In Reeves County, The Poorest Kids Pay For Microsoft's AI And Chevron's Emissions
A $7 billion private gas plant, a $227 million tax break, and a school district that never had a chance.
Texas Republicans have spent thirty years constructing an economic model that works when corporations want something, Republicans give it to them, and the bill goes to everyone else. Sometimes it’s a water supply. Sometimes it’s a school budget. Sometimes it’s a regulatory agency that exists mostly to approve whatever the industry asks for.
And tax abatements. One of the biggest reasons Texas has some of the highest property taxes in America is the use of tax abatements.
What happens when Texas Republicans write a law, include a rule that says this specific thing is not allowed, and a corporation just... ignores the rule? And the Republican officials who are supposed to enforce it say yes anyway?
That’s what’s happening in a West Texas school district, where a Chevron shell company and a Microsoft data center are about to make $227 million in public money quietly disappear.
And it fits the pattern of everything I’ve been writing about recently with tax abatements, data centers, and industry so perfectly that I almost can’t believe it’s real.
But it is.
The setup.
In 2023, Texas Republicans passed a bill called the Jobs, Energy, Technology, and Innovation Act (JETI). It replaced Chapter 313, the previous corporate tax giveaway program that got so embarrassing and so expensive that even Texas Republicans eventually had to kill it. JETI was supposed to be the responsible version.
One of those guardrails was explicit. Data centers are not eligible. The legislature made that call deliberately.
So Chevron looked at that rule, thought about it for a minute, and created a subsidiary called Energy Forge One LLC. Energy Forge One is not, technically, a data center. It’s a power plant. A gas-fired power plant in Pecos, Texas, in the heart of the Permian Basin, that will generate electricity solely and exclusively for a data center and will not connect to the public grid at all. Not one electron goes to a Texas home or business. Not one kilowatt supports the grid that you and I pay into every month.
It is a private gas plant built to serve a private corporation and operating entirely outside the state’s shared electrical infrastructure.
And it qualifies for JETI because it is, technically, a power plant.
This is the loophole. And the Republican-controlled state apparatus approved it.
The numbers.
Let’s be specific about what we’re talking about.
The plant would generate up to 2,500 megawatts of electricity, with the potential to expand to 5,000 megawatts. The price tag on the project is approximately $7 billion. The partners are Chevron, the activist investment fund Engine No. 1, and Microsoft, which signed an exclusivity agreement in March even as it publicly maintains there is “no definitive agreement.”
The JETI tax abatement Energy Forge One applied for is worth more than $227 million over ten years. That money comes from school district property taxes. Under the program’s structure, the state covers the abatement, so the local school district (Pecos-Barstow-Toyah ISD) doesn’t see the budget shortfall directly. The school board approved the application in February without apparent objection.
Which makes sense because, given how these programs are designed, there’s no reason for a local school board to object. The cost is invisible at the local level. It’s laundered through the state budget, spread across every taxpayer in Texas, and attributed to “economic development.”
It’s worth noting that over 73% of Texas school districts are underfunded, with nearly 17% classified as “severely underfunded”. Despite the state’s economic growth, per-student funding lags roughly $4,000 behind the national average.
The application says the plant will create “over 25 permanent, full-time jobs.” Twenty-five jobs. For a $7 billion facility. And because Energy Forge One classified itself as an electricity generation facility, the same classification that makes it eligible for JETI, it isn’t even required to meet a jobs threshold. They put the number in there as a courtesy. They don’t have to hit it.
Twenty-five jobs. $227 million in tax savings. Do that math.
The rule they broke in plain sight.
I want to be precise here.
The Texas JETI program explicitly excludes data centers from eligibility. It’s written into the program’s industry eligibility rules, listed by NAICS code. The Texas Comptroller’s own FAQ says it directly. Data centers are out.
So the question that should be asked is if the power plant exists solely to serve a data center, if it doesn’t connect to the public grid, if its only customer is a data center, if the reason it is being built is because Microsoft needs power for artificial intelligence infrastructure, at what point does calling it “a power plant” stop being a legal distinction and start being a fraud?
The answer, in Republican Texas, is apparently never.
Because the Republican Comptroller’s office reviewed Energy Forge One’s application and, in January, issued a recommendation to approve it, the first such approval in the history of the JETI program for a power plant built solely to serve a data center. There are no other behind-the-meter plants in the JETI pipeline. This is the first. This is the test case. And the Republican-run state apparatus said yes.
The emissions are an atrocity.
While we’re here, let’s talk about what this plant will actually do to the air.
According to Wired’s analysis, Energy Forge One would emit more than 11.5 million tons of CO₂ equivalent annually. That is more than the entire country of Jamaica emitted in 2024.
One power plant. Built not for the public. Not for the grid. For a Microsoft data center.
Hey, while we’re on the topic… have you heard this year will be a Super El Niño? It’s extremely relevant.
Wired analyzed fewer than a dozen of these behind-the-meter data center gas plants currently under construction or permitted across the country and found that together they emit more than many small- to medium-sized nations.
