The massive data centers that AI needs require huge amounts of electricity and water. And they’re popping up all over the state. Those data centers are likely to impact the electrical grid, electricity prices and the state’s water infrastructure and supplies. Assemblymembers Rick Chavez-Zbur and Diane Papan are working to prevent those impacts from hurting Californians.
AB 2383 Ensures Large Energy Users Pay Their Fair Share and Strengthens Grid Reliability
SACRAMENTO, CA - Democratic Caucus Chair and Assemblymember Rick Chavez Zbur's (D-Hollywood) AB 2383, legislation protecting California ratepayers from bearing the rising energy costs associated with large energy use facilities such as data centers, has passed the California State Assembly with bipartisan support and now heads to the Senate. Strongly supported by the NRDC (Natural Resources Defense Council) and the Little Hoover Commission, this bill requires the California Public Utilities Commission (CPUC) to establish a new electricity customer classification for large energy users to ensure the costs of serving these facilities are not shifted onto residential and small business ratepayers.
"As California continues leading the world in innovation and artificial intelligence, we must make sure working families and small businesses are not left footing the bill for the enormous energy demands of large-scale data centers," said Assemblymember Rick Chavez Zbur. "AB 2383 ensures these facilities pay their fair share, protects ratepayers from cost shifts, and helps California plan responsibly for the future of our electrical grid."
California is home to a rapidly expanding technology and artificial intelligence sector, driving increased demand for data centers that power cloud computing, AI systems, and digital infrastructure used worldwide. The California Energy Commission projects statewide peak electricity demand could exceed 66 gigawatts by 2040, with data centers accounting for approximately 6.7 gigawatts of new demand — roughly equivalent to the electricity use of more than 4 million households.
As utilities receive increasing requests from large-load facilities seeking transmission-level service, regulators have identified significant gaps in how these customers are classified and charged for service. While the CPUC recently approved interim rules for large-load customers within Pacific Gas & Electric's territory, statewide long-term planning and ratepayer protections remain unresolved.
AB 2383 requires the CPUC to establish a new classification for large energy use customers by 2028 designed to appropriately assign costs, avoid shifting infrastructure expenses onto other ratepayers, support grid reliability, and promote equitable contributions to state energy programs. The bill also requires utilities serving these facilities to enter into long-term service agreements with large energy users to help avoid stranded infrastructure costs and ensure financial responsibility remains with the facilities driving the demand.
"Californians are one step closer to being protected from paying extra for energy-hogging data centers," said Victoria Rome, director of California government affairs at NRDC (Natural Resources Defense Council.) "Requiring data centers to pay for their energy usage makes sense for all ratepayers and helps keep electricity affordable across the board."
"This bill is an important step toward protecting California ratepayers while enabling responsible economic growth," said Ethan Rarick, executive director of the Little Hoover Commission. "By requiring the creation of a separate rate classification for large energy use facilities, AB 2383 helps ensure that costs are appropriately allocated, and reflects our Commission's core finding that ratepayer protection must be the state's foremost priority in addressing large-load growth."
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