Money Down Before the Study: The Texas Commission's Large Load Interconnection Standards

In Texas, a large load must now put money down before it can be included in an ERCOT interconnection study. The Public Utility Commission of Texas adopted the rule that requires it, "new 16 Texas Administrative Code (TAC) §25.194, relating to Large Load Interconnection Standards," in a notice filed with the Secretary of State on September 18, 2026, and in effect from October 8, 2026. The rule "implements Public Utility Regulatory Act (PURA) §37.0561 as enacted by Senate Bill (SB) 6 during the Texas 89th Regular Legislative Session." Parts of the notice's opening paragraph and of the rule's text follow, not the whole. The commission's responses to written comments are not reported here, and neither are subsection (h), headed "Batch zero load.", which sets separate terms for such loads, and subsection (i), headed "2026 regional transmission plan compliance plan."

The notice sets out what the rule asks. Before a study, a large load customer must sign an intermediate agreement, make certain disclosures and post financial security of $50,000 per megawatt. The rule also requires it to sign a standard large load agreement, the SLLIA, update its disclosures, post financial security again and pay what the rule calls contribution in aid of construction, CIAC, "for direct interconnection costs." The notice adds, "The rule will be republished."

Who the rule covers

The rule reaches large load customers that had not energized when it took effect. For "a large load customer that seeks an expanded interconnection, this section applies to the incremental load addition." In its words, the section "applies to a large load customer that has not energized as of the effective date of this section and that seeks" one of these.

• "a new interconnection at a single site that is equal to or exceeds 75 megawatts (MW);"
• "an expanded interconnection at a single site that equals or exceeds 75 MW for the first time; or"
• "an expanded interconnection at a single site that exceeds 75 MW and is expanding by 75 MW or more; or"
• "to co-locate with a generation resource."

Before the study: an agreement, disclosures and money

Before a customer's request can go into a study, it must "execute and fund an intermediate agreement" with the interconnecting DSP and, where it is a different company, the interconnecting TSP. In the rule's definitions, DSP stands for distribution service provider and TSP for transmission service provider. The agreement comes with disclosures. Paragraph (1) of that subsection is headed "Required disclosures," and its subparagraphs carry these headings.

• "Demonstration of site control."
• "Substantially similar interconnection request."
• "Site-related studies and engineering services."
• "State and local regulatory milestones and approvals."
• "Schedule for phased energization of requested peak demand."
• "Water."
• "Backup generating facilities and on-site backup generating facilities."
• "Power supply."
• "Controllable load resource."

What each asks for is not reported here. Then comes the money. A study fee of $100,000 is paid to the interconnecting DSP or TSP "for transmission studies performed by the interconnecting DSP, the interconnecting TSP, and ERCOT, as applicable," and from 2032 the commission will adjust the $100,000 value "on January 1 every five years." ERCOT's protocols "may establish an additional flat study fee" as well.

The security is set per megawatt. It is $50,000 "per MW of the requested peak demand for new interconnection requests" or $50,000 "per MW of the incremental increase in the peak demand for expanded interconnection requests," and it must be posted "not later than the date that the intermediate agreement is executed." Under the heading "Inflation adjustment", the commission will also adjust the $50,000 value "on January 1 every five years," beginning in 2032. The utility "may accept only the following forms of financial security."

• "cash collateral to be held in a segregated, cash account bearing interest at a rate equal to at least the rate of the constant maturity one-month U.S. Treasury bill;"
• a guaranty, "only if the guarantor has a U.S. or international credit rating of at least" a grade the rule names at each of the rating agencies it lists; or
• "a letter of credit issued by a major U.S. commercial bank, or a U.S. branch office of a major foreign commercial bank, with a U.S. or international credit rating of at least" a grade named in the same way.

The security can be credited to equipment bought before a SLLIA is executed. For "significant equipment or services", which the rule defines as "equipment with a lead time of at least 18 months and services are those necessary to interconnect the large load customer," the utility "must credit the financial security" to their costs, and a customer whose security falls short "must post additional financial security for the difference". The rule then sets a limit, that "Notwithstanding this subparagraph, a large load customer must pay contribution in aid of construction (CIAC) in the form of a direct cash payment for significant equipment or services that meet the definition for direct interconnection costs. CIAC is not refundable."

