Texas Energy Market Report - June 28, 2026

What we are watching today

• Data center expansion driving grid and water planning challenges in Texas
• ERCOT and PUCT advancing new protocols for energy request vetting
• Natural gas production in Permian Basin outpacing crude oil

Headlines and what they mean

Hundreds of data centers are coming to Texas. Here’s what you need to know.

Texas is on track to host hundreds of new data centers, driven by low electricity costs, abundant land, and strong digital infrastructure. According to the Texas Tribune, this surge is prompting grid operators and regulators to reevaluate how energy demand is assessed and approved. The scale of this development is unprecedented and could strain existing transmission capacity, especially in West Texas and the Panhandle. For commercial buyers, this signals a shift toward tighter grid constraints and potential long-term rate volatility, particularly during peak summer months. source

Texas leaders are asking data centers how much water they use. Most aren’t responding.

Water use is emerging as a key regulatory and environmental concern. The Texas Tribune reports that state officials have sent surveys to data center operators requesting water consumption data, but many have not responded. This lack of transparency raises risks for permitting and long-term operations, especially in drought-prone regions. For energy buyers, this underscores the importance of evaluating not just power availability but also water footprint and regulatory compliance when selecting sites or suppliers. source

As data centers seek to tap Texas’ energy, grid regulators are close to approving a new way of vetting requests

The Public Utility Commission of Texas (PUCT) is nearing approval of a new framework to evaluate data center energy requests. This system will assess not only technical feasibility but also environmental impact, water use, and grid stability. The move reflects growing concern that unvetted data center growth could compromise ERCOT’s reliability, especially during summer peaks. For commercial energy buyers, this means that future power contracts may be subject to stricter vetting, making early contract execution and long-term planning essential. source

Permian natural gas production increased faster than crude oil

According to the EIA, natural gas production in the Permian Basin has outpaced crude oil output in June 2026. This trend reflects the region’s shift toward gas-heavy drilling and the growing role of natural gas as both a feedstock and a power generation fuel. For Texas businesses, this reinforces the importance of natural gas price tracking, particularly for facilities with gas-fired generation or those exposed to wholesale power prices tied to gas. source

Deployable reserves shrinking as coal, gas forced outage rates rise: NERC

NERC reports that forced outage rates for coal and gas plants are increasing, reducing the pool of available reserve capacity. This trend is particularly concerning for ERCOT as it approaches summer peak demand. With data center growth adding new load and aging infrastructure under strain, the risk of supply shortages during heat events is rising. Commercial buyers should prioritize contracts with firm delivery and reliability guarantees. source

Texas landowners seek pause in $2B, 765-kV transmission line case over notice concerns

Landowners in Texas are challenging the PUC’s approval of a major transmission line project, citing inadequate notice and due process. The case, involving Oncor and LCRA, could delay critical grid upgrades needed to support data center and renewable development. For energy buyers, this highlights the growing risk of project delays and the importance of monitoring transmission planning timelines. source

The Texas angle

The convergence of data center growth, grid strain, and regulatory scrutiny is reshaping Texas energy markets. With summer approaching and ERCOT’s 4CP season looming, commercial buyers must act now to secure stable, predictable rates. The new vetting framework for data centers will likely increase demand pressure on the grid, while rising natural gas production and forced outages signal volatility. Long-term contracts—especially fixed-rate or block & index agreements—can help mitigate these risks.

What to do this week

• Review your current energy contract’s terms for flexibility, reliability, and duration. Consider extending or locking in rates before summer peak demand.
• Request a free Energy Health Check from United Power Group to assess your exposure to grid volatility and data center-driven demand shifts.
• Evaluate your facility’s water use profile and prepare for potential reporting requirements tied to new state-level data center regulations.
• Engage with your TDSP (Oncor, CenterPoint, AEP Texas, TNMP) to understand transmission project timelines and potential capacity constraints.
• Explore fixed-rate or block & index contracts through UPG’s 30+ supplier panel to hedge against rising wholesale prices.

Bottom line

Texas is at a pivotal moment in its energy evolution. The data center boom is driving unprecedented demand growth, while grid reliability, water use, and transmission planning are under intense scrutiny. For commercial energy buyers, the window to secure stable, long-term power is narrowing. Proactive contract management and early engagement with trusted procurement partners like United Power Group are essential to maintaining cost control and operational resilience in an increasingly complex market.