Texas Energy and Data Center Policy Plan
Texas Energy & Data Center Policy: A Conservative Framework for the 90th Legislature
Texas is the data-center capital of the United States and the fastest-growing electricity market on the continent. A three-pillar conservative framework — distributed generation, transparent baseline operating standards, and a Texas energy and intelligence-infrastructure security board — can keep Texas first, protect Texas families, and secure Texas information technology and physical infrastructure for the long run. This is a pre-filing draft for the 90th Texas Legislature, grounded entirely in primary sources.
- Executive Summary — The Three-Pillar Framework
- The Problem in Context — ERCOT Demand, HB 14, SB 6, SB 388
- Data Centers: Water and Power — What the Research Actually Shows
- The Distributed Power Framework — Pillar 1
- The 21-Node Texas Energy Grid — Map and Specification
- The Joint Venture as a Voluntary Texas Tool
- Proposed Legislation — TDPGA, TDCTSA, TEIISB
- Opposition Analysis — Republican Primary and Democratic General
- HD109 District Impact — The I-45 Corridor
- References
- Inspect the Data
Executive Summary
A three-pillar Texas-first framework for the 90th Legislature
Texas leads the United States in electricity generation, electricity consumption, and data-center investment. According to the ERCOT 2025 State of the Grid Annual Report, the Texas grid delivered 488 million MWh in 2025 — a 5.7% year-over-year increase and the fastest growth rate of any major U.S. grid. ERCOT added 16,000 MW of new generation in a single year, yet active interconnection requests stand at 450,306 MW — roughly 2.8 times current system peak. [ERCOT SOTG, 2025] The market is signaling, plainly, that the existing centralized model cannot keep up with the load that AI, manufacturing reshoring, and Texas population growth are putting on it.
Texas is also the data-center capital of America. As of 2025, Texas data centers consume approximately 8 GW of grid electricity. Bloom Energy and the Texas Tribune project that figure rises to 40 GW by 2028 — a fivefold increase in three years, equivalent to adding more than the entire peak demand of Massachusetts. [Bloom Energy / TX Tribune, 2026] The state currently has 58 GW of new gas-plant capacity in its development pipeline — more than the entire peak demand of California — and 11 plants under construction, with 102 in preconstruction and 28 announced. [TX Tribune, Feb. 2 2026]
Texas should not regulate data centers out of the state. Texas should make data centers a contributing partner in the Texas grid — producing as much power as they consume, paying their own way for the infrastructure they require, and answering to a Texas state license issued by a Texas state board accountable to Texas voters. The federal government should have no jurisdiction over how Texas powers its own economy.
This article proposes a three-pillar policy framework, drafted as three pre-filing bills for the 90th Texas Legislature:
- Pillar 1 — Texas Distributed Power Generation Act (TDPGA). A 21-node, 34,200-MW distributed generation network sited inside ERCOT load zones to reduce congestion premiums, eliminate the need for $33 billion in long-haul transmission projects, and put generation where the demand is.
- Pillar 2 — Texas Data Center Transparency and Standards Act (TDCTSA). Minimal, transparent regulation of data-center operations: defines what a qualifying data-center facility is, requires modest annual disclosure to the State Board, and applies universal baseline operating standards (universal closed-loop cooling for new builds, public water- and energy-use reporting, water-source disclosure). There is no mandate that any data center produce its own power; the voluntary Power Production Compact path is in Bill III.
- Pillar 3 — Texas Energy and Intelligence Infrastructure Security Board (TEIISB). Texas's IT-sovereignty and intelligence-infrastructure security authority. The Board's central mission is to secure Texas's information-technology and physical-infrastructure systems against domestic and foreign threats, establish Texas as the intelligence hub of the world, and preserve Texas lands, way of life, agriculture, and sovereignty. Its statutory tools include: sole authority to issue, renew, and revoke data-center operating licenses; critical-infrastructure security and foreign-ownership review for licensed facilities (a Texas-state review parallel to federal CFIUS, covering entities domiciled in federally-designated adversary nations); facilitation and certification of voluntary Power Production Compacts (PPCs) between data centers and Texas generators — certified PPCs unlock the enhanced Locational Value Credit tier, Texas Energy Fund participation, expedited consolidated permitting, brownfield-site priority, and Community Infrastructure Fund state matching; enforcement of universal baseline emissions standards (SCR ≤2 ppm NOx at 15% O2, hourly public emissions monitoring); administration of a Community Benefit Agreement floor for Air-Burdened Texas Communities (35% local construction, 20% permanent operations, 1.5% revenue to a Community Infrastructure Fund, $15/month utility-bill credit within 2 miles, and an independent 5-year health study); and a transparent statewide registry of every data-center facility operating in Texas.
Communities within a defined distance of three or more existing industrial emission sources, ranked by aggregate ambient pollutant concentrations from TCEQ Continuous Emissions Monitoring System data. This is a Texas-based, data-driven definition, distinct from federal frameworks. It exists to direct higher protective standards to the Texas families most exposed to industrial air pollution, regardless of zip code, race, or income.
The framework is deliberately built on existing Texas statutory architecture — HB 14 (the advanced nuclear fund, 89th Legislature), SB 6 (data-center generator and grid-impact transparency, 89th), and SB 388 (the dispatchable-generation 50% goal, 89th) — rather than asking the Legislature to start over. [FastDemocracy HB 14, 2025] [FlexGen SB 6, 2025] [McGuireWoods SB 388, 2025] The Republican Party of Texas state convention resolution of March 2026 already expresses "strong opposition to the establishment of additional open loop data centers" until grid and water safeguards are in place. [RPT, 2026] This framework operationalizes that resolution.
The remainder of this article walks the data, the law, the bills, the opposition, and the HD109 district impact in detail. Every claim is sourced to a primary record — ERCOT filings, USGS reports, Texas Comptroller documents, Texas Tribune investigative reporting, and the original research of Andy Masley, Julian Estevez, and Construction Physics on the actual measured water footprint of American data centers.
The Problem in Context
ERCOT demand, the data-center boom, and the existing law inventory
ERCOT demand growth is structural, not cyclical
The ERCOT 2025 State of the Grid Annual Report documents a Texas grid growing faster than any other major U.S. grid — 5.0% average annual growth from 2021 through 2025, peaking at 5.7% in 2025 alone. Texas added 16,000 MW of new generation capacity in 2025 (solar 31,000 MW, battery 16,000 MW, wind 10,000 MW, and thermal 5,000 MW added cumulatively from 2021–2025), plus more than 540 miles of new transmission. Yet ERCOT received 61,000 MW of new interconnection requests in 2025 alone, bringing total active queue requests to 450,306 MW — 2.8 times current system peak. [ERCOT SOTG, 2025] Roughly 40% of the existing thermal fleet is more than 30 years old.
Demand is growing 5% per year on a base of 488 million MWh. Supply growth in 2025 (16 GW added) only barely matched demand growth. Meanwhile, the interconnection queue stands at 2.8× system peak — meaning developers want to build, but cannot connect. Lawrence Berkeley National Laboratory identifies grid interconnection delay as one of the leading barriers to new generation in the United States. [LBL, 2024]
The data-center boom is now the single largest demand driver
Texas data centers consumed approximately 8 GW of grid electricity in 2025. Bloom Energy's chief commercial officer, in projections cited by the Texas Tribune in January 2026, expects Texas data-center load to reach 40 GW by 2028. [Bloom / TX Tribune, 2026] Upwind.io's industry research identifies Dallas-Fort Worth as one of the three largest U.S. data-center markets, with active development pipelines in Plano, Frisco, McKinney, and the I-45 corridor south of Dallas. [Upwind, 2025]
The Texas Tribune's February 2, 2026 investigation found 58 GW of gas-fueled power-plant projects added to the Texas pipeline in 2025 alone — more than the entire peak demand of California — with 11 under construction, 102 in preconstruction, and 28 announced. The bulk of these are explicitly tied to data-center anchor tenants. [TX Tribune, Feb. 2 2026] Chevron has announced a 5-GW gas-and-power complex in the Permian Basin to anchor data-center load. [East Daley, 2025] Google has signed a long-term off-take with Intersect Power to build co-located energy parks. [Utility Dive, 2025] Amazon is investing more than $500 million in small modular reactor development. [UAGI, 2025] Conduit Power, Bridge Power Texas, and ENGIE have signed a Prometheus data-center power deal in Texas. [Utility Dive Prometheus, 2025]
The existing Texas law inventory: HB 14, SB 6, SB 388
The 89th Texas Legislature already took meaningful steps. Three bills constitute the existing statutory architecture this framework builds upon:
- HB 14 (89th, 2025) — Texas Advanced Nuclear Energy Fund. Establishes a state fund and the Texas Advanced Nuclear Deployment Office to support advanced reactor and small modular reactor (SMR) development. [Texas Nuclear Alliance, 2025] [FastDemocracy HB 14, 2025] Acknowledges the first-of-kind cost premium and provides a state offset.
- SB 6 (89th, 2025) — Large Load Interconnection Transparency. Imposes generator-fuel-plan and grid-impact reporting on data-center-class large loads. [FlexGen SB 6, 2025] [Mansfield SB 6, 2025] This is the transparency floor the TEIISB bill builds atop.
- SB 388 (89th, 2025) — Dispatchable Generation Goal. Sets a 50% goal that new generation in Texas come from dispatchable sources — nuclear, natural gas, geothermal, hydro, biomass, or coal with capture — rather than weather-dependent intermittent resources alone. [McGuireWoods SB 388, 2025]
The Texas Energy Fund (TEF), separately, has obligated $10 billion in low-interest loans for new dispatchable generation, with 8,800 MW of gas-fired capacity expected by 2029 from TEF-funded projects. [ERCOT SOTG, 2025] The Baker Institute at Rice University documents that these investments — combined with weatherization mandates passed after Winter Storm Uri — have measurably improved ERCOT reliability since 2021. [Baker Institute, 2024]
HB 14, SB 6, and SB 388 collectively fund new generation, require data-center transparency, and set a dispatchable target. They do not require data centers to produce the power they consume. They do not site generation where the load is. They do not establish a single state board with enforcement authority over data-center operating standards. They do not set emissions or water standards binding on data-center owners themselves. The three-pillar framework in this article fills those four gaps.
The Republican Party of Texas state convention resolution of March 2026 directly calls for these missing pieces: "strong opposition to the establishment of additional open loop data centers" until safeguards are in place, and a call for "local and county governments to have meaningful input." [RPT, 2026] This article translates that resolution into bill text.
The central mission: Texas energy and intelligence-infrastructure security
Energy is one dimension of the data-center question. The deeper question is whether Texas treats this build-out as a regulatory headache to be managed, or as the most important infrastructure decision of the next twenty years. The conservative answer is the second. Data centers are not just servers in warehouses — they are the physical substrate of the artificial-intelligence economy, of state and federal government workloads, of financial-market clearing, of military logistics, of energy-grid telemetry, and of the daily lives of every Texas household. Whoever owns and operates that substrate sets the terms of every economy that runs on it.
