Demand for digital infrastructure has not changed. The path to building it may have. This alert describes the landscape that developers, hyperscalers, utilities, and investors now face in Texas, Ohio, and Georgia, three of the most active markets for data center development, and explains how to navigate that new landscape.

Texas

Many developers had expected Governor Abbott’s data center restrictions to be eased after the election. That expectation may no longer be valid. Democrat Gina Hinojosa defeated Governor Abbott, who conceded on election night.⁴ During her campaign Governor-elect Hinojosa pledged a moratorium on data center construction in Texas, which accounts for more than 25% of planned US capacity by 2030.⁵ Democratic state Rep. Vikki Goodwin also defeated three-term incumbent Republican Lt. Gov. Dan Patrick.⁶

The restrictions on data center development now in place in Texas come from two directives. On August 3, 2026, Governor Abbott directed the PUCT and ERCOT to audit all proposed data centers seeking to connect to the grid, requiring developers to disclose information about tax breaks, power use and generation, water use and cooling, community impact mitigation, and ownership. He made clear that any project that fails the audit should be denied a grid connection.⁷ In addition, on September 21, Governor Abbott ordered TCEQ to halt all data center related permits until ERCOT completes its audit of the waitlist.⁸ Neither ERCOT nor the PUCT has announced a timeline for completing the audit.⁹

Two dates are particularly relevant to the future of restrictions on Texas data center development. The 90th Texas Legislature convenes January 12, 2027, and Governor-elect Hinojosa takes office January 19, 2027.¹⁰ Governor Abbott controls the data center directives until then, so the first development to watch is whether he modifies them in the interim. After inauguration, Governor Hinojosa can keep, expand, or replace the directives using the same executive tools Governor Abbott used. Her moratorium remains a campaign commitment tied to future legislation, and she has not announced an implementation date or mechanism.

Durable change in the regulatory environment governing data center development will require the Texas Legislature, and the governing arithmetic is unsettled. Democrats won a majority in the Texas House for the first time since 2003, while Republicans retained control of the Texas Senate.¹¹ Senate Republicans could change chamber rules to curb the Lieutenant Governor’s control over committee appointments and bill assignments.¹² The Texas Senate must also confirm gubernatorial appointees, including PUCT commissioners, by a two-thirds vote,¹³ which limits how quickly a new governor can reshape the PUCT.

The likely areas of agreement are already visible. Governor Abbott’s office said he would work with the Texas Legislature next session to eliminate financial incentives for data centers,¹⁴ and Governor-elect Hinojosa campaigned on ending those tax breaks as well.¹⁵ Both candidates also called for data centers to bear more of their own costs. Governor Abbott supported stricter requirements on electricity use, water use, and siting, and Governor-elect Hinojosa argued that data center companies should pay more of the related infrastructure costs.¹⁶ Data center developers and their prospective tenants should treat the state sales and use tax exemptions for qualifying data centers and large data center projects as being at-risk, particularly given this week’s election results.¹⁷

The executive directives addressing data center development interact with a statutory framework that does not depend on who is governor. On September 18, 2026, the PUCT adopted a rule implementing Senate Bill 6 (SB 6), effective October 8, 2026, that standardizes interconnection requirements, capital contributions, and financial security for loads of 75 MW or more at a single site in ERCOT. Under that rule, a customer must sign a standard interconnection agreement, update its project disclosures, and post security equal to the greater of $50,000 per MW of contracted peak demand or its allocated transmission upgrade costs.¹⁸ SB 6 offers what the executive directives do not: defined requirements and a predictable process.

At the local level, Texas counties generally lack zoning authority. When Hill County adopted a data center moratorium, a lawsuit led the county to rescind it, and other counties dropped similar plans.¹⁹ Community concerns will therefore reach projects mainly through state policy and the audit, which requires ERCOT to collect community impact information from all large and medium projects.²⁰

Navigating Texas.

• Smaller loads. Data centers under 25 MW do not have to complete the audit surveys and are not subject to the pause.²¹ Developers should confirm project-by-project whether the TCEQ permit hold reaches these projects.
• Batch Zero projects. Observers expect well financed projects that qualified for ERCOT’s Batch Zero to be able to wait out the audit.²² Holding costs, outside dates, and financing covenants will determine whether a given project can succeed with the wait-it-out approach.
• Behind-the-meter and co-located configurations. Self-supply plans do not eliminate the need for diligence. The audit requires disclosure of each data center project’s power use and generation,²³ and on-site gas generation needs TCEQ air authorization,²⁴ which Governor Abbott’s September directive has frozen. Co-location with existing generation is also subject to PUCT rules under SB 6.²⁵
• Cost recovery and community engagement. Projects that can show they pay their own way on power, water, and grid upgrades, and that can document early community engagement, will be best positioned however the policy debate is ultimately resolved. Developers should budget additional time and cost for this work.

