Chatbots, Data Centers and Surveillance: 5 Silicon Valley Bills Land on Newsom’s Desk
California lawmakers approved bills (SB 886 and AB 2383) requiring the California Public Utilities Commission to establish separate electricity rates and interconnection rules for large data centers. These measures aim to ensure tech companies, rather than ratepayers, cover the costs of grid upgrades necessitated by data center expansion. Governor Newsom, who previously vetoed similar legislation, has indicated a more favorable stance this year.
The California Legislature has passed two significant bills, SB 886 and AB 2383, aimed at regulating how large data centers pay for electricity and necessary grid infrastructure. These measures, now awaiting Governor Gavin Newsom's signature, mandate the California Public Utilities Commission (CPUC) to establish distinct electricity rates and updated interconnection rules for data centers. The primary goal is to shift the financial burden of new power generation and grid upgrades, driven by the immense energy demands of AI data centers, from general electricity customers to the tech companies themselves.
Authored by Senator Steve Padilla and Assemblymember Rick Chavez Zbur, the legislation follows growing public concern over data centers' electricity and water consumption, with a July poll showing 73% of Californians opposed to local data center construction. Supporters, including The Utility Reform Network (TURN) and environmental groups, argue that data center developers should bear the full cost of their infrastructure demands, citing potential transmission upgrade costs in PG&E's territory.
Opponents, such as the Data Center Coalition (representing companies like Google and Microsoft) and PG&E, contended that the bills unfairly target a single type of electricity customer and could deter data center development in California due to high energy costs and increased regulation. Earlier, more prescriptive drafts of the bills were amended, removing provisions for mandatory on-site batteries and 100% carbon-free power by 2030, in favor of giving the CPUC until July 2027 to implement the new tariffs and rules.
Governor Newsom's stance on data center regulation has evolved; he previously vetoed a bill requiring water consumption disclosure due to business impact concerns. However, he actively engaged in negotiations for the current bills, stating that companies should bear the costs of their data center investments. This involvement suggests a higher likelihood of him signing these bills into law, despite criticism from some advocates who fear potential loopholes that could allow data centers to avoid certain grid costs or clean-energy requirements.