The California Public Utilities Commission is considering whether new tariff rates are needed for data centers and other large loads to help prevent those entities from creating stranded assets and shifting costs to other ratepayers.

The tariffs would be part of new rate design policies for residential and nonresidential customers, the CPUC said in an order instituting rulemaking (OIR) that was approved at an April 9 voting meeting.

The commission wants to create new rates that more accurately reflect the cost of providing service, send price signals that support efficient use of grid infrastructure, and allocate costs fairly across all customers, the CPUC said in the OIR.

The CPUC asked stakeholders whether rate designs and tariff service agreement terms have been adopted in other states or regions for data center customers. Specifically: Have other states or regions created a separate customer class for data center customers? If so, should these rates be applicable in California?

California Senate Bill 57 requires the CPUC to assess the ways in which new large data center loads will affect rates. Electricity affordability is an urgent issue due to recent rate increases from wildfire-related costs and rapid load growth, such as from data centers, the commission said in the OIR.

In July 2025, the CPUC partly approved a new rule that will make it easier for artificial intelligence data centers and other large customers such as EV charging stations to complete transmission connection projects in Pacific Gas and Electric’s territory. (See CPUC OKs New PG&E Rule to Speed Tx Connections for AI Data Centers, Others.)

In February, the CPUC ordered load-serving entities to procure 6 GW of new capacity to meet forecast data center and electric vehicle loads — among other new demand — in the state. (See CPUC Orders Massive 6 GW of New Capacity to Feed Data Centers, Other Loads.)

And in March, the commission approved construction of new transmission facilities for a 49-MW data center in Sunnyvale, but to do so, it relied on a process typically used for distribution projects. (See CPUC OKs Data Center Tx Upgrades Using Distribution Refund Approach.)

Along with large loads and data centers, wildfire mitigation costs have “grown substantially since 2019” for the state’s investor-owned utilities, the CPUC said in the OIR.

From 2019 to 2024, the CPUC authorized IOUs to recover about $40 billion in wildfire costs. In 2024, PG&E’s wildfire revenue requirement was about 27% of the utility’s total revenue requirement. For SCE and San Diego Gas & Electric, the wildfire revenue requirement was about 17% of the IOUs’ total revenue requirement. These amounts translated to an average annual cost of $250 to $490 for residential customers.

Wildfire costs are forecast to continue to rise in the coming years based on the IOUs’ 2026-2029 wildfire management plans, according to the OIR.