Data centers contributing to high electric rates in California

FRESNO, Calif. (FOX26) — It’s a continuing issue people in the state of California have heard for quite some time — high electricity rates.

But just how high are the rates compared to other states across the U.S?

Well, thanks to a newly released report from the State Legislative Analyst’s Office, we’re getting a clearer picture of how much more people spend.

According to the report…

“California’s electricity rates are among the highest in the country,” Johnson said. “On average, residential electricity rates in California are close to double those in the rest of the nation, mostly driven by high rates charged by the state’s three large investor-owned utilities (IOUs).”

But while we know about the IOU’s, like PG&E, Southern California Edison and PacifiCorp, Cal-Matters Reporter Khari Johnson brings up another key factor not being talked about; data centers.

“You know data centers are growing in their electricity and water demand,” Johnson said. “There just wasn’t time to get all to all the water demands in this story, but the electricity demands come at a time when California ratepayers are paying more than you know, anywhere else in the country.”

With technology becoming a growing industry, data centers become more relied on.

But just how important are they?

“Artificial intelligence has played a role in data center activity,” Johnson said. “Essentially, all the traffic of the Internet is also data center activity. Bitcoin mining is part of data center activity, but the pursuit by large tech companies to create general purpose models, sort of like ChatGPT from open AI, that can do a wide range of things.”

Which, in turn, has made California a hub for data centers.

When looking at how many they have compared to the rest of the U.S., only Virginia and Texas have more.

So is there anything being done to make sure rate payers don’t have to pay more out of their pocket?

“As this growth in industry happens, lawmakers are trying to take measures here in California, but also in a lot of other places, Ohio, Virginia, Oregon, to try and protect people who are paying the cost of electricity so that to ensure that the infrastructure of transmission lines or additional power plants don’t get passed on to ratepayers,” Johnson said.

One example includes Senate Bill 57 from State Senator Steve Padilla.

This would require the California Public Utilities Commission to make a special rate structure for ratepayers from the cost of building new transmission lines which supply data centers while meeting the state’s climate goals.

But with artificial intelligence becoming more relied on by larger companies…

“This has expanded greatly the energy demands of data centers, and that’s expected to grow in the years ahead,” Johnson said.

We also looked into how many data centers are here in the Central Valley.

According to the website Data Center Map, three are located in Fresno.

If you have an example of waste watch here in the valley, please email us at Newsdesk@KMPH.com