EPIC: Regulations will decide if electric customers will pay for data centers' costs
An analysis by the Kentucky Energy Planning Inventory Commission (EPIC) indicates that regulations will dictate whether Kentucky electric customers will bear the costs for new data center infrastructure. The report highlights Kentucky's attractiveness to data center companies due to low electricity rates and other resources. EPIC warns that without adequate rules requiring data centers to cover their specific infrastructure costs, these expenses could be passed on to existing customers.
The Kentucky Energy Planning Inventory Commission (EPIC) released a report on June 4, revealing that the regulatory framework in Kentucky will be the determining factor in whether electric bills for residential and business customers will increase due to data center development.
The report highlights Kentucky's appeal to data center companies, citing its low electricity rates, available land, water resources for cooling, a growing fiber network, and a state tax incentive program established by the General Assembly in 2024. One Kentucky utility alone has reportedly identified nearly 30 potential data center projects by early 2026.
EPIC emphasized that if utilities are required to construct new substations, power lines, or generating capacity specifically for data centers, the costs must be recovered. The commission stressed that if regulations mandate data centers to pay for their dedicated infrastructure, existing customers will be safeguarded. Conversely, if these regulations are insufficient or absent, the costs would be distributed among all other electricity consumers. The report referenced Virginia as an example of a state that faced similar issues due to a lack of adequate cost-protection rules during its initial data center expansion.