Texas data center regulation crackdown

In late July 2026, Texas state senators asked the Public Utility Commission to delay a $100 billion, 765‑kV transmission expansion, arguing the plan ignored gas‑generation scenarios and would burden landowners. At the same time, Governor Greg Abbott sent a letter demanding that new data centers fully cover grid‑infrastructure costs, protect residential rates and conserve water, signalling heightened scrutiny of large‑scale projects.

A week later, Abbott intervened directly to stop the Diode data‑center project near Cedar Creek Lake, citing failures to meet standards for community safety, water use and grid impact. The firm withdrew its plans, and Abbott outlined new expectations for data centers, including self‑funded infrastructure, added generation capacity, water‑efficient cooling, reduced noise, and the removal of certain tax exemptions. He announced forthcoming legislation to require annual reporting of electricity and water usage.

By early August, the governor escalated the response, ordering the Public Utility Commission and ERCOT to audit every data‑center proposal seeking grid connection. Projects that do not satisfy audit criteria—covering tax incentives, projected power and water use, community impact and ownership—will be denied access. Abbott warned that data‑center requests now account for about 90 % of new capacity in ERCOT’s interconnection queue, threatening grid reliability, and pledged to work with the legislature to codify stronger protections for ratepayers and local communities.