Tech companies are lining up behind Gov. Greg Abbott’s plan to audit data centers seeking access to Texas’ power grid, even as major questions remain about what the review will involve and how much it will slow the state’s data center boom.
Since Abbott announced the audit Aug. 3, at least 43 companies — including Meta, OpenAI, Microsoft and Amazon Web Services — have publicly expressed support for the effort. That support comes despite Abbott also directing regulators to halt new data center grid connection approvals until the review is finished.
“We share your commitment to ensuring data centers are true partners in every Texas community where we operate — protecting residential ratepayers, strengthening grid reliability and promoting responsible water stewardship,” the Data Center Coalition wrote in a letter to Abbott on Tuesday.
The coalition represents many of the world’s largest technology companies.
But nearly two weeks after Abbott’s announcement, basic details about the audit remain unsettled.
Abbott directed the Electric Reliability Council of Texas to conduct the review, but state officials have not said exactly how many projects will be audited, how the findings will be used or when the freeze on new connections will end. ERCOT said in a Monday filing that it expects the audit to last “several months” and begin shortly after Aug. 20.
The Public Utility Commission of Texas scheduled an emergency meeting for Friday morning to discuss the issue. Abbott’s office has largely referred questions about the audit to the governor’s previous public statements, while ERCOT and the PUCT have otherwise offered few additional details.
That leaves unanswered whether the review will ultimately address some of the biggest concerns surrounding the rapid expansion of data centers in Texas, including electricity demand, water consumption, infrastructure costs and environmental impacts.
Jim Henson, director of the Texas Politics Project, said the political context surrounding the announcement is difficult to ignore. Polling has shown growing unease among rural Texans over data center development, while Texas heads toward competitive general election contests for governor and U.S. Senate.
“It’s all very performative, it’s performative on everybody’s part,” Henson said.
Navigating the politics of data centers
Michael Jewell, an attorney who has represented large industrial companies on energy policy issues, said the industry’s willingness to cooperate is not surprising. Data center companies were already responding to public criticism and attempting to address many of the same concerns raised by Abbott.
“I think the data centers are going to comply with it, and they’re absolutely willing to comply with it,” Jewell said. “They want to be sure they understand what the requirements are and how this is going to develop, and that’s still a work in progress. I’m hoping that what we’ll do is on Friday, start to get a better understanding of what the process is going to be.”
Many companies supporting the audit also have projects in ERCOT’s large-load queue, essentially the line for projects seeking approval to connect to the grid. Abbott has said data centers cannot advance through that process until the audit is complete.
Although ERCOT does not operate the grid across the entire state, Abbott has said the pause applies statewide because the PUCT’s authority extends beyond ERCOT territory.
The move represents a shift in tone for a governor who called Texas the “epicenter of AI development” as recently as November.
Abbott has repeatedly highlighted companies’ announcements that they will comply with the audit, arguing that his administration has established safeguards intended to protect residents from shouldering the infrastructure costs created by massive new power users.
“What Governor Abbott is doing is working,” Abbott press secretary Andrew Mahaleris wrote. “Data centers across the state have announced their full compliance with those standards, which provide guardrails that protect our communities.”
The debate is particularly significant outside Texas cities. A recent analysis found that more than half of the data centers planned in the state are proposed for unincorporated areas, where county governments generally have limited authority to stop development.
Henson described the response from Abbott and the industry as a “political balancing act.” Abbott faces a reelection campaign, while data center operators need continued public and political support to carry out billions of dollars in planned development.
“These kinds of pronouncements and maneuvers will look differently and get different kinds of coverage after the election and once we get into the legislative part of the policy response process,” Henson said.
Is Abbott’s plan enough?
Abbott’s Aug. 3 letter offers some clues about what regulators are expected to examine.
The governor said developers should provide information about tax incentives, electricity consumption and generation, water use and cooling systems, efforts to reduce impacts on surrounding communities and ownership of the facilities. Projects that fail the “comprehensive verification and audit,” Abbott said, should be denied a grid connection.
The audit follows another directive Abbott issued June 10 calling on the PUCT to ensure that new data center connections result in lower residential electricity bills and that developers pay the full cost of the electrical infrastructure needed to serve their facilities.
Abbott has also called on lawmakers to repeal the state's sales tax exemption for data centers. The value of that incentive has grown to more than $1 billion annually as the industry expands. Comptroller’s Office officials said in late July that they expected at least 10 additional data centers per month to be certified for the exemption through the end of the year.
Still, a freeze on conventional grid connections may not halt construction.
A March paper from law firm Troutman Pepper Locke highlighted an increasing trend of data centers partnering with energy companies to develop power plants that directly serve individual facilities. Such arrangements could allow some projects to obtain electricity without relying on a traditional connection to the broader grid.
Critics of Abbott’s approach argue that the Legislature should go further.
Hinojosa has called on Abbott to convene lawmakers in a special session to consider regulations — or impose a complete moratorium on data center construction — rather than waiting for the Legislature's regular session in January.
“When the companies being regulated are cheering for the rules, you know the rules were written for them, not for Texans,” Hinojosa wrote in a statement.
For now, the breadth of support from the technology industry is clear. What remains less clear is what Texas regulators will actually require of those companies, how long the review will delay projects and whether the audit will lead to lasting changes in how one of the state’s fastest-growing industries is regulated.
