diff --git a/.unreleased/allow-alter-extension-in-transaction b/.unreleased/allow-alter-extension-in-transaction
new file mode 100644
index 00000000000..d3c7f90e7ae
--- /dev/null
+++ b/.unreleased/allow-alter-extension-in-transaction
@@ -0,0 +1 @@
+Fixes: #10313 Allow running ALTER EXTENSION timescaledb UPDATE inside a transaction block
diff --git a/src/loader/loader.c b/src/loader/loader.c
index 51b6a9c1453..cab81096c2b 100644
--- a/src/loader/loader.c
+++ b/src/loader/loader.c
@@ -392,6 +392,27 @@ should_load_on_create_extension(Node const *const utility_stmt, TsExtension cons
 	return false;
 }
 
+static bool
+should_load_on_transaction(Node const *const utility_stmt)
+{
+	TransactionStmt *stmt = (TransactionStmt *) utility_stmt;
+
+	/*
+	 * Do not load the extension just to open a transaction. This lets ALTER
+	 * EXTENSION ... UPDATE run as the first extension-touching command inside
+	 * a transaction block instead of failing because BEGIN already loaded the
+	 * old version.
+	 */
+	switch (stmt->kind)
+	{
+		case TRANS_STMT_BEGIN:
+		case TRANS_STMT_START:
+			return false;
+		default:
+			return true;
+	}
+}
+
 static bool
 load_utility_cmd(Node const *const utility_stmt, TsExtension const *const ext)
 {
@@ -403,6 +424,8 @@ load_utility_cmd(Node const *const utility_stmt, TsExtension const *const ext)
 			return should_load_on_alter_extension(utility_stmt, ext);
 		case T_CreateExtensionStmt:
 			return should_load_on_create_extension(utility_stmt, ext);
+		case T_TransactionStmt:
+			return should_load_on_transaction(utility_stmt);
 		case T_DropStmt:
 			return !drop_statement_drops_extension((DropStmt *) utility_stmt, ext);
 		default:
diff --git a/test/expected/loader-oss.out b/test/expected/loader-oss.out
deleted file mode 100644
index cf47fa1bb6d..00000000000
--- a/test/expected/loader-oss.out
+++ /dev/null
@@ -1,560 +0,0 @@
--- This file and its contents are licensed under the Apache License 2.0.
--- Please see the included NOTICE for copyright information and
--- LICENSE-APACHE for a copy of the license.
-\set TEST_DBNAME_2 :TEST_DBNAME _2
-\c :TEST_DBNAME :ROLE_SUPERUSER
-CREATE DATABASE :"TEST_DBNAME_2";
-DROP EXTENSION timescaledb;
---no extension
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-\c :TEST_DBNAME :ROLE_SUPERUSER
-CREATE EXTENSION timescaledb VERSION 'mock-1';
-WARNING:  mock init "mock-1"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
-CREATE EXTENSION IF NOT EXISTS timescaledb VERSION 'mock-1';
-WARNING:  mock post_analyze_hook "mock-1"
-NOTICE:  extension "timescaledb" already exists, skipping
-CREATE EXTENSION IF NOT EXISTS timescaledb VERSION 'mock-2';
-WARNING:  mock post_analyze_hook "mock-1"
-NOTICE:  extension "timescaledb" already exists, skipping
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-1"
-\set ON_ERROR_STOP 0
---test that we cannot accidentally load another library version
-CREATE EXTENSION IF NOT EXISTS timescaledb VERSION 'mock-2';
-ERROR:  extension "timescaledb" has already been loaded with another version
-\set ON_ERROR_STOP 1
-\c :TEST_DBNAME :ROLE_SUPERUSER
---no extension
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-CREATE EXTENSION timescaledb VERSION 'mock-1';
-WARNING:  mock init "mock-1"
---same backend as create extension;
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---start new backend;
-\c :TEST_DBNAME :ROLE_DEFAULT_PERM_USER
-SELECT 1;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
---test fn call after load
-SELECT mock_function();
-WARNING:  mock post_analyze_hook "mock-1"
-WARNING:  mock function call "mock-1"
- mock_function 
----------------
- 
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
-\c :TEST_DBNAME :ROLE_DEFAULT_PERM_USER
---test fn call as first command
-SELECT mock_function();
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
-WARNING:  mock function call "mock-1"
- mock_function 
----------------
- 
-(1 row)
-
---use guc to prevent loading
-\c :TEST_DBNAME :ROLE_SUPERUSER
-SET timescaledb.disable_load = 'on';
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-SET timescaledb.disable_load = 'off';
-SELECT 1;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-\set ON_ERROR_STOP 0
-SET timescaledb.disable_load = 'not bool';
-WARNING:  mock post_analyze_hook "mock-1"
-ERROR:  parameter "timescaledb.disable_load" requires a Boolean value
-\set ON_ERROR_STOP 1
-\c :TEST_DBNAME :ROLE_SUPERUSER
-RESET ALL;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-\c :TEST_DBNAME :ROLE_SUPERUSER
-SET timescaledb.disable_load TO DEFAULT;
-SELECT 1;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-\c :TEST_DBNAME :ROLE_SUPERUSER
-RESET timescaledb.disable_load;
-SELECT 1;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-\c :TEST_DBNAME :ROLE_SUPERUSER
