# Utilities say their rules protect ratepayers against big data centers. Some argue more can be done. **Published:** 2026-06-15T09:55:09.000Z **Source:** [Kentucky Lantern](https://kentuckylantern.com/2026/06/15/utilities-say-their-rules-protect-ratepayers-against-big-data-centers-some-argue-more-can-be-done/) **Republished from:** [Kentucky Lantern](https://kentuckylantern.com/2026/06/15/utilities-say-their-rules-protect-ratepayers-against-big-data-centers-some-argue-more-can-be-done/) (CC BY-NC-ND 4.0) **Canonical:** https://kentuckylantern.com/2026/06/15/utilities-say-their-rules-protect-ratepayers-against-big-data-centers-some-argue-more-can-be-done/ By Liam Niemeyer, [Kentucky Lantern](https://kentuckylantern.com) · June 15, 2026 At a press conference earlier this month, a reporter told Kentucky Gov. Andy Beshear that people in Boyd and Greenup counties had been “caught off guard” by a deal local officials unveiled to bring a very large data center to the area. A number of Boyd County residents had [packed a town hall](https://kentuckylantern.com/2026/06/02/starting-it-off-shady-residents-question-ndas-protections-for-proposed-boyd-co-data-center/) the day before to lambast county judge-executives and other local leaders in part over concerns about what a proposed hyperscale data center could mean for electricity bills and the local environment. Beshear in response said he was not going to let a data center come into the state and “pass along the cost of energy.” He also said such data centers could be a boon for communities by boosting local property taxes. “Any data center that wants to look at Kentucky is going to have to pay for 100% of its own energy,” Beshear said. “And if it needs new means of production, it needs to pay for those, too.” But environmental advocates who keep a close eye on utility and energy policy in Kentucky say despite those assurances from Beshear, he’s not directly in charge on whether the impacts of large data centers will put upward pressure on Kentuckians’ electricity bills. “There’s not really any way to ensure that that is absolutely true,” said Byron Gary, an attorney with the environmental legal group Kentucky Resources Council. “I don’t know how yet the governor is able to confidently say that. Hopefully he knows something that I don’t.” Instead, it is Kentucky’s electric utilities that create ratepayer protections through rules, rates and contracts with data centers that are approved by state utility regulator Kentucky Public Service Commission.  (Lane Boldman (Provided)) A GOP-sponsored bill that [died on the final day of this year’s state legislative session](https://kentuckylantern.com/2026/04/16/housing-data-center-legislation-dies-on-final-day-of-2026-session/) would have required a contract between a data center and a utility to prevent “the subsidization of data center customers by non-data center customers through rates or by any other means.” Republican lawmakers have signaled they plan to discuss whether to take up ratepayer protections against data center impacts next year. In the meantime, advocates argue that utilities can do more to protect electricity ratepayers and ensure hyperscale data centers — if and when they arrive in Kentucky — don’t harm other ratepayers. Lane Boldman, the executive director of the environmental advocacy nonprofit Kentucky Conservation Committee, told the Lantern the way these utility rules and rates, called tariffs, are implemented with data centers matters. “How are they going to do it? How are they going to monitor it?” Boldman said. “The devil’s in the details.” Scottie Ellis, a spokesperson for Beshear, in an email wrote that nearly all data center projects “require some form of state approval and any increase to ratepayers would have to go before the Public Service Commission.” #### Utilities adopt their own rules Over the past two years, utilities have taken the initiative to adopt their own rules to deal with large data centers. These utilities argue the approved rules already protect other ratepayers, including residential customers, in requiring large data center customers to cover their own costs. Investor-owned electric utility Kentucky Power is planning to serve the proposed Boyd County hyperscale data center with its rules and rates for industrial customers. Louisville Gas and Electric and Kentucky Utilities, another investor-owned utility that serves the cities of Louisville and Lexington, received regulator approval last year to adopt its “Extremely High Load Factor” rules for data centers. The nonprofit electric utility East Kentucky Power Cooperative, which generates electricity for 16 electricity distribution cooperatives in the state, also [received regulator approval](https://www.ekpc.coop/sites/default/files/PDFs/2025/2025-10-31__EKPC_Data_Center_tariff_approved_by_PSC2.pdf) last year for data center-specific rules. But Gary, the Kentucky Resources Council attorney, believes these utilities could do more with their rules. Gary often represents a coalition of consumer advocacy and renewable energy nonprofits before the Kentucky Public Service Commission. In a [recent presentation](https://youtu.be/2oiePn-JoPA?si=7urjLjyV-o59RH3p&t=1799), he