As most people know, Texas Governor Greg Abbott stepped in regarding the data center craze last week.
He issued a directive to the Public Utility Commission (PUC) and ERCOT to protect residential ratepayers from the soaring energy and infrastructure costs tied to the massive expansion of AI data centers across the state.
The order requires data centers to pay their own way and to fully fund their own grid interconnections and electric infrastructure costs, preventing these expenses from shifting to everyday household electric bills.
He also directed regulators to take immediate action to actively reduce residential transmission costs.
His order requires PUC and ERCOT to submit a joint memorandum by July 17 detailing how they are shielding residential and small-business customers.
So, theoretically while that takes care of the grid and like issues, there is still the question of water consumption, concern about land use and the quality of life as more rural areas convert into industrial development.
What the order was not was a ban or moratorium on new data center developments.
It was not an immediate, standalone law so the directives regarding the repeal of sales tax exemptions, water usage mandates, noise limits, and mandatory power generation additions are legislative recommendations for the upcoming session, not in Abbott’s order.
He also did not expand local county authority by giving rural or local county governments new authority to halt data center developments in their own backyards, which has been an ongoing point of tension across the state.
With this mere order in mind and the fact much comes down to legislation the bottom line translates into “no time soon” for many of these delicate issues.
I asked my AI friend about the “worst-case vs best-case” 10-to-20-year outlook for Ellis County given the current data center growth.
This information is for you to consider while determining next moves regarding how to manage stubborn local officials and the red tape residents are running into now.
The best-case scenario is managed growth and strong utility planning as well as the promised tax revenue outcome.
If data center projects proceed then moderate abatements with continued hyperscale investment (think Google, DataBank) will see the full buildout of current Red Oak / Midlothian campuses, which could result in a possible $150M–$400M per year total countywide property tax base impact once fully built out and post-abatement cycles mature.
This would mean $50M–$200M a year flowing to local governments and school districts, depending on agreements and timing.
The most immediate point is that most real revenue arrives after eight to 15 years, and who wants to wait that long while land is ravished in the “now.”
The infrastructure outcome for best case is also ERCOT and Oncor successfully expanding transmission in advance with new substations (like the Red Oak 400MW+ builds) to keep up with demand and the developers would need to build partial on-site power or flexible load systems.
The impact is grid strain, so electricity prices could rise (depending on Abbott’s latest order and how that plays out), but the prices would not destabilize.
Water systems will also need to shift toward reclaimed or industrial reuse quickly.
If the data centers must come it will also be imperative for a best-case outcome that communities make sure land used is only located in the industrial corridors concentrated along I-35 and the southern Dallas edge while the rural interior of Ellis County remains mostly agricultural.
In this scenario Ellis County becomes a high-tax-based industrial tech corridor with manageable infrastructure strain and preserved rural interior areas.
As for the worst-case scenario? This could be the result if issues are not dealt with now including overbuilding, grid stress, and uneven incentives. The tax revenue outcome in this case would mean (even with the billions in investment) that the heavy abatements reduce early revenue, competition between counties leads to “race to the bottom” incentives and equipment depreciation cycles limit long-term gains.
The actual outcome here could be $30M–$120M a year net local benefit, but only after infrastructure costs and incentives are taken into consideration first.
The infrastructure outcome is the biggest risk, and at the moment seems to be the most sensitive issue in Ellis County.
In this worst-case scenario multiple 100–500 MW campuses come online at once while transmission expansion lags demand, grid congestion increases with the consequences being higher regional electricity prices, which would be passed to residents as well as possible “queue delays” for new power connections.
There would also be a greater reliance on backup or behind-the-meter generation and that is often natural gas translated into industrial-level power demand faster than grid expansion.
Regarding the water stress scenario, if more evaporative cooling systems are used that is hundreds of millions of gallons annually across countywide buildout with possible seasonal water stress during droughts, increased competition with suburban growth and more pressure on regional water authorities.
As for land and development outcome, the I-35 corridor becomes a continuous industrial spine, and the property values could rise unevenly as in industrial vs. residential split meaning a loss of rural continuity and increased industrial zoning pressure outward.
In that situation Ellis County becomes a major AI infrastructure hub where power and land are heavily industrialized, tax revenue increases – but so do utility costs, infrastructure strain, and rural land conversion.
In both cases Ellis County is balancing gains as in large property tax base expansion, long-term industrial investment stability, regional economic importance in DFW tech corridor with the cost of that being electricity infrastructure expansion, which to date has been the largest hidden cost, water system pressure during drought cycles, loss of farmland and rural living and a low permanent job creation.
To that end Ellis County is not just “getting data centers” it is becoming part of the backbone of AI thus trading land and infrastructure capacity for long-term tax base growth in a globally strategic industry.
Overall, impacts are different depending on where you live.
Communities need to consider the pros and cons and start early on paying attention to the data center land acquisition process. Also, vote city leaders out who do not respect the overall community voice, but remember too not all residents are against data centers so it is important to listen to the majority and act accordingly as a city leader or a resident.
Rita Cook is a freelance writer for The Ellis County Press. She can be reached at rcook13@earthlink.net.