Two things happened in Texas energy this week that look like opposites and are, on closer inspection, the same story. At the top of the capital stack, NextEra agreed to swallow Dominion for roughly $67 billion — the largest utility acquisition in American history, structured end to end to chase the load that AI data centers are about to drop on the grid. At the bottom, the city council in El Paso voted to advance a proposal that would hand future data centers exactly zero tax breaks. Bigger and angrier, in the same seven days, pointed at the same thing.

The connective tissue is power: who builds it, who pays for it, and what it is actually made of. And on that last question the answer quietly shifted this week too — the EIA now expects solar to outproduce coal across ERCOT for the first full year in the grid's history. Scale is the strategy. Cost allocation is the battlefield. And the resource keeping the lights on is the one nobody is fighting about.

"The World's Largest Utility," Built for the AI Load

NextEra Energy agreed on May 18 to acquire Dominion Energy in an all-stock deal valued at nearly $67 billion, creating what both companies are calling the largest regulated utility in the world — roughly 10 million customers across the Southeast and a combined market capitalization near $249 billion. The merger agreement is dated May 15. Dominion holders get a 23% premium and 25.5% of the combined company; NextEra holders keep 74.5%. It is the biggest utility tie-up the country has seen and the largest energy-sector deal since Exxon bought Mobil in 1998.

The logic is not subtle. Dominion sits on top of Northern Virginia, the densest data center cluster on earth. NextEra brings Florida, the largest renewables fleet in the country, and a gas-hub buildout that includes a 5.2 GW project in Anderson County, Texas. Combined, the two would carry a roughly 130 GW large-load pipeline — a backlog of hyperscaler interconnection requests larger than the peak demand of most countries. The bet is that only a balance sheet this size can build generation fast enough to serve it.

I have spent the last two issues on the question of who pays for data center load. This is the supply-side answer to the same pressure: when you cannot build fast enough, you buy someone who already has. Expect NextEra's post-announcement stock dip and the antitrust clock to set the tone for the next few weeks, and expect at least one rival to start quietly shopping. The first AI-era utility mega-merger is rarely the last.

Solar Beats Coal in ERCOT, and No One Built a Plant to Stop It

The EIA's latest Short-Term Energy Outlook projects ERCOT solar generation at 78 billion kWh in 2026 against 60 billion kWh for coal — the first full year solar outproduces coal in the grid's history, per the agency's own data. Solar's share of the ERCOT mix has climbed from 4% in 2021 to 12% in 2025; coal has slid from 19% to 13%. About 40% of all U.S. solar capacity added this year, roughly 14 billion kWh worth, lands in Texas.

The detail that matters is the one in the generator inventory: there are no new coal plants planned in ERCOT, none. This is not solar winning an argument. It is solar winning by attrition while coal stops showing up. Solar already passed coal on a monthly basis back in March 2025; 2026 just turns it into an annual fact, every month except December.

Hold that against the load forecasts everyone keeps quoting. The queue headlines are gas and nuclear, because firm power is what hyperscalers say they want. But the electrons actually being added to the Texas grid right now are overwhelmingly solar — and, as the next story shows, the batteries that make solar dispatchable after the sun goes down.

El Paso Electric Wants a Data-Center Rate Class. The City Wants No Tax Breaks.

El Paso Electric is asking the PUCT to create a dedicated "High Load Factor Large Power" tariff — a rate class built specifically for data centers, with Meta's planned $10 billion El Paso campus as the anchor tenant. The filing includes a bridge period of one to five years during which Meta pays the full delivery cost of serving it; after that window, the cost of the generation built for the campus begins to shift onto the broader customer base.

Two days later, on May 21, the El Paso city council advanced a separate proposal: stricter oversight of AI data centers, mandatory water- and energy-use disclosure, and no tax abatements or incentives for new projects.

This is the cost-allocation fight I keep circling, except now it has a specific utility, a specific city, and a specific mechanism — that bridge period, after which the bill moves. The notable part is not that El Paso worries about cost-shifting. Everyone does. It is that a mid-size Texas city is moving to kill incentives at the exact moment NextEra is spending $67 billion on the premise that this load is the best customer the utility industry has ever had. Somebody is wrong about the economics. Probably both, in different places.

400 Megawatt-Hours in Del Rio and Laredo, and the 53% Nobody Mentions

Spearmint Energy brought two standalone ERCOT batteries to commercial operation this week: Tierra Seca near Del Rio and Seven Flags near Laredo, each 100 MW / 200 MWh, for a combined 200 MW / 400 MWh. Routine on its own. The context is not: Texas accounts for roughly 12.9 GW, or 53%, of the 24 GW of utility-scale battery storage the U.S. plans to add in 2026.

ERCOT entered the year with close to 13.9 GW of operational storage, nearly double the figure twelve months earlier. NERC's summer reliability assessment credits about 7.5 GW of new Texas batteries with firming the evening ramp as solar rolls off. That is the unglamorous machinery making the solar-over-coal headline real — and a big part of why ERCOT thinks it can clear a summer peak it now pegs in the 90-to-98 GW range, comfortably above the 85,508 MW record set in August 2023.

What to Watch Next Week

NextEra-Dominion's regulatory gauntlet. The Hart-Scott-Rodino antitrust clock starts now, and regulators in Virginia, the Carolinas, and Florida all get a say. Watch for analyst downgrades after NextEra's stock dip, and for a rival utility to start its own shopping.

The PUCT large-load rule. The final version of the interconnection rulemaking is due mid-year, including the $50,000-per-MW non-refundable fee. El Paso Electric's data-center tariff is the first real test case for how the cost actually gets split.

ERCOT's batch interconnection. The board is expected to approve the new batch process, targeting an August 1 effective date, with the PUCT weighing in during July. Any change reshapes a queue now sitting north of 450,000 MW.

The first heat. Peak season is here. The first sustained heat event will test whether the 90-plus GW forecast and the new battery fleet hold up. A fresh all-time record is well within reach.

El Paso's council vote. If the no-incentives proposal becomes policy, expect other Texas municipalities to reach for the same template.

Disclaimer: The Grid Report is Barrio Energy's market intelligence product. Nothing here is investment advice. Links go to primary sources wherever possible; form your own view.