El Paso City Council Pushes for Ratepayer Protection in Meta Data Center Power Deal

El Paso's City Council on Monday authorized the City Attorney to continue settlement negotiations seeking a "full hold harmless" agreement that would prevent ratepayers from bearing the costs of a proposed natural gas generation facility tied to Meta's data center expansion, according to KVIA.

The McCloud Generation facility, which El Paso Electric Company (EPE) proposes to construct as a 366-megawatt natural gas plant, would primarily serve Meta's data center operations in the region. During Monday's meeting, the City Attorney's Office briefed Council on the status of EPE's application with the Public Utility Commission of Texas (PUCT).

Two Administrative Law Judges issued a recommendation September 23 that placed strict conditions on approval of the project. The judges found that the McCloud facility may be approved only if protections exist to prevent EPE's other customers from paying for the plant's construction and operating costs throughout its lifespan. Without those protections, the judges recommended denying EPE's application entirely. The judges also determined that if EPE seeks to shift costs to other customers in the future, the company would first have to return to state regulators and demonstrate that such cost recovery is justified.

According to KVIA, the judges additionally found that EPE failed to adequately examine alternatives or prove that the McCloud facility represented the most cost-effective option available.

City officials said a "full hold harmless" agreement would extend beyond construction and operating costs to protect customers from other potential financial impacts, including losses of revenue credits from EPE's off-system power sales.

The ALJ recommendation is not final. The five PUCT commissioners will decide whether to accept, modify, or reject the judges' recommendation. A final order from the PUCT is expected by December 7, 2026.