Kentucky lawmakers ahead of the 2026 session said they would pass legislation to address the expected influx of energy guzzling AI data centers, putting in guardrails to ensure existing utility ratepayers are protected.
That did not end up happening. A provision to put regulations on new data centers was stripped from a bill shortly before it cleared both chambers, as the 2026 session came to a close.
The House passed a bill last month sponsored by GOP Rep. Josh Bray of Mount Vernon that set up guardrails on new data centers. It was designed to ensure current ratepayers do not subsidize utility infrastructure improvements needed to serve the large facilities that use an enormous amount of power.
Ratepayers in many states have seen their utility bills increase due to the influx of new data centers that use staggering amounts of energy to run their artificial intelligence services. Bray’s legislation attempted to make sure that didn’t happen in Kentucky, while also ensuring there was enough excess power generation to attract advanced manufacturing companies that employ more people than data centers.
House Bill 593 cleared that chamber by a 90-8 vote, but subsequently stalled in the Senate. However, the provisions were nearly revived when its language was added into Senate Bill 197 as it cleared a House committee and was sent to the floor of the chamber.
On Wednesday — the final day of the 2026 session — SB 197 was sent back to the House budget committee, where Bray’s data center language was stripped out of the bill before it passed the committee, and then cleared the full chamber less than an hour later. The Senate concurred with the amended SB 197 later that night and sent it to the governor for his signature or veto.
Shortly after the bill cleared the committee, Bray confirmed to Kentucky Public Radio that his data center provisions had been stripped out of the bill and the regulatory effort appeared dead for the session.
Asked what had blocked his measure from advancing, Bray said it was “just the Senate in general.”
“I can't really speak to who or why,” Bray said. “I just know it's good policy, though.”
Bray added that Louisville Gas & Electric and Kentucky Utilities — the largest electric utility company in the state — had opposed his bill.
Under Bray’s proposed legislation, large data centers could only have electric service from a public utility if they sign a contract agreeing to cover any transmission or infrastructure costs attributable to serving that data center. It also added a $75,000 application fee for data center companies seeking utility service to weed out real prospects from more speculative ones, and tied state tax breaks to their compliance with local regulations.
New data center projects proposed by companies in Oldham, Simpson, Meade, Mason and Mercer counties over the past year have brought fierce criticism from local opponents, who have filled public meetings to express their concerns over the negative effects data centers might have on their utility bills, as well as air, water and noise pollution. Developers have countered that data centers will provide a flood of new tax revenue to boost those communities.
Bray said in February that both large data center companies — such as Google, Meta and Amazon — and electric cooperatives in Kentucky were on board with his bill, but LG&E/KU remained critical. He said the investor-owned utility had concerns that HB 593 was a “one-size-fits-all approach,” whereas LG&E/KU didn’t want to be constrained in its approach to rates for large load customers.
LG&E/KU sought and received permission from state regulators last year to spend $3 billion on building two new gas power plant units with a combined generation capacity of 1.3 gigawatts, saying it was mostly needed due to the giant amount of energy they forecast would be needed by future hyperscale data centers.
The company also sought approval for a tariff that would require any large data center customer to sign a 15-year contract guaranteeing it would pay for at least 80% of the energy it says it will consume each month, even if they end up using less. LG&E/KU executives say this would ensure the data company pays for its fair share of power generation if the data centers wind up using less energy than expected — though environmental and consumer advocacy groups argued that stronger protections are needed.
A spokesperson for LG&E/KU did not immediately respond to a request for comment on Bray’s data center legislation failing to pass this session.
The General Assembly passed a bill last year to lure data centers to the state, offering companies an exemption from sales and use taxes for 50 years on their computer equipment.
Those tax breaks were championed by GOP Senate President Robert Stivers of Manchester. Asked by Kentucky Public Radio in late March about Bray’s bill stalling in the Senate, he suggested investor-owned utilities like LG&E should be able to set up their own high load tariffs with approval from the Kentucky Public Service Commission.
Democratic Rep. Adam Moore of Lexington had also filed a bill this session requiring data center companies to agree to contract terms that would protect ratepayers. He called the failure of Bray’s data center legislation “incredibly frustrating.”
“It’s not a partisan issue,” Bray said, noting that he’s received many calls from Mercer and Mason county residents asking for help in their local communities. “I can't protect you from data centers, but our legislature has the opportunity to at least make sure that when they do come here, that they're doing it the right way and it's not going to be born on your all's backs in an already unaffordable world.”
