Oncor assesses impact of Texas data center approval freeze on nearly 300GW of load reserves

Oncor executives told analysts on Thursday's earnings call that approximately 44 GW of large-load projects in its service area have qualified for ERCOT's new "Batch Zero" large-load interconnection process. However, the timeline for this process has become uncertain after Texas Governor Greg Abbott ordered a pause on new data center interconnection approvals for a statewide audit.

ERCOT's admission criteria for Batch Zero, including new financial and technical requirements for loads with peak demand of 75 MW or more, have tightened the scope of Oncor's near-term load growth projects. Oncor is a subsidiary of Sempra.

Sempra Chairman and CEO Jeff Martin said the batch approach is intended to coordinate the interconnection of large loads with the construction of new generation facilities. The admission criteria for the first Batch Zero were finalized in June.

"Imagine a scenario where there is nearly 500 GW of generation capacity waiting to connect to the system, while there are more than 400 GW of large-load customers," Martin said. "The batch process is designed to sequence generation with large loads. Over time, this will create a sequencing effect aimed at balancing what we believe will be significant load growth."

Before the Batch Zero qualification criteria were announced, Oncor had submitted approximately 127 GW of qualified load forecasts to ERCOT earlier this year.

On Thursday, executives expressed confidence in the durability of the load pipeline despite the uncertainty. Oncor CEO Allen Nye said the company's service requests have grown from289 GW at the end of the first quarterto 298 GW this quarter.

"We continue to see very strong growth and strong interest. And, indeed, there are more projects in the pipeline," Nye told analysts on Thursday.

It remains unclear how the governor's order issued on Monday will affect the new ERCOT review process. An ERCOT spokesperson toldlocal mediaon Monday that they have paused Batch Zero reviews pending further clarification from the governor.

Martin said Oncor's current $47.5 billion capital plan does not include any spending related to Batch Zero loads. He said the company plans to update its capital plan in the fourth quarter of this year, but any capital needs related to batch studies would not be incorporated into the company's capital plan until at least 2027.

However, the current plan does include approximately $5 billion for Oncor's ongoing high-voltage transmission projects in Texas's Permian Basin. Nye noted that these projects held a 15-hour public hearing in July.Lieutenant Governor Dan Patrick and several state senatorscalled on the Texas Public Utility Commission after the hearing to reject the applications for these transmission lines, with speakers at the hearing condemning the projects' potential impact on private landowners.

Martin and Nye said they understand the position of Texas lawmakers and expressed support for their efforts, although this could lead to delays in Oncor's projects.

"Like across the country, there will be various elections in November," Martin said. "People are very focused on affordability. Whether you're a Republican, Democrat, or independent, we are all looking for ways to ease the burden on American families, and I think Texas is no exception."

"There is a process ahead, and we are advancing work at an unprecedented scale," Martin continued. "What we want to do is ensure we support that process. We are committed to meeting some of the needs of stakeholders. If the result is that it takes a little more time to make the process better for everyone, ultimately creating a lasting framework, I think that would be very beneficial for Texas."

Sempra's leadership also expressed support for California's legislative process, where state lawmakers are still deliberating wildfire liability reform. Sempra's utility SoCalGas was named in a lawsuit filed by Edison International in January, whichallegesthat the gas company's actions exacerbated the damage from the 2025 Eaton Fire, for which Edison International has already been sued. SoCalGas filed a countersuit against Edison in April seeking compensation for damage to its infrastructure. Trial is set for January 2027. SoCalGas has also been named in litigation related to the 2025 Palisades Fire. Sempra's San Diego Gas & Electric is currently not involved in any wildfire-related litigation.

Sempra continues to advance the sale of its interest in SI Partners, which owns LNG and natural gas infrastructure in the U.S. and Mexico, to KKR Partners for $10 billion, as well as the sale of Mexican natural gas utility Ecogas. Mexican regulators recently approved the Ecogas sale, which Martin said should allow the deal to close later this month.

Sempra Executive Vice President and CFO Karen Sedgwick said these divestitures will remove more than $9 billion in debt from Sempra's balance sheet and should improve the company's outlook with rating agencies. Sedgwick noted that Moody's issued a negative outlook on the parent company in January due to its debt and financing capacity.

Texas regulators approved a $560 million base rate increase for Oncor in April, effective June 1; SDG&E filed its initial GRC application for 2028 with the California Public Utilities Commission in June.