Dear Chairman King, Vice-Chair Hernandez, and distinguished members of the committee:

Thank you for the opportunity to comment on this important issue. The Cato Institute is a nonpartisan public policy research organization dedicated to the principles of individual liberty, limited government, free markets, and peace. At Cato, my research focuses on the role of free markets in improving the availability and affordability of energy and natural resources.

Texas leads the nation in data center growth, with hundreds of facilities operating, under construction, or planned. This growth could bring significant economic benefits, including large capital investments, tax base expansion, and new jobs across supply chains supporting manufacturing, energy infrastructure, and telecommunications. 

Growth also creates the impetus for expanding microgrids and distributed energy resources as parallel pathways to meet unprecedented new demand. Consumer-Regulated Electricity (CRE) is one framework that can help address this challenge while keeping the broader grid reliable and affordable. CRE is a permissionless approach to growth that could streamline the rapid construction of new data centers without impacting the cost or quality of electric utility service for Texans.

The State Affairs Committee was tasked with examining these issues. The March 2026 charge with respect to data centers was, in part, to “[r]eview the existing regulatory framework governing data center development and recommend proposals to streamline regulations while enabling communities to plan and manage growth responsibly.”

CRE would streamline regulations while managing growth responsibly—without raising costs or reducing reliability for residential ratepayers in Texas. CRE utilities would generate, transmit, and sell electricity directly to customers under voluntary contracts without interconnecting to the existing grid or seeking permission from regulators. It offers “speed to power” for large, new customers and certainty for existing customers.