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Politico
18-06-2025
- Business
- Politico
Tech-savvy California is still figuring out data centers
SACRAMENTO, California — For a state that considers itself a leader in both tech and climate, California is falling behind in both building data centers and putting guardrails around their environmental impacts. Democrats in Sacramento are taking cues from lawmakers in Indiana, Ohio and West Virginia as they explore special electricity rates for data centers aimed at controlling costs for other customers. They're also weighing new energy reporting standards to better understand the supercomputers' impacts on California's electric grid. Those proposals come as electric utilities are embracing data centers as a potential business savior that promises to increase electrical demand several fold after an era of energy efficiency. 'This trend is absolutely real for us,' Pacific Gas and Electric CEO Patti Poppe said during the utility's most recent quarterly earnings call in April. 'This will be so beneficial for our customers.' The handful of bills this year are a reaction to PG&E's November 2024 application to energy regulators for a special tariff for all the new data centers it anticipates connecting to its grid in Northern California — enough to require the power of roughly 6.5 million new homes in the next ten years and four times the output of its Diablo Canyon nuclear plant. Tentatively planned projects would add an additional 1.5 million homes worth of power. 'It's a big change, and not expected,' said Hunter Stern, assistant business manager with IBEW 1245, which represents PG&E electrical workers. 'For years, California's goal was to reduce emissions through efficiency and load growth was an indication that emissions would be going up, and we've changed that.' But for ratepayer and environmental advocates, it could go either way: Data centers could, if managed properly, bring down the per-customer grid costs that have been dominating the political conversation for months — or they could leave ratepayers with costly stranded assets and even outpace the growth of renewable energy on the grid. Another concern is pollution from data center power sources. The NAACP announced Tuesday it intends to sue Elon Musk's xAI over public health risks posed by 35 unpermitted natural gas turbines it says are polluting minority communities in Memphis, Tennessee. 'Will [data centers] use clean generation and battery storage?' Matt Freedman, a staff attorney at The Utility Reform Network, asked at a Senate hearing in April. 'The requirements established by the Legislature will largely determine what type of on-site generation is used by these data centers.' Enter state Sen. Steve Padilla and Assemblymember Rebecca Bauer-Kahan. Both Democratic lawmakers are carrying bills designed to protect ratepayers from cost spikes as data centers come online. Padilla's SB 57 would direct the California Public Utilities Commission to set a special tariff for all power customers with at least 50 megawatts of load, while Bauer-Kahan's AB 222 broadly requires commissioners to minimize ratepayer cost-shifting that might stem from an uptick in data centers joining the grid. Each contains added sustainability components. Padilla's measure would allow the CPUC to set zero-carbon procurement targets for data centers. Bauer-Kahan's plan targets transparency by requiring data center operators to report how much energy is used to power AI models and assigns the California Energy Commission to track supercomputer energy consumption trends. Tech players like the Data Center Coalition and the business-aligned Silicon Valley Leadership Group have balked at the bills, arguing Padilla's special tariffs are ill-defined and that Bauer-Kahan's measure will force companies to reveal trade secrets. 'We're all kind of left to throw up our hands and kind of speculate as to what the economic impact of all of this may be,' said Peter Leroe-Munoz, Silicon Valley Leadership Group's general counsel. 'It could have a very real chilling effect on the development of needed data centers here in California.' But Bauer-Kahan thinks the real issue is cost. 'They won't say it out loud because you can't say we should be shifting these to ratepayers,' she said. 'It's a ridiculous thing to say.' Yet if lawmakers don't find a way forward soon, they risk losing the advanced infrastructure fueling Silicon Valley's artificial intelligence boom to other states while simultaneously failing to align in-state data centers with California's ambitious climate goals. 'Data centers are the can of spinach for the AI Popeye,' Leroe-Munoz said. 'Clearly, we're putting ourselves at a competitive disadvantage by making it more difficult [to build] while other states are actively working to make themselves more attractive.' Like this content? Consider signing up for POLITICO's California Climate newsletter.
