The short version: Governor Andy Beshear signed Executive Order 2026-494 on Thursday, directing the Public Service Commission not to let a utility recover data-center costs from other ratepayers. The order carries no grandfather clause. None of the three utilities named in the Paducah American Energy Hub deal has a case on file with the Commission tied to that project.
The order runs two pages and took effect the day it was signed, August 6. It sets out three commitments a data center project has to demonstrate.
Executive Order 2026-494, the operative clauses | What it does |
|---|---|
I.A. Ratepayer protection. Developers "are required to submit an energy plan to the Energy and Environment Cabinet showing how it will protect residential ratepayers, including assurances it can meet its energy needs now, into the near term, and long term without imposing additional costs on other utility ratepayers." | A filing obligation on the developer, at the Cabinet, before permits. |
I.B. Public Service Commission. "The Public Service Commission shall not allow a utility to increase rates paid by other ratepayers to recover costs caused by the development and operation of a data center." | A direct prohibition on the regulator. |
I.C. Environmental protection. The Cabinet "is directed to deny any permitting applications where a data center would negatively impact Kentucky's air quality, water use, water quality, water supply, federal jurisdictional wetlands, or natural resources." | Turns permitting into a veto point. |
II. Taxes. Developers "must commit to paying their full and fair share of state and local taxes and not attempt to avoid paying taxes." | A commitment, with no stated enforcement mechanism. |
III. Community. Transparent engagement with local leaders. "Nothing in this Order shall impact decisions made by local communities regarding the operation of data centers within their jurisdiction." | Leaves the yes-or-no with the county and the city. |
The verbs run at two state agencies, the Energy and Environment Cabinet and the Public Service Commission, both of which answer to the Governor. The requirements on developers are conditions those agencies enforce, not obligations a court would enforce against a company. That distinction is the fight in Frankfort right now.
Beshear stated the limit in his own release: "To be clear, this order doesn't say yes to any data center, that's up to the local community. But it does say no to any center not meeting the requirements." At the press conference he added, per the Kentucky Lantern, "The executive order is going to set a baseline. If you cannot meet it, you're not coming to Kentucky."
PSC chair Angie Hatton, whose commission has to apply it, said she was "grateful that we have guidance like this that will provide a framework that allows us, if we allow data centers to develop in our state, that they're done in a thoughtful and deliberate way, and in a way that allows us to protect Kentucky families and ratepayers of every class." Note the conditional in the middle of that sentence.
Republican leadership was cooler. Senate President Robert Stivers called it "more political theater than public policy" and said a lasting framework belongs in statute. House Speaker David Osborne said it "does appear to include some of the intent of House Bill 593" but "seems to be missing any meaningful changes or real enforcement mechanisms." Representative Josh Bray, who carried that bill, told WKYT he will have a new one ready the first week of the session. Representative Adam Moore, a Democrat, said the two sides are "pretty much in lockstep in our ratepayer protection."
Whether it reaches Paducah is unanswered
The order's text contains no grandfather clause, no carve-out, and no effective-date exception for projects already announced or under negotiation. It took effect August 6 and says nothing about a deal announced in late July.
That silence has not been resolved. No agency guidance has been issued.
The docket is empty
The Energy Department announced in late July that roughly 785 acres of federal land west of Paducah would carry a hyperscale AI campus and the generation to run it, and its own release states that the power service agreement remains subject to Public Service Commission approval.
Nothing tied to that project has been filed. Here is what the three named utilities actually have on record at the Commission, open cases and closed.
Utility | Newest PSC case | What it is |
|---|---|---|
Big Rivers Electric Corporation | 2026-00115, filed Apr. 14, 2026 | A retail electric service agreement with Justified Datapower LLC, a TeraWulf subsidiary. A data center, but a different one, filed three and a half months before the Paducah announcement. |
Jackson Purchase Energy Corporation | 2026-00033, filed Feb. 19, 2026 | An application about a debt limit and line of credit. Unrelated. |
Paducah Power System | None | No case on file with the Commission, open or closed. |
That last row has an explanation in the Energy Department's own announcement. Big Rivers provides wholesale electric service. Jackson Purchase Energy Cooperative provides retail service. Paducah Power System, the release says, "will serve as a community partner," a phrase it does not define.
Paducah Power is a municipal utility buying through the Tennessee Valley Authority, and municipals in TVA territory do not come before the Commission for retail rates the way a cooperative or an investor-owned utility does. So the order's hardest clause lands on the two utilities selling the power, while the hometown utility sits in the deal under an undefined title at an agency where it has no file.
The Big Rivers case is the one to watch. The Commission was handed a data-center service agreement in April, months before Frankfort signed an order about them, and how clause I.B gets applied there is the first practical test of it.
What is settled and what is not
Settled: the Commission has an explicit instruction not to shift data-center costs onto other ratepayers. The Energy and Environment Cabinet has an explicit instruction to deny permits over water and air impacts, which in a county carrying a Superfund listing since 1994 is not a small tool. Local governments keep the final decision, stated in the order's own text.
Not settled: whether any of it reaches the Paducah project, whether an executive order survives a change of governor, what a bill with actual penalties looks like in January, and who pays for the transmission upgrades. That last answer would live in a rate case, and no rate case exists.
Nearby, the $1.76 billion laser enrichment plant has taken the opposite route: a Nuclear Regulatory Commission licensing board seated in May, a published docket, and an environmental group with standing to appeal. Same few hundred acres, different regulator, and a paper trail the public can read.
Quick questions
What is Executive Order 2026-494? An order signed August 6, 2026, setting three conditions on data-center projects in Kentucky: an energy plan protecting residential ratepayers, environmental permitting that can be denied on water and air grounds, and a commitment to pay full state and local taxes.
Does it stop the Paducah data center? No. It neither approves nor rejects any project, and it states that local communities keep that decision.
Does it protect Paducah Power customers? Unclear. Its hardest clause is aimed at the Public Service Commission, and Paducah Power System has no case on file there. The Energy Department lists it as a "community partner," not a service provider.
Is there a PSC case for the Paducah project? No. Neither Big Rivers Electric, Jackson Purchase Energy nor Paducah Power System has a case on file tied to the American Energy Hub.
Can lawmakers undo it? An executive order can be replaced by a later governor or superseded by statute. Rep. Josh Bray has said he will file a data-center bill in the first week of the 2027 session.
