Texas has significantly expanded its review of data-center development since Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) in August to audit projects advancing through ERCOT’s interconnection process. That review has now expanded into state permitting and water use, ERCOT began formal project-level information requests, and PUCT adopted its long-awaited large-load interconnection rule.
Together, these developments mean that electric interconnection, environmental permitting, water supply, on-site generation, and project-readiness representations increasingly need to be evaluated as connected regulatory workstreams.
Governor Abbott Broadens Data Center Review to Permitting and Water Compliance
Governor Abbott has progressively broadened the state’s data-center review beyond ERCOT interconnection issues. On September 14, he directed the Texas Water Development Board (TWDB) to enforce existing water-use reporting requirements and coordinate with ERCOT’s data-center audit. ERCOT subsequently incorporated that review into its State and Community Impact RFI, noting that TWDB helped develop the water-related questions and authorized ERCOT to collect responses on its behalf.
One week later, on September 21, Governor Abbott expanded the review further by directing the Texas Commission on Environmental Quality (TCEQ) to halt permits sought by data centers until ERCOT completes its audit. The directive also states that state agencies should not move forward with regulatory approvals related to data-center development until PUCT, ERCOT, and TWDB obtain the information required by the state’s review.
Taken together, the September actions move the state’s review beyond electric interconnection and into water-use compliance and environmental permitting. Developers with pending or planned Texas projects should therefore evaluate ERCOT verification, TWDB reporting, TCEQ permitting, and related state approvals as coordinated elements of the same development timeline.
PUCT Adopts Permanent Large-Load Interconnection Standards
Separately, on September 18, PUCT adopted new 16 TAC §25.194 in Project No. 58481, implementing the large-load interconnection framework required by Senate Bill 6. The underlying statute requires standards addressing, among other matters, transmission-screening study fees, site control, disclosures concerning duplicative service requests, financial commitments, and responsibility for interconnection costs.
PUCT Order Adopting New 16 TAC §25.194
For developers, utilities, investors, and counterparties, the adoption moves these requirements from a developing rulemaking into the permanent Texas large-load framework. Project documents, financing assumptions, site-control arrangements, utility negotiations, and interconnection strategy should be reviewed against this final rule.
ERCOT Audit Becomes a Formal Due-Diligence Process
ERCOT has moved the August audit directive into a formal, project-level verification process.
September 3 – ERCOT issued provisional Batch Zero classifications to transmission and distribution service providers, identifying whether each large load was conditionally included in Batch Zero and what conditions remained outstanding. Those conditions can include successful verification, correction of modeling deficiencies, or receipt of a PUCT good-cause exception; failure to satisfy an applicable condition may disqualify the project from Batch Zero. (ERCOT Market Notice M-A080326-04)
September 9 – ERCOT began issuing separate Batch Zero Verification Requests for Information to most Interconnecting Large Load Entities with conditionally included projects. Responses must include required supporting documentation and notarized attestations and generally are due within 10 business days of issuance. ERCOT states that successful completion of the verification process is a condition of Batch Zero inclusion and that failure to timely provide a complete response can result in exclusion from the process. (ERCOT Market Notice M-A090926-01)
September 14 – ERCOT issued a separate State and Community Impact RFI to covered data-center projects. The RFI applies to certain Batch Zero data centers and certain substantiated projects with requested loads of at least 25 MW but less than 75 MW, and seeks information concerning grid dependence and on-site generation, water sources and consumption, cooling technologies, public financial assistance, ownership, and community impacts. Complete responses are due October 12, 2026, and ERCOT expects to publish a report with the PUCT by December 10, 2026. (ERCOT Market Notice M-B091426-01)
What Texas-Facing Projects Should Consider
The emerging framework calls for coordinated diligence across power, environmental, water, real estate, incentives, and project development. Companies should review whether representations concerning load, water use, ownership, development status, and on-site generation are consistent across ERCOT, utility, TCEQ, TWDB, and local submissions. Projects considering behind-the-meter natural gas, solar, storage, or WLPUN structures should also evaluate those strategies alongside—not separately from—the applicable interconnection and permitting requirements.
Beatty & Wozniak’s specialized regulatory counsel can assist with mapping the overlapping requirements, reviewing project submissions for consistency, assessing the effect of the new §25.194 standards, and coordinating ERCOT, PUCT, TCEQ, TWDB, utility, and local permitting issues as the audit develops.
For questions regarding Texas large-load interconnection, data-center permitting, or behind-the-meter generation strategies, please contact Raj Lahoti or Miguel Suazo.