AN ACT relating to data centers.

UNOFFICIAL COPY 26 RS HB 593/GA
Page 1 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
AN ACT relating to data centers. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 96 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section and Section 2 of this Act: 5
(a) "Contract" means the electric service agreement between a municipal 6
electric utility and a customer that owns or operates a data center; 7
(b) "Data center" means: 8
1. A qualified data center project that has been preliminarily approved or 9
approved for a certificate of exemption under KRS 139.499; or 10
2. A centralized facility that: 11
a. Is used primarily or exclusively for electronic information 12
services, including but not limited to the management, storage, 13
processing, and dissemination of electronic data and information 14
through the use of computer systems, servers, networking 15
equipment, and related components; 16
b. Has electrical load that is either fixed, portable, or distributabl e, 17
including but not limited to structures that are not affixed to the 18
ground or are easily removed from a location; 19
c. Has an expected or actual peak of real -time energy demand of 20
fifteen (15) megawatts or greater; and 21
d. Has an expected or actual monthly load factor of sixty percent 22
(60%) or greater; 23
(c) "Data center customer" means a customer of a municipal electric utility 24
that owns or operates, or proposes to own or operate, a data center or who is 25
otherwise responsible for paying for municipal electri c utility service for a 26
data center; 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 2 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(d) "Dedicated resource" means one (1) or more sources of electric power or 1
capacity that is sufficient to serve the contract capacity needs of the data 2
center from: 3
1. All or any portion of an electric generation facil ity that is owned or 4
leased by the municipal electric utility or, to the extent permitted by 5
law, the data center customer; 6
2. Bilateral power and capacity agreements entered into by the municipal 7
electric utility; or 8
3. Any combination of both; and 9
(e) "Municipal electric utility" means any city or municipal corporation that is 10
engaged in the furnishing of electric utility service to a consumer for 11
ultimate consumption. 12
(2) A municipal electric utility shall only provide electric service to a data center 13
customer through a contract that conforms to the requirements of this section 14
and Section 2 of this Act. 15
(3) Within one hundred eighty (180) days of the effective date of this Act, a 16
municipal electric utility shall issue and maintain a tariff that include s the 17
following minimum requirements for serving a data center: 18
(a) A process for submission of an application for service, in the form and 19
manner required by the municipal electric utility, that sets forth the data 20
center customer’s: 21
1. Location for the d ata center, including the status of the data center 22
customer’s control over the premises; 23
2. Requirements for electric service, including a load ramp schedule; 24
3. Proposed dedicated resource if the data center’s contract capacity 25
exceeds twenty-five (25) megawatts; and 26
4. Any other information as the municipal electric utility may determine 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 3 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
is necessary to develop a resource supply plan and to conduct 1
necessary interconnection, infrastructure, and pricing studies for 2
service to the data center; 3
(b) Payment of an initial nonrefundable application fee with a minimum fee of 4
not less than seventy-five thousand dollars ($75,000), provided that: 5
1. The data center customer shall be required to pay the full actual cost 6
of the municipal electric utility’s study and development of the 7
requirements to serve the data center consistent with this section; 8
2. The municipal electric utility shall require payment of any 9
supplemental application fees as are necessary to recover its full 10
actual costs of undertaking activities set forth in this section; and 11
3. Any overpayment of actual costs beyond the initial application fee 12
shall be refunded or credited toward satisfying financial obligations 13
for procurement or interconnection agreements at the same 14
geographic site; and 15
(c) Preparation within a reasonable time of load, interconnection, pricing, and 16
any other studies necessary to determine the manner in which to safely and 17
efficiently serve the data center’s requirements in a way that does not have 18
any negative service or rate i mpact to the municipal electric utility’s non -19
data center customer classes and preserves the municipal electric utility’s 20
existing generation margins and excess capacity. 21
(4) A contract between a data center customer and a municipal electric utility shall: 22
(a) Be in the form and manner required by the municipal electric utility; 23
(b) Be consistent with the results of the studies described in subsection (3)(c) of 24
this section; 25
(c) Prevent the subsidization of data center customers by non -data center 26
customers through rates or by any other means; 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 4 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(d) Include terms and conditions to ensur e that all fixed and variable capital 1
and operating costs attributable to serving a data center are fully allocated 2
