The Overview

If you pay an electricity bill in California, a new law requires the state's utility regulator to make data centers pay their own way for connecting to the power grid, rather than spreading those costs to other customers. California's California Technology Innovation and Ratepayer Protection Act, SB 886 was signed by Gov. Gavin Newsom (D) on Sept. 21. ​

The data center boom has raised electricity use, water demand and pollution across California, adding pressure to the grid, according to CalMatters; projected growth in San Jose alone could nearly triple that city's energy use, raising questions about who would pay for needed grid upgrades, CalMatters also reported. The state utility commission must set new electric rules by Jan. 1, 2028, under a law the governor approved in September 2026.

What the Law Does

The law directs the California Public Utilities Commission (CPUC) to establish new electricity tariffs for data centers connecting to the grid by Jan. 1, 2028, and requires the CPUC to ensure those rates do not shift costs onto other customers. The CPUC must also set a specific tariff for data centers seeking transmission-level connections, and may allow utilities to approve direct contracts with such data centers after Jan. 1, 2027, before that tariff is finalized. The BlueGreen Alliance, which supported SB 886 and AB 2383, said the measures require covered data-center facilities to pay upfront for costs, and it applauded Newsom for signing the bills.

Legislative Status

Sen. Steve Padilla (D-CA-18) sponsored the bill as lead author, and ten cosponsors joined him, including McNerney, Arreguín, Becker, Weber Pierson, and Wiener.

The Senate passed the bill 28-8 on May 26, after a Senate committee approved it 12-4 on March 17. An Assembly committee passed it 14-0 on June 24.

Padilla said after the signing: "This data center legislative package contains some of the strongest ratepayer protections and environmental protections from data center costs," according to his Senate office. The Los Angeles Times reported that a broader coalition of environmental groups supported the bill.

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