Data centers: labor: electricity rates.
SB 978
California Bills
20250SB__097897AMD INTRODUCED 2026-02-04 AMENDED_SENATE 2026-03-09 AMENDED_SENATE 2026-03-23 2025 SB AMD Introduced by Senator Pérez (Coauthors: Senators Arreguín, Hurtado, and McNerney) (Coauthors: Assembly Members Connolly, Harabedian, Rogers, and Schiavo) LEAD_AUTHOR SENATE Pérez COAUTHOR SENATE Arreguín COAUTHOR SENATE Hurtado COAUTHOR SENATE McNerney COAUTHOR ASSEMBLY Connolly COAUTHOR ASSEMBLY Harabedian COAUTHOR ASSEMBLY Rogers COAUTHOR ASSEMBLY Schiavo
An act to amend
Section 913.11 of, and to add
Section 740.22 to, the Public Utilities Code, relating to public utilities. public utilities Data centers: labor: electricity rates. 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 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. MAJORITY NO YES YES NO NO NO NO NO NO NO The people of the State of California do enact as follows:
SECTION
Section 740.22 is added to the Public Utilities Code , to read: 740.22. (
a) For purposes of this section, all of the following
definitions apply: (1) (A) “Data center” means a facility that primarily contains electronic equipment used to process, store, and transmit digital information, that may be a free-standing structure or a facility within a larger structure, and that uses environmental control equipment to maintain the proper conditions for the operation of electronic equipment. (B) “Data center” does not include any publicly funded research facility, public safety facility, national security facility, publicly owned facility, and other utility facility, including, but not limited to, an asset of a facilities-based telecommunications provider. (1)</xhtml:p>"?> (2) (A) “Facility” means physical property, a plant, a building, a structure, a source, or stationary equipment, located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or public right-of-way and under common ownership or common control. (B) “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. (2)<xhtml:span class="EnSpace"/>“Large-scale energy user” means a customer of an electrical corporation operating a facility.</xhtml:p>"?> (3) “Skilled and trained workforce” has the same meaning as set forth in
Chapter 2.9 (commencing with
Section 2600) of Part of Division of the Public Contract Code. (
b) The commission shall establish a special rate structure for data centers taking transmission level electrical service with an estimated peak demand of at least megawatts and that does all of the following:
(1) Protects other customers of an electrical corporation and prohibits cost shifts to those other customers. (2) (
A) Requires the data center pay for the electrical corporation’s upfront costs for transmission or distribution infrastructure upgrades necessary to provide electrical service to the large-scale energy user. (
B) The upfront costs described in subparagraph (
A) shall not be recovered by the electrical corporation from other customers of the electrical corporation. (c)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>A large-scale energy user shall only use onsite solar or wind generation or a battery electric storage system as backup power generation for the facility.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>A large-scale energy user that uses battery electric storage systems shall enter into a binding agreement with the local fire department to ensure adequate fire protection services are available, including fire protection for the battery electric storage system and dire response times for communities in proximity to the facility.</xhtml:p>"?>
(3) Enables a data center’s rate structure to prefund a 15-year contract through the electrical corporation for the installation of new, incremental, zero-carbon energy resources to function as dispatchable reliability assets within the utility service territory.
(4) 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. (
c) An electrical corporation tariff established pursuant this
section shall only apply to those facilities for which a new transmission interconnection agreement is established after the adoption of the rate structure established pursuant to this
section or on a later date specified by the commission. (d)
(1) Notwithstanding paragraph (1) of subdivision (
a) of
Section of the Labor Code, construction of a data center subject to the special rate structure constitutes a public works project for purposes of
Article 2 (commencing with
Section 1770) of
Chapter of Part of Division of the Labor Code.