to the data center regardless of category, form, purpose, nature, or label; 3
(e) Require the data center customer to tender prepayment of all estimated 4
capital costs incurred by the municipal electric utility to invest in new or 5
existing infrastructure to serve the data center, subject to subsequent 6
credits, payments, or repayments by the municipal utility if the actual costs 7
of those investments are less than or greater than the prepayments made by 8
the data center customer; 9
(f) Require an identified dedicated resource be available to serve the data 10
center if the data center’s peak load at any point during the term of the 11
contract will exceed twenty-five (25) megawatts; and 12
(g) Allocate any curtailment obligations between a data center and non -data 13
center customers in a manner that is consistent with the rules and 14
requirements of the municipal electric utility’s transmission grid operator 15
and that fairly allocates any mandated curtailment as between a data center 16
customer and non-data center customer classes. 17
(5) The requirements of this section shall not apply to: 18
(a) Distributors of electricity supplied by the Tennessee Valley Authority; 19
(b) Data centers constructed on sites owned by the United States Department of 20
Energy; or 21
(c) An electric service contract entered into prior to the effective date of this 22
Act. 23
SECTION 2. A NEW SECTION OF KRS CHAPTER 96 IS CREA TED TO 24
READ AS FOLLOWS: 25
(1) A municipal utility subject to the requirements of this chapter shall not charge or 26
allocate any of the costs associated with serving or constructing any new 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 5 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
infrastructure to serve a data center to any other customers served by the utility 1
with regard to the following utility services that it provides to the public for 2
compensation: 3
(a) The diverting, developing, pumping, impounding, distributing, or 4
furnishing of water; 5
(b) The collection, transmission, or treatment of sewage; or 6
(c) The production, manufacture, storage, distribution, sale, or furnishing of 7
natural or manufactured gas, or a mixture of both. 8
(2) The provisions of this section shall not apply to data centers constructed on sites 9
owned by the United States Department of Energy. 10
SECTION 3. A NEW SECTION OF KRS CHAPTER 278 IS CREATED TO 11
READ AS FOLLOWS: 12
(1) As used in this section and Section 4 of this Act: 13
(a) "Contract" means the electric service agreement between a retail electri c 14
supplier and a customer that owns or operates a data center, which for any 15
retail electric service agreement involving a retail electric supplier formed 16
under KRS Chapter 279 shall also include the generation and transmission 17
cooperative from which the r etail electric supplier is contractually obligated 18
to purchase electricity; 19
(b) "Data center" means: 20
1. A qualified data center project that has been preliminarily approved or 21
approved for a certificate of exemption under KRS 139.499; or 22
2. A centralized facility that: 23
a. Is used primarily or exclusively for electronic information 24
services, including but not limited to the management, storage, 25
processing, and dissemination of electronic data and information 26
through the use of computer systems, servers, netw orking 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 6 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
equipment, and related components; 1
b. Has electrical load that is either fixed, portable, or distributable, 2
including but not limited to structures that are not affixed to the 3
ground or are easily removed from a location; 4
c. Has an expected or actua l peak of real -time energy demand of 5
fifteen (15) megawatts or greater; and 6
d. Has an expected or actual monthly load factor of sixty percent 7
(60%) or greater; 8
(c) "Data center customer" means a customer of a retail electric supplier that 9
owns or operates, or proposes to own or operate, a data center or who is 10
otherwise responsible for paying for electric utility service for a data center; 11
(d) "Dedicated resource" me ans one (1) or more sources of electric power or 12
capacity that is sufficient to serve the contract capacity needs of the data 13
center from: 14
1. All or any portion of an electric generation facility that is owned or 15
leased by the retail electric supplier or i ts generation and transmission 16
cooperative, or to the extent permitted by law, the data center 17
customer; 18
2. Bilateral power and capacity agreements entered into by the retail 19
electric supplier or its generation and transmission cooperative; or 20
3. Any combination of both; 21
(e) "Generation and transmission cooperative" has the same meaning as in 22
KRS 278.010; and 23
(f) "Retail electric supplier" has the same meaning as in KRS 278.010. 24
(2) A retail electric supplier shall only provide electric service to a data center 25
customer through a contract approved by the commission that is consistent with 26
the retail electric supplier’s data center tariff and this section. 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 7 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(3) Within ninety (90) days of the effective date of this Act, the commission shall 1
promulgate adminis trative regulations in accordance with KRS Chapter 13A to 2
require each retail electric supplier to file and maintain a tariff to serve data 3
centers located within its service territory. Each retail electric supplier shall 4
