California legislators have passed legislation mandating separate electricity tariffs for large data centers, now awaiting gubernatorial signature.
California lawmakers have passed a series of bills designed to prevent data center operators from shifting grid and power costs onto residential ratepayers. The measures now advance to Governor Gavin Newsom’s desk for signature or veto.
The legislative package centers on Senate Bill 886, sponsored by State Senator Steve Padilla (D-San Diego), and Assembly Bill 2383, sponsored by Assemblymember Rick Chavez Zbur (D-Los Angeles). AB 2383 is contingent upon SB 886’s enactment. Together, the bills would direct the California Public Utilities Commission (CPUC) to establish distinct electricity tariffs and updated interconnection rules for large data centers. Under SB 886, formally known as the California Technology Innovation and Ratepayer Protection Act, the CPUC must implement a tariff covering transmission, distribution, and generation costs for new large electrical load customers with a peak demand of at least 75MW.
AB 2383, titled the Fair Share in Energy Act, mandates that electric corporations, community choice aggregators, and electric service providers adopt separate generation and transmission tariffs for new large-load customers taking service on or after January 1, 2027. The CPUC has until July 1, 2027, to finalize the tariff structure under the compromise framework. The Senate approved SB 886 by a vote of 28 to 10, and the Assembly passed it 49 to 7.
Padilla also authored SB 887, which would require data center projects to undergo environmental review under the California Environmental Quality Act to safeguard local air and water quality, while granting local communities a formal role in project approvals. “The Legislature is about to pass one of the nation's strongest data center ratepayer protections – stopping Big Tech from sticking California families with the bill for their data centers while ensuring all local voices have a say on these projects and they comply with our air, water, and climate standards,” Padilla said. “Big Tech keeps promising to be good neighbors, and these bills will make those promises legally enforceable.”
Lawmakers also advanced several ancillary measures. AB 2619 would require data centers to report annual water usage, while AB 1577 mandates energy consumption reporting. AB 2469 would compel facilities to disclose estimated water use when applying for or renewing a business license and assume financial responsibility for new infrastructure required for their operations.
The Data Center Coalition, representing data center owners and operators, opposed the legislation, citing privacy and security concerns.
Newsom has until the end of September to act on the bills. He previously rejected a standalone effort last year to mandate data center water usage reporting, warning it could hinder industry growth. However, his stance has shifted this week, as he characterized data center regulation as a bipartisan priority. “You're seeing states all across this country leaning in. We will be leaning in,” he told reporters.
The California action mirrors broader national trends, with multiple states codifying new rate classes specifically for large-load data centers. Notable examples include Ohio, North Carolina, and Virginia.