The Texas Energy and Intelligence Infrastructure Security Board exists to bring together every existing Texas regulatory body — the Public Utility Commission, ERCOT, the Texas Commission on Environmental Quality, the General Land Office, the Department of Information Resources, the Division of Emergency Management, the Department of Public Safety, the Higher Education Coordinating Board, and the Texas Workforce Commission — with the private industry that must build alongside them, to solve Texas's energy and intelligence-infrastructure problem in three coordinated movements: (1) build new generation capacity fast, where it is needed; (2) build a system that scales as demand scales, indefinitely; and (3) ensure the impact on Texas families, communities, and lands is a net benefit. The purpose of solving these three is to make Texas more independent, to secure our information-technology and physical-infrastructure systems against domestic and foreign threats, and to establish Texas as the intelligence hub of the world while preserving our lands, our way of life, our agriculture, and our sovereignty. Should the rest of the world go sideways, Texans should know that through the work of this Board, our power and our information technology are secure.
That mission is why the Board's energy authorities (licensing data centers, certifying voluntary Power Production Compacts, administering the baseline operating standards) are derivative of the security mission — not the other way around. PUCT remains the Texas energy-market regulator. ERCOT remains the grid operator. TCEQ remains the air and water permitting authority. The TEIISB does not replace any of them. It convenes them, alongside Texas DIR (Texas's existing state-level IT authority), Texas DEM (emergency management), and Texas DPS (security), to make sure that as commercial data-center capacity scales from 8 GW today to 40 GW by 2028, Texas leads instead of follows on the question of who controls the physical and digital infrastructure that runs on top of it. [TX DIR, 2026] The Board exists because data-center proliferation is a Texas sovereignty question, and Texas sovereignty questions belong in a Texas state authority answerable to Texas voters.
Data Centers: Water and Power
What the primary research actually shows — correcting the panic narrative without dismissing the real concerns
The water-and-power objection to data centers is the most widely circulated criticism of the industry and the most consistently misreported one. A responsible conservative answer cannot simply dismiss the concern — the alarming headlines have real political traction. But it also cannot adopt the inflated numbers uncritically. The accurate, evidence-based position is sharper than either reaction: the water concern is largely a math error driven by conflating three categories of water use, and the right Texas policy response is closed-loop cooling, recycled-water mandates, and a state operating license — not banning data centers and watching them go to Oklahoma, Louisiana, or Arizona.
The three-categories problem
Almost every alarming statistic about data-center water use conflates three very different categories. Andy Masley's October 2025 analysis — cross-validated by Construction Physics' August 2025 correction of Lawrence Berkeley National Laboratory methodology — sorts them out as follows: [Masley, 2025] [Construction Physics, 2025]
| Category | Definition | U.S. Volume (2023) | In Headlines? |
|---|---|---|---|
| Direct onsite cooling water | Water evaporated inside the data center to cool servers | ~50M gal/day | Sometimes |
| Indirect power-plant consumptive water | Consumed by power plants that supply the data center | ~200–250M gal/day | Usually |
| Non-consumptive power-plant withdrawal | Withdrawn by plants but returned to source unaffected | Billions of gal/day | Frequently — and incorrectly |
The scale correction
Once the three categories are separated and only consumptive use is counted, the comparative numbers look very different from the panic headlines:
| Activity / Industry | Daily Consumptive Use | Primary Source |
|---|---|---|
| U.S. irrigation (all agriculture) | ~105,000M gal/day | USGS 2015 Water Use Report |
| U.S. lawn and landscape irrigation | ~9,000M gal/day | EPA WaterSense |
| U.S. thermoelectric power (all) | ~3,500M gal/day | USGS 2015 |
| U.S. golf courses | ~3,100M gal/day | National Golf Foundation; Masley |
| All U.S. data centers (consumptive) | 200–275M gal/day | Masley / Construction Physics 2025 |
| All U.S. data centers — onsite only | ~50M gal/day | Lawrence Berkeley National Lab 2024 |
| All U.S. AI data centers (2023) | ~10–15M gal/day | Masley 2025 |
| Projected U.S. AI data centers (2030, onsite) | ~100–150M gal/day | LBL 3× growth; Masley |
The Texas-specific numbers
Julian Estevez's November 2025 analysis — cross-walking USGS data with EIA and ERCOT data-center load figures — documents the Texas-specific impact. [Estevez, 2025] Texas data centers added approximately 0.005% to Texas water demand — the equivalent of roughly 1,600 additional residents in a state of 30 million people. For comparison, Estevez finds Maricopa County data centers use 0.12% of county water; Maricopa County golf courses use 3.8% — roughly 30 times more. Estevez also finds that data centers generate approximately $20,000 in revenue per 1,000 gallons consumed, compared with $19 for agriculture and $312 for electric-power production. [Estevez, 2025]
"The water panic around AI and data centers is driven by math that is off by factors of 1,000. All U.S. data centers combined use about one-quarter of one percent of our freshwater — less than golf courses. The choice isn't between data centers and water. The choice is between unregulated development and the Texas conservative model that requires recycled water, closed-loop cooling, and a contribution to municipal water infrastructure."— HD109 Policy Research, drawing on Masley (2025), Estevez (2025), and AFPI (2026)
Yusuf Mahmood's analysis for the America First Policy Institute, published in Townhall in April 2026, reaches the same conclusion using independent data: all U.S. data-center water use sits between 0.2 and 0.5% of U.S. freshwater; the United States loses 15× more water annually to leaky municipal pipes than every data center in America uses combined; xAI's Colossus II facility uses approximately the same water as 2.5 In-N-Out restaurants in a year; and the Maricopa County data-center-to-golf-course water ratio is 1:30, while data-center revenue per unit water is 50× that of golf. [AFPI / Mahmood, 2026]
Where the water concern is real — and what the Texas policy response is
An honest accounting also requires being clear about what the legitimate water concerns are. There are three:
- Construction-phase impacts. The widely cited Newton County, Georgia / Meta case — the New York Times headline of "taps running dry" — was a construction sediment incident, not an operational issue. The Texas response in the TEIISB bill is a construction-phase water and runoff standard tied to the operating license.
- Local concentration. In The Dalles, Oregon, Google's data center uses 29% of municipal water supply — a real local concentration, even though Google's infrastructure investment (not a rate increase) offset the cost. The Texas response is a per-county data-center water-budget threshold above which a city or county can require recycled-water-only or closed-loop-only operation under the TEIISB bill.
- Open-loop evaporative cooling. The data-center water problem is largely a technology choice. Closed-loop air-cooled condenser (ACC) systems eliminate virtually all direct cooling water in exchange for modestly higher electricity consumption. The Texas response in the TEIISB bill is a closed-loop ACC requirement for any new data-center facility within a defined distance of an Air-Burdened Texas Community.
Data-center water concerns are real in narrow, specific, technology-driven ways. They are entirely manageable with policy that requires the right cooling technology and recycled water in the right places. The Texas answer is the TEIISB operating license — not a moratorium, not a federal mandate, not handing the question to environmental-justice activist litigation. Texas families get the strongest protection in the country, the Texas economy gets the highest-revenue-per-gallon industry on the planet, and Texas keeps its data centers and the tax base they bring.
Power: the harder question
Water is the easier piece. Power is the harder one. Eight gigawatts of current data-center load rising to forty gigawatts by 2028 is a real strain on a grid where the interconnection queue already stands at 2.8× system peak. [ERCOT SOTG, 2025] [Bloom / TX Tribune, 2026] The Texas Tribune's January 2026 reporting documents Bloom Energy positioning fuel-cell-powered behind-the-meter systems precisely because the grid cannot keep up. [Bloom / TX Tribune, 2026]
The conservative answer to the power question is built in Section 4 (distributed generation) and Section 6 (the voluntary joint-venture tool). The short version: Texas builds new generation through a 21-node distributed-generation framework, applies minimum responsible operating standards to data centers, and gives the State Board the legal tools to facilitate voluntary joint ventures between data centers and Texas generators when both parties freely choose that path. The framework solves the grid-capacity problem and the data-center problem through incentive alignment, not coercion.
The Distributed Power Framework
Pillar 1: build power where the load is, not where the line losses are
The Texas grid was built on a centralized model: large generation in the Permian Basin, in East Texas, and along the Gulf Coast, with high-voltage transmission lines running hundreds of miles to load centers in Dallas-Fort Worth, Houston, Austin, and San Antonio. That model imposes two costs that are now politically and economically visible. First, line losses between 8% and 15% on long transmission runs — meaning roughly one tenth of every megawatt-hour generated never reaches a customer. Second, congestion premiums on transmission segments that are oversubscribed — meaning customers in DFW and Houston pay structurally higher locational marginal prices than customers near generation. RMI's Texas distributed-energy research documents both effects directly. [RMI, 2024]
The centralized model also requires building more transmission. The Bell County East to Big Hill 765-kV transmission project — intended to move Central Texas generation to West Texas data-center load — carries an estimated price tag of $33 billion and would cut across approximately 200 miles of Texas Hill Country private land. [Texas Tribune, Feb. 2026] The project has generated bipartisan grassroots opposition, including from sitting Republican legislators. Texas Representative Ellen Troxclair (R, HD19) stated publicly:
"Hands down, Texas is better off building generation than transferring electricity across the state. A reading of the bill makes it clear that all options were to be considered and I don't think that this has happened."— Rep. Ellen Troxclair, R-HD19, opposing the Bell County East to Big Hill 765-kV project, May 2026
What "distributed" actually means
Distributed generation in this framework does not mean rooftop solar. It means utility-scale generation — gas combined cycle, gas peakers, SMR nuclear, utility-scale solar with battery, and IGCC clean-coal — sited inside ERCOT load zones rather than at the geographic periphery. Each node is sized to serve a specific demand zone with a specific fuel mix, chosen for local water availability, fuel proximity, and existing infrastructure (NRC-licensed nuclear sites, lignite belts, gas pipelines, transmission interconnects). The goal is to put generation within a 50-mile radius of the load it serves, eliminating long-haul transmission losses and the need for new $33 billion long-haul transmission projects.
91% of Texas voters support "protecting property owners' rights to produce or lease land for renewable energy" (CTEI 2025 statewide survey). Distributed generation is the property-rights-respecting alternative to forced eminent domain for transmission lines. Building 21 nodes inside ERCOT load zones obviates the need for hundreds of miles of new high-voltage right-of-way carved across Hill Country ranches. Generation, not condemnation.
The fuel mix — pragmatic, not ideological
The 21 nodes in this framework deploy five technologies, chosen for what works where:
- Natural gas CCGT and peaker plants — the workhorse for 2025–2030 demand growth. Cheapest dispatchable MWh; pairs naturally with solar. Sited near major pipelines (Permian, Eagle Ford, Haynesville) and load centers. Approximately 14,800 MW across 11 nodes.
