Gov. Greg Abbott ordered Texas utility regulators and the state’s grid operator to take steps to prevent residential electricity customers from absorbing the infrastructure costs tied to data center growth.
In a letter to the Public Utility Commission of Texas Chairman Thomas Gleeson and the Electric Reliability Council of Texas CEO Pablo Vegas, Abbott laid out a series of directives intended to shield households and small businesses, according to a press release from the governor’s office.
“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 in the press release.
Under the directives, the PUC must require data centers to fully fund the electric infrastructure costs needed to serve their operations so those expenses are not shifted onto residential ratepayers. The PUC and ERCOT were also instructed to identify additional actions within their authority to protect residential and small-business customers and to submit a joint memorandum to the Office of the Governor by July 17.
Abbott additionally directed the PUC to initiate action by July 31 to lower transmission costs for residential ratepayers.
The governor said he intends to work with the Legislature in the next session to put the protections into state law and to ensure that data centers contribute to Texas’ electric capacity rather than simply adding to demand.
Planned legislative proposals include requiring data centers to use water-efficient cooling systems, mandating accurate reporting of electricity and water use for state planning, phasing out outdated tax incentives, and adopting measures such as setbacks and noise-reduction requirements to protect surrounding communities.
The governor’s letter to Chairman Gleeson and CEO Vegas is available to read here.