thereafter file a data center tari ff that conforms to the requirements of the 5
commission’s administrative regulations within ninety (90) days of the 6
promulgation of the administrative regulations. The commission shall require 7
that each data center tariff include the following minimum requi rements for 8
serving a data center: 9
(a) A process for the submission of an application for service, in the form and 10
manner required by the retail electric supplier, that sets forth the following 11
information about the data center: 12
1. The location for the data center, including the status of the data center 13
customer’s control over the premises; 14
2. Requirements for its electric service, including a load ramp schedule; 15
3. A proposed dedicated resource if the data center’s contract capacity 16
exceeds two hundred fifty (250) megawatts; and 17
4. Any other information as the retail electric supplier may determine is 18
necessary to develop a resource supply plan and conduct necessary 19
interconnection, infrastructure, and pricing studies for the data 20
center; 21
(b) Payment of an initial nonrefundable application fee with a minimum fee of 22
not less than seventy-five thousand dollars ($75,000), provided that: 23
1. The data center customer shall be required to pay the full actual cost 24
of the retail electric supplier’s study, including but not limited to third-25
party transmission studies and other third -party costs, and the full 26
actual costs for the development of the requirements to serve the data 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 8 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
center consistent with this section; 1
2. The retail electric supplier shall require payment of supplemental 2
application fees as are necessary to recover its full actual costs of 3
undertaking activities set forth in this section; and 4
3. Any overpayment of actual costs beyond the initial application fee 5
shall be refunded or credited toward satisfyin g financial obligations 6
for procurement or interconnection agreements at the same 7
geographic site; 8
(c) Preparation within a reasonable time of load, interconnection, 9
infrastructure, pricing and any other studies necessary to determine the 10
manner in which t o safely and efficiently serve the data center’s 11
requirements in a way that does not have any negative service or rate impact 12
to the retail electric supplier’s non -data center customer classes and 13
preserves the retail electric supplier’s existing generatio n margins and 14
excess capacity. For a retail electric supplier formed under KRS Chapter 15
279, the existing generation margins and excess capacity of the generation 16
and transmission cooperative from which the retail electric supplier is 17
contractually obligated to purchase electricity shall be preserved; and 18
(d) An itemization of the types of terms and conditions that shall be included 19
within each contract. 20
(4) A contract between a data center customer and a retail electric supplier shall: 21
(a) Be in the form an d manner required by the retail electric supplier and, as 22
applicable, its generation and transmission cooperative; 23
(b) Be consistent with the results of the studies described in subsection (3)(c) of 24
this section; 25
(c) Prevent the subsidization of data cente r customers by non -data center 26
customers through rates or by any other means; 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 9 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(d) Include terms and conditions to ensure that all fixed and variable capital 1
and operating costs attributable to serving a data center are fully allocated 2
to the data center regardless of category, form, purpose, nature, or label; 3
(e) Require the data center customer to tender prepayment of all estimated 4
capital costs incurred by the retail electric supplier, and as applicable, its 5
generation and transmission cooperative, to inv est in new or existing 6
infrastructure to serve the data center, subject to any subsequent credits, 7
payments, or repayments by the retail electric supplier, or as applicable the 8
generation and transmission cooperative, if the actual costs of those 9
investments are less than or greater than the prepayments made by the data 10
center customer; 11
(f) Require an identified dedicated resource be available to serve the data 12
center if the data center’s peak load at any point during the term of the 13
contract will exceed two hundred fifty (250) megawatts; 14
(g) Allocate any curtailment obligations between a da ta center and non -data 15
center customers in a manner that is consistent with the rules and 16
requirements of the transmission grid operator of the retail electric supplier 17
or, as applicable, its generation and transmission cooperative, and that 18
fairly allocat es any mandated curtailment as between a data center 19
customer and non-data center customer classes; and 20
(h) Include any other terms and conditions as the commission may require to 21
isolate and insulate non -data center customers from the costs, risks and 22
liabilities incurred by the retail electric supplier or as applicable, its 23
generation and transmission cooperative, in serving a data center. 24
(5) If the commission has previously approved the data center tariff of a generation 25
and transmission cooperative fro m which a retail electric supplier formed under 26
KRS Chapter 279 is contractually obligated to purchase electricity, then the retail 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 10 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
