Little Hoover Commission’s Virtual Hearing: Senator Josh Becker on Data Centers, Energy Grid Costs, and Who Pays?
Testifying before California’s Little Hoover Commission at its recent hearing on data centers and electricity policy, Sen. Josh Becker framed the rapid growth of data centers as a pivotal moment for California’s energy system—one that could either accelerate the clean-energy transition or impose new costs on households and small businesses.
VX News shares a timely excerpt of Sen. Becker’s remarks acknowledging widespread anxiety around data center expansion, posing the core question: Will these large new loads help finance clean energy, or will they force everyday customers to subsidize infrastructure that drives up rates and prolongs fossil-fuel dependence?
The answer, he argued, hinges on near-term legislative and regulatory decisions.
[Excerpt: Sen. Becker’s Testimony] I’ll start by saying there is a lot of understandable anxiety right now about the rapid growth of data centers. The questions are both urgent and practical: Will data centers help pay for and expand our clean-energy future, or will they force families and small businesses to subsidize massive new loads that drive up rates and actually prolong fossil fuel dependence?
By the way, I will not be addressing the water issues related to data centers today. That is a whole other topic. I’m focused on the energy implications. But I believe the answer is that data centers could be a boon, or they could be a big new problem—and which outcome we get will come down to the policy choices we make over the next several years in the Legislature.
I’ll address in a moment the two main ways data centers could increase costs for everyday customers, and how I believe we can avoid those outcomes through policy, but I want to start with the reality.
Many of the largest technology companies want to expand computing capacity quickly, and many of those same companies have made net-zero pledges. That is a powerful combination. We are already seeing companies make long-term, ambitious investments in what we call clean, firm technologies—clean technologies that can provide steady power—and partnerships to deploy things like advanced geothermal.
Corporate commitments are underwriting new projects that otherwise would not get financed. Those long-term contracts and green premiums are exactly the kind of market signals that can scale new carbon-free generation.
At the same time, tech companies need power now. Many of these clean-firm technologies—advanced geothermal, or in other states, small modular nuclear—take time. Solar and wind paired with storage can be built faster, but interconnection queues and permitting bottlenecks have slowed deployment. And now we also have to contend with backward federal policies on clean energy—on solar and wind—from the Trump administration.
So let me get to the two main ways data centers could increase costs for everyday customers.
First, large new loads often require expensive upgrades to poles, wires, transformers, and substations. Utilities may invest millions expecting long-term revenue from a big customer that will more than cover those upfront costs. However, if a project never materializes or shuts down after a few years, other ratepayers can be left covering the costs of those stranded assets.
Second, an abrupt rise in demand without matching supply drives up electricity costs. Utilities must procure more resource adequacy under California policy and dispatch higher-cost peaker plants more often, raising wholesale market prices that show up on everyone’s bill.
We can avoid these outcomes. A few practical policies can help.
First, new customers must pay their own way for interconnection and distribution upgrades up front. That was the logic behind Senator Padilla’s SB 57, which I supported in the Energy Committee, and I think we need to continue revisiting that approach. It is reflected in the interim Rule 30 approach the CPUC is working on with PG&E.
We need to ensure new loads cover the full cost of service without risking stranded assets. When data centers fully finance infrastructure they require, we avoid shifting that risk to families and small businesses. That is paramount.
Second, we should prioritize demand flexibility. Not all solutions require new supply. If data centers can be flexible—temporarily reducing load for a couple of hours during peak demand, or paying others to reduce their load instead—we can avoid billions in costly new infrastructure and lower peak-driven prices.
That was the idea behind my bill last year, SB 541, which did not make it through, but focused on shifting demand away from system peaks and unlocking unused capacity in the grid we already have outside peak hours.
This is a really important point, and it was a major “aha” moment for me this past year as Energy Chair. Our grid is strained for roughly 40 hours a year—maybe up to 100 hours at most. That means 99% of the time, we are vastly underutilizing our grid’s capacity. On average, we use about 45% of the grid we are paying for.
One analogy that stuck with me is the Walmart parking lot. You don’t build the parking lot for a Tuesday morning in January—you build it for the day before Christmas. That is the status of our grid. We have to plan for peak conditions because nobody wants blackouts.
In September 2022, during the last really tense near-blackout moment, grid demand reached about 56 gigawatts. On September 6 a couple of years later, demand was about 36 gigawatts. But of course, you must plan for the highest scenario.
A nationwide grid-capacity study found that in California, we could add five gigawatts of data centers tomorrow—as long as those data centers are flexible and can curtail load or pay others to do so during that 1% of peak hours. That was a 2025 study by Tyler Norris at Duke.
If data centers can be supported with less costly grid investments simply by reducing demand for a handful of hours per year, they can help pay for the infrastructure we have already built and lower rates for everyone.
Third, we must speed up clean generation and storage. We need more energy as fast as possible to avoid near-term price increases. All of the energy added to our grid last year came from clean sources like solar and wind. We need to keep accelerating that deployment, not throwing up roadblocks as the federal administration has been doing.
We have done some good work in California on permitting and streamlining. Last year, I authored SB 254, which included additional permitting streamlining, and we must continue cutting unnecessary delays without sacrificing environmental or labor standards.
One idea is to require large new loads to procure new generation that would not otherwise happen—and to bring that generation onto the grid itself, not just behind the meter—so it strengthens the system as a whole.
Finally, we must protect communities and workers. The clean-energy transition must create good jobs and shared benefits. New contracts and public financing should include strong worker protections, community benefits, and accountability so the economic gains from data center investment translate into local opportunity.
