PUCT's New Rule Does What No Other State Has Tried: Price Speculative Queue Positions Out of Existence

On March 12, the PUCT filed the proposed rule that will govern how every large load above 75 MW connects to ERCOT. This isn't a discussion paper. It's a price list, a disclosure framework, and a withdrawal penalty structure rolled into one rulemaking.

Comments are due April 17, 2026. The rule is open for public input, and the financial thresholds it sets aren't final. They're proposed. The comment period is where they get calibrated.

$100,000 Per Megawatt, in Two Installments

Proposed 16 TAC 25.194 requires $50,000 per megawatt in financial security before a project can even submit an ERCOT interconnection study request. That's Phase 1, the intermediate agreement. You also need site control (a lease of five years or longer, a deed, or a purchase option), engineering plans with officer attestation, and a study fee of at least $100,000 for projects under 250 MW or $300,000 for 250 MW and above.

After ERCOT completes the interconnection study, Phase 2 kicks in. You've got 30 days to execute an interconnection agreement or your project gets canceled and ERCOT is notified. The agreement triggers a $50,000/MW non-refundable interconnection fee, 100% of direct interconnection construction costs paid in cash (no allowance offset), and financial security for system upgrades.

A 500 MW campus? That's $25 million in financial security before a single study begins, $25 million more in non-refundable fees after the study, plus the full cost of every radial line and substation upgrade your project requires. The rule specifies acceptable forms of financial security: cash, an investment-grade corporate guaranty at BBB- or above, or a letter of credit from a major bank rated A- or above.

Walk Away and Lose 80%

The withdrawal math is designed to sort committed operators from speculative applications. If a customer abandons all or part of its requested capacity, financial security covers outstanding costs first. Of what remains, 20% goes back to the developer. 80% goes to the interconnecting TSP as rate base offset. Contributions in aid of construction aren't refundable. Period.

Miss a phased energization milestone by six months? Same formula. Same 80/20 split. ERCOT reallocates the non-utilized capacity to the next project in line.

The only path to a full refund: sustain operations at contracted peak demand for five consecutive years. Financial security gets returned ratably as you hit milestones, with the full remaining balance released after the five-year mark. That's an alignment mechanism, not a penalty. It rewards operators who build, energize on schedule, and stay.

No More Queue Stuffing

The "substantially similar request" disclosure is the provision that deserves the closest read. Developers must reveal if they're pursuing similar interconnection requests elsewhere that could cause a material change, defined as a delay of one year or more, a demand shift of 20% or more, or a location change.

You can anonymize competitively sensitive details: exact site locations, financing structures, proprietary architecture, and commercial terms. But your identity, general location (load zone), demand size, and energization timeline are explicitly not protected under this rule. The PUCT wants ERCOT queue data to be transparent, and this provision makes it happen.

This directly addresses the queue congestion problem. ERCOT's interconnection queue has ballooned past 300 GW of requests, the vast majority of which won't reach commercial operation. The financial commitment and disclosure requirements are designed to filter the queue down to projects that are actually going to build.

Why This Matters for the Industry

Here's what most coverage will miss: this rule doesn't discourage datacenter development in Texas. It discourages speculative queue positions that consume ERCOT study capacity and delay projects with real capital behind them.

If you have site control, engineering plans in progress, state and local permits underway, and the financial backing to support your interconnection request, this rule gives you something no other state offers: a defined process with defined costs and defined timelines. The financial commitment is significant, but the certainty is worth more.

"The regulatory comment process is where rules get their final shape," said James Dickey, CEO of JD Key Government Affairs, sponsor of Hyperscale News. "McKinsey research shows that roughly 30% of corporate earnings across most industries are influenced by regulatory and government intervention. For datacenter developers in Texas, that number is probably higher. Every earnback timeline, every forfeiture ratio, every grace period and disclosure requirement in this proposed rule is open for public comment right now. Companies that file substantive comments backed by project-level economic data and specific alternative language will shape where those numbers land. Companies that don't will operate under a framework their competitors helped write."

How to Comment

Comments on PUCT Project No. 58481 are due April 17, 2026. File electronically via PUCT Interchange or mail to Central Records, PO Box 13326, Austin, TX 78711-3326. Reference Project Number 58481.

The PUCT requires comments to include a standalone executive summary with bulleted substantive recommendations. Public hearing requests are also due April 17.

Texas is telling the market: bring real projects and we'll give you a clear path. Bring speculative applications and you'll lose 80 cents on the dollar.