Chevron seeks Texas school district tax break for data center power plant

Chevron subsidiary Energy Forge One has applied for a significant state tax abatement in West Texas to build a gas power plant exclusively for a data center. The State Comptroller’s office has recommended approval, a first for a power plant solely for data center use. While no definitive agreement is in place, Microsoft has an "exclusivity agreement" with Chevron and Engine 1, an investment fund, regarding power from the project. The potential tax savings for Chevron could exceed $227 million over 10 years, granted under Texas' Jobs, Energy, Technology, and Innovation (JETI) Act, which incentivizes large infrastructure projects. The Pecos-Barstow-Toyah school board approved the project's tax abatement application in February. This decision, however, coincides with growing public and legislative concern in Texas over the escalating costs of data center incentives and their impact on state revenue, with some estimating annual losses in the billions. Lieutenant Governor Dan Patrick has ordered the legislature to study these costs and recommend safeguards. Environmental concerns also surround the planned gas plant, which is designed to operate "behind-the-meter" without connecting to the public grid. A WIRED analysis suggests such plants, including Energy Forge's, could emit vast amounts of greenhouse gases, potentially more than some small countries. Despite Microsoft's pledge to pay a "full and fair share of local property taxes" and not seek local property tax rate reductions, corporate watchdog groups like Good Jobs First criticize that this pledge doesn't explicitly preclude tax abatements, which are distinct from tax rates. Experts note that while the JETI program has some improvements over prior incentive programs, its guardrails for projects like Chevron's remain relatively low.