Articles · Utility regulation
813 gas generators for one AI data center, and who pays
Two judges recommend approving El Paso Electric's gas plant for Meta's data center only if its other customers are held harmless for its life.
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El Paso Electric asked the Public Utility Commission to amend its certificate so it can build a 366 MW natural gas plant called the McCloud facility. It would primarily serve a data center that Wurldwide is developing in El Paso County. Wurldwide is owned by Meta Platforms, the proposal for decision notes, citing the utility's own application. The plant would be 813 modular gas generators rated at 450 kilowatts each, on approximately 31 acres immediately adjacent to the data center.
Two administrative law judges heard the case by videoconference on July 8th, 2026. Their proposal for decision was filed in the docket on September 23rd, 2026. They recommend approval only if El Paso Electric holds its customers other than Wurldwide harmless from the plant's costs. Without that condition they would recommend denial.
Who pays, and for how long
El Paso Electric proposes a bridge period of up to five years in which Wurldwide takes all of the plant's output and carries all of its capital costs. Its witness James Schichtl testified that the bridge lasts as long as it takes to extend transmission to the data center's site. After that the utility may fold McCloud into its generation resources and revise its rates, and no decision has been made. Any change in cost responsibility would need Commission approval in a separate case. It would not commit to Wurldwide being the only customer to pay the plant's costs after the bridge.
The utility estimates a 20 year service life for the plant. The judges' condition reaches all of it. Their proposed ordering paragraph holds the other retail customers harmless from any capital or operating costs of the facility for its life. The condition lifts only if the utility later shows the plant meets the statute's test. They limited the condition to those capital and operating costs.
What the judges found
The judges found the utility showed a need for capacity to serve the data center but did not show McCloud is a cost-effective and reliable resource. They found the plant isn't needed to serve any other El Paso Electric customer. The utility engaged Enchanted Rock after Wurldwide preferred that vendor. It acknowledged it considered no alternative and issued no request for proposals. It ran no cost-benefit analysis for its ratepayers. McCloud would be the largest project Enchanted Rock has built and the utility's first experience with modular gas generation.
The data center has committed to a peak demand of 1,000 MW by the end of 2029. The judges found the utility can serve about the first 220 MW of that load from its existing resources. The second block of about 220 MW requires additional capacity.
What it costs
The judges' proposed findings put the plant's total estimated cost at approximately $499.8. That estimate covers the generation facilities only and excludes transmission interconnection. Per kilowatt the plant costs $1,609 against $1,264 for a generic gas combustion turbine in the utility's own resource plan. The City of El Paso asked for a capital cost cap of $565.6 million. The judges declined the cap and a performance guarantee and said the hold-harmless condition already protects customers from the plant's costs.
What happens next
The Commission will place the case on an open meeting agenda and notify the parties of the date. KVIA reports that the five commissioners will decide whether to accept, change or reject the recommendation, and that a final order is expected by December 7th, 2026. On Monday El Paso City Council authorized a counteroffer for a full hold harmless. El Paso Electric's chief executive Kelly Tomblin told KVIA the utility is not seeking to shift those costs onto residential or other customers.
The docket is public on the PUCT Interchange. It holds comments from 111 protestors filed by the Sembrando Esperanza Coalition, and residents have filed comments of their own.
What the record can't show
The proposal for decision is a recommendation and not a ruling. It names no payer for the plant's costs after the bridge if the commissioners drop the condition. The cost estimate carries no transmission interconnection cost for the day the plant joins the utility's system. The judges also left the cost of serving the data center's first load outside this case.
