Eastern Kentucky weighs a 1-gigawatt data center as Kentucky Power customers face some of the state's highest bills

PIKEVILLE, Ky. (Nov. 2) — The electric bill at a food pantry outside Pikeville used to top out around $900 a month. Its most recent bill was $2,000, the pantry's director told WEKU in a report published Sunday on how rising power costs are shaping Eastern Kentucky's view of data centers.

Kentucky Power serves about 162,000 customers in 20 eastern counties. Mine closures, the loss of a steel mill and people leaving the region have cut the utility's load, leaving fewer households to cover its costs, WEKU reported. Its customers now pay some of the highest bills in the state. Regulators approved a 6% rate increase in February and a 1% increase next year, adding about $11 to the average monthly bill.

The utility is pitching a large new customer as part of the answer. Maryland-based TeraWulf plans the Muskie Data Campus, an artificial intelligence and high-performance computing site at the EastPark industrial park in Boyd and Greenup counties. An amended agreement signed in October would raise its contracted demand from 500 megawatts to 1 gigawatt, with service starting at 100 megawatts in October 2028 and reaching the full load by October 2029, according to a Kentucky Power fact sheet. WEKU noted that 1 gigawatt is about as much power as Kentucky Power generates today.

"What this really is is potentially a transformational opportunity for Eastern Kentucky," Kentucky Power spokeswoman Sarah Lynch told WEKU.

Under the deal, TeraWulf would fund $10 million a year for 10 years in winter bill credits for residential customers, about $25 a month on January through March bills starting in 2029, the utility said. The company would also pay for the new substation and transmission lines and put up roughly $756 million in financial guarantees, and it could not reduce its contracted capacity or leave during the first 10 years, according to the fact sheet. The Kentucky Public Service Commission still has to approve the amended contract.

In August, Gov. Andy Beshear signed an executive order barring the commission from approving rate increases that pass data center costs on to residential customers. WEKU reported that the order has not yet been tested and that it is unclear whether it would hold up legally.