- Small modular reactor (SMR) and conventional nuclear — for long-term baseload (2031–2050). Sited only at existing nuclear-adjacent locations: Comanche Peak (N1), South Texas Project (C1), Bexar County / CPS Energy (SC2), and the Fermi America Amarillo Hypergrid (P1). Approximately 12,300 MW across 4 nodes. [Texas Nuclear Alliance, 2025] [AWS SMR, 2025]
- Utility-scale solar with battery and gas-peaker firming — deployed where the resource is best: South Texas (S1 Hidalgo, S2 Webb), West Texas (W2 Howard, W3 El Paso). Solar produces zero power after sunset — firming is non-negotiable for grid reliability. Approximately 4,100 MW across 4 nodes.
- Mixed hypergrid — large-scale nuclear-plus-gas-plus-solar campuses with shared infrastructure. The Fermi America Amarillo facility (P1, 5,000 MW) is the lead example. Also at the Permian Basin (W1, 2,000 MW). Approximately 7,000 MW across 2 nodes.
- Clean coal — IGCC with carbon capture — the smallest component, deployed only in East Texas where lignite resources, Class VI CO2 geology, and existing coal-plant workforce exist. Not the Petra Nova post-combustion retrofit approach. IGCC gasifies the coal before combustion, eliminating SO2 and dramatically reducing NOx and PM2.5. Approximately 1,800 MW across 2 nodes (E1 Tyler/Longview, CC1 Carthage).
The total: 34,200 MW across 21 nodes. The distribution by fuel: gas approximately 43%, nuclear approximately 36%, mixed hypergrid approximately 20%, solar approximately 12%, and clean coal approximately 5%. (Percentages overlap because mixed-fuel hypergrids count toward more than one category.)
Why this is the conservative answer
The Locational Value Credit established in the TDPGA bill (Section 7) pays generators for the locational service they provide — transmission-loss avoidance, congestion-premium reduction, and local resilience — that ERCOT's energy-only market does not currently price. This is not a subsidy; it is correctly pricing a market failure the ERCOT energy-only model has carried since its 2001 design. The Texas Energy Fund (TEF) already provides $10 billion in low-interest loans for new dispatchable generation; the TDPGA extends that logic to where the generation goes, not just whether it is dispatchable. [ERCOT SOTG, 2025]
The 21-Node Texas Energy Grid
Map, node specification, and rationale for placement
The map below shows the 21 proposed distributed-generation nodes across all eight ERCOT weather zones. Each node is placed at its true geographic coordinates, drawn on a real Texas state outline derived from USGS county boundary data. The full node specification table follows the map. Total proposed capacity: 34,200 MW.
Node specification table
The table below lists all 21 nodes with their identifier, county, cities served, primary technology, and rated capacity. Total: 34,200 MW.
| ID | County | Cities Served | Technology | MW |
|---|---|---|---|---|
| N1 | Somervell / Hood | Fort Worth SW, Comanche Peak area | SMR Nuclear + Gas CCGT | 2,400 |
| N2 | Parker / Wise | Fort Worth NW, Weatherford | Gas CCGT + Solar | 1,200 |
| N3 | Collin / Kaufman | Plano, McKinney, Frisco DC corridor | Gas CCGT | 1,800 |
| P1 | Potter / Randall | Amarillo — Fermi Hypergrid campus | Nuclear + Gas + Solar Hypergrid | 5,000 |
| P2 | Lubbock | Lubbock | Gas Peaker + Solar | 800 |
| E1 | Smith / Gregg | Tyler, Longview — East TX lignite | IGCC Clean Coal + CCS | 1,000 |
| E2 | Angelina / Nacogdoches | Lufkin | Gas Peaker | 600 |
| SC1 | Travis / Williamson | Austin metro | Gas CCGT + Solar | 2,000 |
| SC2 | Bexar / Medina | San Antonio (CPS Energy) | SMR Nuclear + Gas Peaker | 2,200 |
| SC3 | Bell / Coryell | Killeen, Temple, Waco | Gas Peaker + Solar | 900 |
| H1 | Harris / Fort Bend | Houston NW, Katy | Gas CCGT | 3,000 |
| H2 | Jefferson / Hardin | Beaumont, Port Arthur | Gas CCGT + Solar | 1,500 |
| H3 | Montgomery / N. Harris | The Woodlands, Conroe | Gas Peaker | 1,000 |
| C1 | Matagorda | Bay City — South Texas Project | Nuclear — STP Expansion | 2,700 |
| C2 | Nueces / San Patricio | Corpus Christi, Rockport | Gas CCGT + Solar | 1,200 |
| S1 | Hidalgo / Cameron | McAllen, Brownsville (RGV) | Solar + Battery + Gas Peaker | 1,400 |
| S2 | Webb / Maverick | Laredo, Eagle Pass | Solar + Gas Peaker | 800 |
| W1 | Midland / Ector | Midland-Odessa (Permian Basin) | Gas CCGT + Solar Hybrid | 2,000 |
| W2 | Howard / Mitchell | Big Spring, Sweetwater | Solar + Wind + Battery | 1,000 |
| W3 | El Paso | El Paso (El Paso Electric) | Solar + Gas Peaker | 900 |
| CC1 | Panola / Harrison | Carthage — E. TX lignite belt | IGCC + CCS Clean Coal | 800 |
| Total — 21 nodes across all 8 ERCOT weather zones | 34,200 | |||
Three siting principles drove every placement. First, the node serves a specific demand zone with its identified load profile — not "Texas generally." Second, the fuel mix is matched to local water availability per USGS PP 1894D and the UT Bureau of Economic Geology water-requirements white paper. [UT BEG, 2025] Water-abundant East Texas can support clean coal and CCGT; water-stressed West Texas defaults to solar-plus-battery with minimal gas peaking; nuclear only at existing NRC-licensed sites where water rights and workforce already exist. Third, every node is within a 50-mile radius of either an existing major load center or an explicit incoming data-center campus — eliminating the need for new 200-mile transmission projects.
Node N3 (Collin/Kaufman, 1,800 MW) is the closest sited node to HD109. The I-45 corridor between Hutchins, Wilmer, and Seagoville is a candidate site for an HD109-specific energy-producing data-center campus — covered in Section 9. The N3 specification anchors that proposal in the broader Texas distributed-generation network.
The Joint Venture as a Voluntary Texas Tool
Section 6 — how Texas aligns data-center growth with new grid capacity without coercion
Sections 4 and 5 explain where Texas builds new power. This section explains the most powerful tool the State Board can offer to make that buildout happen faster and on better terms for Texas families — the voluntary Power Production Compact (PPC) between a Texas generator and a data-center anchor tenant. The PPC is not a mandate. It is a state-blessed legal structure that two private parties can choose to use because doing so unlocks the strongest economic incentives Texas can offer.
The three problems the joint venture solves
The PPC tool is designed to solve three distinct problems at the same time:
- The need to build distributed generation in a fast, economically feasible way. The largest obstacle to new Texas dispatchable generation is not technology and not permitting — it is capital cost recovery in an energy-only market that does not pay for capacity. A standalone merchant plant in a licensed node must finance itself against uncertain off-take. A plant paired with a data-center anchor tenant has a contracted off-taker from day one. Financing closes years faster.
- The need for data centers to have the power they need without negatively impacting the Texas grid or the residents who share that grid. Co-located generation removes the data-center load from the long-haul transmission system and from the marginal supply margins that determine peak-demand pricing for everyone else. The data center gets its power; ratepayers in the same load zone see the congestion premium drop.
- The need to anchor strategic compute capacity inside Texas under Texas-controlled legal architecture — so that the intelligence infrastructure powering Texas's economy, government, and households remains accessible to Texans regardless of federal action or foreign disruption. A certified PPC creates a Texas-state-recognized commercial bond between a Texas generator and a Texas-domiciled data-center operation, giving Texas durable jurisdictional standing over the assets that depend on it.
All three problems can be solved without the joint venture — the TDPGA's distributed generation framework will produce new generation at the 21 nodes whether or not any data center participates, SB 6's large-load interconnection rules already constrain how data centers connect to the grid, and Texas already operates substantial state-level IT infrastructure through the Texas Department of Information Resources. [Bracewell SB 6, 2025] [TX DIR, 2026] But the joint venture solves all three problems faster, more efficiently, and with stronger Texas-jurisdictional control over the underlying assets than any of the three pieces on its own. That is the basis for offering the PPC as a voluntary, state-facilitated path with a meaningful benefits package attached.
What the Board is authorized to do
Bill III (TEIISB) gives the State Board explicit authority to facilitate voluntary PPCs. Specifically, the Board:
- Convenes data centers, generators, host cities and counties, ERCOT, PUCT, and TCEQ for voluntary JV development.
- Publishes model PPC templates and best-practice frameworks that minimize transaction costs for parties choosing the JV path.
- Provides neutral mediation if a JV negotiation stalls.
- Certifies a qualifying PPC — a voluntary certification that, once granted, makes the project eligible for an enumerated package of state benefits.
Critically, nothing in Bill III conditions a data-center operating license on participation in a PPC. A data center that prefers to operate without a PPC is fully licensed, regulated, and welcome in Texas — subject to the same universal baseline standards (transparent reporting, emissions, water-source disclosure) that apply to every qualifying facility. The PPC simply unlocks the better deal.
The certification package: what a certified PPC unlocks
A data center and a generator that voluntarily file an TEIISB-certified PPC together unlock five state-facilitated benefits that are unavailable to non-PPC projects:
- Enhanced Locational Value Credit (LVC) tier. Bill I (TDPGA) creates a two-tier LVC. A baseline LVC is paid to any generator sited inside an TEIISB-licensed node. An enhanced LVC tier — calculated to recognize the additional system benefits of dispatch certainty under a contracted off-take — is reserved for generators in a certified PPC. See the explainer below.
- Texas Energy Fund participation. The TEF's existing $10B low-interest loan authority is extended to certified-PPC projects, with the PPC and the TEIISB certification serving as the credit enhancement that lets the project clear TEF's underwriting at the lowest available rate. [ERCOT SOTG, 2025]
- Expedited consolidated state permitting on the federal ADVANCE-Act 25-month NRC shot clock for SMR-anchored projects, and on equivalent compressed timelines for gas and solar-plus-battery projects. [NRC ADVANCE Act, 2024]
- Brownfield-site siting priority within the 21-node network: existing-disturbed sites (former coal/lignite, current utility ROWs, current nuclear sites) are matched to certified PPCs first.
- Community Infrastructure Fund (CIF) state matching. The state matches a portion of the certified PPC's local Community Benefit Agreement contribution — making it economically attractive for host cities and counties to consent.
This is the Republican answer to the data-center question: not "force them to do it," but "make it so attractive that they choose to." The PPC is the carrot. There is no stick.
The Locational Value Credit, explained
The Locational Value Credit (LVC) is central to how the framework prices new generation, and it deserves a plain-language explanation. Today, ERCOT pays generators a single wholesale energy price for each megawatt-hour they produce. That price reflects supply and demand across the whole ERCOT footprint at the moment of production. It does not reflect where the generation is located — even though a megawatt-hour produced 10 miles from the load that uses it costs the system far less than one produced 200 miles away.
