Newsom signs seven data-centre laws on power costs, water and land

Governor Gavin Newsom signed seven data-centre bills on Monday, September 21, a package his office calls the most comprehensive data-centre laws in the country. Together they require operators to disclose how much electricity, water and land a project will use, and they are designed to stop the cost of connecting very large loads from landing on other customers' bills.

"With these laws, we are ensuring that Californians remain in the driver's seat — and that those profiting from data centers aren't doing so at our expense," Newsom said.

Who pays for the wires

The centrepiece is SB 886, the California Technology Innovation and Ratepayer Protection Act from Senator Steve Padilla of San Diego. It directs the California Public Utilities Commission to create separate electricity tariffs for new large-load customers with peak demand of at least 75 megawatts, covering transmission, distribution and generation costs. Its companion, AB 2383 from Assemblymember Rick Chavez Zbur, requires utilities, community-choice aggregators and other electricity providers to adopt separate generation and transmission tariffs for new large loads taking service from January 1, 2027, with the commission to settle the tariff structure by July 1, 2027. AB 2383 only takes effect if SB 886 becomes law, which it now has. A third bill, SB 1168 from Senator Jerry McNerney, covers rate structures for data centres.

The legislature was not close on this. SB 886 passed the Senate 28 to 10 and the Assembly 49 to 7. Padilla's line at the time was that the state was "stopping Big Tech from sticking California families with the bill".

Water first, permit second

Two bills from Assemblymember Diane Papan deal with water. AB 2469 stops a local government approving a new or expanded data centre until the developer discloses its projected water use, and AB 2619 makes operators report the source and volume of the water they use and pay for any supply infrastructure the facility needs. AB 1577, from Assemblymember Rebecca Bauer-Kahan, adds general reporting requirements.

The one that will change project timelines is SB 887, also from Padilla. It removes data centres from the blanket exemptions that let some projects skip review under the California Environmental Quality Act, while offering a streamlined path to projects that meet state water- and energy-conservation standards.

Why now

The political weather changed fast. SFist counts nearly 300 existing data centres in California and 54 projects in the pipeline, and cites a July poll in which 73 per cent of Californians opposed an AI data centre in their own community. Oakley, Gilroy and Richmond have enacted temporary moratoriums; San Francisco and Oakland are considering them.

Newsom himself vetoed a water-disclosure bill last year, saying its reporting rules were too rigid. His office now describes the package as giving communities "more control on water, electricity, and land use". The likelier reading is that a governor who once worried about chasing investment away has decided the electoral risk of rising power bills is larger.

What the industry says

The Data Center Coalition, whose members include Google, Microsoft and OpenAI, opposed the bills, arguing they single out data centres among industrial users and would make California less competitive; Reuters reports the group had previously warned the measures could push projects to other states, and did not comment immediately on the signing.

Whether that happens is the number to watch. California has nearly 300 data centres now, and the tariff rules bite only on new loads of 75 megawatts and above, which is the size of the AI campuses now being planned rather than the enterprise facilities of the past. The commission's rule-making, due by July 2027, will decide how much those campuses actually pay. Other states with their own data-centre backlash will be reading the seven bills closely.