Gov. Abbott calls for data centers to lower costs: Texas Grid Roundup #95

What the new directive from the Governor means.

Gov. Greg Abbott directed Texas electricity regulatory leaders earlier this month to ensure data centers not only pay their fair share of transmission upgrades, but also reduce costs for residential ratepayers. This prompted the Public Utility Commission to revisit a recommendation on cost allocation for large loads. The PUC and ERCOT have until July 17 to respond.

PUC staff had already filed a proposal to update transmission cost recovery methodology and introduced a new minimum billing demand requirement for large load customers. At their June 18 open meeting, PUC commissioners asked staff to revisit the proposal in project 58000 and return with an update on July 9. ERCOT currently allocates transmission costs to customers based largely on how much electricity customers use during four of the highest 15-minute system peaks in the summer, known as the four coincident peaks, or 4CP. I previously wrote about the proposal in Grid Roundup #93. Commission staff will need to determine how much revenue different minimum demand requirements would generate and whether those revenues would reduce costs for residential customers.

Batch zero financial obligations remain unsettled

Data center investors face a major unresolved question of how ERCOT will use or hold financial security during its batch zero study of large loads in the queue for grid connection and eventual energization. The batch zero process requires significant financial commitments from large load developers by July 10, before the batch study begins (see timeline below). The PUC proposal in project 58481 has not been updated since March.