Texas Governor Greg Abbott has suddenly discovered that data centers can be a problem.

They can raise electric-system costs.

They can consume enormous amounts of water.

They can overwhelm rural communities.

They can depend on tax incentives.

Their ownership can be difficult to trace.

And hundreds of proposed projects can threaten the stability of the Texas electric grid.

So on August 3, Abbott ordered the Public Utility Commission and ERCOT to conduct what he called a “comprehensive verification and audit” of data centers seeking to connect to the Texas grid.

No project is supposed to move forward until the review is completed.

That sounds tough.

It also raises a very simple question:

Where was Greg Abbott before the data-center boom became politically toxic?

Because Abbott isn’t an outsider arriving to clean up somebody else’s mess.

He helped build the Texas data-center gold rush.

Abbott Loved the Boom Before Voters Hated It

For years, Abbott sold Texas as the place where technology, private capital, energy and lightly regulated economic development could flourish.

He celebrated enormous technology investments.

He welcomed private-equity giant Apollo to Austin and declared:

“Texas is the new financial capital of America.”

He championed AI growth and massive technology investments.

Texas offered one of the most generous data-center tax structures in the country.

Then the bills started arriving.

Electric demand exploded.

Water became a local issue.

Rural landowners began organizing.

Communities complained about noise, infrastructure and loss of control.

And ERCOT’s interconnection queue became almost absurd.

By August 2026, ERCOT was dealing with approximately 474 gigawatts of proposed new electricity demand.

Abbott’s office says roughly 90% of those requests are data centers.

For perspective, that proposed demand is more than five times Texas’ record ERCOT peak load.

This isn’t ordinary economic development anymore.

It is potentially a restructuring of the Texas electric system.

And somebody has to pay for it.

Now Abbott Says: Data Centers Must “Pay Their Own Way”

On June 10, Abbott ordered the PUC and ERCOT to ensure that data centers pay the electric-infrastructure costs necessary to serve them rather than shifting those costs onto residential customers.

Good.

That principle should have existed from Day One.

Abbott also called for:

data centers to add generation rather than merely adding demand;

water-efficient cooling;

annual electricity and water reporting;

community protections;

and repeal of outdated data-center tax incentives.

Again:

Good ideas.

But this isn’t a new governor taking office and cleaning up an inherited policy.

This is the same governor who presided over the expansion.

The question is therefore not merely:

Are Abbott’s new rules reasonable?

The harder question is:

Why weren’t these protections required before Texas invited hundreds of enormous electricity consumers onto the grid?

Abbott Is Now Auditing His Own Boom

The August 3 directive goes even further.

Abbott ordered regulators to obtain from every data-center project information showing:

Public subsidies.

All state and local tax incentives, grants, abatements and other government financial assistance.

Electricity demand.

Projected annual and peak consumption and plans for on-site generation.

Water demand.

Projected consumption, water sources and cooling technology.

Community effects.

Noise, lighting, traffic, setbacks and emergency-response issues.

And perhaps most interestingly:

Ownership and controlling interests.

That last item is exceptionally important.

Private equity, infrastructure funds, developers, private-credit vehicles and special-purpose entities can make the ultimate economic ownership of a project extraordinarily difficult for ordinary citizens to determine.

Abbott now apparently agrees that Texas needs to know who actually owns these projects.

So do I.

But why only now?

Follow Abbott’s Money Too

The data-center audit should not stop with developers.

It should include the political system that welcomed them.

Transparency USA reports approximately $71.4 million in Abbott campaign contributions during the current 2026 election cycle.

Some of Abbott’s largest donors operate in businesses positioned to benefit directly or indirectly from Texas’ enormous buildout of data centers, electricity generation, natural-gas infrastructure, real estate and AI.

Among them:

Edward Roski Jr. — approximately $2 million.

Roski chairs Majestic Realty.

Majestic’s industrial real-estate network has connections to facilities leased to major technology companies.

Kelcy Warren — approximately $1.5 million this cycle.

Warren controls Energy Transfer, whose natural-gas pipeline infrastructure sits squarely inside the economic ecosystem that can supply enormous new power demand.

Black Mountain interests — approximately $1 million through identified contributions from the company/founder.

Black Mountain has direct Texas data-center and power-development interests.

Elon Musk — $500,000.

Musk sits at the intersection of AI, enormous computing requirements and electricity-intensive infrastructure.

Harlan Crow — identified campaign contributor.

Crow Holdings has announced data-center development activity.

Ray Hunt interests — Abbott donor connections.

Hunt interests span energy, real estate and power infrastructure.

None of those contributions proves that Abbott made a policy decision because someone gave him money.

That isn’t the point.

The point is disclosure.

When a governor receives enormous campaign contributions from people whose businesses can profit from the same economic boom his administration is promoting, citizens deserve to be able to follow the money.

Abbott’s Own Opponent Is Making This an Election Issue

Democratic gubernatorial nominee Gina Hinojosa has made Abbott’s campaign financing part of her attack.