-SET timescaledb.other = 'on';
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-\set ON_ERROR_STOP 0
---cannot update extension after .so of previous version already loaded
-ALTER EXTENSION timescaledb UPDATE TO 'mock-2';
-ERROR:  extension "timescaledb" cannot be updated after the old version has already been loaded
-\set ON_ERROR_STOP 1
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-CREATE EXTENSION timescaledb VERSION 'mock-1';
-WARNING:  mock init "mock-1"
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---start a new backend to update
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-ALTER EXTENSION timescaledb UPDATE TO 'mock-2';
-WARNING:  mock init "mock-2"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-2"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-2"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---drop extension
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-2"
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-CREATE EXTENSION timescaledb VERSION 'mock-2';
-WARNING:  mock init "mock-2"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-2"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-2"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
--- test db 1 still has old version
-\c :TEST_DBNAME :ROLE_SUPERUSER
-SELECT 1;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---try a broken upgrade
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-SELECT * FROM test.extension;
-WARNING:  mock init "mock-2"
-WARNING:  mock post_analyze_hook "mock-2"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
-\set ON_ERROR_STOP 0
-ALTER EXTENSION timescaledb UPDATE TO 'mock-3';
-ERROR:  extension "timescaledb" cannot be updated after the old version has already been loaded
-\set ON_ERROR_STOP 1
---should still be on mock-2
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-2"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-2"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---drop extension
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-2"
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
---create extension anew, only upgrade was broken
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-CREATE EXTENSION timescaledb VERSION 'mock-3';
-WARNING:  mock init "mock-3"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-3"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-3"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-3  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-3"
-SELECT 1;
- ?column? 
-----------
-        1
-(1 row)
-
---mismatched version errors
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
---mock-4 has mismatched versions, so the .so load should be fatal
-SELECT format($$\! utils/test_fatal_command.sh %1$s "CREATE EXTENSION timescaledb VERSION 'mock-4'"$$, :'TEST_DBNAME_2') as command_to_run \gset
-:command_to_run
-FATAL:  extension "timescaledb" version mismatch: shared library version mock-4-mismatch; SQL version mock-4
-server closed the connection unexpectedly
-	This probably means the server terminated abnormally
-	before or while processing the request.
-connection to server was lost
---mock-4 not installed.
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
---broken version and drop
-CREATE EXTENSION timescaledb VERSION 'mock-broken';
-WARNING:  mock init "mock-broken"
-\set ON_ERROR_STOP 0
---intentional broken version
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-broken"
-ERROR:  mock broken "mock-broken"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-broken"
-ERROR:  mock broken "mock-broken"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-broken"
-ERROR:  mock broken "mock-broken"
---cannot drop extension; already loaded broken version
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-broken"
-ERROR:  mock broken "mock-broken"
-\set ON_ERROR_STOP 1
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
---can drop extension now. Since drop first command.
-DROP EXTENSION timescaledb;
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
---broken version and update to fixed
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-CREATE EXTENSION timescaledb VERSION 'mock-broken';
-WARNING:  mock init "mock-broken"
-\set ON_ERROR_STOP 0
---intentional broken version
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-broken"
-ERROR:  mock broken "mock-broken"
---cannot update extension; already loaded bad version
-ALTER EXTENSION timescaledb UPDATE TO 'mock-5';
-ERROR:  extension "timescaledb" cannot be updated after the old version has already been loaded
-\set ON_ERROR_STOP 1
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
---can update extension now.
