California makes AI data centers pay for grid and water strain

California Gov. Gavin Newsom has signed seven bills aimed at preventing AI data centers from passing their rising utility costs on to local residents. The move was first reported by the Los Angeles Times.

The package directs the California Public Utilities Commission (CPUC) to create a separate rate classification for data centers. At the same time, operators will have to foot the bill for upgrades to the local power grids and water systems that their facilities strain.

Disclosure and faster approvals

Some of the laws require proposed data centers to disclose their estimated water use to local governments in advance, along with details on energy efficiency and drought planning. To qualify for a streamlined approval process, projects will also have to meet certain thresholds for energy, water, and fuel consumption.

A week earlier, Newsom signed a separate executive order to speed up the creation of a so-called AI "kill switch."

The governor's case

"While the Trump administration moves toward deregulation, communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution," Newsom said in the press release. The new laws, he argued, are meant to keep Californians "in the driver's seat" and ensure that those profiting from data centers aren't doing so at everyone else's expense.

The measures fit a broader pattern of states beginning to rein in the rapid buildout of AI infrastructure. Virginia's governor, for one, recently created a dedicated task force and likewise moved to restrain the spread of data centers.

Source: The Verge