A sticker against data centers is seen during a forum hosted by Matagorda County Against Data Centers on the impact of data center construction in the state, Thursday, June 11, 2026.
Jason Fochtman/Houston Chronicle
Agriculture Commissioner Sid Miller and Clayton Tucker, Democratic candidate for Agriculture Commissioner, speak during a forum hosted by Matagorda County Against Data Centers on the impact of data center construction in the state, Thursday, June 11, 2026.
Jason Fochtman/Houston Chronicle
Conduits for fiber to connect superclusters of data centers are under construction during a tour of the OpenAI data center in Abilene, Texas, U.S., September 23, 2025.
Shelby Tauber/Dallas Morning News
Alphabet and Google CEO Sundar Pichai, second from right, speaks during a news conference to announce Google’s $40 billion investment in Texas at Google Data Center, Friday, Nov. 14, 2025, in Midlothian. U.S. Rep. Jake Ellzey, from left; U.S. Deputy Secretary of Energy James Danly; Texas Gov. Greg Abbott; and Amanda Peterson Corio, global head of data center energy at Google, listen.
Chitose Suzuki/Dallas Morning News
Somervell County percent 3 commissioner Chip Joslin and Mary Collier join advocacy groups and community members to protest laws surrounding data centers while outside the Texas Capitol in Austin Monday, Feb. 23, 2026. Protestors are advocating for counties to gain legal authority to regulate data center development or enact a statewide pause until protections are in place.
Mikala Compton/Austin American-Statesman
Data obtained by the Houston Chronicle shows the areas of Texas where developers of large data centers want to connect to the grid.
Houston Chronicle
Dallas TX1 data center electrical room is pictured at the NTT Data center campus on March 4, 2026, in Garland, Texas.
Tom Fox/Dallas Morning News
Apartments sit across the street from Dallas TX4, the fourth and final new data center building under construction at the NTT Data center campus in Garland, Texas, March 4, 2026. A row of diesel powered back-up generators in the foreground are being prepared to go online.
Tom Fox/Dallas Morning News
Gov. Greg Abbott gave Texas regulators a month to propose new rules to stop data centers from driving up electricity and water bills for average Texans, but his order is little more than a campaign stunt and cannot change the state’s complicated utility laws.
The governor’s June 10 letter to Thomas Gleeson, chairman of the Public Utility Commission, and Pablo Vegas, CEO of the Electric Reliability Council of Texas, is designed to soothe Republican voters who are angry over the data centers that Abbott encouraged to locate in Texas. Polling shows that hatred for data centers is one thing the right and left share.
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Abbott issued the letter as delegates to the Republican Party of Texas convention finalized anti-data center language for the party platform. Elected Republicans are expected to pass laws that put onerous obligations on data center operators to supply their own power and water while submitting to local control.
In 2025, Abbott wanted Texas to become the epicenter of artificial intelligence development and celebrated Google’s $40 billion investment in the state. “We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen,” he said.
State officials have given data centers $1 billion in tax breaks. Now Abbott’s changed his tune.
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“The rapid scale of data center development requires oversight to ensure everyday Texans are not burdened with the costs of infrastructure driven by data center expansion,” Abbott’s letter said. “When the PUC and ERCOT conduct this review, they shall take into consideration measures to prevent data centers from shifting development risks and costs onto Texans.”
Unfortunately, Texas law currently prohibits the PUC or ERCOT from intervening, and only the Legislature can change that, explained Scott Ellis, managing partner of Foley & Lardner’s Houston office..
“He doesn’t have that power, obviously the Legislature does,” Ellis told me. “This is a marathon. A lot of things can change between now and when we get to the final form of what this is going to look like, because there are a lot of interests at stake.”
Elected officials will decide how much Texans will subsidize some of the biggest corporations on the planet.
A new era
For decades, electricity demand in Texas grew in predictable locations at a slow and steady pace. ERCOT’s competitive wholesale market sent price signals for new power plants, and the PUC authorized regulated utilities like CenterPoint and Oncor to build new powerlines. All customers shared the costs, either through higher electricity rates or standardized transmission charges.
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When the new demand is spread fairly evenly, sharing costs makes sense. But when a single, for-profit artificial intelligence company can demand as much electricity as a small city with the flip of a switch, making all customers subsidize the billions of dollars that it costs is unfair.
“The Texas government has to really focus on how they’re going to allocate those expenses,” Ellis said.
Texans from across the political spectrum agree that the data center companies — or more accurately, their customers — should pay, not consumers.
Abbott’s “directives make clear that economic growth in Texas must strengthen our grid and respect the rights of Texans, not burden them,” wrote Greg Sindelar, CEO of the right-wing conservative group Texas Public Policy Foundation.
Public Citizen, a left-leaning government accountability group, agreed and asked why Abbott is not acting immediately.
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“Even if data center legislation is fast-tracked as an emergency item and signed into law, you’re looking at almost a year, at least,” Adrian Shelley, the Texas director, wrote in a statement. “Abbott should convene a special session to address this crisis now, or declare a statewide moratorium on data center construction until sensible safeguards are in place.”
Data center companies have launched a public relations campaign to stall any new rules. Their customers are not yet ready to pay the full costs associated with artificial intelligence. The industry is still in the get-them-hooked stage, giving away or discounting AI until customers feel they can’t live without it.
Tech companies also argue they provide a public benefit that almost everyone uses, so a little government help is justified.
Subsidies needed
If the AI companies must pay the full cost of building out the grid, their customers will abandon them. Big corporations are already demanding lower prices. AI companies, therefore, will fight like the dickens to water down Abbott’s order and get the public to subsidize their electricity needs.
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Unrelated to the governor’s letter, on Thursday the PUC adopted a new method for managing the addition of new data centers to the grid. Texas will require companies to prove they have the money, land and equipment to connect and that they are not speculators wasting ERCOT’s time.
Abbott’s letter is little more than political posturing to pacify Republicans angry over data centers encroaching on their communities. Nothing will come from his order until the Legislature meets next year, when lobbyists will have sway and campaign promises will be quickly forgotten.
Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.