California lawmakers are moving to make data centers pay for increased energy costs associated with their operations and disclose how much energy they use.

“If you ask a lot of a community, you’re going to give a lot in a community,” said state Senator Steve Padilla, a Democrat from San Diego.

California lawmakers like Padilla are pushing for data centers to bear the cost of the electricity they use.

“It consumes. It consumes a lot of energy from one source. It draws a lot of energy off the grid, creates a lot of demand,” Padilla said of his concerns over the community impacts data centers have. 

Building a data center costs money not only to connect it to the existing energy grid, but also to make grid updates needed to manage increased electricity use, such as modifying existing or building new transmission lines.

Padilla said he wants to ensure those costs are borne by data centers rather than ratepayers.

“People are struggling around this state right now to pay the bills anyways,” Padilla said.

The California Independent System Operator, which oversees energy usage and availability in the state, has identified billions of dollars in transmission upgrades needed over the next decade to accommodate new data centers. According to the California Public Advocates Office, the state’s independent watchdog for utility customers, those costs could end up being passed on to ratepayers.

“Creating an environment where we can have these data centers, but they’re not negatively impacting communities is actually where we need to go for our economy to thrive and for our communities to be cared for,” said Bay  Area Democratic Assemblymember Rebecca Bauer-Kahan.

In addition to Padilla’s efforts on data center costs, Bauer-Kahan is focused on how much electricity data centers use.

Her bill would require existing data centers to report their monthly energy consumption. Proposed data centers would have to provide their proposed energy use as part of the permitting process.

“It will hopefully enable us to build a grid that will keep the lights on and ensure that we’re not shifting these costs to California ratepayers but the companies that need the data centers are paying for them,” Bauer-Kahan said of her efforts, noting optimism Newsom will sign her bill into law.

Republicans were split on the bill. Assemblymember Josh Hoover of Folsom declined to vote on both the aforementioned bills, as he didn’t think the bills struck the right balance. 

Hoover said companies should bear the burden, but California should not overregulate and stifle innovation.

“I think what we need to make sure of though is that we’re not moving too fast and regulating something before we fully understand what we need,” Hoover said, adding he hopes moving forward, Republicans, despite being in the superminority, can be part of conversations.

Hoover also noted concerns over falling behind China’s advancements in artificial intelligence and the technology space, should California overregulate its businesses. He also said it’s incumbent upon California to ensure its existing energy infrastructure is solid statewide to be able to accommodate the developments of the future.

Mark Baldassare of the Public Policy Institute of California said data centers are unpopular.

All this comes amid a recent nonpartisan Public Policy Institute of California survey found just how unpopular data centers were in the state (and nationwide). According to the survey, an overwhelming majority of Californians said they opposed the construction of a data center in their neighborhood, largely due to environmental concerns.

“Oh they don’t like them.,” said Mark Baldassare with the PPIC. “[Data centers are] a big black box. They hear a lot about AI, they know it’s changing their life, they don’t know how it’s going to change their community, and they want to know something about electricity use.”

Baldassare added, concerns over data centers were shared across all regions in the state, demographics, as well as political parties. 

Meantime, there are also efforts to require more disclosure of water usage by data centers — yet another concern over environmental impacts.

All of the bills are on the governor’s desk, and Newsom has until the end of September to sign or veto them.

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