Texas's Large-Load Interconnection Rule Takes Effect Oct. 8: $50,000 a Megawatt to Get Studied, and a 20% Haircut to Walk Away

“The commission determines that the $50,000 per MW amount appropriately balances the statutory objectives of PURA §37.0561 to support business development while minimizing the potential for stranded infrastructure costs” ^[1]. That sentence, repeated nearly word for word in the Public Utility Commission of Texas’s answers to commenters who wanted the number higher and commenters who wanted it lower, is the core of 16 TAC §25.194. The rule implements Senate Bill 6’s large-load interconnection standards for ERCOT, was published in the October 2 Texas Register, and takes effect tomorrow, October 8 ^[1]. It reaches every new or expanding load of 75 MW or more at a single site that has not yet energized ^[1].

This is a state commission rule, and it lands while ERCOT’s large-load queue stands at 474 GW, about 90% of it data centers, and while new data center hookups are paused for the governor’s audit ^[2].

What the rule requires, stage by stage

The rule sorts a large load’s path to the grid into two contracts, and puts money and paperwork at each one.

Before the study. A customer signs an intermediate agreement with its interconnecting utility, pays a flat $100,000 study fee and posts financial security of $50,000 per MW of requested peak demand ^[1]. Unused study money comes back within 60 days of the study’s end ^[1]. Security can be cash in an interest-bearing account, a guaranty from a guarantor rated at least BBB-, or a letter of credit from a bank rated at least A- ^[1]. If the utility has to order equipment with a lead time of at least 18 months before the second contract is signed, the customer pays for it as a non-refundable contribution in aid of construction, and tops up its security if the equipment costs more than the security already posted ^[1].

After the study. Within 60 days of an ERCOT study report that allocates it transmission capacity, the customer must sign a standard large load interconnection agreement, or SLLIA, or the request is cancelled ^[1]. Security at that point is the greater of $50,000 per MW of contracted peak demand or the system upgrade costs ERCOT’s study assigns to the customer ^[1]. All direct interconnection costs are paid in cash up front, “with no standard or other allowance offered to offset the customer’s CIAC payments,” and trued up when the facilities are finished ^[1]. The agreement also binds the customer to a large load minimum billing demand set out in a separate section, §25.193 ^[1].

After energization. The utility returns 20% of the remaining security when the load energizes and the rest in 20% steps as the customer meets the minimum-billing milestones in its agreement ^[1].

The disclosure list is long, and some of it is new for a power interconnection. A customer must show site control through a lease of at least five years, a deed or a purchase option; report water volume, source, supplier and cooling technology; list each backup generator’s nameplate capacity, fuel and permitted run hours; and disclose any “substantially similar” request it or an affiliate is pursuing elsewhere in Texas, with the ERCOT serial number ^[1]. An officer must attest to all of it, and ERCOT and commission staff may audit it ^[1]. False or unverifiable information can cost a customer its security and its allocated capacity ^[1].

How much does it cost to get in line, and to leave?

For a hypothetical 300 MW request, by this column’s arithmetic, that is $15 million in security plus the $100,000 fee before ERCOT runs a study ^[1].

Leaving costs depend on timing ^[1]:

• Withdraw before the study begins: all security back, after the utility collects costs it has incurred and cannot cancel.
• Withdraw after ERCOT allocates capacity but before signing the SLLIA: the utility keeps 20% of the security tied to the capacity allocated. On the 300 MW example, if all of it were allocated, that is $3 million, again by this column’s arithmetic.
• Neither withdraw nor sign by the deadline: the intermediate-stage security is forfeited.
• Fall 24 months behind the phased energization schedule: the utility notifies ERCOT within 30 days, applies the security to amounts owed, subtracts 20% of the security on the unused capacity and returns the balance; ERCOT may reallocate the capacity in a later study.

The final rule is softer than the March 27 proposal. According to Utility Dive, the proposal charged a non-refundable interconnection fee set at the same $50,000 per MW, set a higher study fee for bigger loads, and triggered the missed-milestone process at six months ^[2]. The adopted rule turns the $50,000 into returnable security, makes the study fee flat and sets the trigger at 24 months for the energization schedule “as a whole, and not for each energization milestone individually” ^[1,2]. Outside forfeiture, what the utility keeps is its unrecoverable costs and the 20% haircuts ^[1].

Projects already in ERCOT’s Batch Zero, the group study for loads that met ERCOT Planning Guide Section 9 requirements as of the rule’s effective date, are not grandfathered out. They must sign a SLLIA to keep their allocation, with earlier security and cash credited dollar for dollar ^[1]. A load holding an interconnection agreement signed on or before June 1, 2025, the date SB 6 took effect, pays direct interconnection costs under that agreement rather than new up-front cash ^[1]. For one class of Batch Zero load defined in ERCOT’s Planning Guide, the haircut on withdrawal after allocation is 50% rather than 20% ^[1].

Where the sides stood on the $50,000

The commission’s preamble lists the asks, and they bracket the final number on both sides ^[1].

Lower: Thor Equities asked for $10,000 per MW; Competitive Power Ventures for $10,000 to $15,000; the Advanced Power Alliance and American Clean Power for $10,000 to $20,000; Rowan, Texas Industrial Energy Consumers and the Texas Oil & Gas Association for $20,000; and CenterPoint, a utility, for $30,000 ^[1]. The Texas Energy Buyers Alliance opposed non-refundable security before any study shows transmission is available ^[1].

Higher: the Office of Public Utility Counsel asked for $100,000 per MW, arguing $50,000 is inadequate to cover multibillion-dollar transmission projects if a customer withdraws ^[1]. The Sierra Club proposed tiers rising from $30,000 per MW for the smallest loads to $75,000 above 500 MW, and a study fee scaled from $100,000 to $400,000 ^[1].

The commission turned down both directions and the tiers. Its reasoning for the early stage was that security there demonstrates “access to the necessary capital,” and that stranded costs are “unlikely before an interconnection study is completed” ^[1]. The Data Center Coalition and CloudHQ asked it to strike the non-utilized capacity provision as “unclear, ambiguous, and disproportionate”; the commission kept it, saying indefinite reservations “would foreclose other customers from interconnecting to a system that has been planned and built to serve demand that has not materialized” ^[1]. To Thor Equities, which asked for 12 months’ notice of new requirements, it answered that “Large load customers had more than 12 months of notice,” since SB 6 took effect June 1, 2025 ^[1].

What I’m watching

The rule’s audit clause and the governor’s audit now run side by side. ERCOT’s September 14 State and Community Impact request, sent to Batch Zero data centers not yet energized and to substantiated 25-to-75 MW projects, follows the governor’s list of topics, including water, public financial assistance, noise and ownership, and requires a notarized attestation by 5 p.m. Central on October 12 ^[3]. ERCOT says failure to respond will be reported to the PUCT and the governor’s office, and it expects to publish a report on the responses no later than December 10 ^[3]. Utility Dive reported in August that about 300 data centers of 75 MW or larger sit in Batch Zero ^[4].

The second item is the Batch Zero study clock. ERCOT said in August that the study would not finish by its April 9, 2027 date and that a new timeline was still being worked out, according to Utility Dive ^[4]. Every SLLIA deadline in §25.194 runs from that study report.