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Editor’s Note: The following guest commentary reflects the views and opinions of the author alone and does not necessarily represent the official views of Texas Policy Research, its staff, board, or affiliated organizations. Guest submissions are lightly edited for grammar, formatting, clarity, and length while preserving the author’s voice and arguments.
Hurricane season will soon be upon us. During Hurricane Beryl in 2024, more than 2.5 million Texas electric customers lost power, affecting more than six million Texans. More than a quarter-million customers were still without power after a week. Texans once took reliable electricity for granted. They no longer do.
The concern isn’t limited to storms anymore. Texas is also facing historic electricity demand growth. ERCOT has received more than 400 GW of large-load interconnection requests, roughly five times ERCOT’s all-time peak demand. At the same time, the North American Electric Reliability Corporation (NERC) has classified ERCOT as “high risk” for future loss-of-load events. Reliability alone is difficult. Massive new load growth alone is difficult. Texas now has to manage both.
But Texas should not have to choose between reliability and growth. We want dependable power for families, and we want the jobs, investment, tax base, and technological leadership that come with new industries such as data centers. The question is how to welcome that growth without forcing ordinary Texans to bear unnecessary risks and costs.
Data centers move at software speed. The regulated electricity sector moves at infrastructure speed. Data center developers are entrepreneurial, decentralized, and fast. The traditional electricity sector is centralized, procedural, and deliberate. If Texas wants to remain the best place in America to build, it needs a new electricity pathway that can move closer to the speed of the industries it hopes to attract.
U.S. Energy Secretary Chris Wright recently put the contrast plainly at a Cato Institute event: we would not have had a shale revolution if oil and gas had been organized like the electricity sector. The shale breakthrough did not come from the largest incumbents or a central plan. It came from outsiders testing unconventional ideas, most of which failed — until a few worked. Over the last two decades, Wright noted, U.S. oil production has roughly tripled and natural gas production has roughly doubled, while electricity production has grown only about 10 percent. Texas should ask the obvious question: what would it take to bring shale-style experimentation to electricity?
One answer is off-grid business power. Texas should create a clear parallel path for new electric systems that serve commercial and industrial customers without relying on the regulated grid. These systems would not serve residential consumers. They would not be connected to a regulated utility. And they would not place their costs on captive ratepayers.
The Legislature can make that path simple: electric systems that are physically separate from a regulated grid or utility, and that do not serve residential customers, should not be regulated as public utilities. They should remain subject to generally applicable safety, environmental, land-use, and contract laws. But they should not be forced into a regulatory model designed for utilities that serve homes, schools, hospitals, and small businesses.
This is not a subsidy, mandate, or bailout. It is a clear legal framework allowing sophisticated businesses to meet extraordinary power needs through private capital, private contracts, and private risk. If a data center wants extraordinary amounts of electricity, Texas should let it bring its own power — but families and small businesses should not automatically bear the cost risk of infrastructure built primarily to serve a small number of very large new loads.
The benefits would extend beyond data centers. Every megawatt of demand served off-grid is a megawatt that does not have to be fit into ERCOT, MISO, SPP, or a regulated utility’s rate base. That gives the Public Utility Commission, ERCOT, utilities, co-ops, and municipal providers more room to focus on their core mission: affordable and reliable service for Texans.
It will not be easy. Off-grid electricity developers will have to be wildly innovative to succeed. That is one of the best reasons to try. Texas became an energy leader by allowing private risk-taking, technical experimentation, and competition. Electricity needs the same kind of entrepreneurial opening that helped unlock the shale revolution. Off-grid business power would let Texas test new technologies, new commercial models, and new system designs without gambling with the existing grid. The best ideas could eventually inform ERCOT and the regulated utilities. Even incumbent utilities could participate by creating unregulated affiliates to compete in this new market.
This proposal does not replace ERCOT or the other grids. It complements them. Texas’s regulated grids remain vital to the health, safety, and prosperity of our state, and they must be improved. But the Legislature can help them by giving large new loads another path. Let the regulated grid focus on reliable service for households and existing customers, while private capital helps meet extraordinary new industrial demand. Texas can protect families, welcome growth, and spark the next generation of energy innovation.
About the Author: Glen Lyons has over 40 years of energy experience, including 37 years at ExxonMobil across multiple business areas. Before retiring in 2022, he led ExxonMobil’s U.S. electricity policy and regulatory advocacy and served three years as a member of the ERCOT Board of Directors. Since retiring, he has focused on developing and advancing better electricity policy. He is the founder and chief advocate of Advocates for Consumer Regulated Electricity (ACRE), an informal association.
Readers can learn more about Glen Lyons here.
Disclosure: The author is the founder of Advocates for Consumer Regulated Electricity (ACRE), an informal association engaged in the electricity policy issues discussed in this commentary. He reports no financial interest in the outcome and is not a registered lobbyist.
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