Texas Utility Backs Abbott's Data Center Freeze Even With 298 Gigawatts of Demand Waiting

Texas Gov. Greg Abbott ordered state regulators this week to freeze approval of new data center grid connections until they audit every project seeking to plug into the state's power grid. The company on the receiving end of that freeze says it's fine with it.

Oncor, the transmission utility owned by Sempra, told Wall Street analysts on a Thursday earnings call that it supports Abbott's move. Sempra Chairman and CEO Jeff Martin said the pause fits with a batching process ERCOT already had underway to sequence new power-hungry customers with new power plants coming online, according to Utility Dive.

"We've got close to 500 GW of generation on the sideline waiting to come on the system and, similarly, over 400 GW of large load customers," Martin told analysts. "That batch process is intended to sequence generation with large loads."

The Electric Reliability Council of Texas, the state's grid operator, is currently tracking more than 1,800 projects in its interconnection queue representing over 474 gigawatts of proposed electricity demand, according to the Texas Tribune. That's more than five times the grid's all-time peak demand record. Abbott's office says roughly 90% of those requests come from data centers.

Oncor alone saw service requests climb from 289 GW at the end of the first quarter to 298 GW this past quarter, CEO Allen Nye told analysts. Of that pipeline, about 44 GW had already qualified for ERCOT's new "Batch Zero" process, a set of financial and technical screening requirements for any load over 75 megawatts, finalized in June.

Abbott's order, issued in a letter to the Public Utility Commission of Texas and ERCOT on Monday, directs both agencies to audit every data center project in the queue before allowing any more connections. Developers will now have to disclose tax breaks, water use, cooling operations, ownership structure, and community impact plans. "Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid," Abbott wrote. "Simply put, Texans must come first."

ERCOT confirmed it is pausing the Batch Zero review while it sorts out what Abbott wants audited, according to KSL.

There's no state or federal database tracking these facilities. The Texas Tribune has identified at least 335 data centers already operating in Texas, with another 248 planned, and that's likely an undercount given how many more sit in earlier stages of the interconnection queue. Texas is currently the second-biggest data center market in the country behind Virginia and is on pace to take the top spot, possibly by 2030.

When a handful of massive, power-hungry facilities get first crack at the grid without full transparency on who owns them or how much they'll actually draw, those are legitimate questions for regulators to answer before Texans get stuck footing bigger transmission bills. A June Reuters/Ipsos poll found just one-third of Americans approve of the current pace of data center construction, a signal that public patience is thinning nationally, not just in Texas. New York became the first state to impose its own data center moratorium last month.

The counterargument is substantial. Texas built its reputation as an energy powerhouse by being fast and business-friendly. Companies like Oncor have been pouring capital into transmission because the demand is real. An open-ended freeze risks scaring off investment the state wants, and Martin's own framing suggests the batch system already existed to manage this responsibly before Abbott's order came down.

Oncor says the freeze so far isn't touching its bottom line. Martin told analysts the company's $47.5 billion capital plan through 2030 doesn't include any spending tied to Batch Zero load yet, and any capital tied to the audited batch won't hit Oncor's books until 2027 at the earliest. The current plan does include roughly $5 billion for high-voltage transmission lines in the Permian Basin, which drew a 15-hour public hearing in July after Lt. Gov. Dan Patrick and several state senators pushed the PUC to deny the applications over concerns about private landowners.

Abbott hasn't said how long the audit will take, and it's unclear whether it applies only to projects still in Batch Zero review or to the entire 474-GW queue. ERCOT says it's still reviewing the governor's letter to figure out the scope. Until that's settled, the roughly 400 GW of large-load customers Oncor and other utilities are counting on remain stuck in a holding pattern with no announced end date.