California Would Make 25-MW Data Centers Pay for Their Own Transmission

California is one signature away from making large data centers pay the full cost of connecting to the grid. Senate Bill 886 cleared both chambers on Aug. 31 and was enrolled and presented to Gov. Gavin Newsom on Sept. 9. He has until the end of September to sign or veto it. The bill assigns cost responsibility for all transmission facility upgrades triggered by a new interconnection to the customer that triggered them.

The measure, carried by Sen. Steve Padilla and titled the California Technology Innovation and Ratepayer Protection Act, applies to data centers taking transmission-level electrical service with an estimated peak demand of at least 25 megawatts. It directs the California Public Utilities Commission to establish or modify the governing tariff on or before July 1, 2027. Participating customers would have to prefund a contract of at least 15 years for new zero-carbon energy resources, with behind-the-meter resources allowed to satisfy part of the obligation, and would owe an early termination fee for departing inside 15 years or failing to reach projected load.

A companion bill, AB 2383, is contingent on SB 886 becoming law and would require separate generation and transmission tariffs for new large-load customers taking service on or after Jan. 1, 2027. Utilities would also publish interconnection maps identifying where a large load can connect without triggering major upgrades. Together the two measures move California from case-by-case negotiation toward a published rule, and they put the price of grid capacity in front of a developer before a site is chosen.

For electrical contractors, the practical effect is that utility-side scope moves inside the project. When the customer carries the transmission upgrade bill, substation, switchyard, and high-side work gets budgeted and scheduled with the campus rather than queued behind a utility capital plan. The 15-year zero-carbon prefunding requirement, with its behind-the-meter option, pulls on-site generation and battery storage into the same electrical package. Mandatory demand-response participation, where the commission authorizes it, adds metering, controls, and switching scope that often sat outside the base build.

That mix favors medium-voltage work over branch-circuit volume: terminations above 1,000 volts, switchgear and protective relay installation, grounding and bonding systems, and commissioning support. California already requires state electrician certification for those working for C-10 electrical contractors, and SB 886 does not change that requirement. What it changes is which crews get staffed first. Contractors bidding California campuses will be pricing substation and storage scope they may have subcontracted before, and hiring against it.

If the bill is signed, the commission proceeding runs until July 2027, which means the campuses being negotiated this fall are being papered against a tariff that does not yet exist.