Under this rule money goes down before the study as well as after it. For a developer, that moves part of the cost of a place in line to the front of the schedule, before anyone knows how much capacity the study will allocate.

Getting the money back, or losing it

What happens to the security depends on what the study allocates and on what the customer does next. The rule lists what outstanding amounts owed include, and that list is not reported here. Once they are collected, the utility "must return to the large load customer the remaining balance of financial security" in these cases.

• "the large load customer withdraws its requests for interconnection before ERCOT begins the interconnection study; or"
• "the large load customer is included in an interconnection study, is allocated zero MW across all study years by ERCOT, and withdraws its interconnection request before the deadline to execute a SLLIA that is set forth in subsection (f) of this section."

A customer that is allocated part of what it asked for, and withdraws before the deadline to sign a SLLIA, gets back less, because the utility "must subtract 20% of the financial security associated with the transmission capacity allocated by ERCOT" to it. One that is allocated part and signs a SLLIA "may opt to have financial security that the large load customer posted under an intermediate agreement either returned or credited by the interconnecting DSP or the interconnecting TSP, as described in subsection (f) of this section." Under that subsection the choice is made for "cash collateral", and a guaranty or a letter of credit is returned. And a customer that neither withdraws nor signs a SLLIA in time "is deemed to have forfeited any financial security that the large load customer posted under an intermediate agreement."

The standard agreement

The SLLIA has a deadline. A customer must sign and fund it "Not later than 60 days after ERCOT issues a study report that allocates transmission capacity," and post financial security again, "in an amount that is the greater of" these.

• "$50,000 per MW of the contracted peak demand; or"
• "the costs allocated to the large load customer for system upgrades as a result of a batch zero interconnection study or an interconnection study."

It "may be required to post additional financial security related to the large load minimum billing demand," which §25.193 of the rules describes and which is not reported here. A customer must pay all direct interconnection costs "through CIAC, with no standard or other allowance offered to offset the customer's CIAC payments." CIAC "must be paid in the form of a direct cash payment," it "must be trued-up to reflect the actual costs once the facilities are completed," and a customer "may receive a credit or surcharge on their bill, as applicable, for the difference in actual costs relative to the estimate." CIAC "is not refundable."

The security then comes back in steps. The utility "must return 20% of the remaining balance of financial security when the large load customer energizes and the remainder ratably in 20% increments as the large load customer meets the milestones identified in the customer's SLLIA for meeting its obligation to pay the large load minimum billing demand described in §25.193 of this title for the set period of time described in §25.193." The return is tied to the customer's own milestones.

When a schedule slips, or a disclosure is wrong

The schedule a customer signs up to carries money too. If a customer "fails, by 24 months, to satisfy a milestone in its schedule for phased energization, as described in the SLLIA at the time of execution," then, "Not later than 30 days after" that failure, the utility must notify ERCOT of the customer's "non-utilized capacity." The rule adds that "The 24-month period applies to the energization schedule as a whole, and not for each energization milestone individually." "Within 60 days of providing notice to ERCOT," and after the security has paid any amounts owed, the utility "must subtract 20% of the financial security associated with the non-utilized transmission capacity and then return the balance to the large load customer."

False information has a rule of its own. Subsection (j), paragraph (2), applies "If the information provided by a large load customer under this section or ERCOT Planning Guide Section 9, as of the effective date of this section, is determined to be false or inaccurate or if the accuracy or completeness of the information cannot be verified through supporting documentation".

• "the large load customer may be deemed to have forfeited any financial security that the large load customer posted under this section or ERCOT Planning Guide Section 9, as of the effective date of this section; and"
• "any transmission capacity allocated to the large load customer may be reallocated by ERCOT in a future interconnection study and in a manner consistent with ERCOT protocols."

The rule ties the money to the schedule a developer writes into the agreement. Where a plant is being built to serve the load, that schedule rests on the plant's dates as much as on the data center's.