Texas Large Load Interconnection Update: ERCOT Batch Zero Pause And Verification Process

At its August 14 open meeting, the Public Utility Commission of Texas (Commission) discussed ERCOT’s implementation of Governor Abbott’s August 3 directive, which requires verification of all data centers advancing through ERCOT’s large load interconnection process before they can proceed.

The Governor’s August 3 directive requires the Commission and ERCOT to conduct a comprehensive verification and audit of all data centers advancing through ERCOT’s large load interconnection process, including collection of information regarding grid and water usage, public financial assistance, onsite generation, community impacts, and project ownership.

ERCOT filed a request for Good Cause Exceptions (GCEs) on August 10, relying on 16 TAC § 25.3(b) to excuse its obligation under 16 TAC § 25.361(b)(16) to perform certain duties required by ERCOT rules, including the newly approved Batch Zero process in Planning Guide § 9. In response to the Governor’s directive, ERCOT has paused Batch Zero classification and study activity and stated it will not authorize large computational loads (LCLs) (i.e., data centers and virtual currency mining facilities) to energize until verification is complete. ERCOT therefore did not issue the August 7 Batch Zero classifications required by Planning Guide § 9.3.1(2)(a), creating regulatory and schedule uncertainty for developers, investors, and financing parties. ERCOT expects the verification process to take several months.

The Commission did not act on ERCOT’s pending requests and is expected to consider them at its August 20 open meeting.

I. Two Distinct Verification Workstreams

ERCOT indicated that it is implementing the Governor’s directive through two distinct workstreams: (1) a Batch Zero eligibility verification (Batch Zero Audit) applicable to all large loads seeking to advance through Batch Zero; and (2) a separate community impact information collection effort (Community Impact Audit) applicable to computational loads 25 MW and greater.

1. Batch Zero Audit (Large Loads ≥ 75 MW)

If your project has expected demand of 75 MW or more and was submitted for Batch Zero, you are subject to the Batch Zero Audit. This audit is intended to verify the factual basis for the attestations supporting your project’s Batch Zero eligibility.

Planning Guide § 9.1(8) authorizes ERCOT to request supporting documentation for interconnecting large load entity (ILLE) attestations and perform site-readiness verification through April 9, 2027. ERCOT had planned to conduct verification in parallel with the Batch Zero Study, but the Governor’s directive changes the sequencing by making verification a prerequisite for classification.

For the Batch Zero Audit, ERCOT plans to issue requests for information (RFIs) to ILLEs through their transmission and/or distribution service providers (TDSPs) to verify the attestations supporting Batch Zero eligibility. We encourage you to reach out if you have a project that may be subject to the Batch Zero Audit to discuss what additional submissions may be required.

If ERCOT identifies information inconsistent with an attestation, you will receive notice and a reasonable opportunity to explain the inconsistency. ERCOT has emphasized that it will remove a project from Batch Zero if it determines the attestation was materially false or the ILLE fails to respond within the specified time.

2. Community Impact Audit (Computational Loads ≥ 25 MW)

If your data center or mining project has expected demand of 25 MW or more and has not yet energized, regardless of whether you are part of the Batch Zero Process, it is subject to the Community Impact Audit. This is a separate information collection covering public financial assistance, grid and onsite power supply, electricity and water consumption, cooling technology, community mitigation measures, and project ownership.

ERCOT intends to use the Community Impact Audit to provide the Commission, Governor, and Legislature with information to inform potential future policy and legislative considerations.

The Community Impact Audit should not be conflated with Batch Zero eligibility or the Batch Zero Audit. ERCOT’s August 10 filing does not identify community impact responses as a separate Planning Guide § 9.2.1 eligibility test; a failure to respond will instead be reflected in ERCOT’s report to the Commission.

3. Summary: Which Audit Applies to Your Project

As currently described, the two workstreams apply as follows for interconnecting loads:

• Large Computational Loads (≥ 75 MW) (LCLs) seeking interconnection through the Batch Zero process are subject to both the Batch Zero Audit and the Community Impact Audit.

• Large Non-Computational Loads (≥ 75 MW), seeking interconnection through the Batch Zero process such as an industrial or manufacturing facility, are only subject to the Batch Zero Audit.

• Medium Computational Loads (≥ 25 MW but < 75 MW) (MCLs) seeking interconnection but not yet energized are only subject to the Community Impact Audit.

II. ERCOT’s Pending GCE Request

ERCOT is seeking three Batch Zero process-related GCEs to manage the impacts of front loading the Batch Zero verification process.

1. Classification. First, ERCOT seeks relief from the August 7 deadline in Planning Guide § 9.3.1(2)(a) for classifying large loads for Batch Zero.
2. Quarterly Stability Assessments. Second, ERCOT seeks authority to deviate from Planning Guide § 5.3.5(5)(a)(ii) to allow large loads submitted as Base Load, that ERCOT has determined are eligible to qualify as Base Load but has not formally classified, and that meet all other QSA criteria to participate in the August and November QSAs. ERCOT identified six (6) large load projects expected to participate in the August QSA based on projected January through March 2027 energization dates and seventeen (17) potentially eligible for the November QSA based on projected April through June 2027 energization dates.
3. Dynamic Data. Third, ERCOT was unable to complete review of all dynamic data submissions by the August 7 deadline in Planning Guide § 9.2.2(3)(a). ERCOT therefore seeks authority to notify ILLEs of deficiencies after August 7 and, for any ILLE notified after that date, to preserve the same 24-day cure period measured from the date of actual notification.

