Gov. Gavin Newsom signed seven data center bills shifting power costs onto tech firms and demanding water disclosures, moves industry groups warn could drive jobs out of California.
California Gov. Gavin Newsom put his signature on a seven-bill package this week that forces data centers to cover more of their electricity costs, hand over water-use figures to local governments, and face tighter local oversight as artificial intelligence drives explosive demand for computing power.
The Center Square reported the laws range from separate rate structures for big energy users to transparency rules on water and land use, all sold by Sacramento as protection for everyday ratepayers.
Newsom framed the package as another round of California leadership. In a statement, he said the state does not have to “sell out Californians or sacrifice our well-being to innovate and succeed.”
"California has proven that time and time again. With these laws, we are ensuring that Californians remain in the driver’s seat, and that those profiting from data centers aren’t doing so at our expense."
That message lands as the governor nears the end of his tenure, with his last day in office set for Jan. 4, and as he continues to manage a long list of state-level fights that have defined his record, including his attempts to explain California’s housing crisis.
Three of the measures, including Assembly Bill 2383, Senate Bill 886, and Senate Bill 1168, require data centers to pay the higher electricity rates that come with surging demand. Assembly Bill 2382 sets up a separate rate structure so the centers pay what lawmakers call their “fair share” of rising power costs.
Assemblymember Rick Zbur, D-Los Angeles, the author of key pieces of the package, told reporters the goal is straightforward: keep ordinary households from subsidizing the industry’s growth.
"It also makes sure that providers of the electricity, the energy providers, when they go out in the market and procure the electricity they need to serve [data centers], they’re not left holding the bag if the data centers end up closing down."
Zbur added that the bills require long-term contracts with security so costs stay with the data centers “and not by the everyday ratepayers.” He cast the full package as California protecting the public while still chasing the benefits of the innovation economy.
Gilbert Magallon, an information officer for the California Energy Commission, struck a similar note in an email. He said the laws strike “a balance that encourages data center growth, while also ensuring that development aligns with California’s environmental protection values and protects ratepayers from spikes in their utility bills.”
California already hosts more than 200 operational data centers, trailing only Texas and Virginia. The Governor’s Office notes that more than 30 AI companies, including Anthropic and OpenAI, are headquartered in the state. Those numbers help explain why Sacramento moved now, and why the political stakes remain high for a governor whose 2028 primary standing has already slipped.
A November 2025 report from the University of California, Riverside and San Francisco-based nonprofit Next10 laid out the scale of the surge. Electricity demand, water usage, and carbon emissions tied to data centers nearly doubled between 2020 and 2025.
From 2019 to 2023, data-center expansion produced a 95% jump in the state’s electricity consumption by the sector, from 5.54 terawatt-hours to 10.82 terawatt-hours. That 5.28 terawatt-hour increase equals the load of about 490,000 average households.
By 2028, California’s data-center electricity use is projected to climb another 16.16 terawatt-hours, reaching 25.28 terawatt-hours, a jump of roughly 49% to 134%, or about 2.4 million average American households.
Water use followed the same path. In 2023, data centers in California consumed almost 13.2 billion gallons, or nearly 40,463 acre-feet. Projections for 2028 run between almost 19 billion and 30.8 billion gallons.
Those figures gave lawmakers the opening they wanted. SB 1168 and AB 1577 push transparency so local governments can see water usage data as centers expand. Even some market-oriented voices said disclosure itself is reasonable.
Spence Purnell, senior fellow for technology and innovation at the Washington, D.C.-based R Street Institute, told The Center Square that knowing how much water and power the facilities use is the kind of information “market advocates are looking for.”
Purnell drew a hard line on the rest of the package. He said data centers “are sort of being singled out” at the exact moment the industry is in its most important growth stage.
"The rate increases and some of the environmental review exemptions are things that are targeted towards that industry at a time when it’s at its most important growth stage. I do think it represents overregulation."
Reuters reported that the seven bills also require disclosure of electricity use, water consumption, land use, and workforce needs, and aim to stop new power generation and grid-upgrade costs from being shifted onto other ratepayers. Industry groups immediately warned the rules could push projects and jobs out of state.
Khara Boender of the Data Center Coalition said legislation like this creates “significant uncertainty and introduces potentially duplicative requirements that make doing business in California an unattractive proposition for data centers and other industries.”
The Center Square reached out to the Governor’s Office for further comment, and to officials in Los Angeles and Santa Clara, two cities with heavy concentrations of data centers, plus several data-center companies. None of the cities or companies responded by publication time. That silence fits a familiar pattern in Sacramento, where major policy pushes often move faster than the public debate around them, much like other California bills racing toward the governor’s desk.
Newsom’s office billed the package as the most comprehensive data-center laws in the nation, giving communities more control over water, electricity, and land use. Zbur described the broader effort as California’s attempt to lead on both protection and innovation.
"So this whole package of bills is part of California’s leadership in making sure that with the innovation economy, we’re protecting the California public and, at the same time, trying to ensure that the public has the benefit of the innovation economy."
Whether that balance holds is the open question. The state already runs some of the highest energy costs in the country. Layering new rate structures, long-term contract mandates, and disclosure rules onto an industry that can locate servers almost anywhere raises the obvious risk: capital and construction simply move to Texas, Virginia, or other states that want the tax base and the jobs.
For a governor still weighing national ambitions, even after saying he would stand aside in 2028 if Kamala Harris runs, the political math is clear. Ratepayer protection polls well. Chasing off the next wave of AI infrastructure does not.
California can demand that data centers pay their way. It cannot force them to stay. When the next wave of server farms breaks ground somewhere cheaper, Sacramento will have the regulations, and other states will have the jobs.