As conversations around data centers continue to grow across Kentucky, many customers understandably have questions about what these projects could mean for electric rates, reliability and local communities.
This page was created to provide clear and factual information about data centers, how LG&E and KU plan for growth, and the protections in place to help support fairness for all customers.
As Kentucky’s largest energy company, LG&E and KU have an obligation to serve all customers: To provide safe, reliable and affordable service to residents, small businesses, manufacturers and new industries alike.
That responsibility also includes helping ensure existing customers are protected as Kentucky continues to grow.
That includes supporting new businesses that bring jobs, investment and long-term growth to the communities we’re proud to serve.
We understand customers have questions about how large energy projects could affect electric rates, reliability and local communities — and those are reasonable questions to ask.
Customers consistently tell us affordability matters, and we couldn’t agree more. We have an obligation to serve all customers and any new economic development load in the lowest reasonable cost manner. Serving new growth responsibly also means continuing to prioritize safe, reliable and affordable service for existing customers.
We’re committed to helping ensure growth is managed responsibly and costs are allocated fairly.
Our rates, programs and tariffs are reviewed and approved by the Kentucky Public Service Commission (KPSC) to help ensure they remain fair, just and reasonable.
Our approved Extremely High Load Factor Service rate for very large energy users includes additional requirements and long-term commitments intended to help protect existing customers.
New customers, including data centers, pay for infrastructure located on their property and dedicated only to serving them.
In some cases, we use tariffed opportunities, like our Excess Facilities Rider, which allows customer-specific infrastructure costs to be recovered directly from that customer — not through base rates paid by other customers.
All customers can benefit from broader grid improvements tied to long-term system growth and modernization.
We understand customers want reassurance that growth will not unfairly increase their bills. That’s why customer protections, regulatory oversight and long-term planning are built into how projects are evaluated.
A topic that often comes up is if large load growth, particularly from data centers, could impact customer rates. What we’ve found through our own internal modeling is that revenue from moderate to higher growth can actually help offset a substantial share of new costs, which benefits all customers. When new electric load is added in a way that fully pays for the infrastructure it requires—as our approved Extremely High Load Factor Service rate does—it can help spread fixed system costs over more usage and help moderate rates for all customers.
Major projects like the PowerHouse–Poe Louisville Data Center are designed to help strengthen the grid for everyone. The project includes a $28.4 million electric infrastructure upgrade that will become a permanent asset improving reliability for nearby homes and businesses.
What this means for the communities we’re proud to serve
- Long-term infrastructure improvements that strengthen reliability
- Additional tax revenue supporting local schools and services
- Construction and skilled trade opportunities
- Investments that can support future economic growth
Growth is happening across Kentucky, from new housing and manufacturing to logistics, healthcare and technology. Our role is to plan for that growth responsibly while continuing to serve customers safely and reliably.
The growth of new and expanding industries and customers’ overall energy needs are analyzed as part of our long-term resource planning process. We also have the advantage of being vertically integrated utilities, and the power we generate is prioritized for our customers’ energy needs first.
The PowerHouse–Poe Louisville project is one example of that momentum: a planned $11.1 billion private investment — one of the largest in Kentucky’s history — projected to generate roughly $5.4 billion in regional economic output and create approximately 1,700 construction jobs during its four-year build.
Once operational, the campus is expected to support more than 500 ongoing jobs, including direct, indirect and induced roles, with average wages exceeding $110,000 annually.
The project is also expected to contribute more than $68 million in local tax revenue each year, including an estimated $45.8 million annually for Jefferson County Public Schools, along with support for local fire protection and community services.
To prepare for continued growth, we’re investing in advanced generation and more resilient infrastructure to help maintain safe, reliable and affordable service. We continue modernizing our grid, substations, pipelines and infrastructure to support 24/7 reliability.
Projects like PowerHouse–Poe also demonstrate how new large-scale developments can bring shared community benefits — improved grid reliability, educational partnerships with institutions like the University of Louisville and expanded broadband and fiber capacity that help local businesses and households access faster, more reliable internet service.
Data centers support many of the digital services people use every day — including online banking, streaming video, social media, cloud storage, AI tools and online searches.
While data centers use large amounts of electricity, each project is different and carefully evaluated before being connected to the grid.
Kentucky already hosts several data centers statewide, and each data-center job supports on average six additional jobs in the local economy.
