~ In a recent announcement, Governor Greg Abbott has directed the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to take immediate action in protecting residential ratepayers from the costs associated with data center expansion.

According to Governor Abbott, data centers must operate in a manner that not only reduces costs for residential electricity customers but also takes into consideration the needs of local communities and does not deplete essential resources such as water. In a letter addressed to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, Governor Abbott outlined specific actions that must be taken to achieve these goals.

Firstly, the PUC is required to ensure that data centers fully fund the costs of electric infrastructure needed for their operations, preventing these expenses from being passed on to residential ratepayers. Additionally, both the PUC and ERCOT are expected to identify further measures within their authority to safeguard residential and small business ratepayers. A joint memorandum outlining these actions is due to be submitted to the Office of the Governor by July 17, 2026.

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Furthermore, Governor Abbott has instructed the PUC to initiate action by July 31, 2026, in order to reduce transmission costs for residential ratepayers. These measures are aimed at protecting consumers from bearing any additional financial burden due to data center expansion.

Governor Abbott has also pledged to work with lawmakers during the next legislative session in order to codify these protections and ensure that data centers contribute positively towards Texas' electric capacity rather than solely increasing demand. This may include legislation requiring data centers to use water-efficient cooling systems, accurately report electricity and water usage for state planning purposes, phase out outdated tax incentives, and implement practices such as setbacks and noise reduction measures that protect neighboring communities.

The full letter from Governor Abbott can be found here. With these actions in place, it is hoped that residential ratepayers will be shielded from any negative impacts of data center expansion, while also promoting responsible and sustainable growth in the state.

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