Data Centers

The facilities typically contain thousands of computer servers with powerful processors operating 24/7, along with other network equipment, that require large amounts of electricity to operate. In addition, these devices generate heat as they operate, requiring high-capacity cooling and ventilation to dissipate heat and prevent damage to the equipment.

Data center developers are considering sites all over the United States. Due to the scale of their power consumption, reliable, low-cost electricity is a key resource, and Kentucky has the lowest electric rates in the eastern U.S., along with exceptional reliability. In addition, Kentucky is ideally located among eastern population centers, and offers land, water and fiber network resources.

No. In fact, such projects help to stabilize rates for cooperative members. EKPC and its owner-member cooperatives have taken steps to protect members by implementing a Data Center Power (DCP) tariff, which provides strong protections to ensure data centers pay their own way and do not shift costs to other co-op members. What’s more, large consumers like data centers contribute significantly to cooperatives’ fixed costs and bottom lines, helping to stabilize rates and hold down rising costs. It should be noted that, under regional electric transmission rules, the costs of certain infrastructure upgrades may be shared by neighboring utilities. If the data center is not located in Kentucky’s electric cooperative territory, then it is not subject to EKPC’s DCP tariff, which would assign those costs back to the data center. So, if the data center is located close to, but outside of, co-op territory, then Kentucky consumers could be left paying a portion of the transmission costs while other states receive the economic benefits of jobs and investment.

EKPC’s tariff provides strong protections to ensure the costs of serving data centers are not shifted to other cooperative members. Here are just a few examples:

Data centers pay their own way. The DCP tariff requires capital costs to be paid up front for new power plants or power line infrastructure needed to serve the facility. It also requires estimated operating costs to be paid months ahead of time on a rolling basis; EKPC and the retail distribution cooperative will invoice and withdraw payment from the prepaid account, providing assurance of liquidity.

Large data centers must have dedicated power plant resources. For data centers that use 250 megawatts or more of electricity, the DCP tariff requires a dedicated electric-generating resource. This ensures a data center does not simply buy power from the grid and hope enough power plant capacity continues to be available. The tariff provide flexibility; for example, a new power plant could be built by EKPC to serve the data center, or a power plant could be owned by another entity that provides power under a purchase agreement. 

Fair allocation of costs/risks. The DCP tariff assures that costs and risks are appropriately identified and allocated between the data center and other co-op members, based on the principal that data centers should bear any cost or risk they cause.

Defining what is and is not a data center. The tariff defines data centers as facilities with maximum capacity of 15 megawatts or more, and that operate at 60 percent or more of their capacity on an ongoing basis. This combination of characteristics makes data centers unique among electric users.

Data centers must submit an application and pay for preliminary studies. In order to serve large users and protect reliability for everybody, EKPC and its reliability coordinator must conduct detailed studies and modelling of the proposed facility and its effect on regional power flows. To start that study process, EKPC requires prospective data centers to submit an application and pay an upfront fee of up to $250,000. This fee reimburses the cost of staff time and other resources, and helps to ensure the prospective data center is serious about pursuing their proposed project.

Regulatory oversight of contracts implementing the tariff. The DCP tariff provides guidelines for our cooperatives to develop a three-way contract between the data center developer, the local retail cooperative and EKPC. This contract must be reviewed and approved by the Kentucky Public Service Commission before it goes into effect.

In 2024, our cooperatives began to be contacted by developers of potential projects. We recognized our cooperative members could be affected if our co-ops did not have a framework in place to serve projects with the unique energy needs of data centers. As we developed the DCP tariff, we learned and implemented lessons from other communities in states like Virginia and Ohio that have seen intensive data center development. The Kentucky Public Service Commission reviewed and approved the cooperatives’ DCP tariff in 2025.

No. Our cooperatives are legally obligated to serve any entity—any new home, business, school, factory or other electric user—that chooses to locate in our service territories. Rates are designed to ensure all members pay their fair share of costs based on how they use electricity. That is why there are separate rate classes for residential, commercial and various types of industrial electric customers.

Adding new power plants, power lines or large new consumers like data centers to the high-voltage grid can change the way power flows over the grid. As a result, EKPC works closely with its reliability coordinator, PJM, to protect reliability. Long before such changes can take place, we conduct detailed modeling of power flows under a wide range of conditions to identify changes in power flows and ensure equipment is not overloaded. Often, we identify needed upgrades to transmission facilities, such as new power lines or transformers, to accommodate new power plants or large power users. These upgrades must be made before the addition of new facilities. Federal laws and regulations set high standards for protecting against blackout and brownouts on the high-voltage grid.