Pasadena Evaluates Power, Water Impact of Data Centers on City Resources

As the rapid expansion of artificial intelligence and cloud computing drives unprecedented demand for digital infrastructure, the City of Pasadena is evaluating the potential strain data centers could place on local electric and water distribution systems.

Pasadena Water and Power representatives are scheduled to a comprehensive overview of data center impacts to the Municipal Services Committee on Tuesday, detailing the significant resource requirements of both conventional and hyperscale facilities.

The presentation will highlight the challenges and opportunities associated with accommodating large-load customers in a city committed to ambitious carbon-free energy goals.

The emergence of data centers would present a critical juncture for Pasadena, balancing the potential for economic growth and increased tax revenue against the reality of extreme power and water consumption.

A single 100-megawatt hyperscale data center could consume approximately 788,400 megawatt-hours annually — equivalent to the energy use of 82,000 homes, or 72% of Pasadena’s entire current system load.

“Any new loads that contribute to the peak (not just data centers) is more load that needs to be supported by local generation (Glenarm Power Plant) or Battery Storage,” the PWP presentation stated.

Conventional data centers, which handle general IT workloads such as databases, enterprise systems, email, and web applications, typically draw less than 1 megawatt of load per facility and consume five to 10 kilowatts per rack, sometimes reaching up to 15 kilowatts in modern setups. Hyperscale data centers, generally designed for artificial intelligence, are a different matter entirely — commonly drawing 30 to 60 kilowatts per rack, with high-end AI racks exceeding 80 to 100 kilowatts. These facilities run continuously at 90% to 100% capacity, 8,760 hours per year, creating massive and unrelenting energy demands that dwarf virtually every other commercial use.

The cooling systems required to prevent thousands of servers from overheating also present significant water usage concerns.

Depending on the cooling method and facility size, water consumption can range from 40 to 1,800 acre-feet annually for a facility ranging from 10 to 500 megawatts in capacity. For context, an 1,800 acre-foot demand is equivalent to serving 5,400 residential homes. Google-owned data centers ranged from less than one to more than 5,000 acre-feet of annual demand in 2024, with an average of around 900 acre-feet.

The potential influx of large-load customers poses specific challenges to Pasadena’s infrastructure. Extreme power demand and import constraints could force PWP to run local generation more frequently, potentially jeopardizing the city’s 2030 carbon-free energy goal.

Furthermore, new large loads can worsen regional network congestion, driving up wholesale energy prices and forcing more expensive local generation. Air quality concerns from diesel backup generators and noise pollution from cooling systems and backup generators round out the list of community impacts.

To mitigate these risks, PWP is examining strategies implemented by other states. Virginia has approved a new rate class for customers with demand of 25 megawatts or more, requiring developers to pay a minimum of 85% of contracted capacity for distribution and transmission and 60% of contracted generation demand, and committing them to 14-year contract terms. Ohio similarly requires new data centers with peak demand exceeding 25 megawatts to pay for at least 85% of their average monthly demand regardless of actual use. Minnesota’s law explicitly prohibits any cost-shifting to residential or small business customers and requires large data centers to contribute $2 to $5 million annually to fund low-income energy conservation and home weatherization programs. Texas and New Jersey have enacted comparable large-load tariff and cost-recovery frameworks.

In California, Senate Bill 57 — the Ratepayer and Technological Innovation Protection Act — requires the California Public Utilities Commission to examine whether the rapid growth of data center electricity demand could shift costs onto other ratepayers, with an assessment due by Jan. 1, 2027. The California Independent System Operator (CAISO) is currently studying 4.5 gigawatts of data center load in its 2025-2026 transmission plan, and the California Energy Commission forecasts data center load in the CAISO Balancing Area to increase by 1.8 gigawatts by 2030 and 4.9 gigawatts by 2040.

The city is also considering local zoning regulations to define where data centers can be built and what entitlements they require. Currently, data centers could be interpreted as office, industrial, or research and development uses under existing code. A new code amendment may be necessary to establish a specific definition, identify permitted zones, and determine whether projects require a Conditional Use Permit or may proceed by right.

Despite the challenges, data centers offer potential economic benefits. They can stimulate growth in the biotech and life sciences sectors and generate additional property tax and Utility User Tax revenue. Silicon Valley Power, which hosts the largest data center cluster on the West Coast, estimates that each megawatt of data center load growth adds approximately $60,000 annually to its General Fund — meaning a 50-megawatt facility could contribute up to $3 million per year. Large load requests can also trigger necessary upgrades to aging infrastructure, with costs borne by the developer rather than existing ratepayers.

Moving forward, PWP may develop local regulations and utility interconnection requirements specific to large data centers, continuing to work through the Municipal Services Committee. The utility will also continue collaborating with regional, state, and federal partners, including the Southern California Public Power Authority (SCPPA), the California Municipal Utilities Association (CMUA), CAISO, and federal regulators.