AI's thirst for electricity: the three bills making data centers pay for the grid have passed — Newsom's signature is next

SACRAMENTO — California is in a data center building boom, driven by the AI rush. A data center is a giant warehouse full of servers: every time you ask a chatbot a question, stream a video, or send money through an app, servers in one of these buildings do the work. And they consume enormous amounts of electricity. SB 1168 cites a forecast from the ISO, the state's grid operator: data center demand will grow by 2.3 gigawatts by 2030. A gigawatt is a unit of power so large it usually only comes up when talking about the entire grid.

Serving that demand means new lines, new substations, grid upgrades. Under today's rules, those costs are spread across all electricity customers — meaning households and small shops help carry the infrastructure that data centers require. Three bills in Sacramento were written to change that split. On the session's final night — August 31, 2026 — all three passed. The only signature left to collect is the Governor's.

How the three bills would change the rules

All three aim at the same spot: how the money for building and upgrading the grid gets divided.

- SB 1168 (Sen. Jerry McNerney): directs the CPUC — the California Public Utilities Commission, which sets electricity rates — to develop rate structures ensuring data centers pay their reasonable share of transmission and distribution costs, plus the clean energy procurement they drive. The bill states its goal plainly: easing rate pressure on residential customers, including low-income households.
- SB 886 (Sens. Steve Padilla and McNerney): by January 1, 2028, the CPUC must establish separate tariffs for new large-load customers such as data centers. The threshold is set by the CPUC but cannot exceed 25 megawatts of peak demand. If a facility's hookup triggers line upgrades, the facility pays for them in full. It also requires 10-year minimum prefunded contracts, with early-exit fees. (The final version moved the deadline from July 1, 2027 to January 1, 2028 in an August 28 amendment.)
- AB 2383 (Asm. Rick Chavez Zbur): makes data centers their own customer class with their own tariff by January 1, 2028. Their incremental costs can't be shifted onto other customer groups, and they must carry a share of wildfire-mitigation costs like other large customers. Its threshold likewise can't exceed 25 megawatts. It applies to new transmission-level interconnection contracts signed on or after January 1, 2027.

The bills' limits deserve saying out loud: they block new costs from landing on residents — they don't automatically cut the bill you have today. There's also no official estimate yet of how much any single bill would change.

Who's for, who's against — and where the lobbying money went

A fight over dividing money never stays on paper — it brings a lobbying campaign with it. According to CalMatters, the opposition includes Amazon, Google, Microsoft, Meta, OpenAI, and Anthropic, joined by two utilities — PG&E and Southern California Edison — the IBEW electrical workers' union, and the California Chamber of Commerce. Full transparency: Anthropic makes Claude, the AI tool Bolsa Bridge uses in its newsroom.

Also per CalMatters: PG&E spent $2.86 million on lobbying in the second quarter of 2026 — its second-highest quarter since 1999 — including about $143,000 on data center issues specifically. Amazon spent more than $500,000 in the first half of 2026, spread across 33 bills. Anthropic spent about $90,000 — its first year hiring lobbyists in Sacramento. The Silicon Valley Leadership Group topped $100,000, its highest annual spend since records began in 2005. The Data Center Coalition spent about $60,000.

On the supporting side: the bills' authors, community groups, and TURN — The Utility Reform Network, a longtime ratepayer advocate. "The level of concern and sensitivity is through the roof — it's bipartisan," Sen. Padilla told CalMatters. Assemblymember Diane Papan, who authored two other data center bills, told the outlet this year's environment is entirely different from last year's.

What does this have to do with the Bolsa area?

Southern California Edison is the utility that serves Westminster, Garden Grove, and Fountain Valley. All three bills apply to the state's large investor-owned utilities — SCE included. For nail salons, restaurants, and markets — where the AC, dryers, and freezers run all day — electricity is a major monthly expense. Households just paid for a summer of air conditioning too. How grid costs get divided isn't a far-off Sacramento story. It's inside the SCE envelope that arrives every month.

Who decides what happens next?

The three electricity bills belong to a group of seven data center bills CalMatters tracked this session. Three others would require disclosure of water use — two of them cleared the Legislature on Thursday, August 27, 2026. One more would require environmental review for every data center project.

In 2025, four bills to rein in data centers died or were watered down after lobbying, according to CalMatters. Only one became law — requiring state energy regulators to publish a study of the environmental impact of data centers' electricity demand. This year the Legislature went the other way: all three electricity bills cleared on the final night, August 31. Now the final call belongs to Governor Newsom, with a September 30, 2026 deadline. And the question of who carries the costs of the AI era will follow Californians through many billing cycles to come.

WANT TO FOLLOW ALONG — OR WEIGH IN?

Read the full text of the bills at leginfo.legislature.ca.gov — search "SB 1168," "SB 886," or "AB 2383."

Look up your state representatives by home address: findyourrep.legislature.ca.gov.

Send the Governor your view before September 30: www.gov.ca.gov/contact.