Texas T&D Providers Boost Capex to Support Large-Load Influx

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

Sempra Energy is the latest of several U.S. utilities boosting capital spending plans in order to build out infrastructure to support large-load customers such as data centers.

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Data Centers Bring Capex Boost

As Sempra Energy this week gave final closure on 2025 with its fourth-quarter and full-year earnings results, the company joined the ranks of U.S. utilities giving a significant boost to their multi-year capital spending (capex) plans in order to help meet increased power demand from a growing number of large-load customers, most notably data centers, especially those designed to support artificial intelligence (AI)-based computing.

Texas' deregulated power market separates power transmission and distribution (T&D) companies from being able to provide their own generation services. While multiple new generation projects are in the works for the state, significant near-term plans are being formulated by Texas T&D providers, including Sempra's Oncor, CenterPoint and American Electric Power (AEP), to help deliver the power brought by these increased loads.

Sempra's Spending Boost

In its Thursday earnings report, Sempra said that its five-year capital plans had significantly increased, rising from the 2025-2029 period's spending plan of $56 billion to $65 billion from 2026 through 2030.

The company has specific destinations in mind for this deployment of capital, noting that 95% of the spending is for regulated utility investments in Texas and California and stating that the majority of the spending was intended to support its Texas utility, Oncor, the state's largest power distributor.

Oncor

Oncor serves more than 10 million Texans in the north, central and West Texas regions. Perhaps its most significant area of coverage is the Dallas-Fort Worth area, a growing hotspot for data center development, not only at the state level, but also on a national scale. A November report found that Texas has the most AI data center capacity of any U.S. state, representing a significant load both currently present and coming to Oncor's T&D infrastructure, which it is in the process of strengthening.

Industrial Info is tracking a whopping $150 billion worth of active data center projects that range in development from early planning stages to active construction in Industrial Info's TX-03 market zone, which includes the Dallas-Fort Worth (DFW) metroplex. New data center projects are being planned in the immediate DFW area and also creeping south along the Interstate 35 corridor that connects Dallas and Fort Worth to Waco, Austin and San Antonio.

There are multiple data centers on their way to the area that will require Oncor's power delivery services and infrastructure. Two large undertakings represent a shift south from Dallas toward Waco, still very much within Oncor's coverage. These are CyrusOne's data center in Laguna Park, about 80 miles from Dallas, which will include up to nine buildings and require 400 megawatts of power delivered by Oncor.

Oncor is projecting load growth exceeding 4 gigawatts (GW) in the greater DFW region and is already planning one project, its Southern DFW Load Interconnection project, to strengthen its transmission in the area by rebuilding power lines and updating substations. Subscribers to Industrial Info's GMI Project Database can learn more by viewing the related project reports. While a significant project, the spending required for it is only a drop in the bucket of the more than $12 billion in potential projects Oncor has in store for Texas, many surrounding the DFW area, but several others destined for West Texas, where power loads for the oil and gas industry are significant.

CenterPoint

The week prior to Sempra's announcement of its expanded capex plans, another Texas-focused utility, CenterPoint Energy, raised its capex for the 2026-2035 spending period by $500 million, a somewhat modest increase until one realizes the addition is being tacked on to already substantial plans of $65 billion in capital spending during the 10-year period. CenterPoint's service region is primarily in the Gulf Coast area that includes Houston and Beaumont. While not bringing the influx of data centers that the southern DFW area is showing, some substantial developments are expected, with CenterPoint strengthening its power-delivery services accordingly.

CenterPoint updated it load forecast last week, when it bumped up its date for a predicted 50% rise in the Houston-area's peak load to 2029--two years earlier than its previous forecast. Driving this is 7.5 GW of predicted load growth from data centers. While Industrial Info is tracking more than $4 billion of data center projects intended for the Greater Houston area, only a modest amount of these of these are in an active construction phase and represent only medium-scale facilities. However, other substantial developments are on the way in surrounding cities such as Sealy and Katy.