The unpriced "locational service" has three components: avoided line losses (electricity dissipates as heat in transmission — longer line, more loss), avoided congestion premium (when transmission lines are full, wholesale prices spike on the load side of the bottleneck; DFW pays this premium constantly), and avoided transmission capital (when generation is built at the load, $25–$33 billion in proposed long-haul transmission projects do not have to be built). [ERCOT SOTG, 2025]
Every other major US grid prices locational service. PJM, MISO, CAISO, and NYISO all pay generators differently based on where they are located, through capacity-market locational pricing, local resource zones, or locational installed capacity. ERCOT's 2001 energy-only market design is the lone exception — and it is the reason distributed generation has not emerged organically in Texas. The LVC closes that outlier gap by paying generators for a service that already has economic value. It restores price discovery; it does not distort it. [Ascend Analytics, 2025] [E3 PUCT Assessment, 2022]
Under the TDPGA, the LVC operates in two tiers. The baseline LVC is paid to any ERCOT-registered generator physically sited inside an TEIISB-licensed node and is calculated from the three measured system benefits above. The enhanced LVC is paid to generators that participate in an TEIISB-certified PPC and recognizes the additional system benefits that a contracted-off-take structure provides: dispatch certainty, water-recirculation under Net Water Neutrality, and committed community benefit. Both tiers are funded through the existing TEF authority and a modest TEIISB licensing-fee structure — not through a consumer surcharge.
The capital stack: how a certified joint venture finances new generation
When two private parties voluntarily pursue a certified PPC, the financing structure aligns three balance sheets:
- Anchor-tenant capital (typically 30–50%): the data-center operator contributes equity, contracted off-take, or both to the co-located generation project. The data center receives priority off-take rights up to its committed megawatt-hours; the position is recovered through the spread between the PPC dispatch price and the operator's alternative blended power cost.
- Power-production-company equity (typically 30–50%): an existing Texas generator — utility, IPP, or municipal — contributes generation, operations, and dispatch expertise. The generator remains the ERCOT-registered market participant; the data center is a contracted off-taker.
- Texas Energy Fund debt (the balance): the TEF's low-interest loan authority covers the remaining capital stack, with the TEIISB-certified PPC serving as the collateral and credit enhancement.
This is not a new model. It is the model Google has adopted with Intersect Power for co-located energy parks; the model Chevron is building in the Permian; the model SoftBank has pursued in Portsmouth, Ohio; and the model Amazon Web Services is pursuing through its $500M small-modular-reactor investment. [Utility Dive, 2025] [East Daley, 2025] [Energycast SoftBank, 2025] [AWS SMR, 2025] What the framework does is give Texas a state-level legal architecture that recognizes and certifies these voluntary deals on Texas terms — instead of leaving Texas to ratify deals structured for other jurisdictions.
Water as a certification benefit-of-the-deal
For data centers and generators choosing the certified PPC path, the Net Water Neutrality standard becomes part of the deal. Under TEIISB certification, the joint venture commits to:
- Closed-loop air-cooled condensers on the co-located generation plant — no evaporative cooling-water loss from power production.
- Reclaimed-water-only makeup for any wet processes (typical commercial reclaimed water is non-potable and unsuitable for human consumption but ideal for industrial cooling, per TCEQ RG-445). [TCEQ RG-445, 2024]
- On-site rainwater capture and graywater reuse for landscape and process pre-cooling.
- Annual net-water-balance reporting with verified offsets (aquifer recharge, municipal reclaimed-water expansion funding, or watershed restoration) covering any residual consumption.
Net Water Neutrality is the strictest water standard applied to industrial users anywhere in the country, and it is achievable because the certified PPC's capital stack absorbs the cost up-front rather than imposing retrofit costs on existing facilities. Data centers that do not pursue PPC certification remain subject to the universal baseline water rules under Bill II (Texas Data Center Transparency and Standards Act): closed-loop cooling required for all new builds, public water-use reporting, and water-source disclosure. The high standard is a benefit-of-the-deal for the carrot side, not a sledgehammer for everyone.
The economic case for choosing the certified path
Julian Estevez's revenue analysis is directly relevant here. Data centers generate approximately $20,000 in revenue per 1,000 gallons of water consumed and approximately fifty times the revenue-per-megawatt-hour of agricultural water users. [Estevez, 2025] Data centers are the highest-revenue-per-input industry on the planet. The economic margin available to a data-center operator to participate in a certified PPC — in exchange for the enhanced LVC, TEF participation, expedited permitting, brownfield priority, and CIF state matching — is enormous. The framework's bet is that most large data-center operators will look at the certification package and choose it freely. There is no need for force.
"For every dollar a data center spends in services, it gives back $26 in revenue — but that requires proper tax and community benefit structures."— Dan Diorio, Data Center Coalition, citing Virginia data center returns
The TPTRP linkage: how a certified joint venture becomes a permanent local-revenue engine
Under the Texas Property Tax Replacement Plan framework being developed in companion legislation, the elimination of property tax is paired with a unified state and local sales-tax base that includes commercial utility consumption (electricity, natural gas, water, telecommunications) within the existing 2% local cap permitted under Tax Code Chapter 321–323. [TX Comptroller, 2025] Under existing law (34 Tex. Admin. Code §3.295), qualifying data centers are exempt from the state 6.25% sales tax on equipment, but local sales tax on commercial electricity and natural gas continues to apply. The TPTRP framework preserves and amplifies that distinction: local sales tax on commercial utility consumption becomes a primary recurring revenue stream for cities and counties — replacing property-tax revenue.
A typical 200 MW Texas data center consumes approximately 1.75 TWh of electricity per year. At a representative commercial wholesale rate of $0.06/kWh, that is roughly $105M in annual electricity spend. Under a TPTRP city+county sales-tax rate of approximately 1.5% on commercial utility consumption (well within the existing 2% local cap), the resulting local sales-tax revenue is approximately $1.58M per year per data center.
Add water at approximately $1M/year × 1.5% ≈ $15K/year; add net-export power sold from a 500-MW PPC-paired generation plant (typical net non-anchor sales approximately $50M/year) × 1.5% ≈ $750K/year; and the combined annual recurring city+county revenue from one certified-PPC data center is approximately $2.3M per year, durable, and structurally independent of property-value cycles. Across 15 such certified facilities in the 21-node network, the combined annual city+county revenue contribution from the program is on the order of $35M/year recurring — before counting construction-phase sales tax, hotel-occupancy tax, and TPTRP-base impacts on the surrounding economic activity.
Note: a non-certified data center generates the same electricity sales-tax revenue, because the local sales tax applies under existing law regardless of certification. The certified-PPC path adds the net-export-power revenue stream and the CIF state-matching contribution on top of that baseline.
Why this design is honestly conservative
A blunt mandate — "data centers must produce what they consume” — would have been the easier political shorthand, and it is the framing some federal Democrats have adopted in the PRICE Act. [Casar PRICE Act, 2026] But a mandate is government coercion of a private commercial decision in a market that is already moving toward co-located generation organically. The conservative path is to use the state's tools — tax structure, low-interest financing, expedited permitting, locational pricing — to align private incentives with public benefit, and then let the parties choose. Texas does not need to force data centers to be partners. Texas needs to make the partnership unmistakably the better deal.
Proposed Legislation — 90th Texas Legislature
The three pre-filing drafts that implement the framework
The three pillars are drafted as three separate pre-filing bills for the 90th Texas Legislature. Each is independently passable, and each is strengthened by the other two. Each card below summarizes the bill at a glance; the full TLC-formatted bill text is available on the dedicated bill pages linked from each card and as a downloadable Word document.
The Three-Pillar Texas Energy & Data Center Framework
Review each bill in the tabs below. All three bills are pre-filing drafts. Use the "Read Full Bill" button on each tab to open the full TLC-formatted text on its dedicated page.
Opposition Analysis
Republican-primary attacks, Democratic-general attacks, and rebuttals grounded in primary sources
The three-pillar framework will face two distinct opposition tracks: a Republican-primary track focused on grid reliability, property rights, and federal-government creep; and a Democratic-general-election track focused on consumer cost, environmental justice, and corporate giveaways. Both tracks have legitimate elements and politically motivated elements. The campaign's response must address the legitimate elements substantively and rebut the politically motivated elements with primary data.
Republican-primary attacks
The Texas Tribune's May 7, 2026 investigation documented that most planned or under-construction data centers are sited in red, rural Texas counties — creating direct constituent-representative conflicts that have fractured the Republican coalition on this issue. [TX Tribune, May 7 2026] Three Republican-primary attack lines are most likely:
- "This is too much government for energy." A free-market objection that the Locational Value Credit, the data-center transparency standards, and a new state board collectively expand Texas state regulatory scope. Rebuttal: TEIISB is fundamentally an IT-sovereignty and intelligence-infrastructure security authority — not an energy regulator. PUCT remains the Texas energy-market regulator. TEIISB's energy provisions are derivative of its mission to secure Texas's intelligence infrastructure. On the energy market specifically: the Texas Energy Fund, HB 14 nuclear fund, and SB 388 dispatchable goal already represent Texas state intervention — intervention that 89th Legislature Republican majorities passed and Governor Abbott signed. The TDPGA Locational Value Credit corrects a 2001-era market design failure that prevented distributed generation from emerging on its own. [Baker Institute, 2024]
- "You're going to hand control of Texas energy to a state board that will be captured by the next Democratic administration." A federalism-flavored objection that any new state board is a future regulatory target. Rebuttal: The TEIISB is explicitly designed as a board of appointed-by-Governor, confirmed-by-Senate technical commissioners with fixed terms, not a political body. It replaces the current vacuum — in which TCEQ, PUC, ERCOT, and the Comptroller each have a partial role and none has accountability for data centers specifically — with a single accountable body. The alternative to the TEIISB is not less regulation; it is the current diffuse regulation. [FlexGen SB 6, 2025]
- "Rural Republicans don't want these data centers and you're going to force them on us." The Wes Virdell / Matt Sebesta / Brazoria County GOP objection. Rebuttal: The TEIISB requires meaningful local input — including county and city consent prior to issuance of any operating license — and the CBA floor sends 35% of construction spending, 20% of permanent operations spending, and 1.5% of facility revenue back to host counties. This is the operationalization of the RPT March 2026 resolution that explicitly called for "local and county governments to have meaningful input." [RPT, 2026] [TX Tribune, May 7 2026]
"Hands down, Texas is better off building generation than transferring electricity across the state."— Rep. Ellen Troxclair (R-HD19), May 2026 — an independent Republican validation of the distributed-generation premise
Democratic general-election attacks
Texas Democrats do not currently have a unified statewide energy policy with the operational specificity of this framework. The closest analogue is U.S. Rep. Greg Casar's federal package: the Connect the Grid Act, the PRICE Act, the Data Center Transparency Act, and the Lowering Utility Bills Act. [Casar PRICE Act, 2026] The Democratic playbook is national, framed by the Climate Power PAC's November 2025 post-election memo instructing Democrats to "hammer Republicans on rising energy costs." Three attack lines are most likely:
- "Republicans are giving Big Tech a free ride at the expense of ordinary Texans." The Blumenthal / Sanders November 2025 letter framing. Rebuttal: The TDCTSA's universal baseline standards plus the voluntary TEIISB-certified Power Production Compact structure together impose the strongest disclosure, emissions, water, and community-benefit obligations on data centers anywhere in the country. Certified PPCs commit participating data centers to net exports to the Texas grid — a stronger structure than the federal PRICE Act's bare self-generation requirement. [Casar PRICE Act, 2026] Non-participating data centers still pay full state and local utility-consumption sales tax, which under the TPTRP framework becomes a direct funding stream for the host cities and counties that bear the facility's footprint. [Bloom / TX Tribune, 2026]
- "You're putting gas plants in Black and brown neighborhoods." The most legitimate Democratic line of attack, especially in HD109, where Lancaster and southern DeSoto have existing industrial air-quality concerns. Rebuttal: The TEIISB bill requires SCR ≤2 ppm NOx at 15% O2, closed-loop air-cooled condensers, hourly public emissions monitoring, buffer-zone CEIBA review, and a Community Benefit Agreement floor — protections that no Democratic bill in two sessions has proposed. The framework calls these protections what they are: Texas Family Health Protection standards for Air-Burdened Texas Communities. They protect Texas families directly without requiring federal civil-rights frameworks.
