EDITORIAL: Gov. Abbott directs regulators to protect Texans in managing data center growth

Gov. Greg Abbott took a positive first step toward an appropriate balance between modern society's demand for data center capacity and the strain such facilities can put on local and state resources.

Going forward, two key state regulators - the Public Utilities Commission and the Electric Reliability Council of Texas - and the Texas Legislature must act swiftly to implement commonsense measures. And Abbott must continue to exert his considerable authority and political influence in keeping the issue at the top of everyone's list of priorities.

Abbott issued a letter to PUC Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas calling for various regulatory measures to manage the unprecedented number of proposed data centers.

More than 480 data centers that would be large electricity users, those consuming as much or more power as 18,750 households, have asked to connect to the grid through 2032, according to ERCOT. Abbott said in the letter that he seeks to "guarantee" that data center development "does not come at the cost of Texans and our local communities."

Abbott directed the PUC to require data centers to pay all costs for their electric infrastructure to ensure residential ratepayers bear none of them. Moreover, he wants the PUC to take action so that data centers' interconnections reduce residential electrical bills.

Along those lines, he gave the PUC and ERCOT a deadline of July 17 to submit a joint memorandum to the governor's office identifying additional actions they can take "to safeguard residential and small business ratepayers." Separately, he gave the PUC a July 31 deadline to initiate steps for reducing residential ratepayers' transmission costs.

Meanwhile, Abbott wrote that he intends to work with Texas lawmakers to enact measures that include:

* Codifying whatever actions the PUC takes to comply with the governor's directives.

* Ensuring data centers add capacity to the state's electrical grid.

* Requiring that new data centers employ water-efficient technologies, such as closed-loop cooling systems, and that large centers report their electricity and water usage to the PUC.

* Repealing sales tax exemptions and other incentives for data centers that are deemed "outdated or unnecessary."

* Requiring data centers to reduce impacts on local communities with best practices, such as setbacks and noise reduction, that address local residents' concerns.

All of this marks a welcome and overdue acknowledgment by Abbott, who has long championed such development in Texas, that the benefits of being a top state for hosting data centers comes with the risk of overwhelming communities.

There's a strong case to be made that because increasing that nation's data center capacity is key to facilitating its ability to compete internationally for dominance in artificial intelligence, particularly against China, the state needs to assert itself over local governmental regulation to prevent inconsistency.

That being said, local communities need to have a strong and heeded voice in shaping such regulations. And Abbott and legislative leaders need to resist their urges to pit typically blue urban cities and counties against typically red rural ones. These are not partisan matters, and they should not be contorted into such.

To their credit, Lt. Gov. Dan Patrick and Texas House Speaker Dustin Burrows have included directives on data centers as part of their interim charges to state senators and representatives. Interim charges, issued before an upcoming legislative session, are lists of aspirational directives to lawmakers that provide road maps for future legislation by calling for reviews of state agencies, analyses of issues and recommendations.

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Patrick and Burrows expressed concern that Texas needs to better manage the growth of data centers. While Patrick called for improving transparency among local water providers and preventing industrial growth from making water less affordable for residents and farmers, Burrows called for studying data center development with a focus on global competitiveness, national security and the electrical grid.

Given the massive investments and implications for land use and resources, Texas needs to get data center development right. The fact that this will affect all state residents and industry for generations means that all need to be heard.

Perhaps the greatest challenge is that Texas must move as quickly as possible and as thoughtfully as possible - yet another balancing act without much of a safety net.

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This story was originally published June 16, 2026 at 11:03 AM.