-ALTER EXTENSION timescaledb UPDATE TO 'mock-5';
-WARNING:  mock init "mock-5"
-SELECT 1;
-WARNING:  mock post_analyze_hook "mock-5"
- ?column? 
-----------
-        1
-(1 row)
-
-SELECT mock_function();
-WARNING:  mock post_analyze_hook "mock-5"
-WARNING:  mock function call "mock-5"
- mock_function 
----------------
- 
-(1 row)
-
-\c :TEST_DBNAME_2 :ROLE_SUPERUSER
-ALTER EXTENSION timescaledb UPDATE TO 'mock-6';
-WARNING:  mock init "mock-6"
---The mock-5->mock_6 upgrade is intentionally broken.
---The mock_function was never changed to point to mock-6 in the update script.
---Thus mock_function is defined incorrectly to point to the mock-5.so
---This will now be a FATAL error.
-SELECT format($$\! utils/test_fatal_command.sh %1$s "SELECT mock_function()"$$, :'TEST_DBNAME_2') as command_to_run \gset
-WARNING:  mock post_analyze_hook "mock-6"
-:command_to_run
-WARNING:  mock init "mock-6"
-WARNING:  mock post_analyze_hook "mock-6"
-FATAL:  extension "timescaledb" version mismatch: shared library version mock-5; SQL version mock-6
-server closed the connection unexpectedly
-	This probably means the server terminated abnormally
-	before or while processing the request.
-connection to server was lost
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-6"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-6  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---TEST: create extension when old .so already loaded
-\c :TEST_DBNAME :ROLE_SUPERUSER
---force load of extension with (SELECT * FROM test.extension;)
-SELECT * FROM test.extension;
-WARNING:  mock init "mock-1"
-WARNING:  mock post_analyze_hook "mock-1"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-1  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
-DROP EXTENSION timescaledb;
-WARNING:  mock post_analyze_hook "mock-1"
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
-\set ON_ERROR_STOP 0
-CREATE EXTENSION timescaledb VERSION 'mock-2';
-ERROR:  extension "timescaledb" has already been loaded with another version
-\set ON_ERROR_STOP 1
-SELECT * FROM test.extension;
-                 List of installed extensions
-  Name   | Version |   Schema   |         Description          
----------+---------+------------+------------------------------
- plpgsql | 1.0     | pg_catalog | PL/pgSQL procedural language
-(1 row)
-
---can create in a new session.
-\c :TEST_DBNAME :ROLE_SUPERUSER
-CREATE EXTENSION timescaledb VERSION 'mock-2';
-WARNING:  mock init "mock-2"
-SELECT * FROM test.extension;
-WARNING:  mock post_analyze_hook "mock-2"
-                                      List of installed extensions
-    Name     | Version |   Schema   |                            Description                            
--------------+---------+------------+-------------------------------------------------------------------
- plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
- timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
-(2 rows)
-
---make sure parallel workers started after a 'DISCARD ALL' work
-CREATE TABLE test (i int, j double precision);
-WARNING:  mock post_analyze_hook "mock-2"
-INSERT INTO test SELECT x, x+0.1 FROM generate_series(1,100) AS x;
-WARNING:  mock post_analyze_hook "mock-2"
-DISCARD ALL;
-WARNING:  mock post_analyze_hook "mock-2"
-SELECT set_config(CASE WHEN current_setting('server_version_num')::int < 160000 THEN 'force_parallel_mode' ELSE 'debug_parallel_query' END,'on', false);
-WARNING:  mock post_analyze_hook "mock-2"
- set_config 
-------------
- on
-(1 row)
-
-SET max_parallel_workers_per_gather = 1;
-WARNING:  mock post_analyze_hook "mock-2"
-SELECT count(*) FROM test;
-WARNING:  mock post_analyze_hook "mock-2"
-WARNING:  mock init "mock-2"
- count 
--------
-   100
-(1 row)
-
--- clean up additional database
-\c :TEST_DBNAME :ROLE_SUPERUSER
-DROP DATABASE :"TEST_DBNAME_2" WITH (FORCE);
-WARNING:  mock init "mock-2"
-WARNING:  mock post_analyze_hook "mock-2"
diff --git a/test/expected/loader-tsl.out b/test/expected/loader.out
similarity index 94%
rename from test/expected/loader-tsl.out
rename to test/expected/loader.out
index c74687991cb..74ac0b865f3 100644
--- a/test/expected/loader-tsl.out
+++ b/test/expected/loader.out
@@ -191,6 +191,28 @@ SELECT * FROM test.extension;
  plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
  timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
 
+--ALTER EXTENSION UPDATE works inside a transaction block; BEGIN must not
+--load the old version before UPDATE runs as the first command.
