Little Hoover Commission hears split evidence on data centers’ effects on California power bills

The Little Hoover Commission opened a Dec. 11, 2025 hearing on data centers and California electricity policy with sharply divergent accounts of how rapidly growing computing demand will affect households and businesses.

Senator Josh Becker told the commission that data centers “could be a boon or they could be a big new problem,” and urged a package of enforceable policies so the benefits outweigh the risks. Becker, chair of the Senate Committee on Energy, Utilities and Communications, said new customers should pay for interconnection and distribution upgrades up front, should be required to accept long-term commitments or penalties for early exit, and should participate in demand flexibility programs so they curtail during a few high-stress hours a year. “When data centers fully finance infrastructure they require, we avoid shifting that risk to families and small businesses,” Becker said.

Pacific Gas & Electric Co. painted a different, more optimistic picture. Mike Maderos, PG&E’s vice president for strategic commercial solutions, told commissioners PG&E’s analysis shows that adding gigawatts of data center load could lower costs for existing customers by spreading fixed distribution and transmission costs across a larger consumption base. “For every gigawatt of data center load we can connect, we can see cost reductions of 1 or more percent for all of our customers,” Maderos said, and he estimated projects now in engineering could connect in the late 2020s.

The Data Center Coalition, representing large owners and operators, told the commission the traditional utility ratemaking process — not sector-specific legislative mandates — is the correct venue for resolving cost-allocation questions. Kara Boinder said members are committed to paying full cost of service and urged regulators to use evidence-based utility proceedings rather than laws that single out data centers.

Those claims were met with skepticism by commissioners and public commenters who said short-term rate increases, water use and unequal cost allocation are real risks. Michael Bocadoro, executive director of the Agricultural Energy Consumers Association, urged the commission to be skeptical of PG&E’s projections, saying utilities can profit from capital investments to serve new loads and that rate increases are likely in the near term. Public commenter John Gallagher of Pure Storage called for new measurement standards — “terabytes per watt” — to make data center energy performance transparent.

Regulators and technical staff described where policy choices must be made. Matt Caldwell of the California Public Utilities Commission outlined how PG&E’s proposed Rule 30 would establish a standardized tariff and process for retail customers seeking service at transmission voltages and said an interim implementation decision allows PG&E to process customers while deferring final cost-allocation choices. Heidi Javanbakht of the California Energy Commission described the CEC’s forecasting approach, which converts utilities’ capacity requests into load using utilization factors and confidence weights; she said the CEC’s mid case adds roughly 4,000 MW of data-center-driven load to planning forecasts by 2035 and a higher scenario as much as 6,000 MW, but she underscored uncertainties such as rapid technology changes and ramping behavior.

Commissioners pressed witnesses on specific tools: long-term contracts or minimum-demand charges to reduce stranded-asset risk, up-front payments for network upgrades, demand-management arrangements allowing compute to shift across sites, and more frequent, protected data disclosure to help local governments and utilities assess projects. Witnesses diverged on disclosure: industry warned against site-level mandates that could expose trade secrets; some commissioners said aggregated or anonymized data would be useful for planning and public scrutiny.

The hearing closed with commissioners emphasizing the policy stakes — jurisdictional clarity between the Legislature and state agencies, and potential federal policy changes flagged during the meeting — and with a reminder that written materials and the hearing video would be posted by commission staff. The commission signaled the topic will remain active as the PUC proceeds with a rulemaking and the CEC updates its forecasts.

Next steps: the commission will consider submitted materials on its website, track the CPUC’s Rule 30 proceeding and the PUC’s report timeline (discussed in testimony), and hold follow-ups in early 2026 as part of this multi-part study.