Texas Senate Bill 6, signed by Governor Greg Abbott on June 20, 2025, sets new rules for data centers, cryptocurrency miners, and other large industrial customers that want to plug into the state’s power grid. If a facility’s peak demand at a single site is 75 megawatts or more, it now faces six-figure study fees, per-megawatt financial security, mandatory disclosures, and the possibility of being curtailed by ERCOT during a grid emergency. The law took effect immediately, though the detailed rules are still being finalized by the Public Utility Commission of Texas.
Who the Law Covers
SB 6 defines a “large load” as a customer requesting a new or expanded interconnection at a single site where total demand exceeds 75 megawatts.1Texas Legislature Online. SB 6 Enrolled Bill Text ERCOT applies the threshold to one or more facilities at a single site with aggregate peak demand of 75 MW or more behind one or more common points of interconnection.2ERCOT. Large Load Interconnection Process Q&A The PUCT can lower that threshold if it decides a lower number is needed to support business development while minimizing stranded infrastructure costs.
The industries most affected are hyperscale data center operators, cryptocurrency miners, and semiconductor and advanced manufacturers expanding in Texas.3Baker Botts. Texas Senate Bill 6: Understanding the Impacts to Large Loads and Co-Located Generation Their combined interconnection requests were arriving fast enough that ERCOT projected system peak demand could rise by more than 65 percent by 2031, and a legislative analysis put potential new load at 130 to 150 gigawatts by 2030 against a 2024 peak of 86 GW.4Texas Legislature Online. Bill Analysis: SB 6
What It Costs to Connect
The statute and the PUCT’s proposed implementing rule (16 TAC §25.194) layer several charges onto every large-load applicant.
- An initial transmission screening study fee, set by statute at a minimum of $100,000. Under the proposed rule, the fee is $100,000 for projects between 75 and 250 MW and $300,000 above 250 MW, plus any actual costs beyond those amounts.1Texas Legislature Online. SB 6 Enrolled Bill Text5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
- Financial security of $50,000 per megawatt of requested peak demand before studies can start. It can be posted in cash, by letter of credit, or through an investment-grade guaranty.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
- A non-refundable interconnection fee of $50,000 per megawatt of contracted peak demand, due when studies wrap up and the interconnection agreement is signed.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
- All direct interconnection construction costs, such as radial lines and substations, paid at 100 percent as a Contribution in Aid of Construction with no credits for projected future usage.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
Forfeiture rules are unforgiving. If a project is withdrawn or misses its milestones by six months, 80 percent of the posted financial security goes to the transmission and distribution utility’s rate base, and only 20 percent is refunded to the customer. Projects that energize get 20 percent of the security back ratably, with the rest returned after five years of sustained operations at contracted demand.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
Site Control and Disclosure
Applicants must show site control through ownership, a lease, or another legal interest acceptable to the PUCT. Under the proposed rule, a lease has to extend at least five years past the date the facility expects to hit its contracted peak demand.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
Applicants also have to disclose whether they are pursuing similar interconnection requests elsewhere in Texas that could affect the current application.1Texas Legislature Online. SB 6 Enrolled Bill Text That provision targets the speculative, duplicative filings that had been distorting ERCOT’s demand forecasts. Further disclosures cover on-site backup generation, detailed energization schedules, and state and local permitting progress, including air permits for backup generators.5DLA Piper. Texas Proposes New Interconnection Standards for Large Electric Loads
Curtailment During Grid Emergencies
SB 6 gives ERCOT and utilities new authority to cut power to large loads when the grid is stressed. Legislators referred to this as a “kill switch,” designed so that during severe shortages, large industrial and commercial users shed load rather than pushing that burden onto residential customers.4Texas Legislature Online. Bill Analysis: SB 6
Utility-Administered Curtailment
Any large load interconnected after December 31, 2025, is subject to utility curtailment protocols, and the customer must install equipment that allows load to be shed during firm load-shed events. Critical industrial customers and critical natural gas facilities are exempt.3Baker Botts. Texas Senate Bill 6: Understanding the Impacts to Large Loads and Co-Located Generation
Backup Generation
Large loads with on-site backup generation that can serve at least 50 percent of demand, where that generation cannot export power to the grid, must report their facility details to their utility and to ERCOT. During an emergency, ERCOT may direct them to run their backup generators or cut grid consumption, but only after every available market-based tool other than frequency response service has been used first.3Baker Botts. Texas Senate Bill 6: Understanding the Impacts to Large Loads and Co-Located Generation Facilities that fail to comply can face PUCT financial penalties.4Texas Legislature Online. Bill Analysis: SB 6
