Kentucky’s AG & KU settle to extend coal plant life cycle, scuttle battery power
Attorney General Russell Coleman announced a settlement Wednesday with some of Kentucky’s biggest power providers pledging to extend the lifespan of two coal plants and scuttle plans for a battery storage facility.
The settlement came after Coleman intervened in a case before Kentucky’s Public Service Commission, where Kentucky Utilities/Louisville Gas & Electric sought approval to build two new natural gas-powered plants, a large-scale battery storage facility and a new pollution control system.
The settlement still must be approved by the Public Service Commission, a three-member body that regulates the state’s utilities.
Joining Coleman in the intervention were the Kentucky Industrial Utility Customers group and the Kentucky Coal Association. They pushed for the extension of the coal plants’ life cycles at Mill Creek 2 and the Ghent Generating Station and cheered the settlement.
Environmental groups, such as the Kentucky Resources Council, warn the settlement will saddle ratepayers with a higher bill, increase greenhouse gas emissions and could prove unwise given the “speculative” nature of energy-hungry data centers to power artificial intelligence moving to Kentucky.
“This settlement would saddle Kentuckians with costly, polluting infrastructure based on hypothetical future demand,” Byron Gary, staff attorney at Kentucky Resources Council, wrote in a statement. “The proposal prioritizes corporate interests over affordability, public health and climate action.”
KU/LG&E had already sought for the extension of the Ghent plant through the installation of a $152 million selective catalytic reduction system meant to reduce pollution. However, the companies had initially planned to retire Mill Creek 2 in 2027 as opposed to the 2031 date that the settlement proposes.
Coal power has been a hot political issue in Kentucky for a long time. Recently, the Republican-led legislature has pushed to make it harder for utilities to retire their coal-fired fleet despite those same utilities warning it could lead to higher rates.
Coleman’s office described the deal as a big win for Kentuckians, while taking a shot at former President Joe Biden.
“In sharp contrast to the nonsensical Green Agenda of the Biden Administration, this agreement reinvests in affordable and reliable fossil fuel energy to power Kentucky’s future,” he said in a news release.
The two new gas-powered plants are set to provide 645 megawatts of power each and will cost about $1.4 billion each. In comparison, the battery storage facility was to provide 400 megawatts and cost $775 million, but it would only be able to run for four hours before needing to be recharged.
The battery storage facility, Coleman said, was “uneconomical.”
“This agreement taps into Kentucky’s abundant natural resources and our ‘all-of-the-above’ energy strategy to power the commonwealth’s bright future,” he said. “By securing our affordable energy future, we’ve also kept our commonwealth open for new business investment, job creation and economic growth.”
KU/LG&E sought to build the new plants citing an anticipated influx of high-demand energy consumers, such as the data centers needed for AI development. Kentucky utility companies and groups have been pushing for more state efforts to attract AI data centers.
This month, the Trump administration picked a site in Paducah to help build out the nation’s artificial intelligence infrastructure, though that site is in the Tennessee Valley Authority’s territory. A planned AI data center facility in southwest Jefferson County is within KU/LG&E’s territory.
The agreement also allows the companies to recover the cost of building the new plants, as well as keeping the existing Mill Creek 2 coal-fired plant online, through customer rates. It projects those will be partially offset by revenues from such large users as data centers.
The city governments of Louisville and Lexington, whose boundaries are mostly within the territory of KU/LG&E, did not oppose the settlement
.Tony Curtis, who leads the Louisville-based housing advocacy group Metropolitan Housing Coalition, warned that middle- and low-income tenants would be hurt by the settlement if ultimately approved
.“The burden is being placed squarely on the backs of each of our families, friends and neighbors; and the highest impact will be felt by the lowest income households struggling to afford utility and housing costs,” Curtis said.
“On the contrary, it’s the data centers — if they ever get built — who should bear the risk. This proposal does nothing to drive down rates, stabilize rates or commit to affordable, renewable energy generation. LG&E/KU has stated that without data center growth, there would be no need for the proposed new generation.”
