Powering Kentucky’s Growth, Together

As Kentucky’s largest energy company, LG&E and KU have a responsibility to provide safe, reliable and affordable service to all customers—residents, small businesses, manufacturers and new industries alike. That includes supporting new businesses that bring jobs, investment, and long-term growth to the communities we’re proud to serve.

When new or expanding projects are proposed, our role is clear: provide energy in the most reasonable and least-cost manner—while continuing to serve all customers safely and reliably.

We perform extensive studies to thoroughly evaluate the effects of new energy load when there’s a request for new or expanded electric service by a large customer, like a data center, manufacturing plant or residential complex. We use these studies to help ensure we make any necessary system enhancements to continue providing safe, reliable service for all customers.

We’re also committed to fairness in how all costs are managed:

• New customers, including data centers, pay for the infrastructure located on their property and dedicated to only serving them.
• In some cases, we use tariffed opportunities, like our Excess Facilities Rider, which allows us to build customer-specific infrastructure and recover those costs through direct payments and agreements with a customer and not through base rates. Base rates contain:
  • fixed charges that customers pay to a utility company, regardless of how much of the service (electricity, gas, water, etc.) they consume.
  • Infrastructure energy charges that are designed to cover the utility's fixed costs, such as infrastructure and maintenance.
  • Variable energy charges that comprise of costs, such as fuel that fluctuate with the production consumed by customers.
• All customers benefit from the broader grid improvements tied to system-wide growth.
• Our rates, programs and tariffs are reviewed and approved by the Kentucky Public Service Commission (KPSC) to ensure they remain fair, just, and reasonable.

From new factories and housing developments to high-tech facilities like data centers, economic development is happening across Kentucky. Just this March, Governor Beshear announced Kentucky placed in the top 5 for economic development projects per capita in the 2024 Governor’s Cup rankings — marking the fifth year in a row.

In 2024, LG&E and KU supported 76 business projects — adding more than 3,100 new jobs and driving $2.8 billion in investment across Kentucky. Nearly half of the state’s announced investments that year were in our service area.

That growth drives higher energy demand — and we plan for it carefully.

Through our Integrated Resource Plan, we forecasted in 2024 that Kentucky’s economic momentum — including the arrival of new data centers — could increase demand on our system by 30 to 45% by 2032. That forecast remains on pace.

To prepare, we’re investing in advanced, more efficient generation, and smarter, more resilient infrastructure, including:

• New generation: A state-of-the-art, 640-megawatt natural gas combined-cycle unit is expected to come online in 2027. We’re also constructing a 125-megawatt battery storage system at our E.W. Brown Generating Station and adding two company-owned, 120-megawatt solar facilities located in Mercer and Marion counties, respectively.
• More generation proposed: We’ve requested approval from the Kentucky Public Service Commission to add two additional 645-megawatt gas units, environmental upgrades at Ghent, and 400 megawatts of battery storage.
• Ongoing system enhancements: Modernizing our grid, substations, pipelines and infrastructure to support 24/7 reliability.

Data centers are facilities where digital services — like storing files and images we want to save for later, adding phots and videos to our social media accounts, watching videos and shows online and through streaming services, searching online for information or using AI — are powered and managed. They’re essential to modern life, and they do require significant amounts of energy. Each data center site is unique, and there is no one-size-fits-all approach.

In 2025, we announced our first hyperscale data center customer: a joint venture between PowerHouse Data Centers and Poe Companies. It will be a cutting-edge data center campus, and the first 130 megawatts is planned to come online in 2026.

While some customers have questions about data centers, here’s what’s important to know:

• Kentucky’s legislature created a tax incentive program to attract data centers, citing job creation and economic benefits. Kentucky has been known for its manufacturing sector. Competitive, affordable energy rates, accessible utility infrastructure and Kentucky’s location between the mid-Atlantic and Midwest markets make the commonwealth a prime location for new economic growth and data centers seeking low latency peering.
• Each project will be studied carefully before we connect it to our system.
• We’ve proposed a new rate category — Extremely High Load Factor Service — for large energy users, such as data centers. Energy costs vary depending on the resources and infrastructure required to serve different types of customers. For instance, industrial customers often require higher levels of power and more robust infrastructure than residential users. Rate categories allow utilities to allocate costs proportionally to the customers who generate those costs. In simple terms, the more a customer uses the system, the larger share they pay for the system.

More and more each day, we all rely on technology in our professional and personal lives. Consider the amount of increased electricity the grid and world needed when lightbulbs were introduced as a widely adopted technology. Or when automakers started mass-producing cars and steel. Our economy is growing technologically, and computing power is the source of this growth. And the number one input for producing this technology and data is electricity. Globally, energy demand from data centers is accelerating:

• Electricity use by tech giants like Meta and Microsoft doubled from 2017 to 2021.
• AI searches require up to 10x more energy than traditional ones.
• AI chips need 10x more cooling than traditional cloud hardware.
• Data center energy use could double again by 2026. (Source: Morningstar)

That’s why smart planning is essential for utilities like us. We don’t just react to growth — we prepare for it years in advance.

Q: Will building a data center raise everyone’s rates?

A: No, customers like data centers pay for the facilities that serve only them. When broader upgrades are needed to meet overall system demand, we may seek cost recovery through our base rates – but any proposed changes are always reviewed by the Kentucky Public Service Commission to ensure fairness. 

Q: Will it result in greater costs for residential customers?

A: We have an obligation to ensure energy rates are fair, just, and reasonable for all customers, which includes seeking to have individual customers be responsible for the costs of work or facilities that serve only them. We’re therefore committed to ensuring that all customers, including data centers, pay their fair share of utility costs.

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 certain requirements to ensure we’re protecting customers from any unintended impacts and perform thorough studies. In addition, our long-term planning is based on realistic forecasts, not guarantees. We plan for a variety of scenarios for this very reason.

Q: Do we need all this new generation?

A: Yes. Our forecasts show significant load growth ahead—not just from data centers, but from residential, commercial, and manufacturing demand. These new resources help power the future for all of our customers and for Kentucky as a whole.

Q: What is LG&E and KU’s role in choosing which businesses come to Kentucky?

A: While we’re not the sole factor in determining which businesses ultimately locate in Kentucky, we proudly help market our state as a great place to do business.

We regularly collaborate with site selectors, economic development partners, local communities and company leaders to ensure energy solutions that are tailored, sustainable and scalable—whether it's for a manufacturing facility, data center or distribution hub.

By maintaining a modern energy system, investing in innovative technologies, offering economic development incentives like our Opportunity Grant program, and maintaining affordable rates, we help position Kentucky as a smart choice for long-term business success.

Q: How do you make sure new businesses don’t impact reliability for current customers?

A: Our grid is built for flexibility and growth. Every new connection from a customer that requires large amounts of energy undergoes a detailed engineering study. If upgrades are needed at their property to support a new customer, we make them—and ensure those customers pay their share when the work will only serve them.

Q: Will all the new generation only benefit data centers?

A: No. Our new infrastructure supports the entire grid and strengthens reliability for all customers. Growth is a shared opportunity, and we invest in ways that ensure benefits are distributed broadly.

Q: Why create a new rate class for large users?

A: Fairness. The proposed “Extremely High Load Factor” rate class would ensure large users with unique energy needs—like data centers—are paying rates that reflect the scale and consistency of their energy use, without shifting those costs to other customers.