SB 1168: Data centers: rate structures.

California · Senate · 2025–2026 Regular Session · last verified September 23, 2026

What SB 1168 does, verified September 23, 2026

The bill aims to impose surcharges on data centers for natural gas and electricity consumption. These surcharges would fund wildfire-related costs and support low-income assistance programs. The surcharges would be set by the state energy commission and collected by gas and electric utilities. Data centers that consume natural gas or electricity for primary use would be required to pay the surcharges. Exemptions would be available for data centers that meet specific criteria. The revenues collected from surcharges would be deposited into a special fund, with a portion going to support wildfire-related costs and another portion supporting low-income assistance programs. The bill would require the California Department of Tax and Fee Administration to administer the taxes imposed by the surcharges. The bill would also require the state to reimburse local agencies and school districts for…

Bill journey

✓IntroducedComplete

✓In CommitteeComplete

✓First Chamber FloorComplete

✓Second ChamberComplete

✓GovernorComplete

6ChapteredCurrent

Last action: Chaptered by Secretary of State. Chapter 440, Statutes of 2026. (2026-09-21)Alert me

Author and sponsors

Sen. Jerry McNerneyAuthor · California State Senate

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Coauthors

Sasha Renée Pérez

Recent actions30 total · showing 5

Sep. 21, 2026	Chaptered by Secretary of State. Chapter 440, Statutes of 2026.
Sep. 21, 2026	Approved by the Governor.
Sep. 08, 2026	Enrolled and presented to the Governor at 4 p.m.
Aug. 30, 2026	Assembly amendments concurred in. (Ayes 38. Noes 0.) Ordered to engrossing and enrolling.
Aug. 28, 2026	Read third time. Passed. (Ayes 78. Noes 0. Page 6775.) Ordered to the Senate.

Full action history, 25 earlier actionsConnect Plus

Latest bill textChaptered version, September 21, 2026 · 474 words

Senate Bill No. 1168

CHAPTER 440

An act to add Article 10.5 (commencing with Section 901) to Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, relating to energy.

[ Approved by Governor September 21, 2026. Filed with Secretary of State September 21, 2026. ]

LEGISLATIVE COUNSEL'S DIGEST

SB 1168, McNerney. Data centers: rate structures.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable.

This bill would require the commission to assess opportunities for rate structures to ensure data centers pay a reasonable share of their costs associated with transmission and distribution needs, ensure that data centers pay for their proportionate share of load increases and procurements needed to reliably serve their loads while maintaining consistency with the applicable integrated resource planning requirements, and alleviate cost pressures on residential ratepayers.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares all of the following:

(a) Data centers’ energy use is rapidly increasing across the nation. In California, the Independent System Operator expects energy use to grow by 2.3 gigawatts by 2030. The Pacific Gas and Electric Company alone had about 2,300 megawatts of applications for data center capacity in 2024.

(b) Demands for energy by data centers are growing at the same time as energy prices for Californians are also growing at an unprecedented rate due to factors such as wildfire risk, extreme heat, and the state’s transition to clean energy.

(c) In order to facilitate data center growth in California while simultaneously retaining reasonable electricity and natural gas rates for all Californians, it is critical to ensure that data centers are contributing back to rate stabilization for all by helping pay down the largest driver of utility rates.

SEC. 2.

Article 10.5 (commencing with Section 901) is added to Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, to read:

Article 10.5. Data Centers

901.

As part of a new or existing proceeding, the commission shall assess opportunities for rate structures to do all of the following:

(a) Ensure data centers pay their reasonable share of costs associated with transmission and distribution needs, regardless of whether the data centers interconnect at the transmission or distribution level.

(b) Ensure data centers pay for their proportionate share of load increases and procurements needed to reliably serve their loads while maintaining consistency with the applicable integrated resource planning requirements.

(c) Alleviate cost pressures on residential ratepayers, including, but not limited to, customers enrolled in the California Alternate Rates for Energy program described in Section 739.1 and the Family Electric Rate Assistance program described in Section 739.12.

Text of SB 1168 as chaptered, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions