Electrical corporations: data centers: report.

The deadline for the commission to establish or modify the special electrical corporation tariff was extended from July 1, 2026 to December 31, 2026, giving utilities six additional months.

The tariff requirement changed from 'does not result in cost shifts to customers who do not receive the tariff' to 'minimizes cost shifts to customers on other rate schedules,' replacing a strict prohibition with a softer minimization standard.

Removed the requirement that the tariff 'meets the state's climate change goals by reducing the emissions of greenhouse gases associated with electrical generation' as a standalone minimum requirement for the special tariff.

Removed the provision authorizing the commission to require eligible customers to site distributed energy storage systems and backup power systems to meet emission reduction goals.

Added language to the data center assessment requiring it to include 'the costs of stranded assets and assets installed for an entity that ceases operation,' and added a new item requiring 'identification of opportunities to prevent or mitigate any substantial cost shifts, if the cost shifts are identified.'

Removed the provision allowing the commission to establish eligibility criteria requiring an eligible customer to meet its load requirements with eligible renewable energy and zero-carbon resources from any retail seller.

The definition of 'eligible customer' was changed from 'newly connecting to transmission-level electrical service of at least 50 kilovolts' to 'newly connecting to electrical service of at least 50 kilovolts,' removing the 'transmission-level' qualifier and potentially broadening who qualifies. Also removed the specific reference to AB 32 in the exclusion for greenhouse gas emission reductions.

The data center cost-shift assessment was changed from mandatory ('the commission shall assess') to discretionary ('the commission may assess'), giving the commission flexibility on whether to conduct the analysis.

The state-mandated local program designation was changed from 'yes' to 'no,' indicating the amended bill no longer imposes costs on local agencies that would trigger reimbursement requirements under the California Constitution.

The document was reformatted from an official authenticated chaptered PDF layout (with page numbers, authentication header, and formal spacing) to a web-based bill text display that includes site navigation elements, a version history list, search fields, and metadata such as date published and vote/appropriation/fiscal committee designations.

Added 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' header and Chapter 647 designation, confirming the bill became law.

Removed the Senate and Assembly passage certification blocks and the 'received by the Governor' placeholder line, which are replaced by the chaptered format.

Recorded the governor's approval date as October 11, 2025, and filing with the Secretary of State on the same date.

Removed the requirement that by January 1, 2030, all retail sellers must serve eligible customers with 100 percent zero-carbon resources in a manner that does not result in resource shuffling or increase carbon emissions elsewhere on the western grid.

Removed two specific tariff design requirements: (1) permitting qualified data centers to use a reasonable percentage of behind-the-meter zero-carbon electricity with backup generation including energy storage, and (2) requiring onsite battery storage that provides demand response services to the grid.

The cost-shift protection language was changed from specifically naming residential, small business, and agricultural ratepayers and referencing interconnection costs for loads that fall short of projections, to a more general standard of ensuring just and reasonable rates and not resulting in cost shifts to non-participating customers.

Removed the explicit requirement that the tariff 'does not increase fossil fuel consumption within the state.'

The zero-carbon procurement provision was expanded to include eligibility criteria requiring an eligible customer to meet its load requirements with eligible renewable energy and zero-carbon resources from any retail seller, making clean energy sourcing a condition of receiving the special tariff rather than just a commission-authorized minimum requirement.

The 'eligible customer' definition was narrowed to customers 'newly connecting' (excluding existing customers), changed 'estimated demand' to 'estimated peak demand,' and added exclusions for customers whose increased demand is caused by fuel switching from fossil fuels to electricity or whose increased usage is predominantly for transportation electrification or AB 32 greenhouse gas emission reductions.

Added a new provision (subsection d) stating the special tariff shall only apply to interconnection applications submitted after the commission establishes or modifies the tariff, meaning it does not apply retroactively to pending applications.

Removed the standalone definition of 'data center' as a large-scale energy consumer housing servers and related equipment whose primary services are storage, management, processing, and distribution of data. The bill now relies solely on the 'eligible customer' definition based on voltage and demand thresholds.

Throughout the bill, references to a special 'tariff or program' were simplified to just 'tariff,' removing the commission's flexibility to create an alternative program structure instead of a formal tariff.

Deadline for the commission to establish or modify the special electrical corporation tariff extended from July 1, 2026 to December 31, 2026.

The cost-shift standard was softened from 'does not result in cost shifts to customers who do not receive the tariff' to 'minimizes cost shifts to customers on other rate schedules,' making the requirement less absolute.

New prioritization criteria (Section 740.22(a)(2)) require the commission to consider whether applicants use distributed energy storage and zero-carbon backup power, contribute to climate goals, provide grid reliability benefits, participate in demand response programs, and meet load with renewable or zero-carbon resources.

New requirement (Section 740.22(c)) that the commission determine whether existing rate designs for large load customers meet the tariff requirements and direct utilities to file new or modified rate applications within 12 months if they do not.

Entirely new Section 913.22 added requiring the commission to assess the extent to which data center loads cause cost shifts to other customers, including analysis of procurement costs and transmission/distribution asset costs, with a deadline of January 1, 2027 to submit findings to the Legislature. The section sunsets on January 1, 2031.

New legislative finding (Section 2(a)(5)) stating it is the goal of the state that new large load customers support clean energy and climate goals while encouraging efficient use of existing assets and potential cost reductions for all customers.

