Abbott orders regulators to protect Texans from data center costs

Texas Governor Greg Abbott has issued a directive to state officials, specifically the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT), to protect residential electricity customers from the costs associated with data center development. In a letter dated June 10, Governor Abbott outlined his intention to work with the Texas Legislature in 2027 to implement policies that would repeal sales tax exemptions and other incentives for data centers, which could save the state billions by 2028.

The governor also plans to require data centers to establish setbacks, utilize noise-reduction technology, and employ water-efficient practices. He emphasized that data centers must reduce costs for residential customers and avoid draining community water resources. Abbott has given the PUCT until July 31 to refuse residential transmission costs and until July 17 to report on actions taken, limitations faced, and legislative recommendations. He further mandated that data centers pay for all their electric infrastructure costs to prevent the burden from falling on residential ratepayers, and to annually report their water and electricity usage.

In response, PUCT Chairman Thomas Gleeson stated the commission's priority is to ensure reliable and affordable electricity for Texans, and welcomed the directive. ERCOT affirmed its commitment to balancing unprecedented load growth with a reliable grid. The Data Center Coalition, represented by Vice President of State Policy Dan Diorio, expressed shared commitment to responsible growth, noting that many of Abbott's outlined measures are already being practiced by its members. Environment Texas Executive Director Luke Metzger also lauded the call for greater water efficiency and the elimination of subsidies.