Greg Abbott recommends data center industry crack down

Key Points:

• Governor Greg Abbott proposed comprehensive regulatory measures for Texas data centers to be considered in the 2027 legislative session, aiming to shift infrastructure costs from taxpayers to the data centers themselves amid rapid AI-driven growth and increased power demand.
• Key recommendations include requiring new data centers to add power generation capacity, pay for their own grid interconnection and infrastructure, implement closed-loop water systems, report annual electricity and water usage, address community concerns like noise, and repeal sales tax exemptions for data centers.
• Abbott directed the Public Utility Commission of Texas to reduce residential transmission costs by July 31 and to make data centers fully responsible for their infrastructure costs, while also requesting a joint report from the PUC and ERCOT on mitigating risks and costs from data center expansion by July 17.
• The proposals come amid growing community opposition over environmental and infrastructure impacts of data centers, with Texas facing massive requests for grid connections—primarily from data centers—totaling five times the state's peak electricity demand.
• Despite the extensive regulatory focus, Abbott’s plan does not include expanding local government authority over data center development, a contentious issue as many projects arise in rural areas lacking zoning control, prompting legal and political conflicts.