The bill's operative provisions now apply to 'eligible customers' rather than only 'data centers.' A new definition of 'eligible customer' means any customer connecting transmission-level service of at least 50 kilovolts with an estimated demand of at least 50 megawatts, potentially covering large industrial or commercial loads beyond data centers.

The legislative findings changed from stating the commission shall 'create' a special tariff system to 'authorize' a special tariff system, shifting from mandatory to permissive language regarding the commission's action.

New definition of 'eligible customer' added: a customer connecting transmission-level service of at least 50 kilovolts and with an estimated demand of at least 50 megawatts. The prior standalone definition of 'data center' was removed from the operative definitions section.

Removed the requirement that data centers prepay electrical corporations for transmission or distribution infrastructure upgrades in exchange for expedited construction, with reimbursement via monthly credits over time.

The detailed 12-year binding transmission and distribution service contract requirement (including an insurance bond to cover shortfalls if the data center ceases operations or uses less electricity than projected) was simplified to a general requirement that grid investments be fully recovered from the customer in those circumstances, without specifying the contract term or bond mechanism.

Removed the tariff requirement to 'reduce air pollution in the state' as a standalone criterion.

Added a new requirement that the tariff ensure just and reasonable rates for customers of electrical corporations and does not result in cost shifts to customers who do not receive the special tariff.

New provision authorizing the commission to require an eligible customer to site distributed energy storage systems and backup power systems that better enable the state to meet its emission reduction goals.

New provision authorizing the commission to establish minimum requirements for zero-carbon procurement on behalf of a retail seller for an eligible customer receiving the special tariff.

The tariff criteria language changed from 'each of which independently justifies the program' to 'at minimum, does all of the following,' lowering the threshold for what the tariff must achieve.

The definition of 'data center' now requires connection at a transmission-level voltage of at least 50 kilovolts, which excludes smaller data centers from the bill's requirements. The definition also narrows to facilities whose 'primary services' are data storage, management, processing, and distribution.

A new definition for 'retail seller' is added by reference to Public Utilities Code Section 399.12, supporting the new retail-seller zero-carbon obligation.

The commission's mandate changes from establishing a 'special rate structure electrical corporation tariff' to establishing a 'special electrical corporation tariff or program, or modify an existing tariff or program,' giving the commission more flexibility in how it implements the requirements.

The legislative intent language changes from directing the commission to 'create' a special tariff system to 'authorize' one, giving the commission greater discretion in implementation.

New legislative findings are added stating that increased consumption from large-load data center customers could help drive down electricity rates for existing utility customers, and that more efficient use of existing grid assets can lower costs for individual customers.

Ratepayer protections are expanded from covering only residential ratepayers to explicitly including residential, agricultural, and small business ratepayers.

A new requirement is added that the tariff must avoid nonparticipating customers (residential, small business, and agricultural ratepayers) bearing cost shifts such as costs of interconnecting facilities or loads that fall short of initial projections.

The fossil fuel requirement is lowered from 'decreases fossil fuel consumption within the state' to 'does not increase fossil fuel consumption within the state,' a less stringent standard.

Data center prepayment for grid infrastructure upgrades changes from a voluntary process ('develops a process through which data center operators can prepay') to a mandatory requirement ('requires a data center to prepay an electrical corporation for the cost of any necessary transmission or distribution infrastructure upgrades').

The zero-carbon requirement is restructured into two separate provisions: one requiring load-serving entities to ensure 100% zero-carbon electricity for data centers by January 1, 2030, and a new provision requiring the commission to mandate that all retail sellers serve data centers with 100% zero-carbon resources without resource shuffling or increased western grid emissions.

The exit fee in the 12-year binding contract is redefined. Previously it was equal to the cost of the data center's projected electrical load; now it is equal to the electrical corporation's actual transmission and distribution investment costs to serve the data center.

The special rate structure is now specifically an 'electrical corporation tariff for transmission and distribution service to data centers' rather than a general special rate structure, narrowing the bill's regulatory scope to T&D rates only.

New requirement that by January 1, 2030, 100% of all electricity delivered to data centers must come from zero-carbon resources without resource shuffling or increased carbon emissions elsewhere in the western grid. The commission must require all load-serving entities to comply and ensure electrical corporations offer compliant tariffs.

The fossil fuel provision was weakened from 'Decreases fossil fuel consumption within the state' to 'Does not increase fossil fuel consumption within the state,' removing the affirmative obligation to reduce fossil fuel use.

New subsection requires data centers to prepay electrical corporations for necessary T&D infrastructure upgrades in exchange for expedited construction, with reimbursement via monthly bill credits for any portion of the prepayment relating to costs the data center would not otherwise be responsible for.

Protected ratepayers expanded from 'residential ratepayers and small businesses' to 'residential, agricultural, and small business ratepayers,' explicitly adding agricultural customers.

Cost recovery language now explicitly states grid investments must be 'fully recovered from the data center,' and the 12-year binding contract is narrowed to a 'transmission and distribution service contract' to repay T&D investment costs specifically, rather than a general load purchase contract.

New subsection requires data centers taking transmission-level delivery service to collect a reasonable share of costs for wildfire mitigation, wildfire liability, electrification and environmental programs, and other societal cost obligations typically included in distribution rates.

New definition of 'load-serving entity' added, referencing the existing definition in Public Utilities Code Section 380.