It's in Sen. Phil King's North Central Texas backyard, where the data center that's applied to connect to the statewide electric grid expects to need more than 200 megawatts of power a year to operate.
The same is true in Waco and Hillsboro, where a planned data center is calling for 828 megawatts of power per year. That eclipses the amount the cities used together in 2023. It's the same story in cities in East Texas and elsewhere, King said during a recent Senate committee hearing.
Data centers are setting up across Texas, hungry for more electricity to power scores of hard drives and AI-computing than what's needed by an entire municipality.
"That's what we're facing," King told the Business and Commerce committee last month. "I don't think we need to face those as catastrophes or as even problems. I think we need to face them as real challenges and opportunities for Texas, and we can figure a way to manage this."
The senator, a Republican from Weatherford, said he's spent the past six months doing just that — drafting and redrafting Senate Bill 6. The priority bill is wide-reaching but grid-focused, aiming to prepare the state for a surge in energy demand while working to change long-standing structures so rate-paying Texans alone aren't footing the brunt of the costs to beef up the infrastructure.
As of 2024, Texas housed nearly 41 million gross square feet of data center capacity, according to national trade group the Data Center Coalition. It says data centers paid out $3.2 billion in state and local taxes.
"Texas is open for business on these matters," King said. "We want continued development of these large loads. We need Texas to be in the forefront of cutting-edge technologies."
It may not be easy. Texas demand could more than double by the end of the decade from where it stood in 2020. The statewide grid operator's latest estimate forecasts demand surpassing 150 gigawatts.
Never Again
Data centers, crypto miners and increasing electrification of factories across Texas creates nuance unlike anything grid operator the Electric Reliability Council of Texas has had to manage before.
Its forecasts of booming demand has put lawmakers on edge as ERCOT says it's planning for the grid of the future, one that can not only meet the load needs but weather a major freeze without deadly consequences.
"Above all, we never want to risk another Uri where over 200 Texans died because they lost their electricity," King said of the February 2021 deep freeze that awakened Texans to the creaky reality of the ERCOT grid. "That can never, ever happen again."
His bill aims to solve the challenges — from shoring up demand forecast accuracy to giving utilities more flexibility in managing big loads like those from data centers and ensuring those big users pay their fair share to fund ever-growing transmission needs.
The House, too, is grappling with the issue. In a meeting Wednesday, concerns lingered among legislators in that chamber as they posed similar questions about looming costs to regular Texans and the realities of sky-high demand forecasts before the Public Utility Commission, ERCOT and other energy leaders.
"I've heard a lot coming from the Senate about load projections being super high, which has caused me, as a policymaker, to pause and worry about my constituents," said Rep. Rafael Anchía, a Democrat from Dallas. "Should my constituents, in hearing those numbers, be afraid about whether there is enough power in the system to keep the lights on?"
Load Projections
Public Utility Commission Chair Thomas Gleeson had a simple response for Anchía: "No." Texans don't need to panic, he said, but regulators, legislators, and utilities must be focused on it.
When the Senate committee met for mid-term hearings last year, lawmakers were shocked by ERCOT's projections that demand for power could double in the next five years. The grid's current peak demand record is 85.5 gigawatts. King, with backing from ERCOT's own concerns, has questioned whether the "150 number is real."
Asked the same question Wednesday, Gleeson said he believes a more realistic number is closer to 120 megawatts — which would still be a historic and challenging amount of growth to meet. But it's difficult to reach a precise number to work toward.
ERCOT CEO Pablo Vegas has said that's because there isn't a standardized criteria that all transmission companies use to submit load estimates. Grid experts have scrutinized the figure before, too, saying that while ERCOT is facing unprecedented growth, the eye-popping number is probably overblown.
Now, as ERCOT is working to produce an updated spring demand report under the current reporting structure, Vegas said he expects the projection to grow significantly again. He said it's hard for ERCOT to decipher the likelihood of what amount of the estimated loads will actually show up ready to flip the power switch by set times, but there aren't other options.
"We really haven't gotten anything better," he told senators.
King and committee Chair Charles Schwertner, who co-authored the bill, say their legislation would clean up the reporting data and create barriers, like fees, so only those serious about interconnection show up in the queue for future demand.
That should cut down on "phantom loads," which sometimes stay in the queue even after a project isn't moving forward.
Kill Switch
The bill also calls to give utilities more flexibility in managing rolling blackouts in case of emergencies. Without it, King and others worry that regular Texans could carry most of the burden.
"This means that you could have, and frankly will have, without change, a data center powered up while the neighborhood, literally across the street, is without power," King said. "Everybody please remember during Uri no one died at the manufacturing plant, they all froze to death in their homes."
While the bill floated voluntary programming for blackouts, Vegas suggested participation be required. Vegas said this "kill switch" provision would more fairly allocate blackouts across customer classes.
Dan Diorio, a senior director of state policy for the Data Center Coalition, said members are concerned about lead time ahead of blackouts. He pointed out that data centers often back up emergency infrastructure for clients including hospitals to law enforcement.
"Data centers serving critical national security functions could be shut off with minimal notice or procedures" based on the bill's current language, he said.
While the coalition supports the use of back-up diesel generators, it also worries about being forced to defy emission standards and federal air pollution laws while using them because ERCOT declares an emergency.
Gaming the System
What's likely to be the most controversial component of the bill are its proposed changes in how ERCOT determines large power users' shares of transmission costs — which must increase to ensure power lines and other infrastructure are sufficient to meet the needs of the state's booming data center business.
As is, the costs are determined using measurements taken over four 15-minute periods in the summer. Schwertner said the bill's draft puts a minimum transmission charge in place and calls for the current methodology to be revamped.
Big energy consumers are using technology for "more gaming of the system" than to pay their appropriate share, he said.
In the past decade, industrial power load has surged by 250% in Texas, according to the Office of Public Utility Counsel. Over the same period, according to Benjamin Barkley, head of the office, residential loads increased by less than 25%.
But residential rates increased by 4.5% last year compared with 1.9% recovery rates for industry, he said.
"While these large loads will benefit the Texas economy, residential consumers will be protected by ensuring they only pay their fair share of the cost of these new transmission projects," Barkley testified. "Striking a balance between resiliency and affordability for small commercial residential consumers is going to be key to that end."
Battle Royal
Katie Coleman, who represents big energy users with the Texas Association of Manufacturers, said the bill is identifying the right issues but would be difficult to implement as written.
She suggested state regulators with the Public Utility Commission should conduct a study on how move ahead. Others echoed those thoughts and a PUC staffer said it was something regulators had already discussed.
Pat Wood, a former PUC chairman and now CEO of Hunt Energy in Dallas, pushed back during his own testimony. He was instrumental in the current system that was instituted in 2002 and supported methods that were harder for big users to manipulate in their favor.
"Rather than punt it to the commission and make the battle royal go there and have the bloodletting be up the street, just finish the surgery here," Wood said, asking lawmakers to dictate the new rules themselves.
The costs are coming up fast. ERCOT is currently discussing transmission plans that surpass $30 billion in costs.
The state's load demand increased 6% in 2024 from the previous year. That's already double the rate of growth from 2022 to 2023.
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