Opinion: California must reform utility cost allocation for data centers
The California Public Utilities Commission (CPUC) postponed a decision on providing electricity to Google's San Jose data center, prompting calls for new statewide policies. The article argues that corporations, not ratepayers, should bear the significant infrastructure costs associated with large data centers' energy demands. It advocates for upfront payments, demand charges, and statewide tariffs to protect existing customers.
Dean Florez, a former California Senate majority leader, argues that data centers, which consume energy on the scale of entire cities, should not lead to higher electric bills for everyday Californians. He highlights the California Public Utilities Commission's (CPUC) recent decision to postpone an agreement for Google's San Jose data center, which at full build is projected to draw 250 megawatts, exceeding Marin County's average electricity demand.
The article notes that the CPUC has also reviewed agreements for a Microsoft data center drawing 90 megawatts and a STACK Infrastructure project in San Jose of similar size. A projected pipeline of additional data centers in San Jose, Hayward, Fremont, and Milpitas totaling thousands of megawatts further emphasizes the growing demand. Florez warns that utilities plan costly infrastructure years in advance, and if projects are delayed or abandoned, the costs remain.
Florez urges the CPUC to adopt new rules ensuring that corporations bear the full cost of data center infrastructure, rather than families and small businesses. He proposes substantial upfront payments, minimum demand charges, financial security, and penalties for under-consumption. Additionally, he calls for a statewide tariff for large customers that reflects connection, transmission, and power-procurement costs, advocating for flexible operations and new clean power generation to meet data center demands. Florez concludes that while cities and counties handle land use, the CPUC controls the electrical gate and must protect ratepayers from financing private computing empires.