California lawmakers reach deal in high-stakes fight over regulating data centers
California lawmakers reached a compromise on legislation to regulate energy use by data centers, aiming to protect consumers from rising electricity costs and track the facilities' energy and water consumption. The deal, finalized after intense negotiations, establishes special rules for data centers' electrical use and was driven by growing community opposition and fears of high utility bills.
California state lawmakers have finalized a legislative compromise aimed at regulating the energy consumption of the state's expanding data center industry. The legislation, spearheaded by Sen. Steve Padilla (D-Chula Vista) and Assemblymember Rick Chavez Zbur (D-Los Angeles), requires the California Public Utilities Commission to establish special rates and updated rules for data centers' electricity use, including new power and infrastructure upgrade costs. This action was prompted by increasing community opposition to data centers and concerns over their impact on utility bills.
Business groups, including the Data Center Coalition (representing companies like Google and Microsoft), argued that the proposed restrictions, coupled with California's high energy costs and limited land, would deter data center development in the state, potentially costing municipalities tax revenues and jobs. Utility reform advocates, such as Matthew Freedman of The Utility Reform Network (TURN), praised the legislation for preventing data center costs from being shifted to other consumers and for aligning with clean energy objectives. However, Monica Embrey of the Affordable Energy Campaign expressed concerns about a lack of clean energy requirements for data centers using their own energy and provisions allowing interim utility agreements.
The legislative debate unfolded amidst fierce and growing opposition to data centers across California. Residents of Monterey Park notably voted to permanently ban data centers, and several other San Gabriel Valley cities, along with Tulare County, have enacted moratoriums. In San José, a data center development hotspot, residents have called for a moratorium. Opposition primarily centers on water use, air and noise pollution, and the potential for data centers to strain the grid, necessitating costly upgrades. The California Energy Commission anticipates the state's data center electricity use to double within a decade.
Previous legislative efforts, like Assemblymember Diane Papan's bill requiring water consumption disclosure, were vetoed by Gov. Gavin Newsom, who cited reluctance to impose