Texas agencies outline plans to balance affordability with data center growth
Texas state agencies, the Public Utility Commission (PUC) and Electric Reliability Council of Texas (ERCOT), have outlined new policies to regulate data centers connecting to the state grid, aiming to ensure data center companies bear the costs of growth. These policies, spurred by a gubernatorial order, include evaluating large projects in batches and requiring companies to pay for necessary grid infrastructure. Meanwhile, several politicians have called for a moratorium on data center development, citing concerns over water and electricity use, and one developer, Diode, withdrew a project in East Texas due to pushback.
Texas state agencies, including the Public Utility Commission (PUC) and the Electric Reliability Council of Texas (ERCOT), have unveiled new policies aimed at regulating data centers that connect to the state's power grid. These measures are designed to ensure data center companies, rather than residents, are responsible for covering the costs associated with the industry's rapid growth.
The initiative follows a June 10 order from Gov. Greg Abbott, who emphasized the need to protect residents by prioritizing affordability, reliability, and the interests of Texas communities. Among the new policies, the PUC and ERCOT will prohibit data centers from appropriating existing power resources, launch a new process for evaluating large grid-connection projects in batches, and require large consumers to pay for the grid infrastructure necessitated by their operations. The PUC officially approved ERCOT's batch study process on June 18, which is expected to help assess the collective impact of developments in specific areas.
Simultaneously, state politicians, including State Rep. Gina Hinojosa and Agriculture Commissioner Sid Miller, have called for an executive order establishing a moratorium on data center development. They cite concerns over the industry's significant water and electricity consumption, arguing that residents currently lack sufficient input on such projects. This pushback has already seen tangible results, with data center developer Diode withdrawing plans for a project in East Texas following bipartisan opposition and Gov. Abbott's directive for stricter standards.