Ohio

Ohio remains one of the country’s largest data center markets. It has more than 200 operational data centers, and according to state data, companies plan to invest up to $40 billion in AI infrastructure there by 2030. On November 3, residents of 18 Ohio municipalities voted on 21 data center measures, more than half of the 41 considered nationwide, and at least 14 municipalities approved bans or other restrictions.²⁶ The measures show the forms local action is likely to take going forward:

• Charter bans keyed to load. The cities of Pataskala, Sunbury, and Granville amended their charters to ban data centers with demand of 25 MW or more.²⁷
• Voter approval requirements. Grove City’s Issue 28, a referendum requirement, passed with about 55% of the unofficial vote.²⁸
• Rezoning referendums. Wilmington voters rejected rezonings across four referendums meant to accommodate a data center project.²⁹
• Reversal of a development agreement. In one village, voters chose to block a data center campus already under construction by overturning the agreement that governed its development.³⁰

Polling suggests that concerns regarding data centers will persist in Ohio: a recent poll of Ohio adults found 55% opposed data center construction in the state and 65% opposed tax breaks for data centers.³¹ Amy Acton, who has been elected Governor of Ohio, campaigned on a conditional moratorium on new data centers. Under her proposal, the moratorium would remain in place until a developer agrees to cover all of its own gas, water, and electricity costs, build with union labor, operate without nondisclosure agreements with local governments, and meet existing air and water quality standards.³²

Ohio law gives voters tools that Texas law does not. The Ohio Constitution reserves the referendum power to municipal electors, and township zoning amendments are also subject to referendum.³³ Three open legal questions will shape how far these results reach existing and planned Ohio data center projects:

• Validity. Whether charter bans on a lawful land use are valid exercises of home rule authority, and how they interact with state law, will likely be litigated.³⁴
• Projects in progress. Ohio law generally protects lawful uses in existence when a zoning change takes effect.³⁵ Whether a permitted but partly built campus qualifies is a fact intensive question, and the reversal of a data center development agreement will test it.
• Referendum exposure. Any development agreement, rezoning, or incentive approved by ordinance can be put to voters.

These local measures come on top of tariff terms that already govern data center service in central Ohio. In July 2025, the PUCO adopted AEP Ohio’s tariff requiring new data center customers above 25 MW to pay for at least 85% of their subscribed monthly capacity for up to 12 years, regardless of actual use.³⁶ Customers owe minimum charges for the full initial term and may exit after the fifth year following the load ramp only by paying an exit fee equal to 36 months of minimum charges.³⁷

Navigating Ohio.

• Map referendum windows. For each approval a project needs, identify whether it can be referred to voters and when the referral window closes, and sequence major spending to follow.
• Favor sites with fewer discretionary approvals. A site that needs no rezoning or development agreement will face less referendum exposure than one that does require such measures.
• Document vested rights. Developers should keep a clear record of permits, construction progress, and spending, which will matter if a later measure is applied to the project.
• Account for tariff and local risk together. Developers should evaluate AEP Ohio’s minimum demand obligations and local referendum exposure at the start of site selection, rather than clearing one before examining the other. A site that satisfies the tariff may still face a referendum, and a site with little referendum exposure may not support the minimum demand charges. Learning either late can strand money already spent on the other.

Georgia

Democrats Peter Hubbard, an incumbent member of the Georgia Public Service Commission, and Shelia Edwards, who ran for an open seat, both won their races, and both Republican candidates conceded, giving Democrats control of the Commission.³⁸ Together with Alicia Johnson, whom Democrats elected in 2025,³⁹ they will hold three of the five seats on the Commission. Voters also elected Keisha Lance Bottoms governor.⁴⁰ She campaigned in part in support of a data center moratoriums.⁴¹

The new Georgia Public Service Commission majority inherits significant data center commitments. In December 2025, the Commission approved Georgia Power’s plan to build nearly 10,000 MW of new generation, about $16 billion worth, roughly 80% of it, expected to serve data centers. Under that agreement, Georgia Power will cover the costs through 2031 if the expected data center demand does not materialize.⁴² Earlier, in January 2025, the Georgia Public Service Commission adopted a rule for new customers of 100 MW or more. The rule allows contracts of up to 15 years and minimum billing requirements, and it requires that new contracts be submitted to the Commission for review.⁴³ Commission staff may object to contract terms that do not adequately protect existing customers from the cost of adding a large load.⁴⁴