- "Texas should connect to the national grid to prevent another Uri." The Casar Connect the Grid Act framing. Rebuttal: FERC's own post-Uri investigation found that Uri was caused by inadequate weatherization of existing Texas gas plants and pipelines, not by grid isolation. Connecting to FERC-regulated grids would subject Texas to federal renewable portfolio standards and rate regulations that have measurably raised electricity prices in PJM and MISO. The distributed-generation framework addresses the actual Uri cause — insufficient local dispatchable generation — without surrendering Texas sovereignty over its own grid. [ERCOT SOTG, 2025]
Real weaknesses — and how the legislation resolves them
An honest opposition analysis names the real weaknesses too. The 1.0 draft of this framework had three. Each has a corresponding statutory fix carried in the three-bill package; what follows is each weakness paired with the specific provision that resolves it.
Weakness 1: ERCOT's 2001 energy-only market does not price locational service.
The 2001 energy-only design has served Texas well on price, but it does not pay generators for being in the right place — only for producing. That is one reason distributed generation has not emerged on its own. The Texas PUC shelved the Performance Credit Mechanism (PCM) in December 2024 after concluding the $1B-capped statewide instrument would add only ~780 MW against a ~10,000 MW reliability gap. [Texas Tribune, Dec. 2024] [Utility Dive PCM, 2024] Senate Bill 6 (89th, 2025) separately directed PUCT to reevaluate the four-coincident-peak (4CP) wholesale transmission cost methodology, with final rules due by December 2026. [Bracewell SB 6, 2025] The market reform conversation is open.
The statutory fix — carried in Bill I. TDPGA Section 7 (new Sec. 39A.005 of the Utilities Code) establishes a two-tier Locational Value Credit. The baseline tier is paid to any ERCOT-registered generator physically sited inside a TEIISB-licensed node, calculated from documented avoided line-loss, avoided congestion premium, and avoided transmission capital cost. The enhanced tier is reserved for generators participating in a TEIISB-certified Power Production Compact under Subchapter F of Government Code Chapter 481A — recognizing the additional system benefits of dispatch certainty under a contracted off-take. Both tiers are funded by the existing Texas Energy Fund authority and modest TEIISB licensing fees, not a consumer surcharge — the structural reason PCM failed politically. The Ascend Analytics analysis of subsidized new-entry capacity programs documents that targeted locational instruments paired with directly-financed new generation can reduce, not raise, total system cost. [Ascend Analytics, 2025] [E3 PUCT Assessment, 2022]
Weakness 2: SMR licensing timelines.
Under standard NRC review, the first new Texas SMR would not be operational before 2031–2033, while ERCOT projects 138 GW of demand by 2030 and reports its interconnection queue at 450,306 MW — 2.8× current system peak — as of January 2026. [ERCOT SOTG, 2025]
The statutory fix — built into Bills I and III. The federal ADVANCE Act of 2024 (P.L. 118-67, signed July 9 2024) established a 25-month NRC shot clock for SMR licensing at existing nuclear sites and qualified brownfield fossil sites, and authorized the NRC to reduce licensing fees and accelerate environmental review. [NRC ADVANCE Act, 2024] [Clearpath ADVANCE Act, 2024] The TDPGA prioritizes ADVANCE-Act-qualifying sites for the SMR-anchored nodes: Comanche Peak (Node N1, Somervell County) as an existing nuclear site, South Texas Project (Node C1, Matagorda County) as an existing nuclear site, and the East Texas lignite belt locations (Nodes E1 and CC1) as qualified fossil brownfields. The TEIISB (Bill III) files the consolidated state-side approvals (water rights, air permits, siting, transmission interconnection) as a single package timed to the federal 25-month shot clock, eliminating the federal-state sequencing delay that historically extends nuclear timelines by years. Under this pathway, the first new-build Texas SMR can be operational by 2029–2030 rather than 2031–2033. Gas and solar fill the 2025–2029 gap; SMRs anchor the 2030–2050 baseload — on a timeline that meets the demand curve.
Weakness 3: Local siting impact at the node sites themselves.
Distributing generation reduces long-haul transmission impact, but it does introduce local siting impacts — land use, noise, water rights, and community character — at each of the 21 nodes.
The statutory fix — built into Bills II and III. TDCTSA (Bill II) imposes universal baseline operating standards on every qualifying data-center facility: closed-loop cooling required for power-side equipment on new builds, water-source disclosure at the time of facility application, and annual public reporting of nameplate capacity, continuous load, water consumption (potable, reclaimed, and on-site captured), and electricity and natural-gas consumption. The TEIISB (Bill III) layers on a binding Statutory Mitigation Floor applied uniformly to every licensed node: (1) preference for existing-disturbed sites — brownfields, former coal/lignite, existing utility ROWs, and current nuclear sites — over greenfield development; (2) the Community Benefit Agreement floor (35% local construction hire, 20% permanent operations hire, 1.5% of revenue to a Community Infrastructure Fund, $15/month utility-bill credit for residents within 2 miles, and a funded independent five-year community health study); (3) the 1.5-mile Buffer Zone with the Cumulative Emissions Impact and Buffer Assessment (CEIBA) for any node sited within 1.5 mi of residential; and (4) mandatory host-city and host-county consent before any TEIISB operating license issues — operationalizing the Republican Party of Texas's March 2026 resolution calling for "local and county governments to have meaningful input." [RPT, 2026] The stricter Net Water Neutrality certification described in §6 above is reserved for TEIISB-certified Power Production Compacts under Subchapter K of Government Code Chapter 481A — a benefit-of-the-deal for the voluntary certified path, not a universal license condition.
What the TEIISB is, more fully
Each of the three weakness-fixes routes through the TEIISB. That is intentional. The Board's central mission is Texas IT sovereignty and intelligence-infrastructure security — the energy and licensing tools are derivative of that mission. The Board is the single state-level convening authority that brings every relevant Texas agency to one table on every licensed node, in priority order: the Texas Department of Information Resources (DIR) for state IT and data-sovereignty coordination; the Texas Division of Emergency Management (TDEM) for critical-infrastructure protection; the Texas Department of Public Safety (DPS) for physical security and threat coordination; the Texas Higher Education Coordinating Board (THECB) and the Texas Workforce Commission (TWC) for the Texas-resident workforce pipeline; the Public Utility Commission (PUCT) for rate and market authority; ERCOT for grid operations; the Texas Commission on Environmental Quality (TCEQ) for water and air permits; the General Land Office (GLO) for state lands; and the Office of Public Utility Counsel for residential ratepayer interests. The Board's licensing authority is conditioned on Texas-first operational standards: a Texas-domiciled operator preference, Texas-routed peering for any data center serving Texas state-government workloads, integration with the Texas DIR Shared Technology Services, an annual cybersecurity attestation, and a foreign-ownership review for licensed facilities that is a Texas-state review parallel to (not pre-empting) the federal CFIUS process. [TX DIR, 2026]
The framework is more protective of Texas families than the status quo (which leaves DFW and Houston paying congestion premiums and exposed to Uri-style risk); more protective than the federal Democratic alternative (which exposes Texas to FERC jurisdiction without solving the local generation deficit); more protective of property rights than $33 billion in new long-haul transmission corridors; and more protective of Air-Burdened Texas Communities than any unregulated data-center expansion. The campaign owns the energy issue by being specific, sourced, and Texas-first.
HD109 District Impact
The I-45 corridor and what this framework means for Cedar Hill, Lancaster, DeSoto, Glenn Heights, Wilmer, Hutchins, Combine, Ferris, and Seagoville
Texas House District 109 covers Cedar Hill, Lancaster, the eastern half of DeSoto, Glenn Heights, Wilmer, Hutchins, Combine, a small portion of Ferris, and Seagoville. The district sits inside the ERCOT North Central weather zone — the most congested zone in the Texas grid and the zone with the highest locational marginal prices for retail electricity. The Plano-McKinney-Frisco data-center corridor sits directly north of HD109; the I-45 industrial corridor runs through the southern half of the district. HD109 is at the geographic center of the Texas energy and data-center debate.
What HD109 voters pay today
North Central ERCOT customers pay structurally higher locational marginal prices than customers near generation. [POWWR, 2025] Line-loss and congestion premiums between Permian Basin and Gulf Coast generation and DFW load are baked into every bill. ERCOT's energy-only market does not currently provide a financial signal to build generation closer to DFW load — which is the cost HD109 households and small businesses absorb every month.
The candidate site: the I-45 corridor between Hutchins, Wilmer, and Seagoville
The I-45 corridor from Hutchins through Wilmer to Seagoville is the strongest candidate site in HD109 for an energy-producing data-center campus paired with a voluntary TEIISB-certified Power Production Compact. Three factors converge:
- Existing industrial-zoned land. The I-45 corridor already hosts logistics, freight, and intermodal facilities; introducing a data-center campus does not require rezoning rural or residential land.
- Direct interstate transmission and fiber access. The corridor is adjacent to the I-45 fiber backbone and to existing 138-kV and 345-kV transmission paths into DFW.
- Proximity to TDPGA Node N3. The Collin/Kaufman N3 node (1,800 MW gas CCGT) sits roughly 40–55 miles north of the corridor, well within the 50-mile distributed-generation service radius. An HD109 data-center campus could voluntarily pursue a TEIISB-certified Power Production Compact with a generator at Node N3 — producing power locally and contributing to a North Central node that benefits DFW load broadly.
An HD109 energy-producing data-center campus on the I-45 corridor, anchored by a voluntary TEIISB-certified Power Production Compact with a generator at TDPGA Node N3, would: (1) bring high-revenue, high-tax-base industrial development to Hutchins, Wilmer, and Seagoville; (2) reduce North Central congestion premiums that Cedar Hill, Lancaster, and DeSoto households pay every month; (3) commit 35% of construction spending, 20% of permanent operations spending, and 1.5% of facility revenue back to host cities via the TEIISB CBA floor; (4) provide a $15/month utility-bill credit to every household within 2 miles; and (5) be subject to the strongest air-quality and water-recirculation standards in the country. Strong Texas Communities in action.
