California Tightens Rules on AI Data Center Energy and Water Use

California Governor Gavin Newsom has signed seven bills designed to prevent AI data centers from passing utility costs onto residents. The legislative package requires the California Public Utilities Commission to introduce a new rate classification for data centers and forces these facilities to pay for upgrades to local power grids and water systems. Additional bills in the package mandate that proposed data centers disclose estimated water use to local governments, along with data on energy efficiency and drought planning. To qualify for a streamlined approval process, centers must meet specific energy, water, and fuel consumption requirements. Furthermore, Newsom signed an executive order last week to accelerate the creation of an AI "kill switch." In a press release, Newsom stated, "While the Trump administration moves toward deregulation, communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution." He added, "With these laws, we are ensuring that Californians remain in the driver’s seat — and that those profiting from data centers aren’t doing so at our expense."