California lawmakers reach deal in high-stakes fight over regulating data centers
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Set us as preferred SACRAMENTO — After weeks of intense negotiation, state lawmakers on Friday reached a compromise on legislation to regulate energy use by California’s growing data center industry, action triggered by community anger over the facilities and fears of high utility bills in some communities.The goal, according to legislators and advocates, is to protect consumers from growing electricity costs driven upward by the sprawling facilities and to track the centers’ immense energy and water consumption.
Business groups representing tech companies argued that some of the proposed restrictions and requirements, along with California’s high energy costs and lack of available land, would make it difficult for data centers to open in the state.Municipalities risk missing out on tax revenues and jobs from the centers if the industry goes elsewhere, they said.Two bills to regulate the controversial industry consumed the state Legislature in the final weeks of the 2026 session, drawing in Gov.
Gavin Newsom and industry organizations and lobbyists representing some of the world’s most influential companies, including Google, Meta, Amazon and artificial intelligence firms such as Anthropic and OpenAI.Proposed legislation by Sen.Steve Padilla (D-Chula Vista) and Assemblymember Rick Chavez Zbur (D-Los Angeles), finalized Friday, would establish special rules for data centers’ electrical use.
The legislation requires the California Public Utilities Commission to create special rates and updated rules for data centers’ use of electricity, including the costs for new power for infrastructure upgrades.Climate & Environment California may have an anti-data center movement, but high energy prices were already blocking development.The debate in Sacramento around the data centers centered on how much they should...