Texas spent five years rebuilding its electrical grid based on the lessons of Winter Storm Uri. Now regulators face a harder question: who pays for the surge of large new customers trying to connect? The projections for electricity demand run far above what will actually get built, and hyperscalers want to power their data centers within 18 months, a pace much faster than the three-to-five years large industrial loads once took. ERCOT has run out of spare capacity, and the cost of building more lands squarely on residential and small-business customers if the projected load never arrives. The state’s answer is to make new load prove its intention and viability to build and pay for the grid it requires. On this episode of the Energy Capital Podcast, Matt Boms talks with Thomas Gleeson, chairman of the Public Utility Commission of Texas, the regulator who must write the rules to make that principle work. Gleeson’s North Star is SB6, the 2025 law that rewrote how large loads connect. He explains the trade-offs behind the decisions commissioners are weighing, from financial gates that screen speculative projects to a December deadline to overhaul who pays for transmission. Gleeson returns over and over again to the demand side, arguing that “the megawatt we don’t use is just as important as the megawatt that we generate.” The conversation works through: * Batch zero, ERCOT’s first round of committing firm capacity and the financial security and fee requirements, recently set at $50,000 per megawatt and meant to screen out projects that are purely speculative. * 4CP to 12CP, the proposed overhaul of transmission cost allocation, with a minimum demand charge so that large customers cannot zero-out their shares by curtailing at a few predicted peaks. * The reliability standard, a new three-part measure of how often, how long, and how large an outage Texas will tolerate. * Demand-side resources, the aggregated distributed energy resource pilot, virtual power plants and a $1.8 billion backup-power program funded through the Texas Energy Fund. How Gleeson and the commission write these rules will set how much cost current ratepayers must shoulder and which projects ever get built. Timestamps * 00:00 - Introduction and Chairman Gleeson’s PUC background * 00:48 - A new chapter for the Texas grid: from Uri reform to implementation * 04:19 - The core problem: interconnection capacity and speculative vs. real load * 08:28 - SB6 and ERCOT’s Batch Zero process * 15:10 - Large-load ride-through and performance standards * 19:18 - The reliability standard and load modeling assumptions * 23:39 - The ADER pilot: lessons and whether to scale it * 25:01 - Virtual power plants and the NRG proof of concept * 27:29 - Standardizing DER interconnection across the state * 29:20 - The backup power package: resilience for critical facilities * 32:33 - From 4CP to 12CP: reallocating transmission costs * 39:30 - Closing: taking a breath, and what the era will be remembered for Resources People & Organizations * Matt Boms (LinkedIn) * Texas Advanced Energy Business Alliance (Website - LinkedIn) * Thomas Gleeson (PUCT Biography) * Public Utility Commission of Texas (Website) * Other Orgs * ERCOT (Website) * ADER Pilot Project (Overview) * Batch Study Process for Large Loads (Overview) * Texas Energy Fund (PUCT Program Page) Company & Industry News * Texas PUC Approves TEF Backup Power Program (RTO Insider) * ERCOT’s Batch Zero Proposal and What It Means for Large-Load Projects in Texas (Seyfarth) * ERCOT’s Proposed Batch Zero Process: What Developers Need to Know (Foley & Lardner) Related Podcasts by Energy Capital * How Texas Decides Which Data Centers Connect (Tiffany Wu) (Listen) * How Will Data Centers Pay for Power? (Travis Kavulla) (Listen) Related Posts by Texas Energy & Power * How Texas Decides Which Data Centers Connect (Read) * Price the Grid or Keep Rationing (Read) Transcript Matt Boms: Today, we’re very pleased to welcome back Chairman Thomas Gleeson of the Public Utility Commission of Texas. Chairman Gleeson was appointed to the commission and named Chairman by Governor Abbott in January 2024, but his service to the state of Texas goes back much further than that. Over more than 15 years at the PUC, he has served in a number of important leadership roles, including Executive Director, Chief Operating Officer, Director of Finance Administration, and Fiscal Project Manager. That gives him an unusually deep understanding of the agency, the Texas electric market, and the work required to turn major policy decisions into real world implementation. Chairman Gleeson, thank you for your years of service to Texas and welcome back to the Energy Capital Podcast. Chairman Gleeson: Absolutely. Thank you for that introduction. Looking forward to the discussion. Matt Boms: Awesome. Well, thank you for your time. We know that you’re really busy. This interview happens in the middle of a million conversations