Eleven months after Gavin Newsom vetoed a bill that would have made data centers disclose how much water they use, the California governor signed seven of them on Monday, including the very disclosure requirement he had rejected, plus the strongest ratepayer-protection rules on data-center power in any US state.
The package, announced from Sacramento on September 21, splits into three parts. Three bills, AB 2383, SB 886 and SB 1168, order the California Public Utilities Commission to build separate rate structures for large data-center loads so that the cost of new generation and grid connections lands on the operators rather than on households. Three more, AB 2469, AB 2619 and AB 1577, require developers to tell local governments and water suppliers how much water and electricity a proposed facility will draw before a city or county can approve it. The seventh, SB 887, strips data centers of blanket exemptions under the California Environmental Quality Act and offers a faster judicial-review track only to projects that can show they meet state standards on energy, water and fuel use and will not shift costs onto ratepayers.
“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 in a written statement that framed the signing as a rebuke to the Trump administration’s push to deregulate the sector. His office called it the most comprehensive set of data-center laws in the nation.
The reversal is stark. In October 2025 Newsom vetoed AB 93, the water-disclosure measure, arguing the state needed to better understand the impact on data-center businesses and consumers, and he signed only a narrow energy-study bill. This year he had signalled his administration would be “leaning in” on the issue, and the votes in the Democratic-controlled Legislature were largely party-line in the face of opposition from business groups. Most Republicans voted no, warning the bills add a permitting hurdle while California competes for AI investment.
Sen. Steve Padilla, the San Diego Democrat who wrote SB 886 and SB 887, described the outcome in blunter terms. “These are some of the nation’s strongest data center ratepayer protections — stopping Big Tech from sticking California families with the bill for their data centers while ensuring all local voices have a say on these projects and they comply with our air, water, and climate standards,” he said.
The mechanics matter more than the rhetoric. AB 2383, Assemblymember Rick Chavez Zbur’s Fair Share in Energy Act, requires utilities, community choice aggregators and electric service providers to adopt separate generation and transmission tariffs for new large-load customers taking service on or after January 1, 2027, with the CPUC given until July 1, 2027 to finalise them. The stakes are real money: California Independent System Operator data cited by The Utility Reform Network projected that data-center demand growth in PG&E territory alone could trigger up to $1.8 billion in transmission upgrades. PG&E argued during negotiations that properly allocated large loads could actually lower residential rates by 1 to 2 percent per gigawatt; the commission’s rulemaking will now decide which view prevails.
The industry did not get what it wanted, and it said so carefully. The Data Center Coalition, whose members include Google, Microsoft and OpenAI, lobbied to soften the bills and argues the sector supported 665,500 California jobs, more than $159 billion in economic activity and $14.1 billion in taxes in 2024. Khara Boender, the group’s director of government affairs west, told CalMatters that the industry shares the goal of responsible, well-managed growth but that more work is needed to keep California a competitive market.
Assemblymember Diane Papan, the San Mateo Democrat behind the two water bills, credited the change to public mood rather than any new argument. “When you’re looking down the barrel of public outcry that says we don’t want [data centers] at all, and you’ve got localities that are saying they’re going to ban them, then you know the atmosphere has changed,” she told CalMatters.
Why it matters
California is not the first state to act on data-center costs, but it is the largest, with nearly 300 existing facilities and 54 more in the pipeline. The tariff bills set a template other utility commissions can copy almost verbatim: a distinct customer class, a rule that the class pays for the generation it triggers, and a hard deadline. That template arrives at a moment of unusual political alignment. The House passed a federal Ratepayer Protection Act 417-3 on September 16, a Gallup poll in May found seven in ten Americans oppose data centers in their communities, a July PPIC survey put the California figure at 73 percent, and more than ten states are unwinding data-center tax breaks. An industry that spent 2025 warning that regulation would drive it out of state has instead watched the governor most associated with the AI boom adopt its opponents’ framing. The California Energy Commission expects data-center load in the CAISO footprint to grow from roughly 1,000 megawatts, about 2 percent of peak demand, to 4,500 megawatts, or 9 percent, by 2040. Who pays for that growth is now a settled question in statute and an open one at the CPUC.
Clean-energy advocate Arnab Pal of Deploy Action captured the ambivalence on the winning side. “I don’t think these bills are the end of this fight; I think we’re gonna have to do a lot of implementation on the back end,” he said, adding that as other states move next year California may conclude it should have done more.
What to watch
The CPUC proceeding to design the large-load tariffs is where the industry will now concentrate its lobbying; the July 2027 deadline gives it ten months to shape the definitions of large load, cost causation and what counts as bringing new clean supply onto the grid. Watch too for the first projects to test SB 887’s expedited-review track, and for whether the water-disclosure requirement slows approvals for the 54 pipeline projects. Locally, an Oakland council committee takes up a 45-day moratorium on Tuesday, joining San Francisco, Richmond and Hayward in weighing bans that the new state laws neither pre-empt nor require.
“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.”— Gavin Newsom, Governor, State of California