Kentucky regulators weigh a data-center power contract as residents question who will pay

The parties in a Kentucky utility case jointly asked regulators July 28 to decide a proposed power contract for a Hancock County data center on the existing written record, one day after residents were allowed to comment on the project.

The filing did not approve the agreement. The Kentucky Public Service Commission is still reviewing whether the proposed contract is reasonable, reliable and structured so that existing utility customers do not absorb the costs and risks of serving the proposed 482-megawatt demand.

What the PSC is reviewing

Case No. 2026-00115 concerns a proposed retail electric service agreement among Big Rivers Electric Corp., Kenergy Corp. and Justified DataPower LLC, a subsidiary of TeraWulf Inc.

The planned data-center campus would be located at the former Century Aluminum smelter site in Hancock County. The PSC record describes the proposed arrangement as serving a data center with a 482-megawatt maximum contract demand using transmission capacity associated with the former smelter site.

On May 12, the commission opened an investigation into the agreement’s reasonableness and suspended its proposed effective date through Oct. 13, 2026. That suspension remains important: the contract cannot take effect simply because the parties have asked for a decision.

Why the latest filing matters

The PSC’s July 10 procedural order required Big Rivers or an intervenor to request either a hearing or a decision based on the record by July 28. The joint motion filed that day says Big Rivers, Kenergy, Justified DataPower and the Kentucky attorney general believe the written evidence is comprehensive and sufficient for a full and fair decision.

The parties also said they would participate if the commission determines that a hearing is necessary. The PSC retains authority to require additional proceedings rather than immediately rule on the written record.

The commission held a local public-comment meeting July 27 at Hancock County High School in Lewisport. The meeting was for public comments, and the PSC order specifically said no evidence would be taken. Comments from residents therefore were not formal testimony or evidence in the case record.

Big Rivers’ projected revenues

Big Rivers told the attorney general that the proposed agreement would generate more than $15 million a year in wholesale adders. The utility also estimated more than $10 million in first-year transmission revenue and said Kenergy’s distribution-level adders could exceed $1 million annually.

Big Rivers described the contract as a way to put underused transmission infrastructure back into service after the Century aluminum facility stopped operating in 2022. The utility said the proposed customer would reserve and pay for transmission capacity serving the site.

Those figures are estimates from Big Rivers’ filing, not revenues that have been realized or guaranteed. The project itself also remains proposed and is not operating.

Who would pay for the electricity?

The central consumer question is whether the data-center customer would cover the costs created by its large demand. Big Rivers says the proposed agreement would require the customer to pay for energy, capacity, transmission, congestion and other related market charges.

Big Rivers also says the customer would be responsible for costs of any required system upgrades. The utility characterized the arrangement as a full pass-through structure intended to prevent cost shifting to existing member-ratepayers.

The filing proposes using Big Rivers’ Member Rate Stability Mechanism for some incremental margins. Big Rivers says that after a 1.30 TIER threshold is met, 60% of excess margins would be used to reduce regulatory assets and 40% would be returned to member-consumers through bill credits.

Those potential benefits are proposed mechanisms and assertions in the utility’s filing. Existing customers are not guaranteed bill credits, and the PSC could approve, change or reject the terms.

Reliability and credit protections

Big Rivers says the proposed agreement includes protections for the electric system. In certain emergency conditions, including MISO Energy Emergency Alert Level 3 events, the data-center site could be curtailed before other loads on the system under the proposed terms.

The utility also cites credit protections, including collateral and remedies that could be used if the customer defaults. Its filing says the agreement includes service-interruption rights, collateral draws and support equal to twice the monthly bill, along with emergency billing provisions.

Whether those protections are sufficient is part of the PSC’s review. A large, concentrated load can affect utility planning and reliability, making the contract’s cost allocation, credit terms and curtailment provisions consequential for Big Rivers and Kenergy customers.

What happens next

The PSC will decide whether the existing record is sufficient and whether the proposed agreement should be approved, modified, rejected or examined further through a hearing or additional filings.

The current suspension runs through Oct. 13, 2026. Until the commission acts, the Hancock County data-center power contract remains a proposal, and the projected revenues, customer protections and possible benefits to existing ratepayers remain subject to regulatory review.

Sources

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