Gov. Abbott orders data centers to pay own power grid costs as rural counties face limited authority

BRYAN, Texas (KBTX) — Gov. Greg Abbott on Tuesday directed state regulators to make sure data centers pay for the cost of connecting to the power grid and that residential electric bills go down as a result.

Abbott ordered the Public Utility Commission (PUC) and ERCOT to ensure data centers pay their own infrastructure costs. He is also pledging to push the state legislature to repeal tax breaks for data centers and require them to reduce noise and community impacts.

The move comes as hundreds of data centers are planned across Texas, many of them eyeing rural counties. For those counties already fielding interest from developers, the question isn’t just about electric bills. It’s about how much say they have at all.

Counties lack zoning authority

Robertson County Judge J.D. Scarpinato recently posted on Facebook, acknowledging billion-dollar data center projects are likely already eyeing areas like his county. He wrote, “Under current state law, counties have limited authority to stop projects like these outright.”

“Counties are somewhat restricted by something called Dillon’s rule. They’re allowed to do only what the state gives them permission to do. So they only have the authority expressly given to them,” said Darrek Ferrell who is the Director for the City and County Governance Program at Texas A&M’s Bush School.

That means no zoning. No outright ban. And moratoriums — while possible — are legally murky.

“Unlike a city, counties don’t have zoning capabilities. So in a city like Bryan or College Station, you may have zoning so that it can’t be placed in a neighborhood — counties don’t have that authority or that ability,” Ferrell said.

Tax abatements offer negotiating power

Scarpinato, who has not responded to requests for comment from KBTX, said the county recently hired a consultant to help negotiate with developers. He called tax abatements the county’s best tool to get a seat at the table.

Ferrell agreed but said counties need to do their homework first.

“They look at how long will it take us to recover the money. What burdens will this place on the community that we also have to pay for? And they make the size of the deal based on that due diligence. There are all kinds of benefits to these things and reasons why we would want to encourage and use incentives more like an investment than a giveaway,” Ferrell said.

Residents urged to ask questions

As for what residents can do, Ferrell said show up and ask questions.

“The best thing that a citizen can do is ask about the due diligence process. Ask their county commissioners, ask their county judge just to explain — what are we evaluating and does this project make sense to us as a community?” Ferrell said.

Scarpinato declined to talk with KBTX, even at Commissioners Court Tuesday. KBTX has filed a public information request with Robertson County for records related to any legal counsel sought in connection with data center negotiations. State law gives the county 10 business days before they have to reply.

Abbott directed the PUC and ERCOT to submit a joint report on their findings by July 17.