan, with the new wholesale rate structure aimed at keeping residential rates low while continuing to meet growing data center demand.

The new rules will see data centers removed from the utility's manufacturing service rate customer class, which will lead to approximately 10 percent higher charges for the power they use. The new rate will be phased in for existing customers over the next three fiscal years. New data center developments will face upfront capacity commitment charges of about $1.5 million per megawatt, paid over three to five years.

“That’s really to reflect the incremental capacity that needs to be added to the grid that’s not covered in the base rate,” TVA CEO Tom Rice said during a news conference following the vote.

The IRP suggested that TVA’s service area would require 11-32GW of additional generation capacity to meet growing demand in the coming years. In early 2026, data centers accounted for approximately 20 percent of all power demand from TVA’s industrial customers, with that volume expected to double by early February.

“Affordability and reliability remain at the center of every budget decision we make,” said Rice. “As electricity demand grows, the FY 2027 budget strengthens TVA’s ability to add new capacity, support America’s energy and innovation leadership, and ensure Valley families and businesses continue to have reliable, affordable power for decades to come.”

TVA also recently signed up to President Trump’s voluntary Ratepayer Protection Pledge. Signatories to the pledge commit to five obligations: they must build, procure, or purchase new power supply; cover the full cost of any new infrastructure needed to deliver that power; pay agreed rates regardless of actual electricity use; invest in local hiring and workforce training; and work with grid operators to bolster grid resilience, including by making backup generation available when supply runs tight.

The pledge is part of the federal government's efforts to mitigate the impact of data center growth on electricity bills. Several states have already enacted legislation to this effect at a state level. These include Ohio, North Carolina, and Virginia, among others.