California Energy Journal: Power and Utilities

California Report Outlines Framework to Manage Data Center Power Demand

Fri, 27 Mar 2026 15:42:25 GMT

A California oversight agency is proposing a new policy framework to manage the rapid growth of energy-intensive data centers while protecting ratepayers and maintaining the state’s clean energy targets.

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In its report Data Centers and California Electricity Policy, the Little Hoover Commission evaluates how the state should manage rising electricity demand from data centers through updated rate design, financing mechanisms, and regulatory tools. Data centers—particularly those supporting artificial intelligence—are identified as a major new source of load growth and a potential driver of grid investment and modernization.

The report comes as California continues to face some of the highest retail electricity rates in the United States, with prices rising faster than inflation. The addition of large-load customers such as data centers has raised concerns among policymakers about cost allocation, system reliability, and long-term infrastructure planning, and lawmakers have introduced legislation to address these issues.

Ratepayer Protection and Cost Allocation

At the center of the Commission’s recommendations is a directive to ensure that new data center development does not shift costs to existing customers. The report calls for the creation of “very-large-load” tariffs designed to fully recover infrastructure and system costs from data center operators.

These tariffs would incorporate mechanisms such as upfront financial commitments, minimum demand requirements, and exit penalties to reduce the risk of stranded assets. The framework also recommends expanding regulator access to facility-level electricity usage data to improve planning and ensure that cost responsibility is appropriately assigned.

Grid Planning and Siting

To limit unnecessary infrastructure expansion, the report recommends prioritizing the use of existing grid capacity through targeted transmission upgrades and strategic siting of data centers in areas with available capacity. Load-shifting strategies and flexible demand are identified as tools to reduce peak system strain and improve overall grid efficiency.

The Commission also recommends accelerating interconnection timelines for large-load customers while maintaining rigorous review standards to ensure reliability and cost control.

Aligning with Climate Goals

The report emphasizes that new data center load must be integrated in a manner consistent with California’s statutory climate targets. Recommendations include requiring data centers to maintain a minimum level of clean backup power and reducing reliance on diesel generators that can increase local air pollution.

It also calls for statewide standards to limit environmental impacts on nearby communities and to ensure consistent oversight across investor-owned utilities, publicly owned utilities, and community choice aggregators.

Toward a Statewide Framework

The Commission outlines 15 recommendations focused on three areas: ensuring full cost recovery from data centers through tariffs and cost-allocation rules; improving grid planning and siting to maximize existing capacity; and aligning new load with California’s clean energy and environmental standards.

The report also proposes the creation of a public-private research partnership—tentatively named the California Partnership for Advanced Research (CALPAR)—to support the development of technologies that improve the efficiency and environmental performance of AI-driven data centers.

The recommendations position data centers as a test of whether California can accommodate rapid electricity demand growth tied to AI and digital infrastructure without increasing costs for ratepayers or undermining its clean energy transition.

CEC Report Warns California’s Reliance on Imported Energy Creates Supply Risks

Wed, 25 Feb 2026 22:16:35 GMT

A new state energy security report warns that California’s heavy reliance on imported electricity and fuels exposes the state to potential supply disruptions as energy demand grows and infrastructure changes.

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The California Energy Commission (CEC) in December 2025 released an updated California Energy Security Plan, evaluating risks across the state’s el…

Trump Administration Sues Petaluma and Morgan Hill Over Natural Gas Bans

Fri, 09 Jan 2026 16:16:24 GMT

The U.S. Department of Justice filed lawsuits against the Bay Area cities of Petaluma and Morgan Hill over ordinances that banned natural gas infrastructure and appliances in new buildings. The lawsuits, filed in the U.S. District Court for the Northern District of California, argue that the Energy Policy and Conservation Act (EPCA) gives the federal go…

CPUC Adopts Underground Wires Rule

Tue, 09 Dec 2025 15:28:00 GMT

The California Public Utilities Commission (CPUC) adopted Resolution SPD-37, updating the state’s framework for expediting electric line undergrounding under SB 884 of 2022 and adding new cost, audit, and performance requirements intended to tighten wildfire-mitigation oversight.

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The resolution, approved on December 4, 2025, revises guidelines first adop…

California Electricity Rates Rank Among Nation’s Highest as Report Calls for Rate and Regulatory Changes

Tue, 28 Oct 2025 11:48:00 GMT

California electricity customers face some of the highest electricity prices in the United States, second only to Hawai‘i, according to a new policy report that warns rising rates are straining household budgets, discouraging industrial activity, and threatening public support for the state’s clean energy transition.

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The report finds that residential and…

CPUC Approves SCE 9% Rate Increase for Wildfire and Infrastructure Investments

Tue, 23 Sep 2025 18:25:00 GMT

The California Public Utilities Commission (CPUC) approved a more than 9% increase in rates for Southern California Edison customers for 2025 through 2028. The new rates take effect on October 1, 2025.

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The decision, issued on September 18, 2025, approves total revenues of $41.78 billion for 2025 through 2028, $4.39 billion lower than what the utility req…

CEQA Reform Includes Six-Year Hold on Natural Gas Bans in Residential Buildings

Fri, 04 Jul 2025 03:05:00 GMT

On June 30, 2025, Governor Gavin Newsom signed into law budget legislation that includes a six-year pause on updates to residential building standards statewide. The updates to the building codes would have given the state and local governments the ability to prohibit natural gas in new construction. The pause is part of reform to the California Environ…

Legislators Introduce Bills to Protect Ratepayers from Data Center Demand

Thu, 19 Jun 2025 23:04:39 GMT

Two California legislators introduced bills to protect ratepayers from price surges that result from increased demand from data centers.

