Memphis environmental groups urged officials to deny an electricity deal for xAI, demanded a public review of the project, and said Memphis Light, Gas & Water (MLGW) ratepayers could subsidize some large portions of the infrastructure deal.
Details on the deal that brought the Elon-Musk-founded company to locate its artificial intelligence hub — called the Gigafactory of Compute — to Memphis remain few, even almost two months after its announcement.
A Tuesday letter from the Southern Environmental Law Center (SELC) outlined those knowledge gaps, showed confusion and ignorance on the deal by local leaders, said the facility would cause environmental harm to those in South Memphis, and that MLGW CEO Doug McGowen may have overstepped the boundaries of his position in approving the deal.
The letter was written and sent by the SELC on behalf of the Memphis Community Against Pollution (MCAP), Young, Gifted & Green, Sierra Club Tennessee Chapter, and the Sierra Club Chickasaw Group. SELC said, “many of these members will be directly affected by xAI’s operation and its harmful local consequences.”
The letter was sent to the board of the Tennessee Valley Authority (TVA). SELC said MLGW is requesting TVA to provide xAI 150 megawatts of power. In the letter, SELC argues TVA’s Memphis system is not reliable enough to handle that much new consumption. Also, it said, a deal for the much energy needs more local approvals.
The 150 megawatt demand is enough to power 100,000 homes.
Southern Environmental Law Center
“The xAI facility is demanding a jaw-dropping 150 MW of firm power by the end of 2024,” reads the letter. “To put that demand in perspective, 150 MW is enough electricity to power 100,000 homes. The xAI facility would become MLGW’s largest electricity customer, siphoning five percent of MLGW’s total daily load to power its operations.”
On reliability, the group said that TVA admitted in October that it did not have enough generating and transmission power in the area even before xAI cam knocking. Back then, TVA proposed a new natural-gas-powered generation project here. The project was necessary to “improve the stability of its transmission system in the western portion of Tennessee. In this area, additional resources are needed to ensure that adequate transmission voltages are maintained within the desired limits,” SELC said, citing TVA’s report.
“Overcommitting to industrial load, as MLGW and xAI have requested, could have serious and even life-threatening consequences for residential customers in Memphis.
Southern Environmental Law Center
“In other words, TVA had already identified a reliability concern in the Memphis-area grid, even before factoring in xAI’s load,” SELC said. “Overcommitting to industrial load, as MLGW and xAI have requested, could have serious and even life-threatening consequences for residential customers in Memphis, contrary to the purpose of the TVA Act and the board policy. When TVA cannot meet peak demand, families go without power during increasingly severe hot and cold weather.”
Further, TVA’s gas-powered plants here are cooled with water from the Memphis Sand Aquifer. Higher strains on those plants — like during winter-weather events here in 2022 and 2021 — caused a serious draw on the aquifer and threaten well fields ”that provide drinking water for predominantly Black, low-income South Memphis communities.”
For these reasons and more, the group urged TVA board members to study the impacts of xAI’s supercomputer before agreeing to serve the facility. That study should include impacts to air pollution, climate change, water quality, water quantity and access, environmental justice, and transportation, SELC said.
“It cannot reasonably be disputed that xAI will require TVA to generate additional electricity and add capacity to the system,” the letter said. “TVA must disclose how it proposes to provide power to xAI, analyze alternatives, and study of the same categories of impacts identified in [the proposal for the new gas plant here] before committing to provide power to xAI.”
SELC also argues that the request to serve xAI is premature “because MLGW has not obtained approval from the MLGW Board or [the Memphis City Council] to spend millions of dollars of ratepayer money to subsidize xAI.” MLGW leaders told council members earlier this month that it would pay for $760,000 worth of substation upgrades for the project. Also, the utility will provide xAI a “marginal allowance” to recoup some of the $24 million it will spent o build a new, $24 million substation, meaning a big break on the company’s power bill.
”Thus, according to MLGW’s presentation [to the council], it seems that over the next few years, ordinary MLGW ratepayers will be subsidizing millions of dollars in infrastructure investments required to serve xAI, both directly and through bill credits to xAI,” the letter said.
Despite this “apparent massive commitment of ratepayer funds to subsidize xAI’s infrastructure needs,” neither the council nor the MLGW board was aware of the xAI project until it was announced on June 5,” SELC said.
Further, the group said MLGW board members weren’t even aware of MLGW’s request to serve xAI with more power from the TVA as late as two weeks ago. For proof, SELC cited an MLGW board meeting on July 17 in which MLGW board member Mitch Graves said, “On the xAI stuff…I wasn’t aware…that TVA’s got to approve something… hadn’t heard that anywhere…what is that they need to approve?”
“On the xAI stuff…I wasn’t aware…that TVA’s got to approve something… hadn’t heard that anywhere…what is that they need to approve?”
SELC citing MLGW board member Mitch Graves
SELC said McGowen negotiated this deal with xAI without oversight from his board or the city council. Doing so, the group said, is a violation of the charters of the council and the board.
”Proper review by the MLGW board and city council is essential because MLGW faces significant operational constraints that directly affect the Memphis coalition’s members’ access to electricity,” the letter said. ”MLGW must give the MLGW board and city council their charter-given right to evaluate whether it is in the best interest of MLGW ratepayers to subsidize millions of dollars of infrastructure investment in xAI over the next two years, while at the same time struggling to keep the lights on and provide accurate billing statements to residential customers.
”The TVA board should not consider the pending request until MLGW obtains required local approvals.”