$50,000 per MW Up Front: Texas's Large Load Interconnection Rule Took Effect October 8 and Changes Who Pays for Data Center Hookups

On October 8, 2026, the Public Utility Commission of Texas (PUCT) put its large load interconnection rule, 16 TAC 25.194, into effect. Any new or expanded ERCOT site seeking 75 MW or more must now pay a flat $100,000 study fee, post $50,000 per MW of financial security before ERCOT studies it, and pay every dollar of its direct hookup costs itself. The rule never touches a small business meter, but it changes which data center costs can reach the regulated delivery charges on a Texas commercial electricity bill.

Key takeaways

16 TAC 25.194 took effect October 8, 2026, after the PUCT adopted it on September 18 in Project No. 58481 and published it in the October 2 Texas Register.
A 500 MW data center campus now posts $25 million of security before ERCOT studies it, plus the $100,000 study fee.
The final rule dropped the March proposal's non-refundable $50,000 per MW interconnection fee, so the $50,000 per MW is security, not a charge.
Large loads pay all direct interconnection costs through a contribution in aid of construction (CIAC), with no utility allowance to offset it.
Transmission system upgrades sit outside that payment, and how their cost is shared across all customers is still pending in PUCT Project 58000, with a decision expected in December 2026.

What Happened

The PUCT adopted new 16 TAC 25.194, the large load interconnection standards required by Senate Bill 6 (2025), at its September 18, 2026 open meeting under Project No. 58481. The rule was published in the October 2, 2026 Texas Register (51 TexReg 6875) and took effect October 8, 2026. It applies in the ERCOT region to any large load customer that had not energized by that date and is seeking one of three things:

a new interconnection with expected peak demand of 75 MW or more at a single site,
an expansion that brings an existing site to 75 MW or more for the first time, or
an addition of at least 75 MW at a site already at or above 75 MW.

The rule turns the large load interconnection process into four required steps:

Intermediate agreement. Before ERCOT studies the load, the customer signs an intermediate agreement with its transmission or distribution utility, shows site control, pays the $100,000 study fee, and posts $50,000 per MW of requested peak demand as security. It must also disclose any substantially similar interconnection requests it is pursuing elsewhere and any on-site backup generation able to serve at least 50% of on-site demand.
ERCOT interconnection study. ERCOT and the utility study the request and allocate any system upgrade costs.
Standard large load interconnection agreement (SLLIA). At signing, security rises to the greater of $50,000 per MW of contracted peak demand or the customer's allocated system upgrade costs, and the customer pays its direct interconnection costs through CIAC.
Energization. Security comes back in stages: 20% of the remaining balance at energization, then 20% increments as the customer meets the minimum-billing milestones in its SLLIA.

The commission left itself room to revisit the fee. "As more data becomes available relating to study costs, the commission may amend the rule to update the study fee amount that is required," the PUCT wrote in its adoption order, as reported by Utility Dive on September 21, 2026. Read the primary sources: the adopted rule text at puc.texas.gov, Utility Dive's report on the September 18 vote, and ERCOT's September Batch Zero update.

What Changed Between the March Proposal and the Final Rule?

The final large load interconnection rule is softer than the version the PUCT proposed in March 2026. It eliminated the proposed non-refundable $50,000 per MW interconnection fee, replaced size-tiered study fees with a flat $100,000, and gave projects 24 months instead of six to meet their energization schedule.

Provision	March 2026 proposal	Final rule, effective October 8, 2026
Interconnection fee	Non-refundable $50,000 per MW of contracted peak demand	Eliminated
Study fee	$100,000 to $300,000, depending on project size	Flat $100,000 for every project
Security before the ERCOT study	$50,000 per MW of requested peak demand	$50,000 per MW of requested peak demand (unchanged)
Security at the final agreement	Remaining security applied toward the non-refundable fee	Greater of $50,000 per MW or allocated system upgrade costs
Missed energization milestones	Utility notifies ERCOT once a milestone is six months late	24 months, measured against the energization schedule as a whole
Leftover security after a failed project	20% refunded, 80% used to offset the utility's rate base	Applied to amounts owed, balance returned within 60 days
Direct interconnection costs	100% paid through CIAC, no allowance	100% paid through CIAC, no allowance (unchanged)

