Texas Grid Chief Seeks Power to Cut Data Centers Before Emergencies

Pablo Vegas, chief executive of the Electric Reliability Council of Texas (ERCOT), will ask the Legislature for authority to order data centers to cut their power use at the first level of a grid emergency or even before one is declared, Bloomberg reported. Today, the report said, the grid has to reach level two of a three-level emergency before ERCOT can make that request.

“The practical realities of curtailing large amounts of customers like data centers and managing that from an operational point of view really requires us to think about pulling that up a little bit earlier into the process,” Vegas said Wednesday at the BloombergNEF Summit in Houston, according to Bloomberg’s report, which Insurance Journal carried Thursday. “We really don’t want to impact residential and everyday businesses if we get into a scarcity event in the state.”

The authority he wants to change comes from Senate Bill 6, which the Legislature passed in 2025. It covers new loads of 75 megawatts or more. A large load with on-site backup generators able to carry at least half its demand can be ordered to switch to those generators or cut its draw from the grid. The statute sets when: ERCOT may act only “after the independent organization deploys all available market services, except for frequency responsive services.” It must also send the order through the customer’s utility, which then relays it.

ERCOT declares a level 1 emergency when operating reserves fall below 2,500 megawatts and are not expected to recover within 30 minutes, and level 2 when they fall below 2,000 megawatts. Below 1,500 megawatts it moves to level 3 and rotating outages, according to the operator’s 2026 emergency alert overview. At an October 6 workshop, ERCOT staff wrote that the statute’s trigger for backup-equipped loads “could align with” level 2.

The same presentation argued the trigger comes too late. In an example ERCOT labeled illustrative and simplified, orders that started only after reserves were already below 2,000 megawatts did not take load off fast enough, and the grid reached level 3 and shed firm load. When orders started earlier, on a forecast, reserves held above level 3. “Waiting for the statutory trigger may leave less time than the curtailment response time requires,” the slides said. They found that relaying every order through a utility adds time too, a problem that grows as data center sites get larger. ERCOT took written comments through October 23 and planned a second workshop for early November.

Vegas said the companies building the largest data centers “are on board with integrating into the system.” He added: “If the legislature agrees and thinks it makes sense to modify those requirements, then we can work with them on that as well.”

ERCOT has not yet ordered any data center to curtail under SB 6, Bloomberg reported, though Vegas said facilities cut their use voluntarily during extreme weather last winter. The law also directed ERCOT to build a separate paid service, in which large loads agree in advance to cut use on 24 hours’ notice ahead of an expected emergency. ERCOT’s slides list that service as still under development.

Data centers already cost the state treasury money, through a sales tax exemption that now runs past $1 billion a year, as the Texian Partisan reported. The grid question is a different cost, counted in whose lights go off.

The 90th Legislature convenes January 12. When reserves run short, someone’s power goes off first. Whether that is a data center able to run on its own generators or a neighborhood on a rotating outage is now a question for the Texas Legislature, and the answer will be written into Texas law.