USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Timothy Lee, Buchalter LLP
Enacted in 2025, SB 57 requires the CPUC to study the potential cost shifts to other customers associ- ated with new data centre load. In parallel, California utilities and regulators have continued to refine inter- connection and tariff frameworks: PG&E’s proposed Electric Rule 30 remains under CPUC consideration as of 2026 and is part of a broader effort to stand- ardise and streamline the interconnection process for large new loads, including data centres, while also addressing system upgrade cost responsibility and study timelines. More broadly, by 2026 the regulatory approach has evolved toward a more integrated framework that links rate design, interconnection policy, and reliability planning for high-load customers, reflecting growing concern about the scale and clustering of new data centre demand and its implications for grid capacity, procurement, and long-term infrastructure investment. On the Federal side, activity at FERC has impacts for large loads in California. In Docket RM26-4-000 (Inter- connection of Large Loads to the Interstate Transmis- sion System), FERC is considering a Department of Energy-directed Advance Notice of Proposed Rule- making (ANOPR) focused on the timely and orderly interconnection of large electrical loads to the inter- state transmission system, which it intends to act on by the end of June 2026. FERC noted that it is hard at work having reviewed more than 3,500 pages of com- ments filed in the docket, conducted meetings with stakeholders, and coordinated with government-wide partners. The Order recognises the unprecedented growth of large loads, including data centres and the urgent need for reforms to ensure timely, orderly, and non-discriminatory interconnection. 2.2 Electricity Imports and Exports California permits imports and exports of electricity with neighbouring jurisdictions within the Western Interconnection, which encompasses 14 western US states, parts of Canada, and northern Baja California, Mexico. Import and export transactions are primar- ily managed by CAISO. In recent years, electricity imports have proven vital to maintaining California’s grid reliability and meeting its substantial energy demands, especially as the state seeks to integrate more renewable, intermittent power sources.
The operational reliability and co-ordination of the Western Interconnection is overseen by the Western Electricity Coordinating Council (WECC), which is a FERC-designated regional entity. WECC is responsi- ble for developing and enforcing the mandatory relia- bility standards governing the planning and operation of the bulk power system, including the interties used to facilitate California’s imports and exports. Major Transmission Interconnections California trades electricity with the Pacific Northwest (PNW) (Oregon, Washington, British Columbia) via the Pacific DC Intertie and the AC California-Oregon Intertie (COI/Path 66). California trades electricity with the Desert Southwest (Arizona, Nevada) through numerous AC lines. Limited interconnections also exist with Baja California, Mexico. Reviews and Approvals Scheduling Imports and exports are scheduled through CAISO market mechanisms and must adhere to CAISO’s rel- evant tariff provisions and operating procedures. FERC jurisdiction FERC regulates interstate transmission service and wholesale electricity sales, including import and export transactions. As noted above, FERC is expanding its reach as it relates to the interconnection of large loads. Transmission rights Entities scheduling imports and exports must possess or acquire necessary transmission service rights on the interconnections. Construction and operation of international transmission lines require permits from the US Department of Energy. RA To satisfy California’s RA requirements, imports must meet specific deliverability and availability require- ments established by the CPUC and CAISO. Typical Circumstances and Pricing California typically imports electricity during peak demand periods – ie, evening ramp period when solar output declines, or summer heatwaves when out-of- state power is cheaper relative to in-state power. Exports typically occur when California has surplus
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