Bill to regulate utilities for data centers on the move
Rep. Josh Bray, R-Mount Vernon, told the House Economic Development and Workforce Investment Committee on Thursday that House Bill 593 would protect ratepayers from subsidizing data centers. A high-resolution photo can be found here.
FRANKFORT — As tech companies plan to bring more data centers to Kentucky, House Bill 593 would ensure Kentuckians do not subsidize the utility costs.
The House Economic Development and Workforce Investment Committee heard from Rep. Josh Bray, R-Mount Vernon, on the issue on Thursday. He is the primary sponsor of the legislation.
Bray said he’s spent the last two years on the Artificial Intelligence Task Force learning about the utility needs of data centers.
“What this bill does is make sure Kentucky handles data centers the right way, so that we protect our ratepayers, and we take advantage of kind of a unique opportunity and protect our future economic interest going forward,” Bray said.
If a tech company wants to bring a data center to Kentucky, HB 593 would require the company to do one of three things, Bray said.
First, a company could choose to provide its own electric generation for a data center and donate any excess back to the local utility. The second option is the company could enter into a power purchase agreement, and the third option would be purchasing the electricity on the national open market.
HB 593 would also require a minimum, nonrefundable $75,000 application fee.
“If we have to increase generation, if we have to increase transmission, then the data center should pay for all of those expenses,” Bray said.
The legislation also includes a provision addressing water, gas and wastewater costs, he said.
Rep. Nima Kulkarni, D-Louisville, who also serves as a ranking minority member on the committee, asked Bray what the application fee covers.
Bray said the fee would cover the actual cost of the study to determine the data center’s capacity and transmission requirements.
“The $75,000 application helps make sure that all of that’s paid for up front, so that ratepayers aren’t having to cover that,” he said.
The legislation would apply to municipal and private utility companies, Bray added.
Kulkarni said it is “imperative” Kentucky tries to regulate data centers to avoid negative impacts on our communities.
Rep. Kevin Jackson, R-Bowling Green, said he appreciates Bray’s work at “tackling the issue.” He wanted to know if Bray is certain this bill would protect ratepayers.
“If this bill passes, there’s no way that any constituents’ electric bills, utility bills would go up because of that,” Jackson asked.
Bray said that is his intention, and he believes the bill is “pretty clear” that ratepayers cannot subsidize data centers.
The House Economic Development and Workforce Investment Committee voted unanimously to send HB 593 to the House floor.
Rep. William Lawrence, R-Maysville, said HB 593 is a “due diligence” bill that addresses one of the biggest concerns many constituents have about data centers in Kentucky.
“I feel like we are always on the backside of fixing problems here in Frankfort, and this is a bill that gets ahead of the game,” he said. “We’re setting the parameters. We’re making the guardrails, as we should as the people who set the laws for the state.”