Kentucky Power says it intends to build new gas generation in Eastern Kentucky to support a data center project.
In a memo Monday, the utility told the state Public Service Commission it will no longer seek approval to construct a 450-megawatt combustion turbine at its Big Sandy site.
Instead, the company said it wants the PSC to sign off on a 760-megawatt combined-cycle plant in Lawrence County.
The plant would be operational by 2031 and support the Muskie Data Campus near the border between Boyd and Carter counties.
The data center campus, in the works from developer TeraWulf, would use 1 gigawatt of electricity, about what Kentucky Power currently produces.
TeraWulf would pay the financing costs for the new gas plant, Kentucky Power told the PSC.
An executive order from Gov. Andy Beshear earlier this year prohibits utilities from passing on data center costs to residential customers.
Kentucky Power announced an agreement with the developer last week to offset $100 million in residential winter heating bills over the first 10 years.
The agreement, tied to the Muskie Data Campus near Grayson, would save residential customers $25 a month starting in the winter of 2029.
Sarah Lynch, a Kentucky Power spokeswoman, said the company plans to withdraw its earlier notice of intent and submit a new proposal to the PSC under the terms agreed to with TeraWulf.
“Kentucky Power is preparing a new regulatory filing that will reflect the company’s updated plans for new generation at Big Sandy,” she said. “That regulatory filing will also seek approval of the energy service agreement with TeraWulf."
Kentucky Power generates electricity from natural gas at Big Sandy and coal at the Mitchell plant in northern West Virginia. Their combined output alone would not meet TeraWulf’s needs.
The utility's customers pay some of the highest bills in the state. Residents and officials have been asking state regulators for relief.
TeraWulf is developing another data center in Hancock County in Western Kentucky. The company's work includes a signed agreement with artificial intelligence developer Anthropic.
The PSC recently approved TeraWulf’s contract with local utilities for the nearly 500 megawatts of electricity the project will require.
