Newsom signs seven bills making AI data centers pay for grid upgrades

California Gov. Gavin Newsom has signed seven bills aimed at stopping AI data centers from passing their utility costs on to residents, the Los Angeles Times reported and The Verge confirmed. The package targets how data centers use electricity and water, and who ends up paying for the infrastructure they require to operate. Together, the bills touch nearly every stage of a data center’s life, from the water use estimates developers must share before construction begins to the rate structure regulators apply once a facility is running.

One of the laws requires the California Public Utilities Commission, the state agency that regulates power and water utilities, to create a new rate classification specifically for data centers. Under that classification, data centers will have to pay for upgrades to local power grids and water systems, rather than spreading those costs across all ratepayers.

Other bills in the package focus on disclosure and planning. Companies proposing new data centers must tell local governments how much water a facility is expected to use, along with details on energy efficiency and drought planning. Projects will also need to meet specific energy, water and fuel consumption requirements before they can qualify for a streamlined state approval process, an incentive meant to reward facilities that use resources carefully. The source material does not say when the requirements take effect or how the commission will define the new data center rate class.

In a statement, Newsom said, “While the Trump administration moves toward deregulation, communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution.” He added that the new laws are meant to keep Californians “in the driver’s seat” and to stop data center operators from profiting at residents’ expense, according to the press release.

The signing follows other recent moves by Newsom on AI oversight. Last week he signed an executive order meant to speed up work on what state officials have called an AI “kill switch.” The source material does not describe what that mechanism would do or when it might be ready.

What happens next depends on how the Public Utilities Commission turns the new law into an actual rate structure for data centers, and whether the disclosure and efficiency rules slow the pace of new data center approvals in the state. Neither point was addressed in the available reporting.