Politico
18-06-2025
- Business
- Politico
Enviros, utilities and tech bros walk into a data center
With help from Eric He, Blake Jones and Annie Snider ASK CHATGPT: For a state that considers itself a leader in both tech and climate, California is falling behind in both building data centers and putting guardrails around their environmental impacts. Democrats in Sacramento are taking cues from lawmakers in Indiana, Ohio and West Virginia as they explore special electricity rates for data centers aimed at controlling costs for other customers. They're also weighing new energy reporting standards to better understand the supercomputers' impacts on California's electric grid. Those proposals come as electric utilities are embracing data centers as a potential business savior that promises to increase electrical demand several fold after an era of energy efficiency. 'This trend is absolutely real for us,' Pacific Gas and Electric CEO Patti Poppe said during the utility's most recent quarterly earnings call in April. 'This will be so beneficial for our customers.' The handful of bills this year are a reaction to PG&E's November 2024 application to energy regulators for a special tariff for all the new data centers it anticipates connecting to its grid in Northern California — enough to require the power of roughly 6.5 million new homes in the next 10 years and four times the output of its Diablo Canyon nuclear plant. Tentatively planned projects would add an additional 1.5 million homes worth of power. 'It's a big change, and not expected,' said Hunter Stern, assistant business manager with IBEW 1245, which represents PG&E electrical workers. 'For years, California's goal was to reduce emissions through efficiency and load growth was an indication that emissions would be going up, and we've changed that.' But for ratepayer and environmental advocates, it could go either way: Data centers could, if managed properly, bring down the per-customer grid costs that have been dominating the political conversation for months — or they could leave ratepayers with costly stranded assets and even outpace the growth of renewable energy on the grid. Another concern is pollution from data center power sources. The NAACP announced Tuesday it intends to sue Elon Musk's xAI over public health risks posed by 35 unpermitted natural gas turbines it says are polluting minority communities in Memphis, Tennessee. 'Will [data centers] use clean generation and battery storage?' Matt Freedman, a staff attorney at The Utility Reform Network, asked at a Senate hearing in April. 'The requirements established by the Legislature will largely determine what type of on-site generation is used by these data centers.' Enter state Sen. Steve Padilla and Assemblymember Rebecca Bauer-Kahan. Both Democratic lawmakers are carrying bills designed to protect ratepayers from cost spikes as data centers come online. Padilla's SB 57 would direct the California Public Utilities Commission to set a special tariff for all power customers with at least 50 megawatts of load, while Bauer-Kahan's AB 222 broadly requires commissioners to minimize ratepayer cost-shifting that might stem from an uptick in data centers joining the grid. Each contains added sustainability components. Padilla's measure would allow the CPUC to set zero-carbon procurement targets for data centers. Bauer-Kahan's plan targets transparency by requiring data center operators to report how much energy is used to power AI models and assigns the California Energy Commission to track supercomputer energy consumption trends. Tech players like the Data Center Coalition and the business-aligned Silicon Valley Leadership Group have balked at the bills, arguing Padilla's special tariffs are ill-defined and that Bauer-Kahan's measure will force companies to reveal trade secrets. 'We're all kind of left to throw up our hands and kind of speculate as to what the economic impact of all of this may be,' said Peter Leroe-Munoz, Silicon Valley Leadership Group's general counsel. 'It could have a very real chilling effect on the development of needed data centers here in California.' But Bauer-Kahan thinks the real issue is cost. 'They won't say it out loud because you can't say we should be shifting these to ratepayers,' she said. 'It's a ridiculous thing to say.' Yet if lawmakers don't find a way forward soon, they risk losing the advanced infrastructure fueling Silicon Valley's artificial intelligence boom to other states while simultaneously failing to align in-state data centers with California's ambitious climate goals. 'Data centers are the can of spinach for the AI Popeye,' Leroe-Munoz said. 