III. Implications for Projects With Near-Term Energization Dates

At the August 14 open meeting, ERCOT identified six (6) projects to be energized in the first quarter of 2027 and associated with the August QSA and potentially seventeen (17) to be energized in the second quarter of 2027 associated with the November QSA. The QSA exception is intended to prevent ERCOT’s delayed classification from automatically foreclosing early-2027 energization schedules. Under Planning Guide § 5.3.5, the August QSA corresponds with January through March 2027 Initial Energization; the November QSA corresponds with April through June 2027.

QSA participation does not constitute Base Load classification and does not authorize energization. A large load in the August or November QSA may energize only after ERCOT’s verification confirms Base Load eligibility and all other energization conditions are satisfied.

ERCOT’s QSA exemption request addresses projects targeting Initial Energization in the first half of 2027. It does not provide an equivalent bridge for a large load with an earlier energization date that has already completed the applicable QSA.

For projects with later energization dates (second half of 2027 or later), the immediate QSA consequence is less acute, though verification, classification, study, and downstream milestone timing remain relevant to overall schedules.

IV. July 24 Project Good Cause Exceptions

ERCOT issued a Market Notice on July 23 allowing ILLEs to submit a GCE request to ERCOT if the ILLE was unable to demonstrate strict compliance with all eligibility criteria. ERCOT received 41 requests on July 24 from ILLE’s seeking an exception to Batch Zero eligibility requirements. In its GCE filing, ERCOT stated the following about those ILLEs that submitted requests:

1. Twenty-one of 41 requests ERCOT received were from ILLEs seeking a GCE from the qualifying interconnection study. ERCOT stated that it will not submit those GCE requests to the Commission because ERCOT expressly excluded the qualifying interconnection study from the GCE process. Therefore, those ILLEs will be ineligible for inclusion in Back Zero unless they are separately eligible for classification as studied load.
2. ERCOT will also not consider GCEs from the July 10 deadline for an ILLE to submit dynamic models.
3. The remaining GCE requests¹ will be part of ERCOT’s verification and audit and ERCOT is evaluating each request to determine whether to seek an exception from the Commission (those GCEs will be addressed in another filing).

V. Documentary Readiness

ERCOT and the Commissioners emphasized at the August 14 open meeting that the timing of the verification process will depend materially on the promptness, completeness and accuracy of ILLE responses. Batch Zero projects should therefore ensure that their records are organized and readily support the specific Planning Guide § 9.2.1 eligibility pathway claimed, including the applicable qualification date, project MW, study status, site control, financial security, agreements, ownership, and other material information. ILLEs should also compare their July 10 submissions against the materials submitted by the interconnecting TDSP on July 24 and address any gaps, inconsistencies, or changed facts. LCLs and MCLs subject to the separate Community Impact Audit should similarly prepare the requested information concerning ownership, power supply, public financial assistance, water use, cooling technology, and community mitigation, while ensuring consistency across the two verification workstreams and appropriately protecting commercially sensitive information.

Projects with near-term energization, financing, construction, or contractual milestones should also identify the remaining ERCOT and TDSP approvals on their critical path and assess whether project-specific completion of verification could allow them to resume the next applicable interconnection step before the broader review concludes. For Studied/Allocated Loads, the process will continue beyond the April 9, 2027 Batch Zero Study deadline: projects accepting their allocated Demand must satisfy the subsequent commitment requirements under Planning Guide § 9.3.1(2)(c), including applicable interconnection agreement and security requirements. Because the Commission’s implementing rule in PUCT Project No. 58481 remains pending, the final post-study agreement, security, and timing requirements remain subject to Commission action.

VI. Legal and Procedural Considerations

ERCOT’s pause and requested GCEs create important project-specific legal and procedural issues that may materially affect Batch Zero classification, verification, financing, and energization strategy. The Commission’s eventual order should clarify, among other things, that the verification process remains anchored to the Commission-approved PGRR145 framework; that projects are evaluated under the Planning Guide § 9.2.1 criteria and qualification dates applicable to their original submissions; that existing notice, dispute, cure, and financial security protections are preserved following post-verification classification; and whether projects that complete verification may resume the applicable interconnection process without waiting for completion of the broader audit.

These issues will not affect every project in the same way. Developers, investors, lenders, utilities, and other stakeholders with existing or prospective large load projects should evaluate how the verification process interacts with their particular eligibility pathway, project record, contractual milestones, financing requirements, and planned energization date. Baker Botts is actively advising clients on Batch Zero eligibility and verification, ERCOT and TDSP engagement, project-specific responses to the audit process, and strategies for preserving interconnection and energization timelines. We encourage developers and investors with questions regarding the impact of ERCOT’s pause or the evolving Commission process on a particular project to contact us.

****

The August 20 open meeting will provide additional detail regarding verification scope, mechanics, and timing, and the Commission is expected to consider ERCOT’s three pending GCE requests. Commission action will determine when Batch Zero classification and study activity can resume, how the pause affects QSA participation, whether the April 9, 2027 deadline remains achievable, and the implications for downstream planning and individual project schedules.