This is the AI energy boom that no one in Washington is willing to describe honestly. Tech companies decided they didn’t want to wait years for grid interconnection. So they’re building their own private gas infrastructure, in the middle of fossil fuel country during the climate collapse, collecting whatever public subsidies they can grab on the way in, and leaving the emissions for the rest of us to absorb.
And Texas Republicans are handing them the keys.
The “good neighbor” who isn’t paying rent.
There is a particular piece of this story that should make you furious, so let me make sure you see it.
In January 2026, Microsoft put out a public statement pledging to be a “good neighbor” in the communities where it builds data centers. The company promised, in writing, to pay a “full and fair share of local property taxes.”
In March, Chevron confirmed that Microsoft had signed an exclusivity agreement on the Energy Forge project.
In May, Wired reported that the project is on track to receive $227 million in JETI tax abatements, meaning Microsoft’s power supplier is specifically, deliberately, structurally avoiding paying its full share of local property taxes.
The “good neighbor” pledge is a press release, not a contract.
Microsoft told Wired the commercial terms “have not been finalized.” But Chevron’s exclusivity agreement is real, the application has been filed, and the Comptroller’s recommendation has already been issued. The machinery is running. The disclaimer is just a cover.
This is the program they killed Chapter 313 to build.
Here’s the context that cannot be separated from this story.
JETI replaced Chapter 313, the previous Texas school property tax abatement program, which had become a national embarrassment. Chapter 313 was so widely abused, so nakedly captured by corporate interests, so far removed from its original intent, that Texas Republicans, people who have never met a corporate subsidy they didn’t like, eventually let it expire.
They replaced it with JETI, which was supposed to have better guardrails. Tighter eligibility. More accountability.
JETI has been in effect for less than two years.
And it’s already being used, with the Comptroller’s blessing, to funnel school tax dollars to a Chevron subsidiary building a private gas plant for Microsoft’s artificial intelligence infrastructure.
Yet, there are Texans who are dying TODAY because they don’t have access to healthcare.
Meanwhile, the broader data center sales tax exemption, a separate program that allows data centers to avoid paying sales taxes on equipment purchases, is now costing Texas more than $1.3 billion annually in lost revenue. The Comptroller’s office projects it will cost $3.2 billion over the next two biennia. Lt. Gov. Dan Patrick, a Republican, recently called those numbers “concerning” and directed the Senate to study them. State Senator Joan Huffman said she’s considering legislation to repeal the exemption entirely. But she won’t, because she’s a Republican. She’s the same Republicans who redrew the racist maps in 2021 and let Texas inmates get baked to death in prisons, year after year.
The same Republican leadership that built this architecture is now performing alarm about where it leads. That’s the show. That’s always the show. I’m not calling it political theater, I’m calling it Republican theater.
The pattern.
In Corpus Christi, Republican leadership spent twenty years prioritizing industrial water contracts over the supply that residents needed, and now the city is drilling emergency wells. Then, there’s Project Matador in the Panhandle, where a 99-year lease on public university land was handed to a company with no revenue, no signed tenants, and founders who walked away with billions in paper wealth before a single server went online. And in Abilene, residents pay $3,000 a month in rent while the corporations driving that cost collect 85% tax abatements.
What Chevron just did with JETI is not an anomaly. It is the natural endpoint of a system that Texas Republicans built, maintain, and protect. A system where the rules exist to be reframed. Where the guardrails are suggestions, where “data centers are excluded” means “call it a power plant.”
The Pecos-Barstow-Toyah school district is in Reeves County, one of the poorest counties in Texas. The median household income is roughly $40,000. The district serves the kids of a West Texas oil town. And the Republican government of the state of Texas just recommended giving $227 million from its school tax base to Chevron, so Chevron can sell electricity to Microsoft, so Microsoft can run the AI infrastructure that will make it one of the most valuable companies in human history.
Twenty-five jobs.
And they told you it was for the jobs.
What you can do.
The JETI application for Energy Forge One, application ID J0022, is a matter of public record. The Comptroller’s recommendation has been issued, but a final agreement still requires the Governor’s office sign-off.
Contact your Texas state representative and state senator and ask them directly. Do they support JETI tax abatements for private gas plants that serve data centers and don’t connect to the public grid?
Ask them whether a program that explicitly excludes data centers should be used to subsidize Chevron’s private electricity sales to Microsoft.
Ask them what Texas gets out of this. Ask them to say the number out loud.
Twenty-five jobs.
This article is part of an ongoing series on data centers, water rights, and corporate power in Texas. Previous pieces:
Abilene Is Paying The Price For Texas’ Billionaire Giveaways
Project Matador: The Biggest Billionaire Giveaway In Texas History
May 22, 2026: Last day of early voting (Democratic primary runoff elections)
May 26, 2026: Last day to receive ballot by mail (Democratic primary runoff elections)
May 26, 2026: Election day! (Democratic primary runoff elections)
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