Communicate, Innovate and Participate are critical themes in the electric utility industry today as we face unprecedented increases in demand for electricity.  As I reflect on 2025 at your Cooperative, I want to touch on how these themes have, and will continue, to impact the Tennessee Valley Authority (TVA) and your Cooperative by focusing on data centers, electric demand and generation across America. 

Data Centers

With the rapid evolvement of Artificial Intelligence (AI), large companies such as Google, Amazon, Microsoft, Oracle and Meta are locating and building data centers throughout America to house the computing power needed for AI technology.  One of the biggest issues facing the electric industry and the United States is how can we lead in AI development and deployment at a time when electric generation and transmission capacity does not currently exist to serve these large electric loads.  Another issue is how can we make sure that the capital needed to build new generation to serve these large loads is not being paid for or subsidized by the everyday rate payer.  To solve these questions, all key parties must participate in developing achievable outcomes.

 In the spring of 2026, nearly every state, including Kentucky, proposed legislation that was aimed at ensuring everyday ratepayers don’t subsidize these large data centers.  In May of 2026, President Trump secured the Ratepayer Protection Pledge, an agreement with major tech companies in which these companies would commit to sourcing 100% of their own energy needs, pay for the infrastructure upgrades needed to the electric grid to serve them, and focus on the communities where they operate. 

As an example of how these tech companies are moving forward, I recently listened to a Google representative who outlined Google’s Commitment Framework that aligns with the Ratepayer Protection Pledge.  In his talk, he noted that Google is committed to paying its fair share for infrastructure to ensure their expansion doesn’t burden local communities or utility ratepayers.  He also introduced their Capacity Commitment Framework, which is a multi-faceted contract and regulatory framework that gives utilities, like TVA and WKRECC, the certainty we need to invest in grid upgrades.  Furthermore, he emphasized that Google would be entering into long-term agreements that ensure the dollars will be available to utilities to pay for these large infrastructure upgrades.     

Electric Demand

There are many reasons why the state legislators and federal government are directly involved in data center growth.  The biggest reason is due to the large amounts of electricity needed to power these data centers.  As an example, the state of Texas has a power grid that has a historical electric demand peak for the entire state of approximately 80,000MW.  These tech companies have put in requests to utilities in Texas for capacity to serve over 400,000MW of new electric load.  Utilities all over the country cannot meet these requests without major generation and transmission system expansions.

Within the TVA footprint there is a data center in Memphis that asked for 300MW of electric generation capacity.  To put that into perspective, the entire WKRECC system demand for electricity is around 200MW.  TVA’s long-standing history of delivering reliable power at affordable rates makes the Valley a highly sought after location for these AI companies.  However, TVA does not have enough generation capacity today to serve these loads.    

Generation

To meet these tech company requests and ensure that the US can be the leader in AI deployment, generation and transmission companies, like TVA, must continue to be innovative when designing new generation sources by maximizing the output and efficiency from these generation sources.   Generation and transmission companies will need to spend $100s of billions of dollars to add new generation and transmission sources to the grid at a time when the capital costs for new generation and transmission are at all-time highs.  Furthermore, utilities must try to expedite the design and build process, which generally takes between 5 and 15 years to complete.  Utilities must continue to add always available power generation sources, like nuclear, coal, and natural gas, to the electric grid.  They must also utilize solar, wind, battery storage and other renewable energy sources.  This “all-in” approach to new generation is the only path forward to meet the electric demand growth in America.     

Summary

West Kentucky RECC had another successful year in serving our members.  Our board, management team and employees are committed to continuing to meet your electric needs safely, reliably and affordably moving forward.  Thank you for your business and support as we continue to serve you.

David Smart 

President & CEO