Nearly all likely Texas voters support requiring data center companies to pay for the grid upgrades needed to serve their facilities, according to a new University of Houston poll. Texas has begun requiring large electricity customers to make financial commitments, but the rules governing their share of broader transmission costs remain unfinished.
The University of Houston Hobby School of Public Affairs surveyed 2,000 likely Texas voters Oct. 10–14. Researchers asked whether respondents supported requiring data center companies to pay for the electricity grid upgrades needed to serve their facilities. Support reached 99%, while 1% opposed the policy. The survey's margin of error was 2.19 percentage points.
Separately, 79% supported limiting the number of data centers built in Texas.
For developers, the question extends beyond paying to connect a facility. It includes the cost of transmission capacity reserved for a project and the risk that other electricity customers could bear costs if the developer delays construction, uses less power than expected or abandons the project.
Texas has yet to settle who pays for broader grid costs
The grid itself is complicating efforts to assign costs to individual data center developers, said Joshua Rhodes, a research scientist at the University of Texas at Austin.
“This is tricky because the grid is shared infrastructure,” Rhodes said. “You’d likely need to study each data center’s infrastructure (wires, poles, transformers, etc.) needs and have the data center pay for that and then make sure that those infrastructure costs did not enter into the utilities’ rate base.”
Under the current system, infrastructure costs are borne by all ratepayers, Rhodes said. Those customers have historically benefited from new infrastructure, too. But when an investment serves a single customer class, he said, “you could argue that the costs should be borne more heavily by them.”
Developers that want to handle those costs face a problem.
“Even if data centers want to pay for the infrastructure, and many say they want to, there isn’t a clear way that they can,” Rhodes said.
Rhodes expects the Texas Legislature to consider additional measures in 2027.
The Public Utility Commission of Texas (PUCT) said Senate Bill 6, passed by the 89th Texas Legislature, directed it to establish standards for large-load interconnections and the costs associated with serving those facilities.
The commission has adopted requirements for new large-load interconnections at sites reaching at least 75 megawatts, expansions that reach that threshold for the first time, and additions of at least 75 MW at sites already operating at or above it. The requirements include enhanced planning, a $100,000 study fee and financial security tied to load size, said Sarah Fischer, a PUCT press officer. The commission is also developing rules for how large-load projects pay for transmission infrastructure.
“These adopted and proposed rules will protect customers from paying for large-load interconnection and improve grid planning,” Fischer said.
The adopted rule does not resolve how broader transmission costs will be allocated. The commission left that issue to a separate rulemaking, Project No. 58000.
Financial security does not cover every risk
Under Project No. 58481, a qualifying large-load customer must post financial security of $50,000 per megawatt of requested peak demand at the intermediate agreement stage. When it executes a standard large-load interconnection agreement, required security is the greater of $50,000 per megawatt of contracted peak demand or the system upgrade costs allocated to the customer through the interconnection study.
The rule sets different refund terms for customers who withdraw. For certain Batch Zero projects that receive an allocation of transmission capacity and withdraw before the agreement deadline, utilities retain 50% of the security associated with that capacity. For other specified project categories, utilities retain 20%. The remaining security is returned after outstanding amounts are collected. Other withdrawal circumstances, including withdrawal before the study begins, qualify for return of the remaining security after outstanding amounts are collected.
For projects that proceed, utilities return part of the remaining security when the customer energizes and release the balance as the customer meets payment milestones specified in its interconnection agreement.
Those requirements may not cover every cost a utility incurs to prepare for a large load, said Neil Osnato, founder of Persistence Analytics Group.
“A security deposit isn't necessarily a guarantee that all transmission investments, financing costs, operating expenses or stranded infrastructure costs will be recovered from the developer,” Osnato said. “The real test is not whether the developer posted security. It's whether existing customers remain protected if the developer delays, downsizes, changes ownership or walks away after infrastructure commitments have been made.”
A project's advertised power demand also may not match the load that ultimately reaches the grid. “A megawatt in a development presentation is not necessarily a megawatt available at the meter,” Osnato said.
The exposure depends on the size and duration of security, when utilities spend the money and which costs remain recoverable from other ratepayers, he said.
Proposed rule would require 20 years of transmission payments
Project No. 58000 would establish how large loads pay for transmission service in the Electric Reliability Council of Texas (ERCOT) region. The proposal would replace the existing four-coincident-peak (4CP) method for allocating transmission charges with a 12-coincident-peak (12CP) method.
The existing 4CP method uses a distribution provider's demand during ERCOT's monthly system peaks in June, July, August and September. The proposed 12CP method would use one system peak interval in each calendar month, from October through September. Each interval would be measured over 30 minutes.
The proposal also would set a minimum transmission billing demand based on the greatest of a customer's contracted peak demand, its highest non-coincident peak demand in the previous year or its 12CP demand.
Billing would begin when contracted service becomes available, even if the facility has not energized or is not using the full capacity. The proposed minimum billing period is 20 years, or 240 consecutive monthly payments.
A developer could therefore owe transmission payments based on reserved capacity rather than the electricity its facility consumes. The commission has asked whether the 20-year term should remain fixed, decline in phases or extend longer.
Those provisions remain proposals, not adopted requirements. The adopted interconnection rule requires large-load agreements to acknowledge the minimum-billing obligation to be established through Project No. 58000. It also allows utilities to require additional financial security related to that obligation.
Fischer said the commission expects to give final consideration to the proposed transmission-cost rules by the end of 2026.
The poll shows broad support for making data center developers pay for grid upgrades. The pending rulemaking will help determine what those costs include – and how much financial risk remains with other electricity customers if projects do not use the capacity they reserved.
Shane Snider is a senior news writer at TechTarget, covering AI infrastructure, hyperscale data centers, cloud platforms, and the power and energy systems driving modern compute expansion. You can reach Shane at [email protected] or on LinkedIn.
