LG&E and KU's coal-fired Mill Creek Generating Station in September 2024. (Kentucky Lantern photo by Liam Niemeyer)
Kentucky’s largest utility is proposing to delay the retirement of a coal-fired power plant unit and move forward with building billions of dollars of gas-fired power generation as part of a proposed settlement agreement before the state utility regulator.
The proposed settlement offered by Louisville Gas and Electric and Kentucky Utilities (LG&E and KU) this week would build two new natural gas-fired power plants, each with a capacity of 645 megawatts, costing a total of more than $2.7 billion. Mill Creek 2, one of four coal-fired units at the utility’s Mill Creek Generating Station, would have its planned retirement delayed from 2027 until one of the new gas-fired power plants is operational in 2031.
The settlement is a part of a months-long case LG&E and KU brought before the Kentucky Public Service Commission requesting to build more fossil fuel-fired power generation that the utility says is needed to meet “unprecedented” projected energy demand driven by an influx of data centers.
“As Kentucky’s largest regulated utilities, we have an obligation to serve all customers and new economic development load in the lowest reasonable cost manner. This agreement reflects the importance of that role and the critical needs addressed in our long-term generation investment plans,” said LG&E and KU president John Crockett in a released statement.
The proposed settlement — which the commission could approve, deny or change — was agreed to by groups including Kentucky Industrial Utility Customers representing energy-intensive manufacturers; the Kentucky Coal Association; the Southern Renewable Energy Association; and Republican Kentucky Attorney General Russell Coleman, who praised the settlement as promoting “affordable and reliable energy for Kentucky families.”
“This agreement taps into Kentucky’s abundant natural resources and our ‘all-of-the-above’ energy strategy to power the commonwealth’s bright future,” said Coleman in a statement. “By securing our affordable energy future, we’ve also kept our commonwealth open for new business investment, job creation and economic growth.”
Coleman also touted the settlement for proposing to partially and temporarily offset the costs of one of the proposed gas-fired plants through revenues associated with data centers.
However, intervenors in the case representing affordable housing advocates in Louisville, environmental stakeholders and others lambasted the settlement as saddling Kentuckians with billions of dollars of “costly, polluting infrastructure based on hypothetical future demand.”
Byron Gary, an attorney for the environmental legal group Kentucky Resources Council representing the intervenors, in a statement said the settlement “prioritizes corporate interests over affordability, public health, and climate action.”
Tony Curtis, the executive of the Metropolitan Housing Coalition in Louisville, one of the intervenors opposed to the settlement, in a statement said the “risk and cost” of building two new gas-fired power plants based on “speculative need is not in the best interest of ratepayers, especially low-and fixed-income residents.”
Curtis said data centers driving the energy demand, not ratepayers, should bear the risk with proposed gas-fired generation.
Intervenors critical of the proposed settlement also stated they were disappointed in local governments for Louisville and Lexington not advocating for each cities’ goals to mitigate climate change. The two cities’ leaders agreed to not oppose the proposed settlement. A spokesperson for Louisville Mayor Craig Greenberg did not provide a response to emailed questions about the proposed settlement.
Susan Straub, a spokesperson for Lexington Mayor Linda Gorton, in an emailed statement said the city was “not comfortable with the level of additional power generation permitted in the settlement.” But the city did support other aspects of it, such LG&E and KU removing an additional request to build a utility-scale battery storage system.
An influx of prospective data centers, some to power artificial intelligence services, has created a projected surge of demand for electricity across the country, though it’s unclear whether a number of proposed data centers will be built. Data centers have also driven an increase in electricity costs for ratepayers.
The Kentucky Public Service Commission will begin a public hearing on LG&E and KU’s case and the proposed settlement Aug. 4 at 9 a.m. ET at its Frankfort office. The hearing will be broadcasted live on the agency’s YouTube channel.
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