Texas has spent two legislative sessions making itself the premiere state for incorporation. Whether it\u2019s a state you can actually operate in is a different question, and the answer looks less certain in August than it did in May.<\/p>\n
In recent weeks, the \u201cfeels like\u201d temperature across the Houston metro area climbed above 100 degrees. Houston once set out to build \u201cthe world\u2019s most air-conditioned city,\u201d which is fine until the power grid fails. Air conditioning isn\u2019t comfort here; in prolonged heat, it\u2019s public-safety infrastructure.<\/p>\n
Texas asks more of that infrastructure every day. The state added<\/a> 391,243 residents between July 2024 and July 2025, reaching 31.7 million \u2014 about 2.6 million more people than in 2020. Population growth means more homes, offices, hospitals, and air conditioners. Now the grid has a new power drain that can run around the clock: data centers training and operating artificial intelligence systems.<\/p>\n Texas is unusual in a structural sense, too. Unlike the rest of the Lower 48, Texas runs on its own grid, which the Electric Reliability Council of Texas, known as ERCOT, operates. ERCOT mostly escapes Federal Energy Regulatory Commission jurisdiction because it doesn\u2019t cross state lines.<\/p>\n That independence became a liability in February 2021, when Winter Storm Uri forced the largest controlled outages<\/a> in US history. Since then, the Legislature, the Public Utility Commission of Texas \u2014 which regulates ERCOT \u2014 and generators have mandated weatherization, restructured ERCOT\u2019s board, and adopted reliability standards meant to keep a statewide failure from happening again.<\/p>\n That\u2019s why the Texas Senate Business & Commerce Committee\u2019s July 29 hearing<\/a> focused on electric reliability, including Senate Bill 6<\/a>. SB 6, the large-electric-load law effective June 20, 2025, standardizes ERCOT interconnection for data centers and other power-intensive users, makes them share infrastructure costs, and allows curtailment during grid emergencies.<\/p>\n ERCOT reached an unofficial all-time July peak of 91,089 megawatts on July 22, breaking a record set the day before, Chair Charles Schwertner said in the hearing<\/a>. The grid still held more than 20,000 megawatts in reserve, without a conservation call or emergency. That\u2019s reassuring. It isn\u2019t permission to stop planning.<\/p>\n Possible projects totaling 474 gigawatts \u2014 more than five times that July peak \u2014 are in the pipeline. ERCOT therefore created \u201cBatch Zero<\/a>,\u201d which studies large users together and screens for financial security, site control, equipment orders, and whether the grid can reliably serve them. <\/p>\n The goal is to ensure that large users only connect in quantities and locations the Texas grid can reliably support. The task is no longer to attract investment; it is to distinguish an executable project from a placeholder before Texans pay to build around it.<\/p>\n The heat makes that challenge tangible. No single sweltering week proves climate change, but infrastructure is designed for patterns, not anecdotes. More days are expected to reach or exceed 100 degrees. Hotter days and nights extend cooling demand. AI data centers add a different kind of load: large, concentrated, and continuous. Both trends increase the cost of planning.<\/p>\n Gov. Greg Abbott\u2019s (R) recent actions acknowledge the growing pressures on the grid. In June, he directed<\/a> the PUC and ERCOT to prevent data centers from shifting their infrastructure costs to residential ratepayers and promised legislation addressing data centers\u2019 added generation, water-efficient cooling, usage reporting, community impacts, and tax incentives.<\/p>\n Abbott on Aug. 3 ordered a comprehensive audit of data center projects seeking ERCOT interconnection and paused approvals until the review is complete. That isn\u2019t Texas abandoning AI; it\u2019s Texas recognizing that \u201cbusiness friendly\u201d can\u2019t mean an unlimited claim on shared power and water.<\/p>\n The legal framework still matters. The Texas Business Court offers a specialized forum. Senate Bill 29<\/a> supplies a management-protective governance framework. The Texas Stock Exchange moved from promise to operation when live trading began July 10, and its guide<\/a> anticipates a first corporate listing in October.<\/p>\n These institutions lower the legal and financial cost of choosing Texas, but none of them keeps a plant running in August. Electricity, water, transmission, housing, and transportation determine whether a company can actually operate after it arrives.<\/p>\n This is where the usual Delaware comparison falls short. Delaware\u2019s advantage is principally institutional: statute, court, and precedent. But incorporation reaches only internal affairs; most of what constrains how a company operates is where it does business. Incorporating in Texas doesn\u2019t require that the company operate there, but many of the largest companies to lay down corporate stakes in the state, such as Tesla Inc. and ExxonMobil Holdings Inc., are also headquartered there.<\/p>\n The recent legislative changes let Texas compete on the institutional ground Delaware owns, without giving up its historic industrial capabilities. Houston\u2019s ship channel, energy complex, highways, medical center, and embrace of air conditioning all reflect the same instinct: Law can invite growth, but infrastructure makes growth possible.<\/p>\n The Senate\u2019s broader interim agenda<\/a> follows that tradition. The Legislature this session says it will focus on areas essential to the external affairs of corporations, including broadband, nuclear energy, transmission, cybersecurity, and the state\u2019s new AI law.<\/p>\n For boards and counsel, domicile advice shouldn\u2019t stop with fiduciary standards and litigation exposure. The real question isn\u2019t only which law governs the board, but which jurisdictions govern the success of the enterprise.<\/p>\n A Texas on-the-ground strategy requires asking when a project can interconnect, who funds transmission, whether load can be curtailed, how cooling affects local water, and whether nearby communities accept the bargain. Those are also governance questions: They determine whether management can execute the plan the board approved.<\/p>\n The harder question for Texas is whether it can build quickly, fairly, and with enough foresight to sustain business growth in a hotter, more power-hungry future. The July 29 hearing and Abbott\u2019s willingness to slow the data-center pipeline suggest the state understands the challenge.<\/p>\n Charters are the easy part. Power, water, and transmission are the test.<\/p>\n