Utility CEOs see demand growth
POWER POINT
The demise of data centers has been greatly exaggerated. So says every utility CEO and energy-focused investor we spoke with at the Edison Electric Institute’s annual conference in Arizona. Here’s why…
There is a lot of misleading, misdirected, or straight-up incorrect information floating around about data centers and the AI buildout. I’m not going to dive into the old water-use story — you can do your own research on that — but rather focus this week on what the insiders know: Some newly elected politicians either don’t have the power to stop the buildouts or, if they do, the buildout will likely just continue somewhere else.
Ohio and Georgia are important states to watch with their new incoming political class, but for the sheer importance in size and scope, I’ll focus on the energy and data center capital: Texas.
Incoming Governor Gina Hinojosa and incoming Senator James Talarico both campaigned on promises to go after what they believe to be affordability issues around data centers. I say “what they believe to be” because it’s unclear how much data centers may raise your electricity bill, if at all.
First and foremost, data centers are largely a state issue, meaning officials elected to federal office have little control over outcomes, at least for now. In Texas, any cancellations or moratoriums on new builds will come from the statehouse in Austin. That’s where current Governor Greg Abbott has already, and rather quietly, put his own “pause” on data center permitting. That delay has been underway for a few weeks. Also, in Texas, the Governor has less direct power than in some other states. The power the governor does have largely derives from the authority to appoint those in charge of the all-important permitting process.
In the Lone Star State, that power lies with two agencies: the Public Utility Commission of Texas (PUCT) and the even lesser-known Texas Commission on Environmental Quality (TCEQ). The PUCT regulates Texas’ electricity, telecom, and water industries. It helps oversee growth of anything electricity-grid-related. So if a data center wants to connect to the public utility grid, it needs the commission’s approval. Its chair — a pro-growth chap named Thomas Gleeson —is also on the board of Texas’ electric grid powerhouse ERCOT and will serve his term with the utility commission through September 2029. Yes, three years from now.
That agency gets involved when a data center or power provider wants to connect to the electricity grid. But what about facilities that are off the grid and have their own dedicated power sources? Texas has less control over what happens then. That said, it does have to authorize certain environmental permits, and that responsibility largely lies with the TCEQ. The TCEQ was “BBI” (my own little term for “boring, but important”) until data centers came along. It’s not exactly the Alamo, but this obscure group — run by a regulator named Brooke Paup — is largely the “last stand”…
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