Arizona AG steps in after Project Blue data center energy deal approved

Nearly a month after the Arizona Corporation Commission (ACC) approved a proposed Tucson data center energy deal, Arizona Attorney General Kris Mayes said her office is stepping in to investigate how the agreement meant to power the controversial project, which has received fierce opposition from Pima County residents and Tucson city government officials.

In a Monday statement, Mayes cited concerns about transparency in the Dec. 10 deal approved by the commission, which authorized a private energy agreement between Tucson Electric Power (TEP), Humprey’s Peak Power LLC, and its affiliate Beale Infrastructure Group. 

The agreement would power Project Blue, a data center complex proposed near Tucson, starting in 2027.

However, according to Mayes, the private energy agreement allows TEP and the data center customer to set their own rates without commission oversight, which could result in rate increases for local residents. The Arizona Constitution grants this power to the commission alone and not private parties, Mayes wrote.

By 2028, TEP estimates it will provide 286 megawatts of capacity to Project Blue, “as much energy as it would take to cool about 57,000 homes,” the release states.

“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 the statement. “That’s why my office is stepping in.”

Mayes submitted a rehearing request demanding a new hearing with the commission, allowing the State of Arizona and the City of Tucson to intervene.

For months, local residents and leaders with the No Desert Data Center Coalition have been fighting to bring a stop to the construction of the data center, citing environmental, health and economic factors that will, over time, negatively impact the residents of Tucson and Pima County.

On Christmas Eve, Pima County officials closed the deal, effectively selling land north of Pima County Fairgrounds and west of Houghton Road for the construction of the proposed data center to Beale Infrastructure. The deal moved forward without the annexation from the city of Tucson, following the council’s rejection over the summer.

“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.”