Texas Gov. Greg Abbott sent a letter to state energy regulators Wednesday saying they must take steps to prevent the cost of data center infrastructure from being passed on to residents.
In the letter, Abbott directed the Public Utility Commission of Texas (PUCT) to take action to ensure that data centers will lower residents' energy bills when these facilities connect to the grid and require data centers to pay for the costs of their electric infrastructure. The governor also directed the commission and the Electric Reliability Council of Texas (ERCOT) to review their authority and "identify actions that can be taken under those authorities to safeguard Texans, their property, and resources."
Abbott said the agencies must submit a memorandum by July 17 outlining the steps they've taken, statutory limits to their authority and laws needed to take action. He also said the PUCT must take action by the end of July to reduce residential transmission costs.
The governor’s directive comes amid the rapid development of artificial intelligence, with Texas poised to become the world’s largest data center market in the next few years. The explosion of data centers in the state, along with the resources they consume, has sparked bipartisan backlash from residents and local elected officials across Texas. And regulations for these facilities have divided the state's Republican Party.
"The rapid scale of data center development requires oversight to ensure everyday Texans are not burdened with the costs of infrastructure driven by data center expansion, and to ensure that as data centers interconnect to the Electric Reliability Council of Texas (ERCOT) grid, residential electric bills are not negatively affected," Abbott wrote in his letter.
The PUCT did not immediately respond to a request for comment.
ERCOT, which operates the power grid that serves most of the state, said in a statement to Houston Public Media it will “continue working with the Public Utility Commission of Texas, statewide leadership, and the Legislature to balance the needs of unprecedented load growth and a thriving Texas economy while ensuring a reliable Texas grid.”
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Abbott, in his letter, also outlined his legislative priorities for next year, attempting to rein in data centers.
The governor said he plans to "codify" the PUCT's actions to force data centers to pay for their own electric infrastructure and contribute to the state’s electric supply. Abbott also said he will work to pass legislation that will require data centers to use "water-efficient technologies" and report their electricity and water usage; repeal financial incentives and tax exemptions for these facilities; and reduce their impact on nearby communities.
Earlier this year, state Sen. Paul Bettencourt, R-Houston, said rural Hood County, in the Dallas-Fort Worth region, could not pass a moratorium on data centers, citing state legislation he helped sponsor. County commissioners ultimately voted against the moratorium. Bettencourt called for Texas Attorney General Ken Paxton to intervene in any counties where commissioners attempted to pass a data center moratorium.
In a statement to KERA, the Data Center Coalition – a trade association for the data center industry – said it looks forward to working with the governor and state regulators as these proposals are developed.
"Data centers are the backbone of the 21st century economy, and our member companies are already implementing many of the practices outlined today, including deploying advanced cooling technologies, working in close consultation with water providers and local communities, and paying the full cost of service for the power and energy infrastructure needed to support data center operations," said Dan Diorio, the coalition's vice president of state policy.
KERA’s Pablo Arauz Peña contributed to this report.
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