CA SB 1168 — data center grid cost allocation
California SB 1168 (McNerney) — Data Center Ratepayer Protection: CPUC to Ensure Data Centers Pay Fair Share of Grid Costs (2026)
California · Cal. S.B. 1168 (McNerney), Ch. 440, Stats. 2026 (approved Sept. 21, 2026); Pub. Util. Code sec. 901
- Status
- Enacted (not yet in effect)
- Takes effect
- January 1, 2027
- Applies to
- CPUC (must examine and adopt rate structures); California electric utilities; large data center operators
- Enforced by
- CPUC
California SB 1168 (Sen. Jerry McNerney) directs the California Public Utilities Commission (CPUC), in a new or existing proceeding, to look at rate structures that would make data centers pay their reasonable share of transmission and distribution costs and their proportionate share of the extra power purchases needed to serve them, and that would ease cost pressure on residential customers, including low-income customers in the CARE and FERA programs. Governor Newsom signed it on September 21, 2026 (Chapter 440, Statutes of 2026), and it takes effect January 1, 2027. The measure aims to keep ordinary California ratepayers from subsidizing the electricity costs of AI data centers. It does not set a specific rate or deadline.
Who is protected: California electricity ratepayers (residential and small commercial) who would otherwise subsidize transmission and distribution upgrades needed to serve data centers
Legal detail
SB 1168 (McNerney), Ch. 440, Stats. 2026, approved September 21, 2026; effective January 1, 2027. Adds Pub. Util. Code Art. 10.5 (sec. 901): as part of a new or existing proceeding, the CPUC shall assess opportunities for rate structures to (a) ensure data centers pay their reasonable share of costs associated with transmission and distribution needs, whether they interconnect at transmission or distribution level; (b) ensure data centers pay their proportionate share of load increases and procurements needed to reliably serve their loads, consistent with integrated resource planning requirements; and (c) alleviate cost pressures on residential ratepayers, including CARE and FERA customers. No specific rate, deadline or penalty. Legislative findings cite CAISO's expected 2.3 GW of growth by 2030 and about 2,300 MW of data-center capacity applications to PG&E in 2024. Votes: Senate 30-9 (May 27, 2026); Assembly 78-0 (Aug 28, 2026); Senate concurrence 38-0 (Aug 30, 2026); presented to the Governor Sept 8, 2026.
Key facts
| Jurisdiction | California |
|---|---|
| Level | State |
| Strength | Limited |
| Enacted | September 21, 2026 |
| Citation | Cal. S.B. 1168 (McNerney), Ch. 440, Stats. 2026 (approved Sept. 21, 2026); Pub. Util. Code sec. 901 |
| Private right of action | No, agency enforcement only |
| Penalties | None in the statute; it directs a CPUC rate-structure assessment |
| Topics | data-center siting and energy · consumer protection · government use of AI |
| Bill text | California SB 1168 — Data centers: rate structures — California Legislative Information |
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Related data-center siting and energy rules elsewhere
- Superior WI Data Center Moratorium (1-year) · In effect
- Dane County WI Hyperscale Data Center Moratorium · In effect
- Madison WI Data Center Moratorium (1-year) · In effect
- Manitowoc County WI Data Center Moratorium · In effect
- WA SB 5982 (Data Center / Clean Energy) · In effect
- Dayton OH data center moratorium (180-day, Apr 2026) · In effect
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