"We're working on 20 data center projects right now. And those 20 data center projects have 5.6 gigawatts of potential request for us just in our service territory," said John Bevington, Senior Director of Business and Economic Development with KU and LG&E.
Bevington told state lawmakers that elimination of a sales tax for qualified data center projects in Kentucky is spurring more interest than he's seen in his 16 years with the utilities. It's interest that comes with big demands and promises as the energy-guzzling data centers are seen as vital to staying ahead in the race to develop greater artificial intelligence capabilities.
While it's business for the utilities, Bevington made the argument that the data centers are an economic win for cities and states.
"If you think about a a $4 billion facility — just back of the napkin math — if there's 1% on the real estate there and a percent-and-a-half on the tangible property there, you're talking about potentially $40 million or $50 million a year to our local economy, to our state economy, to our schools," he said.
But bringing the projects online also means generating a lot more power, and the utilities are seeking to build new natural gas and solar facilities to help meet that demand.
And that's setting off some alarms. At a recent Kentucky Public Service Commission meeting, a number of speakers raised a variety of concerns ranging from rate increases on existing customers to environmental effects.
"I am being asked to pay for power generation construction that may not be needed at all so that large corporations can build out a technology that will take away the jobs my children and grandchildren need," one speaker said.
Bevington told lawmakers the utility must go through formal studies to ensure that onboarding any new data center customer would not negatively impact other ratepayers.
AI Task Force co-chair Rep. Josh Bray said he's interested in seeing the state pursue regulatory reform that would create even more incentive for data centers to locate in the commonwealth.