
Texas may overhaul power market to handle data center boom
News ClipE&E News by POLITICO·TX·3/26/2026
Texas's top electricity regulator, Thomas Gleeson, announced that the state's power system is facing significant changes due to surging demand from data centers. The Public Utility Commission and ERCOT are considering overhauling how large users are charged for grid costs and how projects interconnect to the grid, aiming to balance affordability and reliability for all ratepayers.
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Gov: Public Utility Commission, Electric Reliability Council of Texas, Texas Gov. Greg Abbott, Lt. Gov. Dan Patrick, Texas Energy Poverty Research Institute
HOUSTON — Texas's top electricity regulator, Thomas Gleeson, chair of the state Public Utility Commission (PUC), indicated on Wednesday that the state's power system is poised for major changes. Speaking at CERAWeek, Gleeson highlighted the tension between affordability and reliability within the grid, exacerbated by a substantial influx of new data centers. He noted that discussions about redesigning the state's main power market, operated by the Electric Reliability Council of Texas (ERCOT), are now secondary to determining how many large users can connect to the grid.
The PUC is preparing to consider specific changes to market setup, which could alter how large users are charged for grid costs. Currently, these costs are based on power usage during peak hours (Four Coincident Peak program or 4CP), a system Gleeson suggested would likely be discarded. This is because a significant portion of new transmission and distribution infrastructure is being built for large industrial and data center customers, and the PUC aims to prevent these costs from disproportionately burdening residential ratepayers.
ERCOT and the PUC are also working to finalize new rules for evaluating data center projects in batches rather than individually, with the first group expected to be announced by September. This new system will determine which projects can interconnect to the grid. Gleeson's comments suggest a shift in focus from purely affordability, a priority since the market's inception in 1999, to reliability, particularly after Winter Storm Uri in 2021 caused widespread outages. However, he also believes the grid now has