Kicking Off 2026: Changes to Security Deposits and Interconnection Costs in ERCOT

As 2026 begins, developers with transmission-level generation projects in ERCOT face a major regulatory shift under the Standard Generation Interconnection Agreement (SGIA). 

The Public Utility Commission of Texas (PUCT) updated Rule §25.195, changing how Transmission Service Providers (TSPs) recover the cost of Transmission Interconnection Facilities (TIF).  While effective in 2024, the most meaningful impacts apply to SGIAs executed after December 31, 2025. 

What is Changing? 

The updated rule establishes a two-tier cost responsibility framework: 

1. SGIAs Executed on or Before December 31, 2025: TSPs cover all TIF costs.  Any deposits or financial security are refunded once the project reaches commercial operation. 
2. SGIAs Executed After December 31, 2025: TSP funding is capped at an annual allowance that is adjusted yearly using the Consumer Price Index.  The 2026 allowance levels are: 
• $14,408,000 for projects interconnecting at 138 kV or below 
• $20,583,000 for projects interconnecting above 138 kV 

Any TIF costs exceeding these allowance amounts are the generator’s responsibility. 

New Transparency Measures 

ERCOT’s updated SGIA template, effective January 1, 2026, reflects the allowance framework and introduces Notice to Proceed and Construction Authorization Dates, along with some other changes.  

Additionally, TSPs must now report interconnection cost data to ERCOT.  ERCOT will publish annual summaries starting in 2027, providing market-wide visibility into interconnection costs, contributions in aid of construction, and above-allowance expenditures. 

Why This Matters for Developers 

These changes raise the stakes for timing and cost planning. Understanding the new rules is critical for project economics, financing, and site strategy. 

Electric Power Engineers is tracking implementation and advising developers on navigating these changes.  If you are planning a transmission-level generation or storage project in 2026 or beyond, early alignment can prevent costly surprises. 

To discuss how these updates impact your interconnection strategy, contact our team using the form below.