By Rita Cook
Correspondent
Texas Metro News
AUSTIN – Texas Governor Greg Abbott recently stepped up to the plate to address the ongoing data center struggles around the state.
On June 10, the governor sent a letter to Thomas Gleeson, Chairman, Public Utility Commission of Texas (PUC) and Pablo Vegas, President and Chief Executive Officer, Electric Reliability Council of Texas (ERCOT).
He issued directives to both PUC and ERCOT to protect residential ratepayers from the soaring electricity costs and infrastructure upgrades associated with data center expansion.
His main directives and recommendations related to infrastructure & ratepayers noting data centers must fully fund their own electric infrastructure to protect residential ratepayers from costs.
He mentioned lowering bills and directed PUC to initiate action to reduce residential transmission costs on utility bills.
The letter also touched on efficiency & power noting future legislation will aim to require “closed-loop” water-efficient cooling and on-site power generation for data centers.
Regarding tax incentives, Abbott recommended phasing out the current data center sales tax exemption and he emphasized more regulations in the form of enhanced reporting on resource usage and new community safeguards regarding noise and setbacks.
His order has also required PUC and ERCOT to submit a joint memorandum by July 17 detailing how they are shielding residential and small-business customers.
So, while the order takes care of the grid and like issues, there are still lingering questions of water consumption, concern about land use and the quality of life as more rural areas convert into industrial development.
What the order was not was a ban or moratorium on new data center developments.
It was not an immediate, standalone law so the directives regarding the repeal of sales tax exemptions, water usage mandates, noise limits, and mandatory power generation additions are legislative recommendations for the upcoming session, not in Abbott’s order.
He also did not expand local county authority by giving rural or local county governments new authority to halt data center developments in their own backyards, which has been an ongoing point of tension across the state.
With this mere order in mind and the fact much comes down to legislation the bottom line translates into “no time soon” for many of these delicate issues, but it is a start.
Abbott said “Texas has enjoyed extraordinary economic success that has spurred unprecedented job growth and attracted more businesses than any other state. Due to Texas’ success, it has become a magnet for business development, including data centers. The rapid scale of data center development requires oversight to ensure every day 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 also instructed The PUC to initiate action to reduce residential ratepayer transmission costs by July 31, 2026.
The letter also requires large data centers annually report electricity and water usage data to the PUC.
“As Texas continues to welcome innovation and investment, we must ensure that growth
strengthens our people and their quality of life without placing undue burdens on Texans and local communities,” Abbott said. The Texas Tribune reported Texas currently has as many as 450 operating data centers (depending on definition of “data center”) with 140 to 240+ additional projects planned or currently under development.
Rita Cook is a world traveler and writer/editor who specializes in writing on travel, auto, crime and politics. A correspondent for Texas Metro News, she has published 11 books and has also produced low-budget films.
