Senate Bill 6 Has Texas-Sized Implications for Data Centers

Senate Bill 6, legislation that would reshape how large electricity consumers — namely data centers, large manufacturers and cryptocurrency mines — connect to and operate within the Texas power grid, is currently sitting on Gov. Greg Abbott’s desk.

As data centers continue to expand across Texas, many topping 75 megawatts or more in load, concerns have grown about their uncoordinated impact on the Electric Reliability Council of Texas’ (ERCOT) grid infrastructure. SB 6 directly addresses these challenges by requiring large load customers to comply with new interconnection planning standards, financial guarantees and emergency protocols.

Key provisions include:

• A $100,000 minimum fee for initial grid impact studies
• Required proof of site control and financial commitment for transmission infrastructure
• Disclosure of on-site backup generation, which ERCOT may order deployed during emergencies
• A framework to allow, regulate or deny net metering arrangements with co-located generators

The law also prohibits large customers who participate in price-based curtailment or other ancillary services from joining ERCOT’s new Large Load Demand Management Service, designed for emergency load reduction with at least 24 hours’ notice.

The Public Utility Commission (PUC) will be required to re-evaluate how transmission costs are assigned, likely leading to higher grid fees for large, peak-contributing users. ERCOT is also directed to include forecasted large loads in long-term planning models, marking a shift toward proactive grid oversight.

For data center operators, SB 6 means fewer shortcuts and more accountability. Projects will be required to clear higher planning, transparency and financial hurdles to connect to the grid. Operational flexibility may also be constrained during grid stress events, especially if backup systems are in place.

SB 6, passed on June 1, joins a number of tech bills still sitting on the governor’s desk. Should the governor leave SB 6 unsigned by June 22, or refuse to veto, the bill will automatically become law.