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Senate committee advances SB 886 to limit data‑center cost shifts; industry warns of operational risk

California State Senate, Committee on Energy, Utilities and Communications · March 17, 2026

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Summary

SB 886 passed from the committee as amended after debate about tariffs, prefunding for clean generation, demand‑response obligations and a 25 MW threshold; supporters said the bill protects ratepayers, while data‑center industry and tech associations argued the CPUC should lead and warned the bill could chill investment.

The committee voted to advance SB 886, a bill authored by Senator Padilla that would require the California Public Utilities Commission (CPUC) to adopt rate structures and tariffs designed to prevent new large data‑center electricity loads from shifting transmission, distribution and reliability costs to other customers.

Padilla and witnesses described a package of amendments that narrow the bill’s scope to large, new transmission‑service data centers (25 megawatts or greater) and require data centers to prefund long‑term contracts (15 years) for at least 50% of their hourly needs from new zero‑carbon, dispatchable resources or provide other approved means of compliance.

Sam Udan of Net0 and Matt Friedman of The Utility Reform Network said the approach would make developers bear grid upgrade and resource costs, require demand‑response participation tailored to data centers, and reduce the risk of stranded infrastructure.

Industry representatives pushed back. Kara Boender of the Data Center Coalition and Ahmad Thomas of the Silicon Valley Leadership Group argued the CPUC already possesses rate‑making expertise and that prescriptive, facility‑specific statutory mandates risk operational and reliability problems. They warned about limiting backup generation choices and imposing one‑size‑fits‑all demand‑response obligations.

Committee amendments clarified the bill would apply to facilities for which a new transmission interconnection agreement is established after required tariffs are adopted; it also directed the CPUC to create a demand‑response program suited to data‑center operational needs. Supporters and some opposition groups said the amendments improved the bill and removed or softened earlier objections.

The committee passed SB 886 as amended to the Senate Appropriations Committee.