Texas Senate Bill 6: What It Means for Data Centers and Large Loads

Senate Bill 6 is a 2025 Texas statute that rewrote how the ERCOT grid plans for, connects and manages very large electricity customers. Governor Abbott signed it on June 20, 2025, after a legislative session dominated by the surge in data center and industrial load requests.¹ The Legislature’s own analysis describes four aims: allocating transmission costs more fairly, adding reliability protections, making load forecasting more transparent, and making large loads share the burden when the grid has to shed load.⁹

The core of the law is a new Section 37.0561 of the Utilities Code, which directs the Public Utility Commission of Texas (PUCT) to set standard criteria for large-load interconnection that apply across the state.⁹ The PUCT has to write those standards so they support economic development, limit the risk that other customers pay for stranded infrastructure, and keep the system reliable.²

SB 6 applies to ERCOT. Sites in El Paso, the Panhandle or East Texas outside ERCOT follow their own utility’s tariffs, as our Texas site selection guide explains. For the market context inside ERCOT, see ERCOT data center site selection.

SB 6 defines a large load customer as one requesting interconnection of more than 75 MW at a single site, unless the PUCT sets a lower threshold.² The threshold is per site, so a campus that phases in 40 MW at a time can still be a large load if the total request at that location exceeds the line. The PUCT’s adopted interconnection rule applies to loads of 75 MW or more at a single site in ERCOT.⁴

Some duties apply only to loads connected at transmission voltage, and some exclude critical loads. The remote-disconnect requirement, for example, covers customers interconnected after December 31, 2025, but not critical load industrial customers or facilities designated as critical natural gas facilities.³ A data center is generally not in either category, so developers should assume the curtailment duties apply unless counsel confirms otherwise.

The forecasting rule is a separate track. SB 6 asks the PUCT to set criteria for which large loads ERCOT counts in its load forecasts, so that speculative requests do not distort planning. The PUCT handles interconnection standards, net metering and forecasting in separate rulemaking projects, numbered 58481, 58479 and 58480.¹⁰

The most visible change is the price of entry. SB 6 requires a flat screening study fee of at least $100,000 paid to the interconnecting utility, proof of site control, and disclosure of any substantially similar interconnection requests the customer is pursuing elsewhere in Texas that could lead to a material change or withdrawal.² Competitively sensitive details in that disclosure can be withheld or anonymized.⁹ The law also requires large loads to contribute to the utility’s interconnection costs.⁹

The PUCT voted on March 12, 2026, to publish its proposed implementing rule, 16 TAC §25.194, which paired financial security with a non-refundable interconnection fee of $50,000 per MW.¹¹⁶ When the commission adopted the rule on September 18, 2026, it dropped the non-refundable fee in favor of a flat $100,000 study fee regardless of load size.⁶ According to White & Case, it kept a large upfront commitment as security: the developer posts $50,000 per MW of requested capacity before interconnection studies begin.⁴ Utility Dive’s account describes only the per-MW fee being eliminated, so confirm the security terms against the adopted order. The final rule also replaced interim milestone defaults with a 24-month grace period across the energization schedule before a utility must report unused capacity to ERCOT.⁴

In practice the security requirement changes site strategy. A 300 MW request means $15 million posted before the first study, so filing the same project at several substations to see which one comes back first becomes expensive, and the disclosure rule makes it visible. Our guides to the large-load interconnection process and large-load tariffs and service agreements cover how security and minimum bills work more broadly.

SB 6 makes large loads part of ERCOT’s emergency toolkit in three ways, which differ in who decides and whether the customer is paid. Read them together with our guide to firm vs. interruptible power.

The backup generation rules hinge on a definition. On-site backup generating facilities are generation that cannot export to ERCOT and can serve, in aggregate, at least 50% of on-site demand. Large loads must disclose them to the interconnecting utility.² Before or during an energy emergency alert, and after deploying all other available market services except frequency-responsive services, ERCOT may give reasonable notice and direct those customers to curtail load or run their backup generation.² For pricing, ERCOT treats these curtailments as out-of-market actions or firm load shed when it calculates reliability price adjustments.²

That has design consequences. Generators sized for N+1 redundancy can now be called on during grid emergencies, so fuel storage, run-hour limits and air permit terms need to account for grid-support operation, not just utility outages. Our guide to backup generators and fuel sizing goes deeper. The voluntary demand response service is covered in flexible data center loads.³

SB 6 requires PUCT approval for net-metering arrangements that pair a new large load of 75 MW or more with an existing stand-alone generator, the classic co-location or behind-the-meter deal.¹⁰ The generator must notify ERCOT, ERCOT studies the system impact within 120 days, and the PUCT then has 60 days to approve, deny or condition the arrangement. Permitted conditions include protecting other system users from stranded or underutilized asset costs and requiring the load to reduce demand, or the generator to make capacity available, during certain events.¹²

The first test case set a firm line. In Docket 59220, the PUCT approved a 525.5 MW AI campus in Armstrong County co-located with the 265.5 MW Goodnight 1 wind farm, but required the whole campus to be able to curtail within 30 minutes of an ERCOT emergency instruction, with no demand response compensation tied to the arrangement.⁸ The order established that emergency curtailment of a co-located data center is not capped at the capacity of the paired generator.⁷

SB 6 also sets a minimum transmission charge for loads served behind the meter with on-site generation, so co-location reduces but does not eliminate grid cost obligations.⁹ For the broader trade-offs, see behind-the-meter vs. front-of-the-meter power.

SB 6 told the PUCT to revisit the four coincident peak (4CP) method that ERCOT uses to charge wholesale transmission costs.⁹ Staff opened Project 58484 on August 1, 2025, to test whether 4CP still assigns transmission costs appropriately, whether alternatives would work better and which costs should be nonbypassable, and the commission must amend its rules by December 31, 2026.⁵ Large loads have historically lowered transmission bills by cutting use during the four summer peak intervals, so the outcome can change operating cost models. See transmission upgrades and cost allocation.

Separately, the PUCT approved ERCOT’s Batch Zero framework on June 18, 2026, through two protocol revisions (NPRR 1325 and PGRR 145) that create a batch study for loads of 75 MW or more.¹³ Instead of first-come, first-served studies, ERCOT studies eligible loads together and allocates capacity based on what the transmission system can reliably support; a load may receive its full request, a partial allocation or a place in a later batch.¹⁴

On August 3, 2026, Governor Abbott directed the PUCT and ERCOT to verify and audit data centers in the interconnection process before more advance, citing about 474 GW of requests, roughly 90% from data centers. Applicants must disclose public incentives, power and water use, on-site generation, cooling, community impacts and ownership.¹⁵ For any ERCOT site, budget time for that review on top of the SB 6 study steps.

1. 01Confirm the site is in ERCOT and whether the total request at that location exceeds 75 MW.
2. 02Secure site control and budget the $100,000 study fee plus $50,000 per MW of security.
3. 03List every similar request in Texas you are pursuing; the disclosure is mandatory.
4. 04Decide whether backup generation will reach 50% of on-site demand, and plan fuel, permits and controls for emergency dispatch.
5. 05Assume remote-disconnect capability and curtailment equipment will be required at the point of interconnection.
6. 06If pairing with an existing generator, plan for the ERCOT study and PUCT approval window and full-load curtailment conditions.
7. 07Model operating costs with and without today’s 4CP treatment until the transmission cost review concludes.

Rules are still settling, so confirm current terms with the transmission or distribution utility, ERCOT and Texas regulatory counsel before committing security. If you want an independent screen of a Texas parcel first, you can get a site reviewed. For how these rules compare with capacity costs in other markets, see PJM capacity prices and data centers.