Governor Abbott directs PUC and ERCOT to shield Texans from data center infrastructure costs
Governor Greg Abbott directed the Public Utility Commission of Texas (PUC) and ERCOT to protect residential ratepayers from data center expansion costs. He mandated that data centers fully fund their electric infrastructure and will work with the Legislature on new laws. These laws will address water-efficient cooling systems, usage reporting, tax incentives, setbacks, and noise reduction.
Texas Governor Greg Abbott has issued a directive to the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT), ordering immediate actions to protect residential electricity customers from the financial burden of data center expansion. In a letter to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, Governor Abbott emphasized that data centers must operate in ways that reduce costs for residents, conserve water, and consider community needs.
The directive mandates that the PUC require data centers to fully fund the costs of electric infrastructure necessary for their operations, thereby preventing these expenses from being passed on to residential ratepayers. Additionally, the PUC and ERCOT must identify further measures to safeguard residential and small business customers, submitting a joint memorandum to the Governor's office by July 17, 2026. The PUC is also tasked with initiating actions to reduce residential transmission costs by July 31, 2026.
Looking ahead, Governor Abbott pledged to collaborate with the Texas Legislature in the next session to codify these protections into law. This legislative effort will focus on ensuring data centers contribute to Texas' electric capacity, rather than solely increasing demand. Proposed legislation will also require data centers to utilize water-efficient cooling systems, accurately report electricity and water usage for state planning, phase out outdated tax incentives, and adopt community-protective practices such as setbacks and noise reduction.