California reaches compromise on data-center energy rules amid industry and consumer pressure

California’s Senate and Assembly reached a last-minute agreement on two bills that would give the California Public Utilities Commission authority to set special electricity rates and enforce new standards for data-center power use, including paying for transmission upgrades and wildfire mitigation. The legislation, sponsored by Senator Steve Padilla and Assemblymember Rick Chavez Zbur, aims to shield ratepayers from higher bills as AI-driven facilities expand across the state.

Industry representatives such as Google, Meta, Amazon, Anthropic and OpenAI argued that the requirements could make California less attractive for new data centers, potentially costing localities tax revenue and jobs. Advocacy groups responded variably: TURN’s Matthew Freedman welcomed the language that prevents cost shifting, while Monica Embrey of the Affordable Energy Campaign warned that the bills lack clean-energy mandates and allow interim utility agreements.

Residents have increasingly opposed data-center projects, with a recent poll showing 73 % disapproval and several cities enacting bans or moratoriums. Governor Gavin Newsom previously vetoed a water-disclosure bill, but the new measures also require reporting of energy and water consumption. The CPUC’s upcoming rules will shape how the sector, which now consumes about 2 % of California’s electricity, manages its growing demand.