House Lawmakers Weigh Data Center Growth and Its Costs
Texas lawmakers held a hearing to discuss the rapid growth of the data center industry in the state, addressing concerns about electricity demand, water usage, and local control. State agencies proposed methods to manage power grid integration and cost allocation, while public witnesses voiced concerns about environmental impacts and infrastructure costs. The hearing underscored the pressure on lawmakers to determine who bears the costs and what protections are necessary for residents.
Texas lawmakers convened a six-hour House State Affairs Committee hearing to address the escalating growth of the state's data center industry and its associated costs and impacts. State agencies, power-grid regulators, and data center companies presented strategies to accommodate the massive electricity demand while mitigating risks and costs for residential and smaller commercial consumers.
PUCT Chairman Thomas Gleeson outlined plans for data centers to collocate with generating facilities, and ERCOT President Pablo Vegas discussed studying grid effects through batch-integration. OPUC Chief Executive Benjamin Barkley proposed transitioning from a 4CP to a 12CP cost allocation model to ensure large electricity users bear a more consistent share of transmission costs.
Despite these proposed measures, numerous public witnesses, including State Reps. Rafael Anchia and Richard Raymond, voiced significant concerns. These included increased infrastructure costs, a lack of transparency, heightened heat and noise levels, fire risks, and substantial water and power consumption. Rep. Anchia questioned the adequacy of air permits, while Rep. Raymond highlighted the absence of a state database for data center potable water use. Conversely, Assistant Director of Economic Development John Knight from Red Oak and Michael McNamara of Lancium spoke in favor of data centers, emphasizing their transformative economic benefits and the need to differentiate between "bad actors" and beneficial developments. Michael Lucci, founder of State Armor, raised national security implications, linking AI dominance to data center expansion.
While the hearing did not yield a consensus on new data center regulations, it emphasized the growing legislative pressure to define cost responsibility, enhance community information access, and establish protections for Texans living near these facilities, ahead of the next legislative session in January 2027.