In remarks at a hearing held by California state lawmakers, Nico Procos, Director at Silicon Valley Power, a California public power utility, detailed strategies that SVP has adopted to address data centers and planning related to associated load growth.
He made his remarks at a Jan. 28, 2026, Joint Hearing Utilities and Energy Committee and Privacy and Consumer Protection Committee of the state General Assembly.
SVP serves the City of Santa Clara, Calif.
Procos noted that currently there are approximately 60 data centers in operation in SVP’s service territory. Those data centers are typically in the 50-100 megawatt range. Most of those are cloud-focused data centers – they are either co-locators or affiliated with “some of our businesses like Nvidia or Intel.”
Procos said that 55% of its power use is from data centers.
He also noted that the utility has seen significant load growth in recent years and expects for that to continue in the future.
With respect to the transmission expansion process, Procos said that SVP is “very thankful for our partnership with” the California ISO and the California Energy Commission. “It’s been an iterative process over many years.”
He said that “we’ve been in this game a long time and we’ve had lots of conversations with the CEC and with the ISO” related to the question of “is this load going to show up? How do you model this load and I really feel like with that partnership, we’ve kind of perfected that approach,” with the end result being that “we’re seeing some real, tangible projects being built and being proposed in our area.”
Procos said that reliability remains front of mind when it comes to data center projects.
“I don’t think it’s as simple as – well, there’s spare capacity on the transmission line. We see impacts that you could have an outage on a line in Alberta and we see a voltage drop on our system, so it’s all an interconnected system and you’re adding all these megawatts on there and you could have these unanticipated consequences in many different areas.”
Procos also provided details on SVP’s approximately $570 million system expansion program.
The program is designed to double electric load capacity to meet current and future demand.
SVP’s current peak is around 740 MW and “we’re projecting to go to around 1,300 megawatts in five to ten years. That’s almost unprecedented in the electric utility world,” he said. This growth is driven by increasing demand from large industrial customers – namely, data centers.
Since 2021, SVP has communicated limited capacity to customers. “We used to provide ‘Will Serve’ letters. We stopped doing that. We’re issuing system limitation notices and now we go through a process where we do system impact studies and we have formal what we call substation agreements with these customers, which typically will have a ramp over time. And those are based on our evaluation of what our system can accommodate.”
SVP is in ongoing conversations with its customers “because sometimes those ramps don’t work for them or if they’re a co-locator and they’re courting a customer on the other side who wants to lease space they need some sort of certainty of where that’s going to be in four or five years and we work very closely with them.”
At a later point, Procos and other panelists discussed rate impacts tied to data centers.
Overall, when looking at California utility average system rate comparisons for 2024, the City of Santa Clara had the second lowest rates behind California public power utility Turlock Irrigation District.
While there is “a lot of talk about the costs” associated with data centers, “I don’t think there’s enough focus on” the revenue that data centers bring in, Procos said.
“A lot of the reason why we have data centers in Santa Clara is because the rates are much lower,” he noted.
Addressing economic and rate benefits, Procos told the state lawmakers that developers directly fund dedicated substations. “So when they’re connecting on the 60-kV system – and that’s a large customer, typically 50 to 100 megawatts – they’re paying for those substations, they’re paying” for line extensions.
He noted that SVP has a load development fee under which the utility takes into account “all the projects that we’re doing to expand our system and we allocate a portion of that into the load development fee.”
He also said that the utility has been building up its reserves over the last three to five years for a variety of reasons. “Wildfire concerns is one area. The other issue is if you have a data center – we hear about the potential bubble and that may happen, but we’re building up reserves to be able to mitigate that in the future,” he said.
Procos noted that 90% of SVP’s revenue “comes from our large customers. Right now, our residential customers pay five percent of our revenue. That number will probably drop as we increase, so the folks who are funding that reserve are the large customers….we think that’s a prudent way to approach that.”
SVP is taking a closer look at letters of credit to ensure that “if we’re spending money on these customers – that if they for some reason they leave half way through the game that there will be some sort of payment involved there.”
Along with Procos, other participants in the hearing included officials with investor-owned utility PG&E, the California Energy Commission and the California ISO, among others.
