PUCT’s New Framework for a New Type of Load

On a warm September morning on the outskirts of Hutto, a construction foreman points toward a stretch of high-voltage lines as crews pour concrete for a new data center. “We used to build for factories,” he says. “Now we build for megawatts.”

It’s an offhand comment, but it captures a growing reality across Texas: the state’s energy landscape is increasingly shaped by industries that compute rather than manufacture. Rows of servers, not refining towers, are now driving some of the most significant load-growth conversations in ERCOT history.

Not long ago, the growth of data centers in Texas was a straightforward economic development story. It was steady investment, new jobs and expanded tax bases. But over the past eighteen months, as the number and size of proposed campuses has surged, data centers are now intersecting with another long-running Texas narrative: the question of how to plan for a changing, fast-growing grid.

The relationship is not adversarial. Rather, it signals a evolution and maturing of the system. Texas regulators are now outlining clearer expectations for how large loads fit into the state’s long-term reliability and transmission planning. The Public Utility Commission of Texas (PUCT), traditionally focused on market design and utility oversight, has turned its attention to interconnection discipline, emergency coordination, and cost allocation for a new class of high-density digital infrastructure.

The goal is not to slow growth. As PUCT commissioners have reiterated, Texas remains committed to being a competitive home for major industrial users. But the grid needs more transparency and predictability from developers if it is to integrate this wave of new demand smoothly.

CHANGING SCALE, CHANGING ASSUMPTIONS

What prompted this shift and caught policymakers’ attention was not a single campus or a policy dispute, but the collective load profile emerging statewide. In an October briefing, ERCOT reported that the large-load interconnection queue (the list of projects seeking 75 MW or more) had grown from roughly 56 gigawatts to more than 200 gigawatts in just one year.

This figure doesn’t necessarily represent imminent construction and how much will be built. Many projects will evolve, consolidate or drop away. But it highlights a fundamental change in how Texas must plan for future electricity consumption. Large loads are arriving faster, clustering more tightly, and requiring infrastructure on timelines far shorter than traditional industrial facilities.

ERCOT Vice President Kristi Hobbs described the shift simply in an October meeting:
“We’ve never seen load requests of this magnitude come in this quickly. It changes how we plan and what we need to know from developers up front.”

Texas has always accommodated major industrial facilities—refineries, chemical complexes, steel plants. But the emerging wave of data centers differs in three ways:

1. Speed – Projects move from concept to interconnection request in months, not years.

2. Concentration – Clusters form near corridors like Austin, San Antonio, Dallas, and Bryan/College Station.

3. Load Density – A single building can exceed the demand of an entire community.

As one ERCOT engineer put it during a stakeholder workshop: “These aren’t incremental additions to the load forecast. They’re steps.”

This new load profile requires new planning assumptions, which is why PUCT’s regulatory posture is shifting accordingly. Transmission planning that was once a multi-year, iterative process now requires clearer signals much earlier.

SB 6 AND THE EMERGENCE OF LARGE-LOAD STANDARDS

The passage of SB 6 in early 2025 provided the framework Texas needed to adapt. The bill introduced new requirements for large loads and empowered PUCT and ERCOT to design interconnection standards that reflect the realities of modern development. Key elements included:

• Registration requirements for loads ≥75 MW

• A $100,000 interconnection study fee

• Back-up generation expectations

• Emergency coordination procedures

• Direction to create Large-Load Interconnection Standards (Project 58481)

• Oversight of co-located generation and net metering (Project 58479)

PUCT Chair Thomas Gleeson summarized the intent during a September meeting:
“The grid is changing. We need to make sure new large loads integrate responsibly, reliably, and in a way that reflects their real impact on planning.”

This is not a slowdown. Or a rejection of growth. It’s a modernization of the state’s approach to large electric consumers and an acknowledgement that the state needs tools that match the scale of today’s proposals.

