Abbott Orders Data Centers to Cover Their Own Power Costs, Protecting Texas Ratepayers

AUSTIN, TX ⎯ Governor Greg Abbott today directed the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to take immediate steps to protect residential ratepayers from the costs of data center expansion.

“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,” said Governor Abbott.

In a letter to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas, Governor Abbott directed the following actions:

• The PUC must require data centers to fully fund the costs of electric infrastructure needed to serve their operations, preventing those costs from being passed on to residential ratepayers.
• The PUC and ERCOT must identify additional 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.
• The PUC shall initiate action to reduce residential ratepayers’ transmission costs by July 31, 2026.

Governor Abbott also pledged to work with the Legislature next session to codify these protections and ensure data centers add to Texas’ electric capacity rather than merely increasing demand. The Governor will work with lawmakers on legislation requiring data centers to use water-efficient cooling systems, report accurate data on electricity and water usage necessary for state planning, phase out outdated tax incentives, and adopt other practices that protect neighboring communities, such as setbacks and noise reduction.

Read Governor Abbott’s full letter to Chairman Gleeson and CEO Vegas here.