Gov. Greg Abbott Signs SB 6 To Improve Texas Grid Reliability

Concerns that the Texas power grid, managed by the Electric Reliability Council of Texas (ERCOT), could soon begin to groan under the weight of surging demand, led the Texas Legislature to pass Senate Bill 6 (SB 6) in the 2025 session. Signed into law by Governor Greg Abbott on Saturday, this bill is an aggressive attempt to shore up reliability on the Texas grid while making large-load customers bear a fair share of the cost.

Texas has always prided itself on doing things big, including maintaining its status as a national energy powerhouse. From leading the shale oil and gas boom, to supporting state-of-the-art ports moving the lion’s share of U.S. crude and LNG exports, to leading the nation in both wind and solar generating capacity, Texas has fueled America’s growth while taking a different path than other large population states like California, New York, and Florida.

SB 6 is a legislative balancing act designed to ensure Texas continues to play a leading national role in hosting the nation’s rapidly expanding AI industry and its associated datacenters while simultaneously achieving a higher level of grid reliability and energy security. Authored by Senator Charles Schwertner and championed by Lt. Governor Dan Patrick, SB 6 targets one of the elephants in the room: massive electricity consumers, defined as those with loads of 75 megawatts or more.

In addition to high tech datacenters, the bill’s provisions will also impact operations like cryptocurrency mining centers and heavy industrial plants. Such industrial giants have flocked to Texas in recent years to take advantage of comparatively cheap electricity and a business-friendly policy structure.

But the Texas grid has at the same time shown clear signs of struggling to maintain reliability amid a rapid economic and population expansion, and recent projections by ERCOT of massive demand growth over the coming decade motivated the legislature to take proactive action. This is a welcome change from past episodes that saw policymakers taking action only after disaster had struck, as was the case with Winter Storm Uri, which devastated the state in February 2021 following a decade of failure to act to address well-known weaknesses in the grid.

How SB 6 Improves Texas Grid Reliability

The bill signed by Gov. Abbott mandates that large-load customers register with ERCOT and the Public Utility Commission (PUC), provide backup generation (like on-site gas or diesel generators), and shoulder new transmission fees to fund grid upgrades. The new law also greenlights proprietary, behind-the-meter power generation for these facilities, reducing their draw on the grid. Such generation will consist mainly of natural gas plants in the near term, with aspirations for more nuclear generation in the longer term.

SB 6 also gives ERCOT enhanced tools for large load forecasting, enabling both ERCOT and the PUC to review large load projects which involve taking existing generation off the grid. It establishes a process for curtailing large loads before residential and small business customers during emergency situations, a key step that would require backups for large load customers and thus let ERCOT curtail the load during emergencies without centers powering down. The legislature also tossed in a provision which lets water and sewer corporations generate power in hopes of enhancing rural resilience.

“Texas is open for business, but we won’t let unchecked growth crash our grid,” Lt. Gov. Patrick declared when he unveiled his 40 priority bills for the 2025 session in March, with SB 6 near the top. His point is hard to argue with: ERCOT projected in April that Texas power demand will double by 2030, to as high as 208,000 megawatts, driven largely by data centers and industrial loads.

A Pillsbury Law analysis notes that “SB 6 ensures large-load customers contribute to the infrastructure they rely on, protecting residential ratepayers from footing the bill.” The math is compelling: Data centers alone could account for 20% of ERCOT’s peak load by 2030. Without proactive policy intervention like SB 6, the grid would be at higher blackout risk during major weather events.

The Outlook Ahead For The Texas Grid

The legislature’s embrace of behind-the-meter natural gas and nuclear power is a pragmatic nod to both the need to enhance reliability and to the state’s resource abundance. Texas ranks as far and away the largest natural gas producing state in the country. A recent study published by the Environmental Integrity Project reports that the state is in the early stages of a significant gas plant boom, with at least 130 projects either already in the queue or in the planning stage. Altogether, the plants would combine for 58 gigawatts of new 24/7 power generation.

Nuclear appears poised for a national comeback spurred by rising public confidence and favorability and by the rapidly shifting energy policy direction under the Trump administration. Last week, the Department of Energy led by Secretary Chris Wright rolled out a new initiative to reform the system for nuclear reactor testing and spur development of new generation reactors on the site of the DOE National Labs.

Critics will no doubt argue that Texas policymakers should encourage big new industrial power users to focus on wind and solar for their behind-the-meter generation. But, as I’ve detailed here in prior pieces, a consensus has formed among the big datacenter developers that renewables alone can’t handle the 24/7 demands of data centers, and SB 6’s critics consistently ignore that wind and solar lean on gas peaking plants when lack of wind, bad weather and the setting sun render them dormant.

The bill’s supporters argue that SB 6 is less about ideology and more about fairness, centered on the principle that residential customers shouldn’t subsidize grid upgrades for tech giants. As Schwertner put it during Senate debates, “This bill ensures those who strain the system invest in its stability.”

All in all, SB 6 represents a straightforward move by Texas policymakers to ensure that ERCOT and the PUC have the appropriate tools to incorporate large loads onto the grid and ensure minimal risk from a cost and reliability standpoint while maintaining the state’s ability to lead the country in the kinds of large industrial power users. It is a pro-market, pro-development, proactive approach to high-grading the Texas grid, a welcome change from the reactive, disaster-driven processes of the past.