electric supplier may adopt and incorporate the data center tariff of the 1
generation and transmission cooperative in lieu of developing and submitting its 2
own unique tariff to serve data centers as otherwise required by this section. 3
(6) This section shall not be construed to limit or abrogate a retail electric supplier’s 4
exclusive right to serve an electric consuming facility pursuant to KRS 278.016, 5
278.017, and 278.018. 6
(7) The requirements of this section shall not apply to: 7
(a) Distributors of electricity supplied by the Tennessee Valley Authority; 8
(b) Data centers constructed on sites owned by the United States Department of 9
Energy; or 10
(c) An electric service contract entered into prior to the effective date of this 11
Act. 12
SECTION 4. A NEW SECTION OF KRS CHAPTER 278 IS CREATED TO 13
READ AS FOLLOWS: 14
(1) A utility providing a service described in KRS 278.010(3)(b), (d), or (f) to a data 15
center subject to the requirements of Section 3 of this Act shall not charge or 16
allocate any of the costs associated with serving or constructing any new 17
infrastructure to serve the data center to any other cust omer classes served by the 18
utility. 19
(2) The provisions of this section shall not apply to data centers constructed on sites 20
owned by the United States Department of Energy. 21
Section 5. KRS 154.20-229 is amended to read as follows: 22
The authority, with preliminary approval of an eligible company, may execute a 23
memorandum of agreement with the eligible company. The terms and conditions of the 24
memorandum of agreement shall be negotiated between the authority and the company. 25
The terms of the memorandum of agreement shall include but not be limited to the 26
following provisions: 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 11 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(1) The estimated capital investment for the qualified data center project; 1
(2) That the preliminarily approved company shall provide the authority with a ll 2
documentation requested in a manner acceptable to the authority and within the 3
timeframes required by the authority related to the minimum capital investment 4
requirement to be used in monitoring compliance of the memorandum of 5
agreement; 6
(3) That failur e of a preliminarily approved company to meet the minimum capital 7
investment on or before the fifth anniversary of the preliminary approval shall result 8
in cancellation of the memorandum of agreement with the preliminarily approved 9
company; 10
(4) The term of the agreement, which shall not exceed: 11
(a) Fifteen (15) years for a qualified data center project of a project organizer; or 12
(b) 1. Fifty (50) years for a qualified data center project having a capital 13
investment of at least four hundred fifty million dol lars ($450,000,000); 14
or 15
2. Twenty-five (25) years for any other qualified data center project; 16
(5) A provision requiring the preliminarily approved company to notify the authority 17
immediately if the eligible company sells or otherwise transfers or disposes of the 18
land on which a qualified data center project is located; 19
(6) Authorization for the department to issue a certificate of exemption to the 20
preliminarily approved company under KRS 139.499; 21
(7) A provision detailing the elimination of the sales and u se tax exemption and the 22
notice of assessment by the department provided under KRS 139.499 that shall 23
occur if the preliminarily approved company fails to make the minimum capital 24
investment; 25
(8) (a) A statement that the memorandum of agreement may remain in effect, even if 26
there is a future transfer, sale, or disposition, directly or indirectly, of the 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 12 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
qualified data center project, upon the adoption of a resolution by the 1
authority to that effect. 2
(b) If continuation of the sales and use tax exemption is desired by the subsequent 3
owner: 4
1. The memorandum of agreement may be assigned to that owner under 5
paragraph (a) of this subsection provided the subsequent owner assumes 6
the prior owner's obligations under that agreement; or 7
2. The subsequent owner shall enter into a memorandum of agreement 8
with the authority for the remainder of the eligibility period. 9
(c) The authority shall notify the department regarding the events that transpire 10
under paragraphs (a) and (b) of this subsection; 11
(9) That the approved company shall make available to the authority all of its records 12
pertaining to the qualified data center project, including but not limited to records 13
relating to eligible costs and any other records pert aining to the project that the 14
authority may require; 15
(10) (a) That the authority may share information with the department; and 16
(b) That the department may share information with the authority; 17
for the purposes of monitoring and enforcing the terms of th e memorandum of 18
agreement; 19
(11) That, if the preliminarily approved company fails to comply with its obligations 20
under the memorandum of agreement by the fifth anniversary of the preliminary 21
approval, the authority shall: 22
(a) Suspend the memorandum of agreement; 23
(b) Terminate the incentives available to the preliminarily approved company 24
under the memorandum of agreement; 25
(c) Notify the department of the authority's actions; 26
(d) Instruct the department to proceed with the notice of assessment; and 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 13 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
