TL;DR · 30-second read
The Short Version
Louisiana is competing hard for data centers, the giant computer warehouses that run artificial intelligence and use enormous amounts of electricity.
Governor Jeff Landry signed an order saying such projects should lose a state tax break if they push up everyone else’s power bills.
The catch: the biggest bill on the table is a $1.8 billion Texas power plant that the state’s largest utility wants to buy, largely to serve a Meta data center. The order does not touch it. The state’s elected utility regulators decide that one, and they are leaning toward no.
Louisiana Gov. Jeff Landry signed an executive order on June 25, 2026, directing Louisiana Economic Development Secretary Susan Bourgeois to write, within 90 days, new requirements that data centers must meet to claim the state’s Data Center Sales and Use Tax Exemption, the Louisiana Illuminator reported. Under the order, data centers that cause electricity prices to rise across the grid should not qualify for the break unless other benefits outweigh the higher prices.
The order arrives amid a dispute over Entergy Louisiana’s proposed $1.8 billion purchase of the Cottonwood power plant in Newton County, Texas, a price more than three times what the plant sold for in 2024. A consultant to the Louisiana Public Service Commission attributed that increase predominantly to the power needs of Meta’s Hyperion data center in Northeast Louisiana. The order explicitly does not apply to Entergy’s generation plans.
Executive Summary
Landry’s order puts Louisiana in the group of states trying to court hyperscale data centers (the very large campuses built by major cloud and AI companies) while promising that households will not subsidize their electricity. It does this through an economic development lever: a sales tax exemption that projects must now earn by showing they will not raise grid-wide power prices, or that their benefits outweigh any increase.
The order’s reach, however, stops short of the decision that currently matters most to ratepayers. Entergy Louisiana’s plan to buy the Cottonwood plant, which consultant Lane Sisung projected would significantly raise monthly bills for the utility’s 1.1 million customers, is before the Public Service Commission, and the order states it does not limit the commission’s authority. That split between the tax lever and the rate lever is the story’s central point for anyone building, financing or siting AI infrastructure in the state.
The Order Polices a Tax Break, Not a Power Plant
The mechanism in Landry’s order is a condition on a tax incentive. Secretary Bourgeois has 90 days to set requirements for the Data Center Sales and Use Tax Exemption that balance investor interests with residents’ electricity costs. A project that raises prices across the grid is meant to lose eligibility unless its other benefits outweigh that effect. That is a gate for future incentive claims, administered by the state’s economic development agency.
The largest cost item currently in view runs through a different gate. Entergy Louisiana’s proposed $1.8 billion purchase of the Cottonwood plant in Texas, more than triple its 2024 sale price, is a generation decision regulated by the Public Service Commission. Sisung’s analysis for the commission said the price increase is predominantly attributable to power demand from Meta’s Hyperion data center, and projected significant monthly bill increases for Entergy Louisiana’s 1.1 million ratepayers if the deal proceeds. The order says it does not apply to Entergy’s generation plans and does not impair the commission’s constitutional or statutory authority.
So whether those 1.1 million customers absorb costs tied to Hyperion’s load will be settled by five elected commissioners, not by the executive order. Republicans hold a 3-2 majority on the commission and have said they are inclined to follow Sisung’s advice against approving the purchase. For developers and utilities, the practical reading is that Louisiana now has two venues for data center cost questions, and the one with direct control over rates is the commission.
Why an Incentive Condition Is Useful but Indirect
Tying a tax break to grid effects is not empty. Incentives are negotiated before a site is chosen, so a cost test attached to them can shape project terms early, for example by encouraging developers to fund their own generation or accept tariffs that assign new-capacity costs to them. That is leverage a governor has and a commission does not.
The limits are equally clear. Generation needed to serve a large new customer is typically committed through utility agreements and regulatory approvals that the incentive does not govern. Whether a project “causes energy prices to rise across the grid” is also a modeling question, and the order’s balancing test, which allows other benefits to outweigh higher prices, leaves room for judgment. How strict the rule proves to be depends on requirements that have not yet been written.
Every Side’s Claims Deserve the Same Scrutiny
Entergy and Meta have said they disagree with Sisung’s assessment, and Landry has said the Cottonwood proposal would breach promises both companies made not to shift electricity costs to ratepayers. The companies’ disagreement is a claim that needs the same testing as the consultant’s conclusion; the commission’s proceeding is where that evidence should be weighed. Entergy Louisiana CEO Phillip May attended the signing and accepted a copy of the order, while the governor said he had not changed his view on Cottonwood.
The critics’ claims also warrant scrutiny. Commissioner Davante Lewis called the event a “PR stunt” and criticized closed-door data center deals. Jackson Voss of the Alliance for Affordable Energy supported the goal but said Landry pressed the commission last year to shorten its review of Entergy’s power agreement with Meta under the governor’s Lightning Speed Initiative. The Sierra Club called the order “hollow.” The Lightning Speed critique goes to how the current cost question arose; the “hollow” charge is a prediction about rules not yet published, and it can be tested against them once they are.
What It Signals for Hyperscale Siting
For companies evaluating Louisiana, the order adds a cost-allocation test to a financial incentive that matters in site selection. Developers should expect to document grid effects when claiming the exemption, and should treat utility and commission proceedings as the place where their power costs, and who pays them, are ultimately fixed.
The episode also shows the tension facing any state pursuing AI buildout: the order describes data centers as a once-in-a-generation opportunity for rural growth while acknowledging that their power demand can raise costs for existing customers. Louisiana’s answer so far splits that problem between two institutions, and the commission’s Cottonwood decision will be the first real test.
Background
Louisiana has actively recruited large data center projects, most prominently Meta’s Hyperion campus in Northeast Louisiana, which Entergy Louisiana has agreed to supply with power. Gov. Jeff Landry’s Lightning Speed Initiative was created to accelerate permitting for Big Tech and AI investments, and the state offers a Data Center Sales and Use Tax Exemption as an incentive.
Electricity rates for Entergy Louisiana’s 1.1 million customers are set by the Louisiana Public Service Commission, an elected five-member body with constitutional authority over utilities. The commission is now reviewing Entergy’s proposed $1.8 billion Cottonwood plant purchase, the first major test of whether costs tied to data center demand will reach household bills. Source: Landry signs order to protect utility customers as he promotes more data center development — Louisiana Illuminator report on Gov. Jeff Landry’s June 25, 2026 executive order tying the state’s data center tax exemption to electricity costs.Sources