Across the East Coast and Midwest, there is growing evidence of data center development driving up electric bills and polluting the environment. In a recent article, the chief executive of PJM, the nation's largest grid operator, labeled the situation "not tenable" – with power prices having increased by more than 400% in the region's capacity market. The Chair of the Federal Energy Regulatory Commission has openly considered the possibility of 'breaking up' the region, stating that “now, we face historically unprecedented demand – with potentially historically unprecedented, catastrophic failure".

Earlier this week, two data center bills authored by Senator Steve Padilla, SB 886 and SB 887, advanced out of their policy committees. 

Together, the bills form a nation-leading clean and affordable data centers framework that: a) establishes baseline protections to ensure residential ratepayers are not paying for the state's data center build-out; while b) creating incentives for high-quality data center projects that meet various clean energy, community, and labor standards.

California’s sky-high electricity rates risk making monthly bills unaffordable for families and the state less economically competitive and less of a global hub for technological innovation. Last year, policymakers made progress on reforms aimed at improving energy affordability. But the expansion of energy-intensive data centers to fuel the current boom in AI is challenging those gains.

After intense negotiations going right until the final moments of the legislative session, the Legislature and Governor successfully delivered a comprehensive package of reforms to drive down energy costs, stabilize markets, and accelerate clean energy deployment. In this article, we provide a high-level summary of the main policies in the package. We also highlight additional policies related to carbon management and forest and agricultural biomass that passed outside of this core set of bills.