+DROP EXTENSION timescaledb;
+\c :TEST_DBNAME_2 :ROLE_SUPERUSER
+CREATE EXTENSION timescaledb VERSION 'mock-1';
+WARNING:  mock init "mock-1"
+\c :TEST_DBNAME_2 :ROLE_SUPERUSER
+BEGIN;
+ALTER EXTENSION timescaledb UPDATE TO 'mock-2';
+WARNING:  mock init "mock-2"
+COMMIT;
+SELECT 1;
+ ?column? 
+----------
+        1
+
+SELECT * FROM test.extension;
+    Name     | Version |   Schema   |                            Description                            
+-------------+---------+------------+-------------------------------------------------------------------
+ plpgsql     | 1.0     | pg_catalog | PL/pgSQL procedural language
+ timescaledb | mock-2  | public     | Enables scalable inserts and complex queries for time-series data
+
 --drop extension
 DROP EXTENSION timescaledb;
 SELECT 1;
diff --git a/test/sql/.gitignore b/test/sql/.gitignore
index 923e845cacd..800e24ab2ae 100644
--- a/test/sql/.gitignore
+++ b/test/sql/.gitignore
@@ -19,4 +19,3 @@
 /rowsecurity-*.sql
 /timestamp-*.sql
 /ts_merge-*.sql
-/loader-*.sql
diff --git a/test/sql/CMakeLists.txt b/test/sql/CMakeLists.txt
index 857e4918be3..d801124ce94 100644
--- a/test/sql/CMakeLists.txt
+++ b/test/sql/CMakeLists.txt
@@ -85,12 +85,6 @@ set(TEST_TEMPLATES
     plan_expand_hypertable.sql.in
     ts_merge.sql.in)
 
-# Loader test must distinguish between Apache and TSL builds so we parametrize
-# this here
-set(LOADER_TEST_FILE loader-${TEST_LICENSE_SUFFIX})
-configure_file(loader.sql.in
-               ${CMAKE_CURRENT_SOURCE_DIR}/${LOADER_TEST_FILE}.sql)
-
 # tests that fail or are unreliable when run in parallel bgw tests need to run
 # first otherwise they are flaky
 set(SOLO_TESTS
@@ -104,7 +98,7 @@ set(SOLO_TESTS
     telemetry
     net)
 
-list(APPEND SOLO_TESTS ${LOADER_TEST_FILE})
+list(APPEND SOLO_TESTS loader)
 
 if(CMAKE_BUILD_TYPE MATCHES Debug)
   list(
@@ -122,7 +116,7 @@ if(CMAKE_BUILD_TYPE MATCHES Debug)
     symbol_conflict.sql
     test_tss_callbacks.sql
     test_utils.sql
-    ${LOADER_TEST_FILE}.sql)
+    loader.sql)
   if(USE_TELEMETRY)
     list(APPEND TEST_FILES telemetry.sql)
   endif()
diff --git a/test/sql/loader.sql.in b/test/sql/loader.sql
similarity index 93%
rename from test/sql/loader.sql.in
rename to test/sql/loader.sql
index 461ca35b941..c9be2e67718 100644
--- a/test/sql/loader.sql.in
+++ b/test/sql/loader.sql
@@ -93,6 +93,18 @@ ALTER EXTENSION timescaledb UPDATE TO 'mock-2';
 SELECT 1;
 SELECT * FROM test.extension;
 
+--ALTER EXTENSION UPDATE works inside a transaction block; BEGIN must not
+--load the old version before UPDATE runs as the first command.
+DROP EXTENSION timescaledb;
+\c :TEST_DBNAME_2 :ROLE_SUPERUSER
+CREATE EXTENSION timescaledb VERSION 'mock-1';
+\c :TEST_DBNAME_2 :ROLE_SUPERUSER
+BEGIN;
+ALTER EXTENSION timescaledb UPDATE TO 'mock-2';
+COMMIT;
+SELECT 1;
+SELECT * FROM test.extension;
+
 --drop extension
 DROP EXTENSION timescaledb;
 SELECT 1;