Sources for this story
- PUCT Docket 59076, SOAH proposal for decision
- PUCT Docket 59076, filing list
- KVIA, City Council authorizes ongoing negotiations to protect ratepayers from Meta data center energy facility
Claim-by-claim verification · 56 claims
El Paso Electric asked the Public Utility Commission to amend its certificate so it can build a 366 MW natural gas generation facility, the McCloud facility. It would primarily serve a data center Wurldwide LLC is developing in El Paso County.
construct, own, and operate a 366-megawatt (MW) natural gas generation facility (the McCloud facility or Project) that would primarily serve a data center being developed in El Paso County by Wurldwide LLC (Wurldwide)
Citing El Paso Electric's own application, the proposal for decision states that Wurldwide is owned by Meta Platforms Inc.
Wurldwide is owned by Meta Platforms Inc. See EPE Ex. 1 (Application) at 1 n.1.
Meta describes the El Paso project as its newest AI-focused data center and says it can scale to 1GW.
El Paso, Texas, will be home to our newest AI-focused data center, which can scale to 1GW and will support our growing AI workload.
In an update to the same announcement, Meta said the El Paso data center will now officially grow to 1 gigawatt.
Today, we are sharing exciting updates for our next-gen data center in El Paso, Texas, which will now officially grow to 1 gigawatt
Meta's announcement says the El Paso data center's electricity use will be matched with 100% clean and renewable energy. That is a corporate commitment and not a finding of any regulator.
Our El Paso data center’s electricity use will be matched with 100% clean and renewable energy.
El Paso Electric proposes to buy 813 modular gas generators rated at 450 kilowatts.
EPE is proposing to purchase 813 modular 450-kilowatt (kW) gas generators.
The generators are typically installed in groups of four or five, each group connected to a step-up transformer. They are enclosed and fed by a natural gas pipeline.
These generators are typically installed in groups of four or five, each connected to a step-up transformer. The generators are enclosed and provided fuel through a natural gas pipeline.
The McCloud facility would sit on approximately 31 acres of already-disturbed land immediately adjacent to the Wurldwide data center in northeast El Paso County.
The McCloud facility will be located on approximately 31 acres of already-disturbed land immediately adjacent to the Wurldwide data center in northeast El Paso County, Texas.
The Wurldwide data center is intended initially to be the only retail customer of the generating units' output.
adjacent to a data center owned by Wurldwide, which is intended initially to be the only retail customer of the generation units' output
When Wurldwide first approached El Paso Electric it requested 220 MW by 2027 for its data center.
When Wurldwide initially approached EPE, it requested 220 MW by 2027 to serve its data center.
Wurldwide has since asked for more, including an additional 220 MW that could also be in service in 2027.
Wurldwide has since requested incremental load additions, including an additional 220 MW that could also be in service in 2027
Wurldwide has committed to a peak demand of one gigawatt, or 1,000 MW, by the end of 2029.
And Wurldwide has committed to a peak demand of one gigawatt (1,000 MW) by the end of 2029
The judges found El Paso Electric can serve the first approximately 220 MW of Wurldwide's load, called Region 1, from existing resources. The second approximately 220 MW, called Region 2, requires additional capacity.
EPE can serve the first approximately 220 MW of Wurldwide's load (designated Region 1) from its existing system resources, but the second approximately 220 MW of Wurldwide's load (designated Region 2) requires additional capacity.
El Paso Electric cited Wurldwide's expedited schedule, its load ramp and the lack of existing transmission infrastructure to connect the data center to its system. On those grounds it determined that co-located, islanded gas generators were the only way to serve Wurldwide.
Based on Wurldwide's expedited schedule, its load ramp, and the lack of existing transmission infrastructure to connect the data center to EPE's system, EPE determined that co-located, islanded natural-gas generators were the only way to serve Wurldwide
The judges wrote that limits on El Paso Electric's transmission facilities serving Wurldwide's site, and the time needed to expand them, narrowed the choice. On Wurldwide's accelerated timeline a generator co-located with the data center was the only option.
Due to existing limitations of EPE's transmission facilities that serve Wurldwide's site and the amount of time it would take to expand those facilities, Wurldwide's accelerated timeline meant the only option was a generation resource that could be co-located with the data center
El Paso Electric engaged Enchanted Rock after Wurldwide expressed a preference for that vendor.
