California passes laws forcing data centers to disclose water and power use

California Governor Gavin Newsom signed a package of seven bills on Monday aimed at improving transparency around how data centers affect electricity grids and water supplies. The growing number of data centers across the US has sparked protests as communities worry about the strain AI-related infrastructure places on power grids and local water systems.

Starting next year, data center operators will be required to regularly disclose details about their electricity and water consumption. Three of the bills direct the California Public Utilities Commission to create separate electricity rates for data centers, so the facilities cover the costs of connecting to the grid rather than passing those costs on to other customers. One bill also pushes data centers toward greater use of renewable energy.

Other bills in the package require monthly reporting on energy use, mandate water-use disclosures, and make data center operators responsible for covering the cost of necessary infrastructure upgrades. Data centers will also lose an automatic exemption from environmental review requirements.

A persistent information gap

Mark Specht of the Union of Concerned Scientists said it has long been extremely difficult to obtain even basic facts about data center consumption, making it hard to gauge how serious the problem actually is. It remains unclear whether data centers have already driven up electricity bills, since two scenarios are possible: costs could rise due to new infrastructure needs, or bills could fall as fixed grid-maintenance costs get spread across more customers.

Researchers at Santa Clara University who studied water use near data centers found that water providers refused to share consumption data, citing privacy rules, and that most data centers lack publicly available environmental impact reports. Researcher Iris Stewart-Frey said the new laws are a step in the right direction, though notable gaps remain — for instance, water-use disclosures are only required when applying for permits, not on an ongoing basis, making it difficult to track actual annual consumption.