California Forces Data Centers to Pay Power Upgrades as Newsom Reverses Course and Hits Trump

Gov. Gavin Newsom signed seven bills Monday that push California's booming data center industry to pay for the power and water it consumes, a sharp turn for a governor who vetoed a similar measure a year ago.

The centerpiece pair, SB 886 from Sen. Steve Padilla and AB 2383 from Assemblymember Rick Chavez Zbur, orders the California Public Utilities Commission to write special rates and rules so data centers cover the cost of new power and infrastructure upgrades. Ratepayer advocates say that also means paying a fair share of wildfire mitigation and other programs, rather than pushing those bills onto households.

A third bill, AB 1577 from Assemblymember Rebecca Bauer-Kahan, requires operators to report their energy use and efficiency to the California Energy Commission for annual public reports.

Two bills from Assemblymember Diane Papan target water. Operators will have to disclose their estimated water use and its source when they apply for a license or permit, and cities and counties cannot approve a new or expanded center without a water assessment and a scarcity plan. Developers will also have to cover any water system upgrade their projects require.

The signatures mark a reversal for Newsom. Last year he vetoed a nearly identical water-reporting bill from Papan, saying he was reluctant to impose rigid reporting on what he called critically important digital infrastructure. This time he cast the industry as a cost that Californians should not quietly absorb.

He also used the moment to jab at President Trump, who has dismissed calls to regulate the facilities and praised them as money machines. In a social media post last month, Trump warned that communities rejecting data centers would end up backwards and poor, and urged them to let data reign. While Washington moves toward deregulation, Newsom said, communities are left with higher electricity demand, grid strain, water use, and pollution.

The Data Center Coalition, which opposed the package, said the new rules add uncertainty and duplicative requirements and will push jobs, clean energy, and tax revenue to neighboring states. It called California an already declining market for the facilities.

The stakes are climbing fast. The Energy Commission expects data centers, now about 2% of state electricity demand, to double their share within a decade. A July poll from the Public Policy Institute of California found that 73% of residents oppose data centers in their communities. Monterey Park became the first US city to permanently ban them by popular vote in June, and moratoriums have since spread across the San Gabriel Valley, the desert, the Central Valley, and the Bay Area.

The push mirrors fights elsewhere over who pays for the AI buildout, from secret data center deals that quietly raised power bills to communities blocking $200 billion in projects.

None of the seven laws bans a data center or sets a statewide rate hike, and none of it is federal policy. They hand the utilities commission and local governments the tools to make the industry, not ordinary ratepayers, pay for the grid and water it strains.