Data Centers: Facts, Questions, and CoServ’s Commitment to Members

CoServ does not own transmission assets, and how they connect to those assets is governed by the legislature, PUC, and ERCOT. Currently, w The wholesale power supply serving the data center will be isolated to eliminate member exposure.

CoServ, along with all other electric distribution utilities, has a service area assigned by the PUC. As a result, we are obligated to provide electricity in that service area. If a data center approaches CoServ, we would work through the appropriate planning, engineering, regulatory, and contractual processes to determine how service could be provided while protecting our existing Members.

If CoServ serves new large-load developments, including hyperscale data centers, the expectation is that the customer would pay in advance for the costs associated with the infrastructure needed specifically to serve its facility. In doing so, it prevents those costs from being shifted to existing Members.

Not if structured appropriately. If CoServ serves new large-load developments, including hyperscale data centers in the future, it will ensure that the costs of serving this type of facility are borne by that customer rather than existing Members. Any future service arrangement would be evaluated with Member protection as a primary consideration.

A data center facility can provide additional revenue that supports the cooperative. When costs are properly assigned to the customers who create them, additional electricity sales can help spread fixed system costs across a larger volume of energy sales, creating financial benefits for the cooperative and its Members over time.

Protecting reliability will remain CoServ's top priority. Any request from a data center customer would undergo extensive engineering and planning review to ensure that CoServ can continue to provide reliable service to existing residential and business Members.

Multiple entities play a role. Certain aspects of large-load interconnections are governed by ERCOT, the Public Utility Commission of Texas (PUCT), transmission providers, and state regulations.

CoServ has signed the National Ratepayer Protection Pledge, which reflects our commitment to ensuring that the costs associated with serving large-load customers are not unfairly shifted onto existing residential and small-business consumers.

Data centers have become a major topic in statewide and national conversations about electricity demand. While CoServ serves a variety of commercial and industrial facilities, including some that may be considered data centers, we want Members to understand how we would approach any future obligations and the safeguards we would put in place to protect Members.

CoServ's objective would be to structure power supply arrangements to protect existing Members. If CoServ were to serve new large-load developments, including hyperscale data centers in the future, power supply arrangements would be evaluated and designed to minimize Member exposure and maintain reliable service for homes and businesses already connected to the system.

However, the estimated power needed to run data centers is significantly more than the current power capacity in Texas. Additional power supply will be needed in ERCOT if the anticipated data center load materializes. ERCOT, the PUC, and the Texas legislature are working to address new power supply capacity for ERCOT, and Governor Abbott has proposed legislation requiring data centers to add capacity to the grid. While existing data centers have not impacted the cost of power in ERCOT at this point in time, new generation capacity will need to be built as these loads connect to ensure supply and demand remain balanced and energy prices are not negatively impacted.

ERCOT has identified data centers as one of the largest contributors to future electricity demand growth in Texas. Other sources of growth include oil and gas operations, industrial and cryptocurrency loads, and ongoing population growth in Texas.