Texas Senate Bill 6: What It Changed for Data Centers, and What the PUCT Is Still Deciding

Texas Senate Bill 6 was signed by Governor Abbott on June 20, 2025 and took effect immediately. More than a year on, ERCOT has developed rules and guidance for large loads, data centers being the main applicants: they now face disclosure obligations, financial commitments, and curtailment exposure that did not exist before.

As part of this process, the Public Utility Commission of Texas is still writing the rule that will determine how SB 6 actually operates, and in August 2026 the Governor intervened again. For anyone siting a data center in Texas, the rules are not yet settled.

This is what the law requires today, and what remains under development.

What SB 6 requires

Who it applies to

SB 6 reaches large load customers of 75 MW or more in the ERCOT region, and gives the PUCT authority to set a lower threshold. That captures hyperscale data centers, crypto mining operations, and large industrial users alike.

Disclosure of duplicate requests

Large load customers must disclose whether they are pursuing a substantially similar request for service elsewhere in Texas, and whether approval of that other request would cause them to change, delay, or withdraw the current one.

This is aimed squarely at queue speculation. Developers have long filed parallel interconnection requests across multiple sites to preserve optionality, which inflates the queue and makes it difficult for ERCOT to tell which projects are real. Confidentiality protections apply, but the obligation is real.

Disclosure of backup generation, and ERCOT's power to call on it

Customers must provide information about on-site backup generation equal to or greater than half of the proposed load that cannot be exported to the grid.

The consequence matters more than the disclosure. ERCOT may, during an energy emergency and after market-based services have been exhausted, require a large load customer with that backup generation to either deploy it or curtail load. A data center's backup fleet, in other words, is no longer purely a private resilience asset.

Financial commitment

SB 6 imposes a minimum $100,000 flat fee payable to the interconnecting transmission provider for initial screening studies, and directs the PUCT to establish uniform financial commitment requirements — which may include security on a dollar-per-MW basis or contribution in aid of construction.

The intent is to make queue positions cost something, so that speculative filings carry a price.

Curtailment capability

Large loads interconnected after December 31, 2025 must install equipment allowing ERCOT to directly curtail the load during firm load shed events. Non-critical load is the target; this is the mechanism by which large new loads become part of the grid's emergency toolkit rather than a burden on it.

Co-located generation and net metering

New arrangements pairing a registered generation resource with co-located load now go through a formal review:

• The generator notifies ERCOT of the proposed arrangement.
• ERCOT conducts a system impact study within 120 days.
• The PUCT issues its decision within 60 days of receiving that study — and if it fails to act in time, the arrangement is approved by default.

The PUCT may impose reliability conditions, and reviews any open-ended conditions every five years.

Transmission cost allocation

SB 6 requires new large loads to contribute to recovery of the interconnecting utility's costs, and directed the PUCT to re-examine the long-standing four coincident peak (4CP) methodology for allocating transmission charges, with rule changes to follow no later than December 31, 2026.

That 4CP review is the provision with the longest tail. How transmission costs are allocated determines the operating economics of every large load in ERCOT, and the outcome is not yet known.

What has happened since

The PUCT rule is still pending

The implementing rulemaking — PUCT Project No. 58481, which will add 16 TAC §25.194 under PURA §37.0561 — is where the operative detail lives. The Commission voted to publish a draft rule on March 12, 2026, and as of September 2026 it remains pending final adoption with stakeholder comments still being filed.

Two features of the March draft matter to developers:

• The financial security deposit and non-refundable interconnection fee were reduced from $100,000/MW to $50,000/MW. Still a substantial commitment at scale, but half what was first proposed.
• Site control requirements were broadened. The draft would accept an option to lease or option to purchase at the intermediate stage, and a purchase and sale agreement at the interconnection agreement stage.

That second point deserves attention from anyone assembling a site. Under the draft rule, the land documents are no longer merely commercial arrangements between developer and landowner — they become the evidence of site control that supports a queue position. A poorly drafted option, or one whose term expires before the interconnection milestone it is meant to support, becomes a regulatory problem rather than just a contractual one.

We negotiate exactly these documents — options, ground leases, and purchase and sale agreements — for both developers and landowners, and the sequencing against interconnection milestones is now part of the analysis.

The Governor's queue audit

On August 3, 2026, Governor Abbott directed the PUCT and ERCOT to conduct a comprehensive audit of every data center advancing through the interconnection queue. Projects must disclose ownership, financial information, water usage, and community impact data. Those that fail to comply must be denied connection to the grid.

The stated concern is scale. The queue has reached roughly 474 GW, about 90% of it data centers — more than five times the state's record peak demand. The Governor also noted that some data centers had not complied with existing water and power usage reporting obligations.

This was the second intervention in two months, following a June 2026 directive. Read alongside SB 6 and the pending rule, the direction of travel is unambiguous: Texas is moving from an open queue toward one that demands proof of ownership, financing, and genuine commitment before a project advances.

Batch study processes

Separately, ERCOT has been developing batch-based study processes for large loads, which we have written about in ERCOT's Proposed Large Load Batch Study Process. Together with SB 6 and Project 58481, these processes will determine how quickly a project can realistically expect to reach an interconnection agreement.

What this means for a project

For developers, three practical consequences follow.

Optionality now has a price. Duplicate requests must be disclosed, and financial commitments attach to queue positions. The strategy of filing broadly and deciding later is considerably more expensive than it was.

Land documents carry regulatory weight. Under the pending rule, options and purchase agreements evidence site control for interconnection purposes. They need to be drafted with the interconnection timeline in mind, not just the transaction.

Backup generation is a two-way commitment. Disclosure obligations attach, and ERCOT may call on that generation during emergencies. Facility design and offtake assumptions should account for it.

For landowners approached about a data center site, the same forces cut differently: developers now need firmer, longer, better-documented site control earlier, which changes what is reasonable to ask for in an option or lease.

Our role

At S Deatherage Law we represent data center developers, power producers, and landowners across the ERCOT region. We help clients:

• Navigate PUCT and ERCOT regulations and guidance, including SB 6 implementation
• Draft and negotiate options, ground leases, and purchase and sale agreements for project sites
• Review and negotiate interconnection agreements
• Structure project sales before or at notice to proceed
• Negotiate EPC and procurement contracts
• Manage legal risk while the regulatory framework continues to move

If your project is working through the ERCOT queue, or you have been approached about land for a data center, we would be glad to discuss it.

This article reflects Texas law and the pending Public Utility Commission of Texas rulemaking as of September 2026. Project No. 58481 has not been finally adopted, and its requirements may change.