Bills Protecting Ratepayers from Data Center Costs and Incentivizing Sustainable Tech Infrastructure Development Pass Key Senate Committees
SACRAMENTO – This week, two key committees in the California State Senate passed Senate Bills 886 and 887, two measures authored by Senator Steve Padilla (D-San Diego) designed to protect California ratepayers from the potential increased costs and environmental damage caused by data centers.
“California families cannot be left footing the bill for Big Tech’s infrastructure needs,” said Senator Padilla. “Environmental degradation and runaway utility costs cannot be the price for developments. These projects need to be built in a way that supports our grid and uplifts the communities in which they are built.”
After other states experienced skyrocketing energy costs due to data center development, they have taken action to better protect their residents. Last year, energy regulators in Ohio determined that data centers must pay more up front for their power demands. Recently, the newly elected Governors of both Virginia and New Jersey announced their states would be seeking ways to make data centers “pay their fair share.”
Even President Trump and tech companies have recognized the need for ratepayer protections from stranded assets and recently major tech corporations committed to pay for their grid infrastructure and negotiate their own rate structure with utilities. SB 886 takes this voluntary commitment by tech companies and puts it into statute in California.
SB 886 would require the California Public Utilities Commission (CPUC) to establish a special tariff to protect ratepayers from the transmission costs that supply large data centers while meeting the state’s climate goals. The tariff will ensure electrical grid investments for data centers are fully recovered to ensure other ratepayers do not end up footing the bill. A tariff would protect ratepayers from skyrocketing costs without increasing the state’s reliance on fossil fuels.
SB 887 would allow data centers to be eligible for Environmental Leadership Development Project (ELDP) certification if they meet the criteria as well as some additional requirements specific to data centers regarding water use, clean energy, and paying full infrastructure costs. ELDP certification grants the applicants accelerated environmental review. Certified data center applicants can go online faster while also protecting surrounding communities from health and environmental impacts. The bill would also clarify data centers are not ministerial projects exempt from California Environmental Quality Act.
The legislative package is co-sponsored by ratepayer advocacy group TURN and environmental advocacy group Net-Zero California.
“California needs clear, meaningful and ambitious policies to address the rapid growth of data centers,” said Matthew Freedman, Staff Attorney at The Utility Reform Network (TURN). “Senator Padilla’s bills include critical protections to ensure that data center development will benefit the electrical grid, consumers and the environment.”
“California can establish a nation-leading standard for affordable and clean data centers,” said Sam Uden, Co-Founder and Managing Director, Net-Zero California. “Senator Padilla's bills achieve these by establishing clear ratepayer protections as well as incentives for high-quality data centers in the state.”
To learn more about SBs 886 and 887 and Senator Padilla’s efforts to protect California ratepayers from increasing energy costs, click here and here
SB 886 passed the Senate Energy Committee by a vote of 12-4 and now moves to the Appropriations Committee. SB 887 passed the Senate Environmental Quality Committee by a vote of 4-1 and now moves to the Senate Energy Committee.
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Steve Padilla represents the 18th Senate District, which includes the communities of Chula Vista, the Coachella Valley, Imperial Beach, the Imperial Valley, National City, and San Diego. Prior to his election to the Senate in 2022, Senator Padilla was the first person of color ever elected to city office in Chula Vista, the first Latino Mayor, and the first openly LGBT person to serve or be elected to city office. Website of Senator Steve Padilla: https://sd18.senate.ca.gov/