RULEMAKINGS: BUILDING THE NEXT GENERATION OF POLICY

Two ongoing rulemakings are shaping the future landscape:

1. Large-Load Interconnection Standards (Project 58481)

PUCT is evaluating proposals related to:

• Site control verification

• Milestone-based development timelines

• Security deposits or financial assurance

• Enhanced load disclosure requirements

• Cost-sharing for triggered transmission upgrades

During a stakeholder session, one developer summarized the industry’s standpoint:
“Certainty is everything. Clear expectations help all of us—developers, utilities, and ERCOT—plan more effectively.”

2. Co-Located Generation & Net Metering (Project 58479)

As more data centers pair with on-site generation, PUCT is clarifying roles and obligations around:

• Emergency performance and how quickly must a facility transition to backup power in an emergency

• Net-metering eligibility and when does behind-the-meter generation count as stand-alone capacity

• Operational visibility for ERCOT

• How these facilities interact with the broader system during critical events

These rules aim to reduce uncertainty and ensure coordinated action. ERCOT staff noted in a recent workshop that clearer definitions “help ensure large loads and on-site generation operate predictably during both normal and emergency conditions.”

GROWING PUBLIC INTEREST AND MEDIA COVERAGE

As the scale of development has grown, so has public and media interest and the rapid pace of new proposals has made data center development a topic of statewide conversation. Media outlets such as the Texas Tribune, Inside Climate News, and the Houston Chronicle have covered the queue surge, SB 6 implementation, and the planning implications for ERCOT.

Coverage tends to emphasize three themes:

• Grid Reliability - ensuring high-density loads do not disrupt emergency response and long-term infrastructure needs

• Cost Allocation - determining who pays for the transmission lines and substations required to serve these facilities.

• Transparency - clarifying which projects are real, which are speculative, and how ERCOT plans around both.

• Impact - community-level impacts like water, noise, and land use

Local reporting has been particularly active in Central Texas, where rapid growth has intersected with water-supply concerns and zoning deliberations. While PUCT does not control local land use, commissioners frequently acknowledge the value of community transparency and early engagement.

As Commissioner Will McAdams noted, “Local acceptance and system planning are separate issues, but questions at the community level often echo the questions we hear at the state level.”

WHAT THIS MEANS FOR DEVELOPERS

For data center developers, hyperscale operators, and large-load industrial users, the emerging framework does not diminish opportunity. Texas remains one of the most competitive markets for digital infrastructure in the country. What it does provide is a clearer set of expectations for how projects integrate into the grid and into the communities where they locate.

1. Greater Emphasis on Project Credibility

One of the clearest signals from both ERCOT and PUCT is the growing emphasis on complete and credible project information early in the process. The days of placeholder interconnection requests are giving way to a more structured submission environment. Developers should expect to be asked for:

• Verified site control (not options “in negotiation”)

• Load shape and timing characteristics, including flexibility or ramping behavior

• Development timelines tied to measurable milestones

• Financial capability indicators

• Backup power and emergency-transition plans

• Water and cooling strategy disclosures, particularly in water-constrained counties

ERCOT’s planning team has noted publicly that reliable, consistent inputs from developers directly accelerate and improve transmission modeling accuracy. The more precise the data, the more likely a project will move through the system without delay.

2. Defined Emergency Preparedness

SB 6 and subsequent rulemaking activity make it clear that large loads must be prepared to support system stability during scarcity events. This doesn’t mean operating off-grid or bearing the burden of reliability alone. Instead, it signals a coordinated approach:

• Facilities must have functioning backup power, whether through gas turbines, reciprocating engines, battery storage, or hybrid systems.

• Operators need documented transition procedures to respond to ERCOT emergency notices.

• ERCOT’s operational staff is expected to have clearer visibility into how quickly individual loads can reduce consumption or shift to on-site supply.

As one senior ERCOT operator noted in a recent workshop, “We’re not asking for perfection; we’re asking for predictability.”

3. Evolving Cost Participation Models

As transmission infrastructure becomes more closely associated with specific clusters of data center development, such as along corridors like I-35, SH 130, or emerging substation hubs, PUCT is signaling that cost allocation must reflect actual system needs. Developers are unlikely to face universal cost burdens, but they may encounter:

• Security deposits or financial guarantees tied to interconnection milestones

• Cost-sharing requirements for triggered substation or line upgrades

• Refund structures based on project completion or operational longevity

Industry groups have generally acknowledged the logic behind these discussions, recognizing that predictable cost expectations help developers, investors, and regulators plan on consistent timelines.

