By David Taylor / Managing Editor
AUSTIN — Gov. Greg Abbott has directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to halt proposed data center projects from moving forward until state regulators verify critical details about how the facilities would operate, from their electricity and water demands to their ownership and community impacts.
The directive, issued Monday, Aug. 3, requires PUCT and ERCOT to conduct a comprehensive verification and audit of all data centers advancing through ERCOT’s interconnection process before any additional projects are approved. Projects that do not comply with requirements set by the agencies or state law will be denied connection to the Texas grid.
“Our top priority is to protect Texans’ safety and quality of life,” Abbott said. “Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first.”
ERCOT is reviewing more than 474 gigawatts of requests to connect to the state grid, a figure more than five times Texas’ record peak electricity demand in the ERCOT region. State officials said about 90 percent of those new power requests are tied to data centers, raising concerns that rapid load growth could threaten grid reliability if projects are not fully vetted.
Abbott’s latest order builds on his June 10 directive and requires state regulators to obtain detailed information from each data center project before allowing construction-related approvals to proceed through the interconnection process. The required information includes whether developers are paying their own way or relying on state or local financial assistance, including tax incentives, grants, abatements or other public support.
The governor also directed PUCT and ERCOT to determine whether each project will provide its own electricity or rely on the ERCOT grid, including projected annual and peak electricity consumption and any plans to build or procure on-site generation. Regulators must also review projected water use, anticipated water sources, cooling technology and whether facilities will use air-cooled, closed-loop or other water-efficient systems.
Projects must also disclose steps to reduce impacts on neighboring property owners and communities, including noise mitigation, light controls, setbacks, traffic improvements and emergency response coordination. Abbott’s directive further requires information about ownership and controlling interests in each project.
Earlier directive sought to shield ratepayers
In his June 10 directive, Abbott told PUCT and ERCOT to take immediate steps to protect residential ratepayers from costs associated with data center expansion.
“Data centers must operate in ways that reduce costs for residential electricity customers, do not drain water needed for our communities, and take into consideration the needs of our neighborhoods,” Abbott said at the time.
That earlier order required the PUC to make data centers fully fund the electric infrastructure needed to serve their operations so those costs are not shifted to residential ratepayers. It also directed the PUC and ERCOT to identify additional actions within their authority to safeguard residential and small business customers and submit a joint memorandum to the governor’s office by July 17, 2026.
Abbott also directed the PUC to initiate action by July 31, 2026, to reduce residential transmission costs. He pledged to work with lawmakers next session to codify protections requiring data centers to add to Texas’ electric capacity rather than simply increasing demand, use water-efficient cooling systems, report accurate electricity and water usage data, phase out outdated tax incentives and adopt practices such as setbacks and noise reduction to protect nearby communities.
With the latest directive, Abbott signaled that proposed data centers will face a more rigorous state review before they can move ahead in Texas’ rapidly expanding technology and artificial intelligence infrastructure market.
Data centers are already a major presence in Texas, though estimates vary widely because public trackers use different definitions and reporting methods. Some industry databases count roughly 129 to more than 200 operating facilities in the state, while broader market estimates place the total above 600. Texas does not appear to maintain a single official historical inventory, and available public sources do not clearly identify the first data center built in the state.
Leave a Comment