AI brief, Wednesday 28 October 2026
Texas has paused the largest data-centre interconnection queue in America until it can audit it, with $2bn of security sitting behind 45 GW that cannot switch on. Meanwhile Generac's data-centre backlog reaches $4.5bn, and NiSource starts reporting its earnings twice — once with data centres and once without.
Texas has paused 45 GW of data-centre load until it can audit it
American Electric Power's quarterly filing, out on 28 October, contains the clearest account yet of what is happening to the largest data-centre interconnection queue in the United States — and it is not moving.
The numbers, all AEP's own:
- AEP Texas has executed Letters of Agreement for approximately 49 gigawatts of incremental load by 2031.
- In July 2026 it received about $2bn of financial security — cash collateral, corporate or parental guarantees and letters of credit — for the 45 GW of prospective load seeking to participate in ERCOT's Batch Zero process through 2032.
- In October 2026 it segregated approximately $1.2bn of cash collateral under a new rule that also sets out the consequences of withdrawing requested or contracted peak demand, and the terms on which security is returned once a load actually energises.
Batch Zero is ERCOT's one-time transitional interconnection process, approved by the Texas Public Utility Commission this year, which evaluates large load requests system-wide, allocates available transmission capacity and demands financial commitments from the customers asking for it. It applies to loads of 75 MW or more.
Then, in August, the Governor of Texas directed the PUCT and ERCOT to verify every Batch Zero load and to audit data centre projects of 25 MW and above before any further projects advance. ERCOT missed a deadline in the study process, took a good-cause exception from the PUCT, and in AEP's words "has currently paused Batch Zero classification and study activity and stated it will not authorize large loads to energize until verification is complete".
AEP's own risk language is worth quoting next to the 49 GW: "Projected increases in demand from data centers are subject to uncertainty and may not materialize as expected, or may occur at a different pace or scale than anticipated."
The same filing shows the other big market moving the same way. In PJM, a Statement of Principles directs the operator to hold a one-time Reliability Backstop Auction and accelerate capacity market reform "in response to unprecedented data center load growth", aligning the cost of new capacity with the large load customers that make it necessary.
Why it matters. For three days this site has measured the gap between announced data-centre pipelines and power actually delivered. Here is the gap becoming policy. Two things follow. First, a gigawatt figure in a press release now has a price: $2bn of security against 45 GW, and a rule specifying what happens when a customer walks away — which is a regulator's way of saying it no longer believes the queue. Second, the audit is an admission that nobody, including the grid operator, knows how much of that 45 GW is real. Speculative duplicate requests inflate every forecast built on the queue, and those forecasts are what utility capital plans and merchant generation bets are sized against. Watch for the verified number when it lands; the difference between it and 45 GW is the most useful figure anyone will publish about AI power demand this year.
Source: American Electric Power, Form 10-Q for the quarter ended 30 September 2026, filed 28 October 2026 (SEC EDGAR).
Generac's data-centre backlog hits $4.5bn, and Amazon is $2.4bn of it
Generac, which makes generators, reported record third-quarter net sales of $1.29bn, up 16%. The commercial and industrial segment did the work: external net sales up 28% to $552m, against $432m a year earlier. Net income was $109m, or $1.83 a share, against $66m and $1.12.
The two disclosures that matter are about one customer and one number. Generac has entered an agreement with Amazon.com that includes a long-term supply agreement for backup power generators for Amazon's data centres, with initial deliveries expected to total a combined $2.4bn across 2027 and 2028. And chief executive Aaron Jagdfeld said that after the Amazon deal "along with other wins from both new and existing customers, our backlog for products to be sold to the data center market has now grown to approximately $4.5bn".
Why it matters. Read this against the item above. The grid route into ERCOT is paused pending an audit; the diesel-and-gas route is booking billions in firm orders with delivery dates. Backup generation is not the same product as grid capacity — it is sized for outages, not for continuous load — but a $4.5bn backlog is a lot of iron to buy for a contingency, and it is consistent with operators treating onsite power as the thing that gets a building to revenue while the interconnection is uncertain. It is also the second day running that a supplier's order book, rather than a utility's forecast, has been the more reliable evidence about the build-out: yesterday Vertiv paid $1.45bn for behind-the-meter capability, today Generac names its data-centre backlog. Suppliers get paid on signed orders, which is a harder number than a pipeline.
Source: Generac Holdings, third-quarter 2026 results, Exhibit 99.1 to Form 8-K, 28 October 2026 (SEC EDGAR).
NiSource now reports its earnings twice: with data centres, and without
NiSource, the Indiana-based utility, reported on 28 October and extended its long-term plan to 2033. Consolidated adjusted earnings per share are now guided to compound at 10–11% a year for 2027–2033, against 6–8% for what the company calls its "base plan". The capital programme behind it is $32.0bn of base plan capital expenditure plus $8.0bn specifically for data centre investments across those seven years.
The structural detail is the reason for those two numbers. NiSource now presents "base plan adjusted EPS" which excludes the impact of data centre operations and development activities — including providing electric service to current and future data centre or other large load customers — on the stated grounds that it "expects that the earnings from its data center operations and development activities will experience a different growth profile". Separately, signed agreements through its GenCo structure, including a new agreement with Microsoft, are expected to deliver about $1.75bn of savings for existing customers.
Why it matters. A regulated utility has just split its own earnings presentation in two because one class of customer has a different risk and growth profile from everybody else. That is an accounting decision with a reading attached: data-centre earnings are being quarantined from the number by which the core utility is judged — useful if that load turns out to be as uncertain as AEP's filing says it might be, and a tacit acknowledgement that it is. The $1.75bn of customer savings is the political half of the same arrangement: the answer to the ratepayer question the first brief this site published raised, when PG&E argued that a gigawatt of data-centre load could cut everybody else's bill. Here is a utility putting a number on that claim in a signed contract rather than a projection.
Source: NiSource, third-quarter 2026 results, Exhibit 99.1 to Form 8-K, 28 October 2026 (SEC EDGAR).
Three items again today. Microsoft and Alphabet report after the US close this evening and Amazon tomorrow, so the hyperscaler capital-expenditure numbers — the ones that will set the tone for the week — are not filed yet and will lead tomorrow's brief. No Ark7 mention in today's items: the interconnection pause is an ERCOT matter and Ark7's Georgia project is not in that market, so drawing the comparison would have been geographically wrong. The advertisement on this page is unaffected and labelled, as always. How this site works.