As Texas considers the proposed building of three 765-kilovolt transmission lines, a new study is challenging the underlying assumptions of one of the largest infrastructure proposals in state history, saying the lines are too costly and driven by a desire to accommodate data center demands and corporate ESG goals.
In the study, Dr. Brent Bennett, the policy director for Life:Powered, an initiative of the Texas Public Policy Foundation, is calling for a pause on the Energy Reliability Council of Texas’s Strategic Transmission Expansion Plan, or STEP, arguing that the proposal would saddle Texans with enormous costs while primarily benefiting large industrial customers and data centers.
Under the plan, three proposed extra-high-voltage transmission lines would form the backbone of a statewide expansion of the Texas electric grid. But Bennett says the lines aren’t necessary to meet the needs of ordinary Texans, and policymakers should consider less expensive and less disruptive alternatives that could achieve the same reliability objectives.
“The STEP—which includes the Permian Basin Reliability Plan and related long-distance transmission projects approved through December 2025—would impose nearly $100 billion in lifetime costs on Texas ratepayers and result in irreversible property losses for thousands of landowners across the state,” Bennett wrote in the study.
Those projects also carry an estimated capital cost of approximately $33 billion, Bennett asserted.
The debate has become a flashpoint in Texas because of intersecting issues that are emergent around the country: growing electricity demand from data centers, pressure to expand renewable energy infrastructure, the use of eminent domain, and the question of who ultimately pays for major grid investments.
Who Needs the Lines?
Supporters of the project argue that Texas faces rapidly growing electricity demand driven by population growth, industrial activity, and the explosive expansion of artificial intelligence and data centers.
The study does not dispute demand growth. Instead, Bennett argues that the proposed transmission lines are not primarily intended to serve households and small businesses.
“Their primary rationale is to help ERCOT (Electric Reliability Council of Texas) manage a future system with ever more wind and solar power connecting to the grid to meet growing industrial demand,” he wrote. “In other words, the projects in the 765-kV STEP, particularly the 765-kV lines themselves, are a policy choice, not an economic or reliability necessity.”
ERCOT and the PUC (Public Utility Commission) did not examine whether cheaper, more reliable alternatives, especially properly sited dispatchable generation closer to demand, could achieve the same or better reliability outcomes with fewer land-use impacts and lower costs to ratepayers, Bennett continued.
According to the report, ERCOT’s planning assumptions favor moving larger quantities of electricity generated by wind and solar facilities across long distances rather than increasing local dispatchable generation closer to where electricity is consumed. As such, the transmission lines themselves fail to address the need to increase the supply of reliable generation.
One of the study’s key points is that the proposed transmission buildout would reduce future generation and transmission spending by no more than about 2 percent through 2038, meaning considerable private investment in reliable generation will be needed with or without new transmission.
Indeed, Bennett observed, a study from Energy Ventures Analysis found that the 765-kV lines do not materially change ERCOT’s long-term generation mix and leave future price outcomes largely unchanged when compared with scenarios that rely more heavily on properly located gas generation.
Following the Money
Bennett’s study says the principal beneficiaries include transmission companies, power plant developers, ERCOT administrators, and large industrial electricity users.
Transmission companies stand to gain because they earn regulated returns on capital investments. The study estimates that companies constructing the lines could receive approximately $25 billion in equity returns over the life of the project.
Large industrial consumers would also benefit because expanded transmission capacity gives them greater access to renewable energy resources located throughout Texas.
“This group may not seem like an obvious beneficiary, since the 765-kV lines significantly raise their transmission cost burden, but the new class of data centers cares more about grid access than marginal transmission costs,” the study stated.
Also, Bennett stated, many consumers seeking to meet net-zero emissions goals want to access wind and solar power via the grid rather than be forced to build on-site gas generation.
“The 765-kV STEP is built on many assumptions that are fundamentally driven to satisfy the desire of large industrial consumers—from oil and gas majors to new data centers—to purchase more wind and solar from across Texas,” Bennett wrote.
The report argues that these corporate preferences should not dictate statewide infrastructure policy. Meanwhile, Bennett argues that ordinary ratepayers receive little measurable benefit.
