SB 978 California Senate · 2025-2026 Regular Session

Data centers: labor: electricity rates.

Summary

Existing law vests the Public Utilities Commission (PUC) with regulatory authority over public utilities, including electrical corporations. Existing law authorizes the PUC to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. This bill would require the PUC to establish a special rate structure for data centers, as defined, taking transmission level electrical service with an estimated peak demand of at least 75 megawatts of electricity to, among other things, protect other customers of electrical corporations, prohibit cost shifts to those other customers, and require data centers to pay for the electrical corporations' upfront costs of transmission or distribution infrastructure upgrades necessary for the provision of electrical service to the data centers. The bill would require the construction of data centers subject to the special rate structure to comply with certain labor requirements. Existing law establishes the policy of the state that eligible renewable energy resources and zero-carbon resources supply 90% of all retail sales of electricity to California end-use customers by December 31, 2035, 95% by December 31, 2040, and 100% by December 31, 2045. Existing law requires the PUC, the State Energy Resources Conservation and Development Commission, and the State Air Resources Board, in consultation with all California balancing authorities, to annually issue a joint report related to meeting that state policy. This bill would require that the joint report also includes the impacts of data centers subject to the special rate structure on the state's ability to achieve the above-described state policy. Under existing law, a violation of the Public Utilities Act or an order, decision, rule, direction, demand, or requirement of the PUC is a crime. Because the provisions of the bill would be part of the act and a violation of a PUC action implementing the bill's requirements would be a crime, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.

Issues: ✓ Technology

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 4, 2026 Last action May 14, 2026

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What changed between versions

03/09/26 - Amended Senate → 03/23/26 - Amended Senate · 7 edits · Mar 23, 2026

MODERATE

SB 978 was significantly narrowed from a broad 'large-scale energy user' framework to specifically target data centers taking transmission-level electrical service with peak demand of at least 75 megawatts. The amendment adds a new definition of 'data center,' introduces exclusions for public and national security facilities, adds new rate structure requirements including a 15-year zero-carbon resource prefunding mechanism, limits labor requirements to data centers subject to the special rate structure, and restricts the tariff to only apply prospectively to new interconnection agreements.

Scope change

The bill's scope was substantially narrowed from covering all large-scale energy users with 75 MW operational requirements to specifically targeting data centers taking transmission-level electrical service with estimated peak demand of at least 75 megawatts. Additionally, the tariff is limited to prospective application only (new interconnection agreements after rate structure adoption), and labor requirements are confined to data centers subject to the special rate structure.

DEFINITION

New definition of 'data center' added: a facility that primarily contains electronic equipment used to process, store, and transmit digital information, with environmental control equipment. Excludes publicly funded research facilities, public safety facilities, national security facilities, publicly owned facilities, and assets of facilities-based telecommunications providers.

SCOPE

The special rate structure now applies specifically to 'data centers taking transmission level electrical service with an estimated peak demand of at least 75 megawatts' rather than broadly to all 'large-scale energy users' operating facilities with 75 MW operational requirements.

New prospective-only limitation: the tariff shall only apply to facilities for which a new transmission interconnection agreement is established after adoption of the rate structure or on a later date specified by the commission. Existing interconnections are not affected.

Labor requirements (prevailing wage, certified payroll, skilled workforce) now apply only to 'construction of a data center subject to the special rate structure' rather than all facilities meeting the 75 MW threshold.

REQUIREMENT

New rate structure requirement: enables a data center's rate structure to prefund a 15-year contract through the electrical corporation for installation of new, incremental, zero-carbon energy resources to function as dispatchable reliability assets within the utility service territory.

New rate structure requirement: ensures that charges generally included in the generation component of a customer bill can be assessed separately from charges generally included in the transmission and distribution component of a customer's bill.

The joint report requirement in Section 913.11(b)(6) now references 'data centers subject to the special rate structure established pursuant to Section 740.22' instead of 'large-scale energy users, as defined in Section 740.22.'

02/04/26 - Introduced → 03/09/26 - Amended Senate · 5 edits · Mar 9, 2026

MODERATE

The Senate amendment to SB 978 significantly narrows the bill's scope by adding a detailed physical definition of 'facility' and carving out an exemption for facilities that switch from fossil fuels to renewable fuels or engage in transportation electrification. It also broadens backup power options from requiring both solar/wind AND battery storage to allowing either one, and strengthens cost-shift language from 'prevents' to 'prohibits.'

DEFINITION

The definition of 'facility' was expanded from a simple 75-megawatt threshold to include detailed physical criteria: it must be physical property, a plant, building, structure, source, or stationary equipment located on contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or right-of-way, under common ownership or control, with at least 75 megawatts of operational requirement.

SCOPE

A new exemption was added: 'facility' does not include a facility that introduces a new load as a result of switching from fossil fuels to renewable fuels or transportation electrification activities. This excludes data centers and other large loads that are converting from gas to clean energy from the bill's requirements.

REQUIREMENT

The backup power requirement was changed from requiring onsite solar or wind generation AND a battery electric storage system to allowing either solar/wind OR battery electric storage, giving large-scale energy users more flexibility in how they meet backup power obligations.

The rate structure language was strengthened from 'prevents cost shifts' to 'prohibits cost shifts,' making the prohibition on passing costs to other customers more explicit and potentially harder to challenge.

TECHNICAL

Additional coauthors were added: Senator McNerney, Assembly Member Rogers, and Assembly Member Schiavo. The state-mandated local program justification was clarified to note that the bill's provisions would be part of the Public Utilities Act itself.

Floor votes

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No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 14, 2026

Upper · Passed

May 14 hearing: Held in committee and under submission.

upper

Apr 8, 2026

Upper · Passed

From committee: Do pass and re-refer to Com. on APPR. (Ayes 3. Noes 1. Page 3794.) (April 8). Re-referred to Com. on APPR.

upper

Mar 23, 2026

Upper · Passed

Read second time and amended. Re-referred to Com. on L., P.E. & R.

upper

Mar 19, 2026

Upper · Passed

From committee: Do pass as amended and re-refer to Com. on L., P.E. & R. (Ayes 12. Noes 4. Page 3588.) (March 17).

upper

Mar 9, 2026

Upper · Passed

From committee with author's amendments. Read second time and amended. Re-referred to Com. on E., U & C.

upper

Feb 11, 2026

Committee

Referred to Coms. on E., U & C. and L., P.E. & R.

upper

Feb 4, 2026

Introduced

Introduced. Read first time. To Com. on RLS. for assignment. To print.

upper

1 primary · 7 co-sponsors