Texas SB 6 Overhauls Rules for Large Energy Loads in ERCOT

A new state law in Texas, SB 6, significantly changes how large loads interconnect with and operate within The Electric Reliability Council of Texas (ERCOT) grid.

Energy companies developing large data centers, crypto mining operations, manufacturing facilities, or other large loads (75 MW or more) will face new requirements before connecting to the ERCOT grid.

Senate Bill 6 went into effect on June 20, 2025, immediately following the signature of Texas Governor Greg Abbott. It represents a significant response by the Texas Legislature to the massive load growth in the ERCOT region.

Large load is defined to include any load with a peak demand of 75 megawatts (MW) or more, although the Public Utility Commission of Texas (the Commission) may set the threshold at a lower figure. In SB 6, the Legislature delegated significant policy-making authority to the Commission and ERCOT, so developers of large loads in the ERCOT region will need to closely follow the upcoming rulemakings and nodal protocol revision requests that will implement much of SB 6.

SB 6 can be broken down into four main categories: (1) requiring new large-load interconnection standards, (2) limiting net-metering arrangements with existing generators, (3) creating the “large load demand management service” to be administered by ERCOT and (4) directing the Commission to evaluate and update the current transmission cost allocation methodology. 

Requiring new large-load interconnection standards

First, SB 6 requires the Commission to adopt rules setting standards for large load interconnection. There are numerous requirements, many of which are focused on ensuring ERCOT has access to relevant information for system planning, including information related to any on-site backup generating facilities. Other requirements aim to make sure large loads in the interconnection queue are serious about their developments; these include requiring large loads to post $100,000 for initial transmission studies and to bear certain other costs. Some large loads will also be subject to curtailment in certain emergency conditions.

Limiting net-metering arrangements with existing generators

Second, existing generation facilities must go through a process that includes an ERCOT study and Commission approval before co-locating with a large load. Any large load or power generator interested is entering into a co-location arrangement after September 1, 2025 will need to comply with the requirements of SB 6.

Creating the “large load demand management service” to be administered by ERCOT

Third, ERCOT is directed to create a new, competitively procured demand management service. This service will allow large loads to bid to participate and ERCOT will procure the service at the most cost-effective price. The devil is in the details, and interested parties may consider engaging in the ERCOT stakeholder process as this service is created.

Directing the Commission to evaluate and update the current transmission cost allocation methodology

Fourth, the Commission is directed to study the “four coincident peak” methodology used for allocation of wholesale transmission costs to load. This study must begin no later than September 18, 2025, and after conclusion of the study, the Commission must amend its rules to ensure that wholesale transmission charges are appropriately assigned to different types of load. This has the potential to be a significant rulemaking for all types of load, large or otherwise. 

Details Still to Come for Implementation

Interested parties must monitor the implementation at the Commission and ERCOT, as there are many details of these new programs that remain open to further clarification or refining. Failing to do so risks missing key opportunities and risks for developers of large loads in ERCOT.