California Signed Seven Data Center Laws. Grid Costs Now Fall on Operators.

Gov. Gavin Newsom on Monday signed seven bills regulating data centers in California, a package his office called the most comprehensive in the nation. Three of them, SB 886, SB 1168 and AB 2383, direct the California Public Utilities Commission to set rates that make data center operators pay for the grid connections and upgrades their projects trigger, rather than spreading those costs across other customers. "With these laws, we are ensuring that Californians remain in the driver's seat," Newsom said.

The other four address water and environmental review. AB 2469, AB 2619 and AB 1577 require operators to disclose water sources and consumption, and local governments cannot approve new or expanded facilities until that disclosure is made. AB 2619 makes operators pay for the water supply upgrades their facilities need. SB 887 removes data centers from blanket exemptions under the California Environmental Quality Act while offering faster review to projects that meet state water and energy standards. California has nearly 300 operating data centers and 54 more in the pipeline. SB 886 passed the Senate 28-10 and the Assembly 62-7.

SB 886 carries the most detail for electrical scope. Its interconnection provisions apply to data centers with at least 25 megawatts of peak demand, and the bill directs the CPUC to establish or modify a utility tariff on or before July 1, 2027. That tariff must assign the operator cost responsibility for all transmission facility upgrades triggered by its interconnection. Customers served under it must also install onsite zero-carbon storage or equivalent resources and participate in CPUC-authorized demand response programs. SB 886 and SB 887, both carried by Sen. Steve Padilla, also shift a larger share of wildfire mitigation and liability costs onto data center operators.

That moves where the money and the megawatts land on a project. When the developer carries the full cost of transmission upgrades and must add storage and curtailable load, more of the electrical budget shifts inside the fence line: battery energy storage systems, medium-voltage switchgear, controls and metering tied to demand response, and the commissioning that proves it all works before energization. The package also requires operators to disclose workforce needs alongside electricity, water and land use, giving local officials a clearer count of the trades a project will draw.

The laws do not change who may perform electrical work in California, where electricians employed by licensed C-10 electrical contractors must hold state certification. What changes is the timeline and the mix of work. The Data Center Coalition opposed the bills, arguing they single out data centers among large industrial users and could push projects to other states. Until the CPUC tariff is written, California data center jobs face a longer stretch of pre-construction, and once it is, the scope leans harder on storage and controls.

The rules are law. The rate that puts them into practice is due by July 1, 2027.