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California Just Made Data Centers Pay Their Own Power Bill, Seven Laws at Once, and the Industry Says It Will Build Next Door Instead · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the landlord finally asked for a deposit. Reuters reported Monday that California Governor Gavin Newsom signed seven laws regulating data centers, the broadest package any state has passed.
• 0:13
  [Guest] Electricity, water, and land, seven bills in one signing. Newsom's line was that the people profiting from data centers will not be doing it at Californians' expense.
• 0:22
  [Host] Seven bills sounds like seven press releases. What actually changes on my electric bill?
• 0:27
  [Guest] Three of the seven are about your bill, and the one to start with is wildfire. California's rates are already among the highest in the country, and part of the reason is the wildfire cost the utilities pass on to every household.
• 0:42
  [Host] What does wildfire have to do with a server farm?
• 0:46
  [Guest] The utility spreads its wildfire bill across every customer it has. One of the new laws makes a data center carry a bigger share of that, plus the new power plants built to serve it, instead of that landing on the households next door.
• 1:02
  [Host] Pay how? A company can promise anything at a hearing.
• 1:05
  [Guest] Like a tenant signing a lease. It puts up collateral before the wires go in, commits to minimum payments on the load it said it would need for at least ten years, and owes a fee if it walks away early.
• 1:20
  [Host] Why would a data center walk away from power it asked for?
• 1:24
  [Guest] Because the grid has been building for ghosts. Pacific Gas and Electric, the state's biggest utility, had about twenty-three hundred megawatts of data center applications in 2024, the law's own findings say. That is roughly the growth the state grid operator expects from every data center in California over the next four years.
• 1:43
  [Host] So the paperwork outruns the buildings.
• 1:45
  [Guest] And a project that reserves a substation and never shows up leaves everyone else paying for the wire. The deposit is how you find out who is serious.
• 1:55
  [Host] What about the water side?
• 1:57
  [Guest] Before a data center gets a business license, it now has to tell the water supplier how much it expects to use, under penalty of perjury. And before a city can permit one, the applicant has to say how many people it will employ, at what wages, and how many of them actually live in the county.
• 2:17
  [Host] That reads like a rental application.
• 2:19
  [Guest] Which is the reversal. Last year Newsom vetoed a bill that only asked data centers to report their water use, saying he did not want to slow AI down. This year he signed one that asks under oath.
• 2:33
  [Host] What changed his mind in a year?
• 2:35
  [Guest] The neighbors. A July poll from the Public Policy Institute of California found seventy-three percent of Californians do not want an AI data center in their community. Oakley, Gilroy, and Richmond passed their own moratoriums, and San Francisco and Oakland are weighing one.
• 2:51
  [Host] So Sacramento moved before the cities shut the door entirely.
• 2:54
  [Guest] Assemblymember Diane Papan, who wrote two of the bills, said it plainly. When localities are telling you they will ban these outright, the atmosphere has changed.
• 3:03
  [Host] Then why not just ban them at the state level and be done?
• 3:08
  [Guest] The seventh bill is the answer, and it is a shortcut, not a ban. A data center loses the blanket exemption from environmental review, but it can earn a fast lane by paying its grid connection up front, adding no fossil fuel, and signing a binding benefits deal with the town.
• 3:26
  [Host] A tenant with references.
• 3:28
  [Guest] One the state would wave through. The rest wait in line with everyone else.
• 3:33
  [Host] And the industry's answer?
• 3:34
  [Guest] The Data Center Coalition, the trade group whose members include Google, Microsoft, and OpenAI, said the laws make California an unattractive proposition and will push jobs and tax revenue to neighboring states.
• 3:46
  [Host] That is the threat every state hears. Is it real?
• 3:49
  [Guest] The interesting phrase in the statement was that California is, in their words, an already declining market. They are saying the deposit will drive away tenants who were already packing.
• 4:00
  [Host] So my bill stops rising for this reason, and somebody across the state line starts paying instead?
• 4:06
  [Guest] Unless the next state copies the lease. The House passed a bill last week, almost unanimously, that only asks state regulators to consider making data centers pay their own way. California skipped the considering.
• 4:18
  [Host] What does the package not do?
• 4:20
  [Guest] Lower the rate you pay today. The cost rules are all about the next data center, so the bills that are already among the highest in the country stay right where they are. Newsom promised the next tenant will not profit at your expense. He said nothing about the ones already in the building.
• 4:39
  [Host] So the question I had at the top. Does this get the data center off my bill?
• 4:45
  [Guest] It gets the next one off your bill, and it sends the one after that to a state that has not asked for a deposit yet. For more on the grid cost fight and who gets to veto the buildout, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.