Texas Lacks Statewide Record of Water Use, Local Tax Breaks for Data Centers
The Texas Legislature is grappling with a lack of comprehensive statewide data on data center water usage and local tax breaks, with state agencies relying on self-reported information from developers. Governor Greg Abbott has requested an audit from ERCOT and PUC to investigate data centers connecting to the power grid that benefit from tax incentives. Legislative committees are addressing this issue, seeking more robust tracking mechanisms.
During a recent lengthy hearing in the Texas Capitol, officials informed the House State Affairs Committee that state agencies do not systematically track data centers' water consumption or the local tax abatements they receive. Instead, the Texas Legislature and relevant agencies, including the Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission of Texas (PUC), currently depend on surveys and attestations from data center developers for such information.
Pablo Vegas, CEO of ERCOT, and Thomas Gleeson, chairman of the PUC, confirmed this reliance on developer-provided data. This comes after Governor Greg Abbott tasked these agencies with auditing data center projects connecting to the Texas power grid, specifically to identify those benefiting from state and local tax breaks. Both Vegas and Gleeson stated that their agencies would gather this information through surveys, with no immediate plans for independent verification.
Separately, during an exchange with state Rep. Richard Peña Raymond (D-Laredo), officials from the Texas Commission on Environmental Quality (TCEQ) and the Texas Water Development Board (TWDB) also admitted that no statewide record of data center water usage is maintained. Temple McKinnon, director of water supply planning at TWDB, indicated only a PUC survey collects such data, while Robert Sadlier, deputy director of water quality at TCEQ, noted that the permit process doesn't mandate applicants to secure a water supply beforehand. The PUC is expected to finalize its survey and submit it to the governor and the Legislative Budget Board by December 31.