California Governor Gavin Newsom signed a package of bills on September 23, 2026 that requires data-center operators to disclose their electricity and water use, mandating monthly energy reporting and water-use reporting tied to permitting or licensing, while setting separate power rates and removing CEQA exemptions.
Short answer: California Governor Gavin Newsom signed a package of bills on September 23, 2026 that requires data-center operators to disclose their electricity and water use, mandating monthly energy reporting and water-use reporting tied to permitting or licensing, while setting separate power rates and removing CEQA exemptions.
California Governor Gavin Newsom signed a package of bills on Monday, September 23, 2026, that aims to lift the veil on how data centers consume electricity and water. The legislation comes as these facilities spread into more communities nationwide, sparking protests over their potential strain on local power grids and water supplies. Critics say the lack of basic information makes it hard to judge whether the centers are driving up bills or draining scarce resources.
The new laws will require operators to start sharing certain details beginning next year. One set of measures directs the California Public Utilities Commission to establish separate power rates for data centers. The goal is to ensure that the costs of building new grid connections are recovered from the facilities themselves rather than being passed on to other electricity customers. At the same time, the rules encourage data centers to draw a larger share of their energy from renewable sources.
Another bill mandates monthly reporting of energy consumption, giving regulators and the public a regular window into how much power each site uses. Water use will also be disclosed, though the reporting is tied to permitting or licensing processes. Operators will have to report water needs when they apply for permits or obtain a business license, and one of the statutes makes them responsible for funding any infrastructure upgrades needed to serve their facilities.
Environmental review is also changing. A separate measure removes categorical exemptions that previously allowed data centers to bypass the California Environmental Quality Act. This means new projects will undergo the same scrutiny as other large developments, potentially leading to more thorough assessments of their impact on surrounding ecosystems.
Supporters of the legislation say the disclosures will help scientists and residents evaluate whether data centers are living up to sustainability pledges. Mark Specht, a senior manager for the climate and energy program at the Union of Concerned Scientists, noted that the absence of basic facts has made it frustrating to gauge the true effects of these facilities. He explained that researchers have struggled to find reliable data on power and water use, which hampers efforts to model how data center growth could affect utility rates and local resources.
Specht outlined two possible outcomes for electricity costs. On one hand, if data centers connect to high-voltage transmission lines, they may avoid sharing the fixed costs of the distribution network, which could leave other customers to bear those expenses. On the other hand, if they hook into lower-voltage distribution systems, their demand could spread fixed grid costs across a larger base, potentially lowering bills for everyone. He stressed that without concrete usage numbers, it is impossible to tell which scenario is unfolding in California, but he warned that the situation is likely to evolve as the facilities’ power needs increase.
Water use has proved equally opaque. Researchers from Santa Clara University attempted to gather data from water providers in districts housing data centers, but the providers cited privacy rules and refused to share specifics. The team also found that few data centers in the state have made environmental impact reports publicly available. This lack of transparency is especially worrisome as operators chase cheaper land and build larger hyperscale sites in rural areas where small water systems and lower-income communities may have limited capacity to absorb additional demand.
While the new rules represent a step forward, they still leave gaps. Water disclosures will only appear at the point of permitting or licensing, meaning ongoing consumption will not be tracked regularly. Energy reporting will be monthly, but the legislation does not require real-time data or granular breakdowns by time of day or type of workload. Nevertheless, advocates argue that having any standardized information is better than the current near-total darkness, and it will enable more informed debates about where and how data centers should grow.
For people who build with or use AI, the changes signal a shifting landscape. Developers may need to factor in new reporting obligations when planning projects that rely on large-scale compute. Investors and corporate sustainability teams will have clearer metrics to assess the environmental footprint of their cloud workloads. And residents in areas eyeing new data center proposals will gain a concrete basis for asking questions about power and water impacts.
The bills signed by Governor Newsom mark California’s attempt to turn data centers from opaque black boxes into subjects of public scrutiny. Whether the disclosed numbers will reveal a net benefit or a hidden cost remains to be seen, but the move gives stakeholders the data they need to start answering that question.
Operators must begin monthly reporting of energy consumption and disclose water use when applying for permits or obtaining a business license, with the goal of providing regular, standardized data on power and water usage to regulators and the public.
The legislation directs the California Public Utilities Commission to establish separate power rates for data centers, ensuring that costs for new grid connections are recovered from the facilities themselves rather than being passed on to other electricity customers.
The statutes tie water reporting to the permitting or licensing process, meaning operators only disclose water needs when they apply for permits or licenses, so ongoing consumption is not tracked regularly under the current rules.
A separate measure removed categorical exemptions that previously allowed data centers to bypass CEQA, requiring new projects to undergo the same environmental review as other large developments.
Source: The Verge
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