Who Pays for AI’s Power? California Watchdog Urges New Data Center Rules

The Little Hoover Commission, an independent bipartisan California watchdog group, released a report urging state policymakers to take action on the state's fast-growing data center industry. The report outlines over a dozen recommendations for managing the industry's impact on the power grid, electricity prices, and California's climate goals. Key recommendations include requiring confidential, facility-level reporting of data center electricity use so regulators can better forecast demand and understand local impacts, establishing a special electricity rate category for extremely large power users that would require them to pay for grid infrastructure and capacity, and limiting pollution from backup diesel generators at data centers. The report warns that data centers have the potential to significantly increase electricity rates for average California households if their costs are not properly managed. Assemblymember Cottie Petrie Norris, chair of the Assembly's energy and utilities committee, said the Legislature is moving quickly to pass a package of bills aligned with the commission's recommendations to protect consumers from rate increases and ensure data centers pay their fair share.