LOCAL ENGAGEMENT: BECOMING A COMMUNITY CONTRIBUTOR, NOT JUST A TAXPAYER

Perhaps the most meaningful shift, and one that sits adjacent to but deeply influences the regulatory environment, is the new importance of local engagement. While PUCT does not regulate land use, zoning, or water rights, the local context increasingly shapes how data center projects are perceived across the state.

Local leaders, economic development boards, and county commissioners have become critical voices in the Texas data center narrative. Their questions are straightforward, practical, and increasingly consistent across counties:

• What will this facility mean for water use?

• How will it affect noise levels, lighting, and heat rejection?

• What kind of traffic will construction bring?

• Does this project create permanent local jobs?

• Will the site be visually compatible with nearby neighborhoods or rural properties?

• Who benefits locally beyond tax revenue?

These are not anti-development questions. They are context questions and an effort by local communities to understand how a new industrial neighbor fits into the existing environment.

Why This Now Matters More for Developers

Media attention and community interest have elevated these local issues to the state level and not in a regulatory sense, but in a narrative one. When local officials express uncertainty or dissatisfaction, it can:

• influence how projects are discussed at PUCT open meetings,

• affect the tone of press coverage,

• shape public sentiment about data center growth more broadly,

• indirectly affect the scrutiny applied to similar projects across the region.

PUCT commissioners have made clear, both publicly and privately, that while they don’t adjudicate site-level matters, they are aware of community dynamics.

As one commissioner remarked in a recent meeting, “Local acceptance and system planning are different issues, but they often move in parallel lines.”

Local Credibility Helps at the State Level

While PUCT does not weigh local support as a technical factor, developers with strong community relationships often encounter fewer questions during the state-level process. A project perceived as thoughtful, transparent, and locally aligned tends to generate:

• fewer inquiries about readiness,

• fewer concerns about project longevity,

• smoother interconnection discussions,

• and a more stable long-term relationship with the surrounding community.

In a landscape where load growth is rapid and public interest is rising, this alignment is increasingly valuable.

Practical Steps Developers Need to be Taking

Across Texas, leading developers should focus on adjusting their approach by:

• Meeting with county judges and commissioners months before filing interconnection requests

• Providing early, plain-language briefings on water usage, cooling technologies, and emergency protocols

• Hosting site tours for local officials during construction

• Establishing community advisory groups to create a feedback channel

• Offering noise and lighting mitigation plans up front

• Sharing economic impact summaries that reflect local, not just statewide, benefits

• Designing landscape buffers, berms, and architectural treatments to fit rural or suburban settings

• Clarifying construction schedules and expected traffic patterns well in advance

• Developing a strategic “good neighbor” plan to give back to the community

These steps are not regulatory requirements, but they support a project’s social foundation—helping ensure that zoning hearings, commissioners court meetings, and local reporting proceed smoothly.

A MORE STRUCTURED FUTURE, NOT A RESTRICTIVE ONE

Even with these changes, Texas remains one of the most attractive destinations for digital infrastructure in the country. The state continues to emphasize competition, investment, and market-driven growth. Texas is not stepping away from data center development. It is providing a clearer framework for integrating fast-growing, high-density loads into a system that must remain reliable for everyone—households, businesses, and industry alike.

Commissioners have repeatedly emphasized this balance. As Commissioner McAdams put it during a recent open meeting, “Texas is still a great place to build. We’re just making sure the rules match the moment.”

The system is evolving, and in many ways, maturing. Though there are bound to be bumps in the road and some contentious changes along the way, developers who pair growth with transparency, readiness, and community coordination will find Texas continues to offer enormous opportunity.

For companies navigating this landscape, the challenge is less about checking boxes and more about building the kind of early, trusted relationships that create durable permission to advance. This is precisely where Coover | Goss operates: helping developers engage communities thoughtfully, listen authentically, and frame their projects in ways that reflect local context, local priorities, and local values. By building these connections early, we reduce friction later - aligning projects with both regulatory expectations and community expectations before they diverge.