The March draft drew sharp reactions from project counsel. DLA Piper warned in March that the proposal "could result in significant upfront capital commitments" and set thresholds "higher than those imposed by other major US grid operators, where study deposits and interconnection fees for load customers are typically measured in the tens of thousands of dollars rather than millions." Foley & Lardner's Texas Government Solutions group wrote on March 31, 2026 that the proposal marked a shift "from a relatively light-touch queue access to a model emphasizing early commitment, financial discipline, and transparency."

Our read: the commission kept the screen and dropped the toll. The $50,000 per MW still has to be posted as cash, a letter of credit, or a guaranty from a company rated at least BBB- or Baa3, so a speculative 1,000 MW request still ties up $50 million before ERCOT runs a single study.

Who Pays for What Under the Large Load Interconnection Rule?

Under 16 TAC 25.194, the large load customer pays all of its direct interconnection costs itself, through a non-refundable contribution in aid of construction with no allowance, while transmission system upgrades are handled separately and remain subject to regulated transmission cost recovery.

The rule sorts hookup costs into three buckets:

Direct interconnection costs. These are the radial lines and site-serving facilities that exist only to connect one customer. The customer pays them through CIAC, trued up to actual cost, and CIAC is not refundable. Before the rule, practice varied by utility, and some used allowances that rolled the cost of standard interconnection facilities into regulated rates. For loads of 75 MW or more, that allowance is gone.
System upgrades. These are reinforcements to the shared transmission network that the ERCOT study assigns to the request. 16 TAC 25.194 does not charge them as CIAC. Instead, the customer's security must equal at least its allocated upgrade costs, so a project that walks away covers what it owes before anyone else does.
Study costs. The $100,000 fee is due no later than signing the intermediate agreement, and ERCOT protocols may add a separate flat study fee.

How the upgrade costs themselves get shared across customer classes is a different rulemaking. On July 9, 2026, the PUCT approved for publication a proposal in Project 58000 that would replace ERCOT's four coincident peak (4CP) transmission cost allocation with a 12 coincident peak (12CP) method using one peak interval each month. Comments closed August 11, and a decision is expected in December 2026. For a commercial account, that docket will matter more to delivery charges than the October 8 rule does.

Does the Rule Apply to Data Centers Already in ERCOT's Queue?

Yes. 16 TAC 25.194 applies to any large load customer that had not energized by October 8, 2026, so projects already waiting in ERCOT's queue are covered, and the commission declined a request to limit the rule to requests filed after that date.

The queue it filters is large. ERCOT's large load interconnection queue reached about 474 GW in 2026, roughly 90% of it data centers, according to Utility Dive's September 21, 2026 report. In its September Batch Zero update, ERCOT conditionally classified 204 projects totaling 66.4 GW as base load and 158 projects totaling 127.9 GW as studied load. Security or cash a customer already posted counts dollar for dollar toward its obligations under the new rule, and Batch Zero eligibility itself runs through ERCOT's separate Planning Guide process, as we covered in our Batch Zero verification briefing.

Impact on Commercial Electricity Buyers in Texas

The large load interconnection rule does not change any commercial electricity bill today, because no small business account comes close to 75 MW. It reaches commercial buyers through three channels: regulated delivery charges, stranded-cost risk, and the price of contracts that run into 2028 and beyond.

Delivery charges. Transmission costs reach commercial bills through Transmission and Distribution Utility (TDU) charges such as the Transmission Cost Recovery Factor (TCRF). Hookup costs paid through CIAC never enter a utility's rate base, so they cannot flow into those riders. Network upgrades still can, which is why Project 58000's December decision deserves a place on your calendar. Our explainer on how ERCOT's July 22 peak set 2027 transmission charges walks through the current 4CP method.

Stranded-cost risk. Security sized to allocated upgrade costs means a cancelled project's money covers what it owed before those costs land on everyone else. The final rule also dropped the proposal's plan to use 80% of leftover security to offset the utility's rate base, so other ratepayers no longer receive that credit when a project fails.

