Two PPL Corp. utilities — Louisville Gas and Electric and Kentucky Utilities — reached a settlement agreement that clears a path for building about 1.3 GW of gas-fired generation to serve potential data centers and other emerging loads, the parent company said Tuesday.
LG&E and KU expect 1,875 MW of new data center load and 580 MW of other commercial and industrial growth on their systems through 2032, according to testimony filed earlier this month at the Kentucky Public Service Commission.
The settlement agreement filed with the PSC calls for the agency to approve two 645-MW combustion turbine units to be built at two power plants as well as a selective catalytic reduction system to be added to the coal-fired Ghent generating station’s 485-MW Unit 2, PPL said in a U.S. Securities and Exchange Commission filing. The generating units would come online in 2030 and 2031.
The agreement pushes out the retirement date of the 297-MW, coal-fired Mill Creek 2 until Mill Creek 6, one of the planned gas-fired units, begins operating. The new unit is set to come online in 2031 and the coal-fired unit is currently set to be retired in 2027. However, LG&E and KU plan to assess whether it makes sense to operate the coal-fired unit beyond the in-service date of Mill Creek 6.
Also, if the PSC approves the agreement, the utilities would withdraw their proposal to build a four-hour, 400-MW battery electric storage system at LG&E’s Cane Run power plant, according to the filing. They may seek to add a similar facility using a competitive procurement process, according to the agreement.
The PPL utilities agreed to issue a request for proposals for renewable energy and energy storage by mid-2026, with a goal of gaining PSC approval for any selected resources by the end of 2028.
Starting next year, LG&E and KU pledged to file annual reports on their participation in the Southeast Energy Exchange Market, including company-specific cost and benefit assessments and underlying data, according to the agreement.
The utilities were expected to spend about $4.1 billion on the initial plan, including about $900 million on the battery storage project, according to Allentown, Pennsylvania-based PPL. The company said it is not changing its $20 billion capital plan, which runs through 2028, or rate base projections, because it expects to make additional investments, including transmission investment to support data centers in Pennsylvania.
The agreement includes a list of criteria that can be used for the PSC to assess the reasonableness of the utilities’ spending before the investments are added to customer rates. One metric that would show the utilities acted prudently — a standard for cost recovery approval — in building Mill Creek 6 is having at least 500 MW of executed electric service agreements under the companies’ proposed “extremely high load factor” rate entered into by the unit’s in-service date.
The parties to the agreement include LG&E and KU; Kentucky’s attorney general, through the Office of Rate Intervention; Kentucky Industrial Utility Customers; the Southern Renewable Energy Association; and the Kentucky Coal Association.
In mid-June, the Sierra Club urged the PSC to reject the utilities’ plan to build power plants to supply potential data centers until there was firmer evidence the data centers would be built.
As part of the settlement, LG&E and KU agreed to give semi-annual construction, economic development and load forecast updates to the PSC, a measure sought by the Sierra Club.
The PSC has set a hearing on the agreement to begin on Aug. 4 and LG&E and KU expect a commission decision in the fourth quarter, according to PPL.