Then, following Wurldwide's preference for Enchanted Rock, LLC (Enchanted Rock), EPE engaged that vendor.
El Paso Electric acknowledged it considered no alternative to Enchanted Rock and issued no request for proposals. It also acknowledged Wurldwide's preference was a contributing factor in choosing the vendor.
EPE acknowledges that it did not consider any other alternatives to Enchanted Rock for Wurldwide's generation needs, did not submit a request for proposals (RFP), and that Wurldwide's preference for Enchanted Rock was "a contributing factor" to EPE choosing them as a vendor.
El Paso Electric did not conduct a cost-benefit analysis of whether the McCloud facility was a cost-effective option for its ratepayers.
Nor did EPE conduct a cost-benefit analysis as to whether the McCloud facility was a cost-effective option for ratepayers in its system.
The proposal for decision reports a 20-year estimated service life for the McCloud facility at a capital cost of $551.8 million, or $1,609 per kW.
EPE estimates a 20-year service life for the McCloud facility,33 at a capital cost of $551.8 million, or $1,609 per kW.
The judges' proposed findings put the total estimated cost of the McCloud facility at approximately $499.8 million. That is $473 million in cash construction cost with a 10% contingency plus approximately $26.8 million in allowance for funds used during construction.
The total estimated cost of the McCloud facility is approximately $499.8 million, comprising an estimated cash construction cost of $473 million (including a 10% contingency) and approximately $26.8 million in allowance for funds used during construction.
That estimate covers the generation facilities only and excludes transmission interconnection costs, because the plant will not initially connect to El Paso Electric's transmission system.
EPE's cost estimate is only for the generation facilities and does not include transmission interconnection costs because the McCloud facilities will not initially be interconnected to EPE's transmission system.
The City of El Paso asked for a capital cost cap of $565.6 million. That is approximately 102.5% of El Paso Electric's $551.8 million estimate including transmission interconnection and allowance for funds used during construction.
The City requests a capital cost cap of $565.6 million, which is approximately 102.5% of EPE's $551.8 million estimate, including transmission interconnection and allowance for funds used during construction.
El Paso Electric proposes a bridge period of up to five years in which Wurldwide takes all of the plant's generation and is responsible for all of its capital costs.
EPE proposes a "bridge period" of up to five years during which Wurldwide will consume all the generation from the Project and will be responsible for all the Project's capital costs.
El Paso Electric witness James Schichtl testified that the bridge period lasts as long as it takes to extend transmission to Wurldwide's site. He expects that is likely to be less than three years.
EPE witness James Schichtl testified that the bridge period is defined by how long it will take to physically extend transmission facilities to Wurldwide's site, which he expects is likely to be less than three years
Schichtl testified that after the bridge period it may be beneficial to fold McCloud into El Paso Electric's generation resources and revise rates. No decision has been made, and any change in cost responsibility would require Commission approval in a separate case.
After the bridge period, it may be beneficial to integrate the McCloud facility into EPE's generation resources and revise its rates accordingly, but no decision has been made on this issue at this time. Any such change in the cost responsibility for McCloud would require Commission approval in a separate case in the future.
El Paso Electric would not commit to Wurldwide being the only customer to pay the plant's costs after the bridge period. Schichtl testified that he wanted that flexibility.
EPE would not commit to Wurldwide being the only customer to pay those costs thereafter, with EPE witness Schichtl testifying that "I wouldn't make that commitment now because I want that flexibility
The judges found El Paso Electric showed a need for capacity to serve Wurldwide's data center. It did not show McCloud is a cost-effective and reliable resource for Wurldwide or for its broader customer base, and it did not show it adequately considered alternatives.
The Administrative Law Judges (ALJs) find that EPE demonstrated a need for capacity to serve Wurldwide's data center load but did not show that the McCloud facility is a cost-effective and reliable resource to meet either Wurldwide's need or the need of EPE's broader customer base. EPE also failed to show that it adequately considered alternatives to the Project.
