Memphis data centre moratorium: Colossus 1 and Southaven turbines remain beyond the pause
The council delayed its data centre moratorium for 12 months by 7 to 5, the second postponement. The draft exempts Colossus 1 and cannot reach the 1.2 GW Southaven plant that a council presentation says is dedicated to Colossus 2. Memphis may replace the pause with a megawatt threshold and fiscal terms by 22 December.
The Memphis City Council spent Tuesday night arguing about whether to stop new data centres for a year, and then declined to decide. According to Fox News, the council voted 7 to 5 on 6 October to push the final vote on the moratorium to 20 October, the second time the vote has slipped. The quarrel drew its energy from Elon Musk's xAI, which runs a large computing site in the city. The draft ordinance before the council was written to leave that site alone.
The moratorium is the least consequential of the three proposals before the council. It would stop the city from processing rezoning, site plan, building, grading and land disturbance permits for new data centres within city limits, according to the draft ordinance on the August agenda. It exempts existing lawfully operating centres that do not expand their footprint, electrical demand, utility capacity or operational intensity, as well as applications that have already vested. Existing sites that stay within those limits would continue operating.
That describes Colossus 1. A University of Memphis deck presented to the council in September puts its demand at 300 MW, split between 150 MW from the grid supplied by MLGW and TVA and 150 MW from 15 onsite gas turbines, and says operations began on 1 September 2024. In May, xAI said it had signed an agreement giving Anthropic access to Colossus 1 and its more than 220,000 NVIDIA GPUs. The moratorium leaves all of that running.
The next phase of growth sits further out. A council deck presented on 6 October lists an MZX Tech power facility in Southaven, Mississippi, with 41 gas turbines and about 1.2 GW of capacity, as dedicated generation for xAI's Colossus 2 data center in Memphis. The load sits inside the city and the generation sits across the state line. The Mississippi Department of Environmental Quality's Permit Board issued the turbine permit on 10 March 2026, and an appeal was filed in April. The deck does not say whether Colossus 2 had vested before the ordinance was introduced. If it had, the exemption covers it as well. If it had not, Colossus 2 is the one project the pause could reach, and the turbines would still be out of reach.
That is the jurisdictional gap: Memphis controls what gets built inside the city and can set terms for loads connected to its grid, while Mississippi controls the air permit for the Southaven plant. The same deck places 63.8% of the modelled population exposure in Shelby County, so Memphis bears much of the impact from a facility it cannot approve or reject.
Memphis has noticed. Two other drafts are before the council, and both replace the pause with a regime. The first is a document titled the Strategic Large Load Development and Digital Infrastructure District Ordinance, which it says is meant to replace a blanket moratorium with source neutral, tiered and timed review. It covers facilities of 10 MW or more, and it measures demand before subtracting onsite generation, so a campus cannot shrink below the line by building its own turbines. It adds a recurring fiscal floor equal to the ad valorem equivalent on core computing property and a levy of 0.5% of eligible digital infrastructure spending where the city confers discretionary public value. It also lets a developer supply its own power behind the meter, provided every detail is recorded. The draft is marked as pending legal and council review.
The second, DC Regulation 2026v1, sets 20 MW of projected demand as the line for a large data centre, requires closed loop cooling, steps up renewable matching from 60% towards 100% over 10 years, and treats any expansion that raises demand by 20% or more as a new facility. Existing centres must file reports within 12 months. Its recital assumes a temporary moratorium has already been enacted, which has not happened.
Together, the drafts focus Memphis's leverage on electricity demand and revenue, where tiered rules could do more than a blanket pause. A pause also risks sending builders to nearby DeSoto, Crittenden, Fayette or Tipton counties, as Councilman Jeff Warren told local television. In fiscal 2026, the city collected $3,259,282 in data centre community benefit revenue from one facility in Investment Zone 1, according to a public works presentation. A Tulane Road facility joins the tax base next year. Mayor Paul Young has called for more rules while pointing to the revenue these sites generate.
A deadline also bears on the choice. Tennessee's Public Chapter 1044 of 2026 sets development service deadlines from 1 January 2027, according to the Spinosa draft, and a city that wants discretion over large projects needs its rules in place before the clock starts. A permanent regime delivers that. A one year pause that expires in the autumn of 2027 mostly delays the same decision.
The second postponement makes passage of the August text on 20 October less likely. If the council intended to pass it with a few edits, it could have done so at the first meeting. The 7 to 5 vote shows a divided chamber, and the mayor prefers guardrails to a freeze. Even if the pause passed, Colossus 1 would keep running and the Southaven turbines would remain permitted, leaving the council to take up replacement rules within months.
The details of that text matter more than the headline. A threshold measured gross of onsite generation would catch the next campus whether it draws from MLGW, from its own turbines or from both, and a fiscal floor would set a price for it. A threshold measured net would let developers design around the line. Memphis cannot decide whether the Southaven plant is built, but it can decide what the load it feeds will owe the city. A substitute at the 20 October vote, built on the Spinosa or DC Regulation drafts, would put the council on course to adopt a threshold regime, with existing sites exempt, by its last 2026 meeting on 22 December.