Texas pauses data center interconnections

Governor Greg Abbott on August 3 directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to audit every data center advancing through ERCOT’s interconnection process before any project moves forward. Abbott said projects that fail to comply with requirements set by the PUCT, ERCOT and state law will be denied connection to the Texas grid. The order extends a months-long state push to tighten how Texas handles large new power users, especially data centers. Abbott said the review will cover power supply, water use, community impacts and ownership disclosures. ### Why did Texas step in now? Abbott said on August 3 that ERCOT is considering more than 474 gigawatts of requests to connect to the Texas grid, a figure he said is more than five times ERCOT’s record peak electricity demand. He also said about 90% of those new power requests are data centers. Abbott said that level of proposed load growth could endanger grid reliability and stability. (gov.texas.gov) The governor had already moved on June 10 to tell regulators that data centers must fully fund the electric infrastructure needed to serve them and not shift those costs to residential customers. In that earlier directive, Abbott also said he wanted projects to use water-efficient cooling systems, report accurate electricity and water usage, and avoid burdening neighborhoods. (gov.texas.gov) ### What exactly does the audit require from data center projects? Abbott’s August 3 directive requires regulators to collect details on whether projects are relying on tax incentives, grants, abatements or other public support. It also requires developers to disclose projected annual and peak electricity consumption and describe any progress toward building or procuring on-site generation or other measures to reduce demand on the ERCOT grid. (gov.texas.gov) The same order tells PUCT and ERCOT to gather information on projected annual and peak water use, water sources, cooling technology and measures to limit impacts on nearby communities, including noise, lighting, traffic and emergency-response planning. Abbott also ordered disclosure of ownership and controlling interests. (gov.texas.gov) ### Didn’t Texas already change the interconnection process? The Public Utility Commission of Texas said on June 18 that it approved changes to ERCOT’s process for evaluating requests from data centers and other large power users seeking to connect to the grid. PUCT Chairman Thomas Gleeson said the revised process was meant to manage rapid growth in interconnection requests while protecting reliability for homes and businesses. (gov.texas.gov) That June 18 action created a “Batch Study” process under which ERCOT groups projects together to speed evaluations, separate speculative projects and identify needed transmission infrastructure, according to the PUCT. The commission said the revisions would take effect later in the summer and were part of broader rulemakings aimed at ensuring residential consumers do not shoulder connection costs. (ftp.puc.texas.gov) ### What have regulators done since Abbott’s June order? Abbott said on July 24 that the PUCT and ERCOT had already begun “sweeping changes” in how data centers pay for infrastructure and had implemented a new interconnection screening process. He said the agencies were also developing stronger standards that data centers must meet before connecting to the grid. (ftp.puc.texas.gov) The July 24 release said regulators were working on rules requiring new data centers to reduce power quickly when ERCOT instructs them and recommended legislation to require registration with the PUCT and ERCOT so the state has accurate information about electricity and water operations. Abbott also said he would work with lawmakers to clarify the agencies’ authority and codify additional protections in the next legislative session. (gov.texas.gov) ### So is this a full stop or a tougher filter? Abbott’s August 3 order says the audit “must be completed before any data center project moves forward,” making the immediate effect a pause for projects still advancing through ERCOT’s process. At the same time, the state’s June and July actions show Texas is not shutting the door on large-load growth altogether; regulators have said they are redesigning the process to sort serious projects from speculative ones and to make projects cover more of their own system costs. (gov.texas.gov) The next formal step is legislative as well as regulatory. Abbott said on July 24 and June 10 that he will work with the Texas Legislature in its next session on measures covering cost recovery, reporting requirements, cooling standards and other data-center rules, while PUCT dockets and ERCOT’s updated interconnection procedures continue to move ahead. (gov.texas.gov 1) (gov.texas.gov 2)