A state utility regulator has approved the interconnection contract for a hyperscale data center project in Hancock County.
Kentucky’s utility regulator has approved an electricity service contract for a hyperscale data center planned for a former aluminum smelter in Hancock County, marking a critical step before operations can begin. In a Friday afternoon order, the Kentucky Public Service Commission determined that the agreement between Maryland-based developer TeraWulf and utility Big Rivers Electric Corporation provides “adequate protections” for ratepayers, “appropriately allocates” financial risks, and establishes “fair, just and reasonable” rates. The commission moved forward with the approval despite significant local opposition regarding potential environmental impacts and rising utility costs.
Following the ruling, TeraWulf posted on X on Monday morning that the decision represents a “major milestone” and “validates how responsible large-scale data infrastructure can be developed.” The company intends to utilize 482 megawatts of existing transmission infrastructure at the shuttered Century Aluminum site to power the facility. The project holds backing from artificial intelligence firm Anthropic. TeraWulf, which is also pursuing a hyperscale data center at an Eastern Kentucky industrial park, recently confirmed its commitment to meeting Democratic Kentucky Governor Andy Beshear’s regulatory requirements for data center developers.
According to the commission’s 30-page order, the electricity contract mandates that TeraWulf cover the cost of power drawn from the regional grid operator MISO, as well as expenses for its own transmission infrastructure upgrades. The agreement includes safeguards should the facility consume “substantially less” electricity than projected. During the review process, an attorney representing an environmental legal group raised concerns that regional transmission costs required to serve the data center might ultimately fall on ratepayers. The Public Service Commission, a board of commissioners tasked with evaluating utility requests and the reasonableness of industrial electricity contracts, weighed these considerations alongside broader economic factors.
The commission highlighted the project’s economic development potential, noting that TeraWulf estimates the site could generate at least 90 jobs, replacing the approximately 600 positions previously held at the smelter. The utility stands to receive tens of millions of dollars from the contract, alongside potential local tax revenue that the commission described as “not guaranteed.” “The projected financial and community benefits provide additional support for the Commission’s conclusion that approval of the RESA is consistent with the public interest,” the commission wrote.
State regulators also reviewed testimony from a July public hearing in Hancock County, where residents expressed concerns about environmental consequences and long-term economic gains, while others voiced support for the anticipated jobs and tax base expansion. Gary Elder, a Lewisport resident who worked at the former smelter for 40 years before retiring in 2015, addressed the commission during the hearing, voicing fears that data centers could exacerbate rising utility bills. In a Monday phone interview, Elder noted he had discussed the project with Hancock County Judge-Executive Johnny Roberts, the county’s top elected official who backs the initiative. While acknowledging the data center “might not be a bad thing” given the prospect of local tax revenue, Elder cited news reports detailing associated noise, pollution, and increased energy costs. “We know the good because they’re showing it. We haven’t seen the bad yet,” Elder said.