AG Kris Mayes challenges energy agreement for Tucson data center project

PHOENIX — Arizona Attorney General Kris Mayes is challenging an energy agreement related to a planned hyperscale data center complex in Tucson.

Mayes’ move comes after the Arizona Corporation Commission (ACC) decided on Dec. 10 to authorize Tucson Electric Power’s (TEP) private energy agreement with Humprey’s Peak Power LLC., and its affiliate Beale Infrastructure Group to power “Project Blue.”

Mayes said the deal was approved without enough transparency or public oversight, and it could lead to higher electricity prices for regular customers.

“The loophole created for the developers of this data center to secretly set electricity rates behind closed doors and outside of the public process is new, rare and a dangerous recipe for massive price hikes for Arizona consumers,” Mayes said in a statement. “That’s why my office is stepping in.”

Mayes says that if the ACC had carefully reviewed TEP’s private energy agreement for Project Blue, it would have caught a major problem: a provision allowing TEP and the data center customer to set their own electricity rates without Commission oversight.

“By approving an agreement that allows a utility and a customer to ‘choose their own rate,’ the Commission abdicated its constitutional and statutory authority and its duty to protect ratepayers,” Mayes said.

Mayes argued the approval was made without keeping customers in mind, as she says costs will be passed onto ratepayers.

ACC defends role in approving data center energy agreement

However, the ACC accused Mayes of misrepresenting its role in the project and noted that it held a public hearing before approving the energy supply agreement.

Furthermore, the commission said it had no control over approval of the project itself and also denied Mayes’ assertion that the energy agreement could end up costing other ratepayers more.

“The irony is that if the Commission rejected this special contract, TEP would still be able to move forward under existing tariffs and ratepayers would not realize the enhanced protections secured in this agreement that will actually reduce transmission costs for all other customers,” ACC Chair Kevin Thompson said in an email to KTAR News 92.3 FM on Tuesday.

TEP estimates it will be providing 286 megawatts to the project by 2028, which is as much energy as it would take to cool about 57,000 homes, according to a release.

“The public deserves transparency and accountability when utilities enter into unprecedented agreements that may affect electricity rates and grid reliability across Arizona,” Mayes said. “The Commission must ensure that its decisions are grounded in a complete record and made in the public interest.”

Hyperscale data centers are continuing to pop up around the country in abundance but have faced opposition.

Unlike traditional data centers, which usually power the information technology (IT) needs of one organization, hyperscale data centers are massive, always-on facilities that power online services for up to millions of users, using a lot of electricity and infrastructure.

NOTE: This story was updated with a response from the Arizona Corporation Commission after it was originally posted.

Related

Chandler city council unanimously rejects proposed new data centerLive updates for Arizona’s 2026 midterm primaries: County website glitchMain roadway between Maricopa and metro Phoenix closed after fatal incidentArizona voters to choose Republican and Democratic nominees for top education positionRetired Gilbert fire captain honored after dying from job-related cancerStorms make way into Valley with strong winds, scattered showers causing power outages