Big Tech and business groups blocked most California bills meant to regulate how much energy data centers consume for artificial-intelligence workloads, leaving only a study requirement that will culminate in a report due by 2027, according to an Associated Press report based on a CalMatters story.
The remaining law is the last survivor of last year’s push to shield Californians from footing the bill for rising data-center power demand. Instead of tighter controls, the measure requires regulators to produce an analysis of the issue—an outcome that consumer advocates portrayed as watered down.
“It amounts to a ‘toothless’ measure, directing the utility regulator to study an issue it already has the authority to investigate,” said Matthew Freedman, a staff attorney with The Utility Reform Network. Freedman said the report nevertheless could still matter for the policy process: “It could be that the report helps the Legislature to understand the magnitude of the problem and potential solutions,” and, he added, it “could also inform the CPUC’s own review of the reasonableness of rates for data center customers, which they are likely to investigate.”
The dispute over data centers has intensified as the industry’s growing electricity needs have raised questions about whether California’s grid may need costly upgrades. The report says that long-term planning is difficult because of uncertainty over future projects and how quickly artificial-intelligence workloads will shift.
Developers have requested 18.7 gigawatts of service capacity for data centers in California, according to the California Energy Commission, and the story says that amount is more than enough to serve every household in the state. It also says the CPUC’s future approach to what data centers pay for power is becoming urgent as scrutiny of rising electricity costs grows.
The law’s scaled-back scope also reflected legislative and political bargaining. State Sen. Steve Padilla, a Democrat from Chula Vista, said the final version “was not the one we would have preferred,” while also acknowledging that some requirements may seem “obvious,” including that the CPUC can study data-center cost impacts. Padilla said the measure “says unequivocally that the CPUC has the authority to study these impacts.”
Padilla argued that energy demand from data centers is unlikely to change soon, saying “(Data centers) consume huge amounts of energy, huge amounts of resources, and at least in the near future, we’re not going to see that change.” The AP story said earlier drafts of Padilla’s bill went further, including requiring data centers to install large batteries for peak-demand support and pushing utilities to provide 100% carbon-free electricity by 2030—provisions that were later stripped out.
The AP story describes how California’s earlier attempts at oversight unraveled under industry pressure. It says Gov. Gavin Newsom vetoed a bill that would have required data-center operators to report their water use, and that in his veto message Newsom said he was reluctant to impose requirements “without understanding the full impact on businesses and the consumers of their technology.” A September Stanford report cited in the story warned that the state risks losing property-tax revenue, union construction jobs, and “valuable AI talent” if projects move out of state.
The same competitive-jobs concern was reiterated by Big Tech-affiliated groups as lawmakers look toward new attempts. At a CalMatters event in November, Silicon Valley Leadership Group CEO Ahmad Thomas said California must compete to attract investments like the $40 billion data-center project Texas secured with Google, adding that when regulatory details are compared “that’s where sometimes we struggle to find that happy medium.” Dan Diorio, vice president of state policy for the Data Center Coalition, said requirements should apply to all other large electricity users and argued, “To single out one industry is not something that we think would set a helpful precedent.”
Critics of job-loss arguments say those fears are overstated, and the AP story points to the idea that data-center siting decisions are largely driven by energy prices, land, and permitting rather than by where AI researchers live. Shaolei Ren, an AI researcher at UC Riverside, said, “These two things are sort of separate, they’re decoupled.”
Freedman suggested lawmakers may still be able to extract commitments from developers as they revisit the issue, arguing that if companies truly prioritized cheaper power, they wouldn’t be proposing facilities in a state with high electric rates. He said, “There’s so much money in this business that the energy bills — even though large — are kind of like rounding errors for these guys,” and he said the implications are that developers should accept paying more to ensure costs are not shifted to other customers.
The AP story said lawmakers plan additional efforts despite the setbacks. Padilla plans to try again with a bill that would add new rules on who pays for data centers’ long-term grid costs in California, while Assemblymember Rebecca Bauer-Kahan, a Democrat from San Ramon, will revisit her electricity-disclosure bill.