- Nationwide, data center energy use is growing, but these facilities can also create long-term fiscal benefits.
Research shows data centers can generate significant long-term tax revenue for communities while also supporting infrastructure improvements tied to reliability and economic growth.
In Kentucky, data centers can return more than 13 times the local tax revenue compared to the public service costs they generate, while also helping fund infrastructure improvements that can benefit surrounding communities.
More people and businesses rely on digital services every day — from streaming and online shopping to cloud computing and artificial intelligence.
That growing demand requires additional computing power, which also increases energy demand nationwide.
Our economy is evolving technologically, and computing power is helping drive that growth.
That’s why it’s essential to plan ahead and why Kentucky’s balanced energy mix, strong grid and regulatory process position us to manage this growth responsibly while protecting customers.
Q: Will building a data center raise everyone’s rates?
A: Customers like data centers pay for the facilities dedicated specifically to serving them.
When broader upgrades are needed to support long-term system growth, any proposed cost recovery is reviewed by the Kentucky Public Service Commission (KPSC) to help ensure rates remain fair and reasonable.
We also have additional customer protections in place for very large energy users, like data centers, through our approved Extremely High Load Factor Service rate. In simple terms, these customers must meet additional long-term commitments and requirements designed to help protect existing customers and support fairness.
Q: Will data centers affect electric reliability for existing customers?
A: Maintaining safe and reliable service for existing customers remains our top priority.
Before large projects are connected to the grid, we perform extensive engineering studies and long-term planning assessments to evaluate infrastructure needs and reliability impacts.
We also continue investing in generation, transmission and grid modernization projects designed to support Kentucky’s growing energy needs while maintaining reliability for all customers.
Q: Do data centers use a lot of water?
A: Data centers use water as part of their cooling systems, but water usage varies significantly depending on the type of facility, technology and design.
Many companies are also investing in technologies that reduce or recycle water use as part of broader sustainability efforts.
While LG&E and KU provide electric and natural gas service, water infrastructure and water-use decisions are generally managed by local water providers and the companies developing the projects.
Q: Does LG&E and KU decide where data centers are built?
A: While LG&E and KU do not decide where these facilities are built, our service territories are attractive to many types of businesses because of our safe, reliable and affordable energy, dependable infrastructure, central location and economic development incentives that help attract new businesses and support existing ones as they grow.
LG&E and KU’s role is to evaluate energy needs, plan infrastructure responsibly and provide safe, reliable and affordable service consistent with regulatory requirements.
Q: Why is Kentucky attracting data centers?
A: Companies consider many factors when evaluating locations for data centers, including electric reliability, available infrastructure, geographic location, workforce availability and access to broadband and fiber connectivity.
Kentucky’s strong energy infrastructure, central location and growing economy have helped attract interest from a variety of industries, including technology and advanced manufacturing.
Q: What happens if a project doesn’t go forward?
A: When working with prospective customers who require large amounts of energy, we establish project agreements that outline requirements intended to help protect all customers.
Q: How are customers protected if a large energy user leaves or uses less energy than expected?
A: LG&E and KU use agreements, planning requirements and specialized rate structures for very large energy users designed to help reduce risk and support fairness for existing customers.
That includes the approved Extremely High Load Factor Service rate, which includes additional requirements and long-term commitments intended to help protect everyday customers.
Q: Who reviews and approves these projects and rates?
A: Large development projects can involve many different review and approval processes depending on the type of project, location and scope. While LG&E and KU can’t speak to every aspect of those processes, our role related to energy service, infrastructure and rates is subject to oversight through the Kentucky Public Service Commission (KPSC).
Major energy infrastructure projects, rates and customer programs are reviewed through the KPSC’s public regulatory process, which includes open filings, review and opportunities for stakeholder input.
That process also includes review of specialized customer rate classes — like the Extremely High Load Factor Service rate for very large energy users — designed to help support fairness, transparency and protections for everyday customers.
Whether you're a homeowner, small business owner or growing employer, we provide energy that’s safe, reliable and affordable — and built to support Kentucky’s future.
We also understand customers expect growth to be managed responsibly, transparently and fairly.
Projects like PowerHouse–Poe demonstrate how Kentucky can support economic opportunities while continuing to protect reliability and customer interests.
We’re proud to help power the growth that benefits communities across Kentucky.
