In Virginia this spring, a bill directing state energy regulators and utilities to squeeze more out of the existing grid sailed through the legislative process, and was signed into law last month. It will take effect on July 1.
That bill, part of Governor Abigail Spanberger’s “Affordable Virginia Agenda,” enjoyed a quick turnaround in part due to Democrats’ supermajority in the state; it passed the House with nearly unanimous bipartisan support, but was met with a party-line split in the Senate. But it also reflected a broader political inflection point, as rising electricity prices and the demands of the AI boom have made energy a front-burner issue for voters, creating rare bipartisan momentum for grid utilization efforts.
In California, which has some of the highest electricity prices in the country, proponents are rallying support for legislation that would push utilities toward greater utilization over the default of expensive new build-outs.
In part because of the state’s massive data center footprint, Virginia’s grid operates at a higher utilization rate than California’s, explained Arnab Pal, executive director of Deploy Action, which is championing the bill: “So I would say the potential for benefits is greater in California than in Virginia,” he said.
But getting California’s legislation over the finish line is likely to be more challenging.
“Everything is 10 times harder in California because there’s more people to deal with,” Pal said. Utility buy-in and having support from the administration was enough in Virginia, but more will be needed on the West Coast, he added. “There [are] just so many more variables than there are in Virginia.”
California’s legislative process is more heavily influenced by labor unions, for example, which is a stakeholder group that wasn’t particularly involved in Virginia. Deploy Action has already met with California unions several times about the bill, and while Pal said they “haven’t said they’re opposed to this by any stretch,” they haven’t explicitly given their support yet either.
The Golden State also has more constraints impacting the shape of a bill, such as clean energy requirements, and less familiarity with data centers than Virginia, which is home to Data Center Alley. “We have to frame this as the first step,” Pal said. “We need to use more of the existing grid, and then once we do that, what do we do about data centers? And when we figure out what to do with data centers, how do we do that without building more gas? It’s the first of like five chess moves.”
The hyperscalers themselves, meanwhile, “haven’t been super active” in the conversations in Sacramento, but Deploy Action doesn’t anticipate any opposition from them. Their priority is getting interconnected quickly and if using more of the existing grid can unlock capacity without driving up costs, “they’re likely to be in favor of it,” Pal said.
The political backdrop
Senate Bill 905, sponsored by state Sen. Josh Becker, is a piece of umbrella legislation focused on lowering costs for ratepayers. It includes everything from grid utilization requirements to utility reform measures, including wildfire recovery changes and executive compensation limits.
Meanwhile Virginia’s new law is more narrowly focused on directing regulators and the state’s dominant utility to use existing grid capacity more efficiently.
Becker’s SB 905 also takes a broader approach than its parallel bill in the California Assembly, which includes more explicit utilization targets and incentive structures. That bill would require the state’s Public Utilities Commission to establish a grid utilization metric by a set date, and to set a minimum value for that metric within each large electrical corporation’s service territory.
SB 905, by contrast, is focused on establishing public grid utilization data requirements in utility planning, alongside other cost reducing efforts. Pal’s primary critique of the Assembly version, he said, is that it tries to hard-code utilization targets and incentives before California has nailed down exactly where higher utilization saves money, risking a scenario in which utilities chase the metric rather than genuine cost and emissions reductions.
According to Pal, the assembly bill is likely to be revised and brought closer in line with SB 905’s more cautious, first-steps approach. But that said, recent polling in the state funded by Deploy Action indicates there’s public political will for either bill to advance — depending on the packaging. That survey work found high levels of support across party lines for concepts like using more of the existing grid before building new lines and tying data center growth to rate relief. Among Republicans in the state, support for grid utilization topped 80%.
Of course, the grid utilization debate is also playing out against the backdrop of California’s race for governor, where the race’s top contenders — former Attorney General Xavier Becerra and billionaire investor Tom Steyer — have notably different tones toward the state’s investor-owned utilities. Steyer, Pal noted, is “a little bit more aggressive” toward IOUs than Becerra.
If Steyer wins the primary in early June, utilities may decide it’s safer to work with groups like Deploy Action on grid utilization reforms than to risk a tougher approach from a new governor in November. If Becerra becomes the Democratic candidate, however, utilities may think “we can maybe hold off on this, because we could maybe get a better deal next year,” Pal said.
That said, for SB905, which passed out of the appropriations committee last week and now heads to the Senate floor, Pal said general momentum on affordability in the state is more important than the ultimate outcome of the governor’s race.“There’s always going to be a shinier object out there…this is the practical solution,” he said, adding that the fact that nobody has come out explicitly against the bill won’t be enough to get it passed. “In a big state like California, where there’s so many things on the agenda, people actually have to care and want the practical solution…there’s got to be force behind it, and that’s the challenge.”
