Increasing Data Center Power Consumption in California

California public discussion and new law-making steps are driven by the question of the state’s booming data center sector impact on the energy prices for both residential and commercial consumers. In response, legislators have put forward a range of bills that would prevent the utility costs from being inflated due to the power and infrastructure requirements of the giant data centers. Data centers contain the servers and hardware for AI and digital services thus consuming a lot of power as well.

Why Energy Costs and Ratepayer Protections Matter

The energy consumption of data centers ranks among the highest in the commercial sector. The amount of energy they consume can be between 10 and 50 times more than that of an average office building per square foot, and some data centers even plan to demand such huge power amounts that it would be similar to the energy consumption of a small city. As a result, there might be issues with the power grid and, at the same time, a need for costly upgrades to transmission lines and infrastructure. Utility companies are in a tough spot if they decide to build or upgrade the grid capacity to meet the needs of these data centers without cost protections, because the ordinary ratepayers may end up covering those upgrades through higher bills.

New Bills Target Energy Costs and Environmental Standards

On January 14, 2026, California Senator Steve Padilla introduced the new legislative package, Senate Bills 886 and 887, which was intended to protect ratepayers and assure that local communities and the energy grid would benefit from the presence of data centers. One of the bills SB 886 would mandate the California Public Utilities Commission (CPUC) to establish special tariffs which will in a way that will protect residential and small business customers from the financial burden of data center power supply and grid maintenance. The new regulation aimed at preventing data centers from passing on the costs of providing power transmission and infrastructure to other utility customers.

In the meantime, SB 887 would allow data centers with high clean energy use, low water usage and full payment of infrastructure costs to undergo advanced environmental reviews and receive certifications that were previously only available to projects that meet the most stringent standards. These benchmarks consist of limits for carbon-free energy, behind-the-meter power generation, and water recycling. Certified projects could be granted faster access to permit review, balancing the environmental standards with the needs of economic development.

Stakeholder Support and Broader Goals

Supporters of the bills from both ratepayer groups and environmental organizations argue that these measures are a double win for the state of California in terms of climate and affordability goals. They are convinced that if the government plays its cards right, it can ensure a reliable grid while at the same time protecting consumers, and perhaps even attracting investment in data centers that are in keeping with the eco-friendly norms. The legislators are already planning to speed up the studies of the California Public Utilities Commission (CPUC) on the effects of data centers on the electricity bills of the consumers, so that the results can be used in the decision-making process later on.