Industrial Info is tracking more than $4 billion active CenterPoint projects to strengthen the grid in the TX-07 market zone that includes Houston. Within this region, the Galveston area is seeing substations upgrades and a power line rebuild, while the area near Wharton, around 60 miles from downtown Houston and not too far from the planned Sealy data center, represents some of CenterPoint's work on the larger Texas 765-kV (kilovolt) STEP Eastern Backbone Project, a multibillion-dollar project involving CenterPoint and other utilities to build a high-capacity transmission line in the state's eastern regions.

AEP

One of the other utilities at work on the Eastern Backbone Project is American Electric Power (AEP), whose Texas T&D holdings, primarily covering northern and central Texas, represent only a portion of its U.S. holdings that extend beyond Texas' primary Electric Reliability Council of Texas (ERCOT) grid to the Southwestern Power Pool (SPP) and PJM Interconnection.

Within AEP's Texas coverage is one of the largest data center projects coming to the state--and the U.S. for that matter--the flagship campus of the muti-locale OpenAI-led Stargate Project. Construction is underway on the 1,200-acre site, consisting of multiple buildings of a few hundred thousand square feet each and ultimately draining an estimated 1.4 GW of the region's power resources.

In October, AEP increased its five-year capital spending plan through 2030 by 33% to $72 billion, stating that load additions by that date were expected to be 28 GW across its national footprint, primarily coming from Texas and Ohio projects.

AEP also is part of the Texas 765-kV STEP Eastern Backbone Project (see project report) , and is lining up T&D projects in the Abilene area such as a new overhead transmission line and an associated substation upgrade. AEP's T&D projects across the whole of the state represent more than $6 billion in planned spending.

Deregulated Power Markets in the U.S.

Texas passed legislation in 1999 deregulating the power market and preventing companies from providing both T&D services and power generation, with the legislation coming into effect in 2002. Similar moves were made in AEP's other main stomping ground, Ohio, around the same time.

This begs the question of where the companies might be putting their money if those and other states didn't have deregulated markets. AEP is pursuing multiple generation outside of Texas and Ohio. including small nuclear reactors (SMRs), windfarms and natural gas power plants, while CenterPoint, which is primarily focused on T&D in Texas and natural gas distribution in Ohio, plans to upgrade a natural gas-fired plant in Indiana.

Maryland also has a deregulated power market separating T&D from generation, which has one of the state's main transmission companies, Exelon, lobbying hard to overturn the system there and in other mid-Atlantic states to allow it to bring power generation to another region with a strong influx of data centers.

New Texas Gas-Fired Generation & Entergy

While Sempra, AEP and Centerpoint's hands are tied in regard to building generation, they are not wrong in preparing for substantial in power loads. Multiple projects to provide solar and wind power are in the works, but the state's largest new centers of growth come from natural gas-fired power plants, most of which are in the planning stage. Industrial Info is tracking several thousand megawatts of planned gas-fired projects in the state as well as more than 3,000 MW of gas-fired generation assets presently under construction. The most notable of these is New Orleans-based Entergy's 1,200-MW combined-cycle plant near Orange, Texas.

With assets outside of the ERCOT grid, Entergy is allowed to operate both generating and T&D assets and, in addition to the gas-fired plant, is underway with nearly $3.7 worth of T&D projects in its East Texas coverage, which falls under the Midcontinent Independent System Operator (MISO) grid.

Entergy earlier this month also raised its capex plans by $2 billion, pointing to AI data centers as the prime driver in capital spending that now reaches $43 billion for the 2026-2029 period, including more than $11 billion in spending this year.

Key Takeaways

• Multiple companies with a solid presence in Texas' T&D sector have announced increases in capital spending.
• Sempra utility Oncor, CenterPoint Energy and AEP are all expecting massive data center load additions within their service territories.
• Sempra, which has a significant presence in Texas, is the latest utility to announce an increase in capex plans, boosting planned spending for the five years from 2026 through 2030 to $65 billion, from previous 2025-2029 plans $56 billion in spending.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).