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SB-57 Data centers: rates.(2025-2026)

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Date Published: 01/08/2025 09:00 PM
SB57:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill
No. 57

Introduced by Senator Padilla

January 08, 2025

An act to add Section 740.22 to the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


SB 57, as introduced, Padilla. Data centers: rates.
Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.
This bill, the Ratepayer and Technological Innovation Protection Act, would require the commission, on or before July 1, 2026, to establish a special rate structure for data centers, as defined, that, among other things, protects residential ratepayers and small businesses and prevents cost shifts to those existing ratepayers and ensures electrical grid investments to serve data centers are fully recovered, as specified.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be a part of the act and because a violation of a commission action implementing the bill’s requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Ratepayer and Technological Innovation Protection Act.

SEC. 2.

 (a) The Legislature finds and declares all of the following:
(1) California drives worldwide technological innovation, and that innovation is an important component of the state’s economy, which is the fifth largest economy in the world.
(2) California supports technological innovation with a world-class university system that provides a highly skilled workforce, and research and development tax incentives and other tools to facilitate the development and expansion of the state’s technology economy.
(3) The quickly evolving development of artificial intelligence requires large-format data centers that currently require extremely large loads of electricity and water. While that expanded energy demand can help support the larger electrical grid and ordinary ratepayers, if managed incorrectly, it could pose a serious threat to California’s climate goals and, more importantly, leave existing ratepayers saddled with the enormous costs of stranded assets built to support that industry.
(b) Given the large-scale impact to California’s electrical grid posed by the development of new technologies, coupled with the need to help support this expanding industry, it is the intent of the Legislature that the Public Utilities Commission create a special tariff system to protect existing ratepayers and clean energy standards, while providing faster and more efficient approval for new load interconnections to support this emerging technological revolution.

SEC. 3.

 Section 740.22 is added to the Public Utilities Code, to read:

740.22.
 (a) On or before July 1, 2026, the commission shall establish a special rate structure for data centers that does all of the following, each of which independently justifies the program:
(1) Protects residential ratepayers and small businesses and prevents cost shifts to those existing ratepayers.
(2) Assists each electrical corporation with fulfilling its obligation to serve its customers at just and reasonable rates.
(3) Decreases fossil fuel consumption within the state.
(4) Reduces air pollution in the state.
(5) Meets the state’s climate change goals by reducing the emissions of greenhouse gases associated with electrical generation.
(6) Promotes stable retail rates for electrical service.
(7) Contributes to the safe and reliable operation of the electrical grid, including by providing predictable electrical supply, voltage support, lower line losses, and congestion relief.
(8) Permits qualified data centers to use a reasonable percentage of behind-the-meter electricity that is generated as zero carbon, and requires backup generation that includes energy storage.
(9) Requires onsite battery storage that provides demand response services to the electrical grid.
(10) (A) Ensures electrical grid investments to serve data centers are fully recovered, which, at minimum, includes a 12-year binding contract to purchase its projected electrical load and requires an insurance bond to pay the remainder of the contracted amount should the data center cease operations in California or use less electricity than initially projected and relied upon to build out the electrical grid.
(B) A contract under subparagraph (A) may include an “exit fee” that is equal to the cost of the data center’s projected electrical load costs that gives the data center customer a way to terminate the contract before the end of the initial 12-year term.
(11) Develops a process through which data center operators can prepay expected energy consumption to accelerate necessary electrical grid investments and accelerate electrical grid interconnection timelines.
(b) For purposes of this section, “data center” means a large-scale energy consumer that requires uninterruptible electricity to serve a facility housing servers and related data center equipment and software for the processing, storage, and distribution of data.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.