Forward pricing. A $50,000 per MW deposit is a cheap filter for a real project and an expensive one for a placeholder. As speculative requests drop out, retail electric providers (REPs) get a firmer read on the load growth behind long-dated wholesale prices. In the 13,138 commercial plans we track as of October 15, 2026, the TxCP Commercial Rate Index (TCRI) sits at 7.07 cents per kWh, and plans of 25 months and up carry a median of 6.57 cents, 0.38 cents above the 6.19 cent median for 13 to 24 month plans. We read part of that premium as the cost of carrying load-growth uncertainty past 2027.

The TxCP Hookup Cost Ledger: Four Checks Before You Sign Past 2027

Before you sign a commercial electricity contract that runs past 2027, run it through the four checks we use to trace where data center costs can reach a commercial bill, so a rule built for 75 MW sites does not surprise a 75 kW one.

1. Which charges in the quote pass through?

Ask whether TDU charges, including the TCRF, are passed through at cost or built into your fixed rate. Pass-through means any change from Project 58000 lands on your bill during the term.

2. Does the term cross the December 2026 transmission decision?

A contract signed this month runs past the PUCT's expected 12CP decision. Know whether a change in how transmission costs are allocated would be absorbed by the REP or billed to you.

3. Is the long-term premium in line with the market?

Compare a 36-month quote with a 24-month quote taken the same day. Our long-term median runs 0.38 cents above mid-term this week, and a much wider spread deserves an explanation.

4. Does your site manage its peak demand?

If you shift load away from summer peaks to cut transmission charges, ask how a move from 4CP to 12CP would change that strategy, since 12CP would count a peak in every month.

What You Should Do

You do not need to act on the October 8 rule itself, but four moves this month protect a commercial account from the costs it sets in motion, whether your contract renews soon or runs into 2028.

Pull your current contract or Electricity Facts Label and note your term end date and whether TDU charges are passed through.
If your contract ends before mid-2027, request 24-month and 36-month quotes on the same day so both reflect the same market.
Keep each provider's written answers to the questions below with its quote, so you can compare how the offers treat the same transmission risk side by side.
Mark December 2026: ERCOT's Batch Zero verification report is due at the PUCT by December 10, and the Project 58000 decision is expected the same month.

Questions to Ask Your REP or Broker

These four questions show whether a quote treats the coming transmission decisions as your risk or the provider's, which is the part of a long-term price the October 8 rule makes easiest to miss.

Which charges on this quote can change during the term, and which stay fixed for its full length?
If the PUCT moves transmission cost allocation from 4CP to 12CP, who absorbs the difference during the contract term?
How much of your 36-month price is a premium for load-growth risk after 2027?
Can part of the volume be fixed now and the rest priced after ERCOT's December report?

For the full picture, see our guide to Texas business electricity rates, last week's weekly market report, and see every commercial plan we track in our data download.

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Frequently Asked Questions

What is the Texas large load interconnection rule?

The Texas large load interconnection rule is 16 TAC 25.194, adopted by the PUCT on September 18, 2026 and effective October 8, 2026. It sets the process, study fee, and financial security for new or expanded ERCOT loads of 75 MW or more at a single site, most of them data centers.

How much does a data center pay to connect to ERCOT?

A data center pays a flat $100,000 study fee, posts $50,000 per MW of requested peak demand as security before the ERCOT study, and pays all direct interconnection costs through CIAC. At the final agreement, security rises to the greater of $50,000 per MW or its allocated system upgrade costs.

Is the $50,000 per MW a fee?

No. Under the final rule, the $50,000 per MW is financial security that is returned in stages as the project energizes and meets its milestones. The PUCT's March 2026 proposal included a non-refundable $50,000 per MW interconnection fee, but the commission eliminated it before adopting the rule.

Will the large load rule raise business electricity bills in Texas?

Not directly. The rule covers only sites of 75 MW or more. Any effect on a commercial bill arrives through transmission charges and the wholesale outlook behind long-term contracts, and current offers can be compared in our data download.