Texas utility agencies say they’re taking action to protect ratepayers from data center costs

AUSTIN (KVIA) -- Texas Governor Greg Abbott released a response Friday from the state's Public Utility Commission and the Electric Reliability Council of Texas to his June 10 directive to protect residential ratepayers from the costs of data centers.

“I directed the Public Utility Commission and ERCOT to protect Texans from the costs of data center expansion and they are putting that direction into action,” said Governor Abbott. "Residential ratepayers will not foot the bill for this industry’s growth. These actions keep electric bills affordable and protect the water our communities need.”

June 10, the governor told the PUCT to make data centers pay for their own electric infrastructure and to work with ERCOT on more steps to protect ratepayers.

He said PUCT and ERCOT reported they're already taking action by:

• Requiring data centers to not only pay for transmission infrastructure built to serve them but contribute toward meaningfully reducing residential electric bills.
• Adopting rules to prevent large data centers from diverting existing power away from the ERCOT and ensuring power is prioritized for residents.
• Making changes to how data centers pay for the infrastructure needed to serve them, ensuring data centers do not shift those costs onto residents or strain state resources.
• Implemented a new interconnection screening process to prevent data centers from overburdening the power grid.
• Strengthening ERCOT’s process for evaluating and managing data center development, and improved long-term planning to ensure our infrastructure will reliably serve residents.
• Developing stronger standards that data centers must meet before they can connect to the grid.
• Mandate that new data centers reduce their power quickly when ERCOT instructs them. 

Both agencies reportedly recommended legislative changes for the upcoming session, Gov. Abbott said.

They recommend expanding the Lone Star Infrastructure Protection Act to cover large data centers so "foreign actors cannot use them to threaten the Texas grid."

Additionally, the PUC and ERCOT recommended clarifying the agencies' authority to establish other reliability requirements data centers would have to follow.

They also recommend requiring data centers register with PUCT and ERCOT so the state has accurate information about their water and electricity operations.

Gov. Abbott said he will work with the legislature to codify the protections.

Thursday, the governor said Diode Ventures, the developer for a proposed data center in East Texas, scrapped its plans after it said it didn't meet his directives.