Prospective members of the new Commission majority has raised concerns about how those protections will work in practice. Reviewing a large load contract in August, Commissioner Hubbard said he did not believe its terms provided financial guardrails that are sufficient to protect ratepayers.⁴⁵ He has described the new Commission majority’s goal as lowering power bills and holding data centers accountable.⁴⁶ Candidates from both parties said during the campaign that data centers should pay their own way.⁴⁷

Resources the Georgia Public Service Commission has already certified are unlikely to be undone. The new majority will, however, oversee staff review of large load contracts, the next integrated resource plan, and rate treatment when the current base rate freeze expires. On incentives, Governor Kemp vetoed a 2024 bill that would have paused the state’s data center sales tax exemption,⁴⁸ and developers should monitor whether the incoming administration revisits it.

Navigating Georgia.

• Structure contracts to protect other customers. Developers should expect closer scrutiny of minimum bills, collateral, contract term, and allocation of potential stranded costs. Contracts whose terms clearly protect other customers are likely to be best positioned before the new Georgia Public Service Commission.
• Keep siting and power supply decisions separate. The Commission does not decide whether data centers come to Georgia or where they are built.⁴⁹ Its influence is limited to the price and terms of utility service. The change in the Commission majority therefore affects the cost of power for a Georgia project, not whether the project can be sited or permitted. Developers should weigh the two separately: Georgia’s siting and permitting environment remains favorable, while power supply terms now carry more regulatory risk than before.
• Evaluate supplier choice. Under Georgia’s Territorial Electric Service Act, a new premises with a connected load of 900 kW or more has a one-time choice of electric supplier,⁵⁰ which makes service from an electric membership cooperative a real alternative for some data center sites.

Beyond These Three States

The dynamics observed in Texas, Ohio and Georgia can be seen in many other jurisdictions. For example, New York halted new data center approvals in July 2026 for up to a year while it writes new development rules.⁵¹ Before the election, Ballotpedia counted 41 local data center measures in 10 states, 28 that would restrict development and 13 that would facilitate it.⁵² The restrictive measures largely passed. Concern regarding data center development crosses party lines; residents of Republican and Democratic communities alike have pushed back on proposed projects.⁵³

Data center developers should plan for challenging dynamics in communities with pending rezonings and in states that elect their utility regulators, such as Louisiana and Arizona. Developers should also assume that any discretionary local approval may be put to a public vote.

Navigating the Year Ahead

• Revisit how your contracts allocate risk. Developers should review power purchase agreements, electric service agreements, leases, and construction contracts for provisions addressing change-in-law or force majeure tied to governmental action, conditions precedent, and outside dates. Moratoria and audits are now publicly known, which weakens any later claim that they were unforeseeable, so new contracts should allocate this risk expressly.
• Diligence siting at the jurisdictional level. Treat referendum exposure as a standard diligence item. Determine whether the site sits in a charter municipality, a statutory municipality, a township, or (in Texas) an unincorporated county, and whether petitions are circulating.
• Sequence approvals to protect vested rights. Document permits and construction progress, and time major spending to follow the close of any referendum window.
• Build enforceable community commitments. Community benefit agreements covering water, noise, local tax revenue, and hiring are becoming a practical precondition to project approval, and regulators are asking for the same information. Undertaking early, documented community engagement is now a competitive advantage.
• Show that the project pays its own way. Policymakers across the political spectrum can be expected to focus on whether data centers cover their own power, water, and grid costs. Projects that can show that they pay their own way with clear contract terms and supporting data will be best positioned with regulators and communities.
• Broaden power procurement options. Behind-the-meter generation still needs permits. Utility tariffs in Ohio and Georgia impose minimum bills and long terms. Curtailable or flexible load, co-location where rules permit, and alternative suppliers (such as cooperatives in Georgia) may shorten the path to power.
• Underwrite incentive risk. Developers should assume that tax incentives in Texas and Georgia may be repealed or narrowed. Developers should look for grandfathering protections, and model project economics without the incentives.
• Prepare for closer scrutiny from lenders and buyers. Financing and acquisition diligence will now cover local ballot exposure and the status of state directives. Representations and closing conditions will reflect that.

King & Spalding’s Energy team is working with developers, hyperscalers, utilities, and investors to adapt project plans to these developments, from power procurement and interconnection to regulatory strategy and contract structuring across the country. Please contact Stuart Zisman, Jim Bowe, Nikesh Jindal, Thomas Spulak, or RJ Colwell to discuss how the recent election results could affect your projects.