Bills Protecting Ratepayers from Data Center Costs and Incentivizing Sustainable Tech Infrastructure Introduced
SACRAMENTO – Yesterday, Senator Steve Padilla (D-San Diego) introduced Senate Bills 886 and 887, two measures designed to protect California ratepayers from the potential increased costs and environmental damage caused by data centers. Data centers are facilities housing the digital infrastructure, crucial to artificial intelligence services. The bills set new standards incentivizing data center development that supports California’s grid and communities in which they are built.
“California families are already struggling with rising utility bills as it is and we need to ensure they aren’t forced to foot the bill for Big Tech data centers,” said Senator Padilla. “Even President Trump agrees, Big Tech needs to ‘pay their own way.’ California data centers should support the grid and local communities. I look forward to working with legislative leaders, Senator Ben Allen, Chair of the Senate Energy, Utilities and Communications Committee, and Assemblymember Cottie Petrie-Norris, Chair of the Assembly Utilities and Energy Committee, who is holding a hearing on this topic later this month.”
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.”
Senator Padilla is the author of SB 57, the only bill governing data centers to become law in California last year. The bill was significantly amended after intense pressure from data center developers to become a study into the price impacts of data center development. SBs 886 and 887 are a reaffirmation of Senator Padilla’s commitment to protect California families and the state’s critical climate goals from price spikes and other issues caused by data centers. In his proposed 26/27 budget, Governor Newsom provided full funding for the study. As a result, Senator Padilla will be asking the leadership of the Public Utilities Commission (PUC) to expedite the completion of the study to better inform data center policy in the state.
SB 886 would require the PUC 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 and does not qualify as an advanced manufacturing facility.
The legislative package is co-sponsored by ratepayer advocacy group TURN and environmental advocacy group Net-Zero California.
“California needs to take a leadership role in addressing the threats and opportunities presented by data centers” said Matthew Freedman, Staff Attorney at The Utility Reform Network (TURN). “These bills will ensure new electrical demand created by data centers helps to lower rates for all customers, improves grid reliability and accelerates the transition to clean energy resources.”
“Data center-driven load growth presents a unique opportunity to support the state’s affordability and climate goals - but only with thoughtful policy design,” said Sam Uden, Co-Founder and Managing Director, Net-Zero California. “We commend Senator Padilla for his leadership and look forward to working with him and his team in ensuring a pragmatic path forward that both protects ratepayers while supporting technology innovation.”
To learn more about SB 57 and Senator Padilla’s efforts to protect California ratepayers from increasing energy costs, click here and here.
SBs 886 and 887 will be heard in the Senate in the coming months.
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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/