Her campaign alleges that donors with substantial interests in the data-center economy have contributed more than $20 million to Abbott over time.

That aggregate figure is a campaign claim and should be independently reconstructed before being treated as a definitive number.

But several individual connections are independently visible in campaign-finance records.

Hinojosa specifically points to recent contributions from Roski, Warren, Black Mountain’s Rhett Bennett, Elon Musk, Harlan Crow and Hunt-related interests.

The existence of those individual contributions is much easier to document than a sweeping corruption allegation.

The proper question is therefore:

Who gave Abbott money, what do they own, and how do their businesses intersect with Texas’ data-center, electricity and infrastructure policies?

Put that in a public database.

The Pension Money Makes Texas Different

Texas has another enormous source of capital sitting quietly in the background:

Public pensions.

The Teacher Retirement System of Texas alone had approximately $225 billion of investment assets as of August 31, 2025.

Its private-market exposure is enormous.

TRS reported roughly:

$34.5 billion in private equity.

$30.2 billion in real estate.

$15.5 billion in energy, natural resources and infrastructure.

That’s roughly $80 billion in those three categories alone.

TRS says its long-term target for private markets is approximately one-third of the entire trust.

Its manager roster reads like a Who’s Who of the private-capital industry:

Apollo.

Blackstone.

Blue Owl.

BlackRock.

DigitalBridge.

Antin Infrastructure.

EIG.

I Squared.

ECP.

KKR-related managers.

And many others.

Those firms increasingly invest in:

data centers;

digital infrastructure;

private credit;

natural gas;

power plants;

transmission;

real estate;

and AI infrastructure.

That does not mean Texas teachers financed every Texas data center.

It means Texas has an enormous look-through problem.

Abbott Welcomes Apollo While Texas Teachers Invest With Apollo

Apollo illustrates the circularity.

TRS has invested substantial sums with Apollo, including a reported $400 million commitment to Apollo Investment Fund X.

Then in August, Abbott welcomed Apollo’s new strategic hub in Austin.

Again, there is nothing inherently wrong with a Texas pension investing with Apollo or Apollo opening an office in Austin.

But put the pieces together:

Texas politicians want private capital in Texas.

Texas pension systems supply private capital with billions of dollars.

Private capital finances energy, infrastructure and data centers.

Texas grants tax incentives and builds an economic environment designed to attract those projects.

Data centers create enormous electricity demand.

Energy and infrastructure investors profit from serving that demand.

Some people involved in those industries contribute heavily to Texas politicians.

That isn’t proof of corruption.

It is precisely the kind of circular financial system that demands transparency.

Texas Teachers Can Be on Both Sides of the Trade

A Texas teacher might reasonably believe her retirement contribution has one purpose:

Pay her pension.

Follow that dollar through modern private markets and it can become much more complicated.

Teacher contribution

→ TRS

→ private-equity/infrastructure manager

→ power project

→ private-credit financing

→ digital infrastructure

→ data-center ecosystem.

Meanwhile, the same teacher pays an electric bill.

Her community may finance infrastructure.

Her local government may grant incentives.

And the governor may celebrate the economic-development project.

Wall Street potentially earns fees at several different stages.

This is why simply categorizing an investment as “private equity,” “real estate” or “infrastructure” is no longer enough.

Texas retirees should be able to see the underlying economic exposure.

Abbott Has Appointed Wall Street Directly Into Pension Governance

The pension issue isn’t entirely separate from Abbott’s political network.

Abbott controls appointments to important Texas boards.

In June 2026, Abbott appointed Dan West of SCF Partners, an energy-focused private-equity professional, to the TRS Board of Trustees.

Again, private-equity experience can be useful on an investment board.

But Texas already has an enormous private-market allocation.

The governance question should therefore be:

Who represents skepticism?

Who on the TRS board challenges private-equity fees?

Who challenges private valuations?

Who demands LPAs?

Who examines private-credit risk?

Who independently challenges benchmarks?

Who asks whether Texas pension capital is financing an economic-development ecosystem favored by the same political establishment appointing the board?

Texas appears very good at bringing investment professionals into pension governance.

It should be equally good at bringing independent fiduciary skepticism into the room.

The Tax Breaks Were Built Before the Backlash

Texas Tax Code §§151.359 and 151.3595 created substantial sales-and-use-tax exemptions for qualifying data centers.

For ordinary qualifying facilities, the law historically required at least a $200 million investment and 20 qualifying jobs.

Large projects can qualify with at least a $500 million investment and 40 jobs.

For certain qualifying large projects, the exemption can last as long as 20 years.

Twenty years is a long time.

Especially for an industry evolving as quickly as AI.

Abbott now calls some of those incentives outdated and says Texas should repeal unnecessary data-center subsidies.

That is an important admission.

Because if an incentive has become outdated, taxpayers deserve to know:

How much has it already cost?

Which companies received it?

For how many years?

How many jobs were created?

What infrastructure did the public finance?

What electricity costs were shifted elsewhere?

And what return did Texans receive?

