Gov. Abbott orders data centers to pay own power grid costs as rural counties face limited authority
Governor Greg Abbott has directed state regulators to ensure data centers pay their own power grid connection costs and reduce residential electric bills, while also pushing for legislative changes to repeal data center tax breaks and require noise/community impact reduction. This initiative comes as rural Texas counties, such as Robertson County, face limited authority under state law to regulate or halt data center developments, primarily relying on tax abatements for negotiation.
Texas Governor Greg Abbott has issued a directive to the Public Utility Commission (PUC) and ERCOT, instructing them to ensure data centers bear the full cost of connecting to the state's power grid, with the aim of reducing residential electric bills. Additionally, the Governor plans to advocate for the state legislature to repeal existing tax breaks for data centers and mandate measures to mitigate their noise and community impacts.
This statewide action follows a surge in planned data center developments across Texas, particularly in rural counties. Robertson County Judge J.D. Scarpinato highlighted the limited authority counties possess under current state law, citing Dillon's Rule, which restricts counties to powers expressly granted by the state. This legal framework means counties typically lack zoning capabilities, cannot outright ban projects, and face legal uncertainties regarding moratoriums.
Faced with these limitations, Robertson County has hired a consultant to assist in negotiating with developers, with Judge Scarpinato identifying tax abatements as the county's primary tool to influence development. Darrek Ferrell, Director for the City and County Governance Program at Texas A&M's Bush School, affirmed the importance of due diligence for counties to ensure that incentives act as investments rather than giveaways. Ferrell also advised residents to engage with their county commissioners and judges to inquire about project evaluations and community benefits.
Judge Scarpinato has declined to comment on the matter, prompting KBTX to file a public information request with Robertson County for records pertaining to legal counsel sought for data center negotiations. The PUC and ERCOT are expected to submit a joint report on their findings by July 17.