With More Data Centers On The Horizon, Communities Worry About Rising Electricity Bills

This story was originally published by WEKU and is part of the Appalachia + Mid-South Newsroom‘s Data Center series.

Residents across Kentucky, Tennessee and West Virginia have packed public meetings in recent months to speak out against data centers, with a recurring concern being how they could affect the cost of electricity.

On a steamy evening in July, the Kentucky Public Service Commission met at Hancock County High School, about 20 miles east of Owensboro. They’re here to discuss a data center project in the county seat of Hawesville.

More than a dozen residents spoke — none of them in support of the development.

For some, electricity bills were top of mind. Gary Elder, a 69-year-old retiree who lives in Lewisport, said his bills are already high and thinks the data center could drive them up even more.

“Last month at the house was $440,” he said. “Last year during the heat — and I’m sure it will be that way probably my next bill — it was $569. It was my highest electric bill last year. I’m retired. I can’t afford a $1,000, $1,100, $1,200 electric bill.”

Residents weren’t only worried about the impact on their household finances.

Christie Compton, of Falls of the Rough, said she’s expecting her first grandchild in November. She told the commissioners she wants future generations to be able to afford to live in the area.

“I know thinking about, ‘We’re going to make all this extra money,’ it’s very enticing,” she said. “But you have to look at it in the long run and think, ‘What are we going to do for our future?’ If you worry about your children and your grandchildren, think about that, please.”

Developers Eye Kentucky

Data center proposals have multiplied across Kentucky and the surrounding region in the past year, making it the latest battleground over land and water use, community impacts, electricity costs and the rise of artificial intelligence in the broader economy.

Hancock County has a population of just under 10,000 and sits along a quiet part of the Ohio River in Western Kentucky.

In July, Maryland-based developer TeraWulf signed a 20-year contract with AI company Anthropic as a tenant for its Justified Data Campus in Hawesville on the site of an idled aluminum smelter.

It would employ about 100 workers and generate millions of dollars in tax revenue to support local schools, including the one where the meeting was held.

But some in attendance, like Jacob Hodge of Lewisport, aren’t sold on the project.

“None of us want this,” he said. “We weren’t even able to know what was happening before the land was sold.”

TeraWulf representatives attended the Hancock County meeting, but they did not speak or make any presentations. When offered the opportunity to comment for this story, they declined.

However, in a presentation to investors on Aug. 5, Chairman and CEO Paul Prager explained why the company is scaling up its presence in Kentucky.

“The commonwealth is increasingly attractive to prospective tenants because of its power infrastructure, business environment and the constructive engagement we have seen from state, utility and local stakeholders,” he said.

The Kentucky PSC needs to approve or reject TeraWulf’s contract with regional electric cooperative Big Rivers and local utility Kenergy.

The data center will draw nearly 500 megawatts of power from the regional grid, about as much as the shuttered aluminum plant.

Big Rivers has signed President Donald Trump’s Ratepayer Protection Pledge, which aims to shield customers from the cost of building power plants and transmission lines to support data centers.

The voluntary ratepayer pledge — signed by other major utilities in Kentucky and nationwide — may not be enough to reassure residents who have seen their electricity bills spike in recent years.

“You can say in the contracts all day that it says they can’t do that, but we’ve seen it all over the country,” Hodge said at the meeting. “It’s happened thousands of times. People keep getting their rates jacked up because the AI data center comes into town, and this industry is an industry built on lies.”

The Rising Cost Of Power

Kentucky is uniquely dependent on coal to generate electricity among states. With the rise of cheaper natural gas from hydraulic fracturing, or fracking, and the growth of renewables such as wind and solar, coal does not always produce the cheapest electricity.

Residential customers of Kenergy pay some of the highest monthly bills in Kentucky, according to Heatmap, which tracks electricity prices nationwide. In July, the average Kenergy bill was more than $260 — a 39% increase from July 2021. As a whole, average bills across the state have increased more than 21% in that timeframe.

Leslie Barr, a Kenergy spokeswoman, said existing customers would not end up paying more to support data centers.

“Co-ops are opposed to electric rates subsidizing data centers,” she said. “Instead, we support contracts with data centers that can help stabilize electric rates.”

But Jamie Van Nostrand, the former chairman of the Massachusetts Department of Public Utilities, said electricity customers are likely to be on the hook for the new generation and transmission utilities needed to meet data center demand. It’s less likely for customer rates to go down.

“I think the chances of that happening are fairly small,” he said. “I think generally data centers will cause higher rates.”

Van Nostrand, who’s now policy director for The Future of Heat Initiative, said state regulators have the power to protect electricity customers, with legal enforcement that Trump’s voluntary pledge lacks.

Angie Hatton, the chair of the Kentucky PSC, told residents in Hancock County that her commission has used that power before.

“We have to approve or disapprove the contract that they put before us.” she said. “We have disapproved of contracts.”

Elected officials can act, too.

Local officials can approve or deny zoning changes to enable the data centers to be built. They can also enact moratoriums on such developments.

State legislators can codify ratepayer protections into law. Kentucky’s House of Representatives approved such legislation this year, but it stalled in the Senate.

On Aug. 6, Gov. Andy Beshear signed an executive order meant to ensure data centers bear any increases to electricity costs, not residents.

At the PSC meeting in Hancock County, Compton said residents in places like Eastern Kentucky need to make their voices heard.

“I think that they need to come out in full force,” she said. “I think that they need to let their local city councils (know), their fiscal courts, all of them. They need to show up, and all state lawmakers, but mainly, people don’t realize local government is the one that lets this stuff come in.”

TeraWulf’s project in Hancock County could be a preview of what residents can expect four hours east.

In May, the company announced an even larger project, called the Muskie Data Campus, about 20 miles west of Ashland in an industrial park on the border between Boyd and Greenup counties.

Kentucky Power will supply energy to the Muskie campus. The utility usually has the highest average electric bills statewide.

In the investor presentation Aug. 5, Prager said TeraWulf is looking to double the size of the Muskie site, from 1 gigawatt to 2 gigawatts.

This story is part of our series exploring the impacts of data centers in our region. It was produced by the Appalachia + Mid-South Newsroom, a collaboration between West Virginia Public Broadcasting, WPLN and WUOT in Tennessee, LPM, WEKU, WKMS and WKU Public Radio in Kentucky, and NPR. Sign up for the weekly Porch Light newsletter here for news from around the region.