The judges recommend the Commission grant the certificate amendment so long as approval carries a condition. El Paso Electric must hold its customers other than Wurldwide harmless from the plant's capital and operating costs.
In sum, the ALJs recommend that the Commission grant EPE's application for a CCN amendment to construct, own, and operate the McCloud facility so long as approval is conditioned on EPE holding its customers other than Wurldwide harmless from the capital and operating costs of the Project.
Without that condition the judges would recommend denying the application.
Without such a condition, the ALJs would recommend denial of the application.
The judges' proposed ordering paragraph covers the life of the McCloud facility. For that life El Paso Electric must hold its other retail customers harmless from any capital or operating costs, unless and until it shows the plant meets the statute's factors.
For the life of the McCloud facility, EPE must hold harmless its retail customers other than Wurldwide from any capital or operating costs of the facility, unless and until EPE demonstrates that, at that time, the McCloud facility satisfies the factors in PURA § 37.056 with respect to its Texas retail customers.
The judges limited the recommended hold-harmless condition to the plant's capital and operating costs.
As for the scope of the hold-harmless condition, the ALJs find that the record supports applying it to the McCloud facility's capital and operating costs.
The judges called intervenors' wider request to cover other negative impacts largely undefined.
While intervenors raise the possibility for other "negative impacts," this concept is largely undefined.
Every intervenor recommended either outright denial or approval conditioned on protections for customers.
All intervenors in this case recommend either outright denial of the application or that any approval be conditioned on requiring various protections for customers.
Commission Staff made no affirmative recommendation. It deferred to the Commission on whether serving one customer is enough to satisfy the certificate standard.
Commission staff (Staff) does not make an affirmative recommendation regarding the proposed generation facility, but instead "defers to the Commission for a determination of whether servicing one customer is enough to satisfy the CCN standard
The parties at the hearing were El Paso Electric, the City of El Paso, Texas Industrial Energy Consumers, Freeport-McMoRan, the Office of Public Utility Counsel, Juan Vargas and Commission Staff.
The following parties appeared through counsel: EPE, the City, TIEC, FMI, OPUC, Mr. Vargas, and Staff.
El Paso Electric operates solely outside the ERCOT region. So it must obtain a certificate or an amendment to build, own or operate a generation facility of more than 10 MW.
An electric utility operating solely outside of the Electric Reliability Council of Texas (ERCOT) power region, like EPE, must obtain a CCN or amendment to an existing CCN to construct, own, or operate a generation facility with a capacity of more than 10 MW.
The Commission will place the case on an open meeting agenda. It will notify the parties of the meeting date and of the deadlines for exceptions, replies and requests for oral argument.
The Commission will place this case on an open meeting agenda for the Commissioners' consideration. The Commission will notify the Administrative Law Judges and the parties of the open meeting date, as well as the deadlines for filing exceptions to the PFD, replies to the exceptions, and requests for oral argument.
The State Office of Administrative Hearings filed the proposal for decision in the docket on September 23rd, 2026.
176 9/23/2026 SOAH PL PROPOSAL FOR DECISION WITH MEMORANDUM
The hearing on the merits was held by videoconference on July 8th, 2026, before SOAH administrative law judges Cassandra Quinn and Arthur D'Andrea.
a hearing on the merits was held on July 8, 2026, via videoconference before SOAH ALJs Cassandra Quinn and Arthur D'Andrea
The evidentiary record closed on August 6th, 2026.
the evidentiary record closed on August 6,2026, with the filing of the parties' proposed findings of fact
El Paso Electric filed its application on December 8th, 2025.
On December 8, 2025, EPE filed an application with the Public Utility
KVIA reported that the five PUCT commissioners will decide whether to accept, change or reject the recommendation, and that a final order is expected by December 7th, 2026.
the five Public Utility Commission of Texas (PUCT) commissioners will make the final decision on whether to accept, change, or reject the recommendation. The PUCT is expected to issue a final order by December 7, 2026.
