LG&E and KU can build power plants for KY data centers, regulatory board says
AI-generated summary reviewed by our newsroom.
- PSC approves $3 billion plan for two 645 megawatt natural gas plants to serve data centers
- PSC bars special Mill Creek tariff and requires plants only if need materializes
- Same utility companies agree with attorney general to increase prices at lower rate
Kentucky’s largest power companies can move forward with plans to spend $3 billion on two natural gas power plants, the agency responsible for regulating utilities said Tuesday.
The pair of power plants for Kentucky Utilities and Louisville Gas & Electric will support an influx of high-energy demand customers — namely data centers for artificial intelligence — the companies anticipate needing to support across the Bluegrass State in the next five years.
The natural gas power plants will produce 645 megawatts of output each during peak summer demand. One plant will be at KU’s E.W. Brown Generating Station in Mercer County and the other will be at LG&E’s Mill Creek Generating Station in Jefferson County.
Hyperscale data centers are usually those that use more than 100 megawatts of electric power. The state’s lone data center project in South Louisville is likely to use 525 megawatts.
In approving the new plants, the Public Service Commission said Oct. 28 in a more than 200-page order the companies cannot use a special tariff for data center customers receiving energy from Mill Creek to pay for building the plant. In addition, the agency said neither plant can be built if the companies find the projected need for them doesn’t come.
The lifespan of a Kentucky coal plant in Carroll County can also be extended, the order said. It denied a request to keep another coal plant open past retirement and upheld a summer settlement in which the companies agreed to abandon a plan for a battery storage system.
“The PSC believes that these projects will be adequate to replace expected generation retirements and keep current facilities in operation while also allowing the utilities to prepare to meet the power needs of potential economic development projects within LG&E/KU’s territory, including data centers, while protecting ratepayers from potential speculative costs of powering an expected 1,470 MW (megawatts) of load growth,” the agency said in a news release announcing the final order.
Today, 84% of KU and LG&E’s energy comes from coal, according to the companies. About 15% comes from natural gas and 1% comes from renewable sources. Those shares are likely to change as coal-fired units retire and replacement power sources are added to the grid.
In its application submitted this year in February, the utility companies said the need for both plants to support data centers was in part the result of tax incentives passed in 2024 by the Kentucky General Assembly to entice businesses to locate in the commonwealth.
“The projections of significant economic development growth are driven primarily by the anticipated location of 1,750 MW of high load factor, energy-intensive data centers in the Companies’ service territories,” the application said.
In all, LG&E and KU have more than 8,000 MW of economic development load potential based on a current list of potential customers, the application said. The utilities expect significant load growth between 2025 and 2032. Peak summer demand is likely to increase from 6,230 MW this year to 8,034 MW by 2032.
The data center being built in South Louisville is part of the more than 6,000 MW of prospective data center project load in LG&E and KU’s “economic development queue,” the application said.
The load forecast also includes both phases of ongoing construction at the BlueOval SK electric vehicle battery plant in Hardin County and for a number of other economic development projects announced this year across the state by GE Appliances, Ford Motor Co., Corning Inc. and others.
In additional testimony submitted with the February application, LG&E and KU Senior Director of Business and Economic Development John Bevington said the company’s concern was that businesses would begin to look to other states to make investments if Kentucky couldn’t provide the appropriate electricity infrastructure.
In a statement following the agreement with Kentucky Attorney General Russell Coleman and several stakeholders, LG&E and KU President John R. Crockett III said the company appreciates the review process that allows for customer input on its projects. “As Kentucky’s largest regulated utilities, we have an obligation to serve all customers and new economic development load in the lowest reasonable cost manner,” he said. “This agreement reflects the importance of that role and the critical needs addressed in our long-term generation investment plans.”
By scraping the battery storage plan, tweaking the path forward for two of the state’s coal plants and adding natural gas, Coleman said July 30 the agreement protects Kentuckians’ wallets and is consistent with the Trump administration’s agenda to use multiple sources of energy.
“This agreement taps into Kentucky’s abundant natural resources and our ‘all-of-the-above’ energy strategy to power the commonwealth’s bright future,” Coleman said. “By securing our affordable energy future, we’ve also kept our commonwealth open for new business investment, job creation and economic growth.”
Much of the public input and environmental and advocacy group intervention during the process criticized the application and its parts for investing in speculative economic development. Their main worry was residential customers would shoulder the additional cost of electricity if data centers don’t come to foot the bill.
Those groups, including the Sierra Club, Southern Renewable Energy Association and the Kentucky Utility Customers Inc., also said the utility companies were mistakenly looking toward more fossil fuel infrastructure instead of renewable sources of energy, a choice that could worsen climate change.
On Oct. 20, the same utility companies came to an agreement with the attorney general to increase rates, but only by about half of what they originally proposed.
The Public Service Commission still needs to approve the settlement before rate changes can go into effect at the start of 2026.
This story was originally published October 29, 2025 at 11:10 AM.
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