The Public Utility Commission of Texas (PUCT) has finalized one of the most consequential pieces of the large load framework: the financial commitments required to move a project from interconnection request to energization.
On September 18, 2026, the PUCT adopted new 16 TAC §25.194 under Project No. 58481, Large Load Interconnection Standards, implementing provisions of Senate Bill 6 (89th Legislature) (89th Regular Legislative Session). The rule took effect earlier this month on October 8, 2026.
Unlike many of the ERCOT revision requests covered in previous Watt's Current articles, this rule is final. It establishes a structured, milestone-based framework of study fees, financial security, and upfront cost payments intended to ensure that projects in the queue are backed by firm commitments.
Who Does the New ERCOT Large Load Standard Apply To?
The rule applies to large load customers who did not energize their projects as of the rule's effective date and who are seeking:
- A new interconnection of 75 MW or greater at a single site
- An expansion that brings an existing site to 75 MW or greater for the first time
- An expansion of 75 MW or more at a site that already exceeds 75 MW
- Co-location with a generation resource
For expansions, the requirements apply only to the incremental load being added, not to the existing load at the site.
A Two-Stage Financial Commitment Framework
At its core, §25.194 ties financial commitments to two key agreements in the interconnection process:
A few points to keep in mind:
- Any unused portion of the study fee is refunded within 60 days after the interconnection study concludes.
- At the SLLIA stage, if allocated system upgrade costs exceed $50,000 per MW, the customer must post the higher amount to execute the SLLIA and retain its allocated transmission capacity.
- Customers that execute an SLLIA may elect to have their intermediate cash collateral returned or credited toward the SLLIA requirement; a guaranty or letter of credit is returned.
- If an SLLIA is not executed by the deadline, the interconnecting TSP or DSP must cancel the interconnection request.
Financial security may be posted as cash collateral, a guaranty, or a letter of credit, subject to the minimum credit rating requirements defined in the rule.
Direct Interconnection Costs Are Paid Upfront
In addition to financial security, large load customers are responsible for all direct interconnection costs, paid as a Contribution in Aid of Construction (CIAC) in cash. Key characteristics include:
- No standard or other allowance offsets the customer's CIAC payments.
- The interconnecting TSP or DSP must invoice the customer before incurring these costs. CIAC also applies to significant equipment or services (such as equipment with a lead time of at least 18 months) procured before the SLLIA is executed, where they meet the definition of direct interconnection costs.
- If an invoice is not paid within 10 working days, the utility may draw on the customer's financial security and cancel the interconnection request.
- CIAC is trued up to actual costs once facilities are complete but is never refundable, including if the project later withdraws.
Withdrawal, Forfeiture, and Return of Security
The rule defines what happens to posted security as a project moves forward, scales back, or exits the process. In all cases, outstanding amounts owed to the utility are paid or drawn from security first.
- Withdrawal before the study begins, or a 0 MW allocation followed by withdrawal before the SLLIA deadline: Security is returned in full.
- Withdrawal after a partial MW allocation, before the SLLIA deadline: 20% of the security associated with the allocated capacity is forfeited; the rest is returned.
- Executing the SLLIA: The customer may elect to have intermediate cash collateral returned or credited toward SLLIA security; a guaranty or letter of credit is returned.
- No withdrawal and no SLLIA by the deadline: Intermediate security is forfeited in full.
- After SLLIA execution: Withdrawing all or part of the contracted peak demand forfeits 20% of the security tied to the withdrawn portion. At energization, 20% of the remaining balance is returned; the rest is returned ratably in 20% increments as the customer meets its minimum billing demand milestones in the SLLIA. Failure to comply with the SLLIA may result in forfeiture.
- Delayed ramp-up: Missing a phased-energization milestone by 24 months results in forfeiture of 20% of the security tied to the non-utilized capacity, after outstanding amounts (including minimum billing demand) are applied; the balance is returned.
- False or unverifiable information: Posted security may be forfeited.
Accuracy of Information Matters
All disclosures under the intermediate agreement and SLLIA must be attested to by an officer or official with binding authority and are subject to audit and verification by ERCOT and PUCT staff. Information found to be false, inaccurate, or unverifiable may result in forfeiture of financial security, reallocation of transmission capacity, or enforcement action.
What This Means for Large Load Developers
Project No. 58481 changes the financial profile of large load development in ERCOT. For developers, the key implications are:
- Significant capital is committed before an ERCOT interconnection study begins.
- Exposure at the SLLIA stage may exceed $50,000 per MW depending on allocated system upgrade costs.
- Direct interconnection costs are due in cash, on invoice, and are non-refundable, so financing plans must account for early procurement.
- Deadlines are firm, and missing them can result in cancellation and forfeiture.
- Requested MW, phasing, and energization schedules should be right-sized from the start, since scaling back or delaying carries a cost.
In short, a large load interconnection request is no longer a placeholder in the queue; it is a funded, binding commitment.
How EPE Can Support Your ERCOT Large Load Project Under the New Rule
EPE has closely followed Project No. 58481 alongside ERCOT's Large Load Working Group and Batch Zero process. Our team supports large load developers with:
- Interconnection strategy
- Large Load Interconnection Study (LLIS) and Batch Zero support
- Review of ERCOT study results and allocated upgrades
- Dynamic modeling (PSS®E, PSCAD, and TSAT) and Model Quality Testing
- QSA and energization readiness support
With financial commitments now tied directly to interconnection milestones, early technical alignment is more important than ever. To discuss how our team can support your large load interconnection, contact our ERCOT team using the form below.
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