Kentucky communities push back as state energy group says cheap power could fuel a data center boom

A new Kentucky energy report argues that the state's low-cost electricity and available land make it an attractive place for future data center projects, even as opposition to proposed facilities grows in communities across the commonwealth.

What's happening?

In a 20-page analysis, the Energy Planning and Inventory Commission said Kentucky could draw hyperscale data centers without leaving current utility customers unprotected, according to the Kentucky Lantern.

"This report is not about whether Kentucky should recruit data centers. That is a decision local officials and local communities, economic developers will make themselves," said Eric King, Executive Director of EPIC. "Kentuckians deserve confidence that growth can occur while existing customers remain protected."

The report arrives as utilities say up to 30 data centers may be eyeing Kentucky, a prospect that could sharply raise electricity demand if several projects are built.

Lawmakers said they are still weighing whether additional protections are needed.

"We're in a learning position, and I think we're still taking in information to figure out if there is a need for it or not," said Senator Robby Mills. "We want to make the right decision. We want to protect ratepayers."

Why does it matter?

A major source of concern is the sheer scale of hyperscale data centers, which can require huge amounts of electricity and water and have prompted objections in several Kentucky communities.

State Representative Adam Moore said the process has unfolded like the "wild west," faulting local governments for negotiating with developers under nondisclosure agreements that keep important project details out of public view.

"The people who live in those communities feel like it's so underhanded because there is no transparency to it," he said.

The issue is also closely tied to AI and the energy grid. Data centers increasingly support AI tools and cloud computing, and while AI can provide real benefits — such as helping utilities forecast demand and optimize cleaner energy systems — the infrastructure behind those tools can also drive up electricity and water use.

Beyond that, the rapid expansion of these facilities can raise security and misuse concerns, and it could leave households paying more if costs are shifted onto regular customers.

EPIC's analysis points to Ohio as an example of why states may want cost-allocation rules in place early. Electricity bills there have risen sharply, and debate continues over how much data centers may have contributed.

What's being done?

So far, Kentucky has not passed a law specifically addressing the environmental or utility-customer effects of hyperscale data centers.

One Republican-backed bill approved by the House this year would have required utilities to absorb infrastructure costs tied to data centers rather than passing them on to other customers, but it died on the final day of the legislative session, the Kentucky Lantern reported.

Senator Robby Mills and Senator Steve West said the proposal largely ran out of time.

"Sometimes it's okay to take a step back and let the issue kind of percolate through the interim, have the proper interim committee discussions," West said.

Utilities such as Kentucky Power, East Kentucky Power Cooperative, and the Louisville Gas and Electric/Kentucky Utilities system have argued that their existing rules already protect other customers, according to the Kentucky Lantern.

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