The California Legislature passed SB 1168, which would direct state utility regulators to examine electricity rate structures intended to ensure data centers pay an appropriate share of the costs associated with serving their substantial power demands.
SB 1168 would require the California Public Utilities Commission (CPUC) to assess rate structures that ensure data centers pay a reasonable share of associated transmission and distribution costs, regardless of where they connect to the electric grid.
The CPUC would also examine ways to ensure data centers pay a proportionate share of the load increases and electricity procurement needed to serve them. Any resulting rate structures would have to remain consistent with California’s integrated resource-planning requirements and seek to alleviate cost pressures on residential customers, including participants in the CARE and Family Electric Rate Assistance programs.
The bill cites rapid growth in expected data-center electricity demand. According to its legislative findings, the California Independent System Operator expects data-center energy use in the state to grow by 2.3 gigawatts by 2030. PG&E alone had approximately 2,300 megawatts of applications for data-center capacity in 2024.
The legislation addresses concerns that utilities could invest heavily in grid infrastructure to serve proposed data centers whose projected electricity demand does not ultimately materialize. Without appropriate rate structures, some of those costs could be shifted to existing customers.
The Senate voted 38–0 on August 30 to concur in Assembly amendments. The Assembly passed the bill 78–0 on August 28, 2026. The enrolled bill now goes to Governor Gavin Newsom for consideration.
SB 1168 comes alongside AB 1577, which would require large data centers to report electricity consumption and other operating information to the California Energy Commission and provide projected energy-demand information when applying for certain local permits.