'Clearly, we're putting ourselves at a competitive disadvantage by making it more difficult [to build] while other states are actively working to make themselves more attractive.' — CvK, TK Did someone forward you this newsletter? Sign up here! STILL GOT SOME JUICE?: State Sen. Ben Allen's latest bid to require recycling of electric vehicle batteries advanced this afternoon, but he said 'intense conversation' with the Newsom administration lies ahead after the governor vetoed a similar bill last year. Gov. Gavin Newsom in his 2024 veto message bemoaned the administrative burden that would be placed on the Department of Toxic Substances Control — which would have been charged with regulating battery repurposing and recycling. Newsom suggested that Allen consider using a producer responsibility organization, in which battery-makers would take on more of the work, instead. For now, Allen's SB 615 looks much the same as last year's version, forgoing the PRO model and requiring the DTSC to set rules for how batteries are repurposed, refurbished and eventually recycled at the end of their useful life. 'We're still a little stuck on how to … read the most we can' out of the producer responsibility organization portion of Newsom's message, Allen — the author of another producer responsibility law for plastic packaging that Newsom delayed enforcement of in March — told the Assembly Environmental Safety and Toxic Materials Committee today. 'It's funny, because their folks have not been as positive about producer responsibility organizations in other contexts,' he said. Nevertheless, Allen said he was 'feeling good' about negotiations with the administration so far as his bill cleared the Assembly committee. It now heads to the lower house's natural resources panel. — BJ 'LIVES AT RISK': Seven California prisons have halted work on how to protect prisoners from extreme heat after U.S. EPA canceled an Inflation Reduction Act grant last month, Ariel Wittenberg reports for POLITICO'S E&E News. The nonprofit Land Together's $1.7 million grant was intended to last three years and benefit more than 90,000 incarcerated people in the state. The group's executive director is warning that the cancellation could prove deadly. 'The cancellation of Land Together's EPA grant puts lives at risk,' Andrew Winn, the group's executive director, wrote in an email to the affected communities. 'Incarcerated people have very little agency over most aspects of their lives, including their exposure to harmful and even potentially lethal conditions.' Prisons are exempt from state rules that went into effect last year requiring employers to provide cooling areas and other alleviating measures at certain temperatures, leaving many of those employed in prisons — including incarcerated workers — without air conditioning. Many of California's prisons are located in the desert, and 60 percent of respondents in a 2023 survey of more than 2,000 incarcerated people by the Ella Baker Center of Human Rights said they had no access to air-conditioned rooms during extremely hot days. — EH AND THE WINNER IS…: After months of speculation, President Donald Trump has finally named his pick for Bureau of Reclamation commissioner: longtime Arizona water manager Theodore 'Ted' Cooke. The Arizonan's selection suggests that the high-stakes negotiations over the Colorado River — which supplies 40 million people across seven states, including one out of every two Californians, as well as 5.5 million acres of irrigated agriculture — may trump the president's fascination with California's intramural water wars. The seven states that share the West's most important river have been divided for more than a year over how to rein in use along the drought-stricken waterway. The current battle lines pit the Lower Basin states of California, Arizona and Nevada against the Upper Basin states of Colorado, Utah, New Mexico and Wyoming. Cooke's selection appears to be a win for the Lower Basin states — but those battle lines could get redrawn at any time. Cooke's pick also indicates that the administration is carefully attuned to the political salience of Arizona in those negotiations. The state, which is the most closely divided politically, is the most vulnerable to cuts under the century-old legal system governing the river. Its legislature must also approve any new deal to govern the drought-stricken waterway. — AS JUMPING RIGHT IN: The environmental law nonprofit Earthjustice has tapped Los Angeles-based attorney Adrian Martinez as the new head of its Right to Zero campaign aimed at increasing electrification. Martinez previously was a deputy managing attorney for the group's California office where he worked on air pollution cases. He replaces the retiring Paul Cort, who oversaw the campaign's launch, at a time when the Trump administration is threatening to repeal clean air regulations. 'There's never been a more pressing time for cities and states to step up to the plate and protect their health, their air quality, and their future,' Martinez said in a statement. — EH — Offshore wind opponents are targeting a federal grant to upgrade a Humboldt County port for turbine construction. — Tesla plans to shut down production of two of its models the week of July Fourth, and investors look skittish. — San Clemente is shipping in sand — and considering more creative methods — to slow shoreline erosion.
