Data Centers & Public Utilities
KUB exists to serve its customers as a trusted partner and steward, providing industry-leading energy, water, and fiber optic services. As a public, not-for-profit utility, KUB is committed to safe, reliable, and affordable services that enhance the quality of life in East Tennessee. This mission guides KUB’s approach to responding to utility service requests for new customers, including data centers.
As communities across the nation are having conversations about the local impact of large data centers, KUB remains committed to protecting the interest of its ratepayers. Additional detailed information is below.
Does KUB actively recruit data centers to the area?
No, KUB does not actively recruit data centers to the area. KUB does occasionally receive requests from developers looking to site a new data center.
Can KUB refuse to serve these facilities?
KUB is required to offer fair, reasonable, and uniform treatment of customers by rate class. Customers are required to meet all standards for establishing service and to pay for necessary upgrades to serve their specific utility service needs.
KUB can refuse service in the event of inadequate system capacity and/or non-compliance to standards for establishing service.
Yes. KUB has a long legacy of protecting East Tennessee’s natural resources in relation to energy, water, and fiber services. KUB supports regulations by other government entities to guide the development, siting, and zoning for data centers in the communities we serve.
Is KUB concerned about the possibility of large data centers coming to the area?
KUB takes seriously its responsibility to provide high-quality, reliable service to all customers. Any possibility of a large data center coming to KUB’s service area would trigger KUB’s evaluation process to determine feasibility. Through this process, KUB would ensure current customers are not negatively impacted with costs being passed on to them or decreased quality and reliability of their utility services.
Are there data centers on KUB’s system today?
KUB is aware of three data centers in our service territory.
Are local data centers significant energy users?
The three data centers currently in KUB’s service area have a range of energy usage. The largest of the three is contracted to draw up to 73MW of power. By comparison, other communities across the country have seen development of much larger “hyperscale” facilities that can draw over 150MW of electricity.
KUB has not received any recent requests to evaluate very large, hyperscale data center sites for utility service.
How do the area’s existing data centers impact KUB electric rates?
Because data centers provide a high, consistent demand for power, they allow KUB to spread fixed infrastructure costs across more units of electricity. This generates revenue that helps mitigate rate increases while still maintaining infrastructure assets that serve all customers. As a not-for-profit public utility, KUB invests all revenues back into the systems that serve its customers.
How does KUB limit risk to ratepayers of data centers and other large industrial users?
KUB requires that any developer, data center or otherwise, pay for infrastructure upgrades required for their utility service needs. This ensures that Knox County residents and small businesses do not subsidize private industrial growth.
Each of the three data centers currently located within KUB’s service area paid upfront for all electric system upgrades required to meet their utility needs.
Before any approval is granted, all new loads are evaluated carefully to confirm that they do not raise costs for other customers.
Do the existing data centers in Knox County strain the electric grid during extreme weather?
No. KUB’s larger data center customers are on "interruptible" contracts. This means they are contractually obligated to scale back power usage when the electric grid is strained, such as during extreme temperatures. KUB holds all interruptible customers accountable to these requirements to maintain service reliability for other customers.
For example, during Winter Storm Elliott in 2022, large industrial customers with interruptible contracts were curtailed before outages affected other KUB customers.
During more recent extreme weather events, power curtailment by interruptible customers reduced KUB’s total load by approximately 5%, helping stabilize the grid for every KUB ratepayer.
Would it be better for ratepayers if data centers operated “off-grid” and provided their own energy?
Not necessarily. Because data centers provide a high, consistent demand for power, they allow KUB to spread fixed infrastructure costs across more units of electricity. This generates revenue that helps mitigate rate increases while still maintaining infrastructure assets that serve all customers. When data centers connect to the grid under a contract, KUB is able to enforce contractual obligations to protect ratepayers.
In other locations, some off-grid data centers generate their own electricity using large generators. These can create additional noise and pollution concerns and may pose additional challenges for local and state environmental regulators.
Are local data centers significant water users?
Existing local data centers are not large users of KUB water. Their KUB water usage is typically less than a large retail store. KUB’s treatment facility can produce nearly twice as much as is needed on an average Knoxville day.