Indeed, new transmission lines would have minimal impact on future energy prices, and modeling cited in the report showed that constructing new natural gas generation closer to demand centers produced nearly identical price outcomes while avoiding much of the transmission investment.
Alongside the financial burdens to ratepayers, property rights concerns loom large. The report estimates that new transmission corridors crossing rural Texas could affect thousands of landowners, resulting in irreversible property losses across the state. Because major transmission projects often require extensive rights-of-way, landowners can face condemnation proceedings or pressure to grant easements across family farms, ranches, and other private property.
Then, too, the study argues, those property owners have had little opportunity to influence the planning process.
“Unlike the many stakeholders who will benefit from the 765-kV STEP, the people who will be harmed by it—the residential and small commercial ratepayers who will only see the pass-through costs and no market benefits, plus the landowners whose land is seized and devalued—had no direct say in the planning process prior to the CCN applications being filed,” Bennett wrote.
The STEP, Bennet emphasized, was approved without legislation.
“The fact that a plan the size of the 765-kV STEP was instituted without any direct mandate from the Texas Legislature (in contrast to the CREZ lines that were expressly directed by legislation) is a profound mistake that must be corrected,” he wrote. “Now is the time for the PUC to halt the CCN applications and allow the Legislature to consider the 765-kV STEP more carefully during the 2027 legislative session.”
In addition to reevaluating the STEP, the Legislature should require a more transparent public planning process for statewide transmission projects and ensure that ERCOT’s planning protects consumers and property owners rather than shifting risk and cost onto the public for the benefit of a narrow set of stakeholders, Bennett wrote.
A Different Path
Texas has alternatives, the study asserted. Specifically, the study suggests adding new natural-gas generation in West Texas and strategically locating additional generation resources throughout ERCOT.
“Adding 4-5 GW of gas generation in West Texas and shifting some generation across the other regions of the ERCOT grid could eliminate the need for the 765-kV lines,” the report states.
In other words, reliability is achieved by producing electricity where demand exists rather than by continually expanding the distance electricity must travel.
“Building local reliable power sources instead of costly and damaging long-distance extension cords makes more economic sense,” Margaret Byfield, the executive director of American Stewards of Liberty, said in reaction to the report.
The report said a number of options were available, but one reform was essential.
“Regardless of which option or set of options is pursued, the 765-kV STEP and the massive growth in data center demand have combined to expose the fact that the ERCOT market must be reformed to serve ratepayers first and not special interests,” the study concluded. “Only the elected representatives of the people in the Legislature can ensure that this happens, and it is time for policymakers to roll up their sleeves and get to work.”
In a related action last Friday, American Stewards of Liberty (ASL) filed a procedural motion asking regulators to defer any determinations that the proposed 765-kV transmission projects are needed until completion of a related proceeding examining the underlying assumptions behind ERCOT’s Permian Basin Reliability Plan.
According to the motion, the question of whether the transmission lines are necessary is common to all of the pending cases and should be decided only after the Public Utility Commission has a complete record before it. The filing argues that acting sooner in the separate cases could produce inconsistent findings based on disputed assumptions about the need for long-distance transmission and whether alternatives such as additional local generation were adequately considered.
“The asserted need for the proposed 765-kV projects is based upon the premise that the Permian Basin lacks sufficient electrification to support anticipated load growth in the region and therefore requires substantial new transmission infrastructure to import power from other regions of ERCOT,” ASL states in its motion. “However, that premise and the analyses underlying it remain the subject of extensive briefing and dispute.”
Among the issues raised, ASL asserts, is whether the PBRP improperly assumed, rather than evaluated, continued separation between generation resources and Permian Basin load; whether alternatives involving additional local generation were adequately studied before recommending approximately 1,255 miles of new 765-kV transmission facilities; whether the analyses underlying the PBRP effectively embedded the conclusion that long-distance transmission expansion was necessary by assuming that future generation would continue to be sited away from load; and whether the record demonstrates that transmission expansion is the most reasonable, cost-effective, and least burdensome means of addressing reliability concerns.
