Dated July 17, the letter comes in response to a recent request from Abbott for details on what steps the PUC has taken to protect Texas ratepayers from the aftereffects of the ongoing AI data center boom.
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PUC Chair Thomas Gleeson
Ensuring that only financially secure large-load projects can connect to the ERCOT power grid and ensuring that such connections don’t disadvantage other energy uses are among a series of AI data center-related reform projects underway at the Texas Public Utility Commission, according to a letter from the agency’s chair to Gov. Greg Abbott.
Dated July 17, the letter comes in response to a recent request from Abbott for details on what steps the PUC has taken to protect Texas ratepayers from the aftereffects of the ongoing AI data center boom.
PUC Chair Thomas Gleeson, in the letter’s introduction, said he shared the governor’s view “that these projects must be managed in a way that protects residents by prioritizing affordability, reliability, and the interest of Texas communities.” However, of equal importance, he wrote, is ensuring that the system remains reliable even as ERCOT serves more large load industries. “Texas should welcome responsible economic development, but it must do so in a manner that prioritizes affordability, reliability, and the interest of the residents,” wrote Gleeson.
According to Gleeson’s letter, some of the reforms pursued by the PUC include the following:
- ERCOT’s load forecasting process: In February 2026, the PUCT adopted a new rule, 16 Tex. Admin. Code §25.370, that sets minimum requirements that transmission and distribution utilities must follow when they include a proposed new large load in ERCOT’s load forecast. The rule is intended to ERCOT receives consistent and reasonable data. “More accurate forecasts reduce the risk of overbuilding transmission infrastructure, which can result in unnecessary costs that are ultimately recovered from customers through electric rates,” wrote Gleeson.
- Infrastructure Payment Requirements: In May 2026, the PUC completed a comprehensive evaluation of wholesale and retail transmission cost recovery practices. The report noted that rapidly increasing demand for power — primarily driven by new large computational loads like data centers — has driving up the demand for more infrastructure. The report recommended several changes that would require large loads to pay for infrastructure needed to serve them. The PUC has begun codifying the changes in a rulemaking.
- Batch Zero: In June 2026, the PUC approved ERCOT Planning Guide Revision Request (PGRR) 145 that establishes the “Batch Zero” interconnection process for large loads—i.e., loads that are 7.5 megawatts or more in size. Under this new process, ERCOT will transition from its legacy project-by-project study approach to a “batch” study process that evaluates the impacts of all large loads that meet certain criteria. You can read more about the Batch Zero process here.
- New Connection Standards: In February 2026, the PUC initiated a rulemaking under Project No. 58481 to establish standards for interconnecting large load customers to the ERCOT grid in a manner designed to enhance system reliability and protect the financial interests of other ratepayers. In the proposed rule, large load customers would provide certain disclosures and post financial security before their proposed connections can be included in ERCOT’s planning studies.
Recommended Statutory Changes
PUC chair Gleeson, in his letter to the governor, also recommended various legislative reforms. These changes could be taken up by the 90th Texas Legislature, which convenes in Ausitn in 2027. The recommendations include:
- Clarify ERCOT’s authority to adopt reliability requirements for all market participants: ERCOT should be given new authority to communicate curtailment instructions directly to large computational load customers instead of having to go through the load’s interconnecting utility. According to Gleeson, this change would improve ERCOT’s ability to manage real-time grid conditions.
- Clarify PUC’s and ERCOT’s authority to require registration of large computational loads: Large computational load facilities should be required to register with both the PUC and ERCOT to ensure complete and accurate information about these facilities is available for operational and planning needs.
- Require large computational loads to comply with Lone Star Infrastructure Protection Act: The Lone Star Infrastructure Protection Act (LSIPA) prohibits agreements that would give certain foreign-linked companies direct or remote access to, or control over, Texas critical infrastructure. For power grid infrastructure, the LSIPA prohibition currently applies only generation and transmission facilities registered with ERCOT as market participants. LSIPA should be amended to apply to owners of large computational load facilities.
You can read Chairman Gleeson’s letter to Gov. Greg. Abbott here.