(e) Pursue any other remedy set forth in the memorandum of agreement or to 1
which it may be entitled by law;[ and] 2
(12) A certification from the preliminarily approved company that the data center 3
project complies or will comply with all applicable local requirement s, the 4
applicable requirements of Sections 1, 2, 3, and 4 of this Act, and any 5
administrative regulations promulgated thereunder; and 6
(13) Any other provisions not inconsistent with this subchapter and determined to be 7
necessary or appropriate by the parties to the memorandum of agreement. 8
Section 6. KRS 278.466 is amended to read as follows: 9
(1) Each retail electric supplier shall make net metering available to any eligible 10
customer-generator that the supplier currently serves or solicits for service. If the 11
cumulative generating capacity of net metering systems reaches one percent (1%) 12
of a supplier's single hour peak load during a calendar year, the supplier shall have 13
no further obligation to offer net metering to any new customer -generator at any 14
subsequent time. For the purposes of this subsection, the load of a data center as 15
defined in Section 3 of this Act shall not be considered in determining a retail 16
electric supplier's single hour peak load. 17
(2) Each retail ele ctric supplier serving a customer with eligible electric generating 18
facilities shall use a standard kilowatt -hour meter capable of registering the flow of 19
electricity in two (2) directions. Any additional meter, meters, or distribution 20
upgrades needed to m onitor the flow in each direction shall be installed at the 21
customer-generator's expense. If additional meters are installed, the net metering 22
calculation shall yield the same result as when a single meter is used. 23
(3) A retail electric supplier serving an eligible customer -generator shall compensate 24
that customer for all electricity produced by the customer's eligible electric 25
generating facility that flows to the retail electric supplier, as measured by the 26
standard kilowatt -hour metering prescribed in su bsection (2) of this section. The 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 14 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
rate to be used for such compensation shall be set by the commission using the 1
ratemaking processes under this chapter during a proceeding initiated by a retail 2
electric supplier or generation and transmission cooperative on behalf of one (1) or 3
more retail electric suppliers. 4
(4) Each billing period, compensation provided to an eligible customer -generator shall 5
be in the form of a dollar -denominated bill credit. If an eligible customer -6
generator's bill credit exceeds the a mount to be billed to the customer in a billing 7
period, the amount of the credit in excess of the customer's bill shall carry forward 8
to the customer's next bill. Excess bill credits shall not be transferable between 9
customers or premises. If an eligible c ustomer-generator closes his or her account, 10
no cash refund for accumulated credits shall be paid. 11
(5) Using the ratemaking process provided by this chapter, each retail electric supplier 12
shall be entitled to implement rates to recover from its eligible cu stomer-generators 13
all costs necessary to serve its eligible customer -generators, including but not 14
limited to fixed and demand -based costs, without regard for the rate structure for 15
customers who are not eligible customer-generators. 16
(6) For an eligible electric generating facility in service prior to the effective date of the 17
initial net metering order by the commission in accordance with subsection (3) of 18
this section, the net metering tariff provisions in place when the eligible customer -19
generator began taking net metering service, including the one -to-one (1:1) 20
kilowatt-hour denominated energy credit provided for electricity fed into the grid, 21
shall remain in effect at those premises for a twenty -five (25) year period, 22
regardless of whether the premises are sold or conveyed during that twenty -five 23
(25) year period. For any eligible customer -generator to whom this subsection 24
applies, each net metering contract or tariff under which the customer takes service 25
shall be identical, with respect to energy rates , rate structure, and monthly charges, 26
to the contract or tariff to which the same customer would be assigned if the 27
UNOFFICIAL COPY 26 RS HB 593/GA
Page 15 of 15
HB059310.100 - 1235 - XXXX 3/4/2026 2:35 PM GA
customer were not an eligible customer-generator. 1
(7) Electric generating systems and interconnecting equipment used by eligible 2
customer-generators shall meet all applicable safety and power quality standards 3
established by the National Electrical Code (NEC), Institute of Electrical and 4
Electronics Engineers (IEEE), and accredited testing laboratories such as 5
Underwriters Laboratories. 6
(8) An eligible customer -generator installation is transferable to other persons at the 7
same premises upon notification to the retail electric supplier and verification that 8
the installation is in compliance with the applicable safety and power quality 9
standards in KRS 278.467 and in subsection (7) of this section. 10
(9) Any upgrade of the interconnection between the retail electric supplier and the 11
customer-generator that is required by commission -approved tariffs for the purpose 12
of allowing net metering shall be made at the expense of the customer-generator. 13