California just told data centers over 75 MW that they will pay the full cost of their own grid connection. It won’t be the last state to do so — and every one that follows raises the value of a site where the power is already on.
The California legislature passed a package of data center bills this week, headlined by SB 886 (the California Technology Innovation and Ratepayer Protection Act, Sen. Steve Padilla) and AB 2383 (the Fair Share in Energy Act, Asm. Rick Chavez Zbur). Together they require separate electricity tariffs for new large-load customers with peak demand of at least 75 MW, covering transmission, distribution and generation costs, plus updated interconnection rules. The tariffs apply to customers taking service on or after January 1, 2027, and the CPUC must finalize the structure by July 1, 2027. Companion bills add energy-use reporting, annual water reporting and environmental review requirements.
SB 886 cleared the Senate 28–10 and the Assembly 49–7. Governor Newsom has until the end of September to sign or veto; he rejected similar water-reporting measures previously but has recently signalled openness to regulation. The Data Center Coalition opposed the package.
California is following a path already worn by Ohio, Texas and several PJM states: large-load tariffs, minimum-take commitments, and cost allocation that shifts grid upgrade risk from ratepayers to the data center. Combined with FERC’s show-cause orders to the RTOs on co-location and behind-the-meter generation, the direction of regulation is unambiguous — future power is getting more expensive and slower to secure.
What it means if you’re buying: Every new tariff regime widens the price gap between power on paper and power in the ground. A site with an energized interconnect, a signed utility agreement and a known rate carries none of the 2027 tariff risk; a greenfield with a queue position carries all of it. Buyers who need capacity in the next 12–18 months should be underwriting energized megawatts, flowing today, in states that have not yet moved — and should expect those sites to reprice upward as more legislatures follow California.
What to do about it: That’s the thesis behind our powered-site book. ALTAIR 12 (~12 MW connected and flowing, ~5¢ industrial rate, SW Kansas), RIGEL 24 (24 MW metro site, 16 MW flowing today), PERSEUS 20 (20 MW existing with a gas expansion path) and PROCYON 24 (24 MW contracted, transferable) are all energized or contracted now. For larger builds, HYDRA (60 MW, West Virginia, 85 MW utility power at the initial site) and PHOENIX (50 MW, Kentucky) sit in markets without a large-load tariff on the books. Sellers holding energized capacity in a non-tariff state: this is the week to list it.
Original reporting · datacenterdynamics.com ↗ · Summary and analysis by Ax3
