PUCT Approves “Batch Zero” Framework That Will Provide A Pathway For Large Load To Connect To The Grid And Receive Electricity

On June 18, 2026, the Public Utility Commission of Texas (PUCT) approved two Electric Reliability Council of Texas (ERCOT) protocol revisions that establish a new “batch” study interconnection framework for large electricity loads of 75 MW or greater. The prior project-by-project approach had generated a growing backlog of unresolved requests, repeated restudies, and prolonged uncertainty in the face of unprecedented growth in large load interconnection requests. The new framework resolves that by delivering a structured, time-bound process with binding interconnection capacity megawatt (MW) allocations expected by April 2027, meaningful optionality in how qualifying large loads structure their interconnection rights, and formal accommodations for co-located and onsite generation arrangements that allow the reduced capacity needs at those interconnections to be reflected in the study process.

The change was compelled by the scale of demand as ERCOT is tracking more than 438,000 MW of large-load requests, with nearly 89% originating from data centers. The new “Batch” process will group qualifying loads into a single, system-wide study designed to allocate available transmission grid capacity and identify the transmission upgrades needed to serve that load reliably. Batch Zero is the first cohort of qualifying loads to be evaluated under the new framework. ERCOT intends to implement an ongoing batch study process through a separate future protocol revision. Critical eligibility and election deadlines for large load to be included in Batch Zero fall on July 10 and July 24, 2026.

Study process:

As approved, Batch Zero is implemented in two phases. First, a system-wide steady-state and stability screening study will produce Year 1–6 MW allocations communicated to each Interconnecting Large Load Entity (ILLE) via its Transmission Service Provider (TSP) or Distribution Service Provider (DSP), with results expected April 9, 2027. The second phase will consist of a refinement study that will identify recommended transmission improvements, cost estimates and alternatives for review by the Regional Planning Group (ERCOT's stakeholder body responsible for reviewing proposed transmission projects) by June 1, 2027. A final transmission plan is expected in Fall 2027.

Key features of the Batch Zero framework include:

• Three eligibility categories. Each large load is classified as (1) “Base Load” — loads meeting specified commitment criteria by July 10, 2026, that are modeled in the study, but not subject to further reliability evaluation or MW allocation; (2) “Studied/Allocated Load” — loads meeting specified criteria, including evidence of site control, posted financial security and a notarized attestation by July 24, 2026, which are subject to reliability assessment and MW allocation; or (3) excluded, meaning the load may not receive Initial Energization approval until evaluated in a future batch process.
• Two-tier operational rights for Studied Loads. The Batch Zero Interconnection Study will produce two key outputs for each Studied Load: (1) a Low Power Consumption (LPC), representing the maximum MW the load may draw from the ERCOT grid on a firm basis with no dispatch or curtailment obligation, and (2) a Maximum Power Consumption (MPC), set at the load’s full desired peak demand. A Studied Load that does not elect PCLR or WLPUN treatment (defined below) by July 10, 2026, is capped at its LPC. Accessing capacity between LPC and MPC requires either a PCLR election (accepting dispatch obligations) or a WLPUN election (pairing with onsite generation).
• Provisional Controllable Load Resource (PCLR) pathway. A PCLR may energize above its LPC up to its MPC, but in exchange must follow ERCOT security constrained economic dispatch instructions at all times, including instructions to curtail consumption. ERCOT does not guarantee delivery at MPC in real-time, and actual power served may fall below MPC based on grid conditions. PCLR obligations automatically transfer to an acquiring entity in any M&A or project finance transaction, and transaction documents should account for this. Only Studied Loads may elect PCLR treatment, and election requires a completed and notarized Form W Part A delivered to the Interconnecting DSP/TSP by July 10, 2026, and submitted to ERCOT by July 24, 2026.
• Withdrawal-Limited Private Use Network (WLPUN) pathway. A WLPUN pairs a Large Load with onsite or co-located generation at a single point of interconnection (POI), allowing the load to access capacity above its LPC by offsetting grid demand with onsite supply. The load is subject to an ERCOT-determined MW withdrawal limit at the POI at all times. Critically, a WLPUN may only be dissolved after ERCOT issues written confirmation that all necessary transmission facilities have been energized; parties cannot unilaterally exit the structure. Only Studied Loads may elect WLPUN treatment, and election requires an executed Form X signed by both the ILLE and the Interconnecting Entity or Resource Entity (the entity owning or operating the co-located generation resource), delivered to the Interconnecting DSP/TSP by July 10, 2026, and submitted to ERCOT by July 24, 2026.
• Financial security and cost recovery. ILLEs must post financial security for system upgrades necessary to reliably serve the load, as determined by the Interconnecting DSP or TSP. If no system upgrades are required, no financial security is required. In the event specific upgrade costs cannot be determined, a base rate of $50,000/MW will serve as the default. All direct interconnection costs must be paid in cash through Contribution in Aid of Construction (CIAC), with no offset allowed. Interconnecting DSPs/TSPs may not recover these costs under PUCT-regulated rates. If an ILLE withdraws load or misses phased energization milestones by six months, 20% of remaining financial security (after incurred costs) is refunded to the ILLE and 80% is applied to the Interconnecting TSP’s rate base. If the ILLE energizes, 20% of the remaining balance is refunded at energization and ratably as phased milestones are met, with any remaining balance refunded after five years of sustained operations at contracted peak demand. CIAC is non-refundable in all cases.

ERCOT will notify ILLEs of their project classification in August 2026.

Texas has put this process on a fast track and has identified the following key dates:

• July 10, 2026: ILLEs to deliver dynamic data to ERCOT and Form W Part A (PCLR election) and Form X (WLPUN election) to Interconnecting DSP/TSP.
• July 11, 2026: Batch Zero and WLPUN provisions take effect.
• July 24, 2026: All Batch Zero eligibility submissions due from Interconnecting DSP/TSP to ERCOT.
• August 7, 2026: ERCOT issues project classification notices and notifies ILLEs of deficient dynamic data.
• August 31, 2026: Deadline to cure deficient dynamic data or be removed from the Batch Zero Interconnection Study.
• April 9, 2027: ERCOT delivers Batch Zero Interconnection Study report and updated Load Commissioning Plans with MW allocations; 30-day interconnection agreement window opens.
• June 1, 2027: ERCOT delivers Batch Zero transmission plan to the Regional Planning Group.

Please do not hesitate to contact the Sheppard Energy and Infrastructure team with any questions. The Sheppard team will continue to monitor ERCOT and PUCT developments and is available to assist with eligibility determinations, PCLR and WLPUN elections, interconnection agreement negotiations and any M&A or project finance considerations arising from these new requirements.

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