California lawmakers have passed a series of bills that seek to prevent data center operators from shifting grid and power costs onto residential ratepayers.

The measures will now be sent to Governor Gavin Newsom’s desk to be signed into law or vetoed.

The legislation package centers around Senate Bill 886, sponsored by state senator Steve Padilla (D-San Diego), and Assembly Bill 2383, sponsored by Assemblymember Rick Chavez Zbur (D-Los Angeles).

If passed, the two bills would require the California Public Utilities Commission (CUPC) to establish separate electricity tariffs and updated interconnection rules for large data centers, with AB 2383 dependent on SB 886 becoming law.

Under SB 886, also known as the California Technology Innovation and Ratepayer Protection Act, the CPUC would be required to set a tariff covering transmission, distribution, and generation costs for new large load electrical customers with peak demand of at least 75MW.

AB 2383, dubbed the Fair Share in Energy Act, requires electric corporations, community choice aggregators, and electric service providers to adopt separate generation and transmission tariffs for new large-load customers taking service on or after January 1, 2027. The CPUC will have until July 1, 2027, to finalize the tariff structure under the compromise framework.

The Senate approved SB 886 by a vote of 28 to 10, and the Assembly passed it 49 to 7.

Padilla also authored SB 887 that will require data center projects to undergo environmental review under the California Environmental Quality Act to protect local air and water quality, while giving local communities a formal role in project approvals.

"The Legislature is about to pass one of the nation's strongest data center ratepayer protections – stopping Big Tech from sticking California families with the bill for their data centers while ensuring all local voices have a say on these projects and they comply with our air, water, and climate standards," Padilla said. "Big Tech keeps promising to be good neighbors, and these bills will make those promises legally enforceable."

Lawmakers also passed several other related measures. These included AB 2619, which would require data centers to report annual water usage, and AB 1577, which would require reporting of energy consumption. AB 2469 would require facilities to disclose estimated water use when applying for or renewing a business license and to bear financial responsibility for new infrastructure needed for their operations.

The Data Center Coalition, which represents data center owners and operators, opposed the bills, citing privacy and security concerns.

Newsom has until the end of September to sign or veto the bills. He rejected a separate effort last year to require data centers to report water usage, citing concerns that it would impact the industry’s growth. However, this week, the governor shifted tone, telling reporters that regulating data centers is now a bipartisan issue.

"You're seeing states all across this country leaning in. We will be leaning in," he said.

The legislation follows action in other states, many of which have enshrined new rate classes for large-load data centers in law. Examples include Ohio, North Carolina, and Virginia, among others.