By Roger Ford and Erin Petrey
Artificial intelligence (AI) is dominating headlines, earnings reports, and social media. It’s
already reshaping the American economy, for better or worse, impacting industries from
education to healthcare to defense. And with AI comes the data centers that power it. If
Kentucky can benefit from this industry, we must do so with our eyes wide open and with
appropriate guardrails in place.
The Department of Energy reports that electricity used by the U.S. data center industry rose
from 58 terawatt-hours in 2014 to 176 terawatt-hours in 2023. By 2028, data centers could
consume up to 580 terawatt-hours annually – roughly 12% of all U.S. electricity.
When that kind of demand hits the grid, it affects generation, transmission, substations, water
systems, utility planning, and ultimately the monthly bills paid by Kentucky families and
businesses.
The rapid expansion of data centers isn’t simply about technology. It’s about energy, water,
utility rates, and, in Eastern Kentucky, about whether communities that already sacrificed so
much to make others rich will be asked to do so again. Eastern Kentucky knows this story all too
well. Outside capital came here before promising jobs and growth, all in the name of
development. But it was a false promise. The wealth left, while the costs lingered.
Speed without safeguards has a long history of leaving regular people with the bill. Kentucky
must not hand a blank check to every power-hungry project promising to usher in a new age of
prosperity via AI. There are some valid uses of high-performance computing (HPC) and AI,
many of which are already part of our current technology landscape, especially if they help
deliver critical services like healthcare access or real job growth. Some projects may serve a
genuine public purpose, such as facilitating remote work, more rapidly detecting cybersecurity
threats, or optimizing energy systems. However, other applications like cryptomining and digital
asset arbitrage are just cash grabs dressed up as economic development.
On May 26, TeraWulf announced a 1GW hyperscale AI and HPC development at the Muskie
Data Campus in Eastern Kentucky. A 1GW data center campus near Ashland isn’t just another
ribbon-cutting but a major power-policy event. It will require as much continuous electricity as is
needed to power about 750,000 Kentucky homes, more than exists in the entire region.
Kentucky simply does not have the rules, regulations, or public-interest safeguards in place
before projects of this size move forward. It’s the Wild West.
During the 2026 session, Kentucky lawmakers discussed legislation intended to protect power
customers from subsidizing the enormous demands of data centers. That effort failed, putting
Kentuckians at a disadvantage and allowing data center development before establishing a
serious statewide framework to protect all impacted parties and expose hidden costs.
Frankfort should pass a bipartisan Kentucky Data Center Responsibility Act before any new
data center receives tax incentives, expedited approvals, or utility commitments that could
expose existing ratepayers to stranded costs. In other words, we must prevent higher bills for
Kentuckians by avoiding sweetheart deals for data center developers.
Kentucky should also establish a large-load tariff through the Public Service Commission,
including minimum demand charges, long-term contracts, exit fees, performance bonds, and
stranded-cost protections. Independent power producers should be allowed to develop
behind-the-meter generation, private microgrids, islanded power systems, and dedicated energy
parks that serve data centers without destabilizing the broader grid.
Local governments must benefit through public-private energy partnerships, land leases, special
energy districts, franchise fees, or community benefit agreements. Projects seeking tax
incentives must demonstrate significant public benefit and should never become public risk.
Kentucky must require full transparency on ownership, financing, foreign involvement, power
source, water use, efficiency standards, and especially public health and community impacts
before any further data centers are greenlit. Eastern Kentucky – and the rest of the
Commonwealth – cannot become another sacrifice making outsiders wealthy while leaving
regular Kentuckians to clean up after them.
