California has put the cost of plugging a data center into its grid and its water system onto the operator. Governor Gavin Newsom signed seven bills that require developers to pay for the transmission and water upgrades their projects need, to disclose expected power, water and noise to state and local agencies, and to give up the categorical exemptions that let some projects skip environmental review.
The electricity rules sit in three bills. SB 886, the California Technology Innovation and Ratepayer Protection Act, directs the Public Utilities Commission to establish tariffs for interconnecting large participating customers by January 1, 2028. The bill text assigns the cost of transmission upgrades to the customer, requires the tariffs to prevent cost shifts to other ratepayers, and makes an applicant disclose whether it has filed for the same facility in another utility territory or jurisdiction.
AB 2383 requires each electrical corporation to file a transmission and distribution tariff and a generation tariff for those customers, and requires community choice aggregators and electric service providers to adopt a generation tariff for data centers by the same 2028 date. SB 1168 directs the commission to assess rate structures so that data centers pay a reasonable share of transmission and distribution costs and of the procurement needed to serve their load. The Legislature's findings in that bill give the scale: the California Independent System Operator expects load to grow by 2.3 gigawatts by 2030, and Pacific Gas and Electric alone had about 2,300 megawatts of data center capacity applications in 2024.
Reporting is the fourth bill. AB 1577 requires a data center owner or operator to submit its location, size, power usage effectiveness and the fuel burned by onsite generators to the California Energy Commission, which will publish it annually in anonymized, aggregated form and assess data center load trends from the 2029 integrated energy policy report onward. An operator applying for a discretionary permit must also give the local agency its expected annual energy consumption and expected sound levels.
Water gets two bills. AB 2469 bars a city or county from approving a permit for a new data center, or for an expansion that raises peak water use, unless the applicant supplies a water supply assessment and a water scarcity plan and assumes the full cost of any conveyance, treatment, storage or distribution improvements the water supplier determines the project needs.
Land use is SB 887, which defines a data center for the purposes of the California Environmental Quality Act and prohibits applying a categorical exemption to one. The same bill lets the Governor certify a data center as an environmental leadership development project, a status that carries CEQA streamlining, if the project meets uniform statewide standards that the Office of Land Use and Climate Innovation is to develop with the Energy Commission.
Newsom said in the release: "With these laws, we are ensuring that Californians remain in the driver’s seat — and that those profiting from data centers aren’t doing so at our expense." The release puts no dollar figure on the upgrade costs, and the tariff design that decides who pays what is left to commission proceedings that run through 2028.
For an operator planning a California site, transmission upgrades, water infrastructure and CEQA review are now line items in the project budget rather than costs a utility or a community might absorb. The tariffs that set the actual numbers do not have to exist until January 2028, so the near-term effect is disclosure, and anyone filing before then should expect a negotiated contract subject to commission approval rather than a published rate.
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