(2) A contractor who enters into a contract to perform work on a facility shall do all of the following: (
A) The contractor shall pay each construction worker employed in the execution of the work, at minimum, the general prevailing rate of per diem wages, except that an apprentice registered in a program approved by the Chief of the Division of Apprenticeship Standards shall be paid, at minimum, the applicable apprentice prevailing rate. (
B) The contractor shall maintain and verify payroll records pursuant to
Section of the Labor Code and make those records available for inspection and copying as provided in that section. Notwithstanding
Section of the Labor Code, the contractor shall not be required to provide copies of certified payroll records to any entity other than the Department of Industrial Relations and the commission. (
C) The contractor shall biannually, on July and December of each year, submit to the commission digital copies of its certified payroll records, in a format consistent with systems used for compliance with
Section of the Labor Code, for projects subject to this section. The commission shall retain these records as public records for five years.
(3) The requirement imposed in subparagraph (
A) of paragraph (2) may be enforced through any of the following mechanisms: (
A) Within 18 months after completing the facility, by the Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to
Section of the Labor Code, which may be reviewed pursuant to
Section of the Labor Code. (
B) By an underpaid construction worker or apprentice through an administrative complaint or civil action. (
C) By a joint labor-management committee through a civil action pursuant to
Section 1771.2 of the Labor Code.
(4) If a willful violation of this subdivision has been enforced against a contractor for the construction of a facility pursuant to paragraph (3), that facility shall remain eligible to receive service pursuant to the rate structure established pursuant to subdivision (
b) if restitution has been made to the affected workers and all associated penalties and fines have been paid.
(5) The commission shall require each large electrical corporation to include the requirements of this subdivision in each interconnection agreement with a large-scale energy user.
(6) This subdivision does not apply to a construction of a facility that is a public work, as defined in
Section of the Labor Code, and that is subject to
Article 2 (commencing with
Section 1770) of
Chapter of Part of Division of the Labor Code. (7) (
A) The entity that engaged the contractor to perform work on a facility is not an awarding body, as defined in
Section of the Labor Code. Public works project requirements not codified in this
section do not apply to the entity. This
section does not affect the entity’s liability for nonpayment of wages or materials under
Section of
Article XIV of the California Constitution. (
B) The contractor who enters into a contract with the entity described in subparagraph (
A) to perform work on a facility is the awarding body only for the limited purposes of
Section 1773.3 of the Labor Code. (8) (
A) All contracts for the construction of a facility shall require every contractor and subcontractor at every tier to use a skilled and trained workforce for the construction of the facility. (
B) Every contractor and subcontractor at every tier shall use a skilled and trained workforce for the construction of the facility.
SEC.
Section 913.11 of the Public Utilities Code is amended to read: 913.11. (
a) Notwithstanding
Section 10231.5 of the Government Code, the commission, Energy Commission, and State Air Resources Board shall, in consultation with all California balancing authorities, as defined in subdivision (
d) of
Section 399.12, as part of a public process, issue a joint report to the Legislature by January 1, 2021, and at least every four years thereafter. (
b) The joint report shall include all of the following:
(1) A review of the policy described in subdivision (
a) of
Section 454.53, focused on technologies, forecasts, then-existing transmission, and maintaining safety, environmental and public safety protection, affordability, and system and local reliability.
(2) An evaluation identifying the potential benefits and impacts on system and local reliability associated with achieving the policy described in subdivision (
a) of
Section 454.53.
(3) An evaluation identifying the nature of any anticipated financial costs and benefits to electrical, gas, and water utilities, including customer rate impacts and benefits.
(4) The barriers to, and benefits of, achieving the policy described in subdivision (
a) of
Section 454.53.
(5) Alternative scenarios in which the policy described in subdivision (
a) of
Section 454.53 can be achieved and the estimated costs and benefits of each scenario.
(6) An evaluation of the impacts of data centers subject to the special rate structure established pursuant to
Section 740.22, on the state’s ability to achieve the policy described in subdivision (
a) of
Section 454.53.
SEC. 3. No reimbursement is required by this act pursuant to
Section of
Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of