Don’t Just Repeal the Incentives—Audit Them

This is where Abbott’s new “audit” doesn’t go far enough.

ERCOT’s immediate problem is grid reliability.

But Texas needs a financial audit too.

For every qualifying data center, publish:

Developer and ultimate owner.

Private-equity/infrastructure sponsor.

Lenders.

State tax exemptions.

Local tax abatements.

Public infrastructure assistance.

Electricity demand.

Water demand.

Permanent jobs promised.

Permanent jobs delivered.

Capital investment promised.

Capital investment delivered.

Political contributions from owners and executives.

Texas public-pension investments with the owners/managers.

And then calculate:

Public subsidy per permanent job.

That would tell Texans far more than another ribbon cutting.

The Electric Grid Is the Real Subsidy Risk

The largest public cost may eventually have very little to do with formal tax abatements.

It may be electricity infrastructure.

ERCOT has already begun a new batch process for connecting large loads of 75 megawatts and above because the ordinary project-by-project system couldn’t handle the scale of the requests.

Texas is also spending enormous sums to expand electric infrastructure.

Abbott has championed the Texas Energy Fund.

In June alone he announced a $200 million grant for electric-system improvements in Northeast Texas and a Texas Energy Fund loan supporting 860 MW of new natural-gas generation in West Texas.

Those individual projects may serve much broader reliability needs and should not automatically be labeled data-center subsidies.

But Texas now has to answer the allocation question:

When new infrastructure is required substantially because of massive new data-center demand, who pays for it?

Abbott now says the data centers should.

Good.

Enforce it.

And publish the accounting.

Abbott’s Sudden Conversion Is the Political Story

By August, the politics had changed so dramatically that Abbott was openly saying data-center developers had essentially “dug their own grave” with the public.

That’s remarkable.

This is the governor who previously celebrated Texas becoming an AI and technology capital.

Now he is criticizing the industry’s political judgment.

What changed?

Not the physics.

Data centers required huge amounts of electricity before this summer.

They required water before this summer.

Tax exemptions existed before this summer.

Private capital was financing the boom before this summer.

What changed was public opinion.

Data centers became politically dangerous.

Rural Texas started pushing back.

The issue entered the governor’s race.

And suddenly Austin discovered “guardrails.”

That doesn’t make the guardrails bad.

It makes them late.

Give Abbott Credit for One Thing

There is one aspect of Abbott’s August order that deserves real credit.

He isn’t merely asking whether data centers can technically connect.

He is asking:

Who owns them?

Who subsidizes them?

Where does their electricity come from?

Where does their water come from?

What happens to neighboring communities?

Those are exactly the questions Texas should be asking.

So expand the inquiry.

Add:

Who finances them?

Which private-equity funds own them?

Which private-credit firms lend to them?

Which Texas pensions invest with those firms?

What fees are the pension systems paying?

Which political donors benefit?

Which gubernatorial appointees have financial relationships with the managers?

Which tax incentives have already been granted?

That’s the actual Texas money map.

Don’t Let Abbott Audit Only the Last Mile

Right now, Abbott’s audit starts with the data center seeking an ERCOT connection.

That’s too late.

Follow the money backward.

Data center

← developer

← private-equity/infrastructure fund

← private credit

← institutional investors

← Texas public pensions.

Then follow the public side:

Data center

← tax exemption

← local incentive

← public infrastructure

← transmission

← generation

← ratepayers and taxpayers.

Then follow the political side:

Developer / energy company / financier

→ campaign contribution

→ political appointment

→ public policy.

Those three maps should be laid on top of one another.

That is how Texans discover whether there are conflicts.

The Texas Data Center Accountability Test

Abbott says data centers must pay their own way.

Fine.

Then Texas should require:

No hidden subsidies.

No undisclosed ownership.

No infrastructure-cost shifting.

No secret local deals involving public money.

No pension investments hidden behind generic private-market labels.

No political appointments without full conflict disclosure.

No incentive without an independently measurable public return.

And no politician—Republican or Democrat—should get to call a project “economic development” without showing taxpayers the complete economics.

Follow the Abbott Money

Texas has assembled nearly every ingredient required for a private-capital gold rush:

Enormous pension funds.

Private equity.

Private credit.

Cheap land.

Natural gas.

Tax incentives.

Data centers.

AI.

Massive electricity demand.

Political contributions.

And politicians eager to proclaim that Texas is open for business.

Now Greg Abbott wants to become the sheriff.

Better late than never.

But a sheriff investigating a gold rush he helped create shouldn’t be allowed to stop at the town limits.

Follow the developer.

Follow the tax break.

Follow the power plant.

Follow the pension dollar.

Follow the private-equity fund.

Follow the campaign contribution.

And finally:

Follow Greg Abbott.

His own new data-center audit proves the fundamental point.

Texas waited too long to ask who pays, who owns, who profits and who carries the risk.

Now that Abbott has finally asked those questions of the data centers, Texans should ask the same questions of the political and financial system that brought them here