Abbott recommends data center regulation to state lawmakers
Governor Greg Abbott has released comprehensive recommendations for data center regulation in Texas, aiming to shift infrastructure costs from ratepayers to data center developers. These proposals address the rapid growth of AI-driven development and soaring power demands on the ERCOT grid. The recommendations come amidst increasing community opposition to large-scale data center projects and a notable omission of expanded local zoning control.
Texas Governor Greg Abbott has unveiled extensive regulatory recommendations for data centers, slated for consideration by the Legislature in the 2027 session. The proposals are a direct response to the surge in AI-driven data center development and escalating power demands in the state, with the primary goal of ensuring data centers bear the financial burden of their expansion rather than Texas ratepayers.
Abbott's directives include mandating the Public Utility Commission of Texas (PUC) to take action by July 31 to reduce residential transmission costs and require data centers to cover all power infrastructure expenses. Furthermore, he has instructed the PUC and the Electric Reliability Council of Texas (ERCOT) to provide a joint memorandum by July 17, detailing their efforts to mitigate risks and cost increases for Texans due to data center growth. The Data Center Coalition has expressed support, noting the industry's commitment to responsible growth.
These recommendations arrive as opposition to large-scale data center projects intensifies across Texas, driven by community concerns over water usage, noise pollution, land impacts, and strain on local infrastructure. ERCOT has reported a staggering 439 gigawatts in connection requests from large projects, with data centers accounting for approximately 89% of this demand, far exceeding the state's peak grid capacity. Texas, alongside Virginia, leads the nation with 335 existing data centers and over 248 more under development or planned.
A notable absence from Abbott's priorities is any measure to expand local control over data center development. This omission is significant given that counties like Hood County are struggling with a lack of authority to regulate projects increasingly locating in rural, unincorporated areas devoid of zoning restrictions. Efforts by some lawmakers to slow development have faced resistance, including threats from state Sen. Paul Bettencourt and lawsuits from data center developers.