The Air-Burdened Texas Communities case in HD109
Lancaster and southern DeSoto have documented industrial air-quality concerns dating to the 20th-century industrial siting decisions of southern Dallas County. Any honest HD109 energy proposal must address that reality directly. The TEIISB framework does so without invoking federal civil-rights frameworks or "environmental justice" terminology that has been politically weaponized in other contexts. The Texas Family Health Protection standards apply uniformly to every Air-Burdened Texas Community in the state — defined by TCEQ Continuous Emissions Monitoring data, not by federal demographic frameworks. Lancaster and southern DeSoto qualify on the data, and the standards apply.
What this means for HD109 specifically
HD109 covers an industrial-adjacent stretch of southern Dallas County and a fast-growing residential corridor along I-45. Energy and data-center policy is not a marginal issue for this district — it is a defining one. There is currently no published HD109-specific energy or data-center policy framework on the public record. The framework in this article is offered to fill that vacuum with concrete, sourced, Texas-first policy that the constituents of this district can read, evaluate, and hold their representative accountable to.
"My plan does more to protect Cedar Hill, Lancaster, and DeSoto from industrial air pollution than any bill the Democrat Party of Texas has introduced in two sessions. It requires the highest emission control standards, gives communities a direct financial stake in their own power plants, puts air-quality monitors in the neighborhood, and puts money back on utility bills for residents who live near any facility. Show me the Democratic bill that does that."— The HD109 campaign answer on energy and Texas family health protection
The campaign's HD109-specific commitment: pre-file the three bills on day one of the 90th Legislature, prioritize the I-45 corridor candidate site in the TEIISB initial licensing queue, and require host-city consent from Hutchins, Wilmer, and Seagoville before any operating license is issued. Strong Texas communities make their own decisions about their own land — with the data, the standards, and the contributions baked into the law.
References
Sources are organized by the sections of this article they principally inform. Every URL is a working link to a primary or peer-reviewed original. No internal working documents are cited.
Texas Grid Demand & ERCOT Authority — Sections 1, 2, 4, 5
ERCOT. (2026). 2025 State of the Grid Annual Report. Electric Reliability Council of Texas. https://www.ercot.com/files/docs/2026/03/19/2025-ERCOT-Annual-Report-Final-Single-Pages-March-19-2026.pdf
Primary source for all 2025 ERCOT figures cited in this article: 488 million MWh delivered (+5.7% YoY); 16,000 MW added in 2025; 8,800 MW gas expected by 2029 via the Texas Energy Fund; 61,000 MW added to the interconnection queue in 2025; total active queue 450,306 MW = 2.8× system peak; 40% of thermal fleet over 30 years old; cumulative 62,000 MW added 2021–2025 (31k solar, 16k battery, 10k wind, 5k thermal); 540+ miles of transmission added 2025.
ERCOT. (2025). Resource Adequacy — 2025. Electric Reliability Council of Texas. https://www.ercot.com/gridinfo/resource/2025
ERCOT Capacity, Demand, and Reserves and related Resource Adequacy datasets used to validate the 138-GW-by-2030 demand projection referenced in Section 8.
POWWR. (2025). How Data Centers Are Driving Demand Growth in ERCOT. POWWR Industry Analysis. https://www.powwr.com/blog/how-data-centers-are-driving-demand-growth-in-ercot
Industry analysis of locational marginal pricing and congestion premiums in North Central ERCOT, used in Section 9 HD109 cost-impact discussion.
Luminant. (2022). NPRR1092 Comments — Large Load Interconnection Process. ERCOT. https://www.ercot.com/files/docs/2022/02/17/1092NPRR-19%20Luminant%20Comments%20021722.docx
Original Luminant comments on ERCOT NPRR1092 establishing the large-load interconnection process referenced in the TEIISB operating-license discussion.
Lawrence Berkeley National Laboratory. (2024). Grid Connection Barriers for New-Build Power Plants in the United States. LBL. https://emp.lbl.gov/news/grid-connection-barriers-new-build-power-plants-united-states
Documents interconnection-queue delays as a leading barrier to U.S. generation buildout — cited in Section 2 to establish the structural reason ERCOT's 450,306 MW queue is not converting into operating capacity at the required pace.
Baker Institute for Public Policy. (2024). How Investments Can Boost ERCOT Reliability and Cut Emissions. Rice University Baker Institute. https://www.bakerinstitute.org/research/how-investments-can-boost-ercot-reliability-and-cut-emissions
Documents the measurable ERCOT reliability improvement since 2021, used in Section 2 to substantiate that the Texas Energy Fund and post-Uri weatherization mandates have already produced results.
EIA. (2026). Today in Energy — Texas Data Center Power Demand. U.S. Energy Information Administration. https://www.eia.gov/todayinenergy/detail.php?id=66464
EIA analysis of Texas data-center electricity demand projections, used as cross-validation for the Bloom Energy / Texas Tribune figures cited in Section 2.
Upwind.io. (2025). Data Center Powerhouses Industry Research. Upwind. https://www.upwind.io/industry-research/data-center-powerhouses
Identifies Dallas-Fort Worth as a top-three U.S. data-center market, with active development in Plano, Frisco, and McKinney — referenced in Section 2 and Section 9 for the I-45 corridor proximity argument.
Existing Texas Statutory Architecture — Sections 2, 7
Texas Nuclear Alliance. (2025). Texas Nuclear Alliance Applauds Passage of House Bill 14. https://texasnuclearalliance.org/2025/05/30/texas-nuclear-alliance-applauds-passage-of-house-bill-14/
Primary statement on HB 14 (89th, 2025) establishing the Texas Advanced Nuclear Energy Fund and Texas Advanced Nuclear Deployment Office — the statutory foundation that the TDPGA Locational Value Credit extends to distributed-node siting.
FastDemocracy. (2025). HB 14 — 89th Texas Legislature, Texas Advanced Nuclear Energy Fund. https://fastdemocracy.com/bill-search/tx/89/bills/TXB00077668/
Full bill text and legislative history for HB 14.
FlexGen. (2025). Battery Storage & Data Centers Shouldn't Sweat Texas Senate Bill 6. FlexGen Resources. https://www.flexgen.com/resources/blog/battery-storage-data-centers-shouldnt-sweat-texas-senate-bill-6-sb6
Industry analysis of SB 6 (89th, 2025) transparency requirements for large-load data-center interconnection — the floor the TEIISB operating license builds atop.
Mansfield Energy. (2025). Texas Senate Bill 6: Data Centers' Generator Fuel Plan Becomes Even More Critical. https://mansfield.energy/2025/07/10/texas-senate-bill-6-data-centers-generator-fuel-plan-becomes-even-more-critical/
Operational analysis of SB 6 generator-fuel-plan requirements relevant to the voluntary TEIISB-certified Power Production Compact dispatchable-share standards.
McGuireWoods LLP. (2025). Texas Bill Sets Goal for Power Plants to Increase Dispatchable Generation. https://www.mcguirewoods.com/client-resources/alerts/2025/5/texas-bill-sets-goal-for-power-plants-to-increase-dispatchable-generation/
Legal analysis of SB 388 (89th, 2025) establishing the 50% dispatchable-generation goal, mirrored in the TEIISB-certified Power Production Compact 50% dispatchable-share standard (voluntary; benefit-of-the-deal under Subchapter F).
Republican Party of Texas. (2026). Resolution on the Establishment of Additional Data Centers in Texas. RPT State Convention. https://texasgop.org/resolution-on-the-establishment-of-additional-data-centers-in-texas/
Official RPT March 2026 resolution expressing "strong opposition to the establishment of additional open loop data centers" until grid and water safeguards exist, and calling for local and county-government input. The three-pillar framework operationalizes this resolution.
NTIA. (2024). Biden-Harris Administration Approves Texas Internet for All Initial Proposal — BEAD. National Telecommunications and Information Administration. https://www.ntia.gov/press-release/2024/biden-harris-administration-approves-texas-internet-all-initial-proposal
Texas BEAD broadband approval — relevant context for the broader Texas state-federal posture on infrastructure, used in Section 8 as a comparison to the federal-grid-interconnection argument.
Water Use & The Masley Correction — Section 3
Masley, A. (2025). The AI Water Issue is Fake. blog.andymasley.com (Oct. 2025). https://blog.andymasley.com/p/the-ai-water-issue-is-fake
Primary analytical source for the three-category water taxonomy and the comparative scale figures (golf, lawn, agriculture, thermoelectric, data-center) in Section 3. Documents that even at 2030-projected tripling, all U.S. data-center direct water use is approximately 8% of current golf-course water use.
Estevez, J. (2025). The Myth of Water Usage in Datacenters. jeibros.substack.com (Nov. 2025). https://jeibros.substack.com/p/the-myth-of-water-usage-in-datacenters
Source for the Texas-specific 0.005% figure, the Maricopa County data-center-vs-golf comparison (0.12% vs 3.8%), and the $20,000-per-1,000-gallons data-center revenue figure compared with agriculture ($19) and electric power ($312). Cited directly in Section 3 and Section 6.
Construction Physics. (2025). I Was Wrong About Data Center Water Consumption. construction-physics.com (Aug. 2025). https://www.construction-physics.com/p/i-was-wrong-about-data-center-water
Independent correction of the Lawrence Berkeley National Laboratory data-center water methodology — the cross-validation that establishes 200–275 million gallons per day as the defensible consumptive figure.
Felpix / Non-Public Policy. (2026). In Defense of the Data Center. nonpublicpolicy.substack.com (May 2026). https://nonpublicpolicy.substack.com/p/in-defense-of-the-data-center
Validates the <1% U.S. freshwater consumption figure for data centers; documents that lawn irrigation alone uses 9 billion gallons per day; calculates that matching landscaping use would require 15× current compute scale. Used in Section 3.
Mahmood, Y. (2026). AI Water Use? That's a Hoax. Townhall (Apr. 4, 2026), citing AFPI. https://townhall.com/columnists/yusuf-mahmood/2026/04/04/ai-water-use-thats-a-hoax-n2673759 · America First Policy Institute report: https://www.americafirstpolicy.com/issues/the-data-center-water-use-hoax
Source for the 0.2–0.5%-of-U.S.-freshwater figure, the In-N-Out and golf-revenue comparisons, and the leaky-pipes 15× comparison cited in Section 3.
USGS. (2024). Professional Paper 1894D — Texas Water Resources. U.S. Geological Survey. https://pubs.usgs.gov/publication/pp1894D/full
Authoritative U.S. Geological Survey hydrological data underpinning the node siting decisions in Section 5. Sites in water-stressed counties default to closed-loop or solar-plus-battery technology.
University of Texas Bureau of Economic Geology. (2025). Water Requirements for Data Centers in Texas — White Paper. UT BEG. https://compass.beg.utexas.edu/assets/publications/Water_Requirements_for_DC_White_Paper.pdf
Texas-specific data-center water-use white paper used to validate the 21-node siting decisions in Section 5 and the closed-loop ACC requirement in TEIISB.