New Demand Management Service
The law also directs the PUCT to have ERCOT set up a competitive reliability service that pays large-load customers for demand reductions in advance of anticipated emergencies. ERCOT must give at least 24 hours’ notice before deployment, and participants have to stay curtailed for the full energy emergency alert. Customers that already curtail based on wholesale prices or participate in other ancillary reliability services are excluded.4Texas Legislature Online. Bill Analysis: SB 6 ERCOT is also developing NOGRR 282, a technical rule that would require facilities where 50 percent or more of demand is power-electronic-based, such as data centers and crypto operations, to ride through frequency and voltage disturbances rather than tripping offline.6ERCOT. NOGRR 282: Large Electronic Load Ride-Through Requirements
Co-Location With Existing Power Plants
SB 6 establishes a formal approval track for arrangements where a large load co-locates with an existing generator and draws electricity behind the meter. Starting September 1, 2025, any new net-metering arrangement between an existing stand-alone generation resource and a new large-load customer must be disclosed to ERCOT, which performs a system impact study. The PUCT then has 60 days after receiving the study results to approve, deny, or impose conditions.3Baker Botts. Texas Senate Bill 6: Understanding the Impacts to Large Loads and Co-Located Generation
Conditions the PUCT can impose include keeping the generation available to the grid during emergencies or holding the generator owner liable for stranded or underutilized transmission assets. If the PUCT does not act within the 60 days, the arrangement is automatically approved. An exemption applies where the generation resource was majority-owned by the large-load customer’s parent company as of January 1, 2025. Some developers are reportedly exploring workarounds, such as acquiring the entities that own generators or structuring long-term leases and tolling agreements meant to avoid the “net metering arrangement” classification.3Baker Botts. Texas Senate Bill 6: Understanding the Impacts to Large Loads and Co-Located Generation
Transmission Cost Allocation Review
SB 6 also directs the PUCT to review whether the existing method for allocating wholesale transmission costs is fair. Texas has long used a “four coincident peak” (4CP) methodology, which assigns transmission costs based on a customer’s usage during the four highest-demand intervals of the year. The PUCT must complete this evaluation and adopt any new rules by December 31, 2026.4Texas Legislature Online. Bill Analysis: SB 6
The PUCT opened Project No. 58484 in August 2025 and released a draft report on March 16, 2026.7PUCT Interchange. Project No. 58484 Filings Commission staff found that 4CP fails to capture winter scarcity, uses too narrow a measurement window, and lets sophisticated industrial customers, including data centers and crypto miners, shift load during peak periods without reducing the system investment their operations still require. The draft recommended replacing 4CP with a methodology using more coincident peaks over a longer interval, eliminating interconnection cost allowances for large loads, and establishing minimum demand charges based on contracted peak demand for periods of 10 to 15 years.8K&L Gates. Request for Comments on Texas PUCT Draft Report Regarding Transmission Cost Recovery in the ERCOT Region A second staff draft came out on May 4, 2026, and the project moved into formal rulemaking on May 27, 2026.
Where the Rules Stand
The statute is in force, but most of the detail that governs day-to-day compliance lives in PUCT rulemakings that are still open.
Project 58481, the central interconnection standards rulemaking, produced a proposed rule (16 TAC §25.194) published on March 12, 2026, with comments due April 17, 2026.9PUCT Interchange. Project No. 58481 Filings ERCOT has listed a target completion date of August 2026, but no final rule has been adopted.10ERCOT. 89th Legislative Session ERCOT Status
Project 58479 covers net metering and co-location. A proposed rule has been published, and the process runs through a 120-day ERCOT study followed by the 60-day PUCT action window.11NASEO. SB 6 PUCT Implementation Presentation
Project 58482 is developing the new demand management reliability service. As of April 2026 it was in its comment and design phase.12PUCT Interchange. Project No. 58482 Filings The ERCOT Independent Market Monitor, Potomac Economics, recommended an as-needed service model triggered by forecasted probabilities of firm load shed, with a paid-as-bid auction structure to limit market power.13PUCT Interchange. Potomac Economics Comments on Large Load Demand Management Service
Not to Be Confused With the 88th Session’s SB 6
A bill with the same number moved through the previous, 88th Texas Legislature and dealt with an entirely different subject: the Texas Energy Insurance Program, which would have authorized up to 10 gigawatts of weatherized natural gas “reliability assets” dispatched by ERCOT during severe shortages, with a $1 billion per gigawatt revenue cap and a requirement that applicants demonstrate total assets of at least $10 billion per gigawatt.14Texas Legislature Online. SB 6, 88th Legislature Bill Text The 89th session’s SB 6, the one covered here, regulates the demand side instead of subsidizing new generation. If you are searching for the current large-load rules, the 89th session bill is the right one.