Governor Abbott Orders PUC, ERCOT To Shield Texans From Data Center Costs

By Staff Wtiter

AUSTIN, TEXAS – Governor Greg Abbott has directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to take immediate regulatory action to prevent residential electricity customers from absorbing the financial impact of the state’s rapidly expanding data‑center industry.

In a letter sent to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, the Governor said data‑center growth must not come at the expense of Texas households or local communities.

“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 wrote.

Key Directives Issued

• Full Funding of Infrastructure – The PUC must require data centers to pay the entire cost of new electric infrastructure needed to power their facilities. Abbott said this step is necessary to ensure those expenses are not shifted onto residential ratepayers.
• Joint PUC-ERCOT Review – The two agencies must identify additional actions within their authority to protect residential and small‑business customers. A joint memorandum outlining those measures is due to the Governor’s Office by July 17, 2026.
• Transmission Cost Relief — The PUC must begin formal action to reduce transmission costs for residential customers no later than July 31, 2026.

Governor Abbott also signaled he will work with lawmakers next session to codify long‑term protections. His priorities include:

• Requiring data centers to use water‑efficient cooling systems
• Mandating accurate reporting of electricity and water usage for statewide planning
• Phasing out outdated tax incentives for data‑center operators
• Establishing setbacks, noise‑reduction standards, and other community‑protection measures
• Ensuring data centers add to Texas’ electric capacity rather than only increasing demand

Abbott framed the effort as part of a broader strategy to balance Texas’ economic growth with the needs of residents, particularly as energy‑intensive industries continue to expand across the state.