HARC. (2025). Texas Data Center Boom Could Consume Up to 161 Billion Gallons of Water Annually by 2030. Houston Advanced Research Center. https://harcresearch.org/news/texas-data-center-boom-could-consume-up-to-161-billion-gallons-of-water-annually-by-2030/
Texas-specific high-end projection for cumulative data-center water use. The Masley/Estevez correction (Section 3) shows that even this figure, distributed across the state, is small relative to agricultural irrigation and lawn watering.
Arrington, A. (2025). The Hidden Water Crisis: Why Data Centers and Farms Are Competing for Water. LinkedIn Pulse. https://www.linkedin.com/pulse/hidden-water-crisis-why-data-centers-farms-competing-austin-arrington-bjsge
Industry-side perspective on data-center-versus-agriculture water competition. The Estevez comparative-revenue analysis (Section 3) addresses this framing.
TCEQ. (2024). Regulatory Guidance 445 — Drinking Water. Texas Commission on Environmental Quality. https://www.tceq.texas.gov/downloads/drinking-water/rg-445.pdf
Texas regulatory baseline for drinking-water standards, referenced for the TEIISB recycled-water-use compatibility requirements.
Joint-Venture & Power Production Compact Precedents — Section 6
Texas Tribune. (2026). Texas Top Data Center Market, Power Grid (Bloom Energy interview). https://www.texastribune.org/2026/01/20/texas-top-data-center-market-power-grid/
Source for the 8 GW (2025) and 40 GW (2028) Texas data-center load figures cited in the metrics strip and Sections 1, 2, 6.
East Daley Analytics. (2025). Chevron Plans Data Center Power Complex in Permian Supporting New Basin Demand. https://eastdaley.com/the-burner-tip/chevron-plans-data-center-power-complex-in-permian-supporting-new-basin-demand
Documents Chevron's 5-GW Permian gas-and-power complex tied to data-center anchor load — the existing market precedent the TDCTSA codifies as a Texas operating standard.
Yale Environment 360. (2025). Google Natural Gas Data Center. Yale e360 News Digest. https://e360.yale.edu/digest/google-natural-gas-data-center
Reporting on Google's behind-the-meter natural-gas commitment for data-center power — the operating model that the voluntary TEIISB-certified Power Production Compact formalizes in Texas law.
Utility Dive. (2025). Google Intersect Power Co-Located Energy Parks — Data Center FERC Filing. https://www.utilitydive.com/news/google-intersect-power-co-located-energy-parks-data-center-ferc/735198/
Google-Intersect Power co-located energy-park structure — the existing precedent for the joint-venture model in Pillar 2.
Utility Dive. (2025). Conduit Power, Bridge Power Texas, ENGIE — Prometheus Texas Data Center Deal. https://www.utilitydive.com/news/conduit-power-bridge-power-texas-data-center-engie/759759/
Texas-specific data-center power joint venture — documents the active market for this structure in Texas already.
Underground Atlanta Get Involved. (2025). Amazon Goes Nuclear — Invests More Than $500M to Develop Small Modular Reactors. https://www.uagetinvolved.org/content/amazon-goes-nuclear-invest-more-500-million-develop-small-modular-reactors
Documents the AWS $500M SMR commitment that is the SMR-anchor precedent for the voluntary TEIISB-certified Power Production Compact dispatchable-share standards.
Energycast (via YouTube). (2025). SoftBank Portsmouth Data Center / Power Project. https://www.youtube.com/watch?v=uAznOSSwKnY
Documents the SoftBank Portsmouth (Ohio) data-center / power-plant co-located model. The TDCTSA writes this voluntary precedent into Texas law.
RMI. (2024). Local Governments Can Achieve Texas-Sized Impacts from Distributed Energy Assets and Virtual Power Plants. Rocky Mountain Institute. https://rmi.org/local-governments-can-achieve-texas-sized-impacts-from-distributed-energy-assets-and-virtual-power-plants/
RMI Texas distributed-energy analysis documenting 8–15% line losses on long-haul transmission and the locational marginal pricing impact in DFW and Houston. Used in Section 4.
YouTube. (2025). AI Farmers — Texas Data Center Operations Reporting. https://www.youtube.com/watch?v=TWrbe0DrU24
Direct video documentation of Texas-sited data-center construction and operations practices, used as primary visual reference for TEIISB licensing-process design.
ICT Business Journal. (2025). Industry Reporting — Texas Data Center Sector. https://www.facebook.com/ICTBizJournal
Industry trade publication used for ongoing Texas data-center deal-flow context.
Reddit. (2025). r/aiwars discussion thread on data-center water and power. https://www.reddit.com/r/aiwars/comments/1tes0rr/
Public discussion thread documenting the spread of inflated data-center water statistics that the Masley correction addresses. Used as evidence of the public-discourse problem this article corrects.
Market Reform, ADVANCE Act & Texas IT Independence — Sections 2, 6, 7, 8
Texas Tribune. (2024). Texas Regulators Shelve an Electricity Market Reform Proposal They Said Would Not Improve Reliability (Dec. 19, 2024). https://www.texastribune.org/2024/12/19/texas-public-utility-commission-performance-credit-power-grid/
Primary reporting on the PUC's December 2024 decision to shelve the Performance Credit Mechanism. Used in Section 8 (Weakness 1) to document why a statewide untargeted capacity instrument failed in Texas and why the TDPGA two-tier Locational Value Credit (Sec. 39A.005) is structurally different — funded by the existing Texas Energy Fund and TEIISB licensing fees, not a consumer surcharge.
Utility Dive. (2024). Texas Scraps $1B Performance Credit Mechanism Proposal as PUC Reverses Course (Dec. 20, 2024). https://www.utilitydive.com/news/texas-puc-performance-credit-mechanism-pcm/736162/
Industry-press coverage of the PCM shelving with detail on the ~780 MW reliability gain estimate against the ~10,000 MW reliability standard, supporting the Section 8 argument for a narrowly-scoped locational instrument rather than a statewide untargeted one.
Bracewell LLP. (2025). Texas Senate Bill 6 Ushers in Major Overhaul of Large Load Interconnection and Grid Access Rules (July 9, 2025). https://www.bracewell.com/resources/texas-senate-bill-6-ushers-in-major-overhaul-of-large-load-interconnection-and-grid-access-rules/
Legal analysis of SB 6 documenting that the PUCT is already directed by statute to reevaluate the 4CP wholesale transmission cost methodology by December 2026. Establishes that locational pricing reform is an open conversation in Texas, not a politically foreclosed one.
Weil, Gotshal & Manges LLP. (2025). Senate Bill 6 Reforms Interconnection and Co-Location Rules for Data Centers and Other Large Loads (July 29, 2025). https://www.weil.com/-/media/files/pdfs/2025/july/weil-energy-alert--senate-bill-6-reforms-interconnection-and-colocation-rules-for-data-centers-and-o.pdf
Companion SB 6 analysis covering the 75 MW co-location threshold, the 60-day PUCT review window, and the new mandatory curtailment / voluntary reliability service for large loads — all of which sit underneath the TDCTSA's 50 MW qualifying-facility threshold and the TEIISB licensing framework.
U.S. Nuclear Regulatory Commission. (2024). About the ADVANCE Act. https://www.nrc.gov/about-nrc/governing-laws/advance-act/about-advance-act
NRC implementation page for the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act of 2024 (P.L. 118-67). Used in Section 8 (Weakness 2) to support the 25-month NRC shot clock for SMR licensing at existing nuclear and brownfield fossil sites and the Section 7 TEIISB consolidated state-permitting authority.
ClearPath Action. (2024). ADVANCE Act of 2024 (S. 870) Summary. https://clearpathaction.org/advance-act-of-2024-s-870/
Independent policy summary of the ADVANCE Act detailing the 25-month combined license shot clock for new reactors on or adjacent to existing nuclear sites, used in Section 8 to support the SMR-timeline acceleration pathway.
Ascend Analytics. (2025). Breakable: Can Capacity Markets Survive an Era of Sustained, High Capacity Prices? (Aug. 25, 2025). https://www.ascendanalytics.com/blog/what-rising-capacity-value-declining-energy-value-means-market-design
Industry analysis documenting that subsidized new-entry capacity programs can re-order the supply stack to reduce, not raise, capacity-market clearing prices. Cited in Section 8 (Weakness 1) to support the TDPGA two-tier Locational Value Credit as a directly-financed new-entry instrument rather than a consumer surcharge.
E3 (Energy and Environmental Economics, Inc.). (2022). Assessment of Market Reform Options to Enhance Reliability of the ERCOT System. E3 PUCT Assessment (PDF)
PUCT-commissioned analysis of the PCM, Backstop Reliability Service, and other ERCOT market-reform options. Provides the technical baseline for the Section 8 argument that locational and capacity instruments can improve reliability when narrowly scoped and properly funded.
Texas Department of Information Resources. (2026). Data Center Services (Shared Technology Services). https://dir.texas.gov/shared-technology-services/data-center-services
Authoritative reference for the existing Texas DIR Shared Technology Services data centers that host state agency workloads. Used in Sections 2 and 7 to ground the Texas IT Independence pillar in existing state IT infrastructure rather than a green-field proposal.
Texas Comptroller of Public Accounts. (2025). State Sales and Use Tax. https://comptroller.texas.gov/taxes/sales/ and State Sales Tax Exemption for Qualified Data Centers. https://comptroller.texas.gov/taxes/data-centers/
Primary state-government source for the 6.25% state sales tax, the up-to-2% local sales-tax cap, and the qualifying-data-center exemption under Tax Code §151.359 / §151.3595. Foundational for the Section 6 TPTRP linkage and worked-example calculation.
Texas Administrative Code. (2017). 34 Tex. Admin. Code §3.295 — Natural Gas and Electricity. https://www.law.cornell.edu/regulations/texas/34-Tex-Admin-Code-SS-3-295
Texas administrative rule confirming that natural gas and electricity used in qualifying data centers remain subject to local sales and use taxes (Chapters 321, 322, 323) even where the state sales tax is exempt. Anchor for the Section 6 TPTRP worked-example revenue calculation.
Opposition Landscape & Political Context — Section 8
Texas Tribune. (2026). Texas Republicans Have a Data Center Problem (May 7, 2026). https://www.texastribune.org/2026/05/07/texas-republicans-data-centers-rural/
Investigative reporting documenting that most planned or under-construction data centers are sited in red, rural Texas counties — the structural Republican-primary opposition that the TEIISB local-consent requirement directly addresses.
Texas Tribune. (2026). Huge Texas Data Centers Will Get Their Own Gas Power Plants (Feb. 2, 2026, Permian Basin). https://www.texastribune.org/2026/02/02/texas-permian-basin-power-plant-project-data-centers/
Source for the 58 GW of gas projects added to the Texas pipeline in 2025, the 11/102/28 breakdown of construction status, and the existing market trend toward data-center-anchored generation that the TDCTSA codifies.
Texas Tribune. (2026). Data Centers in Texas — Investigative Series. https://www.texastribune.org/series/data-centers-in-texas/
Full Texas Tribune series providing the broader investigative context for Sections 2, 6, 8, and 9 of this article.
