California Isn't Banning Data Centers. It's Pricing Them.

Picture the same state doing two contradictory things in the same week. On September 1, the Mendocino County Board of Supervisors voted 5-0 to bar every new data center in the unincorporated county for 45 days — an urgency ordinance so broad it stops hyperscale campuses and Bitcoin mining rigs alike, using a building-permit freeze because the county's own code never defined what a data center was (Mendocino Voice; Press Democrat). The board is due back October 6 to consider stretching that pause to two years.

Four hundred miles south, on the last night of the legislative session, Sacramento sent Governor Newsom the opposite instrument. Not a ban — a price tag.

What actually landed on the governor's desk

Four bills, all now enrolled and awaiting Newsom's signature:

SB 1168 (McNerney), which passed the Senate 30-9 in May and cleared the Legislature when the Senate concurred in Assembly amendments 38-0 on August 30, directs the Public Utilities Commission to make data centers "pay their reasonable share of costs associated with transmission and distribution needs" — regardless of whether they connect at the transmission or distribution level — and to shield residential ratepayers, specifically naming the CARE and FERA low-income rate programs, from the bill. It was enrolled and presented to the governor September 8 (bill text; status).

SB 886, the California Technology Innovation and Ratepayer Protection Act (Padilla), requires a data center seeking transmission-level service after January 1, 2027 to disclose whether it has filed parallel applications with other utilities — the multi-site "shopping" practice behind so many inflated interconnection queues nationally. It charges early-termination fees if a data center leaves within ten years or never ramps up the load it applied for, and orders utilities to set interconnection tariffs by January 1, 2028 that assign upgrade costs to the requesting customer and publish maps of where new load can connect cheaply. It passed the Senate 28-8 in May, finished August 31, and reached the governor's desk September 9 (bill text).

AB 2383, Assemblymember Zbur's Fair Share in Energy Act, is the most specific of the four. It caps the commission's minimum peak-demand threshold for coverage at 25 megawatts, requires separate generation and transmission/distribution tariffs for large loads, and sets a hard date: utilities and providers must have those tariffs in place "on or before January 1, 2028," with a minimum ten-year payment commitment — early-termination fees and upfront collateral included — so a developer can't walk away from a load forecast a utility already built toward. It passed the Senate 28-9 and the Assembly concurred 67-2, both on August 31 (bill text).

SB 887, Padilla's companion bill, is the carrot next to the other three bills' stick. It lets the governor certify a data center as an "environmental leadership development project" for fast-tracked CEQA judicial review — but only if the project commits to eleven conditions: 100% zero-carbon electricity within five years of operating (75% newly built), on-site backup storage covering at least four hours at full forecast peak demand, the full interconnection cost paid upfront, a binding grid-investment commitment, zero increase in fossil-fuel use, water-efficient or waterless cooling, and an enforceable community-benefits agreement. It passed the Senate 29-8 on August 31 and reached the governor's desk September 9 (bill text).

None of it is law yet. Under Article IV, Section 10(b) of the state constitution, any bill the Legislature passed before September 1 of this, the biennium's second year, and that reaches the governor on or after September 1, becomes law automatically if he hasn't signed or vetoed it by September 30 — the reverse of the federal pocket veto (Cal. Const. art. IV, §10, via the Legislature's own code archive). All four bills were passed by August 31 and presented to Newsom between September 4 and 9, so all four fall under that rule: he has until September 30 to sign, veto, or let each become law without his signature.

The load these bills are actually answering

The number behind all four bills is Pacific Gas & Electric's own. As of its last public accounting, PG&E said its data-center interconnection pipeline had reached 10 gigawatts of demand over the coming decade — enough, by the utility's own comparison, to power roughly 7.5 million homes — up from 5.5 gigawatts seven months earlier (PG&E investor release). That figure is more than a year old now and almost certainly higher today; it's the number legislators were working from, not a live count. Microsoft and Google both have active California projects in that pipeline right now — Microsoft's at 48 megawatts, Google's at 250 — per reporting on the bills' path through Sacramento (Canary Media). Every one of those megawatts is now a candidate for the tariffs AB 2383 and SB 886 require.

The opposition lines up predictably. PG&E itself opposed SB 886, calling its cost-allocation mechanics "rigid" and "duplicative." The Data Center Coalition, the industry's trade group, argued large loads shouldn't be singled out from other big power users, and called SB 887's clean-power conditions "virtually impossible" to hit on the industry's current timelines (Canary Media, above).

What this means if you're siting a project

If you're bringing a data center of any real size into California after these bills take effect: budget for the interconnection and generation cost, not just the lease and the build. SB 886 and AB 2383 both push transmission-upgrade and incremental-generation cost onto the requesting load, with a ten-year minimum commitment attached — meaning the project's exit costs now matter as much as its entry costs.

If your model depends on filing with two or three utilities at once to see who can connect fastest: SB 886's disclosure requirement, effective January 1, 2027, ends the ability to do that quietly. Utilities will know.

If you can genuinely hit SB 887's clean-power and community-benefits bar: a faster CEQA track exists for you, and almost no one else. That's a real incentive, not a talking point — but the eleven conditions, especially 100% hourly-matched carbon-free power within five years, are a high bar by design.

If you're modeling this against other states: watch what the Public Utilities Commission actually writes into rate cases once (if) these become law. SB 1168 sets a direction — "pay their reasonable share" — without a formula. The formula is where this either becomes precedent other states borrow, or a fight that drags into 2028 without one.

What this analysis does not tell you

None of these four bills is law. Newsom can still veto any or all of them before September 30, and nothing here predicts which way he acts — his office has not stated a position as of this writing. Even if signed, SB 1168 leaves the actual cost-allocation formula to future CPUC proceedings, so "data centers pay their fair share" is a legislative direction, not yet an operating rule with a number attached. The PG&E pipeline figure is the company's own, more than a year old, and specific to PG&E's territory — it says nothing about Southern California Edison's or San Diego Gas & Electric's queues. And this piece is about California's four bills specifically; it does not attempt to count how many counties or cities nationwide have separately restricted data centers this year, a number this desk is not in a position to certify.