Texas Governor Greg Abbott issued a directive this week ordering the Public Utility Commission (PUC) of Texas and the Electric Reliability Council of Texas (ERCOT) to take immediate action addressing data center growth in the state, with the explicit goal of preventing data centers from shifting costs onto residential electric customers and minimizing adverse impacts on local communities.

Governor's Directive and Deadlines

The governor's directive instructs the PUC to take action, ensuring that data center interconnections will result in reduced residential electrical bills, and to require data centers to pay for all of their own electric infrastructure costs.

The PUC and ERCOT were also directed to review their existing authorities and identify actions that can be taken to safeguard Texans, their property, and resources.

Both agencies must submit a joint memorandum to the Office of the Governor by July 17, 2026. That memorandum must summarize the actions taken by each agency, identify any statutory limitations on their current authority, and recommend legislative proposals to address gaps in the existing regulatory framework.

Six Legislative Priorities Outlined for the 90th Session

Alongside the immediate directive, the governor used the announcement to reveal six priorities he intends to pursue during the 90th legislative session.

The first priority is to codify the PUC's actions requiring data centers to pay for their own electric infrastructure costs, effectively locking those requirements into state statute rather than leaving them to regulatory discretion.

The second priority would require that all new data centers add to Texas' electric capacity rather than simply increasing electric demand, a distinction that reflects ongoing concerns about the strain large-scale computing facilities place on the ERCOT grid.

The third priority targets water consumption, requiring that all new data centers be built with water-efficient technologies such as closed-loop cooling systems.

The fourth priority would require large data centers to annually report their electricity and water usage data to the PUC, creating a formal reporting mechanism that does not currently exist.

The fifth priority is the repeal of sales tax exemptions and other incentives for data centers that the governor described as outdated or unnecessary.

The sixth priority addresses community impacts directly, requiring data centers to implement best practices, including setbacks, noise-reduction technology, and other measures that take into account the concerns of neighboring residents.