Greg Abbott tells PUC, ERCOT not to pass new data center costs to customers
Texas Gov. Greg Abbott has issued an order directing the Public Utilities Commission (PUC) and ERCOT to ensure that the costs of new electrical infrastructure for data centers are not passed on to Texas ratepayers. This marks the first time the governor has sought to limit the rapid growth of data centers, which face increasing criticism over their significant energy and water consumption. Abbott also called on lawmakers to require data centers to use water efficiently and to repeal their sales tax exemptions.
Texas Gov. Greg Abbott has taken his first steps to address the rapid expansion of data centers in the state by issuing an order aimed at protecting ratepayers from bearing the costs of new electrical infrastructure. On Wednesday, the governor directed the Public Utilities Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) to implement measures preventing these costs from being passed on to consumers, citing concerns over the increasing demand placed on the state's grid by hundreds of proposed data centers.
In addition to the order, Governor Abbott called upon state lawmakers to mandate water efficiency for data centers and to repeal existing sales tax exemptions that benefit the industry. This move comes amid growing political pressure and public backlash, particularly from residents in heavily Republican areas, over the substantial energy and water consumption of data centers. State officials like Agriculture Commissioner Sid Miller have publicly advocated for a temporary moratorium on new data center development, while Lt. Gov. Dan Patrick and House Speaker Dustin Burrows have initiated studies into the industry's resource demands.
Despite previously being a vocal supporter of Texas's tech boom and touting the state as an 'epicenter of AI development'—even appearing with Google CEO Sundar Pichai during a $40 billion data center investment announcement—Abbott's recent actions signal a shift towards stricter oversight. Data from ERCOT indicates that over 480 'large' data centers have requested grid connections by 2032, a significant increase from the current dozen considered major electricity users.