Tech giant Meta is paying to build a natural gas-fired plant to power its El Paso data center, but regulatory filings show the agreement is temporary, raising questions about how Texas ratepayers will be protected once the initial five-year period ends.
El Paso Electric (EPE) plans to supply the data center through McCloud Generation, a 366MW plant with 813 modular gas generators located next to the site, according to a filing with the Public Utility Commission of Texas (PUCT). Starting in 2027, the plant would power the data center exclusively for an initial five-year "bridge period" and remain separate from EPE's transmission system, with all costs recovered from Meta under a commission-approved rate.
The arrangement aligns with the White House-backed Ratepayer Protection Pledge, which calls on large technology companies to pay for the power and infrastructure needed to support their data-center loads rather than shifting those costs onto other customers. But the filing also shows that much of the ultimate risk allocation is deferred, with decisions about long-term cost recovery left to future regulatory proceedings once the temporary structure ends.
"I don't think we have much precedent for this type of temporary arrangement," said Joshua D. Rhodes, an energy researcher at the University of Texas, noting that utility-owned generation built as a time-limited bridge for a single customer is largely untested in regulatory practice.
The bridge arrangement is needed because the data center's load is expected to ramp up faster than the utility's system can currently accommodate, EPE said in the filing. Meta, through its subsidiary Wurldwide LLC, originally requested 220MW from EPE and the commission approved rates based on that load. Projected demand has since increased to more than 440MW by 2027 and potentially to 1GW by 2029, the filing said.
Meta recently announced it would invest $10b to grow the data center to 1GW, a decision that required EPE to amend its filing. The project has drawn opposition from local community organizations and lawmakers, who say Meta previously indicated the El Paso facility would be powered by renewable energy. Meta has since said it plans to pay for the development of renewable generation elsewhere to match the entirety of the data center's electricity use.
Once the transmission and generation capacity is expanded to meet Meta's higher load requirements, EPE will request approval to connect the McCloud generation facility to the grid "and incorporate the cost of the plant into jurisdictional cost of service and retail rates", the utility said. The filing does not specify who will pay for the remaining costs associated with the generation.
"Once generation is incorporated into a utility's cost of service, regulators still have to decide how operating costs, maintenance and depreciation are allocated," said Rhodes, the UT researcher. "Those decisions don't disappear just because a customer paid to build the facility."
Meta and EPE did not respond to emails requesting comment.
