A new bill has been introduced in the California Senate aimed at regulating the expansion of large load data centers across the state and protecting ratepayers from footing the bill for the generation and transmission infrastructure needed to power them.

Introduced by Senator Sasha Renée Pérez (Democrat-Pasadena) SB 978 would require the Public Utilities Commission (PUC) to establish a special rate structure for large-scale energy users, with a capacity of at least 75MW. This would aim to protect other customers of electrical corporations, prevent cost shifts to those other customers, and require large-scale energy users to pay for the electrical corporations’ upfront costs of transmission or distribution infrastructure upgrades necessary for the provision of electrical service to those users.

The bill would also address environmental, community, and workforce concerns by banning diesel backup generation and mandating clean technologies for backup. In addition, it would direct the California Energy Commission to commission a report on the impact of large data center loads on the state’s decarbonization goals.

“I have heard urgent calls from my constituents, and others throughout the state, to regulate data centers and their impacts on energy, water, and pollution,” Senator Pérez said. “SB 978 bans the use of backup diesel generators that emit air pollution, prevents data centers from placing electricity costs onto ratepayers, and directs state regulators to assess the impacts of data centers on California’s ability to meet its climate goals.”

The bill is the latest in a series of similar bills proposed across the country to mitigate the impacts of data centers on ratepayers' electricity prices.

Ohio was one of the first states to pass legislation to this effect, with the Public Utilities Commission of Ohio (PUCO) approving a new rate class in July. It requires new data center customers in Ohio to pay for a portion of their energy requests, even if they use less, to cover the cost of the infrastructure required to bring electricity to those facilities.

Before this, in April, the Oregon House of Representatives passed a bill that granted regulators the authority to consider which customers are the primary beneficiaries of new infrastructure and allocate costs accordingly.

Following this, in September, Virginia’s main utility Dominion Energy proposed a new rate class for data centers, applying to utility customers who consume more than 25MW of energy and have a monthly load factor of more than 75 percent.

In January, Wisconsin became the latest state to propose similar legislation. The Wisconsin State Assembly passed a bill that would set out several protections for ratepayers, including preventing data center operators from passing their energy costs onto residential consumers and requiring data centers to pay for their own generation and transmission infrastructure, stopping ratepayers from subsidizing the infrastructure.