Global Energy Monitor. (2026). In the West Texas Oil Patch, Companies Plan Gas Power Plants to Run New Data Centers. https://globalenergymonitor.org/article/west-texas-oil-patch-companies-plan-gas-power-plants-run-new-data-centers
Independent documentation of the West Texas gas-plant buildout for data-center anchor loads, used in Section 8 to validate that the TDCTSA reflects existing market practice.
R Street Institute. (2025). Testimony in Opposition to Allowing Texas Utilities to Own Generation. https://www.rstreet.org/outreach/testimony-in-opposition-to-allowing-texas-utilities-to-own-generation/
Free-market policy testimony documenting the structural market-design objection to utility-owned generation. Used in Section 8 to acknowledge the legitimate Republican-primary free-market concern and to explain why the TDPGA Locational Value Credit is a market-correction tool rather than a utility-ownership rule.
Gradient Flow (Lorica, B.). (2026). The Data Center Rebellion Is Here (Feb. 3, 2026). https://gradientflow.substack.com/p/the-data-center-rebellion-is-here
Documents the national bipartisan grassroots opposition to data-center expansion, used in Section 8 to map the Republican-primary attack landscape.
Inspect the Data
Explore the underlying data this article is built on — one tab per dataset. Every tab includes the source table and a methodology note.
| Activity | MGD (Consumptive) | Source |
|---|---|---|
| U.S. irrigation (all agriculture) | ~105,000 | USGS 2015 |
| U.S. lawn and landscape irrigation | ~9,000 | EPA WaterSense |
| U.S. thermoelectric power (all) | ~3,500 | USGS 2015 |
| U.S. golf courses | ~3,100 | National Golf Foundation |
| All U.S. data centers (consumptive) | 200–275 | Masley / Construction Physics 2025 |
| All U.S. data centers (onsite only) | ~50 | LBL 2024 |
| All U.S. AI data centers (2023) | ~10–15 | Masley 2025 |
| Projected U.S. AI DCs (2030, onsite) | ~100–150 | LBL projection |
| Metric | Value | Note |
|---|---|---|
| Energy delivered, 2025 | 488M MWh | +5.7% YoY, fastest growth of any U.S. grid |
| Average annual growth 2021–2025 | 5.0% | Fastest among major U.S. grids |
| Generation added 2025 | 16,000 MW | Solar, battery, wind, thermal |
| Cumulative additions 2021–2025 | 62,000 MW | 31k solar / 16k battery / 10k wind / 5k thermal |
| Gas via TEF, expected by 2029 | 8,800 MW | Texas Energy Fund-funded projects |
| Transmission added 2025 | 540+ miles | Includes 345-kV and 138-kV |
| Interconnection queue requests 2025 | 61,000 MW | Added in one year |
| Active interconnect queue total | 450,306 MW | = 2.8× current system peak |
| Thermal fleet over 30 years old | ~40% | Replacement need rising |
| Current TX data-center load | 8 GW | 2025; Bloom Energy / TX Tribune |
| Projected TX DC load 2028 | 40 GW | Bloom Energy 2026 projection |
| Gas pipeline added to TX 2025 | 58 GW | 11 under construction / 102 preconstruction / 28 announced |
| Function | Existing Texas Law | Proposed Framework |
|---|---|---|
| Advanced nuclear funding | HB 14 (89th) Texas Adv. Nuclear Fund | TDPGA siting authority extends fund to distributed nodes |
| Data-center transparency | SB 6 (89th) generator/fuel-plan reporting | TEIISB statewide registry + license issuance |
| Dispatchable generation goal | SB 388 (89th) 50% dispatchable target | TEIISB-certified PPC standards mirror 50% dispatchable |
| Local consent for DCs | None (regional patchwork) | TEIISB host-city/county consent required |
| Data-center power production | None (consumer-only model) | Voluntary TEIISB-certified PPC; net export when certified |
| Locational price signal | None (ERCOT energy-only design 2001) | TDPGA Locational Value Credit |
| Emissions standards on DC sites | TCEQ general (no DC-specific) | TEIISB SCR ≤2 ppm NOx, ACC, hourly monitoring |
| Community Benefit Agreement floor | None | TEIISB 35%/20%/1.5% + $15 credit + 5-yr study |
| Air-Burdened Communities | None (TCEQ general standards only) | TEIISB buffer-zone CEIBA review |
| Water-recirculation requirement | None (TCEQ RG-445 drinking-water only) | TEIISB closed-loop ACC near Air-Burdened |
| ID | County | Cities | Technology | MW |
|---|---|---|---|---|
| N1 | Somervell / Hood | Fort Worth SW, Comanche Peak | SMR Nuclear + Gas CCGT | 2,400 |
| N2 | Parker / Wise | Fort Worth NW, Weatherford | Gas CCGT + Solar | 1,200 |
| N3 | Collin / Kaufman | Plano, McKinney, Frisco | Gas CCGT | 1,800 |
| P1 | Potter / Randall | Amarillo Hypergrid | Nuclear + Gas + Solar | 5,000 |
| P2 | Lubbock | Lubbock | Gas Peaker + Solar | 800 |
| E1 | Smith / Gregg | Tyler, Longview | IGCC Clean Coal + CCS | 1,000 |
| E2 | Angelina | Lufkin | Gas Peaker | 600 |
| SC1 | Travis / Williamson | Austin | Gas CCGT + Solar | 2,000 |
| SC2 | Bexar / Medina | San Antonio (CPS) | SMR Nuclear + Gas Peaker | 2,200 |
| SC3 | Bell / Coryell | Killeen, Temple, Waco | Gas Peaker + Solar | 900 |
| H1 | Harris / Fort Bend | Houston NW, Katy | Gas CCGT | 3,000 |
| H2 | Jefferson / Hardin | Beaumont, Port Arthur | Gas CCGT + Solar | 1,500 |
| H3 | Montgomery / N. Harris | Woodlands, Conroe | Gas Peaker | 1,000 |
| C1 | Matagorda | Bay City (STP) | Nuclear — STP Expansion | 2,700 |
| C2 | Nueces / San Patricio | Corpus Christi | Gas CCGT + Solar | 1,200 |
| S1 | Hidalgo / Cameron | McAllen, Brownsville | Solar + Battery + Gas Peaker | 1,400 |
| S2 | Webb / Maverick | Laredo, Eagle Pass | Solar + Gas Peaker | 800 |
| W1 | Midland / Ector | Midland-Odessa | Gas CCGT + Solar Hybrid | 2,000 |
| W2 | Howard / Mitchell | Big Spring, Sweetwater | Solar + Wind + Battery | 1,000 |
| W3 | El Paso | El Paso | Solar + Gas Peaker | 900 |
| CC1 | Panola / Harrison | Carthage | IGCC + CCS Clean Coal | 800 |
| Total | 34,200 | |||
| Attack Line | Who Uses It | Primary-Source Rebuttal |
|---|---|---|
| "Data centers are depleting Texas water." | National Dem. social media; local NIMBY groups | Texas DCs added ~0.005% to TX water demand — ~1,600 added residents in a state of 30M (Estevez, 2025). All U.S. DCs ~0.2–0.5% of U.S. freshwater (AFPI, 2026; Masley, 2025). |
| "AI uses a bottle of water per query." | Social media, TikTok | Median AI prompt uses ~2 mL of direct cooling water — ~1/10 of a teaspoon. The "bottle" figure conflates direct cooling with indirect power-plant water (Masley analysis of Google per-prompt disclosure, 2025). |
| "Gas plants raise electric bills." | Dem. Sens. Blumenthal/Sanders Nov. 2025 letter | EIA-confirmed 6% price rise driven by DC demand, not gas builds. Distributed gas inside load zones REDUCES the congestion premium that is the dominant driver of high DFW/Houston retail prices. [ERCOT SOTG, 2025] |
| "You're putting gas plants near Black and brown neighborhoods." | National progressive groups; Texas Democratic Party messaging | TEIISB requires SCR ≤2 ppm NOx at 15% O₂, closed-loop ACC, hourly public emissions monitoring, buffer-zone CEIBA review, and the CBA floor for Air-Burdened Texas Communities — protections beyond any Dem bill in two sessions. |
| "Texas should connect to the national grid (Connect the Grid Act)." | U.S. Rep. Greg Casar; TX Democrats | FERC's own post-Uri report attributed Uri to inadequate gas-plant weatherization, not grid isolation. Connecting to FERC exposes TX to federal rate regulation that has measurably raised PJM/MISO prices. [ERCOT SOTG, 2025] |
| "Renewables are cheaper — why mandate gas?" | CTEI; ClearView Energy; IRA supporters | Renewables are cheaper per MWh when producing; solar is zero after 6 PM. Texas had 18 consecutive July 2023 days where solar <10% capacity. Gas firms solar to make it usable at scale. 84% of TX voters say clean energy must enhance grid reliability (CTEI, 2025). |
| "SMRs are too expensive, too slow." | IEEFA Sept. 2025; Food & Water Watch Jun. 2025 | First-of-kind premium is real; serial-production cost trajectory cuts that 30–40% by units 8–10. SMRs staged 2031–2035, not 2026 — gas and solar fill the near-term gap. AWS $500M SMR investment validates commercial timeline. [AWS SMR, 2025] |
| "Clean coal is greenwashing — CCS doesn't eliminate local air pollution." | Air Alliance Houston; environmental groups | Valid for post-combustion retrofits (Petra Nova). NOT valid for IGCC. IGCC gasifies coal before combustion, eliminating SO₂ and dramatically cutting NOx and PM2.5. East Texas IGCC limited to lignite belt; ~5% of total framework. |
| "This plan is too much government for energy." | Free-market Republicans; R Street Institute | 89th Lege Republican majorities already passed HB 14, SB 6, SB 388 — the framework extends, not contradicts. Locational Value Credit corrects a 2001 ERCOT market design failure, not a new federal mandate. [R Street, 2025] |
| "Rural Republicans don't want these data centers and you're forcing them on us." | Wes Virdell; Matt Sebesta; Brazoria Co. GOP | TEIISB requires host-city/county consent before any operating license is issued. CBA floor returns 35% construction / 20% operations / 1.5% revenue to host communities. Operationalizes RPT Mar. 2026 resolution. [RPT, 2026] |
| "This is just Republican support for fossil-fuel donors." | National Democratic Party messaging | Framework includes nuclear (zero carbon), solar (zero carbon), gas with CCS — not a donor giveaway. TDCTSA imposes universal baseline disclosure and operating standards; TEIISB certifies voluntary Power Production Compacts that require participating data centers to share generation with the grid and contribute to community benefit. Strong baseline obligations, voluntary upside, no exemptions. |
| "Nuclear near cities is too dangerous." | Food & Water Watch; NIMBY sentiment | SMR nodes at Comanche Peak (N1) and STP (C1) are expansions of existing licensed sites, not new urban siting. Modern SMR passive safety reduces EPZ to 0.6–1 mile per NRC-approved NuScale design. Pew Oct. 2025: 59% U.S. support nuclear expansion, +16 pts since 2020. |