Newsom Faces Sept. 30 Deadline on Bills That Would Make AI Data Centers Pay for the Power They Use

September 20, 2026 user

Gov. Gavin Newsom is weighing one of the most consequential AI-infrastructure decisions in the country. Two linked bills, SB 886 by Sen. Steve Padilla and AB 2383 by Assemblymember Rick Chavez Zbur, would direct the Public Utilities Commission to create separate electricity tariffs and updated interconnection rules for large data centers. Newsom has until the end of September to sign or veto them. The goal is to keep other customers from paying for the new power generation and grid upgrades built to serve the facilities. Data Center Dynamics

The details matter. SB 886, the California Technology Innovation and Ratepayer Protection Act, would require a tariff covering transmission, distribution and generation costs for new customers with peak demand of at least 75 megawatts. AB 2383, the Fair Share in Energy Act, applies to new large customers taking service on or after Jan. 1, 2027, depends on SB 886 becoming law, and gives the commission until July 1, 2027 to finalize the tariff structure.

The stakes are rising with the load. The California Energy Commission projects data centers will grow from about 1,000 megawatts, roughly 2% of peak demand, to 4,500 megawatts, or 9%, by 2040. The state has 331 of the roughly 3,000 data centers in the U.S., according to Pew Research Center data, and a January 2025 Legislative Analyst’s Office report found California ratepayers already pay among the highest electricity rates in the country. The Center Square The Center Square

The bills sit within a larger package. Padilla also authored SB 887, which would require data center projects to undergo environmental review under the California Environmental Quality Act and give communities a formal role in approvals. AB 1577 by Assemblymember Rebecca Bauer-Kahan would require operators to report expected on-site generation, electrical load and power-usage effectiveness to the Energy Commission and local permitting agencies; it passed the Assembly 48-11. Other states, including Ohio, North Carolina and Virginia, have already created rate classes for large data center customers. California lawmakers pass data center ratepayer protection bills, send to governor for approval – DCD +2

Industry is pushing back. According to CalMatters reporting carried by KPBS, business groups argue the measures would stifle innovation, tie critical infrastructure up in red tape and unfairly burden data center construction compared with other projects. Silicon Valley Leadership Group CEO Ahmad Thomas told CalMatters he sees the public debate as fueled by strong anti-AI sentiment and wants it grounded in reality. Abridged

Newsom’s own record cuts both ways. He rejected a bill last year that would have required data centers to report water use, citing concerns about hurting industry growth. More recently he told reporters that regulating data centers has become a bipartisan issue and that states across the country are leaning in. That shift in tone leaves the outcome unresolved until his deadline.

What to watch: Newsom’s sign-or-veto decision by Sept. 30. If he signs, attention shifts to the commission’s rulemaking ahead of the July 2027 deadline. If he vetoes, the fight returns next session, with utilities, consumer advocates and the tech industry all repositioning.

Sources: Data Center Dynamics (datacenterdynamics.com, “California lawmakers pass data center ratepayer protection bills”); The Center Square (thecentersquare.com, AB 1577 story); CalMatters via KPBS (kpbs.org/news/politics/2026/08/28/the-data-center-backlash-is-here-and-big-tech-is-spending-big-to-combat-it)