The Public Utility Commission of Texas adopted its final rule for connecting very large electricity users to the state grid on September 18, 2026. Law firm analysis The commission is the state agency that regulates utilities. ERCOT is the organization that runs the grid for most of Texas. The rule covers any site that would draw 75 megawatts or more, which is enough power for about 18,750 homes on a hot summer day. Express News
The rule carries out Senate Bill 6, a 2025 state law. That law ordered the commission to set connection standards for these users and required a study fee of at least $100,000. Texas Legislature The final rule itself was not available for this issue, so what follows comes from the published coverage of it.
What a developer must hand over before ERCOT studies a project
Before any study begins, the developer signs a first contract with its local utility. It pays a flat $100,000 study fee, no matter how large the project is. Yahoo Finance It also posts financial security of $50,000 for every megawatt it requests. Financial security is cash, a bank letter of credit or a company guarantee that the utility holds and can draw on if the project fails.
A 1,000 megawatt campus would post $50 million under that math. Law firm analysis The developer must also prove it controls the land and share its schedule for ramping up power use. It must also disclose how much water it expects to use. Express News
Company officers have to sign a statement that the technical information is true. Once the first contract is signed and funded, the utility has 60 days to ask ERCOT to start the study. Law firm analysis
What changes once ERCOT awards capacity
The study tells each project how much power the grid can give it. The developer then signs a standard connection agreement and posts more security. That amount is the larger of $50,000 per megawatt or the cost of the grid upgrades assigned to the project. The utility also bills the developer for the lines and equipment that link its site to the grid before the utility spends that money. The agreement commits the developer to pay a minimum transmission charge set under a separate commission rule. Law firm analysis
The security is based on the full peak demand in the contract. A developer cannot shrink it by pointing to generators at its own site. The commission also refused to exempt any industry, so hydrogen producers and petroleum plants face the same terms as AI data centers.
When the project first turns on, the utility returns 20 percent of the security. The rest comes back in four more 20 percent steps as the developer meets its minimum charge milestones. Law firm analysis
What happens if a project walks away or stalls
The cost of quitting depends on timing. A developer that withdraws before its study starts, or that is awarded zero megawatts, gets all of its security back, minus what it owes the utility. A developer that withdraws after capacity is awarded loses 20 percent of the security tied to that capacity. Law firm analysis
A project that fails to turn on within 24 months of its schedule gets reported to ERCOT. The 24 months applies to the whole schedule, not to each step. Within 60 days of that report, the utility applies the security to any amounts owed and returns the rest. Yahoo Finance
How the final rule differs from the March draft
The draft the commission published in March was much harder on developers. It charged a second fee at the connection agreement and let utilities keep most of the leftover security when a project failed. Texas Register
| Issue | March draft | Adopted rule |
|---|---|---|
| Fee at the connection agreement | $50,000 per megawatt, never refunded | Removed |
| Study fee | $100,000 or $300,000 depending on size | Flat $100,000 |
| Grace period for a missed schedule | Six months | 24 months, measured across the whole schedule |
| Leftover security after a stalled project | 20 percent back, 80 percent to utility rates | Full balance back after costs |
| Final refund of security | After five years at full peak demand | In 20 percent steps tied to minimum charge milestones |
None of this helps a developer waiting on the state’s audit of data centers. ERCOT and the commission plan to publish the audit’s conclusions by December 10, 2026. Yahoo News Until then, any security already posted stays with the utility.
Tomorrow’s topic
California’s new data center laws on power and water use.