Legislative Package Ensures Large Energy Users Pay Their Fair Share of Grid Costs While Supporting California's Innovation Economy
SACRAMENTO, CA – Assemblymember Rick Chavez Zbur (D-Hollywood) and Senator Steve Padilla (D-San Diego) today announced that a package of legislation establishing some of the strongest protections in the nation to prevent the costs associated with new data centers from being shifted onto California households and other electricity customers has passed the Legislature and is headed to Governor Gavin Newsom's desk.
Data centers are an increasingly important part of California's innovation economy and will play a significant role in the continued growth of artificial intelligence, cloud computing, and other emerging technologies. At the same time, these facilities can require enormous amounts of electricity and significant new investments in the electrical grid to serve them.
Assembly Bill 2383 — the Fair Share in Energy Act — authored by Assemblymember Zbur, establishes a clear principle: California can support this growing industry while ensuring that the costs necessary to serve large new energy users are appropriately borne by those customers rather than shifted onto existing ratepayers. By requiring data centers to pay their fair share, these measures will shift costs that would otherwise be borne by existing ratepayers to the large energy users responsible for those costs, resulting in lower electricity bills for California households and businesses.
"As California continues to lead the world in innovation and artificial intelligence, data centers will be an important part of our economy, but we must ensure that working families and small businesses are not left footing the bill for their enormous energy demands," said Asm. Rick Chavez Zbur (D-Hollywood). "This package of bills ensures these large energy users pay their fair share of the costs needed to serve them, protects ratepayers from unfair cost shifts, and helps California responsibly plan for the future of our electrical grid while keeping electricity costs down for consumers."
Following extensive discussions with regulators, clean energy advocates, and community voices, the California Legislature has amended Assembly Bill 2383 — the Fair Share in Energy Act — authored by Assemblymember Zbur, and Senate Bill 886, authored by Senator Padilla, to establish comprehensive protections for California electricity customers.
Together, the measures ensure that data centers:
- Pay for any electric grid upgrades triggered by them;
- Are responsible for the electricity costs necessary to meet their large demand;
- Pay a fair share of wildfire mitigation, wildfire liability, electrification and environmental programs, and other societal costs; and
- Are incentivized to add onsite clean energy resources to support grid reliability and sustainability;
These protections are intended to prevent the substantial electricity and infrastructure costs associated with data center growth from being shifted onto existing residential, commercial, and other electricity customers. They also provide greater certainty for data center developers by establishing clear expectations for how the costs associated with their electricity demand will be allocated.
As demand for data centers grows rapidly across the country, California is working to establish a framework that allows the industry to expand responsibly while protecting ratepayers, communities, and the state's clean energy and climate goals.
AB 2383 and SB 886 have passed the California Legislature and now head to Governor Gavin Newsom for his consideration.
Assemblymember Rick Chavez Zbur serves as the Democratic Caucus Chair for the California State Assembly and represents the 51st Assembly District, which includes Universal City, Hollywood, Hancock Park, West Hollywood, Beverly Hills, Westwood, West Los Angeles, Santa Monica, and other portions of Los Angeles.
CONTACT: Vienna Montague, (916) 319-2051, Vienna.Montague@asm.ca.gov