Governor Greg Abbott directed the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to take immediate steps to protect residential electricity customers from the financial impacts of data center expansion in Texas.
In an official letter to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, Abbott seeks to establish parameters to insulate Texas families and small businesses from escalating grid infrastructure burdens.
According to the press release, the Governor mandated three specific regulatory actions. First, the PUC must require data centers to fully fund the electric infrastructure costs necessary to serve their operations, preventing those costs from being passed on to residential ratepayers.
Additionally, the PUC and ERCOT must identify further actions under their authority to safeguard residential and small business ratepayers and submit a joint memorandum to the Office of the Governor by July 17, 2026.
Finally, Abbott said the PUC is required to initiate administrative action to reduce transmission costs for residential ratepayers by July 31, 2026.
“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 said.
The Governor pledged to work alongside lawmakers during the upcoming legislative session to codify these consumer protections into state law. Abbott’s legislative goals include ensuring data centers add net capacity to the Texas grid rather than simply straining existing supply, mandating water-efficient cooling systems, enforcing accurate utility data reporting, phasing out outdated tax incentives, and establishing neighborhood safeguards like setbacks and noise reduction requirements.
Texas House Speaker Dustin Burrows quickly signaled his support for the regulatory overhauls and upcoming legislative package. Writing on X, Speaker Burrows stated, “Thank you Governor Abbott for pushing for needed accountability and reform. I look forward to working with you on this next session.”