The 20% Walkaway: Who Pays When a Texas Data Center Never Shows Up

October 2026

📘 Summary

Texas has spent two years promising that data centers will "pay their own way" for the grid. Senate Bill 6, signed in 2025, made that the law's guiding idea, and on Sept. 18, 2026 the Public Utility Commission adopted the rule that turns it into dollars: what a large power user has to put up before it can reserve a place on the ERCOT grid, and what it loses if it leaves.

The headline number sounds tough: $50,000 per megawatt in financial security, or $50 million for a 1-gigawatt campus. The number that matters more is smaller. A project that is allocated grid capacity and then walks away forfeits 20% of the security tied to that capacity. The rest comes back, minus whatever it already owes the utility.

That matters because ERCOT's queue of large-load requests is now several times the size of the entire Texas grid, and nobody, including ERCOT, knows how much of it is real. Here's what the new rules require, what a walkaway actually costs, and where the risk still lands on everyone else's bill.

• What changed: A $100,000 study fee plus size-tiered study charges, and $50,000 per MW of security posted before the interconnection study.
• The walkaway rule: 100% back if a project leaves before the study starts; 20% forfeited if it leaves after ERCOT allocates it transmission capacity.
• The softening: An earlier draft would have kept 80% of a departing project's remaining security. Developers pushed for 20%, and got it.
• The open question: The security follows a project's direct costs. The big shared lines planned around the whole queue are a different, much larger bill.

🔌 What the New Rules Require

The rule applies to "large loads" of 75 megawatts or more, the threshold set by SB 6. Most new data center campuses clear it easily. According to a summary of the final rule by the law firm White & Case, a project now faces these costs and conditions:

Credit where it's due: tying the security to a project's allocated upgrade costs, when those are higher than $50,000 per MW, is a real protection. If a utility builds a substation for one campus and the campus vanishes, the utility has money to draw on.

🧮 The Walkaway Math

Here is what the minimum security and the 20% forfeiture look like at common project sizes. These are our calculations from the rule's per-megawatt figures, using the $50,000 floor.

For a sense of scale: the Dallas Fed's Srini Ramaswamy recently put AI data center construction costs at roughly $30 billion to $40 billion per gigawatt, as our Oct. 8 briefing reported. Against that, a $10 million exit cost on a 1-GW reservation is about 0.03% of the project. It's a speed bump, not a wall.

Developers argued for exactly this. In comments reported by Latitude Media in March, they called the original 80% forfeiture a penalty unrelated to actual system costs and proposed 20% instead. Google and Lancium proposed capping the non-refundable portion at $6.5 million, applied only after a study shows a project is viable. Monarch Energy noted that a 500 MW project would need $25 million just to learn whether the grid could serve it. Those are fair points about cash flow. They are also an argument that walking away should stay cheap.

👻 Why "Phantom Load" Is the Real Problem

The forfeiture rate matters because of how crowded and speculative ERCOT's queue has become:

Roughly 90% of those requests are data centers. Utilities and grid operators say many are speculative "phantom" requests: developers filing at several sites to see which one moves first, or landholders filing to make a property more valuable. Latitude Media reported that industry experts suspect hyperscalers file multiple requests at once and then see which ones move forward. Load requests have no standard transparency rules, so the real share can't be measured from the outside.

That's why ERCOT moved to a batch study, where it reviews many projects at once to plan transmission for the whole picture rather than one site at a time. It's also why Gov. Abbott ordered an audit in August, and why ERCOT's Batch Zero study has been paused until that audit is done. A batch study is only as good as the batch. If a large share of the megawatts in it never get built, the transmission plan built around them is too big, and someone pays for the difference.

⚖️ How Texas Compares

Texas isn't the toughest market on this question. It isn't even the toughest utility in Texas.

• Virginia: Dominion Energy's tariff for large loads requires about $1.5 million per MW in collateral, according to Latitude Media. That's 30 times the Texas floor. For a 1-GW campus, it's $1.5 billion.
• The Texas Panhandle: Outside ERCOT, Xcel Energy has asked the PUC to approve its own large-load tariff. Data centers would pay for the transmission, substations and new generation built for them, sign commitments of at least 15 years, pay minimum monthly bills while their use ramps up, and owe exit charges if they leave early, RFD-TV reported. We wrote about the non-ERCOT parts of Texas in our Oct. 8 briefing.
• ERCOT: A one-time security deposit with a 20% forfeiture, and no long-term minimum bill or exit fee written into the statewide rule.

The difference reflects Texas's competitive market. In most of ERCOT, the company that builds the wires isn't the company that sells the power, so there's no single utility tariff to load up with long-term commitments. Analysts quoted by Latitude Media also noted that deal terms in that market are often confidential, which makes ratepayer protections harder to verify.

💸 Who Pays for What's Left

Here's the gap the rule doesn't close. The security covers a project's own upgrade costs. But the most expensive part of the buildout is shared: the regional lines planned because of total forecast demand, including the 765-kilovolt backbone that Oncor, CenterPoint and AEP Texas are building across rural Texas. Those costs go into utility rate bases and are recovered from every customer on the system.

If phantom load inflates the forecast, the shared build gets bigger. When a project that helped justify it walks away, its 20% forfeiture goes to the transmission provider to offset rate base, as Latitude Media described the proposal. That helps. It doesn't come close to covering a line sized for demand that never showed up. How much of a departed project's share of regional upgrades could be charged back to it isn't spelled out in the rule summaries we reviewed. That's a question regulators should answer in public.

Meanwhile, the money for the boom is still flowing freely. The Dallas Fed estimates about $200 billion in investment-grade bonds have been issued this year to finance the AI buildout. Ramaswamy said local resistance may be slowing timelines a bit, but financing in the capital markets is still "foot on the gas pedal." When capital is that easy, a $10 million exit cost won't change many decisions.

🧭 What Texans Should Be Watching

• ERCOT's audit report. ERCOT's report to the PUC, due Dec. 10, should show how many queued megawatts survived scrutiny. The gap between 474 GW requested and what passes is the clearest measure of phantom load we're likely to get.
• The Xcel tariff. If the PUC approves minimum bills and exit fees for the Panhandle, ask why ERCOT customers don't get the same protections.
• The 2027 Legislature. Sen. Judith Zaffirini told KPRC 2 she's drafting a bill to create a separate electric rate class for data centers, as our Oct. 8 briefing reported. A separate class is one way to make sure shared grid costs follow the customers who drove them.
• Transmission cost allocation. SB 6 rulemaking includes a separate track on how transmission costs are divided. That docket, not the interconnection rule, will decide most of what households pay.

🧾 Conclusion

The PUC's rule is a real step. It puts a price on reserving grid capacity, ties the deposit to direct upgrade costs, and gives utilities something to draw on when a project fails. But at 20%, walking away from a gigawatt reservation costs less than a rounding error on the project's budget, in a queue where most of the megawatts may never arrive. The deposit protects the substation. It doesn't protect the regional grid that's being planned around those megawatts, and that's the part every Texan pays for.

For more analysis on Texas energy and AI, visit PowerGrabTX.com.