Luam Tesfaye of the California Public Utilities Commission told the Little Hoover Commission that the agency is tracking rapid growth in large new loads, particularly data centers that support artificial intelligence, and that “in PG&E's territory... they had about 4,000 megawatts in the queue” late last year and “now they have 14,000 megawatts in the queue.” She said the CPUC has put an interim tariff in place for large loads (PG&E's Tariff Rule 30) to standardize information and accelerate interconnection, and that the commission's next step will be to examine cost allocation for those customers.

Why it matters: Witnesses and commissioners expressed concern about the pace and scale of data-center buildout and how costs for new interconnections, transmission upgrades and possible stranded assets would be allocated between large commercial users and other ratepayers. Commissioners urged the CPUC to ensure protections so existing ratepayers do not bear disproportionate costs if large customers leave or their load profiles change.

Details and steps: Tesfaye described the CPUC's phased approach for PG&E territory: create a standardized application/tariff element to obtain reliable load and interconnection information, then move to a second phase focused on allocating costs and avoiding stranded assets. She acknowledged confidentiality concerns from companies about sharing detailed load profiles but said “there's some basic information we need to be able to get.” She also said potential benefits from adding new large load exist because more consumption can spread fixed costs across a larger kWh base, but cautioned the outcome depends on where and how the new load connects and whether interconnection costs are socialized.

Questions from commissioners: Several commissioners pressed witnesses on whether utilities can refuse new connections and on whether a distinct rate class for data centers might be needed. Tesfaye and other witnesses said denial is unlikely but timing or required upgrades could delay interconnection; the CPUC would consider specific rate design and cost-allocation options in upcoming proceedings.

Public advocates: Michael Campbell of the Public Advocates Office said the effect of additional load on rates depends on "the when, the where, and the how" and warned policymakers to avoid simplistic assumptions that more load will always produce lower rates. He noted data-center projects can be easily moved and stressed the need for safeguards so ratepayers are not left covering upgrades if customers depart.

What did not happen at the hearing: The meeting did not approve new tariffs or adopt a specific cost-allocation rule. Testimony described open proceedings at the CPUC and the agency's intention to study and, if necessary, propose allocation changes.