Up an Eastern Kentucky holler near the city of Pikeville, Trissia Scott runs Thankful Hearts Food Pantry. She and her volunteers, including three men named Kenny, distribute food to seniors on a recent Monday, using equipment critical to the pantry’s mission.
But keeping the electricity on has become challenging. Scott said typically, her energy bill for the food pantry is, at most, $900 a month. Then the bill jumped to $1,700. The most recent bill was $2,000.
Scott received a shutoff notice. While donations from a local church helped her avoid that, she worries what the bill will look like during the coldest months. And in the coming weeks, she’ll be getting donations of turkeys for Thanksgiving. She has 11 freezers to keep running.
“I don't have enough to pay December, January, February, the bad months, so we're still asking people if they could go through the GoFundMe and help us if they can,” she said.
Kentucky Power, which serves 162,000 customers in 20 eastern counties, has seen a drop in load due to the closure of coal mines and a steel mill in recent years. Residents are leaving the region, too, reducing the number of households that pay for electricity.
As a result, the utility’s remaining customers pay some of the highest bills in the state. Scott said she’s paying more at home, too.
“My own home went up over $200,” she said, “because we have people every day needing help for the power bills, and it’s just going to get worse.”
Now, Kentucky Power says a data center project two hours north of Pikeville could change that.
“What this really is is potentially a transformational opportunity for Eastern Kentucky,” Sarah Lynch, a spokeswoman for Kentucky Power, told WEKU at a recent open house for the project in Catlettsburg, near the site TeraWulf plans to build a 1-gigawatt facility. That’s about as much as Kentucky Power currently generates.
The utility is building new transmission lines and a substation to serve what will be called the Muskie Data Campus. TeraWulf said it will pay for those upgrades if the plan is approved by state regulators, sparing residential customers another rate increase.
It’s not supposed to be voluntary. Gov. Andy Beshear signed an executive order in August prohibiting the Kentucky Public Service Commission from approving utility rate increases that pass along the cost of energy-hungry data centers to residential customers.
It’s unclear, though, whether Beshear’s order has legal durability. So far, no one has tested it.
Kentucky plans advance
Maryland-based TeraWulf has also agreed to pay for a new power plant in the region, which will generate additional jobs and tax revenues.
“Bringing on a large-load customer like this is a really amazing game changer for us and for our customers,” Lynch said.
Community members have mixed feelings, however. Data centers have generated a swell of opposition across the country, including in Kentucky. Critics cite environmental concerns, water and energy use, and the industries deep ties to artificial intelligence as major problems.
In some communities in Eastern Kentucky, elected leaders are actively pursuing them, or are at least open to them, in part to help make up for coal’s decline and to counter rising electricity prices.
But energy bills in the region aren’t the only thing going up. Utility companies are posting big profits.
American Electric Power, Kentucky Power’s parent company, made $1.2 billion in the June-to-September quarter, up from $972 million in the third quarter last year.
AEP’s Bill Fehrman, the highest paid CEO of a U.S. investor-owned utility last year, said in a statement last week data centers can help keep rates in check for residential customers.
“As electricity demand accelerates, AEP is committed to having new large-load customers bear the incremental system costs they create and fund the investments required to serve them,” he said.
In Eastern Kentucky, some officials have been supportive of data center development. They’ve signed nondisclosure agreements that have raised concerns about transparency. But the city of Pikeville has taken a different approach.
City manager Reggie Hickman said Pikeville did not negotiate in secret with data center developers. It also isn’t offering any property tax breaks, like other communities in Kentucky have.
“So for us, we immediately went to the public and said, you know, we're concerned about the same things you are,” he said. “We're concerned about the water. We're concerned about the noise. We're concerned about the environment. We're concerned about the power rates. That whole litany of things that the public is concerned about, we are too. We live here, too.”
Surrounding Pike County was once the state’s leading coal producer. Coal has faded, though. The bankruptcy of an operator there earlier this year resulted in 300 layoffs, cutting the number of industry workers in the county by half.
Today, Pike County has more than 500 direct jobs in tourism, exceeding the employment of mining in a region where coal was once dominant.
A data center, Hickman said, can replace some of the tax benefits the area got from coal, even if it cannot bring back jobs.
Hickman said it may be a matter of weeks before Pikeville reaches a deal for a data center, which would be built on an old coal mine turned into an industrial park, away from residential areas.
And the city will get the best deal it can or walk away, Hickman said.
“If the greater good can't get served, we don't have any problem at all with saying no,” he said. “We'll try something else.”
Relief on the way?
For Eastern Kentucky residents paying high electricity bills, data centers could mean relief.
Kentucky Power reached an agreement recently with TeraWulf to credit the region’s residential customers $25 for three winter months a year for 10 years, starting in 2029.
Suzanne Barker Griffith is a retired public school teacher in Boyd County, the proposed home of TeraWulf’s Muskie Data Campus. She said that makes a difference to her.
“What I'm concerned about is how much Kentucky Power might be trying to add to our bills at the same time,” Griffith said, “but any time that we can even get our bills down a little bit, I'm happy about.”
State utility regulators in February approved a 6% rate increase for Kentucky Power customers, followed by a 1% increase next year. That bumps the average monthly bill by $11. If the commission had approved the company’s original request, that amount would have been $27.
In a region desperate for relief from skyrocketing energy costs, the temptation of bringing on a large-load customer, despite other concerns, might be too great to resist.
The company’s offering of $25 off winter power bills three years from now is not enough to impress the food pantry’s Scott, however.
“You probably won't even pay the fuel costs that they put on your bill because they got all kinds of different things in your bill: school tax, state tax, fuel costs, all that,” Scott said, “but that won't even make a dent in that.”
This story was produced by WEKU, NPR and the Appalachia + Mid-South Newsroom, a collaboration betweenWest Virginia Public Broadcasting,WPLN andWUOT in Tennessee,LPM,WEKU,WKMS andWKU Public Radio in Kentucky, and NPR. Sign up for the weeklyPorch Light newsletter here for news from around the region.
