Data Center Coalition warns Texas legislators on Senate Bill 6 risks to safety and reliability

On February 27, 2025, the Texas Senate Committee on Business and Commerce convened to discuss Senate Bill 6, which addresses critical issues surrounding the state's electric grid and the operations of data centers. The meeting highlighted the importance of balancing reliability, affordability, and the economic needs of Texas, particularly in the context of the growing data center industry.

A significant focus of the discussions was the role of backup generation in maintaining grid reliability. Dan Diorio, representing the Data Center Coalition, emphasized that data centers are essential for providing uninterrupted services to various critical sectors, including government, law enforcement, and healthcare. He raised concerns about the bill's provisions for remote disconnects, which could jeopardize the operation of data centers during peak demand periods. Diorio argued that insufficient notification and procedures for disconnecting power could lead to severe consequences for both data centers and their tenants.

The committee members acknowledged the necessity of backup generation but recognized the challenges posed by environmental regulations. Many data centers rely on diesel generators, which are cost-effective but limited by federal and state air quality permits. The discussion underscored the need for regulatory flexibility to allow data centers to operate backup generators without risking violations during emergencies.

Another key topic was the bill's approach to co-location agreements and the approval process for new generation sources. Stakeholders expressed the need for a streamlined process that would allow data centers to utilize backup generation effectively while ensuring that new loads do not disrupt existing services. The committee explored the idea of expanding the definition of replacement generation to allow for more flexibility in meeting demand across different regions, particularly in areas like the Permian Basin, where generation capacity is critical.

The meeting concluded with a commitment to further stakeholder engagement and technical discussions to refine the bill. The committee recognized the importance of ensuring that Texas's electric grid remains reliable and affordable while supporting the state's economic growth, particularly in the data center sector. As the legislative process continues, the outcomes of these discussions will have significant implications for Texas's energy landscape and its ability to meet future demands.