reviewed and compared Kentucky utilities’ rules for data centers with a [report](https://www.esig.energy/wp-content/uploads/2026/05/ESIG-Large-Load-Rate-Impacts-primer-WP-2026.pdf) by the consulting firm Brattle Group and the nonprofit Energy Systems Integration Group. That report details the factors behind whether electricity rates increase or decrease for other ratepayers when a utility adds large electricity users, such as hyperscale data centers, to the grid. Gary pulled several recommendations and ideas from the report including: - Whether a utility has incentives or requirements for large electricity users to be flexible on when they use electricity. That can include incentivizing a data center to use more power during hours when daily electricity demand on the grid is not peaking. - Whether a utility requires a contribution-in-aid-of-construction, or a form of payment to cover infrastructure costs to serve a data center. - Whether a utility requires a data center customer to bring their own power plant to provide electricity for an operation. - Whether a utility has a minimum “take-or-pay” provision with a data center, requiring it to pay for a certain amount of electricity regardless of whether it’s used. - Whether a utility requires collateral or an “exit” fee if a data center customer decides to end its contract for electricity early. Gary called each of the utilities’ rules a “starting point” because they have some, but not all, of the data center protections he would like to see for ratepayers.  (Byron Gary, an attorney for the environmental legal group Kentucky Resources Council, talks about the potential utility infrastructure costs of data centers at a conference in 2025. (Kentucky Lantern photo by Liam Niemeyer)) He said the utilities’ rules for data centers did include exit fees and collateral requirements given that the artificial intelligence investment bubble “may burst at some point”. But he believed utilities could do more to require data centers to be flexible on when they use electricity, including in emergency situations when the electricity grid is strained. “It’s a great way to protect existing ratepayers, and also avoid the need to build new infrastructure,” Gary said. He also said it’s unclear to him if each utility’s rate structure — the electricity costs each utility charges to a customer — will bring in enough revenue to benefit ratepayers. Gary said a data center could raise rates if the costs to serve it exceed the revenue it brings in. #### A statewide standard? Spokespeople for the utilities argued their rules are protective, pushing back in specific instances where Gary argued they could do more. Nick Comer, a spokesperson for East Kentucky Power Cooperative, wrote in an email that Gary’s comparison “totally mischaracterizes” the utility’s data center rules, saying they exceed the protections that Gary called for. Sarah Lynch, a Kentucky Power spokesperson, wrote in an email that its requirement for a 20-year contract “is among the longest approved in the industry” and that industrial customers would have to pay for 90% of their contracted electricity capacity every month. Liz Pratt, an LG&E and KU spokesperson, in an emailed statement referenced a [failed effort](https://kentuckylantern.com/2026/04/16/housing-data-center-legislation-dies-on-final-day-of-2026-session/) this year by Rep. Josh Bray, R-Mount Vernon, to create a statewide standard of ratepayer protections. Bray in part referenced [opposition by LG&E and KU](https://kentuckylantern.com/2026/04/16/housing-data-center-legislation-dies-on-final-day-of-2026-session/#:~:text=mentioning%20that%20LG%26E%20and%20KU%20%E2%80%9Cdidn%E2%80%99t%20like%20it%E2%80%9D) when asked why it didn’t advance. Pratt wrote that such protections are better addressed by the Kentucky Public Service Commission. Because each utility is regulated differently, Pratt wrote, a “one-size-fits-all approach won’t work in Kentucky.” “Sweeping broad characterizations based on national data or different utility models that don’t apply to our service area can draw conclusions that are not in our LG&E and KU customers’ best interests; protecting our customers is first and foremost our focus to ensure we continue providing safe, reliable service at the lowest reasonable cost,” Pratt wrote. Boldman, the executive director of the Kentucky Conservation Committee that strongly supported Bray’s legislation, said a [recent state report on data centers](https://kentuckylantern.com/2026/06/04/data-center-investment-ratepayer-protections-can-both-happen-state-report-argues/) noted that the operations were speculative; not all of them will ultimately arrive in Kentucky. She said there needs to be a plan by utilities to protect ratepayers, and those plans have to be regularly reassessed to determine whether they’re working. “It can’t just be the utilities, and it can’t just be the PSC,” Boldman said. “There needs to be an ongoing regular assessment of where we’re at.” ## Sources - [Kentucky Lantern](https://kentuckylantern.com/2026/06/15/utilities-say-their-rules-protect-ratepayers-against-big-data-centers-some-argue-more-can-be-done/)