Senate committee approves data-center bill requiring operators to bear local electrical upgrade costs

The Senate Finance Committee voted to recommend SB 2128 to the calendar after adopting a House effective-date amendment. The bill clarifies that cities, counties and utilities—including co-ops and public utilities—cannot use ratepayer money to cover costs required by large data centers unless upgrades benefit other ratepayers or follow normal cost-allocation rules.

Sponsor (Sen. Tyler/Taylor in committee remarks) described the bill as protecting utility ratepayers from higher bills caused by rapid data-center growth. "Data centers that use 50 plus megawatts of power in their first 3 years would be required to pay the full cost of any new or upgraded electrical infrastructure that's needed by them," the sponsor said.

Supporters argued the statute gives local governments and utilities a clear statutory pathway to require proportionate cost-sharing or full cost responsibility from very large customers. Senator Waller told the committee smaller communities contemplating data centers "are very concerned about the impact on local rate payers" and praised the bill's requirement that data centers bear infrastructure costs when those upgrades primarily serve the data center.

Committee members discussed technical issues including whether data centers may buy power directly from independent producers, continuing local revenue streams (for example, taxes tied to power sales), and how negotiations with TVA or utilities would address any local tax or revenue-sharing effects. The bill did not change local tax sharing rules, a sponsor said.

With the amendment adopted, the committee recommended SB 2128 for passage to the calendar (reported vote: 10 ayes, 1 no).