Deal is reached on regulation of data centers
California lawmakers have reached a compromise on new legislation to regulate data center energy use, aiming to protect consumers from rising utility costs and monitor the facilities' energy and water consumption. The action was prompted by community concerns and involved intense negotiations with tech industry groups. The legislation requires the California Public Utilities Commission to establish special electricity rates and updated rules for data centers.
After weeks of intense negotiations, California state lawmakers reached a compromise on Friday regarding legislation aimed at regulating the energy consumption of the state's burgeoning data center industry. This legislative action was spurred by growing community discontent over these facilities and concerns about escalating utility bills in various communities.
According to legislators and advocates, the primary goals of the new rules are to safeguard consumers from increased electricity costs, which are driven by the expansive data center infrastructure, and to meticulously track the substantial energy and water usage of these centers. Business groups, representing major tech companies like Google, Meta, Amazon, Anthropic, and OpenAI, had argued that some of the proposed regulations, coupled with California's already high energy costs and limited land availability, would impede data center development within the state. They also cautioned that municipalities could lose out on potential tax revenues and job creation if the industry decided to relocate elsewhere.
The proposed legislation, finalized by Sen. Steve Padilla (D-Chula Vista) and Assemblymember Rick Chavez Zbur (D-Los Angeles), with input from Governor Gavin Newsom, mandates the California Public Utilities Commission to devise specific electricity rates and updated regulations for data centers' power usage, including costs associated with new power and infrastructure upgrades.