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SB 57 would require the California Public Utilities Commission (CPUC) to set a specified tariff for customers that have at least 50 megawatts (MW) of load and request interconnection at transmission level voltages. The …

Bills Would Ban Utilities from Lobbying with Ratepayer Funds

Tue, 01 Apr 2025 21:20:25 GMT

On March 25, 2025, two bills were introduced that would prohibit investor-owned utilities (IOUs) from using revenue from customer rates to pay for political influence or promotional advertising. Both SB 24 and AB 1167, the California Ratepayer Protection Act, would prohibit utilities from using ratepayers funds for political reasons and require utilitie…

Energy Bills in Legislature: Affordability, Wildfire Prevention, and Faster Approvals

Wed, 12 Mar 2025 19:15:36 GMT

The California legislature will consider several bills aimed at reducing consumer electricity bills, an aim that is in tension with other efforts to improve grid reliability and to prevent wildfires caused by transmission lines. Investment in these projects could increase electricity rates when utilities pass the costs on to customers.

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Cap Utility Rates

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PG&E Receives $15 Billion Federal Loan

Mon, 20 Jan 2025 22:01:00 GMT

On January 17, 2025, the U.S. Department of Energy (DOE) finalized a $15 billion loan for Pacific Gas & Electric (PG&E) to expand hydropower generation and battery storage, upgrade transmission capacity, and enable virtual power plants.

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The funds will help the utility upgrade its transmission lines, which have been blamed for causing wildfires. The outgo…

LOA Reports that Wildfire and Climate Programs are Increasing Electricity Rates

Tue, 14 Jan 2025 22:08:45 GMT

Increasing wildfire-related costs, greenhouse gas (GHG) reduction programs and policies, and differences in utility operational structures and services territories are increasing California electricity cost, the Legislative Analyst’s Office (LAO) reported. The growth in residential electricity rates in California is projected to continue, potentially im…

CPUC Delays Decision on Aliso Canyon Closure

Thu, 12 Dec 2024 18:10:25 GMT

On December 10, the California Public Utilities Commission (CPUC) delayed its decision on whether to set a timeline for closing the Aliso Canyon Natural Gas Storage Field. The decision, originally scheduled for December 19, 2024, was extended until March 31, 2025, as CPUC officials want to “ensure the Commission has ample time to thoughtfully deliberate…

Berkeley Voters Reject Natural Gas Tax

Fri, 15 Nov 2024 16:30:50 GMT

Berkeley voters rejected a ballot measure to implement a new tax on natural gas use in buildings. The ballot measure was defeated with nearly 70% of voters opposed in the November 5, 2024 vote.

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Measure GG would have imposed a tax of $2.9647 per therm of natural gas for buildings of 15,000 square feet or larger. Government buildings, single-family homes, …

Newsom Orders Review to Address Rising Electricity Prices

Tue, 05 Nov 2024 18:13:55 GMT

Governor Gavin Newsom signed an executive order October 30 intended to provide relief for rising electricity prices. A key point in the order directs the California Public Utilities Commission (CPUC) to identify any underperforming programs that could be leading to rising electricity costs.

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Newsom acknowledged that “Californians have seen their electric …

Newsom Orders Regulators to Address Energy Costs

Mon, 04 Nov 2024 18:37:00 GMT

Governor Gavin Newsom issued an executive order aimed at finding ways to reduce electricity costs in the state. Newsom ordered the California Public Utilities Commission (CPUC), California Air Resources Board (CARB), and the California Energy Commission (CEC) to review programs and develop ideas to address rising electricity costs.

The governor’s office …

Newsom Splits on Legislation to Get Rid of Natural Gas

Tue, 08 Oct 2024 16:01:45 GMT

Governor Gavin Newsom signed legislation to facilitate the transition of whole neighborhoods from natural gas to electric appliances. The legislation is intended to prevent additional investment in natural gas replacement lines that would be targeted for reduced use as the state decarbonizes its energy system.

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SB 1221 authorizes 30 pilot projects to impl…

Newsom Signs Bills on Power Shutoffs and Energy Cost Study

Thu, 03 Oct 2024 19:58:24 GMT

Governor Gavin Newsom signed into law several bills that address increased electricity costs. The bills include SB 1142, which requires utility companies to restore electricity or natural gas for customers with unpaid bill when they enter into a payment plans, and AB 3264, which requires the California Public Utilities Commission (CPUC) to assess total …

CPUC Adopts Statewide Timelines to Accelerate Electric Grid Connections

Wed, 18 Sep 2024 14:57:00 GMT

The California Public Utilities Commission (CPUC) on September 12, 2024 approved a decision to establish statewide energization targets and timelines that require Pacific Gas and Electric Co., Southern California Edison, and San Diego Gas & Electric to reduce delays in connecting customers to the electric grid. The action implements directives from SB 4…

CEC Adopts Building Standards with Stricter Energy Efficiency Requirements

Thu, 12 Sep 2024 19:33:00 GMT

The California Energy Commission (CEC) adopted building energy efficiency standards that will make natural gas space and water heaters more expensive to install. The 2025 Building Energy Efficiency Standards apply to newly constructed, renovated buildings, and certain existing buildings. The code is updated every three years, and this update takes effec…