New data centers won't be able to connect to the Texas power grid until state regulators complete a comprehensive audit of these facilities, following a directive from Gov. Greg Abbott on Monday.
In a letter to the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT), Abbott called on the agencies to collect information on water and power usage at these facilities and to pause data centers' ability to connect to the grid until the audit is complete.
"Our top priority is to protect Texans' safety and quality of life," Abbott said in the letter. "That includes providing affordable energy, maintaining a reliable electric grid, preserving water for our communities, and championing Texas values. Those priorities can, and must, be achieved while also creating the jobs and providing the economic opportunity that comes with our national leadership in technological innovation and investment."
ERCOT says large energy consumers are requesting 474 gigawatts of power — more than five times the amount of energy used to power the entire state during record-breaking demand. About 90% of those requests are from data centers.
It's the latest correspondence between the governor and the state's energy agencies, who are grappling with how to regulate the fastest-growing data center market in the country. And it comes as data centers have faced increasing public scrutiny across the political spectrum.
Earlier this summer, Abbott directed the commission to take action to ensure that data centers lower residents' energy bills when facilities connect to the grid and require data centers to pay for the costs of their electric infrastructure.
The governor also directed the commission and ERCOT, which operates the state's electricity grid, to review their authority and "identify actions that can be taken under those authorities to safeguard Texans, their property, and resources."
PUCT Chairman Thomas Gleeson responded to the governor’s letter last month, outlining the steps the two agencies had already taken to prepare for an influx of data centers to the state. Most of the policies began before the governor’s directive and were undertaken in response to a state law passed in the 2025 legislative session.
In his latest directive, Abbott has directed the PUCT and ERCOT to collect the following information for all new data centers looking to join the power grid:
- Financing for each project, including any government funding and tax incentives
- Projected power usage for each facility and steps taken to reduce the facility's reliance on the Texas power grid, including on-site electric plants used to power the data centers
- Each facility's water usage, and the extent to which it will reuse water or other cooling systems that don't rely on local water sources
- Any efforts to mitigate impacts on nearby communities, such as "noise mitigation, light controls, setbacks, traffic improvements, emergency response coordination, and other community protection measures."
- Details about each project's ownership and "controlling interests."
The commission and ERCOT recently approved a new process for data centers and other large energy consumers looking to connect to the state's power grid. The agencies have been preparing to evaluate its first batch of data centers and other large energy consumers under the new standards. That study, known as "Batch Zero," would evaluate how much energy could be allocated to each project included in that cohort. However, that study is now on hold, according to ERCOT.
"ERCOT is reviewing Governor Abbott’s letter concerning data centers and will work with the Public Utility Commission of Texas to implement the Governor’s directive, including postponement of the Batch Zero transmission planning study," ERCOT spokesperson Trudi Webster said in a statement.
In a statement, PUCT Chairman Thomas Gleeson said the commission will work with ERCOT to fulfill the governor’s directive.
“We appreciate Gov. Abbott's directive and will continue to work closely with ERCOT to ensure these requirements, along with those laid out in our July 17, 2026 letter to Gov. Abbott, are fully carried out on behalf of the people of Texas,” he said.
In a statement, Data Center Coalition Executive Vice President Dan Diorio said the industry group and its members strive to be responsible stewards of the state's resources.
"The Data Center Coalition and its members strive to be good actors where we operate, which is why we are hopeful this directive from the Governor will help separate those who are responsible water and energy stewards from those who are not," he said. "With billions of dollars in investment and hundreds of thousands of jobs on the line, we urge the PUCT and ERCOT to move swiftly in order to distinguish between speculative projects and serious, committed investors and community partners. Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily, ensuring Texas will continue to be the national leader in economic development."
Data centers have received increasing bipartisan scrutiny in Texas. At a recent committee hearing, state lawmakers questioned tax incentives for these facilities. And earlier this summer, Texas legislators sharply critiqued data centers for failing to respond to surveys about their water usage, the Texas Tribune reported.
These projects are increasingly becoming a hot-button campaign issue as well. Texas Agriculture Commissioner Sid Miller, a Republican, recently criticized Abbott for accepting campaign contributions from data centers, calling for the governor to return the funds. Abbott's campaign did not immediately respond to a request for comment Monday. The governor endorsed Miller's opponent, who defeated the outgoing agricultural commissioner in this year's primary.
Democratic gubernatorial candidate Gina Hinojosa also criticized the governor’s latest directive.
“This is the same governor who spent recent months branding Texas the ‘epicenter’ of AI development and championing the industry his giveaway attracted,” she said. “This is the Greg Abbott Corruption Tax in action: rig the deal for global corporations and his donors, send the bill to Texans, and put his own appointees in charge of the cover story when the public catches on.”
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