A public comment opposing the McCloud certificate was filed in the docket on September 1st, 2026.
171 9/1/2026 Joe Ables PC Public comment opposing McCloud CCN - Docket 59076
A public comment from an El Paso Electric residential customer was filed in the docket on September 2nd, 2026.
172 9/2/2026 Mario Gallegos COM Public Comment of Mario Gallegos, El Paso Electric Residential Customer
The Sembrando Esperanza Coalition filed comments from 1118 protestors in the docket on May 19th, 2026.
111 5/19/2026 THE SEMBRANDO ESPERANZA COALITION COM COMMENTS FROM 1118 PROTESTORS
On Monday El Paso City Council authorized the City Attorney, working with the City Manager, to continue settlement negotiations, KVIA reported. The counteroffer it authorized is for a full hold harmless for ratepayers from McCloud's costs.
Monday, the City of El Paso's City Council authorized the City Attorney, in consultation with the City Manager, to continue settlement negotiations and make a counteroffer for a "full hold harmless" for ratepayers from costs of the McCloud Generation facility.
The City says a full hold harmless would also protect customers from other financial impacts, including the potential loss of revenue credits from El Paso Electric's off-system power sales.
would protect customers from other financial impacts, including the potential loss of revenue credits from EPE’s off-system power sales
In a statement KVIA published, El Paso Electric President and CEO Kelly Tomblin said the utility is not seeking to shift those costs onto residential or other customers.
We are not seeking to shift those costs onto residential or other customers.
The judges agreed with El Paso Electric that the cost impacts of Wurldwide's Region 1 load are beyond the scope of this case.
the ALJs agree with EPE that the cost impacts of the Region 1 load are beyond the scope of this proceeding
The judges summarise the City's cost concern. Serving Wurldwide's initial load from system resources uses energy El Paso Electric would otherwise sell off-system, and off-system sales margins are a credit against existing customers' fuel costs.
Serving that load from system resources also consumes energy that EPE would otherwise sell off-system, and off-system sales margins are a credit against the fuel costs existing customers pay.
The judges found the McCloud facility is not needed to serve any El Paso Electric customer other than Wurldwide.
The McCloud facility is not needed to provide service to EPE's customers other than Wurldwide.
The judges found McCloud would be the largest project Enchanted Rock has ever built. El Paso Electric has never worked with Enchanted Rock, and the plant would be its first experience with modular gas generation.
The McCloud facility would be the largest project Enchanted Rock has ever constructed. EPE has never worked with Enchanted Rock, and the McCloud facility would be EPE's first experience with modular gas generation.
El Paso Electric has registered the McCloud facility with the Texas Commission on Environmental Quality under the Standard Permit for Electric Units.
EPE has registered the McCloud facility with the Texas Commission on Environmental Quality under the Standard Permit for Electric Units.
A proposed ordering paragraph requires El Paso Electric to comply with NERC Reliability Standard EOP-012-3 on extreme cold weather preparedness for the McCloud facility.
EPE must comply with NERC Reliability Standard EOP-012-3, governing extreme cold weather preparedness and operations, with respect to the McCloud facility.
The judges declined to recommend the City's proposed cost cap and performance guarantee, saying the hold-harmless condition already protects customers from the plant's costs.
The ALJs decline to recommend the City's proposed cost cap or performance guarantee. These conditions are intended to protect EPE's customers from the costs of the McCloud facility, but this goal would already be achieved by the hold-harmless condition the ALJs recommend above.
McCloud's capital cost is $1,609 per kW, compared with $1,264 per kW for a generic gas combustion turbine in El Paso Electric's 2025 Integrated Resource Plan.
The McCloud facility's capital cost is $1,609 per kW, compared to $1,264 per kW for a generic gas combustion-turbine (CT), as shown in EPE's 2025 Integrated Resource Plan (IRP).