Abbott Issues Directive to ERCOT, Public Utility Commission to Control Rising Data Center Costs
Published in The Texan, 6/10/2026
The governor said he plans to work with the Legislature to further protect ratepayers from growing expenses.
by Meridith Dyer, 6/10/2026
As data centers expand readily in the state, Gov. Greg Abbott has directed the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to take steps to ensure that “residential electric bills are not negatively affected.”
Abbott emphasized in a June 10 press release that data centers must “operate in ways that reduce costs for residential electricity customers” and not drain water from local neighborhoods.
In a letter to PUC Chairman Thomas Gleeson and ERCOT Chief Executive Officer Pablo Vegas, Abbott touted the state’s “economic success that has spurred unprecedented job growth and attracted more businesses than any other state.”
Abbott directed PUC to require data centers to “fully fund the costs of electric infrastructure needed to serve their operations,” without passing costs on to residential ratepayers, and to begin reducing residential ratepayers’ transmission costs by July 31.
Both the PUC and ERCOT must also flag actions they can take to protect residential and small business ratepayers, with the two agencies tasked with submitting a joint memorandum to the governor’s office by July 17.
The governor acknowledged that Senate Bill 6 from the 89th Legislature "took meaningful steps to balance economic growth and consumer interests,” noting that it required large loads to interconnect to the state's grid to "support long-term system reliability."
“However, more must be done to protect Texans, which is why I am implementing these directives that include this review,” Abbott wrote.
He concluded by pledging to work with the Legislature in the upcoming session next year on issues such as cementing the PUC’s requirement for data centers to cover their electricity infrastructure costs, and requiring all new data centers to use water-efficient closed loop cooling systems.
Other legislative goals include annual reporting on data center electricity and water usage, repealing sales tax exemptions for data centers, and reducing impacts on local communities through measures like setbacks and noise-reduction technology.
State Rep. Helen Kerwin (R-Glen Rose) said she appreciates Abbott’s actions to ensure that data centers “bear the costs they create,” rather than Texas families, farmers, and business owners.
The Democratic gubernatorial nominee, state Rep. Gina Hinojosa (D-Austin), criticized Abbott in a June 10 press release, calling his letter a “CYA move” — meaning “cover your ass.” She said that data centers are expanding in Texas due to Abbot’s “generous tax dollar giveaway,” which will result in Texans footing the bill.
“He is backtracking now because I’ve been touring the state since last year with a clear message: data centers are owned by the richest men in the world and they should pay for themselves,” Hinojosa said.
The Texas House Committee on State Affairs met in April to discuss an interim charge on the effects of data centers on the state’s energy grid and water supply.