that are happening right now around energy in Texas. We’re gonna try to hit on as many as we can. And you know, just to kind of set this up, Texas is growing fast. The commission is trying to separate real projects from speculative ones, protect existing customers, use flexibility and customer side resources more efficiently. And build a grid that can support economic development without sacrificing reliability or affordability. So I want to start with, you know, since you last came on the podcast and Doug had you on, it feels like the Texas grid conversation has shifted a little bit from post-Uri reforms and market design and broad policy ideas into a very serious implementation phase. So, from your perspective, do you see this as a new chapter for the Texas grid? Chairman Gleeson: Yeah, I absolutely do. I think you’re right. I think the reforms coming out of Winter Storm Uri, for the most part, have all been implemented. And I think the legislature, the governor, citizens are all happy with the reforms that we’ve put in place. You know, the grid has been tested a few times since Winter Storm Uri and has performed really well. So I think, yeah, the conversation has definitely now shifted to large loads, data centers, hyperscalers, how we’re going to incorporate those reliably and safely onto the grid. And then really, who’s going to pay for it? And I think as we move forward from today onward, who’s gonna pay for all of this is gonna take f you know, primary focus for everybody. Matt Boms: Yeah, absolutely. And I think Texas has always been a growth state if we look back to our our history. But does this load growth moment feel different to you? Chairman Gleeson: It feels a lot different. And the main reason for that is the speed at which it’s changing. You know, historically when large loads have come onto the system, it’s taken three, four, five years for those facilities to need their power. When you’re talking about hyperscalers, these companies want power sometimes within eighteen months to be fully operational. So the speed at which we’re being asked to make decisions that impact the economy is going quicker and having a much, you know, more difficult effect on us coming up with the right decisions in a short amount of time. Matt Boms: And, you know, given all those decisions that need to be made and looking down, you know, over the next few years, what are two or three things that you think Texas absolutely has to get right here moving forward? Chairman Gleeson: Yeah. So the first part again is who’s going to pay for this? We want economic development in Texas. You know, as the governor says, Texas is open for business, but we want to make sure that residential rate payers and small businesses are not bearing the brunt of all the costs that are going to come along with hyperscalers moving to the state. So I think figuring out how to effectively and efficiently allocate costs to those that are actually putting those costs on the system is going to be the number one thing that we do. Number two, and this will always be an issue coming out of Winter Storm Uri, I think, for for the rest of time for Texas and the ERCOT market. How do we ensure that we’re getting the right resource mix on the grid for generation resources? You know, we continue to see a proliferation of batteries and renewables on the grid, particularly solar. And that’s great for the state. You know, those resources keep prices down. When it comes to batteries and solar, you know, they help us a lot in the winter during our two peaks and the summer during our afternoon peak. But I think there’s a growing concern that we need more what we would consider baseload twenty four by seven generation, mostly thinking about gas generation. And so continuing to have discussions about how we incent that type of generation to come onto the grid, I think will continue to be really important for the state. Matt Boms: Absolutely. And for listeners who are not living inside of ERCOT stakeholder meetings, that we certainly have listeners that do live inside of those meetings, but plenty of listeners that are new to the energy space. What is the actual problem that Texas is trying to solve here with large loads and data centers? Just for a beginner who is, you know, hearing this for the first time. Chairman Gleeson: Yeah. So historically the grid has always had a lot of excess capacity. So the transmission system has capacity. A new customer can come and interconnect and not have a problem getting the service that they need. But because of the size of these facilities and the speed at which they are looking to interconnect into the grid, we’ve run out of existing capacity on the system. And so what was happening over the last say six to eight months was large loads were looking to interconnect and not being able to, because as soon as they would have a study validating. Their ability to interconnect, another load would
